SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 2, 2002
Commission file number 0-19292
BLUEGREEN CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 03-0300793
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4960 Conference Way North, Suite 100, Boca Raton, Florida 33431
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 912-8000
Item 2. Acquisition of Assets
On October 2, 2002, Leisure Plan, Inc., a wholly-owned subsidiary of
Bluegreen(R) Corporation (the "Registrant"), acquired substantially all of the
assets and assumed certain liabilities (the "Acquisition") of TakeMeOnVacation,
LLC, RVM Promotions, LLC and RVM Vacations, LLC (collectively, "TMOV").
The Registrant filed a Current Report on Form 8-K on October 17, 2002, which
described the material terms of the Acquisition and which included the related
Asset Purchase Agreement as an exhibit.
This Form 8-K/A is being filed to present audited financial statements of TMOV
as well as pro forma financial information required pursuant to Article 11 of
Regulation S-X.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
The following Combined Financial Statements and Notes thereto of TMOV and
the report of independent certified public accountants relating thereto,
are included in Item 7(a).
Report of Independent Certified Public Accountants
Combined Balance Sheet as of December 31, 2001
Combined Statement of Income for the year ended December 31, 2001
Combined Statement of Members' Deficit for the year ended December 31,
2001
Combined Statement of Cash Flows for the year ended December 31, 2001
Notes to Combined Financial Statements
COMBINED
FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
POMPANO BEACH, FLORIDA
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT
The Controlling Member
TakeMeOnVacation, LLC,
RVM Promotions, LLC,
and RVM Vacations, LLC
Pompano Beach, Florida
We have audited the accompanying combined balance sheet of TakeMeOnVacation,
LLC, RVM Promotions, LLC, and RVM Vacations, LLC as of December 31, 2001, and
the related combined statements of income, members' deficit and cash flows for
the year then ended. These combined financial statements are the responsibility
of the Companies' management. Our responsibility is to express an opinion on
these combined financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of TakeMeOnVacation, LLC,
RVM Promotions, LLC, and RVM Vacations, LLC as of December 31, 2001, and the
combined results of their operations and cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.
As further discussed in Note 1, these financial statements do not include the
activity of Paramount Marketing Consultants, LLC, the parent company, and its
other subsidiaries and other commonly controlled related parties.
April 15, 2002
Miami, Florida /S/ MCCLAIN & COMPANY, L.C.
COMBINED BALANCE SHEET
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
ASSETS
CURRENT ASSETS
Cash $ 45,825
Receivables (Note 2) 1,090,417
Prepaid expenses and other current assets 339,535
Leads inventory, net (Note 3) 170,574
Deferred costs, current portion (Note 5) 6,337,913
----------
Total current assets $ 7,984,264
PROPERTY AND EQUIPMENT, NET (NOTE 4) 559,179
OTHER ASSETS
Deferred costs (Note 5) 9,644,644
Deposits and other assets 258,001
----------
Total other assets 9,902,645
-----------
Total assets $18,446,088
===========
See independent auditors' report. The accompanying notes to the combined
financial statements are an integral part of this combined statement.
LIABILITIES AND MEMBERS' DEFICIT
CURRENT LIABILITIES
Bank overdraft $ 444,391
Accounts payable and accrued expenses 1,113,037
Deferred revenue, current portion (Note 5) 8,251,209
Current portion of obligations under capital
lease (Note 7) 24,447
-----------
Total current liabilities $ 9,833,084
LONG-TERM LIABILITIES
Deferred revenue (Note 5) 10,804,899
Notes payable to related finance
company (Note 6) 4,440,644
Obligations under capital lease (Note 7) 64,858
Interest payable to related party 311,178
-----------
Total long-term liabilities 15,621,579
-----------
Total liabilities 25,454,663
MINORITY INTEREST --
MEMBERS' DEFICIT
Members' contributions 500
Accumulated deficit (7,009,075)
-----------
Total members' deficit (7,008,575)
-----------
Total liabilities and members' deficit $18,446,088
===========
COMBINED STATEMENT OF INCOME
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
REVENUES
Package sales and reservations income $13,651,127
VOI commissions 3,772,014
Club membership 1,423,135
Lead sales 2,444,107
-----------
Total revenues $21,290,383
COST OF SALES
Commissions, fees, mailings, and other costs 11,079,890
Hotel and cruise costs 4,338,947
Lead costs 2,710,023
-----------
18,128,860
-----------
Gross profit 3,161,523
OPERATING EXPENSES
General and administrative 7,554,682
Depreciation 265,757
-----------
Total operating expenses 7,820,439
-----------
Loss from operations before other
income and expenses (4,658,916)
OTHER INCOME (EXPENSES)
Interest income 30,250
Interest expense (275,027)
-----------
Total other income (expenses) (244,777)
-----------
Net loss $(4,903,693)
===========
See independent auditors' report. The accompanying notes to the combined
financial statements are an integral part of this combined statement.
