UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2009

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

WOODBRIDGE HOLDINGS CORPORATION

(Exact name of registrant as specified in its charter)

Florida		11-3675068
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
2100 W. Cypress Creek Road,
Fort Lauderdale, FL		33309
(Address of principal executive offices)		(Zip Code)

(954) 940-4950
(Registrant’s telephone number, including area code)

     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 þ     No o

     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes o     No o

     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.

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes o     No þ

     Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

Class		Outstanding at August 5, 2009
Class A common stock, $0.01 par value		16,637,132
Class B common stock, $0.01 par value		243,807

 

 

Woodbridge Holdings Corporation
Index to Quarterly Report on Form 10-Q

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION
Item 1.		Financial Statements
		Consolidated Statements of Financial Condition as of June 30, 2009 and December 31, 2008 — Unaudited			1
		Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008 — Unaudited			2
		Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2009 and 2008 — Unaudited			3
		Consolidated Statement of Changes in Equity for the six months ended June 30, 2009 — Unaudited			4
		Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 — Unaudited			5
		Notes to Unaudited Consolidated Financial Statements			6
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			31
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			46
Item 4.		Controls and Procedures			47
PART II.		OTHER INFORMATION
Item 1.		Legal Proceedings			48
Item 1A.		Risk Factors			48
Item 6.		Exhibits			48
SIGNATURES					49
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Woodbridge Holdings Corporation
Consolidated Statements of Financial Condition — Unaudited
(In thousands, except share data)

		June 30, 2009				December 31, 2008
Assets
Cash and cash equivalents		$	58,158				114,798
Restricted cash			7,845				21,288
Inventory of real estate			243,564				241,318
Investments:
Bluegreen Corporation			28,580				29,789
Other equity securities			6,545				4,278
Certificates of deposits, short-term			49,920				9,600
Unconsolidated trusts			418				419
Property and equipment, net			105,979				109,477
Intangible assets			5,073				4,324
Other assets			24,183				23,963
Total assets		$	530,265				559,254
Liabilities and Equity
Accounts payable, accrued liabilities and other		$	35,736				36,885
Notes and mortgage notes payable			263,464				264,900
Junior subordinated debentures			85,052				85,052
Loss in excess of investment in subsidiary			—				52,887
Total liabilities			384,252				439,724
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: 30,000,000 shares Issued: 16,637,132 and 19,042,149 shares, respectively			166				190
Class B common stock, $0.01 par value Authorized: 2,000,000 shares Issued and outstanding: 243,807 shares			2				2
Additional paid-in capital			339,650				339,780
Accumulated deficit (a)			(201,356	)			(218,868	)
Accumulated other comprehensive income (loss) (a)			3,882				(135	)
			142,344				120,969
Less — common stock in treasury, at cost (2,385,624 shares at December 31, 2008)			—				(1,439	)
Total Woodbridge shareholders’ equity			142,344				119,530
Noncontrolling interest			3,669				—
Total equity			146,013				119,530
Total liabilities and equity		$	530,265				559,254

See accompanying notes to unaudited consolidated financial statements.

Woodbridge Holdings Corporation
Consolidated Statements of Operations — Unaudited
(In thousands, except per share data)

		Three Months								Six Months
		Ended June 30,								Ended June 30,
						2008								2008
		2009				(As Adjusted)				2009				(As Adjusted)
Revenues:
Sales of real estate		$	1,767				2,395				3,194				2,549
Other revenues			3,046				2,744				5,936				5,708
Total revenues			4,813				5,139				9,130				8,257
Costs and expenses:
Cost of sales of real estate			1,301				1,758				1,994				1,786
Selling, general and administrative expenses			10,349				12,952				21,103				25,579
Interest expense			3,747				2,532				6,520				5,556
Total costs and expenses			15,397				17,242				29,617				32,921
Earnings from Bluegreen Corporation			10,714				1,211				17,050				1,737
Impairment of investment in Bluegreen Corporation			—				—				(20,401	)			—
Impairment of other investments			—				—				(2,396	)			—
Gain on settlement of investment in subsidiary			—				—				40,369				—
Interest and other income			277				1,950				843				3,554
Income (loss) before income taxes and noncontrolling interest			407				(8,942	)			14,978				(19,373	)
(Provision) benefit for income taxes			—				—				—				—
Net income (loss)			407				(8,942	)			14,978				(19,373	)
Add: Net loss attributable to noncontrolling interest			270				—				474				—
Net income (loss) attributable to Woodbridge		$	677				(8,942	)			15,452				(19,373	)
Income (loss) per common share attributable to Woodbridge common shareholders:
Basic		$	0.04				(0.46	)			0.91				(1.01	)
Diluted		$	0.04				(0.46	)			0.91				(1.01	)
Weighted average common shares outstanding:
Basic			16,893				19,255				16,890				19,255
Diluted			16,893				19,255				16,890				19,255

See accompanying notes to unaudited consolidated financial statements.

Woodbridge Holdings Corporation
Consolidated Statements of Comprehensive Income (Loss) — Unaudited
(In thousands)

		Three Months								Six Months
		Ended June 30,								Ended June 30,
		2009				2008				2009				2008
Net income (loss)		$	407				(8,942	)			14,978				(19,373	)
Other comprehensive income (loss):
Pro-rata share of unrealized gain (loss) recognized by Bluegreen Corporation on retained interests in notes receivable sold			132				(458	)			605				(885	)
Pro-rata share of cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold (FAS 115-2)			(1,251	)			—				(1,251	)			—
Unrealized gain (loss) on other equity securities, net of reclassification adjustments (See Note 8)			4,663				273				4,663				(553	)
Total unrealized gain (loss)			3,544				(185	)			4,017				(1,438	)
Other comprehensive income (loss)			3,951				(9,127	)			18,995				(20,811	)
Add: Comprehensive loss attributable to noncontrolling interest			270				—				474				—
Total comprehensive income (loss) attributable to Woodbridge		$	4,221				(9,127	)			19,469				(20,811	)

     The components of accumulated other comprehensive income (loss) are as follows (in thousands):

		June 30,				December 31,
		2009				2008
Unrealized holding gains on available-for-sale securities		$	4,663				—
Cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold (FAS 115-2)			(1,251	)			—
Unrealized holding gain (loss) recognized by Bluegreen Corporation on retained interests in notes receivable sold			470				(135	)
Accumulated other comprehensive income (loss)		$	3,882				(135	)

See accompanying notes to unaudited consolidated financial statements.

