10-K

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 Year Ended December 31, 2007

o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number
001-31931

Levitt Corporation

(Exact name of registrant as specified in its charter)

Florida
(State or other jurisdiction of
incorporation or organization) 11-3675068
(I.R.S. Employer
Identification No.)

2200 West Cypress Creek Road
Ft. Lauderdale, Florida
(Address of principal executive offices) 33309
(Zip Code)

(954) 958-1800
(Registrant’s telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Class A Common Stock, Par Value $0.01 Per Share
(Title of each class) New York Stock Exchange
(Name of each exchange on which registered)

     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes o          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 Exchange Act.

Yes o          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 o

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K 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. (Check one):

Large accelerated filer o	Accelerated filer x		Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o          No x

     As of June 30, 2007, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was $155.4 million based on the $9.43 closing sale price as reported on the New York Stock Exchange.

     The number of shares outstanding for each of the registrant’s classes of common stock, as of February 27, 2008 is as follows:

Class of Common Stock	Shares Outstanding
Class A common stock, $0.01 par value Class B common stock, $0.01 par value	95,040,731   1,219,031

DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Proxy Statement of the registrant relating to the Annual Meeting of Shareholders are incorporated as Part III of this report. The financial statements of Bluegreen Corporation are incorporated in Part II of this report and are filed as an exhibit to this report.

Levitt Corporation
Annual Report on Form 10-K for the year ended December 31, 2007

TABLE OF CONTENTS

	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	11
Item 1B.	Unresolved Staff Comments	20
Item 2.	Properties	20
Item 3.	Legal Proceedings	20
Item 4.	Submission of Matters to a Vote of Security Holders	21
	PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
Item 6.	Selected Financial Data	24
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 8.	Financial Statements and Supplementary Data	59
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	109
Item 9A.	Controls and Procedures	109
Item 9B.	Other Information	110
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	111
Item 11.	Executive Compensation	111
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters	111
Item 13.	Certain Relationships and Related Transactions, and Director Independence	111
Item 14.	Principal Accounting Fees and Services	111
	PART IV
Item 15.	Exhibits, Financial Statement Schedules	112
SIGNATURES		115
EXHIBITS
EX-3.3 Amended and Restated By-laws, as Amended
EX-10.11 Executive Services Agreement with Tatum
EX-12.1 Statement re Computation of Ratios
EX-14.1 Code of Business Conduct and Ethics
EX-21.1 Subsidiaries of the Registrant
EX-23.1 Consent of PricewaterhouseCoopers LLP
EX-23.2 Consent of Ernst & Young LLP
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-31.3 Section 302 Certification of CAO
EX-32.1 Section 906 Certification of CEO
EX-32.2 Section 906 Certification of CFO
EX-32.3 Section 906 Certification of CAO
EX-99.1 Audited financial statements of Bluegreen Corp.

PART I

Some of the statements contained or incorporated by reference herein include 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” ), that involve substantial risks and uncertainties. Some of the forward-looking statements can be identified by the use of words such as “anticipate,” “believe,” “estimate,” “may,” “intend,” “expect,” “will,” “should,” “seek” or other similar expressions. Forward-looking statements are based largely on management’s expectations and involve inherent risks and uncertainties described in this report. When considering those forward-looking statements, you should keep in mind the risks, uncertainties and other cautionary statements in this
Form 10-K, including those identified under Item 1A.—Risk Factors. These risks are subject to change based on factors which are, in many instances, beyond the Company’s control. Some factors which may affect the accuracy of the forward-looking statements apply generally to the real estate industry, while other factors apply directly to us. Any number of important factors could cause actual results to differ materially from those in the forward-looking statements including: the impact of economic, competitive and other factors affecting the Company and its operations; the market for real estate in the areas where the Company has developments, including the impact of market conditions on the Company’s margins and the fair value of our real estate inventory; the risk that the value of the property held by Core Communities may decline, including as a result of a sustained downturn in the residential real estate and homebuilding industries; the impact of market conditions for commercial property and whether the factors negatively impacting the homebuilding and residential real estate industries will impact the market for commercial property; the risk that the development of parcels and master-planned communities will not be completed as anticipated; continued declines in the estimated fair value of our real estate inventory and the potential for write-downs or impairment charges; the effects of increases in interest rates and availability of credit to buyers of our inventory; accelerated principal payments on our debt obligations due to re-margining or curtailment payment requirements; the ability to obtain financing and to renew existing credit facilities on acceptable terms, if at all; the Company’s ability to access additional capital on acceptable terms, if at all; the risks and uncertainties inherent in bankruptcy proceedings and the inability to predict the effect of Levitt and Sons’ reorganization and/or liquidation process on Levitt Corporation and its results of operation and financial condition; the risk that creditors of Levitt and Sons may be successful in asserting claims against Levitt Corporation and the risk that any of Levitt Corporation’s assets may become subject to or included in Levitt and Sons’ bankruptcy case; and the Company’s success at managing the risks involved in the foregoing. Many of these factors are beyond our control. The Company cautions that the foregoing factors are not exclusive.

ITEM 1. BUSINESS

General Description of Business

     Levitt Corporation (“Levitt Corporation”, “we” or the “Company”), directly and through its wholly owned subsidiaries, historically has been a real estate development company with activities in the Southeastern United States. We were organized in December 1982 under the laws of the State of Florida.

     In 2007, Levitt Corporation engaged in real estate activities through Core Communities, LLC (“Core Communities” or “Core”), and other operations, which included Levitt Commercial, LLC (“Levitt Commercial”), an investment in Bluegreen Corporation (“Bluegreen” NYSE: BXG), a development of a homebuilding community in South Carolina, Carolina Oak Homes, LLC (“Carolina Oak”) and other investments in real estate projects through subsidiaries and joint ventures. During 2007, Levitt Corporation also conducted homebuilding operations through Levitt and Sons, LLC (“Levitt and Sons”).

Core Communities

     Core Communities was founded in May 1996 to develop a master-planned community in Port St. Lucie, Florida now known as St. Lucie West. It is currently developing master-planned communities in Port St. Lucie, Florida called Tradition, Florida and in a community outside of Hardeeville, South Carolina called Tradition Hilton Head (formerly known as Tradition, South Carolina). Tradition, Florida has been in

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active development for several years, while Tradition Hilton Head is in the early stage of development. As a master-planned community developer, Core Communities engages in four primary activities: (i) the acquisition of large tracts of raw land; (ii) planning, entitlement and infrastructure development; (iii) the sale of entitled land and/or developed lots to homebuilders and commercial, industrial and institutional end-users; and (iv) the development and leasing of commercial space to commercial, industrial and institutional end-users.

     St. Lucie West is a 4,600 acre master-planned community located in St. Lucie County, Florida. It is bordered by Interstate 95 to the west and Florida’s Turnpike to the east. The community blends residential, commercial and industrial developments where residents have access to commerce, recreation, entertainment, religious and educational facilities all within the community. St. Lucie West is completely sold out and substantially built out and consists of a residential community, two college campuses and numerous recreational amenities and facilities. PGA of America owns and operates a golf course and a country club on an adjacent parcel. The community’s baseball stadium, Tradition Field, serves as the spring training headquarters for the New York Mets professional baseball team and a minor league affiliate. There are more than 6,000 homes in St. Lucie West housing nearly 15,000 residents.

     Tradition, Florida encompasses more than 8,200 total acres, including approximately 3,900 remaining net saleable acres. Approximately 1,800 acres have been sold to date and 259 acres were subject to firm sales contracts with various purchasers as of December 31, 2007. Community Development District special assessment bonds are being utilized to provide financing for certain infrastructure developments. Tradition, Florida is planned to include a 4.5-mile long employment corridor along I-95, educational and health care facilities, commercial properties, residential developments and other uses in a series of mixed-use parcels. As part of the employment corridor, a 120-acre research park is being marketed as the Florida Center for Innovation at Tradition (“FCI”), within which the Torrey Pines Institute for Molecular Studies (TPIMS) is building its new headquarters. FCI is planned to consist of just under two million square feet of research and development space, a 300 bed Martin Memorial Health Systems hospital, a 27-acre lake with a 1-mile fitness trail and recreational amenities, state-of-the-art fiber optic cabling, underground electrical power and proximity to high-quality housing, restaurants, hotels and shopping. Mann Research Center also recently purchased a 22.4 acre parcel within the FCI on which it intends to build a 400,000-square-foot life sciences complex. Oregon Health & Science University’s Vaccine and Gene Therapy Institute also recently announced plans to locate a 120,000-square-foot facility within FCI.

     Tradition Hilton Head, encompasses almost 5,400 total acres, including approximately 2,800 remaining net saleable acres and 150 acres owned and being developed by Carolina Oak, a subsidiary of the Company currently included under Other Operations below. The community is currently entitled for up to 9,500 residential units and 1.5 million square feet of commercial space, in addition to recreational areas, educational facilities and emergency services. There were no firm sales contracts as of December 31, 2007.

     Our Land Division recorded $16.6 million in sales in 2007 compared to $69.8 million in 2006 as demand for residential inventory by homebuilders in Florida substantially decreased. In response, the Land Division has concentrated on seeking buyers for commercial property. In addition to sales of parcels to developers, the Land Division plans to continue to internally develop certain projects for leasing to third parties based on market demand. It is expected that a higher percentage of revenue in the near term will come from sales and development of commercial property in Florida, provided that the market for commercial property remains stable. In addition, the Land Division expects to realize increased revenues in the future arising from residential and commercial land sales in South Carolina as development on Tradition Hilton Head progresses. However, revenues from land sales in South Carolina would be negatively affected if the real estate market in South Carolina sustains a downturn similar to that experienced in Florida. Core generated higher revenues from services in 2007 compared to 2006 due to increased rental income associated with leasing of certain commercial properties and increased revenues relating to irrigation services provided to homebuilders, commercial users, and the residents of Tradition, Florida. Retailers at Tradition, Florida include nationally branded retail stores such as Target, Babies R Us, Bed, Bath and Beyond, Office Max, The Sports Authority, TJ Maxx, Petsmart, LA Fitness and Old Navy.

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     In June 2007, Core Communities began soliciting bids from several potential buyers to purchase assets associated with two of Core’s commercial leasing projects. Management determined it is probable that Core will sell these projects in 2008 and, while Core may retain an equity interest in the properties and provide ongoing management services to a potential buyer, the anticipated level of continuing involvement is not expected to be significant. The assets are available for immediate sale in their present condition. There is no assurance that these sales will be completed in the timeframe expected by management or at all. Due to this decision, the projects and assets that are for sale have been classified as a discontinued operation for all periods presented in accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), and its revenue and expenses are not included in the results of continuing operations for any periods presented in this Annual Report on Form 10-K. The assets have been reclassified to assets held for sale and the related liabilities associated with these assets held for sale were also reclassified in the audited consolidated statements of financial condition. Prior period amounts have been reclassified to conform to the current year presentation. As of December 31, 2007, the carrying value of the subject net assets for sale was $16.1 million. This amount is comprised of total assets of $96.2 million less total liabilities of $80.1 million. While the commercial real estate market has generally been stronger than the residential real estate market, interest in commercial property is weakening and financing is not as readily available in the current market, which may adversely impact the profitability of our commercial property. Management has reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that the assets were appropriately recorded at the lower of cost or fair value less the costs to sell at December 31, 2007.

Other Operations

     During 2007, we were also engaged in commercial real estate activities through our wholly owned subsidiary, Levitt Commercial, LLC (“Levitt Commercial”), and we also have investments in other real estate projects through subsidiaries and various joint ventures. We own approximately 31% of the outstanding common stock of Bluegreen, which acquires, develops, markets and sells vacation ownership interests in “drive-to” vacation resorts, as well as residential home sites around golf courses or other amenities.

     In addition, we are engaged in limited homebuilding activities in Tradition Hilton Head through our wholly owned subsidiary, Carolina Oak, which is a direct subsidiary of Levitt Corporation which was acquired from Levitt and Sons during October 2007. See Recent Developments — Acquisition of Carolina Oak. Levitt Corporation had a previous financial commitment associated with this community, which is located in Tradition Hilton Head, and management determined that it was in the best interest of the Company to continue to develop the community. The results of operations and financial condition of Carolina Oak as of and for the three year period ended December 31, 2007 are included in the Primary Homebuilding segment in this Annual Report on Form 10-K because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed during these periods.

Levitt and Sons

     Acquired in December 1999, Levitt and Sons was a developer of single family homes and townhome communities for active adults and families in Florida, Georgia, Tennessee and South Carolina. Levitt and Sons operated in two reportable segments, Primary Homebuilding and Tennessee Homebuilding. On November 9, 2007 (the “Petition Date”), Levitt and Sons and substantially all of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Florida ( the“Bankruptcy Court”). See Recent Developments — Bankruptcy of Levitt and Sons for the current status of the Chapter 11 Cases.

     The homebuilding environment continued to deteriorate throughout 2007 as increased inventory levels combined with weakened consumer demand for housing and tightened credit requirements negatively affected sales, deliveries and margins throughout the industry. In both Homebuilding segments, Levitt and Sons experienced decreased orders, decreased margins and increased cancellation rates on

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homes in backlog. Excess supply, particularly in previously strong markets like Florida, in combination with a reduction in demand resulting from tightened credit requirements and reductions in credit availability, as well as buyers’ fears about the direction of the market exerted a continuous cycle of downward pricing pressure for residential homes.

     Levitt and Sons engaged in discussions with its five principal lenders in an effort to obtain agreements to restructure its outstanding indebtedness. No substantive agreements were received that addressed either the short term or longer term cash flow requirements of Levitt and Sons or debt repayment. Due to the uncertainty regarding Levitt and Sons’ indebtedness and the continued deterioration of the homebuilding industry and Levitt and Sons’ operations in particular, Levitt Corporation, which had previously loaned Levitt and Sons approximately $84.3 million, stopped funding the cash flow needs of this subsidiary in the third quarter of 2007. Levitt Corporation was unwilling to commit additional material loans and advances to Levitt and Sons unless Levitt and Sons’ debt was restructured in a way which increased the likelihood that Levitt and Sons could generate sufficient cash to meet its future obligations and be positioned to address the long term issues it faced. Levitt and Sons ceased development at its projects at September 30, 2007 due to a lack of funding.

     On November 9, 2007, the Debtors filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Under Section 362 of the Bankruptcy Code, the filing of a bankruptcy petition automatically stays most actions against the Debtors, including most actions to collect pre-petition indebtedness or to exercise control of the property of the Debtors.

     Based on the loss of control over Levitt and Sons as a result of the Chapter 11 Cases and the uncertainties surrounding the nature, timing and specifics of the bankruptcy proceedings, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from its financial results. We are prospectively accounting for any remaining investment in Levitt and Sons, net of any outstanding advances due from Levitt and Sons, as a cost method investment. Under cost method accounting, income would only be recognized to the extent of cash received in the future or when Levitt Corporation is discharged from the bankruptcy, at which time, the balance of the “loss in excess of investment in subsidiary” can be recognized into income. As of November 9, 2007, Levitt Corporation had a negative investment in Levitt and Sons of $123.0 million and there were outstanding advances due from Levitt and Sons of $67.8 million at Levitt Corporation resulting in a net negative investment of $55.2 million. Included in the negative investment was approximately $15.8 million associated with deferred revenue related to intra-segment sales between Levitt and Sons and Core Communities. Since the Chapter 11 Cases were filed, Levitt Corporation has also incurred certain administrative costs in the amount of $1.4 million relating to certain services and benefits provided by the Company in favor of the Debtors. These costs include, but are not limited to, the cost of maintaining employee benefit plans, providing accounting services, human resources expenses, general liability and property insurance premiums, payroll processing expenses, licensing and third-party professional fees (collectively, the “Post Petition Services”).

Recent Developments

Bankruptcy of Levitt and Sons

     On November 9, 2007, the Debtors filed voluntary petitions for relief under the Chapter 11 Cases in the Bankruptcy Court. The Debtors commenced the Chapter 11 Cases in order to preserve the value of their assets and to facilitate an orderly wind-down of their businesses and disposition of their assets in a manner intended to maximize the recoveries of all constituents.

     On November 27, 2007, the Office of the United States Trustee (the “U.S. Trustee), appointed an official committee of unsecured creditors in the Chapter 11 Cases (the “Creditors’ Committee”). On January 22, 2008, the U.S. Trustee appointed a Joint Home Purchase Deposit Creditors Committee of Creditors Holding Unsecured Claims (the “Deposit Holders Committee”, and together with the Creditors Committee, the “Committees”) The Committees have a right to appear and be heard in the Chapter 11 Cases.

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     On November 27, 2007, the Bankruptcy Court granted the Debtors’ Motion for Authority to Incur Chapter 11 Administrative Expense Claim (“Chapter 11 Admin. Expense Motion”) thereby authorizing the Debtors to incur a post petition administrative expense claim in favor of the Company for Post Petition Services. While the Bankruptcy Court approved the incurrence of the amounts as unsecured post petition administrative expense claims, the cash payments of such claims is subject to additional court approval. In addition to the unsecured administrative expense claims, the Company has pre-petition secured and unsecured claims against the Debtors. The Debtors have scheduled the amounts due to the Company in the Chapter 11 Cases. The unsecured pre-petition claims of the Company scheduled by Levitt and Sons are approximately $67.3 million and the secured pre-petition claim scheduled by Levitt and Sons is approximately $460,000. The Company has also filed contingent claims with respect to any liability it may have arising out of disputed indemnification obligations under certain surety bonds. Lastly, the Company implemented an employee severance fund in favor of certain employees of the Debtors. Employees who received funds as part of this program as of December 31, 2007, which totaled approximately $600,000 paid as of that date, have assigned their unsecured claims to the Company. There is no assurance that there will be any funds available to pay the Company these or any other amounts associated with the Company’s claims against the Debtors.

     At December 31, 2007, the Company had a federal income tax receivable of $27.4 million as a result of losses incurred, which is anticipated to be collected upon filing the 2007 consolidated U.S. federal income tax return. The Creditors Committee has advised the Company that they believe the creditors are entitled to share in an unstated amount of the refund.

     Pursuant to the Bankruptcy Code, the Debtors have for a limited period subject to extension, the exclusive right to file a plan of reorganization or liquidation (the “ Plan”).

Rights Offering

     On August 29, 2007, Levitt Corporation distributed to each holder of record of its Class A common stock and Class B common stock as of August 27, 2007 5.0414 subscription rights for each share of such stock owned on that date (the “Rights Offering”), or an aggregate of rights to purchase 100 million shares of Class A common stock. The Rights Offering was priced at $2.00 per share, commenced on August 29, 2007 and was completed on October 1, 2007. Levitt Corporation received $152.8 million of proceeds in connection with the exercise of rights by its shareholders. In connection with the offering, Levitt Corporation issued an aggregate of 76,424,066 shares of Class A common stock on October 1, 2007. The stock price on the October 1, 2007 closing date was $2.05 per share. As a result, there is a bonus element adjustment of 1.97% for all shareholders of record on August 29, 2007 and accordingly the number of weighted average shares of Class A common stock outstanding for basic and diluted (loss) earnings per share was retroactively increased by 1.97% for all prior periods presented in this Annual Report on Form 10-K.

Reductions in Force

     In the third and fourth quarters of 2007, substantially all of Levitt and Sons’ employees were terminated and 22 employees were terminated at Levitt Corporation primarily as a result of the Chapter 11 Cases. On November 9, 2007, Levitt Corporation implemented an employee fund and indicated that it would pay up to $5 million of severance benefits to terminated Levitt and Sons employees to supplement the limited termination benefits which could be paid by Levitt and Sons to those employees. Levitt and Sons is restricted in the amount of termination benefits it can pay to its former employees by virtue of the Chapter 11 Cases. For the year ended December 31, 2007, the Company paid approximately $600,000 in severance and termination charges related to the above fund which is reflected in the Other Operations segment and paid $2.3 million in severance to the employees of the Homebuilding Division prior to deconsolidation. Employees entitled to participate in the fund either received a payment stream, which in certain cases extended over two years, or a lump sum payment, dependent on a variety of factors. For any amounts paid related to this fund from the Other Operations segment, these payments were in exchange for an assignment to the Company by those employees of their unsecured claims against Levitt and Sons. At December 31, 2007 there was $2.0 million accrued to be paid related to this fund as well as severance for employees other than Levitt and Sons employees. In addition to these amounts, we expect additional severance related obligations associated with the fund mentioned above of $1.7 million in 2008 as employees assign their unsecured claims to the Company.

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     In addition to the severance benefits, Levitt Corporation entered into two independent contractor agreements in December 2007 with two former Levitt and Sons employees. The agreements are for past and future consulting services. The total commitment related to these agreements is $1.6 million and will be paid monthly through 2009.

Acquisition of Carolina Oak Homes, LLC

     On October 23, 2007, Levitt Corporation acquired from Levitt and Sons all of the outstanding membership interests in Carolina Oak, a South Carolina limited liability company (formerly known as Levitt and Sons of Jasper County, LLC) for the following consideration: (i) assumption of the outstanding principal balance of a loan in the amount of $34.1 million which is secured by a 150 acre parcel of land owned by Carolina Oak located in Tradition Hilton Head , (ii) execution of a promissory note in the amount of $400,000 to serve as a deposit under a purchase agreement between Carolina Oak and Core Communities of South Carolina, LLC and (iii) the assumption of specified payables in the amount of approximately $5.3 million. The principal asset in Carolina Oak is a 150 acre parcel of partially developed land currently under development and located in Tradition Hilton Head. As of December 31, 2007, Carolina Oak had 14 units under current development with no units in backlog. Carolina Oak has an additional 91 lots that are currently available for home construction.

Acquisition of common stock

     As of March 17, 2008, the Company, together with, Woodbridge Equity Fund LLLP, a newly formed limited liability limited partnership, wholly-owned by the Company, had purchased 3,000,200 shares of Office Depot, Inc. (“Office Depot”) common stock, which represents approximately one percent of Office Depot’s outstanding stock, at a cost of approximately $34.0 million. In connection with the acquisition of this ownership interest, on March 17, 2008, the Company delivered notice to Office Depot of the Company’s intent to nominate two nominees to stand for election to Office Depot’s Board of Directors. One of the nominees, Mark D Begelman, was the President and Chief Operating Officer of Office Depot from 1991 to 1995 and is currently an officer of BankAtlantic. Also on March 17, 2008, the Company, together with Woodbridge Equity Fund LLLP and other participants in the proxy solicitation, filed a preliminary proxy statement with the SEC in connection with the solicitation of proxies in support of the election of the two nominees. The Company has agreed to indemnify each nominee against certain losses and expenses which such nominees may incur in connection with the proxy solicitation and their efforts to gain election to the Office Depot board. In addition, the Company has filed a complaint in the Delaware Court of Chancery seeking, among other things, a court order declaring that the nomination of the two nominees at the Office Depot annual meeting is valid.

Business Strategy

     Our business strategy involves the following principal goals:

     Pursue investment opportunities. We intend to pursue acquisitions and investments opportunistically, using a combination of our cash and third party equity and debt financing. These investments may be within or outside of the real estate industry. We also intend to explore a variety of funding structures which might leverage and capitalize on our available cash and other assets currently owned by us. We may acquire entire businesses, majority interests in companies or minority, non-controlling interests. Investing on this basis will present additional risks, including the risks inherent in the industries in which we invest and potential integration risks if we seek to integrate the acquired operations into our operations.

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     Continue to develop master-planned communities. The Land Division is actively developing and marketing its master-planned communities in Florida and South Carolina. In addition to marketing of parcels to homebuilders, the Land Division continues to expand its commercial operations through sales to developers and through its efforts to internally develop projects for leasing to third parties. Core is committed to developing communities that will responsibly serve its residents and business in the long-term. The goal of its developments is to facilitate a regional roadway network and establish model communities that will set an example for future development. Core has established a series of community design standards which have been incorporated into the overall planning effort of master-planned communities including: utilizing a mix of housing types, including single-family neighborhoods and a variety of higher density communities; and having a neighborhood Town Center, Community School parcels, a workplace environment and community parks. The intent is to establish well-planned, innovative communities that are sustainable for the long-term.

     We view our commercial projects opportunistically and intend to periodically evaluate the short and long term benefits of retention or disposition. In 2007, we announced the intention to sell the commercial leasing projects owned by Core and provide ongoing management services to a potential buyer. Historically, land sale revenues have been sporadic and fluctuate dramatically by quarter and land sale transactions have resulted in 40% to 60% margins. However, margins on land sales and the many factors which impact the margin may not remain at these levels given the current downturn in the real estate markets where we own properties. Recent trends in home sales may require us to hold our land inventory longer than originally projected. We intend to review each parcel ready for development to determine whether to market the parcel to third parties, to internally develop the parcel for leasing, or hold the parcel and determine later whether to pursue third party sales or internal development opportunities. Our decision will be based, in part, on the condition of the commercial real estate market and our evaluation of future prospects. Our land development activities in our master-planned communities offer a source of land for future homebuilding by others. Much of our master-planned community acreage is under varying development orders and is not immediately available for construction or sale to third parties at prices that maximize value. Third-party homebuilder sales remain an important part of our ongoing strategy to generate cash flow, maximize returns and diversify risk, as well as to create appropriate housing alternatives for different market segments in our master-planned communities.

     Operate efficiently and effectively. We have recently taken steps which we believe strengthen our company. We raised a significant amount of capital through a rights offering and have implemented significant reductions in workforce levels. We intend to continue our focus on aligning our staffing levels with business goals and current and anticipated future market conditions. We also intend to continue to focus on expense management initiatives throughout the organization.

     Utilize community development districts to fund development costs. We establish community development districts to access tax-exempt bond financing to fund infrastructure development at our master-planned communities, which is a common practice among land developers in Florida. The ultimate owners of the property within the district are responsible for amounts owed on these bonds, which are funded through annual assessments. Generally, in Florida, no payments under the bonds are required from property owners during the first two to three years after issuance as a result of capitalized interest built into the bond proceeds. While we are responsible for any assessed amounts until the underlying property is sold, this strategy allows us to more effectively manage the cash required to fund infrastructure at the project in the short term. If the property is not sold prior to the assessment date we will be required to pay the full amount of the annual assessment on the property owned by us. However, there have recently been significant disruptions in credit markets, including downward trends in the municipal bond markets which may impact the availability and pricing of this type of financing in the future. We may not be able to access tax-exempt bond financing or any other financing through community development districts if market conditions do not improve.

Business Segments

     Through 2007, management reported results of operations through four segments: Land Division, Other Operations, Primary Homebuilding and Tennessee Homebuilding. The results of operations of Primary Homebuilding, with the exception of Carolina Oak, and Tennessee Homebuilding are only included as separate segments through November 9, 2007, the date of Levitt Corporation’s deconsolidation of Levitt and Sons. The presentation and allocation of the assets, liabilities and results of operations of each

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segment may not reflect the actual economic costs of the segment as a stand-alone business. If a different basis of allocation were utilized, the relative contributions of the segment might differ but, in management’s view, the relative trends in segments would not likely be impacted. See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Item 8. Financial Statements — Note 23 to our audited consolidated financial statements for a discussion of trends, results of operations and other relevant information on each segment.

Land Division

     The Land Division, which operates through Core Communities, generates revenue primarily from land sales from master-planned communities and also generates revenue from leasing commercial properties which it has developed. At December 31, 2007, our Land Division owned approximately 6,500 gross acres in Tradition, Florida including approximately 3,900 saleable acres. Through December 31, 2007, Core Communities had entered into contracts for the sale of a total of approximately 2,100 acres in the first phase development at Tradition, Florida of which approximately 1,800 acres had been delivered at December 31, 2007. Our backlog contains contracts for the sale of 259 acres, although there is no assurance that the consummation of those transactions will occur. Delivery of these acres is expected to be completed in 2009. At December 31, 2007, our Land Division also owned approximately 5,200 gross acres in Tradition Hilton Head, including approximately 2,800 remaining net saleable acres and 150 acres owned and being developed by Carolina Oak, a subsidiary of the Company, currently included under Other Operations below.

     Our Land Division’s land in development and relevant data as of December 31, 2007 were as follows:

									Non-				Third
	Date		Acres		Closed		Current		Saleable		Saleable		Party		Acres
	Acquired		Acquired		Acres(a)		Inventory		Acres(b)		Acres(b)		Backlog(c)		Available
Currently in Development
Tradition, Florida		1998 — 2004		8,246		1,794		6,452		2,583		3,869		259		3,610
Tradition Hilton Head		2005		5,390		163		5,227		2,417		2,810		—		2,810
Total Currently in Development				13,636		1,957		11,679		5,000		6,679		259		6,420

(a)	Closed acres for Tradition Hilton Head include 150 acres owned by Carolina Oak, a wholly owned subsidiary of Levitt Corporation. The revenue from this sale was eliminated in consolidation.
(b)	Actual saleable and non-saleable acres may vary over time due to changes in zoning, project design, or other factors. Non-saleable acres include, but are not limited to, areas set aside for roads, parks, schools, utilities, wetlands and other public purposes.
(c)	Acres under contract to third parties.

Other Operations

     Other operations consist of Levitt Commercial, our investment in Bluegreen Corporation, investments in joint ventures and holding company operations.

Levitt Commercial

     Levitt Commercial was formed in 2001 to develop industrial, commercial, retail and residential properties. Revenues for the year ended December 31, 2007 amounted to $6.6 million which reflect sales of warehouse properties. Levitt Commercial delivered 17 flex warehouse units at its remaining development project. Levitt Commercial completed the sale of all flex warehouse units in inventory in 2007 and we have no current plans for future sales from Levitt Commercial.

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Investment in Bluegreen Corporation

     We own approximately 9.5 million shares of the outstanding common stock of Bluegreen, which represents approximately 31% of that company’s issued and outstanding common stock. Bluegreen is a leading provider of vacation and residential lifestyle choices through its resorts and residential community businesses. Bluegreen is organized into two divisions: Bluegreen Resorts and Bluegreen Communities.

     Bluegreen Resorts acquires, develops and markets vacation ownership interests (“VOIs”) in resorts generally located in popular high-volume, “drive-to” vacation destinations. Bluegreen Communities acquires, develops and subdivides property and markets residential land homesites, the majority of which are sold directly to retail customers who seek to build a home in a high quality residential setting, in some cases on properties featuring a golf course and related amenities.

     Bluegreen also generates significant interest income through its financing of individual purchasers of VOIs and, to a nominal extent, homesites sold by its Bluegreen Communities division.

     We evaluated our investment in Bluegreen at December 31, 2007 and noted that the current $116.0 million book value of the investment was greater than the market value of $68.4 million (based upon a December 31, 2007 closing price of $7.19). We performed an impairment review in accordance with Emerging Issues Task Force 03-1 (“EITF 03-1”), Accounting Principles Board Opinion No. 18 (“APB No. 18”), and Securities and Exchange Commission Staff Accounting Bulletin 59 (“SAB 59”) to analyze various quantitative and qualitative factors and determine if an impairment adjustment was needed. Based on our evaluation and the review of various qualitative and quantitative factors relating to the performance of Bluegreen, the current value of the stock price, and management’s intention with regards to this investment, management determined that the impairment associated with the investment in Bluegreen was not an other than temporary decline and, accordingly, no adjustment to the carrying value was recorded at December 31, 2007.

     Bluegreen recently announced its intention to pursue a rights offering to its shareholders of up to $100 million of its common stock. Bluegreen intends to file a registration statement relating to the rights offering in March 2008. We own approximately 31% of Bluegreen’s outstanding common stock and we currently intend to participate in this rights offering and to support the efforts of Bluegreen’s management to maximize shareholder value through organic and acquisition-driven growth initiatives and then exploring strategic alternatives.

Corporate Operations Headquarters

     In October 2004, we acquired an 80,000 square foot office building to serve as our home office in Fort Lauderdale, Florida for $16.2 million. The building was fully leased and occupied during the year ended December 31, 2005 and generated rental income. On November 9, 2005 the lease was modified and two floors of the building were vacated in January 2006. The building now serves as the Corporate Headquarters for Levitt Corporation. We are planning to seek to lease to third parties this space in 2008 and relocate to a smaller space due to the number of employees we have remaining at this facility.

Other Investments and Joint Ventures

     In the past we have sought to mitigate the risks associated with certain real estate projects by entering into joint ventures. Our investments in joint ventures and the earnings recorded on these investments were not significant for the year ended December 31, 2007.

     We entered into an indemnity agreement in April 2004 with a joint venture partner at Altman Longleaf relating to, among other obligations, that partner’s guarantee of the joint venture’s indebtedness. Our liability under the indemnity agreement is limited to the amount of any distributions from the joint venture which exceeds our original capital and other contributions. Levitt Commercial owns a 20% interest in Altman Longleaf, LLC, which owns a 20% interest in this joint venture. This joint venture is developing a 298-unit apartment complex in Melbourne, Florida. An affiliate of our joint venture partner is the general contractor. Construction commenced on the development in 2004 and was completed in 2006. Our original capital contributions totaled approximately $585,000 and we have received approximately $1.2 million in distributions since 2004. Accordingly, our potential obligation of indemnity at December 31, 2007 is approximately $664,000. The book value of this investment as of December 31, 2007 was zero due to the losses this joint venture has incurred. Based on the joint venture assets that secure the indebtedness, we do not currently believe it is likely that any payment will be required under the indemnity agreement.

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Homebuilding Division

     The Primary and Tennessee Homebuilding segments were deconsolidated from our results of operations on November 9, 2007 due to the Chapter 11 Cases. The results of operations for the three year period ended December 31, 2007 include the results of operations for the Debtors through November 9, 2007. However, we continue to be engaged in limited homebuilding activities in Tradition Hilton Head through Carolina Oak, which was acquired by Levitt Corporation from Levitt and Sons during 2007. The results of operations and financial condition of Carolina Oak as of and for the three year period ended December 31, 2007 are included in the Primary Homebuilding segment in this Form 10-K because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed during these periods.

     As of December 31, 2007, Carolina Oak had 14 units under current development with no units in backlog. Carolina Oak has an additional 91 lots that are currently available for home construction. We may decide to continue to build the remainder of the community which is planned to consist of approximately 403 additional units if the sales of the existing units are successful.

Information Technologies

     We continue to seek to improve the efficiency of our field and corporate operations in an effort to plan appropriately for the construction of our master-planned communities, perform limited homebuilding activities and to plan for future investments or acquisitions. In the fourth quarter of 2006, we implemented a fully integrated operating and financial system in order to have all operating entities on one platform. These systems have enabled information to be shared and utilized throughout our company and have enabled us to better manage, optimize and leverage our employees and management. During 2007, we further implemented the property management module associated with this financial system for use in our Land Division to assist with our expansion and management of our commercial leasing business.

Seasonality

     We have historically experienced volatility but not necessarily seasonality, in our results of operations from quarter-to-quarter due to the nature of the real estate business. Historically, land sale revenues have been sporadic and have fluctuated dramatically. In addition, margins on land sales and the many factors which impact the margin may not remain at historical levels given the current downturn in the real estate markets where we own properties. We are focusing on maximizing our sales efforts with homebuilders at our master-planned communities. However, due to the uncertainty in the real estate market, we expect to continue to experience high volatility in our Land Division revenues throughout 2008.

Competition

     The real estate development industry is highly competitive and fragmented. We compete with third parties in our efforts to sell land to homebuilders. We compete with other local, regional and national real estate companies and homebuilders, often within larger subdivisions designed, planned and developed by such competitors. Some of our competitors have greater financial, marketing, sales and other resources than we do.

     In addition, there are relatively low barriers to entry into our business. There are no required technologies that would preclude or inhibit competitors from entering our markets. Our competitors may independently develop land. A substantial portion of our operations are in Florida and South Carolina, and we expect to continue to face additional competition from new entrants into our markets.

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Employees

     As of December 31, 2007, we employed a total of 117 full-time employees and 8 part-time employees. The breakdown of employees by segment was as follows:

	Full		Part
	Time		Time
Primary Homebuilding		3		—
Land		67		8
Other Operations		47		—
Total		117		8

     Primary Homebuilding employee count includes those employees working at Carolina Oak. They are Levitt Corporation employees but the salaries and expenses related to these individuals are included in the results of operations of Primary Homebuilding for the three year period ended December 31, 2007. In addition to the employees listed in the preceding table, Levitt and Sons had 38 employees as of December 31, 2007 who were providing post-bankruptcy services. These employees are being phased out as projects are abandoned or transferred to the lenders. Levitt Corporation is not paying for the salaries or benefits of these remaining Levitt and Sons’ employees.

     Our employees are not represented by any collective bargaining agreements and we have never experienced a work stoppage. We believe our employee relations are satisfactory.

Additional Information

     Our Internet website address is www.levittcorporation.com. Our 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 our website, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”). Our Internet website and the information contained in or connected to our website are not incorporated into this Annual Report on Form 10-K.

     Our website also includes printable versions of our Corporate Governance Guidelines, our Code of Business Conduct and Ethics and the charters for each of the Audit, Compensation and Nominating/Corporate Governance Committees of our Board of Directors.

ITEM 1A. RISK FACTORS

RISKS RELATING TO OUR BUSINESS AND THE REAL ESTATE BUSINESS GENERALLY

We engage in real estate activities which are speculative and involve a high degree of risk.

     The real estate industry is highly cyclical by nature, the current market is experiencing a significant decline and future market conditions are uncertain. Factors which adversely affect the real estate industry, many of which are beyond our control, include:

• overbuilding or decreases in demand to acquire land;

• the availability and cost of financing;

• unfavorable interest rates and increases in inflation;

• changes in national, regional and local economic conditions;

• cost overruns, inclement weather, and labor and material shortages;

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• the impact of present or future environmental legislation, zoning laws and other regulations;

• availability, delays and costs associated with obtaining permits, approvals or licenses necessary to develop property; and

• increases in real estate taxes, insurance and other local government fees.

There has been a decline in the homebuilding industry over the past two years and if it continues it could adversely affect land development activities at our Land Division.

     For the past two years, the homebuilding industry has experienced a significant decline in demand for new homes and a significant oversupply of lots and homes available for sale. The trends in the homebuilding industry continue to be unfavorable. Demand has slowed as evidenced by fewer new orders and lower conversion rates, which has been exacerbated by increasing cancellation rates. The combination of the lower demand and higher inventories affects the amount of land that we are able to develop and sell in the future, as well as the prices at which we are able to sell the land. We cannot predict how long demand and other factors in the homebuilding industry will remain unfavorable, how active the market will be during the coming periods and how these factors will affect our Land Division. A substantial downturn or a further deterioration in the homebuilding industry will have an adverse effect on our results of operations and financial condition.

Because real estate investments are illiquid, a decline in the real estate market or in the economy in general could adversely impact our business and our cash flow.

     Real estate investments are generally illiquid. Companies that invest in real estate have a limited ability to vary their portfolio of real estate investments in response to changes in economic and other conditions. In addition, the market value of any or all of our properties or investments may decrease in the future. Moreover, we may not be able to timely dispose of an investment when we find dispositions advantageous or necessary, or complete the disposition of properties under contract to be sold, and any such dispositions may not provide proceeds in excess of the amount of our investment in the property or even in excess of the amount of any indebtedness secured by the property. Our inventory of real estate was $227.3 million at December 31, 2007. These land holdings subject us to a greater risk from declines in real estate values in our markets and are susceptible to impairment write-downs in the current real estate environment. Declines in real estate values or in the economy generally could have a material adverse impact on our financial condition and results of operations.

Natural disasters could have an adverse effect on our real estate operations.

     The Florida and South Carolina markets in which we operate are subject to the risks of natural disasters such as hurricanes and tropical storms. These natural disasters could have a material adverse effect on our business by causing the incurrence of uninsured losses, increased homebuyer insurance rates, delays in construction, and shortages and increased costs of labor and building materials.

     In addition to property damage, hurricanes may cause disruptions to our business operations. Approaching storms may require that operations be suspended in favor of storm preparation activities. After a storm has passed, construction-related resources such as sub-contracted labor and building materials are likely to be redeployed to hurricane recovery efforts. Governmental permitting and inspection activities may similarly be focused primarily on returning displaced residents to homes damaged by the storms rather than on new construction activity. Depending on the severity of the damage caused by the storms, disruptions such as these could last for several months.

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A portion of our revenues from land sales in our master-planned communities are recognized for accounting purposes under the percentage of completion method, therefore, if our actual results differ from our assumptions, our profitability may be reduced.

     Under the percentage of completion method of accounting for recognizing revenue, we record revenue and cost of sales as work on the project progresses based on the percentage of actual work incurred compared to the total estimated costs. This method relies on estimates of total expected project costs. Revenue and cost estimates are reviewed and revised periodically as the work progresses. Adjustments are reflected in sales of real estate and cost of sales in the period when such estimates are revised. Variation of actual results compared to our estimated costs in these large master-planned communities could cause material changes to our net margins.

Product liability litigation and claims that arise in the ordinary course of business may be costly which could adversely affect our business.

     Our commercial development business is subject to construction defect and product liability claims arising in the ordinary course of business. These claims are common in the commercial real estate industries and can be costly. We have, and many of our subcontractors have, general liability, property, errors and omissions, workers compensation and other business insurance. However, these insurance policies only protect us against a portion of our risk of loss from claims. In addition, because of the uncertainties inherent in these matters, we cannot provide reasonable assurance that our insurance coverage or our subcontractor arrangements will be adequate to address all warranty, construction defect and liability claims in the future. In addition, the costs of insuring against construction defect and product liability claims, if applicable, are high and the amount of coverage offered by insurance companies is also currently limited. There can be no assurance that this coverage will not be further restricted and become more costly. If we are not able to obtain adequate insurance against these claims, we may experience losses that could negatively impact our operating results.

We are subject to governmental regulations that may limit our operations, increase our expenses or subject us to liability.

     We are subject to laws, ordinances and regulations of various federal, state and local governmental entities and agencies concerning, among other things:

• environmental matters, including the presence of hazardous or toxic substances;

• wetland preservation;

• health and safety;

• zoning, land use and other entitlements;

• building design; and

• density levels.

     In developing a project and building commercial properties, we may be required to obtain the approval of numerous governmental authorities regulating matters such as:

• installation of utility services such as gas, electric, water and waste disposal;

• the dedication of acreage for open space, parks and schools;

• permitted land uses; and

• the construction design, methods and materials used.

     These laws or regulations could, among other things:

• establish building moratoriums;

• limit the number of commercial properties that may be built;

• change building codes and construction requirements affecting property under construction;

• increase the cost of development and construction; and

• delay development and construction.

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     We may also at times not be in compliance with all regulatory requirements. If we are not in compliance with regulatory requirements, we may be subject to penalties or we may be forced to incur significant expenses to cure any noncompliance. In addition, some of our land and some of the land that we may acquire have not yet received planning approvals or entitlements necessary for planned or future development. Failure to obtain entitlements necessary for further development of this land on a timely basis or to the extent desired may adversely affect our future results.

     Several governmental authorities have also imposed impact fees as a means of defraying the cost of providing governmental services to developing areas, and many of these fees have increased significantly during recent years.

Building moratoriums and changes in governmental regulations may subject us to delays or increased costs of construction or prohibit development of our properties.

     We may be subject to delays or may be precluded from developing in certain communities because of building moratoriums or changes in statutes or rules that could be imposed in the future. The State of Florida and various counties have in the past and may in the future continue to declare moratoriums on the issuance of building permits and impose restrictions in areas where the infrastructure, such as roads, schools, parks, water and sewage treatment facilities and other public facilities, does not reach minimum standards. Additionally, certain counties in Florida, including counties where we are developing projects, have enacted more stringent building codes which have resulted in increased costs of construction. As a consequence, we may incur significant expenses in connection with complying with new regulatory requirements that we may not be able to pass on to buyers.

We are subject to environmental laws and the cost of compliance could adversely affect our business.

     As a current or previous owner or operator of real property, we 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 we knew of, or were 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. The presence of any such substance, or the failure promptly to remediate any such substance, may adversely affect our ability to sell or lease the property, to use the property for our intended purpose, or to borrow funds using the property as collateral.

Increased insurance risk could negatively affect our business.

     Insurance and surety companies may take actions that could negatively affect our business, including increasing insurance premiums, requiring higher self-insured retentions and deductibles, requiring additional collateral or covenants on surety bonds, reducing limits, restricting coverages, imposing exclusions, and refusing to underwrite certain risks and classes of business. Any of these actions may adversely affect our ability to obtain appropriate insurance coverage at reasonable costs which could have a material adverse effect on our business.

We utilize community development district and special assessment district bonds to fund development costs and we will be responsible for assessments until the underlying property is sold.

     We establish community development district and special assessment district bonds to access tax-exempt bond financing to fund infrastructure development at our master-planned communities. We are responsible for any assessed amounts until the underlying property is sold. We will continue to be responsible for the annual assessments if the property is never sold. Accordingly, if recent negative trends in the homebuilding industry do not improve, and we are forced to hold our land inventory longer than originally projected, we would be forced to pay a higher portion of annual assessments on property which is subject to assessments. We could be required to pay down a portion of the bonds in the event our entitlements were to decrease as to the number of residential units and/or commercial space that can be built on a parcel(s) encumbered by the bonds. In addition, Core Communities has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds.

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     The availability of tax-exempt bond financing to fund infrastructure development at our master-planned communities may be affected by recent disruptions in credit markets, including the municipal bond market, by general economic conditions and by fluctuations in the real estate market. If we are not able to access this type of financing, we would be forced to obtain substitute financing, which may not be available on terms favorable to the Company, or at all. If we are not able to obtain financing for infrastructure development, Core would be forced to use our own funds or delay development activity at the master-planned communities.

RISKS ASSOCIATED WITH LEVITT AND SONS’ BANKRUPTCY FILING

We cannot predict the effect that the Chapter 11 Cases will have on Levitt and Sons’ business and creditors or on Levitt Corporation.

     There is no assurance that Levitt and Sons will be able to develop, prosecute, confirm and consummate the Plan and that the Plan will be accepted. Third parties may seek and obtain Bankruptcy Court approval to propose and confirm the Plan. As a result, there is no assurance that the creditors will not seek to assert claims against Levitt Corporation or any of its subsidiaries other than Levitt and Sons, whether or not such claims have any merit and the risk that Levitt Corporation’s or any such subsidiary’s assets become subject to or included in Levitt and Sons’ bankruptcy case. In addition, Levitt Corporation files a consolidated federal income tax return, which means that the taxable income or tax losses of Levitt and Sons were included in the Company’s federal income tax return. At December 31, 2007, Levitt Corporation had a federal income tax receivable of $27.4 million as a result of losses incurred, which is anticipated to be collected upon filing the 2007 consolidated U.S. federal income tax return. The Creditors’ Committee of the Chapter 11 Cases has advised that they believe that the creditors are entitled to share in an unstated amount of the refund. At this time, it is not possible to predict the effect that the Chapter 11 Cases will have on Levitt Corporation or whether it will adversely affect our results of operations and financial condition.

Levitt and Sons’ bankruptcy and the publicity surrounding its filing may adversely affect Levitt Corporation and its subsidiaries other than Levitt and Sons.

     The businesses and relationships we had at Levitt and Sons may also be relationships we have at our other subsidiaries. These relationships could be affected by the Chapter 11 Cases of Levitt and Sons and it could materially affect our ability to conduct business with customers, suppliers and employees in the future.

Levitt and Sons had surety bonds on most of their projects some, of which were subject to indemnity by Levitt Corporation.

     Levitt and Sons had $33.3 million in surety bonds relating to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Levitt Corporation could be responsible for up to $12.0 million plus costs and expenses in accordance with the surety indemnity agreement for these instruments. As of December 31, 2007, we recorded $1.8 million in surety bonds accrual at Levitt Corporation related to certain bonds where management considers it probable that the Company will be required to reimburse the surety under the indemnity agreement. It is unclear given the uncertainty involved in the Chapter 11 Cases whether and to what extent the outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Levitt Corporation may be responsible for additional amounts beyond this accrual. It is unlikely that Levitt Corporation would have the ability to receive any repayment, assets or other consideration as recovery of any amount it is required to pay. If losses on additional surety bonds are identified, we will need to take additional charges associated with Levitt Corporation’s exposure under our indemnities, and this may have a material adverse effect on our results of operations and financial condition.

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Levitt Corporation’s outstanding advances due from Levitt and Sons may not be repaid.

     Levitt Corporation has deconsolidated Levitt and Sons from its consolidated financial statements and reflects Levitt and Sons as a cost method investment as of December 31, 2007. At the time of deconsolidation, November 9, 2007, Levitt Corporation had a negative investment in Levitt and Sons of $123.0 million and there were outstanding advances due from Levitt and Sons of $67.8 million at Levitt Corporation resulting in a net negative investment of $55.2 million. Since the Chapter 11 Cases were filed, Levitt Corporation has also incurred certain administrative costs in the amount of $1.4 million related to Post Petition Services. The payment by Levitt and Sons of its outstanding advances and the Post Petition Services expenses are subject to the risks inherent to creditors in the Chapter 11 Cases. Levitt and Sons may not have sufficient assets to repay Levitt Corporation for advances made to Levitt and Sons or the Post Petition Services and it is likely that some, if not all, of these amounts will not be recovered.

RISKS RELATING TO OUR COMPANY

Our outstanding debt instruments impose restrictions on our operations and activities and could adversely affect our financial condition.

     At December 31, 2007, our consolidated debt was approximately $274.8 million of which $137.1 million relates to the Land Division. Debt associated with assets held for sale was $79.0 million. Certain loans which provide the primary financing for Tradition, Florida and Tradition Hilton Head have an annual appraisal and re-margining requirement. These provisions may require Core Communities, in circumstances where the value of its real estate securing these loans declines, to pay down a portion of the principal amount of the loan to bring the loan within specified minimum loan-to-value ratios. Accordingly, should land prices decline, reappraisals could result in significant future re-margining payments. In addition, all of our outstanding debt instruments require us to comply with certain financial covenants. Further, one of our debt instruments contains cross-default provisions, which could cause a default in this debt instrument if we default on other debt instruments. If we fail to comply with any of these restrictions or covenants, the holders of the applicable debt could cause our debt to become due and payable prior to maturity. These accelerations or significant re-margining payments could require us to dedicate a substantial portion of our cash and cash flow from operations to payment of or on our debt and reduce our ability to use our cash for other purposes.

     Certain of our borrowings require us to repay specified amounts upon a sale of a portion of the property securing the debt. The borrowings may require additional principal payments in the event that the timing and the amount of sales are below those agreed to at the inception of the borrowing. Our anticipated minimum debt payment obligations in 2008 total approximately $12.2 million, of which $8.9 million relates to assets held for sale. These amounts do not include any amounts due upon a sale of the collateral, amounts due as a result of sales below expectations or re-margining payments that could be required in the event that property serving as collateral becomes impaired. Core is subject to provisions in its borrowing agreement that require additional principal payments, known as curtailment payments, in the event that sales, within a specific timeframe, are below those agreed to at the inception of the borrowing. In the event that agreed upon sales targets are not met in Tradition Hilton Head, total curtailment payments during 2008 could amount to $34.2 million. In January 2008, a $14.9 million curtailment payment was paid and an additional $19.3 million would be due in June 2008 if actual sales continue to be below the contractual requirements of the development loan. Unfavorable current trends in the homebuilding industry could result in us holding property longer than projected which would increase the likelihood that sales of property would be below levels required by our lenders.

     Our business may not generate sufficient cash flow from operations, and future borrowings may not be available under our existing credit facilities or any other financing sources in an amount sufficient to enable us to service our indebtedness, or to fund our other liquidity needs. We may need to refinance all or a portion of our debt on or before maturity, which we may not be able to do on favorable terms or at all. Recent disruptions in the credit and capital markets could make it more difficult for us to obtain future financing.

     Our ability to meet our debt service and other obligations, to refinance our indebtedness or to fund planned capital expenditures will depend upon our future performance. We are engaged in businesses that are substantially affected by changes in economic cycles. Our revenues and earnings vary with the level of general economic activity in the real estate market and are, therefore, subject to many factors outside of our control. See risk factor below entitled “Our results may vary.”

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Our current land development plans may require additional capital, which may not be available on favorable terms, if at all.

     We may need to obtain additional financing as we fund our current land development projects and pursue new investments. These funds may be obtained through public or private debt or equity financings, additional bank borrowings or from strategic alliances. We may not be successful in obtaining additional funds in a timely manner, on favorable terms or at all, especially in light of the current adverse conditions in the capital and credit markets and the adverse conditions in municipal bond markets which impact our ability to access tax-exempt bond financing. Moreover, certain of our bank financing agreements contain provisions that limit the type and amount of debt we may incur in the future without our lenders’ consent. If we do not have access to additional capital, we may be required to delay, scale back or abandon some or all of our land development activities and we may not be able to pursue new investments. In addition, we may need to reduce capital expenditures and the size of our operations. There is no assurance that we will have sufficient funds to continue to develop our master-planned communities or pursue new investments as currently contemplated without additional financing or equity investment.

Our results may vary.

     We historically have experienced, and expect to continue to experience, variability in operating results on a quarterly basis and from year to year. Factors expected to contribute to this variability include:

• the cyclical nature of the real estate industry;

• prevailing interest rates and the availability of mortgage financing;

• weather;

• cost and availability of materials and labor;

• competitive conditions;

• timing of sales of land;

• the timing of receipt of regulatory and other governmental approvals for land development projects; and

• the timing of the sale of our commercial leasing operations.

Margins in our Land Division are subject to significant volatility.

     Due to the nature and size of our individual land transactions, our Land Division results are subject to significant volatility. Historically, land sale revenues have been sporadic and have fluctuated dramatically and margins on land sales and the many factors which impact the margin may not remain at the current levels given the current downturn in the real estate markets where we own properties. Margins will fluctuate based upon changing sales prices and costs attributable to the land sold. Recent declines in the value of residential land, especially in Florida where Core’s Tradition, Florida community is located, could significantly adversely impact our margins. If the real estate markets deteriorate further or if the current downturn is prolonged, we may not be able to sell land at prices above our carrying cost or even in amounts necessary to repay our indebtedness. In addition to the impact of economic and market factors, the sales price and margin of land sold varies depending upon: the location; the parcel size; whether the parcel is sold as raw land, partially developed land or individually developed lots; the degree to which the land is entitled; and whether the designated use of land is residential or commercial.

     In addition, our ability to realize margins may be affected by circumstances beyond our control, including:

• shortages or increases in prices of construction materials;

• natural disasters in the areas in which we operate;

• lack of availability of adequate utility infrastructure and services; and

• our need to rely on local subcontractors who may not be adequately capitalized or insured.

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     Any of these circumstances could give rise to delays in the start or completion of, or increase the cost of, developing our master-planned communities. We compete with other real estate developers, both regionally and nationally, for labor as well as raw materials, and the competition for materials has recently become global. Increased costs in labor and materials could cause increases in construction costs. In addition, the cost of sales of real estate is dependent upon the original cost of the land acquired, the timing of the acquisition of the land, and the amount of land development, interest and real estate tax costs capitalized to the particular land parcel during active development. Future margins will continue to vary based on these and other market factors.

When commercial leasing projects become available for sale, they may not yield anticipated returns, which could harm our operating results, reduce cash flow, or cause management to choose not to sell certain commercial assets.

     A component of our business strategy is the development of commercial properties and assets for sale. These developments may not be as successful as expected due to the commercial leasing related risks discussed below, as well as the risks associated with real estate development generally, and the timeline involved in development and leasing.

     Development of commercial projects involve the risk of the significant time lag between commencement and completion of the project which subjects us to greater risks due to fluctuation in the general economy, failure or inability to obtain construction or permanent financing on favorable terms, inability to achieve projected rental rates, anticipated pace that we will be able to lease new tenants, higher than estimated construction costs, including labor and material costs, and possible delay in completion of the project because of a number of factors, including weather, labor disruptions, construction delays or delays in receipt of zoning or other regulatory approvals, or man-made or natural disasters.

     Significant changes in economic conditions could adversely affect prospective tenants and our ability to lease newly developed properties and could result in our being forced to hold these properties for a longer period of time.

We are dependent upon certain key tenants in our commercial developments and decisions made by these tenants or adverse developments in the business of these tenants could have a negative impact on our financial condition.

     We own commercial real estate centers which are supported by “anchor” tenants which, due to size, reputation or other factors, are particularly responsible for drawing other tenants and shoppers to our centers in certain cases. We are subject to the risk that certain of these anchor tenants may be unable to make their lease payments or may decline to extend a lease upon its expiration.

     In addition, an anchor tenant may decide that a particular store is unprofitable and close its operations, and, while the tenant may continue to make rental payments, its failure to occupy its premises could have an adverse effect on the property. A lease termination by an anchor tenant or a failure by that anchor tenant to occupy the premises could result in lease terminations or reductions in rent by other tenants in the same shopping center. Vacated anchor tenant space also tends to adversely affect the entire shopping center because of the loss of the departed anchor tenant’s power to draw customers to the center. We may not be able to quickly re-lease vacant space on favorable terms, if at all. Any of these developments could adversely affect our financial condition or results of operations.

It may be difficult and costly to rent vacant space and space which may become vacant in future periods.

     Our goal is to improve the performance of our properties by leasing available space and re-leasing vacated space. However, we may not be able to maintain our overall occupancy levels. Our ability to continue to lease or re-lease vacant space in our commercial properties will be affected by many factors, including our properties’ locations, current market conditions and the provisions of the leases we enter into with the tenants at our properties. In fact, many of the factors which could cause our current tenants to vacate their space could also make it more difficult for us to release that space. The failure to lease or to re-lease vacant space on satisfactory terms could harm our operating results.

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     If we are able to re-lease vacated space, there is no assurance that rental rates will be equal to or in excess of current rental rates. In addition, we may incur substantial costs in obtaining new tenants, including brokerage commission fees paid by us in connection with new leases or lease renewals, and the cost of making leasehold improvements.

The loss of the services of our key management and personnel could adversely affect our business

     Our ability to successfully implement our business strategy will depend on our ability to attract and retain experienced and knowledgeable management and other professional staff. We currently have an Acting Chief Financial Officer and are in the process of seeking to recruit a permanent replacement. There is no assurance that we will be successful in attracting and retaining an experienced and knowledgeable Chief Financial Officer or other key management personnel.

Our future acquisitions may reduce our earnings, require us to obtain additional financing and expose us to additional risks.

     Our business strategy includes investing in and acquiring diverse operating companies and some of these investments and acquisitions may be material. While we will seek investments and acquisitions primarily in companies that provide opportunities for growth with seasoned and experienced management teams, we may not be successful in identifying these opportunities. Further, investments or acquisitions that we do complete may not prove to be successful. Acquisitions may expose us to additional risks and may have a material adverse effect on our results of operations and may:

• fail to accomplish our strategic objectives;

• not perform as expected; and/or

• expose us to the risks of the business that we acquire.

     In addition, we will likely face competition in making investments or acquisitions which could increase the costs associated with the investment or acquisition. Our investments or acquisitions could initially reduce our per share earnings and add significant amortization expense or intangible asset charges. Since our acquisition strategy involves holding investments for the foreseeable future and because we do not expect to generate significant excess cash flow from operations, we may rely on additional debt or equity financing to implement our acquisition strategy. The issuance of debt will result in additional leverage which could limit our operating flexibility, and the issuance of equity could result in additional dilution to our then-current shareholders. In addition, such financing could consist of equity securities which have rights, preferences or privileges senior to our Class A common stock. If we do require additional financing in the future, there is no assurance that it will be available on favorable terms, if at all. If we fail to obtain the required financing, we would be required to curtail or delay our acquisition plans or to liquidate certain of our assets. Additionally, we do not intend to seek shareholder approval of any investments or acquisitions unless required by law or regulation.

Our controlling shareholders have the voting power to control the outcome of any shareholder vote, except in limited circumstances.

     As of December 31, 2007, BFC Financial Corporation (“BFC”) owned 1,219,031 shares of our Class B common stock, which represented all of our issued and outstanding Class B common stock, and 18,676,955 shares, or approximately 19.7%, of our issued and outstanding Class A common stock. In the aggregate these shares represent approximately 20.7% of our total equity and, excluding the 6,145,582 shares of our Class A common stock that BFC has agreed, subject to certain exceptions, not to vote in accordance with the Letter Agreement described in Item 8. — Financial Statements — Note 16, these shares represent approximately 54.0% of our total voting power. Since the Class A common stock and Class B common stock vote as a single group on most matters, BFC is in a position to control our company and

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elect a majority of our Board of Directors. Additionally, Alan B. Levan, our Chairman and Chief Executive Officer, and John E. Abdo, our Vice Chairman, beneficially own approximately 22.6% and 14.0% of the shares of BFC, respectively. Collectively, these shares represent approximately 73.2% of BFC’s total voting power. As a consequence, Alan B. Levan and John E. Abdo effectively have the voting power to control the outcome of any shareholder vote of Levitt Corporation, except in those limited circumstances where Florida law mandates that the holders of our Class A common stock vote as a separate class. BFC’s interests may conflict with the interests of our other shareholders.