COMBINED STATEMENT OF MEMBERS' DEFICIT
YEAR ENDED DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
Members' Accumulated Members'
Contributions Deficit Deficit
------------- ------------- -------------
BALANCE, January 1, 2001 $ 500 $(2,105,382) $(2,104,882)
Members' contributions -- -- --
Net loss -- (4,903,693) (4,903,693)
----- ----------- -----------
BALANCE, December 31, 2001
$ 500 $(7,009,075) $(7,008,575)
===== =========== ===========
See independent auditors' report. The accompanying notes to the combined
financial statements are an integral part of this combined statement.
COMBINED STATEMENT OF CASH FLOWS
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
YEAR ENDED DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash received from customers $ 29,087,288
Cash paid to suppliers and employees (31,333,733)
Interest paid (52,963)
Interest received 30,250
------------
Net cash used in operating activities $(2,269,158)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (150,668)
Increase in deposits (54,640)
------------
Net cash used in investing activities (205,308)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital lease obligations (26,026)
Net advances from related finance company 2,467,347
------------
Net cash provided by financing activities 2,441,321
-----------
Net decrease in cash and cash equivalents (33,145)
CASH AND CASH EQUIVALENTS, January 1, 2001 78,970
-----------
CASH AND CASH EQUIVALENTS, December 31, 2001 $ 45,825
===========
See independent auditors' report. The accompanying notes to the combined
financial statements are an integral part of this combined statement.
COMBINED STATEMENT OF CASH FLOWS (CONTINUED)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
YEAR ENDED DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $(4,903,693)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 265,757
Provision for uncollectible loans 500,000
Increase in receivables (844,827)
Increase in leads inventory (90,556)
Increase in prepaid expenses and other assets (3,008)
Increase in deferred costs (6,616,810)
Increase in bank overdraft 294,527
Increase in accounts payable and accrued expenses 669,918
Increase in accrued interest payable 222,064
Increase in deferred revenue 8,237,470
-----------
Net cash used in operating activities $(2,269,158)
===========
See independent auditors' report. The accompanying notes to the combined
financial statements are an integral part of this combined statement.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The accompanying combined financial statements include the accounts of
TakeMeOnVacation, LLC ("TMOV"), RVM Promotions, LLC ("Promotions"), and
RVM Vacations, LLC ("Vacations"), collectively (the "Company"), all of
which are under common control or ownership. During 2001,
TakeMeOnVacation.com, LLC changed its name to TakeMeOnVacation, LLC.
All significant intercompany accounts and transactions have been
eliminated in the combined financial statements.
The enclosed financial statements do not include the activity of Paramount
Marketing Consultants, LLC ("Paramount"), the parent company, and its
other wholly-owned and majority owned subsidiaries Vacationbook.com, LLC,
Excalibur Marketing, LLC, Empire Reservations, LLC, and Paramount
Hospitality Management, LLC. It does not include Paramount's minority
owned and unconsolidated subsidiaries Palm Beach Resort Development Group,
LLC and Paramount Grande Las Vegas. It also does not include the activity
of Paramount Financing, LLC and Paramount Realty, LLC, which are under the
same common ownership as Paramount.
TMOV, Vacations, and Promotions have substantial intercompany activity
with related companies. As more fully described in Note 8 - Related Party
Transactions, approximately 15% of the Company's total revenue, 39% of the
cost of sales, 10% of the Company's general and administrative expenses,
and 93% of the Company's interest expense were with the above-mentioned
uncombined companies and/or other related parties.