Woodbridge Holdings Corporation
Consolidated Statement of Changes in Equity — Unaudited
Six months ended June 30, 2009
(In thousands)

																										Accumulated
		Shares of Common								Class A				Class B				Additional								Compre-				Common Stock								Noncon-
		Stock Outstanding								Common				Common				Paid-In				Retained				hensive				In Treasury								trolling
		Class A				Class B				Stock				Stock				Capital				Deficit				(loss) income				Shares				Amount				Interest				Total
Balance at December 31, 2008			19,042				244			$	190			$	2			$	339,780			$	(218,868	)		$	(135	)			2,386			$	(1,439	)		$	—			$	119,530
Noncontrolling interest			—				—				—				—				—				—				—				—				—				4,143				4,143
Purchase of treasury shares			—				—				—				—				—				—				—				19				(13	)			—				(13	)
Retirement of treasury shares			(2,399	)			—				(24	)			—				(1,428	)			—				—				(2,405	)			1,452				—				—
Share based compensation related to stock options and restricted stock			—				—				—				—				570				—				—				—				—				—				570
Net income (loss)			—				—				—				—				—				15,452				—				—				—				(474	)			14,978
Pro-rata share of unrealized gain recognized by Bluegreen on retained interests in notes receivable sold			—				—				—				—				—				—				605				—				—				—				605
Pro-rata share of the cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests in notes receivable sold (FAS 115-2)			—				—				—				—				—				2,060				(1,251	)			—				—				—				809
Unrealized gain on other equity securities			—				—				—				—				—				—				4,663				—				—				—				4,663
Issuance of Bluegreen common stock			—				—				—				—				728				—				—				—				—				—				728
Balance at June 30, 2009			16,643				244			$	166			$	2			$	339,650			$	(201,356	)		$	3,882				—			$	—			$	3,669			$	146,013

See accompanying notes to unaudited consolidated financial statements.

Woodbridge Holdings Corporation
Consolidated Statements of Cash Flows — Unaudited
(In thousands)

		Six Months Ended
		June 30,
		2009				2008
Net cash used in operating activities		$	(18,358	)			(39,768	)
Investing activities:
Purchases of other equity securities			—				(33,978	)
Proceeds from sale of other equity securities			—				18,904
Decrease in restricted cash			13,443				1,478
Cash paid in settlement of subsidiary bankruptcy			(12,430	)			—
Distributions from unconsolidated trusts			110				110
Adjustment to acquisition of Pizza Fusion			3,000				—
Proceeds from the maturities of certificates of deposits, short-term			9,600				—
Purchase of certificates of deposits, short-term			(49,920	)			—
Capital expenditures			(352	)			(1,123	)
Net cash used in investing activities			(36,549	)			(14,609	)
Financing activities:
Proceeds from notes and mortgage notes payable			132				7,283
Repayment of notes and mortgage notes payable			(1,558	)			(22,656	)
Payments for debt issuance costs			(294	)			(124	)
Purchase of treasury shares			(13	)			—
Net cash used in financing activities			(1,733	)			(15,497	)
Decrease in cash and cash equivalents			(56,640	)			(69,874	)
Cash and cash equivalents at the beginning of period			114,798				195,181
Cash and cash equivalents at the end of period		$	58,158				125,307
Supplemental cash flow information:
Interest paid on borrowings, net of amounts capitalized		$	5,299				5,793
Supplemental disclosure of non-cash operating, investing and financing activities:
Change in equity resulting from unrealized gain (loss) recognized from equity securities, net of tax		$	5,268				(1,438	)
Change in equity resulting from the issuance of Bluegreen common stock, net of tax		$	728				497
Change in equity resulting from retirement of treasury shares		$	1,439				—
Change in equity resulting from the cumulative impact of accounting changes recognized by Bluegreen Corporation on retained interests sold (FAS 115-2)		$	809				—

See accompanying notes to unaudited consolidated financial statements.

Woodbridge Holdings Corporation
Notes to Unaudited Consolidated Financial Statements

1. Presentation of Interim Financial Statements

     Woodbridge Holdings Corporation (“Woodbridge” or the “Company”) and its wholly-owned subsidiaries engage in business activities through its Land Division and Other Operations segment. Historically, the Company’s operations were primarily within the real estate industry; however, the Company’s recent business strategy has included the pursuit of investments and acquisitions within or outside of the real estate industry, as well as the continued development of master-planned communities. Under this business model, the Company likely will not generate a consistent earnings stream and the composition of the Company’s revenues may vary widely due to factors inherent in a particular investment, including the maturity and cyclical nature of, and market conditions relating to, the business invested in. Net investment gains and other income will be based primarily on the success of the Company’s investments as well as overall market conditions.

     On July 2, 2009, the Company entered into a definitive merger agreement with its parent, BFC Financial Corporation (“BFC”). Subject to the terms and conditions of the agreement, the Company will become a wholly-owned subsidiary of BFC and the Company’s shareholders (other than BFC) will become shareholders of BFC. See Note 23 for further information regarding the merger agreement and the proposed merger.

     The Land Division currently consists of the operations of Core Communities, LLC (“Core Communities” or “Core”), which develops master-planned communities. The Other Operations segment currently includes the parent company operations of Woodbridge (the “Parent Company”), the consolidated operations of Pizza Fusion Holdings, Inc. (“Pizza Fusion”), the consolidated operations of Carolina Oak Homes, LLC (“Carolina Oak”), which engaged in homebuilding activities in South Carolina prior to the suspension of those activities in the fourth quarter of 2008, and the activities of Cypress Creek Capital Holdings, LLC (“Cypress Creek Capital”) and Snapper Creek Equity Management, LLC (“Snapper Creek”). An equity investment in Bluegreen Corporation (“Bluegreen”) and an investment in Office Depot, Inc. (“Office Depot”) are also included in the Other Operations segment.

     Prior to November 9, 2007, the Company also conducted homebuilding operations through Levitt and Sons, LLC (“Levitt and Sons”), which comprised the Company’s Homebuilding Division. The Homebuilding Division consisted of two reportable operating segments, the Primary Homebuilding segment and the Tennessee Homebuilding segment. As previously reported, on November 9, 2007, Levitt and Sons and substantially all of its subsidiaries (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”). In connection with the filing of the Chapter 11 Cases, Woodbridge deconsolidated Levitt and Sons as of November 9, 2007, eliminating all future operations of Levitt and Sons from Woodbridge’s financial results of operations. As a result of the deconsolidation of Levitt and Sons, in accordance with Accounting Research Bulletin (“ARB”) No. 51, “Consolidated Financial Statements” (“ARB No. 51”), the Company recorded its interest in Levitt and Sons under the cost method of accounting.

     As previously reported, on February 20, 2009, the Bankruptcy Court entered an order confirming a plan of liquidation jointly proposed by Levitt and Sons and the Official Committee of Unsecured Creditors. That order also approved the settlement pursuant to the settlement agreement that was entered into on June 27, 2008. No appeal or rehearing of the Bankruptcy Court’s order was timely filed by any party, and the settlement was consummated on March 3, 2009, at which time payment was made in accordance with the terms and conditions of the settlement agreement. Under cost method accounting, the cost of settlement and the related $52.9 million liability (less $500,000 which was determined as the settlement holdback and remained as an accrual pursuant to the settlement agreement) was recognized into income in the first quarter of 2009, resulting in a $40.4 million gain on settlement of investment in subsidiary. See Note 22 for further information regarding the bankruptcy of Levitt and Sons.

