UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2016
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number
001-09071
BBX Capital Corporation
(Exact name of registrant as specified in its charter)
Florida
(State or other jurisdiction of
incorporation or organization)
401 East Las Olas Boulevard,
Suite 800
Fort Lauderdale, Florida
(Address of principal executive
office)
59‑2022148
(I.R.S Employer Identification
No.)
33301
(Zip Code)
(954) 940-4900
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par Value
Class B Common Stock, $.01 par Value
Preferred Share Purchase Rights
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.
YES [ ] NO [X]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. YES [ ] NO [X]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES
[X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§
232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this
chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,
or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ]
reporting company [ ]
Accelerated filer [X]
Non-accelerated filer [ ]
Smaller
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).
YES [ ] NO [X]
On June 30, 2016, the aggregate market value of the registrant’s voting common equity held by non-affiliates was
$140.0 million computed by reference to the closing price of the registrant’s Class A Common Stock on such date.
The registrant does not have any non-voting common equity.
The number of shares outstanding of each of the registrant’s classes of common stock as of March 7, 2017 is as
follows:
Class A Common Stock of $.01 par value, 85,765,452 shares outstanding.
Class B Common Stock of $.01 par value, 16,7 59,009 shares outstanding.
Documents Incorporated by Reference
Portions of the registrant’s Definitive Proxy Statement on Schedule 14A relating to the registrant’s 2017 Annual
Meeting of Shareholders are incorporated by reference into Part III of this Form 10-K.
BBX Capital Corporation
Annual Report on Form 10-K for the Year Ended December 31, 2016
TABLE OF CONTENTS
PART I
Page
Item 1.
Business
Item 1A
Risk Factors
Item 1B
Unresolved Staff Comments
Item 2
Item 3
Item 4
Item 5
Properties
Legal Proceedings
Mine Safety Disclosure
PART II
Market for Registrant’s Common Equity, Related Stockholder
Matters and Results of Operations
Item 6
Selected Financial Data
Item 7
Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Item 7A
Quantitative and Qualitative Disclosures About Market Risk
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22
36
36
37
38
39
43
45
72
Item 8
Financial Statements and Supplementary Data
F-1 to F-69
Item 9
Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 9A
Controls and Procedures
Item 9B
Other Information
PART III
Item 10
Directors, Executive Officers and Corporate Governance
Item 11
Executive Compensation
Item 12
Item 13
Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director
Independence
Item 14
Principal Accounting Fees and Services
PART IV
Item 15
Exhibits, Financial Statement Schedules
SIGNATURES
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85
PART I
Item 1. BUSINESS
Overview
History
On December 15, 2016, the Company completed the acquisition of all the outstanding shares of the
former BBX Capital Corporation (“BCC”) not previously owned by the Company and following the
transaction the Company changed its name from BFC Financial Corporation to BBX Capital Corporation.
The acquisition was consummated by the merger of BCC into a wholly owned subsidiary of the
Company, BBX Merger Sub, LLC. As a consequence of the merger, BCC is now a wholly owned
subsidiary of BBX Capital. The merger is described in further detail in Item 8 – Note 3 of this report.
Prior to the acquisition of all the outstanding shares of BCC, the Company had an 82% equity interest in
BCC and a direct 54% equity
the parent company of Bluegreen
Corporation. BCC held the remaining 46% interest in Woodbridge. Woodbridge became a wholly owned
subsidiary of the Company as a result of the acquisition of all the outstanding shares of BCC by the
Company.
in Woodbridge,
interest
BCC’s principal asset until July 31, 2012 was its ownership of BankAtlantic and its subsidiaries
(“BankAtlantic”). BankAtlantic was a federal savings bank headquartered in Fort Lauderdale,
Florida. On July 31, 2012, BCC completed the sale to BB&T Corporation (“BB&T”) of all of the issued
and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions described
herein are collectively referred to as the “BankAtlantic Sale” or the “BB&T Transaction”). Prior to the
closing of the BB&T Transaction, BankAtlantic formed two wholly-owned subsidiaries, BBX Capital
Asset Management, LLC (“CAM”) and Florida Asset Resolution Group, LLC (“FAR”) and transferred
certain non-performing commercial loans, commercial real estate and previously written-off assets to the
two wholly owned subsidiaries as described in further detail in Item 8 – Note 1 of this report.
BBX Capital Corporation
BBX Capital Corporation (formerly BFC Financial Corporation) is referred to in this report together with
its subsidiaries as “the Company” “we”, “us”, or “our” and is referred to in this report without its
subsidiaries as “BBX Capital”. BBX Capital is a Florida-based diversified holding company with
investments in Bluegreen Corporation (“Bluegreen”), and in real estate and middle market operating
companies.
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Bluegreen Corporation: Founded in 1966 and headquartered in Boca Raton, Florida, Bluegreen
is a sales, marketing and management company focused on the vacation ownership industry.
Bluegreen manages, markets and sells the Bluegreen Vacation Club, a flexible, points-based,
deeded vacation ownership plan with more than 200,000 owners, 66 owned or managed resorts,
and access to more than 4,300 resorts worldwide. Bluegreen also offers a portfolio of fee-based
resort management, financial services, and sales and marketing on behalf of third parties.
Bluegreen had total assets of $1.1 billion as of December 31, 2016.
B B X Capital Real Estate: The BBX Capital Real Estate Division is involved in the
development, operation, management, and investment in residential and commercial real estate.
BBX Capital Real Estate had approximately $180 million of assets as of December 31, 2016
including investments, directly and indirectly through joint ventures, in master planned
communities, multifamily rental communities, single family for sale communities and
commercial properties located primarily in Florida.
· Middle Market: The Middle Market Division’s activities include investments in operating
companies and businesses with revenues of less than $250 million. Currently, our largest middle
market operating company by revenue is Renin Holdings, LLC (“Renin”). Renin manufactures
interior closet doors, wall décor, hardware and fabricated glass products for the home
improvement industry and operates through headquarters in Canada and two manufacturing
assembly and distribution facilities in Canada and the United States. The Middle Market
Division through the Company’s wholly-owned subsidiary, BBX Sweet Holdings, LLC (“BBX
Sweet Holdings”) also has investments in the sugar and confectionary industry. BBX Sweet
Holdings operates businesses that manufacture chocolate and candy for wholesalers, big box
chains,
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retailers and corporate customers as well as selling fine chocolates directly to consumers at nine
retail stores located in South Florida. Additionally, a wholly owned subsidiary of the Company
has entered into area development agreements with MOD Super Fast Pizza Franchising, LLC,
one of the largest fast-casual pizza brands in the United States, pursuant to which it anticipates
developing approximately 60 MOD pizza franchised restaurant locations throughout Florida over
the next seven years. The Middle Market Division had total assets of approximately $74 million
as of December 31, 2016.
Our Strategies and Objectives
Our objective is to increase shareholder value through investments in diverse industries. In recent years,
the Company has focused on providing strategic support to its existing investments with a view to the
improved performance of the organization as a whole. Additionally, we have and may in the future invest
in operating businesses and in real estate developments and joint ventures for the development of
residential and commercial real estate projects, including those in which our affiliates may
participate. The Company’s investments or acquisitions, and the business and investment strategies of the
Company’s subsidiaries, may not prove to be successful or even if successful may not initially generate
income or may generate income on an irregular basis, and may involve a long term investment. The
Company expects to continue to experience losses in its Middle Market Division with an anticipated goal
of building long term value. As a consequence, the Company’s results of operations may vary
significantly on a quarterly basis.
The Company’s goal is to build long-term value rather than focus on quarterly or annual earnings. While
capital markets generally encourage short term results, the Company’s objective continues to be long term
growth as measured by increases in book value and intrinsic value over time.
The Company may also consider transactions involving the sale of all or a portion of its assets,
investments or subsidiaries, including transactions involving Bluegreen. These may include, among other
alternatives, a future sale or spin-off or transactions involving public or private issuances of debt or equity
securities which might decrease or dilute the Company’s ownership interest. See also, “Part II-Item 7 -
Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Additional Information
The Company’s corporate website is www.bbxcapital.com. The Company’s annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, are
available free of charge through its website, as soon as reasonably practicable after such material is
electronically filed with, or furnished to, the SEC. The Company’s website and the information contained
on or connected to it are not incorporated into this Annual Report on Form 10-K.
This document contains forward-looking statements based largely on current expectations of the Company
that involve a number of risks and uncertainties. All opinions, forecasts, projections, future plans or other
statements, other than statements of historical fact, are forward-looking statements and can be identified
by the use of words or phrases such as “plans,” “believes,” “will,” “expects,” “anticipates,” “intends,”
“estimates,” “our view,” “we see,” “would” and words and phrases of similar import. The forward looking
statements in this document are also forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and involve substantial risks and uncertainties. We can give
no assurance that such expectations will prove to have been correct. Actual results, performance, or
achievements could differ materially from those contemplated, expressed, or implied by the forward-
looking statements contained herein. Forward-looking statements are based largely on our expectations
and are subject to a number of risks and uncertainties that are subject to change based on factors which
are, in many instances, beyond our control. When considering forward-looking statements, the reader
should keep in mind the risks, uncertainties and other cautionary statements made in this report. The
reader should not place undue reliance on any forward-looking statement, which speaks only as of the date
made. This document also contains information regarding the past performance of the Company, its
subsidiaries and their respective investments and operations, and the reader should note that prior or
current performance is not a guarantee or indication of future performance. Future results could differ
materially as a result of a variety of risks and uncertainties.
Some factors which may affect the accuracy of the forward-looking statements apply generally to the
industries in which the Company operates, including the real estate development and construction industry
in which BBX Capital Real Estate operates, the resort development and vacation ownership industries in
which Bluegreen operates, the home improvement industry in which Renin operates and the sugar and
confection industry in which BBX Sweet Holdings operates.
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These risks and uncertainties include, but are not limited to:
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BBX Capital has limited sources of cash and is dependent upon dividends from Bluegreen to
fund its operations; Bluegreen may not be in a position to pay dividends or otherwise make a
determination to pay dividends; and dividend payments may be subject to restrictions, including
restrictions contained in debt instruments;
Risks associated with the Company’s indebtedness, including that the Company will be required
to utilize cash flow to service its indebtedness, that indebtedness may make the Company more
vulnerable to economic downturns, that indebtedness may subject the Company to covenants or
restrictions on its operations and activities or on its ability to pay dividends, and, with respect to
the $80 million loan that BBX Capital received from Bluegreen’s subsidiary during April 2015,
that BBX Capital may be required to prepay the loan to the extent necessary for Bluegreen or its
subsidiaries to remain in compliance with covenants under their outstanding indebtedness;
Risks associated with the Company’s current business strategy, including the risk that the
Company will not be in a position to provide strategic support to or make additional investments
in its subsidiaries or in joint ventures, or that the Company may not achieve or maintain in the
future the benefits anticipated to be realized from such support or additional investments, and
the risk that the Company will not be in a position to make new investments or that any
investments made will not prove to be advantageous;
The risks and uncertainties affecting the Company and its subsidiaries, and their respective
results, operations, markets, products, services and business strategies, and the risks and
uncertainties associated with its ability to successfully implement its currently anticipated plans,
and its ability to generate earnings under the current business strategy;
Risks associated with acquisitions, asset or subsidiary dispositions or debt or equity financings
which the Company may consider or pursue from time to time;
The risk that creditors of the Company’s subsidiaries or other third parties may seek to recover
distributions or dividends made by such subsidiaries to the Company or other amounts owed by
such subsidiaries to such creditors or third parties;
Adverse conditions in the stock market, the public debt market and other capital markets and the
impact of such conditions on the activities of the Company and its subsidiaries;
BBX Capital’s shareholders’ interests will be diluted if additional shares of its common stock
are issued;
The risk that BBX Capital may not pay dividends on its Class A Common Stock or Class B
Common Stock in the amount anticipated, when anticipated, or at all,
The impact of economic conditions on the Company, the price and liquidity of BBX Capital’s
Class A Common Stock and Class B Common Stock and the Company’s ability to obtain
additional capital, including the risk that if the Company needs or otherwise believes it is
advisable to issue debt or equity securities or to incur indebtedness in order to fund its operations
or investments, it may not be possible to issue any such securities or obtain such indebtedness on
favorable terms, if at all;
The risk that the SEC prevails in a new trial and the Company’s insurance carrier seeks to obtain
reimbursement of the amounts it previously advanced to the Company in connection with the
action brought by the SEC against BCC and Alan B Levan;
The performance of entities in which the Company has made investments may not be profitable
or achieve anticipated results;
The preparation of financial statements in accordance with generally accepted accounting
principles of the United States of America (“GAAP”) involves making estimates, judgments and
assumptions, and any changes in estimates, judgments and assumptions used could have a
material adverse impact on the financial condition and operating results of the Company or its
subsidiaries.
With respect to Bluegreen, the risks and uncertainties include, but are not limited to:
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Bluegreen’s business and operations, including its ability to market vacation ownership interests
(“VOIs”), may be adversely affected by general economic conditions and the availability of
financing;
Bluegreen may be adversely affected by extensive federal, state and local laws and regulations
and changes in applicable laws and regulations, including risks associated with, and the impact
of, regulatory examinations or audits of its operations, and the costs associated with regulatory
compliance;
The vacation ownership and hospitality industries are highly competitive, and Bluegreen may
not be able to compete successfully;
Bluegreen would incur substantial losses and Bluegreen’s liquidity position could be adversely
impacted if the customers to whom Bluegreen provides financing default on their obligations;
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· While Bluegreen has attempted to structure its business to reduce its need for and reliance on
financing for liquidity in the short term, there is no assurance that Bluegreen’s business and
profitability will not in the future depend on its ability to obtain financing, which may not be
available on favorable terms, or at all;
Bluegreen's indebtedness may impact its financial condition and results of operations, and the
terms of Bluegreen's indebtedness may limit its activities;
The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain,
renew or extend credit facilities, or otherwise raise funds;
Bluegreen’s future success depends on its ability to market its products and services successfully
and efficiently and Bluegreen’s marketing expenses may increase, and changes in Bluegreen’s
business model and marketing may adversely impact revenue;
Bluegreen may not be successful in increasing or expanding its capital-light business
relationships or activities, including fee based, sales and marketing activities, just-in-time VOI
arrangements, and Secondary Market Sales activities, and such activities may not be profitable,
which would have an adverse impact on Bluegreen’s results of operations and financial
condition;
Bluegreen’s results of operations and financial condition may be materially and adversely
impacted if Bluegreen does not continue to participate in exchange networks and other strategic
alliances with third parties or if Bluegreen’s customers are not satisfied with the networks in
which Bluegreen participates or Bluegreen’s strategic alliances;
The resale market for VOIs could adversely affect Bluegreen’s business;
Risks that third party developers who provide VOIs through fee-based services or just-in-time
VOI arrangements do not provide VOIs when planned and the risk that the third parties do not
fulfill their obligations to Bluegreen or to the property owners’ associations (“POAs”) that
maintain the resorts that they developed;
Bluegreen is subject to the risks of the real estate market and the risks associated with real estate
development, including a decline in real estate values and a deterioration of other conditions
relating to the real estate market and real estate development;
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Adverse outcomes in legal or other regulatory proceedings, including claims of noncompliance
with applicable regulations or for development related defects, could adversely affect
Bluegreen’s financial condition and operating results;
Results of audits of Bluegreen’s tax returns or those of Bluegreen’s subsidiaries, or the
imposition of additional taxes on its operations, may have a material adverse impact on
Bluegreen’s financial condition;
Environmental liabilities, including claims with respect to mold or hazardous or toxic
substances, could have a material adverse impact on Bluegreen’s financial condition and
operating results;
A failure to maintain the integrity of internal or customer data could result in damage to
Bluegreen's reputation and/or subject Bluegreen to costs, fines, or lawsuits;
Bluegreen’s technology requires updating, the cost involved in updating the technology may be
significant and the failure to keep pace with developments in technology could impair
Bluegreen's operations or competitive position; and
The loss of the services of Bluegreen’s key management and personnel could adversely affect
its business.
With respect to BBX Capital Real Estate activities, the risks and uncertainties include, but are not limited
to:
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The impact of economic, competitive and other factors affecting BBX Capital Real Estate and
its assets, including the impact of decreases in real estate values on BBX Capital Real Estate’s
business, the value of BBX Capital Real Estate’s assets, the ability of BBX Capital Real
Estate’s borrowers to service their obligations and the value of collateral securing BBX Capital
Real Estate’s loans;
The risk of loan losses and the risks of additional charge-offs, impairments and required
increases in the allowance for loan losses;
The risks associated with investments in real estate developments and joint ventures include:
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exposure to downturns in the real estate and housing markets;
exposure to risks associated with real estate development activities;
risks associated with obtaining necessary zoning and entitlements;
risks that BBX Capital Real Estate’s joint venture partners may not fulfill their
obligations and concentration risks associated with entering into numerous joint
ventures with the same joint venture partner;
risks relating to reliance on third party developers or joint venture partners to complete
real estate projects;
risk that the projects will not be developed as anticipated or be profitable; and
risk associated with customers not performing on their contractual obligations.
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With respect to the Company’s Middle Market activities, the risks and uncertainties include, but are not
limited to:
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Risks that the Middle Market’s business plans will not be successful and that investments in
operating businesses and franchises may not achieve the returns anticipated or may not be
profitable, including the risks associated with the operations and activities of BBX Sweet
Holdings and Renin as well as the anticipated investments in MOD Super Fast pizza franchise
locations;
The amount and terms of indebtedness associated with the acquisitions and operations may
impact the Company’s financial condition and results of operations and limit the Company’s
activities;
Continued operating losses and the failure of the companies to meet financial covenants may
result in the Company making further capital contributions or advances to the companies;
The risk of losses associated with excess and obsolete inventory and the risks of additional
required reserves for lower of cost or market value losses in inventory;
The risk of trade receivable losses and the risks of charge-offs and required increases in the
allowance for bad debts;
Risk associated with commodity price volatility; and
Renin’s operations expose the Company to foreign currency exchange risk of the U.S. dollar
compared to the Canadian dollar.
In addition to the risks and factors identified above, reference is also made to the other risks and factors
detailed in this report and the other reports filed by the Company with the SEC, including those disclosed
in the “Risk Factors” section of this report. The Company cautions that the foregoing factors are not
exclusive.
Divisions
The Company currently operates through three divisions: Bluegreen, BBX Capital Real Estate and Middle
Market.
Bluegreen
Overview
Bluegreen Corporation (“Bluegreen”) is a sales, marketing, and management company focused on the
vacation ownership industry. Bluegreen markets, sells and manages VOIs in resorts, which are generally
located in popular, high-volume, “drive-to” vacation destinations. The resorts in which Bluegreen
markets, sells or manages VOIs were either developed or acquired by Bluegreen, or were developed and
owned by third parties. Bluegreen earns fees for providing sales and marketing services to third party
developers. Bluegreen also earns fees by providing management services to the Bluegreen Vacation Club
and POAs, mortgage servicing, VOI title services, reservation services, and construction design and
development services. In addition, Bluegreen provides financing to FICO® score-qualified individual
purchasers of VOIs, which generates significant interest income.
Strategies
The Company’s strategy to grow Bluegreen’s profitability and long-term value is focused on:
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Increasing vacation ownership sales by expanding existing and identifying new tour sources and
sales locations;
Increasing sales and operating efficiencies across all customer touch-points;
Continuing to efficiently procure vacation ownership interests through a mix of capital light
sources and strategic resort development;
Continuing to grow its resort management, title, loan servicing and other high profit, cash
generating businesses; and
Providing an industry leading level of customer service.
Industry Overview
The resorts component of the leisure industry has historically been serviced primarily by two separate
alternatives for overnight accommodations: commercial lodging establishments and vacation ownership
resorts. Commercial lodging consists principally of hotels and motels in which a room is rented on a
nightly, weekly or monthly basis, or rentals of privately-owned condominium units or homes through both
traditional methods of delivery as well as new web portals and applications. Bluegreen believes that
vacation ownership presents an attractive vacation alternative to commercial lodging particularly for
families.
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Vacation ownership interests were first introduced in Europe in the mid 1960s. Initially, the vacation
ownership industry was highly fragmented, with a large number of local and regional resort developers
and operators having small resort portfolios generally of differing quality. Bluegreen believes that one of
the most significant factors contributing to the growth of the vacation ownership industry was the entry
into the market of some of the world’s major lodging, hospitality and entertainment companies, such as
Marriott Vacations Worldwide Corporation (formerly part of Marriott Hotels), the Walt Disney Company,
Hilton Grand Vacations Company (“Hilton”, formerly part of Hilton Hotels Corporation), Vistana
Signature Experiences (formerly part of Starwood Hotels and Resorts Worldwide, Inc.), and Wyndham
Worldwide Corporation (“Wyndham”). Although vacation ownership operations in some cases comprise
only a portion of these companies’ overall operations, Bluegreen believes that their involvement in the
vacation ownership industry has enhanced the industry’s image with the general public.
The purchase of a timeshare property typically entitles the buyer to use and occupy a fully-furnished
residence, generally for a stated period or in perpetuity. Typically, the buyer acquires an ownership
interest in the vacation residence, which is often held as a tenant-in-common with other buyers of interests
in the vacation residence. However, under a points-based vacation club system, such as the Bluegreen
Vacation Club, the members purchase a real estate interest in a specific VOI resort, which is deeded on
their behalf into a trust and provides the member with beneficial rights, including an annual or biennial
allotment of points that can be used to reserve occupancy at participating resorts. See “Products and
Services – Vacation Ownership” below for additional information regarding the Bluegreen Vacation Club
and Bluegreen’s points-based system.
Bluegreen believes that, in general, the desire exists to take family vacations and that the Bluegreen
Vacation Club is positioned to benefit from consumer demand for family vacations. However, economic
conditions and other factors may have an adverse effect on the demand for vacations, the vacation
ownership industry specifically, and Bluegreen’s operations.
Products and Services
Vacation Ownership
Bluegreen has been involved in the vacation ownership industry since 1994. Since Bluegreen’s inception,
Bluegreen has generated approximately 582,000 VOI sales transactions, which include over 99,000 VOI
sales transactions on behalf of third-parties. As of December 31, 2016, Bluegreen was selling VOIs in the
Bluegreen Vacation Club at 23 sales offices at resorts located in the United States. VOIs in Bluegreen
resorts and those sold by Bluegreen on behalf of third parties typically entitle the buyer to use resort
accommodations through an annual or biennial allotment of “points” which represent the buyer’s
ownership and beneficial use rights in perpetuity in the Bluegreen Vacation Club (supported by an
underlying deeded VOI held in trust for the buyer). Bluegreen believes the Bluegreen Vacation Club
allows its VOI owners to customize their vacation experience in a more flexible manner than traditional
fixed-week vacation ownership programs. Members can use their points to stay in resorts for varying
lengths of time starting at a minimum of two nights. The number of points required for a stay at a resort
varies 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 among available
resorts according to their schedules, space needs, and available points. Subject to certain restrictions and
fees, members are typically allowed to carry over for one year any unused points and to "borrow" points
from the next year. Bluegreen Vacation Club members may use their points to stay in any of the 66
Bluegreen Vacation Club resorts. Bluegreen Vacation Club members may also use their points to take
advantage of other vacation options, including an exchange program offered by a third-party world-wide
vacation ownership exchange network of approximately 4,300 resorts and other vacation experiences such
as cruises and hotel stays. Additionally, through an alliance with Choice Hotels International, Inc. (
“Choice Hotels”), Bluegreen Vacation Club members may enroll in Choice Hotels’ free rewards program,
Choice Privileges®. For a fee, Bluegreen Vacation Club members can convert their Bluegreen Vacation
Club points into Choice Privileges® points, which can be used for free nights at Choice hotel locations
and other rewards such as gift cards. Additionally, for a fee, members of the Bluegreen Traveler Plus™
program may use their Bluegreen Vacation Club points for stays in Choice Hotels’ Ascend Hotel
Collection® properties, a network of historic and boutique hotels in the United States, Canada,
Scandinavia and Latin America, subject to the terms and conditions of the program. See “VOI Exchange
Networks, the Bluegreen Traveler Plus™ Program and Other Strategic Alliances” for additional
information regarding vacation options available to Bluegreen Vacation Club members in addition to
Bluegreen Vacation Club resorts.
The owners of VOIs collectively manage the resort property through nonprofit POAs that are governed by
a board of directors or trustees, consisting of representatives of the developer (so long as the developer
owns VOIs in the resort or as otherwise provided by law) and owners of VOIs at the resort. The board of
directors hires a management company to which it delegates many of the rights and responsibilities of the
POA, including grounds landscaping, security, housekeeping and operating supplies, garbage collection,
utilities, insurance procurement, laundry and repairs and
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maintenance. Each VOI owner is required to pay a share of the costs of maintaining all of the properties in
the Bluegreen Vacation Club system. These charges generally consist of an annual maintenance fee plus
applicable real estate taxes and special assessments, which are assessed on an as-needed basis. If a VOI
owner does not pay such charges, the owner’s use rights may be suspended and ultimately terminated,
subject to the lender’s first mortgage lien on the VOI, if any.
Capital-Light Business Strategy
In addition to Bluegreen’s traditional vacation ownership operations, Bluegreen has in recent years
pursued a business strategy, referred to herein as the “capital-light” business strategy, involving activities
that typically do not require the significant costs and capital investments generally associated with the
acquisition and development of VOIs under Bluegreen’s
traditional vacation ownership
business. Bluegreen believes its capital-light business strategy enables it to utilize its expertise and
existing infrastructure in resort management, sales and marketing, mortgage servicing, title services, and
construction management to generate recurring revenues from third parties. As of December 31, 2016,
Bluegreen’s capital-light business activities consisted of fee-based sales and marketing arrangements; just-
in-time inventory acquisition arrangements; secondary market arrangements; and other fee-based
services. Each of these categories is described below.
Fee-Based Sales and Marketing Arrangements
financing of
Bluegreen offers sales and marketing services to third-party developers for a fee. Under these
arrangements, Bluegreen sells third-party VOIs as Bluegreen Vacation Club interests through its
distribution network of sales offices, typically on a non-committed basis. Bluegreen seeks to
structure its fee for these services to cover its selling and marketing costs, plus an operating
profit. Because the completed VOI was built by a third-party, Bluegreen is not at risk for the
development
to no capital
requirements. However, these activities subject Bluegreen to the risks of third-party developers of
resorts under fee-based sales and marketing arrangements do not deliver the resorts’ VOIs as
planned, or do not fulfill their obligation to Bluegreen or to the POAs that maintain the resorts
they develop. Notes receivable originated in connection with Bluegreen’s sale of third party VOIs
under commission-based arrangements are held by the third party developer, and in certain cases
are serviced by Bluegreen for a fee. Bluegreen refers to sales made on behalf of third-party
developers as “FBS Sales”.
these projects and Bluegreen has
little
Just-In-Time Inventory Acquisition Arrangements
Bluegreen enters into agreements with third-party developers that allow Bluegreen to buy VOI
inventory from time to time in close proximity to the timing of when Bluegreen intends to sell such
VOIs. Bluegreen’s goal is to enter into such arrangements on a non-committed basis, although
Bluegreen may engage in committed arrangements under certain circumstances. Because the
completed VOI was owned by a third-party, Bluegreen is not at risk for the development financing
of these projects. However, Bluegreen is at risk if the third-party developers of resorts under fee-
based sales and marketing arrangements do not deliver the resorts’ VOIs as planned, or do not
fulfill their obligation to Bluegreen or to the POAs that maintain the resorts they develop. Unlike
FBS Sales, receivables originated in connection with sales of just-in-time inventory are held by
Bluegreen. Sales of inventory acquired through these arrangements are sometimes referred to as
“Just-In-Time Sales”.
Secondary Market Arrangements
Bluegreen acquires VOI inventory from POAs and other third parties on a non-committed basis, in
close proximity to the timing of when Bluegreen intends to sell such VOIs. Such VOIs are
typically obtained by the POAs through foreclosure in connection with maintenance fee defaults,
and are generally acquired by Bluegreen at a significant discount. Sales of inventory acquired
through these arrangements are sometimes referred to as “Secondary Market Sales”.
7
Other Fee-Based Services
Bluegreen also earns fees for providing management services to the Bluegreen Vacation Club and
to certain POAs. In connection with the management services provided to the Bluegreen Vacation
Club, Bluegreen manages the club reservation system and provides owner services as well as
billing and collection services. In connection with Bluegreen’s management of POAs, Bluegreen
provides day-to-day management services, including contracting for housekeeping services,
maintenance, and certain accounting and administrative services. As of December 31, 2016,
Bluegreen provided management services to 47 timeshare resort properties and hotels. Other fee-
based services also include the processing of sales of VOIs through Bluegreen’s wholly-owned
title company subsidiary, which earns fees in connection with the closing of the VOI
transactions. Bluegreen also generates fee-based income by providing construction, design and
management services, and mortgage servicing.
Bluegreen has over the last several years increased the activities associated with its capital-light business
strategy; however, Bluegreen’s efforts to continue to execute its capital-light business strategy may not be
successful, and any arrangements entered into may not prove to be profitable. Further, changes in
economic conditions may adversely impact the results of Bluegreen’s fee-based and other capital-light
business activities and may make the capital-light business strategy less attractive going forward.
Vacation Club Resort Locations
Bluegreen Vacation Club resorts are primarily “drive-to” resort destinations. Bluegreen believes that 85%
of its VOI owners live within a 4 hour drive of at least one of its resorts. Units at most of the Bluegreen
Vacation Club resorts typically include a full kitchen, two televisions, and laundry facilities. Many resorts
offer guests a clubhouse (with an indoor or outdoor pool, a game room, exercise facilities and a lounge)
and hotel-type staff. Bluegreen manages certain of the resorts either directly or through a subcontract.
The following table lists the Bluegreen Vacation Club resorts:
Bluegreen Vacation Club
Resort
Paradise Isle Resort
Shoreline Towers Resort
Cibola Vista Resort and Spa (1)
(4)
La Cabana Beach Resort &
Casino (3)
Blue Water Resort at Cable
Beach (1)(4)
The Club at Big Bear Village
(1)(4)
The Innsbruck Aspen (1) (4)
Via Roma Beach Resort (1)
Daytona SeaBreeze™ (1)
Dolphin Beach Club (1)
Fantasy Island Resort II (1)
Mariner’s Boathouse and Beach
Resort
Tropical Sands Resort
Windward Passage Resort
Gulfstream Manor (1)
Resort Sixty-Six (1)
The Hammocks at Marathon ™
(1)
The Fountains (1)
Lake Eve Resort (1) (4)
Orlando’s Sunshine Resort™ I
& II (1)
Casa del Mar Beach Resort (1)
Outrigger Beach Club
Landmark Holiday Beach
Resort
Ocean Towers Beach Club
Panama City Resort & Club
Surfrider Beach Club
Grande Villas at World Golf
Village™ &
The Resort at World Golf
Village (1)
Bluegreen at Tradewinds (1) (4)
Location
Gulf Shores, Alabama
Gulf Shores, Alabama
Peoria, Arizona
Oranjestad, Aruba
Nassau, Bahamas
Big Bear Lake, California
Aspen, Colorado
Bradenton Beach, Florida
Daytona Beach Shores,
Florida
Daytona Beach Shores,
Florida
Daytona Beach Shores,
Florida
Fort Myers Beach, Florida
Fort Myers Beach, Florida
Fort Myers Beach, Florida
Gulfstream, Florida
Holmes Beach, Florida
Marathon, Florida
Orlando, Florida
Orlando, Florida
Orlando, Florida
Ormond Beach, Florida
Ormond Beach, Florida
Panama City Beach, Florida
Panama City Beach, Florida
Panama City Beach, Florida
Sanibel Island, Florida
St. Augustine, Florida
St. Pete Beach, Florida
8
Solara Surfside™ (1)
Petit Crest Villas and Golf Club Villas at Big
Canoe
Studio Homes at Ellis Square (1)(4)
Pono Kai Resort
The Hotel Blake (1) (4)
Bluegreen Club La Pension™(1)
The Breakers Resort (1) (4)
The Soundings Seaside Resort (1) (4)
Mountain Run at Boyne™ (1)
The Falls Village™ (1)
Paradise Point Resort (1)(2)
Bluegreen Wilderness Club at Big Cedar™ (1)
(2)
The Cliffs™ at Long Creek (1)(2)
Lake Condominiums at Big Sky
Bluegreen Club 36™ (1)
South Mountain Resort (1)(4)
Bluegreen at Atlantic Palace
The Manhattan Club (4)
Club Lodges at Trillium (1) (4)
Foxrun Townhouses
Sandcastle Village II
Waterwood Townhouses
The Suites at Hershey (1)
The Lodge Alley Inn™ (1)
Players Club
Carolina Grande™ (1)
Harbour Lights™ (1)
Horizon at 77th (1) (4)
SeaGlass Tower™ (1)
Shore Crest Vacation Villas™ I & II (1)
MountainLoft™ I & II (1)
Laurel Crest™ (1)
Shenandoah™ Crossing (1)
Bluegreen Wilderness Traveler at
Shenandoah™ (1)
BG Patrick Henry Square™ (1) (4)
Parkside Williamsburg Resort (1) (4)
Bluegreen Odyssey Dells™ (1)
Christmas Mountain Village™ (1)
Surfside, Florida
Marble Hill, Georgia
Savannah, Georgia
Kapaa (Kauai), Hawaii
Chicago, Illinois
New Orleans, Louisiana
Dennis Port, Massachusetts
Dennis Port, Massachusetts
Boyne Falls, Michigan
Branson, Missouri
Hollister, Missouri
Ridgedale, Missouri
Ridgedale, Missouri
Big Sky, Montana
Las Vegas, Nevada
Lincoln, New Hampshire
Atlantic City, New Jersey
New York, New York
Cashiers, North Carolina
Lake Lure, North Carolina
New Bern, North Carolina
New Bern, North Carolina
Hershey, Pennsylvania
Charleston, South Carolina
Hilton Head Island, South Carolina
Myrtle Beach, South Carolina
Myrtle Beach, South Carolina
Myrtle Beach, South Carolina
Myrtle Beach, South Carolina
North Myrtle Beach, South Carolina
Gatlinburg, Tennessee
Pigeon Forge, Tennessee
Gordonsville, Virginia
Gordonsville, Virginia
Williamsburg, Virginia
Williamsburg, Virginia
Wisconsin Dells, Wisconsin
Wisconsin Dells, Wisconsin
tween
(1)
(2)
Bluegreen and
(3)
(4)
This resort is managed by Bluegreen Resorts Management, Inc., a wholly-owned subsidiary of Bluegreen.
This resort is developed, marketed and sold by Bluegreen/Big Cedar Vacations LLC (“Bluegreen/Big Cedar
Vacations”), a joint venture between Bluegreen and Big Cedar, LLC. Bluegreen owns a 51% interest in this
joint venture, and the joint venture’s results of operations, cash flows and financial position are included in
Bluegreen’s consolidated financial statements.
This resort is managed by Casa Grande Cooperative Association I, which has contracted with Bluegreen
Resorts Management, Inc. to provide management consulting services to the resort.
This resort, or portion thereof, was developed by third-parties and Bluegreen has sold VOIs on their behalf
or has arrangements to acquire such VOIs as part of Bluegreen’s capital-light business strategy.
Future Resorts and Acquisition of Additional Inventory
Bluegreen believes that it currently has adequate timeshare inventory on hand, or available for sale
through arrangements with third parties in connection with its capital-light business strategy, to satisfy its
projected sales of VOIs for 2017 and a number of years thereafter. However, Bluegreen may decide to
acquire or develop inventory in the future. It is also expected that development activities will continue at
resorts developed by Bluegreen/Big Cedar Vacations and other Bluegreen sites on a limited basis.
9
VOI Exchange Networks, the Bluegreen Traveler Plus™ Program, and Other Strategic Alliances
Bluegreen believes that its VOIs are made more attractive by its alliance with Choice Hotels, its
participation in third-party exchange networks, its Traveler Plus™ program and other strategic affiliations
with third-party resort developers. In 2013, Bluegreen entered into a five-year strategic alliance
agreement with Choice Hotels. Choice Hotels currently franchises approximately 6,400 hotels in more
than 40 countries and territories and its brands include the Ascend Hotel Collection®, Comfort Inn®,
Comfort Suites®, Quality®, Sleep Inn®, Clarion®, Cambria® hotels and suites, MainStay Suites®, Suburban
Extended Stay Hotel®, Econo Lodge ® and Rodeway Inn®. Bluegreen’s relationship with Choice Hotels’
impacts several areas of Bluegreen’s business and, while there is no assurance as to the success of the
relationship, it includes a sales and marketing alliance component that Bluegreen believes enables it to
leverage Choice Hotels’ brands, customer relationships and marketing channels to market Bluegreen’s
VOI offerings. Additionally, subject to the terms and conditions of the agreements, including specified
payments to Choice Hotels, Bluegreen Vacation Club resorts may be branded as part of the Ascend Hotel
Collection®. As of December 31, 2016, a total of 29 Bluegreen Vacation Club resorts were branded as
part of the Ascend Hotel Collection®. Also, Bluegreen Vacation Club members may enroll as members of
the Choice Hotels loyalty program, Choice Privileges®, and for a fee can convert their Bluegreen Vacation
Club points into Choice Privileges® points which can be used for stays at participating Choice
Hotels. Additionally, for a fee, members of the Bluegreen Traveler Plus ™ program may exchange their
vacation points for stays at Choice Hotels’ Ascend Hotel Collection ® properties subject to the terms and
conditions of the program.
Bluegreen Vacation Club members may also participate in an unaffiliated external exchange network,
Resort Condominiums International, LLC (“RCI”). The RCI exchange network allows an owner to
exchange stays in their VOI for occupancy at nearly 4,300 participating resorts located throughout the
world in more than 100 countries, based upon availability and the payment of a variable exchange fee.
The annual membership fees of RCI are included in the Bluegreen Vacation Club dues. In 2016,
approximately 9% of Bluegreen Vacation Club members utilized the RCI exchange network for an
exchange of two or more nights. Most of the Bluegreen Vacation Club resorts are rated in one of the two
highest categories by RCI (Gold Crown and Silver Crown).
Bluegreen Vacation Club members, for an additional annual fee, may also participate in the Bluegreen
Traveler Plus™ program, which allows them to use their points for a variety of hotel stays, RV site stays
within the “Coast to Coast” network, or various cruise vacations. Also, for a nominal fee, Bluegreen
Vacation Club members who purchased or upgraded their VOI since July 1, 2007 and participate in the
Bluegreen Traveler Plus™ program have the ability to use their vacation points to reserve
accommodations in 43 additional resort locations through Bluegreen’s alliances with other resort
development companies (“Direct Exchange”).
No assurance can be given that Bluegreen’s resorts will continue to participate in the RCI or Direct
Exchange networks, or that Bluegreen’s customers will continue to be satisfied with these networks or the
Bluegreen Traveler Plus™ program. In addition, Bluegreen’s relationship with Choice Hotels may not be
received favorably by Choice’s or Bluegreen’s customers and may not have a positive impact on
Bluegreen’s operating results or financial condition. If Bluegreen does not continue to participate in
qualified exchange networks or maintain other strategic alliances, including if Bluegreen’s resorts are not
included in such networks or alliances, or if such networks or other strategic alliances do not operate
effectively, Bluegreen’s financial condition, results and business could be materially adversely affected.
Marketing and Sale of Inventory
Bluegreen uses a variety of methods to attract prospective purchasers of VOIs, including selling discount
vacation packages either face-to-face or through telemarketing efforts to consumers Bluegreen meets in
connection with various marketing alliances (as discussed in greater detail below) and other arrangements,
and referrals of prospective purchasers from existing VOI owners. Bluegreen sometimes provides hotel
accommodations or accommodations in one of Bluegreen’s resorts to prospective purchasers at reduced
rates in exchange for their touring one of Bluegreen’s resorts.
Additionally, Bluegreen offers a sampler program which allows purchasers of this product to enjoy
substantially the same accommodations offered to Bluegreen Vacation Club members during a trial
period, which is generally one or two years. Bluegreen believes that it benefits from the sampler program
as it gives Bluegreen an opportunity to market its VOIs to customers when they use their trial
memberships at a Bluegreen resort and to recapture a portion of the costs incurred in connection with the
initial marketing to prospective customers.
In addition to attracting new customers, Bluegreen seeks to sell VOIs to its existing VOI owners (“owner
sales”). Owner sales generally have lower marketing costs and typically result in relatively higher
operating margins than sales generated through other marketing channels. During 2016, owner sales
accounted for 46% of Bluegreen’s system-
10
wide sales. However, Bluegreen has recently increased, and expects to continue to increase, its marketing
efforts to new customers as compared to existing owners as it believes that its ability to continue to sell
VOIs to its current existing owner base could diminish over time without continued sales to new
customers. Accordingly, Bluegreen expects that its marketing expenses may increase in the future.
Bluegreen uses both “permission” marketing and branding programs. “Permission” marketing methods
involve obtaining the prospective purchasers’ permission, directly or indirectly, to contact them in the
future regarding an offer to purchase a product or service. Branding involves forming alliances with
third-party entities that possess what Bluegreen believes to be a nationally or regionally known brand
name, a good reputation and a customer base with similar demographic characteristics to Bluegreen’s
target market.
One of Bluegreen’s wholly-owned subsidiaries has an arrangement with Big Cedar, LLC (“Big Cedar”),
an affiliate of Bass Pro, Inc. (“Bass Pro”), pursuant to which, Bluegreen’s subsidiary owns 51% of
Bluegreen/Big Cedar Vacations and Big Cedar owns the remaining 49%. Bluegreen/Big Cedar Vacations
develops, markets, and sells VOIs at the Bluegreen Wilderness Club at Big Cedar, a wilderness-themed
resort adjacent to the Big Cedar Lodge, a luxury hotel resort owned by Big Cedar, on the shores of Table
Rock Lake in Ridgedale, Missouri. Bluegreen/Big Cedar Vacations also develops, markets, and sells
timeshare interests in The Cliffs at Long Creek and Paradise Point Resort. Bluegreen/Big Cedar
Vacations pays Big Cedar a fee upon sales of certain timeshare interests for promotional, marketing and
advertising services.
Bluegreen also has an exclusive marketing agreement with Bass Pro, a privately-held retailer of fishing,
marine, hunting, camping and sports gear. Pursuant to the agreement, Bluegreen has the right to market
VOIs at each of Bass Pro’s retail locations. As of December 31, 2016, Bluegreen marketed VOIs in 68 of
Bass Pro’s stores. These marketing efforts include offers for the sale of discounted vacation packages
which require the purchaser to attend a timeshare sales presentation, where permitted by law. Under the
agreement, Bluegreen also has the right to market VOIs in Bass Pro’s catalogs and on its website, and
Bluegreen has access to Bass Pro’s customer lists. In exchange, Bluegreen compensates Bass Pro based
on the overall success of these marketing activities. The amount of compensation is dependent on the
level of additional marketing efforts required by Bluegreen to convert the prospect into a sale and a
defined time frame for such marketing efforts. No compensation is paid to Bass Pro under the marketing
agreement on sales made by Bluegreen/Big Cedar Vacations of VOIs owned by Bluegreen/Big Cedar
Vacations. In accordance with the agreement, Bluegreen makes an annual prepayment to Big Cedar by
February of each year. The prepayment is an advance payment for anticipated commissions estimated to
be generated during the upcoming year, as determined by Bluegreen and Big Cedar, not to exceed $5.0
million. No additional commissions are paid to Big Cedar during any year until the annual prepayment
for that year has been fully earned. During 2016, sales of VOIs to prospects and leads generated by the
marketing arrangement with Bass Pro accounted for approximately 16% of Bluegreen’s VOI sales
volume. Bluegreen’s marketing agreement with Bass Pro is for a term expiring in January 2025, subject
to early termination in whole or in part under certain circumstances. There is no assurance that Bluegreen
will be able to maintain, extend or renew its marketing relationship with Bass Pro, and Bluegreen’s sales
would be materially and adversely impacted if Bluegreen’s relationship with Bass Pro ended.
As previously described, Bluegreen entered into a five-year strategic relationship with Choice Hotels in
2013. This relationship impacts several areas of Bluegreen’s business and, while there is no assurance as
to the success of the relationship, it includes a sales and marketing alliance component which Bluegreen
believes enables Bluegreen to leverage Choice Hotels’ brands, customer relationships and marketing
channels to market Bluegreen’s VOI offerings. Choice Hotels’ obligations under the agreements are
subject to Bluegreen making specified payments to Choice Hotels and certain other terms and conditions.
Typically, Bluegreen’s sales offices are located adjacent to certain of its resorts and are staffed with sales
representatives and sales managers, all of whom are Bluegreen employees. Bluegreen sponsors ongoing
training for its personnel.
It is Bluegreen’s policy to require its sales staff to provide each VOI customer with a written disclosure
statement prior to the time the customer signs a purchase agreement. The purpose of this disclosure
statement is to provide relevant information regarding VOI ownership at the resort and membership in the
Bluegreen Vacation Club. Pursuant to Bluegreen’s policies, the statement must be signed by every
purchaser. Purchasers are entitled to cancel purchase agreements within applicable legal rescission
periods. Substantially all VOI purchasers visit one of Bluegreen’s sales offices prior to or at the time of
purchase.
Customer Financing
Bluegreen generally offers financing of up to 90% of the purchase price of its VOIs to its VOI customers
who meet certain FICO® score-based underwriting standards. The typical financing extended by
Bluegreen on a VOI during
11
2016 provided for a term of 10 years and a fixed interest rate. However, Bluegreen also encourages
purchasers to finance their purchase with a loan having a shorter term by offering a lower interest rate on
those loans. In connection with Bluegreen VOI sales, Bluegreen delivers the property deed to the trustee
of the Bluegreen Vacation Club on behalf of the purchaser and obtains a mortgage on the purchaser’s
VOI.
Purchasers of VOIs are generally required to make a down payment of at least 10% of the VOI sales
price. As part of Bluegreen’s continued efforts to improve its operating cash flows, Bluegreen incentivizes
its sales associates to encourage cash sales, and Bluegreen promotes a point-of-sale credit card program
sponsored by a third party financial institution. As a result of such efforts, Bluegreen has increased both
the percentage of its sales that are 100% cash and its average down payment on financed sales. Including
down payments received on financed sales, approximately 41% of Bluegreen VOI sales during 2016 were
paid in cash within approximately 30 days from the contract date.
See “Products and Services — Vacation Ownership” above for more information about the demographic
profile of Bluegreen’s typical customer. See “Sales of Receivables/Pledging of Receivables” below for
information regarding Bluegreen’s receivable financing activities.
Loan Underwriting
Prior to December 15, 2008, Bluegreen’s VOI financing was not subject to any significant loan
underwriting criteria and no FICO® score was obtained prior to extending credit. Instead, customer
financing on sales of VOIs typically only required the following: (i) receipt of a minimum down payment
of 10% of the purchase price; (ii) a note and mortgage (or deed of trust); and (iii) other closing documents
by the purchaser and Bluegreen.
Effective December 15, 2008, Bluegreen implemented a FICO® score-based credit underwriting
program. Following implementation, subject to certain limited exceptions, Bluegreen no longer provided
financing to customers with FICO® scores below 500, and new customers with FICO® scores between 500
and 599 were required to make a minimum cash down payment of 20%. Effective January 1, 2010,
subject to certain limited exceptions, Bluegreen further increased its FICO®
score-based credit
underwriting standards such that Bluegreen no longer originates financing to customers with FICO® scores
below 575 subject to certain limited exceptions. However, Bluegreen may, from time to time, offer certain
introductory products to customers with different FICO® scores, finance and down payment terms that it
intends to hold in its portfolio. Additionally, Bluegreen may provide financing to customers with no
FICO® scores if the customer makes a minimum required down payment. For loans with an outstanding
balance as of December 31, 2016 that were originated from December 15, 2008 through December 31,
2009, the borrowers’ weighted average FICO ® score at the point of sale was 700. For loans with an
outstanding balance as of December 31, 2016 that were originated from January 1, 2010 through
December 31, 2016, the borrowers’ weighted average FICO ® score at the point of sale was 706. Further
information is set forth in the following table:
FICO® Score (1)
Below 575
Between 575 and 619
Between 620 and 700
Above 700
Percentage of originated and services
VOI notes receivable
Notes receivable originated
December 15, 2008 -
December 15, 2009
Notes receivable originated
January 1, 2010 -
December 15, 2016
5.3%
7.7%
35.9%
51.1%
0.4%
7.4%
39.6%
52.6%
(1) Excludes loans originated after December 15, 2008 for which obligor did not have a FICO® score.
Bluegreen encourages purchasers to make higher down payments and accept shorter loan period terms by
offering lower interest rates. Bluegreen may also from time to time offer lower rates for purchasers with
specific FICO® scores or purchasers of higher volume point packages. In addition, where permitted under
applicable laws, rules and regulations, purchasers may receive a 1% discount in the interest rate by
participating in Bluegreen’s pre-authorized payment plan. As of December 31, 2016, borrowers with
respect to approximately 95% of Bluegreen’s serviced VOI notes receivable participated in Bluegreen’s
pre-authorized payment plan.
12
Effective November 1, 2008, Bluegreen increased the interest rates charged on new loans. The weighted-
average interest rate on Bluegreen’s VOI notes receivable was as follows:
As of December 31,
2016
2015
Notes receivable
originated before
November 1, 2008
Notes receivable
originated on or after
November 1, 2008
Notes receivable
originated before
November 1, 2008
Notes receivable
originated on or after
November 1, 2008
14.98%
15.77%
14.98%
16.13%
Collection Policies
Financed sales of VOIs originated by Bluegreen typically utilize a note and mortgage. Collection efforts
related to the timeshare loans are managed by Bluegreen and are handled by a staff of collectors, assisted
by a mortgage collection computer system. Bluegreen’s collectors are incentivized through a
performance-based compensation program. Technological capabilities include, but are not limited to,
automated lock box and clearing house processing.
Bluegreen generally makes collection efforts to customers by mail and by telephone. Telephone contact
generally commences when an account is as few as 10 days past due. At 30 days past due, a collection
letter is sent to U.S. residents advising the customer that if the loan is not brought current, the delinquency
will be reported to the credit reporting agencies. At 60 days delinquent, Bluegreen sends a letter to the
customer by mail advising that they may be prohibited from making any future reservations for lodging at
a resort. If the delinquency continues, at 90 days past due, Bluegreen stops the accrual of, and reverses
previously accrued but unpaid, interest on the note receivable and mails a “Notice of Intent to Cancel
Membership,” which informs the customer that unless the delinquency is cured within 30 days, Bluegreen
will terminate the customer’s VOI ownership. If the customer fails to respond to such correspondence
within the given timeframe, the loan will be defaulted and the customer’s VOI terminated. In that case,
Bluegreen sends a final letter, typically at approximately 120 days delinquent, to notify the customer of
the loan default and the termination of the customer’s beneficial interest in the VOI property. Thereafter,
Bluegreen seeks to resell the VOI to a new purchaser. Historically, Bluegreen has typically not sought to
collect a deficiency on defaulted notes.
Recently, Bluegreen’s collection efforts have been increasingly impacted by the receipt of cease and
desist letters from attorneys purporting to represent certain VOI owners and have encouraged such owners
to become delinquent and ultimately default on obligations. Following receipt, contact of VOI owners is
ceased, unless otherwise allowed by law.
Allowance for Credit Losses
Under timeshare accounting rules, Bluegreen estimates uncollectibles based on historical uncollectibles
for similar VOI notes receivable and does not consider the value of the underlying collateral. Bluegreen
holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility based on pools of
receivables. In estimating future credit losses, Bluegreen does not use a single primary indicator of credit
quality but instead evaluates its VOI notes receivable based upon a combination of factors, including a
static pool analysis, the aging of the respective receivables, current default trends and prepayment rates by
origination year, as well as the FICO® scores of the borrowers.
Substantially all defaulted VOI notes receivable result in the holder of the note receivable acquiring the
related VOI that secured the note receivable, typically soon after default and at little or no cost. The
reacquired VOI is then available for resale in the normal course of business.
See “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations”
for additional information about the performance of Bluegreen’s notes receivable portfolio.
Sales of Receivables/Pledging of Receivables
Bluegreen’s ability to sell or borrow against its VOI notes receivable has historically been a critical factor
in Bluegreen meeting its liquidity requirements. The vacation ownership business generally involves
making sales of a vacation product where a buyer is only required to pay a minimum of 10% to 20% of the
purchase price up front, while at the same time selling and marketing expenses are primarily cash
expenses exceeding the down payment amount. For the year ended December 31, 2016, Bluegreen’s
sales and marketing expenses were approximately 52% of its system-wide sales. Accordingly, having
facilities for the sale or hypothecation of these VOI notes receivables,
13
along with periodic term securitization transactions, has been a critical factor for Bluegreen in meeting its
short- and long-term cash needs.
Bluegreen’s VOI receivables purchase facilities and term securitizations typically utilize an owner’s trust
structure whereby Bluegreen sells receivables to a wholly-owned, special purpose finance entity which
then sells the receivables to an owner’s trust, typically without recourse to Bluegreen or its subsidiaries,
except for breaches of certain representations and warranties at the time of sale. While in limited
instances Bluegreen has entered into guarantees in connection with its vacation ownership receivables
purchase facilities or term securitizations, historically, Bluegreen has typically not entered into such
guarantees. These facilities usually have detailed requirements with respect to the eligibility of
receivables for purchase, and fundings under these facilities are typically subject to certain conditions
precedent. Under such purchase facilities, a variable purchase price of a portion of the principal balance
of the receivables sold, subject to certain terms and conditions, is paid at closing in cash. The balance of
the purchase price is deferred until such time as the facility purchaser has received a specified return and
all servicing, custodial, agent and similar fees and expenses have been paid and, if applicable, a specified
overcollateralization ratio is achieved and a cash reserve account is fully funded. Bluegreen’s VOI
receivables purchase facilities typically include various conditions to purchase, covenants, triggering
events and other provisions Bluegreen believes to be customary for these types of transactions. Bluegreen
has historically acted as servicer of, and in such capacity received a fee for servicing, the VOI receivables
Bluegreen has sold under these purchase facilities. See “Item 7 – Management’s Discussion and Analysis
of Financial Condition and Results of Operations” for additional information about Bluegreen’s VOI
receivables purchase facilities and term securitizations.
Receivables Servicing
Receivables servicing includes collecting payments from borrowers and remitting the funds to the owners,
lenders or investors in such receivables, accounting for principal and interest on such receivables, making
advances when required, contacting delinquent borrowers, terminating a membership in the Bluegreen
Vacation Club in the event that defaults are not timely remedied, and performing other administrative
duties.
Bluegreen receives mortgage servicing fees for servicing its securitized notes receivable which are
included as a component of interest income. Additionally, Bluegreen earns servicing fee income from
third-party developers in connection with Bluegreen’s servicing of their loan portfolios under certain of
Bluegreen’s fee-based services arrangements.
Market and Industry Data
Market and industry data used throughout this report were obtained from Bluegreen’s internal surveys,
industry publications, unpublished industry data and estimates, discussions with industry sources and
other currently available information. The sources for this data include, without limitation, the American
Resort Development Association. Industry publications generally state that the information contained
therein has been obtained from sources believed to be reliable, but there can be no assurance as to the
accuracy and completeness of such information. Bluegreen has not independently verified such market
data. Similarly, Bluegreen’s internal surveys, while believed by Bluegreen to be reliable, have not been
verified by any independent sources. Accordingly, such data may not prove to be accurate.
BBX Capital Real Estate
Overview
BBX Capital Real Estate’s activities consist of the monetization and management of assets in its portfolio
and investments in real estate developments and unconsolidated real estate joint ventures. Legacy assets
(assets retained following the BankAtlantic sale) include loans, foreclosed real estate and a portfolio of
charged-off loans. BBX Capital Real Estate conducts land entitlement activities on certain properties
acquired through foreclosure and land development projects which include selling or leasing the improved
properties to third parties.
14
Strategies
BBX Capital Real Estate’s growth strategy is focused on:
·
·
·
Identifying and acquiring or developing primarily for-sale housing communities, rental
apartment communities and commercial properties;
Identifying and making investments in opportunistic real estate joint ventures with third party
developers; and
Continuing to monetize the remaining legacy portfolio through loan repayment, collections,
sales, development, or joint venture projects.
Real Estate Developments
Beacon Lake Master Planned Development
The Company obtained entitlements to develop raw land in St. Johns County, Florida into 1,476 finished
lots which will comprise the Beacon Lake Community. The Company acquired this undeveloped property
through foreclosure and it is anticipated that the finished lots will be sold to home builders. The
centerpiece of the community is the 43-acre Beacon Lake, which offers opportunities for outdoor
recreation. The planned amenities include a Junior Olympic lap pool, Splash Park, tennis courts, fitness
center and a community dog park. Single-family homes and townhomes are planned to range from 1,800
square feet to 4,000 square feet and priced from the high $200,000’s to the $500,000’s. Construction
began in January 2017. The Company has entered into a purchase agreement with a home builder for
approximately 152 finished lots with the first finished lot closing anticipated to occur during the first
quarter of 2018.
PGA Station
The Company acquired land through foreclosure located in PGA Station, in the city of Palm Beach
Gardens, Florida in 2014. The property held by the PGA Design Center Holdings joint venture described
below is adjacent to PGA Station. During the year ended December 31, 2016, the Company obtained
governmental approvals to construct a 125 room limited-service suite hotel, a medical office building and
three 60,000 square foot office buildings on vacant tracts of land in PGA Station. The Company is the
master developer of PGA station and intends to sell the developed land to third party developers. The
Company executed a sales contract for the hotel site with closing anticipated during the second quarter of
2017, subject to satisfactory completion of the prospective buyer’s due diligence and other closing
conditions.
Gardens on Millenia
Gardens on Millenia consisted of 37 acres of land acquired through foreclosure located near the
Mall at Millenia in a commercial center of Orlando, Florida. During 2015, the Company obtained
governmental approvals for a 300,000 square foot retail shopping center designed for multiple
big-box and in-line tenants as well as two outparcel retail pads and nine rental apartment
buildings totaling approximately 292 units. The Company contributed the portion of the land
entitled for rental apartments to the Addison on Millenia Investment, LLC joint venture and
contributed the portion of the land entitled for the retail center to the BBX/S Millenia Blvd
Investments, LLC joint venture as initial capital contributions to the joint ventures. The Addison on
Millenia Investment, LLC joint venture and the BBX/S Millenia Blvd Investments, LLC joint venture
are described below in “Investments in unconsolidated real estate joint ventures”.
15
Investments in unconsolidated real estate joint ventures
The Company had investments in the following real estate joint ventures as of December 31, 2016 and
2015 (in thousands):
December 31,
2016
2015
Altis at Kendall Square, LLC
Altis at Lakeline - Austin Investors LLC
New Urban/BBX Development, LLC
Sunrise and Bayview Partners, LLC
Hialeah Communities, LLC
PGA Design Center Holdings, LLC
CCB Miramar, LLC
Centra Falls, LLC
The Addison on Millenia Investment, LLC
BBX/S Millenia Blvd Investments, LLC
Altis at Bonterra - Hialeah, LLC
Altis at Shingle Creek Manager, LLC
Centra Falls II, LLC
Investments in unconsolidated real estate joint ventures
$
$
154
5,165
907
1,574
2,641
1,904
875
595
5,935
5,095
17,626
332
571
43,374
The above investments in unconsolidated real estate joint ventures are described below.
Altis at Kendall Square, LLC (“Kendall Commons”)
764
5,210
864
1,577
4,569
1,911
875
727
5,778
4,905
15,782
-
-
42,962
In March 2013, the Company invested $1.3 million as one of a number of investors in a 321 unit multi-
family development – Altis at Kendall Square – developed by Altman Development (“Altman”). The
multifamily rental community is comprised of 12 three-story apartment buildings, one mixed-use building
and one clubhouse. During the year ended December 31, 2016, the joint venture sold the development and
the Company recognized $3.1 million of equity earnings and received $3.7 million of distributions from
the joint venture.
Altis at Lakeline – Austin Investor, LLC
In December 2014, the Company invested $5.0 million as one of a number of investors in a planned multi-
family development – Altis at Lakeline – being developed by Altman. Located on an approximate 23 acre
parcel in the northwest area of Austin, Texas, Altis at Lakeline is comprised of 19, two and three story,
residential apartment buildings with 354 apartment units, 38 enclosed garages, and a private resort style
5,500 square foot clubhouse. After all investors receive a specified return on capital and the return of
their contributed capital, any distributions thereafter are shared based on earnings with the managing
member receiving an increasing percentage of distributions. Construction commenced in the first quarter
of 2015 and 312 units were available for lease with an occupancy rate of 49% as of December 31, 2016.
New Urban/BBX Development, LLC (“Village at Victoria Park”)
Village at Victoria Park consists of a residential development on approximately 2 acres of previously
vacant land previously owned by the Company that is located near downtown Fort Lauderdale, Florida. In
December 2013, The Company invested in a joint venture with New Urban Communities to develop the
project as 30 single-family homes. The project is a 50% - 50% joint venture with New Urban
Communities serving as the developer and manager of the joint venture. The project commenced
construction and sales during the third quarter of 2014. As of December 31, 2016, the joint venture closed
on 10 single-family homes and has sales contracts on four additional homes.
Bayview (Sunrise and Bayview Partners, LLC)
In June 2014, the Company invested in a joint venture with an affiliate of Procacci Development
Corporation (“PDC”) with the Company and PDC each contributing $1.8 million to the Sunrise and
Bayview Partners joint venture. The joint venture acquired for $8.0 million approximately three acres of
real estate located at Bayview Drive and Sunrise Boulevard in Fort Lauderdale, Florida. The Company
and PDC each have a 50% interest in the joint venture. There is currently an approximate 84,000 square
foot office building along with a convenience store and gas station on the property. The office building
has low occupancy with short term leases. The convenience store's lease ends in
16
March 2022. The Company anticipates that the property will be redeveloped into a mixed-use project at
some point in the future.
Hialeah Communities, LLC (Bonterra – CC Homes)
In July 2014, the Company invested in a joint venture with CC Bonterra to develop approximately 394
homes in a portion of Bonterra community in Hialeah, Florida. The Company transferred approximately
50 acres of land acquired through foreclosure at an agreed upon value of approximately $15.6 million
subject to an $8.3 million mortgage which was assumed by the joint venture. In exchange, the Company
received $2.2 million of cash and a joint venture interest with an agreed upon assigned initial capital
contribution value of $4.9 million. The Company receives 57% of the joint venture distributions until the
Company receives its aggregate capital contributions plus a specified return on capital. Any distributions
thereafter are
increased percentage of
distributions. During the year ended December 31, 2016, the joint venture closed on 212 single-family
homes and the Company received $11.5 million of cash distributions and recognized $9.5 million of
equity earnings from the joint venture. As of December 31, 2016, the joint venture has executed sales
contracts on an additional 109 single-family homes.
the managing member
receiving an
shared with
PGA Design Center Holdings, LLC
In December 2013, the Company purchased for $6.1 million a commercial property in Palm Beach
Gardens, Florida, with three existing buildings consisting of 145,000 square feet of mainly furniture retail
space. The property, which is located in a larger mixed use property now known as PGA Station was
substantially vacant at the date of acquisition. Subsequent to the acquisition of the property, the
Company entered into a joint venture with Stiles Development which acquired a 60% interest in the joint
venture for $2.9 million in cash. The Company contributed the property (excluding certain residential
development entitlements having an estimated value of $1.2 million) to the joint venture in exchange for
$2.9 million in cash and the remaining 40% interest in the joint venture. The Company transferred the
retained residential development entitlements to adjacent parcels owned by it in PGA Station (see above
for a discussion of the other parcels owned by the Company in PGA Station). During the year ended
December 31, 2016, governmental approvals were obtained to change the use of a portion of the property
from retail to office. The joint venture intends to sell or lease the buildings.
CCB Miramar, LLC
In May 2015, the Company invested in a joint venture with two separate unaffiliated developers relating to
the acquisition of real estate in Miramar, Florida for the construction of single-family homes. The
Company contributed $875,000 for an approximate 35% interest in the joint venture and one of the
developers contributed to the joint venture a contract to purchase the real estate. The purchase of the real
estate is subject to certain closing conditions, including receipt of all necessary entitlements and
completion of due diligence by the joint venture.
Centra Falls, LLC
In August 2015, the Company invested as one of a number of investors in a joint venture with an
unaffiliated developer for the development and sale of 89 townhomes in Pembroke Pines, Florida. The
Company contributed $750,000 and is entitled to receive 7.143% of the joint venture distributions until it
receives the return of its aggregate capital contributions plus a specified return on its investment. Any
distributions thereafter are shared with the managing member receiving an increased percentage of
distributions. The project commenced construction and sales during the third quarter of 2015. As of
December 31, 2016, the joint venture closed on 21 townhomes and has executed contracts on an additional
54 townhomes.
The Addison on Millenia Investment, LLC
In December 2015, the Company invested as one of a number of investors in a joint venture to develop
11.8 acres in the Gardens on Millenia site located in Orlando, Florida into nine retail apartment buildings
containing approximately 292 units. The joint venture currently intends to hold the property and operate
the apartment project as an income producing business. The Company transferred property with an
agreed upon value of $5.8 million and $0.3 million of cash for its initial joint venture contribution. The
Company is entitled to receive 48% of the joint venture distributions until it receives its aggregate capital
contributions plus a specified return in its investment. Any distributions thereafter are shared based on
earnings with the managing member receiving an increasing percentage of distributions. Construction
commenced in the first quarter of 2016 and leasing of apartment units is anticipated to begin during the
first quarter of 2017.
17
BBX/S Millenia Blvd Investments, LLC
In October 2015, the Company and a developer invested in a joint venture to develop a retail center on the
Gardens of Millenia site in Orlando, Florida. The joint venture intends to construct the center, lease the
premises and sell the property. The Company transferred property with an agreed upon value of $7.0
million to the joint venture and received $0.7 million in cash and a 90% interest in the joint venture. The
Company is entitled to receive 90% of joint venture distributions until it receives its aggregate capital
contributions plus a specified return on its investment. Any distributions thereafter are shared with the
managing member receiving an increased percentage of the distributions. The joint venture completed the
construction of the retail center, two anchor tenants are open for business and the joint venture anticipates
selling the retail center in 2017.
Altis at Bonterra – Hialeah, LLC
In December 2015, the Company invested in a joint venture with Altman to develop approximately 314
apartment homes in a portion of Bonterra communities in Hialeah, Florida. The Company transferred
approximately 14 acres of land at an agreed upon value of approximately $9.4 million and cash of $7.5
million to the joint venture. The Company is entitled to receive 95% of the joint venture distributions
until it receives its aggregate capital contributions plus a specified return on its investment. Any
distributions thereafter are shared based on earnings with the managing member receiving an increased
percentage of the distributions. Construction commenced during the first quarter of 2016 and leasing of
apartment units is anticipated to begin during the first quarter of 2017.
Altis at Shingle Creek Manager, LLC
During April 2016, the Company invested in a joint venture with Altman and an investor to develop
approximately 356 apartment homes on 24 acres of land located in Kissimmee, Florida. The Company
invested approximately $332,000 for a 2.5% interest in the joint venture. The Company is entitled to
receive 2.5% of the joint venture distributions until it receives its aggregate capital contribution plus a
specified return on its investment. Any distributions thereafter are shared based on earnings with the
managing member receiving an increasing percentage of the distributions. Construction commenced
during the fourth quarter of 2016 and leasing of apartment units is anticipated to begin during the third
quarter of 2017.
Centra Falls II, LLC
During 2016, the Company invested as one of a number of investors in a joint venture with Label & Co. to
develop 61 town homes on land located in the City of Pembroke Pines, Broward County, Florida. The
Company contributed $571,000 to the joint venture and is entitled to receive 7.143% of the joint venture
distributions until it receives its aggregate capital contribution plus a specified return on its
investment. Any distributions thereafter are shared with the managing member receiving an increased
percentage of the distributions. Construction is expected to commence in the first quarter of 2017 and
closings are anticipated to commence during the fourth quarter of 2017.
Legacy Assets
Legacy assets in the Company’s Consolidated Statement of Financial Condition as of December 31, 2016
primarily consisted of $25.5 million of loans receivable, $12.0 million of real estate held-for-investment
and $33.3 million of real estate held-for-sale. PGA Station and the Gardens on Millenia real estate
developments discussed above are included in real estate held-for-sale with an aggregate carrying value of
$9.2 million as of December 31, 2016. These legacy assets are described in further detail in Item 8 – Note
5 and Note 8 of this report.
The majority of the legacy assets do not generate income on a regular or predictable basis. As a
consequence BBX Capital Real Estate does not expect to generate significant revenue from the legacy
assets until the assets are monetized through repayments or transactions involving the sale, joint venture
or development of the underlying real estate. The cash flow from the monetization of legacy assets are
generally invested in income producing real estate, real estate developments and real estate joint ventures
as well as in the Company’s middle market operating businesses. As a result of the substantial decline in
real estate values during the recession, the majority of legacy non-performing commercial real estate loans
and foreclosed real estate were written down in prior periods to the then prevailing estimated fair values of
the collateral less costs to sell. The Company believes there has been continued improvements generally
in real estate markets and believes that the prior estimated fair values of the underlying collateral securing
certain of its commercial real estate loans and its real estate carrying values may be below current market
values. Additionally, this recovery in the real estate market has favorably affected the financial condition
of borrowers and the Company is aggressively pursuing its borrowers and/or guarantors in order to
maximize recoveries through cash settlements, loan workout arrangements or participation interests in the
development or performance of
18
the collateral. If the Company is successful in its efforts, the Company expects to recognize gains to the
extent that the amounts it collects exceed the carrying value of its commercial loans and foreclosed real
estate.
Middle Market Division
Overview
The Middle Market Division invests in operating companies and businesses with revenues of less than
$250 million. Renin, which was acquired in October 2013 and has the highest revenue of our portfolio
companies in this division, manufactures products for the home improvement industry and operates
through headquarters in Canada and two manufacturing assembly and distribution facilities in Canada and
the United States. Since December 2013, the Middle Market Division also has made investments and has
completed acquisitions in the sugar and confectionery industry through the Company’s wholly-owned
subsidiary, BBX Sweet Holdings. In 2016, a wholly owned subsidiary of the Company entered into area
development agreements with MOD Super Fast Pizza Franchising, LLC with a goal of developing
approximately 60 MOD franchised pizza restaurant locations throughout Florida over the next seven
years.
Products and Sales Channels
Renin’s products include sliding bipass and bifold closet doors, room dividers including
barn-style doors and hardware, fabricated glass and home décor products. While the
majority of Renin’s products are manufactured at its facilities located in Canada and the
United States, a portion of its products are sourced from suppliers in China. Renin
products are sold through three distinct channels in North America: retail, wholesale, and
direct in the metropolitan Toronto area (“Toronto Area”). Retail currently makes up over
50% of Renin’s sales and includes big box retail customers such as Home Depot and
Lowes. Wholesale, which includes OEMs and fabricators across North America, makes up
approximately 30% of Renin’s sales. The Toronto Area, where Renin operates an
installation business, generates the remaining sales.
BBX Sweet Holdings’ products include fine chocolates, chocolate drenched candies, tropical snacks, and
hard candies, all of which are made at facilities located in Utah and Florida. BBX Sweet Holdings’ fine
chocolates are sold directly to consumers at its nine Hoffman’s Chocolates retail chocolate locations in
South Florida. BBX Sweet Holdings’ other products are sold to retailers or distributors.
Strategies
The business and operating strategy for the portfolio of companies in the Middle Market Division focuses
on:
Recruiting and retaining talented managers to operate its businesses;
·
· Monitoring financial and operational performance, while supporting management
in
implementation of their goals; and
· Making opportunistic acquisitions in diverse industries.
Employees
Management believes that its relations with its employees are satisfactory. The Company currently
maintains employee benefit programs that are considered by management to be generally competitive with
programs provided by other major employers in its markets.
As of December 31, 2016, the Company and its subsidiaries had approximately 6,141 employees, with
5,729 employees at Bluegreen, of which 549 employees were located at Bluegreen’s headquarters in Boca
Raton, Florida, and 5,180 employees were located in regional field offices throughout the United States
and one office in Aruba.
Competition
The industries in which the Company conducts business are very competitive and we also face substantial
competition with respect to our investment activities from real estate developers and building construction
companies from private equity funds, hedge funds and other institutional investors. The Company
competes with institutions and entities that are larger and have greater resources than the resources
available to the Company. Four unaffiliated companies in the candy and confectionery industry currently
account for approximately 71% of the industry’s revenues reflecting
19
significant fragmentation in the industry in which Sweet Holdings operates. Renin’s products are sold
mainly to large retailers as well as to housing and building construction companies. The industry in which
Renin operates experiences intense competition from foreign importers and producers. MOD Pizza
competes with established pizza brands, new entrants into the fast casual pizza category, especially in
Florida, and for prime locations, with other operators. Bluegreen competes with various high profile and
well-established operators, many of which have greater liquidity and financial resources than Bluegreen.
Further, Bluegreen competes with numerous smaller owners and operators of vacation ownership resorts
and also faces competition from alternative lodging options available to consumers through both
traditional methods of delivery as well as new web portals and applications, including private rentals of
homes or apartments or condominium units, which have increased in popularity in recent years. Many of
the world’s most recognized lodging, hospitality and entertainment companies develop and sell VOIs in
resort properties. Major companies that now operate or are developing or planning to develop vacation
ownership resorts directly or through subsidiaries include Marriott Vacations Worldwide Corporation, the
Walt Disney Company, Hilton, Wyndham, ILG and Diamond Resorts International. Bluegreen also
competes with numerous other smaller owners and operators of vacation ownership resorts. In
Bluegreen’s fee-based services business, Bluegreen typically competes with Hilton Hotels Corporation
and Wyndham Worldwide Corporation. In addition to competing for sales leads, prospects and fee-based
service clients, Bluegreen competes with other VOI developers for marketing, sales, and resort
management personnel.
Regulation
As a public company, we are subject to federal securities laws, including the Securities Exchange Act of
1934. In addition, the companies in which we hold investments are subject to federal, state and local laws
and regulations generally applicable to their respective businesses.
Bluegreen
The vacation ownership and real estate industries are subject to extensive and complex governmental
regulation. Bluegreen is subject to various federal, state, local and foreign environmental, zoning,
consumer protection and other laws, rules and regulations, including those regarding the acquisition,
marketing and sale of real estate and VOIs and various aspects of Bluegreen’s 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 unfair competition in interstate
commerce. In addition, many states have what are known as “Little FTC Acts” that apply to intrastate
activity. In addition to the laws applicable to Bluegreen’s customer financing and other operations
discussed below, Bluegreen is or may be subject to the Fair Housing Act and various other federal laws,
rules and regulations. Bluegreen is also subject to various foreign laws with respect to La Cabana Beach
Resort and Casino in Oranjestad, Aruba and Blue Water Resort at Cable Beach in Nassau, Bahamas. In
addition, in the future, VOIs may be deemed to be securities subject to regulation as such, which could
have a material adverse effect on Bluegreen. The cost of complying with applicable laws and regulations
may be significant and Bluegreen may not maintain compliance at all times with all applicable laws,
including those discussed below. Any failure to comply with current or future applicable laws or
regulations could have a material adverse effect on Bluegreen.
Bluegreen’s vacation ownership resorts are subject to various regulatory requirements, including state and
local approvals. The laws of most states require Bluegreen to file a detailed offering statement describing
Bluegreen’s business and all material aspects of the project and sale of VOIs with a designated state
authority. In addition, when required by state law, Bluegreen provides its VOI purchasers with a public
disclosure statement that contains, among other items, detailed information about the resort, the
surrounding vicinity, and the purchaser’s rights and obligations as a VOI owner. Laws in each state where
Bluegreen sells VOIs generally grant the purchaser of a VOI the right to cancel a purchase contract at any
time within a specified rescission period following the earlier of the date the contract was signed or the
date the purchaser has received the last of the documents required to be provided by Bluegreen. Most
states have other laws that regulate Bluegreen’s activities, including real estate licensure requirements;
sellers of travel licensure requirements; anti-fraud laws; telemarketing laws; prize, gift and sweepstakes
laws; and labor laws.
Under various federal, state and local laws, ordinances and regulations, the owner of real property
generally is liable for the costs of removal or remediation of certain hazardous or toxic substances located
on or in, or emanating from, the property, as well as related costs of investigation and property
damage. These laws often impose such liability without regard to whether the owner knew of the
presence of such hazardous or toxic substances. The presence of these substances, or the failure to
properly remediate these substances if they exist, may adversely affect the owner’s ability to sell or lease
a property or to borrow using the real property as collateral. Other federal and state laws require the
removal or encapsulation of asbestos-containing material when this material is in poor condition or in the
event of construction, demolition, remodeling or renovation. Other statutes may require the removal of
underground storage
20
tanks. Noncompliance with these and other environmental, health or safety requirements may result in the
need to cease or alter operations or development at a property. In addition, certain state and local laws
may impose liability on property developers with respect to construction defects discovered on the
property or repairs made by future owners of such property. Under these laws, Bluegreen may be
required to pay for repairs to the developed property. The development, management and operation of
Bluegreen’s resorts are also subject to the Americans with Disabilities Act.
Bluegreen’s marketing, sales and customer financing activities are also subject to extensive regulation,
which can include, but is not limited to: the Truth-in-Lending Act and Regulation Z; the Fair Housing
Act; the Fair Debt Collection Practices Act; the Equal Credit Opportunity Act and Regulation B; the
Electronic Funds Transfer Act and Regulation E; the Home Mortgage Disclosure Act and Regulation C;
the Dodd–Frank Wall Street Reform and Consumer Protection Act; Unfair or Deceptive Acts or Practices
and Regulation AA; the Patriot Act; the Right to Financial Privacy Act; the Gramm-Leach-Bliley Act; the
Fair and Accurate Credit Transactions Act; and anti-money laundering laws. The Dodd-Frank Act
contains significant changes to the regulation of financial institutions, and related entities, including the
creation of new federal regulatory agencies, and the granting of additional authorities and responsibilities
to existing regulatory agencies to identify and address emerging systemic risks posed by the activities of
financial services firms. The Consumer Financial Protection Bureau (“CFPB”) is one such regulatory
agency created pursuant to the Dodd-Frank Act. The CFPB’s mandate is to protect consumers by carrying
out federal consumer financial laws and to publish rules and forms that facilitate understanding of the
financial implications of the transactions consumers enter into. Consistent with this mission, the CFPB
amended Regulations X and Z to establish new disclosure requirements and forms in Regulation Z for
most closed-end consumer credit transactions secured by real property. The practical impact upon
Bluegreen was the requirement to use a new Integrated Mortgage Disclosure Statement in lieu of the
separate Good Faith Estimate and Closing Statement. No assurance can be given that Bluegreen will be in
compliance with this act or other applicable laws or that compliance with this rule or the promulgation of
additional new standards by the CFPB will not have an adverse impact on Bluegreen. In addition,
Bluegreen’s term securitization transactions currently must comply with certain requirements of the
Dodd-Frank Act, including the risk retention rules.
Bluegreen's management of, and dealings with, POAs, including Bluegreen's purchase of defaulted
inventory from POAs in connection with its secondary market arrangements, is also subject to state laws
and resort rules and regulations, including those with respect to the establishment of budgets and
expenditures, rule-making, and the imposition of maintenance assessments.
During the year ended December 31, 2016, approximately 7% of Bluegreen’s VOI sales were generated
by marketing to prospective purchasers obtained through internal and third-party vendors’ outbound
telemarketing efforts. Bluegreen attempts to monitor the actions and compliance of these third parties, but
there are risks associated with Bluegreen’s and such third parties’ telemarketing efforts. In recent years,
state and federal regulators have increased regulations and enforcement actions related to telemarketing
operations, including requiring the adherence to state “do not call” laws. In addition, the Federal Trade
Commission and Federal Communications Commission have implemented national “do not call”
legislation. These measures have significantly increased the costs associated with telemarketing. While
Bluegreen continues to be subject to telemarketing risks and potential liability, Bluegreen believes that its
exposure to adverse impacts from this heightened telemarketing legislation and enforcement may be
mitigated to some extent by the use of “permission marketing,” whereby Bluegreen obtains the permission
of prospective purchasers to contact them in the future, thereby exempting such calls from the various “do
not call” laws. Bluegreen has also implemented policies and procedures which Bluegreen believes will
help reduce the possibility that individuals who have requested to be placed on its internal company do not
call list are not contacted, but such policies and procedures may not be effective in ensuring strict
regulatory compliance.
To date, no material fines or penalties have been imposed on Bluegreen as a result of its telemarketing
operations. However, from time to time, Bluegreen has been the subject of proceedings for violation of
the “do not call” laws and for violation of state laws applicable to the marketing and sale of
VOIs. Bluegreen may not be able to efficiently or effectively market to prospective purchasers through
telemarketing operations in the future or successfully develop alternative sources of identifying and
marketing to prospective purchasers of Bluegreen’s VOI products at acceptable costs. In addition,
Bluegreen may face significant non-compliance issues or additional costs of compliance, which may
adversely impact Bluegreen’s results and operations in the future.
See also “Item 1A – Risk Factors” for a description of risks with respect to regulatory compliance and
“Item 3 – Legal Proceedings” for a description of any pending regulatory actions.
21
ITEM 1A. RISK FACTORS
We are subject to various risks and uncertainties relating to or arising out of the nature of our
businesses, operations and investments, and general business, economic, financing, legal, regulatory,
and other factors and conditions. New risk factors emerge from time to time and it is not possible for
management to either predict all risk factors or assess all potential impacts of any factor, or
combination of factors, on BBX Capital Corporation or its subsidiaries, including with respect to their
operations, results and financial condition.
BBX Capital relies on dividends from Bluegreen to fund operations.
BBX Capital has relied and continues to rely primarily on dividends from Bluegreen in order to fund its
operations and investments. Dividends from Bluegreen may not be paid to BBX Capital to the extent
previously paid or when anticipated or at all. Bluegreen paid dividends totaling $54.4 million during
2015 and $70.0 million during 2016. The payment of dividends by Bluegreen is subject to compliance
with financial covenants under its credit facilities and certain of Bluegreen's credit facilities contain
terms which may limit the payment of cash dividends without the lender's consent or waiver. Decisions
with respect to dividends by Bluegreen are generally based on, among other things, Bluegreen's
operating results, financial condition, cash flow, and liquidity needs. Dividend payments to BBX
Capital by any of its subsidiaries, including Bluegreen, could, in certain circumstances, be subject to
claims made by creditors of such subsidiary.
