Delaware | 001-35967 | 46-1750895 |
(State or other jurisdiction | (Commission | (I.R.S. Employer |
of incorporation) | File Number) | Identification No.) |
10600 West Charleston Boulevard, Las Vegas, Nevada | 89135 | |
(Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: 702-684-8000 | ||
Exhibit No. | Description | |
99.1 | Press Release issued by Diamond Resorts International, Inc. on October 31, 2013 (furnished herewith). | |
Diamond Resorts International, Inc. | |
October 31, 2013 | By: /s/ David F. Palmer Name: David F. Palmer Title: President and Chief Executive Officer |
• | Total revenue increased $48.9 million, or 34.3%, to $191.6 million for the three months ended September 30, 2013 from $142.7 million for the three months ended September 30, 2012. |
• | Hospitality and Management Services revenue grew by $4.8 million, or 12.1%, for the three months ended September 30, 2013 compared to the three months ended September 30, 2012. This growth was driven mainly by increased management fees as a result of the inclusion of the managed properties from the Island One and PMR Service Companies acquisitions (both completed in July 2013) and increased club revenues. |
• | Vacation Interest sales, net grew by $40.4 million, or 48.5%, for the third quarter of 2013 compared to the same period in 2012. This growth was driven by a: |
◦ | 8.3% increase in tours to 56,822 from 52,474 |
◦ | 9.1% increase in transactions to 8,342 from 7,647 (reflecting closing percentages of 14.7% for the 2013 period and 14.6% for the 2012 period) |
◦ | 36.0% increase in average transaction price to $16,881 from $12,414 |
• | Advertising, sales and marketing expense for the quarter included a non-cash charge of $2.0 million related to the IPO. Excluding this charge, advertising, sales and marketing as a percentage of Vacation Interest sales revenue decreased 5.3 percentage points to 50.0%, from 55.3% in the 2012 period. The non-cash charge related to stock-based compensation was recognized in the three months ended September 30, 2013. Giving effect to this charge, advertising, sales and marketing as a percentage Vacation Interest sales revenue was 51.4%. This improvement was primarily due to improved leverage of fixed costs through increased sales efficiencies. |
• | The pre-tax loss for the quarter included non-cash items netting to $49.1 million related to the IPO and related transactions. Excluding these items, pre-tax income would have increased $26.4 million to $15.2 million for the three months ended September 30, 2013 from a pre-tax loss of $11.3 million for the three months ended September 30, 2012. The non-cash items were charges related to stock-based compensation of $38.5 million and early extinguishment of debt of $13.4 million, offset in part by a gain on bargain purchase of $2.8 million, each recognized in the three months ended September 30, 2013. Giving effect to these items, the pre-tax loss was $34.0 million for the three months ended September 30, 2013. |
• | Net cash used by operations for the three months ended September 30, 2013 was $13.0 million, reflecting $43.8 million, net of repayments, from the buildup of receivables which will be included in future securitizations. |
• | Adjusted EBITDA for the Company and its Restricted Subsidiaries increased $21.8 million, or 56.5%, to $60.6 million for the period from $38.8 million for the three months ended September 30, 2012. This is based on Adjusted EBITDA for the Company on a consolidated basis of $60.4 million for the three months ended September 30, 2013 and $32.3 million for the three months ended September 30, 2012. |
Quarter Ended September 30, | |||||||
2013 | 2012 | ||||||
($ in thousands) | |||||||
Net cash used in operating activities | $ | (12,981 | ) | $ | (5,251 | ) | |
(Benefit) provision for income taxes | (7,626 | ) | 340 | ||||
Provision for uncollectible Vacation Interest sales revenue(a) | (13,851 | ) | (6,276 | ) | |||
Amortization of capitalized financing costs and original issue discounts(a) | (1,804 | ) | (1,660 | ) | |||
Deferred income taxes(b) | 8,040 | 159 | |||||
Gain on foreign currency (c) | 3 | 154 | |||||
Gain on mortgage purchase(a) | 33 | 7 | |||||
Unrealized loss on derivative instruments(d) | (657 | ) | — | ||||
