UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

For the Quarter Ended March 31, 2004

Commission File Number
001-31931

Levitt Corporation

(954) 760-5200
(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 [X] No [  ]

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

Indicate the number of shares outstanding for each of the Registrant’s classes of common stock, as of May 12, 2004:

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Levitt Corporation and Subsidiaries
Index to Consolidated Financial Statements

2

Levitt Corporation

See accompanying notes to unaudited consolidated financial statements.

3

Levitt Corporation

See accompanying notes to unaudited consolidated financial statements.

4

Levitt Corporation

See accompanying notes to unaudited consolidated financial statements.

5

Levitt Corporation

See accompanying notes to unaudited consolidated financial statements.

6

Levitt Corporation

(Continued)

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

See accompanying notes to unaudited consolidated financial statements.

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Levitt Corporation

1. Presentation of Interim Financial Statements

     Levitt Corporation (the “Company”) is the parent company to other entities operating in the real estate development and homebuilding industries. The Company engages in real estate activities through Levitt and Sons, LLC, a developer of single family home communities and condominiums (“Levitt and Sons”); Core Communities, LLC, a land and master-planned community developer (“Core Communities”); an equity investment in Bluegreen Corporation, a New York Stock Exchange-listed company engaged in the acquisition, development, marketing and sale of ownership interests in primarily drive-to vacation resorts, and the development and sale of golf communities and residential land (“Bluegreen”); and other operations which include Levitt Commercial, LLC, a developer of commercial properties (“Levitt Commercial”), and investments in real estate joint ventures.

     The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. 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 presentation have been included. Operating results for the three-month period ended March 31, 2004 are not necessarily indicative of the results that may be expected for the year ended December 31, 2004. Certain items in prior period financial statements have been reclassified to conform to the current presentation. 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, 2003.

2. Stock Based Compensation

     The Company accounts for stock option grants under the recognition and measurement principles of Accounting Principles Board Opinion No. 25, Accounting for stock issued to Employees, and related Interpretations. No compensation expense is recognized because all stock options granted have exercise prices not less than market value of the Company’s stock on the date of grant.

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     The following table illustrates the effect on net earnings per share if the Company had applied the fair value recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as amended SFAS 148, Accounting for Stock-Based compensation – Transition and Disclosure, to stock-based employee compensation (in thousands, except per share data):

3. Inventory of Real Estate

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

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4. Interest

     Interest incurred relating to land under development and construction is capitalized to real estate inventories during the active development period. Interest is capitalized as a component of inventory at the effective rates paid on borrowings during the pre-construction and planning stage and the periods that projects are under development. Capitalization of interest is discontinued if development ceases at a project. Interest is amortized to cost of sales as related homes, land and units are sold. The following table is a summary of interest incurred on notes and mortgage notes payable and the amounts capitalized (in thousands):

5. Investment in Bluegreen Corporation

     During April 2002, the Company acquired approximately 8.3 million shares of the outstanding common stock of Bluegreen for an aggregate purchase price of approximately $53.8 million. In December 2003, the Company acquired an additional 1.2 million shares of Bluegreen from BankAtlantic Bancorp in exchange for a $5.5 million one year note (which was subsequently repaid in April 2004) and additional shares of the Company’s common stock. The Company accounts for its investment in Bluegreen under the equity method. The cost of this investment is adjusted to recognize the Company’s interest in the earnings or losses of Bluegreen subsequent to the acquisition. As of March 31, 2004, the Company’s investment represented approximately 37% of the outstanding common stock of Bluegreen.

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

Condensed Consolidated Balance Sheet

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Condensed Consolidated Statements of Income

6. Notes and Mortgage Notes Payable

     On September 30, 2003 the SEC declared effective the Company’s Registration Statement on Form S-1 for the public offering of up to $100 million of unsecured subordinated investment notes. The investment notes are unsecured obligations of the Company and are subordinated to substantially all other liabilities. In late 2003, the Company ceased advertising the offering, and in March 2004, the unsold notes were deregistered. Approximately $3.2 million of investment notes were outstanding as of March 31, 2004.

7. Commitments and Contingencies

     At March 31, 2004, the Company had $156.4 million of commitments to purchase properties for development, approximately $12.5 million of which is subject to due diligence and satisfaction of certain requirements and conditions, including financing contingencies. The following table summarizes certain information relating to outstanding purchase contracts.

     At March 31, 2004, cash deposits of approximately $4.3 million secured the Company’s commitments under these contracts. Included in the table above are $23.5 million of commitments by Levitt and Sons to purchase properties from Core Communities in arm’s-length transactions.

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8. Litigation

     On December 29, 2000, Smith & Company, Inc. (“Smith”) filed an action against Levitt-Ansca Towne Partnership, a Florida limited partnership (“Partnership”), Bellaggio by Levitt Homes, Inc., a Florida corporation and a wholly owned subsidiary of Levitt and Sons, LLC which holds a 50% interest in the Partnership (“BLHI”, now known as Bellaggio by Levitt and Sons, LLC, a Florida limited liability company), Bellaggio by Ansca, Inc., a/k/a Bellaggio by Ansca Homes, Inc., and Liberty Mutual Insurance Company (collectively, the foregoing parties are “Defendants”). The suit arose out of an August 2000 contract between Smith and the Partnership. The Complaint alleged, among other things, wrongful termination, breach and failure to pay for extra work performed outside the scope of the contract. The Partnership denied the claims, asserted defenses and asserted a number of counterclaims. The case was tried before a jury, and on March 7, 2002, the jury returned a verdict against the Partnership. The court entered a judgment of $3.68 million against the Defendants of which BLHI’s share of potential liability is estimated at $2.6 million. The Partnership appealed the verdict, and on April 14, 2004 the District Court of Appeal in the Fourth District in the State of Florida reversed the judgment with respect to damages and remanded the case back to the trial court for a re-trial on damages only. At March 31, 2004, the Company’s financial statements included a $2.6 million accrual in other liabilities associated with this suit and $3.6 million in restricted cash to secure the appeal bond previously posted.

9. 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 four reportable business segments: Levitt and Sons, Core Communities, Investment in Bluegreen, and Other Operations. The Company evaluates segment performance primarily based on net income after tax. The information provided for segment reporting is based on management’s internal reports. The accounting policies of the segments are generally the same as those described in the summary of significant accounting policies. The elimination entries consist primarily of inter-company sales of real estate between Core Communities and Levitt and Sons and the cost of sales associated with those transactions, recorded in each case based upon terms that management believes would be attained in an arm’s-length transaction. The presentation and allocation of assets, liabilities and results of operations may not reflect the actual economic costs of the segments as stand-alone businesses. If a different basis of allocation were utilized, the relative contributions of the segments might differ, but management believes that the relative trends in segments would likely not be impacted.

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The tables below present unaudited segment information as of and for the three months ended March 31, 2004 and 2003 (in thousands).