If cash flow is not sufficient to fund BBX Capital's liquidity needs or BBX Capital otherwise
determines it is advisable to do so, BBX Capital might seek to liquidate some of its investments or seek
to fund its operations with the proceeds of additional equity or debt financing. Such financing may not
be available on commercially reasonable terms, if at all, and if BBX Capital chooses to liquidate its
investments, it may be forced to do so at depressed prices.
BBX Capital’s acquisitions may reduce earnings, require it to obtain additional financing and expose
it to additional risks.
BBX Capital’s business strategy includes investments in or acquisitions of operating companies, such as
its acquisitions of Renin Corp. and the acquisitions of businesses by BBX Sweet Holdings in the candy
and confections industry. BBX Capital may also seek to make opportunistic investments outside of its
existing portfolio. Some of these investments and acquisitions may be material. While BBX Capital is
seeking investments and acquisitions primarily in companies that provide opportunities for growth, it
may not be successful in identifying these opportunities. Investments or acquisitions that it completes
may not prove to be successful or even if successful may not initially generate income, or may generate
income on an irregular basis or over a long time period. Accordingly BBX Capital’s results of
operations may vary significantly on a quarterly basis and from year to year. Acquisitions and
investments will also expose BBX Capital, or increase BBX Capital’s exposure in the case of
acquisitions of or additional investments in its portfolio companies, to the risks of any business acquired
or invested in. Acquisitions entail numerous risks, including:
·
·
·
·
·
·
·
Difficulties in integrating and assimilating acquired management, acquired company founders,
and operations;
Risks associated with achieving profitability;
The incurrence of significant due diligence expenses relating to acquisitions that are not
completed;
Unforeseen expenses and losses;
Risks associated with entering new markets in which it has no or limited prior experience;
The potential loss of key employees or founders of acquired organizations; and
Risks associated with transferred assets and liabilities.
BBX Capital may not be able to acquire or profitably manage additional businesses, or to integrate
successfully any acquired businesses, including Renin and the businesses BBX Sweet Holdings
acquired, without substantial costs, delays or other operational or financial difficulties, including
difficulties in integrating information systems and personnel and establishing control environment
processes across acquired businesses. The failure to do so could have a material adverse effect on its
business, financial condition and results of operations. In addition, to the extent that operating
businesses are acquired outside the United States or the State of Florida, there will be additional risks
22
related to compliance with foreign regulations and laws including tax laws, labor laws, currency
fluctuations and geographic economic conditions.
In addition, there is significant competition for investments and acquisitions, which could increase the
costs associated with the investment or acquisition. Substantial costs are incurred in connection with
the evaluation of potential acquisition and investment opportunities whether or not the acquisition or
investment is ultimately consummated. Further, funding such investments or acquisitions may rely on
additional debt or equity financing, which will subject BBX Capital to the risks and uncertainties
described in these risk factors. If BBX Capital requires additional financing in the future, the financing
may not be available when needed or on favorable terms, if at all. Additionally, BBX Capital does not
intend to seek shareholder approval of any investments or acquisitions unless required by law or
regulation or by BBX Capital’s Amended and Restated Articles of Incorporation or Bylaws.
In addition, BBX Capital from time to time may consider transactions involving the sale of its
subsidiaries or investments or other transactions which would result in a decrease in BBX Capital’s
ownership interest in its subsidiaries, and there is no assurance that any such transactions, if pursued and
consummated, will generate a profit or otherwise be advantageous to BBX Capital.
We may issue additional securities and incur additional indebtedness at BBX Capital or its
subsidiaries.
BBX Capital may in the future seek to raise funds through the issuance of debt or equity securities.
There is generally no restriction on BBX Capital’s ability to issue debt or equity securities which are
pari passu or have a preference over its Class A Common Stock and Class B Common Stock.
Authorized but unissued shares of BBX Capital’s capital stock are available for issuance from time to
time at the discretion of BBX Capital’s board of directors, and any such issuance may be dilutive to
BBX Capital’s shareholders.
Further, BBX Capital and its subsidiaries have in the past and may in the future incur significant
amounts of debt, including at Bluegreen. Any indebtedness, including indebtedness incurred in the
future could have several important effects on BBX Capital or its subsidiaries, including, without
limitation, that BBX Capital or its subsidiaries may be required to use available cash for the payment of
principal and interest due on its debt and that the outstanding indebtedness and leverage at BBX Capital
or its subsidiaries will impact liquidity, and any negative changes in general economic and industry
conditions will increase such impact.
Bluegreen’s business and operations, including its ability to market VOIs, may be adversely affected
by general economic conditions and the availability of financing.
Bluegreen’s business is subject to risks related to general economic and industry conditions and
trends. Bluegreen’s results, operations and financial condition may be adversely affected by
unfavorable general economic and industry conditions, such as high unemployment rates and job
insecurity, declines in discretionary spending, declines in real estate values and the occurrence of
geopolitical conflicts, including if these or other factors adversely impact the availability of financing
for Bluegreen or Bluegreen’s customers or the ability of Bluegreen’s customers’ to otherwise pay
amounts owed under notes receivable. Further, adverse changes affecting the vacation ownership
industry, such as an oversupply of vacation ownership units, a reduction in demand for such units,
changes in travel and other consumer preferences, demographic and vacation patterns, changes in
governmental regulation of the industry, imposition of increased taxes by governmental authorities, the
declaration of bankruptcy and/or credit defaults by other vacation ownership companies and negative
publicity for the industry, could also have a material adverse effect on Bluegreen’s business. In
addition, Bluegreen's operations and results may be negatively impacted if Bluegreen is unable to update
its business strategy over time and from time to time in response to changing economic and industry
conditions.
Bluegreen may be adversely affected by extensive federal, state and local laws and regulations and
changes in applicable laws and regulations, including the cost of maintaining compliance with new
or existing laws and regulations and the imposition of additional taxes on operations. In addition,
results of audits of Bluegreen’s tax returns or those of Bluegreen’s subsidiaries may have a material
adverse impact on Bluegreen’s financial condition.
The federal government and the states and local jurisdictions in which Bluegreen operates have enacted
extensive regulations that affect the manner in which Bluegreen markets and sells VOIs and conducts its
other business operations. In addition, many states have adopted specific laws and regulations
regarding the sale of VOIs. Many states, including Florida and South Carolina, where certain of
Bluegreen’s resorts are located, extensively regulate
23
the creation and management of timeshare resorts, the marketing and sale of timeshare properties, the
escrow of purchaser funds prior to the completion of construction and closing, the content and use of
advertising materials and promotional offers, the delivery of an offering memorandum and the creation
and operation of exchange programs and multi-site timeshare plan reservation systems. Moreover, with
regard to sales conducted in South Carolina, the closing of real estate and mortgage loan transactions
must be conducted under the supervision of an attorney licensed in South Carolina and otherwise in
accordance with South Carolina’s Time Sharing Transaction Procedures Act. Most states also have
other laws that are applicable to Bluegreen’s activities, such as timeshare project registration laws, real
estate licensure laws, mortgage licensure laws, sellers of travel licensure laws, anti-fraud laws,
consumer protection laws, telemarketing laws, prize, gift and sweepstakes laws, and consumer credit
laws. Bluegreen's management of, and dealings with, POAs, including Bluegreen's purchase of
defaulted inventory from POAs in connection with its Secondary Market Sales, is also subject to state
laws and resort rules and regulations, including those with respect to the establishment of budgets and
expenditures, rule-making, and the imposition of maintenance assessments.
Bluegreen currently is authorized to market and sell VOIs in all locations at which its marketing and
sales are conducted. If Bluegreen’s agents or employees violate applicable regulations or licensing
requirements, their acts or omissions could cause the states where the violations occurred to revoke or
refuse to renew Bluegreen’s licenses, render Bluegreen’s sales contracts void or voidable, or impose
fines on Bluegreen based on past activities.
Further, the Consumer Finance Protection Bureau, created under the Dodd-Frank Act, has emphasized
new regulatory focus on areas of Bluegreen’s business such as consumer mortgage servicing and debt
collection, credit reporting and consumer financial disclosures, all of which affect the manner in which
Bluegreen provides purchase money financing to the purchasers of its VOIs and conducts its lending
and loan servicing operations.
In addition, the federal government and the states and local jurisdictions in which Bluegreen conducts
business have generally enacted extensive regulations relating to direct marketing and telemarketing,
including the federal government’s national “Do Not Call” list, and the making of marketing and related
calls to cell phone users, a significant development in light of cell phone usage rapidly becoming the
primary method of communication. The regulations have impacted Bluegreen’s marketing of VOIs,
and Bluegreen has taken steps designed to ensure compliance with these new regulations. However,
these steps have increased and are expected to continue to increase Bluegreen’s marketing costs and
may not prevent failures in compliance. Bluegreen cannot predict the impact that these legislative
initiatives or any other legislative measures that may be proposed or enacted in the future may have on
Bluegreen’s marketing strategies and results. Further, from time to time, complaints are filed against
Bluegreen by individuals claiming that they received calls in violation of applicable regulations.
Currently, most states have taxed VOIs as real estate, imposing property taxes that are billed to the
respective POAs that maintain the related resorts and have not sought to impose sales tax upon the sale
of the VOI or accommodations tax upon the use of the VOI. From time to time, however, various states
have attempted to promulgate new laws or apply existing laws impacting the taxation of VOIs to
require that sales or accommodations taxes be collected. Should new state or local laws be implemented
or interpreted to impose sales or accommodations taxes on VOIs, Bluegreen’s business could be
materially adversely affected.
From time to time, consumers file complaints against Bluegreen in the ordinary course of Bluegreen’s
business. Bluegreen could be required to incur significant costs to resolve these complaints or enter
into consents with regulators regarding its activities. Bluegreen may not remain in compliance with all
applicable federal, state and local laws and regulations, and violations of applicable laws may have
adverse implications on Bluegreen, including negative public relations, potential litigation and
regulatory sanctions. The expense, negative publicity and potential sanctions associated with any
failure to comply with applicable laws or regulations could have a material adverse effect on
Bluegreen’s results of operations or financial position.
In addition, VOIs may in the future be deemed to be securities under federal or state law and therefore
subject to applicable securities regulation, which could have a material adverse effect on Bluegreen due
to, among other things, the cost of compliance with such regulations.
The vacation ownership and hospitality industries are highly competitive, and Bluegreen may not be
able to compete successfully.
Bluegreen competes with various high profile and well-established operators, many of which have
greater liquidity and financial resources than Bluegreen. Many of the world's most recognized lodging,
hospitality and entertainment companies develop and sell time-share units or VOIs in resort
properties. Bluegreen also competes with numerous
24
smaller owners and operators of vacation ownership resorts and also faces competition from alternative
lodging options available to consumers through both traditional methods of delivery as well as new web
portals and applications, including private rentals of homes or apartments or condominium units, which
have increased in popularity in recent years. Bluegreen's ability to remain competitive and to attract and
retain customers depends on its customers' satisfaction with its products and services as well as on
distinguishing the quality, value, and efficiency of its products and services from those offered by its
competitors. Customer dissatisfaction with experiences at its resorts or otherwise as a member of the
Bluegreen Vacation Club, including due to an inability to use points for desired stays, could result in
negative publicity and/or a decrease in sales, or otherwise adversely impact Bluegreen's ability to
successfully compete in the vacation ownership and hospitality industries. Bluegreen may not be able
to timely and sufficiently identify and remediate the cause of customer dissatisfaction. Any of these
events could materially and adversely impact Bluegreen's operating results and financial condition.
Bluegreen would suffer substantial losses and Bluegreen’s liquidity position could be adversely
impacted if customers to whom Bluegreen provides financing default on their obligations.
Prior to December 15, 2008, Bluegreen did not perform credit checks on the purchasers of its VOIs in
connection with Bluegreen’s financing of their purchases. Effective December 15, 2008, Bluegreen
implemented a FICO® score-based credit underwriting program. Bluegreen enhanced this credit
underwriting program starting in January 2010. While Bluegreen’s loan portfolio originated after
December 15, 2008 has to date experienced defaults at a lower rate than loans originated prior to that
date, Bluegreen’s FICO ® score-based underwriting standards may not continue to result in decreased
default rates or otherwise result in the improved performance of Bluegreen’s notes receivable. Adverse
conditions in the mortgage industry, including credit availability, borrowers’ financial profiles,
prepayment rates and other factors, including those outside Bluegreen’s control, may increase the
default rates Bluegreen experiences or otherwise negatively impact the performance of its notes
receivable. In recent years, external parties have been discouraging certain borrowers from staying
current on their note payments. Although in many cases Bluegreen may have recourse against a buyer
for the unpaid purchase price, certain states have laws that limit Bluegreen’s ability to recover personal
judgments against customers who have defaulted on their loans or Bluegreen may determine that the
cost of doing so may not be justified. Historically, Bluegreen has generally not pursued such recourse
against its customers. In the case of Bluegreen’s notes receivable secured by VOIs, if Bluegreen is
unable to collect the defaulted amount due, Bluegreen traditionally has terminated the customer’s
interest in the Bluegreen Vacation Club and then remarketed the recovered VOI. Irrespective of
Bluegreen’s remedy in the event of a default, Bluegreen cannot recover the marketing, selling and
administrative costs associated with the original sale and such costs generally exceed the cash received
by Bluegreen from the buyer at the time of the sale. In addition, Bluegreen will need to incur such costs
again in order to resell the VOI. Bluegreen updates its estimate of such future losses each quarter, and
consequently, the charge against sales in a particular period may be impacted, favorably or unfavorably,
by a change in expected losses related to notes originated in prior periods. In addition, defaults may
cause buyers of, or lenders whose loans are secured by, Bluegreen’s VOI notes receivable to reduce the
amount of availability or advance rates under receivables purchase and credit facilities, or to result in an
increase the interest costs associated with such facilities. In such an event, the cost of financing may
increase and Bluegreen may not be able to secure replacement or alternative financing on terms
acceptable to Bluegreen, if at all, which would adversely affect Bluegreen’s earnings, financial position
and liquidity.
Under the terms of Bluegreen’s pledged and receivable sale facilities, Bluegreen may be required, under
certain circumstances, to replace receivables or to pay down the loan to within permitted loan-to-value
ratios. Additionally, the terms of Bluegreen’s securitization transactions require Bluegreen to
repurchase or replace loans if Bluegreen breached any of the representations and warranties Bluegreen
made at the time Bluegreen sold the receivables. These agreements also often include terms providing
that in the event of defaults or delinquencies by customers in excess of stated thresholds, or if other
performance thresholds are not met, substantially all of Bluegreen’s cash flow from its retained interest
in the receivable portfolios sold will be required to be paid to the parties who purchased the receivables
from Bluegreen.
While Bluegreen has attempted to restructure its business to reduce its need for and reliance on
financing for liquidity in the short term, there is no assurance that Bluegreen’s business and
profitability will not be impacted by its ability to obtain financing, which may not be available on
favorable terms, or at all.
In connection with sales of VOIs, Bluegreen may offer financing to the purchaser of up to 90% of the
purchase price of the VOI. However, Bluegreen incurs selling, marketing and administrative cash
expenditures prior to and concurrent with the sale. These costs generally exceed the down payment
Bluegreen receives at the time of the sale. Accordingly, Bluegreen’s ability to borrow against or sell its
notes receivable has historically been a critical factor in Bluegreen’s continued liquidity, and Bluegreen
therefore has depended on funds from its credit facilities and
25
securitization transactions to finance its operations. If Bluegreen’s pledged receivables facilities
terminate or expire and Bluegreen is unable to extend them or replace them with comparable facilities,
or if Bluegreen is unable to continue to participate in securitization-type transactions and “warehouse”
facilities on acceptable terms, Bluegreen’s liquidity, cash flow and profitability would be materially and
adversely affected. Credit market disruptions have in the past adversely impacted the willingness of
banks and other finance companies to provide “warehouse” lines of credit for VOI receivables and
resulted from time to time in the term securitization market being unavailable. Future credit market
disruptions may have similar effects or otherwise make obtaining additional and replacement external
sources of liquidity more difficult and more costly.
In addition, financing for real estate acquisition and development and the capital markets for corporate
debt is cyclical. While Bluegreen has increased its focus on expanding its fee-based service business
and encouraging higher down payments in connection with sales. There is no assurance that these
initiatives will enhance Bluegreen’s financial position or otherwise be successful in the long term.
Notwithstanding the initiatives implemented by Bluegreen to improve its cash position, Bluegreen
anticipates that it will continue to seek and use external sources of liquidity, including funds that
Bluegreen obtains pursuant to additional borrowings under its existing credit facilities, under credit
facilities that Bluegreen may obtain in the future, under securitizations in which Bluegreen may
participate in the future or pursuant to other borrowing arrangements, to:
·
·
·
·
Support Bluegreen’s operations and pay dividends;
Finance the acquisition and development of VOI inventory or property and equipment;
Finance a substantial percentage of Bluegreen’s sales; and
Satisfy Bluegreen’s debt and other obligations.
Bluegreen’s ability to service or refinance its indebtedness or to obtain additional financing (including
its ability to consummate future term securitizations) depends on the credit markets and on Bluegreen’s
future performance, which is subject to a number of factors, including the success of Bluegreen’s
business, Bluegreen’s results of operations, leverage, financial condition and business prospects,
prevailing interest rates, general economic conditions, the performance of Bluegreen’s receivables
portfolio, and perceptions about the vacation ownership and real estate industries.
As of December 31, 2016, Bluegreen had $7.5 million of indebtedness scheduled to become due during
2017. Historically, much of Bluegreen’s debt has been renewed or refinanced in the ordinary course of
business. However, there is no assurance that Bluegreen will in the future be able to obtain sufficient
external sources of liquidity on attractive terms, or at all, or otherwise renew, extend or refinance all or
any portion of its outstanding debt. Any of these occurrences may have a material adverse impact on
Bluegreen’s liquidity and financial condition.
Bluegreen's indebtedness may impact its financial condition and results of operations, and the terms
of Bluegreen's indebtedness may limit its activities.
Bluegreen's level of debt and debt service requirements have several important effects on Bluegreen's
operations. Significant debt service cash requirements reduce the funds available for operations and
future business opportunities and increase Bluegreen's vulnerability to adverse economic and industry
conditions, as well as conditions in the credit markets generally. In addition, Bluegreen's leverage
position increases its vulnerability to economic and competitive pressures and may limit funds available
for acquisitions, working capital, capital expenditures, dividends, and other general corporate
purposes. Further, the financial covenants and other restrictions contained in indentures, credit
agreements and other agreements relating to Bluegreen's indebtedness require Bluegreen to meet certain
financial tests and restrict Bluegreen's ability to, among other things, pay dividends, borrow additional
funds, dispose of assets or make investments. If Bluegreen fails to comply with the terms of its debt
instruments, such debt may become due and payable immediately, which would have a material adverse
impact on Bluegreen's cash position and financial condition. Significant resources may be required to
monitor Bluegreen's compliance with its debt instruments (from a quantitative and qualitative
perspective), and such monitoring efforts may not be effective in all cases.
To the extent inflationary trends, tightened credit markets or other factors affect interest rates,
Bluegreen’s debt service costs may increase. If interest rates increased one percentage point, the effect
on interest expense related to Bluegreen’s variable-rate debt would be an annual increase of $2.8
million, based on December 31, 2016 balances.
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The ratings of third-party rating agencies could adversely impact Bluegreen’s ability to obtain, renew
or extend credit facilities, or otherwise raise funds.
Rating agencies from time to time review prior corporate and specific transaction ratings in light of
tightened ratings criteria. In December 2016, Standard & Poor’s Rating Services affirmed Bluegreen’s
‘B+’ credit rating. Bluegreen’s corporate credit rating is also based, in part, on rating agencies’
speculation about Bluegreen’s potential future debt and dividend levels. If rating agencies were to
downgrade Bluegreen’s corporate credit ratings, Bluegreen’s ability to raise funds on favorable terms,
or at all, and Bluegreen’s liquidity, financial condition and results of operations could be adversely
impacted. In addition, if rating agencies downgraded their original ratings on certain bond classes in
Bluegreen’s securitizations, holders of such bonds may be required to sell bonds in the marketplace, and
such sales could occur at a discount, which could impact the perceived value of the bonds and
Bluegreen’s ability to sell future bonds on favorable terms or at all. While Bluegreen is not currently
aware of any reasonably likely downgrades to its corporate credit rating or the ratings of bond classes in
its securitizations, such ratings changes can occur without advance notice.
Bluegreen’s future success depends on its ability to market its products and services successfully and
efficiently and Bluegreen’s marketing expenses have increased and may continue to increase in the
future.
Bluegreen competes for customers with hotel and resort properties, other vacation ownership resorts and
alternative lodging options, including private rentals of homes and apartments or condominium
units. The identification of sales prospects and leads, and the marketing of Bluegreen’s products and
services to them are essential to Bluegreen’s success. Bluegreen incurs expenses associated with
marketing programs in advance of the closing of sales. If Bluegreen’s lead identification and marketing
efforts do not yield enough leads or Bluegreen is unable to successfully convert sales leads to sales,
Bluegreen may be unable to recover the expense of its marketing programs and systems and its
business, operating results and financial condition would be adversely affected. In addition, Bluegreen
is currently focusing and has increased its marketing efforts on selling to new customers, which
typically involves a relatively higher marketing cost compared to sales to existing owners and therefore
has increased and is expected to continue to increase Bluegreen’s sales and marketing expenses. If
Bluegreen is not successful in offsetting the cost increase with greater sales revenue, Bluegreen’s
operating results and financial condition would be adversely impacted. In addition, Bluegreen's
marketing efforts are subject to the risk of changing consumer behavior. Changes in consumer behavior
may adversely impact the effectiveness of marketing efforts and strategies which Bluegreen has in place
and Bluegreen may not be able to timely and effectively respond to such changes.
Changes in new forms of competition, including but not limited to internet marketing models or online
applications may impact Bluegreen’s ability for lead generation.
Bluegreen generates a significant portion of its new sales prospects and leads through its arrangements
with various third parties, including Bass Pro and Choice Hotels. If these arrangements do not generate
a sufficient number of leads or if these arrangements are terminated or limited and not replaced by other
sources of sales prospects and leads, Bluegreen may not be able to successfully market and sell its
products and services to new customers at current sales levels, at anticipated levels or at levels required
in order to offset the costs associated with its marketing efforts. This would adversely impact
Bluegreen’s operating results and financial condition.
Bluegreen may not be successful in maintaining or expanding its capital-light business relationships,
or its capital-light activities, including fee based sales and marketing arrangements, just-in-time VOI
arrangements, and Secondary Market Sales activities, and such activities may not be profitable,
which may have an adverse impact on Bluegreen’s results of operations and financial condition.
Bluegreen offers fee-based marketing, sales, resort management and other services to third-party
developers. Bluegreen has over the last several years continued to expand its capital-light business
strategy, which Bluegreen believes enables it to leverage its expertise in sales and marketing, resort
management, mortgage servicing, construction management and title services. Bluegreen currently
intends to continue its focus on its capital-light business activities as such activities generally produce
positive cash flow and typically require less capital investment than Bluegreen’s traditional vacation
ownership business. Bluegreen has attempted to structure these activities to cover its costs and generate
a profit. Sales of third party developers' VOIs must generate sufficient cash to comply with the terms of
their financing obligations as well as to pay the fees or commissions due Bluegreen. The third party
developers may not be able to obtain or maintain financing necessary to meet the developer’s
requirements, which could impact Bluegreen's ability to sell the developers' inventory. While
Bluegreen could attempt to utilize other arrangements, including just-in-time arrangements, where
Bluegreen would utilize its receivable credit facilities in order to provide fee-based marketing and sales
services, this would reduce the credit
27
otherwise available to Bluegreen and impact profitability. Bluegreen commenced its capital-light
activities largely during the recession in response to poor economic conditions and Bluegreen’s fee-
based and other capital-light business activities in the future may be adversely impacted by changes in
economic conditions. While Bluegreen performs fee-based sales and marketing services, Bluegreen
sells VOIs in a resort developed by a third party as an interest in the Bluegreen Vacation Club. This
subjects Bluegreen to a number of risks typically associated with selling products developed by others
under its own brand name, including litigation risks. Additionally, third party resorts may not meet
Bluegreen’s expectations or match the needs of Bluegreen’s owners.
Bluegreen also sells VOI inventory through Secondary Market arrangements which require low levels
of capital deployment. In connection with Secondary Market Sales, Bluegreen acquires VOI inventory
from its resorts’ POAs on a non-committed basis in close proximity to the timing of when Bluegreen
intends to sell such VOIs. VOIs purchased from POAs are typically obtained by the POAs through
foreclosure in connection with maintenance fee defaults and are generally acquired by Bluegreen at a
discount. While Bluegreen intends to increase its Secondary Market Sales efforts in the future,
Bluegreen may not be successful in doing so, and these efforts may not result in Bluegreen achieving
anticipated results. Further Bluegreen’s Secondary Market Sale activities may subject Bluegreen to
negative publicity, which could adversely impact Bluegreen’s reputation and business.
Bluegreen’s results of operations and financial condition may be materially and adversely impacted
if Bluegreen does not continue to participate in exchange networks and other strategic alliances with
third parties or if Bluegreen’s customers are not satisfied with the networks in which Bluegreen
participates or Bluegreen’s strategic alliances.
Bluegreen believes that its participation in exchange networks and other strategic alliances and its
Traveler Plus™ program make ownership of Bluegreen VOIs more attractive by providing owners with
the ability to take advantage of vacation experiences in addition to stays at Bluegreen’s resorts. A VOI
owner’s participation in the RCI exchange network allows an owner to exchange their annual VOI for
occupancy at over 4,300 participating resorts, based upon availability and the payment of a variable
exchange fee. During 2016, approximately 9% of Bluegreen owners utilized the RCI exchange network
for an exchange of two or more nights. Bluegreen also has a strategic arrangement with Choice Hotels
pursuant to which, subject to payments and conditions, certain of Bluegreen’s resorts have been branded
as part of Choice Hotels’ Ascend Resort Collection® and Ascend Hotel Collection®. In addition,
Bluegreen’s Traveler Plus™ members have the ability to convert their Bluegreen Vacation Club points
into Choice Privileges® points which can be used for stays at participating Choice Hotels or may
convert their Bluegreen Vacation Club points to stay at Ascend Collection® hotels. Also, all Bluegreen
Vacation Club members may convert their Bluegreen Vacation Club points for Choice Privileges®
points for a fee. Bluegreen Vacation Club members, for an additional annual fee, may also participate
in the Bluegreen Traveler Plus™ program which allows them to use their points for a variety of hotel
stays, RV site stays within the “Coast to Coast" network, or various cruise vacations. Also, for a
nominal fee, Bluegreen Vacation Club owners who purchased or upgraded their VOI since July 1, 2007
and participate in the Bluegreen Traveler Plus™ program have the ability to use their vacation points to
reserve accommodations in 43 additional resort locations through Direct Exchange. Bluegreen may not
be able to or desire to continue to participate in the RCI or Direct Exchange networks in the future. In
addition, these networks and Bluegreen’s Traveler Plus™ program may not continue to operate
effectively, and Bluegreen’s customers may not be satisfied with them. Further, Bluegreen’s
relationship with Choice Hotels may not be well received by Bluegreen’s customers or otherwise result
in the benefits Bluegreen expects to derive from the relationship. In addition, Bluegreen may not be
successful in identifying or entering into new strategic relationships in the future. If any of these events
should occur, Bluegreen’s results of operations and financial condition may be materially and adversely
impacted.
The resale market for VOIs could adversely affect Bluegreen’s business.
Based on Bluegreen’s experience at its resorts and at resorts owned by third parties, Bluegreen believes
that resales of VOIs in the secondary market generally are made at net sales prices below the original
customer purchase prices. The relatively lower sales prices are partly attributable to the high marketing
and sales costs associated with the initial sales of such VOIs. Accordingly, the initial purchase price of
a VOI may be less attractive to prospective buyers and Bluegreen competes with buyers who seek to
resell their VOIs. While VOI resale clearing houses or brokers currently do not have a material impact
on Bluegreen’s business, the availability of resale VOIs at lower prices, particularly if an organized and
liquid secondary market develops, could adversely affect Bluegreen’s level of sales and sales prices,
which in turn would adversely affect Bluegreen’s results of operations.
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Bluegreen is subject to the risks of the real estate market and the risks associated with real estate
development, including a decline in real estate values and a deterioration of other conditions relating
to the real estate market and real estate development.
Real estate markets are cyclical in nature and highly sensitive to changes in national and regional
economic conditions, including:
·
·
·
·
·
·
·
Levels of unemployment;
Levels of discretionary disposable income;
Levels of consumer confidence;
The availability of financing;
Overbuilding or decreases in demand;
Interest rates; and
Federal, state and local taxation methods.
A deterioration in general economic conditions or in the real estate market would have a material
adverse effect on Bluegreen’s business.
To the extent Bluegreen decides to acquire more real estate inventory in the future, the availability of
land for development of resort properties at favorable prices at that time will be critical to Bluegreen’s
profitability and the ability to cover its significant selling, general and administrative expenses, cost of
capital and other expenses. If Bluegreen is unable to acquire such land or resort properties at a
favorable cost, Bluegreen’s results of operations may be materially, adversely impacted. The
profitability of Bluegreen’s real estate development activities is also impacted by the cost of
construction materials and services. Should the cost of construction materials and services rise, the
ultimate cost of Bluegreen’s future resorts inventory when developed could increase and have a
material, adverse impact on Bluegreen’s results of operations.
Adverse outcomes in legal or other regulatory proceedings, including claims of non-compliance with
applicable regulations or development-related defects, could adversely affect Bluegreen’s financial
condition and operating results.
In the ordinary course of business, Bluegreen is subject to litigation and other legal and regulatory
proceedings, which result in significant expenses and devotion of time. In addition, litigation is
inherently uncertain and adverse outcomes in the litigation and other proceedings to which Bluegreen is
or may be subject could adversely affect its financial condition and operating results.
Bluegreen engages third-party contractors to construct its resorts. Bluegreen also historically engaged
third-party contractors to develop the communities within its former Bluegreen Communities
business. However, Bluegreen’s customers may assert claims against Bluegreen for construction
defects or other perceived development defects, including, without limitation, structural integrity, the
presence of mold as a result of leaks or other defects, water intrusion, asbestos, electrical issues,
plumbing issues, road construction, water and sewer defects and defects in the engineering of
amenities. In addition, certain state and local laws may impose liability on property developers with
respect to development defects discovered in the future. Bluegreen could have to accrue a significant
portion of the cost to repair such defects in the quarter when such defects arise or when the repair costs
are reasonably estimable. In addition, liabilities related to Bluegreen Communities that were not
assumed by Southstar Development Partners, Inc. (“Southstar”) in connection with Southstar’s purchase
of substantially all of the assets which comprised Bluegreen Communities on May 4, 2012, including
those relating to Bluegreen Communities’ operations prior to the closing of the transaction, remain
Bluegreen’s responsibility.
See “Item 3 - Legal Proceedings” for a description of currently pending legal matters with respect to
Bluegreen. Costs associated with litigation, including claims for development-related defects, and the
outcomes thereof could adversely affect Bluegreen’s liquidity, financial condition and operating results.
Environmental liabilities, including claims with respect to mold or hazardous or toxic substances,
could have a material adverse impact on Bluegreen’s financial condition and operating results.
Under various federal, state and local laws, ordinances and regulations, as well as common law,
Bluegreen may be liable for the costs of removal or remediation of certain hazardous or toxic
substances, including mold, located on, in or emanating from property that Bluegreen owns, leases or
operates, as well as related costs of investigation and
29
property damage at such property. These laws often impose liability without regard to whether
Bluegreen knew of, or was responsible for, the presence of the hazardous or toxic substances. The
presence of such substances, or the failure to properly remediate such substances, may adversely affect
Bluegreen’s ability to sell or lease its property or to borrow money using such property or receivables
generated from the sale of such property as collateral. Noncompliance with environmental, health or
safety requirements may require Bluegreen to cease or alter operations at one or more of its
properties. Further, Bluegreen may be subject to common law claims by third parties based on damages
and costs resulting from violations of environmental regulations or from contamination associated with
one or more of Bluegreen’s properties.
A failure to maintain the integrity of internal or customer data could result in damage to Bluegreen's
reputation and subject Bluegreen to costs, fines, or lawsuits.
Bluegreen's operations and activities require the collection and retention of large volumes of internal
and customer data, including credit card numbers and other personally identifiable information of
Bluegreen's customers and employees. The integrity and protection of that customer, employee and
company data is critical to Bluegreen. If that data is inaccurate or incomplete, Bluegreen could make
faulty decisions. Bluegreen's customers and employees also have a high expectation that Bluegreen will
adequately protect their personal information. The information, security and privacy requirements
imposed by governmental regulation are increasingly demanding. Bluegreen's systems may not be able
to satisfy these changing requirements and employee and customer expectations, or may require
significant additional investments or time in order to do so. Efforts to hack or breach security measures,
failures of systems or software to operate as designed or intended, viruses, operator error, or inadvertent
releases of data all threaten Bluegreen's information systems and records. Bluegreen's reliance on
computer, Internet-based and mobile systems and communications and the frequency and sophistication
of efforts by hackers to gain unauthorized access to such systems have increased significantly in recent
years. A significant theft, loss, or fraudulent use of customer, employee, or company data could
adversely impact Bluegreen's reputation and could result in remedial and other expenses, fines, or
litigation and could have a material adverse impact on Bluegreen’s results of operations and financial
condition.
Bluegreen’s technology requires updating, the cost involved in updating the technology may be
significant, and the failure to keep pace with developments in technology could impair Bluegreen's
operations or competitive position.
The vacation ownership and hospitality industries require the utilization of technology and systems,
including technology utilized for sales and marketing, mortgage servicing, property management, brand
assurance and compliance, and reservation systems. This technology requires continuous updating and
refinements, including technology required to remain competitive and to comply with the legal
requirements such as privacy regulations and requirements established by third parties. Bluegreen is
currently taking steps to update its information technology platform, which has required, and is likely to
continue to require, significant capital expenditures. Older systems which have not yet been updated
may increase the risk of operational inefficiencies, financial loss and non-compliance with applicable
legal and regulatory requirements and Bluegreen may not be successful in updating such systems in the
time frame or at the cost anticipated. Further, as a result of the rapidly changing technological
environment, systems which Bluegreen has put in place or expects to put in place in the near term may
become outdated requiring new technology, and Bluegreen may not be able to replace those systems as
quickly as its competition or within budgeted costs and time frames. Further, Bluegreen may not
achieve the benefits that may have been anticipated from any new technology or system.
BBX Capital and its subsidiaries are subject to environmental laws related to their real estate
activities and the cost of compliance could adversely affect the Company’s businesses.
As current or previous owners or operators of real property, BBX Capital and its subsidiaries, including
Bluegreen, may be liable under federal, state and local environmental laws, ordinances and regulations
for the costs of removal or remediation of hazardous or toxic substances on, under or in the property.
These laws often impose liability whether or not BBX Capital or its subsidiaries knew of, or was
responsible for, the presence of such hazardous or toxic substances. The cost of investigating,
remediating or removing such hazardous or toxic substances may be substantial.
30
In connection with the sale of BankAtlantic to BB&T during July 2012, BBX Capital acquired
nonperforming loans and foreclosed real estate and our results of operations and financial condition
may be adversely affected if these criticized assets are monetized below their current book values.
As a result of the BB&T transaction, BBX Capital maintains and manages a portfolio of foreclosed real
estate and non-performing loans. As a consequence, BBX Capital’s financial condition and results of
operations will be dependent on its ability to successfully manage and monetize these legacy assets.
Further, BBX Capital’s loan portfolio and real estate may not be easily salable in the event BBX Capital
decides to liquidate an asset through a sale transaction. If the legacy assets are not monetized at or near
the current book values ascribed to them, or if these assets are liquidated for amounts less than book
value, BBX Capital’s
results of operations would be adversely
affected. Because a majority of these legacy assets do not generate income on a regular basis, BBX
Capital does not expect to generate significant revenue or income with respect to these assets until such
time as an asset is monetized through repayments or it consummates transactions involving the sale,
joint venture or development of the underlying real estate or investments.
financial condition and
Some of BBX Capital’s operations are through unconsolidated joint ventures with unaffiliated third
parties and we may be adversely impacted by a joint venture partner’s failure to fulfill its obligations.
By entering into joint ventures, BBX Capital may be successful in reducing the amount it invests in the
ownership and development of real estate properties. However, joint venture partners may become
financially unable or unwilling to fulfill their obligations under the joint venture agreements. Most joint
ventures borrow money to help finance their activities, and although recourse on the loans is generally
limited to the managing members, joint ventures and their properties, BBX Capital has in some cases
and may in the future provide ongoing financial support or guarantees. If joint venture partners do not
meet their obligations to the joint venture, BBX Capital may be required to make significant
expenditures which may have an adverse effect on its operating results or financial condition. BBX
Capital has in the past and may in the future have investments in a number of different joint ventures
with the same or related developers which could increase the adverse effects of any failures by such
developer to fulfil its obligations.
Investments by BBX Capital’s real estate division in real estate developments directly or through
joint ventures expose us to market and economic risks inherent in the real estate construction and
development industry.
The real estate construction and development industry is highly competitive and subject to numerous
risks which in many cases are beyond management’s control. The success of BBX Capital’s
investments in real estate developments is dependent on many factors, including:
Demand for or oversupply of new homes, finished lots, rental apartments and commercial real
estate;
Demand for commercial real estate tenants;
Real estate market values;
Changes in capitalization rates impacting real estate values;
Inventory of foreclosed homes negatively impacting selling prices;
Availability and reasonable pricing of skilled labor;
Availability and reasonable pricing of construction materials such as lumber, framing,
concrete and other building materials;
Changes in laws and regulations for new construction and land entitlements, including
environmental and zoning laws and regulations;
Natural disasters and severe weather conditions increasing costs, delaying construction,
causing uninsured losses or reducing demand for new homes;
Availability and cost of mortgage financing for potential purchasers;
Availability, delays and costs associated with obtaining permits, approvals or licenses
necessary to develop property;
Construction defects and product liability claims and;
General economic conditions.
·
· Mortgage loan interest rates;
·
·
·
·
·
·
·
·
·
·
·
·
Any of these factors could give rise to delays in the start or completion of a project, or increase the cost
of developing a project, or could result in reduced prices and values for BBX Capital’s developments,
including developments underlying its joint venture investments.
31
A significant portion of BBX Capital’s loans and real estate assets are located in Florida and
economic conditions in the Florida real estate market could adversely affect BBX Capital’s earnings
and financial condition.
impact BBX Capital’s earnings and
The legacy assets retained by BBX Capital in the BB&T Transaction and the real estate investments
made by BBX Capital are primarily in Florida, and adverse changes to the Florida economy or the real
estate market may negatively
financial condition. BBX
Capital’s real estate investment business, the primary source of repayment for loans and the real estate
collateralizing loans and real estate acquired through foreclosure or settlements with borrowers and its
investments in real estate joint ventures are primarily concentrated in Florida. As a result, BBX Capital
is exposed to geographic risks of high unemployment rates, declines in the housing industry and
declines in the real estate market in Florida. Adverse changes in laws and regulations in Florida would
have a negative impact on BBX Capital’s revenues, financial condition and business. Declines in the
Florida housing markets may negatively impact the credit performance of BBX Capital’s loans and
result in significant asset impairments. Further, the State of Florida is subject to the risks of natural
disasters such as tropical storms and hurricanes, which may disrupt BBX Capital’s operations, adversely
impact the ability of its borrowers to timely repay their loans, adversely impact the value of any
collateral securing loans and BBX Capital’s portfolio of real estate (both held-for-sale and held-for-
investment), or otherwise have an adverse effect on BBX Capital’s results of operations. The severity
and impact of tropical storms, hurricanes and other weather related events are unpredictable.
Renin sales are concentrated with two significant customers and there is significant competition in
the industry.
A significant amount of Renin’s sales are to big-box home centers. These home centers in many
instances have significant negotiating leverage with their vendors, including Renin, and are able to
affect the prices of the products sold and the terms and conditions of conducting business with
them. These home centers may also reduce the number of vendors they purchase from or make
significant changes in their volume of purchases. Although homebuilders, dealers and other retailers
represent other channels of distribution for Renin’s products, the loss of a home center customer or
reduced sales volume at any of these home centers would have a material adverse effect on Renin’s
business. Further, Renin has substantial competition from overseas manufacturers of products similar to
those sold by Renin.
A significant portion of Renin’s business relies on home improvement and new home construction
activity, both of which are cyclical and outside of management’s control.
A significant portion of Renin’s business in Canada and the United States is dependent on the levels of
home improvement activity, including spending on repair and remodeling projects, and new home
construction activity. Macroeconomic conditions including consumer confidence levels, fluctuations in
home prices, unemployment and underemployment levels, interest rates, regulatory initiatives, and the
availability of home equity loans and mortgage financing affect both discretionary spending on home
improvement projects as well as new home construction activity. Adverse changes in these factors or
uncertainty regarding these macroeconomic conditions could result in a decline in spending on home
improvement projects and a decline in demand for new home construction, both of which could
adversely affect Renin’s results of operations.
The operating results of Renin and BBX Sweet Holdings would be negatively impacted if they
experience increased commodity costs or a limited availability of commodities.
BBX Capital’s middle market operating businesses purchase various commodities to manufacture
products, including steel, aluminum, glass and mirror in the case of Renin, and sugar and cocoa in the
case of BBX Sweet Holdings. Fluctuations in the availability and prices of these commodities could
increase the cost to manufacture products. Further, increases in energy costs could increase production
costs as well as transportation costs, each of which could negatively affect their operating
results. Renin’s and BBX Sweet Holdings’ existing arrangements with customers, competitive
considerations and the relative negotiating power and resistance of home center customers and big-box
retailers to price increases make it difficult to increase selling prices to absorb increased production
costs. If Renin and BBX Sweet Holdings are not able to increase the prices of its products or achieve
other cost savings or productivity improvements to offset any increased commodity and production
costs, BBX Capital’s operating results could be negatively impacted. Many of the raw materials
purchased by Renin and BBX Sweet Holdings are sourced from China, Mexico and other
countries. Changes in United States trade practices, or taxes levied on these imports, could
significantly impact the results of these operating companies.
32
Market demand for chocolate and candy products could decline.
BBX Sweet Holdings and its acquired businesses operate in highly competitive markets and compete
with larger companies that have greater resources. The success of these businesses is impacted by
many factors, including the following:
·
·
·
·
·
·
·
·
Effective retail execution;
Effective and cost efficient advertising campaigns and marketing programs;
Adequate supply of commodities at a reasonable cost;
Oversight of product safety;
Ability to sell manufactured products at competitive prices;
Response to changes in consumer preferences and tastes;
Changes in consumer health concerns, including obesity and the consumption of certain
ingredients and;
Concerns related to effects of sugar or other ingredients which may be used to make its
products.
A decline in market demand for chocolate and candy products could negatively affect operating results.
BBX Sweet Holdings may experience product recalls or product liability claims.
Selling products for human consumption involves inherent legal and other risks, including product
contamination, spoilage, product tampering, allergens, or other adulteration. BBX Sweet Holdings
could decide or be required to destroy inventory, recall products or lose sales in connection with
contamination, tampering, adulteration or other deficiencies. These events could result in significant
losses and may damage BBX Sweet Holdings’ reputation, and discourage consumers from buying
products, or cause production and delivery disruptions which would adversely affect BBX Sweet
Holdings’ financial condition and results of operations. BBX Sweet Holdings may also incur losses if
products cause injury, illness or death. A significant product liability claim may adversely affect both
reputation and profitability, even if the claim is unsuccessful.
Information technology failures and data security breaches could harm our business.
The Company relies on information technology (IT) systems, including Internet sites, data hosting
facilities and other hardware and platforms, some of which are hosted by third parties. These IT
systems, like those of most companies, may be vulnerable to a variety of interruptions, including, but not
limited to, natural disasters, telecommunications failures, hackers, and other security issues. Moreover,
the Company’s computer systems, like those of most companies, may become subject to computer
viruses or other malicious codes, and to cyber or phishing-attacks. Although administrative and
technical controls have been implemented which attempt to minimize the risk of cyber incidents,
computer intrusion efforts are becoming increasingly sophisticated, and any enhanced controls installed
might be breached. If the IT systems cease to function properly, the Company could suffer interruptions
in its operations. If the cyber-security is breached, unauthorized persons may gain access to the
proprietary or confidential information of BBX Capital and its subsidiaries, including information about
borrowers, employees or investments. This could require the Company to incur significant costs to
comply with legally required protocols and to repair or restore the security of its systems.
Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock could
adversely affect the market prices of such securities.
Substantial sales of BBX Capital’s Class A Common Stock or Class B Common Stock, including sales
of shares by controlling shareholders and management, could adversely affect the market prices of such
securities. Management has in the past and may in the future enter into Rule 10b5-1 plans pursuant to
which a significant number of shares are sold into the open market.
Alan B. Levan and John E. Abdo's control position may adversely affect the market price of BBX
Capital's Class A Common Stock and Class B Common Stock.
Alan B. Levan, the Chairman and Chief Executive Officer of BBX Capital and John E. Abdo, the Vice
Chairman of BBX Capital, collectively beneficially own shares of BBX Capital’s Class A Common
Stock and Class B Common Stock representing approximately 76% of the general voting power of BBX
Capital. In addition, each of Mr. Alan Levan and Mr. Abdo has been granted restricted securities of
BBX Capital which are scheduled to vest over time. Further, Mr. Alan Levan and Mr. Abdo are parties
to an agreement pursuant to which Mr. Alan Levan has
33
agreed to vote his shares of BBX Capital’s Class B Common Stock in favor of the election of Mr. Abdo
to BBX Capital’s board of directors for so long as he is willing and able to serve as a director of BBX
Capital, and Mr. Abdo has agreed to vote the shares of BBX Capital’s Class B Common Stock he owns
in the same manner that Mr. Alan Levan votes his shares of BBX Capital’s Class B Common Stock.
Mr. Abdo has also agreed, subject to certain exceptions, not to transfer certain of his shares of BBX
Capital’s Class B Common Stock and to obtain the consent of Mr. Alan Levan prior to the conversion
of certain of his shares of BBX Capital’s Class B Common Stock into shares of BBX Capital’s Class A
Common Stock. Because BBX Capital’s Class A Common Stock and Class B Common Stock vote as a
single class on most matters, Mr. Alan Levan and Mr. Abdo effectively have the voting power to elect
the members of BBX Capital’s board of directors and to control the outcome of any other vote of BBX
Capital’s shareholders, except in those limited circumstances where Florida law mandates that the
holders of BBX Capital’s Class A Common Stock vote as a separate class. Mr. Alan Levan’s and
Mr. Abdo’s control position may have an adverse effect on the market price of BBX Capital’s Class A
Common Stock. In addition, their interests may conflict with the interests of BBX Capital’s other
shareholders.
Provisions in BBX Capital's Amended and Restated Articles of Incorporation and Bylaws, as well
as BBX Capital's shareholder rights plan, may make it difficult for a third party to acquire BBX
Capital and could impact the price of BBX Capital's Class A Common Stock and Class B Common
Stock.
BBX Capital's Amended and Restated Articles of Incorporation and Bylaws contain provisions that
could delay, defer or prevent a change of control of BBX Capital or its management. These provisions
could make it more difficult for shareholders to elect directors and take other corporate actions. As a
result, these provisions could limit the price that investors are willing to pay in the future for shares of
BBX Capital's Class A Common Stock or Class B Common Stock. These provisions include:
·
·
·
The provisions in BBX Capital's Amended and Restated Articles of Incorporation
regarding the special voting rights of BBX Capital 's Class B Common Stock;
Subject to the special class voting rights of holders of BBX Capital’s Class B
Common Stock under certain circumstances, the authority of BBX Capital's board of
directors to issue additional shares of common or preferred stock and to fix the
relative rights and preferences of the preferred stock without additional shareholder
approval; and
Advance notice procedures to be complied with by shareholders in order to make
shareholder proposals or nominate directors.
In addition, BBX Capital’s rights agreement, which was adopted and is designed to preserve certain tax
benefits available to BBX Capital, may have an anti-takeover effect because the rights agreement
provides a deterrent to investors from acquiring a 5% or greater ownership interest in BBX Capital’s
Class A Common Stock and Class B Common Stock.
Holders of BBX Capital’s Class A Common Stock and Class B Common Stock may not receive
dividends in the amounts anticipated, when anticipated, or at all.
During each of June 2016, September 2016 and December 2016, BBX Capital’s board of directors
declared a cash dividend of $0.005 per share on BBX Capital’s Class A Common Stock and Class B
Common Stock. BBX Capital has indicated its intention to declare regular quarterly dividends of
$0.005 per share on its Class A Common Stock and Class B Common Stock (an aggregate of $0.02 per
share annually). However, future dividends are subject to approval and declaration by BBX Capital’s
board of directors and, accordingly, BBX Capital may not make dividend payments in the future,
whether in the amount anticipated, on a regular basis or as anticipated, or at all. The payment of
dividends, if any, by BBX Capital will depend on many factors considered by its board of directors,
including, without limitation, BBX Capital’s financial condition and results of operations, liquidity
requirements, market opportunities, and contractual constraints. Further, over time, BBX Capital’s cash
needs may change significantly from its current needs, which could affect whether BBX Capital pays
dividends and the amount of any dividends it may pay in the future. The terms of BBX Capital’s
indebtedness may also restrict it from paying cash dividends on its stock under certain circumstances. In
addition, BBX Capital pays regular quarterly cash dividends of $187,500 with respect to its outstanding
5% Cumulative Preferred Stock. BBX Capital may not pay or set apart for payment any dividend or
other distribution (other than a dividend or distribution payable solely in common stock) on its Class A
Common Stock or Class B Common Stock until such time as all accrued and unpaid dividends on BBX
Capital’s 5% Cumulative Preferred Stock have been or contemporaneously are declared or paid and a
sum is set apart sufficient for payment of such accrued and unpaid dividends.
34
There are inherent uncertainties involved in estimates, judgments and assumptions used in the
preparation of financial statements in accordance with accounting principles generally accepted in
the United States of America (“GAAP”). Any changes in estimates, judgments and assumptions used
could have a material adverse effect on BBX Capital’s financial position and operating results.
The consolidated financial statements included in the periodic reports BBX Capital files with the SEC,
including this Annual Report on Form 10-K, are prepared in accordance with GAAP. The preparation
of financial statements in accordance with GAAP involves making estimates, judgments and
assumptions that affect reported amounts of assets (including goodwill and other intangible assets),
liabilities and related reserves, revenues, expenses and income. This includes estimates, judgments and
assumptions for assessing the amortization/accretion of purchase accounting fair value differences and
the impairment of goodwill and other intangible assets pursuant to applicable accounting guidance.
BBX Capital bases its estimates on historical experience and on various other assumptions that BBX
Capital believes to be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are often not readily apparent
from other sources. However, estimates, judgments and assumptions are subject to change in the future,
and BBX Capital's estimates, judgments and assumptions may prove to be incorrect and BBX Capital's
actual results may differ from these estimates under different assumptions or conditions. If any
estimates, judgments or assumptions change in the future, or BBX Capital’s actual results differ from
BBX Capital's estimates or assumptions, BBX Capital may be required to record additional expenses or
impairment charges, which would be recorded as a charge against its earnings and could have a material
adverse impact on its financial condition and operating results. The Company’s goodwill was tested for
impairment on December 31, 2016 (annual testing date) and the goodwill assigned to one of BBX Sweet
Holdings reporting units was determined to be impaired. The goodwill assigned to another BBX Sweet
Holdings reporting unit was determined not to be impaired. If BBX Sweet Holdings’ reporting units do
not meet expectations or if there is a downturn in the sugar and confectionery industry, the Company
may recognize goodwill impairment charges in future periods.
Unexpected events, such as natural disasters, severe weather and terrorist activities may disrupt the
Company’s operations and increase our costs.
The occurrence of one or more unexpected events, including tsunamis, hurricanes, earthquakes, floods
and other forms of severe weather or terrorist activities in countries or regions in which our
assets, suppliers or our operating businesses are located could adversely affect our operations and
financial performance.
Natural disasters, acts or threats of war or terrorism, or other unexpected events could result in
temporary or long-term disruption in the delivery or supply of necessary raw materials and component
products from suppliers, which would disrupt production capabilities and likely increase our cost of
doing business.
Legal proceedings and the impact of any finding of liability or damages could adversely impact BBX
Capital and its financial condition and operating results.
BBX Capital and its subsidiaries have in the past and may in the future be subject to legal proceedings.
The impact of any funding of liability or damages could adversely impact the Company’s financial
condition and operating results and the costs of defending pending or threatened legal proceedings could
be significant.
The loss of the services of key management and personnel could adversely affect the Company’s
business.
The Company’s ability to successfully implement its business strategy will depend on the ability to
attract and retain experienced and knowledgeable management and other professional staff. If the
Company is unable to retain and motivate its existing employees and efforts to retain and attract key
management and other personnel are unsuccessful, the Company’s results of operations and financial
condition may be materially and adversely impacted.
35
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The principal executive offices of the Company are located at 401 East Las Olas Boulevard, Suite 800,
Fort Lauderdale, Florida, 33301. The office lease expiration date is June 30, 2021. The Company has the
right to renew the terms of the lease for two additional terms of five years commencing as of the
expiration date.
Bluegreen’s principal executive office is located in Boca Raton, Florida in 159,000 square feet of leased
space. The office lease expiration date is December 31, 2018. At December 31, 2016, Bluegreen also
maintained sales offices at or near 23 of its resorts as well as regional administrative offices in Orlando,
Florida and Indianapolis, Indiana. For a description of Bluegreen’s resort properties, that are part of the
Bluegreen Vacation Club, please see “Item 1 Business —Products and Services – Vacation Club Resort
Locations”.
Renin leases its executive offices located at 110 Walker Drive, Brampton, Ontario. The office lease
expiration date is December 31, 2024. Renin leases two manufacturing facilities in the United States and
Canada which have lease expiration dates of December 31, 2019 and December 31, 2024.
BBX Sweet Holdings leases manufacturing facilities in Utah and Florida and leases retail locations in
Florida as follows:
·
·
·
·
·
50,000 square foot manufacturing, storage and distribution facility located at 680 South 500
East, American Fork, Utah, with a lease expiration date of May 31, 2023;
30,000 square feet of office, manufacturing, warehousing and food storage areas located at 2045
High Ridge Road, Boynton Beach, Florida with a lease expiration date of January 31, 2020;
80,000 square feet of office, manufacturing, warehousing and food storage areas located at 1815
Cypress Lake Drive, Orlando, Florida with a lease expiration date of September 30, 2019 with
three additional option terms of five years each commencing as of the expiration date;
Four retail locations in Palm Beach County, Florida with lease expiration dates ranging from
June 30, 2017 to November 30, 2026; and
Five retail locations in Broward County, Florida with lease expiration dates ranging from June
30, 2019 to May 31, 2020.
BBX Sweet Holdings also owns a chocolate manufacturing facility located at 5190 Lake Worth Road,
Greenacres, Florida. The facility is comprised of a 4,000 square foot office and store front area and an
11,526 square foot manufacturing area.
36
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, BBX Capital and its subsidiaries are parties to lawsuits as plaintiff or
defendant involving its operations and activities. Although BBX Capital and its subsidiaries believe that
they have meritorious defenses in all current legal actions, the outcome of litigation and regulatory matters
and timing of ultimate resolution are inherently difficult to predict and uncertain. Set forth below are
descriptions of material pending legal proceedings.
In the ordinary course of business, Bluegreen becomes subject to claims or proceedings from time to time
relating to the purchase, sale, marketing, or financing of VOIs or Bluegreen’s other business
activities. Bluegreen is also subject to certain matters relating to the Bluegreen Communities’ business,
substantially all of the assets of which were sold by Bluegreen on May 4, 2012. Additionally, from time
to time, Bluegreen becomes involved in disputes with existing and former employees, vendors, taxing
jurisdictions and various other parties. From time to time in the ordinary course of business, Bluegreen
also receives individual consumer complaints, as well as complaints received through regulatory and
consumer agencies, including Offices of State Attorneys General. Bluegreen takes these matters seriously
and attempts to resolve any such issues as they arise.
Securities and Exchange Commission v. BankAtlantic Bancorp, Inc. and Alan B. Levan, Case No. 12-
60082-CV-SCOLA, United States District Court, Southern District of Florida
On January 18, 2012, the SEC brought an action in the United States District Court for the Southern
District of Florida against BCC and Alan B. Levan, BCC’s Chairman and Chief Executive Officer,
alleging that they violated securities laws by not timely disclosing known adverse trends in BCC’s
commercial real estate loans, selectively disclosing problem loans and engaging in improper accounting
treatment of certain specific loans which may have resulted in a material understatement of its net loss in
BCC’s Annual Report on Form 10-K for the year ended December 31, 2007. Further, the complaint
alleged that Mr. Alan B. Levan intentionally misled investors in related earnings calls. The Court denied
summary judgment as to most issues, but granted the SEC’s motion for partial summary judgment that
certain statements in one of Alan Levan’s answers on a July 25, 2007 investor conference call were false.
On December 15, 2014, after a six-week trial, the jury found in favor of BCC and Alan B. Levan with
respect to the disclosures made during an April 2007 earnings conference call and in BCC’s quarterly
reports on Form 10-Q for the 2007 first and second quarters, but found that they had engaged in an act of
fraud or deceit toward shareholders or prospective investors by making materially false statements
knowingly or with severe recklessness (1) with respect to three statements in the July 25, 2007 conference
call referenced above, and (2) in their decision to sell certain loans in the fourth quarter of 2007 and failing
to classify the loans as held-for sale in the 2007 Annual Report on Form 10-K. The jury also found that
Mr. Levan made or caused to be made false statements to the independent accountants regarding the held
for sale issue.
On September 24, 2015, the court entered a final judgment denying the SEC’s request for a permanent bar
from Mr. Levan serving as an officer or director of any public company, but instead ordered Mr. Levan
barred from serving as an officer or director of any public company for a period of two years commencing
on December 23, 2015. The court also imposed monetary penalties against BCC in the amount of
$4,550,000 and monetary penalties against Mr. Levan in the amount of $1,300,000.
BCC and Mr. Alan Levan appealed the district court’s judgment to the Eleventh Circuit Court of Appeals.
On September 28, 2016, the Eleventh Circuit Court of Appeals reversed the pretrial summary judgments
and set aside the judgment of the district court. The reversal, which became final on January 31, 2017,
terminated the financial penalties and set aside the two year officer and director bar imposed against Mr.
Alan Levan. Mr. Alan Levan was reappointed as Chairman of the Board and Chief Executive Officer of
the Company. The court remanded the case for a new trial on the disclosure and accounting claims
stripped of the summary judgments. The trial is scheduled to begin in March 2017.
BBX Capital received reimbursements of legal fees and costs from its insurance carrier of approximately
$5.8 million in connection with this matter. In February 2017, BBX Capital received an additional $5.1
million of reimbursements. The insurance carrier has communicated that it reserves all rights and defenses
with respect to such reimbursed amounts.
37
Shiva Stein, on behalf of herself and all others similarly situated, v. BBX Capital Corp., John E. Abdo,
Norman H. Becker, Steven M. Coldren, Willis N. Holcombe, Jarett S. Levan, Anthony P. Segreto,
Charlie C. Winningham, II, BFC Financial Corporation and BBX Merger Subsidiary LLC, Case No.
CACE16014713, Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida.
On August 10, 2016, Shiva Stein filed a lawsuit against the Company, BBX Merger Sub, LLC, BCC and
the members of BCC’s board of directors, which seeks to establish a class of BCC’s shareholders and
challenges the Merger pursuant to which BCC merged with and into BBX Merger Sub. The plaintiff
asserts that the Merger consideration undervalues BCC and is unfair to BCC’s public shareholders, that
the sales process was unfair and that BCC’s directors breached their fiduciary duties of care, loyalty and
candor owed to the public shareholders of BCC because, among other reasons, they failed to take steps to
maximize the value of BCC to its public shareholders and instead diverted consideration to themselves.
The lawsuit also alleges that BBX Capital, as the controlling shareholder of BCC, breached its fiduciary
duties of care, loyalty and candor owed to the public shareholders of BCC by utilizing confidential, non-
public information to formulate the Merger consideration and not acting in the best interests of BCC’s
public shareholders. In addition, the lawsuit includes a cause of action against BCC, the Company and
BBX Merger Sub for aiding and abetting the alleged breaches of fiduciary duties. The lawsuit requested
that the court grant an injunction blocking the proposed Merger or, if the proposed Merger is completed,
rescind the transaction or award damages as determined by the court. On September 15, 2016,
Defendants filed a Motion to Dismiss the amended complaint. On November 21, 2016, the Court issued
an order granting the Motion to Dismiss with prejudice. On December 21, 2016, Plaintiff filed a Notice of
Appeal with the Fourth District Court of Appeals. The Company believes that the appeal is without merit
and intends to continue vigorously defending the action.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
38
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES
The Company’s Class A Common Stock and Class B Common Stock have substantially identical terms,
except as follows:
·
·
Under Florida law and our Articles of Incorporation and Bylaws, holders of our Class A
Common Stock and Class B Common Stock vote together as a single class on most matters
presented for a shareholder vote. On such matters, holders of our Class A Common Stock are
entitled to one vote for each share held, with all holders of Class A Common Stock possessing in
the aggregate 22% of the total voting power. Holders of Class B Common Stock have the
remaining 78% of the total voting power. If the number of shares of Class B Common Stock
outstanding decreases to 1,800,000 shares, the Class A Common Stock’s aggregate voting
power will increase to 40% and the Class B Common Stock will have the remaining 60%. If the
number of shares of Class B Common Stock outstanding decreases to 1,400,000 shares, the
Class A Common Stock’s aggregate voting power will increase to 53% and the Class B
Common Stock will have the remaining 47%. If the number of shares of Class B Common
Stock outstanding decreases to 500,000 shares, the fixed voting percentages will be eliminated,
and holders of our Class A Common Stock and holders of our Class B Common Stock will each
be entitled to one vote per share.
Each share of Class B Common Stock is convertible at the option of the holder thereof into one
share of Class A Common Stock.
In addition to any other approval required by Florida law, the voting structure described in the first bullet
point above may not be amended without the approval of holders of a majority of the outstanding shares
of our Class B Common Stock, voting as a separate class. Holders of our Class B Common Stock also
have certain other special voting rights with respect to matters affecting our capital structure and the Class
B Common Stock.
Market Information
Our Class A Common Stock is quoted on the OTCQX® Best Market under the ticker symbol
“BBXT”. Our Class B Common Stock is quoted on the OTCQX® Best Market under the ticker symbol
“BBXTB”.
Prior to February 3, 2017, our Class A and Class B Common Stock was quoted on the OTCQB market tier
of the OTC Markets (“OTCQB”) under the ticker symbol name “BFCF” and “BFCFB”, respectively.
On March 7, 2017, there were approximately 413 record holders of our Class A Common Stock and
approximately 141 record holders of our Class B Common Stock.
The following table sets forth, for the indicated periods, the high and low trading prices for our Class A
Common Stock and Class B Common Stock as quoted on the OTCQB.
Calendar Year 2015
First quarter
Second quarter
Third quarter
Fourth quarter
For the year ended December 31, 2015
Calendar Year 2016
First quarter
Second quarter
Third quarter
Fourth quarter
For the year ended December 31, 2016
$
$
Class A Common Stock
Class B Common Stock
High
Low
High
Low
$
$
2.76
3.10
2.75
2.90
2.75
2.50
2.51
2.73
3.65
2.50
3.20 $
3.80
3.80
3.90
3.90
3.30 $
2.96
3.70
4.40
4.40
2.84
3.13
2.76
2.85
2.76
2.57
2.50
2.60
3.65
2.50
3.31 $
3.88
3.64
3.80
3.88
3.44 $
3.10
3.95
5.04
5.04
39
Dividends
Prior to June 2016, the Company had never paid cash dividends on its common stock. In June 2016,
September 2016 and December 2016 the Company’s Board of Directors declared quarterly cash dividends
on the Company’s Class A and Class B as follows:
June
September
December
Total for 2016
Record
Date
6/20/2016
9/23/2016
12/19/2016
Payment
Date
7/20/2016
10/20/2016
1/20/2017
$
$
Per
Common
Share
Distribution
Amount
0.005
0.005
0.005
0.015
Future declaration and payment of cash dividends with respect to the Company’s Common Stock, if any,
will be determined in light of the then-current financial condition of the Company and other factors
deemed relevant by the board of directors.
See the “Liquidity and Capital Resources” section of “Item 7 - Management’s Discussion and Analysis of
Financial Condition and Results of Operations” for a discussion regarding the ability of Bluegreen to pay
dividends to the Company, as well as restrictions pertaining thereto.
Issuer Purchases of Equity Securities
On September 21, 2009, our board of directors approved a share repurchase program which authorizes the
repurchase of up to 20,000,000 shares of Class A Common Stock and Class B Common Stock at an
aggregate cost of up to $10 million. The share repurchase program authorizes management, at its
discretion, to repurchase shares from time to time subject to market conditions and other factors. From
April 1, 2016 through April 19, 2016, the Company repurchased 1.0 million shares of its Class A
Common Stock under this repurchase program for approximately $3.0 million, which are the only shares
that have been repurchased under the share repurchase program as of the date of the filing of this report
on Form 10-K. The share repurchase program does not have an expiration date and may be modified or
discontinued at any time in the discretion of our Board of Directors.
40
On October 1, 2016 through October 5, 2016, a total of 247,405 shares of the Company’s Class A
Common Stock previously owned by certain executive officers and an employee of the Company were
surrendered to the Company by such individuals as payment in satisfaction of tax withholding obligations
relating to the vesting on those dates of certain previously reported restricted stock awards granted to the
executive officers. On November 29, 2016, 2,611 shares of the Company’s Class A Common Stock was
surrendered by a director of the Company as consideration for the exercise of stock options previously
granted to the director. Further information is set forth in the table below:
Period
(a) Total
Number of
Shares
Purchased
(b) Average
Price Paid per
Share
October 1, 2016
– October 31,
2016
November 1 –
November 30,
2016
December 1 –
December 31,
2016
247,405
$3.65
2,611
$3.95
-
-
Total
250,016
$3.65
(c) Total
Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
(d) Maximum
Number (or
Approximate Dollar
Value) of Shares that
May Yet Be
Purchased Under the
Plans or Programs (1)
-
-
-
-
19,000,000 shares
(or approximately
$7,000,000)
19,000,000 shares
(or approximately
$7,000,000)
19,000,000 shares
(or approximately
$7,000,000)
19,000,000 shares
(or approximately
$7,000,000)
(1) The shares surrendered to the Company were not made under the share repurchase program.
Equity Compensation Plan Information
The following table lists awards previously granted and outstanding, and securities authorized for
issuance, under the Company’s equity compensation plans at December 31, 2016:
Number of Securities
to be Issued
Upon Exercise
of Outstanding
Options,
Warrants
or Rights
Weighted-
Average
Exercise
Price of
Outstanding
Options,
Warrants
or Rights
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans
(Excluding
Outstanding
Options,
Warrants,
or Rights
186,791
$3.59
1,228,819
-
186,791
-
$3.59
-
1,228,819
Plan category
Equity compensation plans
approved by security
holders
Equity compensation plans
not approved by security
holders
Total
The Company assumed BCC equity compensation plans upon consummation of the Merger on December
15, 2016. Pursuant to the Merger Agreement, awards outstanding under the BCC Equity Compensation
Plan at December 15,
41
2016 continue to be outstanding and governed by the BBX Capital 2005 Restricted Stock and Option Plan,
and the BBX Capital 2014 Stock Incentive Plan, except that such awards were converted into awards that
are eligible to be settled in shares of the Company’s Class A Common Stock resulting in the issuance of
5,090,354 restricted shares of the Company’s Class A Common Stock and non-qualifying stock options to
acquire 35,716 shares of the Company’s Class A Common Stock at December 15, 2016. No further
awards will be granted under the BCC equity compensation plans.
Shareholder Return Performance Graph
Set forth below is a graph comparing the cumulative total returns (assuming reinvestment of dividends) for
the Company’s Class A Common Stock, the Standard and Poor’s 500 Stock Index and Standard and
Poor’s Small-Cap Stock Index and assumes $100 was invested on December 31, 2011.
$
BBX Capital Corporation
Standard and Poor's Small-Cap
Stock Index
Standard and Poor's 500 Stock
Index
12/31/2011 12/31/2012 12/31/2013
825.71
100.00
360.00
12/31/2014
900.00
12/31/2015
968.57
12/31/2016
1,394.29
100.00
114.35
159.78
167.00
161.22
201.35
100.00
113.41
146.98
163.72
162.53
178.02
The Company is not able to identify a group of peer companies or industry or line of business index which
it believes is comparable to the Company and its current activities. Accordingly, the Company selected
the Standard and Poor’s Small-Cap Stock Index based on the Company’s market capitalization.
The performance graph should not be deemed “filed” for purposes of Section 18 of the Exchange Act, or
incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act,
except as expressly set forth by specific reference in such filing.
42
ITEM 6. SELECTED FINANCIAL DATA
The following table sets forth selected historical consolidated financial data as of and for the periods indicated
below. The selected historical consolidated statements of operations for fiscal years 2016, 2015 and 2014 and the
selected consolidated statements of financial conditions as of December 31, 2016 and 2015 are derived from our
audited consolidated financial statements included in Item 8 of this report. The selected historical consolidated
statements of operations for fiscal years 2013 and 2012 and the selected consolidated statements of financial
condition as of December 31, 2014, 2013 and 2012 set forth below are derived from our previously filed audited
consolidated financial statements not included in this report and have been updated to conform to the current
presentation.
2016
For the Years Ended December 31,
2014
(Dollars in thousands, except for per share data)
2015
2013
2012
Statements of Operations Data:
Total revenues
$ 763,995
740,207
672,186
563,763
490,930
Total cost and expenses
703,108
676,971
611,300
466,706
472,278
Gain on extinguishment of debt
Equity in earnings (loss) from unconsolidated
real estate joint ventures
Investment gains
Foreign exchange gain (loss)
Other income
Income from continuing operations before
income taxes
(Provision) benefit for income taxes (1)(8)
Income from continuing operations
Income from discontinued operations, net of
income taxes (2)
Net income
Less: Net income attributable to noncontrolling
interests
Net income attributable to shareholders
Preferred Stock dividends
Net income allocable to common shareholders $
Common Share Data (3) (4)
Basic earnings per share of common stock:
Diluted earnings per share of common stock:
Basic weighted average number of
common shares outstanding
Diluted weighted average number of
common shares outstanding
Cash dividends declared per common share
(5):
Book value per share (6):
$
$
$
$
-
-
-
-
29,875
13,630
-
219
3,300
(1,565)
-
(1,038)
4,050
(573)
-
(715)
4,780
(30)
-
(357)
228
186
9,307
-
2,442
78,036
(36,379)
41,657
64,683
76,596
141,279
64,378
(37,073)
27,305
96,898
(26,141)
70,757
60,462
(16,225)
44,237
-
41,657
-
141,279
-
27,305
-
70,757
267,863
312,100
13,295
28,362
-
28,362
18,805
122,474
-
122,474
13,455
13,850
-
13,850
41,694
29,063
-
29,063
146,085
166,015
(188)
165,827
0.33
0.32
1.41
1.40
0.16
0.16
0.35
0.35
2.14
2.09
86,902
87,022
84,502
83,202
77,142
87,492
87,208
84,761
84,624
79,087
0.015
-
-
-
-
4.64
4.46
3.03
3.05
3.87
43
2016
As of December 31,
2014
2013
2015
2012
Statements of Financial Condition Data:
Loans, loans held-for-sale
and notes receivable, net
Inventory
Total assets
BB&T preferred interest in FAR, LLC
Borrowings (7)
Shareholders' equity
Noncontrolling interests
Total equity
(Dollars in thousands)
$ 456,001
253,788
470,987
220,211
581,641
213,411
804,420
486,534
195,357
194,713
1,436,068 1,340,960 1,402,453 1,430,128 1,537,895
196,877
612,539
298,967
208,822
507,789
-
701,146
454,604
40,850
495,454
68,517
682,729
239,421
182,975
422,396
12,348
661,583
252,906
193,800
446,706
-
675,391
376,826
106,080
482,906
(1) The Company’s ownership interest in BCC increased to 81% during 2015 as a result of the
purchase of additional shares of BCC’s Class A Common Stock on April 30, 2015. Due to the
increase in ownership, during periods after April 30, 2015, the Company files a consolidated
group tax return which includes the operations of the BCC, Woodbridge and Bluegreen.
(2) Discontinued operations include the results of operations of BankAtlantic’s Community
Banking, Investments, Tax Certificates and Capital Services reporting units for the year ended
December 31, 2012.
(3) While the Company has two classes of common stock outstanding, the two-class method is not
presented because the Company’s capital structure does not provide for different dividend rates
or other preferences, other than voting rights, between the two classes.
(4) For the year ended December 31, 2012, basic and diluted earnings per share from discontinued
operations were $1.84 per share.
(5) During June, September and December 2016, the Company declared quarterly cash dividends
of $0.005 per share on its Class A Common Stock and Class B Common Stock.
(6) The denominator of book value per share for all periods was computed by adding the number
of Class A shares outstanding at year-end and the number of Class B shares outstanding at
year-end.
(7) Borrowings consist of notes and mortgage notes payable and other borrowings, receivable-
backed notes payable and junior subordinated debentures.
(8) The benefit for income taxes for the year ended December 31, 2015 was the result of a $127.8
million reversal of a portion of the Company’s deferred tax asset valuation allowance on May
1, 2015 when the Company became eligible to file a consolidated group federal income tax
return with Bluegreen.
44
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
BBX Capital Corporation (formerly BFC Financial Corporation) together with its subsidiaries may be
referred to as the “Company”, “we,” “us,” or “our,” and is referred to without its subsidiaries as “BBX
Capital”. BBX Capital is a Florida-based diversified holding company with investments in Bluegreen
Corporation (“Bluegreen”), real estate and real estate joint ventures and middle market operating
companies. Bluegreen is a sales, marketing and management company focused on the vacation ownership
industry. The Company’s real estate investments include the ownership, financing, acquisition,
development and management of real estate, including through real estate joint ventures. The Company’s
investments in middle market operating businesses include Renin Holdings, LLC (“Renin”) a company
that manufactures products for the home improvement industry, the Company’s investments in sugar and
confectionery businesses through its wholly-owned subsidiary, BBX Sweet Holdings, LLC (“BBX Sweet
Holdings”) and more recently its MOD Pizza franchise activities. Our middle market businesses were, at
the time of acquisition or commencement, early stage businesses. Renin, which was acquired in October
2013 achieved profitability in 2016. BBX Sweet Holdings, which we consider to be in an earlier stage of
development, is not yet profitable. The MOD Pizza franchise activities are only currently commencing in
2017.
On December 15, 2016 the Company completed the acquisition of all the outstanding shares of the former
BBX Capital Corporation (“BCC”) not previously owned by the Company as described in further detail in
Item 8 – Note 3 of this report. On January 30, 2017 the Company changed its name from BFC Financial
Corporation to BBX Capital Corporation.
Prior to the acquisition of all the outstanding shares of BCC, the Company had an 82% equity interest in
BCC and a direct 54% equity interest in Woodbridge, the parent company of Bluegreen. BCC held the
remaining 46% interest in Woodbridge. As a result of the acquisition of the publicly held shares of BCC,
BCC and Bluegreen, indirectly through Woodbridge, are wholly owned subsidiaries of the Company.
As of December 31, 2016, we had total consolidated assets of approximately $1.4 billion and
shareholders’ equity of approximately $454.6 million. Net income attributable to shareholders for the year
ended December 31, 2016 was approximately $28.4 million. Net income attributable to shareholders for
the years ended December 31, 2015 and 2014 was approximately $122.5 million and $13.9 million,
respectively.
We currently report
segments: Bluegreen, BBX Capital Real Estate and Renin.
the results of our business activities
through
the following reportable
Summary of Consolidated Results of Operations
Information regarding income before taxes by segment for the years ended December 31, 2016, 2015 and
2014 is set forth in the table below (in thousands):
For the Years Ended December 31,
2014
2015
2016
Bluegreen
BBX Capital Real Estate
Renin
Corporate Expenses & Other
Income before income taxes
(Provision) benefit for income taxes
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders
$
$
124,948
34,719
857
(82,488)
78,036
(36,379)
41,657
13,295
28,362
124,320
45,474
(2,058)
(103,053)
64,683
76,596
141,279
18,805
122,474
109,494
471
(2,044)
(43,543)
64,378
(37,073)
27,305
13,455
13,850
45
Corporate Expenses & Other
The results of operations of BBX Sweet Holdings and subsidiaries, BBX Capital’s corporate overhead and
the expenses of Woodbridge unrelated to Bluegreen, including Woodbridge’s interest expense associated
with Woodbridge’s junior subordinated debentures, are reported as “Corporate Expenses & Other” in the
Company’s segment information.
Beginning in December 2013, BBX Sweet Holdings commenced acquiring operating businesses in the
candy and confectionery industry. These companies manufacture chocolate and hard candy products
which are sold through wholesale and retail distribution channels. BBX Sweet Holdings is currently
integrating and consolidating the operations of the acquired companies, upgrading personnel, and hiring
experienced marketing, finance and senior executives. Also, during 2016 BBX Sweet Holdings opened
additional retail outlets. BBX Sweet Holdings had trade sales of $30.7 million, $27.8 million and $16.2
million for the years ended December 31, 2016, 2015 and 2014, respectively. The gross margin on BBX
Sweet Holdings trade sales was $3.5 million, $7.2 million and $5.4 million, respectively, and BBX Sweet
Holdings experienced a loss before income taxes of $14.9 million and $8.8 million for the years ended
December 31, 2016 and 2015, respectively. Income before income taxes from BBX Sweet Holdings
operations was $23,000 for the year ended December 31, 2014. The BBX Sweet Holdings losses include
the impact of excess manufacturing capacity and inefficient manufacturing processes. BBX Sweet
Holdings currently intends to continue to pursue acquisitions in the candy and confectionery industry and
we anticipate that BBX Sweet Holdings will continue to generate losses in 2017.
BBX Capital’s corporate overhead consists primarily of expenses associated with administering the
various support functions at its corporate headquarters, including executive compensation, accounting,
legal, human resources, risk management, investor relations and executive offices. BBX Capital’s
corporate general and administrative expenses were $57.9 million, $51.1 million and $41.8 million for the
years ended December 31, 2016, 2015, and 2014 respectively. The increase in BBX Capital’s corporate
general and administrative expenses for each of the years in the three year period ended December 31,
2016 resulted primarily from higher compensation and increased professional fees. In addition,
Woodbridge’s interest expense on its junior subordinated debentures was $4.0 million, $3.6 and $3.6
million for the years ended December 31, 2016, 2015 and 2014, respectively.
Included in “Corporate Expenses & Other” for year ended December 31, 2015 was a $36.5 million
expense in connection with the settlement of the litigation brought by Bluegreen’s former shareholders
related to the April 2013 acquisition of Bluegreen.
Provision (Benefit) for Income Taxes
The provision for income taxes for the years ended December 31, 2016 and 2014 reflects the Company’s
effective tax rate of 46.6% and 57.6% on income before income taxes, respectively. The effective tax rate
was higher than the expected federal income tax rate of 35% due to nondeductible executive
compensation, increases in the deferred tax asset valuation allowance and changes in the Company’s state
income tax effective rate.
The benefit for income taxes for the year ended December 31, 2015 resulted from the release of a portion
of BBX Capital’s deferred tax asset valuation allowance on May 1, 2015 as BBX Capital became eligible
to file a consolidated group federal income tax return with BCC and Bluegreen described in further detail
in Item 8 – Note 13 of this report.
Net Income Attributable To Non-Controlling Interest
BBX Capital includes in its consolidated financial statements the results of operations and financial
position of Bluegreen/Big Cedar Vacations, Bluegreen’s 51% owned subsidiary, and BBX Capital’s 82%
ownership of BCC through December 15, 2016. The non-controlling interest in income of Bluegreen/Big
Cedar Vacations is the portion of Bluegreen/Big Cedar Vacations’ consolidated net income that is
attributable to its unaffiliated 49% interest holder and the non-controlling interest in BCC’s consolidated
net income is the portion of BCC’s consolidated net income that is attributable to its shareholders other
than BBX Capital through December 15, 2016. Net income attributable to the non-controlling interest
totaled $13.3 million, $18.8 million and $13.5 million during the years ended December 31, 2016, 2015
and 2014, respectively.
46
Bluegreen Reportable Segment
Executive Overview
Bluegreen Corporation (“Bluegreen” or “Bluegreen Vacations”) is a sales, marketing, and management
company focused on the vacation ownership industry. Bluegreen Vacations markets, sells and manages
vacation ownership interests in resorts, which are generally located in popular, high-volume, “drive-to”
vacation destinations. The resorts in which Bluegreen Vacations markets, sells or manages VOIs were
either developed or acquired by Bluegreen, or were developed and are owned by third parties. Bluegreen
Vacations earns fees for providing sales and marketing services to these third party developers. Bluegreen
Vacations also earns fees by providing management services to the Bluegreen Vacation Club and property
owners’ associations, mortgage servicing, VOI title services, reservation services, and construction design
and development services. In addition, Bluegreen Vacations provides financing to FICO ® score-qualified
individual purchasers of VOIs, which generates significant interest income.
In addition to Bluegreen’s traditional vacation ownership operations, Bluegreen has in recent years
pursued a business strategy, referred to herein as the “capital-light” business strategy, involving activities
that typically do not require the significant costs and capital investments generally incurred in connection
with the acquisition and development of VOIs under Bluegreen’s traditional vacation ownership
business. Bluegreen believes its capital-light business strategy enables it to leverage its expertise and
existing infrastructure in resort management, sales and marketing, mortgage servicing, title services, and
construction management to generate recurring revenues from third parties. Bluegreen’s goal is for its
capital-light business activities to remain a significant portion of its business; however, these efforts may
not be successful. As of December 31, 2016, Bluegreen’s capital-light business activities consisted of the
following: fee-based sales and marketing arrangements; just-in-time inventory acquisition arrangements;
secondary market arrangements; and other fee-based services. Each of these categories is described
below.