Corporate interest expense(e) | 16,658 | 20,254 | |||||
Change in operating assets and liabilities excluding acquisitions(f) | 53,983 | 7,797 | |||||
Vacation interest cost of sales(g) | 18,605 | 16,778 | |||||
Adjusted EBITDA - Consolidated | 60,403 | 32,302 | |||||
Less: Adjusted EBITDA - Unrestricted Subsidiaries(h) | 7,917 | 756 | |||||
Plus: Intercompany elimination(i) | 8,099 | 7,172 | |||||
Adjusted EBITDA - Diamond and Restricted Subsidiaries | $ | 60,585 | $ | 38,718 |
(b) | Represents the deferred income tax liability arising from the difference between the treatment for financial reporting purposes as compared to income tax return purposes, primarily related to the Island One acquisition. |
(c) | Represents net realized gains on foreign exchange transactions settled at favorable exchange rates and unrealized net gains resulting from the revaluation of foreign currency-denominated assets and liabilities. |
(e) | Represents corporate interest expense; does not include interest expense related to non-recourse indebtedness incurred by our special-purpose subsidiaries that is secured by our Vacation Interest consumer loans. |
(f) | Represents the net change in operating assets and liabilities excluding acquisitions, as computed directly from the statements of cash flows. Vacation Interest cost of sales is included in the net changes in unsold Vacation Interests, net, as presented in the statements of cash flows. |
(g) | We record Vacation Interest cost of sales using the relative sales value method in accordance with ASC 978, "Real-estate Time-Sharing Activities," which requires us to make significant estimates which are subject to significant uncertainty. In determining the appropriate amount of costs using the relative sales value method, we rely on complex, multi-year financial models that incorporate a variety of estimated inputs. These models are reviewed on a regular basis, and the relevant estimates used in the models are revised based upon historical results and management's new estimates. |
(h) | Represents the Adjusted EBITDA of unrestricted subsidiaries as defined in, and calculated in accordance with our 12% senior secured notes. |
(i) | Represents the elimination of revenues and expenses related to agreements entered into between our restricted and unrestricted subsidiaries. The agreements include service agreements for sales and marketing management (terminated on July 24, 2013), resort management, reservation services and portfolio management, whereby certain restricted subsidiaries operate these functions on behalf of the unrestricted subsidiaries for a fee. In addition to these service agreements, we have also entered into intercompany sales agreements, whereby certain restricted subsidiaries purchase unsold Vacation Interests from unrestricted subsidiaries. |
Year Ending December 31, 2013 | ||||||||
($ in thousands) | Low | High | ||||||
Pre-tax income (loss) | $ | (11,700 | ) | $ | 5,500 | |||
Corporate interest expense | $ | 70,100 | $ | 69,600 | ||||
Vacation interest cost of sales(a) | $ | 70,000 | $ | 61,600 | ||||
Depreciation and amortization | $ | 28,600 | $ | 27,600 | ||||
Other non-cash items(b) | $ | 55,400 | $ | 54,400 |
(a) | In accordance with ASC 978, the Company records Vacation Interest Cost of Sales using the relative sales value method (See Note 2 - Summary of Significant Accounting Policies in the Annual Report on Form 10-K for the year ended December 31, 2012 of Diamond Resorts Corporation). This method requires the Company to make a number of projections and estimates, which are subject to significant uncertainty and retroactive adjustment in the future periods. These "true-up" adjustments may result, and for the Company have resulted in prior periods, in major swings (both positive and negative) in the Company's pre-tax income computed in accordance with US GAAP that do not have a direct correlation to the operating performance for the periods in which the "true-ups" are made. It is difficult to predict with any degree of precision what the projections and estimates used in connection with the relative sales value method will be and what impact those projections and estimates will have on the amount recorded in future periods as Vacation Interest Cost of Sales. As a result, guidance for Vacation Interest Cost of Sales (and as a result, pre-tax income) covers a wide range of outcomes. |
