Notes to Unaudited Consolidated Financial Statements

1.    Presentation of Interim Financial Statements

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements. In management ’ s opinion, the accompanying unaudited consolidated financial statements contain all adjustments, which include normal recurring adjustments, as are necessary for a fair statement of the  consolidated financial condition of BFC Financial Corporation (“BFC” or, unless otherwise indicated or the context otherwise requires, “we,” “us,” “our,” or the “Company”) at September 30, 2012; the consolidated results of operations and  comprehensive income (loss) for the three and nine months ended September 30, 2012 and 2011; cash flows for the nine months ended September 30, 2012 and 2011; and the changes in consolidated equity for the nine months ended September 30, 2012. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012 or any other future period . These unaudited consolidated financial statements and related notes are presented as permitted by Form 10-Q and should be read in conjunction with the Company’s audited consolidated financial statements and footnotes thereto included in Amendment No.1 to the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011.  All significant inter-company balances and transactions have been eliminated in consolidation. As used throughout this document, the term “fair value” reflects the Company’s estimate of fair value as discussed herein. Certain amounts for prior periods have been reclassified to conform to the current period’s presentation.

BFC is a holding company whose principal holdings include direct or indirect controlling interests in BBX Capital Corporation (formerly BankAtlantic Bancorp, Inc.) and its subsidiaries (“BBX Capital”) and Bluegreen Corporation and its subsidiaries (“Bluegreen”).  BFC also had a significant investment in Benihana Inc. (“Benihana”) prior to the acquisition of Benihana by Safflower Holdings Corp. (“Safflower”) during August 2012. BBX Capital’s principal asset until July 31, 2012 was its investment in BankAtlantic , a federal savings bank headquartered in Fort Lauderdale, Florida .  On July 31, 2012, BBX Capital completed its sale to BB&T Corporation (“BB&T”) of all of the issued and outstanding shares of capital stock of BankAtlantic (the stock sale and related transactions described herein are collectively referred to as the “Transaction”). As a result of their respective historic direct and indirect ownership interests in BankAtlantic, both BBX Capital and BFC were unitary savings and loan holding companies subject to examination and regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Effective August 31, 2012, BBX Capital and BFC were released from registration as savings and loan holding compan ies because, as a result of the Transaction, they no longer directly or indirectly control a financial institution.   As such, both BBX Capital and BFC are no longer subject to regulation by the Federal Reserve or subject to restrictions applicable to financial institution holding companies.  

As a holding company with controlling positions in BBX Capital and Bluegreen ,   GAAP   require s the consolidation of the financial results of both entities. As a consequence, the assets and liabilities of both entities are presented on a consolidated basis in BFC’s financial statements. However, except as otherwise noted, the debts and obligations of BBX Capital and Bluegreen as well as BFC’s other consolidated entities, including BFC’s wholly owned subsidiary, Woodbridge Holdings, LLC (“Woodbridge”), are not direct obligations of BFC and are non-recourse to BFC. Similarly, the assets of those entities are not available to BFC absent a dividend or distribution. The recognition by BFC of income from controlled entities is determined based on the total percent of economic ownership in those entities. At September 30, 2012, BFC had an approximately 53 % economic ownership interest in BBX Capital and , through Woodbridge, an approximately 54 % economic ownership interest in Bluegreen.

The Company’s business activities currently consist of (i) Real Estate and Other business activities and (ii) Financial Services. We currently report the results of our business activities through five segments. Three of the segments relate to our Real Estate and Other business activities. These segments are: BFC Activities; Real Estate Operations; and Bluegreen Resorts. Our other two segments — BankAtlantic’s commercial lending reporting unit (“CLRU”) and BBX Capital Parent Company (which represents the operations of BBX Capital at its parent company level) — relate to our Financial Services business activities.   As discussed below, discontinued operations include the results of Bluegreen Communities and BankAtlantic’s community banking, investment, capital services and tax certificate reporting units. Cypress Creek Holdings, LLC (“Cypress Creek Holdings”) is also reported as a discontinued operation.  See Note 3 for additional information regarding discontinued operations.