Fee-Based Sales and Marketing Arrangements
Bluegreen offers sales and marketing services to third-party developers for a fee. Under these
arrangements, Bluegreen sells third-party VOIs as Bluegreen Vacation Club interests through its
distribution network of sales offices, typically on a non-committed basis. Bluegreen seeks to structure its
fee for these services to cover its selling and marketing costs, plus an operating profit. Because the
completed VOI was built by a third-party, Bluegreen is not at risk for the development financing of these
projects and Bluegreen has little to no capital requirements. However, Bluegreen is at risk that third-party
developers of resorts under fee-based sales and marketing arrangements do not deliver the resorts’ VOIs
when planned, or do not fulfill their obligations to Bluegreen or to the POAs that maintain the resorts they
developed. Notes receivable originated in connection with Bluegreen’s sale of third party VOIs under
commission-based arrangements are held by the third party developer, and in certain cases are serviced by
Bluegreen for a fee. Bluegreen refers to sales made on behalf of third-party developers as “FBS Sales”.
Just-In-Time Inventory Acquisition Arrangements
Bluegreen enters into agreements with third-party developers that allow Bluegreen to buy VOI inventory
from time to time in close proximity to the timing of when Bluegreen intends to sell such
VOIs. Bluegreen typically enters into such arrangements on a non-committed basis, although Bluegreen
may enter into committed arrangements under certain circumstances. Because the completed VOI was
built by a third-party, Bluegreen is not at risk for the development financing of these projects. However,
Bluegreen is at risk that third-party developers of resorts under just-in-time acquisition arrangements do
not deliver the resorts’ VOIs when planned, or do not fulfill their obligations to Bluegreen or to the POAs
that maintain the resorts they developed. Unlike FBS Sales, receivables originated in connection with
sales of just-in-time inventory are held by Bluegreen. Bluegreen refers to sales of inventory acquired
through these arrangements as “Just-In-Time Sales”.
Secondary Market Arrangements
Bluegreen acquires VOI inventory from POAs and other third parties on a non-committed basis, in close
proximity to the timing of when Bluegreen intends to sell such VOIs. Such VOIs are typically obtained
by the POAs through foreclosure in connection with maintenance fee defaults, and are generally acquired
by Bluegreen at a significant discount. Bluegreen refers to sales of inventory acquired through these
arrangements as “Secondary Market Sales”.
Other Fee-Based Services
Bluegreen also earns fees for providing management services to the Bluegreen Vacation Club and to
certain POAs. In connection with the management services provided to the Bluegreen Vacation Club,
Bluegreen manages the club
47
reservation system and provides owner services as well as billing and collection services. In connection
with Bluegreen’s management of POAs, Bluegreen provides day-to-day management services, including
oversight of housekeeping services, maintenance, and certain accounting and administrative services. As
of December 31, 2016, Bluegreen provided management services to 47 timeshare resort properties and
hotels. Other fee-based services also include the processing of sales of VOIs through Bluegreen’s wholly-
owned title company subsidiary, which earns title fees in connection with the closing of the VOI
transactions.
Bluegreen also generates fee-based income by providing construction, design and management services,
and mortgage servicing.
During the year ended December 31, 2016:
·
·
·
·
·
·
·
Bluegreen generated “free cash flow” (cash flow from operating activities less capital
expenditures) of $102.9 million compared to $72.1 million during 2015. Positive changes in
components of working capital and lower expenditures for inventory were the primary reasons
for this increase.
Bluegreen’s income before income taxes was $124.9 million compared to $124.3 million for
2015.
System-wide sales of VOIs, which include sales of traditional inventory, Secondary Market
Sales, FBS Sales, and Just-In-Time Sales, were $605.4 million compared to $552.7 million
during 2015.
Bluegreen sold $294.8 million of third-party inventory under FBS Sales arrangements and
earned sales and marketing commissions of $2 0 1 . 8 million in connection with those
sales. During 2015, Bluegreen sold $251.4 million of third-party inventory under FBS Sales
arrangements and earned sales and marketing commissions of $173.7 million in connection with
those sales. In addition, Bluegreen sold $39.6 million of inventory under Just-In-Time Sales
arrangements, gross of equity trade allowances compared to $27.6 million during 2015.
Bluegreen sold $165.0 million of inventory under Secondary Market Arrangements, gross of
equity trade allowances compared to $138.5 million during 2015.
Bluegreen’s estimated uncollectible VOI notes receivable as a percentage of gross sales was
14%, which was consistent with Bluegreen’s estimated uncollectible VOI notes receivable as a
percentage of gross sales for the same period in 2015.
Bluegreen paid $10.0 million of special bonuses to certain employees in 2016, where no such
comparable payment occurred in 2015.
During the year ended December 31, 2016, 41% of Bluegreen’s VOI sales were realized in cash within
approximately 30 days from the contract date. See “Liquidity and Capital Resources” below for
additional information.
Seasonality
Bluegreen has historically experienced and expects to continue to experience seasonal fluctuations in its
revenues and results of operations. This seasonality has resulted, and may continue to result, in
fluctuations in Bluegreen’s quarterly operating results. Although Bluegreen typically sees more potential
customers at its sales offices during the quarters ending in June and September, ultimate recognition of the
resulting sales during these periods may be delayed due to down payment requirements for recognition of
real estate sales under GAAP or due to the timing of development and the required use of the percentage-
of-completion method of accounting.
VOI Notes Receivable and Allowance for Credit Losses
Bluegreen offers financing to buyers of VOIs and accordingly, Bluegreen is subject to the risk of defaults
by these customers. Pursuant to GAAP, sales of VOIs are reduced by an estimate of future uncollectible
note balances on originated VOI notes receivable, excluding any benefit for the value of future recoveries
of defaulted VOI inventory. Bluegreen updates its estimate of such future losses each quarter, and
consequently, the charge against sales in a particular period may be impacted, favorably or unfavorably,
by a change in expected losses related to notes originated in prior periods.
Bluegreen’s notes receivable also includes amounts outstanding under Bluegreen Communities’ notes
receivable portfolio, which was excluded from Bluegreen’s sale during May 2012 of substantially all of
the assets of Bluegreen Communities.
Substantially all defaulted VOI notes receivable result in a recovery of the related VOI that secured the
note receivable, typically soon after default and at a nominal cost. Bluegreen then seeks to resell the
recovered VOI in the normal course of business.
48
Bluegreen generally seeks to monetize its notes receivable by transferring the notes to warehouse purchase
facilities, in which case the notes are legally sold to a special purpose entity for the benefit of a financial
institution or conduit, or by pledging the notes as collateral for a receivables hypothecation
loan. Bluegreen attempts to maintain these diversified liquidity sources for its notes receivable in order to
mitigate the risks of being dependent on a single source of credit. Each such facility has eligibility
standards for the notes receivable that may be sold or pledged under the facility. It is generally
contemplated that notes receivable transferred to a warehouse purchase facility will ultimately be included
in a future securitization of the transferred notes. The notes receivable securitized are determined during
the negotiation of the securitization transaction, with the characteristics of the notes receivable selected
determining the terms of the transaction. Notes receivable previously pledged as collateral for a
receivable hypothecation loan may also be included in a term securitization transaction, however such
notes are generally not included if doing so would result in a significant prepayment penalty. Further,
based on the size and timing of the securitization, Bluegreen may also choose to include newly originated
notes receivable. Additionally, the specific characteristics of the notes receivable factor into whether such
notes would be desirable to include in a securitization. Such factors may include delinquency status,
FICO® score of the borrower, interest rate, remaining term, outstanding balance, and whether the
borrower is foreign or domestic.
The average annual default rates and delinquency rates (more than 30 days past due) on Bluegreen’s notes
receivable were as follows:
Average Annual Default Rates
Notes receivable secured by VOIs:
Loans originated prior to December 15, 2008(1)
Loans originated on or after December 15, 2008(1)
Notes receivable secured by homesites
Delinquency Rates (2)
Notes receivable secured by VOIs:
Loans originated prior to December 15, 2008(1)
Loans originated on or after December 15, 2008(1)
Notes receivable secured by homesites
For the Years Ended December 31,
2015
2016
2014
6.1%
7.6%
2.3%
2016
4.4%
3.2%
0.1%
6.5%
7.0%
2.3%
As of December 31,
2015
4.2%
3.1%
2.0%
6.9%
6.8%
4.1%
2014
4.2%
3.1%
1.1%
(1) On December 15, 2008, Bluegreen implemented its FICO ®-score based credit underwriting program.
(2) The percentage of Bluegreen’s notes receivable portfolio that was over 30 days past due as of the dates indicated.
See Note 6 to the Consolidated Financial Statements for additional information about Bluegreen’s notes
receivable, including Bluegreen’s allowance for credit losses.
49
Results of Operations
Information regarding the results of operations for Bluegreen for the years ended December 31, 2016,
2015 and 2014 are set forth below (dollars in thousands):
For the Years Ended December 31,
2016
2015
2014
%
of System-
wide sales
of VOIs,
net(5)
Amount
%
of System-
wide sales
of VOIs,
net(5)
Amount
%
of System-
wide sales
of VOIs,
net(5)
Amount
$
394,745
65% $
424,304
77% $
418,665
80%
164,991
27%
138,487
25%
88,269
17%
294,822
49%
251,399
45%
221,315
42%
39,626
(288,792)
605,392
(294,822)
310,570
(44,428)
266,142
(27,346)
238,796
201,829
103,448
(57,632)
(6,847)
(314,039)
7%
-48%
100%
-49%
51%
-14%
44%
-10%
90%
68%
17%
-10%
-1%
-52%
27,593
(289,060)
552,723
(251,399)
301,324
5%
-52%
100%
-45%
55%
(42,088)
-14%
259,236
(22,884)
236,352
173,659
97,539
(53,896)
(7,046)
(284,351)
47%
-9%
91%
69%
18%
-10%
-1%
-51%
56,827
(261,260)
523,816
(221,315)
302,501
(40,167)
262,334
(30,766)
231,568
144,239
92,089
(49,224)
(7,717)
11%
-50%
100%
-42%
58%
-13%
50%
-12%
88%
65%
18%
-9%
-1%
(250,320)
-48%
(100,988)
-17%
(89,453)
-16%
(94,871)
-18%
58,657
123,224
1,724
124,948
$
$
10%
20% $
48,633
121,437
2,883
9%
22% $
40,342
106,106
3,388
8%
20%
$
124,320
$
109,494
Traditional VOI sales (1)
VOI sales-secondary market
program
Sales of third-party VOIs-
commission basis(3)
Sales of third-party VOIs-just-in-
time basis(4)
Less: Equity trade allowance (6)
System-wide sales of VOIs, net
Less: Sales of third-party VOIs-
commission basis
Gross sales of VOIs
Estimated uncollectible VOI
notes receivable (2)
Sales of VOIs
Cost of VOIs sold (3)
Gross profit (3)
Fee-based sales commission
revenue (4)
Other fee-based services revenue
Cost of other fee-based services
Net carrying cost of VOI inventory
Selling and marketing expenses
General and administrative
expenses
Net interest spread
Operating profit
Other income
Income before income taxes
(1) Traditional VOI represent sales of Bluegreen-owned VOIs acquired or developed by Bluegreen under its traditional
VOI business. Traditional VOI sales do not include Secondary Market Sales, FBS Sales, or Just-In-Time Sales
under Bluegreen’s capital-light business strategy.
(2) Percentages for estimated uncollectible VOI notes receivable are calculated as a percentage of gross sales of VOIs
which excludes sales of third-party VOIs – commission basis (and not of system-wide sales of VOIs, net).
(3) Percentages for costs of VOIs sold and gross profit are calculated as a percentage of sales of VOIs (and not of
system-wide sales of VOIs, net).
(4) Percentages for fee-based sales commission revenue are calculated based on sales of third-party VOIs-commission
basis (and not of system-wide sales of VOIs, net).
(5) Represents the applicable line item, calculated as a percentage of system-wide sales of VOIs, net, unless otherwise
indicated in the above footnotes.
(6) Equity trade allowances are amounts granted to customers upon trading in their existing VOIs in connection with
the purchase of additional VOIs.
50
Bluegreen - Year ended December 31, 2016 compared to the year ended December 31, 2015
System-wide sales of VOIs. System-wide sales of VOIs include all sales of VOIs, regardless of whether Bluegreen
or a third-party owned the VOI immediately prior to the sale. Sales of third-party owned VOIs are transacted as
sales of timeshare interests in the Bluegreen Vacation Club through the same selling and marketing process
Bluegreen uses to sell its VOI inventory. System-wide sales of VOIs were $605.4 million and $552.7 million during
2016 and 2015, respectively. The growth in system-wide sales of VOIs during 2016 reflects an increase in sales,
primarily due to (i) an increase in the number of tours, partially offset by a decrease in the sale-to-tour conversion
ratio and (ii) an increase in the average sales price per transaction. During 2016, the number of tours increased 16%
and the number of new prospect tours increased 22% compared to 2015 The increase in the number of tours reflects
efforts to expand marketing to new sales prospects. The average sales price per transaction increased by 6% during
2016 compared to 2015. System-wide sales were estimated to be adversely impacted $6.3 million by Hurricane
Matthew and the Tennessee wildfires in 2016.
Sales by category are
Included in system-wide sales are FBS Sales, Just-In-Time Sales, Secondary Market Sales and traditional
sales.
in each
transaction. Bluegreen manages which category of VOIs are sold based on several factors, including the
needs of FBS clients, debt service requirements and default resale requirements under term securitization
and similar transactions. These factors contribute to fluctuations in the amount of sales by category from
period to period.
tracked based on which deeded VOI
is conveyed
The following table sets forth certain information for system-wide sales of VOIs for 2016 and 2015. The
information is provided before giving effect to the deferral of Bluegreen VOI sales in accordance with
GAAP:
Number of sales offices at period-end
Number of active contracts with fee-based clients at period-end
Total number of VOI sales transactions
Average sales price per transaction
Number of total prospects tours
Sale-to-tour conversion ratio– total prospects
Number of new prospects tours
Sale-to-tour conversion ratio– new prospects
Percentage of sales to existing owners
Sales volume per guest
$
$
For the Years Ended
December 31,
2016
2015
23
14
45,340
13,727 $
274,987
16.5%
190,235
13.5%
46.0%
2,263 $
23
15
43,576
12,962
237,208
18.4%
156,554
14.9%
48.2%
2,381
Sales of VOIs. Sales of VOIs represent sales of Bluegreen-owned VOIs, including traditional VOIs, those
obtained on a Just-In-Time basis, and those acquired through Secondary Market arrangements, reduced by
equity trade allowances and an estimate of uncollectible VOI notes receivable. In addition to the above-
described factors impacting system-wide sales of VOIs, sales of VOIs are impacted by the proportion of
system-wide sales of VOIs sold on behalf of third-parties on a commission basis, which are not included in
sales of VOIs. Sales of VOIs were $266.1 million and $259.2 million during 2016 and 2015, respectively.
Gross sales of VOIs were reduced by $44.4 million and $42.1 million during 2016 and 2015, respectively,
for estimated future uncollectible notes receivable. Estimated losses for uncollectible VOI notes
receivable vary with the amount of financed sales during the period and changes in Bluegreen’s estimates
of future note receivable performance for existing and newly originated loans. In connection with
Bluegreen’s quarterly analysis of its loan portfolio, which consists of evaluating the expected future
performance of loans with remaining lives of one to ten years, Bluegreen may identify factors or trends
that change its estimate of future loan performance and result in a change in the allowance for credit
losses. Bluegreen’s estimated uncollectible VOI notes receivable as a percentage of gross sales of VOIs
were 14% during both 2016 and 2015. Bluegreen believes that a portion of the default increase in recent
years is a result of the receipt of cease and desist letters from attorneys purporting to represent certain VOI
owners and have encouraged such owners to become delinquent and ultimately default on their
obligations. Following receipt, contact of VOI owners is ceased, unless otherwise allowed by law. While
Bluegreen believes its notes receivable are adequately reserved at this time, actual defaults may differ
from the estimates and the reserve may not be adequate.
Cost of VOIs Sold. Cost of VOIs sold represents the cost at which Bluegreen-owned VOIs sold during the
period were relieved from inventory. In addition to Bluegreen’s traditional inventory, Bluegreen-owned
VOIs also include those
51
that were acquired by Bluegreen under Just-In-Time and Secondary Market arrangements within the
capital-light business strategy. Compared to the cost of Bluegreen’s traditional inventory, VOIs acquired
in connection with Just-In-Time arrangements typically have a relatively higher associated cost of sales as
a percentage of sales while those acquired in connection with Secondary Market arrangements typically
have a lower cost of sales percentage, as Secondary Market inventory is generally obtained from POAs at
a significant discount. During 2016 and 2015, cost of VOIs sold was $27.3 million and $22.9 million,
respectively, and represented 10% and 9%, respectively, of sales of VOIs. Cost of VOIs sold as a
percentage of sales of VOIs varies between periods based on the relative costs of the specific VOIs sold in
each period and the size of the point packages of the VOIs sold (due to offered volume discounts,
including consideration of cumulative sales to existing owners). Additionally, the effect of changes in
estimates under the relative sales value method, including estimates of project sales, future defaults,
upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a
retrospective basis in the period the change occurs. Therefore, cost of sales will typically be favorably
impacted in periods where a significant amount of Secondary Market VOI inventory is acquired and the
resulting change in estimate is recognized. While Bluegreen believes that there is additional inventory
that can be obtained through the Secondary Market at favorable costs to Bluegreen in the future, there can
be no assurance that such inventory will be available as expected.
In September 2016, Bluegreen increased the selling price of its VOIs by 5%. As a result of this pricing
change, Bluegreen's management also increased its estimate of total gross margin generated on the sale of
its VOI inventory. Under the relative sales value method prescribed for timeshare developers to relieve
the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on the sale of
VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during 2016, Bluegreen
recognized a benefit to cost of VOIs sold of $5.6 million.
Fee-Based Sales Commission Revenue. During 2016 and 2015, Bluegreen sold $294.8 million and $251.4
million, respectively, of third-party VOI inventory under commission arrangements within its capital-light
business strategy and earned sales and marketing commissions of $201.8 million and $173.7 million,
respectively, in connection with those sales. The increase in sales of third-party developer inventory on a
commission basis during 2016 was due primarily to the factors described above related to the increase in
system-wide sales of VOIs. Bluegreen earned an average sales and marketing commission of 68% and
69% during 2016 and 2015, respectively.
Net Carrying Cost of VOI Inventory. Bluegreen is responsible for paying maintenance fees and developer
subsidies for unsold VOI inventory to the POAs that maintain the resorts. Bluegreen attempts to mitigate
this expense, to the extent possible, through the rental of owned VOIs and through proceeds from the
Bluegreen sampler programs. The carrying cost of Bluegreen’s inventory was $16.8 million and $15.3
million during 2016 and 2015, respectively, which was partly offset by rental and sampler revenues of
$9.9 million and $8.3 million, respectively. The increase in carrying costs was primarily due to an
increase in maintenance fees related to a newly constructed building at Bluegreen/Big Cedar Vacation’s
Paradise Point resort that began sales in November 2015, partially offset by an increase in rental revenues
and Bluegreen’s increased emphasis on its capital-light strategy.
Selling and Marketing Expenses. Selling and marketing expenses were $314.0 million and $284.4 million
during 2016 and 2015, respectively. As a percentage of system-wide sales of VOIs, selling and marketing
expenses increased to 52% during 2016 from 51% during 2015. The increase in selling and marketing
expenses during 2016 compared to 2015 was a result of Bluegreen’s focus on increasing its marketing
efforts to new prospects as opposed to existing owners, which resulted in higher costs per tour from new
and expanding marketing channels. Sales to existing owners generally involve lower marketing expenses
than sales to new prospects. Further, the increase in 2016 was driven by less favorable sale-to-tour
conversion ratios and a higher percentage of new prospect sales compared to prior year, partially offset by
a higher average sales price per transaction in 2016. Bluegreen expects to continue to increase its focus on
sales to new prospects and, as a result, sales and marketing expenses generally and as a percentage of sales
may continue to increase.
Included in the variety of methods that Bluegreen uses to attract prospective purchasers of VOIs, are
marketing arrangements with various third parties. Sales of VOIs to prospects and leads generated by one
marketing arrangement accounted for approximately 16% of Bluegreen’s VOI sales volume during 2016
and approximately 20% during 2015. There can be no guarantee that Bluegreen will be able to maintain,
extend or renew such arrangement or any other marketing arrangements in the future, and a loss of any
significant marketing relationships could have a material adverse impact on Bluegreen’s financial
condition, including cash position and operating results.
General and Administrative Expenses. General and administrative expenses, which represent expenses
directly attributable to sales and marketing operations and corporate overhead, were $101.0 million and
$89.5 million during 2016 and 2015, respectively. As a percentage of system-wide sales of VOIs, general
and administrative expenses were 17% and 16% during the years ended December 31, 2016 and 2015,
respectively. The increase was primarily due to special bonuses totaling $10 million which were paid to
certain Bluegreen employees in June 2016. Revenues from
52
mortgage servicing during 2016 and 2015 of $3.8 million and $2.7 million, respectively, have been netted
against general and administrative expenses.
Other Fee-Based Services
Revenue and costs related to Bluegreen’s other fee-based services were as follows (in thousands):
For the Years Ended December 31,
2016
2015
$
Revenues:
Fee-based management services
Title operations
Other
Total other fee-based services revenue
Costs:
Fee-based management services
Title operations
Other
Total cost of other fee-based services
Profit:
Fee-based management services
Title operations
Other
Total other fee-based services profit
$
69,743
13,838
19,867
103,448
28,985
5,116
23,531
57,632
40,758
8,722
(3,664)
45,816
64,329
14,283
18,927
97,539
28,608
4,896
20,392
53,896
35,721
9,387
(1,465)
43,643
Other Fee-Based Services Revenue. Other fee-based services revenue increased 6% in 2016 as compared
to 2015. Bluegreen provides management services to the Bluegreen Vacation Club and to a majority of
the POAs of the resorts within the Bluegreen Vacation Club. In connection with Bluegreen’s
management services, Bluegreen also manages the club reservation system, provides services to owners
and performs billing and collection services to the Bluegreen Vacation Club and certain POAs. At
December 31, 2016 and 2015, Bluegreen managed 47 and 46 timeshare resort properties and hotels,
respectively. Fee-based management services revenue increased during 2016 compared to 2015, primarily
as a result of increases in the number of managed resorts and the number of owners in the Bluegreen
Vacation Club. Additionally, Bluegreen generates revenues from providing title services, its Traveler
Plus™ program, and food and beverage and other retail operations. Bluegreen also earns commissions
from providing rental services to third parties and fees from managing the construction activities of certain
of its fee based clients.
Bluegreen intends to continue to pursue its efforts to provide management, title and other services to resort
developers and others, on a cash-fee basis. While Bluegreen’s efforts to do so may not be successful,
Bluegreen anticipates that this will become an increasing portion of its business over time.
Cost of Other Fee-Based Services. Cost of other fee-based services increased 7% in 2016 as compared to
2015. The increase is primarily due to the higher costs associated with programs provided to VOI owners
and increased costs of providing management services as a result of the higher service volumes described
above.
Bluegreen - Year ended December 31, 2015 compared to the year ended December 31, 2014
System-wide sales of VOIs. System-wide sales of VOIs were $552.7 million and $523.8 million during 2015
and 2014, respectively. The growth in system-wide sales of VOIs during 2015 reflects an increase in the
number of tours and the average price per transaction, partially offset by a slight decrease in the sale-to-
tour conversion ratio. During 2015, the number of tours increased 5%, and the number of new prospect
tours increased 8%, compared to 2014. The increase in the number of tours reflects efforts to expand
marketing to new sales prospects. The average price per transaction increased by 5% during 2015
compared to 2014.
53
The following table sets forth certain information for system-wide sales of VOIs for the periods indicated.
The information is provided before giving effect to the deferral of Bluegreen VOI sales in accordance with
GAAP:
For the Years Ended
December 31,
2015
2014
Number of sales offices at period-end
Number of active contracts with fee-based clients at period-end
Total number of VOI sales transactions
Average sales price per transaction
Number of total prospects tours
Sale-to-tour conversion ratio– total prospects
Number of new prospects tours
Sale-to-tour conversion ratio– new prospects
Percentage of sales to existing owners
Sales volume per guest
$
$
23
15
43,576
12,962 $
237,208
18.4%
156,554
14.9%
48.2%
2,381 $
23
13
42,814
12,347
225,342
19.0%
144,729
14.9%
48.3%
2,346
Sales of VOIs. In addition to the above-described factors impacting system-wide sales of VOIs, sales of
VOIs are impacted by the proportion of system-wide sales of VOIs sold on behalf of third-parties on a
commission basis, which are not included in sales of VOIs. Sales of VOIs were $259.2 million and $262.3
million during 2015 and 2014, respectively.
Gross sales of VOIs were reduced by $42.1 million and $40.2 million during 2015 and 2014, respectively,
for estimated future uncollectible notes receivable. Estimated losses for uncollectible VOI notes
receivable vary with the amount of financed sales during the period and changes in Bluegreen’s estimates
of future note receivable performance for existing and newly originated loans. In connection with
Bluegreen’s quarterly analysis of its loan portfolio, which consists of evaluating the expected future
performance of loans with remaining lives of one to ten years, Bluegreen may identify factors or trends
that change its estimate of future loan performance and result in a change in the allowance for credit
losses. Bluegreen’s estimated uncollectible VOI notes receivable as a percentage of gross sales of VOIs
were 14% and 13% during 2015 and 2014, respectively. The increase in 2015 reflects a higher proportion
of financed sales as compared to cash sales during 2015.
Cost of VOIs Sold. During 2015 and 2014, cost of VOIs sold was $22.9 million and $30.8 million,
respectively, and represented 9% and 12%, respectively, of sales of VOIs. Cost of VOIs sold as a
percentage of sales of VOIs varies between periods based on the relative costs of the specific VOIs sold in
each period and the size of the point packages of the VOIs sold (due to offered volume discounts,
including consideration of cumulative sales to existing owners). Additionally, the effect of changes in
estimates under the relative sales value method, including estimates of project sales, future defaults,
upgrades and incremental revenue from the resale of repossessed VOI inventory, are reflected on a
retrospective basis in the period the change occurs. Therefore, cost of sales will typically be favorably
impacted in periods where a significant amount of Secondary Market VOI inventory is acquired and the
resulting change in estimate is recognized.
Fee-Based Sales Commission Revenue. During 2015 and 2014, Bluegreen sold $251.4 million and
$221.3 million, respectively, of third-party VOI inventory under commission arrangements within its
capital-light business strategy and earned sales and marketing commissions of $173.7 million and $144.2
million, respectively, in connection with those sales. The increase in sales of third-party developer
inventory on a commission basis during 2015 was due primarily to an increase in the number of
commission based clients, as well as the factors described above related to the increase in system-wide
sales of VOIs. In addition, Bluegreen earned an average sales and marketing commission of 69% and 65%
during 2015 and 2014, respectively. The increase in 2015 included an incentive commission of $1.1
million related to the achievement of certain sales thresholds pursuant to the terms and conditions of the
applicable contractual arrangement.
Net Carrying Cost of VOI Inventory. The carrying cost of Bluegreen’s inventory was $15.3 million and
$17.7 million during 2015 and 2014, respectively, which was partly offset by rental and sampler revenues
of $8.3 million and $10.0 million, respectively. The decrease in carrying costs and rental and sampler
revenues reflect Bluegreen’s increased emphasis on its capital-light strategy.
Selling and Marketing Expenses. Selling and marketing expenses were $284.4 million and $250.3 million
during 2015 and 2014, respectively. As a percentage of system-wide sales of VOIs, selling and marketing
expenses increased to
54
51% during 2015 from 48% during 2014. The increase in selling and marketing expenses during 2015
compared to 2014 was a result of Bluegreen’s focus on attempting to increase its marketing efforts to new
prospects as opposed to existing owners, which resulted in higher costs per tour from new and expanding
marketing channels. Sales to existing owners generally involve lower marketing expenses than sales to
new prospects.
General and Administrative Expenses. General and administrative expenses were $89.5 million and $94.9
million during 2015 and 2014, respectively. As a percentage of system-wide sales of VOIs, general and
administrative expenses were 16% and 18% during the years ended December 31, 2015 and 2014,
respectively. This decrease is primarily the result of a $5.7 million decrease in executive compensation
from 2014 to 2015 primarily due to the resignation of Bluegreen’s CEO in May 2015. Revenues from
mortgage servicing during 2015 and 2014 of $2.7 million and $1.8 million, respectively, have been netted
against general and administrative expenses.
Other Fee-Based Services
Revenue and costs related to Bluegreen’s other fee-based services were as follows (in thousands):
For the Years Ended December 31,
2015
2014
$
Revenues:
Fee-based management services
Title operations
Other
Total other fee-based services revenue
Costs:
Fee-based management services
Title operations
Other
Total cost of other fee-based services
Profit:
Fee-based management services
Title operations
Other
Total other fee-based services profit
$
64,329
14,283
18,927
97,539
28,608
4,896
20,392
53,896
35,721
9,387
(1,465)
43,643
60,357
14,143
17,589
92,089
27,809
4,727
16,688
49,224
32,548
9,416
901
42,865
Other Fee-Based Services Revenue. Other fee-based services revenue increased 6% in 2015 as compared
to 2014. At December 31, 2015, Bluegreen managed 46 timeshare resort properties and hotels. At
December 31, 2014, Bluegreen managed 49 timeshare resort properties and hotels. In January 2015,
Bluegreen sold the management contract from the Bluegreen at Atlantic Palace Resort and recognized a
$0.3 million gain which is included in other income. Fee-based management services revenue increased
during 2015 compared to 2014 due to an increase in club and resort management revenues and owner
program service revenues, primarily as a result of an increase in the number of owners in the Bluegreen
Vacation Club.
Cost of Other Fee-Based Services. Cost of other fee-based services increased 9% in 2015 as compared to
2014. The increase is primarily due to the higher costs associated with programs provided to VOI owners
and increased costs of providing management services as a result of the higher service volumes described
above.
55
Other Revenues and Expenses – Years ended December 31, 2016, 2015 and 2014
Interest Income and Interest Expense. For the years ended December 31, 2016, 2015 and 2014,
Bluegreen’s net interest spread primarily included the interest earned on $546.1 million, $526.3 million
and $527.0 million, respectively, of gross notes receivable, net of interest expense incurred on $415.0
million, $403.9 million and $407.7 million, respectively, of related receivable-backed debt. The
following table details the sources of interest income and interest expense (in thousands):
Interest Income:
VOI Notes receivable
Other
Total interest income
Interest Expense:
Receivable-backed notes payable
Other
Total interest expenses
Net interest spread
For the Years Ended December 31,
2015
2014
2016
$
$
80,950
8,560
89,510
18,348
12,505
30,853
58,657
78,323
6,008
84,331
20,308
15,390
35,698
48,633
80,773
893
81,666
23,415
17,909
41,324
40,342
Net Interest Spread. Net interest spread was $58.7 million, $48.6 million and $40.3 million during 2016,
2015 and 2014, respectively. The increase in net interest spread during 2016 and 2015 is primarily reflects
lower costs of borrowings and an increase in the size of Bluegreen’s VOI notes receivable portfolio in
those years. Additionally, Bluegreen recorded interest income of $8.0 million and $5.6 million during
2016 and 2015, respectively, related to the $80.0 million loan made by Bluegreen to the Company during
April 2015, which is eliminated in the consolidated financial statements.
Bluegreen’s effective cost of borrowing was 5.03%, 5.36% and 5.95% during 2016, 2015, and 2014,
respectively. The decreases were primary attributed to Bluegreen’s repayment of debt with higher-interest
rates and obtaining new financing at relatively lower rates.
Other Income/Expense, Net. Other income, net was $1.7 million, $2.9 million and $3.4 million during
2016, 2015 and 2014, respectively.
56
BBX Capital Real Estate Reportable Segment
Overview
BBX Capital Real Estate’s primary activities include the acquisition, ownership and management of real
estate, and real estate development projects as well as investments in real estate joint ventures. BBX
Capital Real Estate also manages the legacy assets acquired in the BB&T Transaction. The legacy assets
include portfolios of loans receivable, real estate properties and loans previously charged-off by
BankAtlantic.
Results of Operations
The following table is a condensed income statement before income taxes summarizing the results of
operations of BBX Capital Real Estate (in thousands):
For the Years Ended
December 31,
2015
2016
2014
Change Change
2015 vs
2016 vs
2014
2015
Interest income
Net gains on sales of assets
Other revenues
Total revenues
Interest expense
Recoveries from loan losses, net
Asset impairments, net
Selling, general and administrative expenses
Total costs and expenses
Equity in net earnings (losses) of
unconsolidated joint ventures
Income before income taxes
Interest Income
$
3,606
6,076
5,067
14,749
-
(20,508)
2,304
11,864
(6,340)
9,921
31,181
5,540
46,642
-
(13,457)
287
12,773
(397)
5,072
5,527
7,414
18,013
1,002
(7,155)
7,015
16,121
16,983
(6,315)
(25,105)
(473)
(31,893)
-
(7,051)
2,017
(909)
(5,943)
4,849
25,654
(1,874)
28,629
(1,002)
(6,302)
(6,728)
(3,348)
(17,380)
13,630
$ 34,719
(1,565)
45,474
(559)
471
15,195
(10,755)
(1,006)
45,003
The decrease in interest income for the year ended December 31, 2016 compared to 2015 and 2014
reflects lower interest income recognized on a cash basis from the payoffs of nonaccrual loans. During the
year ended December 31, 2015, $5.8 million of interest income was recognized on the payoff of two
commercial loans. In addition, during 2016 BBX Capital Real Estate recognized lower interest income on
accruing loans associated with declining accruing loan balances due primarily to loan repayments and loan
sales for the year ended December 2015. Accruing loan balances declined from $10.0 million at
December 31, 2014 to $1.5 million at December 31, 2016.
Net Gains on Sales of Assets
The net gains on the sales of assets during the years ended December 31, 2016, 2015 and 2014 were
primarily gains on the sales of real estate properties.
Gains on the sales of assets during the year ended December 31, 2016 resulted primarily from $4.2
million of gains on the sales of commercial land parcels and the recognition of $2.3 million of deferred
gains associated with properties contributed for equity interests in joint ventures during 2013 and
2014. $3.3 million of commercial land parcel gains was related to one property. The gains on the sales of
assets were partially offset by $0.4 million of losses on the sales of residential properties.
Gains on the sales of assets during the year ended December 31, 2015 resulted primarily from the sales of
four properties. Two of the properties were located in West Palm Beach, Florida. One of the properties,
which was purchased by the JRG/BBX Development joint venture for $10.8 million, was sold to a third
party developer for $20.0 million. A second property, which had a $3.2 million carrying value at the date
of sale, was acquired through foreclosure and sold for $11.0 million. A third property was located in the
Bonterra master-planned community in
57
Hialeah, Florida, had a carrying value of $13.9 million and sold for $26.2 million. The fourth property
was acquired through foreclosure in Las Vegas, Nevada, had a carrying value of $2.6 million and sold for
$6.0 million. The Company recognized gains of $31.4 million in the aggregate in connection with these
four property sales.
Included in net gains on the sales of assets during the year ended December 31, 2014 was a $2.5 million
gain on the sale of one commercial property, a $0.6 million gain on the sale of first lien consumer and
residential loans and $1.3 million of gains on the sales of various real estate properties.
Other Revenues
Other revenues primarily consisted of rental income from foreclosed real estate properties. The lower
other revenues during the year ended December 31, 2016 compared to the same 2015 period was
primarily the result of the sale of one student housing rental property during the second quarter of 2016.
The lower other revenues during the year ended December 31, 2015 compared to the same 2014 period
resulted primarily from the sales of rental properties and one operating property during the fourth quarter
of 2014.
Interest Expense
BBX Capital Real Estate did not incur interest expense during the years ended December 31, 2016 and
2015. Interest expense for the year ended December 31, 2014 resulted primarily from an $8.3 million
mortgage that was assumed by the Hialeah Communities joint venture in June 2014.
Recoveries from Loan Losses
Recoveries from loan losses during the year ended December 31, 2016 resulted primarily from $18.0
million of charged off loan recoveries and $2.6 million of recoveries from the charged off loan portfolio.
Recoveries for the year ended December 31, 2015 related primarily to charged off commercial loans and
$2.7 million of recoveries from the charged off loan portfolio.
Recoveries for the year ended December 31, 2014 related primarily to $6.1 million of cash collected on
certain previously charged-off commercial loans and related judgments, $1.6 million of recoveries from
non-accrual loan payoffs, $1.4 million of property tax refunds on a charged off commercial land loan and
a $1.9 million recovery from a commercial land loan foreclosure.
Recoveries from loan losses were generated by legacy loans and due to the nature of these collection
activities and the declining balances of legacy loans it is not expected that BBX Capital Real Estate will
generate recoveries consistent with historical amounts.
Asset Impairments, net
Asset impairments during the year ended December 31, 2016 and 2015 resulted primarily from valuation
allowance adjustments of $3.6 million and $3.6 million, respectively, on foreclosed real estate properties
to reflect updated valuations partially offset by recoveries of previously written down residential loans in
connection with short sales and payoffs.
Asset impairments for the year ended December 31, 2014 were primarily the result of $8.6 million of
impairments on two student housing rental facilities in Tallahassee, Florida. The impairments reflected a
decline in occupancy rates and rents per unit. The student housing impairments were partially offset by
$1.6 million of recoveries of previously written down residential loans in connection with short sales and
payoffs.
58
Selling, General and Administrative Expenses
(in thousands)
Employee compensation and benefits
Occupancy and equipment
Professional fees
Real estate operating expenses
Other
For the Years Ended
December 31,
2016
2015
2014
Change
2016 vs
2015
Change
2015 vs
2014
$
$
3,899
1,311
2,631
2,903
1,120
11,864
3,674
1,266
1,935
4,773
1,125
12,773
3,025
1,230
2,188
6,289
3,389
16,121
225
45
696
(1,870)
(5)
(909)
649
36
(253)
(1,516)
(2,264)
(3,348)
The increase in compensation and benefits expenses for the years ended December 31, 2016 and 2015
resulted primarily from performance bonuses and secondarily from new hires.
Professional fees for the years ended December 31, 2016, 2015 and 2014 were primarily legal fees
incurred in connection with loan portfolio recoveries and foreclosures.
Real estate operating expenses for the years ended December 31, 2016, 2015 and 2014 represent real
estate holding costs, including taxes and insurance, associated with real estate acquired through
foreclosure. The decline in real estate operating expenses reflects the sale of properties, contribution of
real estate to joint ventures, and the transfer of rental properties to properties and equipment.
The decline in other expenses for the years ended December 31, 2016 and 2015 compared to the year
ended December 31, 2014 resulted primarily from lower asset servicing expenses from third party
management companies who service loans and real estate. The significant decline in asset servicing costs
reflects loan repayments and sales, declines in foreclosures as well as real estate liquidations.
Equity in Net Earnings of Unconsolidated Joint Ventures
BBX Capital Real Estate recognized equity in net earnings (losses) of unconsolidated joint ventures of
$13.6 million, ($1.6) million and ($0.6) million during the years ended December 31, 2016, 2015 and
2014, respectively. The unconsolidated real estate joint ventures are generally real estate joint ventures
that develop properties for residential and commercial use. The equity in earnings for the year ended
December 31, 2016 primarily reflects earnings from three joint ventures. Real estate joint ventures equity
losses for the years ended December 31, 2015 and 2014 represent marketing and management fees of joint
ventures in the construction or entitlement phases of the real estate projects.
During the year ended December 31, 2016, the Hialeah Communities joint venture closed on 212 single-
family homes in a planned development of 394 single-family homes. BBX Capital Real Estate received
$11.5 million of cash distributions and recognized $9.5 million of equity earnings from the Hialeah
Communities joint venture for the year ended December 31, 2016. BBX Capital Real Estate recognized
equity losses of $747,000 and $246,000 during the years ended December 31, 2015 and 2014,
respectively, from the Hialeah Communities joint venture.
During the year ended December 31, 2016, the Altis at Kendall Square joint venture leased up and sold
the multi-family rental facility that the joint venture developed and BBX Capital Real Estate received $3.7
million of distributions and recognized $3.1 million of equity earnings from the Altis at Kendall Square
joint venture. BBX Capital Real Estate recognized equity losses from the Altis at Kendall Square joint
venture of $500,000 and $35,000 during the years ended December 31, 2015 and 2014, respectively.
During the year ended December 31, 2016, the New Urban/BBX Development joint venture closed on 9
single-family homes in a planned development of 30 single-family homes. BBX Capital Real Estate
received $1.2 million of cash payment on its $1.6 million joint venture note receivable and recognized
$1.1 million of equity earnings from the New Urban/BBX Development joint ventures for the year ended
December 31, 2016. BBX Capital Real Estate recognized equity losses of $42,000 and $135,000 during
the years ended December 31, 2015 and 2014, respectively, from the New Urban/BBX Development joint
venture.
59
Renin Reportable Segment
Overview
Renin manufactures interior closet doors, wall décor, hardware and fabricated glass products and operates
through headquarters in Canada and two manufacturing assembly and distribution facilities in Canada and
the United States.
Results of Operations
(in thousands)
Trade sales
Cost of goods sold
Gross margin
Interest expense
Selling, general and administrative expenses
(Gain) loss on foreign currency exchange
Total costs and expenses
Income (loss) before income taxes
Gross margin percentage
SG&A as a percent of trade sales
For the Years Ended
December 31,
Change
2016 vs
Change
2015 vs
2016
2015
2014
2015
2014
$
65,225
(47,088)
18,137
313
17,186
(219)
17,280
857
$
% 27.81
% 26.35
56,461
(42,123)
14,338
309
15,049
1,038
16,396
(2,058)
25.39
26.65
57,839
(43,888)
13,951
551
14,729
715
15,995
(2,044)
24.12
25.47
8,764
(4,965)
3,799
4
2,137
(1,257)
884
2,915
2.41
(0.31)
(1,378)
1,765
387
(242)
320
323
401
(14)
1.27
1.19
The improvement in trade sales for the year ended December 31, 2016 compared to the same 2015 period
reflects increased sales volume from Renin’s retail channel customers driven by an improved product mix
which reflected higher sales of its barn door product. The improvement in the gross margin percentage for
the year ended December 31, 2016 compared to the same 2015 period resulted primarily from a higher
proportion of sales of higher margin door and hardware products.
Trade sales declined for the year ended December 31, 2015 compared to the same 2014 period due to the
discontinuation by a large customer of the wall décor product partially offset by increased sales of newly
designed hardware products.
The improvement in the gross margin percentage for the year ended December 31, 2015 compared to the
same 2014 period reflected increased sales of higher margin hardware products and lower sales of lower
margin wall décor products. Also contributing to the improved gross margin percentage was the
consolidation of manufacturing facilities during the second half of 2014.
Renin’s interest expense for the years ended December 31, 2016 and 2015 was associated with a term loan
and a revolving line of credit from a financial institution. Renin’s interest expense for the year ended
December 31, 2014 was primarily associated with notes payable to Bluegreen. Renin refinanced the
Bluegreen notes payable with a financial institution in June 2014 under a facility with a lower interest rate
and outstanding balance.
The increase in selling, general and administration expenses for the year ended December 31, 2016
compared to the same 2015 period was associated with the transition to new executive management
including severance costs, increased consulting and maintenance expenditures designed to enhance the
product development cycle and improve manufacturing efficiencies.
The increase in selling, general and administration expenses for the year ended December 31, 2015
compared to the same 2014 period was associated primarily with new hires partially offset by costs
associated with consolidating manufacturing facilities in Canada incurred during the year ended December
31, 2014.
Foreign currency exchange gains or losses for the years ended December 31, 2016, 2015 and 2014 reflect
changes in the value of the Canadian dollar compared to the U.S. dollar.
60
Consolidated Financial Condition
Consolidated Assets and Liabilities
Total assets at December 31, 2016 and 2015 were $1.4 billion and $1.3 billion, respectively. The primary
changes in components of total assets are summarized below:
·
·
·
·
·
·
·
·
·
·
Increase in cash was primarily from $91.8 million of cash generated from operating activities,
$46.5 million of cash received from loan repayments, $23.6 million of proceeds received from
real estate sales, partially offset by $12.9 million of property and equipment purchases, $16.9
million of cash consideration paid in connection with the BCC Merger, $8.5 million of cash
paid to retire common stock in connection with share based compensation withholding tax
obligations and $12.2 million in distributions to a non-controlling interest;
Decrease in loans receivable and loans held-for-sale due primarily to $46.5 million of loan
repayments and $4.8 million of loans transferred as a result of foreclosure to real estate held-
for-sale;
Higher notes receivable balances associated with increased VOIs gross sales;
Increase in inventory associated with the transfer of $15.3 million of real estate held-for-
investment to land held-for-development in connection with the development of the Beacon
Lakes Community project upon the receipt of land entitlements;
Decrease in real estate held-for-sale primarily from the sale of $19.8 million of real estate,
transfer of a $6.6 million student housing facility to property and equipment and impairments
of $3.6 million, partially offset by the transfer of $11.6 million of real estate held-for-
investment to real estate held-for-sale and $4.8 million of real estate held-for-sale acquired
through foreclosure;
Decrease in real estate held-for-investment due primarily to the transfers of $11.6 million and
$15.3 million of real estate held-for-investment to real estate held-for-sale and inventory,
respectively, partially offset by $7.6 million of property improvements;
Increase in investment in unconsolidated real estate joint ventures reflecting $13.6 million of
joint venture equity earnings and $3.3 million of additional investments substantially offset by
$16.6 million of joint venture distributions;
Increase in property and equipment associated with the transfer of a $6.6 million student
housing facility from real estate held-for-sale;
Decrease in goodwill and other intangible assets resulting primarily from impairments of $0.9
million and $1.5 million, respectively, associated with BBX Sweet Holdings activities; and
Increase in other assets resulting primarily from a $20.7 million construction fund receivable
associated with the issuance of Community Development Bonds by a municipality to finance
the infrastructure of the Beacon Lakes development.
liabilities at December 31, 2016 and 2015 were $940.6 million and $858.1 million,
Total
respectively. The primary changes in components of total liabilities are summarized below:
·
·
·
·
·
Increase in receivable-backed notes payable – non-recourse due to $130.5 million of notes
issued by Bluegreen in connection with its 2016 Term Securitization as well as additional
borrowings on the $25.0 million Fifth Third Term Loan;
Decrease in receivable-backed notes payable – recourse due to Bluegreen’s repayment of notes
payable from a portion of the proceeds it received in connection with its 2016 Term
Securitization;
Increase in notes, mortgage notes payable and other borrowings primarily from the issuance of
$20.7 million of Community Development Bonds;
Increase in deferred income tax liability resulting primarily from lower deferred tax assets
associated with the utilization of net operating loss carryforwards and the sale of foreclosed
properties; and
Higher other liabilities resulting primarily from severance obligations and increases in accrued
executive bonuses.
61
Consolidated Cash Flows
A summary of our consolidated cash flows is set forth below (in thousands):
For the Years Ended December 31,
2015
2016
2014
Cash flows provided by (used in) operating activities
Cash flows provided by (used in) investing activities
Cash flows used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
91,771
34,605
(25,420)
100,956
198,905
299,861
(3,745)
(48,113)
(28,674)
(80,532)
279,437
198,905
109,137
47,572
(94,908)
61,801
217,636
279,437
Cash Flows provided by/used in Operating Activities
The Company’s operating cash flows increased $95.5 million during the year ended December 31, 2016
compared to the same 2015 period. The increase was primarily due to positive changes in components of
working capital mainly associated with Bluegreen operations. Bluegreen’s operating cash flows increased
due to growth in VOI sales and decreased VOI inventory development expenditures.
The decrease in cash flows from operating activities during 2015 compared to 2014 related primarily to
the $36.5 million Woodbridge litigation settlement, higher operating losses from companies acquired
during 2014, increased spending on the development of Bluegreen’s VOI inventory and higher marketing
costs.
Cash Flows provided by/used in Investing Activities
The Company’s investing cash flows increased by $82.7 million during the year ended December 31,
2016 compared to the same 2015 period. The increase was primarily due to lower cash purchases of
BCC’s Class A Common Stock during 2016. In December 2016, the Company paid cash consideration of
$16.9 million and issued 12.0 million shares of its Class A Common Stock for all the outstanding shares
of BCC not previously owned by the Company. In April of 2015, the Company completed a tender offer
in which the Company paid cash consideration of $95.4 million to BCC’s shareholders in connection with
the purchase of shares of BCC’s Class A Common Stock . The increase in cash flows from investing
activities during the year ended December 31, 2016 compared to the same 2015 period also reflects higher
loan receivable cash collections and lower additions to real estate held-for-investment partially offset by
lower proceeds from sales of real estate held for sale.
The decrease in cash flows from investing activities during 2015 compared to 2014 was due primarily to
the $95.4 million of consideration paid by the Company to BCC’s shareholders in 2015 in connection
with the Company’s tender offer.
Cash Flows used in Financing Activities
The Company’s cash used for financing activities decreased from $28.7 million during the year ended
December 31, 2016 to $25.4 million for 2015. The decrease in cash used in financing activities was
primarily due to the repayment of borrowings and lower distributions paid to noncontrolling interests
partially offset by cash dividends paid to common shareholders and higher cash payments associated with
the retirement of the Company’s and subsidiary common stock in connection with share based
compensation withholding tax obligations.
The decrease in cash used in financing activities during 2015 compared to 2014 was due primarily to
Bluegreen’s 2015 Term Securitization and lower repayments of BB&T preferred interest in FAR partially
offset by higher distributions paid to noncontrolling interests.
Commitments
The Company’s material commitments as of December 31, 2016 included the required payments due on
its receivable-backed debt, lines-of-credit and other notes payable, junior subordinated debentures,
commitments to complete certain projects based on its sales contracts with customers, subsidy advances to
certain POAs, an inventory purchase commitment under a just-in-time arrangement and commitments
under non-cancelable operating leases.
62
The following table summarizes the contractual minimum principal and interest payments, net of
unamortized discount, required on all of the Company’s outstanding debt, non-cancelable operating leases
and inventory purchase commitments by period due date, as of December 31, 2016 (in thousands):
Payments Due by Period
Unamortized
Debt
Less
than
1 year
1 — 3
Years
4 — 5
Years
After 5
Years
Issuance
Costs
Total
$
-
5,125
105,049
310,005
(5,190)
414,989
9,966
59,023
45,614
22,079
(2,892)
133,790
-
-
8,873
4,591
-
-
195,879
(1,730)
194,149
-
-
13,464
12,687
31,526
15,852
84,591
10,668
161,331
21,802
549,765
-
(9,812)
61,009
817,401
Contractual Obligations
Receivable-backed notes
payable
Lines-of-credit
payable
and notes
Jr. subordinated debentures (1)
purchase
Inventory
commitment
Noncancelable
leases (1)
Total contractual obligations
operating
Interest Obligations (2)
Receivable-backed notes
payable
Lines-of-credit
payable
and notes
Jr. subordinated debentures
15,248
30,399
26,465
84,529
4,440
6,422
6,129
2,595
-
12,845
12,845
175,752
-
-
-
-
156,641
13,164
207,864
377,669
Total contractual interest
26,110
49,373
41,905
260,281
Total contractual obligations $
57,636
133,964
203,236
810,046
(9,812) 1,195,070
(1) Amounts do not include purchase accounting adjustments for Junior Subordinated Debentures and
Noncancelable operating leases of $41.8 million and $0.5 million, respectively.
(2) Assumes that the scheduled minimum principal payments are made in accordance with the table above
and the interest rate on variable rate debt remains the same as the rate at December 31, 2016.
In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies to certain
property owners’ associations to provide for funds necessary to operate and maintain vacation ownership
properties in excess of assessments collected from owners of the VOIs. During 2016 and 2015,
respectively, Bluegreen made payments related to subsidies of $13.9 million and $15.8 million. As of
December 31, 2016 and December 31, 2015, Bluegreen had no liability for such subsidies. As of
December 31, 2016, Bluegreen was providing subsidies to nine property owners’ associations.
During 2016, BBX Capital entered into a severance arrangement with an executive. Under the terms of
the arrangement the executive will receive $3.7 million over a three year period. In June 2015, Bluegreen
entered into a severance and consulting agreement with its former CEO. Under the agreement the former
CEO will be paid a total of $2.9 million over two years. As of December 31, 2016, $3.9 million was left
to be paid on the above arrangements.
A wholly owned subsidiary of the Company has entered into area development agreements with MOD
Super Fast Pizza Franchising, LLC which will involve entering into lease agreements for MOD restaurant
locations. The Company may be required to guarantee performance on these lease agreements.
The Company believes that its existing cash, anticipated cash generated from operations, anticipated
future permitted borrowings under existing or future credit facilities, and anticipated future borrowings
against its notes receivable under existing, future or replacement purchase facilities will be sufficient to
meet its anticipated working capital, capital expenditure and debt service requirements, including the
contractual payment of the obligations set forth above, for the foreseeable future, subject to the success of
the Company’s ongoing business strategy and the ongoing availability of credit. The Company will
continue its efforts to renew, extend, or replace any credit and receivables purchase facilities that have
expired or that will expire in the near term. The Company may, in the future, also obtain additional credit
facilities and may issue corporate debt or equity securities. Any debt incurred or issued by the Company
may be secured or unsecured, bear interest at fixed or variable rates and may be subject to such terms as
the lender may require. In addition, the Company’s efforts to renew or replace the credit facilities or
receivables purchase facilities which have expired or which are scheduled to expire in the near term may
not be successful, and sufficient
63
funds may not be available from operations or under existing, proposed or future revolving credit or other
borrowing arrangements or receivables purchase facilities to meet its cash needs, including debt service
obligations. To the extent the Company is not able to sell notes receivable or borrow under such facilities,
its ability to satisfy its obligations would be materially adversely affected.
Bluegreen’s receivables purchase facilities and its credit facilities, indentures and other outstanding debt
instruments include what Bluegreen believes to be customary conditions to funding, eligibility
requirements for collateral, cross-default and other acceleration provisions and certain financial and other
affirmative and negative covenants, including, among others, limits on the incurrence of indebtedness,
payment of dividends, investments in joint ventures and other restricted payments, the incurrence of liens,
and transactions with affiliates, as well as covenants concerning net worth, fixed charge coverage
requirements, debt-to-equity ratios, portfolio performance requirements, cash balances and events of
default or termination. In the future, Bluegreen may be required to seek waivers of such covenants, but
may not be successful in obtaining waivers, and such covenants may limit Bluegreen’s ability to raise
funds, sell receivables, or satisfy or refinance its obligations, or otherwise adversely affect Bluegreen’s
ability to pay dividends and the Company’s financial condition and results of operations. In addition,
Bluegreen’s future operating performance and ability to meet its financial obligations will be subject to
future economic conditions and to financial, business and other factors, many of which may be beyond the
Company’s control.
Off-balance-sheet Arrangements
BBX Capital guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real
estate joint ventures, which are not included in the contractual obligations table above, and also guarantees
certain of the obligations in the above table as described in further detail in Item 8 – Note 14 of this
Annual Report.
Liquidity and Capital Resources
BBX Capital Corporation
Liquidity and Capital Resources
BBX Capital’s principal sources of liquidity are its available cash and short-term investments, funds
obtained from scheduled payments on loans, loan recoveries, sales of its loans, loan payoffs, sales of real
estate, income from income producing real estate, distributions from unconsolidated real estate joint
ventures and distributions received from Bluegreen. BBX Capital expects to use its available funds for
general corporate purposes and to make additional investments in real estate based opportunities and
middle market operating businesses or invest in other opportunities or repurchase shares of its common
stock pursuant to the share repurchase program.
BBX Capital believes that its current financial condition and credit relationships, together with anticipated
cash flows from other sources of funds, including potential dividends from Bluegreen (which, as described
below, are subject to certain limitations), and, to the extent determined to be advisable, proceeds from the
disposition of properties or investments, will allow it to meet its anticipated near-term liquidity needs.
BBX Capital may also seek additional liquidity from outside sources, including traditional bank financing,
secured or unsecured indebtedness, or the issuance of equity and/or debt securities. However, these
alternatives may not be available to us on attractive terms, or at all. The inability to raise funds through
the sources discussed above would have a material adverse effect on the Company’s business, results of
operations and financial condition.
BBX Capital expects that it will receive dividends from time to time from Bluegreen. During 2016 and
2015, Bluegreen paid dividends totaling $70.0 million and $54.4 million, respectively. Dividends from
Bluegreen will be dependent on and subject to Bluegreen’s results of operations and cash flows, as well as
restrictions contained in Bluegreen’s debt facilities. Except as otherwise noted, the debts and obligations
of Bluegreen are not direct obligations of the Company and generally are non-recourse to the Company.
Similarly, the assets of Bluegreen are not available to us, absent a dividend or distribution. Furthermore,
certain of Bluegreen’s credit facilities contain terms which could limit the payment of cash dividends
without the lender’s consent or waiver and Bluegreen may only pay dividends subject to such restrictions
as well as the declaration of dividends by its board of directors. As a consequence, BBX Capital may not
receive dividends from Bluegreen consistent with prior periods or in the time frames or amounts
anticipated, or at all. BBX Capital may also receive funds from Bluegreen in connection with its tax
sharing agreement to the extent Bluegreen utilizes BBX Capital’s tax benefits in BBX Capital’s
consolidated tax return. During the years ended December 31, 2016 and 2015, BBX Capital received
$26.2 million and $19.2 million, respectively, of tax sharing payments from Bluegreen.
64
As of December 31, 2016 and 2015, the Company, excluding Bluegreen, had cash, cash equivalents and
short-term investments of approximately $155.7 million and $83.4 million, respectively. Management
believes that BBX Capital has sufficient liquidity to fund operations for the foreseeable future.
Prior to June 2016, the Company had never paid cash dividends on its common stock. In June 2016,
September 2016 and December 2016 the Company’s Board of Directors declared quarterly cash dividends
on the Company’s Class A and Class B Common Stock of $0.005 per share. Future declaration and
payment of cash dividends with respect to the Company’s Common Stock, if any, will be determined in
light of the then-current financial condition of the Company and other factors deemed relevant by the
board of directors.
In April 2015, BBX Capital borrowed $80.0 million at 10% interest from a wholly-owned subsidiary of
Bluegreen to finance in part the purchase of 4,771,221 shares of BCC’s Class A Common Stock in the
previously described tender offer. The incurrence of this debt resulted in BBX Capital being required to
utilize cash flow to service the debt with quarterly payments to Bluegreen of $2.0 million and the
Company may be required to repay all or a portion of the $80.0 million borrowed from Bluegreen if
Bluegreen is not in compliance with debt covenants under its debt instruments.
The Company’s indebtedness including any future debt incurred by the Company may make us more
vulnerable to downturns in the economy, and may subject the Company to covenants or restrictions on its
operations and activities.
On September 21, 2009, our board of directors approved a share repurchase program which authorizes the
repurchase of up to 20,000,000 shares of Class A Common Stock and Class B Common Stock at an
aggregate cost of up to $10 million. The share repurchase program authorizes management, at its
discretion, to repurchase shares from time to time subject to market conditions and other factors. During
2016, BBX Capital repurchased 1.0 million shares of our Class A Common Stock for approximately $3.0
million. No shares were repurchased under the program during the year ended December 31, 2015.
On June 7, 2004, the Company’s board of directors designated 15,000 shares of the Company’s preferred
stock as 5% Cumulative Preferred Stock. On June 21, 2004, the Company sold all 15,000 shares of the
5% Cumulative Preferred Stock to an investor group in a private offering. The Company’s 5% Cumulative
Preferred Stock has a stated value of $1,000 per share. The shares of 5% Cumulative Preferred Stock are
redeemable at the option of the Company, from time to time, at redemption prices of $1,000 per share. In
addition the 5% Cumulative Preferred Stock’s liquidation preference is equal to its stated value of $1,000
per share plus any accumulated and unpaid dividends or an amount equal to the applicable redemption
price in a voluntary liquidation or winding up of the Company. Holders of the 5% Cumulative Preferred
Stock have no voting rights, except as provided by Florida law, and are entitled to receive, when and as
declared by the Company’s board of directors ’ cumulative quarterly cash dividends on each such share at
a rate per annum of 5% of the stated value from the date of issuance. The Company pays quarterly
dividends on the 5% Cumulative Preferred Stock totaling $187,500.
The 5% Cumulative Preferred Stock is mandatorily redeemable and classified as a liability in the
Company’s Consolidated Statements of Financial Condition as of December 31, 2016 and 2015. In
addition, the Company is required to redeem the preferred shares in $5.0 million annual payments in each
of the years in the three year period ending December 31, 2020. For the years ended December 31, 2016,
2015 and 2014, the Company recorded interest expense in its Statements of Operations of $1.2 million,
$1.1 million and $1.1 million, respectively, of which $750,000 was paid during each of these three years
as dividends on the 5% Cumulative Preferred Stock.
During December 2013, BFC made a $5 million loan to the holder of its 5% Cumulative Preferred
Stock. The loan is secured by 5,000 shares of 5% Cumulative Preferred Stock, has a term of five years,
accrues interest at a rate of 5% per annum and provides for payments of interest only on a quarterly basis
during the term of the loan, with all outstanding amounts being due and payable at maturity during
December 2018.
Bluegreen
Bluegreen’s Liquidity and Capital Resources
Bluegreen’s primary sources of funds from internal operations are: (i) cash sales, (ii) down payments on
VOI sales which are financed, (iii) proceeds from the sale of, or borrowings collateralized by, notes
receivable, (iv) cash from finance operations, including mortgage servicing fees and principal and interest
payments received on the purchase money mortgage loans arising from sales of VOIs, and (v) net cash
generated from sales and marketing fee-based services and other resort fee-based services, including
resorts management operations.
65
While the vacation ownership business has historically been capital intensive, Bluegreen has sought to
focus on the generation of “free cash flow” (defined as cash flow from operating activities, less capital
expenditures) by (i) incentivizing its sales associates and creating programs with third-party credit card
companies to generate a higher percentage of sales in cash; (ii) maintaining sales volumes that focus on its
more efficient marketing channels; (iii) minimizing capital and inventory expenditures; (iv) utilizing sales
and marketing, mortgage servicing, resort management services, title services and construction expertise
to pursue fee-based-service business relationships that generally require minimal up-front capital
investment and have the potential to produce incremental cash flows, and (v) more recently by selling
VOIs associated with Secondary Market Sales and Just-In-Time Sales.
Historically, Bluegreen’s business model depended on the availability of credit in the commercial
markets. VOI sales are generally dependent upon providing financing to buyers. The ability to sell and/or
borrow against notes receivable from VOI buyers has been a critical factor in Bluegreen’s continued
liquidity. A financed VOI buyer is only required to pay a minimum of 10% to 20% of the purchase price
in cash at the time of sale; however, selling, marketing, and administrative expenses attributable to the
sale are primarily cash expenses
that generally exceed a buyer’s minimum required down
payment. Accordingly, having financing facilities available for the hypothecation, sale, or transfer of
these VOI receivables has been a critical factor in Bluegreen’s ability to meet its short and long-term cash
needs. Bluegreen has attempted to maintain a number of diverse financing facilities. Historically,
Bluegreen has relied on its ability to sell receivables in the term securitization market in order to generate
liquidity and create capacity in its receivable facilities. In addition, maintaining adequate VOI inventory
to sell and pursue growth into new markets has historically required Bluegreen to incur debt for the
acquisition, construction, and development of new resorts. Development expenditures during 2017 are
expected to be in a range of $60 million to $65 million, which primarily relates to development at
Bluegreen/Big Cedar Vacations’ resorts and proposed development at Bluegreen’s Fountains
Resort. However, if other opportunities to acquire or develop a strategic property on favorable terms
present itself, Bluegreen may decide to acquire or develop additional VOI inventory, which would
increase acquisition and development expenditures and may involve the incurrence of additional debt.
In connection with Bluegreen’s capital-light business strategy, Bluegreen has entered into agreements
with third party developers that allow Bluegreen to buy VOI inventory typically on a non-committed basis
just prior to the sale of such VOI. Bluegreen’s capital-light business strategy also includes Secondary
Market Sales pursuant to which Bluegreen enters into secondary market arrangements with certain resort
POAs and others on a non-committed basis, which allows Bluegreen to acquire VOIs generally at a
significant discount as such VOIs are typically obtained by the POAs through foreclosure in connection
with maintenance fee defaults.
Available funds may also be invested in real estate based opportunities and middle market operating
businesses outside of the timeshare and hospitality industries or loaned to affiliates or others.
Bluegreen’s level of debt and debt service requirements have several important effects on Bluegreen’s
operations, including the following: (i) significant debt service cash requirements reduce the funds
available for operations and future business opportunities and increases Bluegreen’s vulnerability to
adverse economic and industry conditions, as well as conditions in the credit markets, generally; (ii)
Bluegreen’s leverage position increases its vulnerability to economic and competitive pressures; (iii) the
financial covenants and other restrictions contained in indentures, credit agreements and other agreements
relating to Bluegreen’s indebtedness require Bluegreen to meet certain financial tests and restrict
Bluegreen’s ability to, among other things, pay dividends, borrow additional funds, dispose of assets or
make investments; and (iv) Bluegreen’s leverage position may limit funds available for acquisitions,
working capital, capital expenditures, dividends, and other general corporate purposes. Certain of
Bluegreen’s competitors operate on a less leveraged basis and have greater operating and financial
flexibility than Bluegreen does.
2016 Term Securitization
On March 17, 2016, Bluegreen completed a private offering and sale of $130.5 million of investment-
grade, timeshare receivable-backed notes (the “2016 Term Securitization”).
The 2016 Term
Securitization consisted of the issuance of two tranches of timeshare receivable-backed notes (the
“Notes”): $95.7 million of Class A and $34.8 million of Class B notes with note interest rates of 3.17%
and 3.86%, respectively, which blended to an overall weighted-average note interest rate of 3.35%. The
gross advance rate for this transaction was 90%. The Notes mature in July 2031.
The amount of the timeshare receivables sold to BXG Receivable Note Trust 2016 (the “2016 Trust”) was
$145.0 million, $122.3 million of which was sold to the 2016 Trust at closing and $22.7 million of which
was subsequently sold to the 2016 Trust. The gross proceeds of such sales to the 2016 Trust were $130.5
million. A portion of the proceeds were used to: repay the BB&T/DZ Purchase Facility a total of $49.0
million, representing all amounts then outstanding under the facility (including accrued interest); repay
$24.2 million under the Liberty Bank Facility, which includes accrued interest; capitalize a reserve fund;
and pay fees and expenses associated with the transaction. Prior to the closing of the 2016 Term
Securitization, Bluegreen, as servicer, funded $11.3 million in connection with the
66
servicer redemption of the notes related to BXG Receivables Note Trust 2007-A, and certain of the
timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term
Securitization. In April 2016, Bluegreen, as servicer, funded $6.1 million in connection with the servicer
redemption of the notes related to the BXG Receivables Note Trust 2008-A, and certain of the timeshare
loans in such trust were sold to the 2016 Trust in connection with the 2016 Term Securitization. The
remainder of the net proceeds from the 2016 Term Securitization of $36.0 million were used by
Bluegreen for general corporate purposes. As a result of the facility repayments described above,
immediately after the closing of the 2016 Term Securitization, (i) no amounts were outstanding under the
BB&T/DZ Purchase Facility, which allows for maximum outstanding receivable-backed borrowings of
$80.0 million on a revolving basis through December 31, 2017 and (ii) there was $17.6 million
outstanding under the Liberty Bank Facility, which permits maximum outstanding receivable-backed
borrowings of $50.0 million on a revolving basis through November 30, 2017 subject to eligible collateral
and the other terms and conditions of the facility. Thus, additional availability of $73.1 million in the
aggregate was created under the BB&T/DZ Purchase Facility and Liberty Bank Facility subject to the
terms and conditions of those facilities.
While ownership of the timeshare receivables included in the 2016 Term Securitization was transferred
and sold for legal purposes, the transfer of these timeshare receivables was accounted for as a secured
borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result of
this transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash
flows generated by the receivables transferred under the 2016 Term Securitization (excess meaning after
payments of customary fees, interest, and principal under the 2016 Term Securitization) on a pro-rata
basis as borrowers make payments on their timeshare loans.
See Item 8 - Note 12 to the Company’s Consolidated Financial Statements included in this report for
additional information with respect to Bluegreen’s receivable-backed notes payable facilities.
Credit Facilities for Bluegreen Receivables with Future Availability
Bluegreen maintains various credit facilities with financial institutions which allow Bluegreen to borrow
against or sell its VOI notes receivable. Bluegreen had the following credit facilities with future
availability as of December 31, 2016, all of which are subject to revolving availability terms during the
advance period and therefore provide for additional availability as the facility is paid down, subject to
compliance with relevant covenants, eligible collateral and applicable terms and conditions during the
advance period (dollars in thousands):
Outstanding
Balance as of
December
31, 2016
Availability as
of December
31, 2016
Borrowing
Limit
Liberty Bank Facility $
50,000 $
32,674 $
17,326
NBA Receivable
Facility (2)
Pacific Western Bank
Facility
BB&T/DZ Purchase
Facility
Quorum Purchase
Facility
45,000
36,170
8,830
40,000
22,520 (3)
17,480 (3)
80,000
31,417
48,583
50,000
265,000 $
$
23,981
146,762 $
26,019
118,238
Advance Period
Expiration;
Borrowing
Maturity
November
2017; November
2020
June 2018;
December 2022
Borrowing Rate; Rate as of
December 31, 2016
Prime Rate +0.50%;
4.25%
30-Day LIBOR +
2.75% to 3.50%; 3.5%
to 4.00% (1)
September 2018;
September 2021
30 day LIBOR+4.00%
to 4.50%; 5.14%
December 2017;
December 2020
Applicable Index rate
+2.90%; 3.67%(4)
June 2018;
December 2030
(5)
(1) Of the amount outstanding as of December 31, 2016, $14.1 million bears interest at the 30-day LIBOR +
3.25% subject to a floor of 4.0% and $20.1 million bears interest at 30-day LIBOR plus 2.75% subject to
an interest rate floor of 3.5%. Future borrowings will bear interest at the 30-day LIBOR plus 3.25%
subject to an interest rate floor of 4.0%.
(2) The borrowing limit is inclusive of the $15.0 million borrowing limit under the NBA Line-of-Credit
discussed below. Further, t he outstanding balance includes, and availability as of December 31, 2016
reflects, $2.0 million outstanding under the NBA Line of Credit.
(3) The outstanding balance includes, and availability as of December 31, 2016 reflects, $1.7 million
outstanding under the Pacific Western Term Loan.
(4) The Applicable Index Rate for portions of amounts outstanding is either LIBOR, a “Cost of Funds” rate
or commercial paper rates. As described in further detail below, the interest rate will increase to the
applicable rate plus 4.9% upon the expiration of the advance period.
(5) Of the amounts outstanding as of December 31, 2016, $4.7 million bears interest at a fixed rate of 6.9%,
$4.4 million bears interest at a fixed rate of 5.5%, $ 5.2 million bears interest at a fixed rate of 5.0%, and
$9.7 million bears interest at a
67
fixed rate of 4.75%. The interest rate on future borrowings will be set at the time of funding based on rates
mutually agreed upon by all parties.
See Item 8 - Note 12 to the Company’s Consolidated Financial Statements included in this report for
additional information with respect to Bluegreen’s credit facilities terms and covenants.
Critical Accounting Policies
Management views critical accounting policies as accounting policies that are important to the
understanding of our financial statements and also involve estimates and judgments about inherently
uncertain matters. In preparing the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities as of the date of the consolidated statements of financial condition and assumptions that
affect the recognition of income and expenses on the consolidated statements of operations and
comprehensive income for the periods presented. On an ongoing basis, management evaluates its
estimates, including those that relate to the determination of:
·
·
·
·
·
·
·
·
·
The allowance for credit losses;
The estimated future sales value of inventory;
The recognition of revenue, including revenue recognition under the percentage-of-completion
method of accounting;
The recovery of the carrying value of real estate inventories;
The fair value of assets measured at, or compared to, fair value on a non-recurring basis such as
assets held for sale, intangible assets and other long-lived assets;
The valuation of assets and liabilities assumed in the acquisition of a business;
The amount of deferred tax valuation allowance;
Accounting for uncertain tax positions; and
The estimate of contingent liabilities related to litigation and other claims and assessments.
The accounting policies that we have identified as critical accounting policies are:
·
·
·
·
Revenue recognition and inventory cost allocation;
The carrying value of completed VOI inventory;
The carrying value of VOIs held for and under development and long-lived assets; and
Allowance for credit and loan losses.
Management bases its estimates on historical experience and on various other assumptions that it believes
to be reasonable under the circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results
may differ materially from these estimates under different assumptions and conditions. If actual results
significantly differ from management’s estimates, our results of operations and financial condition could
be materially and adversely impacted.
Revenue Recognition and Inventory Cost Allocation
Sales of Real Estate
In accordance with the requirements of Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) 970-605, Real Estate-Revenue Recognition, Bluegreen recognizes
revenue on VOI sales when a minimum of 10% of the sales price has been received in cash (buyer’s
commitment), the legal rescission period has expired, collectibility of the receivable representing the
remainder of the sales price is reasonably assured and Bluegreen has completed substantially all of its
obligations with respect to any development related to the real estate sold.
Bluegreen believes that it uses a reasonably reliable methodology to estimate the collectibility of the
receivables representing the remainder of the sales price of VOIs sold. See the further discussion of
Bluegreen’s policies regarding the estimation of credit losses on Bluegreen’s notes receivable
below. Should Bluegreen become unable to reasonably estimate the collectibility of its receivables,
Bluegreen may have to defer the recognition of sales and its results of operations could be negatively
impacted.
Under timeshare accounting rules, the buyer’s minimum cash down payment towards the purchase of
Bluegreen’s VOIs is met only if the cash down payment received, reduced by the value of certain
incentives provided to the buyer at the time of sale, is at least 10% of the sales price. If, after
consideration of the value of the incentive, the total down
68
payment received from the buyer is less than 10% of the sales price, the VOI sale, and the related cost of
sales and direct selling expenses, are deferred until such time that sufficient cash is received from the
customer, generally through receipt of mortgage payments, to meet the 10% threshold. Changes to the
quantity, type or value of sales incentives that Bluegreen provides to buyers of its VOIs may increase the
number of VOI sales being deferred or extend the period during which a sale is deferred, which could
materially adversely impact Bluegreen’s results of operations.
In cases where construction and development on Bluegreen-owned resorts has not been substantially
completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of
accounting. Should Bluegreen’s estimates of the total anticipated cost of completing any of its projects
increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer
revenue for a longer period of time, which could materially adversely impact its results of operations.
Timeshare accounting rules require the use of an industry-specific relative sales value method for
relieving VOI inventory and recording cost of sales. Under the relative sales value method, cost of sales is
calculated as a percentage of net sales using a cost-of-sales percentage — the ratio of total estimated
development cost to total estimated VOI revenue, including the estimated incremental revenue from the
resale of repossessed VOI inventory, as a result of the default of the related receivable.
Fee-Based Sales Commissions and Other Revenue
In addition to sales of VOIs, Bluegreen also generates revenue from the activities listed below. The table
provides a brief description of the applicable revenue recognition policy:
Fee-based sales commissions...........................................................
Activity
Revenue is recognized
when:
sale
The
transaction
with the VOI purchaser
in
consummated
is
accordance with
the
terms of the agreement
third-party
with
the
and
developer
the
related
consumer
rescission period has
expired.
Resort management and service fees ............................................... Management services
are rendered. (1)
Resort title fees .......................................................
Rental and sampler program...........................................................
are
title
are
amounts
and
Escrow
released
documents
completed.
Guests complete stays at
the resorts. Rental and
sampler
program
proceeds are classified
as a reduction to “Cost
fee-based
of
services”
the
in
consolidated statements
of
and
operations
comprehensive income.
other
(1)
In connection with Bluegreen’s management of the property owners’ associations, among other things,
Bluegreen acts as agent for the property owners’ association to operate the resort as provided under the
management agreement. In certain cases, the personnel at the resorts are Bluegreen employees. The
property owners’ association bear the costs of such personnel and generally pay Bluegreen in advance
of, or simultaneously with, the payment of payroll. In accordance with ASC 605-45, Overall
Considerations of Reporting Revenues Gross as a Principal versus Net as an Agent, reimbursements
from the property owners’ associations relating to direct pass-through costs are recorded net of the related
expenses.
Carrying Value of Completed VOI Inventory
Bluegreen carries its completed VOIs at the lower of (i) cost, including costs of improvements and
amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred
during construction, or (ii) estimated fair market value, less costs to sell. The outstanding balance of
completed VOI inventory, net of purchase accounting adjustments was $156.4 million as of December 31,
2016.
Carrying Value of VOIs Held for Development, or Under Development and Long-Lived Assets
The Company evaluates the recoverability of its long-lived assets, including intangible assets and its real
estate properties under development or held for development, if certain trigger events occur. If the
estimated undiscounted future cash flows are less than the carrying amount of the asset, the asset is
written down to its estimated fair value. The outstanding balance of construction in progress, real estate
held for future VOI development, net of purchase
69
accounting adjustments and land held for development was $13.4 million, $68.7 million and $15.3
million, respectively, as of December 31, 2016.
The Company evaluates its intangible assets when events and circumstances indicate that assets may be
impaired and when the undiscounted cash flows estimated to be generated by those assets are less than
their carrying amounts. The carrying value of these assets is dependent upon estimates of future earnings
that they are expected to generate. If cash flows decrease significantly, intangible assets may be impaired,
in which case they would be written down to their fair value. The estimates of useful lives and expected
cash flows require us to make significant judgments regarding future periods that are subject to a number
of factors, many of which may be beyond our control.
The process of evaluating goodwill for impairment involves the determination of the fair value of the
Company’s reporting units. Inherent in such fair value determinations are certain judgments and estimates
relating to future cash flows, including the Company’s interpretation of current economic indicators and
market valuations, and assumptions about the Company’s strategic plans with regard to its operations. Due
to the uncertainties associated with such evaluations, actual results could differ materially from such
estimates.
The majority of the Company’s intangible assets as of December 31, 2016 were $61.3 million of
management contracts, which was originated in connection with the November 16, 2009 acquisition of a
controlling interest in Bluegreen. Such management contracts are not amortized, but instead are reviewed
for impairment at least annually, or if events or changes in circumstances indicate that the related carrying
amounts may not be recoverable. The remaining balance in intangible assets consists of approximately
$7.6 million of trade names, customer relationships, non-competition agreements, franchise fees and lease
premiums that were initially recorded at fair value and are amortized on a straight-line basis over their
respective estimated useful lives ranging from 4 years to 20 years. During 2016, the Company recognized
a $1.5 million intangible asset impairment loss associated with certain BBX Sweet Holding’s acquisitions
in 2014 and 2015. The impairment loss was measured as the amount by which the carrying amount of the
intangible assets exceeded their fair value.
The Company’s goodwill as of December 31, 2016 was $6.7 million and was recorded in association with
BBX Sweet Holding’s acquisitions during 2015 and 2014. The goodwill was tested for impairment on
December 31, 2016 (annual testing date) and was determined to be impaired and an impairment loss of
$0.9 million was recorded.
Allowance for Credit Losses
Allowance for Credit Losses on Bluegreen’s VOI Notes Receivable - Bluegreen records an estimate of
expected uncollectible VOI notes receivable as a reduction of revenue at the time Bluegreen recognizes a
VOI sale. Bluegreen estimates uncollectible VOI notes receivable based on historical uncollectibles for
similar VOI notes receivable over the applicable historical period, using a technique referred to as a static
pool analysis, which tracks uncollectibles for each year’s sales over the entire life of those notes.
The static pool analysis also considers certain qualitative data, including the aging of the respective
receivables, current default trends by origination year, current economic conditions, and the FICO® scores
of the borrowers. Additionally, under timeshare accounting requirements, no consideration is given for
future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable. Bluegreen
reviews its allowance for credit losses on at least a quarterly basis. If defaults increase, Bluegreen’s
results of operations could be materially adversely impacted. During 2016, 2015, and 2014, Bluegreen’s
estimated uncollectible VOI notes receivable included ($0.2 million), ($0.3 million), and $0.9 million,
respectively, of adjustments to the allowance for uncollectible VOI notes receivable in connection with
loans to borrowers with lower FICO® scores generated prior to December 15, 2008, the date on which
Bluegreen implemented FICO® score-based credit underwriting standards.
Impact of Inflation
The financial statements and related financial data and notes presented herein have been prepared in
accordance with GAAP, which requires the measurement of financial position and operating results in
terms of historical dollars without considering changes in the relative purchasing power of money over
time due to inflation.
The Company is subject to significant interest rate risk on Bluegreen’s notes receivables as well as any
outstanding debt. As a result, interest rates have a more significant impact on our performance than the
effects of general price levels. Although interest rates generally move in the same direction as inflation,
the magnitude of such changes varies.
The Company believes that inflation and changing prices have had and may in the future have a material
impact on its revenues and results of operations. Bluegreen has increased the sales prices of its VOIs
periodically, including in
70
September 2016 and from time to time has experienced increases in construction and development
costs. Bluegreen may not be able to increase or maintain the current level of its sales prices, and increased
construction costs may have a material adverse impact on its gross margin. In addition, to the extent that
inflation in general or increased prices for VOIs adversely impacts consumer demand, Bluegreen’s results
of operations could be adversely impacted. Furthermore, while increases in real estate construction and
development costs may result in increases in real estate sales prices, sales prices may not increase
commensurate with the increase in costs or they may decrease, and increased construction costs may have
a material adverse impact on gross margin. In addition, inflation is often accompanied by higher interest
rates which could have a negative impact on consumer demand and the costs of financing activities.
Rising interest rates as well as increased materials and labor costs may reduce margins.
