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This excerpt taken from the BXG 10-Q filed May 11, 2009. Bluegreen Resorts – Resort Sales and Marketing The following table sets forth certain information for sales of VOIs for the periods indicated, before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with SFAS No. 152.
Bluegreen Resorts’ gross VOI sales (prior to the impact of estimated uncollectible VOI notes receivable and gain on sale of notes receivable) decreased $47.1 million, or 48%, during the three months ended March 31, 2009 as compared to 2008 reflecting our operation of 18 sales offices in 2009, compared to 28 in the first quarter of 2008, and our decision to reduce sales. Sales to owners accounted for 53% of Resorts’ sales during the three months ended March 31, 2009 as compared to 46% during the same period in 2008 as we continued our focus on marketing to our Bluegreen Vacation Club owner base. Additionally, although the number of sales prospects seen by Bluegreen Resorts decreased by 68%, the overall sale-to-tour conversion ratio increased during the first quarter of 2009 to 17.1% from 13.6% in the first quarter of 2008. As required under SFAS No. 152, approximately $8.2 million of gain on sales of VOI notes receivable in 2008 are reflected as an increase to VOI sales. No such gains were recognized during the first quarter of 2009. The majority of the gain represents the reversal of amounts previously recognized as estimated uncollectible VOI notes receivable. As we previously announced any future sales of our notes receivable will be structured so that they are accounted for as on-balance sheet borrowings. Accordingly, we do not expect to recognize future gains on the sale of notes receivable. While we believe the on-balance sheet treatment for the sale of notes receivable provides more transparent results, our results of operations and operating cash flows will be negatively impacted compared to those periods in which off-balance sheet accounting was used. VOI revenue was reduced by our estimate of future uncollectible VOI notes receivable of $7.9 million and $16.4 million during the first quarter of 2009 and 2008, respectively. These estimates vary with the amount of financed sales during the period. Bluegreen Resorts’ gross margin percentages vary between periods based on the relative costs of the specific VOIs sold in each respective period. Gross margin during 2009 as compared to 2008 was negatively impacted by a higher proportion of sales of relatively higher cost VOIs, including the GAAP impact of reacquiring defaulted loans from off-balance sheet term securitizations as more fully described under, “Executive Overview”. Selling and marketing expenses for Bluegreen Resorts decreased $36.1 million, or 59%, during 2009 as compared to 2008. As a percentage of sales, selling and marketing expenses decreased from 67% during 2008 to 56% during 2009. The decrease in selling and marketing expenses during 2009 as compared to 2008 was the result of fewer tours and the operation on fewer sales offices. As a percentage of gross VOI sales (prior to estimated uncollectible VOI notes receivable and gain on sale of notes receivable), selling and marketing expenses decreased to 48% in the first quarter of 2009 from 62% in the same period for 2008, which reflects the elimination of many of our higher cost marketing programs and our continued focus on owner sales (which generally carry lower marketing costs). We believe that selling and marketing expenses as a percentage of gross VOI sales is an important indicator of the performance of Bluegreen Resorts and our performance as a whole. No assurance can be given that selling and marketing expenses will not increase as a percentage of gross VOI sales in future periods. Field general and administrative expenses for Bluegreen Resorts decreased $2.7 million, or 36%, during the first quarter of 2009 as compared to the same period in 2008, the result of operating fewer sales offices. As a percentage of sales, field general and administrative expenses increased from 8% during 2008 to 11% in 2009. 30 As of March 31, 2009, approximately $12.9 million and $7.0 million of sales and field operating profit, respectively, were deferred under SFAS No. 152 because such sales did not yet meet the minimum required buyer’s initial investment. This compares to $23.3 million and $13.5 million of sales and field operating profits, respectively, deferred as of December 31, 2008. We intend to pursue providing sales and marketing services to third-party resort developers and others, on a cash-fee basis. This would involve utilizing our sales and marketing infrastructure, processes and associates, as well as benefits of the Bluegreen Vacation Club, to assist parties that own resorts with the sale of VOIs in their property, in exchange for a cash-fee for such services. We believe that this will become an increasing portion of our business over time. In April 2009, we entered into two fee-for-service arrangements to market timeshares and to manage certain resort operations on behalf of other developers. These excerpts taken from the BXG 10-K filed Mar 16, 2009. Bluegreen Resorts – Resort Sales and Marketing The following table sets forth certain information for sales of VOIs for the periods indicated, before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with SFAS No. 152.