On November 11, 2011, BFC entered into a definitive merger agreement with Bluegreen.  Pursuant to the terms of the merger agreement and subject to the conditions set forth herein , if the merger is consummated, Bluegreen would become a wholly-owned subsidiary of BFC, and Bluegreen’s shareholders (other than BFC ) w ould be entitled to receive eight shares of BFC’s Class A Common Stock for each share of Bluegreen’s common stock that they hold at the effective time of the merger (as adjusted in connection with the reverse stock split of BFC contemplated by the merger agreement).  The merger agreement was approved by BFC’s and Bluegreen’s respective shareholders on June 19, 2012. At that time, BFC’s shareholders also approved an amendment of BFC’s Articles of Incorporation relating to the contemplated reverse stock split and a reduction in the authorized number of shares of BFC’s common stock which, subject to consummation of the merger, BFC would effect immediately prior to the merger. However, consummation of the merger remains subject to certain closing conditions, including the listing of BFC’s Class A Common Stock on a national securities exchange at the effective time of the merger. Under the terms of the merger agreement, either party was permitted to terminate the agreement if the merger was not consummated by September 30, 2012. As previously disclosed, i n light of the parties ’ continued efforts towards consummation of the merger, on September 27, 2012, BFC and Bluegreen agreed that neither party would exercise its right to so unilaterally terminate the merger agreement prior to December 31, 2012. There is no assurance that the conditions for the consummation of the merger will be met or that the merger will be consummated on the contemplated terms, including in the contemplated time frame, or at all .   Following the announcement of our entry into the merger agreement, purported class action lawsuits seeking to enjoin the merger or, if it is completed, to recover relief as determined by the presiding court to be appropriate were  filed. See Note 14 for further information regarding this litigation.

On May 4, 2012, Bluegreen sold substantially all of the assets that comprised its residential communities business segment, Bluegreen Communities , to Southstar Development Partners, Inc. (“Southstar”) for a purchase price of $ 29.0 million in cash. Southstar also agreed to pay an amount equal to 20 % of the net proceeds (as calculated in accordance with the terms of the agreement) , if any, it receives in the event of its sale of two specified parcels of real estate purchased by Southstar under the agreement. Assets excluded from the sale included primarily Bluegreen’s Communities notes receivable portfolio. Bluegreen Communities was previously reported as a separate segment in our Real Estate and Other business activities and has been classified as a discontinued operation in all periods presented in the accompanying consolidated financial statements. See Note 3 for additional information.

As indicated above, on July 31, 2012, BBX Capital completed the sale of BankAtlantic to BB&T pursuant to the terms of the Stock Purchase Agreement between BBX Capital and BB&T dated November 1, 2011, as amended (the “BB&T Agreement”). Pursuant to the   BB&T Agreement, prior to the closing of the Transaction, BankAtlantic formed two subsidiaries, BBX Capital Asset Management, LLC (“CAM”) and Florida Asset Resolution Group, LLC (“FAR”).  BankAtlantic contributed to FAR certain performing and non-performing loans, tax certificates, and real estate owned that had an aggregate carrying value on BankAtlantic’s balance sheet of approximately $ 346 million on the date the sale was consummated, July 31, 2012. FAR assumed all liabilities related to these assets. BankAtlantic also contributed approximately $ 50 million in cash to FAR on July 31, 2012   and thereafter distributed all of the membership interests in FAR to BBX Capital.  At the closing of the Transaction, BBX Capital transferred to BB&T 95 % of the outstanding preferred membership interests in FAR in connection with BB&T’s assumption of BBX Capital’s outstanding TruPs obligations, as described in further detail below. BBX Capital continues to hold the remaining 5 % of FAR’s preferred membership interests.  Under the terms of the Amended and Restated Limited Liability Company of FAR, which was entered into by BBX Capital and BB&T at the closing, BB&T will hold its 95% preferred interest in the net cash flows of FAR until such time as it has recovered $ 285 million in preference amount plus a priority return of LIBOR + 200 basis points per annum on any unpaid preference amount. At that time, BB&T’s interest in FAR will terminate, and BBX Capital will thereafter be entitled to any and all residual proceeds from FAR .  It is expected that the assets (other than cash) contributed to FAR will be monetized over a period of seven years, or longer provided BB&T’s preference amount is repaid within such seven -year period. BBX Capital entered into an incremental $ 35 million guarantee in BB&T’s favor to further assure BB&T’s recovery of the $ 285 million preferred interest within seven years.  As such, FAR is considered a variable interest entity (“VIE”) and in accordance with the applicable accounting guidance for VIE’s, BBX Capital, as the primary beneficiary, is required to consolidate the financial statements of FAR. BB&T’s preferred interest in FAR as of September 30, 2012 was reduced to $ 209 million.