In August 2001, Paramount purchased Vacations' 49% minority members
interest and Promotions' 33% minority members interest. As a result, at
December 31, 2001, Paramount owns 100% of Vacations and 67% of Promotions.
NATURE OF OPERATIONS
Vacations and TMOV are engaged in the marketing and sales of discounted
vacation packages for travel primarily to Florida. The vacation package
terms and conditions require the buyer to attend a Vacation Ownership
Interest ("VOI") sales presentation tour at a resort development. These
resort developments are either owned by a related party or independently
owned. Vacations and TMOV have agreements with the various resort
developers to earn a commission for sales presentation tours. These
commissions are earned as either a percentage of the sales price of VOI
units purchased, or a "flat fee" for each tour arriving at the resort
development.
In October 2001, TMOV started a vacation travel club called
Leisuretivity.com whereby members, for a monthly fee, are allowed to take
advantage of discounted vacation packages to several destinations within
the United States and around the world. In addition, members can take
advantage of other discounts for various non- travel related services and
join a gasoline redemption program that reimburses members up to $8.34 of
gasoline each month. New members also receive a 3-day mini-vacation to
selected destinations in the U.S. New members are charged an initiation
fee and the first monthly payment, both of which are refundable within the
first 45 days ("trial period"). After the trial period expires, a member
is charged a monthly fee.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
NATURE OF OPERATIONS (CONTINUED)
During the year, TMOV assumed the operation of Vacations. At December 31,
2001, Vacations was used primarily as a credit card processing center.
Promotions acquires leads of customers interested in low-cost vacation
packages and sells these leads to independent phone rooms.
REVENUE RECOGNITION
Commissions on Sales of Vacation Ownership Interests
The Company has agreements with the various resort developers to
earn a commission for sales presentation tours. These commissions
are earned as either a percentage of the sales price of VOI units
purchased, or a "flat fee" for each tour arriving at the resort
development. VOI commission revenue is recognized when the resort
developer has collected a 10% down payment and a 10-day rescission
period has expired. The "flat fee" is earned when the customer tours
the resort.
Package Sales
As part of the Company's strategy associated with the marketing of
VOI's, vacation package certificates are sold on a non-refundable
basis. The customer has up to 18 months to exercise the certificate,
at which time the certificate expires. This certificate can be
extended for an additional 12 months generally upon payment of a
nominal fee. All revenues and direct costs incurred relating to the
sale of vacation package certificates are deferred until either the
vacation is taken or the eighteen-month period has expired and the
Company is no longer contractually obligated to fulfill the
vacation. To the extent that vacation package certificates are
extended beyond the eighteen-month period, revenues, including fees
received upon extension and related direct costs, are deferred until
either the vacation is taken or the extended period has expired.
Reservation Processing/Upgrade Fees
Some customers are charged a fee when making their reservations.
Customers also have the opportunity to purchase upgrades to their
basic vacation package. Upgrades primarily include more luxurious
accommodations and car rentals. Reservations and upgrades are paid
generally within 45 days of the scheduled vacations, and are
recognized as revenue when the vacations are taken. This income is
included as package sales in the statement of income.
Travel Club
For new members, revenue is recorded as income after the trial
period has expired. For existing members, revenue is recorded as
earned on a monthly basis.
Lead Sales
Revenue is recorded when a lead is sold to the phone rooms.
Expenses for all companies are recorded when they are incurred.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LEADS INVENTORY
Leads inventory is valued at the lower of cost or market, with cost
determined by the "first-in, first-out" (FIFO) method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost and depreciated primarily using
the straight-line method over the following estimated useful lives of the
assets:
Computer software 3 years
Video production 3 years
Furniture and fixtures 5-7 years
Office and computer equipment 3-5 years
Leasehold improvements Shorter of the life of the
underlying lease or the
estimated useful life of the
improvement
Equipment held under capital leases Shorter of the life of the
underlying lease or the
estimated useful life of the
equipment
Depreciation expense charged to operations for the year ended December 31,
2001 amounted to $265,757.
LONG-LIVED ASSETS
The Company reviews its long-lived assets for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable.