     The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant inter-segment transactions have been eliminated in consolidation. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the

information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair statement have been included. Operating results for the three and six month periods ended June 30, 2009 are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. The year end balance sheet data for 2008 was derived from the December 31, 2008 audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008. Certain reclassifications have been made to prior periods’ consolidated financial statements to be consistent with the current periods’ presentation.

Recently Adopted Accounting Standards

     In May 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 165, “Subsequent Events” (“SFAS No. 165”). SFAS No. 165 establishes accounting and reporting standards for events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In addition, SFAS No. 165 requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for selecting that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. SFAS No. 165 was effective for fiscal years and interim periods ending after June 15, 2009. The adoption of SFAS No. 165 did not have a material impact on the Company’s consolidated financial statements. The Company has performed an evaluation of subsequent events through August 10, 2009, which is the day the financial statements were issued.

     In April 2009, the FASB issued three related FASB Staff Positions (“FSPs”): (i) FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”), (ii) FSP FAS 115-2 and FSP FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (“FSP FAS 115-2/FAS 124-2”), and (iii) FSP FAS No. 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (“FSP FAS 107-1/APB 28-1”), each of which is effective for interim and annual periods ending after June 15, 2009. FSP FAS 157-4 provides guidance on how to determine the fair value of assets and liabilities under SFAS No. 157, “Fair Value Measurements” (“SFAS No. 157”) in the current economic environment and reemphasizes that the objective of a fair value measurement remains an exit price. If the Company was to conclude that there has been a significant decrease in the volume and level of activity of the asset or liability in relation to normal market activities, quoted market values may not be representative of fair value and the Company may conclude that a change in valuation technique or the use of multiple valuation techniques may be appropriate. FSP FAS 115-2/FAS 124-2 modifies the requirements for recognizing other-than-temporarily impaired debt securities and revises the existing impairment model for such securities, by modifying the current intent and ability indicator in determining whether a debt security is other-than-temporarily impaired. FSP FAS 107-1/APB 28-1 enhances the disclosure of instruments under the scope of SFAS No. 157 for both interim and annual periods. The adoption of these FSPs did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

     On December 4, 2007, the FASB issued SFAS No. 141 (Revised 2007), “Business Combinations” (“SFAS No. 141(R)”). SFAS No. 141(R) significantly changed the accounting for business combinations. Under SFAS No. 141(R), subject to limited exceptions, an acquiring entity will be required to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value. Additionally, due diligence and transaction costs incurred to effect a business combination will be expensed as incurred, as opposed to being capitalized as part of the acquisition purchase price. SFAS No. 141(R) also includes a substantial number of new disclosure requirements. The adoption of SFAS No. 141(R) on January 1, 2009 did not impact the Company’s results of operations or financial position, but will impact the accounting for any future acquisitions.

     On December 4, 2007, the FASB issued SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements-an Amendment of 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 (previously referred to as 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 became effective for the Company on January 1, 2009.

Revisions and Reclassifications

     In 2007, Core Communities began soliciting bids from several potential buyers to purchase assets associated with two of Core’s commercial leasing projects (the “Projects”). As the criteria for assets held for sale had been met in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), the assets were reclassified to assets held for sale and the liabilities related to those assets were reclassified to liabilities related to assets held for sale. The results of operations for these assets were reclassified as discontinued operations. During the fourth quarter of 2008, the Company determined that given the difficulty in predicting the timing or probability of a sale of the assets associated with the Projects as a result of, among other things, the economic downturn and disruptions in the credit markets, the requirements of SFAS No. 144 necessary to classify these assets as held for sale and to be included in discontinued operations were no longer met and the Company could not assert the Projects could be sold within a year. Therefore, the results of operations for these Projects were reclassified back into continuing operations for prior periods to conform to the current periods’ presentation.

     A revision was recorded by the Company in the first quarter of 2009 to account for assets and non-controlling interests not recorded properly in the initial application of purchase accounting of the Company’s investment in Pizza Fusion. The adjustment resulted in an increase in cash of $3.0 million, goodwill of $1.1 million and non-controlling interest of $4.1 million. The Company has also recorded an increase in cash flows from investing activities in the six months ended June 30, 2009 of $3.0 million which is included in adjustment to acquisition of Pizza Fusion in the accompanying unaudited consolidated statements of cash flows for the six months ended June 30, 2009. The Company does not believe that this revision had a material impact on the Company’s consolidated balance sheets at September 30, 2008 or December 31, 2008, nor did it materially impact the Company’s consolidated statements of cash flows for the periods then ended. The revision also had no impact on net income or loss or on cash flows from operating activities for the three month periods ended September 30, 2008 or December 31, 2008.

2. Liquidity — Core Communities

     Core’s operations have been negatively impacted by the downturn in the residential and commercial real-estate industries. Market conditions have adversely affected Core’s commercial leasing projects and its ability to complete sales of its real estate inventory and, as a consequence, Core is experiencing cash flow deficits. Possible liquidity sources available to Core include the sale of real estate inventory, including commercial properties, as well as debt and outside equity financing, including secured borrowings using unencumbered land; however, there is no assurance that any or all of these alternatives will be available to Core on attractive terms, if at all, or that Core will otherwise be in a position to utilize such alternatives to improve its cash position. In addition, while funding from Woodbridge is a possible source of liquidity, Woodbridge is generally under no contractual obligation to provide funding to Core and there is no assurance that it will do so.

     Certain of Core’s debt facilities contain financial covenants generally requiring certain net worth, liquidity and loan to value ratios. In January of 2009, Core was advised by one of its lenders that the lender had received an external appraisal on the land that serves as collateral for a development mortgage note payable, which had an outstanding balance of $86.4 million at June 30, 2009. The appraised value would suggest the potential for a re-margining payment to bring the note payable back in line with the minimum loan-to-value requirement. The lender is conducting its internal review procedures, including the determination of the appraised value. As of the date of this filing, Core is in discussions with the lender to restructure the loan which may eliminate any re-margining requirements; however, there is no assurance that these discussions will be successful or that re-margining payments will not otherwise be required in the future.

     As discussed above, the operations of Core have been negatively impacted by the deterioration of the real estate market, and Core may be required to make re-margining payments under certain of its debt facilities. These factors have caused substantial doubt to be raised regarding Core’s ability to continue as a going concern if Woodbridge chooses not to provide Core with the cash needed to meet its obligations when and if they arise. Core’s results are reported separately for segment purposes as the Land Division segment in Note 17. The

financial information provided in the Land Division segment and in the unaudited consolidated financial statements has been prepared assuming that Core will meet its obligations and continue as a going concern. As a result, the unaudited consolidated financial statements and the financial information provided for the Land Division do not include any adjustments that might result from the outcome of this uncertainty.