Prior to the closing of the Transaction, BankAtlantic contributed to CAM certain non-performing commercial loans, commercial real estate owned and previously written off assets that had an aggregate carrying value on BankAtlantic’s balance sheet of $ 125 million as of July 31, 2012. CAM assumed all liabilities related to these assets. BankAtlantic also contributed approximately $ 82 million in cash to CAM. Prior to the closing of the Transaction, BankAtlantic distributed all of the membership interests in CAM to BBX Capital.  CAM remains a wholly owned subsidiary of BBX Capital. CAM distributed the $82 million of cash to BBX Capital and BBX Capital used $51.3

million of the cash to pay BB&T for the accrued and unpaid interest on the TruPs through closing, in each case as described in further detail below.

BB&T made a cash payment in connection with the closing of the Transaction of approximately $ 6.4 million to BBX Capital   which was based on a deposit premium of $ 315.9 million and the net asset value of BankAtlantic at June 30, 2012, in each case as calculated pursuant to the terms of the BB&T Agreement, including, with respect to the net asset value of BankAtlantic, after giving effect to the asset contributions and membership interest distributions by BankAtlantic to BBX Capital described above.

BFC recognized a gain on sale of BankAtlantic of approximately $293.4 million, including approximately $2.8 million of purchase accounting adjustments related to BFC’s acquisitions during 2008 of shares of BBX Capital’s Class A Common Stock which were accounted for as step acquisitions under the purchase method of accounting then in effect. 

Under the terms of the BB&T Agreement, at the closing of the Transaction, BB&T assumed the obligations with respect to BBX Capital’s approximately $285 million in principal amount of outstanding trust preferred securities (“TruPs”), and BBX Capital paid BB&T approximately $ 51.3 million, representing all accrued and unpaid interest on the TruPs through closing.  BBX Capital also paid approximately $ 2.3 million for certain legal fees and expenses incurred by trustees with respect to the now resolved litigation relating to the Transaction brought by certain trustees and holders of the TruPs.  BBX Capital used proceeds received in the Transaction to make these payments.

BankAtlantic’s community banking, investment, capital services and tax certificate reporting units are reflected as “Discontinued Operations” in the unaudited Consolidated Statements of Operations for all periods presented.  BBX Capital is continuing to service and manage , and in the future may originate , commercial loans . As a result, the results of operations for the c ommercial l ending reporting unit are included in the unaudited Consolidated Statement of Operations as continuing operations for all periods presented.  The assets and liabilities transferred to BB&T were not reclassified to assets and liabilities held for sale in the Consolidated Statement of Financial Condition as of December 31, 2011.  The Consolidated Statement of Changes in Equity, Consolidated Statements of Comprehensive Income (Loss) and Consolidated Statement s of Cash Flows remain unchanged from prior period historical presentation for all periods presented.  Additionally, pursuant to the BB&T Agreement, BBX Capital   transfer red to BB&T certain assets and liabilities associated with the   c ommercial l ending reporting unit.  BBX Capital retain ed certain assets and liabilities associated with the disposed reporting units and these assets and liabilities ,   together with all other assets and liabilities retained by BBX Capital in the Transaction , are included in the Consolidated Statement of Financial Condition in their respective line items as of September 30, 2012.

BFC held a significant investment in Benihana prior to the merger between Benihana and Safflower during August 2012.  Pursuant to the merger agreement, Safflower acquired Benihana for a cash purchase price of $ 16.30 per outstanding share of Bluegreen’s common stock.  BFC received approximately $ 24.5 million in exchange for the 1,505,330 shares of Benihana’s common stock that it held at the effective time of the transaction. Prior to such transaction, BFC sold approximately 77,000 shares of Benihana’s common stock during July and August 2012 pursuant to the terms of a Rule 10b5-1 Trading Plan and received net proceeds from such sales of approximately $ 1.25 million.  BFC recognized a gain on sale of approximately $ 9.3 million in connection with the transaction and sales under the Rule 10b5-1 Trading Plan. 