71
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Market Risk
Market risk is defined as the risk of loss arising from adverse changes in market valuations resulting from
interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. BBX
Capital’s primary market risk is equity price risk and interest rate risk.
The Company’s real estate assets market risk consists primarily of equity pricing risk and secondarily
interest rate risk. The majority of real estate assets are investments in unconsolidated real estate
companies, real estate held-for-investment or held-for-sale and loans secured by real estate. The
Company’s financial condition and earnings are affected by changes in real estate values in the markets
where the real estate or real estate collateral is located and changes in interest rates which affects the
affordability of real estate. As a result, there is exposure to equity pricing and interest rate risk in the real
estate market.
The Company’s results of operations are subject to foreign currency exchange risk of the U.S. dollar
compared to the Canadian dollar though its ownership of Renin. Renin’s assets, liabilities, revenue and
expenses that are denominated in foreign currencies will be affected by changes in the exchange rates
between the U.S. dollar and the Canadian dollar. As of December 31, 2016, the Company has not entered
into any foreign exchange forward contracts as hedges against foreign currency exchange risk.
The market price of BBX Capital’s Class A Common Stock and Class B Common Stock are important to
the valuation and financing capability of BBX Capital.
The Company, particularly with respect to Bluegreen, is affected by interest rates, which are subject to the
influence of economic conditions generally, both domestic and foreign, and also to the monetary and fiscal
policies of the United States and its agencies, particularly the Federal Reserve. The nature and timing of
any changes in such policies or general economic conditions and their effect on the Company and its
subsidiaries are unpredictable.
As of December 31, 2016, Bluegreen had fixed interest rate debt of $346.7 million and floating interest
rate debt of $275.2 million. In addition, Bluegreen’s notes receivable were comprised of $544.5 million
of fixed rate notes and $1.6 million of notes bearing floating interest rates. The floating interest rates are
generally based either upon the prevailing prime or LIBOR rates. For floating rate financial instruments,
interest rate changes do not generally affect the market value of the debt, but they do impact future
earnings and cash flows, assuming other factors are held constant. Conversely, for fixed rate financial
instruments, interest rate changes affect the market value of the debt but do not impact earnings or cash
flows.
The Company is subject to interest rate risk on Woodbridge’s junior subordinated debentures. The
interest rates for Woodbridge’s $85.0 million of junior subordinated debentures are variable rates based
upon the prevailing 3-month LIBOR rates. For variable rate financial instruments, interest rate changes do
not generally affect the market value of the debt, but they do impact future earnings and cash flows,
assuming other factors are held constant. If interest rates were to increase one percentage point, the effect
on interest expense related to Woodbridge’s variable-rate debt would be an annual increase of
approximately $850,000, based on December 31, 2016 balances.
To the extent inflationary trends, tightened credit markets or other factors affect interest rates, Bluegreen’s
debt service costs may increase. If interest rates increased or decreased one percentage point, the effect on
interest expense related to Bluegreen’s variable-rate debt would be an annual increase of $2.8 million,
based on December 31, 2016 balances. A similar change in interest rates would affect the total fair value
of Bluegreen’s fixed rate debt by an immaterial amount. This analysis does not consider the effects of
changes in the level of overall economic activity that could result due to interest rate changes. Further, in
the event of a significant change in interest rates, Bluegreen would likely attempt to take actions to
mitigate any exposure to the change. However, due to the uncertainty of the specific actions that would be
taken and their possible effects, the foregoing sensitivity analysis assumes no changes in Bluegreen’s
financial structure.
72
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BBX CAPITAL CORPORATION
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firms:
Independent Report of Grant Thornton LLP ……………………………….……………………………..
…….....
Independent Report of PricewaterhouseCoopers LLP ……………………………….……………….
……………
Financial Statements:
Consolidated Statements of Financial Condition as of December 31, 2016 and 201 5
……………………….………
F-2
F-3
F-4
Consolidated Statements of Operations and Comprehensive Income for each of the years
in the three year period ended December 31, 2016 …………………………………………………….
………
F-5
Consolidated Statements of Changes in Equity for each of the years in the three year period
ended December 31, 2016 ……………………………………………………………………………...
………
F-6
Consolidated Statements of Cash Flows for each of the years in the three year period
ended December 31, 2016 …………………………………………………………………………...
…………
Notes to Consolidated Financial Statements ……………………………………………………………...
…………
F-7
F-10
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Board of Directors and Shareholders
BBX Capital Corporation
We have audited the accompanying consolidated statements of financial condition of BBX Capital
Corporation (a Florida corporation) and subsidiaries (the “Company”) as of December 31, 2016 and 2015,
and the related consolidated statements of operations and comprehensive income, changes in equity, and
cash flows for each of the two years in the period ended December 31, 2016. Our audits of the basic
consolidated financial statements included the financial statement schedules listed in the index appearing
under Item 15(a)(2). These financial statements and financial statement schedules are the responsibility of
the Company’s management. Our responsibility is to express an opinion on these financial statements and
financial statement schedules based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of BBX Capital Corporation and subsidiaries as of December 31, 2016 and
2015, and the results of their operations and their cash flows for each of the two years in the period ended
December 31, 2016 in conformity with accounting principles generally accepted in the United States of
America. Also in our opinion, the related financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present fairly, in all material respects, the
information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the Company’s internal control over financial reporting as of December 31, 2016,
based on criteria established in the 2013 Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated
March 14, 2017 expressed an unqualified opinion.
/s/ Grant Thornton LLP
Fort Lauderdale, Florida
March 14, 2017
F-2
Report of Independent Registered Certified Public Accounting Firm
To the Board of Directors and Shareholders of BBX Capital Corporation
In our opinion, the consolidated statements of operations and comprehensive income, of changes in
equity, and of cash flows for the year ended December 31, 2014 present fairly, in all material respects, the
results of operations and cash flows of BBX Capital Corporation (formerly known as BFC Financial
Corporation) and its subsidiaries for the year ended December 31, 2014 in conformity with accounting
principles generally accepted in the United States of America. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these financial statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
March 16, 2015, except for the change in reportable segments discussed in Note 23 to the consolidated
financial statements, as to which the date is March 14, 2017
F-3
BBX Capital Corporation
Consolidated Statements of Financial Condition
(In thousands, except share data)
ASSETS
Cash and cash equivalents
Restricted cash ( $21,894 in 2016 and $25,358 in 2015 in variable
interest entities ("VIEs"))
Loans held-for-sale
Loans receivable, net
Notes receivable, net ( $287,111 and $280,841 in VIEs in 2016 and 2015,
respectively)
Inventory
Real estate held-for-sale, net
Real estate held-for-investment
Investments in unconsolidated real estate joint ventures
Property and equipment, net
Goodwill
Intangible assets, net
Other assets
Total assets
LIABILITIES AND EQUITY
Liabilities:
Accounts payable
Deferred income
Escrow deposits
Other liabilities
Receivable-backed notes payable - recourse
Receivable-backed notes payable - non-recourse, net of unamortized debt
issuance
costs of $5,190 and $4,905 in 2016 and 2015, respectively (in VIEs)
Notes and mortgage notes payable and other borrowings, net of unamortized
debt
issuance costs of $2,892 and $2,011 in 2016 and 2015, respectively
Junior subordinated debentures, net of unamortized debt issuance costs
of $1,730 and $1,822 in 2016 and 2015, respectively
Deferred income taxes
Shares subject to mandatory redemption
Total liabilities
Commitments and contingencies (See Note 14)
Preferred stock of $.01 par value; authorized 10,000,000 shares:
Redeemable 5% Cumulative Preferred Stock of $.01 par value; authorized
15,000 shares;
December 31,
2016
2015
$
299,861
198,905
$
$
46,456
-
25,521
430,480
253,788
33,345
12,029
43,374
95,998
6,731
68,455
120,030
1,436,068
59,365
21,354
34,035
415,598
220,211
46,338
31,290
42,962
90,020
7,601
70,188
103,093
1,340,960
28,855
37,015
20,152
95,611
87,631
25,976
28,847
24,525
81,623
89,888
327,358
314,024
133,790
120,994
152,367
44,318
13,517
940,614
150,485
8,594
13,098
858,054
issued and outstanding 15,000 shares with a stated value of $1,000 per share
-
-
Equity:
Class A common stock of $.01 par value, authorized 150,000,000 shares;
issued and outstanding 84,844,439 in 2016 and 73,211,519 in 2015
Class B common stock of $.01 par value, authorized 20,000,000 shares;
issued and outstanding 13,184,789 in 2016 and 11,346,336 in 2015
Additional paid-in capital
Accumulated earnings
Accumulated other comprehensive income
Total shareholder equity
Noncontrolling interests
Total equity
Total liabilities and equity
848
732
132
193,347
259,110
1,167
454,604
40,850
495,454
1,436,068
$
113
143,231
232,134
616
376,826
106,080
482,906
1,340,960
See Notes to Consolidated Financial Statements
F-4
BBX Capital Corporation
Consolidated Statements of Operations and Comprehensive Income
(In thousands, except per share data)
For the Years Ended December 31,
2014
2015
2016
Revenues
Sales of VOIs
Fee-based sales commission revenue
Other fee-based services revenue
Trade sales
Interest income
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses
Cost of sales of VOIs
Cost of other fee-based services
Cost of trade sales
Interest expense
Recoveries from loan losses, net
Impairments of assets, net
Litigation settlement
Selling, general and administrative expenses
Total costs and expenses
Equity in net earnings (losses) of unconsolidated
real estate joint ventures
Foreign exchange gain (loss)
Other income, net
Income before income taxes
(Provision) benefit for income taxes (See Note 13)
Net income
Less: Net income attributable to noncontrolling interests
Net income attributable to shareholders
Basic earnings per share
Diluted earnings per share
Basic weighted average number of common
shares outstanding
Diluted weighted average number of common and
common equivalent shares outstanding
Cash dividends declared per Class A common share
Cash dividends declared per Class B common share
Net income
Other comprehensive income, net of tax:
Unrealized (losses) gains on securities available for sale
net of taxes: $131 provision for 2016,
$(16) benefit for 2015 and $0 for 2014
Foreign currency translation adjustments
Other comprehensive income, net
Comprehensive income, net of tax
Less: Comprehensive income attributable
to noncontrolling interests
Total comprehensive income attributable to
shareholders
$
$
$
$
$
$
$
266,142
201,829
103,448
95,996
85,437
6,076
5,067
763,995
27,346
64,479
74,341
36,037
(20,508)
4,656
-
516,757
703,108
13,630
219
3,300
78,036
(36,379)
41,657
13,295
28,362
0.33
0.32
259,236
173,659
97,539
84,284
88,765
31,092
5,632
740,207
22,884
60,942
62,707
40,408
(13,457)
287
36,500
466,700
676,971
(1,565)
(1,038)
4,050
64,683
76,596
141,279
18,805
122,474
1.41
1.40
262,334
144,239
92,089
74,083
86,492
5,527
7,422
672,186
30,766
56,941
54,682
47,402
(7,155)
7,015
-
421,649
611,300
(573)
(715)
4,780
64,378
(37,073)
27,305
13,455
13,850
0.16
0.16
86,902
87,022
84,502
87,492
87,208
84,761
0.015
0.015
0.00
0.00
0.00
0.00
41,657
141,279
27,305
(33)
584
551
42,208
(10)
353
343
141,622
59
89
148
27,453
13,295
18,885
13,490
$
28,913
122,737
13,963
See Notes to Consolidated Financial Statements
F-5
BBX Capital Corporation
Consolidated Statements of Changes in Equity
For Each of the Years in the Three Year Period Ended December 31, 2016
(In thousands)
Shares of
Common
Stock
Outstanding
Class
A
B
Common
Stock Additional
Class
A B Capital
Paid-in Accumulated
Earnings
Accumulated
Other
Non-
controlling
Comprehen- Total
BBX
Capital
Interest in Total
Equity Subsidiaries Equity
sive
Income
Balance, December
31, 2013
Net income
Other comprehensive
income
Subsidiaries' capital
transactions
Distributions to
noncontrolling interest
Conversion of Common
Stock from Class B to
Class A
Issuance of Common
Stock from exercise of
options
Issuance of Common
Stock from vesting of
restricted stock awards
Repurchase and
retirement of Class A
Common Stock
Issuance of restricted
Class B Common Stock
Share-based
compensation
Balance, December
31, 2014
Net income
Other comprehensive
income
Subsidiaries' capital
transactions
Distributions to
noncontrolling interest
Net effect of tender offer
for BCC attributable to
non-controlling interest
Consideration paid in
connection with the
tender offer for BCC
Increase in investment in
BCC from share
exchange agreements
Repurchase and
retirement of Class A
Common Stock
Conversion of Common
Stock from Class B to
Class A
Issuance of Common
Stock from exercise of
options
Issuance of Common
Stock from vesting of
restricted stock awards
Share-based
compensation
Balance, December
31, 2015
Net income
Other comprehensive
income
Subsidiaries' capital
transactions
Increase in investment in
BCC from share
exchange agreements
Issuance of Class A
common stock and
consideration paid to
acquire BCC
noncontrolling interest
71,265 7,337 $ 713 73 142,585
-
-
-
-
-
95,810
240
13,850
239,421
13,850
-
182,975 422,396
13,455 27,305
-
-
-
-
-
-
-
-
-
-
-
-
474
(474)
4
(4)
-
500
-
-
1,219
212
12
2
573
1,389
-
14
-
(14)
(1,040)
-
(10)
-
(4,079)
- 3,093
- 31
(31)
-
-
-
-
2,524
-
-
-
-
-
-
-
-
-
113
-
-
-
-
-
-
-
-
113
500
-
-
587
-
(4,089)
-
2,524
35
148
3,258
3,758
(5,923)
(5,923)
-
-
-
-
-
-
-
587
-
(4,089)
-
2,524
73,307 10,168 $ 733 102
-
-
-
-
142,058
-
109,660
122,474
353 252,906
- 122,474
193,800 446,706
18,805 141,279
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,904
-
-
-
92,763
-
-
(95,424)
- 1,218
- 11
811
(1,549)
-
(15)
-
(4,439)
40
(40)
-
-
-
25
1,389
-
-
-
-
-
-
10
14
-
-
-
(14)
5,562
-
-
-
-
-
-
-
-
-
-
-
263
263
80
343
-
-
1,904
1,039
2,943
-
(14,059) (14,059)
-
92,763
(92,763)
-
-
(95,424)
- (95,424)
-
-
-
-
-
-
822
(822)
-
(4,454)
-
(4,454)
-
10
-
5,562
-
-
-
-
-
10
-
5,562
73,212 11,346 $ 732 113
-
-
-
-
143,231
-
232,134
28,362
616 376,826
28,362
-
106,080 482,906
13,295 41,657
-
-
-
-
-
-
-
-
-
1,608
- 1,531
- 15
1,101
12,038
-
121
-
48,366
-
-
-
-
360
360
-
360
-
-
1,608
413
2,021
1,116
(1,116)
-
191
48,678
(65,572) (16,894)
Distributions to
noncontrolling interest
Class A common stock
cash dividends
Class B common stock
cash dividends
Repurchase and
retirement of Common
Stock
Conversion of Common
Stock from Class B to
Class A
Issuance of Common
Stock from vesting of
restricted stock awards
Issuance of Common
Stock from exercise of
options
Share-based
compensation
Balance, December
31, 2016
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,174)
(212)
(1,880)
(247)
(19)
(2)
(7,299)
38
(38)
-
-
-
1,389
593
14
6
(20)
48
-
-
-
-
-
-
-
10
6,350
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,250) (12,250)
(1,174)
(212)
-
-
(1,174)
(212)
(7,320)
-
(7,320)
-
-
10
6,350
-
-
-
-
-
-
10
6,350
84,845 13,185 $ 848 132
193,347
259,110
1,167 454,604
40,850 495,454
See Notes to Consolidated Financial Statements
F-6
BBX Capital Corporation
Consolidated Statements of Cash Flows
(In thousands)
Operating activities:
Net income
Adjustment to reconcile net income to net cash
provided by operating activities:
Recoveries from loan losses and asset impairments, net
Provision for notes receivable allowances
Depreciation, amortization and accretion, net
Share-based compensation expense
Share-based compensation expense of subsidiaries
Net gains on sales of real estate, loans held-for-sale,
and properties and equipment
Gain on bargain purchase
Equity in (earnings) losses of unconsolidated real estate
For the Years Ended December 31,
2016
2015
2014
$
41,657
141,279
27,305
(14,430)
44,337
8,089
6,350
6,099
(13,233)
42,063
10,511
5,562
5,472
(5,139)
-
(31,211)
(254)
(1,470)
40,164
9,399
2,524
3,703
(4,714)
(1,237)
joint ventures
(13,630)
1,565
573
Return on investment in unconsolidated real estate joint
ventures
Increase (decrease) in deferred income tax
Interest accretion on shares subject to mandatory redemption
Decrease (increase) in restricted cash
Increase in notes receivable
(Increase) decrease in inventory
Decrease (increase) in other assets
Increase (decrease) in other liabilities
Net cash provided by (used in) operating activities
$
13,267
35,704
1,169
10,608
(59,030)
(7,794)
2,135
22,379
91,771
-
(84,329)
1,134
(2,094)
(34,538)
(15,685)
(13,514)
(16,473)
(3,745)
-
12,707
1,102
10,665
(9,820)
19,048
(3,217)
2,405
109,137
Continued
F-7
BBX Capital Corporation
Consolidated Statements of Cash Flows
(In thousands)
Investing activities:
Return of unconsolidated real estate joint venture investment
Investments in unconsolidated real estate joint ventures
Repayment of loans receivable, net
Proceeds from the sale of loans receivable
Proceeds from sales of real estate held-for-sale
Proceeds from contribution of real estate to
unconsolidated real estate joint ventures
Additions to real estate held-for-investment
Additions to real estate held-for-sale
Purchases of property and equipment
Proceeds from the sale of property and equipment
Cash paid for acquisitions, net of cash received
Purchase of BCC noncontrolling interest
Increase (decrease) in cash from other investing activities
Net cash provided by (used in) investing activities
Financing activities:
Repayment of BB&T preferred interest in Florida Asset
Resolution Group, LLC ("FAR")
Repayments of notes, mortgage notes payable and other
borrowings
Proceeds from notes, mortgage notes payable and other
borrowings
Payments for debt issuance costs
Payments of interest on shares subject to mandatory
redemption
Proceeds from the exercise of stock options
Dividends paid on common stock
Excess tax benefits from share-based compensation
Retirement of Class A and Class B Common Stock
Retirement of subsidiary's common stock
Distributions to noncontrolling interest
Net cash used in financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
$
$
$
$
$
F-8
For the Years Ended December 31,
2016
2015
2014
3,321
(3,370)
46,454
-
23,606
-
(7,615)
(561)
(12,939)
2,321
-
(16,894)
282
34,605
510
(9,687)
30,170
68
72,154
701
(20,032)
(10,667)
(12,810)
372
(10)
(95,424)
(3,458)
(48,113)
273
(10,074)
42,298
9,497
33,240
4,086
(4,242)
-
(19,453)
164
(8,844)
-
627
47,572
-
(12,348)
(56,169)
(281,177)
(253,615)
(164,074)
285,682
(4,608)
262,900
(3,830)
137,274
(1,822)
(750)
10
(856)
-
(7,320)
(4,151)
(12,250)
(25,420)
100,956
198,905
299,861
(750)
10
-
-
(4,453)
(2,529)
(14,059)
(28,674)
(750)
586
-
2,080
(4,089)
(2,021)
(5,923)
(94,908)
(80,532)
279,437
198,905
61,801
217,636
279,437
Continued
BBX Capital Corporation
Consolidated Statements of Cash Flows
(In thousands)
$
$
Supplemental cash flow information:
Interest paid on borrowings
Income taxes paid
Income tax refunded
Supplementary disclosure of non-cash investing and
financing activities:
Loans receivable transferred to real estate held-for-sale or
real estate held-for-investment
Loans held-for-sale transferred to loans receivable
Loans receivable transferred to loans held-for-sale
Loans receivable increase from sale of real estate held-for-sale
Real estate held-for-investment transferred to inventory
Real estate held-for-investment transferred to investments
in unconsolidated real estate joint ventures
Real estate held-for-investment transferred to real
estate held-for-sale
Real estate held-for-sale transferred to property and equipment
Increase in real estate held-for-sale from the assumption
of other liabilities
Repayment of note payable with restricted time deposit
Issuance of common stock in exchange for BCC Class A
common stock pursuant to share exchange agreement
Increase in other assets upon issuance of Community
Development District Bonds
Issuance of common stock to acquire BCC noncontrolling
interest
Net increase in shareholders' equity from the effect of
subsidiaries' capital transactions, net of taxes
Increase in accumulated other comprehensive
income, net of taxes
For the Years Ended December 31,
2016
2015
2014
(32,139)
(2,203)
2,695
(35,111)
(26,092)
309
(41,665)
(26,169)
86
4,807
16,078
-
15,254
3,215
7,365
-
10,000
-
21,400
-
2,299
-
-
-
19,448
1,920
11,582
6,557
41,751
-
28,018
-
-
995
-
-
2,879
-
1,116
822
20,743
48,487
-
-
1,608
1,904
551
263
-
-
-
500
113
See Notes to Consolidated Financial Statements
F-9
BBX Capital Corporation
Notes to Consolidated Financial Statements
1. Basis of Financial Statement Presentation
BBX Capital Corporation (formerly BFC Financial Corporation) and its subsidiaries (the “Company”
or, unless otherwise indicated or the context otherwise requires, “we,” “us,” or “our,”) is a Florida-
based diversified holding company. BBX Capital Corporation as a standalone entity without its
subsidiaries is referred to as “BBX Capital”. The Company’s core investments include Bluegreen
Corporation (“Bluegreen”), real estate and middle market companies. Bluegreen is a sales, marketing
and management company focused on the vacation ownership industry. The Company’s real estate
investments include the ownership, financing, acquisition, development and management of real estate,
including through real estate joint ventures. The Company’s investments in middle market operating
businesses include Renin Holdings, LLC (“Renin”), a company that manufactures products for the
home improvement industry, and the Company’s investments in sugar and confectionary businesses
through its wholly-owned subsidiary, BBX Sweet Holdings, LLC (“BBX Sweet Holdings”).
On December 15, 2016 the Company completed the acquisition of all the outstanding shares of the
former BBX Capital Corporation (“BCC”) not previously owned by the Company and on January 30,
2017 the Company changed its name from BFC Financial Corporation to BBX Capital Corporation (see
Note 3 - Merger).
Prior to the acquisition of all the outstanding shares of BCC, the Company had an 82% equity interest in
BCC and a direct 54% equity interest in Woodbridge Holdings, LLC (“Woodbridge”), the parent
company of Bluegreen. As a result of this acquisition, BCC and Woodbridge are wholly owned by
BBX Capital.
Cash Tender Offer for BCC’s Class A Common Stock
On April 30, 2015, the Company completed a cash tender offer pursuant to which it purchased from the
shareholders of BCC a total of 4,771,221 shares of BCC’s Class A Common Stock at a purchase price
of $20.00 per share, for an aggregate purchase price of approximately $95.4 million. Prior to the tender
offer, the Company owned approximately 51% of the issued and outstanding shares of BCC’s Class A
Common Stock and all of the issued and outstanding shares of BCC’s Class B Common
Stock. Collectively, these shares represented an approximately 51% equity interest and 74% voting
interest in BCC. The purchase of BCC’s Class A Common Stock in the tender offer increased the
Company’s ownership interest to approximately 81% of the issued and outstanding shares of BCC’s
Class A Common Stock and collectively the shares of BCC’s Class A Common Stock and Class B
Common Stock owned by the Company subsequent to the tender offer represented an approximately
81% equity interest and 90% voting interest in BCC. As a result of the increase in the Company’s
ownership interest in BCC, the Company files a consolidated group tax return which includes the
operations of BCC, Woodbridge and Bluegreen. See Note 13 for additional information regarding the
Company’s income taxes.
Sale of BankAtlantic
BCC’s principal asset until July 31, 2012 was its ownership of BankAtlantic and its subsidiaries
(“BankAtlantic”). BankAtlantic was a federal savings bank headquartered in Fort Lauderdale,
Florida. On July 31, 2012, BCC completed the sale to BB&T Corporation (“BB&T”) of all of the
issued and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions
described herein are collectively referred
the “BB&T
to as
Transaction”). Prior to the closing of the BB&T Transaction, BankAtlantic formed two wholly-owned
subsidiaries, BBX Capital Asset Management, LLC (“CAM”) and Florida Asset Resolution Group,
LLC (“FAR”).
the “BankAtlantic Sale” or
Prior to the closing of the BB&T Transaction, BankAtlantic contributed approximately $82 million in
cash to CAM and certain non-performing commercial loans, commercial real estate and previously
written-off assets that had an aggregate carrying value on BankAtlantic’s balance sheet of $125 million
as of July 31, 2012. CAM assumed all liabilities related to these assets. Prior to the closing of the
BB&T Transaction, BankAtlantic distributed all of the membership interests in CAM to BCC. CAM
remains a wholly-owned subsidiary of the Company.
BankAtlantic also contributed to FAR certain performing and non-performing loans and real estate that
had an aggregate carrying value on BankAtlantic’s balance sheet of approximately $346 million as of
July 31, 2012. FAR assumed all liabilities related to these assets. BankAtlantic also contributed
approximately $50 million in cash to
F-10
FAR on July 31, 2012 and thereafter distributed all of the membership interests in FAR to BCC. At the
closing of the BB&T Transaction, BCC transferred to BB&T 95% of the outstanding preferred
membership interests in FAR in connection with BB&T’s assumption of BBX Capital’s $285.4 million
in principal amount of outstanding trust preferred securities (“TruPS”) obligations. BCC retained the
remaining 5% of FAR’s preferred membership interests and all of its common membership interests.
Under the terms of the Amended and Restated Limited Liability Company agreement of FAR entered
into by BCC and BB&T at the closing, BB&T was entitled to hold its 95% preferred interest in the net
cash flows of FAR until it recovered $285 million in preference amount plus a priority return of LIBOR
+ 2.0% per annum on any unpaid preference amount. On May 6, 2015, BB&T’s preferred interest in
FAR was repaid in full and redeemed and FAR is currently a wholly-owned subsidiary of the Company.
2. Summary of Significant Accounting Policies
The accounting policies applied by the Company conform to accounting principles generally accepted
in the United States of America.
Consolidation Policy - The consolidated financial statements include the accounts of all the Company’s
wholly-owned subsidiaries, majority owned subsidiaries and other entities in which the Company and
its subsidiaries hold controlling financial interests, or variable interest entities (“VIEs”) if the Company
or its consolidated subsidiary is deemed the primary beneficiary of the VIE. All significant inter-
company accounts and transactions have been eliminated among consolidated entities.
Use of Estimates – The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates. On an ongoing
basis, management evaluates its estimates, including those that relate to the estimated future sales value
of inventory; the recognition of revenue, including revenue recognition under the percentage-of-
completion method of accounting; allowance for credit losses; the recovery of the carrying value of real
estate inventories; the measuring of assets and liabilities at fair value including business combinations
and measuring the fair value on a non-recurring basis of intangible assets, goodwill, real estate held-
for-sale and real estate held-for-investment; the amount of the deferred tax valuation allowance,
accounting for uncertain tax positions and the estimate of contingent liabilities related to litigation and
other claims and assessments. Management bases its estimates on historical experience and on various
other assumptions that it believes to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ materially from these estimates under different
assumptions and conditions.
Reclassifications - Certain amounts for prior years have been reclassified to conform to the revised
financial statement presentation for 2016.
Cash and Cash Equivalents - Cash equivalents consist of cash, demand deposits at financial
institutions, money market funds and other short-term investments with original maturities of 90 days or
less. Management generally invests cash in excess of its immediate operating requirements in short-term
time deposits and money market instruments, typically with original maturities at the date of purchase
of three months or less. Management maintains cash and cash equivalents with various financial
institutions located throughout the United States, Canada and Aruba in amounts exceeding the
$250,000 federally insured limit. Accordingly, the Company is subject to credit risk. Periodic
evaluations of the relative credit standing of financial institutions maintaining the Company’s deposits
are performed to evaluate and attempt to mitigate, if necessary, credit risk.
Restricted Cash – Restricted cash consists primarily of customer deposits held in escrow accounts and
cash collected on pledged/secured notes receivable not yet remitted to lenders.
Revenue Recognition – Revenue is recorded for the sale of vacation ownership interests (“VOIs”), net
of a provision for credit losses, in accordance with timeshare accounting guidance. In accordance with
the requirements of Accounting Standards Codification 970, Real Estate (“ASC 970”), Bluegreen
recognizes revenue on VOI sales when a minimum of 10% of the sales price has been received in cash
(demonstrating the buyer’s commitment), the legal rescission period has expired, collectibility of the
receivable representing the remainder of the sales price is reasonably assured and Bluegreen has
completed substantially all of its obligations with respect to any development related to the real estate
sold.
F-11
Bluegreen believes that it uses a reasonably reliable methodology to estimate the collectibility of the
receivables representing the remainder of the sales price of real estate sold. Bluegreen’s policies
regarding the estimation of credit losses on its notes receivable are discussed in further detail in Note 6 -
“Notes Receivable” below.
Under timeshare accounting rules, the calculation of the adequacy of a buyer’s commitment for the sale
of VOIs requires that cash received towards the purchase of Bluegreen VOIs be reduced by the value of
certain incentives provided to the buyer at the time of sale. If after considering the value of the
incentives provided, the 10% requirement is not met, the VOI sale, and the related cost and direct
selling expenses, are deferred until such time that sufficient cash is received from the customer,
generally through receipt of mortgage payments, to meet the 10% threshold. Changes to the quantity,
type, or value of sales incentives that Bluegreen provides to buyers of its VOIs may result in additional
VOI sales being deferred or extend the period during which a sale is deferred.
In cases where construction and development on Bluegreen-owned resorts has not been substantially
completed, Bluegreen recognizes revenue in accordance with the percentage-of-completion method of
accounting. Should Bluegreen’s estimates of the total anticipated cost of completing any of its projects
increase, Bluegreen may be required to defer a greater amount of revenue or may be required to defer
revenue for a longer period of time.
Under timeshare accounting rules, rental operations, including accommodations provided through the
use of Bluegreen’s sampler program, are accounted for as incidental operations whereby incremental
carrying costs in excess of incremental revenues are expensed as incurred. Conversely, incremental
revenues in excess of incremental carrying costs are recorded as a reduction to the carrying cost of VOI
inventory. Incremental carrying costs include costs that have been incurred by Bluegreen during the
holding period of unsold VOIs, such as developer subsidies and maintenance fees on unsold VOI
inventory. During each of the years presented, all of Bluegreen’s rental revenue and sampler revenue
earned was recorded as an offset to cost of other fee-based services as such amounts were less than the
incremental carrying cost.
In addition to sales of VOIs, Bluegreen also generates revenue from the activities listed below. The
table provides a brief description of the applicable revenue recognition policy:
Activity
Fee-based sales commissions
Revenue is recognized when:
The sale transaction with the VOI purchaser is consummated
in accordance with the terms of the agreement with the third-
party developer and the related consumer rescission period has
expired.
Resort management and service fees Management services are rendered. (1)
Resort title fees
Escrow amounts are released and
completed.
title documents are
Rental and sampler program
Guests complete stays at the resorts. Rental and sampler
program proceeds are classified as a reduction to “Cost of
other fee-based services” in the consolidated statements of
operations and comprehensive income.
(1)
In connection with Bluegreen’s management property owners’ associations, Bluegreen acts as agent for the
property owners’ association to operate the resort as provided under the management agreements. In certain
cases, the personnel at the resorts are Bluegreen employees. The property owners’ association bears the costs of
such personnel and generally pay Bluegreen in advance of, or simultaneously with, the payment of payroll. In
accordance with the accounting guidance for reporting revenues gross versus net, reimbursements from the
property owners’ associations relating to direct pass-through costs are recorded net of the related expenses.
Bluegreen’s cost of other fee-based services consists of the costs associated with the various activities
described above, as well as developer subsidies and maintenance fees on Bluegreen’s unsold VOIs.
Revenue is recognized from the sales of real estate held-for-sale and the transfer of real estate to joint
ventures when the sales are closed and title passes to the buyer, the buyer’s initial and continuing
investment is adequate to demonstrate a commitment to pay for the property, the buyer’s receivable, if
applicable, is not subject to future subordination and the Company does not have substantial continuing
involvement with the property.
F-12
Revenues are recognized on trade sales when products are shipped and the customer takes ownership
and assumes the risk of loss.
Revenues from interest income are recognized on accruing loans when management determines that it is
probable that all of the principal and interest will be collected in accordance with the loan’s contractual
terms. Interest income is recognized on non-accrual loans on a cash basis.
Revenues from real estate operations are generally rental income from properties under operating leases.
Rental income is recognized as rents become due and rental payments received in advance are deferred
until earned.
Loans Receivable - Loans that the Company has the intent and ability to hold for the foreseeable future,
or until maturity or payoff, are reported at their outstanding principal balances net of any discounts and
allowance for loan losses. Loans that management has the intent to sell are classified as loans held-for-
sale and are reported at the lower of aggregate cost or estimated fair value. Discounts on loans held-
for-sale are deferred until the related loan is sold and included in gains and losses upon sale. Loans are
classified as loans held-for-sale when management decides to sell loans that were not originated or
purchased for sale. Transfers of loans between classifications are recorded at the lower of aggregate
cost or estimated fair value at the transfer date.
An allowance for loan losses is recorded to reflect management’s reasonable estimate of probable credit
losses inherent in the loan portfolio based on its evaluation of credit risk as of period end. Loans are
charged off against the allowance when management believes the loan is not collectible. Recoveries are
credited to the allowance.
Management segregates loans into segments with certain common characteristics so as to form a basis
for estimating losses as it relates to the segment. The loan portfolio has the following loan segments:
residential, consumer, commercial non-real estate, commercial real estate, and small business
loans. Impaired loans are measured based on the fair value of the collateral less costs to
sell. Consumer and residential loans past due 120 days or more are evaluated individually for
impairment and measured based on the lower of the estimated fair value of the loan’s collateral less cost
to sell or the carrying value of the loan.
Loans are generally placed on non-accrual status at the earlier of the loan becoming past due 90 days as
to either principal or interest or when the borrower has entered bankruptcy proceedings and the loan is
delinquent. When a loan is placed on non-accrual, all accrued interest is reversed against interest
income. Loans may be restored to accrual status when there has been a satisfactory period of
performance and the loan is expected to perform in the future according to its contractual terms.
Notes Receivable - Bluegreen’s VOI notes receivable are carried at amortized cost less an allowance for
credit losses. Interest income is suspended, and previously accrued but unpaid interest income is
reversed, on all delinquent Bluegreen VOI notes receivable when principal or interest payments are
more than 90 days contractually past due, and not resumed until such VOI notes receivable are less than
90 days past due. After 120 days, Bluegreen’s VOI notes receivable are generally written off against the
allowance for credit loss.
Bluegreen records an estimate of expected uncollectible VOI notes receivable as a reduction of revenue
at the time Bluegreen recognizes a VOI sale. Bluegreen estimates of uncollectible VOI notes receivable
is based on historical uncollectibles for similar VOI notes receivable. Bluegreen uses a static pool
analysis, which tracks uncollectibles for each year’s sales over the entire life of the notes. Bluegreen
also considers whether the historical economic conditions are comparable to current economic
conditions, as well as variations in underwriting standards. Additionally, no consideration is given for
future
the estimate of uncollectible VOI notes
in
receivable. Bluegreen reviews its allowance for credit losses on at least a quarterly basis. Bluegreen’s
loan origination costs are deferred and recognized over the life of the related notes receivable.
recoveries of defaulted
inventory
Trade Receivables – Trade receivables are recorded at the invoiced amount and do not bear
interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its
accounts receivable portfolio. In establishing the required allowance, management considers historical
losses adjusted to take into account current market conditions and the customers' financial condition, the
amount of receivables in dispute, and the current receivables aging and current payment patterns. The
Company reviews its allowance for doubtful accounts quarterly. Past due balances over 90 days and
over a specified amount are reviewed individually for collectibility. Account balances are charged off
against the allowance after all standard means of collection have been exhausted and the potential for
recovery is considered remote. Trade receivables are included in other assets in the Company’s
Consolidated Statements of Financial Condition.
F-13
Inventory
- The Company’s inventory is primarily comprised of completed VOIs, VOIs under
construction, land held for future VOI development and land held for development. VOI completed
inventory is carried at the lower of (i) cost, including costs of improvements and amenities incurred
subsequent to acquisition, capitalized interest, real estate taxes and other costs incurred during
construction, or (ii) estimated fair market value, less costs to sell. VOI inventory and cost of sales are
accounted for under timeshare accounting rules, which require the use of a specific method of the
relative sales value method for relieving VOI inventory and recording cost of sales. Under the relative
sales value method required by timeshare accounting rules, cost of sales is calculated as a percentage of
net sales using a cost-of-sales percentage - the ratio of total estimated development costs to total
estimated VOI revenue, including the estimated incremental revenue from the resale of VOI inventory
repossessed, generally as a result of the default of the related receivable. Also, pursuant to timeshare
accounting rules, inventory is not relieved for VOI cost of sales related to anticipated credit losses.
Accordingly, no adjustment is made when inventory is reacquired upon default of the related
receivable.
The Company also periodically evaluates the recoverability of the carrying amount of its land held for
future vacation ownership development and land held for development under the accounting guidelines
for Property, Plant and Equipment, which provides guidance relating to the accounting for the
impairment or disposal of long-lived assets.
The inventories of Renin and BBX Sweet Holdings are included in other assets in the Company’s
Consolidated Statements of Financial Condition. These inventories are measured at the lower of cost or
market. Cost includes all costs of conversions, including materials, direct labor, production overhead,
depreciation of equipment and shipping cost. Raw materials are stated at the lower of approximate cost,
on a first-in, first-out basis, and market determined by reference to replacement cost. Raw materials are
not written down unless the goods in which they are incorporated are expected to be sold for less than
cost, in which case, they are written down by reference to replacement cost of the raw
materials. Finished goods and work in progress are stated at the lower of cost or market determined on
a first-in, first-out basis for Renin’s finished goods inventory and on an average cost basis for BBX
Sweet Holdings’ finished goods inventory. Shipping and handling fees billed to the customers were
recorded as trade sales and shipping and handling fees paid by Renin and BBX Sweet Holdings were
recorded as selling, general, and administrative expenses. Included in the Company’s Consolidated
Statements of Operations and Comprehensive Income as selling, general, and administrative expenses
for the years ended December 31, 2016, 2015 and 2014 were $6.0 million, $5.5 million and $5.5
million, respectively, of costs associated with shipping goods to customers.
In valuing inventory, the Company makes assumptions regarding the write-downs required for excess
and obsolete inventory based on judgments and estimates formulated from available information.
Estimates for excess and obsolete inventory are based on historical and forecasted usage. Inventory is
also examined for upcoming expiration and write-downs are recorded where appropriate.
Real Estate Held-for-Investment and Real Estate Held-for-Sale – From time to time, the Company
takes possession or ownership of real estate through foreclosure of the underlying loan collateral or
through the purchase of the real estate from third parties. Real estate acquired through foreclosure is
measured at the fair value of the collateral and classified as either real estate held-for-sale or real estate
held-for-investment. When real estate is classified as held-for-sale, it is initially recorded at fair value
less estimated selling costs (cost basis) and subsequently measured at the lower of cost or estimated fair
value. When real estate is classified as held-for-investment, it is recorded at fair value and in
subsequent periods depreciated over
if
applicable. Impairments required at the time of foreclosure are charged to the allowance for loan
losses. Expenditures for capital improvements are generally capitalized. Valuation allowance
adjustments are made to reflect any subsequent declines in fair values. The costs of holding real estate
are charged to real estate operating expenses as incurred. Changes in the real estate valuation allowance
are recorded as asset (recoveries) impairments in the Company’s Consolidated Statement of Operations
and Comprehensive Income.
line method,
the straight
life using
its useful
Investments in Unconsolidated Real Estate Joint Ventures - The Company follows the equity method
of accounting to record its interests in entities in which it does not own the majority of the voting stock
or otherwise hold a controlling financial interest and to record its investment in variable interest entities
in which it is not the primary beneficiary. Under the equity method, an investment is shown on the
Statement of Financial Condition of an investor as a single amount and an investor’s share of earnings
or losses from its investment is shown in the Statement of Operations as a single amount. The
investment is initially measured at cost and adjusted for the investor’s share of the earnings or losses of
the investee as well as dividends received from the investee. The
F-14
investor recognizes its share of the earnings or losses of the investee in the periods for which they are
reported by the investee in its financial statements rather than in the period in which an investee declares
a dividend.
The Company recognizes earnings or losses on certain equity method investments based on the
hypothetical liquidation at book value (“HLBV”) method. Under the HLBV method, earnings or losses
are recognized based on how an entity would allocate and distribute its cash if it were to sell all of its
assets and settle its liabilities for their carrying amounts and liquidate at the reporting date. The HLBV
method is used to calculate earnings or losses for equity method investments when the contractual cash
disbursements are different than the investors’ equity interest.
Interest expense is capitalized by the Company on investments, advances or loans to real estate equity
method companies that began qualifying activities. Total capitalized interest expense cannot exceed
interest expense incurred. Interest expense capitalization ceases when the investee completes its
qualifying activities.
The Company reviews its equity and cost method investments on an ongoing basis for indicators of
other-than-temporary impairment. This determination requires significant judgment in which the
Company evaluates, among other factors, the fair market value of the investments, general market
conditions, the duration and extent to which the fair value of the investment is less than cost, and the
Company’s intent and ability to hold the investment until it recovers. The Company also considers
specific adverse conditions related to the financial health of and business outlook for the investee,
including industry and sector performance, rating agency actions, changes in operations and financing
cash flow factors. If a decline in the fair value of the investment is determined to be other-than-
temporary, an impairment charge is recorded to reduce the investment to its fair value and a new cost
basis in the investment is established.
Property and Equipment - Land is carried at cost. Properties and equipment are carried at cost less
accumulated depreciation. Depreciation is primarily computed on the straight-line method over the
estimated useful lives of the assets which generally range up to 40 years for buildings and building
improvements, from 3 to 14 years for office equipment, furniture and fixtures, 5 years for transportation
and equipment and from 3 to 14 years for leasehold improvements. The cost of leasehold improvements
is amortized using the straight-line method over the shorter of the terms of the related leases or the
useful lives of the assets.
Expenditures for new properties, leasehold improvements and equipment and major renewals and
betterments are capitalized. Expenditures for maintenance and repairs are expensed as incurred, and
gains or losses on disposal of assets are reflected in current operations.
The cost of software development for internal use is capitalized in accordance with the accounting
guidance for costs of computer software developed or obtained for internal use. Capitalization of
software developed for internal use commences during the development phase of the project. Software
developed or obtained for internal use is generally amortized on a straight-line basis over 3 to 5 years.
Goodwill and Intangible Assets – Goodwill is recorded at the acquisition date of a business. The
Company tests goodwill for potential impairment annually on December 31 or during interim periods if
impairment indicators exist. The Company first assesses qualitatively whether it is necessary to
perform the two-step goodwill impairment test. The two-step test is performed when it is more-likely-
than-not that the reporting unit’s goodwill fair value is less than its carrying amount. The Company
evaluates the following factors in its qualitative assessment: macroeconomic conditions, market
considerations, cost factors, financial performance and events affecting the reporting unit.
If the Company concludes from the qualitative assessment that further testing is required, the Company
performs the two-step goodwill impairment test. The first step of the goodwill impairment test is used to
identify potential impairment. This step compares the fair value of a reporting unit with its carrying
value. If the fair value of the reporting unit exceeds its carrying value, goodwill is considered not
impaired and the second step of the impairment test is not necessary. If the fair value of the reporting
unit is less than the carrying value, then the second step of the test is used to measure the amount of
goodwill impairment, if any, in the reporting unit. This step compares the current implied goodwill in
the reporting unit to its carrying amount. If the carrying amount of the goodwill exceeds the implied
goodwill, an impairment is recorded for the excess. The implied goodwill is determined in the same
manner as the amount of goodwill recognized in a business combination is determined.
Intangible assets consist primarily of indefinite lived management contracts recognized upon the
consolidation of Bluegreen during November 2009. The remaining balance in intangible assets
consisted of trade names, customer relationships, non-competition agreements and lease premiums that
were initially recorded at fair value at the acquisition date of a business and are amortized on a straight-
line basis over their respective estimated useful lives.
F-15
Indefinite lived intangible assets are not amortized and are tested for impairment on at least an annual
basis, or more frequently if events and circumstances indicate that the indefinite lived intangible assets
may be impaired. The Company evaluates indefinite lived intangible assets for impairment by first
qualitatively considering relevant events and circumstances to determine whether it is more-likely-than-
not that the fair value of an indefinite-lived intangible asset is less than its carrying value. If it is more-
likely-than-not that the fair value of the indefinite-lived intangible asset is greater than it carrying value
than the indefinite-lived intangible asset is not impaired. If the Company concludes that further testing
is required, the Company calculates the fair value of the indefinite-lived intangible asset and compares
the fair value to the carrying value. If the fair value of the indefinite-lived intangible asset is less than
the carrying value, an impairment is recognized for the difference.
Amortizable intangible assets are tested for recoverability whenever events or changes in circumstances
indicate that the carrying amount of the intangible asset may not be recoverable. The carrying amount
of an intangible asset is not considered recoverable when the carrying amount exceeds the sum of the
undiscounted cash flows expected to result from the use of the intangible asset. The impairment is
measured as the amount by which the carrying amount of the intangible asset exceeds its fair value.
Deferred Income - Bluegreen defers VOI revenue, net of direct incremental selling expenses, for sales
for which the legal rescission period has expired but the required revenue recognition criteria described
above has not been met. Additionally, in connection with Bluegreen’s sampler program, Bluegreen
defers revenue, net of direct incremental selling expenses, for guest stays not yet completed.
Deferred Financing Costs - Deferred financing costs are comprised of costs incurred in connection
with obtaining financing from third-party lenders and are capitalized and amortized to interest expense
over the terms of the related financing arrangements.
Advertising –The Company expenses advertising costs, which are primarily marketing costs, as
incurred. Advertising expense is included in selling, general and administrative expenses in the
accompanying Consolidated Statements of Operations and Comprehensive Income. Bluegreen has
entered into marketing arrangements with various third parties. For the year ended December 31, 2016,
sales of VOIs to prospects and leads generated by one marketing arrangement accounted for over 16%
of VOI sales volume. There can be no guarantee that Bluegreen will be able to maintain this agreement
in accordance with its terms or extend or renew these agreements on similar terms, or at all.
its
file
separate
subsidiaries
Income Taxes – The Company and its subsidiaries in which its owns 80% or more of the subsidiary’s
outstanding equity file a consolidated U.S. Federal and Florida income tax return. Other than Florida,
the Company and
for each
jurisdiction. Subsidiaries in which the Company owns less than 80% of the outstanding equity are not
included in the Company’s consolidated U.S. Federal or Florida state income tax return. For years prior
to December 31, 2015, BCC and Bluegreen filed separate tax returns with the Internal Revenue Service
as the Company owned less than 80% of the outstanding equity of these subsidiaries. Since the
increase in the Company’s ownership interest in BCC due to the purchase of additional shares of BCCs
Class A Common Stock in the above-described cash tender offer, the Company files a consolidated
group tax return which includes the operations of BCC, Woodbridge and Bluegreen for the years ended
December 31, 2016 and 2015. See Note 13 for additional information regarding income taxes.
income
returns
state
tax
The provision for income taxes is based on income before taxes reported for financial statement
purposes after adjustment for transactions that do not have tax consequences. Deferred tax assets and
liabilities are realized according to the estimated future tax consequences attributable to differences
between the carrying value of existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using the enacted tax rates as of the date of the Statement of
Financial Condition. The effect of a change in tax rates on deferred tax assets and liabilities is reflected
in the period that includes the statutory enactment date. A deferred tax asset valuation allowance is
recorded when it has been determined that it is more likely than not that deferred tax assets will not be
realized. If a valuation allowance is needed, a subsequent change in circumstances that causes a change
in judgment about the realization of the related deferred tax amount could result in the reversal of the
deferred tax valuation allowance. Additionally, taxable temporary differences that originate from a
business combination could result in deferred tax valuation allowance reversals.
An uncertain tax position is defined as a position taken or expected to be taken in a tax return that is not
based on clear and unambiguous tax law and which is reflected in measuring current or deferred income
tax assets and liabilities for interim or annual periods. The Company may recognize the tax benefit
from an uncertain tax position
F-16
only if it believes that it is more likely than not that the tax position will be sustained on examination by
the taxing authorities, based on the technical merits of the position. The Company measures the tax
benefits recognized based on the largest benefit that has a greater than 50% likelihood of being realized
upon ultimate resolution. The Company recognizes interest and penalties related to unrecognized tax
benefits in its provision for income taxes.
Noncontrolling Interests – Noncontrolling interests reflect third parties’ ownership interests in entities
that are consolidated in the Company’s financial statements, but less than 100% owned by the
Company. GAAP require that a noncontrolling interest be recognized as equity in the consolidated
financial statements and itemized separately from the parent’s equity. In accordance with applicable
guidance, a change in the ownership interest in a subsidiary is accounted for as an equity transaction if
the parent retains its controlling financial interest in the subsidiary.
Accounting for Loss Contingencies – Loss contingencies, including those arising from legal actions,
are recorded as liabilities when the likelihood of loss is probable and an amount or range of loss can be
reasonably estimated.
Earnings Per Share - Basic earnings per share excludes dilution and is computed by dividing net
income allocable to common stock by the weighted average number of common shares outstanding for
the period. Diluted earnings per share is computed in the same manner as basic earnings per share, but
it also reflects potential dilution that could occur if options to acquire common shares or restricted stock
awards of the Company were exercised or vest. Common stock options and restricted stock awards, if
dilutive, are considered in the weighted average number of dilutive common shares outstanding based
on the treasury stock method. Diluted earnings per share also takes into consideration the potential
dilution from securities issued by subsidiaries that enable their holders to obtain the subsidiary’s
common stock. The resulting net income amount is divided by the weighted average number of dilutive
common shares outstanding.
Stock-Based Compensation – Compensation expense for stock options and non-vested restricted
common stock awards is based on the fair value of the award on the measurement date, which is
generally the grant date. The Company recognizes these compensation costs on a straight-line basis
over the requisite service period of the award, which is generally four years for non-vested restricted
common stock awards and five years for stock options. The fair value of stock options is estimated
using the Black-Scholes option-pricing model. The fair value of non-vested restricted common stock
awards is generally the market price of the Company’s common stock on the grant date.
Recently Adopted Accounting Pronouncements
In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU 2015-03, “Interest –
Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs” as
amended by ASU 2015-15, which requires debt issuance costs to be presented in the balance sheet as a
direct deduction from the carrying value of the associated debt liability, consistent with the presentation
of a debt discount. However, ASU 2015-03 also permits presentation of debt issuance costs on line-of-
credit arrangements as assets. This standard became effective for the Company on January 1,
2016. The Company’s adoption of ASU 2015-03 is reflected in the accompanying balance sheets as of
December 31, 2016 and 2015 and in the tables included in Note 13. As further reflected in the table
below, as a result of the adoption of ASU 2015-03, the Company has reclassified certain unamortized
debt issuance costs as a direct deduction from the carrying value of the associated debt liability reported
in the Company’s Consolidated Balance Sheet as of December 31, 2015 contained in the 2015 Annual
Report (in thousands):
As presented
in the 2015
Annual
Report
December
31,
2015
111,113 $
$
As adjusted
December
31,
2015
102,375
Reclassification
(8,738)$
318,929
123,005
152,307
(4,905)
(2,011)
(1,822)
314,024
120,994
150,485
Other assets (1)
Receivable backed notes payable - non-recourse
(VIE)
Lines of credit and notes payable
Junior subordinated debentures
(1) The Company reclassified $0.7 million of inventory to other assets at December 31, 2015 to conform to the
revised financial statement presentation for 2016.
F-17
New Accounting Pronouncements
the following accounting
The Financial Accounting Standards Board (“FASB”) has
pronouncements and guidance relevant to the Company’s operations which have not been adopted as of
December 31, 2016:
issued
Accounting Standards Update (ASU) No. 2014-09 – Revenue Recognition (Topic 606): In May 2014,
the FASB issued a new standard related to revenue recognition. Under the new standard, revenue is
recognized when a customer obtains control of promised goods or services and is recognized in an
amount that reflects the consideration which the entity expects to receive in exchange for those goods or
services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of
revenue and cash flows arising from contracts with customers. The FASB has recently issued several
amendments to the standard, including identifying performance obligations and other technical
corrections and minor improvements affecting a variety of topics and required disclosures in the new
standard. The standard can be adopted using either the full retrospective or the modified retrospective
method. The Company is evaluating the available adoption methods. The standard is effective for
annual and interim reporting periods beginning after December 15, 2017. The Company anticipates
adopting this standard on January 1, 2018.
The initial analysis identifying areas that will be impacted by the new guidance is substantially
complete, and the Company is currently analyzing the potential impacts to the consolidated financial
statements and related disclosures on a disaggregated basis and evaluating differences in the Company’s
current accounting policies and the new standard.
The Company believes that the new standard will have an impact on the timing of revenue recognition
associated with the Company’s real estate. Specifically, the Company believes the new standard will
impact the timing of revenue recognition for contingent profits on real estate sales and on the
contribution of real estate to joint ventures in which the Company has an equity interest in the joint
venture.
The Company believes that the new standard will not materially affect trade sales revenue recognition.
The Company expects the recognition of its Fee-based sales commission revenue to remain
substantially unchanged. However, the Company is continuing its assessment on the accounting for
Sales of VOIs, collectibility of Sales of VOIs, Other fee-based services revenue and the presentation of
certain revenues on a gross basis based on pending industry guidance anticipated to be issued in 2017.
The AICPA’s Financial Reporting Executive Committee ("FINREC") is in the process of reviewing and
issuing guidance related to the implementation of ASU 2014-09. Final revenue recognition
clarifications are expected to be included in a new revenue recognition guide that the AICPA is
developing. The Company anticipates using this guide and the timeshare industry specific guidance in
making its assessment after the guide is issued.
Accounting Standards Update (ASU) No. 2016-02 – Leases (Topic 842). This update requires an entity
to recognize a right-of-use asset and a lease liability for virtually all of its leases. The liability will be
equal to the present value of lease payments. The asset will generally be based on the liability. For
income statement purposes operating leases will result in straight-line expense and finance leases will
result in expenses similar to current capital leases. The guidance also requires additional disclosures to
enable users of financial statements to understand the amount, timing and uncertainty of cash flows
arising from leases. The guidance will be effective for fiscal years beginning after December 15, 2018,
including interim periods within those fiscal years. Early adoption is permitted. The Company
anticipates adopting this standard on January 1, 2019. The Company expects that the implementation of
this new standard will have an impact on its consolidated financial statements and related disclosures as
the Company has aggregate future minimum lease payments of $61.0 million at December 31, 2016
under its current non-cancelable lease agreements with various expirations dates between 2017 and
2026. The Company anticipates recognition of additional assets and corresponding liabilities related to
these leases on its consolidated statement of financial condition.
Accounting Standards Update (ASU) No. 2016-13, Financial Instruments - Credit Losses (Topic 326),
Measurement of Credit Losses on Financial Instruments. This update requires that expected credit
losses relating to financial assets measured on an amortized cost basis and available-for-sale debt
securities be recorded through an allowance for credit losses. The update introduces an approach based
on expected credit losses to estimate credit losses and expands the disclosure requirements regarding a
company’s assumptions, models, and methods for estimating the allowance for credit losses. Further,
entities will need to disclose the amortized cost balance for each class of financial asset by credit quality
indicator, disaggregated by the year of origination (i.e., by vintage year). This ASU
F-18
is effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years. The Company is currently evaluating the requirements of this update and has not yet
determined its impact on the Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2017-04, Intangibles- Goodwill and Other (Topic 350) -
Simplifying the Test for Goodwill Impairment. This ASU eliminates the second step of the goodwill
impairment test under current guidance. The annual or interim goodwill impairment is performed by
comparing the fair value of a reporting unit with its carrying amount. An impairment charge is
recognized for the amount in which the carrying amount exceeds the fair value of the reporting
unit. The guidance will be effective for fiscal years beginning after December 15, 2019. Early adoption
is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1,
2017. This ASU should be adopted on a prospective basis. The Company believes that the adoption of
this ASU will not have a material impact on Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2017-01, Business Combinations - Clarifying the Definition of
a Business. This ASU affects the determination of whether a company has acquired or sold a business.
The guidance will be effective for fiscal years beginning after December 15, 2017, including interim
periods within those periods. Early adoption is permitted. The Company believes that the adoption of
this ASU will not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2016-18, Statement of Cash Flows, Restricted Cash (Topic
230). This ASU requires that the statement of cash flows explain the change during the period in the
total of cash, cash equivalents and restricted cash. The amount of restricted cash should be included
with cash and cash equivalents when reconciling the beginning of the period and the end of period cash
as shown on the statement of cash flows. The guidance will be effective for fiscal years beginning after
December 15, 2017, including interim periods within those fiscal years. Early adoption is
permitted. The ASU should be applied using the retrospective transition method to each period
presented. The Company believes that the adoption of this ASU will not have a material impact on the
Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230), Classification
of Certain Cash Receipts and Cash Payments. Accounting Standards Updated (ASU) No. 2016-18,
Statement of Cash Flows (Topic 230) - This ASU presents guidance on the classification of certain cash
receipts and payments with the objective of reducing the existing diversity in current practice. The
guidance will be effective for fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. Early adoption is permitted in any interim or annual period. The Company is
currently evaluating the requirements of this update and has not yet determined its impact on the
Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2016-09 – Compensation – Stock Compensation (Topic 718).
The amendments in this update affect all entities that issue share-based payment awards to their
employees. The areas for simplification in this update involve several aspects of the accounting for
share-based payment transactions, including the income tax consequences, classification of awards as
either equity or liabilities, and classification on the statement of cash flows. Changes introduced by this
relates to the timing of when unrecognized tax benefits are recognized, minimum statutory withholding
requirements, and forfeitures, The implementation of this ASU on January 1, 2017 resulted in a
cumulative effect adjustment to accumulated earnings of $3.1 million associated with excess tax
benefits that were not previously recognized because the related tax deduction had not reduced current
taxes payable. The adoption of this update did not have a material impact on the Company’s
consolidated financial statements.
Accounting Standards Update (ASU) No. 2016-07 – Investments – Equity Method and Joint Ventures
(Topic 323) – Simplifying the Transition to the Equity Method of Accounting. This update addresses the
use of the equity method of accounting as a result of an increase in the level of ownership interest or
degree of influence. The amendments in this update eliminate the requirement to retroactively adopt the
equity method of accounting. This ASU was effective as of January 1, 2017. The adoption of this
update did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2016-01 –– Financial Instruments – Overall (Topic 825) –
Recognition and Measurement of Financial Assets and Financial Liabilities. This update requires all
equity investments in unconsolidated entities (other than those accounted for using the equity method of
accounting) to generally be measured at fair value through earnings. The update eliminates the
available-for-sale classification for equity securities with readily determinable fair values and the cost
method for equity investments without readily determinable fair values. However, entities will be able
to elect to record equity investments without readily
F-19
determinable fair values at cost, less impairment. This update also simplifies the impairment
assessment for equity investments and requires the use of the exit price when measuring the fair value
of financial instruments measured at amortized cost for disclosure purposes. The amendments in this
update are effective for fiscal years beginning after December 15, 2017, including interim periods
within those fiscal years. The Company is currently evaluating the requirements of this update and has
not yet determined the impact it may have on the Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2015-11 –– Inventory (Topic 330) – Simplifying the
Measurement of Inventory. This update requires that an entity measure inventory at the lower of cost or
net realizable value. Net realizable value is the estimated selling prices in the ordinary course of
business, less reasonably predictable costs of completion, disposal, and transportation. The update is
intended to more clearly articulate the requirements for the measurement and disclosure of inventory
and not to change current practices. The update is effective for annual and interim reporting periods
beginning after December 15, 2016. This ASU was effective as of January 1, 2017. The adoption of
this update did not have a material impact on the Company’s consolidated financial statements.
Accounting Standards Update (ASU) No. 2014-15 – Presentation of Financial Statements – Going
Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a
Going Concern. This update provides guidance regarding management’s responsibility to evaluate
whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide
related footnote disclosures. The guidance requires management to assess an entity’s ability to continue
as a going concern by incorporating and expanding upon certain principles that are currently in United
States auditing standards. This ASU was effective as of December 31, 2016. The adoption of this
update did not have a material impact on the Company’s consolidated financial statements.
3. Merger
On December 15, 2016 the Company acquired all of the outstanding shares of BCC not previously
owned by the Company. Pursuant to the terms of the Agreement and Plan of Merger, dated as of
July 27, 2016, as amended on October 20, 2016, between BBX Capital, a wholly-owned subsidiary of
BBX Capital (“Merger Sub”) , and BCC (the “Merger Agreement”) , BCC merged with and into Merger
Sub and BCC is now a wholly owned subsidiary of BBX Capital Corporation.
Pursuant to the terms of the Merger Agreement, each share of BCC’s Class A Common Stock
outstanding immediately prior to December 15, 2016 (other than shares held by the Company and
shares as to which appraisal rights were exercised in accordance with Florida law) was converted into
the right to receive, at the election of the holder thereof, either (i) $20.00 in cash, without interest (the
“Cash Consideration”), or (ii) 5.4 shares of the Company’s Class A Common Stock (the “Stock
Consideration” and, collectively with the Cash Consideration, the “Merger Consideration”). Shares of
BCC’s Class A Common Stock which were converted into the right to receive Merger Consideration
but as to which no election was made were converted into the right to receive Cash Consideration.
Based on
the foregoing, the Company paid to BCC’s shareholders a total of approximately
$16.9 million of Cash Consideration and issued to BCC’s shareholders a total of approximately
12.0 million shares of the Company’s Class A Common Stock as Stock Consideration.
The merger was accounted for as an equity transaction as the Company increased its ownership interest
in BCC and retained its controlling financial interest. The Company held an approximately 82% equity
interest in BCC prior to the Merger and, as a result of the Merger, the Company owns 100% of BCC.
Accounting for the merger as an equity transaction resulted in no gain or loss being recognized in the
Company’s Consolidated Statements of Operations and Comprehensive Income and the difference
between the consideration paid and the amount of noncontrolling interest was recognized in additional
paid-in capital.
Pursuant to the terms of the Merger Agreement, effective upon consummation of the Merger on
December 15, 2016, the Company adopted and assumed BCC’s 2014 Stock Incentive Plan, as
amended, and BCC’s 2005 Restricted Stock and Option Plan, as amended (collectively, the “B CC
Capital Equity Plans”). Options and restricted stock awards granted under the BCC Equity Plans and
outstanding at December 15, 2016, including those held by the Company’s executive officers, other
employees, and directors, were converted into BBX Capital’s options or restricted stock awards, as the
case may be. Specifically, each option to acquire shares of BCC’s Class A Common Stock that was
outstanding at December 15, 2016 was converted into an option to acquire shares of BBX Capital’s
Class A Common Stock upon the same terms and conditions as in effect at December 15, 2016, except
that the number of shares which may be acquired upon exercise of the option now equals the number of
shares subject to the
F-20
option at December 15, 2016 multiplied by the Merger exchange ratio of 5.4 shares of BBX Capital’s
Class A Common Stock for each share of BCC’s Class A Common Stock and the exercise price of the
option now equals the exercise price at December 15, 2016 of the Merger divided by 5.4. In addition,
each share of BCC’s Class A Common Stock subject to a restricted stock award outstanding at
December 15, 2016 was converted pursuant to the terms of the Merger Agreement into a restricted share
of BBX Capital’s Class A Common Stock, which restricted shares are subject to the same terms and
conditions as in effect at December 15, 2016, except that the number of restricted shares subject to the
award has been multiplied by the Merger exchange ratio of 5.4 shares of BBX Capital’s Class A
Common Stock for each share of BCC’s Class A Common Stock. Based on the foregoing, 5,090,354
restricted shares of BBX Capital’s Class A Common Stock awards were issued in exchange for 942,657
restricted shares of BCC’s Class A Common Stock awards outstanding as of December 15, 2016.
4. Consolidated Variable Interest Entities
Bluegreen
Bluegreen sells VOI notes receivable through special purpose finance entities. These transactions are
generally structured as non-recourse to Bluegreen, and are designed to provide liquidity for Bluegreen
and to transfer the economic risks and certain benefits of the notes receivable to third parties. In a
securitization, various classes of debt securities are issued by the special purpose finance entities that
are generally collateralized by a single tranche of transferred assets, which consist of VOI notes
receivable. Bluegreen services the securitized notes receivable for a fee pursuant to servicing
agreements negotiated with third parties based on market conditions at the time of the securitization.
In these securitizations, Bluegreen generally retains a portion of the securities and continues to service
the securitized notes receivable. Under these arrangements, the cash payments received from obligors
on the receivables sold are generally applied monthly to pay fees to service providers, make interest and
principal payments to investors, and fund required reserves, if any, with the remaining balance of such
cash retained by Bluegreen; however, to the extent the portfolio of receivables fails to satisfy specified
performance criteria (as may occur due to, among other things, an increase in default rates or credit loss
severity) or other trigger events occur, the funds received from obligors are distributed on an
accelerated basis to investors. Depending on the circumstances and the transaction, the application of
the accelerated payment formula may be permanent or temporary until the trigger event is cured. As of
December 31, 2016, Bluegreen was in compliance with all applicable terms under its securitization
transactions, and no trigger events had occurred.
its organizational structure,
In accordance with applicable accounting guidance for the consolidation of VIEs, Bluegreen analyzes
its variable interests, which may consist of loans, servicing rights, guarantees, and equity investments, to
determine if an entity in which Bluegreen has a variable interest is a variable interest entity. Bluegreen’s
analysis includes a review of both quantitative and qualitative factors. Bluegreen bases its quantitative
analysis on the forecasted cash flows of the entity, and bases its qualitative analysis on the design of the
entity,
including decision-making ability, and relevant financial
agreements. Bluegreen also uses its qualitative analysis to determine if Bluegreen must consolidate a
variable interest entity as the primary beneficiary. In accordance with applicable accounting guidance,
Bluegreen has determined these securitization entities to be VIEs of which Bluegreen is the primary
beneficiary and, therefore, Bluegreen consolidates the entities into its financial statements. As
previously described, the Company consolidates Bluegreen and its consolidated subsidiaries and VIEs
into its consolidated financial statements.
Under the terms of certain of Bluegreen’s timeshare note sales, Bluegreen has the right to repurchase or
substitute a limited amount of defaulted mortgage notes receivable for new notes receivable at the
outstanding principal balance plus accrued interest. Voluntary repurchases and substitutions by
Bluegreen of defaulted notes receivable during 2016, 2015 and 2014 were $6.5 million, $3.3 million and
$4.9 million, respectively. Bluegreen’s maximum exposure to loss relating to its non-recourse
securitization entities is the difference between the outstanding VOI notes receivable and the notes
payable, plus cash reserves and any additional residual interest in future cash flows from collateral.
F-21
Information related to the assets and liabilities of Bluegreen’s consolidated VIEs included in the
Company’s Consolidated Statements of Financial Condition is set forth below (in thousands):
Restricted cash
Securitized notes receivable, net
Receivable backed notes payable - non-recourse
$
December 31,
2016
2015
21,894
287,111
327,358
25,358
280,841
314,024
The restricted cash and the securitized notes receivable balances disclosed in the table above are
restricted to satisfy obligations of the VIEs.
JRG/BBX Development, LLC (“North Flagler”)
In October 2013, the Company entered into the North Flagler joint venture with JRG USA, and in
connection with the formation of the joint venture JRG USA assigned to the joint venture a contract to
purchase for $10.8 million a 4.5 acre real estate parcel overlooking the Intracoastal Waterway in West
Palm Beach, Florida. The Company was entitled to receive 80% of any joint venture distributions until
it received the return of its capital investment and 70% of any joint venture distributions thereafter. The
Company was the managing member and had control of all aspects of the operations of the joint
venture.
The Company analyzed North Flagler’s operating agreement and determined that it was the primary
beneficiary of the joint venture and therefore should consolidate North Flagler in its financial
statements. This conclusion was based primarily on the determination that the Company absorbed 80%
of the losses, was entitled to 70% of the profits and controls all aspects of North Flagler’s operations.
In May 2015, the North Flagler joint venture purchased the 4.5 acre parcel for $10.8 million and on the
same day sold the property to a third party developer for $20.0 million. Included in the Consolidated
Statement of Operations in net gains on sales of assets for the year ended December 31, 2015 is a $7.8
million gain on the property sale. Net sales proceeds in the amount of $2.3 million were distributed to
the noncontrolling member.
5. Loans Held-for-Sale and Loans Receivable
Loans held-for-sale and loans receivable portfolios consisted of the following components (in
thousands):
Loans held-for-sale
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Loans receivable, net
December 31,
2016
2015
$
$
$
-
1,169
5,880
2,506
1,799
14,167
25,521
21,354
11,250
16,294
4,054
2,368
69
34,035
The underlying collateral for the real estate loan portfolio, except residential loans, was located
primarily in Florida at December 31, 2016 and 2015. 28%, 26% and 14% of the residential loan
portfolio underlying collateral as of December 31, 2016 was located in California, New York and
Florida, respectively.
As of December 31, 2016, foreclosure proceedings were in process on $9.5 million of residential loans
and $66,700 of consumer loans.
The total discount on loans receivable was $3.3 million as of December 31, 2016 and 2015,
respectively.
F-22
Loans held-for-sale are reported at the lower of cost or fair value measured on an aggregate basis. As of
December 31, 2015 the lower of cost or fair value adjustment on loans held-for-sale was $1.6
million. The Company transfers loans from held-for-sale to loans receivable when, based on the current
economic environment and related market conditions, it has the intent to hold those loans for the
foreseeable future. As of June 30, 2016, based on then current market conditions and an evaluation of
the residential loan portfolio, the Company transferred residential loans held-for-sale with aggregate
unpaid principal balances, net of charge-offs, of $17.3 million from loans held-for-sale to loans
receivable. The lower of cost or fair value of the residential loans on the transfer date was $16.1
million. Any difference between the lower of cost or fair value of the loan and the unpaid principal
balance net of charge-offs was recognized as a discount.
In June 2015, small business, residential and second-lien consumer loans were transferred from loans
held-for-sale to loans held-for-investment based on the Company’s decision to hold these loans for the
foreseeable future as a result of appreciating real estate values and improving economic conditions
generally. As a consequence, $2.4 million, $70,000 and $4.9 million of second-lien consumer,
residential and small business loans, respectively, were transferred from loans held-for-sale to loans
receivable measured at the lower of cost or fair value on the transfer date. Any difference between the
carrying amount of the loan and its outstanding principal balance was recognized as a discount.
In July 2014, BBX Capital received net proceeds from the sales of its first-lien consumer loan portfolio
and certain residential loans of approximately $3.2 million and $6.3 million, respectively. Included in
net gains on the sales of assets for the year ended December 31, 2014 was a $0.6 million gain from the
sale of these loans.
The loan portfolio is segregated into five segments: commercial non-real estate loans, commercial real
estate loans, small business loans, consumer loans, and residential loans described below:
Commercial non-real estate - represents loans secured by general corporate assets of the borrowers’
business and at December 31, 2015 one $10.0 million unsecured loan made in connection with the sale
of land to a developer.
Commercial real estate - represents loans for acquisition, development and construction of various
types of properties including residential, office buildings, retail shopping centers, and other non-
residential properties.
Small business – consists of loans originated to businesses in principal amounts that do not generally
exceed $2.0 million. The principal source of repayment for these loans is generally from the cash flow
of a business.
Consumer - consists of loans to individuals originated through BankAtlantic’s branch network.
Consumer loans are generally home equity lines of credit secured by a second mortgage on the primary
residence of the borrower.
Residential – represents loans secured by one to four dwelling units.
Credit Quality Information
The Company assesses loan credit quality by monitoring delinquencies and current loan to value ratios.
The recorded investment (unpaid principal balance less charge-offs and discounts) in non-accrual loans
receivable was as follows (in thousands):
Loan Class
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total nonaccrual loans
December 31,
2016
2015
1,169
5,880
2,506
1,701
12,762
24,018
1,250
9,639
4,054
2,368
69
17,380
$
$
F-23
An age analysis of the past due recorded investment in loans receivable as of December 31, 2016 and
2015 was as follows (in thousands):
December 31, 2016
Past Due
Past Due
or More (1)
Past Due
Current
Receivable
31-59 Days
60-89 Days
90 Days
Total
Total
Loans
Commercial non-real estate
Commercial real estate
Small business
Consumer
Residential
Total
December 31, 2015
Commercial non-real estate
Commercial real estate
Small business:
Consumer
Residential
Total
$
$
$
$
-
-
-
23
609
632
-
-
-
-
231
231
330
3,986
-
467
9,541
14,324
330
3,986
-
490
10,381
15,187
839
1,894
2,506
1,309
3,786
10,334
1,169
5,880
2,506
1,799
14,167
25,521
31-59 Days
60-89 Days
90 Days
Total
Total
Loans
Past Due
Past Due
or More (1)
Past Due
Current
Receivable
-
-
-
316
-
316
-
-
205
138
24
367
329
3,986
-
562
42
4,919
329
3,986
205
1,016
66
5,602
10,921
12,308
3,849
1,352
3
11,250
16,294
4,054
2,368
69
28,433
34,035
1) There were no loans that were 90 days or more past due and still accruing interest as of December
31, 2016 or 2015.
The activity in the allowance for loan losses for the years ended December 31, 2016, 2015 and 2014
was as follows (in thousands):
For the Years Ended December 31,
2014
2015
2016
Allowance for Loan Losses:
Beginning balance
Charge-offs:
Recoveries :
Provision :
Ending balance
Ending balance individually evaluated for impairment
Ending balance collectively evaluated for impairment
Total
Loans receivable:
Ending balance individually evaluated for impairment
Ending balance collectively evaluated for impairment
Total
Proceeds from loan sales
Transfer to loans held-for-sale
Transfer from loans held-for-sale
Impaired Loans
$
$
$
$
$
$
$
-
(156)
20,664
(20,508)
-
-
-
-
21,363
4,158
25,521
-
-
16,078
977
(1,037)
13,517
(13,457)
-
-
-
-
12,849
21,186
34,035
68
-
7,365
2,713
(7,189)
12,608
(7,155)
977
-
977
977
17,045
10,776
27,821
9,497
2,299
-
Loans are considered impaired when, based on current information and events, management believes it
is probable that it will be unable to collect all amounts due according to the contractual terms of the
loan agreement. Impairment
F-24
is evaluated based on past due status for consumer and residential loans. Impairment is evaluated for
commercial and small business loans based on payment history, financial strength of the borrower or
guarantors and cash flow associated with the collateral or business. Collateral dependent impaired loans
are charged down to the fair value of collateral less cost to sell. Interest payments on impaired loans are
recognized on a cash basis as interest income. Impaired loans, or portions thereof, are charged off when
deemed uncollectible.
Individually impaired loans as of December 31, 2016 and 2015 were as follows (in thousands):
As of December 31, 2016
Unpaid
Recorded Principal Related
Investment Balance Allowance Investment Balance Allowance
As of December 31, 2015
Unpaid
Recorded Principal Related
Total with allowance recorded
Total with no allowance
recorded
Total
$
$
-
-
24,188
24,188
39,901
39,901
-
-
-
-
-
17,380
17,380
30,212
30,212
-
-
-
Average recorded investment and interest income recognized on impaired loans for the years ended
December 31, 2016 and 2015 were as follows (in thousands):
For the Years Ended
December 31, 2016
December 31, 2015
Average
Recorded
Interest
Income
Average
Recorded
Interest
Income
Investment
Recognized
Investment
Recognized
Total with allowance recorded
Total with no allowance
recorded
Total
$
$
-
24,573
24,573
-
657
657
-
22,186
22,186
-
1,299
1,299
Individually impaired loans and the average recorded investment and interest income recognized on
impaired loans as of December 31, 2014 were as follows (in thousands):
As of December 31, 2014
Unpaid
Recorded Principal Related
For the Year Ended
December 31, 2014
Average
Recorded
Interest
Investment Balance Allowance
Investment
Income
Total with allowance recorded
Total with no allowance recorded
Total
$
$
735
17,361
18,096
1,664
35,812
37,476
735
-
735
837
23,161
23,998
7
1,111
1,118
Impaired loans without specific valuation allowances represent loans that were written-down to the fair
value of the collateral less cost to sell, loans in which the collateral value less cost to sell was greater
than the carrying value of the loan, loans in which the present value of the cash flows discounted at the
loans’ effective interest rate was equal to or greater than the carrying value of the loans, or loans that
were collectively measured for impairment.
There were no commitments to lend additional funds on impaired loans as of December 31, 2016.
F-25
6. Notes Receivable
The table below provides information relating to Bluegreen’s notes receivable and related allowance for
credit losses as of December 31, 2016 and 2015 (in thousands):
Notes receivable :
VOI notes receivable - non-securitized
VOI notes receivable - securitized
Other notes receivable (1)
Gross notes receivable
Allowance for credit losses
Notes receivable, net
Allowance as a % of gross notes receivable
December 31,
2016
2015
$
$
175,123
369,259
1,688
546,070
(115,590)
430,480
21%
166,040
357,845
2,427
526,312
(110,714)
415,598
21%
(1) Notes receivable secured by homesites were originated through a business, substantially all of the
assets of which were sold by Bluegreen in 2012.
The weighted-average interest rate on Bluegreen’s notes receivable was 15.7%, 15.9% and 16.0% at
December 31, 2016, 2015 and 2014, respectively. Bluegreen’s notes receivable bear interest at fixed
rates. Bluegreen’s VOI notes receivable are generally secured by property located in Florida, Missouri,
Nevada, South Carolina, Tennessee and Wisconsin.
Future principal payments due on Bluegreen’s notes receivable (including notes receivable secured by
homesites) during each of the five years subsequent to December 31, 2016 and thereafter are set forth
below (in thousands):
2017
2018
2019
2020
2021
Thereafter
December 31,
2016
72,371
61,717
56,748
58,153
60,522
236,559
546,070
$
$
Credit Quality for Financed Receivables and the Allowance for Credit Losses
Bluegreen holds large amounts of homogeneous VOI notes receivable and assesses uncollectibility
based on pools of receivables. In estimating future credit losses, Bluegreen’s management does not use
a single primary indicator of credit quality but instead evaluates its VOI notes receivable based upon a
static pool analysis that incorporates the aging of the respective receivables, default trends and
prepayment rates by origination year, as well as the FICO® scores of the borrowers at the time of
origination.
The activity in Bluegreen’s allowance for loan losses (including with respect to notes receivable secured
by homesites) was as follows (in thousands):
For the Years Ended December 31,
2015
2016
2014
Balance, beginning of period
Provision for credit losses
Write-offs of uncollectible receivables
Balance, end of period
$
$
110,714
44,337
(39,461)
115,590
102,566
42,062
(33,914)
110,714
90,592
40,164
(28,190)
102,566
F-26
The following table shows the delinquency status of Bluegreen’s VOI notes receivable as of December
31, 2016 and 2015 (in thousands):
Current
31-60 days
61-90 days
> 90 days (1)
Total
December 31,
2016
521,536
6,378
5,082
11,386
544,382
$
$
2015
501,738
6,889
4,869
10,389
523,885
(1)
Includes $5.3 million and $5.2 million as of December 31, 2016 and 2015, respectively, relat ed
to VOI notes receivable that, as of such date, had defaulted but the related VOI note receivable
balance had not yet been charged off in accordance with the provisions of certain of Bluegreen's
receivable-backed notes payable transactions. These VOI notes receivable have been reflected in
the allowance for credit losses.
7. Inventory
Inventory consisted of the following (in thousands):
Completed VOI units
Construction-in-progress
Real estate held for future VOI development
Land held for development
Purchase accounting adjustment
Total Inventory
December 31,
2016
2015
$
$
163,581
13,396
98,453
15,254
(36,896)
253,788
166,781
10,455
90,400
-
(47,425)
220,211
Inventory is primarily comprised of completed VOIs, VOIs under construction, land held for future
VOI development and land held for single-family lot development. The Company reviews real estate
held for VOI development and land held for development for impairment when events or changes in
circumstances indicate that the carrying amount of the assets might not be recoverable. No impairment
charges were recorded with respect to inventory during the years ended December 31, 2016, 2015 and
2014.
In September 2016, Bluegreen increased the selling price of its VOIs by 5%. As a result of this pricing
change, Bluegreen’s management also increased its estimate of total gross margin generated on the sale
of its VOI inventory. Under the relative sales value method prescribed for timeshare developers to
relieve the cost of VOI inventory, changes to the estimate of gross margin expected to be generated on
the sale of VOI inventory are recognized on a retrospective basis in earnings. Accordingly, during
2016, Bluegreen recognized a benefit to cost of VOIs sold of $5.6 million.
Interest capitalized to VOI
inventory w a s $0.4 million a n d $0.7 million during 2016 and 2015,
respectively. The interest expense reflected in the Company’s Consolidated Statements of Operations
and Comprehensive Income is net of capitalized interest.
F-27
In addition, included in “other assets” in the Company’s Consolidated Statements of Financial
Condition as of December 31, 2016 and 2015 was inventory manufactured by Renin and BBX Sweet
Holdings consisting of the following (in thousands):
Raw materials
Paper goods and packaging materials
Finished goods
Total
December 31,
2016
2015
$
$
5,059
2,090
7,577
14,726
5,822
4,504
6,021
16,347
Manufactured inventories are stated at the lower of cost or market value. Cost is determined by the first-
in, first out method. In valuing inventory, the Company makes assumptions regarding the write-downs
required for excess and obsolete inventory based on judgments and estimates formulated from available
information. The Company estimates for excess and obsolete inventory are based on historical and
forecasted usage. Inventory is also examined for upcoming expiration and is written down where
appropriate. Included in costs of goods sold were $4.7 million, $1.7 million and $0.2 of inventory write-
downs for the years ended December 31, 2016, 2015 and 2014, respectively.