INCOME TAXES
No liability for income taxes appears on the accompanying combined
financial statements as the entities are either disregarded or
partnerships for income tax purposes, and as such, are not taxpaying
entities. Members are taxed individually on their share of the Company's
earnings. Net income or loss is allocated among the members in accordance
with the Company's operating agreement.
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 reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or
less to be cash equivalents.
BUSINESS PROMOTION AND ADVERTISING
Advertising and promotional costs are expensed as incurred. Business
Promotion is expensed as passengers travel and is included as cost of
sales. Total advertising and promotional expense for the year ended
December 31, 2001 approximated $462,000.
NOTE 2 - RECEIVABLES
Receivables consist primarily of open trade accounts that have not been
reduced by an allowance for doubtful accounts, as management considers all
receivables to be fully collectible.
NOTE 3 - LEADS INVENTORY
Leads inventory consists of customer leads purchased from independent
contractors who operate travel booths in malls, movie theaters, fairs,
shows, etc. throughout the United States of America. These leads will be
sold to phone rooms in the future. Leads inventory at December 31, 2001
amounted to $170,574, net of a $20,054 reserve.
NOTE 4 - PROPERTY AND EQUIPMENT
At December 31, 2001, property and equipment consisted of the following:
Computer software $ 297,611
Video production 60,582
Office and computer equipment 354,599
Furniture and fixtures 55,756
Leasehold improvements 59,106
Equipment held under capital lease 136,493
---------
964,147
Less accumulated depreciation (404,968)
---------
$ 559,179
=========
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 5 - DEFERRED REVENUE AND DEFERRED COSTS
All revenues and direct costs incurred relating to the sale of vacation
package certificates are deferred until either the vacation is taken or
the eighteen-month period has expired and the Company is no longer
contractually obligated to fulfill the vacation. To the extent that
vacation package certificates are extended beyond the eighteen-month
period, revenues, including fees received upon extension and related
direct costs, are deferred until either the vacation is taken or the
extended period has expired. Deferred revenue consists of revenues from
the sale of the vacation package, reservations processing, and upgrade
fees. Deferred costs consist of commission, merchant fees, and direct
mailing costs. The current portion of deferred revenue and costs are for
package certificates with travel or expiration dates within the next 12
months.
Reservations processing/upgrade fees are all current since they are paid
generally within 45 days of travel date.
At December 31, 2001, deferred revenue and costs consist of the following:
Deferred Revenue:
Package sales $ 18,207,795
Reservations processing/upgrade fees 848,313
------------
19,056,108
Less current portion (8,251,209)
------------
$ 10,804,899
============
Deferred Costs:
Commissions $ 14,346,625
Merchant fees 873,871
Direct mailing costs 762,061
------------
15,982,557
Less current portion (6,337,913)
------------
$ 9,644,644
============
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 6 - NOTES PAYABLE
At December 31, 2001, notes payable consisted of the following:
TMOV unsecured line of credit with a related finance company at Wall
Street Journal ("WSJ") prime rate plus 2%, with a floor of 8% (8%
at December 31, 2001), principal and interest due in 2005. $2,820,167
Promotions unsecured line of credit with a related finance company at
WSJ prime rate plus 2%, with a floor of 8% (8% at December 31,
2001), payments to be made first from company distributions and
any unpaid principal and interest is due on June 2005, guaranteed
by a minority member's interest in Promotions. 1,620,477
----------
4,440,644
Less current portion --
----------
$4,440,644
==========
Principal payments on the notes over the next four years and in the
aggregate are as follows:
2002 $ --
2003 --
2004 --
2005 4,440,644
----------
$4,440,644
==========
Total interest expense under these notes for the year ended December 31,
2001 was approximately $255,000.