RISKS ASSOCIATED WITH OUR OWNERSHIP STAKE IN BLUEGREEN CORPORATION

     We own approximately 31% of the outstanding common stock of Bluegreen Corporation, a publicly-traded corporation whose common stock is listed on the New York Stock Exchange under the symbol “BXG”. Although traded on the New York Stock Exchange, our shares of Bluegreen’s common stock may be deemed restricted stock, which would limit our ability to liquidate our investment if we chose to do so. While we have made a significant investment in Bluegreen Corporation, we do not expect to receive any dividends from the company for the foreseeable future.

     For the year ended December 31, 2007, our earnings from our investment in Bluegreen were $10.3 million, compared to $9.7 million in 2006, and $12.7 million in 2005. At December 31, 2007, the book value of our investment in Bluegreen was $116.0 million. A significant portion of our earnings and book value are dependent upon Bluegreen’s ability to continue to generate earnings and maintain its market value. Further, declines in the market value of Bluegreen’s shares or other events that could impair the value of our holdings would have an adverse impact on the value of our investment. We review our investment in Bluegreen for impairment on an annual basis or as events or circumstances warrant for other than temporary declines in value. Bluegreen recently announced its intention to pursue a rights offering to its shareholders of up to $100 million of its common stock and we currently intend to participate in the rights offering. We refer you to the public reports filed by Bluegreen with the Securities and Exchange Commission for information regarding Bluegreen.

ITEM 1B. UNRESOLVED STAFF COMMENTS

     None.

ITEM 2. PROPERTIES

     We own our principal and executive offices located at our Corporate Headquarters at 2200 West Cypress Creek Road, Fort Lauderdale, Florida 33309. In 2008, we are planning to seek to lease to third parties the space in our executive offices and relocate to smaller space due to the number of employees we have remaining at this facility. Core Communities owns their executive office building in Port St. Lucie, Florida. We also have various month to month leases on the trailers we occupy in Tradition Hilton Head. In addition to our properties used for offices, we additionally own commercial space in Florida that is leased to third parties. Because of the nature of our real estate operations, significant amounts of property are held as inventory and property and equipment in the ordinary course of our business.

ITEM 3. LEGAL PROCEEDINGS

Levitt and Sons Bankruptcy

     On November 9, 2007, Levitt and Sons and substantially all of its subsidiaries filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida.

     It is not possible to predict the impact that the Chapter 11 Cases will have on Levitt and Sons’ business and creditors or on Levitt Corporation. See Item 1. — Business — Recent Developments — Bankruptcy of Levitt and Sons.

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Class Action litigation

     On January 25, 2008, plaintiff Robert D. Dance filed a purported class action complaint as a putative purchaser of our securities against us and certain of our officers and directors, asserting claims under the federal securities law and seeking damages. This action was filed in the United States District Court for the Southern District of Florida and is captioned Dance v. Levitt Corp. et al., No. 08-CV-60111-DLG. The securities litigation purports to be brought on behalf of all purchasers of our securities beginning on January 31, 2007 and ending on August 14, 2007. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder by issuing a series of false and/or misleading statements concerning our financial results, prospects and condition. We intend to vigorously defend this action.

General litigation

     We are party to additional various claims and lawsuits which arise in the ordinary course of business. We do not believe that the ultimate resolution of these claims or lawsuits will have a material adverse effect on our business, financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None submitted.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

     Our Class A common stock is listed on the New York Stock Exchange (the “NYSE”) under the symbol “LEV.” BFC is the sole holder of the Company’s Class B common stock and there is no trading market for the Company’s Class B common stock. The Class B common stock may only be owned by BFC or its affiliates and is convertible into Class A common stock at the discretion of the holder on a one-for-one basis.

     The quarterly high and low sale prices of our Class A common stock on the NYSE for the years ended December 31, 2007 and 2006 are presented in the following table.

	2006				2007
	High		Low		High		Low
First Quarter	$	25.50	$	20.10	$	15.44	$	9.19
Second Quarter	$	22.33	$	14.15	$	11.82	$	8.47
Third Quarter	$	16.10	$	9.22	$	10.62	$	2.00
Fourth Quarter	$	13.70	$	11.54	$	4.00	$	1.54

     The stock prices do not include retail mark-ups, mark-downs or commissions. On March 7, 2008, the closing sale price of our Class A common stock as reported on the NYSE was $1.91 per share.

Shareholder Return Performance Graph

     Set forth below is a graph comparing the cumulative total returns (assuming reinvestment of dividends) for the Class A common stock, the Dow Jones U.S. Total Home Construction Index and the Russell 2000 Index and assumes $100 was invested on January 2, 2004.

	Symbol	1/2/2004		12/31/2004		12/31/2005		12/31/2006		12/31/2007
Levitt Corporation Class A common stock	LEV		100.00		152.48		113.60		61.31		11.04
Dow Jones US Total Home Construction Index	DJUSHB		100.00		140.43		161.22		127.99		56.58
Russell 2000 Index	RTY		100.00		116.18		120.04		140.44		136.58

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Comparison of Four Year Cumulative Total Return

Holders

     On February 27, 2008, there were approximately 690 record holders and 95,040,731 shares of the Class A common stock issued and outstanding. Our controlling shareholder, BFC, holds all of the 1,219,031 shares of our Class B common stock outstanding.

NYSE Certification

     On October 9, 2007, the Company submitted its Annual Section 303A.12(b) Certification to the NYSE. Pursuant to this filing, the Chief Executive Officer provided an unqualified certification that, as of the date of the certification, he was not aware of any violation by the Company of the Corporate Governance Listing Standards of the NYSE.

Dividends

     On each of January 24, 2006, April 26, 2006, August 1, 2006, October 23, 2006 and January 22, 2007 our Board of Directors declared cash dividends of $0.02 per share on our Class A common stock and Class B common stock. These dividends were paid in February 2006, May 2006, August 2006, November 2006 and February 2007, respectively. There were no other dividends declared during the years ended December 31, 2006 and 2007.

     The Board has not adopted a policy of regular dividend payments. The payment of dividends in the future is subject to approval by our Board of Directors and will depend upon, among other factors, our results of operations and financial condition. We do not expect to pay dividends to shareholders for the foreseeable future.

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ITEM 6. SELECTED FINANCIAL DATA

     The following table sets forth selected consolidated financial data as of and for the years ended December 31, 2003 through 2007. Certain selected financial data presented below as of December 31, 2007, 2006, 2005, 2004 and 2003 and for each of the years in the five-year period ended December 31, 2007, are derived from our audited consolidated financial statements. Based on the loss of control over Levitt and Sons as a result of the Chapter 11 Cases and the uncertainties surrounding the nature, timing and specifics of the bankruptcy proceedings, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from its financial results. The results of operations for the Primary and Tennessee Homebuilding segments are through November 9, 2007 with the exception of the operations of Carolina Oak which are for the full year. As a result of the deconsolidation, the consolidated financial condition data does not include the Primary and Tennessee Homebuilding segments with the exception of Carolina Oak. This table is a summary and should be read in conjunction with the audited consolidated financial statements and related notes thereto which are included elsewhere in this report.

	As of and for the Year Ended December 31,
	2007			2006			2005			2004			2003
	(Dollars in thousands, except per share, unit and average price data)
Consolidated Operations:
Revenues from sales of real estate	$	410,115			566,086			558,112			549,652			283,058
Cost of sales of real estate (a)		573,241			482,961			408,082			406,274			209,431
Margin (a)		(163,126	)		83,125			150,030			143,378			73,627
Earnings from Bluegreen Corporation		10,275			9,684			12,714			13,068			7,433
Selling, general & administrative expenses		116,087			119,337			87,162			70,992			42,027
(Loss) income from continuing operations		(236,385	)		(9,143	)		55,069			57,420			26,820
Income (loss) from discontinued operations, net of tax		1,765			(21	)		(158	)		(5	)		—
Net (loss) income	$	(234,620	)		(9,164	)		54,911			57,415			26,820
Basic (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.45	)		2.73			3.04			1.78
Discontinued operations		0.05			—			(0.01	)		—			—
Total basic (loss) earnings per common share	$	(6.00	)		(0.45	)		2.72			3.04			1.78
Diluted (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.46	)		2.70			2.98			1.74
Discontinued operations		0.05			—			(0.01	)		—			—
Total diluted (loss) earnings per common share (b)	$	(6.00	)		(0.46	)		2.69			2.98			1.74
Basic weighted average common shares outstanding (thousands) (c)		39,092			20,214			20,208			18,883			15,108
Diluted weighted average common shares outstanding (thousands) (c)		39,092			20,214			20,320			18,965			15,108
Dividends declared per common share	$	0.02			0.08			0.08			0.04			—
Key Performance Ratios:
Margin percentage (d)		(39.8	)%		14.7	%		26.9	%		26.1	%		26.0	%
SG&A expense as a percentage of total revenues		27.9	%		20.8	%		15.4	%		12.8	%		14.7	%
Return on average shareholders’ equity, annualized (e)		(77.6	)%		(2.6	)%		17.0	%		27.3	%		23.0	%
Ratio of debt to shareholders’ equity		105.3	%		171.4	%		113.6	%		89.9	%		138.8	%
Ratio of debt to total capitalization (f)		51.3	%		63.2	%		53.2	%		47.3	%		58.1	%
Ratio of net debt to total capitalization (f)		14.9	%		58.0	%		38.0	%		24.9	%		46.1	%

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	As of and for the Year Ended December 31,
	2007			2006			2005			2004			2003
	(Dollars in thousands, except per share, unit and average price data)
Consolidated Financial Condition Data:
Cash	$	195,181			48,391			113,562			125,522			35,965
Inventory of real estate	$	227,290			822,040			611,260			413,471			254,992
Investment in Bluegreen Corporation	$	116,014			107,063			95,828			80,572			70,852
Total assets	$	712,851			1,090,666			895,673			678,467			393,505
Total debt	$	274,820			588,365			397,309			264,967			174,093
Total liabilities	$	451,745			747,427			545,887			383,678			268,053
Shareholders’ equity	$	261,106			343,239			349,786			294,789			125,452
Book value per share (j)	$	2.71			17.31			17.65			14.88			8.47
Primary Homebuilding:
Revenues from sales of real estate	$	345,666			424,420			352,723			418,550			222,257
Cost of sales of real estate (a)		501,206			367,252			272,680			323,366			173,072
Margin (a)	$	(155,540	)		57,168			80,043			95,184			49,185
Margin percentage (d)		(45.0	)%		13.5	%		22.7	%		22.7	%		22.1	%
Construction starts		558			1,445			1,212			1,893			1,593
Homes delivered		998			1,320			1,338			1,783			1,011
Average selling price of homes delivered	$	338,000			322,000			264,000			235,000			220,000
Net orders (units)		383			847			1,289			1,378			2,240
Net orders (value)	$	94,782			324,217			448,207			376,435			513,436
Tennessee Homebuilding (g):
Revenues from sales of real estate	$	42,042			76,299			85,644			53,746			—
Cost of sales of real estate (a)		51,360			72,807			74,328			47,731			—
Margin (a)	$	(9,318	)		3,492			11,316			6,015			—
Margin percentage (d)		(22.2	)%		4.6	%		13.2	%		11.2	%		—
Construction starts		171			237			450			401			—
Homes delivered		146			340			451			343			—
Average selling price of homes delivered	$	205,000			224,000			190,000			157,000			—
Net orders (units)		110			269			478			301			—
Net orders (value)	$	20,621			57,776			98,838			51,481			—
Land Division (h):
Revenues from sales of real estate	$	16,567			69,778			105,658			96,200			55,037
Cost of sales of real estate		7,447			42,662			50,706			42,838			31,362
Margin (a)	$	9,120			27,116			54,952			53,362			23,675
Margin percentage (d)		55.0	%		38.9	%		52.0	%		55.5	%		43.0	%
Acres sold		40			371			1,647			1,212			1,337
Inventory of real estate (acres) (i)		6,679			6,871			7,287			5,965			6,837
Inventory of real estate (value)	$	189,903			176,356			150,686			122,056			43,906
Acres subject to sales contracts — Third parties		259			74			246			1,833			1,433
Aggregate sales price of acres subject to sales contracts to third parties	$	77,888			21,124			39,283			121,095			103,174
Assets held for sale		96,214			47,284			19,134			7,985			—
Total assets		342,696			271,169			228,756			194,825			83,034
Liabilities related to assets held for sale		80,093			28,263			10,770			3,262			—
Notes and mortgage notes payable		137,057			68,642			51,294			49,470			15,174
Total liabilities		214,393			133,015			94,006			83,343			23,621
Total shareholders’ equity	$	128,303			138,154			134,750			111,482			59,413

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(a)	Margin is calculated as sales of real estate minus cost of sales of real estate. Included in cost of sales of real estate for the years ended December 31, 2007 and 2006 are homebuilding inventory impairment charges and write-offs of deposits and pre-acquisition costs of $206.4 million and $31.1 million, respectively, in our Primary Homebuilding segment. In our Tennessee Homebuilding segment impairment charges amounted to $11.2 million and $5.7 million in the years ended December 31, 2007 and 2006, respectively.
(b)	Diluted (loss) earnings per share takes into account the dilutive effect of our stock options and restricted stock using the treasury stock method and the dilution in earnings we recognize as a result of outstanding Bluegreen securities that entitle the holders thereof to acquire shares of Bluegreen’s common stock.
(c)	The weighted average number of common shares outstanding in basic and diluted (loss) earnings per common share for all prior periods presented has been retroactively adjusted for the number of shares representing the bonus element arising from the rights offering that closed on October 1, 2007. Under the rights offering, stock was issued on October 1, 2007 at a purchase price below the market price on October 1, 2007 resulting in the bonus element of 1.97%. The number of weighted average shares of Class A common stock is required to be retroactively increased by this percentage for all prior periods presented.
(d)	Margin percentage is calculated by dividing margin by sales of real estate.
(e)	Calculated by dividing net (loss) income by average shareholders’ equity. Average shareholders’ equity is calculated by averaging beginning and end of period shareholders’ equity balances.
(f)	Total capitalization is calculated as total debt plus total shareholders’ equity. Net debt is calculated as total debt minus cash.
(g)	Bowden Building Corporation was acquired in May 2004. The Company had no homebuilding operations in Tennessee in 2003.
(h)	Revenues and costs of sales of real estate include land sales to Levitt and Sons, if any. These inter-segment transactions are eliminated in consolidation. Included in total liabilities is a net receivable amount associated with intersegment loans. This amount eliminates fully in consolidation but has the effect of decreasing liabilities when shown on a stand alone basis. As of December 31, 2007, the Parent Company (Other Operations) had outstanding advances from Core Communities in the amount of $38.3 million which are generally subordinated to loans from third party lenders. These advances eliminate in consolidation.
(i)	Estimated net saleable acres (subject to final zoning, permitting, and other governmental regulations and approvals). Includes approximately 56 acres related to assets held for sale as of December 31, 2007.
(j)	Book value per share is calculated as shareholders equity divided by total number of shares issued and outstanding as of December 31 of each year.

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Executive Overview

     Our operations have historically been concentrated in the real estate industry which is cyclical in nature. In addition, the majority of our inventory has been located in the State of Florida.

     Our ongoing operations include our land development business, Core Communities, which sells land to residential builders as well as to commercial developers, and internally develops commercial real estate and enters into lease arrangements with tenants. In addition, our Other Operations consist of an investment in Bluegreen, a NYSE-listed company in which we own approximately 31% of its outstanding common stock. Bluegreen is engaged in the acquisition, development, marketing and sale of ownership interests in primarily “drive-to” vacation resorts, and the development and sale of golf communities and residential land. Other Operations also includes limited homebuilding activities in Tradition Hilton Head through our subsidiary, Carolina Oak, which is developing a community known as Magnolia Walk. The results of operations and financial condition of Carolina Oak as of and for the three year period ended December 31, 2007 are included in the Primary Homebuilding segment in this Annual Report on Form 10-K because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed during these periods. Until its filing for protection under the Bankruptcy Code on November 9, 2007, Levitt and Sons engaged in the construction and sale of residential housing.

Outlook

     The homebuilding environment continued to deteriorate throughout 2007 as increased inventory levels combined with weakened consumer demand for housing and tightened credit requirements negatively affected sales, deliveries and margins throughout the industry. Excess supply, particularly in previously strong markets like Florida, in combination with a reduction in demand resulting from tightened credit markets and reductions in credit availability, as well as buyers’ fears about the direction of the market, exerted downward pricing pressure for residential homes and land. As a result of the significant slowdown Levitt and Sons and substantially all of its subsidiaries filed the Chapter 11 cases. See Item 1. Business — Recent Developments — Bankruptcy of Levitt and Sons for the current status of the Chapter 11 Cases.

     Our Land Division entered 2007 with two active projects, Tradition, Florida and Tradition Hilton Head. During 2007, we continued our development and sales activities in both of these projects with increased activity in Hilton Head from the prior year. As a result of the Hilton Head expansion, we incurred higher general and administrative expenses in the Land Division in 2007. In addition, the overall slowdown in the homebuilding market had an effect on demand for residential land in our Land Division which was partially mitigated by increased commercial sales and commercial leasing revenue. Traffic at the Tradition, Florida information center slowed from prior years in connection with the overall slowdown in the Florida homebuilding market.

     As we enter 2008, we will continue to focus on the strength of our balance sheet and will continue to bring costs in line with market conditions and our strategic objectives. We have taken steps to align our staffing levels with current and anticipated future market conditions and have implemented expense management initiatives throughout the organization. While there is clearly a slowdown in the homebuilding sector, the Land Division expects to continue developing and selling land in its master-planned communities in South Carolina and Florida. In addition to the marketing of parcels to homebuilders, the Land Division plans to continue to expand its commercial operations through sales to developers and the internal development of certain projects for leasing to third parties. The Land Division is currently pursuing the sale of two of its commercial leasing projects. However, while the commercial real estate market has generally been stronger than the residential real estate market, interest in commercial property is showing signs of weakening and financing is not as readily available in the current market, which may adversely impact the profitability of these sales.

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     We are also engaged in limited homebuilding activities in Tradition Hilton Head through our wholly owned subsidiary, Carolina Oak. Levitt Corporation had a previous financial commitment associated with this community and management determined that it was in the best interest of the Company to develop the community. As of December 31, 2007, Carolina Oak had 14 units under current development with no units in backlog. Carolina Oak has an additional 91 lots that are currently available for home construction. We may decide to continue to build the remainder of the community which consists of approximately 403 additional units if the sales of the existing units are successful. The results of operations and financial condition of Carolina Oak as of and for the three year period ended December 31, 2007 are included in the Primary Homebuilding segment in this Annual Report on Form 10-K.

     Looking forward, we intend to pursue acquisitions and investments opportunistically, using a combination of our cash and third party equity and debt financing. These acquisitions and investments may be within or outside of the real estate industry. We also intend to explore a variety of funding structures which might leverage and capitalize on our available cash and other assets currently owned by us. We may acquire entire businesses, majority interests in companies or minority, non-controlling interests.

Financial and Non-Financial Metrics

     Performance and prospects are evaluated using a variety of financial and non-financial metrics. The key financial metrics utilized to evaluate historical operating performance include revenues from sales of real estate, margin (which we measure as revenues from sales of real estate minus cost of sales of real estate), margin percentage (which we measure as margin divided by revenues from sales of real estate), (loss) income from continuing operations, net (loss) income and return on equity. We also continue to evaluate and monitor selling, general and administrative expenses as a percentage of revenue, our ratios of debt to shareholders’ equity and debt to total capitalization and our cash requirements. Non-financial metrics used to evaluate historical performance include saleable acres in our Land Division and the number of acres in our backlog. In evaluating future prospects, management considers financial results as well as non-financial information such as acres in backlog (measured as land subject to an executed sales contract). The ratio of debt to shareholders’ equity and cash requirements are also considered when evaluating future prospects, as are general economic factors and interest rate trends. These metrics are not an exhaustive list, and management may from time to time utilize different financial and non-financial information or may not use all of the metrics mentioned above.

Critical Accounting Policies and Estimates

     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 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 revenues and expenses on the consolidated statements of operations for the periods presented. These estimates require the exercise of judgment, as future events cannot be determined with certainty. Material estimates that are particularly susceptible to significant change in subsequent periods relate to revenue and cost recognition on percent complete projects, reserves and accruals, impairment reserves of assets, valuation of real estate, estimated costs to complete construction, reserves for litigation and contingencies and deferred tax valuation allowances. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from these estimates if conditions change or if certain key assumptions used in making these estimates ultimately prove to be materially incorrect.

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     We have identified the following accounting policies that management views as critical to the accurate portrayal of our financial condition and results of operations.

Loss in excess of investment in Levitt and Sons

     Under Accounting Research Bulletin No. 51 (“ARB No. 51”), consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners. Under these rules, legal reorganization or bankruptcy represents conditions which can preclude consolidation or equity method accounting as control rests with the Bankruptcy Court, rather than the majority owner. Accordingly, we deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from the financial results of operations. Therefore, in accordance with ARB No. 51, we follow the cost method of accounting to record the interest in Levitt and Sons, our wholly owned subsidiary which declared bankruptcy on November 9, 2007. Under cost method accounting, income will only be recognized to the extent of cash received in the future or when the Company is discharged from the bankruptcy, at which time, any loss in excess of the investment in subsidiary can be recognized into income as discussed below.

     As a result of the deconsolidation, Levitt Corporation had a negative basis in its investment in Levitt and Sons because the subsidiary generated significant losses and intercompany liabilities in excess of its asset balances. This negative investment, “Loss in excess of investment in subsidiary”, is reflected as a single amount on the audited consolidated statement of financial condition as a $55.2 million liability as of December 31, 2007. This balance was comprised of a negative investment in Levitt and Sons of $123.0 million and outstanding advances due from Levitt and Sons of $67.8 million to Levitt Corporation. Included in the negative investment was approximately $15.8 million associated with deferred revenue related to intra-segment sales between Levitt and Sons and Core Communities.

     Since Levitt and Sons’ results are no longer consolidated and Levitt Corporation believes that it is not probable that it will be obligated to fund future operating losses at Levitt and Sons, any adjustments reflected in Levitt and Sons’ financial statements subsequent to November 9, 2007 are not expected to affect the results of operations of Levitt Corporation. The reversal of our liability into income will occur when either Levitt and Sons’ bankruptcy is discharged and the amount of the Company’s remaining investment in Levitt and Sons’ is determined or we reach a final settlement in the Bankruptcy Court related to any claims against Levitt Corporation. Levitt Corporation will continue to evaluate our cost method investment in Levitt and Sons quarterly to review the reasonableness of the liability balance.

Inventory of Real Estate

     As of November 9, 2007, Levitt and Sons was deconsolidated from Levitt Corporation’s results of operations and accordingly the inventory of real estate related to homebuilding is no longer included in the consolidated statement of financial condition with the exception of Carolina Oak which is a homebuilding community now owned directly by Levitt Corporation.

     As of December 31, 2007, inventory of real estate includes Carolina Oak homebuilding inventory, land, land development costs, interest and other construction costs and is stated at accumulated cost which does not exceed net realizable value. Due to the large acreage of certain land holdings and the nature of our project development life cycles, disposition of our inventory in the normal course of business is expected to extend over a number of years.

     The expected future costs of development in our Land Division are analyzed at least quarterly to determine the appropriate allocation factors to charge to cost of sales when such inventory is sold. During the long term project development cycles in our Land Division, which can approximate 12-15 years, such development costs are subject to volatility. Costs in the Land Division to complete infrastructure will be influenced by changes in direct costs associated with labor and materials, as well as changes in development orders and regulatory compliance.

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     We review real estate inventory for impairment on a project-by-project basis in accordance with SFAS No. 144. In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in an amount by which the carrying amount of the asset exceeds the fair value of the asset.

     At December 31, 2007, we reviewed the Carolina Oak project using a cash flow model. The related unleveraged cash flow was calculated using projected revenues and costs-to-complete and projected sales of inventory. The present value of the projected cash flow from the project exceeded the carrying amount of the project and accordingly no impairment charge was recognized. We obtained market assessments and appraisals for our land inventory in 2007 to assess the fair market value. The sales value exceeded the book value and accordingly no impairment charge was recognized.

     In prior periods, the real estate inventory for Levitt and Sons was reviewed for impairment in accordance with SFAS No. 144. The fair market value of the real estate inventory balance was assessed on a project-by-project basis. For projects representing land investments, where homebuilding activity had not yet begun, valuation models were used as the best evidence of fair value and as the basis for the measurement. If the calculated project fair value was lower than the carrying value of the real estate inventory, an impairment charge was recognized to reduce the carrying value of the project to the fair value. For projects with homes under construction, we measured the recoverability of assets by comparing the carrying amount of an asset to the estimated future undiscounted net cash flows. At the time of our analyses, the unleveraged cash flow models projected future revenues and costs-to-complete and the sale of the remaining inventory based on the current status of each project and reflected current market trends, current pricing strategies and cancellation trends. If the carrying amount of a project exceeded the present value of the cash flows from the project discounted using the weighted average cost of capital, an impairment charge was recognized to reduce the carrying value of the project to fair market value. As a result of this analysis, we recorded impairment charges of approximately $226.9 million and $36.8 million in cost of sales for the years ended December 31, 2007 and 2006, respectively, in the Primary and Tennessee Homebuilding segments and for capitalized interest in the Other Operations segment related to the projects in the Homebuilding Division that Levitt and Sons ceased developing.

     The assumptions developed and used by management are subjective and involve significant estimates, and are subject to increased volatility due to the uncertainty of the current market environment. As a result, actual results could differ materially from management’s assumptions and estimates and may result in material inventory impairment charges to be recorded in the future.

Investments in Unconsolidated Subsidiaries — Equity Method

     In December 2003, FASB Interpretation No. 46(R) “Consolidation of Variable Interest Entities”, (“FIN No. 46(R)”) was issued by the FASB to clarify the application of ARB No. 51 to certain Variable Interest Entities (“VIEs”), in which equity investors do not have the characteristics of a controlling interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Pursuant to FIN No. 46(R), an enterprise that absorbs a majority of the VIE’s expected losses, receives a majority of the VIE’s expected residual returns, or both, is determined to be the primary beneficiary of the VIE and must consolidate the entity. For entities in which the company has less than a controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN No. 46R, the entities are accounted for using the equity method of accounting.

     We follow the equity method of accounting to record our interests in subsidiaries in which we do not own the majority of the voting stock and to record our investment in variable interest entities in which we are not the primary beneficiary. These entities consist of Bluegreen Corporation, joint ventures and statutory business trusts. The statutory business trusts are variable interest entities in which the Company is not the primary beneficiary. Under the equity method, the initial investment in a joint venture is recorded at cost and is subsequently adjusted to recognize our share of the joint venture’s earnings or losses. Distributions received reduce the carrying amount of the investment. We evaluate our investments in

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unconsolidated entities for impairment during each reporting period in accordance with Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock” (“APB No. 18”). These investments are evaluated annually or as events or circumstances warrant for other than temporary declines in value. We evaluated the investment in Bluegreen at December 31, 2007 and noted that the $116.0 million book value of the investment was greater than the market value of $68.4 million (based upon a December 31, 2007 closing price of $7.19). We performed an impairment review in accordance with Emerging Issues Task Force 03-1 (“EITF 03-1”), APB No. 18, and Securities and Exchange Commission Staff Accounting Bulletin 59 (“SAB 59”) to analyze various quantitative and qualitative factors to determine if an impairment adjustment was needed. Based on the evaluation and the review of various qualitative and quantitative factors relating to the performance of Bluegreen, the current value of the stock price, and management’s intention with regard to this investment, management determined that the impairment associated with the investment in Bluegreen was not an other than temporary decline and accordingly, no adjustment to the carrying value was recorded at December 31, 2007.

Homesite Contracts and Consolidation of Variable Interest Entities

     In the ordinary course of business, we enter into contracts to purchase land held for development, including option contracts. Option contracts allow us to control significant positions with minimal capital investment and substantially reduce the risks associated with land ownership and development. Our liability for nonperformance under such contracts is typically only the required non-refundable deposits. We do not have legal title to these assets. However, if certain conditions are met under the requirements of FIN No. 46(R), our non-refundable deposits in these land contracts may create a variable interest for the Company, with the Company being identified as the primary beneficiary. If these conditions are met, FIN No. 46(R) requires us to consolidate the variable interest entity holding the asset to be acquired at their fair value. At December 31, 2007, we had no non-refundable deposits under these contracts, and we had no contracts in place to acquire land.

Revenue Recognition

     Revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and we do not have a substantial continuing involvement in accordance with SFAS No. 66, “Accounting for Sales of Real Estate” (“SFAS 66”). In order to properly match revenues with expenses, we estimate construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. We monitor the accuracy of estimates by comparing actual costs incurred subsequent to closing to the estimate made at the time of closing and make modifications to the estimates based on these comparisons.

     Revenue is recognized for certain land sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of SFAS 66, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of our land sales, this involvement typically consists of final development activities. We recognize revenue and related costs as work progresses using the percentage-of-completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from our current estimates. If our estimates of development costs remaining to be completed and relative sales values are significantly different from actual amounts, then our revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.

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     Other revenues consist primarily of rental property income, marketing revenues, irrigation service fees, and title and mortgage revenue. Irrigation service connection fees are deferred and recognized systematically over the life of the irrigation plant. Irrigation usage fees are recognized when billed as the service is performed. Title and mortgage operations include agency and other fees received for processing of title insurance policies and mortgage loans. Revenues from title and mortgage operations are recognized when the transfer of the corresponding property or mortgages to third parties has been consummated.

     Effective January 1, 2006, Bluegreen adopted AICPA Statement of Position 04-02, “Accounting for Real Estate Time-Sharing Transactions” (“SOP 04-02”). This Statement amends FASB Statement No. 67, “Accounting for Costs and Initial Rental Operations of Real Estate Projects” (“FAS No. 67”), to state that the guidance for incidental operations and costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-02. The adoption of SOP 04-02 resulted in a one-time, non-cash, cumulative effect of change in accounting principle charge of $4.5 million to Bluegreen for the year ended December 31, 2006, and accordingly reduced the earnings in Bluegreen recorded by us by approximately $1.4 million for the same period.

Capitalized Interest

     Interest incurred relating to land under development and construction is capitalized to real estate inventory or property and equipment during the active development period. For inventory, interest is capitalized at the effective rates paid on borrowings during the pre-construction, and planning stages and the periods that projects are under development. Capitalization of interest is discontinued if development ceases at a project. Capitalized interest is expensed as a component of cost of sales as related homes, land and units are sold. For property and equipment under construction, interest associated with these assets is capitalized as incurred to property and equipment and is expensed through depreciation once the asset is put into use.

Income Taxes

     We record income taxes using the liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence of temporary differences between the financial statement and income tax basis of our assets and liabilities. We estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated statements of financial condition. The recording of a net deferred tax asset assumes the realization of such asset in the future. Otherwise, a valuation allowance must be recorded to reduce this asset to its net realizable value. We consider future pretax income and ongoing prudent and feasible tax strategies in assessing the need for such a valuation allowance. In the event that we determine that we may not be able to realize all or part of the net deferred tax asset in the future, a valuation allowance for the deferred tax asset is charged against income in the period such determination is made.

     We file a consolidated Federal and Florida income tax return. Separate state returns are filed by subsidiaries that operate outside the state of Florida. Even though Levitt and Sons and its subsidiaries have been deconsolidated from Levitt Corporation for financial statement purposes, they will continue to be included in the Company’s Federal and Florida consolidated tax returns until Levitt and Sons is discharged from bankruptcy. As a result of the deconsolidation of Levitt and Sons, all of Levitt and Sons’ net deferred tax assets are no longer presented in the consolidated statement of financial condition at December 31, 2007 but remain a part of Levitt and Sons’ condensed consolidated financial statements at December 31, 2007 and accordingly will be part of the tax return.

     We adopted the provisions of FASB Interpretation No. 48 — “Accounting for Uncertainty in Income Taxes — an interpretation of FASB No. 109” (“FIN 48”) on January 1, 2007. FIN 48 provides guidance on recognition, measurement, presentation and disclosure in financial statements of uncertain tax positions that a company has taken or expects to take on a tax return. FIN 48 substantially changes the accounting policy for uncertain tax positions. As a result of the implementation of FIN 48, we recognized a decrease of $260,000 in the liability for unrecognized tax benefits, which was accounted for as an increase to the January 1, 2007 balance of retained earnings. At year end, we had gross tax-affected unrecognized tax benefits of $2.4 million of which $0.2 million, if recognized, would affect the effective tax rate.

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Stock-based Compensation

     We adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”) as of January 1, 2006 and elected the modified-prospective method, under which prior periods are not restated. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over requisite service period, which is the vesting period. for all awards granted after January 1, 2006, and for the unvested portion of stock options that were outstanding at January 1, 2006.

     We currently use the Black-Scholes option-pricing model to determine the fair value of stock options. The fair value of option awards on the date of grant using the Black-Scholes option-pricing model is determined by the stock price and assumptions regarding expected stock price volatility over the expected term of the awards, risk-free interest rate, expected forfeiture rate and expected dividends. If factors change and we use different assumptions for estimating stock-based compensation expense in future periods or if we decide to use a different valuation model, the amounts recorded in future periods may differ significantly from the amounts recorded in the current period and could affect net income and earnings per share.

Goodwill

     Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but instead tested for impairment at least annually in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). We conduct on at least an annual basis, a review of the goodwill to determine whether the carrying value of goodwill exceeds the fair market value using a discounted cash flow methodology. Should this be the case, the value of goodwill may be impaired and written down. In the year ended December 31, 2006, we conducted an impairment review of the goodwill related to the Tennessee Homebuilding segment in the Homebuilding Division acquired in connection with our acquisition of Bowden Building Corporation in 2004. The profitability and estimated cash flows of this reporting entity were determined in the second quarter of 2006 to have declined to a point where the carrying value of the assets exceeded their market value. We used a discounted cash flow methodology to determine the amount of impairment resulting in completely writing off goodwill of approximately $1.3 million in the year ended December 31, 2006. The write-off is included in other expenses in the consolidated statements of operations.

Discontinued Operations

     As discussed previously in Item 1. Business, the commercial leasing properties at Core Communities are treated as discontinued operations due to our intention to sell these projects. Due to this decision, the projects and assets that are for sale have been accounted for as discontinued operations for all periods presented in accordance with SFAS No. 144. Accordingly, the results of operations from these projects have been reclassified to discontinued operations for all periods presented in this Annual Report on Form 10-K. In addition, the assets have been reclassified to assets held for sale and the related liabilities associated with these assets held for sale were also reclassified in the consolidated statements of financial condition for all prior periods presented to conform to the current year presentation. Additionally, pursuant to SFAS No. 144 assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell. Management has reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that these assets were appropriately recorded at the lower of cost or fair value less the costs to sell at December 31, 2007.

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Consolidated Results of Operations

										2007			2006
	Year Ended December 31,									vs. 2006			vs. 2005
	2007			2006			2005			Change			Change
	(In thousands, except per share data)
Revenues
Sales of real estate	$	410,115			566,086			558,112			(155,971	)		7,974
Other revenues		5,766			7,488			6,585			(1,722	)		903
Total revenues		415,881			573,574			564,697			(157,693	)		8,877
Costs and expenses
Cost of sales of real estate		573,241			482,961			408,082			90,280			74,879
Selling, general and administrative expenses		116,087			119,337			87,162			(3,250	)		32,175
Other expenses		3,929			3,677			4,855			252			(1,178	)
Total costs and expenses		693,257			605,975			500,099			87,282			105,876
Earnings from Bluegreen Corporation		10,275			9,684			12,714			591			(3,030	)
Interest and other income, net of interest expense		7,439			7,816			10,289			(377	)		(2,473	)
(Loss) income from continuing operations before income taxes		(259,662	)		(14,901	)		87,601			(244,761	)		(102,502	)
Benefit (provision) for income taxes		23,277			5,758			(32,532	)		17,519			38,290
(Loss) income from continuing operations		(236,385	)		(9,143	)		55,069			(227,242	)		(64,212	)
Discontinued operations:
Income (loss) from discontinued operations, net of tax		1,765			(21	)		(158	)		1,786			137
Net (loss) income	$	(234,620	)		(9,164	)		54,911			(225,456	)		(64,075	)
Basic (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.45	)		2.73			(5.60	)		(3.18	)
Discontinued operations		0.05			—			(0.01	)		0.05			0.01
Total basic (loss) earnings per share	$	(6.00	)		(0.45	)		2.72			(5.55	)		(3.17	)
Diluted (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.46	)		2.70			(5.59	)		(3.16	)
Discontinued operations		0.05			—			(0.01	)		0.05			0.01
Total diluted (loss) earnings per share (a)	$	(6.00	)		(0.46	)		2.69			(5.54	)		(3.15	)
Basic weighted average shares outstanding (b)		39,092			20,214			20,208			18,878			6
Diluted weighted average shares outstanding (b)
		39,092			20,214			20,320			18,878			(106	)

(a)

Diluted (loss) earnings per share takes into account (i) the dilution in earnings we recognize from Bluegreen as a result of outstanding securities issued by Bluegreen that enable the holders thereof to acquire shares of Bluegreen’s common stock and (ii) the dilutive effect of our stock options and restricted stock using the treasury stock method.

(b)

The weighted average number of common shares outstanding in basic and diluted (loss) earnings per common share for 2006 and 2005 have been retroactively adjusted for a number of shares representing the bonus element arising from the rights offering that closed on October 1, 2007. Under the rights offering, stock was issued on October 1, 2007 at a purchase price below the market price on October 1, 2007 resulting in the bonus element of 1.97%. The number of weighted average shares of Class A common stock is required to be retroactively increased by this percentage for all prior periods presented.

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     As of November 9, 2007, the accounts of Levitt and Sons were deconsolidated from our financial statements. Therefore, the financial data and comparative analysis in the preceding table reflects operations through November 9, 2007 related to the Primary Homebuilding and Tennessee Homebuilding segments compared to full year results of operations in 2006 and 2005, with the exception of Carolina Oak which is included in the above table for the full year in 2007 since this subsidiary is not part of the Chapter 11 Cases.

For the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

     We had a consolidated net loss of $234.6 million for the year ended December 31, 2007 as compared to a net loss of $9.2 million for the year ended December 31, 2006. The significant loss in the year ended December 31, 2007 was the result of recording $226.9 million of impairment charges related to inventory of real estate of which $217.6 million was recorded in the Homebuilding Division and $9.3 million was recorded in the Other Operations segment related to capitalized interest. This compares to $36.8 million of impairment charges recorded in the year ended December 31, 2006. In addition, there were decreased sales of real estate and margins on sales of real estate by all segments, and higher selling, general and administrative expenses associated with Other Operations and our Land Division. In addition, interest expense was $3.8 million for the year ended December 31, 2007 while there was no interest expense in 2006. These increased expenses and lower sales of real estate were slightly offset by an increase in income from discontinued operations related to increased commercial lease activity generating higher rental revenues.

     Revenues from sales of real estate decreased to $410.1 million for the year ended December 31, 2007 from $566.1 million for the year ended December 31, 2006. This decrease is attributable to fewer homes delivered in the Homebuilding Division, and fewer land sales in both Other Operations and the Land Division. The Homebuilding Division had lower revenue despite the average sales price of units delivered increasing to $321,000 in 2007 compared to $302,000 in the same period in 2006 due to the number of deliveries decreasing to 1,144 homes as compared to 1,660 homes during the same period in 2006. In Other Operations, Levitt Commercial delivered 17 units during the year ended December 31, 2007 recording $6.6 million in revenues compared to 29 units during the year ended December 31, 2006 and $11.0 million in revenues. The Land Division sold approximately 40 acres in the year ended December 31, 2007 as compared to 371 acres in 2006. These decreases were slightly offset by an increase in land sales recorded by the Homebuilding Division which totaled $20.1 million for the year ended December 31, 2007 while there were no comparable sales in 2006.

     Other revenues decreased $1.7 million to $5.8 million for the year ended December 31, 2007, compared to $7.5 million during the year ended December 31, 2006. Other revenues in the Primary Homebuilding segment decreased due to fewer closings.

     Cost of sales of real estate increased $90.3 million to $573.2 million during the year ended December 31, 2007, as compared to $483.0 million for the year ended December 31, 2006. The increase in cost of sales was due to the increased impairment charges recorded in an aggregate amount of $226.9 million compared to $36.8 million in the same period in 2006. In addition, included in cost of sales is approximately $18.8 million associated with sales by both segments of the Homebuilding Division of land that management decided to not develop further, while there were no similar sales or costs in 2006. These increases were offset by lower cost of sales due to fewer land sales recorded by the Land Division and the Other Operations segment and fewer units delivered by both segments of the Homebuilding Division.

     Consolidated margin percentage declined during the year ended December 31, 2007 to a negative margin of 39.8% compared to a margin of 14.7% in the year ended December 31, 2006 primarily related to the impairment charges recorded in the Homebuilding Division and Other Operations segment. Consolidated gross margin excluding impairment charges was 15.5% in the year ended December 31, 2007 compared to a gross margin of 21.2% in 2006. The decline was associated with significant discounts offered in 2007 in an attempt to reduce cancellations and encourage buyers to close, aggressive pricing discounts on “spec units” and a lower margin being earned on land sales.

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     Selling, general and administrative expenses decreased $3.3 million to $116.1 million during the year ended December 31, 2007 compared to $119.3 million during the year ended December 31, 2006 primarily as a result of decreased employee compensation and benefits and other general and administrative charges in the Homebuilding Division and Other Operations as a result of the multiple reductions in force that occurred in 2007. In addition, annual incentive compensation recorded in 2007 was significantly less throughout all segments of the business compared to the year ended December 31, 2006 due to the significant reductions in force in the Homebuilding Division and significant operating losses in 2007. In addition, Levitt and Sons was deconsolidated as of November 9, 2007 and the selling, general and administrative expenses of Levitt and Sons are reflected through November 9, 2007 compared to a full year of selling, general and administrative expenses in 2006. These decreases were slightly offset by increased selling, general and administrative expenses in the Land Division segment related to operating costs associated with the commercial leasing business and increasing activity in the master-planned community in Tradition Hilton Head and restructuring related expenses recorded in Other Operations and the Homebuilding Division, in the amount of $7.4 million which included severance related expenses, facilities expenses, and independent contractor expenses. As a percentage of total revenues, selling, general and administrative expenses increased to 27.9% during the year ended December 31, 2007, from 20.8% during 2006 as a result of the decreased revenue.

     Other expenses increased slightly to $3.9 million during the year ended December 31, 2007 from $3.7 million in 2006. In the year ended December 31, 2007, we recorded a surety bond accrual that did not exist in 2006. Due to the cessation of most development activity in Levitt and Sons’ projects, we evaluated Levitt Corporation’s exposure on the surety bonds and letters of credit supporting any Levitt and Sons projects based on indemnifications Levitt Corporation provided to the bond holders. Levitt and Sons had $33.3 million in surety bonds related to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, we could be responsible for up to $12.0 million plus costs and expenses in accordance with the surety indemnity agreement for these instruments. As of December 31, 2007, we recorded $1.8 million in surety bonds accrual related to certain bonds where management considers it probable that the Company will be required to reimburse the surety under the indemnity agreement. In addition to the surety bond accrual, the Other Operations segment also recorded a write-off of leasehold improvements which did not exist in 2006. As part of the reductions in force discussed above and the Chapter 11 Cases, we vacated certain leased space. Leasehold improvements in the amount of $564,000 related to the vacated space will not be recovered and were written-off in the year ended December 31, 2007. These decreases were offset by the write-down of goodwill in 2006 of approximately $1.3 million associated with the Tennessee Homebuilding segment. In addition, title and mortgage expense decreased due to the decrease in closings.

     Bluegreen reported net income for the year ended December 31, 2007 of $31.9 million, as compared to net income of $29.8 million in 2006. In the first quarter of 2006, Bluegreen adopted SOP 04-02 and recorded a one-time, non-cash, cumulative effect of change in accounting principle charge of $4.5 million, which contributed to the slight increase in 2007. Our interest in Bluegreen’s income was $10.3 million for the year ended December 31, 2007 compared to $9.7 million in 2006.

     Interest and other income, net of interest expense decreased from $7.8 million during the year ending December 31, 2006 to $7.4 million during the same period in 2007. The decrease is due to an increase in interest expense in 2007. Interest incurred totaled $46.7 million and $40.5 million for the years ended December 31, 2007 and 2006, respectively. While all interest was capitalized in the year ended December 31, 2006, only $42.9 million was capitalized in 2007 due to a decreased level of development associated with a large portion of our real estate inventory which resulted in a decreased amount of qualified assets for interest capitalization. Interest incurred was higher due to higher average debt balances for the year ended December 31, 2007 as compared to the same period in 2006, as well as increases in the average interest rate on our variable-rate debt. At the time of home closings and land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2007 and 2006 included previously capitalized interest of approximately $17.9 million and $15.4 million, respectively. Interest expense was offset by higher forfeited deposits on cancelled contracts in our Homebuilding Division as well as higher interest income due to the investment of the proceeds from the Rights Offering.

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     The benefit for income taxes had an effective rate of 9.0% in the year ended December 31, 2007 compared to 38.6% in the year ended December 31, 2006. The decrease in the effective tax rate is a result of recording a valuation allowance in the year ended December 31, 2007 for those deferred tax assets that are not expected to be recovered in the future. Due to the significant impairment charges recorded in the year ended December 31, 2007, the expected timing of the reversal of those impairment charges, and expected taxable losses in the foreseeable future, we do not believe at this time we will have sufficient taxable income to realize all of the deferred tax assets. At December 31, 2007, we had $102.6 million in gross deferred tax assets. After consideration of $24.0 million of deferred tax liabilities and the ability to carryback losses, a valuation allowance of $78.6 million was recorded. The increase in the valuation allowance from December 31, 2006 is $78.1 million.

     The income from discontinued operations, which relates to two commercial leasing projects at Core Communities, was $1.8 million in 2007 compared to a loss of $21,000 in 2006. The increase is due to increased commercial lease activity generating higher rental revenues.

For the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

     We incurred a consolidated net loss of $9.2 million for the year ended December 31, 2006 as compared to net income of $54.9 million in 2005, which represented a decrease in consolidated net income of $64.1 million, or 116.7%. This decrease was the result of decreased margins on sales of real estate across all operating segments due to increased cost of sales, and inventory impairments recorded in the year ended December 31, 2006 in the amount of $36.8 million, and higher selling and administrative expenses. There were no inventory impairments recorded in 2005, although we did write-off $467,000 in deposits. These increases in expenses were offset in part by an increase in sales of real estate. Further, Bluegreen Corporation experienced a decline in earnings in the year ended December 31, 2006 compared to the same period in 2005.

     Revenues from sales of real estate increased slightly from $558.1 million to $566.1 million for the year ended December 31, 2006 as compared to 2005. The increase was primarily attributable to an increase in the average selling prices of homes delivered by both segments of our Homebuilding Division offset in part by decreases in the sales of real estate for the Land Division and Other Operations for the year ended December 31, 2006. Homebuilding Division revenues increased from $438.4 million for the year ended December 31, 2005 to $500.7 million in 2006. During the year ended December 31, 2006, 1,660 homes were delivered compared to 1,789 homes delivered during 2005, however the average selling price of deliveries increased to $302,000 for the year ended December 31, 2006 from $245,000 in 2005. The increase in the average price of our homes delivered was the result of price increases initiated throughout 2005 due to strong demand, particularly in Florida. In the year ended December 31, 2005, the Land Division recorded land sales of $105.7 million compared to land sales of $69.8 million in 2006. The large decrease is attributable to a bulk land sale of 1,294 acres for $64.7 million recorded by the Land Division in the year ended December 31, 2005 compared to 371 total acres sold by the Land Division in 2006. Revenues for 2005 also reflect sales of flex warehouse properties as Levitt Commercial delivered 44 flex warehouse units at two of its development projects, generating revenues of $14.7 million. Levitt Commercial delivered 29 units during the year ended December 31, 2006 recording $11.0 million in revenues.

     Other revenues increased from $6.6 million during the year ending December 31, 2005 to $7.5 million in 2006. This change was primarily related to an increase in lease and irrigation revenue associated with our Land Division’s Tradition, Florida master-planned community.

     Cost of sales increased 18.4% to $483.0 million during the year ended December 31, 2006, as compared to 2005. The increase in cost of sales was due to increased revenues from real estate. In addition, the increase was due to impairment charges and inventory related valuation adjustments in the amount of $36.8 million in our Homebuilding Division. Projections of future cash flows related to the remaining assets in the Homebuilding Divisions were discounted and used to determine the estimated impairment charge. These adjustments were calculated based on market conditions at that time and assumptions made by our management, which may differ materially from actual results. In the second quarter of 2006, we recorded inventory impairment charges related to the Tennessee Homebuilding segment which have consistently delivered lower than expected margins. In the second quarter of 2006, key management personnel resigned and we faced increased start-up costs in the Nashville market. We also

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experienced a downward trend in home deliveries in our Tennessee Homebuilding segment during the second quarter and as a result of these factors, we recorded an impairment charge of approximately $4.7 million. In the fourth quarter of 2006, we recorded additional impairment charges of $29.7 million in both segments of the Homebuilding Division due to the continued downward trend in certain homebuilding markets. In addition to impairment charges, cost of sales increased due to higher construction costs. The increase in cost of sales in the Homebuilding Division was partially offset by lower cost of sales in the Land Division and Other Operations, based on the decrease in land sales recorded. Consolidated cost of sales as a percentage of related revenue was approximately 85.3% for the year ended December 31, 2006, as compared to approximately 73.1% in 2005. This increase adversely affected gross margin percentages across all business segments. This decrease in margin was attributable to the impairment charges, higher construction costs as well as lower land revenues recognized associated with pricing pressure on sales of land.

     Selling, general and administrative expenses increased $32.1 million to $119.3 million during the year ended December 31, 2006 compared to $87.2 million during 2005 as a result of higher employee compensation and benefits, advertising costs and professional services expenses. Employee compensation and benefits expense increased by approximately $7.1 million, from $42.5 million during the year ended December 31, 2005 to $49.6 million for 2006. This increase related to the number of employees increasing from 668 at December 31, 2005 to 698 at December 31, 2006. The employee count was as high as 765 as of June 30, 2006. These increases were primarily a result of the continued expansion of the Primary Homebuilding segment and Land Division activities into new geographic areas and enhanced support functions. Further, approximately $3.1 million of the increase in compensation expense was associated with non-cash stock-based compensation for which no expense was recorded in 2005. Additionally, other charges of $1.0 million consisted of employee related costs, including severance and retention payments relating to our Homebuilding Division. Advertising and outside broker expense increased approximately $8.6 million in the year ended December 31, 2006 compared to 2005 due to increased advertising costs for new communities opened during 2006 and increased advertising and increased costs to outside brokers associated with efforts to attract buyers in a challenging homebuilding market. Lastly, we experienced an increase in administrative costs of $2.8 million due to non-capitalizable consulting services performed during the year ended December 31, 2006 related to our financial systems implementation of a new technology and data platform for all of our operating entities. Effective October 2006, our segments, excluding our Tennessee Homebuilding segment began utilizing one system platform. The system implementation costs consisted of training and other validation procedures that were performed in the year ended December 31, 2006. Similar professional services costs were not incurred during the year ended December 31, 2005. As a percentage of total revenues, selling, general and administrative expenses increased to 20.8% during the year ended December 31, 2006, from 15.4% during the same period in 2005, due to the increases in overhead spending noted above, coupled with the decline in total revenues generated in our Land Division with no corresponding decrease in overhead costs. Management continues to evaluate overhead spending in an effort to align costs with backlog, sales and deliveries.

     Interest incurred and capitalized totaled $40.5 million for the year ended December 31, 2006 compared to $18.9 million in 2005. Interest incurred was higher due to higher outstanding debt balances, as well as an increase in the average interest rate on our variable-rate debt and new borrowings. At the time of home closings and land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2006 and 2005 included previously capitalized interest of approximately $15.4 million and $9.0 million, respectively.

     Other expenses decreased to $3.7 million during the year ended December 31, 2006 from $4.9 million for the year ended December 31, 2005. The decrease was primarily attributable to a decrease of $677,000 in debt prepayment penalties that were incurred in 2005, a $830,000 litigation reserve recorded in 2005, and hurricane related expenses incurred during the year ended December 31, 2005 while no hurricane expenses were incurred in 2006. The decrease in other expenses was partially offset by goodwill impairment charges recorded in the year ended December 31, 2006 of approximately $1.3 million related to our Tennessee Homebuilding segment. In the second quarter of 2006, we determined the profitability and estimated cash flows of the reporting entity declined to a point where the carrying value of the assets exceeded their estimated fair market value resulting in a write-off of goodwill.

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     Bluegreen reported net income for the year ended December 31, 2006 of $29.8 million, as compared to net income of $46.6 million in 2005. Our interest in Bluegreen’s earnings, net of purchase accounting adjustments, was $9.7 million for the 2006 period compared to $12.7 million for the same period in 2005, net of purchase accounting adjustments and the cumulative effect of a 2005 restatement.

     Interest and other income, net of interest expense decreased from $10.3 million during the year ending December 31, 2005 to $7.8 million during 2006. This change was primarily related to certain one time income items recorded in 2005 in the amount of $7.3 million, including a contingent gain receipt and the reversal of a $6.8 million construction related obligation which were not realized in 2006. These decreases were partially offset by higher income in 2006 related to a $1.3 million gain on sale of fixed assets from our Land Division, higher interest income generated by our various interest bearing deposits, and a $2.6 million increase in forfeited deposits realized by our Homebuilding Division.

     Provision for income taxes reflects an effective rate of 38.6% in the year ended December 31, 2006 compared to 37.1% in the year ended December 31, 2005. The change in the effective rate is due to the temporary differences created due to impairment of goodwill for the year ended December 31, 2006. Additionally, we recognized an adjustment of an over accrual of income tax expense in the amount of approximately $262,000, which is immaterial to the current and prior period financial statements to which it relates.

     The loss from discontinued operations, which relates to two commercial leasing projects at Core Communities decreased $137,000 from $158,000 in the year ended December 31, 2005 to $21,000 in 2006. The decrease is due to increased commercial lease activity generating higher rental revenues.

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Land Division Results of Operations

										2007			2006
	Year Ended December 31,									vs. 2006			vs. 2005
	2007			2006			2005			Change			Change
	(Dollars in thousands)
Revenues
Sales of real estate	$	16,567			69,778			105,658			(53,211	)		(35,880	)
Other revenues		2,893			2,063			924			830			1,139
Total revenues		19,460			71,841			106,582			(52,381	)		(34,741	)
Costs and expenses
Cost of sales of real estate		7,447			42,662			50,706			(35,215	)		(8,044	)
Selling, general and administrative expenses		17,240			13,305			11,918			3,935			1,387
Other expenses		—			—			1,177			—			(1,177	)
Total costs and expenses		24,687			55,967			63,801			(31,280	)		(7,834	)
Interest and other income, net of interest expense		1,842			2,622			7,861			(780	)		(5,239	)
(Loss) income from continuing operations before income taxes		(3,385	)		18,496			50,642			(21,881	)		(32,146	)
Provision for income taxes		(4,802	)		(6,948	)		(19,088	)		2,146			12,140
(Loss) income from continuing operations		(8,187	)		11,548			31,554			(19,735	)		(20,006	)
Discontinued operations:
Income (loss) from discontinued operations, net of tax		1,765			(21	)		(158	)		1,786			137
Net (loss) income	$	(6,422	)		11,527			31,396			(17,949	)		(19,869	)
Operational data:
Acres sold		40			371			1,647			(331	)		(1,276	)
Margin percentage (a)		55.0	%		38.9	%		52.0	%		16.1	%		(13.1	)%
Unsold saleable acres (b)		6,679			6,871			7,287			(192	)		(416	)
Acres subject to sales contracts — Third parties		259			74			246			185			(172	)
Aggregate sales price of acres subject to sales contracts to third parties		77,888			21,124			39,283			56,764			(18,159	)

(a)	Margin percentage is calculated by dividing margin (sales of real estate minus cost of sales of real estate) by sales of real estate.
(b)	Includes approximately 56 acres related to assets held for sale as of December 31, 2007.

     Due to the nature and size of individual land transactions, our Land Division results are subject to significant volatility. Although we have historically realized margins of between 40.0% and 60.0% on Land Division sales, margins on land sales are likely to remain in the lower end, or even below, of the historical range given the downturn in the real estate markets and the significant decrease in demand in Florida. Margins will fluctuate based upon changing sales prices and costs attributable to the land sold. In addition to the impact of economic and market factors, the sales price and margin of land sold varies depending upon: the location; the parcel size; whether the parcel is sold as raw land, partially developed land or individually developed lots; the degree to which the land is entitled; and whether the designated use of land is residential or commercial. The cost of sales of real estate is dependent upon the original cost of the land acquired, the timing of the acquisition of the land, and the amount of land development, interest and real estate tax costs capitalized to the particular land parcel during active development. Allocations to cost of sales involve significant management judgment and include an estimate of future costs of development, which can vary over time due to labor and material cost increases, master plan design changes and regulatory modifications. Accordingly, allocations are subject to change based on factors which are in many instances beyond management’s control. Future margins will continue to vary based on these and other market factors. If the real estate markets deteriorate further, there is no assurance that we will be able to sell land at prices above our carrying cost or even in amounts necessary to repay our indebtedness.

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     The value of acres subject to third party sales contracts increased from $21.1 million at December 31, 2006 to $77.9 million at December 31, 2007. This backlog consists of executed contracts and provides an indication of potential future sales activity and value per acre. However, the backlog is not an exclusive indicator of future sales activity. Some sales involve contracts executed and closed in the same quarter and therefore will not appear in the backlog. In addition, contracts in the backlog are subject to cancellation.

For the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

     Revenues from sales of real estate decreased 76.3% to $16.6 million during the year ended December 31, 2007, compared to $69.8 million in 2006. Sales of real estate in Tradition, Florida for the year ended December 31, 2007 consisted of 37 acres with a net sales price of $12.7 million, net of deferrals related to percentage of completion accounting, as compared to 208 acres with a net sales price of $51.2 million in 2006. In 2007, demand for residential land in Tradition, Florida slowed dramatically. In addition, in the year ended December 31, 2007, we sold nine residential lots encompassing approximately three acres in Tradition Hilton Head with a net sales price of $1.1 million, net of deferrals related to percentage of completion accounting. This compares to sales to third parties in Tradition Hilton Head encompassing 10 acres with a net sales price of $4.7 million in the year ended December 31, 2006 and an additional 150 acres transferred to Carolina Oak which eliminated in consolidation. In addition, revenues for the year ended December 31, 2007 included “look back” provisions of $1.5 million compared to $870,000 in the year ended December 31, 2006. “Look back” revenue relates to incremental revenue received from homebuilders based on the final resale price to the homebuilder’s customer. We also recognized deferred revenue on previously sold bulk land and residential lots totaling approximately $1.3 million for the year ended December 31, 2007, of which $733,000 related to sales to affiliated segments and is eliminated in consolidation. There was no similar activity for the year ended December 31, 2006. Management continues to focus on commercial land sales and the leasing and development of its retail centers. At Tradition Hilton Head, management is completing the development of the initial phases of this master-planned community and expects a marketing launch in the spring of 2008.

     Other revenues increased approximately $800,000 to $2.9 million for the year ended December 31, 2007, compared to $2.1 million during 2006. This was due to increased revenues related to irrigation services provided to homebuilders, commercial users and the residents of Tradition, Florida, marketing income associated with Tradition, Florida, and rental revenues associated with our commercial leasing business.

     Cost of sales decreased $35.2 million to $7.5 million during the year ended December 31, 2007, as compared to $42.7 million for the same period in 2006 due to the decrease in sales of real estate.