During the quarter ended March 31, 2012, management identified an error in its cost of sales and other miscellaneous accounts and recorded an out of period adjustment related to prior quarters and years. The impact s   of the errors were: an understatement of cost of sales of Vacation Ownership Interests (“ VOIs ”) sold of $ 1.3 million; an overstatement of other expenses of $ 300,000 ; an understatement of net loss from continuing operations of $ 1.0 million; an overstatement of net income attributable to noncontrolling interest of $ 608,000 ; an overstatement of provision for income taxes of $ 402,000 ; and an understatement of net loss attributable to BFC of $ 22,000 .  Management determined, after evaluating the quantitative and qualitative aspects of these corrections, that our current and prior period financial statements were not materially misstated.  Furthermore, management does not believe that these adjustments will be material to its estimated results of operations for the year end ing December 31, 2012.

On October 14, 2011, BBX Capital effected a one-for- five reverse split of its common stock. The reverse stock split did not impact the Company’s equity or voting interest in BBX Capital . Where appropriate, amounts throughout this report have been adjusted to reflect the reverse stock split.

2.    Liquidity and Regulatory Considerations

BFC

Regulatory Considerations

As a result of BBX Capital’s direct, and BFC’s indirect, previous ownership interest in BankAtlantic, BBX Capital and BFC were “unitary savings and loan holding companies” subject to examination and regulation by the Federal Reserve .  As previously described, in connection with BBX Capital’s sale of BankAtlantic to BB&T, both BBX Capital and BFC were released from registration as “unitary savings and loan holding companies,” effective August 31, 2012.

BFC, on a parent company only basis, previously committed that it would not, without the prior written non-objection of the Federal Reserve , (i) incur or issue any additional debt or debt securities, increase lines of credit or guarantee the debt of any other entity or (ii) make dividend payments on its stock. BFC determined not to seek the Federal Reserve’s written non-objection to the dividend payments on its preferred stock for each of the quarters ended December 31, 2011, March 31, 2012 and June 30, 2012.  Following BFC’s deregistration as a savings and loan holding company , such unpaid dividend s totaling approximately $ 563,000 were paid . BFC paid its third quarter dividend of $ 187,500 as of September 30, 2012.  F uture dividend payments will not require the prior written non-objection of the Federal Reserve , provided BFC continues not to be subject to regulation as a financial institution holding company . 

Liquidity Considerations

Except as otherwise noted, the debts and obligations of BBX Capital, Bluegreen and Woodbridge are not direct obligations of BFC and generally are non-recourse to BFC.  Similarly, the assets of those entities are not available to BFC, absent a dividend or distribution from those entities. BFC’s principal sources of liquidity are its available cash and short-term investments. 

We expect to use our available funds to fund operations and meet our obligations.  We may also use available funds to make additional investments in the companies within our consolidated group, invest in equity securities and other investments, or repurchase shares of our common stock pursuant to our share repurchase program. On September 21, 2009, our board of directors approved a share repurchase program which authorizes the repurchase of up to 20,000,000 shares of Class A Common Stock and Class B Common Stock at an aggregate cost of up to $ 10 million.  The share repurchase program replaced our $10 million repurchase program that our board of directors approved in October 2006 which placed a limitation on the number of shares which could be repurchased under the program at 1,750,000 shares of Class A Common Stock.  The current program, like the prior program, authorizes management, at its discretion, to repurchase shares from time to time subject to market conditions and other factors.  No shares were repurchased during the three or nine months ended September 30, 2012, or during the years ended December 31, 2011 or 2010.

BFC has not received cash dividends from BBX Capital since March 2009. Prior to its deregistration as a savings and loan holding company, BBX Capital’s payment of dividends was subject to the oversight of the Federal Reserve.  In addition, prior to its sale of BankAtlantic, BBX Capital was restricted from paying dividends pursuant to the terms of the indentures governing its TruPs due to its deferral of interest payments thereunder.  While these restrictions no longer apply, BBX Capital may only pay dividends if and when declared by its board of directors, a majority of whom are independent directors under the listing standards of the New York Stock Exchange (the “NYSE”).

BFC has never received cash dividends from Bluegreen. Certain of Bluegreen’s credit facilities contain terms which prohibit the payment of cash dividends, and Bluegreen may only pay dividends subject to such restrictions and declaration by its board of directors, a majority of whom are independent directors under the listing standards of the NYSE.