(b) | Other non-cash items include: stock based compensation, loss on extinguishment of debt, impairments and other write-offs, gain on disposal of assets, gain on bargain purchase from business combinations, amortization of loan origination costs, and amortization of net portfolio (discounts) premiums. |
(c) | Principally for IT infrastructure and sales center expansion/refurbishment. This does not include expenditures for the acquisition of inventory, or resort-level capital improvements which are paid by the homeowners associations. |
• | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or Vacation Interest inventory; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect cash requirements for income taxes; |
• | Adjusted EBITDA does not reflect interest expense for our corporate indebtedness; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often |
• | we make expenditures to replenish Vacation Interests inventory (principally pursuant to our inventory recovery agreements and in connection with our strategic acquisitions), and Adjusted EBITDA does not reflect our cash requirements for these expenditures or certain costs of carrying such inventory (which are capitalized); and |
• | other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as |
Quarter Ended September 30, 2013 | |||
($ in thousands) | |||
Loss before benefit for income taxes | $ | (33,935 | ) |
Plus: Non-cash charge from stock-based compensation | 38,495 | ||
Non-cash charge from early extinguishment from of debt | 13,383 | ||
Less: Gain on bargain purchase | (2,756 | ) | |
Income before provision for income taxes excluding net non-cash items | $ | 15,187 | |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2013 | Quarter Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Hospitality and Management Services | Vacation Interest Sales and Financing | Corporate and Other | Total | Hospitality and Management Services | Vacation Interest Sales and Financing | Corporate and Other | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 33,610 | $ | — | $ | — | $ | 33,610 | $ | 29,999 | $ | — | $ | — | $ | 29,999 | |||||||||||||||
Consolidated resort operations | 9,326 | — | — | 9,326 | 8,361 | — | — | 8,361 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $13,851, $0, $13,851, $0, $6,276, $0 and $6,276, respectively | — | 123,708 | — | 123,708 | — | 83,318 | — | 83,318 | |||||||||||||||||||||||
Interest | — | 13,971 | 326 | 14,297 | — | 12,551 | 335 | 12,886 | |||||||||||||||||||||||
Other | 1,227 | 9,434 | — | 10,661 | 1,019 | 7,129 | — | 8,148 | |||||||||||||||||||||||
Total revenues | 44,163 | 147,113 | 326 | 191,602 | 39,379 | 102,998 | 335 | 142,712 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 9,408 | — | — | 9,408 | 8,862 | — | — | 8,862 | |||||||||||||||||||||||
Consolidated resort operations | 9,602 | — | — | 9,602 | 7,314 | — | — | 7,314 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 18,605 | — | 18,605 | — | 16,778 | — | 16,778 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 70,714 | — | 70,714 | — | 49,554 | — | 49,554 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 10,154 | — | 10,154 | — | 8,226 | — | 8,226 | |||||||||||||||||||||||
Loan portfolio | 278 | 2,018 | — | 2,296 | 189 | 2,257 | — | 2,446 | |||||||||||||||||||||||
Other operating | — | 3,912 | — | 3,912 | — | 2,454 | — | 2,454 | |||||||||||||||||||||||
General and administrative | — | — | 61,114 | 61,114 | — | — | 27,976 | 27,976 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 7,583 | 7,583 | — | — | 5,205 | 5,205 | |||||||||||||||||||||||
Interest | — | 4,267 | 16,658 | 20,925 | — | 4,554 | 20,254 | 24,808 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 13,383 | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 1,200 | 1,200 | — | — | 401 | 401 | |||||||||||||||||||||||
Gain on disposal of assets | — | — | (585 | ) | (585 | ) | — | — | (122 | ) | (122 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | — | (2,756 | ) | (2,756 | ) | — | — | 115 | 115 | |||||||||||||||||||||
Total costs and expenses | 19,288 | 109,670 | 96,597 | 225,555 | 16,365 | 83,823 | 53,829 | 154,017 | |||||||||||||||||||||||