Bluegreen Resorts’ gross VOI sales (prior to the impact of estimated uncollectible VOI notes receivable and gain on sale of notes receivable) increased $19.6 million, or 4%, during 2008 as compared to 2007 primarily due to our continued focus on marketing to our Bluegreen Vacation Club owner base. Sales to owners increased by 13% and accounted for 46% of Resorts’ sales during 2008 as compared to 41% during 2007. Additionally, although the number of sales prospects seen by Bluegreen Resorts decreased by 2%, the overall sale-to-tour conversion ratio increased 6% during 2008, resulting in an overall sales increase during 2008 as compared to 2007. In connection with the restructuring described below, we closed a number of sales locations and implemented various changes to 45 our sales program that we expect will materially reduce the number of sales transactions, and the amount of sales during 2009. As required under SFAS No. 152, approximately $39.4 million and $8.2 million of gain on sales of VOI notes receivable in 2007 and 2008, respectively, were reflected as an increase to VOI sales. The majority of these gains represent the reversal of amounts previously recognized as estimated uncollectible VOI notes receivable. While the overall decrease in gain on sale of VOI notes receivable in 2008 as compared to 2007 was primarily the result of lower off-balance sheet receivable sales during 2008 compared to 2007 ($68.6 million of loans in 2008 compared to $266.9 million in 2007), as a percentage of notes receivable sold, the gain decreased in 2008 due to higher interest rates required by investors in the securitization market. As we previously announced any future sales of our notes receivable will be structured so that they are accounted for as on-balance sheet borrowings. Accordingly, we do not expect to recognize future gains on the sale of notes receivable. While we believe the on-balance sheet treatment for the sale of notes receivable provides more transparent results, our results of operations and operating cash flows will be negatively impacted compared to those periods in which off-balance sheet accounting was used. The increase in gross VOI revenue was further reduced by an increase of $10.6 million, or 16%, in our estimate of future uncollectible VOI notes receivable primarily due to higher gross VOI sales in 2008 as compared to 2007, and a higher default experience. Bluegreen Resorts’ gross margin percentages vary between periods based on the relative costs of the specific VOIs sold in each respective period. Gross margin during 2008 as compared to 2007 was positively impacted by sales of VOIs located at our Bluegreen Wilderness Traveler at Shenandoah resort, which has a relatively low cost, and to a lesser extent, by a system-wide price increase during the first quarter of 2008. Selling and marketing expenses for Bluegreen Resorts increased $14.5 million, or 6%, during 2008 as compared to 2007. As a percentage of sales, selling and marketing expenses increased from 58% during 2007 to 64% during 2008. The increase in selling and marketing expenses during 2008 as compared to 2007 reflected the overall increase in sales and a general increase in overall marketing expenses. As a percentage of sales, our selling and marketing costs increased primarily as a result of the recognition of smaller gains on sale (recorded as a component of revenue) in 2008 as compared to 2007, partially offset by increased sales to existing owners, (which generally carry lower marketing costs), and a slightly higher 2008 sale-to-tour conversion rate. As a percentage of gross VOI sales (prior to estimated uncollectible VOI notes receivable and gain on sale of notes receivable), selling and marketing expenses increased to 56% in 2008 from 55% in 2007. We believe that selling and marketing expenses as a percentage of gross VOI sales is an important indicator of the performance of Bluegreen Resorts and our performance as a whole. No assurance can be given that selling and marketing expenses will not increase as a percentage of gross VOI sales in future periods. As a result of our 2008 strategic initiatives, we believe that total selling and marketing expense for Bluegreen Resorts will be materially reduced in 2009 as compared to 2008. See “Liquidity and Capital Resources” below for additional information on these reductions. Field general and administrative expenses for Bluegreen Resorts decreased $4.3 million, or 14%, during 2008 as compared to 2007. As a percentage of sales, field general and administrative expenses decreased from 7% during 2007 to 6% in 2008. As a result of closing certain of our sales offices in connection with the 2008 strategic initiatives, we anticipate that our future field general and administrative expenses will continue to decrease overall. As of December 31, 2008, approximately $23.3 million and $13.5 million of sales and field operating profit, respectively, were deferred under SFAS No. 152 because such sales did not yet meet the minimum required buyer’s initial investment. This compares to $24.6 million and $14.3 million of sales and field operating profits, respectively, deferred as of December 31, 2007. We intend to pursue providing sales and marketing services to third-party resort developers and others, on a cash-fee basis. This would involve utilizing our sales and marketing infrastructure, processes and associates, as well as benefits of the Bluegreen Vacation Club, to assist parties that own resorts with the sale of VOIs in their property, in exchange for a cash-fee for such services. We believe that this will become an increasing portion of our business over time 46 Bluegreen Resorts – Resort Sales and Marketing Bluegreen Resorts’ net sales of real estate increased $45.2 million, or 11%, during 2007 as compared to 2006 as a result of higher sales of VOIs and higher gains on sales of VOI notes receivable, partially offset by an increase in estimated uncollectible VOI notes receivable. The following table sets forth certain information for sales of VOIs for the periods indicated, before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with SFAS No. 152.