8. Real Estate Held-For-Investment and Real Estate Held-For-Sale
Real estate held-for-investment and real estate held-for-sale consists of property acquired primarily
through foreclosures, settlements, or deeds in lieu of foreclosure. Upon acquisition real estate is
classified as real estate held-for-sale or real estate held-for investment. Real estate is classified as held-
for-sale when the property is available for immediate sale in its present condition, management commits
to a plan to sell the property, an active program to locate a buyer has been initiated, the property is
being marketed at a price that is reasonable in relation to its current fair value and it is likely that a sale
will be completed within one year. When the property does not meet the real estate held-for-sale
criteria, the real estate is classified as held-for-investment.
The following table presents real estate held-for-sale grouped in the following classifications (in
thousands):
Real estate held-for-sale
Land
Rental properties
Residential single-family
Other
Total real estate held-for-sale
December 31,
2016
2015
$
$
28,701
1,748
2,896
-
33,345
25,994
17,162
2,924
258
46,338
The following table presents real estate held-for-investment grouped in the following classifications (in
thousands):
December 31,
2016
2015
Real estate held-for-investment
Land
Other
Total real estate held-for-investment
$
$
11,149
880
12,029
30,369
921
31,290
The amount of interest capitalized to land held-for-investment associated with real estate development
for the years ended December 31, 2016 and 2015 were $0 and $706,000 respectively.
F-28
The following tables present the activity in real estate held-for-sale and held-for-investment for the
years ended December 31, 2016, 2015 and 2014 (in thousands):
For the Years Ended December 31,
2015
2016
Real Estate
Real Estate
Beginning of period, net
Acquired through foreclosure
Transfers
Purchases
Transfers to inventory
$
Held-for-Sale
46,338
4,807
11,582
-
-
Held-for-
Investment Held-for-Sale
41,733
3,215
41,751
10,667
-
31,290
-
(11,582)
-
(15,254)
Transfers to property and equipment
Improvements
Accumulated depreciation
Sales
Property contributed to joint
ventures
Impairments, net
End of period, net
$
(6,557)
561
-
(19,823)
-
(3,563)
33,345
-
7,615
(40)
-
-
-
12,029
-
3,261
-
(51,040)
-
(3,249)
46,338
Held-for-
Investment
76,552
-
(41,751)
-
-
-
16,771
(468)
-
(19,448)
(366)
31,290
Beginning of period, net
Acquired through foreclosure
Transfers
Purchases
Improvements
Accumulated depreciation
Sales
Impairments, net
End of period, net
For the Year Ended December 31, 2014
Real Estate
Held-for-Sale
Held-for-
Investment
$
$
33,971
5,300
28,018
2,313
-
-
(26,973)
(896)
41,733
107,336
16,100
(28,018)
1,977
3,824
(462)
(16,200)
(8,005)
76,552
The following table presents the real estate held-for-sale valuation allowance activity for the years
ended December 31, 2016, 2015 and 2014 (in thousands):
For the Years Ended December 31,
2015
2016
2014
Beginning of period
Transfer to held-for-investment
Impairments, net (1)
Sales
End of period
$
$
4,400
-
3,563
(2,723)
5,240
2,940
(93)
3,089
(1,536)
4,400
4,818
-
896
(2,774)
2,940
(1) Tax certificate impairments are not included.
F-29
Net real estate income (loss) included in the Consolidated Statements of Operations and Comprehensive
Income were as follows (in thousands):
Real estate acquired in settlement of
loans and tax certificates:
Income from real estate operations
Real estate operating expenses
Impairment of real estate
Net gains on the sales of real estate
Net real estate income (losses)
0
For the Years Ended December 31,
2014
2015
2016
$
$
2,589
(2,903)
(3,563)
5,487
1,610
3,887
(4,773)
(3,615)
31,114
26,613
5,516
(6,296)
(8,901)
4,677
(5,004)
9. Investments in Unconsolidated Real Estate Joint Ventures
As of December 31, 2016, the Company had equity interests in 13 unconsolidated real estate joint
ventures that develop single-family master planned communities, multifamily apartment facilities and
retail centers. Investments in unconsolidated real estate joint ventures are unconsolidated variable
interest entities. See Note 4 for information regarding the Company’s investments in consolidated
variable interest entities.
The Company had the following investments in unconsolidated real estate joint ventures (in thousands):
Investment in unconsolidated real estate joint
ventures
Altis at Kendall Square, LLC
Altis at Lakeline - Austin Investors LLC
New Urban/BBX Development, LLC
Sunrise and Bayview Partners, LLC
Hialeah Communities, LLC
$
PGA Design Center Holdings, LLC
CCB Miramar, LLC
Centra Falls, LLC
The Addison on Millenia Investment, LLC
BBX/S Millenia Blvd Investments, LLC
Altis at Bonterra - Hialeah, LLC
Altis at Shingle Creek Manager, LLC
Centra Falls II, LLC
December 31,
2016
2015
154
5,165
907
1,574
2,641
1,904
875
595
5,935
5,095
17,626
332
571
764
5,210
864
1,577
4,569
1,911
875
727
5,778
4,905
15,782
-
-
%
BBX Capital
%
Ownership
20.24
33.74
50.00
50.00
57.00
40.00
35.00
7.14
48.00
90.00
95.00
2.50
7.14
Investments in unconsolidated real estate joint
ventures
$
43,374
42,962
its
the respective operating agreements governing
The Company analyzed
in
unconsolidated real estate joint ventures and determined that it is not the primary beneficiary and
therefore the investments in the real estate joint ventures are accounted for under the equity method of
accounting. The conclusions were based primarily on the determination that the Company does not
have the power to direct activities of the joint ventures that most significantly affect the joint venture’s
economic performance as the Company only has limited protective rights under the operating
agreements, is not the manager of the joint ventures and does not have day-to-day decision making
authority. Additionally, in the majority of the joint ventures the managing member guarantees the
indebtedness of the joint venture and in certain joint ventures the managing member is responsible for
construction cost overruns. The Company’s maximum loss exposure in unconsolidated real estate joint
ventures was $49.0 million as of December 31, 2016.
investments
F-30
In certain joint ventures the Company transferred land to the joint venture as an initial capital
contribution resulting in deferred gains and joint venture basis adjustments. The Company accounted
for the contribution of land to the joint ventures on the cost recovery method. Included in other
liabilities in the Company’s Consolidated Statements of Financial Condition as of December 31, 2016
and 2015 was $0.9 million and $3.2 million, respectively, of deferred gains. During the year ended
December 31, 2016, the Company recognized $2.3 million of deferred gains upon sales by joint
ventures of single-family homes and a multifamily apartment facility.
Differences between the net investments in unconsolidated real estate joint ventures and the underlying
equity in the net assets of the joint ventures result from basis adjustments and the capitalization of
interest.
The aggregate amount of interest capitalized associated with land development activities of the real
estate joint ventures was $0.9 million and $0.5 million for the years ended December 31, 2016 and
2015, respectively. There was no interest capitalized during the year ended December 31, 2014.
The aggregate amount of real estate joint venture basis adjustments was $7.6 million and $9.3 million
as of December 31, 2016 and 2015, respectively. Included in the Company’s Consolidated Statement of
Operations and Comprehensive Income was $1.5 million of equity earnings associated with basis
adjustments from joint ventures arising from sales by joint ventures of single-family homes. There were
no real estate joint venture basis adjustments in equity earnings for the years ended December 31, 2015
or 2014.
The equity earnings of unconsolidated real estate joint ventures was $13.6 million for the year ended
December 31, 2016 of which $9.5 million was equity earnings from the Hialeah Communities real
estate joint venture. The condensed Statements of Financial Condition as of December 31, 2016 and
2015, and the condensed Statements of Operations for the years ended December 31, 2016, 2015 and
2014 for the Hialeah Communities joint venture was as follows (in thousands):
Assets
Cash
Real estate inventory
Properties and equipment
Other assets
Total assets
Liabilities and Equity
Notes payable
Other liabilities
Total liabilities
Total equity
Total liabilities and equity
December 31,
2016
2015
$
$
$
$
2,719
28,246
439
1,387
32,791
16,278
8,628
24,906
7,885
32,791
6,960
31,251
60
6,839
45,110
22,351
11,456
33,807
11,303
45,110
Total revenues
Costs of sales
Other expenses
Net earnings (loss)
Equity in net earnings (losses) of unconsolidated real
estate joint ventures
For the Years Ended December 31,
2014
2015
2016
$
$
$
84,860
(62,315)
(4,562)
17,983
17
-
(1,340)
(1,323)
9,547
(747)
-
-
(419)
(419)
(239)
F-31
10. Property and Equipment
Property and equipment was comprised of (in thousands):
December 31,
2016
2015
Land, building and building improvements
Leasehold improvements
Office equipment, furniture and fixtures
Transportation
Accumulated depreciation
Property and equipment, net
$
$
73,883
11,912
65,284
453
151,532
(55,534)
95,998
68,915
9,611
59,696
379
138,601
(48,581)
90,020
Included in selling, general and administrative expenses in the Company’s Consolidated Statements of
Operations and Comprehensive Income was approximately $12.4 million, $11.4 million and $10.6
million of depreciation expense for the years ended December 31, 2016, 2015 and 2014, respectively.
11. Goodwill and Intangible Assets
Goodwill
The Company tests goodwill for potential impairment annually or during interim periods if impairment
indicators exist. The Company’s goodwill of $6.7 million at December 31, 2016 and $7.6 million at
December 31, 2015 is associated with BBX Sweet Holdings acquisitions during 2015 and 2014,
respectively. The Company’s goodwill was tested for impairment on December 31, 2016 (annual
testing date) and the goodwill assigned to one of BBX Sweet Holdings reporting units was determined
to be impaired. The goodwill assigned to another BBX Sweet Holdings reporting unit was determined
not to be impaired. If BBX Sweet Holdings’ reporting units do not meet expectations or if there is a
downturn in the sugar and confectionery industry, the Company may recognize goodwill impairment
charges in future periods.
As of December 31, 2016 the estimated fair value of BBX Sweet Holdings impaired reporting unit was
less than the estimated fair value of its underlying assets and the Company recognized an impairment
loss of $0.9 million. Cumulative goodwill impairment losses were $0.9 million as of December 31,
2016 and $0 as of December 31, 2015. There were no goodwill impairments during the years ended
December 31, 2015 or 2014. Changes to BBX Sweet Holdings strategic plan implemented by its new
management team resulted in the goodwill impairment loss at the BBX Sweet Holdings reporting unit.
The process of evaluating goodwill for impairment involves the determination of the fair value of the
Company’s reporting units. Inherent in such fair value determinations are certain judgments and
estimates relating to future cash flows, including the Company’s interpretation of current economic
indicators and market valuations, and assumptions about the Company’s strategic plans with regard to
its operations. Due to the uncertainties associated with such evaluations, actual results could differ
materially from such estimates.
F-32
Intangible Assets
Intangible assets are as follows (in thousands):
Class
Intangible assets:
Management contracts
Trademarks
Customer Relationships
Lease premium
Area development contracts
Other
Accumulated amortization
Total intangibles assets
December 31,
2016
2015
$
$
61,293
5,215
1,620
2,411
660
126
71,325
(2,870)
68,455
61,293
5,965
2,691
2,411
-
246
72,606
(2,418)
70,188
Management contracts are indefinite lived intangible assets and are not amortized.
Trademarks, customer relationships and non-competition agreements are amortized using the straight-
line method over their expected useful lives of 4 years to 20 years.
For the year ended December 31, 2016 , the Company entered into area development agreements with a
franchisor. The area development agreements are amortized using the straight-line method over their
expected lives of 7 years.
Amortization expense of intangible assets included in selling general and administrative expenses for
the years ended December 31, 2016, 2015 and 2014 was approximately $0.9 million, $0.9 million and
$0.6 million, respectively.
The lease premiums are amortized using the straight-line method over their expected useful lives of 5 to
9 years.
The Company tests intangible assets for recoverability whenever events or changes in circumstances
indicate the carrying value of an asset group may not be recoverable. Due to the change in management
at BBX Sweet Holdings, the Company tested BBX Sweet Holdings asset groups for recoverability for
the year ended December 31, 2016. Based on the Company’s evaluation the carrying amounts of
certain asset groups exceeded their undiscounted future cash flows. As a result, the Company
recognized a $1.5 million intangible asset impairment loss included in impairment of assets, net in the
Statements of Operations and Comprehensive Income. The impairment loss was measured as the
amount by which the carrying amount of the intangible assets exceeded fair value. There were no
impairment losses during the years ended December 31, 2015 or 2014.
The Company utilizes discounted cash flow methodology to determine the fair value of its goodwill and
intangible assets. The discounted cash flow methodology establishes fair value by estimating the
present value of the projected future cash flows to be generated from reporting units or asset groups.
The discount rate applied to the projected future cash flows to arrive at the present value is intended to
reflect all risks of ownership and the associated risks of realizing the stream of projected future cash
flows. The Company generally used a five year period in computing discounted cash flow values. The
most significant assumptions used in the discounted cash flow methodology are the discount rate, the
terminal value and the forecast of future cash flows.
F-33
The estimated aggregate amortization expense of intangible assets for each of the five succeeding years
is as follows (in thousands):
Years Ending December 31,
2017
2018
2019
2020
2021
$
Total
812
790
548
504
501
Included in other liabilities was a $225,000 lease discount intangible liability associated with the
Anastasia acquisition. The lease discount is amortized using the straight-line method over the lease
term of five years.
12. Debt
Notes Payable and Other Borrowings
Contractual minimum principal payments of debt outstanding for each of the five years subsequent to
December 31, 2016 and thereafter are shown below (in thousands):
Notes and
Mortgage
Notes
Payable and
Lines of
Credit
Recourse
Receivable
Backed
Notes
Payable
$
$
9,966
22,270
36,753
8,317
37,297
22,079
136,682
(2,892)
-
133,790
-
-
5,125
41,385
32,247
8,874
87,631
-
-
87,631
Non-
recourse
Receivable
Backed
Notes
Payable
-
-
-
31,417
-
301,131
332,548
(5,190)
-
327,358
Junior
Subordinated
Debentures
-
-
-
-
-
Total
9,966
22,270
41,878
81,119
69,544
195,879 527,963
195,879 752,740
(9,812)
(1,730)
(41,782)
(41,782)
152,367 701,146
2017
2018
2019
2020
2021
Thereafter
Unamortized debt issuance
costs
Purchase Accounting
Total Debt
The minimum contractual payments set forth in the table above may differ from actual payments due to
the timing of principal payments required upon (1) the sale of real estate assets that serve as collateral
on certain debt (release payments) and (2) cash collections of pledged or transferred notes receivable.
F-34
The table below sets forth information regarding the lines-of-credit and notes payable facilities (other
than receivable-backed notes payable) of the Company as of December 31, 2016 and 2015 (dollars in
thousands):
December 31, 2016
December 31, 2015
Debt
Balance
Interest
Rate
Carrying
Amount of
Pledged
Assets
Debt
Balance
Interest
Rate
$
52,500
5.50%
29,349
58,500
8.05%
1,727
4,326
2,006
6.02%
3.62%
5.00%
8,963
9,157
8,230
3,791
4,572
9,721
5.68%
3.50%
5.50%
Carrying
Amount of
Pledged
Assets
30,411
10,868
9,336
24,246
15,000
3.46%
60,343
25,000
3.11%
54,312
25,000
3.46%
20,114
-
(2,177)
98,382
-
-
$ 136,156 $
(1,975)
99,609
-
-
$
21,435
4.50-
6.00% $
20,744 $
-
-
9,692
3,417
-
(1)
5.00%
3.37%
(2)
(2)
(2)
8,071
5,330
4,997
1,579
5.25%
2,044
3,023
(1)
5.00%
3.18%
2.35% -
5.25%
$
$
-
-
129,173
-
(2)
(2)
(2)
3,089
Bluegreen:
2013 Notes Payable
Pacific Western Term
Loan
Fifth Third Bank Note
NBA Line of Credit
Fifth Third Syndicated
Line of Credit
Fifth Third Syndicated
Term Loan
Unamortized debt
issuance costs
Total Bluegreen
$
Other Notes Payable:
Community Development
District Obligations
Wells Fargo Capital
Finance
Anastasia Note
Iberia Line of Credit
Other
Unamortized debt
issuance costs
(715)
Total Other Notes
Payable
$
35,408
Total Notes Payable $ 133,790
(36)
$
21,385
$ 120,994
(1) The term loan and revolving advance facility bear interest at the Bank Prime Interest Rate or the
daily three month LIBOR interest rate plus a margin specified in the credit agreement ranging
from 0.5% to 3.25% per annum.
(2) The collateral is a blanket lien on the respective company’s assets.
Bluegreen
2013 Notes Payable - In March 2013, Bluegreen issued $75.0 million of senior secured notes (the “2013
Notes Payable”) in a private financing transaction. The 2013 Notes Payable are secured by certain of
Bluegreen’s assets, including primarily the cash flows from the residual interests relating to term
securitizations and the VOI inventory in the BG Club 36 resort in Las Vegas, Nevada. Pursuant to the
terms of the 2013 Notes Payable, Bluegreen is required to periodically pledge reacquired VOI inventory
in the BG Club 36 resort. Bluegreen may also pledge additional residual interests from other term
securitizations. In September 2016, the 2013 Notes Payable were amended to reduce the interest rate
to 5.50%. The 2013 Notes Payable mature in March 2020, with certain required
from 8.05%
amortization during the seven-year term. The terms of the 2013 Notes Payable include certain
covenants and events of default, which Bluegreen’s management considers to be customary for
transactions of this type. The proceeds from the 2013 Notes Payable were used to fund a portion of the
merger consideration paid to Bluegreen’s former shareholders in connection with the closing of
Woodbridge’s April 2013 acquisition of Bluegreen.
Pacific Western Term Loan - Bluegreen has a non-revolving term loan (the “Pacific Western Term
Loan”) with Pacific Western Bank, as successor by merger to CapitalSource Bank, secured by unsold
inventory and undeveloped land at the Bluegreen Odyssey Dells Resort. The Pacific Western Term
Loan matures in June 2019 and bears interest at 30-day LIBOR plus 5.25% (6.02% at December 31,
2016). Interest payments are paid monthly. Principal
F-35
payments are effected through release payments upon sales of the timeshare interests in the Bluegreen
Odyssey Dells Resort that serve as collateral for the Pacific Western Term Loan, subject to mandatory
principal reductions pursuant to the terms of the loan agreement. The Pacific Western Term Loan is
cross-collateralized and is subject to cross-default with the Pacific Western Facility described below
under “Receivable-Backed Notes Payable.”
Fifth Third Bank Note Payable - In April 2008, Bluegreen entered into a note payable with Fifth Third
Bank to finance an acquisition of real estate. The Fifth Third Bank Note Payable matures in August
2021. Principal and interest on amounts outstanding under the Fifth Third Bank Note Payable are
payable monthly through maturity. The interest rate under the note equals the 30-day LIBOR plus
3.00%, with a 0.125% roundup provision (3.62% as of December 31, 2016).
NBA Line of Credi t - Since December 2013, Bluegreen/Big Cedar Vacations has had a revolving line
of credit with National Bank of Arizona (the “NBA Line of Credit”). The NBA Line of Credit is
secured by unsold inventory and VOIs under construction at Bluegreen/Big Cedar Vacation’s Paradise
Point Resort. The NBA Line of Credit has a borrowing limit of $15.0 million, which is included in the
$45.0 million of availability under the NBA Receivables Facility discussed below. The revolving
advance period expires in June 2018 and the maturity is June 2020. The NBA Line of Credit bears
interest at the 30-day LIBOR plus 3.50% (with an interest rate floor of 5.00%) in connection with the
final funding of the construction loan for the Paradise Point Resort. Interest payments are paid
monthly. Principal payments are effected through release payments upon sales of the timeshare
interests in the Paradise Point Resort that serve as collateral for the NBA Line of Credit, subject to
mandatory principal reductions. The NBA Line of Credit is cross-collateralized and is subject to cross-
default with the NBA Receivables Facility described below under “Receivable-Backed Notes Payable.”
Fifth Third Syndicated Line-of-Credit and Fifth Third Syndicated Term Loan - In November 2014,
Bluegreen entered into a $25.0 million revolving credit facility with Fifth Third Bank as administrative
agent and lead arranger and certain other bank participants as lenders. The facility was secured by
certain of Bluegreen’s sales centers, certain VOI inventory and specified non-consumer receivables and
was guaranteed by certain of Bluegreen’s subsidiaries. In December 2016, Bluegreen amended and
restated the credit and security agreement. The amended and restated facility is a $100.0 million
syndicated credit facility with Fifth Third, as administrative agent and lead arranger and certain other
bank participants. The amended and restated facility includes a $25.0 million term loan (the “Fifth
Third Syndicated Term Loan”) with quarterly amortization requirements and a $75.0 million revolving
line of credit (the “Fifth Third Syndicated Line-of-Credit”). Amounts borrowed under the facility
generally bear interest at LIBOR plus 2.75% - 3.75% depending on Bluegreen’s leverage ratio, are
collateralized by certain of Bluegreen’s VOI inventory, sales center buildings and short-term
receivables, and will mature in December 2021. The facility contains covenants and conditions which
Bluegreen considers to be customary for transactions of this type. Borrowings are used by Bluegreen
for general corporate purposes. As of December 31, 2016, outstanding borrowings under the facility
totaled $40.0 million, including the $25.0 million Fifth Third Syndicated Term Loan and $15.0 million
of borrowings under the Fifth Third Syndicated Line-of-Credit. As of December 31, 2016, the interest
rate under the Fifth Third Syndicated Term Loan and the Fifth Third Syndicated Line-of-Credit was
3.46%.
Other Notes Payable
Community Development District Obligations - A community development district or similar
development authority (“CDD”) is a unit of local government created under various state and/or local
statutes to encourage planned community development and allow for the construction of infrastructure
improvements through alternative financing sources, including the tax-exempt bond markets. A CDD is
generally created through the approval of the local city or county in which the CDD is located and is
controlled by a Board of Supervisors representing the landowners within the CDD. In connection with
the development of the Beacon Lakes Community, The Meadow View at Twin Creeks CDD was
formed by St. Johns County, Florida to use bond financing to fund construction of infrastructure
improvements at the Beacon Lakes C ommunity. The CDD assesses the property owners benefiting
from the improvements financed by the bond offerings.
The obligation to pay principal and interest on the bonds issued by the CDD is assigned to each parcel
within the CDD and the CDD has a lien on each parcel. If the owner of the parcel does not pay this
obligation, the CDD can foreclose on the lien. The CDD bond obligations, including interest and the
associated lien on the property are typically payable, secured and satisfied by revenues, fees or
assessments levied on the property benefited.
The total amount of CDD bond obligations outstanding with respect to the Beacon Lake Community
was $21.4 million as of December 31, 2016. The assessments to be levied by the CDD are fixed or
determinable amounts. The CDD bond obligations outstanding as of December 31, 2016 have fixed
interest rates ranging from 4.5% to 6.00%
F-36
and mature at various times during the years 2017 through 2047. The Company at its option has the
ability to repay a specified portion of the bonds at the time of each lot closing.
The Company records an obligation for the CDD bond upon issuance with a corresponding increase in
other assets. The CDD bonds are secured by a lien on the Beacon Lake property with a carrying amount
of $15.3 million as of December 31, 2016. The Company relieves the CDD bond obligation associated
with a particular parcel when the purchaser of the property assumes the obligation which occurs
automatically upon such purchaser’s acquisition of the property or upon repayment by the
Company. Included in other assets in the Company’s Consolidated Statement of Financial Condition as
of December 31, 2016 was $20.7 million of funds that the Company does not have the right of setoff on
the Company’s CDD bond obligations. Other assets associated with the CDD bond obligations are
reduced with a corresponding increase in land development when the CDD disburses the funds to
contractors for the construction of infrastructure improvements.
Wells Fargo Capital Finance - On June 11, 2014, Renin entered into a credit agreement (the “WF
Credit Agreement”) with Wells Fargo Capital Finance Corporation (“Wells Fargo”). Under the terms
and conditions of the WF Credit Agreement, Wells Fargo made a $1.5 million term loan to Renin. The
WF Credit Agreement also includes a revolving advance facility pursuant to which Wells Fargo agreed
to make loans to Renin on a revolving basis up to a maximum of approximately $18.0 million or, if
lower, the Borrowing Base (as defined in the WF Credit Agreement), subject to Renin’s compliance
with the terms and conditions of the WF Credit Agreement, including certain specific financial
covenants as discussed below.
Amounts outstanding under the term loan and loans made under the revolving advance facility bear
interest at the Canadian Prime Rate or the daily three month LIBOR rate plus a margin specified in the
WF Credit Agreement at various rates between 0.5% per annum and 3.25% per annum. The revolving
advance facility also includes a 0.25% per annum fee charged on the amount of unused commitment.
The term loan and borrowings under the revolving advance facility require monthly interest payments.
In addition, beginning on October 1, 2014, the term loan requires quarterly principal repayments of
$75,000. The maturity date under the WF Credit Agreement with respect to the term loan and all loans
made pursuant to the revolving advance facility is June 11, 2019. The amount outstanding under the
term loan and revolving advance facility were $0.8 million and $8.9 million, respectively, as of
December 31, 2016. The amount outstanding under the term loan and revolving advance facility were
$1.1 million and $7.0 million, respectively, as of December 31, 2015.
Under the terms and conditions of the WF Credit Agreement, Renin is required to comply with certain
financial covenants including a monthly Fixed Charge Coverage Ratio (as defined in the amended WF
Credit Agreement) measured on a trailing twelve-month basis. The WF Credit Agreement also contains
customary affirmative and negative covenants, including those that, among other things, limit the ability
of Renin to incur liens or engage in certain asset dispositions, mergers or consolidations, dissolutions,
liquidations or winding up of its businesses. The loans are collateralized by all of Renin’s assets. Renin
was in compliance with the WF Credit Agreement financial covenants as of December 31, 2016.
Anastasia Note - In October 2014, BBX Sweet Holdings acquired the outstanding common shares of
Anastasia. A portion of the purchase consideration was a $7.5 million promissory note. The
promissory note bears interest at 5% per annum and the Company made two annual principal payments
o f $2.0 million on the promissory note plus accrued interest on October 1, 2016 and 2015. The
remaining $3.5 million balance of the promissory note is payable in two annual payments of principal
and accrued interest as follows: $2.0 million plus accrued interest on October 1, 2017, and the final
payment of $1.5 million plus accrued interest on October 1, 2018. The repayment of the promissory
note is guaranteed by the Company and secured by the common stock of Anastasia. The Anastasia note
payable was recorded at a $0.3 million discount to reflect the fair value of the note payable at the
acquisition date.
Iberia Line of Credit - On August 7, 2015, BBX Sweet Holdings entered into a Loan and Security
Agreement and related agreements with Iberiabank, which provides for borrowings by BBX Sweet
Holdings of up to $5.0 million on a revolving basis. Amounts borrowed under this facility accrue
interest at a floating rate of thirty day LIBOR plus 2.75%. Payments of interest only are payable
monthly. The facility matures, and all outstanding principal and interest will be payable, on August 4,
2017, with one twelve month renewal option at BBX Sweet Holdings’ request, subject to satisfaction of
certain conditions. The loan documents include a number of covenants, including financial covenants
relating to BBX Sweet Holdings’ debt service coverage ratio. The facility is secured by the assets of
BBX Sweet Holdings and its subsidiaries and is guaranteed by the Company. BBX Sweet Holdings was
in compliance with the Iberiabank loan financial covenants as of December 31, 2016.
F-37
Other– Other notes payable includes a term loan to BBX Sweet Holdings with an outstanding balance
of $1.6 million as of December 31, 2016 and 2015 collateralized by land and buildings with a carrying
value of $2.0 million as of December 31, 2016. The Company is the guarantor on this note payable.
The remaining other notes payable as of December 31, 2015 consisted of purchase consideration notes
payable in connection with BBX Sweet Holdings acquisitions. The purchase consideration notes
payable were repaid during the year ended December 31, 2016.
Receivable-Backed Notes Payable
The table below sets forth information regarding Bluegreen’s receivable-backed notes payable facilities
(dollars in thousands):
December 31, 2016
December 31, 2015
Principal
Balance of
Pledged/
Secured
Interest
Principal
Balance of
Pledged/
Secured
Debt
Interest
Rate
Receivables
Balance
Rate
Receivables
4.25% $
3.50 -
4.0%
5.14%
$
41,357 $
46,547
40,763
27,712
109,832 $
24,860
18,481
89,888
4.00% $
4.00 -
4.50%
4.93%
$
56,815
29,947
23,596
110,358
Debt
Balance
Recourse receivable-backed
notes payable:
Liberty Bank Facility
$
32,674
NBA Receivables Facility
Pacific Western Facility
Total
34,164
20,793
87,631
$
Non-recourse receivable-
backed
notes payable:
BB&T/DZ Purchase Facility $
31,417
Quorum Purchase Facility
2007 Term Securitization
2008 Term Securitization
2010 Term Securitization
2012 Term Securitization
2013 Term Securitization
2015 Term Securitization
2016 Term Securitization
Unamortized debt issuance
costs
Total
Total receivable-backed
debt
$
$
23,981
-
-
13,163
32,929
48,514
75,011
107,533
(5,190)
327,358
414,989
3.67% $
4.75-
6.90%
-
-
5.54%
2.94%
3.20%
3.02%
3.35%
-
$
$
41,388 $
38,228
26,855
-
-
16,191
36,174
51,157
78,980
117,249
28,500
17,642
7,227
24,074
44,603
62,670
95,985
-
3.33% $
4.75-
6.90%
7.32%
7.88%
5.54%
2.94%
3.20%
3.02%
-
-
367,994 $
(4,905)
314,024
-
477,826 $
403,912
$
$
50,224
32,303
18,720
7,726
28,159
49,091
66,020
100,142
-
-
352,385
462,743
Liberty Bank Facility - Since 2008, Bluegreen has maintained a revolving timeshare receivables
hypothecation facility (the “Liberty Bank Facility”) with Liberty Bank which provides for advances on
eligible receivables pledged under the Liberty Bank Facility, subject to specified terms and conditions,
during a revolving credit period. Pursuant to the terms of the agreement, as amended in November
2015, the aggregate maximum outstanding borrowings are $50.0 million and the revolving credit period
will expire in November 2017. The Liberty Bank Facility allows future advances of (i) 85% of the
unpaid principal balance of Qualified Timeshare Loans assigned to agent, and (ii) 60% of the unpaid
principal balance of Non-Conforming Qualified Timeshare Loans assigned to agent, all of which bear
interest at the WSJ Prime Rate plus 0.50% per annum subject to a 4.00% floor. Principal and interest
are required to be paid as cash is collected on the pledged receivables, with all outstanding amounts
being due in November 2020. In March 2016, Bluegreen repaid $24.2 million, including accrued
interest, under the facility in connection with the 2016 Term Securitization described below.
NBA Receivables Facility - Bluegreen/Big Cedar Vacations has a revolving timeshare hypothecation
facility with National Bank of Arizona (the “NBA Receivables Facility”). The NBA Receivables
Facility provides for advances at a rate of 85% on eligible receivables pledged under the facility up to a
maximum of $45.0 million of outstanding borrowings (inclusive of outstanding borrowings under the
NBA Line of Credit discussed above), subject to eligible
F-38
collateral and specified terms and conditions, during a revolving credit period which expires in June
2018. In September 2016, NBA agreed to advance eligible timeshare receivables through December 16,
2016 in a minimum amount of $15.0 million, but not to exceed $45.0 million of outstanding borrowings
and subject to certain conditions and other terms of the facility at a reduced interest rate equal to 30-day
LIBOR plus 2.75% (with an interest rate floor of 3.50%). Amounts outstanding under the NBA
Receivables Facility for borrowings made prior to the September 2016 amendment accrue interest at the
previously prevailing rates of 30-day LIBOR plus 3.25% (with an interest rate floor of 4.00%). Except
as described above, all other future borrowings will accrue interest at a rate equal to the 30-day LIBOR
plus 3.25% (with an interest rate floor of 4.00%). Principal repayments and interest on borrowings
under the NBA Receivables Facility are paid as cash is collected on the pledged receivables, subject to
future required decreases in the advance rates after the expiration of the revolving advance period, with
the remaining outstanding balance maturing in December 2022. As of December 31, 2016, $14.1
million of the outstanding balance bears interest at 4.0% and $20.1 million of the outstanding balance
bears interest at 3.50%. All principal and interest payments received on pledged receivables are applied
to principal and interest due under the facility. The NBA Receivables Facility is cross-collateralized
and is subject to cross-default with the NBA Line of Credit described above.
Pacific Western Facility - Bluegreen has a revolving timeshare receivables hypothecation facility (the
“Pacific Western Facility”) with Pacific Western Bank, as successor-by-merger to CapitalSource Bank,
which provides for advances on eligible receivables pledged under the facility, subject to specified
terms and conditions, during a revolving credit period. Maximum outstanding borrowings under the
Pacific Western Facility are $40.0 million (inclusive of outstanding borrowings under the Pacific
Western Term Loan discussed above), subject to eligible collateral and other terms and conditions. The
revolving advance period expiration date is September 2018, subject to an additional 12-month
extension at the option of Pacific Western Bank. Eligible “A” receivables that meet certain eligibility
and FICO® score requirements, which Bluegreen’s management believes are typically consistent with
loans originated under Bluegreen’s current credit underwriting standards, are subject to an 85% advance
rate. The Pacific Western Facility also allows for certain eligible “B” receivables (which have less
stringent FICO® score requirements) to be funded at a 53% advance rate. Borrowings under the Pacific
Western Facility accrue interest at 30-day LIBOR plus 4.50%, except that the interest rate on a portion
of future borrowings under the Pacific Western Facility, to the extent such borrowings are in excess of
established debt minimums, will accrue interest at 30-day LIBOR plus 4.00%. Principal repayments
and interest on borrowings under the Pacific Western Facility are paid as cash is collected on the
pledged receivables, subject to future required decreases in the advance rates after the end of the
revolving advance period, with the remaining outstanding balance maturing in September 2021, subject
to an additional 12-month extension at the option of Pacific Western Bank. As of December 31, 2016,
the interest rate on the facility was 5.1%. The Pacific Western Facility is cross-collateralized and is
subject to cross-default with the Pacific Western Term Loan.
BB&T/DZ Purchase Facility - Bluegreen has a timeshare notes receivable purchase facility (the
“BB&T/DZ Purchase Facility”) with Branch Banking and Trust Company (“BB&T”) and DZ Bank AG
Deutsche Zentral-Genossenschaftsbank, Frankfurt AM Main (“DZ”), which permits maximum
outstanding financings of $80.0 million. Availability under the BB&T/DZ Purchase Facility is on a
revolving basis through December 2017, and amounts financed are secured by timeshare receivables at
an advance rate of 75%, subject to eligible collateral and other terms of the facility, which Bluegreen
believes to be customary for financing arrangements of this type. The facility will mature and all
outstanding amounts will become due thirty-six months after the revolving advance period has expired,
or earlier under certain circumstances set forth in the facility. Interest on amounts outstanding under the
facility is tied to an applicable index rate of the LIBOR rate, in the case of amounts funded by BB&T,
and a cost of funds rate or commercial paper rates, in the case of amounts funded by or through
DZ. The interest rate under the facility equals the applicable index rate plus 2.9% until the expiration
of the revolving advance period and thereafter will equal the applicable index rate plus 4.9%. Subject
to the terms of the facility, Bluegreen will receive the excess cash flows generated by the receivables
sold (excess meaning after payments of customary fees, interest and principal under the facility) until
the expiration of the receivables advance period, at which point all of the excess cash flow will be paid
to the note holders until the outstanding balance is reduced to zero. In March 2016, Bluegreen repaid
$49.0 million, including accrued interest, under the facility in connection with the 2016 Term
Securitization described below. While ownership of the timeshare receivables included in the facility is
transferred and sold for legal purposes, the transfer of these timeshare receivables is accounted for as a
secured borrowing for financial reporting purposes. The facility is nonrecourse and is not guaranteed
by Bluegreen.
Quorum Purchase Facility - Bluegreen and Bluegreen/Big Cedar Vacations have a timeshare notes
receivable purchase facility (the “Quorum Purchase Facility”) with Quorum Federal Credit Union
(“Quorum”). In October 2015, Quorum agreed to purchase on a revolving basis through June 30, 2017,
eligible timeshare receivables in an amount of up to an aggregate $50.0 million purchase price, subject
to certain conditions precedent and other terms
F-39
of the facility. In October 2016, the Quorum Purchase Facility was amended and the advance period
was extended through June 30, 2018. The interest rate on future advances made under the Quorum
Purchase Facility will be set at the time of funding based on rates mutually agreed upon by all
parties. Amounts currently outstanding under the Quorum Purchase Facility accrue interest at interest
rates ranging from 4.75% to 6.90% per annum. The Quorum Purchase Facility provides for an 85%
advance rate on eligible receivables sold under the facility. Future advances are also subject to a loan
purchase fee of 0.50%. The Quorum Purchase Facility becomes due in December 2030. Eligibility
requirements for receivables sold include, among others, that the obligors under the timeshare notes
receivable sold be members of Quorum at the time of the note sale. Subject to performance of the
collateral, Bluegreen or Bluegreen/Big Cedar Vacations, as applicable, will receive any excess cash
flows generated by the receivables transferred to Quorum under the facility (excess meaning after
payments of customary fees, interest, and principal under the facility) on a pro-rata basis as borrowers
make payments on their timeshare loans. While ownership of the timeshare receivables included in the
Quorum Purchase Facility is transferred and sold for legal purposes, the transfer of these timeshare
receivables is accounted for as a secured borrowing for financial reporting purposes. The facility is
nonrecourse and is not guaranteed by Bluegreen.
investment-grade,
2016 Term Securitization - On March 17, 2016, Bluegreen completed a private offering and sale of
$130.5 million of
(the “2016 Term
Securitization”). The 2016 Term Securitization consisted of the issuance of two tranches of timeshare
receivable-backed notes (the “Notes”): $95.7 million of Class A and $34.8 million of Class B notes with
note interest rates of 3.17% and 3.86%, respectively, which blended to an overall weighted-average note
interest rate of 3.35%. The gross advance rate for this transaction was 90%. The Notes mature in July
2031.
receivable-backed notes
timeshare
The amount of the timeshare receivables sold to BXG Receivable Note Trust 2016 (the “2016 Trust”)
was $145.0 million, $122.3 million of which was sold to the 2016 Trust at closing and $22.7 million of
which was subsequently sold to the 2016 Trust. The gross proceeds of such sales to the 2016 Trust
were $130.5 million. A portion of the proceeds were used to: repay the BB&T/DZ Purchase Facility a
total of $49.0 million, representing all amounts then outstanding under the facility (including accrued
interest); repay $24.2 million under the Liberty Bank Facility, which includes accrued interest;
capitalize a reserve fund; and pay fees and expenses associated with the transaction. Prior to the closing
of the 2016 Term Securitization, Bluegreen, as servicer, funded $11.3 million in connection with the
servicer redemption of the notes related to BXG Receivables Note Trust 2007-A, and certain of the
timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term
Securitization. In April 2016, Bluegreen, as servicer, funded $6.1 million in connection with the
servicer redemption of the notes related to the BXG Receivables Note Trust 2008-A, and certain of the
timeshare loans in such trust were sold to the 2016 Trust in connection with the 2016 Term
Securitization. The remainder of the net proceeds from the 2016 Term Securitization of $36.0 million
were used by Bluegreen for general corporate purposes.
While ownership of the timeshare receivables included in the 2016 Term Securitization was transferred
and sold for legal purposes, the transfer of these timeshare receivables was accounted for as a secured
borrowing for financial accounting purposes. Accordingly, no gain or loss was recognized as a result
of this transaction. Subject to the performance of the collateral, Bluegreen will receive any excess cash
flows generated by the receivables transferred under the 2016 Term Securitization (excess meaning
after payments of customary fees, interest, and principal under the 2016 Term Securitization) on a pro-
rata basis as borrowers make payments on their timeshare loans.
Other Non-Recourse Receivable-Backed Notes Payable - In addition to the above described facilities,
Bluegreen has a number of other nonrecourse receivable-backed notes payable facilities, as set forth in
the table above. During 2016, Bluegreen repaid $82.6 million under these additional receivable-backed
notes payable facilities, including the payment in full of the notes payable issued in connection with the
2007 and 2008 Term Securitizations. During 2016, Bluegreen wrote off the related unamortized 2007
and 2008 Term Securitization debt issuance costs totaling approximately $0.5 million.
As of December 31, 2016, Bluegreen was in compliance with all financial debt covenants under its debt
instruments.
F-40
Junior Subordinated Debentures
Junior subordinated debentures outstanding at December 31, 2016 and 2015 were as follows (in
thousands):
December 31,
2016
2015
Junior Subordinated Debentures
Issue
Date
Outstanding Outstanding
Amount
Amount
Levitt Capital Trust I ("LCT I")
03/15/2005 $
23,196
23,196
Levitt Capital Trust II ("LCT II")
05/04/2005
30,928
30,928
Levitt Capital Trust III ("LCT III")
06/01/2006
15,464
15,464
Levitt Capital Trust IV ("LCTIV")
07/18/2006
Total Woodbridge Holdings
15,464
85,052
15,464
85,052
Bluegreen Statutory Trust I
03/15/2005
23,196
23,196
Bluegreen Statutory Trust II
05/04/2005
25,774
25,774
Bluegreen Statutory Trust III
05/10/2005
10,310
10,310
Bluegreen Statutory Trust IV
04/24/2006
15,464
15,464
Bluegreen Statutory Trust V
07/21/2006
15,464
15,464
Bluegreen Statutory Trust VI
02/26/2007
Total Bluegreen Corporation
Unamortized debt issuance costs
Purchase accounting adjustment
Total Junior Subordinated
Debentures
20,619
110,827
(1,730)
(41,782)
20,619
110,827
(1,822)
(43,572)
$
152,367
150,485
Beginning
Optional
Maturity Redemption
Date
Date
03/01/2035 03/15/2010
06/30/2035 06/30/2010
06/30/2036 06/30/2011
09/30/2036 09/30/2011
3/30/2035 03/30/2010
7/30/2035 07/30/2010
7/30/2035 07/30/2010
6/30/2036 06/30/2011
9/30/2036 09/30/2011
4/30/2037 04/30/2012
Interest
Rate (1)
LIBOR +
3.85%
LIBOR +
3.80%
LIBOR +
3.80%
LIBOR +
3.80%
LIBOR
+4.90%
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.85%
LIBOR
+4.80%
(1) LIBOR interest rates are indexed to three-month LIBOR and adjust quarterly.
Woodbridge and Bluegreen have each formed statutory business trusts (collectively, the “Trusts”) each
of which issued trust preferred securities and invested the proceeds thereof in junior subordinated
debentures of Woodbridge and Bluegreen, respectively. The Trusts are variable interest entities in
which Woodbridge and Bluegreen, as applicable, are not the primary beneficiaries as defined by the
accounting guidance for the consolidation of variable interest entities. Accordingly, the Company and
its subsidiaries do not consolidate the operations of these Trusts; instead, the beneficial interests in the
Trusts are accounted for under the equity method of accounting. Interest on the junior subordinated
debentures and distributions on the trust preferred securities are payable quarterly in arrears at the same
interest rate. During the year ended December 31, 2016, there were no significant changes related to
Woodbridge’s $83.3 million of junior subordinated debentures (net of $1.7 million of unamortized debt
issuance costs) or Bluegreen’s $69.0 million of junior subordinated debentures (net of $ 41.8 million of
purchase accounting adjustments and unamortized debt issuance costs).
During January 2017, Woodbridge purchased approximately $11.1 million of LCTII trust preferred
securities for $6.7 million and purchased approximately $7.7 million of LCTIII trust preferred securities
for $4.7 million.
trustees of
In accordance with the respective trust agreements of the Trusts and the applicable indentures for the
related junior subordinated debentures, Woodbridge delivered the purchased trust preferred securities to
the
the cancellation of an equivalent amount of
Woodbridge’s junior subordinated debentures held by LCTII and LCT III. Accordingly, in February
2017, $11.1 million of Woodbridge’s junior subordinated debentures held by LCTII were cancelled and
$7.7 million of Woodbridge’s junior subordinated debentures held by LCTIII were cancelled.
in exchange for
the Trusts
In February 2017, Woodbridge recognized a $6.9 million gain associated with the cancellation of the
LCTII and LCTIII Junior Subordinated Debenture Notes.
F-41
13. Income Taxes
The Company’s United States and foreign components of income before income taxes are as follows (in
thousands):
For the Years Ended December 31,
2015
2016
2014
U.S.
Foreign
Total
$
$
77,629
407
78,036
67,272
(2,589)
64,683
67,553
(3,175)
64,378
The provision for income taxes consisted of (in thousands):
Current:
Federal
State
Deferred:
Federal
State
$
Provision (benefit) for income taxes
$
For the Years Ended December 31,
2016
2015
2014
(339)
1,014
675
36,393
(689)
35,704
36,379
5,288
2,445
7,733
(74,189)
(10,140)
(84,329)
(76,596)
20,756
3,904
24,660
11,001
1,412
12,413
37,073
The Company's actual provision for income taxes differs from the expected Federal income tax
provision as follows (dollars in thousands):
Income tax provision at expected
federal income tax rate of 35% $
27,313 35.00 % $
22,639
35.00 % $
22,532 35.00 %
For the Years Ended December 31,
2015(1)
2016(1)
2014(1)
Increase (decrease) resulting
from:
Benefit for state taxes,
net of federal effect
Taxes related to subsidiaries not
consolidated for income tax
purposes
Nondeductible executive
compensation
Bluegreen settlement
SEC penalty
Increase/(decrease) in valuation
allowance
Other – net
Provision (benefit) for income
taxes
527
0.68
9,029
13.96
6,120
9.51
(3,432)
(4.40)
(4,842)
(7.49)
1,124
1.75
5,833
-
-
5,275
863
7.47
-
-
6.76
1.11
5,524
12,820
1,243
8.54
19.82
1.92
(127,835) (197.63)
7.46
4,826
4,993
-
-
7.76
-
-
1,294
1,010
2.01
1.57
$
36,379 46.62 % $
(76,596) (118.42)% $
37,073 57.60 %
(1)
Expected tax is computed based upon income before noncontrolling interests.
F-42
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets
and tax liabilities were (in thousands):
Deferred tax assets:
Allowance for loan losses, tax certificate losses and
write-downs for financial statement purposes
$
Federal and State NOL and tax credit carryforward
Capital loss carryover
Real estate valuation
Share based compensation
Income recognized for tax purposes and deferred
for financial statement purposes
Investment in unconsolidated affiliates
Property and equipment
Other
Total gross deferred tax assets
Valuation allowance
Total deferred tax assets
Deferred tax liabilities:
Installment sales treatment of notes
Intangible assets
Junior subordinated debentures
Deferral of VOI sales and costs under timeshare accounting
Investment in securities
Other
Total gross deferred tax liabilities
Net deferred tax liability
Less net deferred tax liability at beginning of period
Net deferred tax liabilities from acquisitions
Less change in net deferred tax liability for amounts
included
in other comprehensive income
(Provision) benefit for deferred income taxes
$
December 31,
2015
2014
2016
42,008
218,609
-
16,828
3,626
-
828
3,015
10,355
295,269
(135,121)
160,148
152,074
24,501
16,349
8,718
116
2,708
204,466
(44,318)
8,594
-
41,832
237,820
15
33,505
3,097
103
828
588
5,685
323,473
(129,846)
193,627
150,237
25,368
17,205
9,222
96
93
202,221
(8,594)
92,609
329
38,771
270,331
766
42,278
5,742
103
828
1,056
11,467
371,342
(257,681)
113,661
152,419
26,467
18,700
8,554
112
18
206,270
(92,609)
77,089
3,107
20
(35,704)
(15)
84,329
-
(12,413)
Activity in the deferred tax asset valuation allowance was (in thousands):
Balance, beginning of period
Increase (decrease) in deferred tax valuation
allowance
Other comprehensive loss
Balance, end of period
$
$
For the Years Ended December 31,
2016
2015
129,846
257,681
2014
256,410
5,275
-
135,121
(127,835)
-
129,846
1,294
(23)
257,681
The Company evaluates its deferred tax assets to determine if valuation allowances are required. In the
evaluation, management considers net operating loss (“NOL”) carry-back availability, expectations of
sufficient future taxable income, trends in earnings, existence of taxable income in recent years, the
future reversal of temporary differences, and available tax planning strategies that could be
implemented, if required. Valuation allowances are established based on the consideration of all
available evidence using a more likely than not standard. Based on the Company’s
F-43
evaluations, which are discussed in further detail below, the deferred tax valuation allowances increased
by $5.3 million and $1.3 million for the years ended December 31, 2016 and 2014, respectively, and
decreased by $127.8 million for the year ended December 31, 2015.
The Company evaluated all positive and negative evidence available as of the reporting date, including
tax planning strategies, the ability to file a consolidated return with its subsidiaries, the expected future
reversal of existing taxable temporary differences, and expected future taxable income (primarily of
Bluegreen) exclusive of reversing temporary differences and carry forwards. Based on this evaluation,
the Company has determined that it is more likely than not that it will be able to realize certain deferred
tax assets against which it had previously carried a valuation allowance.
At December 31, 2014, the Company had maintained a valuation allowance against deferred tax assets
of $257.7 million as the Company, BCC and Bluegreen filed separate group federal and state tax
returns. A substantial portion of these deferred tax assets were attributable to federal and state net
operating loss carry forwards. As a separate tax return filer, the Company maintained a full valuation
allowance against certain deferred tax assets based on the Company’s determination that it was more
likely than not that these deferred tax assets would not be realized. As a result of the increase in the
company’s ownership interest in BCC completed on April 30, 2015 ( as discussed in Note 1), the
Company currently files a consolidated group tax return with all of its U.S. subsidiaries from May 1,
2015 forward. As a consequence, a substantial portion of the Company’s net operating losses and other
deductible temporary differences may be utilized in the consolidated return without limitation.
The Company will continue to evaluate the positive and negative evidence available in subsequent
periods and adjust its remaining valuation allowance to reflect the amount of net deferred tax assets it
determines are more likely than not to be realized.
At December 31, 2016, the Company had estimated federal and Florida net operating loss carryforwards
of approximately $436.0 million and $958.4 million, respectively (which expire from 2023 through
2034). As described below, the Company’s ability to utilize a portion of these NOLs to offset future
taxable income is subject to significant limitations as a result of the 2009 Woodbridge merger and the
2015 BCC tender offer. In addition, the Company has non-Florida state NOLs of $280.7 million, which
expire from 2017 through 2036. The Company’s NOL carryforwards also include federal and Florida
NOLs of approximately $19.7 million and $16.1 million, respectively, that are attributed to the exercise
of stock options and the vesting of restricted stock awards. These tax benefits will not be recognized in
the financial statements until such deductions are utilized to reduce taxes payable.
As of December 31, 2016, the Company had alternative minimum tax credit carryforwards of $25.6
million, which do not expire.
The Company’s NOLs and tax credits at December 31, 2016 include federal and Florida NOL
carryforwards and federal tax credit carryforwards that can only be utilized if the Company has separate
company taxable income. These NOL carryforwards cannot be utilized against most of the Company’s
subsidiaries’ taxable income, including Bluegreen. As such, a full valuation allowance has been
established for these NOL carryforwards and tax credits. The aggregate amount of these federal and
Florida NOLs and federal tax credit carry-forwards as of December 31, 2016 was $227.6 million,
$749.2 million and $2.1 million, respectively. These Federal and Florida NOL carryforwards expire
from 2025 through 2035. The federal tax credit carryforwards expire from 2025 through 2031.
In addition, as a result of the Company’s merger with Woodbridge in September 2009, the Company
experienced a “change of ownership” as that term is defined in the Internal Revenue Code. This change
of ownership resulted in a significant limitation of the amount of the Company’s pre-merger net
operating losses that can be utilized by the Company annually. Of the total federal and Florida net
operating loss carryforwards, approximately $74.5 million and $64.9 million, respectively, were
generated by the Company prior to the merger with Woodbridge. As a result, a valuation allowance has
been established for these NOLs to the extent that they may expire before they can be utilized. These
Federal and Florida NOL carryforwards expire from 2021 through 2029.
Canadian income tax NOL carryforwards were $3.3 million and expire from 2033 to 2036. As the
Canadian operations have had taxable losses in recent years, a full valuation allowance has been applied
to these NOL carryforwards.
On September 21, 2009, the Company adopted a shareholder rights agreement aimed at protecting its
ability to use available NOLs to offset future taxable income. See Note 18 for additional information
regarding the Company’s rights agreement.
F-44
The Company evaluates its tax positions based upon guidelines of ASC 740-10, Income Tax, which
clarifies the accounting for uncertainty in tax positions. Based on an evaluation of uncertain tax
provisions, the Company is required to measure tax benefits based on the largest amount of benefit that
is greater than 50% likely of being realized upon settlement. There were no unrecognized tax benefits
at December 31, 2016, 2015 or 2014.
The Company is no longer subject to federal or Florida income tax examinations by tax authorities for
tax years before 2013. Several of the Company’s subsidiaries are no longer subject to income tax
examinations in certain state, local and non-U.S. jurisdictions for tax years before 2012.
In August 2015, Bluegreen received notice from the Internal Revenue Service that its Income Tax
Return for the year ended December 31, 2013 was selected for examination. In September 2015, the
examination was extended to include the tax year ended December 31, 2012. In May 2016, Bluegreen
received notification from the Internal Revenue Service that the examination for the tax years ended
December 2013 and December 2012 was closed with no adjustments.
Certain of the Company’s state income tax filings are under routine examination. While there is no
assurance as to the results of these audits, the Company does not currently anticipate any material
adjustments in connection with these examinations.
14. Commitments and Contingencies
The Company and its subsidiaries are lessees under various operating leases for real estate and
equipment. At December 31, 2016, the approximate minimum future rental payments under such leases
for the periods shown are (in thousands):
Year Ending December 31,
Amount
2017 $
2018
2019
2020
2021
Thereafter
Total $
12,687
9,363
6,489
5,515
5,153
21,802
61,009
The Company and its subsidiaries incurred rent expense as follows (in thousands):
For the Years Ended December 31,
2015
2016
2014
Rental expense for premises and equipment
$
15,905
13,745
12,943
In the ordinary course of business, the Company and its subsidiaries are parties to lawsuits as plaintiff
or defendant involving its operations and activities. Reserves are accrued for matters in which
management believes it is probable that a loss will be incurred and the amount of such loss can be
reasonably estimated. There were no reserves accrued by the Company with respect to legal proceedings
as of December 31, 2016. As of December 31, 2015, the Company accrued $0.1 million for pending
legal proceedings.
In certain matters, management is unable to estimate the loss or reasonable range of loss until additional
developments provide information sufficient to support an assessment of the loss or range of
loss. Frequently in these matters, the claims are broad and the plaintiffs have not quantified or factually
supported their claim. Litigation is inherently uncertain and adverse judgements and the costs of
defending or resolving legal claims may be substantial and may have a material adverse impact on the
Company’s results of operations or financial condition.
F-45
The following is a description of certain ongoing litigation matters:
Securities and Exchange Commission Complaint
On January 18, 2012, the SEC brought an action in the United States District Court for the Southern
District of Florida against BCC and Alan B. Levan, BCC’s Chairman and Chief Executive Officer,
alleging that they violated securities laws by not timely disclosing known adverse trends in BCC’s
commercial real estate loans, selectively disclosing problem loans and engaging in improper accounting
treatment of certain specific loans which may have resulted in a material understatement of its net loss
in BCC’s Annual Report on Form 10-K for the year ended December 31, 2007. Further, the complaint
alleged that Mr. Alan B. Levan intentionally misled investors in related earnings calls. The Court
denied summary judgment as to most issues, but granted the SEC’s motion for partial summary
judgment that certain statements in one of Alan Levan’s answers on a July 25, 2007 investor conference
call were false.
On December 15, 2014, after a six-week trial, the jury found in favor of BCC and Alan B. Levan with
respect to the disclosures made during an April 2007 earnings conference call and in BCC’s quarterly
reports on Form 10-Q for the 2007 first and second quarters, but found that they had engaged in an act
of fraud or deceit toward shareholders or prospective investors by making materially false statements
knowingly or with severe recklessness (1) with respect to three statements in the July 25, 2007
conference call referenced above, and (2) in their decision to sell certain loans in the fourth quarter of
2007 and failing to classify the loans as held-for sale in the 2007 Annual Report on Form 10-K. The
jury also found that Mr. Levan made or caused to be made false statements to the independent
accountants regarding the held for sale issue.
On September 24, 2015, the court entered a final judgment denying the SEC’s request for a permanent
bar from Mr. Levan serving as an officer or director of any public company, but instead ordered Mr.
Levan barred from serving as an officer or director of any public company for a period of two years
commencing on December 23, 2015. The court also imposed monetary penalties against BCC in the
amount of $4,550,000 and monetary penalties against Mr. Levan in the amount of $1,300,000.
BCC and Mr. Alan Levan appealed the district court’s judgment to the Eleventh Circuit Court of
Appeals. On September 28, 2016, the Eleventh Circuit Court of Appeals reversed the pretrial summary
judgments and set aside the judgment of the district court. The reversal, which became final on January
31, 2017, terminated the financial penalties and set aside the two year officer and director bar imposed
against Mr. Alan Levan. Mr. Alan Levan was reappointed as Chairman of the Board and Chief
Executive Officer of the Company. The court remanded the case for a new trial on the disclosure and
accounting claims stripped of the summary judgments. The trial is scheduled to begin in March 2017.
BBX Capital received reimbursements of legal fees and costs from its insurance carrier of
approximately $5.8 million in connection with this matter. In February 2017, BBX Capital received an
additional $5.1 million of reimbursements. The insurance carrier has communicated that it reserves all
rights and defenses with respect to such reimbursed amounts.
The legal fees and costs reimbursements as well as the release of the $4,550,000 penalty, which were
received in February 2017, are not reflected in the Company’s consolidated financial statements as of
December 31, 2016.
In Re BCC Merger Shareholder Litigation
On August 10, 2016, Shiva Stein filed a lawsuit against the Company, BBX Merger Sub, LLC, BCC
and the members of BCC’s board of directors, which seeks to establish a class of BCC’s shareholders
and challenges the Merger. The plaintiff asserts that the Merger consideration undervalues BCC and is
unfair to BCC’s public shareholders, that the sales process was unfair and that BCC’s directors
breached their fiduciary duties of care, loyalty and candor owed to the public shareholders of BCC
because, among other reasons, they failed to take steps to maximize the value of BCC to its public
shareholders and instead diverted consideration to themselves. The lawsuit also alleges that BBX
Capital, as the controlling shareholder of BCC, breached its fiduciary duties of care, loyalty and candor
owed to the public shareholders of BCC by utilizing confidential, non-public information to formulate
the Merger consideration and not acting in the best interests of BCC’s public shareholders. In addition,
the lawsuit includes a cause of action against BCC, the Company and Merger Sub for aiding and
abetting the alleged breaches of fiduciary duties. The lawsuit requested that the court grant an
injunction blocking the proposed Merger or, if the proposed Merger is completed, rescind the
transaction or award damages as determined by the court. On September 15, 2016, Defendants filed a
Motion to Dismiss the amended complaint. On November 21, 2016, the
F-46
Court issued an order granting the Motion to Dismiss with prejudice. On December 21, 2016, Plaintiff
filed a Notice of Appeal with the Fourth District Court of Appeals. The Company believes that the
appeal is without merit and intends to continue vigorously defending the action.
The following is a description of certain commitments and guarantees:
In lieu of paying maintenance fees for unsold VOI inventory, Bluegreen provides subsidies to certain
property owners’ associations to provide for funds necessary to operate and maintain vacation
ownership properties in excess of assessments collected from owners of the VOIs. During 2016 and
2015, respectively, Bluegreen made payments related to subsidies of $13.9 million and $15.8 million.
As of December 31, 2016 and December 31, 2015, Bluegreen had no liability for such subsidies. As of
December 31, 2016, Bluegreen was providing subsidies to nine property owners’ associations.
In October 2013, Bluegreen entered into an agreement to purchase from an unaffiliated third party
completed VOI inventory at the Lake Eve Resort in Orlando, Florida over a five-year period. The total
purchase commitment was $35.1 million, of which $5.4 million, $5.0 million and $7.2 million of
inventory was purchased in 2016, 2015 and 2014, respectively. As of December 31, 2016, $13.5 million
of the Lake Eve Resort purchase commitment remained.
During 2016, the Company entered into a severance arrangement with an executive. Under the terms of
the arrangement the executive will receive $3.7 million over a three year period. In June 2015,
Bluegreen entered into a severance and consulting agreement with its former CEO. Under the
agreement the former CEO will be paid a total of $2.9 million over two years. As of December 31,
2016, $3.9 million was left to be paid on the above arrangements.
The Company guarantees certain obligations of its wholly-owned subsidiaries and unconsolidated real
estate joint ventures as follows:
·
·
·
·
During the year ended December 31, 2016, the Sunrise and Bayview Partners, LLC joint
venture owned 50% by Procacci Bayview, LLC and 50% by CAM refinanced its land
acquisition loan with a financial institution. The Company provided the financial institution
with a guarantee of 50% of the outstanding balance of the joint venture’s loan which had an
outstanding balance of $5.0 million as of December 31, 2016.
In July 2014, the Company entered into the Hialeah Communities joint venture with CC
Bonterra to develop approximately 394 homes in a portion of the newly proposed Bonterra
community in Hialeah Florida. The Company transferred approximately 50 acres of land at an
agreed upon value of approximately $15.6 million subject to an $8.3 million mortgage which
was assumed by the joint venture. In March 2015, the joint venture refinanced the $8.3
million mortgage loan into a $31.0 million acquisition and development loan. In March 2016,
the loan was modified reducing the loan balance from $31.0 million to $26.5 million. The
Company is a guarantor of up to $3.2 million of the joint venture’s $26.5 million acquisition
and development loan.
The Company is a guarantor on a $3.5 million note payable of Anastasia owed to the
seller. The Anastasia note payable is also secured by the common stock of Anastasia.
BBX Sweet Holdings and the Company are guarantors of a $1.6 million note payable of
Hoffman’s owed to Centennial Bank. This note is secured by $2.0 million of properties and
equipment.
15. Stock Incentive Plans
Restricted Stock and Stock Options Plans
The Company has four share-based compensation plans as of December 31, 2016: the BFC Financial
Corporation 2014 Stock Incentive Plan (the “2014 Plan”) the BFC Financial Corporation 2005 Stock
Incentive Plan (the “2005 Plan”), the BBX Capital 2005 Restricted Stock and Option Plan, and the
BBX Capital 2014 Stock Incentive Plan. The BBX Capital 2005 Restricted Stock and Option Plan and
the BBX Capital 2014 Stock Incentive Plan are collectively referred to as the “BCC Equity
Compensation Plans”.
F-47
The 2014 Plan initially permitted the issuance of up to 500,000 shares of the Company’s Class A
Common Stock and up to 4,500,000 shares of the Company’s Class B Common Stock pursuant to
restricted stock awards or stock options granted under the 2014 Plan. On May 19, 2015, the
shareholders of the Company approved an amendment to the 2014 Plan to increase the maximum
number of shares of the Company’s Class B Common Stock available under the 2014 Plan from
4,500,000 shares to 8,500,000 shares. At December 31, 2016, 1,228,802 shares remained available for
grants of awards under the 2014 Plan. There are no shares available for grant under the 2005 Plan.
The Company assumed the BCC Equity Compensation Plans upon consummation of the Merger on
December 15, 2016 (see Note 3 – Merger). Pursuant to the Merger Agreement, awards outstanding
under the BCC Equity Compensation Plan at December 15, 2016 continue to be outstanding and
governed by the BCC Equity Compensation Plans, except that such awards were converted into awards
that are eligible to be settled in shares of the Company’s Class A Common Stock resulting in the
issuance of 5,090,354 of restricted shares of the Company’s Class A Common Stock and non-qualifying
stock options to acquire 35,716 shares of the Company’s Class A Common Stock at December 15,
2016. No further awards will be granted under the BCC Equity Compensation Plans.
The maximum term of incentive and non-qualifying stock options issuable under the 2014 Plan is ten
years. Vesting is established by the Compensation Committee of the Board of Directors in connection
with each grant of options or restricted stock award.
Compensation expense for stock options and restricted common stock awards is based on the fair value
of the award on the measurement date, which is generally the grant date. The fair value of the
Company’s stock options is estimated using the Black-Scholes option-pricing model. The Company
recognizes compensation costs on a straight-line basis over the requisite service period of the awards.
There were no options granted to employees or non-employee directors during the three year period
ended December 31, 2016. As described below, the Company issued restricted stock awards to certain
officers for each of the years in the three year period ended December 31, 2016.
The following table sets forth information on outstanding options:
Outstanding at December 31, 2013
Exercised
Forfeited
Expired
Granted
Outstanding at December 31, 2014
Exercised
Forfeited
Expired
Granted
Outstanding at December 31, 2015
Exercised
Forfeited
Expired
Assumed pursuant to the merger agreement (1)
Outstanding at December 31, 2016
Exercisable at December 31, 2016
Available for grant at December 31, 2016
Weighted
Average
Exercise
Price
0.41
0.41
0.00
0.00
0.00
0.41
0.41
0.00
0.00
0.00
0.41
0.41
0.00
0.00
17.05
3.59
3.59
Outstanding
Options
1,654,643 $
(1,428,420)
-
-
-
226,223 $
(25,000)
-
-
-
201,223 $
(50,148)
-
-
35,716
186,791 $
186,791 $
1,228,802
Weighted
Average
Remaining
Contractual
Term
1.91 $
Aggregate
Intrinsic
Value
($000)
4,104
5,038
2.66 $
1.93 $
1.24 $
1.24 $
631
85
600
143
-
675
675
(1) BCC options to acquire 6,614 of BCC Class A Common Stock were exchanged for options to acquire 35,716
shares of the Company's Class A Common Stock pursuant to the terms of the Merger Agreement .
F-48
There is no unearned compensation cost related to the Company’s stock options as all options were
vested as of December 31, 2016.
During the years ended December 31, 2016, 2015 and 2014, the Company received net proceeds of
approximately $21,000, $10,000 and $586,000, respectively, upon the exercise of stock options. The
total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was
$143,000, $85,000 and $5.0 million, respectively.
The following is a summary of the Company’s non-vested restricted stock activity:
Outstanding at December 31, 2013
Granted
Vested
Forfeited
Outstanding at December 31, 2014
Granted
Vested
Forfeited
Outstanding at December 31, 2015
Granted
Assumed pursuant to the Merger Agreement (1)
Vested
Forfeited
Outstanding at December 31, 2016
Non-vested
Restricted
Stock
Weighted
Average
Grant Date
Fair Value
6,330,695 $
3,575,041
(1,389,072)
-
8,516,664 $
2,372,592
(3,915,749)
-
6,973,507 $
1,823,565
5,090,354
(2,755,430)
-
11,131,996 $
0.78
3.80
0.79
-
2.05
3.16
1.19
-
2.90
4.30
2.74
2.14
-
2.74
(1)
942,658 of BCC’s restricted stock units were exchanged for approximately 5.1 million of the Company's
restricted Class A Common Stock units.
On December 22, 2016, the Company’s Compensation Committee approved the grant of 1,823,565
restricted shares of the Company’s Class B Common Stock to the Company’s executive officers under
the 2014 Plan. The restricted Class B common shares had an aggregate fair value of $7.8 million on the
grant date. The restricted shares vest ratable in annual installments of approximately 456,000 shares
over four years beginning on October 1, 2017.
On September 30, 2016, a total of 1,389,076 shares of restricted Class A common stock and 773,205
shares of restricted Class B common stock granted by the Company to i t s executive officers in
November 2012 and October 2014, respectively, vested. The executive officers surrendered a total of
880,051 shares of the Company’s Class A common stock to the Company to satisfy the $3.4 million tax
withholding obligation associated with the vesting of these shares. The Company retired the
surrendered shares.
Between October 1, 2016 and October 5, 2016, a total of 593,148 shares of restricted Class B common
stock granted by the Company to its executive officers in September 2015 vested. The employees
surrendered a total of 247,405 shares of the Company’s Class B common stock to the Company to
satisfy the $0.9 million tax withholding obligation associated with the vesting of these shares. The
Company retired the surrendered shares.
On September 1, 2015, the Company’s Compensation Committee granted a total of 2,372,592 restricted
shares of the Company’s Class B Common Stock to its executive officers under the 2014 Plan. The
restricted Class B common shares had an aggregate fair value of $7.5 million on the grant date. The
restricted shares vest ratably in annual installments of approximately 593,000 shares over four years
beginning in October 2016.
On October 6, 2014, the Company’s Compensation Committee approved the grant of an aggregate of
3,092,817 shares of restricted Class B Common Stock to the Company’s executive officers. The fair
value of approximately $11.8 million was calculated based on the closing price of the Company’s Class
B Common Stock on the date of grant. The cost is being recognized over a four year service period.
The restricted shares vest ratably in annual installments of approximately 773,000 shares over four years
with the first installment of 773,000 shares vesting on September 30, 2015.
F-49
On October 7, 2013, the Company’s Compensation Committee approved the grant of an aggregate of
892,224 shares of restricted Class A Common Stock to the Company’s executive officers. 410,000 of
these restricted stock awards were granted under the Company’s 2005 Stock Incentive Plan and will
vest four years from the grant date on October 7, 2017. The fair value of those 410,000 shares of
restricted stock was approximately $1.0 million. The grant of the balance of 482,224 of those restricted
shares was subject to the approval of the 2014 Plan by the Company’s shareholders. Upon approval of
the 2014 Plan at the Company’s 2014 Annual Meeting of Shareholders, the remaining 482,224
restricted shares were granted under the 2014 Plan. The fair value of those 482,224 shares of restricted
stock was approximately $1.8 million based on the closing price of the Company’s Class A Common
Stock on June 12, 2014.
The fair value of shares of the Company’s restricted stock awards which vested during the years ended
December 31, 2016, 2015 and 2014 was $10.3 million, $10.7 million and $5.5 million,
respectively. The Company recognized restricted stock compensation expense of approximately $6.4
million, $5.6 million and $2.5 million for the years ended December 31, 2016, 2015 and 2014,
respectively.
As of December 31, 2016, the total unrecognized compensation cost related to the Company’s non-
vested restricted stock compensation was approximately $27.0 million. The cost is expected to be
recognized over a weighted-average period of approximately 2.82 years.
BCC Equity Compensation Plans
As noted above, the Company assumed and adopted the BCC Equity Compensation Plans as of
December 15, 2016. The maximum term of incentive stock options and non-qualifying stock options
issuable under each of these plans was ten years. Vesting was established by BCC’s Compensation
Committee of its Board of Directors (“BCC Compensation Committee”) in connection with each grant
of options or restricted stock. The BBX Capital 2005 Restricted Stock and Option Plan provided that
up to 1,875,000 shares of BCC’s Class A common stock may be issued. The BBX Capital 2014 Stock
Incentive Plan provided that up to 2,000,000 shares of BCC’s Class A common stock may be
issued. No further awards will be granted under the BCC Equity Compensation Plans.
In March 2015, BCC’s Board of Directors approved an amendment to both the B C C Equity
Compensation Plans. The amendment to each Plan authorized the Compensation Committee to issue
restricted stock awards in the form of restricted stock units rather than directly in restricted
stock. Following the amendment, BCC and its then executive officers agreed to retire any shares of
BCC’s outstanding restricted Class A common stock awards previously issued in the name of the
Compensation Committee and subject to forfeiture until vested in exchange for BCC issuing to the then
executive officers restricted BCC Class A common stock units (“RSUs”). This exchange resulted in the
retirement of 1,391,282 BCC Class A common shares. Pursuant to the terms of the RSUs, BCC
promised to issue BCC Class A common stock at the time the underlying units vest. The BCC RSUs
issued have the same terms, and cover the same number of underlying shares of BCC Class A common
stock, as the BCC restricted stock awards that were retired.
F-50
The following is a summary of BCC’s non-vested restricted Class A common share activity:
Outstanding at December 31, 2013
Vested
Forfeited
Granted
Outstanding at December 31, 2014
Vested
Forfeited
Granted
Outstanding at December 31, 2015
Vested
Forfeited
Granted
RSUs exchanged (1)
Outstanding at December 31, 2016
Class A
Non-vested
Restricted
Stock
Weighted
Average
Grant date
Fair Value
1,310,302 $
(315,102)
-
396,082
1,391,282 $
(381,622)
-
419,492
1,429,152 $
(486,494)
-
-
(942,658)
- $
8.76
6.52
-
16.58
11.50
9.13
-
15.60
13.33
10.52
-
-
14.78
-
(1)
942,658 of BCC’s restricted stock units were exchanged for approximately 5.1 million of the Company Class A
restricted Common Stock units on December 15, 2016 pursuant to the Merger Agreement .
On September 30, 2016, 381,622 of restricted BCC Class A common stock units granted to executive
officers in September 2012 and September 2014 vested. BCC repurchased and retired an aggregate of
158,024 shares of BCC Class A common stock to satisfy the $3.2 million withholding tax obligations
associated with the vesting of these units. Between October 1, 2016 and October 5, 2016 104,872 of
restricted BCC Class A common stock units granted to executive officers in September 2015
vested. BCC repurchased and retired an aggregate of 43,749 shares of BCC Class A common stock to
satisfy the $0.9 million withholding tax obligations associated with the vesting of these units.
On September 1, 2015, BCC’s Compensation Committee granted in the aggregate 419,492 of BCC
restricted Class A common stock units to its executive officers under the BBX Capital 2014 Stock
Incentive Plan. These RSUs had a $6.5 million fair value on the grant date and vest ratably each year
over the 4 year service period beginning in October 2016. The grant date fair value was calculated
based on the closing price of BCC’s Class A common stock on the grant date. BCC recognized the
compensation costs based on the straight-line method over the vesting period.
In October 2014, BCC’s Compensation Committee granted in the aggregate 396,082 shares of BCC
restricted Class A common stock (“RSAs”) under the BBX Capital 2014 Stock Incentive Plan to its
executive officers. These RSAs had a $6.6 million fair value on the grant date and vest ratably each
year over the 4 year service period beginning in September 2015. The grant date fair value was
calculated based on the closing price of BCC’s Class A common stock on the grant date.
In October 2013, BCC’s Compensation Committee granted in the aggregate 430,000 RSAs under the
BBX Capital 2005 Restricted Stock and Option Plan. These RSAs had a $5.7 million fair value on the
grant date. The grant date fair value was calculated based on the closing price of BCC’s Class A
common stock on the grant date. The RSAs vest four years from the grant date or October 8, 2017.
The fair value of restricted shares of BCC’s stock vested during the years ended December 31, 2016,
2015 and 2014 was $10.0 million, $6.0 million and $5.5 million, respectively.
BCC recognized stock based compensation costs based on the grant date fair value. The grant date fair
value for stock options was calculated using the Black-Scholes option pricing model incorporating an
estimated forfeiture rate
F-51
and recognized the compensation costs for those shares vesting on a straight-line basis over the requisite
service period of the award, which was generally the option vesting term of five years.
The following is a summary of BCC’s Class A common stock option activity:
Weighted
Average
Outstanding Exercise
Class A
Options
21,282 $
-
-
(5,801)
-
15,481 $
-
(3,307)
(5,158)
-
7,016 $
-
-
(402)
-
(6,614)
- $
Price
289.17
-
-
455.00
-
227.03
-
92.09
475.12
-
108.24
-
-
374.00
-
92.09
-
Weighted
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
($000)
2.5
2.3
1.6 $
1.2
- $
-
-
-
-
-
Outstanding at December 31, 2013
Exercised
Forfeited
Expired
Granted
Outstanding at December 31, 2014
Exercised
Forfeited
Expired
Granted
Outstanding at December 31, 2015
Exercised
Forfeited
Expired
Granted
Stock options exchanged (1)
Outstanding at December 31, 2016
(1) Options to acquire 6,614 shares of BCC Class A Common Stock were exchanged for options to acquire 35,716
shares of the Company's Class A Common Stock on December 15, 2016 .
There were no BCC options granted or exercised during any of the years in the three year period ended
December 31, 2016.
Included in the Company’s Consolidated Statements of Operations and Comprehensive Income is $6.1
million, $5.5 million and $3.7 million of share-based compensation expense related to BCC for the
years ended December 31, 2016, 2015 and 2014, respectively. There were no recognized tax benefit
associated with the compensation expense for the years ended December 31, 2016, 2015 and 2014 as it
was not more likely than not that BCC would realize the tax benefits associated with the share based
compensation expense.
16. Employee Benefit Plans and Incentive Compensation Program
Defined Contribution 401(k) Plan
The Company’s Employee Retirement Plan, is an Internal Revenue Code Section 401(k) Retirement
Savings Plan. Employees who have completed 90 days of service and have reached the age of 18 are
eligible to participate in the 401(k) plan. For the year ending December 31, 2016, an eligible employee
under the plan was entitled to contribute up to $18,000, while an eligible employee over 50 years of age
was entitled to contribute up to $24,000. During the years ended December 31, 2016, 2015 and 2014,
the Company matched 100% of the first 3% of employee contributions and 50% of the next 2% of
employee contributions. The match amounts vest immediately. For the years ended December 31,
2016, 2015 and 2014, the Company recorded expense for its contributions to the 401(k) plan totaling
approximately $0.5 million, $0.4 million and $0.3 million, respectively.
F-52
Deferred Retirement Agreement
On September 13, 2005, the Company entered into an agreement with Glen R. Gilbert, the Company’s
former Chief Financial Officer, pursuant to which the Company agreed to pay him a monthly retirement
benefit of $5,449 beginning January 1, 2010. During the third quarter of 2005, the Company recorded
the present value of the retirement benefit payment, as actuarially determined, in the amount of
$482,444, payable as a life annuity with 120 payments at 6.5% interest. The interest on the retirement
benefit is recognized monthly as compensation expense. At December 31, 2016 and 2015, the deferred
retirement obligation balance was approximately $423,000 a n d $459,000, respectively, which
represents the present value of accumulated benefit related obligation and is included in other liabilities
in the Company’s Consolidated Statements of Financial Condition. The related compensation expense
for the years ended December 31, 2016, 2015 and 2014 was approximately $29,000, $31,000
and $33,000, respectively.
Incentive Compensation Program
On September 29, 2008, Woodbridge’s Board of Directors approved the terms of an incentive program
for certain employees, including certain executive officers, pursuant to which a portion of their
compensation may be based on the cash returns realized on investments held by individual limited
partnerships or other legal entities. Certain of the participants in this incentive program are also
employees and executive officers of the Company. This incentive program qualifies as a liability-based
plan and, accordingly, the components of the program are required to be evaluated in order to determine
the estimated fair value of the liability, if any, to be recorded. Based on the evaluation there was no
liabilities recognized under the program at December 31, 2016 and 2015.
Bluegreen
Bluegreen’s Employee Retirement Plan (the “Bluegreen Retirement Plan”) is an Internal Revenue Code
Section 401(k) Retirement Savings Plan. Historically, all U.S.-based employees at least 21 years of age
with at least three months of employment with Bluegreen are eligible to participate in the Bluegreen
Retirement Plan. The Bluegreen Retirement Plan provides for an annual employer discretionary
matching contribution. Bluegreen matches 100% of each participant’s contributions not exceeding 3%
of each participant’s compensation, plus 50% of the participant’s contributions in excess of 3% but not
in excess of 5% of the participant’s compensation. Further, Bluegreen may make additional
discretionary matching contributions not to exceed 4% of each participant’s compensation. During the
years ended December 31, 2016, 2015 and 2014, expenses recorded for Bluegreen’s contributions to the
Bluegreen Retirement Plan totaled $5.0 million, $4.8 million and $4.6 million, respectively.
17. Shares Subject to Mandatory Redemption
On June 7, 2004, the Company’s board of directors designated 15,000 shares of the Company’s
preferred stock as 5% Cumulative Preferred Stock. On June 21, 2004, the Company sold all 15,000
shares of the 5% Cumulative Preferred Stock to an investor group in a private offering.
The Company’s 5% Cumulative Preferred Stock has a stated value of $1,000 per share. The shares of
5% Cumulative Preferred Stock are redeemable at the option of the Company, from time to time, at a
redemption price of $1,000 per share. In addition, the Company is required to redeem the preferred
shares in $5.0 million annual payments in each of the years in the three year period ending December
31, 2020. The 5% Cumulative Preferred Stock’s liquidation preference is equal to its stated value of
$1,000 per share plus any accumulated and unpaid dividends or an amount equal to the applicable
redemption price in a voluntary liquidation or winding up of the Company. Holders of the 5%
Cumulative Preferred Stock have no voting rights, except as provided by Florida law, and are entitled to
receive, when and as declared by the Company’s board of directors, cumulative quarterly cash
dividends on each such share at a rate per annum of 5% of the stated value from the date of issuance.
The Company pays quarterly dividends on the 5% Cumulative Preferred Stock totaling $187,500.
The 5% Cumulative Preferred Stock is mandatorily redeemable and classified as a liability in the
Company’s Consolidated Statements of Financial Condition as of December 31, 2016 and 2015. For
the years ended December 31, 2016, 2015 and 2014, the Company recorded interest expense in its
Consolidated Statements of Operations and Comprehensive Income of $1.2 million, $1.1 million and
$1.1 million, respectively, of which $750,000 was paid during each of these three years as dividends on
the 5% Cumulative Preferred Stock.
F-53
During December 2013, the Company made a $5 million loan to the holders of its 5% Cumulative
Preferred Stock. The loan is secured by 5,000 shares of 5% Cumulative Preferred Stock, accrues
interest at a rate of 5% per annum and provides for payments of interest only on a quarterly basis during
the term of the loan, with all outstanding amounts being due and payable at maturity in December 2018.
