Discontinued Operations

6 Months Ended

Jun. 30, 2011

Discontinued Operations

8. Discontinued Operations

On March 24, 2011, we announced that we had engaged advisors to explore strategic alternatives for Bluegreen Communities, including a possible sale of the division. Based on its analysis of information and the available options presented to it, on June 30, 2011, our Board of Directors made the determination to seek to sell Bluegreen Communities or all or substantially all of its assets. As a consequence, we determined that Bluegreen Communities met the criteria for classification as discontinued operations and, accordingly, the operating results of Bluegreen Communities, which had previously been presented as a separate reporting segment, are included in discontinued operations in the consolidated statements of operations. In addition, the majority of the assets related to Bluegreen Communities are presented separately on the consolidated balance sheets as “assets held for sale.” The assets held for sale primarily consist of Bluegreen Communities’ real estate assets valued on our books at $87.8 million and $31.8 million as of December 31, 2010 and June 30, 2011, respectively. This decrease in the carrying amount of the assets held for sale as of June 30, 2011 as compared to December 31, 2010, primarily related to the $56.4 million non-cash charge described below recorded during the three months ended June 30, 2011 to write down the value of Bluegreen Communities’ assets to estimated fair value less cost to sell. We derived the fair value of Bluegreen Communities’ assets held for sale based on the enterprise level discounted cash flow estimates (Level 3 inputs), and the expressions of interest received in the marketing process of the related assets. We recently entered into a non-binding letter of intent with a third party contemplating the sale of Bluegreen Communities, or a similar transaction. However, as of the date of this filing, we had not entered into any definitive agreement or agreements with respect to the sale of Bluegreen Communities or its assets, and we may not be successful in our efforts to consummate any such sale or sales.

Below are the results of discontinued operations for the three and six months ended June 30, 2010 and June 30, 2011 (in thousands):

	For the Three Months Ended June 30,
	2010			2011
Revenues of discontinued operations	$	2,671		$	2,597
Cost of discontinued operations		(7,364	)		(4,271	)
Loss on assets held for sale		—			(56,757	)
Interest expense		(1,120	)		(772	)
Loss from discontinued operations before benefit for income taxes	$	(5,813	)	$	(59,203	)
Benefit for income taxes		1,916			22,817
Loss from discontinued operations	$	(3,897	)	$	(36,386	)
		For the Six Months Ended June 30,
		2010			2011
Revenues of discontinued operations	$	6,268		$	7,011
Cost of discontinued operations		(18,763	)		(10,160	)
Loss on assets held for sale		—			(56,757	)
Interest expense		(2,228	)		(1,532	)
Loss from discontinued operations before benefit for income taxes	$	(14,723	)	$	(61,438	)
Benefit for income taxes		5,884			23,676
Loss from discontinued operations	$	(8,839	)	$	(37,762	)

As described above, loss from discontinued operations during the three and six months ended June 30, 2011 includes a loss on assets held for sale of approximately $56.8 million. Additional losses, which may be significant, may be incurred in the future to the extent that actual sales proceeds from the disposition of assets held for sale are materially different from their estimated fair value.

Cost of discontinued operations during the six months ended June 30, 2010 includes non-cash impairment charges of approximately $5.6 million to write down certain phases of completed Communities properties to their estimated fair value less costs to sell at that time. This charge was incurred as a result of continued low volume of sales, reduced prices and the impact of reduced sales on the forecasted sellout period of the projects.

Also, included in results of discontinued operations in each of the periods presented is interest expense on notes payable collateralized by certain Bluegreen Communities’ inventory and property and equipment ($27.8 million as of June 30, 2011), as such debt is required to be repaid in full upon the sale of the related assets.