     Margin percentage increased to 55.0% in the year ended December 31, 2007 from 38.9% in the year ended December 31, 2006. The increase in margin is primarily due to increased commercial sales in 2007 which generated a higher margin and 100% margin being realized on “lookback” revenue because the associated costs were fully expensed at the time of closing.

     Selling, general and administrative expenses increased 29.6% to $17.2 million during the year ended December 31, 2007 compared to $13.3 million in the same period in 2006. The increase is the result of higher employee compensation and benefits, increased operating costs associated with the commercial leasing business and increased other general and administrative costs. The number of full time employees increased to 67 at December 31, 2007, from 59 at December 31, 2006, as additional personnel were added to support development activity in Tradition Hilton Head. General and administrative costs increased due to increased expenses associated with our commercial leasing activities, increased legal expenditures, increased insurance costs and increased marketing and advertising expenditures designed to attract buyers in Florida and establish a market presence in South Carolina.

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     Interest and other income, net of interest expense decreased from $2.6 million during the year ending December 31, 2006, to $1.8 million during 2007. Interest incurred for the years ended December 31, 2007 and 2006 was $10.3 million and $5.1 million, respectively. Interest capitalized totaled $7.7 million for the year ended December 31, 2007 compared to $5.1 million during 2006. The interest expense in the year ended December 31, 2007 of approximately $2.6 million was attributable to funds borrowed by Core Communities but then loaned to Levitt Corporation. The capitalization of this interest occurred at the consolidated level and all intercompany interest expense and income was eliminated on a consolidated basis. As noted above, interest incurred was higher due to higher outstanding balances of notes and mortgage notes payable and an increase in the average interest rate on variable-rate debt. At the time of land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2007 and 2006 included previously capitalized interest of approximately $66,000 and $443,000, respectively. Interest and other income also decreased by a gain on sale of fixed assets which totaled $1.3 million in the year ended December 31, 2006 compared to $20,000 in 2007. The decreases were slightly offset by an increase in inter-segment interest income associated with the aforementioned intercompany loan to Levitt Corporation (which is eliminated in consolidation).

     The income from discontinued operations, which relates to two commercial leasing projects at Tradition, Florida, was $1.8 million in 2007 compared to a loss of $21,000 in 2006. The increase is due to increased commercial lease activity generating higher rental revenues.

For the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

     Revenues from sales of real estate decreased 34.0% to $69.8 million during the year ended December 31, 2006, from $105.7 million during 2005. During the year ended December 31, 2006, we sold 371 acres at an average margin of 38.9% as compared to 1,647 acres sold at an average margin of 52.0% for 2005. The decrease in revenue was primarily attributable to a large bulk sale of land adjacent to Tradition, Florida consisting of a total of 1,294 acres for $64.7 million, which occurred in the year ended December 31, 2005. Included in the 371 acres sold in 2006 are 150 acres transferred to Carolina Oak. Intercompany profits recognized by the Land Division are deferred until the homes are delivered on those properties to third parties, at which time the deferred profit is applied against consolidated cost of sales. During the year ended December 31, 2006, the Land Division’s intercompany sales amounted to $18.8 million, of which the $3.3 million profit was deferred at December 31, 2006, as compared to no intercompany sales in the year ended December 31, 2005.

     The increase in other revenues from $924,000 for the year ended December 31, 2005 to $2.1 million in 2006 related to increased marketing fees associated with cooperative marketing agreements with homebuilders and lease and irrigation income.

     Cost of sales decreased $8.0 million to $42.7 million during the year ended December 31, 2006, as compared to $50.7 million in 2005. The decrease in cost of sales was directly related to the decrease in revenues from the Land Division in 2006. This decrease was slightly offset by an increase in cost of sales due to lower margin sales in 2006. The large bulk sale that took place in 2005, which represented the majority of the sales activity in 2005, generated higher than normal margins for the year ended December 31, 2005. Cost of sales as a percentage of related revenue was approximately 61.1% for the year ended December 31, 2006 compared to 48.0% in 2005.

     Selling, general and administrative expenses increased 11.6% to $13.3 million during the year ended December 31, 2006, from $11.9 million during 2005. The increase primarily was a result of increases in compensation and other administrative expenses attributable to increased headcount in support of our expansion into the South Carolina market, and commercial development, commercial leasing and irrigation activities. Additionally, we incurred increases in Florida property taxes, advertising and marketing costs, and depreciation associated with commercial projects being developed internally. These increases were slightly offset by lower incentive compensation associated with significant operating losses

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in the year ended December 31, 2006 compared to 2005. As a percentage of total revenues, our selling, general and administrative expenses increased to 18.5% during the year ended December 31, 2006, from 11.2% during 2005. The large variance is attributable to the large land sale that occurred in the year ended December 31, 2005 which resulted in a large increase in revenue without a corresponding increase in selling, general and administrative expenses due to the fixed nature of many of the Land Division’s expenses.

     Interest incurred and capitalized during the years ended December 31, 2006 and 2005 was $5.1 million and $2.4 million, respectively. Interest incurred was higher in 2006 due to higher outstanding balances of notes and mortgage notes payable, as well as increases in the average interest rate on our variable-rate debt. Cost of sales of real estate during the year ended December 31, 2006 included previously capitalized interest of $443,000, compared to $743,000 during 2005.

     The decrease in interest and other income from $7.9 million for the year ended December 31, 2005 to $2.6 million in 2006 is related to a reversal of a construction related obligation recorded in 2005 in the amount of $6.8 million. This item was not present in 2006. This decrease was partially offset by a $1.3 million gain on sale of fixed assets and higher interest income generated by our various interest bearing deposits.

     The loss from discontinued operations, relates to two commercial leasing projects at Core Communities decreased $137,000 from $158,000 in the year ended December 31, 2005 to $21,000 in the year ended December 31, 2006. The decrease in the loss from discontinued operations is due to increased commercial lease activity generating higher rental revenues.

Other Operations Results of Operations

										2007			2006
	Year Ended December 31,									Vs. 2006			Vs. 2005
	2007			2006			2005			Change			Change
	(Dollars in thousands)
Revenues
Sales of real estate	$	6,574			11,041			14,709			(4,467	)		(3,668	)
Other revenues		952			1,435			1,963			(483	)		(528	)
Total revenues		7,526			12,476			16,672			(4,950	)		(4,196	)
Costs and expenses
Cost of sales of real estate		16,793			11,649			12,520			5,144			(871	)
Selling, general and administrative expenses		32,508			28,174			17,841			4,334			10,333
Other expenses		2,390			8			72			2,382			(64	)
Total costs and expenses		51,691			39,831			30,433			11,860			9,398
Earnings from Bluegreen Corporation		10,275			9,684			12,714			591			(3,030	)
Interest and other income, net of interest expense		6,294			4,059			2,108			2,235			1,951
(Loss) income before income taxes		(27,596	)		(13,612	)		1,061			(13,984	)		(14,673	)
Benefit (provision) for income taxes		34,297			5,639			(378	)		28,658			6,017
Net income (loss)	$	6,701			(7,973	)		683			14,674			(8,656	)

     Other Operations include all other Company operations, including Levitt Commercial, parent company general and administrative expenses, earnings from our investment in Bluegreen and earnings (loss) from investments in various real estate projects and trusts. We currently own approximately 9.5 million shares of the common stock of Bluegreen, which represented approximately 31% of Bluegreen’s outstanding shares as of December 31, 2007. Under equity method accounting, we recognize our pro-rata

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share of Bluegreen’s net income (net of purchase accounting adjustments) as pre-tax earnings. Bluegreen has not paid dividends to its shareholders; therefore, our earnings represent only our claim to the future distributions of Bluegreen’s earnings. Accordingly, we record a tax liability on our portion of Bluegreen’s net income. Our earnings in Bluegreen increase or decrease concurrently with Bluegreen’s reported results. Furthermore, a significant reduction in Bluegreen’s financial position could potentially result in an impairment charge on our investment against our future results of operations. For a complete discussion of Bluegreen’s results of operations and financial position, we refer you to Bluegreen’s Annual Report on Form 10-K for the year ended December 31, 2007,as filed with the SEC, and the financial statement contained herein, as filed as an Exhibit 99.1 to this Form 10-K.

For the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

     Revenue from sales of real estate was $6.6 million in the year ended December 31, 2007 compared to $11.0 million in the year ended December 31, 2006. Levitt Commercial delivered 17 flex warehouse units in 2007 while 29 units were delivered during 2006. Levitt Commercial completed the sale of all flex warehouse units in inventory in 2007, and we have no current plans for future sales from Levitt Commercial.

     Other revenues decreased to $952,000 in the year ended December 31, 2007 from $1.4 million in 2006 due to the reduction in leasing revenue received from the sub-tenant in the corporate headquarters building. The sub-tenant leased space in our headquarters building and returned a portion of this space to us in the fourth quarter of 2006, which we now occupy. We are planning to seek to lease to third parties this space in 2008 and relocate to smaller space due to the number of employees we have remaining at this facility.

     Cost of sales of real estate increased to $16.8 million during the year ended December 31, 2007, as compared to $11.6 million during the year ended December 31, 2006 due to an increase of $9.3 million in capitalized interest impairment charges. This increase was offset in part by a decrease of $3.8 million in cost of sales related to fewer deliveries of commercial warehouse units, as we delivered 12 fewer flex warehouse units in the year ended December 31, 2007 as compared to 2006. In addition, interest in Other Operations is amortized to cost of sales in accordance with the relief rate used in the Company’s operating segments, and due to the lower sales in 2007, the operating segments experienced decreased interest amortization which resulted in less amortization by the Other Operations segment.

     Bluegreen reported net income for the year ended December 31, 2007 of $31.9 million, as compared to net income of $29.8 million in 2006. In the first quarter of 2006, Bluegreen adopted SOP 04-02 and recorded a one-time, non-cash, cumulative effect of change in accounting principle charge of $4.5 million, which contributed to the slight increase in 2007. Our interest in Bluegreen’s income was $10.3 million for the year ended December 31, 2007 compared to $9.7 million in 2006.

     Selling, general and administrative expenses increased $4.3 million to $32.5 million during the year ended December 31, 2007 compared to $28.2 million in 2006. The increase was attributable to $5.1 million of restructuring related charges associated with Levitt Corporation and Levitt and Sons employees. In the third and fourth quarters of 2007, substantially all of Levitt and Sons’ employees were terminated and 22 employees were terminated at Levitt Corporation primarily as a result of the Chapter 11 Cases. Levitt Corporation recorded approximately $2.4 million in the year ended December 31, 2007 of severance benefits to terminated Levitt and Sons employees to supplement the limited termination benefits which could be paid by Levitt and Sons to those employees. The restructuring related expenses were slightly offset by lower stock based compensation and annual incentive compensation expense as a result of the multiple reductions in force that occurred in 2007 and significant operating losses in 2007. The decrease in non-cash stock based compensation expense is attributable to the large number of employee terminations that occurred in 2007 which resulted in a reversal of stock compensation amounts previously accrued. The reversal related to forfeited options in connection with the terminations.

44

     Other expenses increased to $2.4 million during the year ended December 31, 2007 from $8,000 in 2006. In the year ended December 31, 2007, we recorded a surety bond accrual that did not exist in 2006. Due to the cessation of most development activity in Levitt and Sons’ projects, we evaluated Levitt Corporation’s exposure on the surety bonds and letters of credit supporting any Levitt and Sons projects based on indemnifications Levitt Corporation provided to the bond holders. As of December 31, 2007, we recorded $1.8 million in surety bonds accrual related to certain bonds where management considers it probable that the Company will be required to reimburse the surety under the indemnity agreement. In addition to the surety bond accrual, the Other Operations segment also recorded a write-off of leasehold improvements which also did not exist in 2006. As part of the reductions in force discussed above and the Chapter 11 Cases, we vacated certain leased space. Leasehold improvements in the amount of $564,000 related to this vacated space will not be recovered and were written off in the year ended December 31, 2007.

     Interest and other income, net of interest expense was approximately $6.3 million for the year ended December 31, 2007 compared to $4.1 million in 2006. This increase was primarily the result of the Rights Offering we completed in October 2007, the proceeds of which resulted in higher average cash balances at the parent company in the year ended December 31, 2007 which generated higher interest income, as well as interest income related to intersegment loans to the Primary and Tennessee Homebuilding segments which were eliminated in consolidation. This increase was partially offset by an increase in interest expense. Interest incurred in Other Operations was approximately $10.8 million and $7.4 million for the year ended December 31, 2007 and 2006, respectively. While all interest was capitalized in the year ended December 31, 2006, $9.8 million was capitalized in 2007 due to a decreased level of development associated with a large portion of our real estate inventory which resulted in a decreased amount of qualified assets for interest capitalization. The increase in interest incurred was attributable to an increase in the average balance of our borrowings as a result of our issuance of trust preferred securities during 2006, and the aforementioned funds borrowed by Core Communities but then loaned to Levitt Corporation.

For the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

     During the year ended December 31, 2006, Levitt Commercial delivered 29 flex warehouse units at two of its projects, generating revenues of $11.0 million as compared to 44 flex warehouse units in 2005, generating revenues of $14.7 million. Deliveries of individual flex warehouse units by Levitt Commercial generally occur in rapid succession upon the completion of a warehouse building.

     Cost of sales of real estate in Other Operations includes the expensing of interest previously capitalized, as well as the costs of development associated with the Levitt Commercial projects. Interest in Other Operations is capitalized and amortized to cost of sales in accordance with the relief rate used in our operating segments. This capitalization is for Other Operations debt where interest is allocated to inventory in the other operating segments. Cost of sales of real estate decreased $871,000 from $12.5 million in the year ended December 31, 2005 to $11.6 million in the year ended December 31, 2006. The primary reason for the decrease in cost of sales is due to fewer sales at Levitt Commercial partially offset by increased cost of sales associated with previously capitalized interest related to corporate debt.

     Bluegreen reported net income for the year ended December 31, 2006 of $29.8 million, as compared to net income of $46.6 million in 2005. Our interest in Bluegreen’s earnings, net of purchase accounting adjustments, was $9.7 million for the year ended December 31, 2006 compared to $12.7 million in 2005.

     Selling, general and administrative expense increased 57.9% to $28.2 million during the year ended December 31, 2006, from $17.8 million during 2005. The increase was a result of higher employee compensation and benefits, recruiting expenses, and professional services expenses. Employee compensation costs increased by approximately $4.4 million from $7.4 million during the year ended December 31, 2005 to $11.8 million in 2006. The increase related to the increase in the number of full time employees to 63 at December 31, 2006 from 46 at December 31, 2005. Additionally, approximately $3.1 million of the increase in compensation expense was associated with non-cash stock-based compensation for which no expense was recorded in 2005. We experienced an increase in professional services due to non-capitalizable consulting services performed in the year ended December 31, 2006 related to our systems implementation. The system implementation costs and merger related costs did not exist in the year ended December 31, 2005. These increases were partially offset by decreases in bonus expense of approximately $1.0 million from the year ended December 31, 2005 due to decreased profitability.

     Interest incurred and capitalized on notes and mortgage notes payable totaled $7.4 million during the year ended December 31, 2006, compared to $4.4 million during the same period in 2005. The increase in interest incurred was attributable to an increase in junior subordinated debentures and an increase in the average interest rate on our borrowings. Cost of sales of real estate includes previously capitalized interest of $3.6 million and $2.0 million during the year ended December 31, 2006 and 2005, respectively. Those amounts include adjustments to reconcile the amount of interest eligible for capitalization on a consolidated basis with the amounts capitalized in our other business segments.

45

Primary Homebuilding Segment Results of Operations

										2007			2006
	Year Ended December 31,									vs. 2006			vs. 2005
	2007			2006			2005			Change			Change
	(Dollars in thousands, except average price data)
Revenues
Sales of real estate	$	345,666			424,420			352,723			(78,754	)		71,697
Other revenues		2,243			4,070			3,750			(1,827	)		320
Total revenues		347,909			428,490			356,473			(80,581	)		72,017
Costs and expenses
Cost of sales of real estate		501,206			367,252			272,680			133,954			94,572
Selling, general and administrative expenses		61,568			65,052			46,917			(3,484	)		18,135
Other expenses		1,539			2,362			3,606			(823	)		(1,244	)
Total costs and expenses		564,313			434,666			323,203			129,647			111,463
Interest and other income, net of interest expense		(325	)		2,982			639			(3,307	)		2,343
(Loss) income before income taxes		(216,729	)		(3,194	)		33,909			(213,535	)		(37,103	)
Benefit (provision) for income taxes		1,396			1,508			(12,270	)		(112	)		13,778
Net (loss) income	$	(215,333	)		(1,686	)		21,639			(213,647	)		(23,325	)
Operational data:
Homes delivered		998			1,320			1,338			(322	)		(18	)
Construction starts		558			1,445			1,212			(887	)		233
Average selling price of homes delivered	$	338,000			322,000			264,000			16,000			58,000
Margin percentage (a)		(45.0	)%		13.5	%		22.7	%		(58.5	)%		(9.2	)%
Gross sales contracts (units)		765			1,108			1,398			(343	)		(290	)
Sales contracts cancellations (units)		382			261			109			121			152
Net orders (units)		383			847			1,289			(464	)		(442	)
Net orders (value)	$	94,782			324,217			448,207			(229,435	)		(123,990	)
Backlog of homes (units)		—			1,126			1,599			(1,126	)		(473	)
Backlog of homes (value)	$	—			411,578			512,140			(411,578	)		(100,562	)

(a) Margin percentage is calculated by dividing margin (sales of real estate minus cost of sales of real estate) by sales of real estate.

     As of November 9, 2007, the accounts of Levitt and Sons were deconsolidated from our financial statements. Therefore, the financial data and comparative analysis in the table above reflects operations through November 9, 2007 in the Primary Homebuilding segment compared to full year results of operations in 2006 and 2005, with the exception of Carolina Oak the results of which are included in the above results for the full year in 2007 since this subsidiary is not part of the Chapter 11 Cases. Carolina Oak is still in the early stages of development, and therefore its results of operations are immaterial to the segment, but have been included in the Primary Homebuilding segment because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed in 2006 and 2007.

For the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

     Revenues from sales of real estate decreased 18.6% or $78.8 million to $345.7 million during the year ended December 31, 2007, from $424.4 million during 2006 despite the increase in average sales price of deliveries from $322,000 in 2006 to $338,000 in 2007. During the year ended December 31, 2007, 998 homes were delivered compared to 1,320 homes delivered during 2006. The decrease in units delivered was partially offset by increased land sales. We recognized $8.0 million of revenue attributable to the sale of land that management decided not to develop further, while there were no land sales in 2006.

46

     Other revenues decreased $1.8 million to $2.2 million for the year ended December 31, 2007, compared to $4.1 million during 2006. Other revenues in the Primary Homebuilding segment decreased due to lower revenues from our title company due to fewer closings.

     Cost of sales increased to $501.2 million during the year ended December 31, 2007, compared to $367.3 million for 2006. The increase was primarily due to the increased impairment charges on inventory of real estate and an increase in cost of sales associated with the land sale that occurred in the year ended December 31, 2007 slightly offset by a decrease in cost of sales due to a fewer number of deliveries. Impairment charges were $206.4 million in the year ended December 31, 2007 compared to $31.1 million in impairment charges in 2006.

     Margin percentage (defined as sales of real estate minus cost of sales of real estate, divided by sales of real estate) declined to a negative 45.0% in the year ended December 31, 2007 from 13.5% in the year ended December 31, 2006 mainly attributable to the impairment charges recorded in the year ended December 31, 2007. Margin percentage excluding impairments declined from 20.8% in the year ended December 31, 2006 to 14.7% during the year ended December 31, 2007. This decline was primarily attributable to significant discounts offered in an effort to reduce cancellations and to encourage buyers to close, and aggressive pricing discounts on spec units as well as lower margin earned on the $8.0 million land sale mentioned above.

     Selling, general and administrative expenses decreased 5.4% to $61.6 million during the year ended December 31, 2007, compared to $65.1 million in 2006 primarily as a result of lower employee compensation and benefits expense and decreased office and administrative expenses as a result of the multiple reductions in force that occurred in 2007. In addition, there was no annual incentive compensation recorded in 2007 for the Primary Homebuilding segment. In addition, Levitt and Sons was deconsolidated as of November 9, 2007 and the selling, general and administrative expenses of Levitt and Sons are reflected through November 9, 2007 compared to a full year of selling, general and administrative expenses in 2006. These decreases were offset in part by increased legal costs primarily related to the preparation of the Chapter 11 Cases. As a percentage of total revenues, selling, general and administrative expense was approximately 17.7% for the year ended December 31, 2007 compared to 15.2% in 2006.

     Other expenses of $1.5 million decreased during the year ended December 31, 2007 from $2.4 million in 2006 as a result of a decrease in title and mortgage expense. Title and mortgage expense mostly relates to closing costs and title insurance costs for closings processed internally. These costs were lower in 2007 due to the decrease in closings.

     Interest and other income, net of interest expense decreased from income of $3.0 million during the year ended December 31, 2006 to expense of $325,000 during 2007. This change was primarily related to interest expense. Interest incurred totaled $31.2 million and $27.2 million for the years ended December 31, 2007 and 2006, respectively. While all interest was capitalized during the year ended December 31, 2006, $23.9 million in interest was capitalized during the year ended December 31, 2007 due to a decreased level of development occurring in the projects in the Primary Homebuilding segment in 2007 which resulted in a decreased amount of qualified assets for interest capitalization. Interest incurred increased as a result of higher average debt balances for the year ended December 31, 2007 as compared to 2006. At the time of home closings and land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2007 and 2006 included previously capitalized interest of approximately $14.1 million and $9.7 million, respectively. Interest expense was slightly offset by an increase in forfeited deposits of $3.5 million resulting from increased cancellations of home sale contracts.

47

For the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

     Revenues from home sales in our Primary Homebuilding segment increased 20.3% to $424.4 million during the year ended December 31, 2006, from $352.7 million during 2005. The increase was the result of an increase in average sale prices on home deliveries, which increased to $322,000 for the year ended December 31, 2006, compared to $264,000 during 2005. Since our typical sale to delivery cycle lasted between 12 and 15 months, much of the increase in average sales price on deliveries was attributable to the price increases in 2005 which we were able to maintain through the first half of 2006. The increase in sales prices was partially offset by a decrease in the number of deliveries which declined slightly to 1,320 homes during the year ended December 31, 2006 from 1,338 homes during 2005.

     The value of net orders in our Primary Homebuilding segment decreased to $324.2 million during the year ended December 31, 2006, from $448.2 million during 2005. During the year ended December 31, 2006, net unit orders decreased to 847 units from 1,289 units during 2005 as a result of reduced traffic and lower conversion rates as well as an increase in order cancellations. The decrease in net orders was partially offset by the average sales price increasing 10.1% during the year ended December 31, 2006 to $383,000, from $348,000 in 2005. Higher average selling prices are primarily a reflection of price increases that were implemented in 2005 and maintained in the first half of 2006, as well as the product mix of sales being generated from projects with higher average sales prices. In 2006, Primary Homebuilding had 1,108 gross sales contracts with 261 cancellations (a 24% cancellation rate) compared to 1,398 gross sales contracts with 109 cancellations (an 8% cancellation rate) for 2005. The increase in cancellations was pervasive in our Florida markets and was attributed primarily to adverse market conditions in Florida and the overall residential market.

     Cost of sales in our Primary Homebuilding segment increased $94.6 million to $367.3 million during the year ended December 31, 2006, from $272.7 million during 2005. The increase in cost of sales is due to the increase in revenue from home sales as well as impairment charges and inventory related valuation adjustments recorded in the amount of $31.1 million. Cost of sales also increased due to higher construction costs related to longer cycle times and increased carrying costs.

     Margin percentages declined in the Primary Homebuilding segment during the year ended December 31, 2006 to 13.5%, from 22.7% during 2005. There were no impairment charges recorded in 2005, although we did write-off $457,000 in deposits. Gross margin excluding inventory impairments was 20.8% in 2006 compared to a gross margin of 22.7% in 2005. The decline was associated with higher construction costs in 2006 compared to 2005.

     Selling, general and administrative expenses in our Primary Homebuilding segment increased 38.7% to $65.1 million during the year ended December 31, 2006, as compared to $46.9 million during 2005 primarily as a result of higher employee compensation and benefits expense, recruiting costs, higher outside sales commissions, increased advertising, and costs of expansion throughout Florida, Georgia and South Carolina. Employee compensation costs increased by approximately $4.5 million, from $26.1 million during the year ended December 31, 2005 to $30.6 million in 2006 mainly attributable to higher average headcount, which reached 581 employees as of June 30, 2006, before totaling 536 employees as of December 31, 2006. There were 506 employees at December 31, 2005. During 2006, we reduced headcount throughout the Primary Homebuilding segment and, in connection with these reductions, we incurred charges for employee related costs, including severance and retention payments. Employee cost increases were offset in part by a reduction in incentive compensation in 2006 associated with the decrease in profitability in the year ended December 31, 2006 as compared to 2005. Selling costs were higher in 2006 by $8.8 million, primarily associated with higher broker commissions earned, increased sales expenses associated with efforts to attract buyers in a challenging homebuilding market and increased headcount associated with the expansion into new markets discussed above. Additionally, legal fees associated with litigation increased for the year ended December 31, 2006 as compared to 2005. As a percentage of total revenues, selling, general and administrative expense was approximately 15.2% for the year ended December 31, 2006 compared to 13.2% in 2005.

     Other expenses decreased 34.6% to $2.4 million during the year ended December 31, 2006 from $3.6 million in 2005. The decrease in other expenses related to an $830,000 reserve recorded in 2005 to account for our share of costs associated with a litigation settlement and a decrease in title and mortgage expense of approximately $414,000 compared to 2005.

     Interest incurred and capitalized on notes and mortgages payable totaled $27.2 million during the year ended December 31, 2006, compared to $11.0 million in 2005. Interest incurred increased as a result of an increase in the average interest rate on our variable-rate borrowings as well as a $149.6 million increase in our borrowings from December 31, 2005. Cost of sales of real estate associated with previously capitalized interest totaled $9.7 million during the year ended December 31, 2006 as compared to $4.7 million in 2005.

48

Tennessee Homebuilding Segment Results of Operations

										2007			2006
	Year Ended December 31,									vs. 2006			vs. 2005
	2007			2006			2005			Change			Change
	(Dollars in thousands, except average price data)
Revenues
Sales of real estate	$	42,042			76,299			85,644			(34,257	)		(9,345	)
Total revenues		42,042			76,299			85,644			(34,257	)		(9,345	)
Costs and expenses
Cost of sales of real estate		51,360			72,807			74,328			(21,447	)		(1,521	)
Selling, general and administrative expenses		5,010			12,806			10,486			(7,796	)		2,320
Other expenses		—			1,307			—			(1,307	)		1,307
Total costs and expenses		56,370			86,920			84,814			(30,550	)		2,106
Interest and other income, net of interest expense		(68	)		127			188			(195	)		(61	)
(Loss) income before income taxes		(14,396	)		(10,494	)		1,018			(3,902	)		(11,512	)
(Provision) benefit for income taxes		(1,700	)		3,241			(421	)		(4,941	)		3,662
Net (loss) income	$	(16,096	)		(7,253	)		597			(8,843	)		(7,850	)
Operational data:
Homes delivered		146			340			451			(194	)		(111	)
Construction starts		171			237			450			(66	)		(213	)
Average selling price of homes delivered	$	205,000			224,000			190,000			(19,000	)		34,000
Margin percentage (a)		(22.2	)%		4.6	%		13.2	%		(26.8	)%		(8.6	)%
Gross sales contracts (units)		266			412			641			(146	)		(229	)
Sales contracts cancellations (units)		156			143			163			13			(20	)
Net orders (units)		110			269			478			(159	)		(209	)
Net orders (value)	$	20,621			57,776			98,838			(37,155	)		(41,062	)
Backlog of homes (units)		—			122			193			(122	)		(71	)
Backlog of homes (value)	$	—			26,662			45,185			(26,662	)		(18,523	)

(a) Margin percentage is calculated by dividing margin (sales of real estate minus cost of sales of real estate) by sales of real estate.

     As of November 9, 2007, the accounts of Levitt and Sons were deconsolidated from our financial statements. Therefore, the financial data and comparative analysis in the above table reflects the operations of the Tennessee Homebuilding segment through November 9, 2007 compared to full year results of operations in 2006 and 2005.

For the Year Ended December 31, 2007 Compared to the Year Ended December 31, 2006

     Revenues from sales of real estate decreased to $42.0 million during the year ended December 31, 2007, from $76.3 million during 2006. During the year ended December 31, 2007, 146 homes were delivered at an average sales price of $205,000 as compared to 340 homes delivered at an average price of $224,000 during the year ended December 31, 2006. The average sales prices of homes delivered in 2007 declined due to the product mix sold, discounts on deliveries, and aggressive pricing on spec sales. This decrease was offset by an increase of $11.1 million of revenue recognized related to a land sale that occurred in the year ended December 31, 2007 related to property that management decided to not develop further. There were no land sales in 2006. Additionally, included in revenues are certain lot sales occurring in the year ended December 31, 2007.

49

     Cost of sales of real estate decreased 29.5% to $51.4 million during the year ended December 31, 2007, as compared to $72.8 million during 2006 due to a decrease in home deliveries. The decrease in home deliveries was offset by increased impairment charges related to inventory, and increased cost of sales associated with land sales. Included in cost of sales in the year ended December 31, 2007 was $11.1 million associated with land sales. There were no land sales in 2006. In addition, impairment charges increased $5.5 million from $5.7 million in the year ended December 31, 2006 to $11.2 million in the year ended December 31, 2007.

     Margin percentage decreased to a negative margin of 22.2% in the year ended December 31, 2007 from 4.6% in the year ended December 31, 2006. The decrease in margin percentage was primarily attributable to impairment charges, which increased by $5.5 million in the year ended December 31, 2007 compared to 2006. Margin percentage excluding impairment charges declined from 12.0% during the year ended December 31, 2006 to 4.6% during the year ended December 31, 2007 due to the mix of homes delivered with lower average selling prices and minimal to no margin being generated on the land or lot sales that occurred during the period.

     Selling, general and administrative expenses decreased $7.8 million to $5.0 million during the year ended December 31, 2007 compared to $12.8 million during 2006 primarily as a result of lower employee compensation and benefits, decreased broker commission costs and decreased advertising and marketing costs. The decrease in employee compensation and benefits is mainly a result of the multiple reductions in force that occurred in 2007 in connection with the filing of the Chapter 11 Cases. Decreased broker commission costs were due to lower revenues generated in the year ended December 31, 2007 compared to 2006 and the decreases associated with marketing and advertising are attributable to a decreased focus in 2007 on advertising in the Tennessee market. In addition, selling, general and administrative expenses related to the Tennessee Homebuilding segment are reflected through November 9, 2007 compared to a full year of selling, general and administrative expenses in 2006. These decreases were offset in part by increased severance related expense related to Tennessee employees, payroll taxes and other benefits associated with the terminations that occurred in 2007.

     There were no other expenses in the year ended December 31, 2007 compared to $1.3 million in 2006. Other expenses in the year ended December 31, 2006 reflect the write-off of $1.3 million in goodwill related to the Bowden acquisition.

     Interest incurred totaled $1.9 million and $2.7 million for the years ended December 31, 2007 and 2006, respectively. While all interest was capitalized during the year ended December 31, 2006, $1.8 million in interest was capitalized during the year ended December 31, 2007 due to the decreased level of development in the projects in this segment in 2007 which resulted in less assets being qualified for interest capitalization. Interest incurred decreased as a result of lower average debt balances for the year ended December 31, 2007 as compared to 2006. At the time of home closings and land sales, the capitalized interest allocated to such inventory is charged to cost of sales. Cost of sales of real estate for the years ended December 31, 2007 and 2006 included previously capitalized interest of approximately $1.3 million and $2.1 million, respectively.

For the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

     Revenues from home sales decreased 10.9% to $76.3 million during the year ended December 31, 2006, from $85.6 million during 2005. The decrease is the result of a decrease in the number of deliveries which declined to 340 homes during the year ended December 31, 2006 from 451 homes during 2005 partially offset by an increase in average sales prices on homes delivered, which increased to $224,000 for the year ended December 31, 2006, compared to $190,000 during 2005.

     The value of net orders decreased to $57.8 million during the year ended December 31, 2006, from $98.8 million during 2005. During the year ended December 31, 2006, net unit orders decreased to 269 units, from 478 units during 2005 as a result of reduced traffic and lower conversion rates. The decrease in net orders was partially offset by the average sales price on new orders increasing 3.9% during the year ended December 31, 2006 to $215,000, from $207,000 during 2005. Higher average selling prices are primarily a reflection of the homes sold in certain projects in 2006. In 2006, the Tennessee Homebuilding segment had 412 gross sales contracts with 143 cancellations (a 35% cancellation rate) compared to 641 gross sales contracts with 163 cancellations (a 25% cancellation rate) for 2005.

50

     Cost of sales decreased $1.5 million to $72.8 million during the year ended December 31, 2006, from $74.3 million during 2005. The decrease in cost of sales is due to the decreased number of deliveries, offset in part by an increase in impairment charges and inventory related valuation adjustments in the amount of $5.7 million.

     Margin percentage declined during the year ended December 31, 2006 to 4.6%, from 13.2% during 2005. There were no impairment charges recorded in 2005, although we did write-off $10,000 in deposits. Gross margin excluding inventory impairments was 12.0% compared to a gross margin of 13.2% in 2005. The decline was associated with higher construction costs in 2006 compared to 2005.

     Selling, general and administrative expenses increased 22.1% to $12.8 million during the year ended December 31, 2006, as compared to $10.5 million during 2005 primarily as a result of higher employee compensation and benefits expense, costs of expansion into the Nashville market and increased marketing and selling costs. During 2006, we reduced headcount in the Tennessee Homebuilding segment and in connection with these reductions we incurred charges for employee related costs, including severance and retention payments. As a percentage of total revenues, selling, general and administrative expense was approximately 16.8% for the year ended December 31, 2006 compared to 12.2% in 2005.

     Other expense of $1.3 million for the year ended December 31, 2006 related to the write-off of goodwill associated with the Bowden acquisition as compared to no expense recorded in 2005.

     Interest incurred and capitalized on notes and mortgages payable totaled $2.7 million during the year ended December 31, 2006, compared to $1.1 million in 2005. Interest incurred increased as a result of an increase in the average interest rate on our variable-rate borrowings. Cost of sales of real estate associated with previously capitalized interest totaled $2.1 million during the year ended December 31, 2006 as compared to $1.6 million for 2005.

FINANCIAL CONDITION

     Our total assets at December 31, 2007 and 2006 were $712.9 million and $1.1 billion, respectively of which $195.2 million and $48.4 million was cash and cash equivalents at December 31, 2007 and 2006, respectively. At December 31, 2006, $706.5 million of assets related to Levitt and Sons. Excluding assets from Levitt and Sons at December 31, 2006, total assets related to our ongoing operations increased by $314.6 million at December 31, 2007 from December 31, 2006. The changes in total assets, excluding Levitt and Sons, primarily resulted from:

• a net increase in inventory of real estate of approximately $69.8 million, primarily related to the Land Division’s development activities and the acquisition of Carolina Oak;

• an increase of $41.8 million in property and equipment and assets held for sale associated with increased investment in commercial properties under construction by our Land Division and support for infrastructure in our master-planned communities;

• a net increase of approximately $9.0 million in our investment in Bluegreen associated primarily with $10.3 million of earnings from Bluegreen (net of purchase accounting adjustments);

• a net increase in cash and cash equivalents of $146.8 million, which resulted from cash provided by financing activities of $228.5 million, offset by cash used in operations and investing activities of $36.7 million and $45.0 million, respectively. The increase in financing activities relates to the $152.8 million of proceeds from the Rights Offering, as well as increases in our borrowings associated with commercial and residential development; and

• An increase in our current tax asset of $22.8 million related to tax benefits incurred due to the net operating losses recorded in 2007.

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     Total liabilities at December 31, 2007 and December 31, 2006 were $451.7 million and $747.4 million, respectively. At December 31, 2006, $511.5 million of liabilities was related to Levitt and Sons. Excluding liabilities related to Levitt and Sons at December 31, 2006, total liabilities related to our ongoing operations increased by $215.8 million at December 31, 2007 from December 31, 2006. The changes in total liabilities, excluding Levitt and Sons, primarily resulted from:

• a net increase in notes and mortgage notes payable of $156.0 million, primarily related to project debt associated with land development activities and the acquisition of Carolina Oak;

• an increase of $55.2 million associated with the loss in excess of the investment in Levitt and Sons created as a result of Levitt and Sons declaring bankruptcy on November 9, 2007; and

• The above increases were partially offset by a decrease in our deferred tax liability of $12.8 million.

LIQUIDITY AND CAPITAL RESOURCES

     We have taken steps throughout 2007 to address the challenging real estate environment and we continue to work to improve operational cash flows and increase our sources of financing. We implemented reductions in force throughout 2007 in order to align staffing levels with current market conditions and our business goals and strategies. We believe that our current financial condition and credit relationships, together with anticipated cash flows from operations and other sources of funds, which may include proceeds from the disposition of certain properties or investments, will provide for our anticipated current liquidity needs.

     Management assesses the Company’s liquidity in terms of the Company’s ability to generate cash to fund its operating and investment activities. During the year ended December 31, 2007, our primary sources of funds were the proceeds from our Rights Offering, the proceeds from the sale of real estate inventory and borrowings from financial institutions. We intend to use available cash and our borrowing capacity to implement our business strategy of pursuing investment opportunities, continuing the development of our master-planned communities, operating efficiently and effectively and utilizing community development districts to fund development costs. We also will use available cash to repay borrowings and to pay operating expenses.

     The Company separately manages liquidity at the Levitt Corporation parent level and at the operating subsidiary level, consisting primarily of Core Communities. Subsidiary operations are generally financed using operating assets as loan collateral and many of the financing agreements in place contain covenants at the subsidiary level. Parent company guarantees are rarely provided and when provided, are provided on a limited basis.

     Levitt Corporation is primarily a holding company, and in light of the cash needs of Core Communities and Bluegreen’s history of not paying dividends, it is not anticipated that Levitt Corporation will receive sufficient dividends or other payments from its subsidiaries or investment income from its investments to cover its overhead costs for the foreseeable future.

Levitt Corporation (Parent level)

     At December 31, 2007, Levitt Corporation had approximately $162.0 million of cash and $137.8 million of outstanding debt. On October 1, 2007, Levitt Corporation completed a Rights Offering to its shareholders which generated cash proceeds of approximately $152.8 million

     Debt principally consisted of :

• approximately $85.1 million of junior subordinated debentures associated with the issuance of Trust Preferred Securities;

• approximately $746,000 in subordinated investment notes which are unsecured and do not contain any financial covenants;

• approximately $39.7 million in debt in connection with the loan assumption related to Carolina Oak; and

• approximately $12.0 million in debt consisting principally of secured financing on our Corporate headquarters building.

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     On October 25, 2007, Levitt Corporation acquired from Levitt and Sons the membership interests in Carolina Oak which owns a 150 acre parcel in Tradition Hilton Head. Levitt Corporation became the obligor for the entire outstanding balance of $34.1 million under the credit facility collateralized by the 150 acre parcel (the “Carolina Oak Loan”). The Carolina Oak Loan was modified in connection with the acquisition. Levitt Corporation was previously a guarantor of this loan and as partial consideration for the Carolina Oak Loan, the membership interest of Levitt and Sons, previously pledged by Levitt Corporation to the lender, was released. The outstanding balance under the Carolina Oak Loan may be increased by approximately $11.2 million to fund certain infrastructure improvements and to complete the construction of fourteen residential units currently under construction. The Carolina Oak Loan is collateralized by a first mortgage on the 150 acre parcel in Tradition Hilton Head and guaranteed by Carolina Oak. The Carolina Oak Loan is due and payable on March 21, 2011 but may be extended for one additional year at the discretion of the lender. Interest accrues under the facility at the Prime Rate (7.25% at December 31, 2007) and is payable monthly. The Carolina Oak Loan is subject to customary terms, conditions and covenants, including the lender’s right to accelerate the debt upon a material adverse change with respect to Levitt Corporation. At December 31, 2007, there was no immediate availability to draw on this facility based on available collateral.

     On February 14, 2008, Bluegreen announced that it intends to pursue a rights offering to its shareholders for up to $100 million of its common stock. We currently intend to participate in this rights offering which could result in a substantial additional investment in Bluegreen.

     At this time, it is not possible to predict the impact that the Chapter 11 Cases will have on Levitt Corporation and its results of operations, cash flows or financial condition. At the time of deconsolidation, November 9, 2007, Levitt Corporation had a negative investment in Levitt and Sons of $123.0 million and there were outstanding advances due from Levitt and Sons of $67.8 million at Levitt Corporation resulting in a net negative investment of $55.2 million. Since the Chapter 11 Cases were filed, Levitt Corporation has also incurred certain administrative costs in the amount of $1.4 million related to Post Petition Services. The payment by Levitt and Sons of its outstanding advances and the Post Petition Services expenses are subject to the risks inherent to creditors in the Chapter 11 Cases. Levitt and Sons may not have sufficient assets to repay Levitt Corporation for advances made to Levitt and Sons or the Post Petition Services and it is likely that some, if not all, of these amounts will not be recovered. In addition, Levitt Corporation files a consolidated federal income tax return. At December 31, 2007, Levitt Corporation had a federal income tax receivable of $27.4 million as a result of losses incurred which is anticipated to be collected upon filing the 2007 consolidated U.S. federal income tax return. The Creditors Committee has advised that they believe the creditors are entitled to share in an unstated amount of the refund.

Core Communities

     At December 31, 2007, Core had approximately $33.1 million of cash as well as immediate availability under its various lines of credit of $19.0 million, and $216.0 million in outstanding debt including liabilities associated with assets held for sale. Core has incurred and expects to continue to incur significant land development expenditures in both Tradition, Florida and in Tradition Hilton Head. Tradition Hilton Head is in the early stage of the master-planned community’s development cycle and significant investments have been made and will be required in the future to develop the master community infrastructure. Sales in Tradition Hilton Head have been limited to golf course lots sold to various builders and an intercompany land sale in December 2006 (see Item 1. Business — Recent Developments — Acquisition of Carolina Oak Homes LLC). Recent investments in Tradition, Florida have been primarily to build infrastructure to support the master-planned community and the sale of various commercial land parcels. The current investment in land and development, as well as property and equipment has been financed primarily through a combination of secured borrowings, which totaled $212.7 million at December 31, 2007, and proceeds from bonds issued by community development districts and special assessment districts which support the development of infrastructure improvements while burdening the developed property with long-term tax assessments. This financing at December 31,

53

2007 consisted of district bonds totaling $218.7 million with approximately $82.9 million currently outstanding and approximately $129.5 million available to fund future development expenditures. These bonds are further discussed below in “Off Balance Sheet Arrangements and Contractual Obligations”. The availability of tax-exempt bond financing to fund infrastructure development at our master-planned communities may be affected by recent disruptions in credit markets, including the municipal bond market, by general economic conditions and by fluctuations in the real estate market. If we are not able to access this type of financing, we would be forced to obtain substitute financing, which may not be available on terms favorable to the Company, or at all. If we are not able to obtain financing for infrastructure development, we would be forced to use our own funds or delay development activity at our master-planned communities.

     Core’s borrowing agreement requires repayment of specified amounts upon a sale of a portion of the property collateralizing the debt. Core is subject to provisions in its borrowing agreement that require additional principal payments, known as curtailment payments, in the event that sales are below those agreed to at the inception of the borrowing. In the event that agreed upon sales targets are not met in Tradition Hilton Head, total curtailment payments during 2008 could amount to $34.2 million. In January 2008, a $14.9 million curtailment payment was paid and an additional $19.3 million would be due in June 2008 if actual sales continue to be below the contractual requirements of the development loan.

     In March 2008, Core agreed to the termination of a $20 million line of credit after the lender expressed its concern that Levitt and Sons’ bankruptcy may have resulted in a technical default by virtue of language in the facility regarding “affiliates”. At December 31, 2007, no amounts were outstanding under the $20 million facility other than a $122,000 outstanding letter of credit which was secured by a cash deposit in March 2008. There have been no funds drawn subsequent to December 31, 2007. The lender has agreed to honor two construction loans to a subsidiary of Core totaling $11.7 million provided that the borrowings are paid in full at maturity and has waived any technical defaults under the loans arising from Levitt and Sons’ bankruptcy through the maturity dates of the loans.

     Additionally, Core has undertaken construction projects on certain commercial land parcels within its developments. At December 31, 2007, Core had incurred debt of $79.0 million in connection with the development of these commercial properties which are being actively marketed for sale. These assets and related liabilities are classified as held for sale in the consolidated statements of financial condition and are treated as discontinued operations for accounting purposes. See further discussion in Item 1. Business — Core Communities.

     Possible liquidity sources available to Core include the sale of the commercial properties, the sale or pledging of additional unencumbered land and funding from Levitt Corporation. The debt covenants at Core generally consist of net worth, liquidity and loan to value financial covenants. The loans which provide the primary financing for Tradition, Florida and Tradition Hilton Head have an annual appraisal and re-margining requirement. These provisions may require Core, in circumstances where the value of its real estate securing these loans declines, to pay down a portion of the principal amount of the loan to bring the loan within specified minimum loan-to-value ratios. Accordingly, should land prices decline, reappraisals could result in significant future re-margining payments. In addition, all of our outstanding debt instruments require us to comply with certain financial covenants. Further, one of our debt instruments contains cross-default provisions, which could cause a default in this debt instrument if we default on other debt instruments. If we fail to comply with any of these restrictions or covenants, the holders of the applicable debt could cause our debt to become due and payable prior to maturity. These accelerations or significant re-margining payments could require us to dedicate a substantial portion of cash or cash flow from operations to payment of or on our debt and reduce our ability to use our cash flow for other purposes.

     Given the overall condition of the homebuilding industry in Florida and the current oversupply of single-family residential land in the St. Lucie market, we do not expect any meaningful single-family residential land sales by Core in the near future. Management efforts will be focused on commercial and other land sales in Florida and commercial and residential sales in Hilton Head. Core’s business may not generate sufficient cash flow from operations, and future borrowings may not be available under its existing credit facilities or any other financing sources in an amount sufficient to enable Core to service its indebtedness, or to fund its other liquidity needs. We may need to refinance all or a portion of Core’s debt on or before maturity, which we may not be able to do on favorable terms or at all. Recent disruptions in the credit and capital markets could make it more difficult for us to obtain financing than in prior periods

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Off Balance Sheet Arrangements and Contractual Obligations

     In connection with the development of certain projects, community development, special assessment or improvement districts have been established and may utilize tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. If these improvement districts were not established, we would need to fund community infrastructure development out of operating income or through other sources of financing or capital, or be forced to delay our development activity. The obligation to pay principal and interest on the bonds issued by the districts is assigned to each parcel within the district, and a priority assessment lien may be placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property are typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. The Company pays a portion of the revenues, fees, and assessments levied by the districts on the properties the Company still owns that are benefited by the improvements. The Company may also agree to pay down a specified portion of the bonds at the time of each unit or parcel closing. These costs are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.

     The bond financing from Core Communities at December 31, 2007 and 2006 consisted of district bonds totaling $212.7 million and $62.8 million, respectively, with outstanding amounts of approximately $82.9 million and $50.4 million at December 31, 2007 and 2006, respectively. Further, at December 31, 2007 and 2006, there was approximately $129.5 million and $7.0 million, respectively, available under these bonds to fund future development expenditures. Bond obligations at December 31, 2007 mature in 2035 and 2040. As of December 31, 2007, the Company owned approximately 11% of the property within the community development district and approximately 91% of the property within the special assessment district. During the year ended December 31, 2007, the Company recorded approximately $1.3 million in assessments on property owned by the Company in the districts. We are responsible for any assessed amounts until the underlying property is sold. We will continue to be responsible for the annual assessments if the property is never sold. Accordingly, if recent negative trends in the homebuilding industry do not improve, and we are forced to hold our land inventory longer than originally projected, we would be forced to pay a higher portion of annual assessments on property which is subject to assessments. We could be required to pay down a portion of the bonds in the event our entitlements were to decrease as to the number of residential units and/or commercial space that can be built on a parcel(s) encumbered by the bonds. In addition, Core Communities has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds.

     At December 31, 2006, we recorded no liability associated with outstanding CDD bonds as the assessments were not both fixed and determinable. At December 31, 2007, a liability of $3.3 million was recognized because the special assessments related to the commercial leasing assets held for sale were fixed and the final assessment was made during the fourth quarter of 2007. This liability is included in the liabilities related to assets held for sale in the audited consolidated statement of financial condition.

     We entered into an indemnity agreement in April 2004 with a joint venture partner at Altman Longleaf, relating to, among other obligations, that partner’s guarantee of the joint venture’s indebtedness. Our liability under the indemnity agreement is limited to the amount of any distributions from the joint venture which exceeds our original capital and other contributions. Accordingly, our potential obligation of indemnity was approximately $664,000 at December 31, 2007. Based on the joint venture assets that secure the indebtedness, we do not believe it is likely that any payment will be required under the indemnity agreement.

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     The following table summarizes our contractual obligations as of December 31, 2007 (in thousands):

			Payments due by period
			Less than		13 - 36		37 - 60		More than
Category (1)	Total		12 Months		Months		Months		60 Months
Long-term debt obligations (2)	$	274,820		3,242		45,942		118,193		107,443
Long-term debt obligations associated with assets held for sale		78,970		8,914		5,709		61,250		3,097
Interest payable on long-term debt		181,293		21,202		36,592		18,116		105,383
Operating lease obligations		4,714		1,276		1,599		557		1,282
Severance related termination obligations		1,949		1,912		37		—		—
Independent contractor agreements		1,596		915		681		—		—
Total obligations	$	543,342		37,461		90,560		198,116		217,205

(1)

Long-term debt obligations consist of notes, mortgage notes and bonds payable. Interest payable on these long-term debt obligations is the interest that will be incurred related to the outstanding debt. Operating lease obligations consist of lease commitments. The timing of contractual payments for debt obligations assumes the exercise of all extensions available at the borrower’s sole discretion.

(2)

In addition to the above scheduled payments, the Core borrowing agreement requires repayment of specified amounts upon a sale of a portion of the property collateralizing the debt or upon a reappraisal of the underlying collateral if declines in value cause the loan to exceed maximum loan to value ratios. In addition, Core is subject to provisions in its borrowing agreement that require additional principal payments, known as curtailment payments, in the event that sales are below those agreed to at the inception of the borrowing. In the event that agreed upon sales targets are not met in Tradition Hilton Head, total curtailment payments during 2008 could amount to $34.2 million. In January 2008, a $14.9 million curtailment payment was paid and an additional $19.3 million would be due in June 2008 if actual sales continue to be below the contractual requirements of the development loan. Additionally, certain borrowings may require increased principal payments on our debt obligations due to re-margining requirements.

     In addition to the above contractual obligations, we have $2.4 million in unrecognized tax benefits related to FIN 48.

     Tradition Development Company, LLC, a wholly-owned subsidiary of Core Communities (“TDC”), entered into an advertising agreement with the operator of a Major League Baseball team pursuant to which, among other advertising rights, TDC obtained a royalty-free license to use, among others, the trademark “Tradition Field” at the sports complex located in Port St. Lucie and the naming rights to that complex. Unless otherwise renewed, the agreement terminates on December 31, 2013; provided, however, that upon payment of a specified buy-out fee and compliance with other contractual procedures, TDC has the right to terminate the agreement on or after December 31, 2008. Required cumulative payments under the agreement through December 31, 2013 are approximately $1.1 million.

     At December 31, 2007, Core Communities had outstanding surety bonds and letters of credit of approximately $2.8 million related primarily to obligations to various governmental entities to construct improvements in our various communities. We estimate that approximately $2.7 million of work remains to complete these improvements. We do not believe that any outstanding bonds or letters of credit will likely be drawn upon.

     In the ordinary course of business we sell land to third parties where the Company is obligated to complete site development and infrastructure improvements subsequent to the sale date. Future development and construction obligations amount to $4.7 million at December 31, 2007, which are expected to be incurred over the next three years. The timing of future development will depend on factors such as the timing of future sales, demographic growth rates in the areas in which these obligations occur and the impact of any future deterioration or improvement in the local real estate market.

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     Levitt and Sons had $33.3 million in surety bonds under their projects at the time of filing the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Levitt Corporation could be responsible for up to $12.0 million plus costs and expenses in accordance with the surety indemnity agreement for these instruments. As of December 31, 2007, we recorded $1.8 million in surety bonds accrual at Levitt Corporation related to certain bonds where management considers it probable that Levitt Corporation will be required to reimburse the surety under the indemnity agreement. It is unclear, given the uncertainty involved in the Chapter 11 Cases whether and to what extent these surety bonds will be drawn and the extent to which Levitt Corporation may be responsible for additional amounts beyond this accrual. It is unlikely that Levitt Corporation would have the ability to receive any repayment, assets or other consideration as recovery of any amounts it is required to pay.

     The table below sets forth our debt obligations, principal payments by scheduled maturity, weighted-average interest rates and estimated fair market value as of December 31, 2007 (dollars in thousands):

																						Fair Market
																						Value at
	Payments due by year																					December 31,
	2008			2009			2010			2011			2012			Thereafter			Total			2007
Fixed rate debt:
Notes and mortgage payable(a)		999			427			271			298			244			100,983			103,222			90,398
Average interest rate		8.08	%		8.09	%		8.10	%		8.11	%		5.27	%		5.27	%		7.16	%
Variable rate debt:
Notes and mortgage payable(a)		2,243			41,892			3,352			115,276			2,375			6,460			171,598			168,365
Average interest rate		7.53	%		7.53	%		7.61	%		7.61	%		7.73	%		7.73	%		7.57	%
Total debt obligations		3,242			42,319			3,623			115,574			2,619			107,443			274,820			258,763

(a) Fair value calculated using current estimated borrowing rates.

     Assuming the variable rate debt balance of $171.6 million outstanding at December 31, 2007 (which does not include approximately $85.1 million of initially fixed-rate obligations which will not become floating rate during 2008) was to remain constant, each one percentage point increase in interest rates would increase the interest incurred by us by approximately $1.7 million per year.

Impact of Inflation

     The financial statements and related financial data presented herein have been prepared in accordance with generally accepted accounting principles, which require 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.

     Inflation could have a long-term impact on us because any increase in the cost of land, materials and labor would result in a need to increase the sales prices of land which may not be possible. In addition, inflation is often accompanied by higher interest rates which could have a negative impact on demand and the costs of financing land development activities. Rising interest rates as well as increased materials and labor costs may reduce margins.

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New Accounting Pronouncements

     In November 2006, the FASB issued Emerging Issues Task Force Issue No. 06-8, “Applicability of the Assessment of a Buyers Continuing Investment under FASB Statement No. 66, Accounting for Sales of Real Estate”, (“EITF 06-8”). EITF 06-8 establishes that a company should evaluate the adequacy of the buyer’s continuing investment in determining whether to recognize profit under the percentage-of-completion method. EITF 06-8 is effective for the first annual reporting period beginning after March 15, 2007 (our fiscal year beginning January 1, 2008). The effect of EITF 06-8 is not expected to be material to our consolidated financial statements.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities”, (“SFAS 159”). SFAS 159 permits companies to measure many financial instruments and certain other items at fair value. This Statement is effective for fiscal years beginning after November 15, 2007 (our fiscal year beginning January 1, 2008). The adoption of SFAS 159 is not expected to be material to our consolidated financial statements.

     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 (our fiscal year beginning January 1, 2008), and interim periods within those fiscal years. During February 2008, the FASB issued a Staff Position that will (i) partially defer the effective date of SFAS 157 for one year for certain nonfinancial assets and nonfinancial liabilities and (ii) remove certain leasing transactions from the scope of SFAS 157. Management is currently reviewing the effect of SFAS 157 but does not at this time expect that the adoption will have a material effect on our consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — an amendment of ARB No. 51”, (“SFAS 160”). SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. SFAS 160 is effective for our fiscal year beginning January 1, 2009. We have not yet evaluated the impact that the adoption of SFAS 160 will have on our consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R broadens the guidance of SFAS 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. SFAS 141R expands on required disclosures to improve the statement users’ abilities to evaluate the nature and financial effects of business combinations. SFAS 141R is effective for our fiscal year beginning January 1, 2009. The adoption of SFAS 141R could have a material effect on our consolidated financial statements if we decide to pursue business combinations due to the requirement to write-off transaction costs to the consolidated statements of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risk is defined as the risk of loss arising from adverse changes in market valuations that arise from interest rate risk, foreign currency exchange rate risk, commodity price risk and equity price risk. We have a risk of loss associated with our borrowings as we are subject to interest rate risk on our long-term debt. At December 31, 2007, we had $171.6 million in borrowings with adjustable rates tied to the prime rate and/or LIBOR rates and $103.2 million in borrowings with fixed or initially-fixed rates. Consequently, the impact on our variable rate debt from changes in interest rates may affect our earnings and cash flows but would generally not impact the fair value of such debt. With respect to fixed rate debt, changes in interest rates generally affect the fair market value of the debt but not our earnings or cash flow.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO FINANCIAL STATEMENTS

Levitt Corporation

Report of Independent Registered Certified Public Accounting Firm of PricewaterhouseCoopers LLP	60
Consolidated Statements of Financial Condition	61
As of December 31, 2007 and 2006
Consolidated Statements of Operations	62
For each of the years in the three year period ended December 31, 2007
Consolidated Statements of Comprehensive (Loss) Income	63
For each of the years in the three year period ended December 31, 2007
Consolidated Statements of Shareholders’ Equity	64
For each of the years in the three year period ended December 31, 2007
Consolidated Statements of Cash Flows	65
For each of the years in the three year period ended December 31, 2007
Notes to Consolidated Financial Statements	67

Bluegreen Corporation

The financial statements of Bluegreen Corporation, which is considered a significant subsidiary, are required to be included in this report. The financial statements of Bluegreen Corporation for the three years ended December 31, 2007, including the Report of Independent Registered Certified Public Accounting Firm of Ernst & Young LLP, are included as exhibit 99.1 to this report.

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Report of Independent Registered Certified Public Accounting Firm

To the Board of Directors and Shareholders of Levitt Corporation

In our opinion, based on our audits and the report of other auditors, the accompanying consolidated statements of financial condition and the related consolidated statements of operations, of comprehensive (loss) income, of shareholders’ equity and of cash flows present fairly, in all material respects, the financial position of Levitt Corporation and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We did not audit the financial statements of Bluegreen Corporation, an approximate 31 percent-owned equity investment of the Company which reflects a net investment totaling $116.0 million and $107.1 million at December 31, 2007 and 2006, respectively and equity in the net earnings of approximately $10.3 million, $9.7 million and $12.7 million for the years ended December 31, 2007, 2006 and 2005 respectively. The financial statements of Bluegreen Corporation were audited by other auditors whose report thereon has been furnished to us, and our opinion on the financial statements expressed herein, insofar as it relates to the amounts included for Bluegreen Corporation, is based solely on the report of the other auditors. 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits and the report of other auditors provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company adopted the provisions of FASB Interpretation No. 48 — Accounting for Uncertainty in Income Taxes — and interpretation of FASB No. 109 in January 1, 2007.

As discussed in Notes 22 and 26, on November 9, 2007 (the “Petition Date”), Levitt and Sons, LLC (“Levitt and Sons”) and substantially all of its subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Florida. As a result, Levitt and Sons was deconsolidated from the Company as of the Petition Date and has been prospectively reported as a cost method investment. On the Petition Date, Levitt and Sons had total assets, total liabilities and net shareholder’s deficit of approximately $373 million, $480 million, and $107 million, respectively.