NOTE 7 - CAPITAL LEASE
Vacations has a lease agreement for furniture and fixtures under a capital
lease expiring in 2005. The assets and liability under the capital lease
are recorded at the lower of the present value of the minimum lease
payments, or the fair value of the asset, and are included in net property
and equipment. The assets are depreciated over the lesser of their
estimated useful life, or the term of the lease. Depreciation of the
assets under capital lease is included in depreciation expense for the
year ended December 31, 2001.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 7 - CAPITAL LEASES (CONTINUED)
Minimum future lease payments under the capital lease for the next four
years and in the aggregate are as follows:
2002 $ 34,901
2003 34,901
2004 34,901
2005 2,906
---------
Total minimum lease payments 107,609
Less amount representing interest (18,304)
---------
Present value of net minimum lease payments 89,305
Less current portion (24,447)
---------
$ 64,858
=========
Interest rate on the capitalized lease is imputed based on the lower of
the Company's incremental borrowing rate at the inception of the lease or
the lessor's implicit rate of return, which is 10.5%. Imputed interest
expense for the year ended December 31, 2001, was approximately $13,600.
NOTE 8 - RELATED PARTY TRANSACTIONS
Promotions sells leads to B & M Marketing, Inc. ("B & M"), which is owned
by the former minority members of Vacations and Promotions (see Note 1,
Principles of Combination). B & M then sells vacation travel certificates
on behalf of Vacations. Total leads sold to B & M amounted to
approximately $1,238,000. Total commissions paid by Vacations to B & M for
the sale of travel certificates approximated $3,755,000 net of deferred
costs of approximately $10,511,000.
Vacations charges this same related entity for an allocation of expenses.
Total expenses charged during the year amounted to approximately $79,000.
TMOV and Vacations buy cruise cabins from an unconsolidated subsidiary of
Paramount Marketing Consultants, Inc. ("PMCI"), a related party, and then
market the cruise as part of their vacation travel packages. Total amount
paid to this company approximated $2,507,000. TMOV and Vacations also
receive VOI commissions and incur hotel costs from a resort partially
owned by Paramount. Total VOI commissions received approximated $773,000.
Total hotel costs paid were approximately $230,000.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 8 - RELATED PARTY TRANSACTIONS (CONTINUED)
The Company receives advances from Financing, a related company. As
further discussed in Note 6, these advances are supported by notes payable
and bear interest at prevailing rates. The notes mature in 2005. Financing
has indicated that it will not demand payment of this debt until the
Company's cash flow supports such repayment without impairing its
operations. During 2001, net advances from Financing to the related
entities approximated $2,420,000. Total interest incurred for the year
ended December 31, 2001 approximated $255,000.
Paramount pays general and administrative expenses on behalf of the
Company. In turn, Paramount charges the Company a management fee. This fee
is determined by management. Total management fees charged for the year
ended December 31, 2001 approximated $534,000.
TMOV charges Excalibur Marketing Consultants, LLC ("Excalibur"), an entity
related by common ownership, a fee for each Las Vegas Mini Vacation. For
the year ended December 31, 2001, these fees amounted to approximately
$840,000. Additionally, TMOV charges Excalibur a fee for each tour taken
at various resort developments. For the year ended December 31, 2001,
these fees amounted to approximately $352,000.
The Company leases commercial office space from Paramount Realty, LLC
("Realty"), a related entity. The lease is for a period of two years
expiring in September, 2002 with options to renew for three separate
additional one-year periods. The leases call for monthly rent of $12,243,
plus an allocation of common area maintenance charges. Total rent paid to
Realty for 2001 under these leases approximated $287,000.
The Company had the following balances and transactions with related
parties as of and for the year ended December 31, 2001:
Other current assets $ 55,188
Related company receivables 237,834
Deferred costs 10,511,010
Deposits and other assets 500
Accounts payable and accrued expenses 365,102
Notes payable 4,389,691
Revenues 3,203,179
Cost of sales 7,025,619
General and administrative expenses 771,342
Interest expense 255,226
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 9 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Company experiences credit risk in connection with its bank accounts.
At various times during the year, the Company maintained deposits with
financial institutions in excess of amounts insured by the Federal Deposit
Insurance Corporation. The exposure to the Company from these transactions
is solely dependent upon daily bank balances and the financial strength of
the respective institutions.
NOTE 10 - OPERATING LEASES
The Company had entered into several real estate, automobile, and
equipment leases accounted for as operating leases. These leases expire in
various years through 2006.