Gross VOI sales increased $56.3 million, or 13%, driven primarily by our continued focus on marketing to our growing Bluegreen Vacation Club owner base. Sales to owners increased by 32% and accounted for 41% of Resorts’ sales during 2007 as compared to 34% during 2006. Also contributing to higher 2007 sales was same-resort sales increases at many of our sales offices. Same-resort sales increased by almost 8% during 2007 as compared to 2006 and were highlighted by increases in sales originating at the Smoky Mountain Preview Center in Sevierville, Tennessee, The Falls Village™ resort in Branson, Missouri, MountainLoft™ in Gatlinburg, Tennessee, and an offsite sales office in Las Vegas, Nevada. Higher sales were also attributable, to a lesser extent, to the opening of new sales offices at SeaGlass Tower™, located in Myrtle Beach, S.C., and at a new resort under development in Williamsburg, Virginia, as well as an 8% system-wide price increase that went into effect during March 2007. These factors, combined with a 5% overall increase in the number of sales prospects seen by Bluegreen Resorts during 2007, and a relatively consistent, overall sale-to-tour conversion ratio during these periods, contributed to the overall sales increase during 2007 as compared to 2006. The increase in the average sales price per transaction, primarily due to the system-wide price increase, also contributed to higher VOI sales. As required under SFAS No. 152, approximately $44.7 million and $39.4 million of gain on sales of VOI notes receivable in 2006 and 2007, respectively, are reflected as an increase to VOI sales. The majority of these gains represent the reversal of amounts previously recognized as estimated uncollectible VOI notes receivable. The increase in gain on sale of VOI notes receivable in 2007 as compared to 2006 represents the sale of $266.9 million of loans in 2007 compared to $243.6 million in 2006. The increase in VOI revenue and gains on sales of VOI notes receivable were partially offset by an increase of $5.7 million, or 10%, in our estimate of future uncollectible VOI notes receivable primarily due to higher VOI sales in 2007 as compared to 2006. 48 Bluegreen Resorts’ gross margin percentages vary between periods based on the relative costs of the specific VOIs sold in each respective period. As compared to the 78% gross margin earned in 2006, our gross margin of 75% for 2007 was negatively impacted by a higher proportion of sales of VOIs in 2007 of relatively higher cost resorts as compared to 2006. Overall gross margins on VOIs sold in 2007 decreased compared to previous periods reflecting the higher costs of acquiring and developing properties. Selling and marketing expenses for Bluegreen Resorts increased $14.2 million, or 6%, during 2007 as compared to 2006. As a percentage of sales, selling and marketing expenses decreased from 61% during 2006 to 58% during 2007. The increase in selling and marketing expenses during 2007 as compared to 2006 reflects the overall increase in sales prospects, higher marketing expenses at our newly opened off-site sales offices and a general increase in overall marketing expenses. As a percentage of sales, our selling and marketing costs decreased primarily as a result of the recognition of higher gains on sale (recorded as a component of revenue) in 2007 as compared to 2006, increased sales to existing owners, which generally carry lower marketing costs, as well as changes to our sales commission policy. As a percentage of gross VOI sales, selling and marketing expenses decreased to 55% in 2007 from 59% in 2006. Field general and administrative expenses for Bluegreen Resorts decreased $146,000 during 2007 as compared to 2006. As a percentage of sales, field general and administrative expenses decreased from 8% during 2006 to 7% in 2007. As of December 31, 2007, approximately $24.6 million and $14.3 million of sales and field operating Profit, respectively, were deferred under SFAS No. 152 because such sales did not yet meet the minimum required initial investment. This compares to $27.3 million and $15.3 million of sales and field operating profits, respectively, deferred as of December 31, 2006. Bluegreen Resorts – Resort Sales and Marketing The following table sets forth certain information for sales of VOIs for the periods indicated, before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with SFAS No. 152.