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 (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 (iii) 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.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
March 17, 2008

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Levitt Corporation
Consolidated Statements of Financial Condition
December 31, 2007 and 2006
(In thousands, except share data)

	2007			2006
Assets
Cash and cash equivalents	$	195,181			48,391
Restricted cash		2,207			1,397
Current income tax receivable		27,407			—
Inventory of real estate		227,290			822,040
Assets held for sale		96,214			47,284
Investment in Bluegreen Corporation		116,014			107,063
Property and equipment, net		33,566			33,115
Other assets		14,972			31,376
Total assets	$	712,851			1,090,666
Liabilities and Shareholders’ Equity
Accounts payable, accrued liabilities and other	$	41,077			84,323
Customer deposits		541			42,571
Current income tax payable		—			3,905
Liabilities related to assets held for sale		80,093			28,263
Notes and mortgage notes payable		189,768			503,313
Junior subordinated debentures		85,052			85,052
Loss in excess of investment in subsidiary		55,214			—
Total liabilities		451,745			747,427
Shareholders’ equity:
Preferred stock, $0.01 par value
Authorized: 5,000,000 shares
Issued and outstanding: no shares		—			—
Class A Common Stock, $0.01 par value
Authorized: 150,000,000 and 50,000,000 shares, respectively
Issued and outstanding: 95,040,731 and 18,609,024 shares, respectively		950			186
Class B Common Stock, $0.01 par value
Authorized: 10,000,000 shares
Issued and outstanding: 1,219,031 shares		12			12
Additional paid-in capital		336,795			184,401
(Accumulated deficit) retained earnings		(78,537	)		156,219
Accumulated other comprehensive income		1,886			2,421
Total shareholders’ equity		261,106			343,239
Total liabilities and shareholders’ equity	$	712,851			1,090,666

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Consolidated Statements of Operations
For each of the years in the three year period ended December 31, 2007
(In thousands, except per share data)

	2007			2006			2005
Revenues:
Sales of real estate	$	410,115			566,086			558,112
Other revenues		5,766			7,488			6,585
Total revenues		415,881			573,574			564,697
Costs and expenses:
Cost of sales of real estate		573,241			482,961			408,082
Selling, general and administrative expenses		116,087			119,337			87,162
Other expenses		3,929			3,677			4,855
Total costs and expenses		693,257			605,975			500,099
Earnings from Bluegreen Corporation		10,275			9,684			12,714
Interest and other income, net of interest expense		7,439			7,816			10,289
(Loss) income from continuing operations before income taxes		(259,662	)		(14,901	)		87,601
Benefit (provision) for income taxes		23,277			5,758			(32,532	)
(Loss) income from continuing operations		(236,385	)		(9,143	)		55,069
Discontinued operations:
Income (loss) from discontinued operations, net of tax		1,765			(21	)		(158	)
Net (loss) income	$	(234,620	)		(9,164	)		54,911
Basic (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.45	)		2.73
Discontinued operations		0.05			—			(0.01	)
Total basic (loss) earnings per common share	$	(6.00	)		(0.45	)		2.72
Diluted (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.46	)		2.70
Discontinued operations		0.05			—			(0.01	)
Total diluted (loss) earnings per common share	$	(6.00	)		(0.46	)		2.69
Weighted average common shares outstanding:
Basic		39,092			20,214			20,208
Diluted		39,092			20,214			20,320
Dividends declared per common share:
Class A common stock	$	0.02			0.08			0.08
Class B common stock	$	0.02			0.08			0.08

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Consolidated Statements of Comprehensive (Loss) Income
For each of the years in the three year period ended December 31, 2007
(In thousands)

	2007			2006			2005
Net (loss) income	$	(234,620	)		(9,164	)		54,911
Other comprehensive income:
Pro-rata share of unrealized (loss) gain recognized by Bluegreen Corporation on retained interests in notes receivable sold		(870	)		1,263			2,420
Benefit (provision) for income taxes		335			(487	)		(933	)
Pro-rata share of unrealized (loss) gain recognized by Bluegreen Corporation on retained interests in notes receivable sold (net of tax)		(535	)		776			1,487
Comprehensive (loss) income	$	(235,155	)		(8,388	)		56,398

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Consolidated Statements of Shareholders’ Equity
For each of the years in the three year period ended December 31, 2007
(In thousands)

																		Accumulated
	Shares of Common				Class A		Class B		Additional			Retained						Compre-
	Stock Outstanding				Common		Common		Paid-In			Earnings			Unearned			hensive
	Class A		Class B		Stock		Stock		Capital			(Deficit)			Compensation			Income (loss)			Total
Balance at December 31, 2004		18,597		1,219	$	186		12		180,790			113,643			—			158			294,789
Issuance of restricted common stock		7		—		—		—		220			—			(220	)		—			—
Amortization of unearned compensation on restricted stock grants		—		—		—		—		—			—			110			—			110
Net income		—		—		—		—		—			54,911			—			—			54,911
Pro-rata share of unrealized gain recognized by Bluegreen on sale of retained interests, net of tax		—		—		—		—		—			—			—			1,487			1,487
Issuance of Bluegreen common stock, net of tax		—		—		—		—		74			—			—			—			74
Cash dividends paid		—		—		—		—		—			(1,585	)		—			—			(1,585	)
Balance at December 31, 2005		18,604		1,219	$	186		12		181,084			166,969			(110	)		1,645			349,786
Issuance of restricted common stock		5		—		—		—		—			—			—			—			—
Reversal of unamortized stock compensation related to restricted stock upon adoption of FAS 123(R)		—		—		—		—		(110	)		—			110			—			—
Share based compensation related to stock options and restricted stock		—		—		—		—		3,250			—			—			—			3,250
Net loss		—		—		—		—		—			(9,164	)		—			—			(9,164	)
Pro-rata share of unrealized gain recognized by Bluegreen on sale of retained interests, net of tax		—		—		—		—		—			—			—			776			776
Issuance of Bluegreen common stock, net of tax		—		—		—		—		177			—			—			—			177
Cash dividends paid		—		—		—		—		—			(1,586	)		—			—			(1,586	)
Balance at December 31, 2006		18,609		1,219	$	186		12		184,401			156,219			—			2,421			343,239
Issuance of restricted common stock		8		—		—		—		—			—			—			—			—
Issuance from Rights Offering, net of issue costs		76,424		—		764		—		151,887			—			—			—			152,651
Share based compensation related to stock options and restricted stock		—		—		—		—		2,193			—			—			—			2,193
Net loss		—		—		—		—		—			(234,620	)		—			—			(234,620	)
Pro-rata share of unrealized loss recognized by Bluegreen on sale of retained interests, net of tax		—		—		—		—		—			—			—			(535	)		(535	)
Issuance of Bluegreen common stock, net of tax		—		—		—		—		(279	)		—			—			—			(279	)
Tax asset valuation allowance associated with Bluegreen capital transactions		—		—		—		—		(1,407	)		—			—			—			(1,407	)
Cash dividends paid		—		—		—		—		—			(396	)		—			—			(396	)
Cumulative impact of change in accounting for uncertainties in income taxes (FIN 48 — see Note 18)		—		—		—		—		—			260			—			—			260
Balance at December 31, 2007		95,041		1,219	$	950		12		336,795			(78,537	)		—			1,886			261,106

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Consolidated Statements of Cash Flows
For each of the years in the three year period ended December 31, 2007
(In thousands)

	2007			2006			2005
Operating activities:
Net (loss) income	$	(234,620	)		(9,164	)		54,911
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization		5,207			3,703			1,681
Change in deferred income taxes		(1,187	)		(14,263	)		4,202
Earnings from Bluegreen Corporation		(10,275	)		(9,684	)		(12,714	)
Earnings from unconsolidated trusts		(220	)		(178	)		(95	)
Loss (earnings) from real estate joint ventures		27			417			(69	)
Share-based compensation expense related to stock options and restricted stock		1,962			3,250			—
Gain on sale of property and equipment		—			(1,329	)		—
Write off of property and equipment		533			245			—
Impairment of inventory and long lived assets		226,879			38,083			—
Changes in operating assets and liabilities:
Restricted cash		(1,321	)		421			199
Inventory of real estate		26,950			(255,968	)		(199,598	)
Notes receivable		2,903			(1,640	)		(764	)
Other assets		2,180			5,174			2,413
Customer deposits		(23,974	)		(8,990	)		8,664
Accounts payable, accrued expenses and other liabilities		(31,662	)		9,824			8,633
Net cash used in operating activities		(36,618	)		(240,099	)		(132,537	)
Investing activities:
Investment in real estate joint ventures		(229	)		(469	)		(50	)
Distributions from real estate joint ventures		47			576			365
Investments in unconsolidated trusts		—			(928	)		(1,624	)
Distributions from unconsolidated trusts		220			178			82
Proceeds from sale of property and equipment		30			1,943			—
Deconsolidation of subsidiary cash balance		(6,387	)		—			—
Capital expenditures		(38,749	)		(29,476	)		(12,857	)
Net cash used in investing activities		(45,068	)		(28,176	)		(14,084	)
Financing activities:
Proceeds from notes and mortgage notes payable		236,839			379,732			381,345
Proceeds from notes and mortgage notes payable to affiliates		—			—			9,767
Proceeds from junior subordinated debentures		—			30,928			54,124
Repayment of notes and mortgage notes payable		(158,923	)		(202,704	)		(249,327	)
Repayment of notes and mortgage notes payable to affiliates		—			(223	)		(56,165	)
Payments for debt issuance costs		(1,695	)		(3,043	)		(3,498	)
Payments for stock issue costs		(196	)		—			—
Proceeds from issuance of common stock		152,847			—			—
Cash dividends paid		(396	)		(1,586	)		(1,585	)
Net cash provided by financing activities		228,476			203,104			134,661
Increase (decrease) in cash and cash equivalents	$	146,790			(65,171	)		(11,960	)
Cash and cash equivalents at the beginning of period		48,391			113,562			125,522
Cash and cash equivalents at end of period	$	195,181			48,391			113,562

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Consolidated Statements of Cash Flows
For each of the years in the three year period ended December 31, 2007
(In thousands)

	2007			2006		2005
Supplemental cash flow information
Interest paid on borrowings, net of amounts capitalized	$	5,927			963		(1,285	)
Income taxes paid		4,556			17,140		19,214
Supplemental disclosure of non-cash operating, investing and financing activities:
Change in shareholders’ equity resulting from the change in other comprehensive (loss) gain, net of taxes	$	(535	)		776		1,487
Change in shareholders’ equity from the net effect of Bluegreen’s capital transactions, net of taxes		(279	)		177		74
Decrease in inventory from reclassification to property and equipment		2,859			8,412		1,809
Increase in deferred tax liability due to cumulative impact of change in accounting for uncertainties in income taxes (FIN 48 — see Note 18)		260			—		—

At November 9, 2007 all accounts of Levitt and Sons were deconsolidated from the Company. Refer to Note 26 for an analysis of the balances at the time of deconsolidation.

See accompanying notes to consolidated financial statements.

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Levitt Corporation
Notes to Consolidated Financial Statements

     1. Description of Business

Organization and Business

     Levitt Corporation, and its wholly owned subsidiaries, historically has been a real estate development company with activities in the Southeastern United States. The Company was organized in December 1982 under the laws of the State of Florida.

     In 2007, Levitt Corporation engaged in real estate activities through Core Communities, LLC (“Core Communities or Core”), and other operations, which included Levitt Commercial, LLC (“Levitt Commercial”), an investment in Bluegreen Corporation (“Bluegreen”), a development of a homebuilding community in South Carolina, Carolina Oak Homes, LLC (“Carolina Oak”), and other investments in real estate projects through subsidiaries and joint ventures. During 2007, the Company also conducted homebuilding operations through Levitt and Sons, LLC (“Levitt and Sons”).

     Core Communities was founded in May 1996 to develop a master-planned community in Port St. Lucie, Florida now known as St. Lucie West. It is currently developing master-planned communities in St. Lucie, Florida called Tradition, Florida and in a community outside of Hardeeville, South Carolina called Tradition Hilton Head (formerly known as Tradition, South Carolina). Tradition, Florida has been in active development for several years, while Tradition Hilton Head is in the early stage of development. As a master-planned community developer, Core Communities engages in four primary activities: (i) the acquisition of large tracts of raw land; (ii) planning, entitlement and infrastructure development; (iii) the sale of entitled land and/or developed lots to homebuilders and commercial, industrial and institutional end-users; and (iv) the development and leasing of commercial space to commercial, industrial and institutional end-users.

     On October 23, 2007, Levitt Corporation acquired from Levitt and Sons all of the outstanding membership interests in Carolina Oak Homes, LLC, a South Carolina limited liability company (formerly known as Levitt and Sons of Jasper County, LLC), for the following consideration: (i) assumption of the outstanding principal balance of a loan in the amount of $34.1 million which is collateralized by a 150 acre parcel of land owned by Carolina Oak Homes, LLC located in Tradition Hilton Head, (ii) execution of a promissory note in the amount of $400,000 to serve as a deposit under a purchase agreement between Carolina Oak and Core Communities of South Carolina, LLC and (iii) the assumption of specified payables in the amount of approximately $5.3 million. The principal asset of Carolina Oak is a 150 acre parcel of land currently under development and located in Tradition Hilton Head.

     Acquired in December 1999, Levitt and Sons was a developer of single family homes and townhome communities for active adults and families in Florida, Georgia, Tennessee and South Carolina. Levitt and Sons operated in two reportable segments, Primary Homebuilding and Tennessee Homebuilding. On November 9, 2007 (the “Petition Date”), Levitt and Sons and substantially all of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code (the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of Florida ( the“Bankruptcy Court”). Based on the loss of control over Levitt and Sons as a result of the Chapter 11 Cases and the uncertainties surrounding the nature, timing and specifics of the bankruptcy proceedings, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from its financial results. The Company is prospectively accounting for any remaining investment in Levitt and Sons, net of outstanding advances due from Levitt and Sons, as a cost method investment. Under cost method accounting, income would only be recognized to the extent of cash received in the future or when the Company is discharged from the bankruptcy, at which time, the balance of the “ loss in excess of investment in subsidiary” can be recognized into income. See Note 22 for a discussion of the Chapter 11 Cases and Note 26 for a discussion of our investment in Levitt and Sons and the related condensed consolidated financial statements of this cost investment at December 31, 2007.

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     2. Summary of Significant Accounting Policies

Consolidation Policy

     The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries except with respect to Levitt and Sons which is described below. All significant inter-company transactions have been eliminated in consolidation.

     Based on the loss of control over Levitt and Sons as a result of the bankruptcy filing and the uncertainties surrounding the nature, timing and specifics of the bankruptcy proceedings, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, effectively eliminating all future results of Levitt and Sons and substantially all of its subsidiaries from its financial results of operations, and will prospectively account for any remaining investment in Levitt and Sons, as a cost method investment, as noted above.

Use of Estimates

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ significantly from those estimates. Material estimates relate to revenue recognition on percent complete projects, reserves and accruals, impairment of assets, determination of the valuation of real estate and estimated costs to complete construction, litigation and contingencies, the current tax asset, and the amount of the deferred tax asset valuation allowance. The Company bases estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Loss in excess of investment in Levitt and Sons

     Under Accounting Research Bulletin No. 51 (“ARB 51”), consolidation of a majority-owned subsidiary is precluded where control does not rest with the majority owners. Under these rules, legal reorganization or bankruptcy represents conditions which can preclude consolidation or equity method accounting as control rests with the bankruptcy court, rather than the majority owner. Accordingly, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations from the financial results of operations. Therefore, and in accordance with ARB 51 the Company follows the cost method of accounting to record the interest in Levitt and Sons, a wholly owned subsidiary, which declared bankruptcy on November 9, 2007. Under cost method accounting, income will only be recognized to the extent of cash received in the future or when the Company is discharged from the bankruptcy, at which time, any loss in excess of the investment in subsidiary can be recognized into income, as described below.

     As a result of the deconsolidation, Levitt Corporation had a negative basis in the investment in Levitt and Sons because the subsidiary generated significant losses and intercompany liabilities in excess of its asset balances. This negative investment, “Loss in excess of investment in subsidiary”, is reflected as a single amount on the Company’s consolidated statement of financial condition as a $55.2 million liability as of December 31, 2007. This balance was comprised of a negative investment in Levitt and Sons of $123.0 million, and outstanding advances due from Levitt and Sons of $67.8 million to Levitt Corporation. Included in the negative investment was approximately $15.8 million associated with deferred revenue related to intra-segment sales between Levitt and Sons and Core Communities.

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     Since Levitt and Sons’ results are no longer consolidated and Levitt Corporation believes that it is not probable that it will be obligated to fund future operating losses at Levitt and Sons, any adjustments reflected in Levitt and Sons’ financial statements subsequent to November 9, 2007 are not expected to affect the results of operations of Levitt Corporation. The reversal of the Company’s liability into income will occur when either Levitt and Sons’ bankruptcy is discharged and the amount of the Company’s remaining investment in Levitt and Sons’ is determined or Levitt Corporation reaches an agreement with the Bankruptcy Court for a final settlement amount related to any claims against Levitt Corporation. Levitt Corporation will continue to evaluate the cost method investment in Levitt and Sons quarterly to review the reasonableness of the liability balance.

Cash Equivalents

     Cash and cash equivalents consist of demand deposits at commercial banks. The Company also invests in money market funds during the year. The cash deposits are held primarily at various financial institutions and exceed federally insured amounts, however the Company has not experienced any losses on such accounts and management does not believe these concentrations to be a credit risk to the Company.

Restricted Cash

     Cash and interest bearing deposits are segregated into restricted accounts for specific uses in accordance with the terms of certain land sale contracts, home sales and other sales agreements. Restricted funds may be utilized in accordance with the terms of the applicable governing documents. The majority of restricted funds are controlled by third-party escrow fiduciaries.

Inventory of Real Estate

     As of November 9, 2007, Levitt and Sons was deconsolidated from Levitt Corporation’s results of operations and accordingly the inventory of real estate related to homebuilding is no longer included in the consolidated statement of financial condition with the exception of Carolina Oak which is a homebuilding community now owned directly by Levitt Corporation.

     As of December 31, 2007, inventory of real estate includes Carolina Oak homebuilding inventory, land, land development costs, interest and other construction costs and is stated at accumulated cost which does not exceed net realizable value. Due to the large acreage of certain land holdings and the nature of the Company’s project development life cycles, disposition of inventory in the normal course of business is expected to extend over a number of years.

     The expected future costs of development in our Land Division are analyzed at least quarterly to determine the appropriate allocation factors to charge to cost of sales when such inventory is sold. During the long term project development cycles in our Land Division, which can approximate 12-15 years, such development costs are subject to volatility. Costs in the Land Division to complete infrastructure will be influenced by changes in direct costs associated with labor and materials, as well as changes in development orders and regulatory compliance.

     The Company reviews real estate inventory for impairment on a project-by-project basis in accordance with Statement of Financial Accounting Standards No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”). In accordance with SFAS No. 144, long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in an amount by which the carrying amount of the asset exceeds the fair value of the asset.

     At December 31, 2007, the Company reviewed the Carolina Oak project using a cash flow model. The related unleveraged cash flow was calculated using projected revenues and costs-to-complete and projected sales of inventory. The present value of the projected cash flow from the project exceeded the carrying amount of the project and accordingly no impairment charge was recognized. The Company obtained market assessments and appraisals for land inventory in 2007 to assess the fair market value. The sales value exceeded the book value and accordingly no impairment charge was recognized.

69

     In prior periods, the real estate inventory for Levitt and Sons was reviewed for impairment in accordance with SFAS No. 144. The fair market value of the real estate inventory balance was assessed on a project-by-project basis. For projects representing land investments where homebuilding activity had not yet begun, valuation models were used as the best evidence of fair value and as the basis for the measurement. If the calculated project fair value was lower than the carrying value of the real estate inventory, an impairment charge was recognized to reduce the carrying value of the project to the fair value. For projects with homes under construction, the Company measured the recoverability of assets by comparing the carrying amount of an asset to the estimated future undiscounted net cash flows. At the time of these analyses, the unleveraged cash flow models projected future revenues and costs-to-complete and the sale of the remaining inventory based on the current status of each project and reflected current market trends, current pricing strategies and cancellation trends. If the carrying amount of a project exceeded the present value of the cash flows from the project discounted using the weighted average cost of capital, an impairment charge was recognized to reduce the carrying value of the project to fair market value. As a result of this analysis, the Company recorded impairment charges of approximately $226.9 million and $36.8 million in cost of sales for the years ended December 31, 2007 and 2006, respectively, in the Primary and Tennessee Homebuilding segments and for capitalized interest in the Other Operations segment related to the projects in the Homebuilding Division that Levitt and Sons ceased developing.

     The assumptions developed and used by management are subjective and involve significant estimates, and are subject to increased volatility due to the uncertainty of the current market environment. As a result, actual results could differ materially from management’s assumptions and estimates and may result in material inventory impairment charges to be recorded in the future.

Discontinued Operations

     As discussed in Note 3, the commercial leasing properties at Core Communities are treated as a discontinued operation due to our intention to sell these projects. Due to this decision, the projects and assets that are for sale have been accounted for as discontinued operations for all periods presented in accordance with SFAS No. 144. Accordingly, the results of operations from these projects have been reclassified to discontinued operations for all periods presented in these consolidated financial statements. In addition, the assets have been reclassified to assets held for sale and the related liabilities associated with these assets held for sale were also reclassified in the consolidated statements of financial condition for all prior periods presented to conform to the current year presentation. Additionally, pursuant to SFAS No. 144, assets held for sale are measured at the lower of its carrying amount or fair value less cost to sell. Management has reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that these assets were appropriately recorded at the lower of cost or fair value less the costs to sell at December 31, 2007.

Investments in Unconsolidated Subsidiaries — Equity Method

     In December 2003, FASB Interpretation No. 46(R) “Consolidation of Variable Interest Entities”, (“FIN No. 46(R)”) was issued by the FASB to clarify the application of ARB 51 to certain Variable Interest Entities (“VIEs”), in which equity investors do not have the characteristics of a controlling interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. Pursuant to FIN No. 46(R), an enterprise that absorbs a majority of the VIE’s expected losses, receives a majority of the VIE’s expected residual returns, or both, is determined to be the primary beneficiary of the VIE and must consolidate the entity. For entities in which the company has less than a controlling financial interest or entities where it is not deemed to be the primary beneficiary under FIN No. 46R, the entities are accounted for using the equity method of accounting.

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     The Company follows the equity method of accounting to record its interests in subsidiaries in which it does not own the majority of the voting stock and to record its investment in variable interest entities in which it is not the primary beneficiary. These entities consist of Bluegreen Corporation, joint ventures and statutory business trusts. The statutory business trusts are variable interest entities in which the Company is not the primary beneficiary. Under the equity method, the initial investment in a joint venture is recorded at cost and is subsequently adjusted to recognize the Company’s share of the joint venture’s earnings or losses. Distributions received reduce the carrying amount of the investment. The Company evaluates its investments in unconsolidated entities for impairment during each reporting period in accordance with Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock”. (“APB No. 18”). These investments are evaluated annually or as events or circumstances warrant for other than temporary declines in value. The Company evaluated the investment in Bluegreen at December 31, 2007 and noted that the $116.0 million book value of the investment was greater than the market value of $68.4 million (based upon a December 31, 2007 closing price of $7.19). The Company performed an impairment review in accordance with Emerging Issues Task Force 03-1 (“EITF 03-1”), APB No. 18, and Securities and Exchange Commission Staff Accounting Bulletin 59 (“SAB 59”) to analyze various quantitative and qualitative factors to determine if an impairment adjustment was needed. Based on the evaluation and the review of various qualitative and quantitative factors relating to the performance of Bluegreen, the current value of the stock price, and management’s intention with regard to this investment, the Company determined that the impairment associated with the investment in Bluegreen was not an other than temporary decline and accordingly, no adjustment to the carrying value was recorded at December 31, 2007.

Homesite Contracts and Consolidation of Variable Interest Entities

     In the ordinary course of business, the Company enters into contracts to purchase land held for development, including option contracts. Option contracts allow the Company to control significant positions with minimal capital investment and substantially reduce the risks associated with land ownership and development. The liability for nonperformance under such contracts is typically only the required non-refundable deposits. The Company does not have legal title to these assets. However, if certain conditions are met, under the requirements of FIN No. 46(R), the Company’s non-refundable deposits in these land contracts may create a variable interest, with the Company being identified as the primary beneficiary. If these conditions are met, FIN No. 46(R) requires the Company to consolidate the variable interest entity holding the asset to be acquired at their fair value. At December 31, 2007, there were no non-refundable deposits under these contracts, and the Company had no contracts in place to acquire land.

Capitalized Interest

     Interest incurred relating to land under development and construction is capitalized to real estate inventory or property and equipment during the active development period. For inventory, interest is capitalized at the effective rates paid on borrowings during the pre-construction and planning stages and the periods that projects are under development. Capitalization of interest is discontinued if development ceases at a project. Capitalized interest is expensed as a component of cost of sales as related homes, land and units are sold. For property and equipment under construction, interest associated with these assets is capitalized as incurred to property and equipment and is expensed through depreciation once the asset is put into use. The following table is a summary of interest incurred, capitalized and expensed relating to inventory under development and construction exclusive of impairment adjustments (in thousands):

	For the year ended December 31,
	2007			2006			2005
Interest incurred to non-affiliates	$	46,719			40,473			17,977
Interest incurred to affiliates		—			—			892
Interest capitalized		(42,912	)		(40,473	)		(18,869	)
Interest expense, net	$	3,807			—			—
Interest included in cost of sales	$	17,949			15,358			8,959

     In addition to the above interest expensed in cost of sales, the capitalized interest balance of inventory of real estate as of December 31, 2007 has been reduced by $24.8 million of impairment reserves allocated to the capitalized interest component of inventory of real estate. Approximately $9.3 million of these impairments related to Levitt Corporation’s impairment of capitalized interest recorded in Other Operations associated with projects at Levitt and Sons, and the remaining $15.5 million relates to our Homebuilding segments.

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     Additionally, as indicated in Note 3, certain amounts of interest for the year ended December 31, 2007 associated with two of Core’s commercial leasing projects have been reclassified to income (loss) from discontinued operations. Prior periods have been reclassified to conform to the current presentation.

Property and Equipment

     Property and equipment is stated at cost and consists primarily of office buildings and land, furniture and fixtures, equipment and water treatment and irrigation facilities. Repair and maintenance costs are expensed as incurred. 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 10 years for equipment. Leasehold improvements are amortized using the straight-line method over the shorter of the terms of the related leases or the useful lives of the assets. In cases where the Company determines that land and the related development costs are to be used as fixed assets, these costs are transferred from inventory of real estate to property and equipment. For fixed assets that are under construction, interest associated with these assets is capitalized as incurred and will be relieved to expense through depreciation once the asset is put into use.

Revenue Recognition

     Revenue and all related costs and expenses from house and land sales are recognized at the time that closing has occurred, when title and possession of the property and the risks and rewards of ownership transfer to the buyer, and if the Company does not have a substantial continuing involvement in accordance with SFAS No. 66, “Accounting for Sales of Real Estate” (“SFAS 66”). In order to properly match revenues with expenses, the Company estimates construction and land development costs incurred and to be incurred, but not paid at the time of closing. Estimated costs to complete are determined for each closed home and land sale based upon historical data with respect to similar product types and geographical areas and allocated to closings along with actual costs incurred based on a relative sales value approach. The Company monitors the accuracy of estimates by comparing actual costs incurred subsequent to closing to the estimate made at the time of closing and make modifications to the estimates based on these comparisons.

     Revenue is recognized for certain land sales on the percentage-of-completion method when the land sale takes place prior to all contracted work being completed. Pursuant to the requirements of SFAS 66, if the seller has some continuing involvement with the property and does not transfer substantially all of the risks and rewards of ownership, profit shall be recognized by a method determined by the nature and extent of the seller’s continuing involvement. In the case of land sales, this involvement typically consists of final development activities. The Company recognizes revenue and related costs as work progresses using the percentage of completion method, which relies on estimates of total expected costs to complete required work. Revenue is recognized in proportion to the percentage of total costs incurred in relation to estimated total costs at the time of sale. Actual revenues and costs to complete construction in the future could differ from current estimates. If the estimates of development costs remaining to be completed and relative sales values are significantly different from actual amounts, then the revenues, related cumulative profits and costs of sales may be revised in the period that estimates change.

     Other revenues consist primarily of rental property income, marketing revenues, irrigation service fees, and title and mortgage revenue. Irrigation service connection fees are deferred and recognized systematically over the life of the irrigation plant. Irrigation usage fees are recognized when billed as the service is performed. Title and mortgage operations include agency and other fees received for processing of title insurance policies and mortgage loans. Revenues from title and mortgage operations are recognized when the transfer of the corresponding property or mortgages to third parties has been consummated.

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     Effective January 1, 2006, Bluegreen adopted AICPA Statement of Position 04-02, “Accounting for Real Estate Time-Sharing Transactions” (“SOP 04-02”). This Statement amends FASB Statement No. 67 “Accounting for Costs and Initial Rental Operations of Real Estate Projects” (“FAS No. 67”) to state that the guidance for incidental operations and costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-02. The adoption of SOP 04-02 resulted in a one-time, non-cash, cumulative effect of change in accounting principle charge of $4.5 million to Bluegreen for the year ended December 31, 2006, and accordingly reduced the earnings in Bluegreen recorded by us by approximately $1.4 million for the same period.

Goodwill

     Goodwill acquired in a purchase business combination and determined to have an indefinite useful life is not amortized, but instead tested for impairment at least annually in accordance with SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS No. 142”). The Company conducts on at least an annual basis, a review of the goodwill to determine whether the carrying value of goodwill exceeds the fair market value using a discounted cash flow methodology. Should this be the case, the value of goodwill may be impaired and written down. In the year ended December 31, 2006, the Company conducted an impairment review of the goodwill related to the Tennessee Homebuilding segment in the Homebuilding Division acquired in connection with our acquisition of Bowden Building Corporation in 2004. The profitability and estimated cash flows of this reporting entity were determined in the second quarter of 2006 to have declined to a point where the carrying value of the assets exceeded their market value. The Company used a discounted cash flow methodology to determine the amount of impairment resulting in completely writing off goodwill of approximately $1.3 million in the year ended December 31, 2006. The write-off is included in other expenses in the consolidated statements of operations.

Stock-based Compensation

     The Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), "Share-Based Payment” (“SFAS 123R”) as of January 1, 2006 and elected the modified-prospective method, under which prior periods are not restated. Under the fair value recognition provisions of this statement, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense on a straight-line basis over the requisite service period, which is the vesting period for all awards granted after January 1, 2006, and for the unvested portion of stock options that were outstanding at January 1, 2006.

     The Company currently uses the Black-Scholes option-pricing model to determine the fair value of stock options. The fair value of option awards on the date of grant using the Black-Scholes option-pricing model is determined by the stock price and assumptions regarding expected stock price volatility over the expected term of the awards, risk-free interest rate, expected forfeiture rate and expected dividends. If factors change and the Company uses different assumptions for estimating stock-based compensation expense in future periods or if the Company decides to use a different valuation model, the amounts recorded in future periods may differ significantly from the amounts recorded in the current period and could affect net income and earnings per share.

Income Taxes

     The Company records income taxes using the liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequence of temporary differences between the financial statement and income tax bases of our assets and liabilities. The Company estimates income taxes in each of the jurisdictions in which it operates. This process involves estimating tax exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within the consolidated statements of financial condition. The recording of a net deferred tax asset assumes the realization of such asset in the future. Otherwise, a valuation allowance must be recorded to reduce this asset to its net realizable value. The Company considers future pretax income and ongoing prudent and feasible tax strategies in assessing the need for such a valuation allowance. In the event that the Company determines that it may not be able to realize all or part of the net deferred tax asset in the future, a valuation allowance for the deferred tax asset is charged against income in the period such determination is made.

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     The Company and its subsidiaries file a consolidated Federal and Florida income tax return. Separate state returns are filed by subsidiaries that operate outside the state of Florida. Even though Levitt and Sons and its subsidiaries have been deconsolidated from Levitt Corporation for financial statement purposes, they will continue to be included in the Company’s Federal and Florida consolidated tax returns until Levitt and Sons is discharged from bankruptcy. As a result of the deconsolidation of Levitt and Sons, all of Levitt and Sons’ net deferred tax assets are no longer presented in the accompanying consolidated statement of financial condition at December 31, 2007 but remain a part of Levitt and Sons’ condensed consolidated financial statements at December 31, 2007 and accordingly will be part of the tax return.

     The Company adopted the provisions of FASB Interpretation No. 48 — “Accounting for Uncertainty in Income Taxes — an interpretation of FASB No. 109” (“FIN 48”) on January 1, 2007. FIN 48 provides guidance on recognition, measurement, presentation and disclosure in financial statements of uncertain tax positions that a company has taken or expects to take on a tax return. FIN 48 substantially changes the accounting policy for uncertain tax positions. As a result of the implementation of FIN 48, the Company recognized a decrease of $260,000 in the liability for unrecognized tax benefits, which was accounted for as an increase to the January 1, 2007 balance of retained earnings. At year-end, there were gross tax affected unrecognized tax benefits of $2.4 million of which $0.2 million, if recognized, would affect the effective tax rate.

(Loss) Earnings per Share

     The Company has two classes of common stock. Class A common stock is listed on the New York Stock Exchange, and 95,040,731 shares and 18,609,024 at December 31, 2007 and 2006, respectively, are issued and outstanding. The Company also has Class B common stock which is held exclusively by BFC Financial Corporation (“BFC”), the Company’s controlling shareholder.

     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 and conversion rights, between the two classes. Basic (loss) earnings per common share is computed by dividing net (loss) income by the weighted average number of common shares outstanding for the period. Diluted (loss) earnings per share is computed in the same manner as basic (loss) earnings per share, but it also gives consideration to (a) the dilutive effect of the Company’s stock options and restricted stock using the treasury stock method and (b) the pro rata impact of Bluegreen’s dilutive securities (stock options and convertible securities) on the amount of Bluegreen’s earnings that the Company recognizes.

New Accounting Pronouncements

     In November 2006, the FASB issued Emerging Issues Task Force Issue No. 06-8, “Applicability of the Assessment of a Buyers Continuing Investment under FASB Statement No. 66, Accounting for Sales of Real Estate”, (“EITF 06-8”). EITF 06-8 establishes that a company should evaluate the adequacy of the buyer’s continuing investment in determining whether to recognize profit under the percentage-of-completion method. EITF 06-8 is effective for the first annual reporting period beginning after March 15, 2007 (the Company’s fiscal year beginning January 1, 2008). The effect of EITF 06-8 is not expected to be material to the Company’s consolidated financial statements.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The impact of SFAS No. 159 is not expected to have a material impact on the Company’s financial position or results of operations.

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     In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“SFAS No. 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurement. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. During February 2008, the FASB issued a Staff Position that will (i) partially defer the effective date of SFAS No. 157 for one year for certain nonfinancial assets and nonfinancial liabilities and (ii) remove certain leasing transactions from the scope of SFAS No. 157. The impact of adopting SFAS No. 157 is not expected to have a material impact on the Company’s financial position or results of operations.

     In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 requires that a noncontrolling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the noncontrolling interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any noncontrolling equity investment retained in a deconsolidation. SFAS 160 is effective for the Company’s fiscal year beginning January 1, 2009. The Company has not yet evaluated the impact the adoption of SFAS 160 will have on its consolidated financial statements.

     In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R broadens the guidance of SFAS 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. SFAS 141R expands on required disclosures to improve the statement users’ abilities to evaluate the nature and financial effects of business combinations. SFAS 141R is effective for the Company’s fiscal year beginning January 1, 2009. The adoption of SFAS 141R could have a material effect on its consolidated financial statements if the Company decides to pursue business combinations due to the requirement to write-off transaction costs to the consolidated statements of operations.

     3. Sale of Two Core Communities Commercial Leasing Projects — Discontinued Operations

     In June 2007, Core Communities began soliciting bids from several potential buyers to purchase assets associated with two of Core’s commercial leasing projects. Management determined it is probable that Core will sell these projects and, while Core may retain an equity interest in the properties and provide ongoing management services to a potential buyer, the anticipated level of continuing involvement is not expected to be significant. It is management’s intention to complete the sale of these assets in the first half of 2008. The assets are available for immediate sale in their present condition. There is no assurance that these sales will be completed in the timeframe expected by management or at all. Due to this decision, the projects and assets that are for sale have been accounted for as discontinued operations for all periods presented in accordance with SFAS No. 144, including the reclassification of results of operations from these projects to discontinued operations for the years ended December 31, 2006 and 2005.

     The assets have been reclassified to assets held for sale and the related liabilities associated with these assets were also reclassified to liabilities related to assets held for sale in the consolidated statements of financial condition. Prior period amounts have been reclassified to conform to the current year presentation. Depreciation related to these assets held for sale ceased in June 2007. The Company has elected not to separate these assets in the consolidated statements of cash flows for all periods presented. While the commercial real estate market has generally been stronger than the residential real estate market, interest in commercial property is weakening and financing is not as readily available in the current market, which may adversely impact the profitability of the Company’s commercial property. Management has reviewed the net asset value and estimated the fair market value of the assets based on the bids received related to these assets and determined that these assets were appropriately recorded at the lower of cost or fair value less the costs to sell at December 31, 2007.

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     The following table summarizes the assets held for sale and liabilities related to the assets held for sale for the two commercial leasing projects as of December 31, 2007 and December 31, 2006:

	December 31,		December 31,
	2007		2006
Property and equipment, net	$	84,677		45,560
Other assets		11,537		1,724
Assets held for sale	$	96,214		47,284
Accounts payable, accrued liabilities and other	$	1,123		925
Notes and mortgage payable		78,970		27,338
Liabilities related to assets held for sale	$	80,093		28,263

     The following table summarizes the results of operations for the two commercial leasing projects for the years ended December 31, 2007, 2006 and 2005 (in thousands):

	2007			2006			2005
Revenue	$	4,692			1,753			187
Costs and expenses		1,837			1,814			477
		2,855			(61	)		(290	)
Other Income		18			28			36
Income (loss) before income taxes		2,873			(33	)		(254	)
(Provision) benefit for income taxes		(1,108	)		12			96
Net income (loss)	$	1,765			(21	)		(158	)

     4. (Loss) Earnings per Share

     Basic (loss) earnings per common share is computed by dividing (loss) earnings attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted (loss) earnings per common share is computed in the same manner as basic (loss) earnings per share taking into consideration (a) the dilutive effect of the Company’s stock options and restricted stock using the treasury stock method and (b) the pro rata impact of Bluegreen’s dilutive securities (stock options and convertible securities) on the amount of Bluegreen’s earnings recognized by the Company. For the years ended December 31, 2007 and 2006, common stock equivalents related to the Company’s outstanding stock options and unvested restricted stock amounted to 11,528 shares and 6,095 shares, respectively, and were not considered because their effect would have been antidilutive. In the year ended December 31, 2005, 112,187 shares of outstanding stock options were considered for common stock equivalents. In addition, there were additional options to purchase shares of common stock at various prices which were not included in common stock equivalents because the exercise prices were greater than the average market price of the common shares and therefore, their effect would be antidilutive. For the years ended December 31, 2007, 2006 and 2005, there were additional options to purchase 1,870,361, 1,897,944 and 1,311,951 shares of common stock equivalents, respectively which were not included.

     The weighted average number of common shares outstanding in basic and diluted (loss) earnings per share for the year ended December 31, 2006 and 2005 have been retroactively adjusted by the bonus element subsequently created on October 1, 2007 as a result of the rights offering in which stock was issued on October 1, 2007 at a purchase price below the market price on October 1, 2007. Sale of the Company’s Class A common stock priced at $2.00 per share pursuant to the terms of this offering was completed on October 1, 2007; the closing price of the Company’s Class A common stock on the October 1, 2007 closing date was $2.05 per share creating a bonus element adjustment of 1.97% for all shareholders of record on August 29, 2007. Thus, the weighted average shares of Class A common stock outstanding for basic and diluted (loss) earnings per share is retroactively increased by 1.97% for the years ended December 31, 2006 and 2005.

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     The following table presents the computation of basic and diluted (loss) earnings per common share (in thousands, except for per share data):

	For the Year Ended December 31,
	2007			2006			2005
Numerator:
Basic (loss) earnings per common share:
(Loss) earnings from continuing operations	$	(236,385	)		(9,143	)		55,069
Income (loss) from discontinued operations		1,765			(21	)		(158	)
Net (loss) income — basic	$	(234,620	)		(9,164	)		54,911
Diluted (loss) earnings per common share:
Net (loss) income from continuing operations — basic	$	(236,385	)		(9,143	)		55,069
Pro rata share of the net effect of Bluegreen dilutive securities		(42	)		(100	)		(251	)
(Loss) income from continuing operations		(236,427	)		(9,243	)		54,818
Income (loss) from discontinued operations		1,765			(21	)		(158	)
Net (loss) income — diluted	$	(234,662	)		(9,264	)		54,660
Denominator:
Basic average shares outstanding		39,092			19,823			19,817
Bonus adjustment factor from registration rights offering		—			1.0197			1.0197
Basic average shares outstanding		39,092			20,214			20,208
Net effect of stock options assumed to be exercised		—			—			112
Diluted average shares outstanding		39,092			20,214			20,320
Basic (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.45	)		2.73
Discontinued operations	$	0.05			—			(0.01	)
Total basic (loss) earnings per share	$	(6.00	)		(0.45	)		2.72
Diluted (loss) earnings per common share:
Continuing operations	$	(6.05	)		(0.46	)		2.70
Discontinued operations	$	0.05			—			(0.01	)
Total diluted (loss) earnings per share	$	(6.00	)		(0.46	)		2.69

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     5. Equity transactions

Cash dividends

     Cash dividends declared by the Company’s Board of Directors for the three year period ended December 31, 2007 are summarized as follows:

		Classes of	Dividend
Declaration Date	Record Date	Common Stock	per share		Payment Date
January 24, 2005	February 8, 2005	Class A, Class B	$	0.02	February 15, 2005
April 25, 2005	May 9, 2005	Class A, Class B	$	0.02	May 16, 2005
July 25, 2005	August 11, 2005	Class A, Class B	$	0.02	August 18, 2005
November 7, 2005	November 17, 2005	Class A, Class B	$	0.02	November 23, 2005
January 24, 2006	February 8, 2006	Class A, Class B	$	0.02	February 15, 2006
April 26, 2006	May 8, 2006	Class A, Class B	$	0.02	May 15, 2006
August 1, 2006	August 11, 2006	Class A, Class B	$	0.02	August 18, 2006
October 23, 2006	November 10, 2006	Class A, Class B	$	0.02	November 17, 2006
January 22, 2007	February 9, 2007	Class A, Class B	$	0.02	February 16, 2007

     The Company has not adopted a policy of regular dividend payments. The payment of dividends in the future is subject to approval by the Board of Directors and will depend upon, among other factors, the Company’s results of operations and financial condition.

Rights Offering

     On August 29, 2007, Levitt Corporation distributed to each holder of record of its Class A common stock and Class B common stock as of August 27, 2007 5.0414 subscription rights for each share of such stock owned on that date (the “Rights Offering”), or an aggregate of rights to purchase 100 million shares of Class A common stock. The Rights Offering was priced at $2.00 per share, commenced on August 29, 2007 and was completed on October 1, 2007. Levitt Corporation received $152.8 million of proceeds in connection with the exercise of rights by its shareholders. In connection with the offering, Levitt Corporation issued an aggregate of 76,424,066 shares of Class A common stock on October 1, 2007. The stock price on the October 1, 2007 closing date was $2.05 per share. As a result, there is a bonus element adjustment of 1.97% for all shareholders of record on August 29, 2007 and accordingly the number of weighted average shares of Class A common stock outstanding for basic and diluted (loss) earnings per share was retroactively increased by 1.97% for all periods presented in these consolidated financial statements. See Note 4 for (loss) earnings per share calculation.

     6. Stock Based Compensation

     On May 11, 2004, the Company’s shareholders approved the 2003 Levitt Corporation Stock Incentive Plan. In March 2006, subject to shareholder approval, the Board of Directors of the Company approved the amendment and restatement of the Company’s 2003 Stock Incentive Plan to increase the maximum number of shares of the Company’s Class A common stock, $0.01 par value, that may be issued for restricted stock awards and upon the exercise of options under the plan from 1,500,000 to 3,000,000 shares. The Company’s shareholders approved the Amended and Restated 2003 Stock Incentive Plan (“Incentive Plan”) on May 16, 2006.

     The maximum term of options granted under the Incentive Plan is 10 years. The vesting period for each grant is established by the Compensation Committee of the Board of Directors and for employees is generally five years utilizing cliff vesting and for directors the option awards are immediately vested. Option awards issued to date become exercisable based solely on fulfilling a service condition. Since the inception of the Incentive Plan there have been no expired stock options.

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     In January 2006, the Company adopted FAS 123R using the modified prospective method which requires the Company to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remained outstanding at the date of adoption. This Statement requires companies to expense the estimated fair value of stock options and similar equity instruments issued to employees over the vesting period in their statements of operations. FAS 123R eliminated the alternative to use the intrinsic method of accounting provided for in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”), which generally resulted in no compensation expense recorded in the financial statements related to the granting of stock options to employees if certain conditions were met.

     Amounts for periods prior to January 1, 2006 presented herein have not been restated to reflect the adoption of FAS 123R. The proforma effect for the year ended December 31, 2005 is as follows and has been disclosed to be consistent with prior accounting rules (in thousands, except per share data):

	Year Ended
	December 31,
	2005
Pro forma net income:
Net income, as reported	$	54,911
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related income tax effect		(1,416	)
Pro forma net income	$	53,495
Basic earnings per share:
As reported	$	2.72
Pro forma	$	2.65
Diluted earnings per share:
As reported	$	2.69
Pro forma	$	2.63

     The basic and diluted earnings per share for the year ended December 31, 2005 was adjusted to reflect the bonus element subsequently created on October 1, 2007 as a result of the rights offering. See discussion in Note 4.

     The fair values of options granted are estimated on the date of their grant using the Black-Scholes option pricing model based on certain assumptions. The fair value of the Company’s stock option awards, which are primarily subject to five year cliff vesting, is expensed over the vesting life of the stock options under the straight-line method.

     The fair value of each option granted was estimated using the following assumptions:

	Year ended			Year ended			Year ended
	December 31, 2007			December 31, 2006			December 31, 2005
Expected volatility		40.05%-52.59	%		37.37%-39.80	%	37.99%-50.35%
Expected dividend yield		0.00%-.83	%		0.39%-0.61	%	0.00%-0.33%
Risk-free interest rate		4.58%-5.14	%		4.57%-5.06	%	4.02%-4.40%
Expected life	5-7.5 years			5-7.5 years			7.5 years
Forfeiture rate — executives		5	%		5	%	—
Forfeiture rate — non-executives		10	%		10	%	—

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     Expected volatility is based on the historical volatility of the Company’s stock. Due to the short period of time the Company has been publicly traded, the historical volatilities of similar publicly traded entities are reviewed to validate the Company’s expected volatility assumption. Expected volatility increased in the year ended December 31, 2007 compared to 2006 and 2005 due to increased volatility of homebuilding stocks in general and the declining share price of the Company’s stock. The expected dividend yield is based on an expected quarterly dividend. In April 2007, the Company determined that it does not expect to pay dividends to shareholders in the foreseeable future. The most recent dividend was paid in first quarter of 2007 at $.02 per share. In years ended December 31, 2006 and 2005, the quarterly dividend was $.02 per share. The risk-free interest rate for periods within the contractual life of the stock option award is based on the yield of US Treasury bonds on the date the stock option award is granted with a maturity equal to the expected term of the stock option award granted. The expected life of stock option awards granted is based upon the “simplified” method for “plain vanilla” options contained in SEC Staff Accounting Bulletin (“SAB”) No. 107 (“SAB 107”). SAB 107 stated that it would not expect a company to use the simplified method for share option grants after December 31, 2007. Such detailed information about employee exercise behavior is not widely available by December 31, 2007. Accordingly, SAB 110 was issued stating that the simplified method is accepted beyond December 31, 2007. Historically, forfeiture rates were estimated based on historical employee turnover rates. In 2007, there were substantial forfeitures as a result of the reductions in force. See Note 12 for explanation. As a result, the Company adjusted their stock compensation to reflect actual forfeitures.

     Non-cash stock compensation expense for the years ended December 31, 2007 and 2006 related to unvested stock options amounted to $1.9 million and $3.1 million, with an expected or estimated income tax benefit of $578,000 and $849,000 respectively. Stock compensation expense for the year ended December 31, 2007 includes $3.5 million of amortization of stock option compensation offset by $1.6 million of a reversal of stock compensation previously expensed related to forfeited options. In addition to stock compensation, the Company recorded $231,000 of tax benefit related to employees exercising stock options to acquire BankAtlantic Bancorp Inc (“Bancorp”) shares of common stock which was granted to the Company’s employees before the Company was spun off from Bancorp.

     At December 31, 2007, the Company had approximately $8.1 million of unrecognized stock compensation expense related to outstanding stock option awards which is expected to be recognized over a weighted-average period of 3.2 years.

     Stock option activity under the Incentive Plan for the years ended December 31, 2006 and 2007 was as follows:

			Weighted		Weighted Average	Aggregate
			Average		Remaining	Intrinsic
	Number		Exercise		Contractual	Value
	of Options		Price		Term	(thousands)
Options outstanding at December 31, 2005		1,305,176	$	25.59		$	—
Granted		759,655		13.53			—
Exercised		—		—			—
Forfeited		172,650		25.79			—
Options outstanding at December 31, 2006		1,892,181	$	20.73	8.33 years		—
Granted		752,409		9.18			—
Exercised		—		—			—
Forfeited		782,200		17.71			—
Options outstanding at December 31, 2007		1,862,390	$	17.33	8.00 years	$	—
Options exercisable at December 31, 2007		99,281	$	19.56	7.27 years	$	—
Stock options available for equity compensation grants at December 31, 2007		1,137,610

A summary of the Company’s non-vested stock options activity for the years ended December 31, 2006 and 2007 was as follows:

			Weighted		Weighted Average		Aggregate
			Average		Remaining		Intrinsic
	Number		Exercise		Contractual		Value
	of Options		Price		Term		(thousands)
Non-vested at December 31, 2005		1,250,000	$	13.44			$	—
Grants		759,655		6.44				—
Vested		44,105		6.33				—
Forfeited		172,650		12,98				—
Non-vested at December 31, 2006		1,792,900	$	10.70	8.28 years			—
Grants		752,409		4.95				—
Vested		—		—				—
Forfeited		782,200		9.11				—
Non-vested at December 31, 2007		1,763,109	$	8.95		8.04 years	$	—

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     The following table summarizes information about stock options outstanding as of December 31, 2007:

	Options Outstanding				Options Exercisable
			Remaining
Range of Exercise	Number of		Contractual
Price	Stock Options		Life		Options		Exercise Price
$0.00 — $3.21		12,000		9.66		—	—
$6.43 — $9.64		522,909		9.47		—	—
$9.64 — $12.85		7,500		9.24		—	—
$12.85 — $16.07		439,950		8.57		—	—
$16.07 — $19.28		51,605		8.48		44,105	$	16.09
$19.28 — $22.49		451,800		6.09		45,000	$	20.15
$22.49 — $25.70		48,250		6.61		—	—
$28.92 — $32.13		328,376		7.56		10,176	$	31.95
		1,862,390		8.00		99,281	$	19.56

     The Company also grants restricted stock, which is valued based on the market price of the common stock on the date of grant. Compensation expense arising from restricted stock grants is recognized using the straight-line method over the vesting period. Unearned compensation for restricted stock is a reduction of shareholders’ equity in the consolidated statements of financial condition. During the year ended December 31, 2005, the Company granted 6,887 restricted shares of Class A common stock to non-employee directors under the Incentive Plan, having a market price on the date of grant of $31.95 per share. During the year ended December 31, 2006, the Company granted 4,971 restricted shares of Class A common stock to non-employee directors under the Incentive Plan, having a market price on the date of grant of $16.09 per share. During the year ended December 31, 2007, the Company granted 7,641 restricted shares of Class A common stock to non-employee directors under the Incentive Plan, having a market price on the date of grant of $9.16 per share. The restricted stock vests monthly over a 12 month period. Non-cash stock compensation expense for the years ended December 31, 2007, 2006 and 2005 related to restricted stock awards amounted to $81,000, $150,000 and $110,000, respectively.

     7. Notes Receivable

     Notes receivable, which is included in other assets, amounted to $4.0 million and $6.9 million as of December 31, 2007 and 2006, respectively, and represents purchase money notes due from third parties resulting from various land sales at Core Communities. The weighted average interest rate of the notes outstanding was 7.25% and 6.74% as of December 31, 2007 and 2006, respectively. There was one outstanding note at December 31, 2007, and its interest is payable quarterly at the Prime Rate and payment of principal is due in full in December 2009.

     8. Impairment of Goodwill

     SFAS No. 142 requires that goodwill be reviewed for impairment at least annually. In 2005, no impairment charges were required as a result of this review. During 2006, the Company performed its annual review of goodwill for impairment. Under SFAS No. 142, goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value as determined using a discounted cash flow methodology. As a result of the 2006 review, the Company completely wrote off the $1.3 million of goodwill in the Tennessee Homebuilding segment that was recorded in connection with the Bowden Building Corporation acquisition and that was recorded in other assets. The profitability and estimated cash flows of the reporting entity declined to a point where the carrying value of the assets exceeded their market value resulting in a write-off of goodwill. This write-off is included in other expenses in the audited consolidated statements of operations for the year ended December 31, 2006.

     9. Inventory of Real Estate

     At December 31, 2007 and 2006, inventory of real estate is summarized as follows (in thousands):

	December 31,
	2007		2006
Land and land development costs	$	196,577		566,459
Construction cost		1,062		172,682
Capitalized interest		29,012		47,752
Other costs		639		35,147
	$	227,290		822,040

     The Company reviews long-lived assets, consisting primarily of inventory of real estate, for impairment whenever events or changes in circumstances indicate that the carrying value may not be realizable as noted above. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the assets carrying amount to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value.

     In 2005, fair market value was based on the sales prices of similar real estate inventory and the reviews resulted in no impairment. As a result of the various impairment analysis conducted throughout 2007 and 2006, the Company recorded impairment charges of approximately $226.9 million and $36.8 million, respectively, in cost of sales of real estate in the years ended December 31, 2007 and 2006 in the Homebuilding Division and for capitalized interest in the Other Operations segment related to the projects in the Homebuilding Division that Levitt and Sons ceased developing.

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     10. Property and Equipment

     Property and equipment at December 31, 2007 and 2006 is summarized as follows (in thousands):

		December 31,
	Depreciable Life	2007			2006
Land, buildings	30 years	$	16,677			16,516
Water and irrigation facilities	30 years		6,594			6,588
Furniture and fixtures and equipment	3-10 years		15,165			15,102
			38,436			38,206
Accumulated depreciation			(4,870	)		(5,091	)
Property and equipment, net		$	33,566			33,115

     Depreciation expense was $2.9 million, $1.7 million and $1.4 million for the years ended December 31, 2007, 2006 and 2005, respectively, and is included in selling, general and administrative expenses in the accompanying consolidated statements of operations. Depreciation expense related to assets held for sale was $755,000, $925,000 and $214,000 for the years ended December 31, 2007, 2006 and 2005, respectively, and is included in income (loss) from discontinued operations.

     Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value amount may not be realizable. If an evaluation is required, the estimated future undiscounted cash flows associated with the asset are compared to the assets carrying value to determine if an impairment of such asset is necessary. The effect of any impairment would be to expense the difference between the fair value of such asset and its carrying value. In 2005 and 2006, fair market value was based on disposals of similar assets and the review resulted in no impairment. In 2007, the Company performed a review of its fixed assets and determined that certain leasehold improvements were no longer appropriately valued as we vacated the leased space associated with those improvements. The leasehold improvements in the amount of $564,000 related to this vacated space will not be recovered and were written off in the year ended December 31, 2007.

     11. Investment in Bluegreen Corporation

     The Company owns approximately 9.5 million shares of the common stock of Bluegreen Corporation representing approximately 31% of Bluegreen’s outstanding common stock. The Company accounts for its investment in Bluegreen under the equity method of accounting. The cost of the Bluegreen investment is adjusted to recognize the Company’s interest in Bluegreen’s earnings or losses. The difference between a) the Company’s ownership percentage in Bluegreen multiplied by its earnings and b) the amount of the Company’s equity in earnings of Bluegreen as reflected in the financial statements relates to the amortization or accretion of purchase accounting adjustments made at the time of the acquisition of Bluegreen’s stock, adjustments made to the Company’s investment balance related to equity transactions recorded by Bluegreen that effect the Company’s ownership and to the cumulative adjustment discussed below.

     In connection with the securitization of certain of its receivables in December 2005, Bluegreen undertook a review of the prior accounting treatment and determined that it would restate its consolidated financial statements for the first three quarters of fiscal 2005 and the fiscal years ended December 31, 2003 and 2004 due to certain misapplications of GAAP in the accounting for sales of Bluegreen’s vacation ownership notes receivable and other related matters. The Company recorded the cumulative effect of the restatement in the year ended December 31, 2005. This cumulative adjustment was recorded as a $2.4 million reduction of the Company’s earnings from Bluegreen and a $1.1 million increase in the Company’s pro-rata share of unrealized gains recognized by Bluegreen. These adjustments resulted in a $1.3 million reduction in the investment in Bluegreen.

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     Effective January 1, 2006, Bluegreen adopted SOP 04-02. This Statement amends FAS No. 67 to state that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions. The accounting for those operations and costs is subject to the guidance in SOP 04-02. The adoption of SOP 04-02 resulted in a one-time, non-cash, cumulative effect of change in accounting principle charge of $4.5 million to Bluegreen for the year ended December 31, 2006, and accordingly reduced the earnings in Bluegreen recorded by the Company by approximately $1.4 million for the same period.

     The Company evaluated the investment in Bluegreen at December 31, 2007 and noted that the current $116.0 million book value of the investment was greater than the market value of $68.4 million (based upon a December 31, 2007 closing price of $7.19). The Company performed an impairment review in accordance with EITF 03-1, APB No. 18 and SAB 59 to analyze various quantitative and qualitative factors and determine if an impairment adjustment was needed. Based on the evaluation and the review of various qualitative and quantitative factors relating to the performance of Bluegreen, the current value of the stock price, and management’s intention with regards to this investment, the Company determined that the impairment associated with the investment in Bluegreen was not an other than temporary decline and accordingly, no adjustment to the carrying value was recorded at December 31, 2007.

     Bluegreen’s condensed consolidated financial statements are presented below (in thousands):

Condensed Consolidated Balance Sheet
(In thousands)

	December 31,
	2007		2006
Total assets	$	1,039,578		854,212
Total liabilities		632,047		486,487
Minority interest		22,423		14,702
Total shareholders’ equity		385,108		353,023
Total liabilities and shareholders’ equity	$	1,039,578		854,212

Condensed Consolidated Statements of Income
(In thousands)

	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2007			2006			2005
Revenues and other income	$	691,494			673,373			684,156
Cost and other expenses		632,279			610,882			603,624
Income before minority interest and provision for income taxes		59,215			62,491			80,532
Minority interest		7,721			7,319			4,839
Income before provision for income taxes		51,494			55,172			75,693
Provision for income taxes		(19,568	)		(20,861	)		(29,142	)
Income before cumulative effect of change in accounting principle		31,926			34,311			46,551
Cumulative effect of change in accounting principle, net of tax		—			(5,678	)		—
Minority interest in cumulative effect of change in accounting principle		—			1,184			—
Net income	$	31,926			29,817			46,551

     Bluegreen issued a press release on February 14, 2008 announcing its intention to pursue a rights offering to its shareholders of up to $100 million of its common stock. The Company owns approximately 31% of Bluegreen’s outstanding common stock and it currently intends to participate in this rights offering.

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     12. Accounts Payable, Accrued Liabilities and Other

     Accounts payable, accrued liabilities and other at December 31, 2007 and 2006 are summarized as follows (in thousands):

	December 31,
	2007		2006
Trade and retention payables	$	3,015		34,758
Accrued compensation		2,017		7,399
Accrued construction obligations		8,354		21,299
Deferred revenue		16,799		12,255
Accrued litigation reserve		—		320
Restructuring related accruals		6,211		—
Other liabilities		4,681		8,292
	$	41,077		84,323

     The following table summarizes the restructuring related accruals activity recorded for the year ended December 31, 2007 (in thousands):

	Severance					Independent			Surety
	related and					Contractor			Bond
	Benefits			Facilities		agreements			Accrual		Total
Balance at December 31, 2006	$	—			—		—			—		—
Restructuring charges		4,864			1,010		1,497			1,826		9,197
Cash payments		(2,910	)		—		(76	)		—		(2,986	)
Balance at December 31, 2007	$	1,954			1,010		1,421			1,826		6,211

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     In the third and fourth quarters of 2007, substantially all of Levitt and Sons’ employees were terminated and 22 employees were terminated at Levitt Corporation primarily as a result of the Chapter 11 Cases. On November 9, 2007, Levitt Corporation implemented an employee fund and indicated that it would pay up to $5 million of severance benefits to terminated Levitt and Sons employees to supplement the limited termination benefits which could not be paid by Levitt and Sons to those employees. Levitt and Sons is restricted in the amount of termination benefits it can pay to its former employees by virtue of the Chapter 11 Cases.