18. Common Stock, Preferred Stock and Dividends
Common Stock
The Company’s Articles of Incorporation authorize the Company to issue both Class A Common Stock,
par value $.01 per share, and Class B Common Stock, par value $.01 per share. Under Florida law and
the Company’s Articles of Incorporation, holders of the Company’s Class A Common Stock and Class
B Common Stock vote together as a single class on most matters presented to a vote of the Company’s
shareholders. On such matters, holders of the Company’s Class A Common Stock are entitled to one
vote for each share held, with all holders of Class A Common Stock possessing in the aggregate 22% of
the total voting power. Holders of Class B Common Stock possess the remaining 78% of the total
voting power. If the number of shares of Class B Common Stock outstanding decreases to 1,800,000
shares, the Class A Common Stock’s aggregate voting power will increase to 40% and the Class B
Common Stock will have the remaining 60%. If the number of shares of Class B Common Stock
outstanding decreases to 1,400,000 shares, the Class A Common Stock’s aggregate voting power will
increase to 53% and the Class B Common Stock will have the remaining 47%. These relative voting
percentages will remain fixed unless the number of shares of Class B Common Stock outstanding
decreases to 500,000 shares or less, at which time the fixed voting percentages will be eliminated, and
holders of Class A Common Stock and holders of Class B Common Stock would then each be entitled
to one vote per share held. Each share of Class B Common Stock is convertible at the option of the
holder thereof into one share of Class A Common Stock.
On September 21, 2009, the Company adopted a rights agreement (“Rights Agreement”) designed to
preserve shareholder value and protect our ability to use available net operating loss carryforwards to
offset future taxable income. The Rights Agreement provides a deterrent to shareholders from acquiring
a 5% or greater ownership interest in the Company’s Class A Common Stock and Class B Common
Stock, taken as a whole, without the prior approval of the Board of Directors. Shareholders of the
Company at September 21, 2009 were not required to divest any shares.
On September 21, 2009, the Board of Directors approved a share repurchase program which authorizes
the repurchase of up to 20,000,000 shares of Class A and Class B Common Stock at an aggregate cost
of no more than $10.0 million. The share repurchase program authorizes management, at its discretion,
to repurchase shares from time to time subject to market conditions and other factors.
As part of the share repurchase program, the Company entered into a Rule 10b5-1 Repurchase Plan (the
“Repurchase Plan”) during March 2016, which authorized the Company’s designated broker to
repurchase up to 1.0 million shares of the Company’s Class A Common Stock in the open market or
through privately negotiated transactions in accordance with the terms, and subject to the limitations,
including price limitations and limitations under Rule 10b-18 under the Securities Exchange Act of
1934, as amended, specified in the Repurchase Plan. During April 2016, the Company repurchased 1.0
million shares of its Class A Common Stock under the Repurchase Plan for approximately $3.0
million.
On September 4, 2015, the Company entered into Share Exchange Agreements with Alan B. Levan,
John E. Abdo, Jarett S. Levan and Seth M. Wise as holders of restricted stock units of Class A Common
Stock of BCC. See Note 22 for information regarding the options exercised by the Company and the
share exchanges consummated under the Share Exchange Agreements during 2015 and 2016. Upon the
Company’s adoption of the BCC Equity Compensation Plans in connection with the Merger Agreement
on December 15, 2016, the Share Exchange Agreements were terminated.
Preferred Stock
The Company’s authorized capital stock includes 10 million shares of preferred stock, par value of $.01
per share. See Note 17 for further information regarding the Company’s outstanding 5% Cumulative
Preferred Stock.
F-54
Dividends
Prior to June 2016, the Company had never paid cash dividends on its common stock. In June 2016,
September 2016 and December 2016 the Company’s Board of Directors declared quarterly cash
dividends on the Company’s Class A Common Stock and Class B Common Stock as follows:
Record
Date
6/20/2016
9/23/2016
12/19/2016
Payment
Date
7/20/2016
10/20/2016
1/20/2017
June
September
December
Total for 2016
Per
Common
Share
Distribution
Amount
0.005
0.005
0.005
0.015
$
$
Future declaration and payment of cash dividends with respect to the Company’s common stock, if any,
will be determined in light of the then-current financial condition of the Company and other factors
deemed relevant by the board of directors. See Note 17 for information regarding dividends paid by the
Company with respect to its 5% Cumulative Preferred Stock.
19. Noncontrolling Interests
The following table summarizes the noncontrolling interests in the Company’s subsidiaries at
December 31, 2016 and 2015 (in thousands):
BCC
Joint ventures and other
Total noncontrolling interests
December 31,
2016
2015
-
40,850
40,850
62,728
43,352
106,080
$
$
The following table summarizes the income recognized with respect to the Company’s subsidiaries
attributable to noncontrolling interests for the years ended December 31, 2016, 2015 and 2014 (in
thousands):
For the Years Ended December 31,
2015
2016
2014
BCC
Joint ventures and other
Net income attributable to noncontrolling
interests
$
$
F-55
3,489
9,806
13,295
4,964
13,841
18,805
2,040
11,415
13,455
20. Earnings Per Common Share
The following table presents the computation of basic and diluted earnings per common share
attributable to shareholders for the years ended December 31, 2016, 2015 and 2014 (in thousands,
except per share data):
For the Years Ended December 31,
2015
2016
2014
Basic earnings per common share
Numerator:
Net income
Less: Noncontrolling interests net income
Net income available to common
shareholders
Denominator:
Basic weighted average number of
of common shares outstanding
Basic earnings per common share
Diluted earnings per common share
Numerator:
Net income available to common
shareholders
Denominator:
Basic weighted average number of
common shares outstanding
Effect of dilutive stock-based compensation
Diluted weighted average number of
common shares outstanding
$
$
$
$
41,657
13,295
141,279
18,805
27,305
13,455
28,362
122,474
13,850
86,902
87,022
84,502
0.33
1.41
0.16
28,362
122,474
13,850
86,902
590
87,022
186
84,502
259
87,492
87,208
84,761
Diluted earnings per common share
$
0.32
1.40
0.16
During the year ending December 31, 2016, approximately 55,000 restricted stock awards and options
to acquire 35,716 shares of Class A common stock were anti-dilutive. During each of the years ended
December 31, 2015 and 2014, there were no restricted stock awards or options to acquire shares of
common stock that were anti-dilutive.
21. Fair Value Measurement
Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. There are three
main valuation techniques to measure the fair value of assets and liabilities: the market approach, the
income approach and the cost approach. The accounting literature defines an input fair value hierarchy
that has three broad levels and gives the highest priority to quoted prices (unadjusted) in active markets
for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The valuation techniques are summarized below:
The market approach uses prices and other relevant information generated by market transactions
involving identical or comparable assets or liabilities.
The income approach uses financial models to convert future amounts to a single present amount.
These valuation techniques include present value and option-pricing models.
The cost approach is based on the amount that currently would be required to replace the service
capacity of an asset. This technique is often referred to as current replacement cost.
F-56
The input fair value hierarchy is summarized below:
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the
Company has the ability to access at each reporting date. An active market for the asset or liability is a
market in which transactions for the asset or liability occur with sufficient frequency and volume to
provide pricing information on an ongoing basis. A quoted price in an active market provides the most
reliable evidence of fair value and is used to measure fair value whenever available.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a
Level 2 input must be observable for substantially the full term of the asset or liability. Level 2 inputs
include: quoted prices for similar assets or liabilities in active markets; quoted prices for identical or
similar assets or liabilities in markets that are not active, that is, markets in which there are few
transactions for the asset or liability, the prices are not current, or price quotations vary substantially
either over time or among market makers (for example, some brokered markets), or in which little
information is released publicly (for example, a principal-to-principal market); inputs other than quoted
prices that are observable for the asset or liability (for example, interest rates and yield curves
observable at commonly quoted intervals, volatilities, prepayment speeds, loss severities, credit risks,
and default rates).
Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are only used to
measure fair value to the extent that observable inputs are not available, thereby allowing for situations
in which there is little, if any, market activity for the asset or liability at the measurement date.
Assets and liabilities on a recurring basis
There were no assets or liabilities measured at fair value on a recurring basis in the Company’s
consolidated financial statements as of December 31, 2016 or 2015.
Assets on a non-recurring basis
The following table presents major categories of assets measured at fair value on a non-recurring basis
as of December 31, 2016 (in thousands):
Fair Value Measurements Using
Carrying
Quoted prices
in
Significant
Total
Amount Active Markets
Other
Significant
Impairments (1)
As of
December
31,
for Identical Observable Unobservable
For the
Assets
Inputs
Inputs
Year Ended
December 31,
2016
Description
2016
(Level 1)
(Level 2)
(Level 3)
Loans measured for
impairment using the fair
value
of the underlying collateral
$
5,759
Impaired real estate held-for-
sale
Total
5,456
11,215
$
-
-
-
-
-
-
5,759
5,456
11,215
101
3,271
3,372
(1) Total impairments represent the amount of losses recognized during the year ended December
31, 2016 on assets that were held and measured at fair value as of December 31, 2016.
F-57
Quantitative information about significant unobservable inputs within Level 3 on major categories of
assets measured at fair-value on a non-recurring basis is as follows (Fair Value in thousands):
As of December 31, 2016
Fair
Valuation
Unobservable
Description
Value
Technique
Inputs
Range (Average) (1)(2)
Loans measured for
impairment using the fair
value
Fair Value of
Discount Rates and
Appraised
of the underlying collateral $
5,759 Collateral
Value less Cost to Sell
Impaired real estate
Fair Value of
held-for-sale
Total
5,456
Property
$
11,215
Asset Purchase
Agreements
and appraisals
$0.1 - $0.7 million ( $0.3
million)
$0.1 - $1.4 million ( $0.5
million)
(1) Range and average appraised values were reduced by estimated costs to sell.
(2) Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.
The following table presents major categories of assets measured at fair value on a non-recurring basis
as of December 31, 2015 (in thousands):
Fair Value Measurements Using
Carrying
Quoted prices
in
Significant
Total
Amount Active Markets
Other
Significant
Impairments (1)
As of
December
31,
for Identical Observable Unobservable
For the
Assets
Inputs
Inputs
Year Ended
December 31,
2015
Description
2015
(Level 1)
(Level 2)
(Level 3)
Loans measured for
impairment using the fair
value
of the underlying collateral
Impaired real estate held-for-
sale
and held-for-investment
Impaired loans held-for-sale
Total
$
$
186
13,257
5,856
19,299
-
-
-
-
-
-
-
-
186
120
13,257
5,856
19,299
3,000
740
3,860
(1) Total impairments represent the amount of losses recognized during the year ended December
31, 2015 on assets that were held and measured at fair value as of December 31, 2015.
F-58
Quantitative information about significant unobservable inputs within Level 3 on major categories of
assets measured at fair value on a non-recurring basis was as follows (Fair Value in thousands):
As of December 31, 2015
Fair
Valuation
Unobservable
Description
Loans measured for
impairment
Value
Technique
Inputs
Range (Average) (1)(2)
Discount Rates and
using the fair value of the
Fair Value of
Appraised Value
underlying collateral
$
186 Collateral
less Cost to Sell
Impaired real estate held-
for-
sale and held-for-
investment
Fair Value of
Discount Rates and
Appraised
13,257
Property
Fair Value of
Value less Cost to Sell
Discount Rates and
Appraised
$0.2 - $0.4 million ( $0.3
million)
$0.3 - $11.0 million ( $2.0
million)
Impaired loans held-for-
sale
5,856 Collateral
Value less Cost to Sell
$0.1 -$0.5 million ($0.2
million)
Total
$ 19,299
(1) Range and average appraised values were reduced by costs to sell.
(2) Average was computed by dividing the aggregate appraisal amounts by the number of appraisals.
Liabilities on a non-recurring basis
There were no liabilities measured at fair value on a non-recurring basis in the Company’s consolidated
financial statements as of December 31, 2016 or 2015.
Loans Measured For Impairment
Impaired loans are generally valued based on the fair value of the underlying collateral less cost to sell
as the majority of the Company’s loans are collateral dependent. The fair value of the Company’s loans
may significantly increase or decrease based on changes in property values as its loans are primarily
secured by real estate. The Company primarily uses third party appraisals to assist in measuring non-
homogenous impaired loans and broker price opinions to assist in measuring homogeneous impaired
loans. The appraisals generally use the market or income approach valuation technique and use market
observable data to formulate an estimate of the fair value of the loan’s collateral. However, the
appraiser uses professional judgment in determining the fair value of the collateral, and the Company
may also adjust these values for changes in market conditions subsequent to the appraisal date. When
current appraisals are not available for certain loans, the Company uses its judgment on market
conditions to adjust the most current appraisal. As a consequence, the calculation of the fair value of the
collateral is considered a Level 3 input. The Company generally recognizes impairment losses based on
third party broker price opinions when impaired homogeneous loans become 120 days delinquent.
These third party valuations from real estate professionals also use Level 3 inputs in determining fair
values. The observable market inputs used to fair value loans include comparable property sales, rent
rolls, market capitalization rates on income producing properties, risk adjusted discount rates and
foreclosure time frames and exposure periods.
Real Estate Held-for-Sale and Held-for-Investment
Real estate is generally valued using third party appraisals or broker price opinions. These appraisals
generally use the market approach valuation technique and use market observable data to formulate an
estimate of the fair value of the properties. The market observable data typically consists of comparable
property sales, rent rolls, market capitalization rates on income producing properties and risk adjusted
discount rates. The above inputs are considered Level 3 inputs as the appraiser uses professional
judgement in the calculation of the fair value of the properties.
Loans Held-for-Sale
Loans held-for-sale are valued using an income approach with Level 3 inputs as market quotes or sale
transactions of similar loans are generally not available. The fair value is estimated by discounting
forecasted cash flows, using a discount rate that reflects the risks inherent in the loans held-for-sale
portfolio. For non-performing loans held-for-sale, the forecasted cash flows are based on the estimated
fair value of the collateral less cost to sell adjusted for foreclosure expenses and other operating
expenses of the underlying collateral until foreclosure or sale.
F-59
Financial Disclosures about Fair Value of Financial Instruments
The following tables present information for consolidated financial instruments at December 31, 2016
and 2015 (in thousands):
Carrying
Amount
As of
December 31,
2016
299,861
46,456
25,521
430,480
Fair Value Measurements Using
Quoted
prices
in Active Significant
Fair Value Markets
Other
Significant
As of
December
31,
2016
for
Identical ObservableUnobservable
Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
299,861 299,861
46,456
46,456
27,904
545,000
5,063
4,900
414,989
420,400
133,790
152,367
13,517
135,404
149,200
13,600
-
-
-
-
-
-
-
-
-
-
-
27,904
545,000
4,900
420,400
135,404
149,200
13,600
Fair Value Measurements Using
Quoted
prices
in Active Significant
Fair Value Markets
Other
Significant
As of
December
31,
2015
for
Identical ObservableUnobservable
Assets
(Level 1)
Inputs
(Level 2)
Inputs
(Level 3)
Carrying
Amount
As of
December 31,
2015
198,905
59,365
55,389
415,598
198,905 198,905
59,365
59,365
63,668
495,000
-
-
-
-
-
-
-
-
-
-
-
63,668
495,000
4,500
406,600
124,456
116,500
11,900
5,063
4,500
$
403,912
406,600
120,994
150,485
13,098
124,456
116,500
11,900
-
-
-
-
-
-
-
-
-
-
-
-
-
-
$
$
$
$
$
Financial assets:
Cash and interest bearing deposits in
banks
Restricted cash
Loans receivable including loans held-
for-sale, net
Notes receivable, net
Notes receivable from preferred
shareholders (1)
Financial liabilities:
Receivable-backed notes payable
Notes and mortgage notes payable and
other borrowings
Junior subordinated debentures
Shares subject to mandatory redemption
Financial assets:
Cash and interest bearing deposits in
banks
Restricted cash
Loans receivable including loans held-
for-sale, net
Notes receivable, net
Notes receivable from preferred
shareholders (1)
Financial liabilities:
Receivable-backed notes payable
Notes and mortgage notes payable and
other borrowings
Junior subordinated debentures
Shares subject to mandatory redemption
(1) Notes
receivable
the
Company’s Consolidated Statements of Financial Condition as of December 31, 2016 and 2015 .
from preferred shareholders
in other assets in
included
is
Management has made estimates of fair value that it believes to be reasonable. However, because there
is no active market for many of these financial instruments, the fair value of these financial instruments
has been derived using the income approach technique with Level 3 unobservable inputs. Estimates
used in net present value financial
F-60
models rely on assumptions and judgments regarding issues where the outcome is unknown and actual
results or values may differ significantly from these estimates. These fair value estimates do not
consider the tax effect that would be associated with the disposition of the assets or liabilities at their
fair value estimates. As such, the estimated value upon sale or disposition of the asset may not be
received and the estimated value upon disposition of the liability in advance of its scheduled maturity
may not be paid.
The fair value of the Company’s accruing loans is calculated using an income approach with Level 3
inputs by discounting forecasted cash flows using estimated market discount rates that reflect the
interest rate and credit risk inherent in the loan portfolio. The Company’s management assigns a credit
risk premium and an illiquidity adjustment to these loans based on delinquency status. The fair value of
non-accruing collateral dependent loans is estimated using an income approach with Level 3 inputs
utilizing the fair value of the collateral adjusted for operating and selling expenses and discounted over
the estimated holding period based on the market risk inherent in the property.
The fair value of notes receivable and note receivable from preferred shareholders are estimated using
Level 3 inputs and is based on estimated future cash flows considering contractual payments and
estimates of prepayments and defaults, discounted at a market rate.
The fair value of the 5% Cumulative Preferred Stock, which is subject to mandatory redemption, is
calculated using the income approach with Level 3 inputs by discounting the estimated cash flows at a
market discount rate.
The amounts reported in the consolidated statements of financial condition relating to Bluegreen’s notes
and mortgage notes payable and other borrowings, including receivable-backed notes payable,
approximate fair value for indebtedness that provides for variable interest rates. The fair value of
Bluegreen’s fixed rate, receivable-backed notes payable was determined using Level 3 inputs by
discounting the net cash outflows estimated to be used to repay the debt. These obligations are to be
satisfied using the proceeds from the consumer loans that secure the obligations.
The fair value of other borrowings is measured using the income approach with Level 3 inputs obtained
by discounting the forecasted cash flows based on estimated market rates.
The fair value of Community Development Bonds is measured using the market approach with level 3
inputs obtained based on estimated market prices of similar financial instruments.
The fair value of junior subordinated debentures is estimated using Level 3 inputs based on the
contractual cash flows discounted at a market rate or based on market price quotes from the over-the-
counter bond market.
22. Certain Relationships and Related Party Transactions
The Company may be deemed to be controlled by Alan B. Levan, the Company’s Chairman and Chief
Executive Officer, and John E. Abdo, Vice Chairman of the Company. Together, Mr. Alan Levan and
Mr. Abdo may be deemed to beneficially own shares of the Company’s Class A Common Stock and
Class B Common Stock representing approximately 76% of the Company’s total voting power. Mr.
Abdo was Vice Chairman of BCC prior to the Merger. Mr. Abdo became Chairman of Bluegreen
during December 2015 following Mr. Alan Levan’s resignation from such position (as described below)
after previously serving as Bluegreen’s Vice Chairman. In December 2015, Mr. Alan Levan resigned as
Chairman, Chief Executive Officer and President of the Company, as Chairman and Chief Executive
Officer of BCC and as chairman of Bluegreen. Jarett S. Levan, Executive Vice President of the
Company, and President of BCC and son of Alan B. Levan, was appointed Acting Chairman of the
Board and Chief Executive Officer and President of the Company and Acting Chairman and Chief
Executive Officer of BCC. Further, Seth M. Wise is an executive officer and director of the Company,
and Raymond S. Lopez is an executive officer of the Company, and were each executive officers of
BCC. The Company a n d BCC owned 54% and 46%, respectively, of Woodbridge prior to the
merger. Currently, Woodbridge is a wholly-owned subsidiary of the Company and Woodbridge is the
sole shareholder of Bluegreen. See Note 3 – Merger for a description of the BCC Merger in which BCC
merged with and into a wholly owned subsidiary of the Company.
On February 7, 2017, the Company’s Board of Directors reappointed Alan B. Levan as Chairman of the
Board and Chief Executive Officer of the Company. Jarett S. Levan, who was serving as Acting
Chairman, Chief Executive Officer and President of the Company, will continue to serve as President of
the Company.
F-61
On May 8, 2015, the Company, BCC, Woodbridge, Bluegreen and their respective subsidiaries entered
into an Agreement to Allocate Consolidated Income Tax Liability and Benefits pursuant to which,
among other customary terms and conditions, the parties agreed to file consolidated federal tax returns.
The parties calculate their respective income tax liabilities and attributes as if each of them were a
separate filer. If any tax attributes are used by another party to the agreement to offset its tax liability,
the party providing the benefit will receive an amount for the tax benefits realized. Bluegreen paid the
Company $26.2 million and $19.2 million during the years ended December 31, 2016 and 2015,
respectively, pursuant to the Agreement to Allocate Consolidated Income Tax Liability and Benefits.
On September 4, 2015, the Company entered into Share Exchange Agreements with Alan B. Levan,
John E. Abdo, Jarett S. Levan and Seth M. Wise (collectively, the “ BCC RSU Holders”) as holders of
restricted stock units of Class A Common Stock of BCC (“ BCC RSUs”). Pursuant to the Share
Exchange Agreements, (a) each BCC RSU Holder granted the Company the option to acquire,
simultaneously with the vesting of each BCC RSU, some or all of the shares of BCC’s Class A
Common Stock which, absent the Share Exchange Agreement, would (after withholding) have been
received by the BCC RSU Holder upon the vesting of the BCC RSUs and (b) the Company agreed to
issue to the BCC RSU Holder shares of the Company’s Class A Common Stock or Class B Common
Stock having an aggregate market value equal to the aggregate market value of the shares of BCC’s
Class A Common Stock acquired by the Company upon the option exercise. Pursuant to the Share
Exchange Agreements, the market value of the shares of the Company’s Class A Common Stock and
Class B Common Stock and of the BCC’s Class A Common Stock is the closing price of the applicable
company’s class of stock on the trading day immediately preceding the date of closing of the share
exchange.
On September 1, 2015, the Company’s Board of Directors approved (a) the exercise in full of the
Company’s options with respect to all of the BCC RSUs held by the BCC RSU Holders which vested on
September 30, 2015 and (b) the issuance of shares of the Company’s Class B Common Stock in
exchange therefor. In connection with this option exercise, on September 30, 2015, the Company
issued a total of 1,218,476 shares of its Class B Common Stock to the BCC RSU Holders and received a
total of 221,821 shares of BCC’s Class A Common Stock in exchange therefor. The share exchanges
were effected simultaneously with the vesting of the applicable BCC RSUs on September 30, 2015 and
were based on the closing prices of the Company’s Class B Common Stock and BCC’s Class A
Common Stock on September 29, 2015 of $2.88 per share and $15.82 per share, respectively. The
following table sets forth the number of shares issued and exchanged in the September 2015 transaction
described above.
BBX Capital RSU Holder
Alan B. Levan
John E. Abdo
Jarett S. Levan
Seth M. Wise
Total
Number of Shares of the
Company’s Class B
Common Stock Issued to
the BCC RSU Holder
Number of Shares of BCC’s
Class A Common Stock
Received by the Company
405,624
405,624
204,413
202,815
1,218,476
73,843
73,843
37,213
36,922
221,821
On September 12, 2016, the Board of Directors approved (a) the exercise in full of the Company’s
options with respect to all of the BCC RSUs held by the BCC RSU Holders which were scheduled to
vest between September 30, 2016 and October 4, 2016 and (b) the issuance of shares of the Company’s
Class B Common Stock in exchange therefor. In addition, during September 2016, each BCC RSU
Holder agreed, as a result of the Company’s entry into the Merger Agreement on July 27, 2016 and the
5.4 exchange ratio contemplated thereby, to receive no more than 5.4 shares of the Company’s Class A
Common Stock or Class B Common Stock for each share of BCC’s Class A Common Stock subject to
vested BCC RSUs with respect to any share exchanges effected during the pendency of the Merger
Agreement. Between September 30, 2016 and October 4, 2016, the Company issued a total of 1,530,822
shares of its Class B Common Stock to the BCC RSU Holders and received a total of 283,486 shares of
BCC’s Class A Common Stock in exchange therefor. Because the exchange ratio calculated by dividing
the closing price of BCC’s Class A Common Stock on each relevant date by the closing price of the
Company’s Class B Common Stock on each such date exceeded 5.4, the Company issued 5.4 shares of
its Class B Common Stock for each share of BCC’s Class A Common Stock received by it between
September 30, 2016 and October 4, 2016. Upon the Company’s adoption of the BCC Equity
Compensation Plans on December 15, 2016, the share exchange agreements were terminated.
F-62
The following table sets forth the number of shares issued and exchanged in the 2016 transaction
described above.
Individual
Reporting Person
Alan B. Levan
John E. Abdo
Jarett S. Levan
Seth M. Wise
Total
Date of Share
Exchange
9/30/2016
10/1/2016
9/30/2016
10/2/2016
9/30/2016
10/3/2016
9/30/2016
10/4/2016
Number of Shares
of the Company’s
Class B Common
Stock Issued to the
BCC RSU Holder
398,752
107,800
398,752
107,800
204,962
53,897
204,962
53,897
1,530,822
Number of Shares
of BCC’s Class A
Common Stock
Received by the
Company
73,843
19,963
73,843
19,963
37,956
9,981
37,956
9,981
283,486
During each of the years ended December 31, 2016, 2015 and 2014, the Company paid Abdo
Companies, Inc. approximately $306,000 in exchange for certain management services. John E. Abdo,
the Company’s Vice Chairman, is the principal shareholder and Chief Executive Officer of Abdo
Companies, Inc.
Certain of the Company’s affiliates, including its executive officers, have independently made
investments with their own funds in investments that the Company has sponsored and in which the
Company holds investments.
23. Segment Reporting
Operating segments are defined as components of an enterprise about which separate financial
information is available that is regularly reviewed by the chief operating decision maker in assessing
performance and deciding how to allocate resources. Reportable segments consist of one or more
operating segments with similar economic characteristics, products and services, production processes,
type of customer, distribution system or regulatory environment.
The information provided for segment reporting is obtained from internal reports utilized by
management of the Company and its subsidiaries. The presentation and allocation of assets and results
of operations may not reflect the actual economic costs of the segments as standalone businesses. If a
different basis of allocation were utilized, the relative contributions of the segments might differ but the
relative trends in the segments’ operating results would, in management’s view, likely not be impacted.
From time to time, we revise the identification of our segments and/or the measurement of each
segment’s operating results. These revisions are generally the result of changes in the alignment of
segment operations or changes in how our management reviews and assesses profitability and allocates
resources to each segment.
The Chief Operating Decision Maker (“CODM”) views the Company and its organizational structure
based on the Company’s investments in its major operating companies. For the years ended December
31, 2015 and 2014 the Company reported its results of operations through two reportable segments:
Bluegreen and BCC, the Company’s then major operating companies. During the fourth quarter of
2016, the Company completed the acquisition of all outstanding shares of BCC not previously owned
by the Company. As a consequence, the Company will no longer maintain discrete financial
information for BCC and BCC will no longer be a reportable segment. As a result of the changes in its
organizational structure, the Company determined that it was appropriate to report its results of
operations through three reportable segments: Bluegreen, BBX Capital Real Estate and Renin. For the
years ended December 31, 2015 and 2014 segment information was changed retrospectively to conform
to 2016 presentation.
In the table for the years ended December 31, 2016, 2015 and 2014 amounts set forth in the column
entitled “Corporate Expenses & Other” include the operations of BBX Sweet Holdings, interest expense
associated with Woodbridge’s trust preferred securities (“TruPs”), and corporate overhead. BBX Sweet
Holdings consists of the results of acquired businesses in the sugar and confectionary industry. The
operations of BBX Sweet Holdings were
F-63
evaluated and management concluded that this operating segment did not warrant separate presentation
as a reportable segment and therefore was aggregated into the “Corporate Expenses & Other” category.
The Company evaluates segment performance based on segment income before income taxes.
Set forth below is summary information regarding the Company’s reportable segments:
Bluegreen
Bluegreen markets, sells and manages real estate-based VOIs in resorts generally located in popular,
high-volume, “drive-to” vacation destinations, which were developed or acquired by Bluegreen or are
owned by others in which case Bluegreen earns fees for providing these services. Bluegreen also earns
fees by providing club and property owners’ association management services, mortgage servicing, VOI
title services, reservation services, and construction design and development services. In addition,
Bluegreen provides financing to credit-qualified individual purchasers of VOIs, which provides
significant interest income.
BBX Capital Real Estate
BBX Capital Real Estate activities include the acquisition, ownership and management of real estate,
and real estate development projects as well as investments in real estate joint ventures. BBX Capital
Real Estate also manages the legacy assets acquired in the BB&T Transaction. The legacy assets
include portfolios of loans receivable, real estate properties and previously charged-off BankAtlantic
loans.
Renin
Renin manufactures interior closet doors, wall décor, hardware and fabricated glass products and
operates through its headquarters in Canada and two manufacturing, assembly and distribution facilities
in Canada and the United States. During 2016, total revenues for the Renin reportable segment include
$30.4 million of trade sales to two major customers and their affiliates. Renin’s revenues and properties
and equipment located outside the United States totaled $19.8 million and $1.6 million, respectively.
F-64
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2016 (in thousands):
Reportable Segments
BBX
Capital
Bluegreen
Real
Estate
Renin
Corporate
Expenses
&
Other
Eliminations
Segment
Total
$ 266,142
-
-
-
-
266,142
201,829
103,448
-
89,510
-
-
660,929
27,346
64,479
-
30,853
-
-
-
-
-
3,606
6,076
5,067
14,749
-
-
-
-
(20,508)
2,304
-
-
65,225
-
-
-
65,225
-
-
47,088
313
-
-
-
-
30,771
321
-
-
31,092
-
-
27,253
12,871
-
2,352
-
-
-
(8,000)
-
-
(8,000)
-
-
-
(8,000)
-
-
201,829
103,448
95,996
85,437
6,076
5,067
763,995
27,346
64,479
74,341
36,037
(20,508)
4,656
415,027
537,705
11,864
(6,340)
17,186
64,587
73,651
116,127
(971)
(8,971)
516,757
703,108
Revenues:
Sales of VOIs
Fee-based sales commission
revenue
Other fee-based services revenue
Trade sales
Interest income
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based services
Cost of trade sales
Interest expense
Recoveries from loan losses, net
Asset impairments, net
Selling, general and administrative
expenses
Total costs and expenses
Equity in net earnings of
unconsolidated
real estate joint ventures
Foreign exchange gain
Other income
-
-
1,724
Income (loss) before income taxes $ 124,948
13,630
-
-
34,719
-
219
-
857
-
-
2,547
(82,488)
-
-
(971)
-
13,630
219
3,300
78,036
Total assets
$ 1,128,630
179,856
28,913
723,214
(624,545) 1,436,068
Equity method investments
included in total assets
Expenditures for segment fixed
assets
Depreciation and amortization
Goodwill
$
$
$
$
-
43,374
-
-
9,605
4,534
-
266
603
-
1,718
901
-
1,350
2,051
6,731
-
-
-
-
43,374
12,939
8,089
6,731
F-65
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2015 (in thousands):
Reportable Segments
BBX Capital
Bluegreen
$ 259,236
173,659
97,539
-
84,331
-
-
614,765
22,884
60,942
-
35,698
Real
Estate
Renin
-
-
-
-
-
-
9,921
-
56,461
-
31,181
5,540
46,642
-
-
56,461
-
-
-
-
-
-
42,123
309
-
-
-
(13,457)
287
-
-
-
-
Corporate
Expenses
&
Other
Eliminations
Segment
Total
-
-
-
27,823
135
(89)
511
28,380
-
-
20,584
10,441
-
-
36,500
-
-
259,236
173,659
-
-
(5,622)
-
(419)
(6,041)
-
-
-
(6,040)
97,539
84,284
88,765
31,092
5,632
740,207
22,884
60,942
62,707
40,408
-
-
-
(13,457)
287
36,500
373,804
493,328
12,773
(397)
15,049
57,481
66,134
133,659
(1,060)
(7,100)
466,700
676,971
-
-
2,883
124,320
(1,565)
-
-
45,474
-
(1,038)
-
(2,058)
-
-
2,226
(103,053)
-
-
(1,059)
-
(1,565)
(1,038)
4,050
64,683
Revenues:
Sales of VOIs
Fee-based sales commission
revenue
Other fee-based services
revenue
Trade sales
Interest income
Net gains (losses) on sales of
assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based services
Cost of trade sales
Interest expense
Recoveries from loan losses,
net
Impairment of assets, net
Litigation settlement
Selling, general and
administrative
expenses
Total costs and expenses
Equity in net losses of
unconsolidated
real estate joint ventures
Foreign exchange loss
Other income, net
Income (loss) before taxes
Total assets
$ 1,083,151
204,787
22,778
548,332
(518,088) 1,340,960
Equity method investments
included in total assets
Expenditures for segment fixed
assets
Depreciation and amortization
Goodwill
$
$
$
$
-
42,962
-
-
9,176
6,940
-
4
810
-
92
643
-
3,538
2,118
7,601
-
-
-
-
42,962
12,810
10,511
7,601
F-66
The table below sets forth the Company’s segment information as of and for the year ended December
31, 2014 (in thousands):
Reportable Segments
BBX
Capital
Bluegreen
Real
Estate
Renin
Corporate
Expenses
&
Other
Eliminations
Segment
Total
$ 262,334
-
-
-
-
262,334
144,239
92,089
81,666
-
-
-
580,328
30,766
56,941
-
41,324
-
-
-
-
5,072
-
5,527
7,414
18,013
-
-
-
1,002
(7,155)
7,015
-
-
-
57,839
-
-
57,839
-
-
43,888
551
-
-
-
-
92
16,245
-
456
16,793
-
-
10,794
5,449
-
-
-
-
(338)
(1)
-
(448)
(787)
-
-
-
(924)
-
-
144,239
92,089
86,492
74,083
5,527
7,422
672,186
30,766
56,941
54,682
47,402
(7,155)
7,015
345,191
474,222
16,121
16,983
14,729
59,168
46,756
62,999
(1,148)
(2,072)
421,649
611,300
-
-
3,388
(559)
-
-
-
(715)
-
(14)
-
2,677
-
-
(1,285)
(573)
(715)
4,780
$ 109,494
471
(2,044)
(43,543)
-
64,378
Revenues:
Sales of VOIs
Fee-based sales commission
revenue
Other fee-based services revenue
Interest income
Trade sales
Net gains on sales of assets
Other revenue
Total revenues
Costs and Expenses:
Cost of sales of VOIs
Cost of other fee-based services
Cost of trade sales
Interest expense
Recoveries from loan losses, net
Impairment of assets, net
Selling, general and
administrative
expenses
Total costs and expenses
Equity in net loss from
unconsolidated
real estate joint ventures
Foreign exchange loss
Other income, net
Income (loss) before income
taxes
Total assets
$ 1,045,498
216,101
23,661
456,386
(330,350) 1,411,296
Equity method investments
included in total assets
Expenditures for segment fixed
assets
Depreciation and amortization
Goodwill
$
$
$
$
-
16,065
-
-
18,049
6,909
-
996
802
-
93
602
-
315
1,086
7,377
-
-
-
-
16,065
19,453
9,399
7,377
F-67
24. Selected Quarterly Results (Unaudited)
The following tables summarize the results of operations for each fiscal quarter during the years ended December
31, 2016 and 2015 (in thousands except for per share data):
2016
Revenues
Costs and expenses
Equity in net (losses) earnings of
unconsolidated real estate joint
ventures
Foreign exchange gains (losses)
Other income, net
Income before income taxes
(Provision) benefit for income taxes
Net income
Less: Net income attributable to
noncontrolling interests
Net income to common shareholders
Basic earnings per common share
Diluted earnings per common share
$
$
Basic weighted average number of
common shares outstanding
Diluted weighted average number of
common and common equivalent shares
outstanding
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Total
$ 165,639
153,310
12,329
192,965
192,616
349
208,236
171,685
36,551
197,155
185,497
11,658
763,995
703,108
60,887
(342)
210
263
12,460
(5,107)
7,353
1,871
5,482
0.06
0.06
1,655
110
189
2,303
368
2,671
2,427
244
0.00
0.00
4,480
5
1,459
42,495
(19,118)
23,377
7,837
(106)
1,389
20,778
(12,522)
8,256
13,630
219
3,300
78,036
(36,379)
41,657
5,602
17,775
3,395
4,861
13,295
28,362
0.21
0.05
0.21
0.05
0.33
0.32
86,839
85,946
85,864
88,949
86,902
87,013
86,145
86,573
89,961
87,492
F-68
2015
Revenues
Costs and expenses
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 149,893
136,587
13,306
190,971
191,605
(634)
199,291
175,218
24,073
200,052
173,561
26,491
Equity in net losses of unconsolidated
real estate joint ventures
Foreign exchange (losses) gains
Other income, net
Income before income taxes
(Provision) benefit for income taxes
Net income
Less: Net income attributable to
noncontrolling interests
Net income to common shareholders
Basic earnings per common share
Diluted earnings per common share
$
$
Basic weighted average number of
common shares outstanding
Diluted weighted average number of
common and common equivalent shares
outstanding
Total
740,207
676,971
63,236
(1,565)
(1,038)
4,050
64,683
76,596
141,279
(304)
(469)
1,248
13,781
(8,609)
5,172
3,286
1,886
0.02
0.02
(291)
70
1,114
259
90,353
90,612
6,317
84,295
0.97
0.97
(158)
(236)
1,205
24,884
(4,213)
20,671
(812)
(403)
483
25,759
(935)
24,824
4,313
16,358
4,889
19,935
18,805
122,474
0.19
0.23
0.19
0.23
1.41
1.40
87,136
87,093
87,023
86,839
87,022
87,332
87,286
87,174
87,175
87,208
F-69
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
We have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15€ and
15d-15€) to make known material information concerning the Company, including its subsidiaries, to
those officers who certify our financial reports and to other members of our senior management. As of
December 31, 2016, our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, our disclosure controls and procedures. Based on that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2016, our
disclosure controls and procedures were effective to ensure that information required to be disclosed in
the reports that we file or submit under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the Securities and Exchange
Commission and is accumulated and communicated to our management, including our Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect
that our disclosure controls and procedures and internal control over financial reporting will prevent all
errors and all improper conduct. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the control system are
met. Further, the design of a control system must reflect the fact that there are resource constraints, and
the benefits of controls must be considered relative to their costs. Because of the inherent limitations in
all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of improper conduct, if any, have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns can occur because of
simple error or mistake. Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the control. Further, the
design of any control system is based in part upon assumptions about the likelihood of future events,
and there can be no assurance that any such design will succeed in achieving its stated goals under all
potential future conditions.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Our internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with
accounting principles generally accepted in the United States of America. As of December 31, 2016,
our management, with the participation of our Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of our internal control over financial reporting based on the framework in
Internal Control – Integrated Framework – 2013 issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Based on such evaluation, our management concluded that our
internal control over financial reporting was effective as of December 31, 2016.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
73
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
Board of Directors and Shareholders
BBX Capital Corporation
We have audited the internal control over financial reporting of BBX Capital Corporation (a Florida
corporation) and subsidiaries (the “Company”) as of December 31, 2016, based on criteria established in
the
2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company’s management is responsible for
maintaining effective internal control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting, included in the accompanying Management’s Report on
Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, the Company maintained, in all material respects, effective internal control over
financial reporting as of December 31, 2016, based on criteria established in the 2013 Internal Control
—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States), the consolidated financial statements of the Company as of and for the year
ended December 31, 2016, and our report dated March 14, 2017 expressed an unqualified opinion on
those financial statements.
/s/ Grant Thornton LLP
Fort Lauderdale, Florida
March 14, 2017
74
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the quarter
ended December 31, 2016 that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None
75
PART III
The remaining information required by Items 10 through 14 of Part III of Form 10-K will be provided
by incorporating such information by reference to our Definitive Proxy Statement on Schedule 14A
relating to our 2017 Annual Meeting of Shareholders in the event it is filed with the Securities and
Exchange Commission by no later than 120 days after December 31, 2016. Alternatively, we may
provide the information required by Items 10 through 14 of Part III of Form 10-K in an amendment to
this Annual Report on Form 10-K under cover of Form 10-K/A, in which case such amendment will be
filed with the Securities and Exchange Commission by the end of such 120 day period.
76
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
a) Documents Filed as Part of this Report:
1)
Financial Statements
The following consolidated financial statements of BBX Capital Corporation and its subsidiaries are
included herein under Part II, Item 8 of this Report.
Reports of Independent Registered Public Accounting Firms.
Consolidated Statements of Financial Condition as of December 31, 2016 and 2015.
Consolidated Statements of Operations and Comprehensive Income for each of the years in the three
year period ended December 31, 2016.
Consolidated Statements of Changes in Equity for each of the years in the three year period ended
December 31, 2016.
Consolidated Statements of Cash Flows
the years
in
the
three year period ended
for each of
December 31, 2016.
Notes to Consolidated Financial Statements.
2) Financial Statement Schedules
Schedule III – Real estate and accumulated depreciation for BBX Capital Corporation
Schedule IV – Mortgage loans on real estate for BBX Capital Corporation
All other schedules are omitted as the required information is either not applicable or presented in the
financial statements or related notes.
3)
Exhibits
incorporated herein by reference to documents previously filed as indicated below:
The following exhibits are either filed as a part of or furnished with this report or are
Exhibit
Number
Description
Reference
2.1
2.2
Agreement and Plan of Merger, dated July
27, 2016, by and among the Company, BBX
Merger Subsidiary LLC and BBX Capital
Corporation
Letter Agreement, dated October 20, 2016,
amending the Agreement and Plan of the
Merger, dated as of July 27, 2016 by and
among the Company, BBX Merger Subsidiary
LLC and BBX Capital Corporation
77
Exhibit 2.1 to Registrant's Current Report on Form 8-K
filed on July 28, 2016
Exhibit 2.1 to Registrant's Current Report on Form 8-K
filed on October 20, 2016
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
Amended and Restated Articles of
Incorporation, effective October 8, 1997
Amendment to the Amended and Restated
Articles of Incorporation, effective June 18,
2002
Amendment to the Amended and Restated
Articles of Incorporation, effective April 15,
2003
Amendment to the Amended and Restated
Articles of Incorporation, effective February
7, 2005
Amendment to the Amended and Restated
Articles of Incorporation, effective June 22,
2004, as amended on December 17, 2008
Amendment to the Amended and Restated
Articles of Incorporation, effective May 19,
2009
Amendment to the Amended and Restated
Articles of Incorporation, effective September
21, 2009
Amendment to the Amended and Restated
Articles of Incorporation, effective September
21, 2009
Amendment to the Amended and Restated
Articles of Incorporation, effective December
19, 2013
Amendment to the Amended and Restated
Articles of Incorporation, effective January
30, 2017
3.11
Bylaws, as amended
Exhibit 3.1 of Registrant’s Registration Statement on
Form 8-A filed October 16, 1997
Exhibit 4 of Registrant’s Current Report on Form 8-K
filed June 27, 2002
Appendix B of Registrant’s Definitive Proxy Statement
on Schedule 14A filed April 18, 2003
Appendix A of Registrant’s Definitive Information
Statement on Schedule 14C filed January 18, 2005
Exhibit 3.1 of Registrant’s Current Report on Form 8-
K filed December 18, 2008
Appendix A of Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 29, 2009
Annex D of the Joint Proxy Statement/Prospectus that
forms a part of Amendment No. 1 to Registrant’s
Registration Statement on Form S-4 filed August 14,
2009
Exhibit 3.8 of Registrant’s Current Report on Form 8-
K filed September 25, 2009
Exhibit 3.1 of Registrant’s Current Report on Form 8-
K filed December 23, 2013
Exhibit A of the Registrant’s Definitive Information
Statement on Schedule 14C filed January 9, 2017
Exhibit 3.1 of Registrant’s Current Report on Form 8-
K filed February 12, 2015
4.1
Specimen Class A Common Stock Certificate Exhibit 4.1 filed with this Report
4.2
Specimen Class B Common Stock Certificate
Exhibit 4.2 filed with this Report
Rights Agreement dated as of September 21,
2009 by and between BFC Financial
Corporation and American Stock Transfer
and Trust Company, LLC as Rights Agent.
BFC Financial Corporation 2014 Stock
Incentive Plan, as amended
BFC Financial Corporation 2005 Stock
Incentive Plan, as amended
BBX Capital 2005 Restricted Stock and
Option Plan, as amended
BBX Capital 2014 Stock Incentive Plan, as
amended
Employment agreement between Alan B.
Levan and BFC Financial Corporation
4.3
10.1
10.2
10.3
10.4
10.5
10.6
Employment agreement between John E.
Abdo and BFC Financial Corporation
10.7
Employment agreement between Seth M.
Wise and BFC Financial Corporation
10.8
10.9
10.10
10.11
Employment agreement between Jarett S.
Levan and BFC Financial Corporation
Employment agreement between Ray S.
Lopez and BFC Financial Corporation
Employment agreement between Alan B.
Levan and BBX Capital Corporation
Employment agreement between John E.
Abdo and BBX Capital Corporation
78
Exhibit 4.1 of Registrant’s Current Report on Form 8-
K, filed September 25, 2009
Appendix A to the Registrant’s Definitive Proxy
Statement on Schedule 14A filed April 24, 2015
Appendix A to the Registrant’s Definitive Proxy
Statement on Schedule 14A filed November 21, 2012
Exhibit 10.3 filed with this Report
Exhibit 10.4 filed with this Report
Exhibit 10.1 of Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2012 filed
on November 15, 2012
Exhibit 10.2 of Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2012 filed
on November 15, 2012
Exhibit 10.3 of Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2012 filed
on November 15, 2012
Exhibit 10.5 of Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2012 filed
on November 15, 2012
Exhibit 10.1 of Registrants Quarterly Report on Form
10-Q for the quarter ended March 31, 2015 filed on
May 8, 2015
Exhibit 10.10 filed with this Report
Exhibit 10.11 filed with this Report
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Employment agreement between Jarett S.
Levan and BBX Capital Corporation
Employment agreement between Seth M.
Wise and BBX Capital Corporation
Employment agreement between Ray S.
Lopez and BBX Capital Corporation
Indenture between BXG Receivables Note
Trust 2012-A as Issuer, Bluegreen
Corporation as Servicer, Vacation Trust, Inc.
as Club Trustee, Concord Servicing
Corporation as Backup Servicer and U.S.
Bank National Association, as Indenture
Trustee, Paying Agent and Custodian, dated
as of August 15, 2012.
Sale Agreement by and among BRFC 2012-A
LLC as Depositor and BXG Receivables Note
Trust 2012-A as Issuer dated as of August 15,
2012
Transfer Agreement by and among Bluegreen
Corporation, BXG Timeshare Trust I as Seller
and BRFC 2012-A LLC as Depositor, dated
as of August 15, 2012
Purchase and Contribution Agreement by and
among Bluegreen Corporation, as Seller and
BRFC 2012-A LLC as Depositor, dated as of
August 15, 2012.
Note Purchase and Collateral Trust and
Security Agreement by and among Bluegreen
Corporation, Bluegreen Vacations Unlimited,
Inc., Bluegreen Resorts Managements, Inc.,
and TFRI 2013-1 LLC as Obligors,
Bluegreen Nevada, LLC as Guarantor, and
US National Bank as Collateral Agent, Note
Registrar and Paying Agent, and AIG Asset
Management (U.S.) LLC as Designated
Representative, dated March 26, 2013
BXG Receivables Note Trust 2013-A,
Standard Definitions
Indenture between BXG Receivables Note
Trust 2013-A, as Issuer, Bluegreen
Corporation, as Servicer, Vacation Trust, Inc.
as Club Trustee, Concord Servicing
Corporation, as Backup Servicer, and U.S.
Bank National Association, as Indenture
Trustee, Paying Agent and Custodian, dated
as of September 15, 2013
Sale Agreement by and among BRFC 2013-A
LLC, as Depositor, and BXG Receivables
Note Trust 2013-A, as Issuer, dated as of
September 15, 2013
Transfer Agreement by and among Bluegreen
Corporation, BXG Timeshare Trust I, as
Seller, and BRFC 2013-A LLC, as Depositor,
dated as of September 15, 2013
Purchase and Contribution Agreement by and
among Bluegreen Corporation, as Seller and
BRFC 2013-A LLC as Depositor, dated as of
September 15, 2013
Amended and Restated Purchase and
Contribution Agreement, dated as of
December 1, 2013, by and among Bluegreen
Corporation and Bluegreen Timeshare
Finance Corporation I
Amended and Restated Sale Agreement,
dated as of December 1, 2013, by and among
Bluegreen Timeshare Finance Corporation I
and BXG Timeshare Trust I
79
Exhibit 10.12 filed with this Report
Exhibit 10.13 filed with this Report
Exhibit 10.14 filed with this Report
Bluegreen Corporation's Form 8-K filed with the SEC
on September 14, 2012
Bluegreen Corporation's Form 8-K filed with the SEC
on September 14, 2012
Bluegreen Corporation's Form 8-K filed with the SEC
on September 14, 2012
Bluegreen Corporation's Form 8-K filed with the SEC
on September 14, 2012
Exhibit 10.1 of Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2013 filed on
May 15, 2013
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on October 2, 2013
Exhibit 10.2 of Registrant's Current Report on Form 8-
K filed on October 2, 2013
Exhibit 10.3 of Registrant's Current Report on Form 8-
K filed on October 2, 2013
Exhibit 10.4 of Registrant's Current Report on Form 8-
K filed on October 2, 2013
Exhibit 10.5 of Registrant's Current Report on Form 8-
K filed on October 2, 2013
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
Exhibit 10.2 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
10.36
10.37
10.38
10.39
Fifth Amended and Restated Indenture, dated
as of December 1, 2013, among BXG
Timeshare Trust I, Bluegreen Corporation,
Vacation Trust, Inc., Concord Servicing
Corporation, U.S. Bank National Association,
Branch Banking and Trust Company and DZ
Bank AG
Fifth Amended and Restated Note Funding
Agreement, dated as of December 1, 2013, by
and among BXG Timeshare Trust I,
Bluegreen Corporation, Bluegreen Timeshare
Finance Corporation I, the purchasers from
time to time parties thereto, Branch Banking
and Trust Company and DZ Bank AG
Amended and Restated Trust Agreement,
dated as of December 17, 2013, by and
among Bluegreen Timeshare Finance
Corporation I, GSS Holdings, Inc., and
Wilmington Trust Company
Sixth Amended and Restated Standard
Definitions
Credit Agreement dated November 5, 2014,
among Bluegreen Corporation, as Borrower,
Fifth Third Bank, as Administrative Agent
and L/C Issuer, and Guarantors and Lenders
party thereto
Indenture, dated as of January 15, 2015,
between BXG Receivables Note Trust 2015-
A, as Issuer, Bluegreen Corporation, as
Servicer, Vacation Trust, Inc. as Club Trustee,
Concord Servicing Corporation, as Backup
Servicer, and U.S. Bank National Association,
as Indenture Trustee, Paying Agent and
Custodian
Sale Agreement, dated as of January 15,
2015, by and among BRFC 2015-A LLC, as
Depositor, and BXG Receivables Note Trust
2015-A, as Issuer
Transfer Agreement, dated as of January 15,
2015, by and among Bluegreen Corporation,
BXG Timeshare Trust I, as Seller, and BRFC
2015-A LLC, as Depositor
Purchase and Contribution Agreement, dated
as of January 15, 2015, by and among
Bluegreen Corporation, as Seller, and BRFC
2015-A LLC, as Depositor
BXG Receivables Note Trust 2015-A,
Standard Definitions
Second Amended and Restated Secured
Promissory Note dated June 25, 2015, by and
among Bluegreen Vacations Unlimited, Inc.,
as Borrower, and Pacific Western Bank, as
Lender
Second Amendment to Amended and
Restated Loan and Security Agreement dated
June 25, 2015, by and among Bluegreen
Corporation, as Borrower, and Pacific
Western Bank, as Lender
Third Amended and Restated Revolving
Promissory Note (Hypothecation Facility)
dated June 30, 2015, by and among
Bluegreen / Big Cedar Vacations, LLC, as
Borrower, and National Bank of Arizona, as
Lender
80
Exhibit 10.3 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
Exhibit 10.4 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
Exhibit 10.5 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
Exhibit 10.6 of Registrant's Current Report on Form 8-
K filed on December 23, 2013
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on November 10, 2014
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on February 3, 2015
Exhibit 10.2 of Registrant's Current Report on Form 8-
K filed on February 3, 2015
Exhibit 10.3 of Registrant's Current Report on Form 8-
K filed on February 3, 2015
Exhibit 10.4 of Registrant's Current Report on Form 8-
K filed on February 3, 2015
Exhibit 10.5 of Registrant's Current Report on Form 8-
K filed on February 3, 2015
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on June 30, 2015
Exhibit 10.2 of Registrant's Current Report on Form 8-
K filed on June 30, 2015
Exhibit 10.1 of Registrant's Current Report on Form 8-
K filed on July 7, 2015
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
First Amended and Restated Loan and
Security Agreement (Hypothecation Facility)
dated June 30, 2015, by and among
Bluegreen / Big Cedar Vacations, LLC, as
Borrower and National Bank of Arizona, as
Lender
First Amended and Restated Promissory Note
(Inventory Loan) dated June 30, 2015, by and
among Bluegreen / Big Cedar Vacations,
LLC, as Borrower, and National Bank of
Arizona, as Lender
First Amended and Restated Loan Agreement
(Inventory Loan) dated June 30, 2015, by and
among Bluegreen / Big Cedar Vacations,
LLC, as Borrower, and National Bank of
Arizona, as Lender
Loan Agreement and Promissory Note, dated
April 17, 2015, between BFC Financial
Corporation and Bluegreen Specialty Finance,
LLC
Tax Sharing Agreement dated as of May 8,
2015, by and among BFC Financial
Corporation, BBX Capital and Bluegreen
Indenture dated as of March 17, 2016,
between BXG Receivables Note Trust 2016-
A, as Issuer, Bluegreen Corporation, as
Servicer, Vacation Trust, Inc., as Club
Trustee, Concord Servicing Corporation, as
Backup Servicer, and U.S. Bank National
Association, as Indenture Trustee, Paying
Agent and Custodian
Sale Agreement, dated as of March 17, 2016,
by and among BRFC 2016-A LLC, as
Depositor, and BXG Receivables Note Trust
2016-A, as Issuer
Transfer Agreement, dated as of March 17,
2016, by and among Bluegreen Corporation,
BXG Timeshare Trust I, as Seller, and BRFC
2016-A LLC, as Depositor
Purchase and Contribution Agreement, dated
as of March 17, 2016, by and among
Bluegreen Corporation, as Seller, and BRFC
2016-A LLC, as Depositor
Exhibit 10.2 of Registrant's Current Report on Form 8-
K filed on July 7, 2015
Exhibit 10.3 of Registrant's Current Report on Form 8-
K filed on July 7, 2015
Exhibit 10.4 of Registrant's Current Report on Form 8-
K filed on July 7, 2015
Exhibit (b)(1) to Amendment No. 2 of the Schedule
TO-T filed by Registrant with the Securities and
Exchange Commission on April 22, 2015
Exhibit 10.2 of Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2013 filed on
May 15, 2013
Exhibit 10.1 to Registrant's Current Report on Form 8-
K filed on March 23, 2016
Exhibit 10.2 to Registrant's Current Report on Form 8-
K filed on March 23, 2016
Exhibit 10.3 to Registrant's Current Report on Form 8-
K filed on March 23, 2016
Exhibit 10.4 to Registrant's Current Report on Form 8-
K filed on March 23, 2016
10.49
BXG Receivables Note Trust 2016-A,
Standard Definitions
Exhibit 10.5 to Registrant's Current Report on Form 8-
K filed on March 23, 2016
Amended and Restated Credit Agreement
dated as of December 16, 2016, by and
among Bluegreen Corporation, as Borrower
and Fifth Third Bank, as Administrative
Agent and L/C Issuer
Amended and Restated Security Agreement,
dated as of December 16, 2016, by and
among Bluegreen Corporation, as Borrower,
Bluegreen Vacations Unlimited, Inc. and
Bluegreen Resorts Management, Inc. as
Grantors, and Fifth Third Bank, as
Administrative Agent
Ratio of Earnings to Fixed Charges
Subsidiaries of the Registrant
Consent of Grant Thornton LLP
Consent of PricewaterhouseCoopers LLP
Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
10.50
10.51
12.1
21.1
23.1
23.2
31.1
31.2
81
Exhibit 10.1 to Registrant's Current Report on Form 8-
K filed on December 22, 2016
Exhibit 10.2 to Registrant's Current Report on Form 8-
K filed on December 22, 2016
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
32.1
32.2
Certification of Chief Executive Officer
pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Certification of Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Furnished with this Report
Furnished with this Report
101.INS XBRL Instance Document
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Schema
Document
XBRL Taxonomy Extension Calculation
Linkbase Document
XBRL Taxonomy Extension Definition
Linkbase Document
XBRL Taxonomy Extension Labels Linkbase
Document
XBRL Taxonomy Extension Presentation
Linkbase Document
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
Filed with this Report
82
Schedule III – Real Estate Investments and Accumulated Depreciation
BBX Capital Corporation
As of December 31, 2016
(Dollars in thousands)
Initial Costs
Building and
Capitalized
Costs
Subsequent
to
Property
Land Improvements Acquisition Other
Depreciable
Year of
Foreclosure
Lives
Total Accumulated
Cost
(1)
Depreciation Construction Month/Year
RoboVault $ 1,590
6,310
Villas San
Michele
880
5,260
$ 2,470
11,570
-
-
-
-
7,900
1,207
2009
4/2013
-
6,140
115
2008
9/2013
- 14,040
1,322
(1) The aggregate cost for federal income tax purposes is $19.5 million.
(Years)
40
40
The following table presents the changes in BBX Capital’s real estate investments for the year ended
December 31, 2016:
(in thousands)
Balance at December 31, 2015
Depreciation
Transfer to property and equipment
Balance at December 31, 2016
$
$
Total
Costs
Accumulated
Depreciation
7,900
-
6,140
14,040
840
367
115
1,322
83
Schedule IV – Mortgage Loans on Real Estate
BBX Capital Corporation
As of December 31, 2016
(Dollars in thousands)
Interest Final
Periodic
Face Carrying
Principal
Amount of
Loans
Subject
to
Delinquent
Rate Maturity Payment Prior AmountAmount of Principal
of
Number
of
Loans
Description
(1)
Date (2) Terms
Liens
Loans Loans (3) or Interest
71 First-lien 1-4 Family (4)
5.30% 11/9/2033 Monthly $
- 23,079
14,167
16,726
43 Second lien -Consumer
3.99% 12/14/2017 Monthly
8,468
4,466
1,800
841
12 Small Business Real Estate
6.79% 5/11/2025 Monthly
-
2,724
2,284
Large Balance Commercial
Real Estate Loans
1 Marina
1 Land
Total Mortgage Loans
2.45% 1/1/2018 Monthly
4.00% 12/31/2016 Maturity
-
-
4,189
3,985
1,894
3,985
$ 8,468 38,443
24,130
21,552
-
-
3,985
(1) Represents weighted average interest rates for mortgage loans grouped by category when there is more
than one loan in the category.
(2) Represents weighted average maturity dates for mortgage loans grouped by category when there is
more than one loan in the category.
(3) The aggregate cost for federal income tax purposes was $27.4 million.
(4) The Company does not own the servicing on these loans.
The following table presents the changes in the Company’s mortgage loans for the year ended December 31, 2015
(in thousands):
Balance at December 31, 2015
Advances on existing mortgages
Collections of principal
Foreclosures
Costs of mortgages sold
Balance at December 31, 2016
$
$
43,545
-
(14,761)
(4,807)
-
23,977
84
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BBX CAPITAL CORPORATION
March
Levan
Board
14,
2017
By:
/s/
Alan
B.
Alan B. Levan, Chairman of the
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Alan B. Levan
Alan B. Levan
/s/ John E. Abdo
John E. Abdo
/s/ Jarett S. Levan
Jarett S. Levan
/s/ Seth M. Wise
Seth M. Wise
/s/ Raymond S. Lopez
Raymond S. Lopez
/s/Norman H. Becker
Norman H. Becker
/s/Steven M. Coldren
Steven M. Coldren
/s/ Darwin Dornbush
Darwin Dornbush
/s/Willis N. Holcombe
Willis N. Holcombe
/s/ Oscar J. Holzmann
Oscar J. Holzmann
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
Chairman of the Board and Chief Executive Officer
Vice Chairman of the Board
President and Director
Executive Vice President and Director
Executive Vice President, Chief Financial Officer, Chief
Accounting Officer and Risk Officer
Director
Director
Director
Director
Director
85
/s/ Alan Levy
Alan Levy
/s/ Joel Levy
Joel Levy
/s/ William Nicholson
William Nicholson
/s/Tony P. Segreto
Tony P. Segreto
/s/ Neil A. Sterling
Neil A. Sterling
Director
Director
Director
Director
Director
/s/Charlie C. Winningham, II
Charlie C. Winningham, II
Director
86
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
March 14, 2017
Exhibit 4.1
Exhibit 4.2
Alan B. Levan
BBX Capital Corporation
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( this “Agreement”), is signed as of
November 12, 2012, by and between BBX Capital Corporation, a Florida corporation (the
“Company”) and Alan B. Levan (the “Executive”) but effective as of September 30, 2012
(the “Effective Date”).
WHEREAS, the Company desires to employ the Executive as Chairman and
Chief Executive Officer and the Executive desires to accept such employment, all upon the
terms and conditions set forth in this Agreement;
WHEREAS, the Executive has experience and expertise in the Company’s
business (t h e “Business”). By virtue of his employment with Company, and the
predecessors from which it emerged, the Executive has become familiar with and possesses
knowledge of the manner, methods, trade secrets and other confidential information
pertaining to the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth in this Agreement, the Company and the Executive agree as follows:
1.
Recitals; Defined Terms . The above recitals are true and correct and are
incorporated herein by reference. When used in this Agreement, a “Change in Control”
shall be deemed to occur if:
1.1
any “person” (as such term is utilized in Section 13(d) and Section
14(d)(2) of the Securities and Exchange Act), including without limitation any “group” (as
such term is utilized in Section 13(d)(3) of the Exchange Act), who is not, on the date of
this Agreement, either (1) an affiliate of the Company, or (2) the beneficial owner of 10%
or more of the Company’s issued and outstanding common stock, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of
securities of the Company (or any successor thereto) representing more than 33% of the
votes that may be cast for the election of directors of the Company, or any successor
company as the case may be; or
1.2
any person who is not, on the date of this Agreement an affiliate of
the Company, shall become a shareholder of the Company holding fifty percent or more of
the outstanding stock of any class of the Company; or
1.3
as the result of, or in connection with, any cash or other tender
offer, or exchange offer, merger, consolidation or other business combination, or any
combination of any one or more of the foregoing transactions, the persons who were
directors of the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the directors of the
Company, or any successor thereto; or as a result of a sale of all or substantially all of the
assets of the Company, or any liquidation, dissolution, bankruptcy, assignment for the
benefit of creditors (whether such action is voluntary or involuntary by the Company), or
any similar transaction or any combination of any one or more of the foregoing or similar
transactions, the persons who were directors of the Company immediately prior to the
consummation of any such transaction or combination of transactions shall cease to
constitute a majority of the directors of the successor to the Company.
2.
Employment Term.
The term of the Executive's employment (the
"Term") begins on the Effective Date and concludes three (3) years from the Effective Date;
provided, however, that the Term shall be automatically renewed for successive one- year
periods commencing on the third anniversary of the Effective Date unless: (i) either the
Company or the Executive, not fewer than six (6) months prior to the expiration of the initial
three year term, provides notice of intention not to renew the Agreement for a one year term
or, during any one year extension of the initial term, provides notice of intention not to
renew not fewer than ninety (90) days prior to the expiration of any such one year term, (ii)
the Executive terminates this Agreement for Good Reason (defined below), (iii) the
Company terminates this Agreement for Cause (defined below) or (iv) this Agreement is
otherwise terminated in accordance with its provisions.
3.
Services.
3.1
Office and Duties . During the Term, the Executive shall
serve as Chairman and Chief Executive Officer of the Company, subject to the terms of this
Agreement, with such duties, authority and responsibility as are commensurate with such
position, subject to oversight and direction of the Company’s board of directors (the
“Board”). In exercising his duties and responsibilities, the Executive shall have all the power
and authority necessary to fulfill and discharge his duties and responsibilities and shall abide
by lawful directions given by the Board. The Executive shall be responsible for such
additional duties commensurate with his position not materially inconsistent with the
foregoing as may be reasonably determined by the Board from time to time.
3.2
Best Efforts. During the Term, the Executive shall diligently
and competently devote his best efforts and energies to the Business and affairs of the
Company, and shall use his best efforts, skills and abilities to promote the interests of the
Company and otherwise to discharge his obligations under this Agreement; provided,
however, that nothing in this A greement shall restrict the Executive from serving in
executive capacities with any affiliated companies or pursuing interests in accordance with
historical practice.
4.
Compensation.
4.1
Annual Base Salary. During the Term, the Executive shall
receive a base salary at the initial annual rate of Seven Hundred Fifty Thousand Dollars
($750,000) (“Base Salary”), payable in accordance with the Company's normal payroll
practices or at such other reasonable intervals as may from time to time be used by the
Company for paying its other employees. The Executive will be entitled to annual salary
reviews and as such the Executive’s Base Salary may be increased by the Company’s
compensation committee (the “Compensation Committee”) from time to time during the
term of this Agreement but shall not be reduced without his written consent.
4.2
Annual Bonus. An annual bonus (the “Annual Bonus”) may
be paid to the Executive of up to 200% of Base Salary in the discretion of the Compensation
Committee. Such Annual Bonus amount shall include consideration of certain performance
factors as determined by
the Compensation Committee. Payments of Annual Bonus amounts to the Executive shall be
made by March 31 of each year for the prior year’s performance. The Executive’s Annual
Bonus opportunity shall commence in 2012, payable in cash by March 31, 2013 for 2012
performance.
4.3
Discretionary Bonus Payable Currently . Concurrent with the
signing of this Agreement the Executive shall be paid a discretionary bonus of $1,100,000.
4.4
Long Term Incentive Compensation .
4.4.1
Grant. Concurrent with the signing of this
Agreement, Executive shall be granted 376,802 shares subject to : (i) the definitions, terms,
and conditions of the stock plan used by the Company (the “ Plan”) by which their award is
authorized, (ii) the restrictions and conditions noted below, and (iii) annual vesting in
accordance with the following schedule (the “Restricted Shares”) , which is measured from
the Effective Date:
12 Months
24 Months
36 Months
48 Months
94,201
The Executive also shall be entitled to participate in such other plans for granting equity
(e.g., future grants of restricted stock awards (“RSAs”) or other stock awards) as may
subsequently be approved by the Compensation Committee .
94,200
94,201
94,200
These Restricted Shares are granted on the conditions that Executive remains
employed by the Company through and including the respective vesting periods and that the
Board has not terminated the employment of the Executive for “Cause,” as the term is
defined in Section 6. 2, below.
4.4.2
Carried Interest Compensation Plan. In addition to the
compensation otherwise provided herein, the Compensation Committee will also work with
its Compensation Consultant and the Executive Management Team to develop a Carried
Interest Compensation Plan (a “Carried Interest Plan”) consistent with the traditional private
equity pay model. The Board has sole discretion and authorization to create such Carried
Interest Plan.
5.
Reimbursement of Expenses; Benefits .
5.1
Reimbursement of Expenses .
Upon submission of
appropriate documentation in accordance with the C ompany’s policy, the Executive shall be
entitled to reimbursement for all reasonable, out-of-pocket expenses incurred by him during
the Term in connection with the proper and efficient discharge of his duties hereunder,
including, without limitation, all reasonable expenses incurred by the Executive for travel to
promote the interests of the Company, as well as reasonable expenses for meals, hotels or
other accommodations, and other customary items during any such trips, including existing
expense reimbursement arrangements and practices.
5.2
Employee Benefit Plans and Programs . During the Term, the
Executive shall be entitled to participate in the Company’s employee benefit plans and
programs, including such 401(k) plans, health insurance and welfare plans as the Company
may adopt for employees
generally or for the Company’s executives , including existing plans and programs under
existing practices.
5.3
Vacations. The Executive shall be entitled to paid vacation
during each calendar year in such amounts as are commensurate with his position and
company policy, however, no less than existing practices.
6.
Termination. The Executive's employment under this Agreement may be
terminated by the Company or the Executive without any breach of this Agreement only
under the circumstances set forth in ensuing Sections 6.1 through 6. 4 and upon provision of
the applicable compensation set forth in Section 7 :
6.1
Death. This Agreement and the Executive's employment
under this Agreement shall terminate immediately and automatically upon the Executive's
death.
6.2
The Company may
By Company for Cause.
terminate the Executive's employment under this Agreement for Cause (as hereinafter
defined). “Cause,” as to the Executive, shall mean: (a) committing fraud against the
Company or embezzlement of Company property; (b) being convicted of a felony or any
other crime that involves moral turpitude under applicable laws of the United States or any
state thereof; (c) an action or omission of the Executive which constitutes a willful and
material breach of this Agreement which is not the result of the Executive's death or
disability and which is not cured within fifteen (15) days after receipt by the Executive of
written notice of the same from the Board. However, an adverse result in the current SEC
action, unless it results in an officer and director bar, shall not be a basis for termination for
Cause.
6.3
By Company Without Cause . The occurrence of any of the
following shall be deemed to be a termination by the Company of the Executive's
employment under this Agreement “Without Cause:” (a) any action taken by the Company
to terminate the Executive's employment other than for Cause , including providing notice of
intention not to renew this Agreement, which termination shall only be effective upon
written notice to the Executive; (b) any breach of this Agreement by the Company ; or (c)
upon the Disability (defined below) of the Executive . Failure of the Executive to timely
terminate his employment upon the occurrence of an event described in subsection (b),
above shall not result in a waiver of any right the Executive may have to terminate his
employment based upon any future occurrence. “Disability” shall mean any incapacity or
disability of the Executive which renders the Executive mentally or physically unable to
perform his duties under this Agreement as determined in accordance with Company
policy. ermination due to Disability shall be deemed to have occurred upon the first day of
the month following the determination of Disability as defined in the preceding sentence.
6.4
By Executive for Good Reason. The occurrence of any of the
following shall be deemed to be grounds for the Executive to terminate employment for
Good Reason:. (a) any action taken by the Company to materially diminish, or attempt to
materially diminish, the duties, responsibilities or authority of the Executive if, within sixty
(60) days after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action (s); or (b )
any action taken by the Company to materially change, or attempt to materially change the
Executive's title or his position in the hierarchy of the Company if, within sixty (60) days
after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action(s) ; or (c)
any breach of this Agreement by the Company .
Failure of the Executive to timely terminate his employment upon the occurrence of an event
described in subsections (a), (b), or (c) above shall not result in a waiver of any right the
Executive may have to terminate his employment based upon any future occurrence.
7.
If
Payments After Termination .
this Agreement or the Executive's
employment hereunder are terminated for the reasons set forth in Section 6.1 hereof, then the
Executive's estate shall receive the annual Base Salary through the date of termination in
accordance with the terms of this Agreement and the prorated portion of the Annual Bonus,
through the
to be calculated based on the average bonus paid over the prior two (2) years ,
date of termination in accordance with the terms of this Agreement. If this Agreement or the
Executive's employment hereunder are terminated for the reasons set forth in Sections 6. 2
hereof, then the Executive shall receive the Base Salary through the date of termination in
accordance with the terms of this Agreement. If this Agreement is terminated pursuant to
Section 6.3 or 6. 4 hereof, then the Executive shall receive:
(a) the Base Salary through the date of termination in accordance with the
terms of this Agreement, and the prorated portion of the Annual Bonus, to be calculated
based on the average bonus paid over the prior two (2) years, during the fiscal year and
through the date of termination plus;
(b) a severance payment in an amount that equals 2.00 (or 2.99 times if
within 2 years of a Change in Control ) times the Executive’s a nnual Base Salary and 2.00
(or 2.99 times if within 2 years of a Change in Control) times Annual Bonus opportunity at
the time of the termination; plus
(c) accelerated vesting of granted but not vested Incentive Stock Options and
Restricted Shares subject to the definitions, terms, and conditions of the Plan or plan by
which their award is authorized; plus
(d) continuation of health insurance, life insurance, dental insurance and
other benefits received at the time of separation from the Company through the two (2)
years (or three (3) years if within 2 years of a Change in Control ) following the year in
which termination occurs.
Subsequent to Termination, the Executive shall not be entitled to receive any further
compensation or benefits from the Company, except as expressly provided by this
Agreement. A condition to the Company’s obligation to provide the severance payments and
benefits provided by this Agreement is that Executive complies with the obligations of non-
competition, non-solicitation of customers , confidentiality and non-disclosure referenced in
Section 8 of this Agreement and provided for by Florida law and execute a general release in
a form acceptable to the Board.
8.
Non-Competition; Non-Disclosure , Confidentiality and Non-Solicitation of
Customers. Subsequent to the execution of this Agreement, Executive and Compensation
Committee agree to sign a Non-Competition, Non-Disclosure, Confidentiality, and Non-
Solicitation of Customers in term and scope acceptable to both parties.
9 .
Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's estate or
beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
10.
Notices. All notices, requests, demands or other communications by the
terms hereof required or permitted to be given by one party to another shall be given in
writing by personal delivery, by facsimile or by regular mail, postage prepaid, addressed to
such other party or delivered to such other party as follows:
If to the Company:
BBX Capital Corporation
c/o Compensation Committee Chair
2100 West Cypress Creek Road
Fort Lauderdale, FL 33309
Telephone: (954) 940-5020
If to the Executive:
Alan B. Levan
P.O. Box 39002
Fort Lauderdale, FL 33303
or at such other address or facsimile number as may be given by any of them to the others in
writing from time to time and such notices, requests, demands or other communication shall
be deemed to have been received when hand delivered, on the day after the date sent by
facsimile (with receipt confirmed) or, if mailed, the fourth day following the day of the
mailing thereof; provided that if any such notice, request, demand or other communication
shall have been mailed and if regular mail service shall be interrupted by strikes or other
irregularities, such notice, request, demand or other communication shall be deemed to have
been received on the fourth business day following the resumption of normal mail service.
11.
Prevailing Party
. In the event of any dispute with regard to
this Agreement, the prevailing party shall be entitled to receive from the non-prevailing party
and the non-prevailing party shall pay upon demand all reasonable fees and expenses of
counsel for the prevailing party.
12.
Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties, and merge and supersede all prior discussions,
agreements and understandings of every kind and nature among them as to the subject matter
hereof.
13.
Amendments to Agreement . This Agreement shall not be amended except
by a writing signed by each party to the Agreement, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing signed by
each party to the Agreement.
14.
U.S. Dollars. All dollar amounts in this Agreement are stated in United
States Dollars.
15.
Governing Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the law of the State of Florida, without
giving effect to principles of conflicts of laws. Any controversies of any nature whatsoever
arising under this Agreement shall be subject to the exclusive jurisdiction of the courts of
Broward County, Florida, which shall be the exclusive jurisdiction and venue for any
disputes, actions or lawsuits arising out of or relating to this Agreement. The parties to this
Agreement irrevocably waive to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any court in respect
hereof, brought in Broward County, Florida and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought in an
inconvenient forum.
17.
Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Executive without the prior written
consent of the Company. This Agreement may be assigned by the Company in connection
with the sale, transfer or other disposition of all or substantially all of the Company's assets
or business.
18.
Pronouns. Whenever the context requires, the use in this Agreement of a
pronoun of any gender shall be deemed to refer also to any other gender, and the use of the
singular shall be deemed to refer also to the plural.
19.
Headings. The headings of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
20.
Calculation of Time Periods . When calculating the period of time within
which or following which any act is to be done or step taken pursuant to this Agreement, the
date which is the reference date in calculating such period shall be excluded.
21.
Execution in Counterparts. This Agreement may be executed in several
counterparts, by original or facsimile signature, each of which so executed shall be deemed
to be an original and such counterparts together shall be deemed to be one and the same
instrument, which shall be deemed to be executed as of the date first above written.
23.
Further Assurances . The parties hereto shall sign such further documents
and do and perform and cause to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full effect to this Agreement and
every party thereof.
24.
Survival. Any termination of this Agreement shall not affect the ongoing
provisions of this Agreement, which shall survive such termination in accordance with their
terms.
25.
Severability. The invalidity or unenforceability, in whole or in part, or any
covenant, promise or undertaking, or any section, subsection, paragraph, sentence, clause,
phrase or word or of
any provision of this Agreement shall not affect the validity or enforceability of the
remaining portions thereof.
26.
Participation of Parties; Construction
. The parties hereto acknowledge
that this Agreement and all matters contemplated herein have been negotiated between both
of the parties hereto and their respective legal counsel and that both parties have participated
in the drafting and preparation of this Agreement from the commencement of negotiations at
all times through the execution hereof. The parties hereto acknowledge that they have each
read this Agreement and understand the effect of its provisions. Accordingly, this Agreement
shall be interpreted and construed without reference to any rule requiring that this Agreement
be interpreted or construed against the party causing it to be drafted.
27.
Independent Counsel
. The Executive acknowledges that counsel to the
Company has not represented him nor provided him with legal or other advice in connection
with the transactions contemplated by this Agreement and that he has been urged to seek
independent legal, tax and financial advice in order to analyze the risks and merits of the
transactions contemplated by this Agreement.
28.
Director and Officer Insurance; Indemnification. The Company shall
indemnify the Executive to the same extent as it indemnifies its other Named Executive
Officers, and the Company shall provide coverage for the Executive under its policies of
Director’s and Officer’s insurance as the same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph of this Agreement.
THE COMPANY:
BBX CAPITAL CORPORATION,
a Florida corporation
By:/s/ Steven Coldren
Steve Coldren, Compensation Committee
Chairman
THE EXECUTIVE:
By: /s/ Alan B. Levan
Alan B. Levan
John E. Abdo
BBX Capital Corporation
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( this “Agreement”), is signed as of
November 12, 2012, by and between BBX Capital Corporation, a Florida corporation (the
“Company”) and John E. Abdo (the “Executive”) but effective as of September 30, 2012 (the
“Effective Date”).
WHEREAS, the Company desires to employ the Executive as Vice Chairman
and the Executive desires to accept such employment, all upon the terms and conditions set
forth in this Agreement;
WHEREAS, the Executive has experience and expertise in the Company’s
business (t h e “Business”). By virtue of his employment with Company, and the
predecessors from which it emerged, the Executive has become familiar with and possesses
knowledge of the manner, methods, trade secrets and other confidential information
pertaining to the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth in this Agreement, the Company and the Executive agree as follows:
1.
Recitals; Defined Terms . The above recitals are true and correct and are
incorporated herein by reference. When used in this Agreement, a “Change in Control”
shall be deemed to occur if:
1.1
any “person” (as such term is utilized in Section 13(d) and Section
14(d)(2) of the Securities and Exchange Act), including without limitation any “group” (as
such term is utilized in Section 13(d)(3) of the Exchange Act), who is not, on the date of
this Agreement, either (1) an affiliate of the Company, or (2) the beneficial owner of 10%
or more of the Company’s issued and outstanding common stock, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of
securities of the Company (or any successor thereto) representing more than 33% of the
votes that may be cast for the election of directors of the Company, or any successor
company as the case may be; or
1.2
any person who is not, on the date of this Agreement an affiliate of
the Company, shall become a shareholder of the Company holding fifty percent or more of
the outstanding stock of any class of the Company; or
1.3
as the result of, or in connection with, any cash or other tender
offer, or exchange offer, merger, consolidation or other business combination, or any
combination of any one or more of the foregoing transactions, the persons who were
directors of the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the directors of the
Company, or any successor thereto; or as a result of a sale of all or substantially all of the
assets of the Company, or any liquidation, dissolution, bankruptcy, assignment for the
benefit of creditors (whether such action is voluntary or involuntary by the Company), or
any similar transaction or any combination of any one or more of the foregoing or similar
transactions, the persons who were directors of the Company immediately prior to the
consummation of any such transaction or combination of transactions shall cease to
constitute a majority of the directors of the successor to the Company.
2.
Employment Term.
The term of the Executive's employment (the
"Term") begins on the Effective Date and concludes three (3) years from the Effective Date;
provided, however, that the Term shall be automatically renewed for successive one- year
periods commencing on the third anniversary of the Effective Date unless: (i) either the
Company or the Executive, not fewer than six (6) months prior to the expiration of the initial
three year term, provides notice of intention not to renew the Agreement for a one year term
or, during any one year extension of the initial term, provides notice of intention not to
renew not fewer than ninety (90) days prior to the expiration of any such one year term, (ii)
the Executive terminates this Agreement for Good Reason (defined below), (iii) the
Company terminates this Agreement for Cause (defined below) or (iv) this Agreement is
otherwise terminated in accordance with its provisions.
3.
Services.
3.1
Office and Duties . During the Term, the Executive shall
serve as Vice Chairman of the Company, subject to the terms of this Agreement, with such
duties, authority and responsibility as are commensurate with such position, subject to
oversight and direction of the Company’s board of directors (the “ Board”). In exercising his
duties and responsibilities, the Executive shall have all the power and authority necessary to
fulfill and discharge his duties and responsibilities and shall abide by lawful directions given
by the Board. The Executive shall be responsible for such additional duties commensurate
with his position not materially inconsistent with the foregoing as may be reasonably
determined by the Board from time to time.
3.2
Best Efforts. During the Term, the Executive shall diligently
and competently devote his best efforts and energies to the Business and affairs of the
Company, and shall use his best efforts, skills and abilities to promote the interests of the
Company and otherwise to discharge his obligations under this Agreement; provided,
however, that nothing in this A greement shall restrict the Executive from serving in
executive capacities with any affiliated companies or pursuing interests in accordance with
historical practice.
4.
Compensation.
4.1
Annual Base Salary. During the Term, the Executive shall
receive a base salary at the initial annual rate of Seven Hundred Fifty Thousand Dollars
($750,000) (“Base Salary”), payable in accordance with the Company's normal payroll
practices or at such other reasonable intervals as may from time to time be used by the
Company for paying its other employees. The Executive will be entitled to annual salary
reviews and as such the Executive’s Base Salary may be increased by the Company’s
compensation committee (the “Compensation Committee”) from time to time during the
term of this Agreement but shall not be reduced without his written consent.