As previously described, BFC held a significant investment in Benihana prior to the merger between Benihana and Safflower during August 2012.  Pursuant to the merger agreement, Safflower acquired Benihana for a cash purchase price of $ 16.30 per outstanding share of Bluegreen’s common stock.  BFC received approximately $24.5 million in exchange for the 1,505,330 shares of Benihana’s common stock that it held at the effective time of the transaction. Prior to Safflower’s acquisition of Benihana, BFC sold approximatel y 77,000 shares of Benihana’s common stock

during July and August 2012 pursuant to the terms of a Rule 10b5-1 Trading Plan and received net proceeds from such sales of approximately $ 1.25 million. BFC recognized a gain on sale of approximately $ 9.3 million in connection with the transaction and sales under the Rule 10b5-1 Trading Plan.  In addition, during each of the first three quarters of 2012, BFC received approximately $ 127,000 of dividend payments with respect to its shares of Benihana’s common stock.

We believe that our current financial condition and credit relationships, together with anticipated cash flows from other sources of funds, dividends from our subsidiaries, and, to the extent determined to be advisable, proceeds from the disposition of properties or investments, will allow us to meet our anticipated near-term liquidity needs. With respect to long-term liquidity requirements, in addition to the foregoing, we may also   seek to raise funds through the incurrence of long-term secured or unsecured indebtedness, or the issuance of equity and/or debt securities.  However, these alternatives may not be available to us on attractive terms, or at all. The inability to raise funds through the sources discussed above would have a material adverse effect on the Company’s business, results of operations and financial condition.

Woodbridge

On September 21, 2009, BFC consummated its merger with Woodbridge Holdings Corporation (“WHC”). Pursuant to the merger, WHC became a wholly owned subsidiary of BFC, and the shareholders of WHC at the effective time of the merger (other than BFC) were entitled to receive 3.47 shares of BFC’s Class A Common Stock in exchange for each share of WHC’s Class A Common Stock that they owned .   Under Florida law, holders of WHC’s Class A Common Stock who did not vote to approve the merger and properly asserted and exercised their appraisal rights with respect to their shares (“Dissenting Holders”) are entitled to receive a cash payment in an amount equal to the fair value of their shares as determined in accordance with the provisions of Florida law in lieu of the shares of BFC’s Class A Common Stock that they would otherwise have been entitled to receive. Dissenting Holders, who collectively held approximately 4.2 million shares of WHC’s Class A Common Stock, rejected Woodbridge’s offer of $ 1.10 per share and requested payment for their shares based on their respective fair value estimates of WHC’s Class A Common Stock. In accordance with Florida law, Woodbridge thereafter commenced legal proceedings relating to the appraisal process.  In December 2009, a $ 4.6 million liability was recorded based on Woodbridge’s $1.10 per share offer to the Dissenting Holders, with a corresponding reduction to additional paid-in capital .  On July 5, 2012, the presiding court in the appraisal rights action determined the fair value of the Dissenting Holders’ shares to be $ 1.78 per share and awarded legal and other costs in favor of the Dissenting Holders. As a result, the $4.6 million liability was increased to approximately $7.5 million (with a corresponding reduction to additional paid in capital of $ 2.8 million as of the quarter ended June 30, 2012 to account for the per share value awarded .     H owever, the amount of the award for legal and other costs that may be payable could not be reasonably estimated and accordingly, is not reflected in BFC’s financial statements .  Woodbridge has appealed the court’s decision regarding the per share value and the award to the Dissenting Holders of legal fees and costs. The outcome of the appeal is uncertain.

Core Communities

In early 2010, Woodbridge made the decision to pursue an orderly liquidation of Core Communities LLC, Woodbridge’s wholly owned subsidiary (“Core” or Core Communities”) , and worked cooperatively with the various lenders to achieve that objective.  During November 2010, Core entered into a settlement agreement with one of its lenders, which had previously commenced actions seeking foreclosure of properties in Florida and South Carolina which served as collateral under mortgage loans totaling approximately $ 113.9 million. Under the terms of the agreement, Core pledged additional collateral to the lender consisting of membership interests in five of Core’s subsidiaries and granted security interests in the real property owned by such subsidiaries in Port St. Lucie, Florida, substantially all of which was undeveloped raw land. Core also agreed to an amendment of the complaint related to the Florida foreclosure action to include this additional collateral and an entry into consensual judgments of foreclosure in both the Florida and South Carolina foreclosure actions. As of November 30, 2010, Core deconsolidated the five subsidiaries, the membership interests in which were transferred to the lender upon entry into the consensual judgments of foreclosure.  In turn, the lender agreed not to enforce a deficiency judgment against Core and, in February 2011, released Core from any other claims arising from or relating to the loans. In connection therewith, a deferred gain on settlement of investment in subsidiary of $ 11.3 million was recognized into income during the three months ended March 31, 2011.