     The severance related and benefits accrual includes severance, severance related payments made to Levitt and Sons employees, payroll taxes and other benefits related to the terminations that occurred in 2007 as part of the Chapter 11 Cases. For the year ended December 31, 2007, the Company paid approximately $600,000 in severance and termination charges related to the above fund which is reflected in the Other Operations segment and paid $2.3 million in severance to the employees of the Homebuilding Division prior to deconsolidation. Employees entitled to participate in the fund either received a payment stream, which in certain cases extended over two years, or a lump sum payment, dependent on a variety of factors. For any amounts paid related to the fund from the Other Operations segment, these payments were in exchange for an assignment to the Company by those employees of their unsecured claims against Levitt and Sons. At December 31, 2007 there was $2.0 million accrued to be paid related to this fund as well as severance for employees other than Levitt and Sons employees. In addition to these amounts, we expect additional severance related obligations of $1.7 million in 2008 as employees assign their unsecured claims to the Company.

     The facilities accrual as of December 31, 2007 represents expense associated with property and equipment leases that the Company had entered into that are no longer providing a benefit to the Company, as well as termination fees related to contractual obligations the Company cancelled. Included in this amount are future minimum lease payments, fees and expenses, net of estimated sublease income for which the provisions of SFAS 146, as applicable, were satisfied. This restructuring expense is included in selling general and administrative expenses for the Other Operations segment for the year ended December 31, 2007.

     The independent contractor related expense relates to two contractor agreements entered into with former Levitt and Sons employees. The agreements are for past and future consulting services. The total commitment related to these agreements is $1.6 million as of December 31, 2007 and will be paid monthly through 2009. The expense associated with these arrangements is included in selling general and administrative expenses for the Other Operations segment for the year ended December 31, 2007.

     Levitt and Sons had $33.3 million in surety bonds related to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Levitt Corporation could be responsible for up to $12.0 million plus costs and expenses in accordance with the surety indemnity agreement for these instruments. As of December 31, 2007, the Company has recorded $1.8 million in surety bonds accrual at Levitt Corporation related to certain bonds for which management considers it probable that the Company will be required to reimburse the surety under the indemnity agreement. It is unclear given the uncertainty involved in the Chapter 11 Cases whether and to what extent the outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Levitt Corporation may be responsible for additional amounts beyond this accrual. It is unlikely that Levitt Corporation would have the ability to receive any repayment, assets or other consideration as recovery of any amounts it is required to pay. The expense associated with this accrual is included in other expense in the Other Operations segment for the year ended December 31, 2007, due to its non-recurring and unusual nature.

     While there may have been immaterial amounts of severance related charges in the years ended 2005 and 2006, there were not comparable restructuring related costs.

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     13. Notes and Mortgage Notes Payable

     Notes and mortgages payable at December 31, 2007 and 2006 are summarized as follows (in thousands):

	December 31,
	2007		2006		Interest Rate	Maturity Date
Primary Homebuilding Borrowings (a)
Mortgage notes payable (b)	$	—	$	48,633	From Prime — 0.50%	Range from July
					to Prime + 0.50%	2007 to September 2009
South Carolina borrowing base facility (c)		39,674		—	Prime	March 2011
Other borrowing base facilities (d)		—		316,000	From LIBOR + 2.00% to LIBOR + 2.40%	Range from August 2009 to January 2010
Line of credit (e)		—		14,000	Prime	September 2007
		39,674		378,633
Tennessee Homebuilding Borrowings (a)
Mortgage notes payable (b)		—		6,674	From Prime — 0.25% to Prime + 0.50%	Range from March 2007 to March 2008
Other borrowing base facilities (d)		—		32,600	From LIBOR + 2.00% to LIBOR + 2.40%	December 2009
		—		39,274
Land Borrowings
Land acquisition mortgage notes payable (f)		97,594		66,932	From Fixed 6.88% to LIBOR + 2.80%	Range from June 2011 to October 2019
Construction mortgage notes payable (f) (g)		39,330		1,546	From LIBOR + 2.00% to Prime	Range from February 2009 to November 2009
Other borrowings		133		164	Fixed 7.48%	August 2011
		137,057		68,642
Other Operations Borrowings
Land acquisition and construction mortgage notes payable		—		1,641	LIBOR + 2.75%	September 2007
Mortgage notes payable (h)		12,027		12,197	Fixed 5.47%	April 2015
Subordinated investment notes		746		2,489	Fixed from 7.25% to 9.15%	Range from January 2008 to August 2011
Promissory note payable		264		437	Fixed 2.44%	July 2009
Levitt Capital Trust I		23,196		23,196	From fixed 8.11% to	March 2035
Unsecured junior subordinated debentures (i)					LIBOR + 3.85%
Levitt Capital Trust II Unsecured junior subordinated debentures (j)		30,928		30,928	From fixed 8.09% to LIBOR + 3.80%	July 2035
Levitt Capital Trust III Unsecured junior subordinated debentures (k)		15,464		15,464	From fixed 9.25% to LIBOR + 3.80%	June 2036
Levitt Capital Trust IV Unsecured junior subordinated debentures (l)		15,464		15,464	From fixed 9.35% to LIBOR + 3.80%	September 2036
		98,089		101,816
Total Notes and Mortgage Notes Payable (m)	$	274,820	$	588,365

(a) Levitt Corporation deconsolidated Levitt and Sons from its consolidated financial statements as of November 9, 2007. Thus, notes and mortgage notes payable related to the Primary Homebuilding and Tennessee Homebuilding segments as of December 31, 2007 are not included in this table, see Note 26 for more information regarding Levitt and Sons’ financial statements with the exception of outstanding debt related to Carolina Oak. The South Carolina borrowing base facility represents the Carolina Oak Loan and is included in the Primary Homebuilding segment because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed in 2006 and 2007.

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(b)	Levitt and Sons entered into various loan agreements to provide financing for the acquisition, site improvements and construction of residential units. As of December 31, 2006, these loan agreements provided for advances on a revolving loan basis up to a maximum outstanding balance of $79.2 million. The loans were collateralized by inventory of real estate with net carrying values aggregating $100.4 million at December 31, 2006.
(c)	On March 21, 2007, Levitt and Sons entered into a $100.0 million revolving working capital, land acquisition, development and residential construction borrowing base facility agreement and borrowed $30.2 million under the facility. The proceeds were used to finance the inter-company purchase of a 150 acre parcel in Tradition Hilton Head from Core Communities and to refinance a $15.0 million line of credit. On October 25, 2007, in connection with Levitt Corporation’s acquisition from Levitt and Sons of the membership interests in Carolina Oak (see Item 1. Business — Recent Developments — Acquisition of Carolina Oak Homes), Levitt Corporation became the obligor for the entire Carolina Oak Loan outstanding balance of $34.1 million. The Carolina Oak Loan was modified in connection with the acquisition. Levitt Corporation was previously a guarantor of this loan and as partial consideration for the Carolina Oak Loan, the membership interest of Levitt and Sons, previously pledged by Levitt Corporation to the lender, was released. The outstanding balance under the Carolina Oak Loan may be increased by approximately $11.2 million to fund certain infrastructure improvements and to complete the construction of fourteen residential units currently under construction. The Carolina Oak Loan is collateralized by a first mortgage on the 150 acre parcel in Tradition Hilton Head and guaranteed by Carolina Oak. The Carolina Oak Loan is due and payable on March 21, 2011 and may be extended on the anniversary date of the facility at the Prime Rate (7.25% at December 31, 2007) and interest is payable monthly. The Carolina Oak Loan is subject to customary terms, conditions and covenants, including the lender’s right to accelerate the debt upon a material adverse change with respect to the borrower. At December 31, 2007, there was no immediate availability to draw on this facility based on available collateral.
(d)	During 2006, Levitt and Sons entered into a revolving credit facility and amended certain of its existing credit facilities, increasing the amount available for borrowings under these facilities to $450.0 million and amending certain of the initial credit agreement’s definitions. Advances under these facilities bore interest, at Levitt and Sons’ option at either (i) the lender’s Prime Rate less 50 basis points or (ii) 30-day LIBOR plus a spread of between 200 and 240 basis points, depending on the facility. As of December 31, 2006, these facilities provided for advances on a revolving loan basis up to a maximum outstanding balance of $357.7 million. The loans were collateralized by mortgages on respective properties including improvements. The facilities were collateralized by inventory of real estate with net carrying values aggregating $483.6 million at December 31, 2006.
(e)	As of December 31, 2006, Levitt and Sons had a credit agreement with a financial institution to provide a $15.0 million line of credit. At December 31, 2006, Levitt and Sons had available credit of $1.0 million and had $14.0 million outstanding. The credit facility was refinanced in connection with the $100.0 million revolving working capital, land acquisition, development and residential construction borrowing base facility agreement that Levitt and Sons entered into on March 21, 2007. The guarantee was collateralized by Levitt Corporation’s pledge of its membership interest in Levitt and Sons, LLC.
(f)	Core Communities’ notes and mortgage notes payable are collateralized by inventory of real estate and property and equipment with net carrying values aggregating $172.1 million and $150.6 million as of December 31, 2007 and 2006, respectively. In September 2006, Core entered into credit agreements with a financial institution to provide an additional $40.0 million in financing on an existing credit facility increasing the total maximum outstanding balance to $88.9 million. This facility matures in June 2011. As of December 31, 2007, $77.2 million was outstanding, with $11.0 million under the line currently available for borrowing based on available collateral. In September 2007, Core entered into credit agreements with a financial institution to provide an additional $8.0 million in financing on an existing credit facility increasing the total maximum outstanding balance to $33.0 million. This facility matures in October 2019. As of December 31, 2007, $15.4 million is outstanding with $8.0 million under the line currently available for borrowing based on available collateral. These notes accrue interest at varying rates tied to various indices as noted above and interest is payable monthly. For certain notes, principal payments are required monthly or quarterly as the note dictates.

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(g)	On February 28, 2007, Core Communities of South Carolina, LLC, a wholly owned subsidiary of Core Communities entered into a $50.0 million revolving credit facility for construction financing for the development of the Tradition Hilton Head master-planned community. The facility is due and payable on February 28, 2009 and is subject to a one year extension upon compliance with the conditions set forth in the agreement. The loan is collateralized by 1,829 gross acres of land and the related improvements, easements as well as assignments of rents and leases. A payment guarantee for the loan amount was provided by Core Communities. The loan accrues interest at the bank’s Prime Rate and interest is payable monthly. The loan documents include customary conditions to funding, collateral release and acceleration provisions and financial, affirmative and negative covenants.
(h)	Levitt Corporation entered into a mortgage note payable agreement with a financial institution in March 2005 to repay the bridge loan used to temporarily fund the Company’s purchase of its Corporate headquarters in Fort Lauderdale. This note payable is collateralized by the office building. The note payable contains a balloon payment provision of approximately $10.4 million at the maturity date in April 2015. Principal and interest are payable monthly.
(i)	In March 2005, Levitt Capital Trust I issued $22.5 million of trust preferred securities to third parties and $696,000 of trust common securities to the Company and used the proceeds to purchase an identical amount of junior subordinated debentures from the Company. Interest on these junior subordinated debentures and distributions on these trust preferred securities are payable quarterly in arrears at a fixed rate of 8.11% through March 30, 2010 and thereafter at a floating rate of 3.85% over 3-month LIBOR until the scheduled maturity date of March 30, 2035. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at our option at any time after five years from the issue date or sooner following certain specified events.
(j)	In May 2005, Levitt Capital Trust II issued $30.0 million of trust preferred securities to third parties and $928,000 of trust common securities to the Company and used the proceeds to purchase an identical amount of junior subordinated debentures from the Company. Interest on these junior subordinated debentures and distributions on these trust preferred securities are payable quarterly in arrears at a fixed rate of 8.09% through June 30, 2010 and thereafter at a floating rate of 3.80% over 3-month LIBOR until the scheduled maturity date of June 30, 2035. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at our option at any time after five years from the issue date or sooner following certain specified events.
(k)	In June 2006, Levitt Capital Trust III issued $15.0 million of trust preferred securities to third parties and $464,000 of trust common securities to the Company and used the proceeds to purchase an identical amount of junior subordinated debentures from the Company. Interest on these junior subordinated debentures and distributions on these trust preferred securities are payable quarterly in arrears at a fixed rate of 9.25% through June 30, 2011 and thereafter at a floating rate of 3.80% over 3-month LIBOR until the scheduled maturity date of June 30, 2036. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at our option at any time after five years from the issue date or sooner following certain specified events.
(l)	In July 2006, Levitt Capital Trust IV issued $15.0 million of trust preferred securities to third parties and $464,000 of trust common securities to the Company and used the proceeds to purchase an identical amount of junior subordinated debentures from the Company. Interest on these junior subordinated debentures and distributions on these trust preferred securities are payable quarterly in arrears at a fixed rate of 9.35% through September 30, 2011 and thereafter at a floating rate of 3.80% over 3-month LIBOR until the scheduled maturity date of September 30, 2036. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at our option at any time after five years from the issue date or sooner following certain specified events.
(m)	At December 31, 2007, 2006 and 2005 the Prime Rate as reported by the Wall Street Journal was 7.25%, 8.25% and 7.25%, respectively, and the three-month LIBOR Rate was 4.98%, 5.36% and 4.53%, respectively.

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     Some of the Company’s subsidiaries have borrowings which contain covenants that, among other things, require the subsidiary to maintain financial ratios and a minimum net worth. These requirements may limit the amount of debt that the subsidiaries can incur in the future and restrict the payment of dividends from subsidiaries to the Company. At December 31, 2007, the Company was in compliance with all loan agreement financial requirements and covenants.

     At December 31, 2007, the aggregate required scheduled principal payment of indebtedness in each of the next five years is approximately as follows (in thousands):

Year Ended December 31,
2008	$	3,242
2009		42,319
2010		3,623
2011		115,574
2012		2,619
Thereafter		107,443
	$	274,820

     The timing of contractual payments for debt obligations assumes the exercise of all loan extensions available at the borrower’s sole discretion.

     In addition to the above scheduled payments, Core is subject to provisions in its borrowing agreement that require additional principal, known as curtailment payments, in the event that sales are below those agreed to at the inception of the borrowing. In the event that agreed upon sales targets are not met in Tradition Hilton Head, total curtailment payments during 2008 could amount to $34.2 million. In January 2008, a $14.9 million curtailment payment was paid and an additional $19.3 million would be due in June 2008, if actual sales continue to be below the contractual requirements of the development loan.

     In March 2008, Core agreed to the termination of a $20 million line of credit after the lender expressed its concern that Levitt and Sons’ bankruptcy may have resulted in a technical default by virtue of language in the facility regarding “affiliates”. At December 31, 2007, no amounts were outstanding under the $20 million facility other than a $122,000 outstanding letter of credit which was secured by a cash deposit in March 2008. There have been no amounts drawn subsequent to December 31, 2007. The lender has agreed to honor two construction loans to a subsidiary of Core totaling $11.7 million provided that the borrowings are paid in full at maturity and has waived any technical defaults under the loans arising from Levitt and Sons’ bankruptcy through the maturity dates of the loans.

     14. Development Bonds Payable

     In connection with the development of certain projects, community development, special assessment or improvement districts have been established and may utilize tax-exempt bond financing to fund construction or acquisition of certain on-site and off-site infrastructure improvements near or at these communities. The obligation to pay principal and interest on the bonds issued by the districts is assigned to each parcel within the district, and a priority assessment lien may be placed on benefited parcels to provide security for the debt service. The bonds, including interest and redemption premiums, if any, and the associated priority lien on the property are typically payable, secured and satisfied by revenues, fees, or assessments levied on the property benefited. The Company pays a portion of the revenues, fees, and assessments levied by the districts on the properties the Company still owns that are benefited by the improvements. The Company may also agree to pay down a specified portion of the bonds at the time of each unit or parcel closing. These costs are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.

     The bond financing at December 31, 2007 and 2006 consisted of district bonds totaling $212.7 million and $62.8 million, respectively, with outstanding amounts of approximately $82.9 million and $50.4 million at December 31, 2007 and 2006, respectively. Further, at December 31, 2007 and 2006, there was approximately $129.5 million and $7.0 million, respectively, available under these bonds to fund future development expenditures. Bond obligations at December 31, 2007 mature in 2035 and 2040. As of December 31, 2007, the Company owned approximately 11% of the property within the community development district and approximately 91% of the property within the special assessment district. During the year ended December 31, 2007, the Company recorded approximately $1.3 million in assessments on property owned by the Company in the districts. The Company is responsible for any assessed amounts until the underlying property is sold and will continue to be responsible for the annual assessments if the property is never sold. In addition, Core Communities has guaranteed payments for assessments under the district bonds in Tradition, Florida which would require funding if future assessments to be allocated to property owners are insufficient to repay the bonds. Management has evaluated this exposure based upon the criteria in Statement of Financial Accounting Standards No. 5 “Accounting for Contingencies”, and has determined that there have been no substantive changes to the projected density or land use in the development subject to the bond which would make it probable that Core would have to fund future shortfalls in assessments.

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     In accordance with Emerging Issues Task Force Issue 91-10, “Accounting for Special Assessments and Tax Increment Financing” (“EITF 91-10”), the Company records a liability for the estimated developer obligations that are fixed and determinable and user fees that are required to be paid or transferred at the time the parcel or unit is sold to an end user. At December 31, 2006, we recorded no liability associated with outstanding CDD bonds as the assessments were not both fixed and determinable. At December 31, 2007, a liability of $3.3 million was recognized because the special assessments related to the commercial leasing assets held for sale were fixed and determinable as the final assessment was made during the fourth quarter of 2007. This liability is included in the liabilities related to assets held for sale in the accompanying consolidated statement of financial condition as of December 31, 2007, and includes amounts associated with Core’s ownership of the property.

     15. Employee Benefit Plan

401(k) Plan

     The Company has a defined contribution plan established pursuant to Section 401(k) of the Internal Revenue Code. Employees who have completed three months of service and have reached the age of 18 are eligible to participate. During the years ended December 31, 2007, 2006, and 2005, the Company’s employees participated in the Levitt Corporation Security Plus Plan and the Company’s contributions amounted to $1.1 million, $1.3 million, and $1.1 million, respectively. These amounts are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

     16. Certain Relationships and Related Party Transactions

     The Company and Bancorp are under common control. The controlling shareholder of the Company and Bancorp is BFC. The majority of BFC’s capital stock is owned or controlled by the Company’s Chairman of the Board and Chief Executive Officer, Alan B. Levan, and by the Company’s Vice Chairman, John E. Abdo, both of whom are also directors of the Company, and executive officers and directors of BFC, Bancorp and BankAtlantic. Mr. Levan and Mr. Abdo are the Chairman and Vice Chairman, respectively, of Bluegreen Corporation.

     The Company occupied office space at BankAtlantic’s corporate headquarters through November 2006. In 2005, Bancorp provided this office space on a month-to-month basis and received reimbursements for overhead based on market rates. In 2006, rent was paid to BFC on the same basis for the first ten months of the year. Pursuant to the terms of a shared services agreement between the Company and BFC, certain administrative services, including human resources, risk management, and investor relations, are provided to the Company by BFC on a percentage of cost basis. The total amounts paid for these services in 2007, 2006 and 2005 were $1.1 million, $912,000, and $127,000, respectively, and may not be representative of the amounts that would be paid in an arms-length transaction. Separately, the Company paid certain fees to Bancorp and to Bluegreen for services provided to the Company.

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     The following table sets forth fees paid to the indicated related parties (in thousands)

	Year Ended December 31,
	2007		2006		2005
BFC	$	1,057		912		127
Bancorp		101		185		734
Bluegreen Corporation		—		—		81
Total fees	$	1,158		1,097		942

     The amounts paid represent rent, amounts owed for services performed or expense reimbursements.

     Levitt and Sons utilized the services of Conrad & Scherer, P.A., a law firm in which William R. Scherer, a member of the Company’s Board of Directors, is a member. Levitt and Sons paid fees aggregating $22,000, $470,000 and $914,000 to this firm during the years ended December 31, 2007, 2006 and 2005, respectively.

     Certain of the Company’s executive officers separately receive compensation from affiliates of the Company for services rendered to those affiliates. Members of the Company’s Board of Directors and executive officers also have banking relationships with BankAtlantic in the ordinary course of BankAtlantic’s business.

     At December 31, 2007 and 2006, $6.1 million and $4.6 million, respectively, of cash and cash equivalents were held on deposit by BankAtlantic, and included in the 2006 amount was $255,000 of restricted cash, while no restricted cash was held on deposit by BankAtlantic at December 31, 2007. Interest on deposits held at BankAtlantic for each of the years ended December 31, 2007, 2006 and 2005 was approximately $147,000, $436,000 and $316,000, respectively.

     During the year ended December 31, 2005, actions were taken by the Company with respect to the development of certain property owned by BankAtlantic. The Company’s efforts included the successful rezoning of the property and obtaining the permits necessary to develop the property for residential and commercial use. BankAtlantic reimbursed the Company during 2006 $438,000 for the out-of-pocket costs incurred by it in connection with these efforts.

     On October 1, 2007, the Company completed a Rights Offering to holders of common stock providing each holder the right to purchase 5.0414 shares of Class A common stock at $2.00 per share for each share of common stock held of record on August 27, 2007 (as described in Note 5). BFC participated in this rights offering on the same terms as made available to all other shareholders. BFC was issued an aggregate of 16,602,712 basic subscription rights of which 10,457,130 and 6,145,582 are attributable to BFC’s holdings in the Company’s Class A and Class B Stock, respectively.

     By letter dated September 27, 2007 (“Letter Agreement”), BFC agreed, subject to certain limited exceptions, not to vote the 6,145,582 shares of Levitt’s Class A common stock that BFC acquired upon exercise of its subscription rights in the rights offering associated with BFC’s holdings in Levitt’s Class B common stock. The Letter Agreement provides that any future sale of shares of Levitt’s Class A common stock by BFC will reduce, on a share for share basis, the number of shares of Levitt’s Class A common stock that BFC has agreed not to vote. BFC’s acquisition of the 16,602,712 shares of Levitt’s Class A common stock upon its exercise of its subscription rights increased BFC’s economic ownership interest in Levitt to 20.7% from 16.6% and increased BFC’s voting interest in Levitt excluding the 6,145,582 shares subject to the Letter Agreement, to 54.0% from 52.9%.

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     17. Commitments and Contingencies

     The Company’s rent expense for premises and equipment for the years ended December 31, 2007, 2006 and 2005 was $2.6 million, $2.7 million and $1.6 million, respectively. Approximate minimum future rentals due under non-cancelable leases with a term remaining of at least one year are as follows (in thousands):

Year ended December 31,
2008	$	1,276
2009		993
2010		606
2011		343
2012		214
Thereafter		1,282
	$	4,714

     Of the above lease payments, $1.0 million were accrued at December 31, 2007 due to management’s decision to vacate the leased space. See Note 12 for further discussion.

     Tradition Development Company, LLC, a wholly-owned subsidiary of Core Communities (“TDC”), entered into an advertising agreement with the operator of a Major League Baseball team pursuant to which, among other advertising rights, TDC obtained a royalty-free license to use, among others, the trademark “Tradition Field” at the sports complex located in Port St. Lucie and the naming rights to that complex. Unless otherwise renewed, the agreement terminates on December 31, 2013; provided, however, upon payment of a specified buy-out fee and compliance with other contractual procedures, TDC has the right to terminate the agreement on or after December 31, 2008. Required cumulative payments under the agreement through December 31, 2013 are approximately $1.1 million.

     At December 31, 2007, Core Communities had outstanding surety bonds and letters of credit of approximately $2.8 million related primarily to its obligations to various governmental entities to construct improvements in various of its communities. The Company estimates that approximately $2.7 million of work remains to complete these improvements. The Company does not believe that any outstanding bonds or letters of credit will likely be drawn upon.

     Levitt and Sons had $33.3 million in surety bonds related to its ongoing projects at the time of the filing of the Chapter 11 Cases. In the event that these obligations are drawn and paid by the surety, Levitt Corporation could be responsible for up to $12.0 million plus costs and expenses in accordance with the surety indemnity agreement for these instruments. As of December 31, 2007, the Company has recorded $1.8 million in surety bonds accrual at Levitt Corporation related to certain bonds where management considers it probable that the Company will be required to reimburse the surety under the indemnity agreement. See Note 12 for further discussion.

     The Company entered into an indemnity agreement in April 2004 with a joint venture partner at Altman Longleaf relating to, among other obligations, that partner’s guarantee of the joint venture’s indebtedness. The liability under the indemnity agreement is limited to the amount of any distributions from the joint venture which exceeds our original capital and other contributions. Original capital contributions were approximately $585,000 and the Company has received approximately $1.2 million in distributions since 2004. Accordingly, the potential obligation of indemnity at December 31, 2007 is approximately $664,000.

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     18. Income Taxes

     The benefit (provision) for income tax expense consists of the following (in thousands):

	Year Ended December 31,
	2007			2006			2005
Continuing operations	$	23,277			5,758			(32,532	)
Discontinued operations		(1,108	)		12			96
Total benefit (provision) for income taxes	$	22,169			5,770			(32,436	)
Continuing operations:
Current tax benefit (provision):
Federal	$	30,251			(7,360	)		(24,792	)
State		19			(1,145	)		(3,538	)
		30,270			(8,505	)		(28,330	)
Deferred income tax (provision) benefit:
Federal		(6,032	)		13,060			(3,651	)
State		(961	)		1,203			(551	)
		(6,993	)		14,263			(4,202	)
Total income tax benefit (provision)	$	23,277			5,758			(32,532	)

     The Company’s benefit (provision) for income taxes differs from the federal statutory tax rate of 35% due to the following (in thousands):

	Year Ended December 31,
	2007			2006			2005
Income tax benefit (provision) at expected federal income tax rate of 35%	$	90,881			5,215			(30,661	)
Benefit (provision) for state taxes, net of federal benefit		9,483			936			(2,696	)
Tax-exempt income		425			489			492
Goodwill impairment adjustment		—			(458	)		—
Share-based compensation		(134	)		(317	)		—
Increase in valuation allowance		(76,730	)		(425	)		—
Other, net		(648	)		318			333
Benefit (provision) for income taxes	$	23,277			5,758			(32,532	)

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     The tax effects of temporary differences that give rise to significant portions of the deferred tax assets consist of the following (in thousands):

	As of December 31,
	2007			2006
Deferred tax assets:
Real estate held for sale capitalized for tax purposes in excess of amounts capitalized for financial statement purposes	$	2,016			6,205
Real estate valuation adjustments		—			12,889
Investment in Levitt and Sons		68,339			—
Share based compensation		1,427			849
Accrued and other non-deductible expenses		2,237			848
Purchase accounting adjustments from real estate acquisitions		—			274
Federal net operating loss carryforward		14,191			—
State net operating loss carryforward		5,122			398
Income recognized for tax purposes and deferred for financial statement purposes		7,228			6,949
Other		2,049			—
Gross deferred tax assets		102,609			28,412
Valuation allowance		(78,562	)		(425	)
Total deferred tax assets		24,047			27,987
Deferred tax liabilities:
Investment in Bluegreen		21,768			19,501
Property and equipment		496			985
Other		1,783			866
Total deferred tax liabilities		24,047			21,352
Net deferred tax asset		—			6,635
Less the deferred income tax (assets) liabilities at beginning of period		(6,635	)		7,028
Implementation of FIN 48		(1,798	)		—
Deferred income taxes on Bluegreen’s unrealized gains, losses and issuance of common stock		894			600
(Provision) benefit for deferred income taxes		(7,539	)		14,263
Provision for deferred income taxes — discontinued operations		(546	)		—
(Provision) benefit for deferred income taxes — continuing operations	$	(6,993	)		14,263

     The net deferred tax asset of $6.6 million as of December 31, 2006 is presented in Other Assets on the consolidated statements of financial condition. There was no net deferred tax asset as of December 31, 2007.

     Activity in the deferred tax valuation allowance was (in thousands):

	As of December 31,
	2007		2006
Balance, beginning of period	$	425		—
Increase in deferred tax valuation allowance		76,730		425
Increase in deferred tax valuation allowance — paid in capital		1,407		—
Balance, end of period	$	78,562		425

     SFAS No. 109, “Accounting for Income Taxes”, requires that all available evidence, both positive and negative, be considered to determine whether, based on the weight of that evidence, a valuation allowance is needed. Future realization of the tax benefits of an existing deductible temporary difference or carryforward ultimately depends on the existence of sufficient taxable income of the appropriate character. Possible sources of taxable income that can be considered include: (i) future reversals of existing taxable temporary differences; (ii) future taxable income exclusive of reversing temporary differences and carryforwards; (iii) taxable income in prior carryback years; and (iv) tax planning strategies.

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     The Company has performed such an analysis, and a valuation allowance has been provided against deferred tax assets to the extent they cannot be used to offset future income arising from the expected reversal of taxable differences. The Company has therefore established a valuation allowance for the entire deferred tax assets, net of the deferred tax liabilities. A valuation allowance of $78.6 million and $425,000 as of December 31, 2007 and December 31, 2006, respectively, has been provided due to the significance of the Company’s losses, including losses generated by Levitt and Sons, and significant uncertainties of its ability to realize these assets. The Company will be required to update its estimates of future taxable income based upon additional information management obtains and will continue to evaluate the realizability of the net deferred tax asset on a quarterly basis.

     Federal and state net operating loss carryforwards amount to approximately $40.5 million and $88.9 million, respectively, and expire in the year 2027.

     The Company is subject to U.S. federal income tax as well as to income tax in multiple state jurisdictions. The Company is no longer subject to U.S. federal or state and local income tax examinations by tax authorities for tax years before 2004. The Internal Revenue Service (IRS) commenced an examination of the Company’s U.S. income tax return for 2004 in the fourth quarter of 2006 and completed its examination in the first quarter of 2008. The conclusion of the examination resulted in a small refund expected to be received in the second quarter of 2008 and will have an immaterial effect on the Company’s results of operations or financial condition.

     As a result of the implementation of FIN 48, the Company recognized a decrease of approximately $260,000 in the liability for unrecognized tax benefits, which was accounted for as a reduction to the January 1, 2007 balance of retained earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):

Balance at January 1, 2007	$	2,000
Additions based on tax positions related to the current year		1,128
Additions for tax positions of prior years		—
Reductions for tax positions of prior years		(763	)
Settlements		—
Lapse of Statute of Limitations		—
Balance at December 31, 2007	$	2,365

     At December 31, 2007, the Company had gross tax affected unrecognized tax benefits of $2.4 million of which $248,000, if recognized, would affect the effective tax rate.

     At December 31, 2007 the Company had a federal income tax receivable of $27.4 million as a result of losses incurred, which is anticipated to be collected upon filing the 2007 consolidated U.S. federal income tax return. The Creditors Committee in the Chapter 11 Cases has advised the Company that they believe that the creditors are entitled to share in an unstated amount of the refund.

     The Company recognizes interest and penalties accrued related to unrecognized tax benefits in tax expense. During the years ended December 31, 2007 and 2006, the Company recognized approximately $168,000, and $168,000 in interest and penalties, respectively. The Company did not recognize any interest and penalties for the year ended December 31, 2005. The Company had approximately $336,000 and $168,000 for the payment of interest and penalties accrued at December 31, 2007 and 2006, respectively.

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     19. Other Revenues

     The following table summarizes other revenues detail information (in thousands):

	For the year ended December 31,
	2007		2006		2005
Other revenues
Mortgage & title operations	$	2,243		4,070		3,750
Lease/rental income		1,111		1,501		1,963
Marketing fees		1,610		1,243		674
Irrigation revenue		802		674		198
	$	5,766		7,488		6,585

     20. Other Expenses and Interest and Other Income, net of Interest Expense

     Other expenses and interest and other income, net of interest expense are summarized as follows (in thousands):

	For the Year Ended
	December 31,
	2007			2006		2005
Other expenses
Title and mortgage operations expense	$	1,539			2,362		2,776
Loss on disposal of fixed assets		564			—		—
Litigation settlement reserve		—			—		830
Penalty on early debt repayment		—			—		677
Hurricane expense, net of projected recoveries		—			8		572
Goodwill impairment		—			1,307		—
Surety bond indemnification		1,826			—		—
Total other expenses	$	3,929			3,677		4,855
Interest and other income, net of interest expense
Interest income	$	4,046			2,882		2,520
Interest expense		(3,807	)		—		—
Contingent gain receipt		—			—		500
Partial reversal of construction obligation		—			—		6,765
Gain on sale of fixed assets		30			1,329		—
Forfeited buyer deposits		6,196			2,700		77
Other income		974			905		427
Interest and other income, net of interest expense	$	7,439			7,816		10,289

     Included in other expense in the year ended December 31, 2007 is $1.8 million associated with Levitt Corporation’s potential surety bond obligation that the Company believes is probable that the Company will be required to reimburse the surety under the indemnity agreement. See Note 12 for further discussion.

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     21. Estimated Fair Values of Financial Instruments

     Estimated fair values of financial instruments are determined using available market information and appropriate valuation methodologies. However, judgments are involved in interpreting market data to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of amounts the Company could realize in a current market exchange.

     The following methods and assumptions were used to estimate fair value:

• Carrying amounts of cash and cash equivalents, accounts payable and accrued liabilities approximate fair value due to their short-term nature.

• Carrying amounts of notes receivable approximate fair values as they are tied to the Prime Rate.

• Carrying amounts of notes and mortgage notes payable that provide for variable interest rates approximate fair value after an adjustment to bring previous borrowing spreads in line with current available spreads, as the terms of the credit facilities require periodic market adjustment of interest rates. The fair value of the Company’s fixed rate indebtedness, including development bonds payable, was estimated using discounted cash flow analyses, based on the Company’s current borrowing rates for similar types of borrowing arrangements.

	December 31, 2007				December 31, 2006
	Carrying		Fair		Carrying		Fair
(In thousands)	Amount		Value		Amount		Value
Financial assets:
Cash and cash equivalents	$	195,181		195,181		48,391		48,391
Notes receivable		3,985		3,985		6,888		6,888
Financial liabilities:
AP and accrued liabilities	$	41,077		41,077		84,323		84,323
Notes payable associated with assets held for sale		78,970		77,620		27,338		27,338
Notes and mortgage notes payable		274,820		258,763		588,365		588,911

     22. Litigation

     On November 9, 2007, the Debtors filed voluntary petitions for relief under the Chapter 11 Cases in the Bankruptcy Court. The Debtors commenced the Chapter 11 Cases in order to preserve the value of their assets and to facilitate an orderly wind-down of their businesses and disposition of their assets in a manner intended to maximize the recoveries of all constituents.

     On November 27, 2007, the Office of United States Trustee (the “U.S. Trustee), appointed an official committee of unsecured creditors in the Chapter 11 Cases (the “Creditors’ Committee”). On January 22, 2008, the U.S. Trustee appointed a Joint Home Purchase Deposit Creditors Committee of Creditors Holding Unsecured Claims (the “Deposit Holders Committee”, and together with the Creditors Committee, the “Committees”). The Committees have a right to appear and be heard in the Chapter 11 Cases.

     On November 27, 2007, the Bankruptcy Court granted the Debtors’ Motion for Authority to Incur Chapter 11 Administrative Expense Claim (“Chapter 11 Admin. Expense Motion”) thereby authorizing the Debtors to incur a post petition administrative expense claim in favor of the Company for Post Petition Services. While the Bankruptcy Court approved the incurrence of the amounts as unsecured post petition administrative expense claims, the cash payments of such claims is subject to additional court approval. In addition to the unsecured administrative expense claims, the Company has pre-petition secured and unsecured claims against the Debtors. The Debtors have scheduled the amounts due to the Company in the Chapter 11 Cases. The unsecured pre-petition claims of the Company scheduled by Levitt and Sons are approximately $67.3 million and the secured pre-petition claim scheduled by Levitt and Sons is approximately $460,000. The Company has also filed contingent claims with respect to any liability it may

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have arising out of disputed indemnification obligations under certain surety bonds. Lastly, the Company implemented an employee severance fund in favor of certain employees of the Debtor. Employees who received funds as part of this program as of December 31, 2007, which totaled approximately $600,000 paid as of that date, have assigned their unsecured claims to the Company. There is no assurance that there will be any funds available to pay the Company these or any other amounts associated with the Company’s claims against the Debtors.

     At December 31, 2007 the Company had a federal income tax receivable of $27.4 million as a result of losses incurred, which is anticipated to be collected upon filing the 2007 consolidated U.S. federal income tax return. The Creditors Committee has advised the Company that they believe the creditors are entitled to share in an unstated amount of the refund.

     Pursuant to the Bankruptcy Code, the Debtors have for a limited period subject to extension, the exclusive right to file a plan of reorganization or liquidation (the “ Plan”).

Class Action Lawsuit

     On January 25, 2008, plaintiff Robert D. Dance filed a purported class action complaint as a putative purchaser of the Company’s securities against the Company and certain of its officers and directors, asserting claims under the federal securities law and seeking damages. This action was filed in the United States District Court for the Southern District of Florida and is captioned Dance v. Levitt Corp. et al., No. 08-CV-60111-DLG. The securities litigation purports to be brought on behalf of all purchasers of the Company’s securities beginning on January 31, 2007 and ending on August 14, 2007. The complaint alleges that the defendants violated Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated there under by issuing a series of false and/or misleading statements concerning the Company’s financial results, prospects and condition. The Company intends to vigorously defend this action.

     23. Segment Reporting

     Operating segments are components of an enterprise about which separate financial information is available that is regularly reviewed by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company had four reportable business segments during the year ended December 31, 2007: Land, Other Operations, Primary Homebuilding and Tennessee Homebuilding. The Company evaluates segment performance primarily based on pre-tax income. The information provided for segment reporting is based on management’s internal reports. The accounting policies of the segments are the same as those of the Company. Eliminations consist primarily of the elimination of sales and profits on real estate transactions between the Land and Primary Homebuilding segments, which were recorded based upon terms that management believes would be attained in an arm’s-length transaction. The presentation and allocation of assets, liabilities and results of operations may not reflect the actual economic costs of the segments as stand-alone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ, but management believes that the relative trends in segments would likely not be impacted.

     The Company’s Land Division segment consists of the operations of Core Communities and the Other Operations segment consists of the activities of Levitt Commercial, the Company’s parent company operations, earnings from investments in Bluegreen and other real estate investments and joint ventures. The Company’s Homebuilding division consists of the Primary Homebuilding segment and the Tennessee Homebuilding segment. The Primary and Tennessee Homebuilding segments were deconsolidated from our results of operations on November 9, 2007 due to the Chapter 11 Cases. The results of operations for the three year period ended December 31, 2007 include the results of operations for Levitt and Sons through November 9, 2007. The Primary Homebuilding segment includes the operations of Carolina Oak. The results of operations and financial condition of Carolina Oak as of and for the three year period ended December 31, 2007 are included in the Primary Homebuilding segment because it is engaged in homebuilding activities and because the financial metrics from this company are similar in nature to the other homebuilding projects within this segment that existed during these periods. Therefore, the assets and liabilities noted below in the Primary Homebuilding segment represent the assets and liabilities of Carolina Oak.

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     The following tables present segment information for the years ended December 31, 2007, 2006 and 2005 (in thousands):

Year Ended	Primary			Tennessee						Other
December 31, 2007	Homebuilding			Homebuilding			Land			Operations			Eliminations			Total
Revenues:
Sales of real estate	$	345,666			42,042			16,567			6,574			(734	)		410,115
Other revenues		2,243			—			2,893			952			(322	)		5,766
Total revenues		347,909			42,042			19,460			7,526			(1,056	)		415,881
Costs and expenses:
Cost of sales of real estate		501,206			51,360			7,447			16,793			(3,565	)		573,241
Selling, general and administrative expenses		61,568			5,010			17,240			32,508			(239	)		116,087
Other expenses		1,539			—			—			2,390			—			3,929
Total costs and expenses		564,313			56,370			24,687			51,691			(3,804	)		693,257
Earnings from Bluegreen Corporation		—			—			—			10,275			—			10,275
Interest and other income, net of interest expense		(325	)		(68	)		1,842			6,294			(304	)		7,439
(Loss) income from continuing operations before income taxes		(216,729	)		(14,396	)		(3,385	)		(27,596	)		2,444			(259,662	)
Benefit (provision) for income taxes		1,396			(1,700	)		(4,802	)		34,297			(5,914	)		23,277
(Loss) income from continuing operations		(215,333	)		(16,096	)		(8,187	)		6,701			(3,470	)		(236,385	)
Discontinued operations:
Income from discontinued operations, net of tax		—			—			1,765			—			—			1,765
Net (loss) income	$	(215,333	)		(16,096	)		(6,422	)		6,701			(3,470	)		(234,620	)
Inventory of real estate	$	38,457			—			189,903			6,262			(7,332	)		227,290
Total assets	$	38,749			—			342,696			336,713			(5,307	)		712,851
Total debt	$	39,674			—			137,057			98,089			—			274,820
Total liabilities	$	41,402			—			214,393			184,601			11,349			451,745
Total shareholders’ equity	$	(2,653	)		—			128,303			152,112			(16,656	)		261,106

99

Year Ended	Primary			Tennessee						Other
December 31, 2006	Homebuilding			Homebuilding			Land			Operations			Eliminations			Total
Revenues:
Sales of real estate	$	424,420			76,299			69,778			11,041			(15,452	)		566,086
Other revenues		4,070			—			2,063			1,435			(80	)		7,488
Total revenues		428,490			76,299			71,841			12,476			(15,532	)		573,574
Costs and expenses:
Cost of sales of real estate		367,252			72,807			42,662			11,649			(11,409	)		482,961
Selling, general and administrative expenses		65,052			12,806			13,305			28,174			—			119,337
Other expenses		2,362			1,307			—			8			—			3,677
Total costs and expenses		434,666			86,920			55,967			39,831			(11,409	)		605,975
Earnings from Bluegreen Corporation		—			—			—			9,684			—			9,684
Interest and other income, net of interest expense		2,982			127			2,622			4,059			(1,974	)		7,816
(Loss) income from continuing operations before income taxes		(3,194	)		(10,494	)		18,496			(13,612	)		(6,097	)		(14,901	)
Benefit (provision) for income taxes		1,508			3,241			(6,948	)		5,639			2,318			5,758
(Loss) income from continuing operations		(1,686	)		(7,253	)		11,548			(7,973	)		(3,779	)		(9,143	)
Discontinued operations:
Loss from discontinued operations, net of tax		—			—			(21	)		—			—			(21	)
Net (loss) income	$	(1,686	)		(7,253	)		11,527			(7,973	)		(3,779	)		(9,164	)
Inventory of real estate	$	608,358			56,214			176,356			13,269			(32,157	)		822,040
Total assets	$	644,447			62,065			271,169			146,116			(33,131	)		1,090,666
Total debt	$	378,633			39,274			68,642			101,816			—			588,365
Total liabilities	$	529,476			55,524			133,015			49,357			(19,945	)		747,427
Total shareholders’ equity	$	114,971			6,541			138,154			96,759			(13,186	)		343,239

Year Ended	Primary			Tennessee						Other
December 31, 2005	Homebuilding			Homebuilding			Land			Operations			Eliminations			Total
Revenues:
Sales of real estate	$	352,723			85,644			105,658			14,709			(622	)		558,112
Other revenues		3,750			—			924			1,963			(52	)		6,585
Total revenues		356,473			85,644			106,582			16,672			(674	)		564,697
Costs and expenses:
Cost of sales of real estate		272,680			74,328			50,706			12,520			(2,152	)		408,082
Selling, general and administrative expenses		46,917			10,486			11,918			17,841			—			87,162
Other expenses		3,606			—			1,177			72			—			4,855
Total costs and expenses		323,203			84,814			63,801			30,433			(2,152	)		500,099
Earnings from Bluegreen Corporation		—			—			—			12,714			—			12,714
Interest, net and other income		639			188			7,861			2,108			(507	)		10,289
Income from continuing operations before income taxes		33,909			1,018			50,642			1,061			971			87,601
(Provision) benefit for income taxes		(12,270	)		(421	)		(19,088	)		(378	)		(375	)		(32,532	)
Income from continuing operations		21,639			597			31,554			683			596			55,069
Discontinued operations:
Loss from discontinued operations, net of tax		—			—			(158	)		—			—			(158	)
Net income	$	21,639			597			31,396			683			596			54,911
Inventory of real estate	$	406,821			59,738			150,686			11,608			(17,593	)		611,260
Total assets	$	437,392			68,953			228,756			178,195			(17,623	)		895,673
Total debt	$	229,029			43,481			51,294			73,505			—			397,309
Total liabilities	$	316,772			55,159			94,006			88,165			(8,215	)		545,887
Total shareholders’ equity	$	120,620			13,794			134,750			90,030			(9,408	)		349,786

     Included in total liabilities at the respective segments are net receivable and payable amounts associated with intersegment loans. These amounts eliminate fully in consolidation but have the effect of decreasing or increasing liabilities when shown on a stand alone basis. As of December 31, 2007, the Parent Company (Other Operations) had outstanding advances from Core Communities in the amount of $38.3 million which are also generally subordinated to loans from third party lenders. These advances eliminate in consolidation.

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     24. Parent Company Financial Statements

     Levitt Corporation has debt service obligations relating to the Subordinated Investment Notes (“Investment Notes”) and unsecured junior subordinated debentures (“Junior Subordinated Debentures”). Junior Subordinated Debentures are direct unsecured obligations of Levitt Corporation, are not guaranteed by the Company’s subsidiaries and are not collateralized by any assets of the Company or its subsidiaries. The Company would be restricted from paying dividends to its common shareholders in the event of a default on either the Investment Notes or Junior Subordinated Debentures, and restrictions on the Company’s subsidiaries’ ability to remit dividends to Levitt Corporation could result in such a default if the Company does not have available funds to service those obligations.

     Some of the Company’s subsidiaries have borrowings which contain covenants that, among other things, require the subsidiary to maintain certain financial ratios and minimum net worth. These covenants may have the effect of limiting the amount of debt that the subsidiaries can incur in the future and restricting the payment of dividends from subsidiaries to the Company. At December 31, 2007, under the most restrictive of these covenants, approximately $55.0 million of the subsidiaries’ net assets were not available to transfer funds to the Company in the form of loans, advances or dividends, and $76.1 million was available for these transfers. At December 31, 2007 and 2006, the Company and its subsidiaries were in compliance with all loan agreement financial covenants. At December 31, 2007 consolidated retained earnings included approximately $35.8 million which represented undistributed earnings recognized by the equity method.

     The accounting policies for the parent company are generally the same as those policies described in the summary of significant accounting policies in Note 2. The parent company’s interests in its consolidated subsidiaries are reported under equity method accounting for purposes of this presentation.

     Condensed statements of financial condition at December 31, 2007 and 2006 and condensed statements of operations and cash flows for each of the years in the three-year period ended December 31, 2007 are shown below:

Levitt Corporation (Parent Company Only)
Condensed Statements of Financial Condition
(In thousands except share data)

	December 31,
	2007			2006
Assets
Cash and cash equivalents	$	161,557			8,900
Inventory of real estate		5,950			7,717
Investment in Bluegreen Corporation		116,014			107,063
Investment in Unconsolidated Trusts		2,565			2,565
Investment in wholly-owned subsidiaries		110,598			258,353
Other assets		32,848			69,476
Total assets	$	429,532			454,074
Liabilities and Shareholders’ Equity
Accounts payable and accrued liabilities	$	42,932			4,255
Loss in excess of investment in subsidiary		39,432			—
Notes payable		1,010			2,925
Junior subordinated debentures		85,052			85,052
Deferred tax liability, net		—			18,603
Total liabilities		168,426			110,835
Shareholders’ equity:
Preferred stock, $0.01 par value
Authorized: 5,000,000 shares
Issued and outstanding: no shares		—			—
Common stock, Class A, $0.01 par value
Authorized: 150,000,000 and 50,000,000 shares, respectively
Issued and outstanding: 95,040,731 and 18,609,024 shares, respectively		950			186
Common stock, Class B, $0.01 par value
Authorized: 10,000,000 shares
Issued and outstanding: 1,219,031 shares, respectively		12			12
Additional paid-in capital		336,795			184,401
(Accumulated deficit) retained earnings		(78,537	)		156,219
Accumulated other comprehensive income		1,886			2,421
Total shareholders’ equity		261,106			343,239
Total liabilities and shareholders’ equity	$	429,532			454,074

101

Levitt Corporation (Parent Company Only)
Condensed Statements of Operations
(In thousands)

	Year Ended December 31,
	2007			2006			2005
Earnings from Bluegreen Corporation	$	10,275			9,684			12,713
Other revenues		7,363			3,497			2,015
Costs and expenses		44,880			28,158			16,550
Loss before income taxes		(27,242	)		(14,977	)		(1,822	)
Benefit for income taxes		34,567			6,162			674
Net income (loss) before undistributed earnings from subsidiaries		7,325			(8,815	)		(1,148	)
(Loss) earnings from consolidated subsidiaries, net of income taxes		(241,945	)		(349	)		56,059
Net (loss) income	$	(234,620	)		(9,164	)		54,911

102

Levitt Corporation (Parent Company Only)
Condensed Statements of Cash Flows
(In thousands)

	Year Ended December 31,
	2007			2006			2005
Operating activities:
Net (loss) income	$	(234,620	)		(9,164	)		54,911
Adjustments to reconcile net (loss) income to net cash provided (used in) by operating activities:
Depreciation and amortization		2,664			1,352			113
(Decrease) increase in deferred income taxes		(19,240	)		2,953			5,057
Equity from earnings in Bluegreen Corporation		(10,275	)		(9,684	)		(12,714	)
Equity from loss (earnings) in consolidated subsidiaries		241,945			349			(56,059	)
Equity from loss in joint ventures		—			2			47
Equity in earnings from unconsolidated trusts		(220	)		(178	)		(95	)
Share-based compensation expense related to stock options and restricted stock		1,962			3,250			—
Dividends received from consolidated subsidiaries		13,073			12,086			17,805
Loss on disposal of assets		536			—			—
Changes in operating assets and liabilities:
Inventory of real estate		1,767			(3,552	)		(2,470	)
(Increase) decrease in other assets		(1,153	)		1,404			(123	)
Increase (decrease) in accounts payable, accrued expenses and other liabilities		5,043			(9,444	)		6,813
Decrease in current income tax		(6,249	)		—			—
Net cash (used in) provided by operating activities		(4,767	)		(10,626	)		13,285
Investing activities:
Distributions and advances from real estate joint ventures		—			153			37
Investment in unconsolidated trusts		—			(928	)		(1,624	)
Distributions from unconsolidated trusts		220			178			82
Investment in consolidated subsidiaries		—			—			(3,549	)
Purchase of property, plant and equipment		(41	)		(7,895	)		(1,082	)
Net cash provided by (used in) investing activities		179			(8,492	)		(6,136	)
Financing activities:
Proceeds from notes and mortgage notes payable		151			479			43
Repayment of notes and mortgage notes payable to affiliates		—			—			(38,000	)
Repayment of notes and mortgage notes payable		(2,066	)		(686	)		(19,001	)
Proceeds from junior subordinated notes		—			30,928			54,124
Proceeds from issuance of common stock		152,847			—			—
Payments for debt offering cost		—			(1,077	)		(1,686	)
Payments for stock issuance costs		(196	)		—			—
Net increase (decrease) in intercompany due		6,905			(43,858	)		1,032
Cash dividends paid		(396	)		(1,585	)		(1,585	)
Net cash provided by (used in) financing activities		157,245			(15,799	)		(5,073	)
Increase (decrease) in cash and cash equivalents		152,657			(34,917	)		2,076
Cash and cash equivalents at the beginning of period		8,900			43,817			41,741
Cash and cash equivalents at end of period	$	161,557			8,900			43,817

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     25. Selected Quarterly Financial Data (unaudited)

     The following tables summarize the quarterly results of operations for the years ended December 31, 2007 and 2006. Due to rounding and changes in the number of shares outstanding, the sum of the quarterly (loss) earnings per share amounts may not equal the (loss) earnings per share reported for the year (in thousands, except per share data):

	Year Ended December 31, 2007
	First			Second			Third			Fourth			Total
	Quarter			Quarter			Quarter			Quarter			2007
Revenues:
Sales of real estate	$	141,298			125,364			122,824			20,629			410,115
Other revenues		1,912			1,702			1,449			703			5,766
Total revenues		143,210			127,066			124,273			21,332			415,881
Costs and Expenses:
Cost of sales of real estate		112,908			171,594			275,340			13,399			573,241
Other costs and expenses		32,796			33,430			32,668			21,122			120,016
Total costs and expenses		145,704			205,024			308,008			34,521			693,257
Earnings from Bluegreen Corporation		1,744			1,357			4,418			2,756			10,275
Interest and other income, net of interest expense		2,340			3,294			3,109			(1,304	)		7,439
Income (loss) from continuing operations before income taxes		1,590			(73,307	)		(176,208	)		(11,737	)		(259,662	)
(Provision) benefit for income taxes		(611	)		15,112			6,228			2,548			23,277
Income (loss) from continuing operations		979			(58,195	)		(169,980	)		(9,189	)		(236,385	)
Discontinued operations:
(Loss) income from discontinued operations, net of tax		(3	)		108			812			848			1,765
Net income (loss)	$	976			(58,087	)		(169,168	)		(8,341	)		(234,620	)
Basic earnings (loss) per share:
Continuing operations	$	0.05			(2.88	)		(8.41	)		(0.10	)		(6.05	)
Discontinued operations		—			0.01			0.04			0.01			0.05
Total basic earnings (loss) per share	$	0.05			(2.87	)		(8.37	)		(0.09	)		(6.00	)
Diluted earnings (loss) per share:
Continuing operations	$	0.05			(2.88	)		(8.41	)		(0.10	)		(6.05	)
Discontinued operations		—			0.01			0.04			0.01			0.05
Total diluted earnings (loss) per share	$	0.05			(2.87	)		(8.37	)		(0.09	)		(6.00	)
Basic weighted average shares outstanding		20,217			20,218			20,220			96,256			39,092
Diluted weighted average shares outstanding		20,228			20,218			20,220			96,256			39,092
Dividends declared per common share	$	0.02			—			—			—			0.02

104

	Year Ended December 31, 2006
	First			Second			Third			Fourth			Total
	Quarter			Quarter			Quarter			Quarter			2006
Revenues:
Sales of real estate	$	125,543			130,658			130,939			178,946			566,086
Other revenues		1,669			2,064			1,782			1,973			7,488
Total revenues		127,212			132,722			132,721			180,919			573,574
Costs and expenses:
Cost of sales of real estate		102,055			105,652			104,520			170,734			482,961
Other costs and expenses		27,039			32,536			32,293			31,146			123,014
Total costs and expenses		129,094			138,188			136,813			201,880			605,975
(Loss) earnings from Bluegreen Corporation		(49	)		2,152			6,923			658			9,684
Interest and other income, net of interest expense		879			2,122			1,548			3,267			7,816
(Loss) income from continuing operations before income taxes		(1,052	)		(1,192	)		4,379			(17,036	)		(14,901	)
Benefit (provision) for income taxes		427			389			(1,399	)		6,341			5,758
(Loss) income from continuing operations		(625	)		(803	)		2,980			(10,695	)		(9,143	)
Discontinued operations:
(Loss) income from discontinued operations, net of tax		(35	)		66			(7	)		(45	)		(21	)
Net (loss) income	$	(660	)		(737	)		2,973			(10,740	)		(9,164	)
Basic (loss) earnings per share:
Continuing operations	$	(0.03	)		(0.04	)		0.15			(0.53	)		(0.45	)
Discontinued operations		—			—			—			—			—
Total basic (loss) earnings per share	$	(0.03	)		(0.04	)		0.15			(0.53	)		(0.45	)
Diluted (loss) earnings per share:
Continuing operations	$	(0.03	)		(0.04	)		0.14			(0.53	)		(0.46	)
Discontinued operations		—			—			—			—			—
Total diluted (loss) earnings per share	$	(0.03	)		(0.04	)		0.14			(0.53	)		(0.46	)
Basic weighted average shares outstanding		20,211			20,213			20,214			20,216			20,214
Diluted weighted average shares outstanding		20,211			20,213			20,221			20,216			20,214
Dividends declared per common share	$	0.02			0.02			0.02			0.02			0.08

     There were material decreases in the results of operations in the fourth quarter of 2007 primarily related to the deconsolidation of Levitt and Sons as of November 9, 2007. This deconsolidation resulted in the Company not recording results of operations associated with Levitt and Sons after November 9, 2007.

     In the fourth quarter of 2007 the Company recorded $2.5 million in certain restructuring related expenses consisting of independent contractor agreements, and facilities expense. In addition, severance related expenses were recorded in the third and fourth quarter of 2007. These expenses were recorded in selling, general and administrative expenses and other expenses. See Note 12 for further details.

     Included in the fourth quarter results of operations was $3.8 million of interest expense while there was no comparable expense in previous periods. This expense was associated with a decreased level of development associated with a large portion of our real estate inventory which resulted in a decreased amount of qualified assets for interest capitalization.

     The Land Division recorded $13.1 million in sales of real estate during the three months ended December 31, 2007.

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     26. Financial Information of Levitt and Sons

     Based on the loss of control over Levitt and Sons as a result of the Chapter 11 Cases and the uncertainties surrounding the nature, timing and specifics of the bankruptcy proceedings, Levitt Corporation deconsolidated Levitt and Sons as of November 9, 2007, eliminating all results associated with its statements of financial condition, statements of operations and cash flows. Levitt Corporation’s previously reported consolidated statements of financial condition, consolidated statements of operations and consolidated cash flows prior to November 9, 2007 continue to include Levitt and Sons’ financial condition, results of operations and cash flows. Since Levitt and Sons’ results after November 9, 2007 are not consolidated with the Company’s results, and because the Company believes it is not probable that it will be obligated to fund losses related to its investment in Levitt and Sons under principles of consolidation, any material uncertainties related to Levitt and Sons’ future operations are not expected to impact the Company’s financial results.

     The following table summarizes the assets, liabilities and net equity of Levitt and Sons as of November 9, 2007, the date it was deconsolidated from the financial statements, as well as the calculation of the loss in excess of investment in subsidiary which was recorded on the Company’s consolidated statement of financial condition at December 31, 2007:

	November 9,
	2007
Cash	$	6,387
Inventory		356,294
Property and equipment		1,681
Other assets		8,974
Assets deconsolidated		373,336
Accounts payable and other accrued liabilities		50,709
Customer deposits		18,007
Notes and mortgage payable		344,052
Due to Levitt Corporation		67,831
Liabilities deconsolidated	$	480,599
Net equity/negative investment	$	(107,263	)
The loss in excess of investment in subsidiary is comprised of:
Net equity/negative investment		(107,263	)
Due to Levitt Corporation		67,831
Deferred revenue		(15,780	)
	$	(55,212	)

     Included in the loss in excess of investment in subsidiary was approximately $15.8 million associated with deferred revenue related to intra-segment sales between Levitt and Sons and Core Communities.

     The following condensed consolidated financial statements of Levitt and Sons have been prepared in conformity with Statement of
Position 90-7 “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”), which requires that the liabilities subject to compromise by the Bankruptcy Court are reported separately from the liabilities not subject to compromise, and that all transactions directly associated with the Plan be reported separately as well. Liabilities subject to compromise include pre-petition unsecured claims that may be settled at amounts that differ from those recorded in Levitt and Sons’ condensed consolidated statements of financial condition.