4.2
Annual Bonus. An annual bonus (the “Annual Bonus”) may
be paid to the Executive of up to 200% of Base Salary in the discretion of the Compensation
Committee. Such Annual Bonus amount shall include consideration of certain performance
factors as determined by the Compensation Committee. Payments of Annual Bonus amounts
to the Executive shall be made
by March 31 of each year for the prior year’s performance. The Executive’s Annual Bonus
opportunity shall commence in 2012, payable in cash by March 31, 2013 for 2012
performance.
4.3
Discretionary Bonus Payable Currently . Concurrent with the
signing of this Agreement the Executive shall be paid a discretionary bonus of $1,100,000.
4.4
Long Term Incentive Compensation .
4.4.1
Grant. Concurrent with the signing of this
Agreement, Executive shall be granted 376,802 shares subject to : (i) the definitions, terms,
and conditions of the stock plan used by the Company (the “ Plan”) by which their award is
authorized, (ii) the restrictions and conditions noted below, and (iii) annual vesting in
accordance with the following schedule (the “Restricted Shares”) , which is measured from
the Effective Date:
12 Months
24 Months
36 Months
48 Months
94,201
The Executive also shall be entitled to participate in such other plans for granting equity
(e.g., future grants of restricted stock awards (“RSAs”) or other stock awards) as may
subsequently be approved by the Compensation Committee .
94,201
94,200
94,200
These Restricted Shares are granted on the conditions that Executive remains
employed by the Company through and including the respective vesting periods and that the
Board has not terminated the employment of the Executive for “Cause,” as the term is
defined in Section 6. 2, below.
4.4.2
Carried Interest Compensation Plan. In addition to the
compensation otherwise provided herein, the Compensation Committee will also work with
its Compensation Consultant and the Executive Management Team to develop a Carried
Interest Compensation Plan (a “Carried Interest Plan”) consistent with the traditional private
equity pay model. The Board has sole discretion and authorization to create such Carried
Interest Plan.
5.
Reimbursement of Expenses; Benefits .
5.1
Reimbursement of Expenses .
Upon submission of
appropriate documentation in accordance with the C ompany’s policy, the Executive shall be
entitled to reimbursement for all reasonable, out-of-pocket expenses incurred by him during
the Term in connection with the proper and efficient discharge of his duties hereunder,
including, without limitation, all reasonable expenses incurred by the Executive for travel to
promote the interests of the Company, as well as reasonable expenses for meals, hotels or
other accommodations, and other customary items during any such trips, including existing
expense reimbursement arrangements and practices.
5.2
Employee Benefit Plans and Programs . During the Term, the
Executive shall be entitled to participate in the Company’s employee benefit plans and
programs, including such 401(k) plans, health insurance and welfare plans as the Company
may adopt for employees
generally or for the Company’s executives , including existing plans and programs under
existing practices.
5.3
Vacations. The Executive shall be entitled to paid vacation
during each calendar year in such amounts as are commensurate with his position and
company policy, however, no less than existing practices.
6.
Termination. The Executive's employment under this Agreement may be
terminated by the Company or the Executive without any breach of this Agreement only
under the circumstances set forth in ensuing Sections 6.1 through 6. 4 and upon provision of
the applicable compensation set forth in Section 7 :
6.1
Death. This Agreement and the Executive's employment
under this Agreement shall terminate immediately and automatically upon the Executive's
death.
6.2
The Company may
By Company for Cause.
terminate the Executive's employment under this Agreement for Cause (as hereinafter
defined). “Cause,” as to the Executive, shall mean: (a) committing fraud against the
Company or embezzlement of Company property; (b) being convicted of a felony or any
other crime that involves moral turpitude under applicable laws of the United States or any
state thereof; (c) an action or omission of the Executive which constitutes a willful and
material breach of this Agreement which is not the result of the Executive's death or
disability and which is not cured within fifteen (15) days after receipt by the Executive of
written notice of the same from the Board.
6.3
By Company Without Cause . The occurrence of any of the
following shall be deemed to be a termination by the Company of the Executive's
employment under this Agreement “Without Cause:” (a) any action taken by the Company
to terminate the Executive's employment other than for Cause , including providing notice of
intention not to renew this Agreement, which termination shall only be effective upon
written notice to the Executive; (b) any breach of this Agreement by the Company ; or (c)
upon the Disability (defined below) of the Executive . Failure of the Executive to timely
terminate his employment upon the occurrence of an event described in subsection (b),
above shall not result in a waiver of any right the Executive may have to terminate his
employment based upon any future occurrence. “Disability” shall mean any incapacity or
disability of the Executive which renders the Executive mentally or physically unable to
perform his duties under this Agreement as determined in accordance with Company
policy. ermination due to Disability shall be deemed to have occurred upon the first day of
the month following the determination of Disability as defined in the preceding sentence.
6.4
By Executive for Good Reason. The occurrence of any of the
following shall be deemed to be grounds for the Executive to terminate employment for
Good Reason:. (a) any action taken by the Company to materially diminish, or attempt to
materially diminish, the duties, responsibilities or authority of the Executive if, within sixty
(60) days after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action (s); or (b )
any action taken by the Company to materially change, or attempt to materially change the
Executive's title or his position in the hierarchy of the Company if,
within sixty (60) days after the Executive becomes aware of such action, the Executive
notifies the Company in writing and the Company does not immediately correct such
action(s); or (c) any breach of this Agreement by the Company .
Failure of the Executive to timely terminate his employment upon the occurrence of an event
described in subsections (a), (b), or (c) above shall not result in a waiver of any right the
Executive may have to terminate his employment based upon any future occurrence.
7.
If
Payments After Termination .
this Agreement or the Executive's
employment hereunder are terminated for the reasons set forth in Section 6.1 hereof, then the
Executive's estate shall receive the annual Base Salary through the date of termination in
accordance with the terms of this Agreement and the prorated portion of the Annual Bonus,
to be calculated based on the average bonus paid over the prior two (2) years ,
through the
date of termination in accordance with the terms of this Agreement. If this Agreement or the
Executive's employment hereunder are terminated for the reasons set forth in Sections 6. 2
hereof, then the Executive shall receive the Base Salary through the date of termination in
accordance with the terms of this Agreement. If this Agreement is terminated pursuant to
Section 6.3 or 6. 4 hereof, then the Executive shall receive:
(a) the Base Salary through the date of termination in accordance with the
terms of this Agreement, and the prorated portion of the Annual Bonus, to be calculated
based on the average bonus paid over the prior two (2) years, during the fiscal year and
through the date of termination plus;
(b) a severance payment in an amount that equals 2.00 (or 2.99 times if
within 2 years of a Change in Control ) times the Executive’s a nnual Base Salary and 2.00
(or 2.99 times if within 2 years of a Change in Control) times Annual Bonus opportunity at
the time of the termination; plus
(c) accelerated vesting of granted but not vested Incentive Stock Options and
Restricted Shares subject to the definitions, terms, and conditions of the Plan or plan by
which their award is authorized; plus
(d) continuation of health insurance, life insurance, dental insurance and
other benefits received at the time of separation from the Company through the two (2)
years (or three (3) years if within 2 years of a Change in Control ) following the year in
which termination occurs.
Subsequent to Termination, the Executive shall not be entitled to receive any further
compensation or benefits from the Company, except as expressly provided by this
Agreement. A condition to the Company’s obligation to provide the severance payments and
benefits provided by this Agreement is that Executive complies with the obligations of non-
competition, non-solicitation of customers , confidentiality and non-disclosure referenced in
Section 8 of this Agreement and provided for by Florida law and execute a general release in
a form acceptable to the Board.
8.
Non-Competition; Non-Disclosure , Confidentiality and Non-Solicitation of
Customers. Subsequent to the execution of this Agreement, Executive and Compensation
Committee agree to sign a Non-Competition, Non-Disclosure, Confidentiality, and Non-
Solicitation of Customers in term and scope acceptable to both parties.
9 .
Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's estate or
beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
10.
Notices. All notices, requests, demands or other communications by the
terms hereof required or permitted to be given by one party to another shall be given in
writing by personal
delivery, by facsimile or by regular mail, postage prepaid, addressed to such other party or
delivered to such other party as follows:
If to the Company:
BBX Capital Corporation
c/o Compensation Committee Chair
P.O. Box 39001
Fort Lauderdale, FL 33303
Telephone: (954) 940-5020
If to the Executive:
John E. Abdo
1350 NE 56th St.
Suite 200
Ft. Lauderdale, FL 33334
or at such other address or facsimile number as may be given by any of them to the others in
writing from time to time and such notices, requests, demands or other communication shall
be deemed to have been received when hand delivered, on the day after the date sent by
facsimile (with receipt confirmed) or, if mailed, the fourth day following the day of the
mailing thereof; provided that if any such notice, request, demand or other communication
shall have been mailed and if regular mail service shall be interrupted by strikes or other
irregularities, such notice, request, demand or other communication shall be deemed to have
been received on the fourth business day following the resumption of normal mail service.
11.
Prevailing Party
. In the event of any dispute with regard to
this Agreement, the prevailing party shall be entitled to receive from the non-prevailing party
and the non-prevailing party shall pay upon demand all reasonable fees and expenses of
counsel for the prevailing party.
12.
Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties, and merge and supersede all prior discussions,
agreements and understandings of every kind and nature among them as to the subject matter
hereof.
13.
Amendments to Agreement . This Agreement shall not be amended except
by a writing signed by each party to the Agreement, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing signed by
each party to the Agreement.
14.
U.S. Dollars. All dollar amounts in this Agreement are stated in United
States Dollars.
15.
Governing Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the law of the State of Florida, without
giving effect to principles of conflicts of laws. Any controversies of any nature whatsoever
arising under this Agreement shall be subject to the exclusive jurisdiction of the courts of
Broward County, Florida, which shall be the exclusive jurisdiction and venue for any
disputes, actions or lawsuits arising out of or relating to this
Agreement. The parties to this Agreement irrevocably waive to the fullest extent permitted
by law, any objection which they may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement, or any judgment
entered by any court in respect hereof, brought in Broward County, Florida and further
irrevocably waive any claim that any suit, action or proceeding brought in Broward County,
Florida, has been brought in an inconvenient forum.
17.
Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Executive without the prior written
consent of the Company. This Agreement may be assigned by the Company in connection
with the sale, transfer or other disposition of all or substantially all of the Company's assets
or business.
18.
Pronouns. Whenever the context requires, the use in this Agreement of a
pronoun of any gender shall be deemed to refer also to any other gender, and the use of the
singular shall be deemed to refer also to the plural.
19.
Headings. The headings of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
20.
Calculation of Time Periods . When calculating the period of time within
which or following which any act is to be done or step taken pursuant to this Agreement, the
date which is the reference date in calculating such period shall be excluded.
21.
Execution in Counterparts. This Agreement may be executed in several
counterparts, by original or facsimile signature, each of which so executed shall be deemed
to be an original and such counterparts together shall be deemed to be one and the same
instrument, which shall be deemed to be executed as of the date first above written.
23.
Further Assurances . The parties hereto shall sign such further documents
and do and perform and cause to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full effect to this Agreement and
every party thereof.
24.
Survival. Any termination of this Agreement shall not affect the ongoing
provisions of this Agreement, which shall survive such termination in accordance with their
terms.
25.
Severability. The invalidity or unenforceability, in whole or in part, or any
covenant, promise or undertaking, or any section, subsection, paragraph, sentence, clause,
phrase or word or of
any provision of this Agreement shall not affect the validity or enforceability of the
remaining portions thereof.
26.
Participation of Parties; Construction
. The parties hereto acknowledge
that this Agreement and all matters contemplated herein have been negotiated between both
of the parties hereto and their respective legal counsel and that both parties have participated
in the drafting and preparation of this Agreement from the commencement of negotiations at
all times through the execution hereof. The parties hereto acknowledge that they have each
read this Agreement and understand the effect of its provisions. Accordingly, this Agreement
shall be interpreted and
construed without reference to any rule requiring that this Agreement be interpreted or
construed against the party causing it to be drafted.
27.
Independent Counsel
. The Executive acknowledges that counsel to the
Company has not represented him nor provided him with legal or other advice in connection
with the transactions contemplated by this Agreement and that he has been urged to seek
independent legal, tax and financial advice in order to analyze the risks and merits of the
transactions contemplated by this Agreement.
28.
Director and Officer Insurance; Indemnification. The Company shall
indemnify the Executive to the same extent as it indemnifies its other Named Executive
Officers, and the Company shall provide coverage for the Executive under its policies of
Director’s and Officer’s insurance as the same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph of this Agreement.
THE COMPANY:
BBX CAPITAL CORPORATION,
a Florida corporation
By: /s/ Steven Coldren
Steve Coldren, Compensation Committee
Chairman
THE EXECUTIVE:
By: /s/ John E. Abdo
John E. Abdo
Jarett Levan
BBX Capital Corporation
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( this “Agreement”), is signed as of
November 12, 2012, by and between BBX Capital Corporation, a Florida corporation (the
“Company”) and Jarett Levan (the “Executive”) but effective as of September 30, 2012 (the
“Effective Date”).
WHEREAS, the Company desires to employ the Executive as President and
the Executive desires to accept such employment, all upon the terms and conditions set forth
in this Agreement;
WHEREAS, the Executive has experience and expertise in the Company’s
business (t h e “Business”). By virtue of his employment with Company, and the
predecessors from which it emerged, the Executive has become familiar with and possesses
knowledge of the manner, methods, trade secrets and other confidential information
pertaining to the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth in this Agreement, the Company and the Executive agree as follows:
1.
Recitals; Defined Terms . The above recitals are true and correct and are
incorporated herein by reference. When used in this Agreement, a “Change in Control”
shall be deemed to occur if:
1.1
any “person” (as such term is utilized in Section 13(d) and Section
14(d)(2) of the Securities and Exchange Act), including without limitation any “group” (as
such term is utilized in Section 13(d)(3) of the Exchange Act), who is not, on the date of
this Agreement, either (1) an affiliate of the Company, or (2) the beneficial owner of 10%
or more of the Company’s issued and outstanding common stock, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of
securities of the Company (or any successor thereto) representing more than 33% of the
votes that may be cast for the election of directors of the Company, or any successor
company as the case may be; or
1.2
any person who is not, on the date of this Agreement an affiliate of
the Company, shall become a shareholder of the Company holding fifty percent or more of
the outstanding stock of any class of the Company; or
1.3
as the result of, or in connection with, any cash or other tender
offer, or exchange offer, merger, consolidation or other business combination, or any
combination of any one or more of the foregoing transactions, the persons who were
directors of the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the directors of the
Company, or any successor thereto; or as a result of a sale of all or substantially all of the
assets of the Company, or any liquidation, dissolution, bankruptcy, assignment for the
benefit of creditors (whether such action is voluntary or involuntary by the Company), or
any similar transaction or any combination of any one or more of the foregoing or similar
transactions, the persons who were directors of the Company immediately prior to the
consummation of any such transaction or combination of transactions shall cease to
constitute a majority of the directors of the successor to the Company.
2.
Employment Term.
The term of the Executive's employment (the
"Term") begins on the Effective Date and concludes three (3) years from the Effective Date;
provided, however, that the Term shall be automatically renewed for successive one- year
periods commencing on the third anniversary of the Effective Date unless: (i) either the
Company or the Executive, not fewer than six (6) months prior to the expiration of the initial
three year term, provides notice of intention not to renew the Agreement for a one year term
or, during any one year extension of the initial term, provides notice of intention not to
renew not fewer than ninety (90) days prior to the expiration of any such one year term, (ii)
the Executive terminates this Agreement for Good Reason (defined below), (iii) the
Company terminates this Agreement for Cause (defined below) or (iv) this Agreement is
otherwise terminated in accordance with its provisions.
3.
Services.
3.1
Office and Duties . During the Term, the Executive shall
serve as President of the Company, subject to the terms of this Agreement, with such duties,
authority and responsibility as are commensurate with such position, subject to oversight and
direction of
the Company’s Chief Executive Officer. In exercising his duties and
responsibilities, the Executive shall have all the power and authority necessary to fulfill and
discharge his duties and responsibilities and shall abide by lawful directions given by the
Board. The Executive shall be responsible for such additional duties commensurate with his
position not materially inconsistent with the foregoing as may be reasonably determined by
the Board from time to time.
3.2
Best Efforts. During the Term, the Executive shall diligently
and competently devote his best efforts and energies to the Business and affairs of the
Company, and shall use his best efforts, skills and abilities to promote the interests of the
Company and otherwise to discharge his obligations under this Agreement; provided,
however, that nothing in this A greement shall restrict the Executive from serving in
executive capacities with any affiliated companies or pursuing interests in accordance with
historical practice.
4.
Compensation.
4.1
Annual Base Salary. During the Term, the Executive shall
receive a base salary at the initial annual rate of Three Hundred Seventy Five Thousand
Dollar ($375,000) (“Base Salary”), payable in accordance with the Company's normal
payroll practices or at such other reasonable intervals as may from time to time be used by
the Company for paying its other employees. The Executive will be entitled to annual salary
reviews and as such the Executive’s Base Salary may be increased by the Company’s
compensation committee (the “Compensation Committee”) from time to time during the
term of this Agreement but shall not be reduced without his written consent.
4.2
Annual Bonus. An annual bonus (the “Annual Bonus”) may
be paid to the Executive of up to 8 0% of Base Salary in the discretion of the Compensation
Committee. Such Annual Bonus amount shall include consideration of certain performance
factors as determined by the Compensation Committee. Payments of Annual Bonus amounts
to the Executive shall be made by March 31 of each year for the prior year’s performance.
The Executive’s Annual Bonus opportunity shall commence in 2012, payable in cash by
March 31, 2013 for 2012 performance.
4.3
Discretionary Bonus Payable Currently . Concurrent with the
signing of this Agreement the Executive shall be paid a discretionary bonus of $ 650,000.
4.4
Long Term Incentive Compensation .
4.4.1
Grant. Concurrent with the signing of this
Agreement, Executive shall be granted 188,401 shares subject to : (i) the definitions, terms,
and conditions of the stock plan used by the Company (the “ Plan”) by which their award is
authorized, (ii) the restrictions and conditions noted below, and (iii) annual vesting in
accordance with the following schedule (the “Restricted Shares”) , which is measured from
the Effective Date:
12 Months
24 Months
36 Months
48 Months
47,100
The Executive also shall be entitled to participate in such other plans for granting equity
(e.g., future grants of restricted stock awards (“RSAs”) or other stock awards) as may
subsequently be approved by the Compensation Committee .
47,100
47,100
47,100
These Restricted Shares are granted on the conditions that Executive remains
employed by the Company through and including the respective vesting periods and that the
Board has not terminated the employment of the Executive for “Cause,” as the term is
defined in Section 6. 2, below.
4.4.2
Carried Interest Compensation Plan. In addition to the
compensation otherwise provided herein, the Compensation Committee will also work with
its Compensation Consultant and the Executive Management Team to develop a Carried
Interest Compensation Plan (a “Carried Interest Plan”) consistent with the traditional private
equity pay model. The Board has sole discretion and authorization to create such Carried
Interest Plan.
5.
Reimbursement of Expenses; Benefits .
5.1
Reimbursement of Expenses .
Upon submission of
appropriate documentation in accordance with the C ompany’s policy, the Executive shall be
entitled to reimbursement for all reasonable, out-of-pocket expenses incurred by him during
the Term in connection with the proper and efficient discharge of his duties hereunder,
including, without limitation, all reasonable expenses incurred by the Executive for travel to
promote the interests of the Company, as well as reasonable expenses for meals, hotels or
other accommodations, and other customary items during any such trips, including existing
expense reimbursement arrangements and practices.
5.2
Employee Benefit Plans and Programs . During the Term, the
Executive shall be entitled to participate in the Company’s employee benefit plans and
programs, including such 401(k) plans, health insurance and welfare plans as the Company
may adopt for employees generally or for the Company’s executives, including existing
plans and programs under existing practices.
5.3
Vacations. The Executive shall be entitled to paid vacation
during each calendar year in such amounts as are commensurate with his position and
company policy, however, no less than existing practices.
6.
Termination. The Executive's employment under this Agreement may be
terminated by the Company or the Executive without any breach of this Agreement only
under the
circumstances set forth in ensuing Sections 6.1 through 6. 4 and upon provision of the
applicable compensation set forth in Section 7 :
6.1
Death. This Agreement and the Executive's employment
under this Agreement shall terminate immediately and automatically upon the Executive's
death.
6.2
The Company may
By Company for Cause.
terminate the Executive's employment under this Agreement for Cause (as hereinafter
defined). “Cause,” as to the Executive, shall mean: (a) committing fraud against the
Company or embezzlement of Company property; (b) being convicted of a felony or any
other crime that involves moral turpitude under applicable laws of the United States or any
state thereof; (c) an action or omission of the Executive which constitutes a willful and
material breach of this Agreement which is not the result of the Executive's death or
disability and which is not cured within fifteen (15) days after receipt by the Executive of
written notice of the same from the Board.
6.3
By Company Without Cause . The occurrence of any of the
following shall be deemed to be a termination by the Company of the Executive's
employment under this Agreement “Without Cause:” (a) any action taken by the Company
to terminate the Executive's employment other than for Cause , including providing notice of
intention not to renew this Agreement, which termination shall only be effective upon
written notice to the Executive; (b) any breach of this Agreement by the Company ; or (c)
upon the Disability (defined below) of the Executive . Failure of the Executive to timely
terminate his employment upon the occurrence of an event described in subsection (b),
above shall not result in a waiver of any right the Executive may have to terminate his
employment based upon any future occurrence. “Disability” shall mean any incapacity or
disability of the Executive which renders the Executive mentally or physically unable to
perform his duties under this Agreement as determined in accordance with Company
policy. ermination due to Disability shall be deemed to have occurred upon the first day of
the month following the determination of Disability as defined in the preceding sentence.
6.4
By Executive for Good Reason. The occurrence of any of the
following shall be deemed to be grounds for the Executive to terminate employment for
Good Reason:. (a) any action taken by the Company to materially diminish, or attempt to
materially diminish, the duties, responsibilities or authority of the Executive if, within sixty
(60) days after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action (s); or (b )
any action taken by the Company to materially change, or attempt to materially change the
Executive's title or his position in the hierarchy of the Company if, within sixty (60) days
after the Executive becomes aware of such action, the Executive notifies the Company in
writing and the Company does not immediately correct such action(s) ; or (c) any breach of
this Agreement by the Company.
Failure of the Executive to timely terminate his employment upon the occurrence of an event
described in subsections (a), (b), or (c) above shall not result in a waiver of any right the
Executive may have to terminate his employment based upon any future occurrence.
7.
If
Payments After Termination .
this Agreement or the Executive's
employment hereunder are terminated for the reasons set forth in Section 6.1 hereof, then the
Executive's estate shall receive the annual Base Salary through the date of termination in
accordance with the terms of this Agreement and the prorated portion of the Annual Bonus,
to be calculated based on the average bonus paid over the prior two (2) years ,
through the
date of termination in accordance with the terms of this Agreement. If this Agreement or the
Executive's employment hereunder are terminated for the reasons set forth in Sections 6. 2
hereof, then the Executive shall receive the Base Salary
through the date of termination in accordance with the terms of this Agreement . If this
Agreement is terminated pursuant to Section 6.3 or 6. 4 hereof, then the Executive shall
receive:
(a) the Base Salary through the date of termination in accordance with the
terms of this Agreement, and the prorated portion of the Annual Bonus, to be calculated
based on the average bonus paid over the prior two (2) years, during the fiscal year and
through the date of termination plus;
(b) a severance payment in an amount that equals 1.50 (or 2.00 times if
within 2 years of a Change in Control ) times the Executive’s a nnual Base Salary and 1.50
(or 2.00 times if within 2 years of a Change in Control) times Annual Bonus opportunity at
the time of the termination; plus
(c) accelerated vesting of granted but not vested Incentive Stock Options and
Restricted Shares subject to the definitions, terms, and conditions of the Plan or plan by
which their award is authorized; plus
(d) continuation of health insurance, life insurance, dental insurance and
the 18
other benefits received at the time of separation from the Company through
months (or two (2) years if within 2 years of a Change in Control ) following the year in
which termination occurs.
Subsequent to Termination, the Executive shall not be entitled to receive any further
compensation or benefits from the Company, except as expressly provided by this
Agreement. A condition to the Company’s obligation to provide the severance payments and
benefits provided by this Agreement is that Executive complies with the obligations of non-
competition, non-solicitation of customers , confidentiality and non-disclosure referenced in
Section 8 of this Agreement and provided for by Florida law and execute a general release in
a form acceptable to the Board.
8.
Non-Competition; Non-Disclosure , Confidentiality and Non-Solicitation of
Customers. Subsequent to the execution of this Agreement, Executive and Compensation
Committee agree to sign a Non-Competition, Non-Disclosure, Confidentiality, and Non-
Solicitation of Customers in term and scope acceptable to both parties.
9 .
Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's estate or
beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
10.
Notices. All notices, requests, demands or other communications by the
terms hereof required or permitted to be given by one party to another shall be given in
writing by personal delivery, by facsimile or by regular mail, postage prepaid, addressed to
such other party or delivered to such other party as follows:
If to the Company:
BBX Capital Corporation
c/o Compensation Committee Chair
P.O. Box 39001
Fort Lauderdale, FL 33303
Telephone: (954) 940-5020
If to the Executive:
Jarett Levan
P.O. Box 39002
Fort Lauderdale, FL 33303
or at such other address or facsimile number as may be given by any of them to the others in
writing from time to time and such notices, requests, demands or other communication shall
be deemed to have been received when hand delivered, on the day after the date sent by
facsimile (with receipt confirmed) or, if mailed, the fourth day following the day of the
mailing thereof; provided that if any such notice, request, demand or other communication
shall have been mailed and if regular mail service shall be interrupted by strikes or other
irregularities, such notice, request, demand or other communication shall be deemed to have
been received on the fourth business day following the resumption of normal mail service.
11.
Prevailing Party
. In the event of any dispute with regard to
this Agreement, the prevailing party shall be entitled to receive from the non-prevailing party
and the non-prevailing party shall pay upon demand all reasonable fees and expenses of
counsel for the prevailing party.
12.
Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties, and merge and supersede all prior discussions,
agreements and understandings of every kind and nature among them as to the subject matter
hereof.
13.
Amendments to Agreement . This Agreement shall not be amended except
by a writing signed by each party to the Agreement, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing signed by
each party to the Agreement.
14.
U.S. Dollars. All dollar amounts in this Agreement are stated in United
States Dollars.
15.
Governing Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the law of the State of Florida, without
giving effect to principles of conflicts of laws. Any controversies of any nature whatsoever
arising under this Agreement shall be subject to the exclusive jurisdiction of the courts of
Broward County, Florida, which shall be the exclusive jurisdiction and venue for any
disputes, actions or lawsuits arising out of or relating to this Agreement. The parties to this
Agreement irrevocably waive to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any court in respect
hereof, brought in Broward County, Florida and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought in an
inconvenient forum.
17.
Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Executive without the prior written
consent of the Company. This Agreement may be assigned by the Company in connection
with the sale, transfer or other disposition of all or substantially all of the Company's assets
or business.
18.
Pronouns. Whenever the context requires, the use in this Agreement of a
pronoun of any gender shall be deemed to refer also to any other gender, and the use of the
singular shall be deemed to refer also to the plural.
19.
Headings. The headings of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
20.
Calculation of Time Periods . When calculating the period of time within
which or following which any act is to be done or step taken pursuant to this Agreement, the
date which is the reference date in calculating such period shall be excluded.
21.
Execution in Counterparts. This Agreement may be executed in several
counterparts, by original or facsimile signature, each of which so executed shall be deemed
to be an original and such counterparts together shall be deemed to be one and the same
instrument, which shall be deemed to be executed as of the date first above written.
23.
Further Assurances . The parties hereto shall sign such further documents
and do and perform and cause to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full effect to this Agreement and
every party thereof.
24.
Survival. Any termination of this Agreement shall not affect the ongoing
provisions of this Agreement, which shall survive such termination in accordance with their
terms.
25.
Severability. The invalidity or unenforceability, in whole or in part, or any
covenant, promise or undertaking, or any section, subsection, paragraph, sentence, clause,
phrase or word or of any provision of this Agreement shall not affect the validity or
enforceability of the remaining portions thereof.
26.
Participation of Parties; Construction
. The parties hereto acknowledge
that this Agreement and all matters contemplated herein have been negotiated between both
of the parties hereto and their respective legal counsel and that both parties have participated
in the drafting and preparation of this Agreement from the commencement of negotiations at
all times through the execution hereof. The parties hereto acknowledge that they have each
read this Agreement and understand the effect of its provisions. Accordingly, this Agreement
shall be interpreted and construed without reference to any rule requiring that this Agreement
be interpreted or construed against the party causing it to be drafted.
27.
Independent Counsel
. The Executive acknowledges that counsel to the
Company has not represented him nor provided him with legal or other advice in connection
with the transactions contemplated by this Agreement and that he has been urged to seek
independent legal, tax and
financial advice in order to analyze the risks and merits of the transactions contemplated by
this Agreement.
28.
Director and Officer Insurance; Indemnification. The Company shall
indemnify the Executive to the same extent as it indemnifies its other Named Executive
Officers, and the Company shall provide coverage for the Executive under its policies of
Director’s and Officer’s insurance as the same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph of this Agreement.
THE COMPANY:
BBX CAPITAL CORPORATION,
a Florida corporation
By:/s/ Steven Coldren
Steve Coldren, Compensation Committee
Chairman
THE EXECUTIVE:
By: /s/ Jarett Levan
Jarett Levan
Seth Wise
BBX Capital Corporation
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ( this “Agreement”), is signed as of
November 12, 2012, by and between BBX Capital Corporation, a Florida corporation (the
“Company”) and Seth Wise (the “Executive”) but effective as of September 30, 2012 (the
“Effective Date”).
WHEREAS, the Company desires to employ the Executive as Executive Vice
President and the Executive desires to accept such employment, all upon the terms and
conditions set forth in this Agreement;
WHEREAS, the Executive has experience and expertise in the Company’s
business (t h e “Business”). By virtue of his employment with Company, and the
predecessors from which it emerged, the Executive has become familiar with and possesses
knowledge of the manner, methods, trade secrets and other confidential information
pertaining to the Business.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth in this Agreement, the Company and the Executive agree as follows:
1.
Recitals; Defined Terms . The above recitals are true and correct and are
incorporated herein by reference. When used in this Agreement, a “Change in Control”
shall be deemed to occur if:
1.1
any “person” (as such term is utilized in Section 13(d) and Section
14(d)(2) of the Securities and Exchange Act), including without limitation any “group” (as
such term is utilized in Section 13(d)(3) of the Exchange Act), who is not, on the date of
this Agreement, either (1) an affiliate of the Company, or (2) the beneficial owner of 10%
or more of the Company’s issued and outstanding common stock, shall become the
“beneficial owner” (as such term is defined in Rule 13d-3 under the Exchange Act) of
securities of the Company (or any successor thereto) representing more than 33% of the
votes that may be cast for the election of directors of the Company, or any successor
company as the case may be; or
1.2
any person who is not, on the date of this Agreement an affiliate of
the Company, shall become a shareholder of the Company holding fifty percent or more of
the outstanding stock of any class of the Company; or
1.3
as the result of, or in connection with, any cash or other tender
offer, or exchange offer, merger, consolidation or other business combination, or any
combination of any one or more of the foregoing transactions, the persons who were
directors of the Company immediately prior to the consummation of any such transaction or
combination of transactions shall cease to constitute a majority of the directors of the
Company, or any successor thereto; or as a result of a sale of all or substantially all of the
assets of the Company, or any liquidation, dissolution, bankruptcy, assignment for the
benefit of creditors (whether such action is voluntary or involuntary by the Company), or
any similar transaction or any combination of any one or more of the foregoing or similar
transactions, the persons who were directors of the Company immediately prior to the
consummation of any such transaction or combination of transactions shall cease to
constitute a majority of the directors of the successor to the Company.
2.
Employment Term.
The term of the Executive's employment (the
"Term") begins on the Effective Date and concludes three (3) years from the Effective Date;
provided, however, that the Term shall be automatically renewed for successive one- year
periods commencing on the third anniversary of the Effective Date unless: (i) either the
Company or the Executive, not fewer than six (6) months prior to the expiration of the initial
three year term, provides notice of intention not to renew the Agreement for a one year term
or, during any one year extension of the initial term, provides notice of intention not to
renew not fewer than ninety (90) days prior to the expiration of any such one year term, (ii)
the Executive terminates this Agreement for Good Reason (defined below), (iii) the
Company terminates this Agreement for Cause (defined below) or (iv) this Agreement is
otherwise terminated in accordance with its provisions.
3.
Services.
3.1
Office and Duties . During the Term, the Executive shall
serve as Executive Vice President of the Company, subject to the terms of this Agreement,
with such duties, authority and responsibility as are commensurate with such position,
subject to oversight and direction of the Company’s President. In exercising his duties and
responsibilities, the Executive shall have all the power and authority necessary to fulfill and
discharge his duties and responsibilities and shall abide by lawful directions given by the
Board. The Executive shall be responsible for such additional duties commensurate with his
position not materially inconsistent with the foregoing as may be reasonably determined by
the Board from time to time.
3.2
Best Efforts. During the Term, the Executive shall diligently
and competently devote his best efforts and energies to the Business and affairs of the
Company, and shall use his best efforts, skills and abilities to promote the interests of the
Company and otherwise to discharge his obligations under this Agreement; provided,
however, that nothing in this A greement shall restrict the Executive from serving in
executive capacities with any affiliated companies or pursuing interests in accordance with
historical practice.
4.
Compensation.
4.1
Annual Base Salary. During the Term, the Executive shall
receive a base salary at the initial annual rate of Three Hundred Seventy Five Thousand
Dollar ($375,000) (“Base Salary”), payable in accordance with the Company's normal
payroll practices or at such other reasonable intervals as may from time to time be used by
the Company for paying its other employees. The Executive will be entitled to annual salary
reviews and as such the Executive’s Base Salary may be increased by the Company’s
compensation committee (the “Compensation Committee”) from time to time during the
term of this Agreement but shall not be reduced without his written consent.
4.2
Annual Bonus. An annual bonus (the “Annual Bonus”) may
be paid to the Executive of up to 8 0% of Base Salary in the discretion of the Compensation
Committee. Such Annual Bonus amount shall include consideration of certain performance
factors as determined by the Compensation Committee. Payments of Annual Bonus amounts
to the Executive shall be made by March 31 of each year for the prior year’s performance.
The Executive’s Annual Bonus opportunity shall commence in 2012, payable in cash by
March 31, 2013 for 2012 performance.
4.3
Discretionary Bonus Payable Currently . Concurrent with the
signing of this Agreement the Executive shall be paid a discretionary bonus of $ 750,000.
4.4
Long Term Incentive Compensation .
4.4.1
Grant. Concurrent with the signing of this
Agreement, Executive shall be granted 188,401 shares subject to : (i) the definitions, terms,
and conditions of the stock plan used by the Company (the “ Plan”) by which their award is
authorized, (ii) the restrictions and conditions noted below, and (iii) annual vesting in
accordance with the following schedule (the “Restricted Shares”) , which is measured from
the Effective Date:
12 Months
24 Months
36 Months
48 Months
47,100
The Executive also shall be entitled to participate in such other plans for granting equity
(e.g., future grants of restricted stock awards (“RSAs”) or other stock awards) as may
subsequently be approved by the Compensation Committee .
47,100
47,100
47,100
These Restricted Shares are granted on the conditions that Executive remains
employed by the Company through and including the respective vesting periods and that the
Board has not terminated the employment of the Executive for “Cause,” as the term is
defined in Section 6. 2, below.
4.4.2
Carried Interest Compensation Plan. In addition to the
compensation otherwise provided herein, the Compensation Committee will also work with
its Compensation Consultant and the Executive Management Team to develop a Carried
Interest Compensation Plan (a “Carried Interest Plan”) consistent with the traditional private
equity pay model. The Board has sole discretion and authorization to create such Carried
Interest Plan.
5.
Reimbursement of Expenses; Benefits .
5.1
Reimbursement of Expenses .
Upon submission of
appropriate documentation in accordance with the C ompany’s policy, the Executive shall be
entitled to reimbursement for all reasonable, out-of-pocket expenses incurred by him during
the Term in connection with the proper and efficient discharge of his duties hereunder,
including, without limitation, all reasonable expenses incurred by the Executive for travel to
promote the interests of the Company, as well as reasonable expenses for meals, hotels or
other accommodations, and other customary items during any such trips, including existing
expense reimbursement arrangements and practices.
5.2
Employee Benefit Plans and Programs . During the Term, the
Executive shall be entitled to participate in the Company’s employee benefit plans and
programs, including such 401(k) plans, health insurance and welfare plans as the Company
may adopt for employees generally or for the Company’s executives, including existing
plans and programs under existing practices.
5.3
Vacations. The Executive shall be entitled to paid vacation
during each calendar year in such amounts as are commensurate with his position and
company policy, however, no less than existing practices.
6.
Termination. The Executive's employment under this Agreement may be
terminated by the Company or the Executive without any breach of this Agreement only
under the circumstances set forth in ensuing Sections 6.1 through 6. 4 and upon provision of
the applicable compensation set forth in Section 7 :
6.1
Death. This Agreement and the Executive's employment
under this Agreement shall terminate immediately and automatically upon the Executive's
death.
6.2
The Company may
By Company for Cause.
terminate the Executive's employment under this Agreement for Cause (as hereinafter
defined). “Cause,” as to the Executive, shall mean: (a) committing fraud against the
Company or embezzlement of Company property; (b) being convicted of a felony or any
other crime that involves moral turpitude under applicable laws of the United States or any
state thereof; (c) an action or omission of the Executive which constitutes a willful and
material breach of this Agreement which is not the result of the Executive's death or
disability and which is not cured within fifteen (15) days after receipt by the Executive of
written notice of the same from the Board.
6.3
By Company Without Cause . The occurrence of any of the
following shall be deemed to be a termination by the Company of the Executive's
employment under this Agreement “Without Cause:” (a) any action taken by the Company
to terminate the Executive's employment other than for Cause , including providing notice of
intention not to renew this Agreement, which termination shall only be effective upon
written notice to the Executive; (b) any breach of this Agreement by the Company ; or (c)
upon the Disability (defined below) of the Executive . Failure of the Executive to timely
terminate his employment upon the occurrence of an event described in subsection (b),
above shall not result in a waiver of any right the Executive may have to terminate his
employment based upon any future occurrence. “Disability” shall mean any incapacity or
disability of the Executive which renders the Executive mentally or physically unable to
perform his duties under this Agreement as determined in accordance with Company
policy. ermination due to Disability shall be deemed to have occurred upon the first day of
the month following the determination of Disability as defined in the preceding sentence.
6.4
By Executive for Good Reason. The occurrence of any of the
following shall be deemed to be grounds for the Executive to terminate employment for
Good Reason:. (a) any action taken by the Company to materially diminish, or attempt to
materially diminish, the duties, responsibilities or authority of the Executive if, within sixty
(60) days after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action (s); or (b )
any action taken by the Company to materially change, or attempt to materially change the
Executive's title or his position in the hierarchy of the Company if, within sixty (60) days
after the Executive becomes aware of such action, the Executive notifies the Company in
writing and the Company does not immediately correct such action(s) ; or (c) any breach of
this Agreement by the Company.
Failure of the Executive to timely terminate his employment upon the occurrence of an event
described in subsections (a), (b), or (c) above shall not result in a waiver of any right the
Executive may have to terminate his employment based upon any future occurrence.
7.
Payments After Termination .
this Agreement or the Executive's
employment hereunder are terminated for the reasons set forth in Section 6.1 hereof, then the
Executive's estate shall receive the annual Base Salary through the date of termination in
accordance with the terms of this Agreement and the prorated portion of the Annual Bonus,
through the
to be calculated based on the average bonus paid over the prior two (2) years ,
date of termination in accordance with the
If
terms of this Agreement . If this Agreement or the Executive's employment hereunder are
terminated for the reasons set forth in Sections 6.2 hereof, then the Executive shall receive
the Base Salary through the date of termination in accordance with the terms of this
Agreement. If this Agreement is terminated pursuant to Section 6. 3 or 6. 4 hereof, then the
Executive shall receive:
(a) the Base Salary through the date of termination in accordance with the
terms of this Agreement, and the prorated portion of the Annual Bonus, to be calculated
based on the average bonus paid over the prior two (2) years, during the fiscal year and
through the date of termination plus;
(b) a severance payment in an amount that equals 1.50 (or 2.00 times if
within 2 years of a Change in Control ) times the Executive’s a nnual Base Salary and 1.50
(or 2.00 times if within 2 years of a Change in Control) times Annual Bonus opportunity at
the time of the termination; plus
(c) accelerated vesting of granted but not vested Incentive Stock Options and
Restricted Shares subject to the definitions, terms, and conditions of the Plan or plan by
which their award is authorized; plus
(d) continuation of health insurance, life insurance, dental insurance and
other benefits received at the time of separation from the Company through
the 18
months (or two (2) years if within 2 years of a Change in Control ) following the year in
which termination occurs.
Subsequent to Termination, the Executive shall not be entitled to receive any further
compensation or benefits from the Company, except as expressly provided by this
Agreement. A condition to the Company’s obligation to provide the severance payments and
benefits provided by this Agreement is that Executive complies with the obligations of non-
competition, non-solicitation of customers , confidentiality and non-disclosure referenced in
Section 8 of this Agreement and provided for by Florida law and execute a general release in
a form acceptable to the Board.
8.
Non-Competition; Non-Disclosure , Confidentiality and Non-Solicitation of
Customers. Subsequent to the execution of this Agreement, Executive and Compensation
Committee agree to sign a Non-Competition, Non-Disclosure, Confidentiality, and Non-
Solicitation of Customers in term and scope acceptable to both parties.
9 .
Withholding. Anything to the contrary notwithstanding, all payments
required to be made by the Company hereunder to the Executive or the Executive's estate or
beneficiaries shall be subject to the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably determine it should withhold
pursuant to any applicable law or regulation.
10.
Notices. All notices, requests, demands or other communications by the
terms hereof required or permitted to be given by one party to another shall be given in
writing by personal delivery, by facsimile or by regular mail, postage prepaid, addressed to
such other party or delivered to such other party as follows:
If to the Company:
BBX Capital Corporation
c/o Compensation Committee Chair
P.O. Box 39001
Fort Lauderdale, FL 33303
Telephone: (954) 940-5020
If to the Executive:
Seth Wise
2719 Juniper Lane
Davie, FL 33330
or at such other address or facsimile number as may be given by any of them to the others in
writing from time to time and such notices, requests, demands or other communication shall
be deemed to have been received when hand delivered, on the day after the date sent by
facsimile (with receipt confirmed) or, if mailed, the fourth day following the day of the
mailing thereof; provided that if any such notice, request, demand or other communication
shall have been mailed and if regular mail service shall be interrupted by strikes or other
irregularities, such notice, request, demand or other communication shall be deemed to have
been received on the fourth business day following the resumption of normal mail service.
11.
Prevailing Party
. In the event of any dispute with regard to
this Agreement, the prevailing party shall be entitled to receive from the non-prevailing party
and the non-prevailing party shall pay upon demand all reasonable fees and expenses of
counsel for the prevailing party.
12.
Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties, and merge and supersede all prior discussions,
agreements and understandings of every kind and nature among them as to the subject matter
hereof.
13.
Amendments to Agreement . This Agreement shall not be amended except
by a writing signed by each party to the Agreement, and this Agreement may not be
discharged except by performance in accordance with its terms or by a writing signed by
each party to the Agreement.
14.
U.S. Dollars. All dollar amounts in this Agreement are stated in United
States Dollars.
15.
Governing Law. This Agreement and its validity, construction and
performance shall be governed in all respects by the law of the State of Florida, without
giving effect to principles of conflicts of laws. Any controversies of any nature whatsoever
arising under this Agreement shall be subject to the exclusive jurisdiction of the courts of
Broward County, Florida, which shall be the exclusive jurisdiction and venue for any
disputes, actions or lawsuits arising out of or relating to this Agreement. The parties to this
Agreement irrevocably waive to the fullest extent permitted by law, any objection which
they may now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any court in respect
hereof, brought in Broward County, Florida and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought in an
inconvenient forum.
17.
Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned by the Executive without the prior written
consent of the Company. This
Agreement may be assigned by the Company in connection with the sale, transfer or other
disposition of all or substantially all of the Company's assets or business.
18.
Pronouns. Whenever the context requires, the use in this Agreement of a
pronoun of any gender shall be deemed to refer also to any other gender, and the use of the
singular shall be deemed to refer also to the plural.
19.
Headings. The headings of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
20.
Calculation of Time Periods . When calculating the period of time within
which or following which any act is to be done or step taken pursuant to this Agreement, the
date which is the reference date in calculating such period shall be excluded.
21.
Execution in Counterparts. This Agreement may be executed in several
counterparts, by original or facsimile signature, each of which so executed shall be deemed
to be an original and such counterparts together shall be deemed to be one and the same
instrument, which shall be deemed to be executed as of the date first above written.
23.
Further Assurances . The parties hereto shall sign such further documents
and do and perform and cause to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full effect to this Agreement and
every party thereof.
24.
Survival. Any termination of this Agreement shall not affect the ongoing
provisions of this Agreement, which shall survive such termination in accordance with their
terms.
25.
Severability. The invalidity or unenforceability, in whole or in part, or any
covenant, promise or undertaking, or any section, subsection, paragraph, sentence, clause,
phrase or word or of any provision of this Agreement shall not affect the validity or
enforceability of the remaining portions thereof.
26.
Participation of Parties; Construction
. The parties hereto acknowledge
that this Agreement and all matters contemplated herein have been negotiated between both
of the parties hereto and their respective legal counsel and that both parties have participated
in the drafting and preparation of this Agreement from the commencement of negotiations at
all times through the execution hereof. The parties hereto acknowledge that they have each
read this Agreement and understand the effect of its provisions. Accordingly, this Agreement
shall be interpreted and construed without reference to any rule requiring that this Agreement
be interpreted or construed against the party causing it to be drafted.
27.
Independent Counsel
. The Executive acknowledges that counsel to the
Company has not represented him nor provided him with legal or other advice in connection
with the transactions contemplated by this Agreement and that he has been urged to seek
independent legal, tax and financial advice in order to analyze the risks and merits of the
transactions contemplated by this Agreement.
28.
Director and Officer Insurance; Indemnification. The Company shall
indemnify the Executive to the same extent as it indemnifies its other Named Executive
Officers, and the Company shall provide coverage for the Executive under its policies of
Director’s and Officer’s insurance as the same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
set forth in the first paragraph of this Agreement.
THE COMPANY:
BBX CAPITAL CORPORATION,
a Florida corporation
By: /s/ Steven Coldren
Steve Coldren, Compensation Committee
Chairman
THE EXECUTIVE:
By: /s/ Seth Wise
Seth Wise
BBX Capital Corporation
Raymond S. Lopez
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this “Agreement"), is signed as of M a y 6,
2015, by and between BBX Capital Corporation, a Florida corporation (the "Company"') and
Raymond Lopez (the “Executive") but effective as of March 16, 2015 (the "Effective Date").
WHEREAS, the Company desires to employ the Executive as Chief Financial Officer
and Chief Risk Officer, the Executive desires to accept such employment, all upon the terms and
conditions set forth in this Agreement;
WHEREAS, the Executive has experience and expertise in the Company's business
(the “Business"). By virtue of his employment with Company, and the predecessors from which it
emerged, the Executive has become familiar with and possesses knowledge of the manner, methods,
trade secrets and other confidential information pertaining to the Business.
forth in this Agreement, the Company and the Executive agree as follows:
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set
1.
Recitals: Defined Terms. The above recitals are true and correct and are incorporated
herein by reference. When used in this Agreement a “Change in Control” shall be deemed to
occur if:
1.1 any "person”(as such term is utilized in Section 13(d) and Section 14(d)(2) of the
Securities and Exchange Act), including without limitation any “group ” (as such term is utilized in
Section 13(d)(3) of the Exchange Act), who is not, on the date of this Agreement, either ( 1) an
affiliate of the Company, or (2) the beneficial owner of 10% or more of the Company's issued and
outstanding common stock, shall become the "beneficial owner" (as such term is defined in Rule 13d-
3 under the Exchange Act) of securities of the Company (or any successor thereto) representing more
than 33% of the votes that may be cast for the election of directors of the Company, or any successor
company as the case may be: or
1.2 any person who is not, on the date of this Agreement an affiliate of the
Company, shall become a shareholder of the Company holding fifty percent or more of the
outstanding stock of any class of the Company: or
1.3
as the result of, or in connection with, any cash or other tender offer, or
exchange offer, merger, consolidation or other business combination, or any combination of any one or
more of the foregoing transactions, the persons who were directors of the Company immediately prior
to the consummation of any such transaction or combination of transactions shall cease to constitute a
majority of the directors of the Company, or any successor thereto; or as a result of a
sale of all or substantially all of the assets of the Company, or any liquidation, dissolution,
bankruptcy, assignment for the benefit of creditors (whether such action is voluntary or involuntary by
the Company), or any similar transaction or any combination of any one or more of the foregoing or
similar transactions, the persons who were directors of the Company immediately prior to the
consummation of any such transaction or combination of transactions shall cease to constitute a
majority of the directors of the successor to the Company.
2.
Employment Term. The term of the Executive's employment (the "Term") begins on
the Effective Date and concludes if (i) the Executive terminates this Agreement for Good Reason
(defined below), (ii) the Company terminates this Agreement for Cause (defined below) or (iii) this
Agreement is otherwise terminated in accordance with its provisions.
3.
Services.
3.1 Office and Duties. During the Term, the Executive shall serve as Chief Financial
Officer of the Company, subject to the terms of this Agreement, with such duties, authority and
responsibility as are commensurate with such position, subject to oversight and direction of the
Company's Chief Executive Officer. In exercising his duties and responsibilities, the Executive shall
have all the power and authority necessary to fulfill and discharge his duties and responsibilities and
shall abide by lawful directions given by the Board. The Executive shall be responsible for such
additional duties commensurate with his position not materially inconsistent with the foregoing as may
be reasonably determined by the Board from time to time.
3.2 Best Efforts. During the Term, the Executive shall diligently and competently
devote his best efforts and energies to the Business and affairs of the Company, and shall use his best
efforts, skills and abilities to promote the interests of the Company and otherwise to discharge his
obligations under this Agreement; provided, however, that nothing in this Agreement shall restrict the
Executive from serving in executive capacities with any affiliated companies or pursuing interests in
accordance with historical practice.
4.
Compensation.
4.1 Annual Base Salary. During the Term, the Executive shall receive a base salary
at the initial annual rate of one hundred seventy four thousand five hundred dollars ($174,500.00)
("Base Salary"), payable in accordance with the Company's normal payroll practices or at such other
reasonable intervals as may from time to time be used by the Company for paying its other employees.
The Executive will be entitled to annual salary reviews and as such the Executive's Base Salary may
be increased by the Company's Compensation Committee (the "Compensation Committee") from time
to time during the term of this Agreement but shall not be reduced without his written consent.
4.2 Annual Bonus. An annual bonus (the ''Annual Bonus'') may be paid to the
Executive of up to 60% of Base Salary at the discretion of the Compensation Committee. Such Annual
Bonus amount shall include consideration of certain performance factors as determined by the
Compensation Committee. Payments of Annual Bonus amounts to the Executive shall be made by
March 31 of each year for the prior year's performance. The Executive's Annual Bonus opportunity
shall commence in 2015, payable in cash by March 31, 2016 for 2015 performance.
5.
Reimbursement of Expenses: Benefits.
5.1 Reimbursement of Expenses. Upon submission of appropriate documentation in
accordance with the Company's policy, the Executive shall be entitled to reimbursement for all
reasonable, out-of-pocket expenses incurred by him during the Term in connection with the proper and
efficient discharge of his duties hereunder, including, without limitation, all reasonable expenses
incurred by the Executive for travel to promote the interests of the Company, as well as
reasonable expenses for meals, hotels or other accommodation, and other customary items during any
such trips, including existing expense reimbursement arrangements and practices.
5.2 Employee Benefit Plans and Programs. During the Term, the Executive shall be
entitled to participate in the Company's employee benefit plans and programs, including such 401 (k)
plans, health insurance and welfare plans as the Company may adopt for employees generally or for the
Company's executives, including existing plans and programs under existing practices.
5.3 Vacations. The Executive shall be entitled to paid vacation during each calendar
year in such amounts as are commensurate with his position and company policy, however, no less than
existing practices.
6.
Termination. The Executive's employment under this Agreement may be terminated
by the Company or the Executive without any breach of this Agreement only under the circumstances
set forth in ensuing Sections 6.1 through 6.4 and upon provision of the applicable compensation set
forth in Section 7:
6.1 Death. This Agreement and the Executive’s employment under this Agreement
shall terminate immediately and automatically upon the Executive's death.
6.2 By Company for Cause. The Company may terminate the Executive's
employment under this Agreement for Cause (as hereinafter defined). "Cause," as to the Executive,
shall mean: (a) committing fraud against the Company or embezzlement of Company property; (b)
being convicted of a felony or any other crime that involves moral turpitude under applicable laws of
the United States or any state thereof; (c) an action or omission of the Executive which constitutes a
willful and material breach of this Agreement which is not the result of the Executive's death or
disability and which is not cured within fifteen (15) days after receipt by the Executive of written
notice of the same from the Board.
6.3 By Company Without Cause. The occurrence of any of the following shall be
deemed to be a termination by the Company of the Executive's employment under this
Agreement “Without Cause:” (a) any action taken by the Company to terminate the Executive's
employment other than for Cause; (b) any breach of this Agreement by the Company: or (c) upon the
Disability (defined below) of the Executive. Failure of the Executive to timely terminate his
employment upon the occurrence of an event described in subsection (b), above shall not result in a
waiver of any right the Executive may have to terminate his employment based upon any future
occurrence. “Disability'' shall mean any incapacity or disability of the Executive which renders the
Executive mentally or physically unable to perform his duties under this Agreement as determined in
accordance with Company policy. Termination due to Disability shall be deemed to have
occurred upon the first day of the month following the determination of Disability as defined in the
preceding sentence.
6.4 By Executive for Good Reason. The occurrence of any of the following shall be
deemed to be grounds for the Executive to terminate employment for Good Reason: (a) any action
taken by the Company to materially diminish, or attempt to materially diminish, the duties,
responsibilities or authority of the Executive if, within sixty (60) days after the Executive becomes
aware of such action, the Executive notifies the Company in writing and the Company does
not immediately correct such action(s); or (b) any action taken by the Company to materially change, or
attempt to materially change the Executive's title or his position in the hierarchy of the Company if,
within sixty (60) days after the Executive becomes aware of such action, the Executive notifies the
Company in writing and the Company does not immediately correct such action(s); or (c) any breach of
the
this
Company. Failure of the Executive to timely terminate his employment upon the occurrence of an event described
in subsections (a), (b), or (c) above shall not result in a waiver of any right the Executive may have to
terminate his employment based upon any future occurrence.
Agreement
by
7.
Payments After Termination . If this Agreement or the Executive's employment
hereunder are terminated for the reasons set forth in Section 6.1 hereof, then the
Executive's estate shall receive the annual Base Salary through the date of termination
in accordance with the terms of this Agreement and the prorated portion of the
Annual Bonus, to be calculated based on the average bonus paid over the prior two
(2) years, through the date of termination in accordance with the terms of this
Agreement. If this Agreement or the Executive's employment hereunder are
terminated for the reasons set forth in Sections 6.2 hereof; then the Executive shall
receive the Base Salary through the date of termination in accordance with the terms
of this Agreement. If this Agreement is terminated pursuant to Section 6.3 or 6.4
hereof; then the Executive shall receive:
(a)
A severance payment in the amount that equals 1.0 times (or 1.5 times if within
2 years of a change in control) the Executive’s annual base salary and 1.0 times (or 1.5 times if
within 2 years of a change in control) the annual bonus opportunity at the time of termination plus
Continuation of health insurance, life insurance, dental insurance and
other benefits received at the time of separation from the Company through 12 months from the time
of separation.
(b)
Subsequent to Termination, the Executive shall not be entitled to receive any further compensation or
benefits from the Company, except as expressly provided by this Agreement. A condition to
the Company's obligation to provide the severance payments and benefits provided by this Agreement
is that Executive complies with the obligations of non-competition, non-solicitation of customers,
confidentiality and non-disclosure referenced in Section 8 of this Agreement and provided for by
Florida law and executes a general release in a form acceptable to the Board.
8.
Non-Competition: Non-Disclosure. Confidentiality and Non-Solicitation
of Customers. Subsequent to the execution of this Agreement, Executive agrees to
sign a Non-Competition, Non-Disclosure, Confidentiality, and Non-Solicitation of
Customers in term and scope acceptable to both parties.
9.
Withholding. Anything to the contrary notwithstanding, all payments required to be
made by the Company hereunder to the Executive or the Executive's estate or beneficiaries shall be
subject to the withholding of such amounts, if any, relating to tax and other payroll deductions as the
Company may reasonably determine it should withhold pursuant to any applicable law or regulation.
10.
Notices. All notices, requests, demands or other communications by the terms
hereof required or permitted to be given by one party to another shall be given in writing by personal
delivery, by facsimile or by regular mail postage prepaid, addressed to such other party or delivered to
such other party as follows:
If to the Company:
BBX Capital Corporation
c/o Compensation Committee Chair
P.O. Box 39001
Fort Lauderdale. FL 33303
Telephone: (954) 940-5020
If to the Executive:
Raymond Lopez
P.O. Box 39001
Fort Lauderdale. FL 33303
Telephone: (954) 940-4925
or at such other address or facsimile number as may be given by any of them to the others in writing
from time to time and such notices, requests, demands or other communication shall be deemed to have
been received when hand delivered, on the day after the date sent by facsimile (with receipt confirmed)
or, if mailed, the fourth day following the day of the mailing thereof: provided that if any such notice,
request, demand or other communication shall have been mailed and if regular mail service shall be
interrupted by strikes or other irregularities, such notice, request, demand or other communication
shall be deemed to have been received on the fourth business day following the resumption of normal
mail service.
11.
Prevailing Party. In the event of any dispute with regard to this Agreement the
prevailing party shall be entitled to receive from the non-prevailing party and the non-prevailing party
shall pay upon demand all reasonable fees and expenses of counsel for the prevailing party.
12.
Entire Agreement . This Agreement sets forth the entire agreement and
understanding between the parties, and merge and supersede all prior discussions, agreements and
understandings of every kind and nature among them as to the subject matter hereof.
13.
Amendments to Agreement. This Agreement shall not be amended except by a
writing signed by each party to the Agreement, and this Agreement may not be discharged except by
performance in accordance with its terms or by a writing signed by each party to the Agreement.
14.
U.S.
Dollars. All
dollar
amounts
in
this
Agreement
are
stated in United States Dollars.
15.
Law. This Agreement and its validity, construction and performance shall be
governed in all respects by the law of the State of Florida, without giving effect to principles of
conflicts of laws. Any controversies of any nature whatsoever arising under this Agreement shall be
subject to the exclusive jurisdiction of the courts of Broward County, Florida, which shall be the
exclusive jurisdiction and venue for any disputes, actions or lawsuits arising out of or relating to this
Agreement. The parties to this Agreement irrevocably waive to the fullest extent permitted by law,
any objection which they may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement, or any judgment entered by any court in
respect hereof, brought in Broward County, Florida and further irrevocably waive any claim that any
suit, action or proceeding brought in Broward County, Florida, has been brought in an inconvenient
forum.
16.
Successors and Assigns. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted assigns. This Agreement
may not be assigned by the Executive without the prior written consent of the Company. This
Agreement may be assigned by the Company in connection with the sale, transfer or other disposition
of all or substantially all of the Company's assets or business.
17.
Pronouns. Whenever the context requires, the use in this Agreement of a pronoun of
any gender shall be deemed to refer also to any other gender, and the use of the singular shall be
deemed to refer also to the plural.
18.
Headings. The headings of this Agreement are inserted for convenience of
reference only and shall not constitute a part hereof.
19.
Calculation of Time Periods. When calculating the period of time within which or
following which any act is to be done or step taken pursuant to this Agreement, the date which is the
reference date in calculating such period shall be excluded.
20.
Execution in Counterparts. This Agreement may be executed in several counterparts,
by original or facsimile signature, each of which so executed shall be deemed to be an original and
such counterparts together shall be deemed to be one and the same instrument, which shall be deemed
to be executed as of the date first above written.
21.
Further Assurances. The parties hereto shall sign such further documents and do and
perform and cause to be done and performed such further and other acts and things as may be
necessary or desirable in order to give full effect to this Agreement and every party thereof.
22.
Survival. Any termination of this Agreement shall not affect the ongoing provisions
of this Agreement, which shall survive such termination in accordance with their terms.
23.
Severability. The invalidity or unenforceability, in whole or in part, or any covenant,
promise or undertaking, or any section, subsection, paragraph, sentence, clause, phrase or word or of
any provision of this Agreement shall not affect the validity or enforceability of the remaining
portions thereof.
24.
Participation of Parties: Construction. The parties hereto acknowledge that this
agreement and all matters contemplated herein have been negotiated between both of the parties hereto
and their respective legal counsel and that both parties have participated in the drafting and preparation
of this Agreement from the commencement of negotiations at all times through the execution hereof.
The parties hereto acknowledge that they have each read this Agreement and understand the effect of
its
and
construed without reference to any rule requiring that this Agreement be interpreted or
construed against the party causing it to be drafted.
Accordingly,
Agreement
provisions.
interpreted
shall
this
be
25.
Independent Counsel. The Executive acknowledges that counsel to the Company
has not represented him nor provided him with legal or other advice in connection with the
transactions contemplated by this Agreement and that he has been urged to seek independent legal,
tax and financial advice in order to analyze the risks and merits of the transactions contemplated by
this Agreement.
26.
Director and Officer Insurance: Indemnification. The Company shall indemnify the
Executive to the same extent as it indemnifies its other Named Executive Officers, and the Company
shall provide coverage for the Executive under its policies of Director's and Officer's insurance as the
same may be in effect from time to time.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth in
the first paragraph of this Agreement.
THE COMPANY:
BBX CAPITAL CORPORATION,
a Florida corporation
By: /s/Alan B. Levan
THE EXECUTIVE:
By: /s/Raymond S. Lopez
BANKATLANTIC BANCORP, INC.
2005 Restricted Stock and Option Plan
Exhibit 10.3
1. PURPOSES. The purposes of this BankAtlantic Bancorp, Inc. (“Company”) 2005 Restricted
Stock and Option Plan (the “Plan”) are to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to the Employees of the Company or its
Subsidiaries (as defined in Section 2 below) as well as other individuals who perform services for the
Company and its Subsidiaries, and to promote the success and profitability of the Company’s business.
Options granted hereunder may be either “incentive stock options,” as defined in Section 422 of the
Internal Revenue Code of 1986, as amended, or “non-qualified stock options,” at the discretion of the
Committee (as defined in Section 2 below) and as reflected in the terms of the Stock Option Agreement
(as defined in Section 2 below).
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) “Award Notice” shall mean, with respect to a particular Restricted Stock Award, a written
instrument signed by the Company and the recipient of the Restricted Stock Award evidencing the
Restricted Stock Award and establishing the terms and conditions thereof.
(b) “Award Recipient” shall mean the recipient of a Restricted Stock Award.
(c) “Beneficiary” shall mean the Person designated by an Award Recipient to receive any Shares
subject to a Restricted Stock Award made to such Award Recipient that become distributable following
the Award Recipient’s death.
(d) “Board of Directors” shall mean the Board of Directors of the Company.
(e) “Class A Common Stock” shall mean the Class A common stock, par value $0.01 per share, of
the Company.
(f) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(g) “Committee” shall mean the Committee appointed by the Board of Directors in accordance
with paragraph (a) of Section 4 of the Plan.
(h) “Company” shall mean BankAtlantic Bancorp, Inc., a Florida corporation, and its successors
and assigns.
(i) “Continuous Status as an Employee” shall mean the absence of any interruption or termination
of service as an Employee. Continuous Status as an Employee shall not be considered interrupted in the
case of sick leave, military leave, or any other leave of absence approved by the Board of Directors of
the Company or the Committee. Continuous Status as an Employee shall not be deemed terminated or
interrupted by a termination of employment followed immediately by service as a non-Employee
director of the Company or one or more of its Subsidiaries until a subsequent termination of all service
as either a non-Employee director or an Employee.
(j) “Covered Employee” shall mean, for any taxable year of the Company, a person who is, or
who the Committee determines is reasonably likely to be, a “covered employee” (within the meaning of
section 162(m) of the Code).
(k) “Disability” shall mean permanent and total disability as defined in Section 22(e)(3) of the
Code.
(l) “Employee” shall mean any person, including officers and directors, employed by the
Company or any Parent or Subsidiary of the Company. The payment of a director’s fee by the
Company shall not be sufficient to constitute “employment” by the Company.
(m) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
1
(n) “Fair Market Value” shall be determined by the Committee in its discretion; provided,
however, that where there is a public market for the Class A Common Stock, the fair market value per
Share shall be (i) if the Class A Common Stock is listed or admitted for trading on any United States
national securities exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the closing price of such stock on such exchange or reporting system, as
the case may be, on the relevant date, as reported in any newspaper of general circulation, or (ii) if the
Class A Common Stock is quoted on the National Association of Securities Dealers Automated
Quotations (“NASDAQ”) System, or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing bid and asked quotations for such stock
on the relevant date, as reported by a generally recognized reporting service.
(o) “Incentive Stock Option” shall mean a stock option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code.
(p) “Nonqualified Stock Option” shall mean a stock option not intended to qualify as an Incentive
Stock Option or a stock option that at the time of grant, or subsequent thereto, fails to satisfy the
requirements of Section 422 of the Code.
(q) “Option” shall mean a stock option granted pursuant to the Plan.
(r) “Optioned Stock” shall mean the Class A Common Stock subject to an Option.
(s) “Optionee” shall mean the recipient of an Option.
(t) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(u) “Performance-Based Restricted Stock Award” shall mean a Restricted Stock Award to which
Section 8.3 is applicable.
(v) “Performance Goal” shall mean, with respect to any Performance-Based Restricted Stock
Award, the performance goal(s) established pursuant to Section 8.3(a), the attainment of which is a
condition of vesting of the Performance-Based Restricted Stock Award.
(w) “Performance Measurement Period” shall mean, with respect to any Performance Goal, the
period of time over which attainment of the Performance Goal is measured.
(x) “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an
association, a joint-stock company, a trust, an estate, an unincorporated organization and any other
business organization or institution.
(y) “Restricted Stock Award” shall mean an award of Shares pursuant to Section 8.
(z) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act or any successor rule.
(aa) “Service” shall mean, unless the Committee provides otherwise in an Award Notice:
(a) service in any capacity as a common-law employee, director, advisor or consultant to the Company
or a Parent or Subsidiary; (b) service in any capacity as a common-law employee, director, advisor or
consultant (including periods of contractual availability to perform services under a retainer
arrangement) to an entity that was formerly a Parent or Subsidiary, to the extent that such service is an
uninterrupted continuation of services being provided immediately prior to the date on which such
entity ceased to be a Parent or Subsidiary; and (c) performance of the terms of any contractual non-
compete agreement for the benefit of the Company or a Parent or Subsidiary.
2
(bb) “Share” shall mean a share of the Class A Common Stock, as adjusted in accordance with
Section 9 of the Plan.
(cc) “Stock Option Agreement” shall mean the written option agreements described in Section 14
of the Plan.
(dd) “Subsidiary” shall mean a “subsidiary corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Code.
(ee) “Transferee” shall mean a “transferee” of the Optionee as defined in Section 7.4 of the Plan.
3. STOCK. Subject to the provisions of Section 9 of the Plan, the maximum aggregate number of
Shares which may be issued for Restricted Stock Awards and upon the exercise of Options under the
Plan is 9,375,000 Shares. During any calendar year, individuals who are Covered Employees may not
be issued in the aggregate Shares covered by Restricted Stock Awards or Options in excess of the full
amount of Shares available for grant under the Plan. If an Option or Restricted Stock Award should
expire or become un-exercisable for any reason without having been exercised or vested in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have been terminated,
become available for further grant under the Plan.
Subject to the provisions of Section 9 of the Plan, no person shall be granted Options under the
Plan in any calendar year covering an aggregate of more than the full amount of Shares available for
grant under the Plan. If an Option should expire, become unexercisable for any reason without having
been exercised in full, or be cancelled for any reason during the calendar year in which it was granted,
the number of Shares covered by such Option shall nevertheless be treated as Options granted for
purposes of the limitation in the preceding sentence.
4. ADMINISTRATION.
(a) Procedure. The Plan shall be administered by a Committee appointed by the Board of
Directors, which initially shall be the Compensation Committee of the Company. The Committee shall
consist of not less than two (2) members of the Board of Directors. Once appointed, the Committee
shall continue to serve until otherwise directed by the Board of Directors. From time to time the Board
of Directors, at its discretion, may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause), and appoint new members in substitution therefor,
and fill vacancies however caused; provided, however, that at no time shall a Committee of less than
two (2) members of the Board of Directors administer the Plan. If the Committee does not exist, or for
any other reason determined by the Board of Directors, the Board may take any action and exercise any
power, privilege or discretion under the Plan that would otherwise be the responsibility of the
Committee.
(b) Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have the
authority, in its discretion: (i) to grant Incentive Stock Options, in accordance with Section 422 of the
Code, to grant Nonqualified Stock Options or to grant Restricted Stock Awards; (ii) to determine, upon
review of relevant information, the Fair Market Value of the Class A Common Stock; (iii) to determine
the exercise price per share of Options to be granted or consideration for Restricted Stock Awards;
(iv) to determine the persons to whom, and the time or times at which, Options and Restricted Stock
Awards shall be granted and the number of Shares to be represented by each Option or Restricted Stock
Award; (v) to determine the vesting schedule of the Options and Restricted Stock Awards to be granted;
(vi) to interpret the Plan; (vii) to prescribe, amend and rescind rules and regulations relating to the Plan;
(viii) to determine the terms and provisions of each Option or Restricted Stock Award granted (which
need not be identical) and, with the consent of the holder thereof if required, modify or amend each
Option or Restricted Stock Award; (ix) to accelerate or defer (with the consent of the holder thereof)
the exercise or vesting date of any Option or the vesting date of any Restricted Stock Award; (x) to
authorize any person to execute on behalf of the Company any instrument required to effectuate the
grant of an Option or Restricted Stock Award previously granted by the Committee; (xi) to re-price
previously granted Options and/or substitute new Options or Restricted Stock Awards for previously
granted Options or Restricted Stock Awards, as the case may be, which previously granted Options or
Restricted Stock Awards contain less favorable terms, including, in the case of Options, higher exercise
prices; and (xii) to make all other determinations deemed necessary or advisable for the administration
of the Plan.
3
(c) Effect of the Committee’s Decision. All decisions, determinations and interpretations of the
Committee shall be final and binding on all Optionees, Award Recipients or Transferees, if applicable.
5. ELIGIBILITY. Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options and Restricted Stock Awards may be granted to Employees as well as directors, independent
contractors and agents who are natural persons (but only if such Options or Restricted Stock Awards are
granted as compensation for personal services rendered by the independent contractor or agent to the
Company or a Subsidiary that are not
services in connection with the offer or sale of securities in a capital-raising transaction or services that
directly or indirectly promote or maintain a market for the Company’s securities), as determined by the
Committee. Any person who has been granted an Option or Restricted Stock Award may, if he is
otherwise eligible, be granted an additional Option or Options or Restricted Stock Award.
Except as otherwise provided under the Code, to the extent that the aggregate Fair Market Value
of Shares for which Incentive Stock Options (under all stock option plans of the Company and of any
Parent or Subsidiary) are exercisable for the first time by an Employee during any calendar year
exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options. For purposes of
this limitation, (a) the Fair Market Value of Shares is determined as of the time the Option is granted
and (b) the limitation is applied by taking into account Options in the order in which they were granted.
The Plan shall not constitute a contract of employment nor shall the Plan confer upon any
Optionee or Award Recipient any right with respect to continuation of employment or continuation of
providing services to the Company, nor shall it interfere in any way with his right or the Company’s or
any Parent or Subsidiary’s right to terminate his employment or his provision of services at any time.
6. TERM OF PLAN. The Plan shall continue in effect ten (10) years from the date of its adoption
by the Board of Directors, unless sooner terminated under Section 11 of the Plan.
7. STOCK OPTIONS.
7.1 Term of Option. The term of each Option shall be ten (10) years from the date of grant thereof
or such shorter term as may be provided in the Stock Option Agreement. However, in the case of an
Incentive Stock Option granted to an Employee who, immediately before the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock
of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five
(5) years from the date of grant thereof or such shorter time as may be provided in such Optionee’s
Stock Option Agreement.
7.2 Exercise Price And Consideration.
(a) Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an
Option shall be such price as determined by the Committee, but shall be subject to the following:
(i) In the case of an Incentive Stock Option which is
(A) granted to an Employee who, immediately before the grant of such Incentive Stock
Option, owns stock representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no
less than one hundred and ten percent (110%) of the Fair Market Value per Share on the date of
grant.
(B) granted to an Employee not within (A), the per share exercise price shall be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(C) in the case of a Nonqualified Stock Option, the per Share exercise price shall be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
4
(b) Certain Corporate Transactions. In the event the Company substitutes an Option for a stock
option issued by another corporation in connection with a corporate transaction, such as a merger,
consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of
stock or property), reorganization (whether or not such reorganization comes within the definition of
such term in Section 368 of the Code) or partial or complete liquidation involving the Company and
such other corporation, the exercise price of such substituted Option shall be as determined by the
Committee in its discretion (subject to the provisions of Section 424(a) of the Code in the case of a stock
option that was intended to qualify as an “incentive stock option”) to preserve, on a per Share basis
immediately after such corporate transaction, the same ratio of Fair Market Value per Option Share to
exercise price per Share which existed immediately prior to such corporate transaction under the option
issued by such other corporation.
(c) Payment. The consideration to be paid for the Shares to be issued upon exercise of an Option,
including the method of payment, shall be determined by the Committee and may consist entirely of
cash, check, promissory note, or other shares of the Company’s capital stock having a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, or any combination of such methods of payment, or such other consideration
and method of payment for the issuance of Shares to the extent permitted under the law of the
Company’s jurisdiction of incorporation. The Committee may also establish coordinated procedures
with one or more brokerage firms for the “cashless exercise” of Options, whereby Shares issued upon
exercise of an Option are delivered against payment by the brokerage firm on the Optionee’s behalf.
When payment of the exercise price for the Shares to be issued upon exercise of an Option consists of
shares of the Company’s capital stock, such shares will not be accepted as payment unless the Optionee
or Transferee, if applicable, has held such shares for the requisite period necessary to avoid a charge to
the Company’s earnings for financial reporting purposes.
7.3 Exercise Of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Committee, including
performance criteria with respect to the Company or its Subsidiaries and/or the Optionee, and as shall
be permissible under the terms of the Plan. An Option may not be exercised for a fraction of a Share. An
Option shall be deemed to be exercised when written notice of such exercise has been given to the
Company in accordance with the terms of the Option by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Committee, consist of any consideration and method
of payment allowable under Section 7.2(c) of the Plan. Until the issuance of the stock certificate
evidencing such Shares (as evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), which in no event will be delayed more than thirty
(30) days from the date of the exercise of the Option, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of
the Option. No adjustment will be made for a dividend or other right for which the record date is prior
to the date the stock certificate is issued, except as provided in the Plan. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Status as an Employee. Subject to this Section 7.3(b), if any Employee ceases
to be in Continuous Status as an Employee, he or any Transferee may, but only within thirty (30) days or
such other period of time not exceeding three (3) months as is determined by the Committee (or,
provided that the applicable Option is not to be treated as an Incentive Stock Option, such longer period
of time as may be determined by the Committee) after the date he ceases to be an Employee, exercise
his Option to the extent that he or any Transferee was entitled to exercise it as of the date of such
termination. To the extent that he or any Transferee was not entitled to exercise the Option at the date of
such termination, or if he or any Transferee does not exercise such Option (which he or any Transferee
was entitled to exercise) within the time specified herein, the Option shall terminate. If any Employee
ceases to serve as an Employee as a result of a termination for cause (as determined by the Committee),
any Option held by such Employee or any Transferee shall terminate immediately and automatically on
the date of his termination as an Employee unless otherwise determined by the Committee.
Notwithstanding the foregoing, if an Employee ceases to be in Continuous Status as an Employee solely
due to a reorganization, merger, consolidation, spin-off, combination, re-assignment to another member
of the affiliated group of which the Company is a member
5
or other similar corporate transaction or event, the Committee may, in its discretion, suspend the
operation of this Section 7.3(b); provided that the Employee shall execute an agreement, in form and
substance satisfactory to the Committee, waiving such Employee’s right to have such Employee’s
Options treated as Incentive Stock Options from and after a date determined by the Committee which
shall be no later than three months from the date on which such Employee ceases to be in Continuous
Status as an Employee, and such Employee’s Options shall thereafter be treated as Nonqualified
Options for all purposes.
(c) Disability of Optionee. Notwithstanding the provisions of Section 7.3(b) above, in the event
an Employee is unable to continue his employment as a result of his Disability, he or any Transferee
may, but only within three (3) months or such other period of time not exceeding twelve (12) months as
is determined by the
Committee (or, provided that the applicable Option is not to be treated as an Incentive Stock Option,
such longer period of time as may be determined by the Committee) from the date of termination of
employment, exercise his Option to the extent he or any Transferee was entitled to exercise it at the date
of such Disability. To the extent that he or any Transferee was not entitled to exercise the Option at the
date of Disability, or if he or any Transferee does not exercise such Option (which he or any Transferee
was entitled to exercise) within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option and who is at the time of his death an Employee and who
shall have been in Continuous Status as an Employee since the date of grant of the Option, the
Option may be exercised at any time within twelve (12) months (or, provided that the applicable
Option is not to be treated as an Incentive Stock Option, such longer period of time as may be
determined by the Committee) following the date of death, by the Optionee’s estate, by a person
who acquired the right to exercise the Option by bequest or inheritance, or by any Transferee, as
the case may be, but only to the extent of the right to exercise that would have accrued had the
Optionee continued living one (1) month after the date of death; or (ii) within thirty (30) days or
such other period of time not exceeding three (3) months as is determined by the Committee (or,
provided that the applicable Option is not to be treated as an Incentive Stock Option, such longer
period of time as may be determined by the Committee) after the termination of Continuous Status
as an Employee, the Option may be exercised, at any time within three (3) months following the
date of death, by the Optionee’s estate, by a person who acquired the right to exercise the Option
by bequest or inheritance, or by any Transferee, as the case may be, but only to the extent of the
right to exercise that had accrued at the date of termination.
7.4 Transferability Of Options. During an Optionee’s lifetime, an Option may be exercisable only
by the Optionee and an Option granted under the Plan and the rights and privileges conferred thereby
shall not be subject to execution, attachment or similar process and may not be sold, pledged, assigned,
hypothecated, transferred or otherwise disposed of in any manner (whether by operation of law or
otherwise) other than by will or by the laws of descent and distribution. Notwithstanding the foregoing,
to the extent permitted by applicable law and Rule 16b-3, the Committee may determine that an Option
may be transferred by an Optionee to any of the following: (1) a family member of the Optionee; (2) a
trust established primarily for the benefit of the Optionee and/or a family member of said Optionee in
which the Optionee and/or one or more of his family members collectively have a more than 50%
beneficial interest; (3) a foundation in which such persons collectively control the management of
assets; (4) any other legal entity in which such persons collectively own more than 50% of the voting
interests; or (5) any charitable organization exempt from income tax under Section 501(c)(3) of the
Code (collectively, a “Transferee”); provided, however, in no event shall an Incentive Stock Option be
transferable if such transferability would violate the applicable requirements under Section 422 of the
Code. Any other attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of any
Option under the Plan or of any right or privilege conferred thereby, contrary to the provisions of the
Plan, or the sale or levy or any attachment or similar process upon the rights and privileges conferred
hereby, shall be null and void.
8. RESTRICTED STOCK AWARDS.
8.1 In General.
6
(a) Each Restricted Stock Award shall be evidenced by an Award Notice issued by the Committee
to the Award Recipient containing such terms and conditions not inconsistent with the Plan as the
Committee may, in its discretion, prescribe, including, without limitation, any of the following terms or
conditions:
(i) the number of Shares covered by the Restricted Stock Award;
(ii) the amount (if any) which the Award Recipient shall be required to pay to the Company
in consideration for the issuance of such Shares (which shall in no event be less than the
minimum amount required for such Shares to be validly issued, fully paid and nonassessable
under applicable law);
(iii) whether the Restricted Stock Award is a Performance-Based Award and, if it is, the
applicable Performance Goal or Performance Goals;
(iv) the date of grant of the Restricted Stock Award; and
(v) the vesting date for the Restricted Stock Award.
(b) All Restricted Stock Awards shall be in the form of issued and outstanding Shares that shall be
either:
(i) registered in the name of the Committee for the benefit of the Award Recipient and held
by the Committee pending the vesting or forfeiture of the Restricted Stock Award;
(ii) registered in the name of Award Recipient and held by the Committee, together with a
stock power executed by the Award Recipient in favor of the Committee, pending the vesting or
forfeiture of the Restricted Stock Award; or
(iii) registered in the name of and delivered to the Award Recipient.
In any event, the certificates evidencing the Shares shall at all times prior to the applicable
vesting date bear the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a Restricted Stock
Award agreement between BankAtlantic Bancorp, Inc. and [Name of Award Recipient] dated [Date]
made pursuant to the terms of the BankAtlantic Bancorp, Inc. 2005 Restricted Stock and Option Plan,
copies of which are on file at the executive offices of BankAtlantic Bancorp, Inc., and may not be sold,
encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan
and Agreement.
and/or such other restrictive legend as the Committee, in its discretion, may specify.
(c) Except as otherwise provided by the Committee, a Restricted Stock Award shall not be
transferable by the Award Recipient other than by will or by the laws of descent and distribution, and
the Shares granted pursuant to such Restricted Stock Award shall be distributable, during the lifetime of
the Award Recipient, only to the Award Recipient.