3. Business Combination

     On September 18, 2008, the Company, indirectly through its wholly-owned subsidiary, PF Program Partnership, LP (formerly Woodbridge Equity Fund II LP), purchased for an aggregate of $3.0 million, 2,608,696 shares of Series B Convertible Preferred Stock of Pizza Fusion, together with warrants to purchase up to 1,500,000 additional shares of Series B Convertible Preferred Stock of Pizza Fusion at an exercise price of $1.44 per share. The Company also received options, exercisable on or prior to September 18, 2009, to purchase up to 521,740 additional shares of Series B Convertible Preferred Stock of Pizza Fusion at a price of $1.15 per share, which options, if exercised, entitled the Company to receive warrants to purchase up to 300,000 additional shares of Series B Convertible Preferred Stock of Pizza Fusion at an exercise price of $1.44 per share. The warrants have a term of 10 years, subject to earlier expiration in certain circumstances. As discussed below and in Note 23, the Company exercised these options on July 2, 2009.

     Pizza Fusion is a restaurant franchise which was founded in 2006 and which operates in a niche market within the quick service and organic food industries. As of June 30, 2009, Pizza Fusion was operating 20 locations throughout the United States and had entered into franchise agreements to open an additional 9 stores by February 2010.

     During 2008, the Company evaluated its investment in Pizza Fusion under FASB Interpretation No. 46(R), “Consolidation of Variable Interest Entities” (“FIN No. 46(R)”), and determined that Pizza Fusion is a variable interest entity. Pizza Fusion is in its infancy stages and will likely require additional financial support for its normal operations and further expansion of its franchise operations. Furthermore, on a fully diluted basis, the Company’s investment represents a significant interest in Pizza Fusion and, therefore, the Company is expected to bear the majority of the variability of the risks and rewards of Pizza Fusion. Additionally, as shareholder of the Series B Convertible Preferred Stock, the Company has control over the Board of Directors of Pizza Fusion. Based upon these factors, the Company concluded that it is the primary beneficiary. Accordingly, under purchase accounting, the Company has consolidated the assets and liabilities of Pizza Fusion in accordance with SFAS No. 141 “Business Combinations.” However, the assets of Pizza Fusion are not available to Woodbridge.

     The Company recorded $5.5 million in other intangible assets, including $1.1 million in goodwill related to its investment in Pizza Fusion. The intangible assets consist primarily of the value of franchise agreements that had been executed by Pizza Fusion at the acquisition date. These intangible assets will be amortized over the length of the franchise agreements, which is generally 10 years.

     On July 2, 2009, the Company exercised its option to purchase 521,740 shares of Series B Preferred Stock of Pizza Fusion at a price of $1.15 per share, or an aggregate purchase price of $600,000. Upon the exercise of the option, the Company was also granted warrants to purchase up to 300,000 additional shares of Series B Convertible Preferred Stock of Pizza Fusion at an exercise price of $1.44 per share. The warrants have a term of 10 years, subject to earlier expiration under certain circumstances.

4. Stock Based Compensation

     The Company recognizes stock based compensation expense under the provisions of SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”), using the modified prospective transition method. SFAS No. 123R requires a public entity to measure compensation cost associated with awards of equity instruments based on the grant-date fair value of the awards over the requisite service period. SFAS No. 123R requires public entities to initially measure compensation cost associated with awards of liability instruments based on their current fair value. The fair value of that award is to be remeasured subsequently at each reporting date through the settlement date. Changes in fair value during the requisite service period will be recognized as compensation cost over that period.

     In accordance with SFAS No. 123R, the Company estimates the grant-date fair value of its stock options using the Black-Scholes option-pricing model, which takes into account assumptions regarding the dividend yield, the risk-free interest rate, the expected stock-price volatility and the expected term of the stock options. 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 using the straight-line method.

     The following table summarizes stock options outstanding as of June 30, 2009 as well as activity during the six months then ended:

		Number of				Weighted
		Stock				Average Exercise
		Options				Price
Options outstanding at December 31, 2008			318,471			$	78.89
Granted			—				—
Exercised			—				—
Forfeited			3,900			$	72.36
Options outstanding at June 30, 2009			314,571			$	78.97
Options exercisable at June 30, 2009			141,682			$	70.93

     As of June 30, 2009, the weighted average remaining contractual lives of stock options outstanding and stock options exercisable were 6.7 years and 6.1 years, respectively.

     Non-cash stock compensation expense related to stock options for the three months ended June 30, 2009 and 2008 amounted to $262,000 and $568,000, respectively. Non-cash stock compensation expense related to stock options for the six months ended June 30, 2009 and 2008 amounted to $527,000 and $1.2 million, respectively.

     The Company also grants shares of restricted Class A Common Stock, valued at the closing market price of such stock on the date of grant. Restricted stock is issued primarily to the Company’s directors and typically vests in equal monthly installments over a one-year period. 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 component of additional paid-in capital in shareholders’ equity in the unaudited consolidated statements of financial condition. Non-cash stock compensation expense related to restricted stock for the three months ended June 30, 2009 and 2008 amounted to $35,000 and $29,000, respectively. Non-cash stock compensation expense related to restricted stock for the six months ended June 30, 2009 and 2008 amounted to approximately $88,000 and $46,000, respectively.

     Historically, forfeiture rates were estimated based on historical employee turnover rates. In accordance with SFAS No. 123R, companies are required to adjust forfeiture estimates for all awards with performance and service conditions through the vesting date so that compensation cost is recognized only for awards that vest. During the six months ended June 30, 2009, there was a small amount of pre-vesting forfeitures as a result of reductions in force in the Land Division. During the six months ended June 30, 2008, there were substantial pre-vesting forfeitures as a result of reductions in force related to the Company’s restructurings and the bankruptcy of Levitt and Sons. In accordance with SFAS No. 123R, pre-vesting forfeitures result in a reversal of compensation cost whereas a post-vesting cancellation would not. The Company did not recognize a significant reversal of compensation cost for the six months ended June 30, 2009, while the Company recognized approximately $1.2 million in reversal of compensation expense related to pre-vesting option forfeitures for the six months ended June 30, 2008.

     On September 29, 2008, the Company’s Board of Directors approved the terms of an incentive program for certain of the Company’s employees, including certain of the Company’s executive officers, pursuant to which a portion of their compensation will be based on the cash returns realized by the Company on its existing

investments and new investments designated by the Board. It is anticipated that the Company’s investments will be held by individual limited partnerships or other legal entities which will be the basis for incentives granted under the programs. The Company’s executive officers may have interests tied both to the performance of a particular investment as well as interests relating to the performance of the portfolio of investments as a whole. The Company believes that the program appropriately aligns payments to the executive officer participants and other participating employees with the performance of the Company’s investments.

     In accordance with SFAS No. 123R, the Company has determined that the new executive incentive program qualifies as a liability-based plan and, accordingly, the Company was required to evaluate the components of the program to determine the fair value of the liability, if any, to be recorded. Based on its evaluation, the Company determined that the liability for compensation under the executive compensation program as of June 30, 2009 was not material.