Minimum future lease payments under all operating leases for the next five
years and in the aggregate are as follows:
Years ending
December 31,
------------
2002 $289,376
2003 141,656
2004 69,887
2005 30,813
2006 15,407
--------
$547,139
========
Rent expense under these leases for the year ended December 31, 2001 was
approximately $388,000.
NOTE 11 - COMMITMENTS
In August 2001, TMOV entered into a two-year vacation fulfillment
agreement with an unrelated third party ("Vici") whereby TMOV will provide
vacation accommodations in Orlando, Ft. Lauderdale, and Palm Beach,
Florida to residents of the United Kingdom who buy vacation packages (as
defined in the agreement) from Vici. TMOV must remit weekly payments to
Vici as defined in the agreement. The agreement may be terminated as
outlined in the contract.
See independent auditors' report.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 2001
TAKEMEONVACATION, LLC,
RVM PROMOTIONS, LLC, AND
RVM VACATIONS, LLC
NOTE 11 - COMMITMENTS (CONTINUED)
At December 31, 2001, as part of the Leisuretivity.com travel club, TMOV
had a commitment to reimburse members up to $133,000 of gasoline
reimbursements. This amount is dependent upon the members meeting all the
requirements set forth in the gasoline redemption program. To be eligible
for reimbursement, a member must submit a voucher within 30 days after the
month end. In January 2002, TMOV reimbursed $950 of gasoline vouchers. Per
the terms of the membership agreement, TMOV is not liable for any
additional amounts to members.
At December 31, 2001, Leisuretivity.com had approximately 1,970 members
who had a right to cancel membership for a full refund of approximately
$19,600.
NOTE 12 - NON-CONTROLLING MEMBERS
At December 31, 2001, Promotions is 33% owned by a non-controlling member
who is also an officer.
See independent auditors' report.
(b) Pro Forma Financial Information.
The following unaudited pro forma financial information is included in
Item 7(b).
Introduction to Pro Forma Condensed Consolidated Financial Information
Combined Balance Sheet as of September 29, 2002
Combined Statement of Income for the six months ended September 29, 2002
Combined Statement of Income for the year ended March 31, 2002
BLUEGREEN CORPORATION
Introduction to Pro Forma Condensed
Consolidated Financial Information (Unaudited)
The following pro forma condensed consolidated financial information consists of
a Pro Forma Condensed Consolidated Balance Sheet as of September 29, 2002 and
Pro Forma Condensed Consolidated Statements of Income for the six months ended
September 29, 2002 and for the year ended March 31, 2002 (collectively the "Pro
Forma Statements").
The Pro Forma Condensed Consolidated Balance Sheet was prepared to give effect
to the Acquisition as if it had occurred on September 29, 2002. The Pro Forma
Condensed Consolidated Statement of Income for the six months ended September
29, 2002, gives effect to the Acquisition as if it had occurred on April 1,
2002. The Pro Forma Condensed Consolidated Statement of Income for the year
ended March 31, 2002, gives effect to the Acquisition as if it had occurred on
April 2, 2001. For the purposes of the Pro Forma Condensed Consolidated
Statement of Income for the year ended March 31, 2002, the Statement of Income
of the Registrant for the year ended March 31, 2002 and the Statement of Income
of TMOV for the year ended December 31, 2001 were used as the basis for the Pro
Forma Financial Information contained therein.
The pro forma adjustments to, or "reflected in," the Pro Forma Statements are
based on the historical results of TMOV giving effect to the Acquisition based
on the purchase method of accounting and the assumptions and adjustments
described in the accompanying notes to the Pro Forma Statements.
The Registrant is in the process of determining the final purchase price
allocation for the Acquisition, and therefore the purchase price allocation
reflected in the Pro Forma Statements is preliminary and subject to change.
The pro forma adjustments are based upon currently available information and
upon certain assumptions that management of the Registrant believes are
reasonable under the circumstances. The Pro Forma Statements do not purport to
be indicative of what the Registrant's financial position or results of
operations would actually have been if the aforementioned transactions in fact
had occurred on such dates indicated above, or to project the Registrant's
financial position or results of operations at any future date or for any future
period. The Pro Forma Statements should be read in conjunction with the
Registrant's Consolidated Financial Statements in its most recent Annual Report
on Form 10-K and Quarterly Report on Form 10-Q and TMOV's Combined Financial
Statements included herein.