106

Levitt and Sons
Condensed Consolidated Statements of Financial Condition
As of December 31, 2007 and 2006
(In thousands)

	2007			2006
Assets
Cash	$	5,365			13,333
Inventory		208,686			664,572
Property and equipment		55			2,190
Other assets		23,810			26,417
Total assets	$	237,916			706,512
Liabilities and Shareholders’ Equity
Accounts payable and other accrued liabilities	$	469			43,411
Customer deposits		—			41,738
Current income tax payable		—			8,467
Notes and mortgage notes payable		—			417,907
Due to Levitt Corporation		748			59,414
Due to Core Communities		—			14,063
Liabilities subject to compromise (A)		354,748			—
Shareholder’s (deficit) equity	$	(118,049	)		121,512
Total liabilities and shareholder’s equity	$	237,916			706,512

(A) Liabilities Subject to Compromise

     Liabilities subject to compromise in Levitt and Sons’ condensed consolidated statements of financial condition as of December 31, 2007 refer to both secured and unsecured obligations that will be accounted for under the Plan, including claims incurred prior to the Petition Date. They represent the debtors’ current estimate of the amount of known or potential pre-petition claims that are subject to restructuring in the Chapter 11 Cases. Such claims remain subject to future adjustments.

     Liabilities subject to compromise at December 31, 2007 were as follows, in thousands:

Accounts payable and other accrued liabilities	$	54,619
Customer deposits		17,451
Due to Levitt Corporation		87,182
Deficiency claim associated with secured debt		38,552
Notes and mortgage payable		156,944
Total liabilities subject to compromise	$	354,748

107

Levitt and Sons
Condensed Consolidated Statements of Operations
Years Ended December 31, 2007, 2006 and 2005
(In thousands)

	2007			2006			2005
Revenues
Sales of real estate	$	397,561			500,719			438,367
Other revenues		2,245			4,070			3,750
Total revenues		399,806			504,789			442,117
Costs and expenses
Cost of sales of real estate		562,763			440,059			347,008
Selling, general and administrative expenses		70,848			77,858			57,403
Total costs and expenses		633,611			517,917			404,411
Reorganization items, net		(3,525	)		—			—
Other income, net of interest and other expense		(1,928	)		(560	)		(2,779	)
(Loss) income before income taxes		(239,258	)		(13,688	)		34,927
(Provision) benefit for income taxes		(303	)		4,749			(12,691	)
Net (loss) income	$	(239,561	)		(8,939	)		22,236

27. Subsequent Event

Acquisition of common stock

     As of March 17, 2008, the Company, together with, Woodbridge Equity Fund LLLP, a newly formed limited liability limited partnership, wholly-owned by the Company, had purchased 3,000,200 shares of Office Depot, Inc. (“Office Depot”) common stock, which represents approximately one percent of Office Depot’s outstanding stock, at a cost of approximately $34.0 million. In connection with the acquisition of this ownership interest, on March 17, 2008, the Company delivered notice to Office Depot of the Company’s intent to nominate two nominees to stand for election to Office Depot’s Board of Directors. One of the nominees, Mark D Begelman, was the President and Chief Operating Officer of Office Depot from 1991 to 1995 and is currently an officer of BankAtlantic. Also on March 17, 2008, the Company, together with Woodbridge Equity Fund LLLP and other participants in the proxy solicitation, filed a preliminary proxy statement with the SEC in connection with the solicitation of proxies in support of the election of the two nominees. The Company has agreed to indemnify each nominee against certain losses and expenses which such nominees may incur in connection with the proxy solicitation and their efforts to gain election to the Office Depot board. In addition, the Company has filed a complaint in the Delaware Court of Chancery seeking, among other things, a court order declaring that the nomination of the two nominees at the Office Depot annual meeting is valid.

108

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

     As of the end of the period covered by this Annual Report on Form 10-K, our management evaluated, with the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that, as of December 31, 2007 our disclosure controls and procedures were effective to ensure the information required to be disclosed in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and was accumulated and communicated to our management, including our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, as appropriate to allow for timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and are subject to certain limitations, including the exercise of judgment by individuals, the difficulty in identifying unlikely future events and the difficulty in eliminating misconduct completely.

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 Rule 13a-15(f) under the Exchange Act). With the participation of our Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, our management evaluated as of December 31, 2007 the effectiveness of our internal control over financial reporting. The evaluation was conducted based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s internal control over financial reporting is 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 and includes those policies and procedures that:

(a)	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(b)	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
(c)	provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material affect on the Company’s financial statements.

     Our management concluded, based on its evaluation of the effectiveness of our internal control over financial reporting described above, that our internal control over financial reporting was effective as of December 31, 2007.

     PricewaterhouseCoopers LLP, our independent registered certified public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 31, 2007 as stated in its report which appears in this Annual report on Form 10-K. See Item 8. Financial Statements and Supplementary Data.

109

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, 2007 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

/s/ Alan B. Levan
Alan B. Levan
Chief Executive Officer
March 17, 2008

/s/ Patrick M. Worsham
Patrick M. Worsham
Acting Chief Financial Officer
March 17, 2008

/s/ Jeanne T. Prayther
Jeanne T. Prayther
Chief Accounting Officer
March 17, 2008

ITEM 9B. OTHER INFORMATION

None.

110

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The information required for this item is incorporated by reference from our Proxy Statement to be filed with the SEC no later than 120 days after the end of the year covered by this Form 10-K, or, alternatively, by amendment to this Form 10-K under cover of Form 10K/A not later than the end of such 120 day period.

ITEM 11. EXECUTIVE COMPENSATION

     The information required for this item is incorporated by reference from our Proxy Statement to be filed with the SEC no later than 120 days after the end of the year covered by this Form 10-K, or, alternatively, by amendment to this Form 10-K under cover of Form 10K/A not later than the end of such 120 day period.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

     The information required for this item (other than the information related to our equity compensation plans set forth below) is incorporated by reference from our Proxy Statement to be filed with the SEC no later than 120 days after the end of the year covered by this Form 10-K, or, alternatively, by amendment to this Form 10-K under cover of Form 10K/A not later than the end of such 120 day period.

     The following table contains information, as of December 31, 2007, concerning our equity compensation plans:

	Number of securities to be issued		Weighted average exercise		Number of securities
	upon exercise of outstanding		price of outstanding		remaining available for
Plan Category	options, warrants or rights		options, warrants and rights		future issuance
Equity compensation plans approved by security holders		1,862,390	$	17.33		1,137,610
Equity compensation plans not approved by security holders		—		—	—
Total		1,862,390	$	17.33		1,137,610

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     The information required for this item is incorporated by reference from our Proxy Statement to be filed with the SEC no later than 120 days after the end of the year covered by this Form 10-K, or, alternatively, by amendment to this Form 10-K under cover of Form 10K/A not later than the end of such 120 day period.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     The information required for this item is incorporated by reference from our Proxy Statement to be filed with the SEC no later than 120 days after the end of the year covered by this Form 10-K, or, alternatively, by amendment to this Form 10-K under cover of Form 10K/A not later than the end of such 120 day period.

111

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 Levitt Corporation and its subsidiaries are included herein under Part II, Item 8 of this Report.

Report of Independent Registered Certified Public Accounting Firm dated March 17, 2008

Consolidated Statements of Financial Condition as of December 31, 2007 and 2006.

Consolidated Statements of Operations for each of the years in the three year period ended December 31, 2007.

Consolidated Statements of Comprehensive (Loss) Income for each of the years in the three year period ended December 31, 2007.

Consolidated Statements of Shareholders’ Equity for each of the years in the three year period ended December 31, 2007.

Consolidated Statements of Cash Flows for each of the years in the three year period ended December 31, 2007.

Notes to Consolidated Financial Statements.

(2)	Financial Statement Schedules
	All schedules are omitted as the required information is either not applicable or is presented in the financial statements or related notes.
(3)	Exhibits
	The following exhibits are either filed as a part of this Report or are incorporated herein by reference to documents previously filed as indicated below:

Exhibit
Number	Description	Reference
3.1	Amended and Restated Articles of Incorporation	Exhibit 2.1 to the Registrant’s Registration Statement on Form 8-A, filed on December 12, 2003
3.2	Articles of Amendment to the Amended and Restated Articles of Incorporation	Appendix A to the Registrant’s 2007 Proxy Statement, filed on September 6, 2007
3.3	Amended and Restated By-laws, as Amended	Filed with this Report
10.1	Levitt Corporation Amended and Restated 2003 Stock Incentive Plan	Appendix A to the Registrant’s 2006 Proxy Statement, filed on April 17, 2006
10.2	Levitt Corporation 2004 Performance-Based Annual Incentive Plan	Appendix D to the Registrant’s 2004 Proxy Statement, filed on April 20, 2004

112

Exhibit
Number	Description	Reference
10.3	Amended and Restated Trust Agreement among Levitt Corporation, as Depositor, JP Morgan Chase Bank, National Association, as Property Trustee, Chase Bank USA, National Association, as Delaware Trustee, and the Administrative Trustees Named Therein, as Administrative Trustees, dated as of March 15, 2005	Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.4	Junior Subordinated Debenture between Levitt Corporation and JP Morgan Chase Bank, National Association, as Trustee, dated as of March 15, 2005	Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.5	Revolving Loan Agreement by and among Tradition Development Company, LLC, Horizons St. Lucie Development, LLC, Horizons Acquisition 7, LLC and Tradition Mortgage, LLC, as Borrower, Core Communities, LLC, as Guarantor, and Wachovia Bank, National Association, as Lender, dated as of April 8, 2005	Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.6	Unconditional Guaranty of Core Communities, LLC, as Guarantor, in favor of Wachovia Bank, National Association, dated as of April 8, 2005	Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.7	Amended and Restated Trust Agreement among Levitt Corporation, as Depositor, Wilmington Trust Company, as Property Trustee, Wilmington Trust Company, as Delaware Trustee, and the Administrative Trustees Named Therein, as Administrative Trustees, dated as of May 4, 2005	Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.8	Junior Subordinated Debenture between Levitt Corporation and Wilmington Trust Company, as Trustee, dated as of May 4, 2005	Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q, filed on May 10, 2005
10.9	Revolving Working Capital, Land Acquisition and Development and Residential Construction Borrowing Base Facility Agreement by and among Levitt and Sons, LLC and Ohio Savings Bank, dated as of March 21, 2007	Exhibit 10.11 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 9, 2007
10.10	Assumption and Modification of Note and Loan Agreement by and among Levitt and Sons, LLC, Levitt Corporation and AmTrust Bank (f/k/a Ohio Savings Bank), dated as of October 25, 2007	Exhibit 10.12 to the Registrant’s Quarterly Report on Form 10-Q, filed on November 9, 2007
10.11	Executive Services Agreement by and among Levitt Corporation and Tatum, LLC, dated as of December 5, 2007, relating to the employment of Patrick Worsham	Filed with this Report
12.1	Statement re Computation of Ratios — Ratio of Earnings to Fixed Charges	Filed with this Report
14.1	Code of Business Conduct and Ethics	Filed with this Report
21.1	Subsidiaries of the Registrant	Filed with this Report
23.1	Consent of PricewaterhouseCoopers LLP	Filed with this Report

113

Exhibit
Number	Description	Reference
23.2	Consent of Ernst & Young LLP	Filed with this Report
31.1	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed with this Report
31.2	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed with this Report
31.3	CAO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	Filed with this Report
32.1	CEO Certification 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
32.2	CFO Certification 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
32.3	CAO Certification 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
99.1	Audited financial statements of Bluegreen Corporation for the three years ended December 31, 2007	Filed with this Report

114

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

	LEVITT CORPORATION
March 17, 2008	By:	/s/Alan B. Levan
		Alan B. Levan
		Chairman of the Board of Directors, 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	Chairman of the Board and Chief Executive Officer (Principal Executive Officer)	March 17, 2008
/s/ John E. Abdo John E. Abdo	Vice-Chairman of the Board	March 17, 2008
/s/ Seth M. Wise Seth M. Wise	President	March 17, 2008
/s/ Patrick M. Worsham Patrick M. Worsham	Acting Chief Financial Officer (Principal Financial Officer)	March 17, 2008
/s/ Jeanne T. Prayther Jeanne T. Prayther	Chief Accounting Officer (Principal Accounting Officer)	March 17, 2008
/s/ James Blosser James Blosser	Director	March 17, 2008
/s/ Darwin C. Dornbush Darwin C. Dornbush	Director	March 17, 2008
/s/ S. Lawrence Kahn, III S. Lawrence Kahn, III	Director	March 17, 2008
/s/ Alan Levy Alan Levy	Director	March 17, 2008
/s/ Joel Levy Joel Levy	Director	March 17, 2008
/s/ William R. Nicholson William R. Nicholson	Director	March 17, 2008
/s/ William R. Scherer William R. Scherer	Director	March 17, 2008

115 EX-3.3 2 g12103exv3w3.htm EX-3.3 AMENDED AND RESTATED BY-LAWS, AS AMENDED

EXHIBIT 3.3

AMENDED AND RESTATED
BY-LAWS OF
LEVITT CORPORATION

(as amended on December 3, 2007)

ARTICLE I

SHAREHOLDERS

     Section 1. Place of Meetings. All annual and special meetings of shareholders shall be held at the place designated by the board of directors and may be held within or without the State of Florida.

     Section 2. Annual Meeting. A meeting of the shareholders of the Corporation for the election of directors and for the transaction of such other business of the Corporation as may properly come before the meeting shall be held annually at such date and time as the board of directors may determine.

     Section 3. Special Meetings. Special meetings of the shareholders for any purpose or purposes shall be held when called by the chairman of the board, the president, or a majority of the board of directors and when called by the chairman of the board, the president or the secretary upon the written request of the holders of outstanding shares representing not less than fifty percent of the votes entitled to be cast at the meeting. Such written request shall state the purpose of the meeting and shall be delivered at the principal office of the Corporation addressed to the chairman of the board, the president or the secretary. No business other than that stated in the notice of a special meeting shall be transacted thereat.

     Section 4. Conduct of Meetings. Annual and special meetings shall be conducted in accordance with rules established from time to time by the board of directors. The board of directors shall designate a chairman to preside at such meetings.

     Section 5. Notice of Meeting. Written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting is called shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the chairman of the board, the president, or the secretary, or the directors calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the U.S. mail, addressed to the shareholder at his address as it appears on the stock transfer books or records of the Corporation as of the record date prescribed in Section 6 of this Article I, with postage thereon prepaid. When any shareholders’ meeting, either annual or special, is adjourned for thirty days or more, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than thirty days or of the business to be transacted thereat, other than an announcement at the meeting at which such adjournment is taken.

     Section 6. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the board of directors shall fix in advance a date as the record date for any such determination of shareholders. Such date in any case shall be not more than sixty days and, in case of a meeting of shareholders, not less than ten days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.

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     Section 7. Voting Lists. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make at least ten days before each meeting of the shareholders a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each. The list shall be kept on file at the principal office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours, for a period of twenty days prior to such meeting. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder at any time during the meeting. The original stock transfer books shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer books or to vote at any meeting of shareholders.

     Section 8. Quorum. The outstanding shares of the Corporation representing a majority of the votes entitled to be cast, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. When a specified item of business is required to be voted on by a class or series of stock, a majority of the shares of such class or series shall constitute a quorum for the transaction of such item of business by that class or series. If outstanding shares representing less than a majority of the votes entitled to be cast are represented at a meeting, holders of the shares representing a majority of the votes entitled to be cast so represented may adjourn the meeting from time to time without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum.

     Section 9. Proxies. At all meetings of shareholders, a shareholder may vote by proxy executed in writing by the shareholder or by his duly authorized attorney in fact. Proxies solicited on behalf of the management shall be voted as directed by the shareholder or, in the absence of such direction, as determined by a majority of the board of directors. No proxy shall be valid after eleven months from the date of its execution except for a proxy coupled with an interest.

     Section 10. Voting of Shares in the Name of Two or More Persons. When ownership stands in the name of two or more persons, in the absence of written directions to the Corporation to the contrary, at any meeting of the shareholders of the Corporation any one or more of such shareholders may cast, in person or by proxy, all votes to which such ownership is entitled. In the event an attempt is made to cast conflicting votes, in person or by proxy, by the several persons in whose names shares of stock stand, the vote or votes to which those persons are entitled shall be cast as directed by a majority of those holding such stock and present in person or by proxy at such meeting, but no votes shall be cast for such stock if a majority cannot agree.

     Section 11. Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine. Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority so to do is contained in an appropriate order of the court or other public authority by which such receiver is appointed.

     A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee shall be entitled to vote the shares so transferred.

     Neither treasury shares of its own stock held by the Corporation, nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held by the Corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

2

     Section 12. Informal Action by Shareholders. Any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting, without prior notice and without a vote if consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Within ten days after obtaining such authorization by written consent, notice shall be given to those shareholders who have not consented in writing. The notice shall fairly summarize the material features of the authorized action and, if the action is of a type for which dissenters’ rights are provided for by statute, the notice shall contain a clear statement of the right of shareholders dissenting therefrom to be paid the fair value of their shares upon compliance with further provisions of such statute regarding the rights of dissenting shareholders.

     Section 13. Inspectors of Election. In advance of any meeting of shareholders, the board of directors may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment thereof. The number of inspectors shall be either one or three. If the board of directors so appoints either one or three such inspectors, that appointment shall not be altered at the meeting. If inspectors of election are not so appointed, the chairman of the board or the president may, and on the request of not less than ten percent of the votes represented at the meeting shall, make such appointment at the meeting. If appointed at the meeting, the majority of the votes present shall determine whether one or three inspectors are to be appointed. In case any person appointed as inspector fails to appear or fails or refuses to act, the vacancy may be filled by appointment by the board of directors in advance of the meeting or at the meeting by the chairman of the board or the president.

     The duties of such inspectors shall include: determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result; and such acts as may be proper to conduct the election or vote with fairness to all shareholders.

     Section 14. Nomination of Directors.

     (a) Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Corporation, except as may be otherwise provided in the Articles of Incorporation of the Corporation or as may otherwise be required by applicable law or regulation. Nominations of persons for election to the board of directors may be made at any annual meeting of shareholders, or at any special meeting of shareholders called for the purpose of electing directors, (i) by or at the direction of the board of directors (or any duly authorized committee thereof) or (ii) by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 14 and on the record date for the determination of shareholders entitled to vote at such meeting and (B) who complies with the notice procedures set forth in this Section 14. In addition to any other applicable requirements, for a nomination to be made by a shareholder pursuant to clause (ii) of this Section 14(a), such shareholder must have given timely notice thereof in proper written form to the secretary of the Corporation.

     (b) To be timely, a shareholder’s notice to the secretary pursuant to clause (ii) of Section 14(a) must be delivered to or mailed and received at the principal office of the Corporation (i) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting is mailed or such public disclosure of the date of the annual meeting is made, whichever first occurs, or (ii) in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting is mailed or public disclosure of the date of the special meeting is made, whichever first occurs.

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     (c) To be in proper written form, a shareholder’s notice to the secretary pursuant to clause (ii) of Section 14(a) must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director, (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by the person and (D) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, and (ii) as to the shareholder giving the notice, (A) the name and record address of such shareholder, (B) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, together with evidence reasonably satisfactory to the secretary of such beneficial ownership, (C) a description of all arrangements or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, (D) a representation that such shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice and (E) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

     (d) No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 14. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, then the chairman of the meeting shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

     Section 15. New Business.

     (a) To be properly brought before the annual meeting of shareholders, business must be either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the board of directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the meeting by or at the direction of the board of directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the meeting by any shareholder of the Corporation (A) who is a shareholder of record on the date of the giving of the notice provided for in this Section 15 and on the record date for the determination of shareholders entitled to vote at such meeting and (B) who complies with the notice procedures set forth in this Section 15. In addition to any other applicable requirements, including but not limited to the requirements of Rule 14a-8 promulgated by the Securities and Exchange Commission under the Exchange Act, for business to be properly brought before an annual meeting by a shareholder pursuant to clause (iii) of this Section 15(a), such shareholder must have given timely notice thereof in proper written form to the secretary of the Corporation.

     (b) To be timely, a shareholder’s notice to the secretary pursuant to clause (iii) of Section 15(a) must be delivered to or mailed and received at the principal office of the Corporation, not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the shareholder in order to be timely must be so received no later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting is mailed or such public disclosure of the date of the annual meeting is made, whichever first occurs.

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     (c) To be in proper written form, a shareholder’s notice to the secretary pursuant to clause (iii) of Section 15(a) must set forth as to each matter such shareholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of such shareholder, (iii) the class or series and number of shares of capital stock of the Corporation which are owned beneficially or of record by such shareholder, together with evidence reasonably satisfactory to the secretary of such beneficial ownership, (iv) a description of all arrangements or understandings between such shareholder and any other person or persons (including their names) in connection with the proposal of such business by such shareholder and any material interest of such shareholder in such business, (v) a representation that such shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting and (vi) any material interest of the shareholder proposing to bring such business before such meeting (or any other shareholders known to be supporting such proposal) in such proposal.

     (d) Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at the annual meeting of shareholders except business brought before such meeting in accordance with the procedures set forth in this Section 15; provided, however, that, once business has been properly brought before such meeting in accordance with such procedures, nothing in this Section 15 shall be deemed to preclude discussion by any shareholder of any such business. If the chairman of such meeting determines that business was not properly brought before the meeting in accordance with the foregoing procedures, then the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

ARTICLE II

BOARD OF DIRECTORS

     Section 1. General Powers. The business and affairs of the Corporation shall be under the direction of its board of directors. The board of directors shall annually elect a chairman of the board and a president from among its members and shall designate, when present, either the chairman of the board or the president to preside at its meetings.

     Section 2. Members and Terms. The board of directors shall consist of no less than three and no more than twelve members and shall be divided into three classes. The specific number of members may be set from time to time by resolution of the board of directors. The members of each class shall be elected for a term of three years and until their successors are elected and qualified. One class shall be elected by ballot annually.

     Section 3. Qualification. Directors need not be shareholders of the Corporation nor residents of the State of Florida.

     Section 4. Regular and Special Meetings. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board of directors or by the chairman of the board or president.

     Special meetings of the board of directors may be called by or at the request of the chairman of the board, the president or one-third of the directors. Written notice of any special meeting shall be given to each director at least two days previously thereto delivered personally or by telegram or facsimile transmission or at least five days previously thereto delivered by mail at the address at which the director is most likely to be reached. Such notice shall be deemed to be delivered when deposited in the U.S. mail so addressed with postage thereon prepaid if mailed or when delivered to the telegraph company if sent by telegram or transmitted via facsimile.

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     Any director may waive notice of any meeting by a writing filed with the secretary. The attendance of a director at a meeting shall constitute waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the board of directors need be specified in the notice or waiver of notice of such meeting, but any such notice shall specify the place of the meeting.

     Members of the board of directors may participate in special meetings by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other. Such participation shall constitute presence in person but shall not constitute attendance for the purpose of compensation pursuant to Section 10 of this article.

     Section 5. Quorum. A majority of the number of directors then serving shall constitute a quorum for the transaction of business at any meeting of the board of directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time and to another place without notice other than announcement at the meeting.

     Section 6. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors, unless a greater number is prescribed by statute, the Articles of Incorporation or these Bylaws.

     Section 7. Action Without a Meeting. Any action required or permitted to be taken by the board of directors at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. The written consent shall be filed with the minutes of proceedings of the board of directors.

     Section 8. Resignation. Any director may resign at any time by sending a written notice of such resignation to the principal office of the Corporation addressed to the chairman of the board or the president. Unless otherwise specified therein, such resignation shall take effect upon receipt thereof by the chairman of the board or the president. More than three consecutive absences from regular meetings of the board of directors, unless excused by resolution of the board of directors, shall automatically constitute a resignation, effective when such resignation is accepted by the board of directors.

     Section 9. Vacancies. Any vacancy occurring in the board of directors may be filled only by the affirmative vote of a majority of the remaining directors although less than a quorum of the board of directors, or by a sole remaining director. A director elected to fill a vacancy shall be elected to serve until the next election of directors by the shareholders.

     Section 10. Compensation. Directors, as such, may receive such compensation for their services as may be determined by resolution of the board of directors. Directors may also be allowed reasonable expenses of attendance, if any, for each regular or special meeting of the board of directors. Members of either standing or special committees may be allowed such compensation for actual attendance at committee meetings as the board of directors may determine.

     Section 11. Presumption of Assent. A director of the Corporation who is present at a meeting of the board of directors at which action on any matter is taken shall be presumed to have assented to the action taken unless his dissent or abstention shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the Corporation within five days after the date he receives a copy of the minutes of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

     Section 12. Advisory Directors. The board of directors, by resolution adopted by a majority of the full board, may appoint advisory directors to the board, who shall serve as directors emeritus, and shall have such authority and receive such compensation and reimbursement as the board of directors shall provide. Advisory directors shall not have the authority to participate by vote in the transaction of business.

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ARTICLE III

EXECUTIVE AND OTHER COMMITTEES

     Section 1. Appointment. The board of directors, by resolution adopted by a majority of the full board, may designate the chief executive officer and two or more of the other directors to constitute an executive committee. The designation of any committee pursuant to this Article III and the delegation of authority thereto shall not operate to relieve the board of directors, or any director, of any responsibility imposed by law or regulation. The executive committee may designate a member to serve as “Chairman” of the executive committee.

     Section 2. Authority. The executive committee, when the board of directors is not in session, shall have and may exercise all of the authority of the board of directors, except to the extent, if any, that such authority is limited by the resolution appointing the executive committee; and except also that the executive committee shall not have the authority of the board of directors with reference to the amendment of the charter or bylaws of the Corporation, or recommending to the shareholders a plan of merger, consolidation, or conversion; the sale, lease or other disposition of all or substantially all of the property and assets of the Corporation otherwise than in the usual and regular course of its business; a voluntary dissolution of the Corporation; a revocation of any of the foregoing; or the approval of a transaction in which any member of the executive committee, directly or indirectly, has any material beneficial interest.

     Section 3. Tenure. Subject to the provisions of Section 8 of this Article III each member of the executive committee shall hold office until the next regular annual meeting of the board of directors following his designation and until his successor is designated as a member of the executive committee.

     Section 4. Meetings. Regular meetings of the executive committee may be held without notice at such times and places as the executive committee may fix from time to time by resolution. Special meetings of the executive committee may be called by any member thereof upon not less than one day’s notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of the executive committee may waive notice of any meeting and no notice of any meeting need be given to any member thereof who attends in person. The notice of a meeting of the executive committee need not state the business proposed to be transacted at the meeting.

     Section 5. Quorum. A majority of the members of the executive committee shall constitute a quorum for the transaction of business at any meeting thereof, and action of the executive committee must be authorized by the affirmative vote of a majority of the members present at a meeting at which a quorum is present.

     Section 6. Action Without a Meeting. Any action required or permitted to be taken by the executive committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the executive committee.

     Section 7. Vacancies. Any vacancy in the executive committee may be filled by a resolution adopted by a majority of the full board of directors.

     Section 8. Removal and Resignations. Any member of the executive committee may be removed at any time with or without cause by resolution adopted by a majority of the full board of directors. Any members of the executive committee may resign from the executive committee at any time by giving written notice to the president or secretary of the Corporation. Unless otherwise specified thereon, such resignation shall take effect upon receipt. The acceptance of such resignation shall not be necessary to make it effective.

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     Section 9. Procedure. The executive committee shall elect a presiding officer from its members and may fix its own rules of procedure which shall not be inconsistent with these bylaws. It shall keep regular minutes of its proceedings and report the same to the board of directors for its information at the meeting thereof held next after the proceedings shall have been taken.

     Section 10. Other Committees. The board of directors may by resolution establish an audit committee, a compensation committee or other committees composed of directors as they may determine to be necessary or appropriate for the conduct of the business of the Corporation and may prescribe the duties, constitution and procedures thereof. The limitations on authority set forth in Section 2 of this Article III shall apply to any committee established hereunder.

ARTICLE IV

OFFICERS

     Section 1. Positions. The officers of the Corporation shall be a chairman of the board, a president, a secretary and a chief financial officer, each of whom shall be elected by the board of directors. The office of secretary may be held by any other officer. The board of directors may designate one or more vice presidents as senior executive vice president, executive vice president or senior vice president. The board of directors may also elect or authorize the appointment of such other officers as the business of the Corporation may require. The officers shall have such authority and perform such duties as the board of directors may from time to time authorize or determine. In the absence of action by the board of directors, the officers shall have such powers and duties as generally pertain to their respective offices.

     Section 2. Election and Term of Office. The officers of the Corporation shall be elected annually at the first meeting of the board of directors after each annual meeting of the shareholders. If the election of officers is not held at such meeting, such election shall be held as soon thereafter as possible. Each officer shall hold office until his successor shall have been duly elected and qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. Election or appointment of an officer, employee or agent shall not of itself create contract rights.

     Section 3. Removal. Any officer may be removed by the board of directors whenever, in its judgment, the best interests of the Corporation will be served thereby, but such removal, other than for cause, shall be without prejudice to the contract rights, if any, of the person so removed.

     Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the board of directors for the unexpired portion of the term.

     Section 5. Remuneration. The remuneration of the officers shall be fixed from time to time by the board of directors.

ARTICLE V

CONTRACTS, CHECKS AND DEPOSITS

     Section 1. Contracts. Except as otherwise prescribed by these bylaws with respect to certificates for shares, the board of directors may authorize any officer, employee or agent of the Corporation to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation. Such authority may be general or confined to specific instances.

     Section 2. Checks, Drafts, Etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by one or more officers, employees or agents of the Corporation in such manner as shall from time to time be determined by the board of directors.

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     Section 3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in any of its duly authorized depositories as the board of directors may select.

ARTICLE VI

CERTIFICATES FOR SHARES AND THEIR TRANSFER

     Section 1. Certificates for Shares. Shares of capital stock of the Corporation may, but need not, be represented by certificates. If represented by a certificate, each certificate shall be in such form as shall be determined by the board of directors, shall be signed by the chief executive officer or by any other officer of the Corporation authorized by the board of directors, attested by the secretary or an assistant secretary, and may be sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles if the certificate is manually signed on behalf of a transfer agent or a registrar, other than the Corporation itself or one of its employees. Each certificate for shares of capital stock shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares are issued, with the number or shares and date of issue, shall be entered on the stock transfer books of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate may be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in the case of a lost or destroyed certificate, a new certificate may, but need not, be issued therefor upon such terms and indemnity to the Corporation as the board of directors may prescribe.

     Section 2. Transfer of Shares. Transfers of shares of capital stock of the Corporation shall be made only on its stock transfer books. Authority for such transfer shall be given only by the holder of record thereof or by his legal representative, who shall furnish evidence of such authority, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Corporation. Such transfer shall be made only on surrender for cancellation of the certificate, if any, for such shares. The person in whose name shares of capital stock stand on the books of the Corporation shall be deemed by the Corporation to be the owner therefor for all purposes and the Corporation shall not be bound to recognize any equitable or other claim to interest in such capital stock on the part of any other person, whether or not the Corporation shall have express or other notice thereof, except as otherwise provided by law.

     Section 3. Shares of Stock Without Certificates. The board of directors may authorize the issuance of some or all of the shares of any or all of the classes or series of capital stock of the Corporation without certificates. The authorization shall not affect shares of stock already represented by certificates until and unless said certificates are surrendered to the Corporation or its transfer agent. Within a reasonable time after the issuance or transfer of shares without certificates, the Corporation shall send the holder thereof a written statement of the information required on certificates of stock by applicable law or these Bylaws.

ARTICLE VII

BOOKS AND RECORDS

     Section 1. Maintenance of Books and Records. The Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its shareholders, board of directors and committees of directors. The Corporation shall keep at its registered office or principal place of business or at the office of its transfer agent a record of its shareholders, giving the names and addresses of all shareholders and the number, class and series, if any, of the shares held by each. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.

     Section 2. Shareholder Inspection Rights. Shareholders shall have such inspection rights as are specifically granted under Florida law.

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ARTICLE VIII

FISCAL YEAR

     The fiscal year of the Corporation shall end on the 31st day of December of each year or at such other time as may be fixed from time to time by resolution of the board of directors. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the board of directors.

ARTICLE IX

DIVIDENDS

     Subject to the terms of the Corporation’s Articles of Incorporation, the board of directors may, from time to time, declare, and the Corporation may pay, dividends on its outstanding shares of capital stock.

ARTICLE X

CORPORATE SEAL

     The board of directors may adopt a corporate seal for the Corporation. The corporate seal shall have inscribed thereon the name of the Corporation and the words “Corporate Seal, Florida.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced on any document. Except as otherwise provided by law, the failure to affix the seal of the Corporation to a document shall not affect the validity thereof.

ARTICLE XI

AMENDMENTS

     The Bylaws may be amended or repealed, or new Bylaws may be adopted, by action of either the shareholders or the board of directors. The shareholders may from time to time specify particular provisions of the Bylaws which may not be altered or repealed by the board of directors.

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EX-3.3

EX-3.3 Amended and Restated By-laws, as Amended

EX-10.11

Exhibit 10.11

Tatum
Executive Services Agreement

December 5, 2007

Mr. Alan B. Levan
Levitt Corporation
2100 W. Cypress Creek Road
Ft. Lauderdale, FL 33309

Dear Alan:

Tatum, LLC (“Tatum,” “we,” or “us”) is pleased that Levitt Corporation (the “Company”, “you” or “your”) desires to employ Patrick Worsham, a member of Tatum (the “Employee”), to serve as a part of the office of the CFO of the Company, with a title to be determined as the role is more fully defined. The Employee’s status shall be at-will, and nothing in this Agreement shall alter the Company’s ability to terminate the Employee, with or without cause or notice; provided, however, if termination of this Agreement is under Section 4(a) of Exhibit A the Company shall continue to pay Tatum and the Employee during the 30 day notice period. This letter along with the terms and conditions attached as Exhibit A and any other exhibits or schedules attached hereto (collectively, the “Agreement”) confirms our mutual understanding of the terms and conditions upon which we will make available to you the Employee and Tatum’s intellectual capital to the Employee for use in connection with the Employee’s employment relationship with you.

Effective as of December 10, 2007, the Employee will become your employee serving in the capacity set forth above. The Employee will work on a full-time basis and be subject to the Company’s policies and supervision, direction and control of and report directly to the Company’s management. While the Employee will remain a member of Tatum and have access to Tatum’s intellectual capital to be used in connection with the Employee’s employment relationship with you, we will have no supervision, direction or control over the Employee with respect to the services provided by the Employee to you.

You will pay directly to the Employee a salary of $25,200 a month (“Salary”). In addition, you will reimburse the Employee for all travel related and out-of pocket expenses incurred by the Employee in connection with his services to the Company. These will include reasonable accommodations, meals and travel related costs as approved by the Company. In addition, you will pay directly to Tatum a fee of $10,800 per month (“Fees”). Seventy percent of any cash or equity incentive bonus shall be paid directly to the Employee and the remaining 30% shall be paid/granted directly to Tatum.

Payments to the Employee shall be made in accordance with the Company’s standard payroll and expense reimbursement policies. Payments to Tatum should be made in accordance with the instructions set forth on Exhibit A at the same time payments are made to the Employee.

In lieu of the Employee participating in the Company-sponsored employee health insurance plans, the Employee will remain on his or her current health insurance plans. You will reimburse the Employee for amounts paid by the Employee for health insurance for himself and his family of up to the lesser of the amount provided to other similar senior level employees or actual amounts paid by the employee which will be based upon presentation of reasonable documentation of premiums paid by the Employee. In accordance with the U.S. federal tax law, such amount will not be considered reportable W-2 income, but instead, non-taxable benefits expense.

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As an employee, the Employee will be eligible to participate in the Company’s 401(k) Plan upon completion of the eligibility requirements set forth in the Plan document. The Employee will be eligible for vacation and holidays consistent with the Company’s policy as it applies to senior management. The Employee will be exempt from any delay periods otherwise required for vacation and holiday eligibility.

You will have the opportunity to make the Employee a full-time member of Company management at any time during the term of this Agreement by entering into another form of Tatum agreement, the terms of which will be negotiated at such time.

As a condition to providing the services hereunder, we require a security deposit in an amount equal to $25,000 (the “Deposit”), which will only be used by us under the limited circumstances described on Exhibit A. The Deposit is due upon the execution of this Agreement.

The Company will provide Tatum or the Employee with written evidence that the Company maintains reasonable directors’ and officers’ insurance covering the Employee at no additional cost to the Employee and the Company will maintain such insurance at all times while this Agreement remains in effect. Furthermore, the Company will maintain such insurance coverage with respect to occurrences arising during the term of this Agreement for at least three years following the termination or expiration of this Agreement or will purchase a directors’ and officers’ extended reporting period or “tail” policy to cover the Employee.

We appreciate the opportunity to serve you and believe this Agreement accurately reflects our mutual understanding. We would be pleased to discuss this Agreement with you at your convenience. If the foregoing is in accordance with your understanding, please sign a copy of this Agreement and return it to my attention.

Sincerely,

Tatum, LLC

/s/ A. Michael McCracken
A. Michael McCracken
Managing Partner

Accepted and agreed:
Levitt Corporation

By: /s/Susan D. McGregor
Name: Susan McGregor
Title: EVP—Human Resources

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EX-12.1

Exhibit 12.1

Levitt Corporation
Calculation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)

	Year ended December 31,
	2007			2006			2005			2004			2003
Earnings:
Pre-tax income from continuing operations before adjustment for income or loss from equity investees	$	(270,135	)		(24,345	)		74,723			74,203			35,304
Fixed charges		46,719			40,473			18,869			11,055			7,924
Add: Amortization of capitalized interest		17,949			15,358			8,959			9,872			6,425
Distributed income from equity investees		267			754			447			9,744			1,561
Capitalized interest		(42,912	)		(40,473	)		(18,869	)		(10,796	)		(7,691	)
	$	(248,112	)		(8,233	)		84,129			94,078			43,523
Fixed charges:
Interest expense	$	3,807			—			—			259			233
Interest capitalized		42,912			40,473			18,869			10,796			7,691
	$	46,719			40,473			18,869			11,055			7,924
Ratio of earnings to fixed charges		—			—			4.46			8.51			5.49
Deficiency	$	294,831			48,706			—			—			—

EX-14.1

Exhibit 14.1

CODE OF BUSINESS CONDUCT AND ETHICS
FOR THE DIRECTORS, OFFICERS AND EMPLOYEES OF
LEVITT CORPORATION
(Adopted February 23, 2004; Amended December 18, 2006)

INTRODUCTION

The Company expects its representatives to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities. Failing to do so puts the Company’s name, reputation for integrity and business at risk. While the Company strives to achieve market leadership and business success, achieving those results through unethical business practices will not be tolerated. This Code of Business Conduct and Ethics reinforces the Company’s commitment to the highest legal and ethical standards. This Code covers a wide range of business practices and procedures. It does not cover every issue that may arise, but it sets forth the basic principles to guide the Company’s directors, officers and employees. Additionally, the Company’s officers and other employees remain subject to the Company’s other policies including any set forth in the Company’s Employee Handbook.

Nothing herein shall be deemed to constitute a waiver by the Company of any fiduciary or good faith duty owed by any director, officer or employee of the Company under applicable law, rules or regulations. Also, if a law, rule or regulation conflicts with a policy in this Code, the directors, officers and employees must comply with the law, rule or regulation. (Certain capitalized terms used herein are defined in Section 11 below.)

1. Compliance with Laws, Rules and Regulations (Including Insider Trading Laws)

Compliance with the laws, rules and regulations applicable to the Company is the foundation on which the Company’s ethical standards are built. The Company’s directors, officers and employees are expected to adhere to all such laws, rules and regulations, including insider trading laws.

2. Disclosure Obligations

(a) All officers and employees who are involved in the Company’s securities and regulatory disclosure processes must maintain familiarity with the disclosure requirements applicable to the Company under applicable federal and state laws, rules and regulations.

(b) All directors, officers and employees must cooperate fully with the people responsible for preparing reports filed by the Company with the Securities and Exchange Commission (“SEC”) and regulatory authorities and all other materials that are made available to the public to make sure those people are aware in a timely manner of all information that might have to be disclosed in those reports or other materials or that might affect the way in which information is disclosed in such reports or materials.

(c) All directors, officers and employees shall strive to provide full, accurate, timely and understandable disclosure in the reports filed by the Company with the SEC.

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3. Conflicts of Interest

(a) Directors, officers and employees should avoid conflicts of interest or the appearance of conflicts of interest with the Company.

(i) A “conflict of interest” exists when an individual’s private interest interferes, or even appears to interfere in any way with the Company’s interest. Conflict situations include, but are not limited to, situations:

(1) When a director, officer or employee, or a member of his or her family, will benefit personally from something the director, officer or employee does or fails to do that is not in the Company’s best interests,

(2) When a director, officer or employee takes actions or has interests that may make it difficult to perform his or her Company work objectively and effectively, and

(3) When a director, officer or employee, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company.

(b) If a conflict of interest arises, a director or officer must promptly report the conflict of interest to the Company’s board of directors (“Board”), and an employee other than a director or officer must promptly report the conflict of interest to such employee’s supervisor (or, if reporting to the supervisor would be inappropriate, then to the general counsel of the Company). In each instance the director, officer or employee will work with the individual or individuals to whom a conflict of interest is reported to devise an arrangement by which (i) that individual or those individuals (or their designee) will monitor the situation which creates, or gives the appearance of creating, a conflict of interest, (ii) the director, officer or employee who has a conflict will, to the fullest extent possible, be kept out of any decisions that might be affected by the conflict of interest, (iii) arrangements will be made to ensure that the director, officer or employee will not profit personally from the situation that causes the conflict of interest, and (iv) every reasonable effort will be made to eliminate the conflict of interest as promptly as possible.

4. Corporate Opportunities

(a) No director, officer or employee will:

(i) Unless, after full disclosure to the Audit Committee, the Company has expressly decided not to attempt to take advantage of an opportunity, take for himself or herself personally any Corporate Opportunity discovered through the use of Company property, information or position;

(ii) use Company property, information or position for personal gain; or

(iii) compete with the Company generally or with regard to specific transactions or opportunities.

(b) Directors, officers and employees owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises.

5. Excluded Transactions

(a) The Company seeks non-employee directors who will provide business experience and judgment valuable to the Company and its stockholders. Such directors may include individuals who have substantial real estate development experience, are engaged in multiple business activities, and who would not be expected to devote all of their time and attention to the Company’s affairs and business. Thus, a rigid requirement that directors who are not officers of the Company (“non-employee directors”) offer to the Company any real estate acquisition opportunity presented to them or of which they may be aware is inappropriate. Accordingly, under this Code non-employee directors will have no obligation to offer a real estate acquisition opportunity to the Company simply because the opportunity may be useful to the Company’s business.

2

(b) Subject to the provisions set forth below, the participation of a non-employee director, directly or indirectly through an Affiliate, in an Excluded Transaction shall not, under this Code, constitute (1) a Corporate Opportunity, (2) a conflict of interest or potential conflict of interest between such director and the Company, or (3) competition with the Company.

(c) If a non-employee director has manifested interest in participating in an Excluded Transaction and, thereafter, the Company manifests an interest in itself pursuing the Real Estate Acquisition that is the subject of the Excluded Transaction, the non-employee director shall (1) disclose to the Board his or her interest in participating in such Excluded Transaction, (2) recuse himself or herself from any Board deliberation or other Company action in respect thereof, and (3) not review or otherwise accept access to any Company documents or other information in respect thereof.

6. Fair Dealing

(a) Each employee, officer and director will at all times deal fairly with the Company’s customers, suppliers, competitors and employees. While employees, officers and directors are expected to work diligently to advance the interests of the Company, they are expected to do so in a manner that is consistent with the highest standards of integrity and ethical dealing.

(b) No employee, officer or director is to take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of facts or any other unfair-dealing practice.

7. Confidentiality

(a) Directors, officers and employees must maintain the confidentiality of all information entrusted to them by the Company or its customers that is treated by them as confidential or is considered confidential under applicable law (such as the Health Insurance Portability and Accountability Act), except when disclosure is authorized by the Company or legally mandated.

• Confidential information includes all information that may be of use to the Company’s competitors, or that could be harmful to the Company or its customers, if disclosed. Confidential information also includes all non-public personal information.

(b) Directors, officers and employees must comply with all confidentiality policies adopted by the Company from time to time, and with confidentiality provisions in agreements to which they or the Company are parties.

8. Protection and Proper Use of Company Assets

(a) Directors, officers and employees will in all practicable ways protect the Company’s assets and ensure their efficient use.

(b) Directors, officers and employees will use the Company’s assets only for the Company’s legitimate business purposes.

3

9. Change in or Waiver of this Code

(a) Any waiver of any provision of this Code must be approved by the Audit Committee, or if any of its members will be personally affected by the waiver, by a committee consisting entirely of independent directors (within the meaning of the New York Stock Exchange listing standards) who will not be personally affected by the waiver.

(b) No waiver of any provision of this Code with regard to a director or executive officer will be effective until that waiver has been reported to the individual responsible for the preparation and filing with the SEC of the Company’s reports on Form 8-K (or any successor to that form) or for disclosure on the Company’s website in sufficient detail to enable that individual to prepare the appropriate disclosure with respect to the waiver.

(c) Any change in or waiver of provisions of this Code will be promptly reported in filings with the SEC on Form 8-K or disclosed on the Company’s website to the full extent required by the SEC’s rules and by any applicable rules of any securities exchange or securities quotation system on which the Company’s securities are listed or quoted.

10. Compliance

(a) In accepting a position with the Company, each officer, director and employee becomes accountable for adhering to this Code.

(b) Directors, officers and employees must report promptly any violations of this Code (including any violations of the requirement of compliance with law). Failure to report a violation can lead to disciplinary action against the individual who failed to report the violation which may be as severe as the disciplinary action against the individual who committed the violation.

(c) Possible violations of this Code by an employee other than an executive officer or director may be reported to Human Resources. Possible violations of this Code by a director or an executive officer should be reported to the Company’s internal audit staff who will inform the Chief Executive Officer (“CEO”), unless the CEO is involved, in which case internal audit will inform the Chairman of the Audit Committee.

Employees may also report possible violations concerning accounting or internal auditing practices anonymously through the Company’s arrangement with EthicsPoint (or such other unaffiliated third party as may be designated by the Company on its website from time to time). Anonymous reports submitted through Ethicspoint will initially be reviewed by the Company’s internal audit staff. You should return to the EthicsPoint web-site at least 48 hours after making your report to see the response from internal audit to your report or to see any follow-up questions that they may have. After internal audit has gathered all relevant facts, the report will be presented to the Chairman of the Audit Committee. It is the Audit Committee’s responsibility to review the facts and circumstances and to determine any necessary action.

Further information concerning the Company’s arrangement with EthicsPoint may be found on the Company’s link at the Ethicspoint website by clicking on the relevant subject headings in the EthicsPoint Secure Area.

(d) The identity of the employee who reports a possible violation of this Code will be kept confidential, except to the extent the employee who reports the possible violation consents to be identified or the identification of that employee is required by law.

4

(e) Possible violations may be reported orally or in writing and may be reported anonymously as described above.

(f) The Company will not allow retaliation for reports of possible violations made in good faith.

(g) The Board shall determine, or designate appropriate persons to determine, appropriate actions to be taken if this Code is violated. Such actions shall be reasonably designed to deter wrongdoing and to promote accountability for adherence to this Code and may include termination of employment or service as a director.

11. Terms used in this Code

(a) “Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, the first named Person.

(b) “Company” means Levitt Corporation and all of its direct and indirect subsidiaries.

(c) “Corporate Opportunity” means:

(a) Any opportunity to engage in a business activity of which a director or senior officer of the Company becomes aware, either (1) in connection with the performance of functions as a director or senior officer of the Company, or under circumstances that should reasonably lead the director or senior officer to believe that the Person offering the opportunity expects it to be offered to the Company; or (2) through the use of corporate information or property, if the resulting opportunity is one that the director or senior officer should reasonably be expected to believe would be of interest to the Company; or

(b) Any opportunity to engage in a business activity of which a senior executive of the Company becomes aware and knows is closely related to a business in which the Company is engaged or expects to engage.

(d) “Director, officer or employee of the Company” means a director or officer of Levitt Corporation or an employee of the Company or of any of its subsidiaries.

(e) “Excluded Transaction” means any Real Estate Acquisition:

(a) of which the non-employee director did not become aware, either (1) in connection with the performance of functions as a director of the Company, or under circumstances that should reasonably lead the director to believe that the Person offering the opportunity expects it to be offered to the Company or (2) through the use of corporate information or property; or

(b) which either is rejected on the Company’s behalf or approved for the non-employee director’s participation by a majority of the Company’s disinterested directors, after being fully informed of the material facts in respect thereof, including the non-employee director’s interests therein.

(f) “Person” means an individual, a partnership, a corporation, a limited liability company, an unlimited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or any governmental authority.

(g) “Real Estate Acquisition” means any acquisition, directly or through an Affiliate of the referenced Person, of improved or unimproved real estate, either directly or through the acquisition of equity or voting securities of a Person, the principal asset of which is such improved or unimproved real estate.

5

EX-21.1

Exhibit 21.1

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt Corporation	Formation
BankAtlantic Venture Partners 1, LLC	Florida
BankAtlantic Venture Partners 2, LLC	Florida
BankAtlantic Venture Partners 3, LLC	Florida
BankAtlantic Venture Partners 4, LLC	Florida
BankAtlantic Venture Partners 7, Inc	Florida
BankAtlantic Venture Partners 8, Inc	Florida
BankAtlantic Venture Partners 9, Inc	Florida
BankAtlantic Venture Partners 10, Inc	Florida
BankAtlantic Venture Partners 14, Inc	Florida
BankAtlantic Venture Partners 15, Inc	Florida
Carolina Oak Homes, LLC	So. Carolina
Core Communities, LLC	Florida
Cypress Creek Holding, LLC	Delaware, Florida (as a foreign LLC)
Levitt and Sons, LLC	Florida
Levitt Commercial, LLC	Florida
Levitt Insurance Service, LLC	Florida
Woodbridge Capital Corporation	Florida

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt Commercial, LLC	Formation
Levitt Commercial Andrews, LLC	Florida
Levitt Commercial Boynton Commerce Center, LLC	Florida
Levitt Commercial High Ridge II, LLC	Florida
Levitt Commercial High Ridge, LLC	Florida
Levitt Commercial Sawgrass, LLC	Florida
Levitt Commercial Development LLC	Florida
Levitt Village at Victoria Park, LLC	Florida

	State or Other Jurisdiction of
Subsidiaries of Levitt Commercial	Incorporation, Organization or
Development, LLC	Formation
Levitt Commercial Construction, LLC	Florida

1

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Core Communities, LLC	Formation
Core Commercial Group, LLC	Florida
Core Commercial Realty, LLC	Florida
Core Communities of Georgia, LLC	Florida
Core Communities of South Carolina, LLC	Florida
Core Communities of South Carolina, LLC (f/k/a Core Communities S.C. Operations, LLC)	So. Carolina
Horizons Acquisition 5, LLC	Florida
Horizons Acquisition 7, LLC	Florida
Horizons St. Lucie Development, LLC	Florida
Lake Charles Development Company, LLC	Florida
Somerset Realty, LLC	Florida
St. Lucie Farms, LLC	Florida
St. Lucie West Development Company, LLC	Florida
St. Lucie West Realty, LLC	Florida
Tradition Brewery, LLC	Florida
Tradition Construction, LLC	Florida
Tradition Development Company, LLC	Florida
Tradition Health & Fitness LLC	Florida
Tradition Irrigation Company, LLC	Florida
Tradition Mortgage, LLC	Florida
Tradition Outfitters, LLC	Florida
Tradition Title Company, LLC	Florida
Tradition Village Center, LLC	Florida

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Core Commercial Group, LLC	Formation
The Landing Holding Company, LLC	Florida
Town Hall at Tradition, LLC	Florida

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Core Commercial Realty, LLC	Formation
Tradition Realty, LLC	Florida

	State or Other Jurisdiction of
Subsidiaries of Core Communities of South	Incorporation, Organization or
Carolina, LLC (S.C. LLC)	Formation
Tradition of South Carolina Brewery, LLC	South Carolina
Tradition of South Carolina Commercial Development, LLC	South Carolina
Tradition of South Carolina Construction, LLC	South Carolina
Tradition of South Carolina Development Company, LLC	South Carolina
Tradition of South Carolina Irrigation Company, LLC	South Carolina
Tradition of South Carolina Marketing, LLC	South Carolina
Tradition of South Carolina Mortgage, LLC	South Carolina
Tradition of South Carolina Real Estate, LLC	South Carolina
Tradition of South Carolina Realty, LLC	South Carolina
Tradition of South Carolina Title Company, LLC	South Carolina
Tradition of South Carolina Town Hall, LLC	South Carolina
Tradition of South Carolina Village Center, LLC	South Carolina
TSCG Club, LLC	South Carolina
TSCGR Holding, LLC	South Carolina
TSCR Club, LLC	South Carolina

2

	State or Other Jurisdiction of
Subsidiaries of Horizons St. Lucie	Incorporation, Organization or
Development, LLC	Formation
Tradition Research Park, LLC	Florida
Florida Center for Innovation at Tradition, LLC	Florida
Village Pointe at Tradition, LLC	Florida

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of The Landing Holding Company, LLC	Formation
The Landing at Tradition Development Company, LLC	Florida

	State or Other Jurisdiction of
Subsidiaries of Tradition Development	Incorporation, Organization of
Company, LLC	Formation
(None at present)

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt and Sons, LLC	Formation
Avalon Park by Levitt and Sons, LLC	Florida
Cascades by Levitt and Sons, LLC	Florida
Levitt and Sons at Hawk’s Haven, LLC	Florida
Levitt and Sons at Hunter’s Creek, LLC	Florida
Levitt and Sons at Tradition, LLC	Florida
Levitt and Sons at World Golf Village, LLC	Florida
Levitt and Sons of Flagler County, LLC	Florida
Levitt and Sons of Georgia, LLC	Georgia
Levitt GP, LLC	Florida
Levitt and Sons of Hernando County, LLC	Florida
Levitt and Sons of Lake County, LLC	Florida
Levitt and Sons of Lee County, LLC	Florida
Levitt and Sons of Manatee County, LLC	Florida
Levitt and Sons of Orange County, LLC	Florida
Levitt and Sons of Osceola County, LLC	Florida
Levitt and Sons of Seminole County, LLC	Florida
Levitt and Sons of South Carolina, LLC (f/k/a Levitt and Sons of the Carolinas, LLC)	South Carolina
Levitt and Sons of Tennessee, LLC	TN
Levitt and Sons, Inc.	Florida
Levitt and Sons, Incorporated	Delaware
Levitt Construction Corp.-East	Florida
Levitt Construction-East, LLC	Florida
Levitt Homes Bellaggio Partners, LLC	Florida
Levitt Homes, LLC	Florida
Levitt Industries, LLC	Florida
Levitt Realty Services, Inc.	Florida
Levitt Realty Services, LLC	Florida
Magnolia Lakes by Levitt and Sons, LLC	Florida
Regency Hills by Levitt and Sons, LLC	Florida

3

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt and Sons of Georgia, LLC	Formation
Levitt and Sons of Cherokee County, LLC	Georgia
Levitt and Sons of Hall County, LLC	Georgia
Levitt and Sons of Paulding County, LLC	Georgia
Levitt and Sons Realty Georgia, LLC	Georgia
Levitt Construction Georgia, LLC	Georgia
Levitt Title, LLC	Georgia

	State or Other Jurisdiction of
Subsidiaries of Levitt and Sons of South	Incorporation, Organization or
Carolina, LLC	Formation
Levitt and Sons of Aiken County, LLC	So. Carolina
Levitt and Sons of Horry County, LLC	So. Carolina
Levitt and Sons Realty South Carolina, LLC	So. Carolina
Levitt Construction-South Carolina, LLC	So. Carolina

	State or Other Jurisdiction of
Subsidiaries of Levitt and Sons of	Incorporation, Organization or
Tennessee, LLC	Formation
Bowden Building Corporation	TN
Levitt and Sons of Nashville, LLC	TN
Levitt and Sons of Shelby County, LLC	TN

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt GP, LLC	Formation
(None at present)

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt Homes, LLC	Formation
BankAtlantic Venture Partners 5, LLC	Florida
Bellaggio by Levitt and Sons, LLC	Florida
Levitt at Amherst, LLC	Florida
Levitt at Huntington Lakes, LLC	Florida
Levitt at Twin Acres, LLC	Florida
Levitt at Westchester West, LLC	Florida
Levitt at Westchester, LLC	Florida
Levitt Hagen Ranch, LLC	Florida
Levitt Homes at Waters Edge, Inc.	New York
LM Mortgage Company, LLC	Florida
The Villages at Emerald Lakes, LLC	Florida
U.F.C. Title Insurance Agency, LLC	Florida

	State or Other Jurisdiction of
	Incorporation, Organization or
Subsidiaries of Levitt Industries, LLC	Formation
Lev-Brn, LLC	Florida
Summerport by Levitt and Sons, LLC	Florida

	State or Other Jurisdiction of
Partnerships of Woodbridge Capital	Incorporation, Organization or
Corporation	Formation
Woodbridge Equity Fund LLLP	Florida

4

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-136569) and S-8s (Nos. 333-11728, 333-11729, 333-134975) of Levitt Corporation of our report dated March 17, 2008 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

PricewaterhouseCoopers LLP
Fort Lauderdale, Florida
March 17,2008

/s/ PricewaterhouseCoopers LLP
Certified Public Accountants

EX-23.2

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-136569) and Forms S-8 (Nos. 333-11728, 333-11729 and 333-134975) of our report dated February 26, 2008 with respect to the consolidated financial statements of Bluegreen Corporation as of December 31, 2007 and 2006 and for each of the three years in the period ended December 31, 2007, which are included as an Exhibit in the Levitt Corporation Annual Report (Form 10-K) for the year ended December 31, 2007.

/s/ ERNST & YOUNG LLP
Certified Public Accountants

West Palm Beach, Florida
March 11, 2008

EX-31.1

Exhibit 31.1

I, Alan B. Levan, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Levitt 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 officers 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 officers 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 17, 2008

By:	/s/ Alan B. Levan
	Alan B. Levan,
	Chief Executive Officer

EX-31.2

Exhibit 31.2

I, Patrick M. Worsham, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Levitt 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 officers 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 officers 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 17, 2008

By:	/s/ Patrick M. Worsham
	Patrick M. Worsham,
	Acting Chief Financial Officer

EX-31.3

Exhibit 31.3

I, Jeanne T. Prayther, certify that:

1.	I have reviewed this Annual Report on Form 10-K of Levitt 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 officers 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 officers 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 17, 2008

By:	/s/ Jeanne T. Prayther
	Jeanne T. Prayther,
	Chief Accounting Officer

EX-32.1

Exhibit 32.1

Certificate 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 Levitt Corporation (the “Company”) for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alan B. Levan, 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, as amended; 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
Date: March 17, 2008	Title:	Chief Executive Officer

EX-32.2

Exhibit 32.2

Certificate 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 Levitt Corporation (the “Company”) for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Patrick M. Worsham, Acting 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, as amended; 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/ Patrick M. Worsham
	Name:	Patrick M. Worsham
Date: March 17, 2008	Title:	Acting Chief Financial Officer

EX-32.3

Exhibit 32.3

Certificate 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 Levitt Corporation (the “Company”) for the year ended December 31, 2007, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeanne T. Prayther, Chief Accounting 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, as amended; 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/ Jeanne T. Prayther
	Name:	Jeanne T. Prayther
Date: March 17, 2008	Title:	Chief Accounting Officer

EX-99.1

Exhibit 99.1

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

BLUEGREEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)

	December 31,			December 31,
	2006			2007
ASSETS
Cash and cash equivalents (including restricted cash of $21,476 and $19,460 at December 31, 2006 and 2007, respectively)	$	71,148		$	144,973
Contracts receivable, net		23,856			20,532
Notes receivable (net of allowance of $13,499 and $17,458 at December 31, 2006 and 2007, respectively)		144,251			160,665
Prepaid expenses		10,800			14,824
Other assets		27,465			23,405
Inventory, net		349,333			434,968
Retained interests in notes receivable sold		130,623			141,499
Property and equipment, net		92,445			94,421
Goodwill		4,291			4,291
Total assets	$	854,212		$	1,039,578
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities
Accounts payable	$	18,465		$	38,901
Accrued liabilities and other		49,458			60,421
Deferred income		40,270			36,559
Deferred income taxes		87,624			98,362
Receivable-backed notes payable		21,050			54,999
Lines-of-credit and notes payable		124,412			176,978
10.50% senior secured notes payable		55,000			55,000
Junior subordinated debentures		90,208			110,827
Total liabilities		486,487			632,047
Minority interest		14,702			22,423
Commitments and contingencies
Shareholders’ Equity
Preferred stock, $.01 par value, 1,000 shares authorized; none issued		—			—
Common stock, $.01 par value, 90,000 shares authorized; 33,603 and 33,957 shares issued at December 31, 2006 and 2007, respectively		336			339
Additional paid-in capital		175,164			178,144
Treasury stock, 2,756 common shares at both December 31, 2006 and 2007, at cost		(12,885	)		(12,885	)
Accumulated other comprehensive income, net of income taxes		12,632			9,808
Retained earnings		177,776			209,702
Total shareholders’ equity		353,023			385,108
Total liabilities and shareholders’ equity	$	854,212		$	1,039,578

See accompanying notes to consolidated financial statements.