5. Inventory of Real Estate

     Inventory of real estate is summarized as follows (in thousands):

		June 30,				December 31,
		2009				2008
Land and land development costs		$	202,518				202,456
Construction costs			442				463
Capitalized interest			39,969				37,764
Other costs			635				635
		$	243,564				241,318

     As of June 30, 2009, inventory of real estate included inventory related to Carolina Oak and the Land Division.

     The Company reviews real estate inventory for impairment on a project-by-project basis in accordance with SFAS 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 future undiscounted cash flows expected to be generated by the asset, or by using appraisals of the related assets. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

6. Property and Equipment

     Property and equipment at June 30, 2009 and December 31, 2008 is summarized as follows (in thousands):

						June 30,				December 31,
		Depreciable Life				2009				2008
Real estate investments		30-39 years				$	96,888				97,113
Water and irrigation facilities		35-50 years					12,490				12,346
Furniture and fixtures and equipment		3-7 years					12,332				12,259
							121,710				121,718
Accumulated depreciation							(15,731	)			(12,241	)
Property and equipment, net						$	105,979				109,477

     Depreciation expense for the three months ended June 30, 2009 and 2008 was approximately $1.4 million and $612,000, respectively. Depreciation expense for the six months ended June 30, 2009 and 2008 was approximately $3.5 million and $1.2 million, respectively, and is included in selling, general and administrative expenses in the accompanying unaudited consolidated statements of operations. The increase in depreciation expense in the three and six months ended June 30, 2009 compared to the same 2008 periods was mainly associated with depreciation expense related to Core’s commercial assets. Depreciation expense for these commercial assets was not recorded for the three and six months ended June 30, 2008 as these commercial assets were classified as discontinued operations during those periods. The commercial assets were reclassified back to continuing operations during the fourth quarter of 2008.

     Property and equipment is stated at cost, less accumulated depreciation and amortization, and consists primarily of land and buildings, furniture and fixtures, leasehold improvements, equipment and water treatment and irrigation facilities. Repairs and maintenance costs are expensed as incurred. Significant renovations and improvements that improve or extend the useful lives of assets are capitalized. Depreciation is primarily computed on the straight-line method over the estimated useful lives of the assets, which generally range up to 50 years for water and irrigation facilities, 40 years for buildings, and 7 years for equipment, furniture and fixtures. 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, the costs are transferred from inventory of real estate to property and equipment.

7. 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, exclusive of impairment adjustments (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Interest incurred		$	4,398				5,594				8,805				11,806
Interest capitalized			(651	)			(3,062	)			(2,285	)			(6,250	)
Interest expense		$	3,747				2,532				6,520				5,556
Interest expensed in cost of sales		$	80				44				80				44

8. Investments

Bluegreen Corporation

     At June 30, 2009, the Company owned approximately 9.5 million shares of Bluegreen’s common stock, 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 Company’s financial statements relates to the amortization or accretion of purchase accounting adjustments made at the time of the acquisition of Bluegreen’s common stock and a basis difference due to impairment charges recorded on the Company’s investment in Bluegreen, as described below.

     During 2008, the Company began evaluating its investment in Bluegreen on a quarterly basis for other-than-temporary impairments in accordance with FSP FAS 115-1/FAS 124-1, “The Meaning of Other-than-Temporary Impairment and Its Application to Certain Investments” (“FSP FAS 115-1/FAS 124-1”), Accounting Principles Board Opinion No. 18, “The Equity Method of Accounting for Investments in Common Stock,” and Securities and Exchange (“SEC”) Commission Staff Accounting Bulletin No. 59. These evaluations generally include an analysis of various quantitative and qualitative factors relating to the performance of Bluegreen and its stock price. The Company values Bluegreen’s common stock using a market approach valuation technique and Level 1 valuation inputs under SFAS No. 157. Based on the results of its evaluations during the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009, the Company determined that other-than-temporary impairments were necessary for those periods. As a result, the Company recorded impairment charges of $53.6 million, $40.8 million and $20.4 million during the quarters ended September 30, 2008, December 31, 2008 and March 31, 2009, respectively. Based on its impairment evaluation performed during the quarter ended June 30, 2009, the Company determined that its investment in Bluegreen was not impaired at June 30, 2009. As of June 30, 2009, the carrying value of the Company’s investment in Bluegreen was $28.6 million.

     As a result of the impairment charges taken at September 30, 2008, December 31, 2008 and March 31, 2009, a basis difference was created between the Company’s investment in Bluegreen and the underlying assets and liabilities carried on the books of Bluegreen. Therefore, earnings from Bluegreen will be adjusted each period to reflect the amortization of this basis difference. As such, the Company established an allocation methodology by which the Company allocated the impairment loss to the relative fair value of Bluegreen’s underlying assets based upon the position that the impairment loss was a reflection of the perceived value of these underlying assets. The appropriate amortization will be calculated based on the useful lives of the underlying assets and other relevant data associated with each asset category. As such, amortization of $8.6 million and $13.9 million, respectively, was recorded into the Company’s pro rata share of Bluegreen’s net income for the three and six months ended June 30, 2009.

     The following table shows the reconciliation of the Company’s pro rata share of Bluegreen’s net income to the Company’s total earnings from Bluegreen recorded in the unaudited consolidated statements of operations (in thousands):

		Three Months Ended				Six Months Ended
		June 30, 2009				June 30, 2009
Pro rata share of Bluegreen’s net income		$	2,076				3,158
Amortization of basis difference			8,638				13,892
Total earnings from Bluegreen Corporation		$	10,714				17,050

     The following table shows the reconciliation of the Company’s pro rata share of its net investment in Bluegreen and its investment in Bluegreen after impairment charges at June 30, 2009 and December 31, 2008 (in thousands):

		June 30,				December 31,
		2009				2008
Pro rata share of investment in Bluegreen Corporation		$	35,089				115,065
Amortization of basis difference			13,892				9,150
Less: Impairment of investment in Bluegreen Corporation during the three months ended March 31, 2009			(20,401	)			(94,426	)
Investment in Bluegreen Corporation		$	28,580				29,789

     Bluegreen’s unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of income are as follows (in thousands):

Unaudited Condensed Consolidated Balance Sheets

		June 30,				December 31,
		2009				2008
Total assets		$	1,196,265				1,193,507
Total liabilities		$	764,147				781,522
Total Bluegreen shareholders’ equity			399,864				382,467
Noncontrolling interest			32,254				29,518
Total equity			432,118				411,985
Total liabilities and shareholders’ equity		$	1,196,265				1,193,507

Unaudited Condensed Consolidated Statements of Income

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Revenues and other income		$	92,031				151,603				170,520				290,955
Cost and other expenses			86,321				144,726				157,775				280,989
Income before noncontrolling interests and provision for income taxes			5,710				6,877				12,745				9,966
Benefit (provision) for income taxes			2,654				(2,112	)			358				(2,967	)
Net income			8,364				4,765				13,103				6,999
Net income attributable to noncontrolling interests			(1,550	)			(1,320	)			(2,736	)			(2,158	)
Net income attributable to Bluegreen		$	6,814				3,445				10,367				4,841

Office Depot Investment

     At June 30, 2009, the Company owned approximately 1.4 million shares of Office Depot’s common stock, representing less than 1% of Office Depot’s outstanding common stock as of that date. This investment is reviewed quarterly for other-than-temporary impairments in accordance with FSP FAS 115-1/FAS 124-1 and is accounted for under the available-for-sale method of accounting whereby any unrealized holding gains or losses are included in equity.