Carolina Oak

In 2007, WHC acquired from Levitt and Sons, LLC (“Levitt and Sons”), WHC’s wholly-owned subsidiary at the time, all of the outstanding membership interests in Carolina Oak, LLC (“Carolina Oak”), which engaged in homebuilding activities in South Carolina prior to the suspension of the activities in the fourth quarter of 2008. In the fourth quarter of 2009, the inventory of real estate at Carolina Oak was reviewed for impairment and a $ 16.7 million impairment charge was recorded to adjust the carrying amount of Carolina Oak’s inventory to its fair value of $ 10.8 million. 

Woodbridge was the obligor under a $ 37.2 million loan collateralized by the Carolina Oak property.  During 2009, the lender declared the loan to be in default and filed an action for foreclosure.  On April 26, 2011, a settlement agreement was entered into to resolve the disputes and ligation relating to the loan. Under the terms and subject to the conditions of the settlement agreement, (i) Woodbridge paid $ 2.5 million to the note holder, (ii) Carolina Oak conveyed to the note holder the real property securing the loan and (iii) the note holder agreed not to pursue certain remedies, including a deficiency judgment, and after the expiration of an agreed-upon time period (which expired during April 2012), to fully release Woodbridge and Carolina Oak. In accordance with applicable accounting guidance, a deferred gain on debt settlement of $ 29.9 million was recorded in the Company’s consolidated statement of financial condition as of December 31, 2011 and was recognized as income in the quarter ended June 30, 2012 as a result of the full release of Woodbridge and Carolina Oak during April 2012.

Cypress Creek Holdings

Cypress Creek Holdings owned an 80,000 square foot office building in Fort Lauderdale, Florida. As of December 31, 2011, the building, which had an estimated carrying value of approximately $ 6.4 million, served as collateral for an approximately $ 11.2 million mortgage loan.

The building was vacated during March 2010 and a fter efforts to lease the space proved unsuccessful, the lender   agreed to permit Cypress Creek Holdings to pursue a short sale of the building. During January 2012, the building was sold for approximately $ 10.8 million. The proceeds of the sale plus a $ 668,000 payment made by Cypress Creek Holdings were paid to the lender in full satisfaction of the loan. During the first quarter of 2012, the Company recognized a gain of approximately $ 4.4 million in connection with the sale.

Cypress Creek Holdings’ results of operations are reported as a discontinued operation in the Company’s consolidated financial statements and its assets, which were sold during the first quarter of 2012, were classified as assets held for sale as of December 31, 2011.

BBX Capital

BBX Capital and CAM had cash balances of $ 33.8 million and current liabilities of $ 10.3 million as of September 30, 2012.  In connection with the consummation of the Transaction, on July 31, 2012, BBX Capital received cash proceeds of approximately $ 29.0 million, consisting of a $ 6.4 million cash payment from BB&T and approximately $ 22.5 million of cash held in CAM, net of transaction costs, trustee fees and costs associated with the TruPs related litigation and payments to BB&T of accrued and unpaid TruPs interest.  BBX Capital’s liquidity is primarily dependent upon the repayments of loans, sales of real estate, and funds   paid to it based on   its 5 % preferred interest in FAR.  Based on   current and expected liquidity needs and sources, BBX Capital expects to be able to meet its liquidity needs over the next 12 months.

3.    Discontinued Operations

Bluegreen Communities 

On May 4, 2012, Bluegreen sold substantially all of the assets that comprised Bluegreen Communities to Southstar f or a purchase price of $ 29.0 million in cash. Additionally, Southstar agreed to pay an amount equal to 20 % of the net proceeds (as calculated in accordance with the terms of the agreement), if any, it receives in the event of its sale   of two specified parcels of real estate purchased by Southstar under the agreement. Certain assets, including primarily Bluegreen Communities’ notes receivable portfolio, were not sold to Southstar.

The assets so ld to Southstar were accounted for as assets held for sale and had been previously written down to their

fair value less costs to sell. The fair value of the assets held for sale was derived from the sale price under the agreement with Southstar. Therefore, Bluegreen did not incur a significant gain or loss upon the closing of the transaction.