8.2 Vesting Date.
(a) The vesting date for each Restricted Stock Award shall be determined by the Committee and
specified in the Award Notice and, if no date is specified in the Award Notice, shall be the first
anniversary of the date on which the Restricted Stock Award is granted. Unless otherwise determined
by the Committee and specified in the Award Notice:
(i) if the Service of an Award Recipient is terminated prior to the vesting date of a
Restricted Stock Award for any reason other than death or Disability, any unvested Shares shall
be forfeited without consideration (other than a refund to the Award Recipient of an amount
equal to the lesser of (A) the cash amount, if any, actually paid by the Award Recipient to the
Company for the Shares being forfeited and (B) the Fair Market Value of such Shares on the
date of forfeiture);
7
(ii) if the Service of an Award Recipient is terminated prior to the vesting date of a
Restricted Stock Award on account of death or Disability, any unvested Shares with a vesting
date that is during the period of six (6) months beginning on the date of termination of Service
shall become vested on the date of termination of Service and any remaining unvested Shares
forfeited without consideration (other than a refund to the Award Recipient of an amount equal
to the lesser of (A) the cash amount, if any, actually paid by the Award Recipient to the
Company for the Shares being forfeited and (B) the Fair Market Value of such Shares on the
date of forfeiture).
8.3 Performance-Based Restricted Stock Awards.
(a) At the time it grants a Performance-Based Restricted Stock Award, the Committee shall
establish one or more Performance Goals the attainment of which shall be a condition of the Award
Recipient’s right to retain the related Shares. The Performance Goals shall be selected from among the
following:
(i) earnings per share;
(ii) net income;
(iii) return on average equity;
(iv) return on average assets;
(v) core earnings;
(vi) stock price;
(vii) strategic business objectives, consisting of one or more objectives based on meeting
specified cost targets, business expansion goals, goals relating to acquisitions or divestitures,
revenue targets or business development goals;
(viii) except in the case of a Covered Employee, any other performance criteria established
by the Committee;
(ix) any combination of (i) through (viii) above.
Performance Goals may be established on the basis of reported earnings or cash earnings, and
consolidated results or individual business units and may, in the discretion of the Committee, include or
exclude extraordinary items and/or the results of discontinued operations. Each Performance Goal may
be expressed on an absolute and/or relative basis, may be based on or otherwise employ comparisons
based on internal targets, the past performance of the Company (or individual business units) and/or the
past or current performance of other companies.
(b) At the time it grants a Performance-Based Restricted Stock Award, the Committee shall
establish a Performance Measurement Period for each Performance Goal. The Performance
Measurement Period shall be the period over which the Performance Goal is measured and its
attainment is determined. If the Committee establishes a Performance Goal but fails to specify a
Performance Measurement Period, the Performance Measurement Period shall be:
(i) if the Performance-Based Restricted Stock Award is granted during the first three
months of the Company’s fiscal year, the fiscal year of the Company in which the Performance-
Based Restricted Stock Award is granted; and
(ii) in all other cases, the period of four (4) consecutive fiscal quarters of the Company that
begins with the fiscal quarter in which the Performance-Based Restricted Stock Award is
granted.
(c) Within a reasonable period of time as shall be determined by the Committee following the end
of each Performance Measurement Period, the Committee shall determine, on the basis of such
evidence as it deems appropriate, whether the Performance Goals for such Performance Measurement
Period have been attained and, if they have been obtained, shall certify such fact in writing.
(d) If the Performance Goals for a Performance-Based Restricted Stock Award have been
determined by the Committee to have been attained and certified, the Committee shall either:
8
(i) if the relevant vesting date has occurred, cause the ownership of the Shares subject to
such Restricted Stock Award, together with all dividends and other distributions with respect
thereto that have been accumulated, to be transferred on the stock transfer records of the
Company, free of any restrictive legend other than as may be required by applicable law, to the
Award Recipient;
(ii) in all other cases, continue the Shares in their current status pending the occurrence of
the relevant vesting date or forfeiture of the Shares.
If any one or more of the relevant Performance Goals have been determined by the Committee to
not have been attained, all of the Shares subject to such Restricted Stock Award shall be forfeited
without consideration (other than a refund to the Award Recipient of an amount equal to the lesser of
(A) the cash amount, if any, actually paid by the Award Recipient to the Company for the Shares being
forfeited and (B) the Fair Market Value of such Shares on the date of forfeiture).
(e) If the Performance Goals for any Performance Measurement Period shall have been affected
by special factors (including material changes in accounting policies or practices, material acquisitions
or dispositions of property, or other unusual items) that in the Committee’s judgment should or should
not be taken into account, in whole or in part, in the equitable administration of the Plan, the Committee
may, for any purpose of the Plan, adjust
such Performance Goals and make payments accordingly under the Plan; provided, however, that any
adjustments made in accordance with or for the purposes of this section 8.3(e) shall be disregarded for
purposes of calculating the Performance Goals for a Performance-Based Restricted Stock Award to a
Covered Employee if and to the extent that such adjustments would have the effect of increasing the
amount of a Restricted Stock Award to such Covered Employee.
8.4 Dividend Rights. Unless the Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant Award Notice, any dividends or
distributions declared and paid with respect to Shares subject to the Restricted Stock Award, whether or
not in cash, shall be held and accumulated for distribution at the same time and subject to the same
terms and conditions as the underlying Shares.
8.5 Voting Rights. Unless the Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant Award Notice, voting rights appurtenant
to the Shares subject to the Restricted Stock Award, shall be exercised by the Committee in its
discretion.
8.6 Tender Offers. Each Award Recipient shall have the right to respond, or to direct the
response, with respect to the issued Shares related to its Restricted Stock Award, to any tender offer,
exchange offer or other offer made to the holders of Shares. Such a direction for any such Shares shall
be given by completing and filing, with the inspector of elections, the trustee or such other person who
shall be independent of the Company as the Committee shall designate in the direction, a written
direction in the form and manner prescribed by the Committee. If no such direction is given, then the
Shares shall not be tendered.
8.7 Designation of Beneficiary. An Award Recipient may designate a Beneficiary to receive any
unvested Shares that become available for distribution on the date of his death. Such designation (and
any change or revocation of such designation) shall be made in writing in the form and manner
prescribed by the Committee. In the event that the Beneficiary designated by an Award Recipient dies
prior to the Award Recipient, or in the event that no Beneficiary has been designated, any vested Shares
that become available for distribution on the Award Recipient’s death shall be paid to the executor or
administrator of the Award Recipient’s estate, or if no such executor or administrator is appointed
within such time as the Committee, in its sole discretion, shall deem reasonable, to such one or more of
the spouse and descendants and blood relatives of such deceased person as the Committee may select.
8.8 Taxes. The Company or the Committee shall have the right to require any person entitled to
receive Shares pursuant to a Restricted Stock Award to pay the amount of any tax which is required to
be withheld with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, a
sufficient number of Shares to cover the amount required to be withheld.
9
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
Subject to any required action by the shareholders of the Company, in the event any
recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off, combination,
repurchase, or exchange of Class A Common Stock or other securities, stock dividend or other special
and nonrecurring dividend or distribution (whether in the form of cash, securities or other property),
liquidation, dissolution, or other similar corporate transaction or event, affects the Class A Common
Stock such that an adjustment is appropriate in the Committee’s discretion in order to prevent dilution or
enlargement of the rights of Optionees and Award Recipients under the Plan, then the Committee shall,
in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares of
Class A Common Stock or other securities deemed to be available thereafter for grants of Options and
Restricted Stock Awards under the Plan in the aggregate to all eligible individuals and individually to
any one eligible individual, (ii) the number and kind of shares of Class A Common Stock or other
securities that may be delivered or deliverable in respect of outstanding Options or Restricted Stock
Awards, and (iii) the exercise price of Options. In addition, the Committee is authorized to make
adjustments in the terms and conditions of, and the criteria included in, Options and Restricted Stock
Awards (including, without limitation, cancellation of Options or Restricted Stock Awards in exchange
for the in-the-money value, if any, of the vested portion thereof, or substitution of Options or Restricted
Stock Awards using stock of a successor or other entity) in recognition of unusual or nonrecurring
events (including, without limitation, events described in the preceding sentence) affecting the
Company or any Subsidiary or the financial statements of the Company or any Subsidiary, or in
response to changes in applicable laws, regulations, or account principles; provided, however, that any
such adjustment to an Option or Performance-Based Restricted Stock Award granted to a Covered
Employee with respect to the Company or its Parent or Subsidiaries shall conform to the requirements
of section 162(m) of the Code and the regulations thereunder then in effect. In addition, each such
adjustment with respect to an Incentive Stock Option shall comply with the rules of Section 424(a) of
the Code (or any successor provision), and in no event shall any adjustment be made which would
render any Incentive Stock Option granted hereunder other than an “incentive stock option” as defined
in Section 422 of the Code. The Committee’s determination shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof
shall be made with respect to, the number or price of shares of Class A Common Stock subject to an
Option or Restricted Stock Award.
In the event of the proposed dissolution or liquidation of the Company, or in the event of a
proposed sale of all or substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Committee or the Board of Directors may determine, in its
discretion, that (i) if any such transaction is effected in a manner that holders of Class A Common Stock
will be entitled to receive stock or other securities in exchange for such shares, then, as a condition of
such transaction, lawful and adequate provision shall be made whereby the provisions of the Plan and
the Options granted hereunder shall thereafter be applicable, as nearly equivalent as may be practicable,
in relation to any shares of stock or securities thereafter deliverable upon the exercise of any Option or
(ii) the Option will terminate immediately prior to the consummation of such proposed transaction. The
Committee or the Board of Directors may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Committee or the Board of Directors and give
each Optionee or Transferee, if applicable, the right to exercise his Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be exercisable; provided,
however, that the Committee may, at any time prior to the consummation of such merger, consolidation
or other business reorganization, direct that all, but not less than all, outstanding Options be cancelled as
of the effective date of such merger, consolidation or other business reorganization in exchange for a
cash payment per optioned Share equal to the excess (if any) of the value exchanged for an outstanding
Share in such merger, consolidation or other business reorganization over the exercise price of the
Option being cancelled.
In the event of any merger, consolidation, or other business reorganization in which the Company
is not the surviving entity, any Restricted Stock Award with respect to which Shares had been awarded
to an Award Recipient shall be adjusted by allocating to the Award Recipient the amount of money,
stock, securities or other property to be received by the other shareholders of record, and such money,
stock, securities or other property shall be subject to the same terms and conditions of the Restricted
Stock Award that applied to the Shares for which it has been exchanged.
10
Without limiting the generality of the foregoing, the existence of outstanding Options or
Restricted Stock Awards granted under the Plan shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issuance by the Company of debt securities or preferred or
preference stock that would rank above the Shares subject to outstanding Options or Restricted Stock
Awards; (iv) the dissolution or liquidation of the Company; (v) any sale, transfer or assignment of all or
any part of the assets or business of the Company; or (vi) any other corporate act or proceeding,
whether of a similar character or otherwise.
10. TIME FOR GRANTING OPTIONS AND RESTRICTED STOCK AWARDS. The date of grant
of an Option or Restricted Stock Award shall, for all purposes, be the date on which the Committee
makes the determination granting such Option or Restricted Stock Award or such later date as the
Committee may specify. Notice of the determination shall be given to each Optionee or Award
Recipient within a reasonable time after the date of such grant.
11. AMENDMENT AND TERMINATION OF THE PLAN.
11.1 Committee Action; Shareholders’ Approval. Subject to applicable laws and regulations, the
Committee or the Board of Directors may amend or terminate the Plan from time to time in such
respects as the Committee or the Board of Directors may deem advisable, without the approval of the
Company’s shareholders.
11.2 Effect of Amendment or Termination. No amendment or termination or modification of the
Plan shall in any manner affect any Option or Restricted Stock Award theretofore granted without the
consent of the Optionee or Award Recipient, except that the Committee or the Board of Directors may
amend or modify the Plan in a manner that does affect Options or Restricted Stock Awards theretofore
granted upon a finding by the Committee or the Board of Directors that such amendment or
modification is in the best interest of Shareholders, Optionees or Award Recipients.
12. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to the
exercise of an Option or delivered with respect to a Restricted Stock Award unless the exercise of such
Option and the issuance and delivery of such Shares pursuant thereto or the grant of a Restricted Stock
Award and the delivery of Shares with respect thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, grant of a Restricted Stock Award or delivery of
Shares with respect to a Restricted Stock Award, the Company may require the Person exercising such
Option or acquiring such Shares or Restricted Stock Award to represent and warrant at the time of any
such exercise, grant or acquisition that the Shares are being purchased only for investment and without
any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company,
such a representation is required by any of the aforementioned relevant provisions of law. The
Company shall not be required to deliver any Shares under the Plan prior to (i) the admission of such
Shares to listing on any stock exchange on which Shares may then be listed, or (ii) the completion of
such registration or other qualification under any state or federal law, rule or regulation as the
Committee shall determine to be necessary or advisable.
13. RESERVATION OF SHARES. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of
the Plan. Inability of the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite authority shall not have been obtained.
11
14. STOCK OPTION AGREEMENT; AWARD NOTICE. Options shall be evidenced by written
option agreements and Restricted Stock Awards shall be evidenced by Award Notices, each in such
form as the Board of Directors or the Committee shall approve.
15. Intentionally omitted.
16. OTHER PROVISIONS. The Stock Option Agreements or Award Notices authorized under
the Plan may contain such other provisions, including, without limitation, restrictions upon the exercise
of the Option or vesting of the Restricted Stock Award, as the Board of Directors or the Committee
shall deem advisable. Any Incentive Stock Option Agreement shall contain such limitations and
restrictions upon the exercise of the Incentive Stock Option as shall be necessary in order that such
Option will be an incentive stock option as defined in Section 422 of the Code.
17. INDEMNIFICATION OF COMMITTEE MEMBERS. In addition to such other rights of
indemnification they may have as directors, the members of the Committee shall be indemnified by the
Company against the reasonable expenses, including attorneys’ fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection with any appeal thereon,
to which they or any of them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any Option or Restricted Stock Award granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for gross negligence or misconduct in the
performance of his duties; provided that within sixty (60) days after institution of any such action, suit
or proceeding a Committee member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
18. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall impose no
obligation upon the Optionee to exercise such Option.
19. WITHHOLDINGS; TAX MATTERS.
19.1 The Company shall have the right to deduct from all amounts paid by the Company in cash
with respect to an Option under the Plan any taxes required by law to be withheld with respect to such
Option. Where any Person is entitled to receive Shares pursuant to the exercise of an Option, the
Company shall have the right to require such Person to pay to the Company the amount of any tax
which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or
to sell without notice, a sufficient number of Shares to cover the minimum amount required to be
withheld. To the extent determined by the Committee and specified in the Option Agreement, an Option
holder shall have the right to direct the Company to satisfy the minimum required federal, state and
local tax withholding by reducing the number of Shares subject to the Option (without issuance of such
Shares to the Option holder) by a number equal to the quotient of (a) the total minimum amount of
required tax withholding divided by (b) the excess of the Fair Market Value of a Share on the Option
exercise date over the Option exercise price per Share.
19.2 If and to the extent permitted by the Committee and specified in an Award Notice for a
Restricted Stock Award other than a Performance-Based Restricted Stock Award, an Award Recipient
may be permitted or required to make an election under section 83(b) of the Code to include the
compensation related thereto in income for federal income tax purposes at the time of issuance of the
Shares to such Award Recipient instead of at a subsequent vesting date. In such event, the Shares issued
prior to their vesting date shall be issued in certificated form only, and the certificates therefor shall bear
the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a Restricted Stock
Award agreement between BankAtlantic Bancorp, Inc. and [Name of Recipient] dated [Date] made
pursuant to the terms of the BankAtlantic Bancorp, Inc. 2005 Restricted Stock and Option Plan, copies
of which are on file at the executive offices of BankAtlantic Bancorp, Inc., and may not be sold,
encumbered, hypothecated or otherwise transferred except in accordance with the terms of such Plan
and Agreement.
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or such other restrictive legend as the Committee, in its discretion, may specify. In the event of the
Award Recipient’s termination of Service prior to the relevant vesting date or forfeiture of the Shares
for any other reason, the Award Recipient shall be required to return all forfeited Shares to the
Company without consideration therefor (other than a refund to the Award Recipient of an amount
equal to the lesser of (A) the cash amount, if any, actually paid by the Award Recipient to the Company
for the Shares being forfeited and (B) the Fair Market Value of such Shares on the date of forfeiture).
20. OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect any other stock
option or incentive or other compensation plans in effect for the Company or any Subsidiary, nor shall
the Plan preclude the Company from establishing any other forms of incentive or other compensation
for employees and directors of the Company or any Subsidiary.
21. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall include
the plural, and the masculine pronoun shall include the feminine gender.
22. HEADINGS, ETC. NO PART OF PLAN. Headings of Articles and Sections hereof are
inserted for convenience and reference; they constitute no part of the Plan.
23. SEVERABILITY. If any provision of the Plan is held to be invalid or unenforceable by a court
of competent jurisdiction, then such invalidity or unenforceability shall not affect the validity and
enforceability of the other provisions of the Plan and the provision held to be invalid or unenforceable
shall be enforced as nearly as possible according to its original terms and intent to eliminate such
invalidity or unenforceability.
13
FIRST AMENDMENT TO THE
BANKATLANTIC BANCORP, INC.
2005 Restricted Stock and Option Plan
WHEREAS,
the BankAtlantic Bancorp, Inc. (the
to
“Company”) 2005 Restricted Stock and Option Plan (the “Plan”), adopted by the
Company’s Board of Directors (the “Board”) on April 5, 2005, is entered into on this 3rd
day of March, 2015 (the “Effective Date”); and
this amendment
WHEREAS, the Board desires to amend the Plan to allow for the delivery of
restricted stock awards pursuant to a “restricted stock unit” agreement.
NOW, THEREFORE, the Plan shall be amended as follows:
1. Amendment to Section 8.1 . Section 8.1 shall be deleted in its entirety and
replaced with the following:
“8.1In General.
(a) Each Restricted Stock by an Award Notice issued by the Committee to the
Award Recipient containing such terms and conditions not inconsistent with the Plan as
the Committee may, in its discretion, prescribe, including, without limitation, any of the
following terms or conditions:
(i) the number of Shares covered by the Restricted Stock Award;
(ii) the amount (if any) which the Award Recipient shall be required to pay to
the Company in consideration for the issuance of such Shares (which shall in on
event be less than the minimum amount required for such Shares to be validly
issued, fully paid and nonassessable under applicable law);
(iii) whether the Restricted Stock Award is a Performance-Based Award and,
if it is, the applicable Performance Goal or Performance Goals;
(iv) the date of grant of the Restricted Stock Award;
(v) the vesting date for the Restricted Stock Award.
(b) Restricted Stock Awards may be in the form of issued and outstanding Shares
that shall be either:
(i) registered in the name of the Committee for the benefit of the Award
Recipient and held by the Committee pending the vesting of the Restricted Stock
Award;
(ii) registered in the name of the Award Recipient and held by the Committee,
together with a stock power executed by the Award Recipient in favor of the
Committee, pending the vesting or forfeiture of the Restricted Stock Award; or
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(iii) registered in the name and delivered to the Award Recipient.
In any event, the certificates evidencing the Shares shall at all times prior to the
applicable vesting date bear the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a
Restricted Stock Award agreement between BankAtlantic Bancorp, Inc. and [Name of
Award Recipient] dated [Date] made pursuant to the terms of the BankAtlantic Bancorp,
Inc. 2005 Restricted Stock and Option Plan, copies of which are on file at the executive
offices of BankAtlantic Bancorp, Inc., and may not be sold, encumbered, hypothecated or
otherwise transferred except in accordance with the terms of such Plan and Agreement.
and/or such other restrictive legend as the Committee, in its discretion, may specify.
(c) Restricted Stock Awards may also be in the form of “restricted stock units,”
where no Shares are issued and outstanding until the Vesting Date(s) or, alternatively,
until the Performance Goals have been satisfied. Each unit represents to the right to
receive one share of Class A Common Stock upon vesting. On each Vesting Date, or
when the Performance Goals are met in the case of a Performance-Based Award, the
appropriate number of Shares will then be issued and outstanding, registered in the name
of the Award Recipient, and at that time, such Shares shall be freely transferable without
restriction and the Award Recipient shall have all rights of beneficial ownership.
(d) Except as otherwise provided by the Committee, a Restricted Stock Award
shall not be transferable by the Award Recipient other than by will or by the laws of
descent and distribution, and the Shares granted pursuant to such Restricted Stock Award
shall be distributable, during the lifetime of the Award Recipient, only to the Award
Recipient.
2.Governing Law. This Amendment shall be construed and enforced in
accordance with the law of the State of Florida, without giving effect to the conflict of
law principles thereof.
3.No Other Changes. Except as expressly modified hereby, the terms and
conditions of the Plan shall continue in full force and effect.
15
BBX CAPITAL CORPORATION
2014 STOCK INCENTIVE PLAN
Exhibit 10.4
1. PURPOSES. The purpose of this BBX Capital Corporation 2014 Stock Incentive Plan (this
“Plan”) is to attract, retain and motivate officers and other employees of BBX Capital Corporation, a
Florida corporation (the “Company”), or its Subsidiaries or Affiliates (as hereinafter defined), as well as
directors and other individuals who perform services for the Company or its Subsidiaries or Affiliates,
to compensate them for their services, to encourage ownership by them of stock of the Company, to
align their interests with those of shareholders in the creation of long-term value, and to promote the
success and profitability of the Company’s business.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) “Affiliate” shall mean, with respect to a specified Person, a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under common control with, the
Person specified.
(b) “Award Notice” shall mean, with respect to a particular Restricted Stock Award, a written
instrument signed by the Company and the recipient of the Restricted Stock Award evidencing the
Restricted Stock Award and establishing the terms and conditions thereof.
(c) “Award Recipient” shall mean the recipient of a Restricted Stock Award.
(d) “Beneficiary” shall mean the Person designated by an Award Recipient to receive any Shares
subject to a Restricted Stock Award made to such Award Recipient that become distributable following
the Award Recipient’s death.
(e) “Board of Directors” shall mean the Board of Directors of the Company.
(f) “Class A Common Stock” shall mean the Class A common stock, par value $0.01 per share, of
the Company.
(g) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(h) “Committee” shall mean the Committee appointed by the Board of Directors in accordance
with paragraph (a) of Section 4 of this Plan.
(i)
“Company” shall mean BBX Capital Corporation, a Florida corporation, and its
successors and assigns.
(j) “Continuous Status as an Employee” shall mean, subject to the following sentence, the
absence of any interruption or termination of service as an Employee. Notwithstanding the foregoing,
“Continuous Status as an Employee” with respect to a particular individual shall not be considered (i)
interrupted in the case of such individual’s absence due to sick leave, military leave, or any other leave
of absence approved by the Board of Directors or the Committee or (ii) terminated or interrupted if such
individual (A) is hired or re-hired as an Employee of the Company or any Parent, Subsidiary or
Affiliate of the Company within a period of three (3) months following the termination of his or her
employment or (B) continues to serve as a director of the Company or any Parent, Subsidiary or
Affiliate of the Company notwithstanding the termination of his or her employment, or is appointed or
re-appointed to serve as a director of the Company or any Parent, Subsidiary or Affiliate of the
Company within a period of three (3) months following the termination of his or her employment. If an
individual remains in “Continuous Status as an Employee” solely by reason of satisfaction of any of the
events specified in clause (ii) of the preceding sentence, any time-based vesting criteria with respect to
an Option previously granted to the individual shall be tolled for the period of time during which he or
she was not an Employee or director of the Company or any Parent, Subsidiary or Affiliate of the
Company.
(k) “Covered Employee” shall mean, for any taxable year of the Company, a person who is, or
who the Committee determines is reasonably likely to be, a “covered employee” (within the meaning of
Section 162(m) of the Code).
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(l) “Disability” shall mean permanent and total disability as defined in Section 22(e)(3) of the
Code.
(m) “Employee” shall mean any person, including officers, employed by the Company or any
Parent, Subsidiary or Affiliate of the Company.
(n) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
(o) “Fair Market Value” shall be determined by the Committee in its discretion; provided,
however, that so long as (i) the Class A Common Stock is listed or admitted for trading on any United
States national securities exchange, (ii) transactions in the Class A Common Stock are reported on a
consolidated transaction reporting system, or (iii) the Class A Common Stock is quoted on any system
of automated dissemination of quotations of securities prices in common use, the fair market value per
Share of the Class A Common Stock shall be the closing price of the Class A Common Stock on such
exchange or reporting system or as quoted on such system of automated dissemination of quotations of
securities, as the case may be, on the relevant date.
(p) “Incentive Stock Option” shall mean an Option intended to qualify as an “incentive stock
option” within the meaning of Section 422 of the Code.
(q) “Nonqualified Stock Option” shall mean an Option not intended to qualify as an Incentive
Stock Option, or an Option that at the time of grant, or subsequent thereto, fails to satisfy the
requirements of Section 422 of the Code.
(r) “Option” shall mean a stock option granted pursuant to this Plan.
(s) “Optioned Stock” shall mean the Class A Common Stock subject to an Option.
(t) “Optionee” shall mean the recipient of an Option.
(u) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in
Section 424(e) of the Code.
(v) “Performance-Based Restricted Stock Award” shall mean a Restricted Stock Award to which
Section 8.3 is applicable.
(w) “Performance Goal” shall mean, with respect to any Performance-Based Restricted Stock
Award, the performance goal(s) established pursuant to Section 8.3(a), the attainment of which is a
condition of the vesting and/or retention of the Performance-Based Restricted Stock Award.
(x) “Performance Measurement Period” shall mean, with respect to any Performance Goal, the
period of time over which attainment of the Performance Goal is measured.
(y) “Person” shall mean an individual, a corporation, a partnership, a limited liability company, an
association, a joint-stock company, a trust, an estate, an unincorporated organization and any other
business organization or institution.
(z) “Restricted Stock Award” shall mean an award of restricted Shares pursuant to Section 8.
(aa) “Rule 16b-3” shall mean Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act or any successor rule.
(bb) “Service” shall mean, unless the Committee provides otherwise in an Award Notice: (a)
service in any capacity as a common-law employee, director, advisor or consultant to the Company or a
Parent, Subsidiary or Affiliate of the Company; (b) service in any capacity as a common-law employee,
director, advisor or consultant (including periods of contractual availability to perform services under a
retainer arrangement) to an entity that was formerly a Parent, Subsidiary or Affiliate of the Company, to
the extent that such service is an uninterrupted
2
continuation of services being provided immediately prior to the date on which such entity ceased to be
a Parent, Subsidiary or Affiliate of the Company; and (c) performance of the terms of any contractual
non-compete agreement for the benefit of the Company or a Parent, Subsidiary or Affiliate of the
Company. Notwithstanding the foregoing, an individual’s “Service” shall not be considered terminated
if, within three (3) following the termination of his or service in any capacity described in the preceding
sentence or performance of a contractual non-compete agreement described in the preceding sentence,
such individual is hired or re-hired as an Employee of the Company or any Parent,
Subsidiary or Affiliate of the Company or is appointed or re-appointed to serve as a director of the
Company or any Parent, Subsidiary or Affiliate of the Company. If an individual’s “Service” is deemed
to continue solely by reason of satisfaction of any of the events specified in the preceding sentence, any
time-based vesting criteria with respect to a Restricted Stock Award previously granted to the individual
shall be tolled for the period of time during which he or she did not satisfy the “Service” requirements
set forth in the first sentence of this paragraph.
(cc) “Share” shall mean a share of the Class A Common Stock, as adjusted in accordance with
Section 9.
(dd) “Stock Option Agreement” shall mean the written Option agreements described in Section
14.
(ee) “Subsidiary” shall mean a “subsidiary corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Code.
(ff) “Transferee” shall have the meaning set forth in Section 7.4.
3. STOCK. Subject to the provisions of Section 9, the maximum aggregate number of Shares
which may be issued for Restricted Stock Awards and upon the exercise of Options under this Plan is
One Million (1,000,000) Shares. If an Option or Restricted Stock Award should expire or become
unexercisable for any reason without having been exercised or vested in full, the unpurchased Shares
which were subject thereto shall, unless this Plan shall have been terminated, become available for
further grant under this Plan.
The number of Shares authorized for grant under this Plan as Incentive Stock Options shall be no
more than the total number of Shares authorized for grant under this Plan, as set forth in the preceding
paragraph. Notwithstanding any provision in this Plan to the contrary, and subject to Section 9, the
maximum aggregate number of Shares with respect to one or more Options or Restricted Stock Awards
that may be granted to any one person during any calendar year shall be Three Hundred Thousand
(300,000) Shares. If an Option or Restricted Stock Award should expire, become unexercisable for any
reason without having been exercised in full, or be cancelled for any reason during the calendar year in
which it was granted, the number of Shares covered by such Option or Restricted Stock Award shall
nevertheless be treated as Options or Restricted Stock Awards, as the case may be, granted for purposes
of the limitation in the preceding sentence.
4. ADMINISTRATION.
( a ) Procedure. This Plan shall be administered by a Committee appointed by the Board of
Directors, which initially shall be the Compensation Committee of the Board of Directors. The
Committee shall consist of not less than two (2) members of the Board of Directors. Once appointed,
the Committee shall continue to serve until otherwise directed by the Board of Directors. From time to
time, the Board of Directors, at its discretion, may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause), and appoint new members in
substitution therefor, and fill vacancies however caused; provided, however, that at no time shall the
Committee consist of less than two (2) members of the Board of Directors. If the Committee does not
exist, or for any other reason determined by the Board of Directors and permitted pursuant to the terms
hereof, the Board of Directors may take any action and exercise any power, privilege or discretion under
this Plan that would otherwise be the responsibility of the Committee.
(b) Powers of the Committee. Subject to the provisions of this Plan, the Committee shall have
the authority, in its discretion: (i) to grant Incentive Stock Options, in accordance with Section 422 of
the Code, to grant Nonqualified Stock Options, or to grant Restricted Stock Awards; (ii) if applicable, to
determine, upon review of relevant information, the Fair Market Value of the Class A Common Stock;
(iii) to determine the persons to whom,
3
and the time or times at which, Options and Restricted Stock Awards shall be granted; (iv) to determine
the terms and provisions of each Option or Restricted Stock Award granted (which need not be
identical), including, without limitation, the number of Shares represented by each Restricted Stock
Award, the number of shares underlying each Option, the exercise price per share of each Option, the
consideration, if any, for each Restricted Stock Award and the vesting schedule of each Option and
Restricted Stock Award; (v) to interpret this Plan; (vi) to amend this Plan, if amendment by the
Committee is permitted pursuant to the terms hereof; (vii) to modify or amend each Option or
Restricted
Stock Award, including to accelerate or defer the exercise or vesting date of any Option or the vesting
date of any Restricted Stock Award (in each case with the consent of the holder thereof to the extent
required); (viii) to authorize any person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option or Restricted Stock Award previously granted by the Committee; (ix)
to re-price previously granted Options and/or substitute new Options or Restricted Stock Awards for
previously granted Options or Restricted Stock Awards, as the case may be, which previously granted
Options or Restricted Stock Awards contain less favorable terms, including, in the case of Options,
higher exercise prices; and (x) to make all other determinations deemed necessary or advisable for the
administration of this Plan.
(c) Effect of the Committee’s Decision . All decisions, determinations and interpretations of the
Committee shall be final and binding on all Optionees, Award Recipients or Transferees, if applicable.
5. ELIGIBILITY. Incentive Stock Options may be granted only to employees, including
officers, of the Company or any Parent or Subsidiary of the Company. Nonqualified Stock Options and
Restricted Stock Awards may be granted to Employees as well as directors of, and independent
contractors and agents who are natural persons and perform services for, the Company or any Parent,
Subsidiary or Affiliate of the Company (provided that Options and Restricted Stock Awards may not be
granted under this Plan to an independent contractor or agent to the Company or a Parent, Subsidiary or
Affiliate of the Company for services in connection with the offer or sale of securities in a capital-
raising transaction or services that directly or indirectly promote or maintain a market for the
Company’s securities). Any individual who has been granted an Option or Restricted Stock Award
may, if he or she is otherwise eligible, be granted additional Options and/or Restricted Stock Awards.
Except as otherwise provided under the Code, to the extent that the aggregate Fair Market Value of
Shares for which Incentive Stock Options (under all stock option plans of the Company and of any
Parent or Subsidiary of the Company) are exercisable for the first time by an Employee during any
calendar year exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options.
For purposes of this limitation, (a) the Fair Market Value of Shares is determined as of the time the
Option is granted and (b) the limitation is applied by taking into account Options in the order in which
they were granted.
This Plan shall not constitute a contract of employment nor shall this Plan confer upon any
Optionee or Award Recipient any right with respect to continuation of employment or continuation of
providing services to the Company, nor shall it interfere in any way with his or her right or the
Company’s or any Parent, Subsidiary or Affiliate of the Company’s right to terminate his or her
employment or provision of services at any time.
6. TERM OF PLAN. This Plan shall continue in effect ten (10) years from the date of its
adoption by the Company’s shareholders as provided in Section 15, unless sooner terminated under
Section 11.
7. STOCK OPTIONS.
7 . 1 Term of Option. The term of each Option shall be ten (10) years from the date of grant
thereof or such shorter term as may be provided in the Stock Option Agreement. However, in the case
of an Incentive Stock Option granted to an Employee who, immediately before the Incentive Stock
Option is granted, owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive
Stock Option shall be five (5) years from the date of grant thereof or such shorter time as may be
provided in such Optionee’s Stock Option Agreement.
4
7.2 Exercise Price and Consideration.
( a ) Price. The per Share exercise price for the Shares to be issued pursuant to exercise of an
Option shall be such price as determined by the Committee, but shall be subject to the following:
(i) In the case of an Incentive Stock Option which is:
(A) granted to an Employee who, immediately before the grant of such Incentive Stock
Option, owns stock representing more than ten percent (10%) of the voting power of all classes
of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise
price shall be no less than one hundred and ten percent (110%) of the Fair Market Value per
Share on the date of grant; or
(B) granted to an Employee not within (A), the per Share exercise price shall be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonqualified Stock Option, the per Share exercise price shall be no less
than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
( b ) Certain Corporate Transactions. In the event an Option is substituted for a stock option
issued by another Person in connection with a corporate transaction, such as a merger, consolidation,
acquisition of property or stock, separation (including a spin-off or other distribution of stock or
property), reorganization (whether or not such reorganization comes within the definition of such term
in Section 368 of the Code) or partial or complete liquidation involving the Company and such other
Person, the exercise price per Share of such substituted Option shall (subject to the provisions of
Section 424(a) of the Code in the case of a stock option that was intended to qualify as an “incentive
stock option”) be in such amount so as to preserve, on a per Share basis with respect to such substituted
option, the same ratio of Fair Market Value per Share to exercise price per Share which existed
immediately prior to such corporate transaction.
( c ) Payment. The consideration to be paid for the Shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Committee and may consist
entirely of cash, check, promissory note, or other shares of the Company’s capital stock having a Fair
Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which
said Option shall be exercised, or any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares to the extent permitted under the law of
the Company’s jurisdiction of incorporation. The Committee may also establish coordinated procedures
with one or more brokerage firms for the “cashless exercise” of Options, whereby Shares issued upon
exercise of an Option are delivered against payment by the brokerage firm on the Optionee’s behalf.
When payment of the exercise price for the Shares to be issued upon exercise of an Option consists of
shares of the Company’s capital stock, such shares will not be accepted as payment unless the Optionee
or Transferee, if applicable, has held such shares for the requisite period necessary to avoid a charge to
the Company’s earnings for financial reporting purposes.
7.3 Exercise Of Option.
( a ) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the Committee, including
performance criteria with respect to the Optionee, performance criteria with respect to the Company or
any Parent or Subsidiary of the Company, or in the case of Nonqualified Stock Options, performance
criteria with respect to any Affiliate of the Company, and as shall be permissible under the terms of this
Plan. An Option may not be exercised for a fraction of a Share. An Option shall be deemed to be
exercised when written notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company. Full payment may, as
authorized by the Committee, consist of any consideration and method of payment allowable under
Section 7.2(c).
(b) Termination of Status as an Employee. If any individual ceases to be in Continuous Status
as an Employee, such individual or his or her Transferee may, but only within three (3) months (or,
provided that the applicable Option is not an Incentive Stock Option, such longer period of time as may
be determined by the
5
Committee) after the date the individual ceases to be in Continuous Status as an Employee, exercise an
Option previously granted and then-outstanding to the extent that the individual or his or her Transferee
was entitled to exercise the Option as of the date of such termination of Continuous Status as an
Employee and the Option did not otherwise expire prior to the exercise date. To the extent that the
individual or his or her Transferee was not entitled to exercise the Option at the date of termination of
Continuous Status as an Employee, or if the individual or any Transferee does not exercise such Option
within the time specified herein, the Option shall terminate and no longer be exercisable.
Notwithstanding the foregoing provisions of this Section 7.3(b), (i) if any individual ceases to serve as
an Employee as a result of a termination for cause (as determined by the Committee), any Option held
by such individual or his or her Transferee shall terminate immediately and automatically on the date of
termination as an Employee unless otherwise determined by the Committee, and (ii) if an individual
ceases to be in Continuous Status as an Employee solely due to a reorganization, merger, consolidation,
spin-off, combination, or other similar corporate transaction or event, the Committee may, in its
discretion, suspend the operation of this Section 7.3(b); provided that, in the case of this clause (ii) or if
an Employee of the Company or any Parent or Subsidiary of the Company is re-assigned to an Affiliate
of the Company, the individual shall execute an agreement, in form and substance satisfactory to the
Committee, waiving such individual’s right to have his or her Options treated as Incentive Stock
Options from and after a date determined by the Committee, which shall be no later than three (3)
months after the cessation or re-assignment date, as the case may be, and such individual’s Options
shall thereafter be treated as Nonqualified Stock Options for all purposes.
(c) Disability of Optionee. Notwithstanding the provisions of Section 7.3(b) above, in the event
an Employee is unable to continue his employment as a result of his or her Disability, such individual or
his or her Transferee may, but only within three (3) months or such other period of time as is
determined by the Committee not exceeding twelve (12) months (or, provided that the applicable
Option is not an Incentive Stock Option, such longer period of time as may be determined by the
Committee) from the date of cessation of employment for Disability, exercise an Option previously
granted and then-outstanding to the extent the individual or his or her Transferee was entitled to
exercise the Option at the date of such cessation of employment for Disability and the Option did not
otherwise expire prior to the exercise date.. To the extent that the individual or his or her Transferee was
not entitled to exercise the Option at the date of cessation of employment for Disability, or if the
individual or his or her Transferee does not exercise such Option within the time specified herein, the
Option shall terminate and no longer be exercisable.
(d) Death of Optionee. In the event of the death of an Optionee:
(i) who is at the time of his or her death an Employee and who shall have been in Continuous
Status as an Employee since the date of grant of the Option, the Option may be exercised at any time
within twelve (12) months (or, provided that the applicable Option is not an Incentive Stock Option,
such longer period of time as may be determined by the Committee) following the date of death or the
earlier expiration of the Option in accordance with its terms, in each case by the Optionee’s estate, by a
person who acquired the right to exercise the Option by bequest or inheritance, or by any Transferee, as
the case may be, but only to the extent of the right to exercise in effect as of the date of death or that
would have accrued had the Optionee continued living one (1) month after the date of death; or
(ii) within thirty (30) days or such other period of time as is determined by the Committee
not exceeding three (3) months (or, provided that the applicable Option is not an Incentive Stock
Option, such longer period of time as may be determined by the Committee) after the termination of the
Optionee’s Continuous Status as an Employee (other than due to a termination for cause, in which case
clause (i) of Section 7.3(b) shall govern), the Option may be exercised, at any time within three (3)
months following the date of death or the earlier expiration of the Option in accordance with its terms,
in each case by the Optionee’s estate, by a person who acquired the right to exercise the Option by
bequest or inheritance, or by any Transferee, as the case may be, but only to the extent of the right to
exercise that had accrued at the date of termination the Optionee’s Continuous Status as an Employee.
7 . 4 Transferability of Options. During an Optionee’s lifetime, an Option may be exercisable
only by the Optionee and an Option granted under this Plan and the rights and privileges conferred
thereby shall not be subject to execution, attachment or similar process and may not be sold, pledged,
assigned, hypothecated, transferred or otherwise disposed of in any manner (whether by operation of
law or otherwise) other than by will or by the laws of descent and distribution. Notwithstanding the
foregoing, to the extent permitted by applicable law and Rule 16b-3,
6
the Committee may determine that an Option may be transferred by an Optionee to any of the
following: (i) a family member of the Optionee; (ii) a trust established primarily for the benefit of the
Optionee and/or a family member of said Optionee in which the Optionee and/or one or more of his
family members collectively have a more than fifty percent (50%) beneficial interest; (iii) a foundation
in which such persons collectively control the management of assets; (iv) any other legal entity in which
such persons collectively own more than fifty percent (50%) of the voting interests; or (v) any
charitable organization exempt from income tax under Section 501(c)(3) of the Code (collectively, a
“Transferee”); provided, however, that in no event shall an Incentive Stock Option be transferable if
such transferability would violate the applicable requirements under Section 422 of the Code. Any other
attempt to sell, pledge, assign, hypothecate, transfer or otherwise dispose of any Option under this Plan
or of any right or privilege conferred thereby, contrary to the provisions of this Plan, or the sale or levy
or any attachment or similar process upon the rights and privileges conferred hereby, shall be null and
void.
8. RESTRICTED STOCK AWARDS.
8.1 In General.
(a) Each Restricted Stock Award shall be evidenced by an Award Notice issued by the
Committee to the Award Recipient containing such terms and conditions not inconsistent with this Plan
as the Committee may, in its discretion, prescribe, including, without limitation, any of the following
terms or conditions:
(i)
the number of Shares covered by the Restricted Stock Award;
(ii) the amount (if any) which the Award Recipient shall be required to pay to the Company in
consideration for the issuance of such Shares (which shall in no event be less than the minimum amount
required for such Shares to be validly issued, fully paid and nonassessable under applicable law);
(iii) whether the Restricted Stock Award is a Performance-Based Award and, if it is, the
applicable Performance Goal or Performance Goals;
(iv) the date of grant of the Restricted Stock Award; and
(v) the vesting date for the Restricted Stock Award.
(b) All Restricted Stock Awards shall be in the form of issued and outstanding Shares that, in the
discretion of the Committee, shall be either:
(i) registered in the name of the Committee for the benefit of the Award Recipient and held
by the Committee pending the vesting or forfeiture of the Restricted Stock Award;
(ii) registered in the name of the Award Recipient and held by the Committee, together with a
stock power executed by the Award Recipient in favor of the Committee, pending the vesting or
forfeiture of the Restricted Stock Award; or
(iii) registered in the name of and delivered to the Award Recipient.
In any event, the certificates evidencing the Shares shall at all times prior to the applicable vesting
date bear the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a Restricted Stock Award
agreement between BBX Capital Corporation and [Name of Award Recipient] dated [Date] made
pursuant to the terms of the BBX Capital Corporation 2014 Stock Incentive Plan, copies of which
are on file at the executive offices of BBX Capital Corporation, and may not be sold, encumbered,
hypothecated or otherwise transferred except in accordance with the terms of such Plan and
Agreement.
and/or such other restrictive legend as the Committee, in its discretion, may specify.
7
(c) Except as otherwise provided by the Committee, a Restricted Stock Award shall not be
transferable by the Award Recipient other than by will or by the laws of descent and distribution, and
the Shares granted pursuant to such Restricted Stock Award shall be distributable, during the lifetime of
the Award Recipient, only to the Award Recipient.
8.2 Vesting Date.
(a) The vesting date for each Restricted Stock Award shall be determined by the Committee and
specified in the Award Notice and, if no date is specified in the Award Notice, shall be the first
anniversary of the date on which the Restricted Stock Award is granted. Unless otherwise determined
by the Committee and specified in the Award Notice:
(i) if the Service of an Award Recipient is terminated prior to the vesting date of a Restricted
Stock Award for any reason other than death or Disability, any unvested Shares shall be forfeited
without consideration (other than a refund to the Award Recipient of an amount equal to the lesser of
(A) the cash amount, if any, actually paid by the Award Recipient to the Company for the Shares being
forfeited and (B) the Fair Market Value of such Shares on the date of forfeiture);
(ii) if the Service of an Award Recipient is terminated prior to the vesting date of a Restricted
Stock Award on account of death or Disability, any unvested Shares with a vesting date that is during
the period of six (6) months beginning on the date of termination of Service shall become vested on the
date of termination of Service and any remaining unvested Shares shall be forfeited without
consideration (other than a refund to the Award Recipient of an amount equal to the lesser of (A) the
cash amount, if any, actually paid by the Award Recipient to the Company for the Shares being
forfeited and (B) the Fair Market Value of such Shares on the date of forfeiture).
8.3 Performance-Based Restricted Stock Awards.
(a) If the Committee determines that a Restricted Stock Award shall be a Performance-Based
Restricted Stock Award, at the time of grant of the award, the Committee shall establish one or more
Performance Goals, the attainment of which shall be a condition to the vesting and/or retention of the
related Shares. The Performance Goals shall be selected from among the following:
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
(xiv)
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
(xxii)
(xxiii)
(xxiv)
earnings per share;
total or net revenue;
revenue growth;
operating income;
net operating income after tax;
pre-tax or after-tax income;
cash flow;
cash flow per share;
net income;
EBIT;
EBITDA;
adjusted EBITDA;
profit growth;
return on equity;
return on assets;
return on capital employed;
economic value added (or an equivalent metric);
core earnings;
share price performance or other measures of equity valuation;
other earnings criteria or profit-related return ratios;
total shareholder return;
market share;
expense levels;
working capital levels;
8
(xxv)
(xxvi)
(xxvii)
strategic business objectives, consisting of one or more objectives based on meeting
specified cost, profit, operating profit, sales, revenue, cash or cash generation targets
or measures, or goals, including those relating to business expansion, business
development, acquisitions or divestitures;
except in the case of a Covered Employee, any other performance criteria
established by the Committee; or
any combination of (i) through (xxvi) above.
Performance Goals may be established on the basis of reported earnings or cash earnings, and
consolidated results or the results of a business segment or individual business unit and may, in the
discretion of the Committee, include or exclude certain items, including the operations or results of a
business segment or individual business unit and/or the results of discontinued operations. Each
Performance Goal may be expressed on an absolute and/or relative basis, may be based on or otherwise
employ comparisons based on internal targets, the past performance of the Company (or individual
business segments or units) and/or the past or current performance of other companies. Performance
Goals need not be based upon an increase or positive result under a particular business criterion and
could include, for example, maintaining the status quo or limiting economic losses (measured, in each
case, by reference to specific business criteria).
(b) At the time it grants a Performance-Based Restricted Stock Award, the Committee shall
establish a Performance Measurement Period for each Performance Goal. The Performance
Measurement Period shall be the period over which the Performance Goal is measured and its
attainment is determined. If the Committee establishes a Performance Goal but fails to specify a
Performance Measurement Period, the Performance Measurement Period shall be:
(i) if the Performance-Based Restricted Stock Award is granted during the first three months
of the Company’s fiscal year, the fiscal year of the Company in which the Performance-Based
Restricted Stock Award is granted; and
(ii) in all other cases, the period of four (4) consecutive fiscal quarters of the Company that
begins with the fiscal quarter in which the Performance-Based Restricted Stock Award is granted.
(c) Within a reasonable period of time as shall be determined by the Committee following the end
of each Performance Measurement Period, the Committee shall determine, on the basis of such
evidence as it deems appropriate, whether the Performance Goals for such Performance Measurement
Period have been attained and, if they have been obtained, shall certify such fact in writing.
(d) If the Performance Goals for a Performance-Based Restricted Stock Award have been
determined and certified by the Committee to have been attained:
(i) if the relevant vesting date has occurred, the Committee shall cause the ownership of the
Shares subject to such Restricted Stock Award, together with all dividends and other distributions with
respect thereto that have been accumulated, to be transferred on the stock transfer records of the
Company, free of any restrictive legend other than as may be required by applicable law, to the Award
Recipient; and
(ii) in all other cases, the Shares shall continue in their current status pending the occurrence
of the relevant vesting date or forfeiture of the Shares.
If any one or more of the relevant Performance Goals have been determined by the Committee to
not have been attained, all of the Shares subject to such Restricted Stock Award shall be forfeited
without consideration (other than a refund to the Award Recipient of an amount equal to the lesser of
(A) the cash amount, if any, actually paid by the Award Recipient to the Company for the Shares being
forfeited and (B) the Fair Market Value of such Shares on the date of forfeiture).
(e) If the Performance Goals for any Performance Measurement Period shall have been affected
by special factors (including material changes in accounting policies or practices, material acquisitions
or dispositions of property, or other unusual items) that in the Committee’s judgment should or should
not be taken into account, in whole or in part, in the equitable administration of this Plan, the Committee
may, for any purpose of this Plan, adjust
9
such Performance Goals and make payments accordingly under this Plan; provided, however, that any
adjustments made in accordance with or for the purposes of this section 8.3(e) shall be disregarded for
purposes of calculating the Performance Goals for a Performance-Based Restricted Stock Award to a
Covered Employee if and to the extent that such adjustments would have the effect of increasing the
amount of a Restricted Stock Award to such Covered Employee.
8.4 Dividend Rights. Unless the Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant Award Notice, any dividends or
distributions declared and paid with respect to Shares subject to the Restricted Stock Award, whether or
not in cash, shall be held and accumulated for distribution at the same time and subject to the same
terms and conditions as the underlying Shares.
8 . 5 Voting Rights. Unless the Committee determines otherwise with respect to any Restricted
Stock Award and specifies such determination in the relevant Award Notice, the Award Recipient shall
have the right to direct the voting of the Shares subject to the Restricted Stock Award.
8.6 Tender and Other Offers. Each Award Recipient shall have the right to respond, or to direct
the response, with respect to the Shares related to his or her Restricted Stock Award, to any tender offer,
exchange offer, rights offer or other offer made to the holders of Shares. To the extent applicable, such a
direction for any such Shares shall be given by completing and filing, with the inspector of elections,
the trustee or such other person who shall be independent of the Company as the Committee shall
designate in the direction, a written direction in the form and manner prescribed by the Committee. If no
such direction is given, then the Shares shall not be tendered or the Award Recipient shall be deemed to
not have participated in such exchange, rights or other offer, as the case may be.
8 . 7 Designation of Beneficiary. An Award Recipient may designate a Beneficiary to receive
any unvested Shares that become available for distribution on the date of his or her death. Such
designation (and any change or revocation of such designation) shall be made in writing in the form and
manner prescribed by the Committee. In the event that the Beneficiary designated by an Award
Recipient dies prior to the Award Recipient, or in the event that no Beneficiary has been designated, any
vested Shares that become available for distribution on the Award Recipient’s death shall be paid to the
executor or administrator of the Award Recipient’s estate, or if no such executor or administrator is
appointed within such time as the Committee, in its sole discretion, shall deem reasonable, to the spouse
or the descendants or blood relatives of such deceased person as the Committee may select.
8.8 Taxes. The Company or the Committee shall have the right to require any person entitled to
receive Shares pursuant to a Restricted Stock Award to pay the amount of any tax which is required to
be withheld with respect to such Shares, or, in lieu thereof, to retain, or to sell without notice, or the
person receiving the Shares pursuant to the Restricted Stock Award may otherwise satisfy the tax
withholding requirement by surrendering, a sufficient number of shares of the Company’s capital stock
to cover the amount required to be withheld.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the shareholders of the Company, in the event any recapitalization, forward or
reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or exchange of
Class A Common Stock or other securities, stock dividend or other special and nonrecurring dividend or
distribution (whether in the form of cash, securities or other property), liquidation, dissolution, or other
similar corporate transaction or event, affects the Class A Common Stock such that an adjustment is
appropriate in the Committee’s discretion in order to prevent dilution or enlargement of the rights of
Optionees and Award Recipients under this Plan, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of (i) the number and kind of shares of Class A Common Stock or
other securities deemed to be available thereafter for grants of Options and Restricted Stock Awards
under this Plan in the aggregate to all eligible individuals and individually to any one eligible individual,
(ii) the number and kind of shares of Class A Common Stock or other securities that may be delivered
or deliverable in respect of outstanding Options or Restricted Stock Awards, and (iii) the exercise price
of Options. In addition, the Committee is authorized to make adjustments in the terms and conditions of,
and the criteria included in, Options and Restricted Stock Awards (including, without limitation,
cancellation of Options or Restricted Stock Awards in exchange for the in-the-money value, if any, of
the vested portion thereof, or substitution of Options or Restricted Stock Awards using stock of a
successor or other Person) in recognition of unusual or nonrecurring events (including, without
10
limitation, events described in the preceding sentence) affecting the Company or any Parent, Subsidiary
or Affiliate of the Company, or the financial statements of the Company or any Parent, Subsidiary or
Affiliate of the Company, or in response to changes in applicable laws, regulations, or account
principles; provided, however, that any such adjustment to an Option or Performance-Based Restricted
Stock Award granted to a Covered Employee with respect to the Company or its Parent, Subsidiaries or
Affiliates shall conform to the requirements of section 162(m) of the Code and the regulations
thereunder then in effect. In addition, each such adjustment with respect to an Incentive Stock Option
shall comply with the rules of Section 424(a) of the Code (or any successor provision), and in no event
shall any adjustment be made which would cause any Incentive Stock Option granted hereunder to fail
to constitute an “incentive stock option” as defined in Section 422 of the Code. The Committee’s
determination shall be final, binding and conclusive. Except as expressly provided herein, no issuance
by the Company of shares of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or
price of Shares of Class A Common Stock subject to an Option or Restricted Stock Award.
In the event of the proposed dissolution or liquidation of the Company, or in the event of a
proposed sale of all or substantially all of the assets of the Company, or the merger of the Company
with or into another Person, the Committee or the Board of Directors may determine, in its discretion,
that (i) if any such transaction is effected in a manner that causes holders of Class A Common Stock to
be entitled to receive stock or other securities in exchange for such shares, then, as a condition of such
transaction, lawful and adequate provision shall be made whereby the provisions of this Plan and the
Options granted hereunder shall thereafter be applicable, as nearly equivalent as may be practicable, in
relation to any shares of stock or securities thereafter deliverable upon the exercise of any Option or (ii)
the Option will terminate immediately prior to the consummation of such proposed transaction. The
Committee or the Board of Directors may, in the exercise of its discretion in such instances, declare that
any Option shall terminate as of a date fixed by the Committee or the Board of Directors and give each
Optionee or Transferee, if applicable, the right to exercise his Option as to all or any part of the
Optioned Stock, including Shares as to which the Option would not otherwise be exercisable; provided,
however, that the Committee may, at any time prior to the consummation of such merger, consolidation
or other business reorganization, direct that all, but not less than all, outstanding Options be cancelled as
of the effective date of such merger, consolidation or other business reorganization in exchange for a
cash payment per optioned Share equal to the excess (if any) of the value exchanged for an outstanding
Share in such merger, consolidation or other business reorganization over the exercise price of the
Option being cancelled.
Unless otherwise determined by the Committee or the Board of Directors, in the event of any
merger, consolidation, or other business reorganization in which the Company is not the surviving
entity, any Restricted Stock Award with respect to which Shares had been awarded to an Award
Recipient shall be adjusted by allocating to the Award Recipient the amount of money, stock, securities
or other property to be received by the other shareholders of record, and such money, stock, securities
or other property shall be subject to the same terms and conditions of the Restricted Stock Award that
applied to the Shares for which it has been exchanged.
Without limiting the generality of the foregoing, the existence of outstanding Options or Restricted
Stock Awards granted under this Plan shall not affect in any manner the right or power of the Company
to make, authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the
Company; (iii) any issuance by the Company of debt securities or preferred stock that would rank senior
to the Shares subject to outstanding Options or Restricted Stock Awards; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the assets or
business of the Company; or (vi) any other corporate act or proceeding, whether of a similar character
or otherwise.
1 0 . COMPLIANCE WITH CODE SECTION 162(m). It is the intent of the Company that
Options granted to Covered Employees and Performance-Based Restricted Stock Awards to Covered
Employees shall constitute qualified “performance-based compensation” within the meaning of Section
162(m) of the Code and the regulations thereunder, unless otherwise determined by the Committee at
the time of grant of the Option or Restricted Stock Award. Accordingly, the applicable terms hereof,
including the definition of “Covered Employee” and the provisions of Section 8.3, shall be interpreted
in a manner consistent with Section 162(m) of the Code and the regulations thereunder. The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a given person will be
a Covered Employee with respect to a fiscal year that has not yet been
11
completed, the term Covered Employee as used herein shall mean only a person designated by the
Committee as likely to be a Covered Employee with respect to a specified fiscal year. If any provision of
this Plan or any Option Agreement or Award Notice relating to a Performance-Based Restricted Stock
Award that is designated as intended to comply with Section 162(m) of the Code does not comply or is
inconsistent with the requirements of Section 162(m) of the Code or the regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to conform to such
requirements.
11. AMENDMENT AND TERMINATION OF THIS PLAN. The Board of Directors or the
Committee may at any time and from time to time terminate, modify, suspend or amend this Plan, in
whole or in part, provided, however, that no such termination, modification, suspension or amendment
shall be effective without shareholder approval if such approval is required to comply with any
applicable law or stock exchange rule. No termination, modification, suspension or amendment of this
Plan shall, without the consent of an Optionee or Award Recipient, adversely affect his or her rights
under any Option or Restricted Stock Award previously granted to the Optionee or Award Recipient, as
the case may be. Notwithstanding any provision herein to the contrary, the Board of Directors or the
Committee shall have broad authority to amend this Plan to take into account changes in applicable tax
laws, securities laws, accounting rules and other applicable state and federal laws.
12. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to the
exercise of an Option or delivered with respect to a Restricted Stock Award unless the exercise of such
Option and the issuance and delivery of such Shares pursuant thereto or the grant of a Restricted Stock
Award and the delivery of Shares with respect thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares
may then be listed, and shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option, grant of a Restricted Stock Award or delivery of Shares
with respect to an Option or Restricted Stock Award, the Company may require the Person exercising
such Option or acquiring such Shares or Restricted Stock Award to represent and warrant at the time of
any such exercise, grant or acquisition that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required by applicable law. The Company shall not be required to
deliver any Shares under this Plan prior to (i) the admission of such Shares to listing on any stock
exchange on which Shares may then be listed, or (ii) the completion of such registration or other
qualification under any state or federal law, rule or regulation as the Committee shall determine to be
necessary or advisable.
13. RESERVATION OF SHARES. The Company, during the term of this Plan, will at all times
reserve and keep available such number of shares of Class A Common Stock as shall be sufficient to
satisfy the requirements of this Plan. Inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the
lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such shares as to which such requisite authority shall not have been
obtained.
14. STOCK OPTION AGREEMENT; AWARD NOTICE. Options shall be evidenced by
written Stock Option Agreements and Restricted Stock Awards shall be evidenced by written Award
Notices, each in such form as the Committee shall approve.
The date of grant of an Option or Restricted Stock Award shall, for all purposes, be the date on
which the Committee makes the determination to grant such Option or Restricted Stock Award or such
later date as the Committee may specify. Notice of the determination shall be given to each Optionee or
Award Recipient within a reasonable time after the date of grant.
15. SHAREHOLDER APPROVAL. This Plan shall be subject to, and become effective upon,
the approval by the shareholders of the Company holding shares of the Company’s common stock
representing a majority of the votes entitled to be cast on this Plan. No Performance-Based Restricted
Stock Awards shall be granted after the fifth (5th) anniversary of the effective date of this Plan unless,
prior to such date, the listing of permissible Performance
12
Goals set forth in Section 8.3 shall have been re-approved by the shareholders of the Company in the
manner required by Section 162(m) of the Code and the regulations thereunder.
16. OTHER PROVISIONS. The Stock Option Agreements and Award Notices authorized
under this Plan may contain such other provisions, including, without limitation, restrictions upon the
exercise of the Option or vesting of the Restricted Stock Award, as the Board of Directors or the
Committee shall deem advisable; provided such provisions may not be inconsistent with the terms
hereof. Any Stock Option Agreement with respect to an Incentive Stock Option shall contain such
limitations and restrictions upon the exercise of the Incentive Stock Option as shall be necessary in
order to cause such Option to constitute an “incentive stock option” as defined in Section 422 of the
Code.
17. INDEMNIFICATION OF COMMITTEE MEMBERS. In addition to such other rights of
indemnification they may have as directors, the members of the Committee shall be indemnified by the
Company against the reasonable expenses, including attorneys’ fees actually and necessarily incurred in
connection with the defense of any action, suit or proceeding, or in connection with any appeal thereon,
to which they or any of them may be a party by reason of any action taken or any failure to act under or
in connection with this Plan or any Option or Restricted Stock Award granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for gross negligence or misconduct in the
performance of his or her duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company the opportunity, at
the Company’s own expense, to handle and defend the same.
18. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall impose no
obligation upon the Optionee to exercise such Option.
19. WITHHOLDINGS; TAX MATTERS.
19.1 The Company shall have the right to deduct from all amounts paid by the Company in cash
with respect to an Option under this Plan any taxes required by law to be withheld with respect to such
Option. Where any Person is entitled to receive Shares pursuant to the exercise of an Option, the
Company shall have the right to require such Person to pay to the Company the amount of any tax
which the Company is required to withhold with respect to such Shares, or, in lieu thereof, to retain, or
to sell without notice, a sufficient number of Shares to cover the minimum amount required to be
withheld. To the extent determined by the Committee and specified in the Stock Option Agreement, an
Optionee shall have the right to direct the Company to satisfy the minimum required federal, state and
local tax withholding by reducing the number of Shares subject to the Option (without issuance of such
Shares to the Optionee) by a number equal to the quotient of (a) the total minimum amount of required
tax withholding divided by (b) the excess of the Fair Market Value of a Share on the Option exercise
date over the Option exercise price per Share.
19.2 If and to the extent permitted by the Committee and specified in an Award Notice for a
Restricted Stock Award other than a Performance-Based Restricted Stock Award, an Award Recipient
may be permitted or required to make an election under Section 83(b) of the Code to include the
compensation related thereto in income for federal income tax purposes at the time of issuance of the
Shares to such Award Recipient instead of at a subsequent vesting date. In such event, the Shares issued
prior to their vesting date shall be issued in certificated form only, and the certificates therefor shall bear
the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a Restricted Stock Award
agreement between BBX Capital Corporation and [Name of Recipient] dated [Date] made pursuant
to the terms of the BBX Capital Corporation 2014 Stock Incentive Plan, copies of which are on file
at the executive offices of BBX Capital Corporation, and may not be sold, encumbered,
hypothecated or otherwise transferred except in accordance with the terms of such Plan and
Agreement.
or such other restrictive legend as the Committee, in its discretion, may specify.
13
In the event of the Award Recipient’s termination of Service prior to the relevant vesting date or
forfeiture of the Shares for any other reason, the Award Recipient shall be required to return all
forfeited Shares to the Company without consideration therefor (other than a refund to the Award
Recipient of an amount equal to the lesser of (A) the cash amount, if any, actually paid by the Award
Recipient to the Company for the Shares being forfeited and (B) the Fair Market Value of such Shares
on the date of forfeiture).
20. OTHER COMPENSATION PLANS. The adoption of this Plan shall not affect any other
stock option or incentive or other compensation plans in effect for the Company or any Parent,
Subsidiary or Affiliate of the Company, nor shall this Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees and directors of the Company or any
Parent, Subsidiary or Affiliate of the Company, or for any other individual who performs services for
the Company or any Parent, Subsidiary or Affiliate of the Company. Notwithstanding the foregoing,
after the effective date of this Plan, the Company will not issue any awards under the Company’s 2005
Restricted Stock and Option Plan or the Company’s Amended and Restated 2001 Option Plan; however,
this Plan shall not impact in any manner any awards previously granted under such prior plans.
21. SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall
include the plural, and the masculine pronoun shall include the feminine gender.
22. HEADINGS, ETC. NO PART OF PLAN. Headings of Articles and Sections hereof are
inserted for convenience and reference only; they constitute no part of this Plan.
23. SEVERABILITY. If any provision of this Plan is held to be invalid or unenforceable by a
court of competent jurisdiction, then such invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this Plan, and the provision held to be invalid or unenforceable
shall be enforced as nearly as possible according to its original terms and intent to eliminate such
invalidity or unenforceability.
14
FIRST AMENDMENT TO THE
BANKATLANTIC BANCORP, INC.
2014 Restricted Stock and Option Plan
WHEREAS,
the BankAtlantic Bancorp, Inc. (the
to
“Company”) 2014 Restricted Stock and Option Plan (the “Plan”), adopted by the
Company’s Board of Directors (the “Board”) on April 29, 2014, is entered into on this
3rd day of March, 2015 (the “Effective Date”); and
this amendment
WHEREAS, the Board desires to amend the Plan to change the name of the Plan
to the BBX Capital, Inc. 2014 Restricted Stock and Option Plan;
WHEREAS, the Board desires to amend the Plan to allow for the delivery of
restricted stock awards pursuant to a “restricted stock unit” agreement.
NOW, THEREFORE, the Plan shall be amended as follows:
1.Amendment to the Name of the Plan. The name of the Plan shall be changed to
the BBX Capital, Inc. 2014 Restricted Stock and Option Plan.
2. Amendment to Section 8.1 . Section 8.1 shall be deleted in its entirety and
replaced with the following:
“8.1In General.
(a) Each Restricted Stock by an Award Notice issued by the Committee to the
Award Recipient containing such terms and conditions not inconsistent with the Plan as
the Committee may, in its discretion, prescribe, including, without limitation, any of the
following terms or conditions:
(i) the number of Shares covered by the Restricted Stock Award;
(ii) the amount (if any) which the Award Recipient shall be required to pay to
the Company in consideration for the issuance of such Shares (which shall in on
event be less than the minimum amount required for such Shares to be validly
issued, fully paid and nonassessable under applicable law);
(iii) whether the Restricted Stock Award is a Performance-Based Award and,
if it is, the applicable Performance Goal or Performance Goals;
(iv) the date of grant of the Restricted Stock Award;
(v) the vesting date for the Restricted Stock Award.
(b) Restricted Stock Awards may be in the form of issued and outstanding Shares
that shall be either:
(i) registered in the name of the Committee for the benefit of the Award
Recipient and held by the Committee pending the vesting of the Restricted Stock
Award;
15
(ii) registered in the name of the Award Recipient and held by the Committee,
together with a stock power executed by the Award Recipient in favor of the
Committee, pending the vesting or forfeiture of the Restricted Stock Award; or
(iii) registered in the name and delivered to the Award Recipient.
In any event, the certificates evidencing the Shares shall at all times prior to the
applicable vesting date bear the following legend:
The Class A Common Stock evidenced hereby is subject to the terms of a
Restricted Stock Award agreement between BBX Capital, Inc. and [Name of Award
Recipient] dated [Date] made pursuant to the terms of the BBX Capital, Inc. 2014
Restricted Stock and Option Plan, as amended, copies of which are on file at the
executive offices of BBX Capital, Inc., and may not be sold, encumbered, hypothecated
or otherwise transferred except in accordance with the terms of such Plan and
Agreement.
and/or such other restrictive legend as the Committee, in its discretion, may specify.
(c) Restricted Stock Awards may also be in the form of “restricted stock units,”
where no Shares are issued and outstanding until the Vesting Date(s) or, alternatively,
until the Performance Goals have been satisfied. Each unit represents to the right to
receive one share of Class A Common Stock upon vesting. On each Vesting Date, or
when the Performance Goals are met in the case of a Performance-Based Award, the
appropriate number of Shares will then be issued and outstanding, registered in the name
of the Award Recipient, and at that time, such Shares shall be freely transferable without
restriction and the Award Recipient shall have all rights of beneficial ownership.
(d) Except as otherwise provided by the Committee, a Restricted Stock Award
shall not be transferable by the Award Recipient other than by will or by the laws of
descent and distribution, and the Shares granted pursuant to such Restricted Stock Award
shall be distributable, during the lifetime of the Award Recipient, only to the Award
Recipient.
3.Governing Law. This Amendment shall be construed and enforced in
accordance with the law of the State of Florida, without giving effect to the conflict of
law principles thereof.
4.No Other Changes. Except as expressly modified hereby, the terms and
conditions of the Plan shall continue in full force and effect.
16
Exhibit 12.1
BBX Capital Corporation
Computation of Ratio of Earnings to Fixed Charges
(In thousands)
Earnings Available to Cover Fixed
Charges:
Income from continuing operations
before taxes
(Income) loss from equity investees
Distibuted income to equity investees
Add: Fixed charges:
Interest on borrowings
2016
For the Years Ended December 31,
2013
2014
(In thousands)
2015
2012
$
78,036
64,683
64,378
96,898
60,462
(13,630)
13,267
77,673
1,565
-
66,248
573
-
64,951
30
-
96,928
$
37,243
42,173
47,402
50,621
Interest portion of rent expense
5,249
4,536
4,271
3,593
Total fixed charges (1)
42,492
Earnings available to cover fixed charges $ 120,165
2.83
Ratio of earnings to fixed charges
46,709
51,673
54,214
112,957
2.42
116,624
2.26
151,142
2.79
(186)
-
60,276
59,964
4,634
64,598
124,874
1.93
(1) Consists of interest expense on all indebtedness (including costs related to the amortization of deferred financing costs),
capitalized interest and the portion of operating lease rental expense that is representative of the interest factor.
Subsidiaries of BBX Capital Corporation
BBX Capital Florida, LLC
Woodbridge Holdings, LLC
Eden Services, Inc.
BFC Securities Corporation
BankAtlantic Financial Ventures II, LLC
I.R.E. Property Analysts, Inc.
I.R.E. Energy 1981, Inc.
Southern National General Corporation
Kingsway Services Inc.
BFC Shared Services Corporation
Risk Management Services, LLC
BFC/CCC, Inc.
B-D2 Holdings, LLC
B-DJ Holdings, LLC
B-26 Holdings, LLC
D-2 Acquisition
Subsidiaries of BFC/CCC, Inc.
CCC Real Estate Management, LLC
LAS Trademark, LLC
Subsidiaries of Woodbridge Holdings, LLC
BankAtlantic Venture Partners 1, LLC
BankAtlantic Venture Partners 2, LLC
BankAtlantic Venture Partners 3, LLC
BankAtlantic Venture Partners 4, LLC
BankAtlantic Venture Partners 7, Inc
BankAtlantic Venture Partners 8, Inc
BankAtlantic Venture Partners 9, Inc
BankAtlantic Venture Partners 10, Inc
BankAtlantic Venture Partners 14, Inc
BankAtlantic Venture Partners 15, Inc
Bluegreen Corporation
BG Program GP, LLC
BG Program Partnership, LP
BXG Florida Corporation
Carolina Oak Homes, LLC
Carolina Oak Homes Realty, LLC
Core Communities, LLC
Cypress Creek Capital Holdings, LLC
Levitt Commercial, LLC
ODI Program GP Corporation
ODI Program Partnership, LLLP
PF Program Partnership, LP
PF Program GP LLC
Southern States Lending, LLC
Exhibit 21.1
Jurisdiction of
Organization
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
So. Carolina
So. Carolina
Florida
Florida
Florida
Florida
Florida
Delaware
Delaware
Florida
Woodbridge Executive Incentive Plan 1 LP
Woodbridge Financial, LLC
Woodbridge Fund I LLC
Woodbridge Overhead Funding LLC
Subsidiary of Levitt Commercial, LLC
Levitt Commercial Boynton Commerce Center, LLC
Subsidiaries of Core Communities, LLC
Core Commercial Group, LLC
Core Commercial Realty, LLC
Core Communities of South Carolina, LLC
Horizons Acquisition 7, LLC
Lake Charles Development Company, LLC
Somerset Realty, LLC
St. Lucie Farms, LLC
Tradition Brewery, LLC
Tradition Construction, LLC
Tradition Outfitters, LLC
Tradition Research Park, LLC
Tradition Title Company, LLC
Tradition Village Center, LLC
Core Development Company, LLC
Core Asset Advisors, LLC
Subsidiary of Core Commercial Group, LLC
The Landing Holding Company, LLC
Landing Phase II, LLC
Subsidiary of The Landing Holding Company, LLC
The Landing at Tradition Development Company, LLC
Subsidiary of Core Commercial Realty, LLC
Tradition Realty, LLC
Subsidiary of Tradition Realty, LLC
Tradition Referral, LLC
Subsidiaries of Core Communities of South Carolina, LLC
Tradition of South Carolina Commercial Development, LLC
Tradition of South Carolina Construction, LLC
Tradition Hilton Head Realty, LLC
Tradition of South Carolina Village Center, LLC
Tradition National Golf Club, LLC
Tradition Hilton Head, LLC
Subsidiaries of Bluegreen Corporation
BBCV Receivables-Q 2010, LLC
Big Cedar JV Interiors, LLC
Bluegreen Asset Management Corporation
Bluegreen Beverage, LLC
Bluegreen Communities of Georgia, LLC
Bluegreen Communities of Texas, LP
Bluegreen Communities, LLC
Bluegreen Corporation of Tennessee
Bluegreen Golf Clubs, Inc.
Bluegreen Guaranty Corporation
Bluegreen HoldCo, LLC
Florida
Florida
Florida
Florida
Florida
Florida
Florida
So. Carolina
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Mississippi
Florida
Florida
Florida
Florida
Florida
Florida
South Carolina
South Carolina
South Carolina
South Carolina
South Carolina
South Carolina
Delaware
Delaware
Delaware
Delaware
Georgia
Delaware
Delaware
Delaware
Delaware
Florida
Nevada
Bluegreen Holding Corporation (Texas)
Bluegreen Louisiana, LLC
Bluegreen Management Resources, LLC
Bluegreen Nevada, LLC
Bluegreen New Jersey, LLC
Bluegreen Properties N.V.
Bluegreen Properties of Virginia, Inc.
Bluegreen Purchasing & Design, Inc.
Bluegreen Receivables Finance Corporation III
Bluegreen Resorts International, Inc.
Bluegreen Resorts Management, Inc.
Bluegreen Resorts of Canada, Inc.
Bluegreen Servicing LLC (f/k/a Bluegreen Florida, LLC)
Bluegreen Southwest Land, Inc.
Bluegreen Southwest One, L.P.
Bluegreen Specialty Finance, LLC
Bluegreen Timeshare Finance Corporation I
Bluegreen Treasury Services, LLC
Bluegreen Vacations Unlimited, Inc.
Bluegreen/Big Cedar Vacations, LLC
BRFC 2010-A, LLC
BRFC 2012-A LLC
BRFC 2013-A LLC
BRFC 2015-A LLC
BRFC 2016-A LLC
BRFC III Deed Corporation
BRFC-Q 2010, LLC
BRM Bahamas Limited
BXG Construction, LLC
BXG Mineral Holdings, LLC
BXG Realty, Inc.
Catawba Falls, LLC
Encore Rewards, Inc.
Family Fun Company, LLC
Great Vacation Destinations, Inc.
Jordan Lake Preserve Corporation
Leisure Capital Corporation
Leisure Communication Network, Inc.
Leisurepath, Inc.
Managed Assets Corporation
New England Advertising Corporation
Outdoor Traveler Destinations, LLC
Pinnacle Vacations, Inc.
Prizzma, LLC
Resort Title Agency, Inc.
SC Holdco, LLC
Select Connections, LLC
TFRI 2013-1 LLC
Subsidiaries of BBX Capital Florida, LLC
BBX Partners, Inc.
Delaware
Delaware
Delaware
Delaware
Delaware
Aruba
Delaware
Florida
Delaware
Delaware
Delaware
Canada
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Delaware
Bahamas
Delaware
Delaware
Delaware
North Carolina
Delaware
Delaware
Florida
North Carolina
Vermont
Delaware
Florida
Delaware
Vermont
Florida
Delaware
Delaware
Florida
Delaware
Delaware
Delaware
Florida
BBX Capital Asset Management, LLC
Florida Asset Resolution Group, LLC
BBX Capital Partners, LLC
BBX Sweet Holdings, LLC
Renin Holdings, LLC
Food For Thought Restaurant Group – Florida, LLC
Subsidiaries of BBX Partners Inc.
Heartwood Partners 1, LLC
Heartwood Partners 2, LLC
Heartwood Partners 3, LLC
Heartwood Partners 4, LLC
Subsidiaries of Renin Holdings, LLC
Renin US, LLC
Renin Canada Corporation
Subsidiaries of Renin Canada Corporation
Renin UK Corporation
Subsidiaries of BBX Sweet Holdings, LLC
The Hoffman Commercial Group, Inc.
Good Fortunes East, LLC
Boca Bons East, LLC
B&B Bons, LLC
S&F Good Fortunes, LLC
Hoffchoc, LLC
Hoffmans Chocolate, LLC
Brea Enterprises, LLC
Chocolate Acquisition Sub, LLC dba Kron Chocolatier
Las Olas Confections and Snacks, LLC
Subsidiaries of Las Olas Confections and Snacks, LLC
Fantasy Chocolates, Inc.
Jer's Chocolates, LLC
Sweet Acquisitions CA2, LLC d/b/a Helen Grace
Sweet Acquisitions CA3, LLC d/b/a The Toffee Box
Sweet Acquisitions CA4, LLC d/b/a Droga Chocolates
Sweet Acquisitions UT1 d/b/a Kencraft Candy
Sweet Acquisitions UT2
Anastasia Confections, Inc.
Subsidiaries of Food For Thought Restaurant Group – Florida, LLC
Food For Thought Restaurant Group
Food For Thought Restaurant Group – Operations, LLC
Subsidiaries of BBX Capital Asset Management, LLC
BBX Chapel Trail, LLC
BBX Shingle Creek, LLC
BBX Miramar, LLC
BBX Centra, LLC
FL Cell Tower
BBX Bonterra Multifamily, LLC
BBX Gardens Multifamily, LLC
BBX Austin, LLC
BBX Hialeah Apartments, LLC
Hialeah Multifamily, LLC
Florida
Delaware
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Mississippi
Canada
United Kingdom
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
California
California
California
California
Utah
Utah
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
BBX Residential Victoria Park, LLC
Premier Flagler, LLC
Banc Servicing Center, LLC
Fidelity Service, LLC
Fidelity Tax, LLC
Heartwood 3, LLC
Heartwood 4, LLC
Heartwood 7, LLC
Heartwood 11, LLC
FL Billboards, LLC
Heartwood 18, LLC
Heartwood 19, LLC
Heartwood 21, LLC
Heartwood 23, LLC
Heartwood 24, LLC
Heartwood 40, LLC
Heartwood 41, LLC
Heartwood 42, LLC
Heartwood 44, LLC
Heartwood 47, LLC
Heartwood 50, LLC
Heartwood 88, LLC
Heartwood 90, LLC
Heartwood 91, LLC
Heartwood 91-2, LLC
Heartwood 91-3, LLC
Heartwood 91-4, LLC
Heartwood 92, LLC
Subsidiary of Florida Asset Resolution Group, LLC
Heartwood 58, LLC
FAR Holdings Group, LLC
Subsidiaries of FAR Holdings Group, LLC
Heartwood 2, LLC
Heartwood 43, LLC
Heartwood 55, LLC
FAR 1, LLC
FAR 2, LLC
FAR 3, LLC d/b/a Robovault
FAR 4, LLC
FAR 5, LLC
FAR 6, LLC
Subsidiaries of Heartwood 58, LLC
FT Properties, LLC
Sunrise Atlantic, LLC
Heartwood 45, LLC
Heartwood 56, LLC
Heartwood 57, LLC
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Florida
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have issued our reports dated March 14, 2017 with respect to internal control over financial
reporting, the consolidated financial statements as of and for the year ended December 31,
2016, and related schedules, included in the Annual Report of BBX Capital Corporation on
Form 10-K for the year ended December 31, 2016. We hereby consent to the incorporation by
reference of said reports in the Registration Statements of BBX Capital Corporation on Forms
S-8 (File No. 333-12543, File No. 333-127206, File No. 333-159805, File No. 333-186085, File
No. 333-197195, File No. 333-206371, File No. 333-215247 and File No. 333-215260).
/s/Grant Thornton LLP
Fort Lauderdale, Florida
March 14, 2017
CONSENT OF INDEPENDENT CERTIFIED REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (N0.
333-12543, 333-127206, 333-159805, 333-186085, 333-197195, 333-206371, 333-215247 and 333-
215260) of BBX Capital Corporation of our report dated March 16, 2015, except for the change in
reportable segments discussed in Note 23 to the consolidated financial statements, as to which the date
is March 14, 2017, relating to the financial statements, which appear in this Form 10-K.
Exhibit 23.2
/s/ PricewaterhouseCoopers, LLP
Fort Lauderdale, Florida
March 14, 2017
Exhibit 31.1
I, Alan B. Levan, certify that:
1)
I have reviewed this annual report on Form 10-K of BBX Capital Corporation;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and
5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have
a significant role in the registrant’s internal control over financial reporting.
Date: March 1 4, 2017
By:/s/Alan B. Levan
Alan B. Levan,
Chairman of the Board and
Chief Executive Officer
Exhibit 31.2
I, Raymond S. Lopez, certify that:
1)
I have reviewed this annual report on Form 10-K of BBX Capital Corporation;
2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3) Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4) The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))
for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b. Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting
principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter (the registrant’s
fourth fiscal quarter in the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal control over financial
reporting; and
5) The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial reporting.
Date: March 1 4, 2017
By: /s/Raymond S. Lopez
Raymond S. Lopez,
Chief Financial Officer
Exhibit 32.1
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of BBX Capital Corporation (the “Company”) for
the year ended December 31, 2016, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Alan B. Levan, Chairman of the Board and Chief Executive Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ Alan B. Levan
Name: Alan B. Levan
Title: Chairman of the Board and Chief Executive Officer
Date: March 14, 2017
Exhibit 32.2
Certification Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of BBX Capital Corporation (the “Company”) for
the year ended December 31, 2016, as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), I, Raymond S. Lopez, Chief Financial Officer of the Company, certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
/s/ Raymond S. Lopez
Name: Raymond S. Lopez
Title: Chief Financial Officer
Date: March 14, 2017