1

BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)

	Year Ended		Year Ended			Year Ended
	December 31,		December 31,			December 31,
	2005		2006			2007
Revenues:
Gross sales of real estate	$	550,335	$	583,795		$	605,250
Estimated uncollectible VOI notes receivable		—		(59,497	)		(65,242	)
Gains on sales of VOI notes receivable (Resort sales portion)		—		38,848			42,750
Sales of real estate		550,335		563,146			582,758
Other resort and communities operations revenue		73,797		63,610			67,411
Interest income		34,798		40,765			44,703
Sales of notes receivable		25,226		5,852			(3,378	)
		684,156		673,373			691,494
Costs and expenses:
Cost of real estate sales		177,800		179,054			178,731
Cost of other resort and communities operations		77,317		53,193			49,982
Selling, general and administrative expenses		300,239		356,989			377,551
Interest expense		14,474		18,785			24,272
Other expense, net		6,207		2,861			1,743
Provision for loan losses		27,587		—			—
		603,624		610,882			632,279
Income before minority interest and provision for income taxes		80,532		62,491			59,215
Minority interest in income of consolidated subsidiary		4,839		7,319			7,721
Income before provision for income taxes and cumulative effect of change in accounting principles		75,693		55,172			51,494
Provision for income taxes		29,142		20,861			19,568
Income before cumulative effect of change in accounting principle		46,551		34,311			31,926
Cumulative effect of change in accounting principle, net of tax		—		(5,678	)		—
Minority interest in cumulative effect of change in accounting principle		—		1,184			—
Net income	$	46,551	$	29,817		$	31,926
Income before cumulative effect of change in accounting principle per common share:
Basic	$	1.53	$	1.12		$	1.03
Diluted	$	1.49	$	1.10		$	1.02
Cumulative effect of change in accounting principle, net of tax and net of minority interest in income of cumulative effect of change in accounting principle per common share:
Basic	$	—	$	(0.15	)	$	—
Diluted	$	—	$	(0.14	)	$	—
Net income per common share:
Basic	$	1.53	$	0.98		$	1.03
Diluted	$	1.49	$	0.96		$	1.02
Weighted average number of common and common equivalent shares:
Basic		30,381		30,557			30,975
Diluted		31,245		31,097			31,292

See accompanying notes to consolidated financial statements.

2

BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands)

										Accumulated
										Other
	Common				Additional		Treasury			Comprehensive
	Shares		Common		Paid-in		Stock at			Income, Net of			Retained
	Issued		Stock		Capital		Cost			Income Taxes			Earnings		Total
Balance at December 31, 2004		32,990	$	330	$	167,408	$	(12,885	)	$	4,805		$	101,408	$	261,066
Net income		—		—		—		—			—			46,551		46,551
Net unrealized gains on retained interests in notes receivable sold, net of income taxes and reclassification adjustments		—		—		—		—			3,770			—		3,770
Comprehensive income																50,321
Shares issued upon exercise of stock options		271		3		1,403		—			—			—		1,406
Modification of equity awards and vesting of restricted stock		6		—		327		—			—			—		327
Income tax benefit from stock options exercised		—		—		541		—			—			—		541
Shares issued in connection with conversion of 8.25% convertible subordinated debentures		1		—		5		—			—			—		5
Balance at December 31, 2005		33,268		333		169,684		(12,885	)		8,575			147,959		313,666
Net income		—		—		—		—			—			29,817		29,817
Net unrealized gains on retained interests in notes receivable sold, net of income taxes and reclassification adjustments		—		—		—		—			4,057			—		4,057
Comprehensive income																33,874
Shares issued upon exercise of stock options		312		3		2,642		—			—			—		2,645
Stock option expense		—		—		2,103		—			—			—		2,103
Modification of equity awards and vesting of restricted stock		23		—		735		—			—			—		735
Balance at December 31, 2006		33,603		336		175,164		(12,885	)		12,632			177,776		353,023
Net income		—		—		—		—			—			31,926		31,926
Net unrealized losses on retained interests in notes receivable sold, net of income taxes and reclassification adjustments		—		—		—		—			(2,824	)		—		(2,824	)
Comprehensive income																29,102
Shares issued upon exercise of stock options		140		1		558		—			—			—		559
Stock option expense		—		—		2,052		—			—			—		2,052
Vesting of restricted stock		214		2		370		—			—			—		372
Balance at December 31, 2007		33,957	$	339	$	178,144	$	(12,885	)	$	9,808		$	209,702	$	385,108

See accompanying notes to consolidated financial statements.

3

BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

	Year Ended			Year Ended			Year Ended
	December 31,			December 31,			December 31,
	2005			2006			2007
Operating activities:
Net income	$	46,551		$	29,817		$	31,926
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Cumulative effect of change in accounting principle, net		—			5,678			—
Non-cash stock compensation expense		327			2,848			2,422
Minority interest in income of consolidated subsidiary		4,839			6,135			7,721
Depreciation		12,332			14,376			14,489
Amortization		5,807			2,793			3,180
Gain on sales of notes receivable		(25,226	)		(44,700	)		(39,372	)
Loss on disposal of property and equipment		94			2,096			688
Provision for loan losses		27,587			59,489			65,419
Provision for deferred income taxes		16,979			12,835			12,468
Interest accretion on retained interests in notes receivable sold		(9,310	)		(14,569	)		(15,157	)
Proceeds from sales of notes receivable		198,260			218,455			229,067
Changes in operating assets and liabilities:
Contracts receivable		612			3,854			3,324
Notes receivable		(220,491	)		(283,305	)		(305,972	)
Prepaid expenses and other assets		2,120			(12,009	)		(473	)
Inventory		29,022			(8,273	)		(59,322	)
Accounts payable, accrued liabilities and other		6,022			12,906			28,471
Net cash provided (used) by operating activities		95,525			8,426			(21,121	)
Investing activities:
Cash received from retained interests in notes receivable sold		11,016			30,032			35,949
Business acquisition		(675	)		—			—
Investments in statutory business trusts		(1,780	)		(928	)		(619	)
Purchases of property and equipment		(16,724	)		(24,736	)		(15,855	)
Proceeds from sales of property and equipment		22			93			2
Net cash (used) provided by investing activities		(8,141	)		4,461			19,477
Financing activities:
Proceeds from borrowings collateralized by notes receivable		24,772			68,393			151,973
Payments on borrowings collateralized by notes receivable.		(64,714	)		(85,114	)		(120,145	)
Proceeds from borrowings under line-of-credit facilities and notes payable		26,382			56,670			147,835
Payments under line-of-credit facilities and notes payable		(92,071	)		(94,586	)		(123,320	)
Payments on 10.50% senior secured notes		(55,000	)		—			—
Proceeds from issuance of junior subordinated debentures		59,280			30,928			20,619
Payments of debt issuance costs		(3,300	)		(4,438	)		(2,052	)
Proceeds from exercise of employee and director stock options		1,406			2,645			559
Distributions to minority interest		—			(941	)		—
Net cash (used) provided by financing activities		(103,245	)		(26,443	)		75,469
Net (decrease) increase in cash and cash equivalents		(15,861	)		(13,556	)		73,825
Cash and cash equivalents at beginning of period		100,565			84,704			71,148
Cash and cash equivalents at end of period		84,704			71,148			144,973
Restricted cash and cash equivalents at end of period		(18,321	)		(21,476	)		(19,460	)
Unrestricted cash and cash equivalents at end of period	$	66,383		$	49,672		$	125,513

See accompanying notes to consolidated financial statements.

4

BLUEGREEN CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)
(in thousands)

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2005		2006		2007
Supplemental schedule of non-cash operating, investing and financing activities:
Inventory acquired through foreclosure or deedback in lieu of foreclosure	$	10,585	$	—	$	—
Inventory acquired through financing	$	54,054	$	95,698	$	26,425
Property and equipment acquired through financing	$	1,114	$	4,640	$	1,188
Offset of Joint Venture distribution of operating proceeds to minority interest against the Prepayment (see Note 4)	$	1,340	$	—	$	—
Retained interests in notes receivable sold	$	38,913	$	33,967	$	36,222
Change in unrealized gains on retained interests in notes receivable sold	$	6,130	$	6,423	$	(4,554	)
Income tax benefit from stock options exercised	$	541	$	—	$	—
Supplemental schedule of operating cash flow information:
Interest paid, net of amounts capitalized	$	15,955	$	17,171	$	24,407
Income taxes paid	$	6,646	$	10,064	$	9,823

See accompanying notes to consolidated financial statements.

5

BLUEGREEN CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Significant Accounting Policies

Organization

We provide Colorful Places to Live and Play^® through our resorts and residential communities businesses. Our resorts business (“Bluegreen Resorts”) acquires, develops, markets, sells and manages real estate-based vacation ownership interests (“VOIs”) in resorts generally located in popular, high-volume, “drive-to” vacation destinations. VOIs in our resorts typically entitle the buyer to use resort accommodations through an annual or biennial allotment of “points” which represent their ownership and beneficial use rights in perpetuity in our Bluegreen Vacation Club (supported by an underlying deeded VOI held in trust for the buyer). Depending on the extent of their ownership and beneficial rights, members in our Bluegreen Vacation Club may stay in any of our participating resorts or take advantage of an exchange program offered by a third-party world-wide vacation ownership exchange network of over 3,700 resorts and other vacation experiences such as cruises and hotel stays. We are currently marketing and selling VOIs in 22 resorts located in the United States and Aruba. We also sell VOIs at seven off-site sales offices and on the campus of one resort under development located in the United States. Additionally, club members who acquired or upgraded their VOIs on or after November 1, 2007 also have access to 18 Shell Vacation Club (“Shell”) resorts, through our Select Connections™ joint venture with Shell. Shell is an unaffiliated privately-held resort developer. Our residential communities business (“Bluegreen Communities”) acquires, develops and subdivides property and markets residential homesites, the majority of which are sold directly to retail customers who seek to build a home in a high quality residential setting, in some cases on properties featuring a golf course and other related amenities. Our other resort and communities operations revenues consist primarily of resort property management services, resort title services, resort amenity operations, non-cash sales incentives provided to buyers of VOIs, rental brokerage services, realty operations and daily-fee golf course operations. We also generate significant interest income by providing financing to individual purchasers of VOIs.

Principles of Consolidation

Our consolidated financial statements include the accounts of all of our wholly-owned subsidiaries and entities in which we hold a controlling financial interest. The only non-wholly owned subsidiary that we consolidate is Bluegreen/Big Cedar Vacations, LLC (the “Bluegreen/Big Cedar Joint Venture”), as we hold a 51% equity interest in the Bluegreen/Big Cedar Joint Venture, have an active role as the day-to-day manager of the Bluegreen/Big Cedar Joint Venture’s activities, and have majority voting control of the Bluegreen/Big Cedar Joint Venture’s management committee. We do not consolidate our statutory business trusts (see Note 13) formed to issue trust preferred securities as these entities are each variable interest entities in which we are not the primary beneficiary as defined by Financial Accounting Standards Board (“FASB”) Interpretation No. 46R (“FIN No. 46R”). The statutory business trusts are accounted for under the equity method of accounting. We have eliminated all significant intercompany balances and transactions.

Use of Estimates

United States generally accepted accounting principles require us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Cash and Cash Equivalents

We invest cash in excess of our immediate operating requirements in short-term time deposits and money market instruments generally with original maturities at the date of purchase of three months or less. We maintain cash and cash equivalents with various financial institutions. These financial institutions are located throughout the United States, Canada and Aruba. Our policy is designed to limit exposure to any one institution. However, a significant portion of our unrestricted cash is maintained with a single bank and, accordingly, we are subject to credit risk. Periodic evaluations of the relative credit standing of financial institutions maintaining our deposits are performed to evaluate and mitigate, if necessary, credit risk.

Restricted cash consists primarily of customer deposits held in escrow accounts.

6

Revenue Recognition and Contracts Receivable

In accordance with the requirements of Statement of Financial Accounting Standards (“SFAS”) No. 66, Accounting for Sales of Real Estate, as amended by SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions (“SFAS No. 152”), we recognize revenue on VOI and homesite 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 we have completed substantially all of our obligations with respect to any development related to the real estate sold. We believe that we use a reasonably reliable methodology to estimate the collectibility of the receivables representing the remainder of the sales price of real estate sold. See the further discussion of our policies regarding the estimation of credit losses on our notes receivable below. Should our estimates regarding the collectibility of our receivables change adversely, we may have to defer the recognition of sales and our results of operations could be negatively impacted. Upon the adoption of SFAS No. 152 on January 1, 2006, the calculation of the adequacy of a buyer’s commitment for the sale of VOIs changed so that cash received towards the purchase of our VOIs is reduced by the value of certain incentives provided to the buyer at the time of sale. If after considering the value of the incentive 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. Changes to the quantity, type, or value of sales incentives that we provide to buyers of our VOIs may result in additional VOI sales being deferred, and thus our results of operations could be materially adversely impacted.

In cases where all development has not been completed, we recognize revenue in accordance with the percentage-of-completion method of accounting. Should our estimates of the total anticipated cost of completing one of our Bluegreen Resorts’ or Bluegreen Communities’ projects increase, we may be required to defer a greater amount of revenue or may be required to defer revenue for a longer period of time, and thus our results of operations could be materially adversely impacted.

Contracts receivable consists of: (1) amounts receivable from customers on recent sales of VOIs pending recording of the customers’ notes receivable in our loan servicing system; (2) receivables related to unclosed homesite sales; and, (3) receivables from third-party escrow agents on recently closed homesite sales. Contracts receivable are reflected net of an allowance for cancellations of unclosed Bluegreen Communities’ sales contracts, which totaled approximately $0.6 million and $0.3 million at December 31, 2006 and 2007, respectively. Contracts receivable are stated net of a reserve for loan losses of $0.5 million and $0.9 million at December 31, 2006 and 2007, respectively.

Our other resort and communities operations revenues consist primarily of sales and service fees from the activities listed below. The table provides a brief description of the applicable revenue recognition policy:

Activity	Revenue is recognized as:
Vacation ownership tour sales	Vacation ownership tour sales commissions are earned per contract terms with third parties.
Resort title fees	Escrow amounts are released and title documents are completed.
Management fees	Management services are rendered.
Rental commissions	Rental services are provided.
Rental income	Guests complete stays at the resorts. Effective January 1, 2006, rental income is classified as a reduction to “Cost of other resort and communities operations”.
Realty commissions	Sales of third-party-owned real estate are completed.
Golf course and ski hill daily fees	Services are provided.
Mini-vacation package sales to third parties	Mini-vacation packages are fulfilled (i.e., guests use mini- vacation packages to stay at a hotel, take a cruise, etc.). During 2006, we transitioned our mini-vacation business so that substantially all mini-vacation tours are used internally at a Bluegreen sales office. Mini-vacation packages used for internal purposes are deferred and recognized as a credit to marketing expense.

7

Our cost of other resort and communities operations consists of the costs associated with the various revenues described above as well as developer subsidies and maintenance fees on our unsold VOIs.

Notes Receivable

Our notes receivable are carried at amortized cost less an allowance for bad debts. Interest income is suspended and previously accrued but unpaid interest income is reversed on all delinquent notes receivable when principal or interest payments are more than three months contractually past due and not resumed until such loans are less than three months past due. As of December 31, 2006 and 2007, $3.0 million and $3.1 million, respectively, of our notes receivable were more than three months contractually past due and, hence, were not accruing interest income.

Prior to January 1, 2006, we estimated credit losses on our notes receivable portfolios generated in connection with the sale of VOIs and homesites in accordance with SFAS No. 5, Accounting for Contingencies, as our notes receivable portfolios consisted of large groups of smaller-balance, homogeneous loans. Consistent with Staff Accounting Bulletin No. 102, Selected Loan Loss Allowance Methodology and Documentation Issues, we first segmented our notes receivable by identifying risk characteristics that are common to groups of loans and then estimated credit losses based on the risks associated with these segments. Under this method, the amount of loss was reduced by the estimated value of the defaulted inventory to be recovered. Although this policy continues for notes receivable generated in connection with the sale of homesites, effective January 1, 2006, we changed our accounting for loan losses for VOI notes receivable in accordance with SFAS No. 152. Under SFAS No. 152, we estimate uncollectibles based on historical uncollectibles for similar VOI notes receivable over the applicable historical period. We use a static pool analysis, which tracks uncollectibles for each year’s sales over the entire life of those notes. We also consider whether the historical economic conditions are comparable to current economic conditions. Additionally, under SFAS No. 152 no consideration is given for future recoveries of defaulted inventory in the estimate of uncollectible VOI notes receivable. We review our reserve for loan losses on at least a quarterly basis.

Retained Interest in Notes Receivable Sold

When we sell our notes receivable either pursuant to our vacation ownership receivables purchase facilities (more fully described in Note 6) or through term securitizations, we evaluate whether or not such transfers should be accounted for as a sale pursuant to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (“SFAS No. 140”) and related interpretations. The evaluation of sale treatment under SFAS No. 140 involves legal assessments of the transactions, which include determining whether the transferred assets have been isolated from us (i.e., put presumptively beyond our reach and the reach of our creditors, even in bankruptcy or other receivership), determining whether each transferee has the right to pledge or exchange the assets it received, and ensuring that we do not maintain effective control over the transferred assets through either an agreement that either: (1) entitles and obligates us to repurchase or redeem the assets before their maturity; or (2) provides us with the ability to unilaterally cause the holder to return the assets (other than through a cleanup call).

In connection with such transactions, we retain subordinated tranches and rights to excess interest spread which are retained interests in the notes receivable sold. Gain or loss on the sale of the receivables depends in part on the allocation of the previous carrying amount of the financial assets involved in the transfer between the assets sold and the retained interests based on their relative fair value at the date of transfer.

We consider our retained interests in notes receivable sold as available-for-sale investments and, accordingly, carry them at fair value in accordance with SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities. Unrealized gains or losses on our retained interests in notes receivable sold are included in our shareholders’ equity as accumulated other comprehensive income, net of income taxes. Declines in fair value that are determined to be other than temporary are charged to operations.

We measure the fair value of the retained interests in the notes receivable sold initially and on a quarterly basis based on the present value of estimated future expected cash flows using our best estimates of the key assumptions — prepayment rates, loss severity rates, default rates and discount rates commensurate with the risks involved. Interest on the retained interests in notes receivable sold is accreted using the effective yield method.

Inventory

Our inventory consists of completed VOIs, VOIs under construction, land held for future vacation ownership development and residential land acquired or developed for sale. We carry our inventory at the lower of cost, including costs of improvements and amenities incurred subsequent to acquisition, capitalized interest, real estate taxes and other

8

costs incurred during construction, or estimated fair value, less cost to dispose. Through December 31, 2005, homesites and VOIs reacquired upon default of the related receivable were considered held for sale and were recorded at fair value less costs to sell. Although this practice continues for homesites reacquired, the adoption of SFAS No. 152 on January 1, 2006 changed our method of accounting for VOI inventory, including future recoveries from defaults. Under SFAS No. 152, VOI inventory and cost of sales is accounted for using the relative sales value method. 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 VOI inventory repossessed, generally as a result of the default of the related receivable. Also, pursuant to SFAS No. 152, we do not relieve inventory for VOI cost of sales related to anticipated credit losses. We periodically evaluate the recovery of the carrying amount of our individual resort and residential communities’ properties under the guidelines of SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets (“SFAS No. 144”).

Property and Equipment

Our property and equipment acquired is recorded at cost. We record depreciation and amortization in a manner that recognizes the cost of our depreciable assets in operations over their estimated useful lives using the straight-line method. Leasehold improvements are amortized over the shorter of the terms of the underlying leases or the estimated useful lives of the improvements. Depreciation expense includes the amortization of assets recorded under capital leases. We evaluate the recovery of the carrying amounts of our long-lived assets under the guidelines of SFAS No. 144.

Goodwill

Our goodwill primarily relates to a business combination whereupon Great Vacation Destinations, Inc. (“GVD”), one of our wholly-owned subsidiaries, acquired substantially all the assets and assumed certain liabilities of TakeMeOnVacation, LLC, RVM Promotions, LLC, and RVM Vacations, LLC (collectively, “TMOV”) in 2002. As of December 31, 2006 and 2007, goodwill was allocated to our Resorts Division. We account for our goodwill under the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. This statement requires that goodwill deemed to have indefinite lives not be amortized, but rather be tested for impairment on an annual basis. Our impairment analysis during the years ended December 31, 2005, 2006, and 2007 determined that no goodwill impairment existed.

Treasury Stock

We account for repurchases of our common stock using the cost method with common stock in treasury classified in our consolidated balance sheets as a reduction of shareholders’ equity.

Advertising Expense

We expense advertising costs as incurred. Advertising expense was $102.7 million, $123.0 million and $130.5 million for the years ended December 31, 2005, 2006, and 2007, respectively. Advertising expense is included in selling, general and administrative expenses in our consolidated statements of income.

Stock-Based Compensation

We recognize stock-based compensation expense under the provisions of SFAS No. 123R, Share-Based Payment (revised 2004) (“SFAS No. 123R”), which we adopted January 1, 2006, utilizing the modified prospective method.

We utilize the Black-Scholes option pricing model for calculating the fair value of each option granted. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, this model requires the input of subjective assumptions, including the expected price volatility of the underlying stock. Projected data related to the expected volatility and expected life of stock options is based upon historical and other information. Changes in these subjective assumptions can materially affect the fair value of the estimate, and therefore, the existing valuation models do not provide a precise measure of the fair value of our employee stock options. Additionally, SFAS No. 123R also requires us to estimate forfeitures in calculating the expense relating to stock-based compensation.

There were 440,000 stock options granted to our employees during 2006. There were 142,785 stock options and 17,497 shares of restricted common stock granted to our non-employee directors during 2006. During 2007 there were no stock options granted and there were 196,850 shares of restricted stock granted to our employees. Additionally, during 2007 there were 136,494 stock options and 16,696 shares of restricted common stock granted to our non-employee directors.

9

All stock options were granted with an exercise price equal to the closing price of our common stock on the date of grant.

The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	During the year ended December 31,
	2005			2006			2007
Risk free investment rate		3.9	%		5.0	%		4.9	%
Dividend yield		0.0	%		0.0	%		0.0	%
Volatility factor of expected market price		61.0	%		53.0	%		45.8	%
Life of option	5.5 years			5.8 years			5.0 years

The Company uses historical data to estimate option exercise behavior and employee termination. The risk free investment rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The Company uses the historical volatility of the Company’s traded stock to estimate the volatility factor of expected market price.

We recognize stock-based compensation expense on a straight-line basis over the service or vesting period of the instrument. Total compensation costs related to stock-based compensation charged against income during the year ended December 31, 2007 was $2.4 million. Total stock-based compensation recorded in 2007 consists of $2.0 million related to the expense of existing and newly granted stock options and $0.4 million related to existing and newly granted restricted stock. At the grant date, the Company estimates the numbers of shares expected to vest and subsequently adjusts compensation costs for the estimated rate of forfeitures at the option grant date and on an annual basis. The Company uses historical data to estimate option exercise behavior and employee termination in determining the estimated forfeiture rate. The estimated forfeiture rate applied as of the most recent option grant date during 2007 was 16%. Total compensation costs related to stock-based compensation charged against income during the year ended December 31, 2006 was $2.8 million. Total stock-based compensation recorded in 2006 consists of $2.1 million related to the expense of existing and newly granted stock options, $0.2 million related to existing and newly granted restricted stock, and $0.6 million related to the modification of existing stock option grants, which accelerated the vesting of approximately 85,000 stock options for one employee.

As of December 31, 2007, there were approximately $7.7 million of total unrecognized compensation costs related to non-vested stock-based compensation arrangements under our stock compensation plans. The costs for stock options granted are expected to be recognized over a weighted-average period of 2.6 years. The costs for restricted stock granted are expected to be recognized over a weighted-average period of 4.3 years During the years ended December 31, 2005, 2006, and 2007 the total fair value of shares vested was $2.3 million, $1.8 million and $616,000, respectively. A summary of the status of the Company’s non-vested restricted shares as of December 31, 2007, and changes during the year ended December 31, 2007, is as follows:

				Weighted-Average
	Number			Grant-Date
Non-vested Restricted Shares	of Shares			Fair Value
	(in 000's)
Non-vested at January 1, 2007		14,482		$	12.91
Granted		213,546			11.98
Vested		(17,097	)		11.70
Forfeited		—
Non-vested at December 31, 2007		210,931		$	12.07

SFAS No. 123R requires companies to continue to provide the pro forma disclosures required by SFAS No. 123, as amended for all periods presented in which share-based payments were accounted for under the intrinsic value method of APB 25. The following table illustrates the pro forma effect on net income and earnings per common share as if we had applied the fair-value recognition provisions of SFAS No. 123 to all of our share-based compensation awards for periods prior to the adoption of SFAS No. 123R (in thousands, except per share data):

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	Year Ended
	December 31,
	2005
Net income, as reported	$	46,551
Add: Total stock-based compensation expense included in the determination of reported net income, net of related tax effects		207
Deduct: Total stock-based compensation expense determined under the fair value-based method for all awards, net of related tax effects		(1,493	)
Pro forma net income	$	45,265
Earnings per share, as reported:
Basic	$	1.53
Diluted	$	1.49
Pro forma earnings per share:
Basic	$	1.49
Diluted	$	1.45

Earnings Per Common Share

We compute basic earnings per common share by dividing net income by the weighted-average number of common shares outstanding. Diluted earnings per common share is computed in the same manner as basic earnings per share, but also gives effect to all dilutive stock options and unvested restricted shares using the treasury stock method. There were approximately 0.8 million, 0.8 million, and 1.3 million stock options not included in diluted earnings per common share during the years ended December 31, 2005, 2006, and 2007, respectively, as the effect would be anti-dilutive.

The following table sets forth our computation of basic and diluted earnings per common share (in thousands, except per share data):

	Year Ended December 31,
	2005		2006		2007
Basic and diluted earnings per common share — numerator:
Net income	$	46,551	$	29,817	$	31,926
Denominator:
Denominator for basic earnings per common share-weighted-average shares		30,381		30,557		30,975
Effect of dilutive securities:
Stock options and unvested restricted stock		864		540		317
Denominator for diluted earnings per common share-adjusted weighted-average shares and assumed conversions		31,245		31,097		31,292
Basic earnings per common share:	$	1.53	$	0.98	$	1.03
Diluted earnings per common share:	$	1.49	$	0.96	$	1.02

Comprehensive Income

SFAS No. 130, Reporting Comprehensive Income, requires the change in net unrealized gains or losses on our retained interests in notes receivable sold, which are held as available-for-sale investments, to be included in other comprehensive income. Comprehensive income is shown as a subtotal within our consolidated statements of shareholders’ equity for each period presented.

Recent Accounting Pronouncements Not Yet Adopted

In September 2006, the FASB issued FAS No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a methodology for measuring fair value, and expands the required disclosure for fair value measurements. SFAS No. 157 is effective for us beginning with our 2008 fiscal year, at which time it will be applied prospectively. In February 2008, the FASB agreed to partially defer the effective date, for one year, of SFAS No. 157,

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for non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis. We are currently evaluating the impact that FAS No. 157 will have on our financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value and is effective for us beginning with our 2008 fiscal year. We do not expect to elect the fair value measurement option for any financial assets or liabilities at the present time.

On December 4, 2007, the FASB issued SFAS No. 141 (Revised 2007), Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) will significantly change the accounting for business combinations. Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. SFAS No. 141(R) must be applied prospectively to business combinations for which the acquisition date is on or after January 1, 2009. We are currently evaluating the impact that SFAS No. 141(R) will have on our financial statements.

On December 4, 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements-an Amendment of Accounting Research Bulletin (“ARB”) No. 51 (“SFAS No. 160”). SFAS No. 160 establishes new accounting and reporting standards for a non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. Specifically, this statement requires the recognition of a non-controlling interest (minority interest) as equity in the consolidated financial statements separate from the parent’s equity. The amount of net income attributable to the non-controlling interest will be included in consolidated net income on the face of the income statement. SFAS No. 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. Such gain or loss will be measured using the fair value of the non-controlling equity investment on the deconsolidation date. SFAS No. 160 also includes expanded disclosure requirements regarding the interests of the parent and its non-controlling interest. SFAS No. 160 is effective for us beginning with our 2009 fiscal year. We are currently evaluating the impact that SFAS No. 160 will have on our financial statements.

2. Cumulative Effect of Change in Accounting Principle

Effective January 1, 2006, we adopted SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions (“SFAS No. 152”). This statement amends SFAS No. 66, Accounting for Sales of Real Estate, and SFAS No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, in association with the issuance of American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) 04-2, Accounting for Real Estate Time-Sharing Transactions. SFAS No. 152 was issued to address the diversity in practice resulting from a lack of guidance specific to the timeshare industry. Among other things, the new standard addresses the treatment of sales incentives provided by a seller to a buyer to consummate a transaction, the calculation of and presentation of uncollectible notes receivable, the recognition of changes in inventory cost estimates, recovery or repossession of VOIs, selling and marketing costs, operations during holding periods, developer subsidies to property owners’ associations and upgrade and reload transactions. Restatement of previously reported financial statements is not permitted. Accordingly, as a result of the adoption of SFAS No. 152, our financial statements for periods beginning on or after January 1, 2006, are not comparable, in certain respects, with those prepared for periods ended prior to January 1, 2006.

Many sellers of timeshare interests, including us, provide incentives to customers in connection with the purchase of a VOI. Under SFAS No. 152, the value of certain incentives and other similarly treated items are either recorded as a reduction to VOI revenue or recorded in a separate revenue line item within the statements of income, in our case other resort and communities operations revenue. Furthermore, SFAS No. 152 requires that certain incentives and other similarly treated items such as cash credits earned through our Sampler Program be considered in calculating the buyer’s down payment toward the buyer’s commitment, as defined in SFAS No. 152, in purchasing the VOI. Our Sampler Program provides purchasers with an opportunity to utilize our VOI product during a one year trial period. In the event the Sampler package purchaser subsequently purchases a VOI interest from us, a portion of the amount paid for their Sampler Package is credited toward the down payment on the subsequent purchase. Under SFAS No. 152, the credit given is treated similarly to a sales incentive. If after considering the sales incentive the required buyer’s commitment amount, defined as 10% of sales value, is not met, the VOI revenue and related cost of sales and direct selling costs are deferred until the buyer’s commitment test is satisfied, generally through the receipt of required mortgage note payments from the buyer. The net deferred VOI revenue and related costs are recorded as a component of deferred income in the accompanying balance sheets as of December 31, 2006 and 2007. Prior to the adoption of

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SFAS No. 152, sales incentives were not recorded apart from VOI revenue and were not considered in determining the customer down payment required in the buyer’s commitment in purchasing the VOIs.

SFAS No. 152 also amends the relative sales value method of recording VOI cost of sales. Specifically, consideration is now given not only to the costs to build or acquire a project and the total revenue expected to be earned on a project, but also to the sales of recovered VOI interests reacquired on future cancelled or defaulted sales. The cost of VOI sales is calculated by estimating these future costs and recoveries. Prior to the adoption of SFAS No. 152, we did not include the recovery of VOIs in our projected revenues in determining the related cost of the VOIs sold.

SFAS No. 152 changes the treatment of losses on VOI notes and contracts receivable and provides specific guidance on methods to estimate losses. Specifically, SFAS No. 152 requires that the estimated losses on originated mortgages exclude an estimate for the value of recoveries as the recoveries are to be considered in inventory costing, as described above. In addition, the standard requires a change in the classification of our provision for loan losses for VOI receivables that were historically recorded as an expense, requiring that such amount be reflected as a reduction of VOI sales. Furthermore, if we sell our VOI notes receivables in a transaction that qualifies for off-balance sheet sales treatment under SFAS No. 140, the associated allowance for loan losses related to the sold receivables is reversed and reflected as an increase to VOI sales. Prior to the adoption of SFAS No. 152, the reversal of the allowance on sold receivables was recorded as a component of the gain on sale.

Under SFAS No.152, rental operations, including the usage of our Sampler Program, are accounted for as incidental operations whereby incremental costs in excess of incremental revenue are charged to expense as incurred. Conversely, incremental revenue in excess of incremental costs is recorded as a reduction to VOI inventory. Incremental costs include costs that have been incurred by us during the holding period of the unsold VOIs, such as developer subsidies and maintenance fees. During 2006 and 2007, all of our rental revenue and Sampler revenue recognized was recorded as an off-set to cost of other resort and communities operations revenue as such amounts were less than the incremental cost. Prior to the adoption of SFAS No. 152, rental revenues were separately presented in the consolidated statements of income as a component of other resort and communities operations revenue and a portion of Sampler proceeds was deferred until the buyer purchased a VOI or the Sampler usage period expired.

The adoption of SFAS No. 152 on January 1, 2006, resulted in a net charge of $4.5 million, which is presented as a cumulative effect of change in accounting principle, net of the related tax benefit and the charge related to minority interest.

3. Joint Venture

On June 16, 2000, one of our wholly-owned subsidiaries entered into an agreement with Big Cedar LLC (“Big Cedar”), an affiliate of Bass Pro, Inc. (“Bass Pro”), to form the Joint Venture, a vacation ownership development, marketing and sales limited liability company. We have a 51% ownership interest in the Joint Venture, while Big Cedar owns 49%. Under the terms of the original agreement, the Joint Venture was developing, marketing and selling VOIs at The Bluegreen Wilderness Club at Big Cedar, a 324-unit, 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. In December 2007, the agreement was amended to include the development, marketing, and selling of timeshare interests in additional property purchased by the Joint Venture in September 2007. The agreement, as amended, also requires that the Joint Venture pay Big Cedar a fee on sales of newly developed timeshare interests for promotional, marketing, and advertising services.

In addition to its 51% ownership interest, we also receive a quarterly management fee from the Joint Venture equal to 3% of the Joint Venture’s net sales in exchange for our involvement in the day-to-day operations of the Joint Venture. We also service the Joint Venture’s notes receivable in exchange for a servicing fee.

Based on our role as the day-to-day manager of the Joint Venture, its majority control of the Joint Venture’s Management Committee and our controlling financial interest in the Joint Venture, the accounts of the Joint Venture are consolidated in our financial statements.

Because the Joint Venture has a finite life (i.e., the Joint Venture can only exist through the earlier of: i) December 31, 2057; ii) the sale or disposition of all or substantially all of the assets of the Joint Venture; iii) a decision to dissolve the Joint Venture by us and Big Cedar; or iv) certain other events described in the Joint Venture agreement), the minority interest in the Joint Venture meets the definition of a mandatorily redeemable non-controlling interest as specified in SFAS No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. The settlement value of this mandatorily redeemable non-controlling interest at December 31, 2006 and 2007 was $15.2

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million and $22.9 million, respectively, based on the sale or disposition of all or substantially all of the assets of the Joint Venture as of those respective dates.

During the years ended December 31, 2005, 2006, and 2007, the Joint Venture paid approximately $0.6 million, $0.5 million, and $0.1 million, respectively, to Bass Pro and affiliates for construction management services and furniture and fixtures in connection with the development of the Joint Venture’s vacation ownership resort and sales office. In addition, the Joint Venture paid Big Cedar and affiliates approximately $2.0 million, $2.9 million, and $2.1 million for gift certificates and hotel lodging during the year ended December 31, 2005, 2006, and 2007, respectively, in connection with the Joint Venture’s marketing activities.

4. Marketing Agreement

On June 16, 2000, we entered into an exclusive, 10-year marketing agreement with Bass Pro, a privately-held retailer of fishing, marine, hunting, camping and sports gear. Bass Pro is an affiliate of Big Cedar (see Note 3). Pursuant to the agreement, we have the right to market our VOIs at each of Bass Pro’s national retail locations (we were in 45 of Bass Pro’s stores as of December 31, 2007), in Bass Pro’s catalogs and on its web site. We also have access to Bass Pro’s customer lists. In exchange for these services, we compensate Bass Pro based on the overall success of the marketing activities. The amount of compensation is dependent on the level of additional marketing efforts required by us to convert the prospect into a sale and a defined time frame for such marketing efforts. No compensation was paid to Bass Pro on sales made by the Joint Venture. In 2005, 2006, and 2007, we recognized marketing compensation expense to Bass Pro of approximately $5.2 million, $6.4 million, and $6.6 million, respectively. In December 2007, the marketing agreement was amended to extend through January 1, 2015 and also requires us to make a non-interest bearing annual prepayment to Big Cedar on or before January 1 each year, which operates as an advance payment for anticipated commissions to be earned in the upcoming year. The annual prepayment will be equal to 100% of the estimated amount of commissions generated during the upcoming year, as determined by the us and Big Cedar, not to exceed $5,000,000. No additional commissions will be paid to Big Cedar during any year, until the annual prepayment for that year has been fully earned.

On June 16, 2000, we prepaid $9.0 million to Bass Pro (the “2000 Prepayment”). The Prepayment was fully amortized from compensation earned by Bass Pro and distributions otherwise payable to Big Cedar from the earnings of the Joint Venture as a member thereof through December 31, 2005. Additional compensation and member distributions will be paid in cash to Bass Pro or Big Cedar. During 2006, the Joint Venture made a member distribution of $1.9 million. Of the 2005 distribution, $1.3 million was payable to Big Cedar and used to pay down the balance of the Prepayment. As of December 31, 2005, the 2000 Prepayment was fully amortized.

In December 2007 and simultaneous with entering into the amended joint venture agreement, described above Note 3, we extended our marketing arrangement through January 1, 2015 with Bass Pro, a privately-held retailer of fishing, marine, hunting, camping and sports gear, and certain Bass Pro affiliates including Big Cedar, by entering into an Amended and Restated Marketing and Promotions Agreement (“Amended M&P Agreement”). Pursuant to the Amended M&P Agreement, we will continue to have the right to market our timeshare interests at each of Bass Pro’s retail locations, in Bass Pro’s catalogs and on its website, as well as through other marketing channels. In exchange for access to these marketing channels, we will pay Big Cedar (on behalf of itself and its affiliates) a commission on sales of our timeshare interests made to purchasers generated from the Bass Pro/Big Cedar marketing channels described above. There is no commission paid by on sales made by the Joint Venture or on sales of Joint Venture timeshare interests.

During the years ended December 31, 2005, 2006, and 2007, we paid affiliates of Bass Pro approximately $89,000, $2.1 million, and $3.3 million, respectively, for various services including tour costs, premiums and lead generation, as well as $4.0 million during 2007 for prepaid commissions to be earned by Big Cedar in 2008 under the amended marketing agreement described above.

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5. Notes Receivable

The table below sets forth additional information relative to our notes receivable (in thousands).

	As of December 31,
	2006			2007
Notes receivable secured by VOIs	$	150,649		$	172,787
Notes receivable secured by homesites		6,915			5,336
Other notes receivable		186			—
Notes receivable, gross		157,750			178,123
Allowance for loan losses		(13,499	)		(17,458	)
Notes receivable, net	$	144,251		$	160,665

The weighted-average interest rate on our notes receivable was 14.2% and 13.8% at December 31, 2006 and 2007, respectively. All of our VOI loans bear interest at fixed rates. The weighted average interest rate charged on loans secured by VOIs was 14.3% and 13.9% at December 31, 2006 and 2007, respectively. Approximately 79% of our notes receivable secured by homesites bear interest at variable rates, while the balance bears interest at fixed rates. The weighted average interest rate charged on loans secured by homesites was 11.9% and 12.1% at December 31, 2006 and 2007, respectively.

Our vacation ownership loans are generally secured by property located in Florida, Michigan, Missouri, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin and Aruba. The majority of Bluegreen Communities’ notes receivable are secured by homesites in Georgia, Texas and Virginia.

The table below sets forth the activity in our allowance for uncollectible notes receivable for 2006 and 2007 (in thousands):

	Year Ended
	December 31,
	2006			2007
Balance, beginning of year	$	10,869		$	13,499
Adjustment for cumulative effect of change in accounting principle		1,164			—
Provision for loan losses		59,489			65,419
Less: Allowance on sold receivables		(38,848	)		(42,750	)
Less: Write-offs of uncollectible receivables		(19,175	)		(18,710	)
Balance, end of year	$	13,499		$	17,458

Installments due on our notes receivable during each of the five years subsequent to December 31, 2006, and 2007, and thereafter are set forth below (in thousands):

	2006		2007
Due in 1 year	$	28,912	$	39,838
Due in 2 years		10,280		10,761
Due in 3 years		11,008		11,953
Due in 4 years		12,079		13,662
Due in 5 years		13,693		15,412
Thereafter		81,778		86,497
Total	$	157,750	$	178,123

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     The following table summarizes our allowance for loan losses by division as of December 31, 2006 and 2007:

	Bluegreen			Bluegreen
	Resorts			Communities			Other			Total
December 31, 2006:
Notes receivable	$	150,649		$	6,915		$	186		$	157,750
Allowance for loan losses		(13,140	)		(173	)		(186	)		(13,499	)
Notes receivable, net	$	137,509		$	6,742		$	—		$	144,251
Allowance as a % of gross notes receivable		9	%		3	%		1100	%		9	%
December 31, 2007:
Notes receivable	$	172,787		$	5,336		$	—		$	178,123
Allowance for loan losses		(17,196	)		(262	)		—			(17,458	)
Notes receivable, net	$	155,591		$	5,074		$	—		$	160,665
Allowance as a % of gross notes receivable		10	%		5	%		0	%		10	%

6. Sales of Notes Receivable

     Sales of notes receivable during the years ended December 31, 2005, 2006, and 2007 were as follows (in millions):

Year Ended
December 31, 2005:
	Aggregate Principal						Initial Fair Value
	Balance of Notes		Purchase		Gain		of Retained
Facility	Receivable Sold		Price		Recognized		Interest
2004 BB&T Purchase Facility	$	211.9	$	180.1	$	25.0	$	42.4
2005 Term Securitization		16.7		15.1		0.2		3.0
Total	$	228.6	$	195.2	$	25.2	$	45.4

Year Ended
December 31, 2006:
	Aggregate Principal						Initial Fair Value
	Balance of Notes		Purchase		Gain		of Retained
Facility	Receivable Sold		Price		Recognized		Interest
2005 Term Securitization	$	18.6	$	16.7	$	4.6	$	3.8
2006-A GE Purchase Facility		72.0		64.8		11.1		8.5
2006 Term Securitization		153.0		137.0		29.0		29.6
Total	$	243.6	$	218.5	$	44.7	$	41.9

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Year Ended
December 31, 2007:
	Aggregate Principal						Initial Fair Value
	Balance of Notes		Purchase		Gain		of Retained
Facility	Receivable Sold		Price		Recognized		Interest
2006-A GE Purchase Facility	$	66.9	$	60.2	$	10.6	$	8.3
2007 Term Securitization		200.0		168.9		28.8		36.3
Total	$	266.9	$	229.1	$	39.4	$	44.6

As a result of adopting SFAS No. 152 during the year ended December 31, 2006, approximately $38.8 million of the gain was recorded as a component of sales of real estate on the accompanying Statements of Income for the year ended December 31, 2006; with the remaining gain of $5.9 million reflected in the sales of notes receivable line item on the accompanying statements of income. During the year ended December 31, 2007, approximately $42.8 million of the gain was recorded as a component of sales of real estate on the accompanying Statements of Income for the year ended December 31, 2007; with the offsetting amount of $3.4 million reflected in the sales of notes receivable line item on the accompanying statements of income.

The following assumptions were used to measure the initial fair value of the retained interest in notes receivable sold or securitized for each of the periods listed below:

	For the year ended December 31,
	2005	2006	2007
Prepayment rates	17% - 9%	17% - 9%	29% - 11%
Loss severity rates	35% - 45%	35% - 71%	38% - 72%
Default rates	10% - 1%	11% - 1%	12% - 1%
Discount rates	9% - 12%	9%	9% - 12.6%

The following is a description of the facilities that were used to sell notes receivable that qualified for sale recognition under the provisions of SFAS 140.

2004 BB&T Purchase Facility

On December 31, 2004, we executed agreements for a vacation ownership receivables purchase facility (the “2004 BB&T Purchase Facility”) with Branch Banking and Trust Company (“BB&T”). The 2004 BB&T Purchase Facility utilized an owner’s trust structure, pursuant to which we sold receivables to Bluegreen Receivables Finance Corporation IX, our wholly-owned, special purpose finance subsidiary (“BRFC IX”), and BRFC IX sold the receivables to an owner’s trust (a qualified special purpose entity) without recourse to us or BRFC IX except for breaches of certain customary representations and warranties at the time of sale. We did not enter into any guarantees in connection with the 2004 BB&T Purchase Facility. The 2004 BB&T Purchase Facility had detailed requirements with respect to the eligibility of receivables for purchase and fundings under the BB&T Purchase Facility were subject to certain conditions precedent. Under the 2004 BB&T Purchase Facility, a variable purchase price of approximately 85.0% of the principal balance of the receivables sold, subject to certain terms and conditions, was paid at closing in cash. The balance of the purchase price was deferred until such time as BB&T had received a specified return and all servicing, custodial, agent and similar fees and expenses had been paid. The specified return was equal to the commercial paper rate or London Interbank Offered Rate (“LIBOR”), as applicable, plus an additional return of 1.15%, subject to use of alternate return rates in certain circumstances. In addition, we paid BB&T structuring and other fees totaling $1.1 million in December 2004, which was expensed over the funding period of the 2004 BB&T Purchase Facility. We acted as servicer under the 2004 BB&T Purchase Facility for a fee. The BB&T Purchase Facility expired on December 30, 2005.

2005 Term Securitization

On December 28, 2005, BB&T Capital Markets, a division of Scott & Stringfellow, Inc., served as initial purchaser and placement agent for a $203.8 million private offering and sale of vacation ownership receivable-backed securities (the

17

“2005 Term Securitization”). The $191.1 million in aggregate principal of vacation ownership receivables offered and sold in the 2005 Term Securitization were previously sold to BRFC IX. The proceeds of the 2005 Term Securitization were used to pay BB&T all amounts outstanding under the 2004 BB&T Purchase Facility, pay fees associated with the transaction to third-parties, deposit initial amounts in a required cash reserve account and the escrow accounts for the Pre-funded Receivables (see below) and provide net cash proceeds of $1.1 million to us.

In addition, the 2005 Term Securitization allowed for an additional $35.3 million in aggregate principal of our qualifying vacation ownership receivables (the “2005 Pre-funded Receivables”) that could be sold by us through March 28, 2006. The proceeds of $31.8 million (at an advance rate of 90%) as payment for the 2005 Pre-funded Receivables were deposited into an escrow account by the Indenture Trustee of the 2005 Term Securitization until such receivables were actually sold by us to BRFC X. During 2005, we sold $16.7 million in 2005 Pre-funded Receivables to BRFC X and the $15.1 million purchase price was disbursed to us from the escrow account. During 2006, we sold the remaining $18.6 million in pre-funded receivables to BRFC X and the $16.7 million purchase price was disbursed to us from the escrow account.

2006 GE Purchase Facility

In March 2006, we executed agreements for a VOI receivables purchase facility (the “2006 GE Purchase Facility”) with General Electric Real Estate (“GE”). The GE Purchase Facility utilizes an owner’s trust structure, pursuant to which we sell receivables to Bluegreen Receivables Finance Corporation XI, our wholly-owned, special purpose finance subsidiary (“BRFC XI”), and BRFC XI sells the receivables to an owner’s trust (a qualified special purpose entity) without recourse to us or BRFC XI except for breaches of certain customary representations and warranties at the time of sale. We did not enter into any guarantees in connection with the 2006 GE Purchase Facility. The GE Purchase Facility has detailed requirements with respect to the eligibility of receivables for purchase, and fundings under the GE Purchase Facility are subject to certain conditions precedent. Under the 2006 GE Purchase Facility, a variable purchase price of approximately 90% of the principal balance of the receivables sold, subject to adjustment under certain terms and conditions, was paid at closing in cash. The balance of the purchase price is deferred until such time as GE has received a specified return, a specified overcollateralization ratio is achieved, a cash reserve account is fully funded and all servicing, custodial, agent and similar fees and expenses have been paid. GE is entitled to receive a return equal to the applicable Swap Rate (which is essentially a published interest swap arrangement rate as defined in the 2006 GE Purchase Facility agreements) plus 2.35%, subject to use of alternate return rates in certain circumstances. In addition, we paid GE a structuring fee of approximately $437,500 in March 2006. Subject to the terms of the agreements, we act as servicer under the 2006 GE Purchase Facility for a fee.

The 2006 GE Purchase Facility allowed for transfers of notes receivable for a cumulative purchase price of up to $125.0 million through March 2008. During 2006, the Company transferred $72.0 million in VOI receivables for an aggregate purchase price of $64.8 million under the 2006 GE Purchase Facility. During 2007, the Company transferred $66.9 million in VOI receivables for an aggregate purchase price of $60.2 million under the GE Purchase Facility, which fully utilized the 2006 GE Purchase Facility.

2006 Term Securitization

In September 2006, BB&T Capital Markets, a division of Scott & Stringfellow, Inc., served as initial purchaser and placement agent for a private offering and sale of $139.2 million of our VOI receivable-backed securities (the “2006 Term Securitization”). Approximately $153.0 million in aggregate principal of VOI receivables were securitized in this transaction, including: (1) $75.7 million in aggregate principal of receivables that were previously transferred under an existing VOI receivables purchase facility in which BB&T serves as Agent (see 2006 BB&T Purchase Facility below in Footnote 10); (2) $38.0 million of VOI receivables owned by us immediately prior to the 2006 Term Securitization and 3) an additional $39.3 million in aggregate principal of our qualifying VOI receivables (the “2006 Pre-funded Receivables”) that could be sold by us through December 22, 2006. The expected proceeds of $35.7 million (at an advance rate of 91%) as payment for the 2006 Pre-funded Receivables were originally deposited into an escrow account by the indenture trustee of the 2006 Term Securitization. During 2006, we sold $39.3 million in 2006 Pre-funded Receivables to BRFC XII and the $35.7 million purchase price was disbursed to us from the escrow account. The proceeds were used by us for general operating purposes.

2007 Term Securitization

In September 2007, BB&T Capital Markets, a division of Scott & Stringfellow, Inc. served as initial purchaser and placement agent for a private offering and sale of $177.0 million of VOI receivable-backed securities (the “2007 Term Securitization”). Approximately $200.0 million in aggregate principal of VOI receivables were securitized and sold in

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this transaction, including: (1) $115.5 million in aggregate principal of VOI receivables that were previously transferred under the 2006 BB&T Purchase Facility (see Note 10); (2) $35.8 million of VOI receivables owned by the Company immediately prior to the 2007 Term Securitization; and, (3) an additional $48.7 million in aggregate principal of the Company’s qualifying VOI receivables that could be sold by us through December 28, 2007 (the “2007 Pre-funded Receivables”). The purchase price for the 2007 Pre-Funded Receivables was deposited into an escrow account. During 2007, we sold $48.7 million in 2007 Pre-funded Receivables, and the $43.1 million purchase price was disbursed to us from the escrow account.

7. Retained Interests in Notes Receivable Sold

Our retained interests in notes receivable sold, which are classified as available-for-sale investments, and their associated unrealized gains are set forth below (in thousands).

			Gross
	Amortized		Unrealized
As of December 31, 2006:	Cost		Gain		Fair Value
2002 Term Securitization	$	12,643	$	472	$	13,115
2004 Term Securitization (see Note 6)		17,784		2,785		20,569
2004 GE Purchase Facility (see Note 6)		6,695		56		6,751
2005 Term Securitization (see Note 6)		42,469		8,291		50,760
2006 GE Purchase Facility (see Note 6)		7,405		1,264		8,669
2006 Term Securitization (see Note 6)		23,253		7,506		30,759
Total	$	110,249	$	20,374	$	130,623

			Gross
	Amortized		Unrealized
As of December 31, 2007:	Cost		Gain (Loss)			Fair Value
2002 Term Securitization	$	8,842	$	—		$	8,842
2004 Term Securitization (see Note 6)		11,934		2,797			14,731
2004 GE Purchase Facility (see Note 6)		5,633		(609	)		5,024
2005 Term Securitization (see Note 6)		29,268		2,230			31,498
2006 GE Purchase Facility (see Note 6)		15,481		953			16,434
2006 Term Securitization (see Note 6)		24,522		1,529			26,051
2007 Term Securitization (see Note 6)		30,000		8,919			38,919
Total	$	125,680	$	15,819		$	141,499

The contractual maturities of our retained interest in notes receivable sold as of December 31, 2007, based on the final maturity dates of the underlying notes receivable are as follows:

	Amortized
	Cost		Fair Value
After one year but within five	$	8,842	$	8,842
After five years but within ten		116,838		132,657
Total	$	125,680	$	141,499

The following assumptions were used to measure the fair value of the above retained interests as of December 31, 2006 and 2007:

	As of December 31,
	2006	2007
Prepayment rates	27% - 6%	33% - 6%
Loss severity rates	30% - 71%	18% - 72%
Default rates	11% - 1%	12% - 0%
Discount rates	8% - 9%	12.6%

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     The following table shows the hypothetical fair value of our retained interests in notes receivable sold based on a 10% and a 20% adverse change in each of the assumptions used to measure the fair value of those retained interests (dollars in thousands):

				Hypothetical Fair Value at December 31, 2007
	Adverse							2004 GE				2006 GE
	Change			2002 Term		2004 Term		Purchase		2005 Term		Purchase		2006 Term		2007 Term
	Percentage			Securitization		Securitization		Facility		Securitization		Facility		Securitization		Securitization
Prepayment rate:		10	%	$	8,776	$	14,433	$	5,006	$	31,005	$	16,286	$	25,601	$	38,424
		20	%		8,712		14,146		4,988		30,537		16,146		25,180		37,963
Loss severity rate:		10	%		8,775		14,635		4,857		30,760		15,467		25,460		37,940
		20	%		8,709		14,538		4,689		30,022		14,502		24,868		36,961
Default rate:		10	%		8,762		14,587		4,822		30,724		15,295		25,382		37,662
		20	%		8,683		14,444		4,624		29,961		14,186		24,723		36,430
Discount rate:		10	%		8,386		14,405		4,869		30,857		15,804		25,541		37,893
		20	%		7,954		14,093		4,722		30,246		15,211		25,054		36,916

     The table below summarizes certain cash flows received from and (paid to) our qualifying special purpose finance subsidiaries (in thousands):

	For the Year Ended December 31,
	2005			2006			2007
Proceeds from new sales of receivables	$	198,260		$	218,455		$	229,067
Collections on previously sold receivables		(104,863	)		(145,096	)		(173,448	)
Servicing fees received		4,969			6,955			8,697
Purchases of defaulted receivables		(631	)		(1,122	)		(3,420	)
Resales of foreclosed assets		(30,573	)		(40,566	)		(44,786	)
Remarketing fees received		16,793			23,163			25,858
Cash received on retained interests in notes receivable sold		11,016			30,032			35,949
Cash paid to fund required reserve accounts		(6,445	)		(13,495	)		(10,044	)
Purchases of upgraded accounts		(2,443	)		(17,447	)		(28,251	)

     Quantitative information about the portfolios of VOI notes receivable previously sold without recourse in which we hold the above retained interests is as follows (in thousands):

	As of				Year Ended
	December 31, 2007				December 31, 2007
			Principal
	Total		Amount
	Principal		of Loans		Credit
	Amount of		60 or More		Losses, Net
	Loans		Days Past Due		of Recoveries
2002 Term Securitization	$	29,638	$	767	$	584
2004 Term Securitization		55,880		1,409		2,463
2004 GE Purchase Facility		20,941		708		706
2005 Term Securitization		131,711		3,826		6,113
2006 GE Purchase Facility		105,680		2,679		—
2006 Term Securitization		112,700		3,771		3,557
2007 Term Securitization		188,185		3,865		—

     The net unrealized gain on our retained interests in notes receivable sold, which is presented as a separate component of our shareholders’ equity net of income taxes, was approximately $12.6 million and $9.8 million as of December 31, 2006 and 2007, respectively.

     During the years ended December 31, 2005 and 2006, we recorded an other-than-temporary decrease of approximately $539,000 and $39,000 respectively, in the fair value of one of our VOI receivable transactions, based primarily on

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higher than projected defaults. In 2007, we recorded an other-than-temporary decrease in the fair value of two of our VOI receivable transactions totaling approximately $2.4 million, based primarily on an increase in the discount rates used to value our retained interest in notes receivable sold. These charges have been netted against interest income on our consolidated statements of income.

8. Inventory

Our net inventory holdings, summarized by division, are set forth below (in thousands).

	As of December 31,
	2006		2007
Bluegreen Resorts	$	233,290	$	288,969
Bluegreen Communities		116,043		145,999
	$	349,333	$	434,968

Bluegreen Resorts inventory as of December 31, 2006 consisted of land inventory of $46.6 million, $85.4 million of construction-in-progress and $101.3 million of completed VOI units. Bluegreen Resorts inventory as of December 31, 2007, consisted of land inventory of $75.3 million, $121.1 million of construction-in-progress and $92.6 million of completed VOI units.

Interest capitalized to inventory during the years ended December 31, 2005, 2006, and 2007 totaled $10.0 million, $12.1 million, and $15.5 million, respectively. The interest expense reflected in our consolidated statements of income is net of capitalized interest.

9. Property and Equipment

The table below sets forth the property and equipment held by us (in thousands).

		December 31,
	Useful Life	2006			2007
Office equipment, furniture and fixtures	3-14 years	$	58,795		$	67,894
Golf course land, land improvements, buildings and	5-39 years		33,684			32,462
equipment Land, buildings and building improvements	3-31 years		35,254			42,694
Leasehold improvements	2-14 years		16,846			15,663
Transportation and equipment	3-5 years		2,459			2,435
			147,038			161,148
Accumulated depreciation and amortization of leasehold improvements			(54,593	)		(66,727	)
Total		$	92,445		$	94,421

10. Receivable-Backed Notes Payable

The table below sets forth the balances of our receivable-back notes payable facilities (in thousands).

	December 31,
	2006		2007
2006 BB&T Purchase Facility	$	—	$	16,967
GMAC Receivable Facility		16,870		11,400
GE Bluegreen/Big Cedar Receivables Facility		—		24,100
Textron Facility		2,180		1,482
Foothill Facility		1,983		1,050
Other		17		—
Total	$	21,050	$	54,999

The 2006 BB&T Purchase Facility. In June 2006, we executed agreements for a VOI receivables purchase facility (the “2006 BB&T Purchase Facility”) with BB&T. While ownership of the receivables is transferred for legal purposes, the transfer of the receivables under the facility are accounted for as a financing transaction for financial accounting purposes. Accordingly, the receivables will continue to be reflected as assets and the associated obligations will be

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reflected as liabilities on our balance sheet. The 2006 BB&T Purchase Facility utilizes an owner’s trust structure, pursuant to which we transfer receivables to Bluegreen Timeshare Finance Corporation I, our wholly-owned, special purpose finance subsidiary (“BTFC I”), and BTFC I subsequently transfers the receivables to an owner’s trust without recourse to us or BTFC I, except for breaches of certain customary representations and warranties at the time of transfer. We did not enter into any guarantees in connection with the BB&T Purchase Facility. The 2006 BB&T Purchase Facility has detailed requirements with respect to the eligibility of receivables, and fundings under the BB&T Purchase Facility are subject to certain conditions precedent. Under the 2006 BB&T Purchase Facility, as amended, a variable purchase price of approximately 83% of the principal balance of the receivables transferred, subject to certain terms and conditions, is paid at closing in cash. The balance of the purchase price is deferred until such time as BB&T and other liquidity providers arranged by BB&T have in aggregate received a specified return (the “Specified Return”) and all servicing, custodial, agent and similar fees and expenses have been paid. The Specified Return is equal to either the commercial paper rate or LIBOR rate plus 1.25%, subject to use of alternate return rates in certain circumstances. We act as servicer under the 2006 BB&T purchase facilities for a fee. The BB&T Purchase Facility allows for transfers of notes receivable for a cumulative purchase price of up to $137.5 million, on a revolving basis, through May 2008.