BLUEGREEN CORPORATION
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
September 29, 2002
(Amounts in Thousands)
Condensed
Historical Pro Forma Consolidated
Bluegreen Historical Adjustments Pro Forma
Corporation TMOV For Acquisition Balance Sheet
----------- ---- --------------- -------------
Assets
$ 403 (A)
(2,292) (B)
-------
Cash and cash equivalents .............................. $ 59,463 $ (403) (1,889) $ 57,171
Contracts receivable, net .............................. 24,120 -- -- 24,120
Notes receivable, net .................................. 67,776 -- -- 67,776
Prepaid expenses ....................................... 11,950 20 139 (A) 12,109
Inventory, net ......................................... 168,839 -- -- 168,839
Retained interests in notes receivable sold ............ 46,639 -- -- 46,639
(29)(A)
2,068 (C)
-------
Property and equipment, net ............................ 49,090 407 2,039 51,536
Receivable from affiliates ............................. -- 990 (990)(A) --
2,477 (A)
2,792 (B)
(694)(C)
-------
Other assets ........................................... 28,862 10,327 4,575 43,764
--------- -------- ------- ---------
Total assets .................................... $ 456,739 $ 11,341 $ 3,874 $ 471,954
========= ======== ======= =========
Liabilities and shareholders' equity
Accounts payable ....................................... $ 4,911 $ 61 $ -- $ 4,972
75(A)
500(B)
-------
Accrued liabilities and other .......................... 46,647 1,541 575 48,763
Deferred income ........................................ 3,760 11,513 747 (C) 16,020
Deferred income taxes .................................. 35,860 -- 627 (C) 36,487
Payable to affiliates .................................. -- 2,489 (2,489)(A) --
Receivable-backed notes payable ........................ 13,812 -- -- 13,812
Lines-of-credit and notes payable ...................... 41,263 151 -- 41,414
10.50% senior secured notes ............................ 110,000 -- -- 110,000
8.25% convertible subordinated debentures .............. 34,371 -- -- 34,371
--------- -------- ------- ---------
Total liabilities .............................. 290,624 15,755 (540) 305,839
Minority interest ...................................... 3,334 -- -- 3,334
Shareholders' equity (deficit)
Common stock ........................................... 273 -- -- 273
Additional paid-in capital ............................. 123,258 1 (1)(A) 123,258
Treasury stock ......................................... (12,885) -- -- (12,885)
Net unrealized gains on retained interests
in receivables sold, net of income taxes ............. 4,151 -- -- 4,151
Retained earnings (accumulated deficit) ................ 47,984 (4,415) 4,415(A) 47,984
--------- -------- ------- ---------
Total shareholders' equity (deficit) ................... 162,781 (4,414) 4,414 162,781
--------- -------- ------- ---------
Total liabilities and shareholders' equity ...... $ 456,739 $ 11,341 $ 3,874 $ 471,954
========= ======== ======= =========
BLUEGREEN CORPORATION
Notes to Pro Forma Condensed Consolidated Balance Sheet
(Amounts in Thousands)
(Unaudited)
(A) Pro forma adjustment to adjust TMOV's historical balance sheet to reflect
only the assets acquired and liabilities assumed in the Acquisition, and
to eliminate TMOV's historical members' equity.
(B) Pro forma adjustment to reflect the cash and contingent purchase prices
incurred in the Acquisition. Only $500,000 of the contingent purchase
price has been recognized, as there are no specific contingencies to be
resolved in connection with the payment of this amount. The remaining
contingent purchase price of $12.5 million has not been recognized, as the
payment of this amount is contingent upon future earnings and is not
determinable beyond a reasonable doubt.
(C) Pro forma adjustment to adjust the carrying values of the assets acquired
in the Acquisition to fair market value, and to record the net deferred
tax liability as a result of such adjustments in carrying value.