Bluegreen Resorts’ gross VOI sales (prior to the impact of estimated uncollectible VOI notes receivable and gain on sale of notes receivable) increased $19.6 million, or 4%, during 2008 as compared to 2007 primarily due to our continued focus on marketing to our Bluegreen Vacation Club owner base. Sales to owners increased by 13% and accounted for 46% of Resorts’ sales during 2008 as compared to 41% during 2007. Additionally, although the 45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
our sales program that we expect will materially reduce the number of sales transactions, and the amount of sales during 2009. As required under SFAS No. 152, approximately $39.4 million and $8.2 million of gain on sales of VOI notes receivable in 2007 and 2008, respectively, were reflected as an increase to VOI sales. The majority of these gains represent the reversal of amounts previously recognized as estimated uncollectible VOI notes receivable. While the overall decrease in gain on sale of VOI notes receivable in 2008 as compared to 2007 was primarily the result of lower The increase in gross VOI revenue was further reduced by an increase of $10.6 million, or 16%, in our estimate of future uncollectible VOI notes receivable primarily due to higher gross VOI sales in 2008 as compared to 2007, and a higher default experience. Bluegreen Resorts’ gross margin percentages vary between periods based on the relative costs of the specific VOIs sold in each respective period. Gross margin during 2008 as compared to 2007 was positively impacted by sales of VOIs located at our Bluegreen Wilderness Traveler at Shenandoah resort, which has a relatively low cost, and to a lesser extent, by a system-wide price increase during the first quarter of 2008. Selling and marketing expenses for Bluegreen Resorts increased $14.5 million, or 6%, during 2008 as compared to 2007. As a percentage of sales, selling and marketing expenses increased from 58% during 2007 to 64% during 2008. The increase in selling and marketing expenses during 2008 as compared to 2007 reflected the overall increase in sales and a general increase in overall marketing expenses. As a percentage of sales, our selling and marketing costs Field general and administrative expenses for Bluegreen Resorts decreased $4.3 million, or 14%, during 2008 as compared to 2007. As a percentage of sales, field general and administrative expenses decreased from 7% during 2007 to 6% in 2008. As a result of closing certain of our sales offices in connection with the 2008 strategic initiatives, we anticipate that our future field general and administrative expenses will continue to decrease overall. As of December 31, 2008, approximately $23.3 million and $13.5 million of sales and field operating profit, respectively, were deferred under SFAS No. 152 because such sales did not yet meet the minimum required buyer’s initial investment. This compares to $24.6 million and $14.3 million of sales and field operating profits, respectively, deferred as of December 31, 2007. We intend to pursue providing sales and marketing services to third-party resort developers and others, on a cash-fee basis. This would involve utilizing our sales and marketing infrastructure, processes and associates, as well as benefits of the Bluegreen Vacation Club, to assist parties that own resorts with the sale of VOIs in their property, in exchange for a cash-fee for such services. We believe that this will become an increasing portion of our 46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bluegreen Resorts – Resort Sales and Marketing Bluegreen Resorts’ net sales of real estate increased $45.2 million, or 11%, during 2007 as compared to 2006 as a result of higher sales of VOIs and higher gains on sales of VOI notes receivable, partially offset by an increase in estimated uncollectible VOI notes receivable. The following table sets forth certain information for sales of VOIs for the periods indicated, before giving effect to the percentage-of-completion method of accounting and the deferral of sales in accordance with SFAS No. 152.
Gross VOI sales increased $56.3 million, or 13%, driven primarily by our continued focus on marketing to our growing Bluegreen Vacation Club owner base. Sales to owners increased by 32% and accounted for 41% of Resorts’ sales during 2007 as compared to 34% during 2006. Also contributing to higher 2007 sales was same-resort sales increases at many of our sales offices. Same-resort sales increased by almost 8% during 2007 as compared to 2006 and The increase in VOI revenue and gains on sales of VOI notes receivable were partially offset by an increase of $5.7 million, or 10%, in our estimate of future uncollectible VOI notes receivable primarily due to higher VOI sales in 2007 as compared to 2006. 48 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bluegreen Resorts’ gross margin percentages vary between periods based on the relative costs of the specific VOIs sold in each respective period. As compared to the 78% gross margin earned in 2006, our gross margin of 75% for 2007 was negatively impacted by a higher proportion of sales of VOIs in 2007 of relatively higher cost resorts as compared to 2006. Overall gross margins on VOIs sold in 2007 decreased compared to previous periods reflecting Selling and marketing expenses for Bluegreen Resorts increased $14.2 million, or 6%, during 2007 as compared to 2006. As a percentage of sales, selling and marketing expenses decreased from 61% during 2006 to 58% during 2007. The increase in selling and marketing expenses during 2007 as compared to 2006 reflects the overall increase in sales prospects, higher marketing expenses at our newly opened off-site sales offices and a general increase in overall Field general and administrative expenses for Bluegreen Resorts decreased $146,000 during 2007 as compared to 2006. As a percentage of sales, field general and administrative expenses decreased from 8% during 2006 to 7% in 2007. As of December 31, 2007, approximately $24.6 million and $14.3 million of sales and field operating Profit, respectively, were deferred under SFAS No. 152 because such sales did not yet meet the minimum required initial investment. This compares to $27.3 million and $15.3 million of sales and field operating profits, respectively, deferred as of December 31, 2006. | EXCERPTS ON THIS PAGE:
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