     During the quarters ended December 31, 2008, March 31, 2009 and June 30, 2009, the Company performed impairment analyses of its investment in Office Depot. The impairment analyses included an evaluation of, among other things, qualitative and quantitative factors relating to the performance of Office Depot and its stock price. As a result of these evaluations, the Company determined that other-than-temporary impairment charges were required at December 31, 2008 and March 31, 2009 and recorded a $12.0 million impairment charge relating to its investment in Office Depot in the three months ended December 31, 2008 and an additional $2.4 million impairment charge in the three months ended March 31, 2009. Based on its impairment evaluation performed during the quarter ended June 30, 2009, the Company determined that its investment in Office Depot was not impaired at June 30, 2009.

     Data with respect to this investment as of June 30, 2009 is shown in the table below (in thousands):

		June 30,
		2009
Fair value at December 31, 2008		$	4,278
Other-than-temporary impairment during the three months ended March 31, 2009			(2,396	)
Unrealized holding gain			4,663
Fair value at June 30, 2009		$	6,545

     The Company valued Office Depot’s common stock using a market approach valuation technique and Level 1 valuation inputs under SFAS No. 157. The Company uses quoted market prices to value equity securities. The fair value of Office Depot’s common stock in the Company’s unaudited consolidated statements of financial condition at June 30, 2009 of $6.5 million was calculated based upon the $4.56 closing price of Office Depot’s common stock on the New York Stock Exchange on June 30, 2009. On August 6, 2009, the closing price of Office Depot’s common stock was $5.06 per share.

     The table below shows the amount of gains and other-than-temporary losses reclassified out of other comprehensive gain (loss) into net income (loss) for the period (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Unrealized holding gains arising during the period		$	4,663				1,451				2,267				625
Less: Reclassification adjustment for gains included in net income (loss)			—				(1,178	)			—				(1,178	)
Add: Reclassification adjustment for other- than-temporary losses included in net income (loss)			—				—				2,396				—
Net unrealized gain (loss) on securities		$	4,663				273				4,663				(553	)

9. Debt

     The Company’s outstanding debt as of June 30, 2009 and December 31, 2008 amounted to $348.5 million and $350.0 million, respectively.

     The following table summarizes the Company’s outstanding notes and mortgage notes payable at June 30, 2009 and December 31, 2008. These notes accrue interest at fixed rates and variable rates which are tied to the Prime Rate and/or LIBOR rate (in thousands):

		June 30,				December 31,
		2009				2008				Maturity Date
5.50% Commercial development mortgage note payable (a)		$	58,262				58,262			June 2012
2.06% Commercial development mortgage note payable			4,696				4,724			June 2010
2.41% Commercial development mortgage note payable			9,041				8,919			July 2010
5.00% Land development mortgage note payable			25,000				25,000			February 2012
3.72% Land acquisition mortgage note payable			22,824				23,184			October 2019
6.88% Land acquisition mortgage note payable			4,808				4,928			October 2019
3.06% Land acquisition mortgage note payable (b)			86,392				86,922			June 2011
3.25% Borrowing base facility			37,174				37,458			March 2011
5.47% Other mortgage note payable			11,712				11,831			April 2015
6.00% — 6.13% Development bonds			3,281				3,291			May 2035
6.50% — 9.15% Other borrowings			274				381			August 2009 - June 2013
Total		$	263,464				264,900

     Certain of Core’s debt facilities contain financial covenants generally requiring certain net worth, liquidity and loan to value ratios. Further, certain of Core’s debt facilities contain cross-default provisions under which a default on one loan with a lender could cause a default on other debt instruments with the same lender. If Core fails to comply with any of these restrictions or covenants, the lenders under the applicable debt facilities could cause Core’s debt to become due and payable prior to maturity. These accelerations or significant re-margining payments could require Core to dedicate a substantial portion of its cash to pay its debt and reduce its ability to use its cash to fund its operations. If Core does not have sufficient cash to satisfy these required payments, then Core would need to seek to refinance the debt or obtain alternative funds, which may not be available on attractive terms, if at all. In the event that Core is unable to refinance its debt or obtain additional funds, it may default on some or all of its existing debt facilities.

     The following table summarizes the Company’s junior subordinated debentures at June 30, 2009 and December 31, 2008 (in thousands):

														Beginning
														Optional
		June 30,				December 31,				Maturity				Redemption
		2009				2008				Date				Date
8.11% Levitt Capital Trust I		$	23,196				23,196			March 2035				March 2010
8.09% Levitt Capital Trust II			30,928				30,928			July 2035				July 2010
9.25% Levitt Capital Trust III			15,464				15,464			June 2036				June 2011
9.35% Levitt Capital Trust IV			15,464				15,464			September 2036				September 2011
Total		$	85,052				85,052

10. Fair Value Measurements

     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 transaction.

     The estimated fair values of cash, cash equivalents, short-term investments, accounts payable and accrued expenses approximate their respective carrying values as of June 30, 2009 and December 31, 2008

because of the liquid nature of the assets and relatively short-term maturities of the obligations. The Company estimates that the fair value of its notes receivable at June 30, 2009 and December 31, 2008 were approximately $4.5 million and $4.0 million, respectively, and were based upon the Prime rate. The Company estimates that at June 30, 2009 and December 31, 2008 the fair value of its fixed rate debt was approximately $109.9 million and $31.7 million, respectively, and the fair value of its variable rate debt was approximately $178.0 million and $227.1 million, respectively.

     On January 1, 2008, the Company partially adopted SFAS No. 157, which, among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would either be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

	•		Level 1. Observable inputs such as quoted prices in active markets for identical assets or liabilities;
	•		Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
	•		Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
			Investments Measured at Fair Value on a Recurring Basis (in thousands):

		Fair Value				Fair Value at
		Hierarchy				June 30, 2009
Investment in other equity securities		Level 1				$	6,545

Investments Measured at Fair Value on a Non-Recurring Basis (in thousands):

		Fair Value				Fair Value at
		Hierarchy				June 30, 2009
Investment in Bluegreen Corporation		Level 1				$	23,984
Investment in unconsolidated trusts		Level 3					1,051
						$	25,035

     Assets Measured at Fair Value on a Non-Recurring Basis Using Significant Unobservable Inputs (Level 3) (in thousands):

		Investment in
		Unconsolidated
		Trusts
Balance at December 31, 2008		$	419
Total unrealized gains			632
Balance at June 30, 2009		$	1,051

11. Commitments and Contingencies

     At June 30, 2009 and December 31, 2008, the Company had outstanding surety bonds of approximately $5.4 million and $8.2 million, respectively, which were related primarily to obligations to various governmental entities to construct improvements in various communities. The Company currently estimates that approximately $1.1 million of work remains to complete these improvements and that further improvements to developments not being pursued will not be required. Accordingly, the Company does not believe that any material amounts will likely be drawn on the outstanding surety bonds.