Also included in results of discontinued operations in each of the periods presented is interest expense primarily on Bluegreen’s H4BG Communities Facility as certain of the assets classified as held for sale (and which were sold to Southstar as part of the Bluegreen Communities sale) served as collateral under this facility. The entire amount of the debt outstanding under the H4BG Communities Facility and a $ 2.0 million deferred fee were repaid upon the sale of the assets on May 4, 2012.

Cypress Creek Holdings

During January 2012, Cypress Creek Holdings sold the office building it owned for approximately $ 10.8 million. The building served as collateral for an approximately $ 11.2 million mortgage loan. Accordingly, the proceeds of the sale plus a $ 668,000 payment made by Cypress Creek Holdings were paid to the lender in full satisfaction of the loan. The Company recognized a gain of approximately $ 4.4 million in connection with the sale during the first quarter of 2012. Cypress Creek Holdings’ results of operations are reported as a discontinued operation in the accompanying consolidated financial statements and its assets, which were sold during January 2012, were classified as assets held for sale as of December 31, 2011.

The tables below present the results of discontinued operations for Bluegreen Communities for the three and nine months ended September 30, 2012 and 2011 and Cypress Creek Holdings for the three months ended September 30, 2011 and the nine months ended September 30, 2012 and 2011 (in thousands):

There were no results of discontinued operations for Cypress Creek Holdings during the three months ended September 30, 2012.

The following table presents the assets held for sale and liabilities related to the assets held for sale for Bluegreen Communities and Cypress Creek Holdings as of December 31, 2011 (in thousands):

BBX Capital

BankAtlantic’s five reporting units each reflect a component of the BankAtlantic entity and each is the low est level for which cash flows can be clearly distinguished, operationally and for financial reporting purposes.  These five components are Community Banking, Commercial Lending, Tax Certificates, Investments, and Capital Services.   Based on its agreement with BB&T, BBX Capital determined that its Community Banking, Investments, Capital Services and Tax Certificates reporting units should be treated as discontinued operations.  BBX Capital sold all operations and the majority of the assets and liabilities of these discontinued reporting units to BB&T as of July 31, 2012. Management does not intend to continue in any material respect any activities of or have any continuing involvement with these reporting units. Although certain assets of the Commercial Lending reporting unit were sold to BB&T, BBX Capital intends to continue Commercial Lending reporting unit activities and as a result, will include the Commercial Lending reporting unit in continuing operations in the statement of operations .  

Pursuant to the BB&T Agreement, FAR will retain in addition to certain assets associated with BBX Capital’s continuing Commercial Lending reporting unit, certain assets and liabilities that were associated with BBX Capital’s 

disposed reporting units (Community Banking, Tax Certificates, Investments, and Capital Services reporting units). BBX Capital determined that the ongoing cash flows of the disposed reporting units were not significant relative to the historical cash flows of each reporting unit; therefore the income and expenses associated with the disposed reporting units are reported in discontinued operations for each period presented.  The carrying value of the disposed reporting units’ net assets included in FAR’s total assets discussed above was $ 112   million as of July 31 , 2012.  The assets held by FAR are expected to be monetized in accordance with the terms of such assets or through orderly transactions over a seven year period  o r longer provided BB&T’s preferred interest is repaid within such seven-year period. Ninety-five percent of the cash flows from these assets net of operating expenses and a stated preferred return will be applied toward the repayment of BB&T’s preferred interest in FAR.

The gain on the sale of BankAtlantic to BB&T, which is included in the consolidated statements of operations in “Discontinued operations” for the three and nine months ended September 30, 2012, was as follows (in thousands):

Included in the carrying amount of BankAtlantic was $ 2.0 million of unrealized holding gains on securities available for sale and $ 20.2 million of defined benefit pension plan losses deferred in BankAtlantic’s other comprehensive income.  Also included in the gain on the sale of BankAtlantic was $1.0 million of stay bonuses paid by BBX Capital  and reimbursed by BB&T, to key employees of BankAtlantic for pre-acquisition services.

As a consequence of the sale of BankAtlantic, BBX Capital’s stockholders’ equity increased by $ 30 8. 8 million representing a $290.6 million gain on the sale of BankAtlantic and an $18.2 million reduction in accumulated other comprehensive loss.    

The cash consideration received by BBX for the sale of BankAtlantic’s stock upon the consummation of the Transaction as of July 31, 2012 was as follows (in thousands):