During the year ended December 31, 2007, we transferred $143.3 million of VOI notes receivable to the 2006 BB&T Purchase Facility and received $121.4 million in cash proceeds. In connection with the 2007 Term Securitization (see Note 6) all amounts outstanding on the 2006 BB&T Purchase Facility as of September 2007 were repaid. In December 2007, we transferred $20.4 million of VOI notes receivable to the 2006 BB&T Purchase Facility and received $17.0 million in cash proceeds. The remaining availability under the 2006 BB&T Purchase Facility, subject to the terms and conditions of the facility, was $120.5 million. As of December 31, 2007, the outstanding balance bore interest at 5.85%. During 2006, we borrowed $68.4 million under the 2006 BB&T Purchase Facility.

The GMAC Receivables Facility. In February 2003, we entered into a revolving VOI receivables credit facility (the “GMAC Receivables Facility”) with Residential Funding Corporation (“RFC”), an affiliate of GMAC. The GMAC Receivables Facility has detailed requirements with respect to the eligibility of receivables for inclusion and other conditions to funding. The borrowing base under the GMAC Receivables Facility is 90% of the outstanding principal balance of eligible notes arising from the sale of VOIs. The GMAC Receivables Facility includes affirmative, negative and financial covenants and events of default. All principal and interest payments received on pledged receivables are applied to principal and interest due under the GMAC Receivables Facility. Interest payments are due monthly. During the years ended December 31, 2006 and 2007, we did not pledge any VOI receivables under the GMAC Receivables Facility. As of December 31, 2007, the outstanding balance bore interest at 8.60%. In February 2008, the advance period on the GMAC Receivables Facility expired. All amounts outstanding under the GMAC Receivables Facility are due on February 15, 2015.

GE Bluegreen/Big Cedar Receivables Facility. During April 2007, the Bluegreen/Big Cedar Joint Venture entered into a $45.0 million revolving VOI receivables credit facility (the “GE Bluegreen/Big Cedar Receivables Facility”) with GE. Bluegreen Corporation has guaranteed the full payment and performance of the Bluegreen/Big Cedar Joint Venture in connection with the Facility. The GE Bluegreen/Big Cedar Receivables Facility allows for advances on a revolving basis through April 16, 2009. All outstanding borrowings on the GE Bluegreen/Big Cedar Receivables Facility mature no later than April 16, 2016. The GE Bluegreen/Big Cedar Receivables Facility has detailed requirements with respect to the eligibility of receivables for inclusion and other conditions to funding. The borrowing base under the GE Bluegreen/Big Cedar Receivables Facility ranges from 97% - 90% (based on the spread between the weighted average note receivable coupon and GE’s interest rate) of the outstanding principal balance of eligible notes receivable arising from the sale of VOIs. The GE Bluegreen/Big Cedar Receivables Facility includes affirmative, negative and financial covenants and events of default. All principal and interest payments received on pledged receivables are applied to principal and interest due under the GE Bluegreen/Big Cedar Receivables Facility. Indebtedness under the GE Bluegreen/Big Cedar Receivables Facility bears interest adjusted monthly at the one month LIBOR plus 1.75%. The Bluegreen/Big Cedar Joint Venture was required to pay an upfront loan commitment fee of $225,000 in connection with the Facility. During 2007 the Bluegreen/Big Cedar Joint Venture pledged $32.0 million in aggregate principal balance of notes receivable under the facility and received $30.8 million in cash proceeds, net of issuance costs. As of December 31, 2007, the outstanding balance bore interest at 6.35%, and the remaining availability under the GE Bluegreen/Big Cedar Receivables Facility, subject to the terms and conditions of this facility, was $20.9 million.

The Textron Facility. During December 2003, we signed a combination $30.0 million Acquisition and Development and Timeshare Receivables facility with Textron Financial Corporation (the “Textron Facility”). The borrowing period for acquisition and development loans under the Textron Facility expired on October 1, 2004. The borrowing period for VOI receivables loans under the Textron Facility expired on March 1, 2006, and outstanding VOI receivables borrowings mature no later than March 31, 2009. Receivable-backed borrowings under the Textron Facility bear interest at the prime lending rate plus 1.00% (8.25% at December 31, 2007), subject to a 6.00% minimum interest rate.

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The Foothill Facility. The Foothill Facility is secured by the pledge of Bluegreen Communities’ receivables, inventory, and for the pledge of Bluegreen Resorts’ receivables and requires principal payments based on agreed-upon release prices as homesites in the encumbered communities are sold and bears interest at the prime lending rate plus 1.25% (8.5% at December 31, 2007). Interest payments are due monthly. The interest rate charged on outstanding receivable borrowings under the Foothill Facility is the prime lending rate plus 0.25% (7.5% at December 31, 2007) when the average monthly outstanding loan balance is greater than or equal to $15.0 million. If the average monthly outstanding loan balance is less than $15.0 million, the interest rate is the greater of 4.00% or the prime lending rate plus 0.50% (7.75% at December 31, 2007). All principal and interest payments received on pledged receivables are applied to principal and interest due under the Foothill Facility. At December 31, 2007, approximately $711,000 of the outstanding balance relates to Bluegreen Communities’ receivables borrowings and approximately $339,000 relates to Bluegreen Resorts’ receivables borrowings. Outstanding indebtedness collateralized by receivables is due December 31, 2008. As of December 31, 2007, the outstanding balance bore interest at 7.75%.

11. Lines-of-Credit and Notes Payable

We have outstanding borrowings with various financial institutions and other lenders, which have been used to finance the acquisition and development of our inventory and to fund operations. Financial data related to our borrowing facilities is set forth below (in thousands).

	December 31,		December 31,
	2006		2007
Lines-of-credit secured by inventory and golf courses with a carrying value of $251 million at December 31, 2007. Interest rates range from 9.25% to 9.83% at December 31, 2006 and 8.25% to 9.10% at December 31, 2007. Maturities range from September 2009 to November 2011	$	90,974	$	148,080
Notes and mortgage notes secured by certain inventory, property, equipment and investments with an aggregate carrying value of $51 million at December 31, 2007. Interest rates ranged from 4.75% to 9.50% at December 31, 2006 to 6.05% to 8.50% at December 31, 2007. Maturities range from February 2008 to May 2026		32,736		28,501
Lease obligations secured by the underlying assets with an aggregate carrying value of $0.4 million at December 31, 2007. Imputed interest rates ranging from 3.29% to 14.20% at December 31, 2006 and from 3.29% to 9.92% at December 31, 2007. Maturities range from February 2008 to November 2011		702		397
Total	$	124,412	$	176,978

The table below sets forth the contractual minimum principal payments required on our lines-of-credit and notes payable and capital lease obligations for each year subsequent to December 31, 2007. Such minimum contractual payments may differ from actual payments due to the effect of principal payments required on a homesite or VOI release basis for certain of the above obligations (in thousands).

2008	$	7,442
2009		121,141
2010		28,851
2011		16,024
2012		307
Thereafter		3,213
Total	$	176,978

The following is a discussion of our significant credit facilities and significant new borrowings during the year ended December 31, 2007:

The GMAC AD&C Facility. In February 2003, RFC also provided us with an acquisition, development and construction revolving credit facility for Bluegreen Resorts (the “GMAC AD&C Facility”). The period during which individual projects can be added to the GMAC AD&C Facility, as amended, expires on February 15, 2008, but borrowings on approved projects can be made, subject to the terms and conditions of individual project commitments on dates from July 2008 through June 2009, with outstanding borrowings maturing on dates ranging from September 2010 through November 2011. Principal will be repaid through agreed-upon release prices as VOIs are sold at the financed resorts, subject to minimum required amortization. Interest payments are due monthly. During the year ended December 31, 2007, we borrowed $81.4 million under the GMAC AD&C Facility in the aggregate on our Fountains (Orlando), and

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Las Vegas resorts as well as the acquisition of a 27.5 acre property located on Table Rock Lake located in Ridgedale, Missouri. As of December 31, 2007, the outstanding balance bore interest at 9.10%.

The GMAC Communities Facility. We have a revolving credit facility with RFC (the “GMAC Communities Facility”) for the purpose of financing our Bluegreen Communities real estate acquisitions and development activities. The GMAC Communities Facility is secured by the real property homesites (and personal property related thereto) at the following Bluegreen Communities projects, as well as any Bluegreen Communities projects acquired by us with funds borrowed under the GMAC Communities Facility (the “Secured Projects”): Catawba Falls Preserve (Black Mountain, North Carolina); Lake Ridge at Joe Pool Lake (Cedar Hill and Grand Prairie, Texas); Mystic Shores at Canyon Lake (Spring Branch, Texas); Havenwood at Hunter’s Crossing (New Braunfels, Texas); The Bridges at Preston Crossings (Grayson County, Texas); King Oaks (College Station, Texas); Vintage Oaks at the Vineyard (New Braunfels, Texas); and Sanctuary River Club at St. Andrews Sound (St. Simons Island, Georgia). In addition, the GMAC Communities Facility is secured by our Carolina National and the Preserve at Jordan Lake golf courses in Southport, North Carolina and Chapel Hill, North Carolina, respectively. The period during which we can add additional projects to the GMAC Communities Facility has expired although we can continue to borrow on projects approved prior to the expiration of the individual borrowing commitments ranging from June 30, 2008 though the maturity of the facility on September 30, 2009. Principal payments are effected through agreed-upon release prices paid to RFC, as homesites in the Secured Projects are sold. Interest payments are due monthly. The GMAC Communities Facility includes customary conditions to funding, acceleration and event of default provisions and certain financial affirmative and negative covenants. We use the proceeds from the GMAC Communities Facility to finance the acquisition and development of Bluegreen Communities projects. During 2007 we borrowed $68.5 million under the GMAC Communities Facility. In addition, we had repayments of approximately $54.4 million under this facility during 2007. As of December 31, 2007, the outstanding balance bore interest at 8.25%.

The Wachovia Line-of-Credit. In August 2007, we executed agreements to renew our unsecured line-of-credit with Wachovia Bank, N.A. and increase it from $15.0 million to $20.0 million. Amounts borrowed under the line bear interest at 30-day LIBOR plus 1.75%. Interest is due monthly, and all outstanding amounts are due on July 30, 2009. The line-of-credit agreement contains certain covenants and conditions typical of arrangements of this type. As of December 31, 2007, no borrowings were outstanding under this line; however, as of December 31, 2007 an aggregate of $551,000 of irrevocable letters of credit, were provided under this line-of-credit.

12. Senior Secured Notes Payable

On April 1, 1998, we consummated a private placement offering (the “Offering”) of $110.0 million in aggregate principal amount of 10.50% senior secured notes due April 1, 2008 (the “Notes”). On June 27, 2005, we used the proceeds from our junior subordinated debentures to redeem $55.0 million in aggregate principal amount of the Notes at a redemption price of 101.75% plus accrued and unpaid interest through June 26, 2005 of approximately $1.4 million. Interest on the Notes is payable semiannually on April 1 and October 1 of each year. The Notes are redeemable at our option, in whole or in part, in cash, together with accrued and unpaid interest, if any, to the date of redemption at par. As of December 31, 2006 and 2007, the principal balance of the Notes totaled $55.0 million.

The Notes are our senior obligations and rank pari passu in right of payment with all of our existing and future senior indebtedness and rank senior in right of payment to all of our existing and future subordinated obligations. None of the assets of Bluegreen Corporation secures our obligations under the Notes, and the Notes are effectively subordinated to our secured indebtedness to any third party to the extent of assets serving as security thereon. The Notes are unconditionally guaranteed, jointly and severally, by each of our subsidiaries (the “Subsidiary Guarantors”), with the exception of the Joint Venture, Bluegreen Properties N.V., Resort Title Agency, Inc., any special purpose finance subsidiary, any subsidiary which is formed and continues to operate for the limited purpose of holding a real estate license and acting as a broker, and certain other subsidiaries which have individually less than $50,000 of assets (collectively, “Non-Guarantor Subsidiaries”). Each of the note guarantees covers the full amount of the Notes and each of the Subsidiary Guarantors is 100% owned, directly or indirectly, by us. The Note guarantees are senior obligations of each Subsidiary Guarantor and rank pari passu in right of payment with all existing and future senior indebtedness of each such Subsidiary Guarantor and senior in right of payment to all existing and future subordinated indebtedness of each such Subsidiary Guarantor. The Note guarantees of certain Subsidiary Guarantors are secured by a first mortgage (subject to customary exceptions) or similar instrument (each, a “Mortgage”) on certain Bluegreen Communities properties of such Subsidiary Guarantors (the “Pledged Properties”). Absent the occurrence and the continuance of an event of default, the Notes trustee is required to release its lien on the Pledged Properties as property is sold and the Trustee does not have a lien on the proceeds of any such sale. As of December 31, 2007, the Pledged Properties had an aggregate net carrying value of approximately $944,692. The Notes’ indenture includes certain negative covenants including restrictions on the incurrence of certain debt and liens and on payments of cash dividends.

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     Supplemental financial information for Bluegreen Corporation, our combined Non-Guarantor Subsidiaries and our combined Subsidiary Guarantors is presented below.

CONDENSED CONSOLIDATING BALANCE SHEETS
(dollars in thousands)

	December 31, 2006
				Combined		Combined
	Bluegreen			Non-Guarantor		Subsidiary
	Corporation			Subsidiaries		Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	36,316		$	17,002	$	17,830	$	—		$	71,148
Contracts receivable, net		—			1,222		22,634		—			23,856
Intercompany receivable		165,997			—		—		(165,997	)		—
Notes receivable, net		—			57,845		86,406		—			144,251
Inventory, net		—			17,967		331,366		—			349,333
Retained interests in notes receivable sold		—			130,623		—		—			130,623
Property and equipment, net		16,110			933		75,402		—			92,445
Investments in subsidiaries		290,084			—		3,230		(293,314	)		—
Other assets		7,860			4,582		30,114		—			42,556
Total assets	$	516,367		$	230,174	$	566,982	$	(459,311	)	$	854,212
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable, accrued liabilities and other	$	33,303		$	20,717	$	54,173	$	—		$	108,193
Intercompany payable		—			8,967		157,030		(165,997	)		—
Deferred income taxes		(19,813	)		47,864		59,573		—			87,624
Lines-of-credit and notes payable		4,646			18,914		121,902		—			145,462
10.50% senior secured notes payable		55,000			—		—		—			55,000
Junior subordinated debentures		90,208			—		—		—			90,208
Total liabilities		163,344			96,462		392,678		(165,997	)		486,487
Minority interest		—			—		—		14,702			14,702
Total shareholders’ equity		353,023			133,712		174,304		(308,016	)		353,023
Total liabilities and shareholders’ equity	$	516,367		$	230,174	$	566,982	$	(459,311	)	$	854,212

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	December 31, 2007
				Combined		Combined
	Bluegreen			Non-Guarantor		Subsidiary
	Corporation			Subsidiaries		Guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	104,793		$	24,581	$	15,599	$	—		$	144,973
Contracts receivable, net		—			893		19,639		—			20,532
Intercompany receivable		112,312			13,138		—		(125,450	)		—
Notes receivable, net		—			77,414		83,251		—			160,665
Inventory, net		—			29,117		405,851		—			434,968
Retained interests in notes receivable sold		—			141,499		—		—			141,499
Property and equipment, net		13,471			562		80,388		—			94,421
Investments in subsidiaries		312,446			—		3,230		(315,676	)		—
Other assets		9,072			2,821		30,627		—			42,520
Total assets	$	552,094		$	290,025	$	638,585	$	(441,126	)	$	1,039,578
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable, accrued liabilities and other	$	21,620		$	17,961	$	96,300	$	—		$	135,881
Intercompany payable		—			—		125,450		(125,450	)		—
Deferred income taxes		(20,534	)		57,337		61,559		—			98,362
Lines-of-credit and notes payable		73			65,666		166,238		—			231,977
10.50% senior secured notes payable		55,000			—		—		—			55,000
Junior subordinated debentures		110,827			—		—		—			110,827
Total liabilities		166,986			140,964		449,547		(125,450	)		632,047
Minority interest		—			—		—		22,423			22,423
Total shareholders’ equity		385,108			149,061		189,038		(338,099	)		385,108
Total liabilities and shareholders’ equity	$	552,094		$	290,025	$	638,585	$	(441,126	)	$	1,039,578

26

CONDENSED CONSOLIDATING STATEMENTS OF INCOME
(dollars in thousands)

	Year Ended December 31, 2005
				Combined		Combined
	Bluegreen			Non-Guarantor		Subsidiary
	Corporation			Subsidiaries		Guarantors		Eliminations			Consolidated
REVENUES
Sales of real estate	$	—		$	55,007	$	495,328	$	—		$	550,335
Other resort and communities operations revenue		—			13,236		60,561		—			73,797
Management fees		58,360			—		—		(58,360	)		—
Equity income from subsidiaries		52,045			—		—		(52,045	)		—
Interest income		1,379			17,294		16,125		—			34,798
Gain on sales of notes receivable		—			25,226		—		—			25,226
		111,784			110,763		572,014		(110,405	)		684,156
COSTS AND EXPENSES
Cost of real estate sales		—			15,955		161,845		—			177,800
Cost of other resort and communities operations		—			5,056		72,261		—			77,317
Management fees		—			1,158		57,202		(58,360	)		—
Selling, general and administrative expenses		61,934			27,297		211,008		—			300,239
Interest expense		4,446			2,875		7,153		—			14,474
Provision for loan losses		—			1,416		26,171		—			27,587
Other expense, net		1,967			3,117		1,123		—			6,207
		68,347			56,874		536,763		(58,360	)		603,624
Income before minority interest and provision for income taxes		43,437			53,889		35,251		(52,045	)		80,532
Minority interest in income of consolidated subsidiary		—			—		—		4,839			44,839
Income before provision for income taxes		43,437			53,889		35,251		(56,884	)		75,693
(Benefit) provision for income taxes		(3,114	)		19,502		12,754		—			29,142
Net income	$	46,551		$	34,387	$	22,497	$	(56,884	)	$	46,551

27

	Year Ended December 31, 2006
			Combined			Combined
	Bluegreen		Non-Guarantor			Subsidiary
	Corporation		Subsidiaries			Guarantors			Eliminations			Consolidated
REVENUES
Sales of real estate	$	—	$	58,568		$	504,578		$	—		$	563,146
Other resort and communities operations revenue		—		14,198			49,412			—			63,610
Management fees		57,667		—			—			(57,667	)		—
Equity income from subsidiaries		26,572		—			—			(26,572	)		—
Interest income		1,768		24,753			14,244			—			40,765
Gain on sales of notes receivable		—		5,852			—			—			5,852
		86,007		103,371			568,234			(84,239	)		673,373
COSTS AND EXPENSES
Cost of real estate sales		—		16,134			162,920			—			179,054
Cost of other resort and communities operations		—		4,913			48,280			—			53,193
Management fees		—		844			56,823			(57,667	)		—
Selling, general and administrative expenses		48,158		29,953			278,878			—			356,989
Interest expense		4,853		4,106			9,826			—			18,785
Other expense, net		1,194		1,193			474			—			2,861
		54,205		57,143			557,201			(57,667	)		610,882
Income before minority interest and provision for income taxes		31,802		46,228			11,033			(26,572	)		62,491
Minority interest in income of consolidated subsidiary		—		—			—			7,319			47,319
Income before provision for income taxes		31,802		46,228			11,033			(33,891	)		55,172
Provision for income taxes		1,985		14,681			4,195			—			20,861
Income before cumulative effect of change in accounting principle		29,817		31,547			6,838			(33,891	)		34,311
Cumulative effect of change in accounting principle, net of tax		—		(1,942	)		(3,736	)		—			(5,678	)
Minority interest in income of cumulative effect of change in accounting principle		—		—			—			1,184			1,184
Net income	$	29,817	$	29,605		$	3,102		$	(32,707	)	$	29,817

28

	Year Ended December 31, 2007
				Combined			Combined
	Bluegreen			Non-Guarantor			Subsidiary
	Corporation			Subsidiaries			Guarantors		Eliminations			Consolidated
REVENUES
Sales of real estate	$	—		$	56,354		$	526,404	$	—		$	582,758
Other resort and communities operations revenue		—			13,268			54,143		—			67,411
Management fees		69,182			—			—		(69,182	)		—
Equity income from subsidiaries		25,381			—			—		(25,381	)		—
Interest income		3,054			28,201			13,448		—			44,703
Sales of notes receivable		—			(3,378	)		—		—			(3,378	)
		97,617			94,445			593,995		(94,563	)		691,494
COSTS AND EXPENSES
Cost of real estate sales		—			12,965			165,766		—			178,731
Cost of other resort and communities operations		—			4,507			45,475		—			49,982
Management fees		—			9,782			59,400		(69,182	)		—
Selling, general and administrative expenses		47,118			32,481			297,952		—			377,551
Interest expense		18,912			5,360			—		—			24,272
Other expense (income), net		382			(133	)		1,494		—			1,743
		66,412			64,962			570,087		(69,182	)		632,279
Income before minority interest and provision for income taxes		31,205			29,483			23,908		(25,381	)		59,215
Minority interest in income of consolidated subsidiary		—			—			—		7,721			47,721
Income before provision for income taxes		31,205			29,483			23,908		(33,102	)		51,494
(Benefit) provision for income taxes		(721	)		11,203			9,086		—			19,568
Net income	$	31,926		$	18,280		$	14,822	$	(33,102	)	$	31,926

29

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(dollars in thousands)

	Year Ended December 31, 2005
				Combined			Combined
	Bluegreen			Non-Guarantor			Subsidiary
	Corporation			Subsidiaries			Guarantors			Consolidated
Operating activities:
Net cash (used) provided by operating activities	$	(10,409	)	$	12,777		$	93,157		$	95,525
Investing activities:
Cash received from retained interests in notes receivable sold		—			11,016			—			11,016
Investment in statutory business trust		(1,780	)		—			—			(1,780	)
Installment payments on business acquisition		—			—			(675	)		(675	)
Purchases of property and equipment		(5,112	)		(216	)		(11,396	)		(16,724	)
Proceeds from sales of property and equipment		—			—			22			22
Net cash (used) provided by investing activities		(6,892	)		10,800			(12,049	)		(8,141	)
Financing activities:
Proceeds from borrowings collateralized by notes receivable		—			11,966			12,806			24,772
Payments on borrowings collateralized by notes receivable		—			(37,743	)		(26,971	)		(64,714	)
Proceeds from borrowings under line-of-credit facilities and notes payable		—			—			26,382			26,382
Payments under line-of-credit facilities and notes payable		(1,071	)		(1,113	)		(89,887	)		(92,071	)
Payments on 10.50% senior secured notes payable		(55,000	)		—			—			(55,000	)
Proceeds from issuance of junior subordinated debentures		59,280			—			—			59,280
Payment of debt issuance costs		(1,862	)		(37	)		(1,401	)		(3,300	)
Proceeds from exercise of employee and director stock options		1,406			—			—			1,406
Net cash provided (used) by financing activities		2,753			(26,927	)		(79,071	)		(103,245	)
Net (decrease) increase in cash and cash equivalents		(14,548	)		(3,350	)		2,037			(15,861	)
Cash and cash equivalents at beginning of period		70,256			18,793			11,516			100,565
Cash and cash equivalents at end of period		55,708			15,443			13,553			84,704
Restricted cash and cash equivalents at end of period		(173	)		(6,709	)		(11,439	)		(18,321	)
Unrestricted cash and cash equivalents at end of period	$	55,535		$	8,734		$	2,114		$	66,383

30

	Year Ended December 31, 2006
				Combined			Combined
	Bluegreen			Non-Guarantor			Subsidiary
	Corporation			Subsidiaries			Guarantors			Consolidated
Operating activities:
Net cash (used) provided by operating activities	$	(41,538	)	$	(13,051	)	$	63,015		$	8,426
Investing activities:
Cash received from retained interests in notes receivable sold		—			30,032			—			30,032
Investments in statutory business trusts		(928	)		—			—			(928	)
Purchases of property and equipment		(7,180	)		(68	)		(17,488	)		(24,736	)
Proceeds from sales of property and equipment		—			—			93			93
Net cash (used) provided by investing activities		(8,108	)		29,964			(17,395	)		4,461
Financing activities:
Proceeds from borrowings collateralized by notes receivable		—			68,393			—			68,393
Payments on borrowings collateralized by notes receivable		—			(81,303	)		(3,811	)		(85,114	)
Proceeds from borrowings under line-of-credit facilities and notes payable		6,500			—			50,170			56,670
Payments under line-of-credit facilities and notes payable		(7,824	)		(193	)		(86,569	)		(94,586	)
Proceeds from issuance of junior subordinated debentures		30,928			—			—			30,928
Payment of debt issuance costs		(1,054	)		(2,251	)		(1,133	)		(4,438	)
Proceeds from exercise of employee and director stock options		2,645			—			—			2,645
Distributions to minority interest		(941	)		—			—			(941	)
Net cash provided (used) by financing activities		30,254			(15,354	)		(41,343	)		(26,443	)
Net (decrease) increase in cash and cash equivalents		(19,392	)		1,559			4,277			(13,556	)
Cash and cash equivalents at beginning of period		55,708			15,443			13,553			84,704
Cash and cash equivalents at end of period		36,316			17,002			17,830			71,148
Restricted cash and cash equivalents at end of period		(173	)		(8,478	)		(12,825	)		(21,476	)
Unrestricted cash and cash equivalents at end of period	$	36,143		$	8,524		$	5,005		$	49,672

31

	Year Ended December 31, 2007
				Combined			Combined
	Bluegreen			Non-Guarantor			Subsidiary
	Corporation			Subsidiaries			Guarantors			Consolidated
Operating activities:
Net cash (used) provided by operating activities	$	44,015		$	(62,687	)	$	(2,449	)	$	(21,121	)
Investing activities:
Cash received from retained interests in notes receivable sold		—			35,949			—			35,949
Investments in statutory business trusts		(619	)		—			—			(619	)
Purchases of property and equipment		(4,868	)		(58	)		(10,929	)		(15,855	)
Proceeds from sales of property and equipment		—			—			2			2
Net cash (used) provided by investing activities		(5,487	)		35,891			(10,927	)		19,477
Financing activities:
Proceeds from borrowings collateralized by notes receivable		—			151,973			—			151,973
Payments on borrowings collateralized by notes receivable		—			(117,749	)		(2,396	)		(120,145	)
Proceeds from borrowings under line-of-credit facilities and notes payable		—			—			147,835			147,835
Payments under line-of-credit facilities and notes payable		(2,541	)		(89	)		(120,690	)		(123,320	)
Proceeds from issuance of junior subordinated debentures		20,619			—			—			20,619
Payment of debt issuance costs		(711	)		(628	)		(713	)		(2,052	)
Proceeds from exercise of employee and director stock options		559			—			—			559
Net cash provided by financing activities		17,926			33,507			24,036			75,469
Net increase in cash and cash equivalents		56,454			6,711			10,660			73,825
Cash and cash equivalents at beginning of period		36,316			17,002			17,830			71,148
Cash and cash equivalents at end of period		92,770			23,713			28,490			144,973
Restricted cash and cash equivalents at end of period		(475	)		(7,810	)		(11,175	)		19,460	)
Unrestricted cash and cash equivalents at end of period	$	92,295		$	15,903		$	17,315		$	125,513

32

13. Junior Subordinated Debentures

Trust Preferred Securities Offerings

We have formed statutory business trusts (collectively, the “Trusts”) and each issued trust preferred securities and invested the proceeds thereof in our junior subordinated debentures. The Trusts are variable interest entities in which we are not the primary beneficiary as defined by FIN No. 46R. Accordingly, we do not consolidate the operations of the Trusts; instead, the Trusts are accounted for under the equity method of accounting. In each of these transactions, the applicable Trust issued trust preferred securities as part of a larger pooled trust securities offering which was not registered under the Securities Act of 1933. The applicable Trust then used the proceeds from issuing the trust preferred securities to purchase an identical amount of junior subordinated debentures from us. Interest on the junior subordinated debentures and distributions on the trust preferred securities are payable quarterly in arrears at the same interest rate. Distributions on the trust preferred securities are cumulative and based upon the liquidation value of the trust preferred security. The trust preferred securities are subject to mandatory redemption, in whole or in part, upon repayment of the junior subordinated debentures at maturity or their earlier redemption. The junior subordinated debentures are redeemable in whole or in part at the Company’s option at any time after five years from the issue date or sooner following certain specified events. In addition, we made an initial equity contribution to each Trust in exchange for its common securities, all of which are owned by us, and those proceeds were also used to purchase an identical amount of junior subordinated debentures from us. The terms of each Trust’s common securities are nearly identical to the trust preferred securities.

We had the following junior subordinated debentures outstanding at December 31, 2007 (dollars in thousands):

	Outstanding		Initial
	Amount of		Equity			Fixed			Variable	Beginning
	Junior		To			Interest			Interest	Optional
	Subordinated		Trust		Issue	Rate			Rate	Redemption	Maturity
Trust	Debentures		(3)		Date	(1)			(2)	Date	Date
Bluegreen Statutory Trust I	$	23,196	$	696	3/15/05		9.160	%	3-month LIBOR + 4.90%	3/30/10	3/30/35
Bluegreen Statutory Trust II		25,774		774	5/04/05		9.158	%	3-month LIBOR + 4.85%	7/30/10	7/30/35
Bluegreen Statutory Trust III		10,310		310	5/10/05		9.193	%	3-month LIBOR + 4.85%	7/30/10	7/30/35
Bluegreen Statutory Trust IV		15,464		464	4/24/06		10.130	%	3-month LIBOR + 4.85%	6/30/11	6/30/36
Bluegreen Statutory Trust V		15,464		464	7/21/06		10.280	%	3-month LIBOR + 4.85%	9/30/11	9/30/36
Bluegreen Statutory Trust VI		20,619		619	2/26/07		9.842	%	3-month LIBOR + 4.80%	4/30/12	4/30/37
	$	110,827	$	3,327

(1)	Both the trust preferred securities and junior subordinated debentures bear interest at a fixed interest rate from the issue date through the beginning optional redemption date.
(2)	Both the trust preferred securities and junior subordinated debentures bear interest at a variable interest rate from the beginning optional redemption date through the maturity date.
(3)	Initial equity in trust is recorded as part of other assets in our consolidated balance sheets.

14. Fair Value of Financial Instruments

In estimating the fair values of our financial instruments, we used the following methods and assumptions:

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

33

Contracts receivable: The amounts reported in our consolidated balance sheets for contracts receivable approximate fair value. Contracts receivable are non-interest bearing and generally convert into cash or an interest-bearing mortgage note receivable within thirty days.

Notes receivable: The amounts reported in our consolidated balance sheets for notes receivable approximate fair value based on discounted future cash flows using current rates at which similar loans with similar maturities would be made to borrowers with similar credit risk.

Retained interests in notes receivable sold: Retained interests in notes receivable sold are carried at fair value based on discounted cash flow analyses.

Lines-of-credit, notes payable, receivable-backed notes payable and junior subordinated debentures: The amounts reported in our consolidated balance sheets approximate their fair value for indebtedness that provides for variable interest rates. The fair value of our fixed-rate indebtedness was estimated using discounted cash flow analyses, based on our current incremental borrowing rates for similar types of borrowing arrangements.

10.50% senior secured notes payable and junior subordinated debentures: The fair values of our senior secured notes payable and junior subordinated debentures were based on the discounted value of contractual cash flows at a market discount rate or market price quotes from the over-the-counter bond market.

	December 31, 2006				December 31, 2007
	Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value
Cash and cash equivalents	$	71,148	$	71,148	$	144,973	$	144,973
Contracts receivable, net		23,856		23,856		20,532		20,532
Notes receivable, net		144,251		144,251		160,665		160,665
Retained interests in notes receivable sold		130,623		130,623		141,499		141,499
Lines-of-credit, notes payable, and receivable- backed notes payable		145,462		145,462		231,977		231,977
10.50% senior secured notes payable		55,000		55,275		55,000		54,725
Junior subordinated debentures		90,208		82,141		110,827		103,351

15. Common Stock and Stock Option Plans

Shareholders’ Rights Plan

On July 27, 2006, the Board of Directors adopted rights agreement (the “Rights Agreement”) and declared a dividend of one preferred share purchase right (a “Right”) for each outstanding share of the Company’s common stock. The Board of Directors authorized the adoption of the Rights Agreement to protect shareholders from coercive or otherwise unfair takeover tactics. In general terms, (as amended with Form 8-A/A filed with the SEC on May 24, 2007) the Rights Agreement imposes a significant penalty upon any person or group which acquires beneficial ownership of 10% or more of the Company’s outstanding common stock without the prior approval of the Board of Directors. The Company, its subsidiaries, employee benefit plans or any of its subsidiaries, and any entity holding common stock for or pursuant to the terms of any such employee benefit plan will be excepted, as will Levitt Corporation, its affiliates, successors and assigns.

On October 16, 2006, in connection with the settlement of litigation then pending before the United States District Court for the Southern District of Florida between the Company, as plaintiff, David A. Siegel, David A. Siegel Revocable Trust, and Central Florida Investments, Inc., as defendants (collectively, the “Siegel Shareholders”), and the directors of the Company, as counter-defendants, the Rights Agreement was amended pursuant to a Stipulation and Order (the “Stipulation”) to extend the period in which the Siegel Shareholders may divest their shares of the Company’s common stock to avoid the impact of the Rights Agreement. On May 21, 2007 and October 16, 2007, we amended the Stipulation and the Rights Agreement to further extend the period in which the Siegel Shareholders may divest their shares of the Company’s common stock. The Stipulation, as currently in effect, requires that the Siegel Shareholders their ownership of an aggregate of 1,112,000 of shares of the Company’s common stock by April 16, 2008, to divest an additional 4,260,198 shares of the Company’s common stock by October 16, 2008 and to divest their remaining shares of the Company’s common stock by October 16, 2009. However, if the Siegel Shareholders breach any provision of the Stipulation, the Company’s Board of Directors may terminate the period for divestiture.

34

Stock Option Plans

Under our employee stock option plans, options can be granted with various vesting periods. Options granted to employees subsequent to December 31, 2002 vest 100% on the five-year anniversary of the date of grant. Our options are granted at exercise prices that either equal or exceed the quoted market price of our common stock at the respective dates of grant. All of our options expire ten years from the date of grant.

All options granted to non-employee directors (the “Outside Directors”) on or prior to December 31, 2002 vested ratably over a three-year period while options granted after December 31, 2002 vest either immediately upon grant or on the five-year anniversary of the date of grant. All Outside Director stock options are nonqualified and expire ten years from the date of grant, subject to alternative expiration dates under certain circumstances.

The following table lists our grants of stock options and restricted stock to our employees and our non-employee directors under the 2005 Stock Incentive Plan (in thousands, in shares). See Note 1 of the Notes to Consolidated Financial Statements for further discussion of stock options granted.

	Stock Option Awards						Restricted Stock Awards
					Weighted
					average grant date
	Employees		Directors		fair value		Employees		Directors
2005		668,000		141,346	$	10.81		—		5,374
2006		440,000		142,785	$	6.58		—		17,497
2007		—		136,494	$	5.58		196,850		16,696
Total		1,108,000		420,625				196,850		39,567

A summary of our stock option activity related to all of our prior and current stock option plans is presented below (in thousands, except per share data).

	Number						Weighted
	of						Average		Number of
	Shares			Outstanding			Exercise Price		Shares
	Reserved			Options			Per Share		Exercisable
Balance at December 31, 2005		3,201			2,010		$	10.65		665
Granted		—			583		$	12.02
Forfeited		(86	)		(217	)	$	11.20
Exercised		(312	)		(312	)	$	8.48
Balance at December 31, 2006		2,803			2,064		$	11.31		481
Granted		—			137		$	11.98
Forfeited		—			(123	)	$	17.05
Exercised		(140	)		(140	)	$	3.99
Balance at December 31, 2007		2,663			1,938		$	11.51		579

The weighted average exercise price of shares exercisable as of December 31, 2007 was $9.00 and the weighted average remaining contractual term of these shares was 5.7 years. The aggregate intrinsic value of our stock options outstanding and exercisable was $3.7 million and $1.0 million as of December 31, 2006 and 2007, respectively. The total intrinsic value of our stock options exercised during the years ended December 31, 2005, 2006, and 2007 was $2.9 million, $1.4 million and $1.1 million, respectively. The weighted-average exercise prices and weighted-average remaining contractual lives of our outstanding stock options at December 31, 2007 (grouped by range of exercise prices) were:

35

					Weighted-				Weighted-
					Average		Weighted-		Average
	Number		Number of		Remaining		Average		Exercise Price
	of Options		Vested Options		Contractual Term		Exercise Price		(Vested Only)
	(In 000’s)		(In 000’s)		(In years)
$2.11 - $3.00		35		35		3.5	$	2.21	$	2.21
$3.01 - $4.52		423		220		4.8	$	3.47	$	3.45
$4.53 - $6.79		130		30		5.3	$	5.86	$	5.92
$6.80 - $10.20		39		39		1.0	$	8.82	$	8.82
$10.21 - $15.31		684		114		9.4	$	11.96	$	11.47
$15.32 - $18.36		627		141		7.6	$	18.29	$	18.04
		1,938		579		7.2	$	11.51	$	9.00

Common Stock Reserved For Future Issuance

As of December 31, 2007, common stock reserved for future issuance was comprised of shares issuable (in thousands):

Upon exercise of stock options under our employee stock option plan (1)	2,598
Upon exercise of outside director stock options under our director stock option plan	65
	2,663

(1) Stock options were granted to non-employee directors under our Employee Stock Option Plan during 2005, 2006 and 2007.

16. Commitments and Contingencies

At December 31, 2007, the estimated cost to complete development work in subdivisions or resorts from which homesites or VOIs have been sold totaled $76.6 million. Development is estimated to be completed as follows: 2008 — $46.5 million, 2009 — $21.6 million, 2010 and beyond — $8.5 million.

In 2006 we entered into a separation agreement with our former CEO, George Donovan. Under the terms of this agreement, Mr. Donovan will be paid a total of $3 million over a seven year period in exchange for his services to be available on a when and if needed basis. We recorded an expense of $2.6 million in 2006, which represents the then present value of the seven year agreement. As of December 31, 2007 we owed Mr. Donovan $2.5 million in remaining payments, the present value of which is recorded as a liability on our consolidated balance sheet.

Rent expense for the years ended December 31, 2005, 2006, and 2007 totaled approximately $8.5 million, $11.6 million and $13.0 million, respectively.

Lease commitments under these and our various other noncancelable operating leases for each of the five years subsequent to December 31, 2007, and thereafter are as follows (in thousands):

2008	$	9,130
2009		8,100
2010		6,937
2011		4,388
2012		3,467
Thereafter		22,081
Total future minimum lease payments	$	54,103

At December 31, 2007, we had approximately $551,000 in outstanding commitments under stand-by letters of credit with banks, primarily related to the construction of an elevated water tank for one our Bluegreen Communities projects.

In the ordinary course of our business, we become subject to claims or proceedings from time to time relating to the purchase, subdivision, sale or financing of real estate. Additionally, from time to time, we become involved in disputes with existing and former employees, vendors, taxing jurisdictions and various other parties. Unless otherwise described below, we believe that these claims are routine litigation incidental to our business. The following are matters that we are describing in more detail in accordance with SFAS No. 5, Accounting for Contingencies.

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Bluegreen Resorts

Tennessee Tax Audit

In 2005, the State of Tennessee Audit Division (the “Division”) audited certain subsidiaries within Bluegreen Resorts for the period from December 1, 2001 through December 31, 2004. On September 23, 2006, the Division issued a notice of assessment for approximately $652,000 of accommodations tax based on the use of Bluegreen Vacation Club accommodations by Bluegreen Vacation Club members who became members through the purchase of non-Tennessee property. We believe the attempt to impose such a tax is contrary to Tennessee law, and intend to vigorously oppose such assessment by the Division. An informal conference was held in early December 2007 to discuss this matter with representatives of the Division. No formal resolution of the issue was reached during the conference and no further action has been initiated yet by the State of Tennessee. While the timeshare industry has been successful in challenging the imposition of sales taxes on the use of accommodations by timeshare owners, there is no assurance that the Company will be successful in contesting the current assessment.

Shore Crest Claim

We filed suit against the general contractor with regard to alleged construction defects at our Shore Crest Vacation Villas resort in South Carolina, including deficiencies in exterior insulating and finishing systems that have resulted in water intrusion; styled Shore Crest Vacation Villas II Owners Association, Inc., Bluegreen Corporation vs. Welbro Constructors, S.C., Inc. et al. Case No.: 04-CP-26-500 and Shore Crest Vacation Villas Owners Association, Inc., Bluegreen Vacations Unlimited, Inc., as successor to Patten Resorts, Inc. and as successor to Bluegreen Resorts, Inc. vs. Welbro Constructors Inc. et al. Case No. 04-CP-26-499. We estimate that the total cost of repairs to correct the defects will range from $4 million to $6 million. Whether the matter is settled by litigation or by negotiation, it is possible that we may need to participate financially in some way to correct the construction deficiencies and will continue to incur legal and other costs as the matter is pursued. As of December 31, 2007, we had accrued $1.3 million related to this matter.

LeisurePath Vacation Club

In Michelle Alamo, Ernest Alamo, Toniann Quinn and Terrance Quinn v. Vacation Station, LLC, LeisurePath Vacation Club, LeisurePath, Inc., Bluegreen Corporation, Superior Court of New Jersey, Bergen County, Docket No. L-6716-05, Civil Action, Plaintiffs filed a purported “Class Action Complaint” on September 23, 2005. The Complaint raises allegations concerning the marketing of the LeisurePath Travel Services Network product to the public, and, in particular, New Jersey residents by Vacation Station, LLC, an independent distributor of travel products. Vacation Station, LLC purchased LeisurePath membership kits from LeisurePath, Inc.’s Master Distributor, Mini Vacations, Inc. and then sold the memberships to consumers. The initial Plaintiffs (none of whom actually bought the Leisure Path product) assert claims for violations of the New Jersey Consumer Fraud Act, fraud, nuisance, negligence and for equitable relief all stemming from the sale and marketing by Vacation Station, LLC of the LeisurePath Travel Services Network. Plaintiffs are seeking the gifts and prizes they were allegedly told by Vacation Station, LLC that they won as part of the sales promotion, and that they be given the opportunity to rescind their agreement with LeisurePath along with a full refund. Plaintiffs further seek punitive damages, compensatory damages, attorneys’ fees and treble damages of unspecified amounts. In February 2007, the Plaintiffs amended the complaint to add two additional Plaintiffs/proposed class representatives, Bruce Doxey and Karen Smith-Doxey. Unlike the initial Plaintiffs who were first contacted by Vacation Station, LLC some seven (7) months after LeisurePath terminated its relationship with Vacation Station, LLC and did not purchase LeisurePath products, the Doxeys purchased a participation in the LeisurePath Travel Services Network. Vacation Station, LLC and its owner have each filed for bankruptcy protection and accordingly the case is being pursued against LeisurePath and Bluegreen Corporation. In the Fall of 2007 the court denied plaintiffs’ request to certify their claims as a class action. Subsequently, the parties negotiated a settlement in an effort to extinguish the claims of persons who purchased the benefits of the Leisure Path Travel Services Network. The parties have reached an agreement in principle to a settlement pursuant to which persons who purchased a participation in the Network from Vacation Station, LLC’s sales office in Hackensack, New Jersey will be allowed to select either: (1) seven consecutive nights of accommodations in a Bluegreen resort located in either Orlando, Las Vegas, or Myrtle Beach to be used by December 31, 2009; or (2) continued memberships and a waiver of their Network membership fees until 2012. In an effort to resolve any claims of individuals who may allege improper soliciting, but did not purchase a participation in the Network, an agreed upon number of three day/two night vacation certificates (for use at the same properties listed above) will be made available. The first non-purchasers who submit a prepared affidavit swearing to the validity of their claim will receive these certificates. Furthermore, Defendants have agreed in principle to a “high-low agreement” with regard to Plaintiffs’ Counsel’s attorney’s fees pursuant to which he will receive a minimum of $150,000.00 and a maximum of $300,000.00 depending upon the Court’s fee award. Incentive payments totaling

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$13,000.00 will be made to the six named Plaintiffs in the suit. This settlement structure was preliminarily approved by the court on January 18, 2008. A Fairness Hearing for final approval of the proposed settlement will take place on April 18, 2008. As of December 31, 2007, we have accrued $260,000 in connection with this matter, which is equal to the approximate cost of the proposed settlement and the low end of the range in the high-low agreement in accordance with the provisions of the Statement of Financial Accounting Standard No. 5, Accounting for Contingencies.

Bluegreen Communities

Mountain Lakes Mineral Rights

Bluegreen Southwest One, L.P., (“Southwest”), a subsidiary of Bluegreen Corporation, is the developer of the Mountain Lakes subdivision in Texas. In Cause No. #28006; styled Betty Yvon Lesley et a1 v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P.et al. in the 266th Judicial District Court, Erath County, Texas, the Plaintiffs filed a declaratory judgment action against Southwest seeking to develop their reserved mineral interests in, on and under the Mountain Lakes subdivision. Plaintiffs’ claims are based on property law, oil and gas law, contract and tort theories. The property owners association and some of the individual landowners have filed cross actions against Bluegreen, Southwest and individual directors of the property owners association related to the mineral rights and certain amenities in the subdivision as described below. On January 17, 2007, the court ruled that the restrictions placed on the development that prohibited oil and gas production and development were invalid and not enforceable as a matter of law, that such restrictions do not prohibit the development of Plaintiffs’ prior reserved mineral interests and that Southwest breached its duty to lease the minerals to third parties for development. The Court further ruled that Southwest is the sole holder of the right to lease the minerals to third parties. The order granting the Plaintiffs’ motion was severed into a new cause styled Cause No. 28769 Betty Yvon Lesley et a1 v. Bluff Dale Development Corporation, Bluegreen Southwest One. L.P.et al. in the 266th Judicial District Court, Erath County, Texas. Southwest has appealed the trial court’s ruling. The appeal is styled Bluegreen Southwest One, LP et al. v. Betty Yvon Lesley et al.; in the 11th Court of Appeals, Eastland, Texas. Bluegreen does not believe that it has material exposure to the property owners association based on the cross claim relating to the mineral rights other than the potential claim for legal fees incurred by the property owners association in connection with the matter. As of December 31, 2007, Bluegreen had accrued $1.5 million in connection with the issues raised related to the mineral rights claims. Separately, one of the amenity lakes in the Mountain Lakes development did not reach the expected level after construction was completed. Owners of homesites within the Mountain Lakes subdivision and the Property Owners Association of Mountain Lakes have asserted cross claims against Southwest and Bluegreen regarding such failure as part of the Lesley litigation referenced above as well as in Cause No. 067-223662-07; Property Owners Association of Mountain Lakes Ranch, Inc. v. Bluegreen Southwest One, L. P., et al.; in the 67^th Judicial District Court of Tarrant County, Texas. Southwest continues to investigate reasons for the delay of the lake to fill and currently estimates that the cost of remediating the condition will be approximately $3.0 million, which was accrued during the year ended December 31, 2006. Additional claims may be pursued in the future in connection with these matters, and it is not possible at this time to estimate the likelihood of loss or amount of potential exposure with respect to any such matters.

17. Income Taxes

Our provision for income taxes consists of the following (in thousands):

	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
	2005		2006		2007
Federal:
Current	$	9,418	$	7,397	$	5,124
Deferred		15,600		11,913		12,749
		25,018		19,310		17,873
State and other:
Current		2,745		629		1,976
Deferred		1,379		922		(281	)
		4,124		1,551		1,695
Total	$	29,142	$	20,861	$	19,568

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The reasons for the difference between our provision for income taxes and the amount that results from applying the federal statutory tax rate to income before provision for income taxes and cumulative effect are as follows (in thousands):

	December 31,		December 31,		December 31,
	2005		2006		2007
Income tax expense at statutory rate	$	25,018	$	19,310	$	18,024
Effect of state taxes, net of federal tax				1,551		1,004
benefit		4,124
Other		—		—		540
	$	29,142	$	20,861	$	19,568

Our deferred income taxes consist of the following components (in thousands):

	December 31,			December 31,
	2006			2007
Deferred federal and state tax liabilities (assets):
Installment sales treatment of notes	$	196,687		$	234,528
Deferred federal and state loss carryforwards/AMT credits		(120,609	)		(146,889	)
Book over tax carrying value of retained interests in notes receivable sold		15,565			17,648
Book reserves for loan losses and inventory		(7,758	)		(9,070	)
Tax over book depreciation		5,780			4,862
Unrealized gains on retained interests in notes receivable sold (see Note 6)		7,742			5,739
Deferral of VOI sales under SFAS No. 152		(4,365	)		(5,016	)
Other		(5,418	)		(3,440	)
Deferred income taxes	$	87,624		$	98,362
Total deferred federal and state tax liabilities	$	229,085		$	266,590
Total deferred federal and state tax assets		(141,461	)		(168,228	)
Deferred income taxes	$	87,624		$	98,362

We have available federal net operating loss carryforwards of $253 million, which expire beginning in 2021 through 2027, and alternative minimum tax credit carryforwards of $36 million, which never expire. Additionally, we have available state operating loss carryforwards of $544 million, which expire beginning in 2008 through 2027 and Florida alternative minimum tax credit carryforwards of $2.1 million, which never expire. The income tax benefits from our state operating loss carryforwards are net of a valuation allowance of $1.7 million.

Internal Revenue Code Section 382 addresses limitations on the use of net operating loss carry forwards following a change in ownership, as defined in Section 382. We do not believe that any such ownership change occurred during 2006. If our interpretation were found to be incorrect, there would be significant limitations placed on these carry forwards which would result in an increase in the Company’s tax liability and a reduction of its net income.

We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for years before 2003.

The Internal Revenue Service (“IRS”) commenced an examination of our U.S. income tax returns for 2004 and 2005 in the first quarter of 2007. On October 12, 2007, we received an examination report (the “2004 & 2005 Examination Report”) from the IRS for the 2004 & 2005 tax periods asserting, in the aggregate, approximately $35,000 of additional tax due, plus accrued interest.

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes-an Interpretation of FASB Statement No. 109 (“FIN 48”), which clarifies the accounting for uncertainty in tax positions. Based on an evaluation of uncertain tax provisions, we are required to measure tax benefits based on the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The adoption of FIN 48 on January 1, 2007 did not have an impact on our financial position or results of operations. In accordance with our accounting policy, we recognize interest and penalties related to unrecognized taxes as a component of general and administrative expenses. This policy did not change as a result of the adoption of FIN 48.

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On July 12, 2007, the Governor of the State of Michigan signed the Michigan Business Tax Act (“MBT”), which imposes a business income tax and a modified gross receipts tax. The MBT, which became effective January 1, 2008, replaced the state’s current Single Business Tax, which expired on December 31, 2007. The MBT creates a new tax on business income and is assessed on every taxpayer with business activity in Michigan, unless prohibited by federal law. The base of the tax starts with federal taxable income or a comparable measure of income for partnerships and S corporations, which is then subject to various adjustments, including apportionment, to identify business activity in Michigan. The tax rate is 4.95%. The MBT also creates a new tax based on a modified measure of a business’ gross receipts. The base of the tax is gross receipts less purchases from other firms. Purchases from other firms include inventory purchased during the tax year and capital expenditures. The tax rate is 0.8%. We do not believe that the MBT will have a material impact on our effective tax rate.

As of December 31, 2007, we had no amounts recorded for uncertain tax positions.

18. Employee Retirement Savings Plan and Other Employee Matters

Our Employee Retirement Plan is an Internal Revenue Code section 401(k) Retirement Savings Plan (the “Plan”). All employees at least 21 years of age with one year of employment with us are eligible to participate in the Plan. The Plan, as amended, provides an annual employer discretionary matching contribution and a fixed-rate employer matching contribution equal to 50% of the first 3% of a participant’s contribution with an annual limit of $1,000 per participant. During the years ended December 31, 2005, 2006, and 2007, we recognized expenses for our contributions to the Plan of approximately $620,000, $720,000 and $903,000, respectively. Effective for 2008, the fixed-rate employer match was increased to 100% of the first 3% of a participant’s contribution with an annual limit of $1,500 per participant.

Our employees in Aruba, which comprise approximately 1% of our total workforce, are subject to the terms of a collective bargaining agreement.

19. Business Segments

We have two reportable business segments — Bluegreen Resorts and Bluegreen Communities. Bluegreen Resorts develops markets and sells VOIs in our resorts, through the Bluegreen Vacation Club, and provides resort management services to resort property owners associations. Bluegreen Communities acquires large tracts of real estate, which are subdivided, improved (in some cases to include a golf course on the property and other related amenities) and sold, typically on a retail basis as homesites. Our reportable segments are business units that offer different products. The reportable segments are each managed separately because they sell distinct products with different development, marketing and selling methods.

We evaluate the performance and allocate resources to each business segment based on its respective field operating profit. Field operating profit is operating profit prior to the allocation of corporate overhead, interest income, other income or expense items, interest expense, income taxes, minority interest and cumulative effect of change in accounting principle. Inventory and notes receivable are the only assets that we evaluate on a segment basis — all other assets are only evaluated on a consolidated basis. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 1 to the Consolidated Financial Statements.

Required disclosures for our business segments are as follows (in thousands):

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	Bluegreen		Bluegreen
	Resorts		Communities		Totals
As of and for the year ended December 31, 2005:
Sales of real estate	$	358,240	$	192,095	$	550,335
Other resort and communities operations revenue		64,276		9,521		73,797
Depreciation expense		7,161		1,684		8,845
Field operating profit		59,578		47,227		106,805
Inventory, net		173,338		67,631		240,969
Notes Receivable, net		120,592		7,191		127,783
Goodwill		4,291		—		4,291
As of and for the year ended December 31, 2006:
Sales of real estate	$	399,105	$	164,041	$	563,146
Other resort and communities operations revenue		51,688		11,922		63,610
Depreciation expense		8,322		1,641		9,963
Field operating profit		53,937		35,824		89,761
Inventory, net		233,290		116,043		349,333
Notes Receivable, net		137,509		6,742		144,251
Goodwill		4,291		—		4,291
As of and for the year ended December 31, 2007:
Sales of real estate	$	453,541	$	129,217	$	582,758
Other resort and communities operations revenue		53,624		13,787		67,411
Depreciation expense		8,356		1,715		10,071
Field operating profit		69,909		23,633		93,542
Inventory, net		288,969		145,999		434,968
Notes Receivable, net		155,591		5,074		160,665
Goodwill		4,291		—		4,291

Reconciliations to Consolidated Amounts

     Field operating profit for our reportable segments reconciled to our consolidated income before provision for income taxes and minority interest is as follows (in thousands):

	Year Ended December 31,
	2005			2006			2007
Field operating profit for reportable segments	$	106,805		$	89,761		$	93,542
Interest income		34,798			40,765			44,703
Sales of notes receivable		25,226			5,852			(3,378	)
Other expense, net		(6,207	)		(2,861	)		(1,743	)
Corporate general and administrative expenses		(38,029	)		(52,241	)		(49,637	)
Interest expense		(14,474	)		(18,785	)		(24,272	)
Provision for loan losses		(27,587	)		—			—
Consolidated income before minority interest and provision for income taxes	$	80,532		$	62,491		$	59,215

     Depreciation expense for our reportable segments reconciled to our consolidated depreciation expense is as follows (in thousands):

	Year Ended December 31,
	2005		2006		2007
Depreciation expense for reportable segments	$	8,845	$	9,963	$	10,071
Depreciation expense for corporate fixed assets		3,487		4,413		4,418
Consolidated depreciation expense	$	12,332	$	14,376	$	14,489

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Assets for our reportable segments reconciled to our consolidated assets (in thousands):

	December 31,
	2006		2007
Notes receivable for reportable segments		144,251		160,665
Inventory for reportable segments		349,333		434,968
Goodwill		4,291		4,291
Assets not allocated to reportable segments		356,337		439,654
Total assets	$	854,212	$	1,039,578

Geographic Information

Sales of real estate by geographic area are as follows (in thousands):

	Year Ended December 31,
	2005		2006		2007
United States	$	539,131	$	554,904	$	575,309
Aruba		11,204		8,242		7,449
Consolidated totals	$	550,335	$	563,146	$	582,758

Inventory by geographic area is as follows (in thousands):

	December 31,
	2006		2007
United States	$	344,817	$	431,160
Aruba		4,516		3,808
Consolidated totals	$	349,333	$	434,968

20. Quarterly Financial Information (Unaudited)

A summary of the quarterly financial information for the years ended December 31, 2006 and 2007 is presented below (in thousands, except for per share information).

	For the Three Months Ended
	March 31,			June 30,		September 30,		December 31,
	2006			2006		2006		2006
Sales of real estate	$	121,760		$	141,947	$	172,549	$	126,890
Gross profit		76,538			92,925		125,822		88,807
Income before cumulative effect of change in accounting principle		4,031			6,580		21,907		1,793
Cumulative effect of change in accounting principle, net of tax and minority interest		(4,494	)		—		—		—
Net (loss) income	$	(463	)	$	6,580	$	21,907	$	1,793
Income before cumulative effect of change in accounting principle per common share:
Basic	$	0.13		$	0.22	$	0.72	$	0.06
Diluted	$	0.13		$	0.21	$	0.71	$	0.06
Net (loss) income per common share:
Basic	$	(0.02	)	$	0.22	$	0.72	$	0.06
Diluted	$	(0.01	)	$	0.21	$	0.71	$	0.06

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	For the Three Months Ended
	March 31,		June 30,		September 30,		December 31,
	2007		2007		2007		2007
Sales of real estate	$	122,022	$	143,274	$	180,870	$	136,592
Gross profit		85,290		96,969		125,310		96,458
Net income		5,333		4,092		13,953		8,548
Net income per common share:
Basic	$	0.17	$	0.13	$	0.45	$	0.28
Diluted	$	0.17	$	0.13	$	0.45	$	0.27

21. Subsequent Events

In February 2008, we announced that we intend to pursue a rights offering to our shareholders of up to $100 million of our common stock. We intend to file a registration statement relating to the rights offering in March. While Bluegreen had $125.5 million of unrestricted cash and cash equivalents at December 31, 2007, the purpose of the rights offering is to further strengthen our balance sheet in light of our $55 million of senior secured notes maturing in April 2008 and to support growth, including growth through acquisitions. We intend to pursue available opportunities and evaluate our business plan for Bluegreen Communities, with a long-term goal being to best position our company to take advantage of strategic alternatives so as to maximize shareholder value in the future.

In January 2008, we transferred $26.0 million of notes receivable and received $21.5 million in cash proceeds under the 2006 BB&T Purchase Facility. In February 2008, we transferred an additional $18.8 million of notes receivable and received $15.6 million in cash proceeds under the same facility. Our remaining availability subsequent to these transfers was $83.9 million.

In January 2008, we borrowed approximately $7.5 million under our GMAC AD&C Facility for development at our resort in Las Vegas, Nevada and our Fountains resort in Orlando, Florida. We also borrowed $10.2 million under the GMAC Communities Facility for general corporate purposes.

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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders of
Bluegreen Corporation

We have audited the accompanying consolidated balance sheets of Bluegreen Corporation (the Company) as of December 31, 2007 and 2006, and the related consolidated statements of income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2007. 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 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 financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bluegreen Corporation at December 31, 2007 and 2006, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Company adopted SFAS No. 123(R), Share-Based Payment, applying the modified prospective method at the beginning of 2006. As discussed in Note 2, in 2006 the Company has also adopted SFAS No. 152, Accounting for Real Estate Time-Sharing Transactions.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Bluegreen Corporation’s internal control over financial reporting as of December 31, 2007, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2008 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP  

Certified Public Accountants 

West Palm Beach, Florida
February 26, 2008

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