     On November 9, 2007, Woodbridge 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 Levitt and Sons was permitted to pay to those employees. Levitt and Sons was restricted in the payment of termination benefits to its former employees by virtue of the Chapter 11 Cases.

     The following table summarizes the restructuring related accruals activity recorded for the six months ended June 30, 2009 (in thousands):

		Severance Related and Benefits				Facilities				Independent Contractor Agreements				Surety Bond Accrual				Total
Balance at December 31, 2008		$	129				704				597				1,144				2,574
Restructuring charges			82				—				39				—				121
Cash payments			(211	)			(186	)			(388	)			(37	)			(822	)
Balance at June 30, 2009		$	—				518				248				1,107				1,873

     The severance related and benefits accrual includes severance payments, payroll taxes and other benefits related to the terminations of Levitt and Sons employees, as well as other employees of the Company, that occurred in 2007 as part of the Chapter 11 Cases. The Company did not incur any significant severance and benefits related restructuring charges in the three months ended June 30, 2009, while, during the three months ended June 30, 2008, the Company incurred charges of approximately $816,000. During the six months ended June 30, 2009 and 2008, the Company incurred severance and benefits related restructuring charges of approximately $82,000 and $2.0 million, respectively. For the three months ended June 30, 2009 and 2008, the Company paid approximately $79,000 and $1.2 million, respectively, in severance and termination charges related to the above described employee fund as well as severance for employees other than Levitt and Sons employees, all of which are reflected in the Other Operations segment. For the six months ended June 30, 2009 and 2008, these payments amounted to approximately $211,000 and $2.7 million, respectively. 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. Former Levitt and Sons’ employees who received these payments were required to assign to the Company their unsecured claims against Levitt and Sons.

     The facilities accrual as of June 30, 2009 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 for which the provisions of SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” were satisfied. Total cash payments related to the facilities accrual were $93,000 and $173,000 for the three months ended June 30, 2009 and 2008, respectively. Total cash payments related to the facilities accrual were $186,000 and $259,000 for the six months ended June 30, 2009 and 2008, respectively.

     The independent contractor agreements accrual relates to two consulting agreements entered into by Woodbridge with former Levitt and Sons employees. The total commitment related to these agreements as of June 30, 2009 was approximately $248,000 and will be paid monthly through December 2009. During the three months ended June 30, 2009 and 2008, the Company paid $182,000 and $206,000, respectively, under these agreements. During the six months ended June 30, 2009 and 2008, the Company paid $388,000 and $412,000, respectively, under these agreements.

     Levitt and Sons had approximately $33.3 million of surety bonds outstanding 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, Woodbridge could be responsible for up to $11.7 million plus costs and expenses in accordance with the surety indemnity agreements executed by Woodbridge. At each of June 30, 2009 and December 31, 2008, the Company had $1.1 million in surety bonds accrual at Woodbridge related to certain bonds where management believes it to be probable that the Company will be required to reimburse the surety under applicable indemnity agreements. The Company did not reimburse any amounts during the three months ended June 30, 2009, while it reimbursed approximately $367,000 during the three months ended June 30, 2008 in accordance with the indemnity agreement for bond claims paid during the period. For the six months ended June 30, 2009 and 2008, the Company reimbursed the surety approximately $37,000 and $532,000, respectively. It is unclear whether and to what extent the remaining outstanding surety bonds of Levitt and Sons will be drawn and the extent to which Woodbridge may be responsible for additional amounts beyond this accrual. There is no assurance that the Company will not be responsible for amounts in excess of the $1.1 million accrual. Woodbridge will not receive any repayment, assets or other consideration as recovery of any amounts it may be required to pay. In September 2008, a surety filed a lawsuit to require Woodbridge to post collateral against a portion of the $11.7 million surety bonds exposure relating to two bonds totaling $5.4 million after a municipality made claims against the surety. The Company believes that the municipality does not have the right to demand payment under the bonds and initiated a lawsuit against the municipality. Because the Company does not believe a loss is probable, the Company did not accrue any amount in connection with this claim as of June 30, 2009. As claims have been made on the bonds, the surety requested the Company post a $4.0 million letter of credit as security while the matter is litigated with the municipality, and the Company has complied with that request.

     At June 30, 2009, the Company had $2.4 million in unrecognized tax benefits related to FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB No. 109” (“FIN No. 48”). FIN No. 48 provides guidance for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that a company has taken or expects to take on a tax return.

12. Development Bonds Payable

     In connection with the development of certain of Core’s 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. Core is required to pay the revenues, fees, and assessments levied by the districts on the properties it still owns that are benefited by the improvements. Core may also be required to pay down a specified portion of the bonds at the time each unit or parcel is sold. The costs of these obligations are capitalized to inventory during the development period and recognized as cost of sales when the properties are sold.

     Core’s bond financing at June 30, 2009 and December 31, 2008 consisted of district bonds totaling $218.7 million at each of these dates with outstanding amounts of approximately $143.6 million and $130.5 million, respectively. Further, at June 30, 2009, approximately $68.4 million were available under these

bonds to fund future development expenditures. Bond obligations at June 30, 2009 mature in 2035 and 2040. As of June 30, 2009, Core owned approximately 16% of the property subject to assessments within the community development district and approximately 91% of the property subject to assessments within the special assessment district. During the three months ended June 30, 2009 and 2008, Core recorded approximately $158,000 and $163,000, respectively, in assessments on property owned by it in the districts. During the six months ended June 30, 2009 and 2008, Core recorded approximately $317,000 and $268,000, respectively, in assessments on property owned by it in the districts. Core 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 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 SFAS 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.

     In accordance with EITF Issue No. 91-10, “Accounting for Special Assessments and Tax Increment Financing,” 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 each of June 30, 2009 and December 31, 2008, the liability related to developer obligations associated with Core’s ownership of the property was $3.3 million. This liability is included in the accompanying unaudited consolidated statements of financial condition as of June 30, 2009 and December 31, 2008.

13. Earnings (Loss) per Share and Stock Repurchases

     Basic earnings (loss) per common share is computed by dividing earnings (loss) attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per common share is computed in the same manner as basic earnings (loss) per common 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 three months ended June 30, 2009 and 2008, 314,571 and 290,368 shares of common stock equivalents, respectively, at various prices were not included in the computation of diluted (loss) earnings per common share because the exercise prices were greater than the average market price of the common shares and, therefore, their effect would be antidilutive. For the six months ended June 30, 2009 and 2008, 314,571 and 287,368 shares of common stock equivalents, respectively, at various prices were not included in the computation of diluted (loss) earnings per common share because the exercise prices were greater than the average market price of the common shares and, therefore, their effect would be antidilutive.