BLUEGREEN CORPORATION
Pro Forma Condensed Consolidated Income Statement (Unaudited)
Six Months Ended September 29, 2002
(Amounts in Thousands, Except Earnings Per Share)
Condensed
Historical Pro Forma Consolidated
Bluegreen Historical Adjustments Pro Forma
Corporation TMOV For Acquisition Income Statement
----------- ---- --------------- -------------
Total revenues .............................................. $179,823 $20,102 $ 2,059 (A) $ 201,984
204 (B)
(228)(C)
2,279 (D)
316 (E)
(229)(F)
------
Costs and expenses .......................................... 161,733 19,592 2,342 183,667
-------- ------ ------ --------
Income before income taxes .................................. 18,090 510 (283) 18,317
Provision for income taxes .................................. 6,965 -- 87 (G) 7,052
Minority interest in income of consolidated subsidiaries .... 244 -- -- 244
-------- ------ ------ --------
Net income .................................................. $ 10,881 $ 510 $ (370) $ 11,021
======== ====== ====== ========
Income per common share:
Basic ........................................................ $ 0.45 $ 0.45
======== ========
Diluted ...................................................... $ 0.41 $ 0.41
======== ========
Weighted average number of common and common equivalent shares:
Basic ....................................................... 24,436 24,436
======== ========
Diluted ..................................................... 28,763 28,763
======== ========
BLUEGREEN CORPORATION
Pro Forma Condensed Consolidated Income Statement (Unaudited)
Year Ended March 31, 2002
(Amounts in Thousands, Except Earnings Per Share)
Condensed
Historical Pro Forma Consolidated
Bluegreen Historical Adjustments Pro Forma
Corporation TMOV For Acquisition Income Statement
----------- ---- --------------- -------------
Total revenues ............................................ $287,825 $ 21,320 $ 3,407 (A) $312,552
408 (B)
(255)(C)
3,772 (D)
171 (E)
(534)(F)
-------
Costs and expenses ........................................ 268,343 26,224 3,562 298,129
-------- -------- ------- --------
Income before income taxes ................................ 19,482 (4,904) (155) 14,423
Provision for income taxes ................................ 7,501 -- (1,948)(G) 5,553
Minority interest in income of consolidated subsidiaries .. 249 -- -- 249
-------- -------- ------- --------
Net income ................................................ $ 11,732 $ (4,904) $ 1,793 $ 8,621
======== ======== ======= ========
Income per common share:
Basic ...................................................... $ 0.48 $ 0.36
======== ========
Diluted .................................................... $ 0.46 $ 0.35
======== ========
Weighted average number of common and common equivalent shares:
Basic ..................................................... 24,256 24,256
======== ========
Diluted ................................................... 29,993 (4,171)(H) 25,822
======== ========
BLUEGREEN CORPORATION
Notes to Pro Forma Condensed Consolidated Statements of Income
(Amounts in Thousands)
(Unaudited)
(A) Pro forma adjustment to reflect new basis in deferred revenue as a result
of applying the purchase accounting method.
(B) Pro forma adjustment to increase depreciation expense in connection with
the adjusted carrying value of TMOV's property and equipment acquired in
the Acquisition.
(C) Pro forma adjustment to eliminate TMOV's interest expense on debt that was
not assumed in the Acquisition.
(D) Pro forma adjustment to amortize intangible asset for customer list
acquired in the Acquisition.
(E) Pro forma adjustment to reflect change in TMOV's accounting method to
reverse the capitalization of lead costs.
(F) Pro forma adjustment to eliminate related party management fee charged to
TMOV during the six months ended September 29, 2002.
(G) Pro forma income tax provision for TMOV's historical income statement and
the net effect of the adjustments above.
(H) Pro forma adjustment to exclude the assumed conversion of the Registrant's
8.25% convertible subordinated debentures from the computation of diluted
earnings per share as such conversion would have an antidilutive effect on
pro forma diluted income per common share.
(c) Exhibits.
10.208 Asset Purchase Agreement dated as of September 30, 2002, by
and among TakeMeOnVacation, LLC, RVM Promotions, LLC, RVM
Vacations, LLC and Leisure Plan, Inc. (incorporated by
reference to exhibit of same designation to Current Report on
Form 8-K dated October 2, 2002.)
23.1 Consent of McClain & Company, L.C.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: December 16, 2002 By: /S/ GEORGE F. DONOVAN
-------------------------------
George F. Donovan
President and
Chief Executive Officer