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

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Numerator:
Basic earnings (loss) per common share:
Net earnings (loss) attributable to Woodbridge — basic		$	677				(8,942	)			15,452				(19,373	)
Diluted earnings (loss) per common share:
Net earnings (loss) attributable to Woodbridge — basic		$	677				(8,942	)			15,452				(19,373	)
Pro rata share of the net effect of Bluegreen dilutive securities			—				(5	)			—				(7	)
Net earnings (loss) attributable to Woodbridge — diluted		$	677				(8,947	)			15,452				(19,380	)
Denominator:
Basic average shares outstanding			16,893				19,255				16,890				19,255
Effect of dilutive stock options and unvested restricted stock			—				—				—				—
Diluted average shares outstanding			16,893				19,255				16,890				19,255
Earnings (loss) per common share attributable to Woodbridge common shareholders:
Basic		$	0.04				(0.46	)			0.91				(1.01	)
Diluted		$	0.04				(0.46	)			0.91				(1.01	)

Stock Repurchases

     In November 2008, the Company’s Board of Directors approved a stock repurchase program which authorized Woodbridge to repurchase up to 5 million shares of its Class A Common Stock from time to time on the open market or in private transactions. In the fourth quarter of 2008, the Company repurchased 2,385,624 shares at an aggregate cost of $1.4 million. These repurchased shares were canceled and retired in February 2009. In the first quarter of 2009, the Company repurchased 19,393 shares at an aggregate cost of $13,000. These repurchased shares were canceled and retired in April 2009. All shares repurchased are recorded as treasury stock until such time as they are canceled and retired. At June 30, 2009, 2,594,983 shares remained available for repurchase under the stock repurchase program. There can be no assurance that Woodbridge will repurchase any or all of the shares which remain available for repurchase under the program, and the level of future repurchases will depend on a number of factors, including levels of cash generated from operations, cash requirements for acquisitions and investment opportunities, repayment of debt, the Company’s current stock price, and other factors. The stock repurchase program does not have an expiration date and may be modified or discontinued at any time.

14. Other Revenues

     The following table summarizes other revenues (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Lease/rental income		$	2,413				2,219				4,693				4,719
Marketing fees			36				246				84				339
Impact fees			126				32				137				178
Franchise revenue			202				—				501				—
Irrigation revenue			269				247				521				472
Total other revenues		$	3,046				2,744				5,936				5,708

15. Income Taxes

     The Company’s provision for income taxes is estimated to result in an effective tax rate of 0.0% in 2009. The effective tax rate used for the three and six months ended June 30, 2008 was 0.0%. The 0.0% effective tax rate is a result of the Company recording a valuation allowance for those deferred tax assets that are not expected to be recovered in the future. Due to large losses in the past and expected taxable losses in the foreseeable future, the Company may not have sufficient taxable income of the appropriate character in the future to realize any portion of the net deferred tax asset.

     The Company and its subsidiaries are subject to U.S. federal income tax as well as to income tax in Florida and South Carolina. The Company has effectively settled all U.S. federal income tax matters for years through 2004. All years subsequent to 2004 remain open and subject to examination. The Company’s Federal income tax returns for 2005, 2006 and 2007 are currently being examined by the Internal Revenue Service.

16. Interest and Other Income

     Interest and other income is summarized as follows (in thousands):

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2009				2008				2009				2008
Interest income		$	166				625				432				2,101
Gain on sale of other equity securities			—				1,178				—				1,178
Forfeited deposits			—				—				188				—
Other income			111				147				223				275
Total interest and other income		$	277				1,950				843				3,554

17. 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 has two reportable business segments, Land and Other Operations. The Company evaluates segment performance primarily based on pre-tax income before noncontrolling interests. The information provided for segment reporting is based on management’s internal reports. Except as otherwise indicated in this report, the accounting policies of the segments are the same as those of the Company. Eliminations consist of the elimination of transactions between the Land Division and Other Operations segments. All of the eliminated transactions were recorded based upon terms that management believed 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. The Other Operations segment consists of the operations of the Parent Company, Pizza Fusion, and Carolina Oak, other activities through Cypress Creek Capital and Snapper Creek, an equity investment in Bluegreen and an investment in Office Depot.

     The following tables present segment information as of and for the three and six months ended June 30, 2009 and 2008 (in thousands):

Three Months Ended						Other
June 30, 2009		Land				Operations				Eliminations				Total
Revenues:
Sales of real estate		$	1,408				320				39				1,767
Other revenues			2,533				521				(8	)			3,046
Total revenues			3,941				841				31				4,813
Costs and expenses:
Cost of sales of real estate			1,113				173				15				1,301
Selling, general and administrative expenses			5,162				5,209				(22	)			10,349
Interest expense			1,301				2,446				—				3,747
Total costs and expenses			7,576				7,828				(7	)			15,397
Earnings from Bluegreen Corporation			—				10,714				—				10,714
Interest and other income			130				170				(23	)			277
(Loss) income before income taxes and noncontrolling interest			(3,505	)			3,897				15				407
(Provision) benefit for income taxes			—				—				—				—
Net (loss) income			(3,505	)			3,897				15				407
Add: Net loss attributable to noncontrolling interest			—				270				—				270
Net (loss) income attributable to Woodbridge		$	(3,505	)			4,167				15				677
Inventory of real estate		$	209,149				35,565				(1,150	)			243,564
Total assets		$	329,889				201,526				(1,150	)			530,265
Total debt		$	214,389				134,127				—				348,516
Total liabilities		$	246,754				145,523				(8,025	)			384,252
Total equity		$	83,135				56,003				6,875				146,013

Three Months Ended						Other
June 30, 2008		Land				Operations				Eliminations				Total
Revenues:
Sales of real estate		$	1,711				635				49				2,395
Other revenues			2,493				251				—				2,744
Total revenues			4,204				886				49				5,139
Costs and expenses:
Cost of sales of real estate			1,145				587				26				1,758
Selling, general and administrative expenses			5,320				7,651				(19	)			12,952
Interest expense			871				2,104				(443	)			2,532
Total costs and expenses			7,336				10,342				(436	)			17,242
Earnings from Bluegreen Corporation			—				1,211				—				1,211
Interest and other income			661				1,732				(443	)			1,950
(Loss) income before income taxes			(2,471	)			(6,513	)			42				(8,942	)
Benefit for income taxes			—				—				—				—
Net (loss) income		$	(2,471	)			(6,513	)			42				(8,942	)
Inventory of real estate		$	200,976				48,620				(7,411	)			242,185
Total assets		$	362,709				316,389				(5,387	)			673,711
Total debt		$	202,165				136,400				—				338,565
Total liabilities		$	239,666				181,958				11,227				432,851
Total shareholders’ equity		$	123,043				134,431				(16,614	)			240,860