Income (loss) before (benefit) provision for income taxes | 24,875 | 37,443 | (96,271 | ) | (33,953 | ) | 23,014 | 19,175 | (53,494 | ) | (11,305 | ) | |||||||||||||||||||
(Benefit) provision for income taxes | — | — | (7,626 | ) | (7,626 | ) | — | — | 340 | 340 | |||||||||||||||||||||
Net income (loss) | $ | 24,875 | $ | 37,443 | $ | (88,645 | ) | $ | (26,327 | ) | $ | 23,014 | $ | 19,175 | $ | (53,834 | ) | $ | (11,645 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Hospitality and Management Services | Vacation Interest Sales and Financing | Corporate and Other | Total | Hospitality and Management Services | Vacation Interest Sales and Financing | Corporate and Other | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 96,304 | $ | — | $ | — | $ | 96,304 | $ | 85,574 | $ | — | $ | — | $ | 85,574 | |||||||||||||||
Consolidated resort operations | 26,465 | — | — | 26,465 | 25,522 | — | — | 25,522 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $29,731, $0, $29,731, $0, $16,093, $0 and $16,093, respectively | — | 325,815 | — | 325,815 | — | 202,764 | — | 202,764 | |||||||||||||||||||||||
Interest | — | 40,021 | 1,138 | 41,159 | — | 38,015 | 1,039 | 39,054 | |||||||||||||||||||||||
Other | 7,535 | 21,649 | — | 29,184 | 3,835 | 16,357 | — | 20,192 | |||||||||||||||||||||||
Total revenues | 130,304 | 387,485 | 1,138 | 518,927 | 114,931 | 257,136 | 1,039 | 373,106 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 27,952 | — | — | 27,952 | 25,597 | — | — | 25,597 | |||||||||||||||||||||||
Consolidated resort operations | 26,169 | — | — | 26,169 | 22,620 | — | — | 22,620 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 45,451 | — | 45,451 | — | 17,175 | — | 17,175 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 181,668 | — | 181,668 | — | 124,591 | — | 124,591 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 29,141 | — | 29,141 | — | 26,674 | — | 26,674 | |||||||||||||||||||||||
Loan portfolio | 782 | 6,773 | — | 7,555 | 631 | 6,549 | — | 7,180 | |||||||||||||||||||||||
Other operating | — | 6,518 | — | 6,518 | — | 5,419 | — | 5,419 | |||||||||||||||||||||||
General and administrative | — | — | 105,612 | 105,612 | — | — | 70,937 | 70,937 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 19,912 | 19,912 | — | — | 13,379 | 13,379 | |||||||||||||||||||||||
Interest | — | 12,451 | 58,110 | 70,561 | — | 14,240 | 55,718 | 69,958 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 13,383 | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 1,279 | 1,279 | — | — | 390 | 390 | |||||||||||||||||||||||
Gain on disposal of assets | — | — | (673 | ) | (673 | ) | — | — | (218 | ) | (218 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | — | (2,726 | ) | (2,726 | ) | — | — | (22,634 | ) | (22,634 | ) | |||||||||||||||||||
Total costs and expenses | 54,903 | 282,002 | 194,897 | 531,802 | 48,848 | 194,648 | 117,572 | 361,068 | |||||||||||||||||||||||
Income (loss) before benefit for income taxes | 75,401 | 105,483 | (193,759 | ) | (12,875 | ) | 66,083 | 62,488 | (116,533 | ) | 12,038 | ||||||||||||||||||||
Benefit for income taxes | — | — | (6,777 | ) | (6,777 | ) | — | — | (13,353 | ) | (13,353 | ) | |||||||||||||||||||
Net income (loss) | $ | 75,401 | $ | 105,483 | $ | (186,982 | ) | $ | (6,098 | ) | $ | 66,083 | $ | 62,488 | $ | (103,180 | ) | $ | 25,391 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2013 | Quarter Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 31,851 | $ | 6,099 | $ | (4,340 | ) | $ | 33,610 | $ | 29,772 | $ | 4,220 | $ | (3,993 | ) | $ | 29,999 | |||||||||||||
Consolidated resort operations | 8,216 | 1,110 | — | 9,326 | 7,262 | 1,099 | — | 8,361 | |||||||||||||||||||||||
Vacation Interest sales, net of provision (adjustment) of $13,494, $357, $0, $13,851, $6,639, $(363), $0 and $6,276, respectively | 113,110 | 10,598 | — | 123,708 | 77,318 | 6,000 | — | 83,318 | |||||||||||||||||||||||
Interest | 12,964 | 1,333 | — | 14,297 | 10,053 | 2,833 | — | 12,886 | |||||||||||||||||||||||
Other | 11,774 | 12,665 | (13,778 | ) | 10,661 | 9,034 | 10,178 | (11,064 | ) | 8,148 | |||||||||||||||||||||
Total revenues | 177,915 | 31,805 | (18,118 | ) | 191,602 | 133,439 | 24,330 | (15,057 | ) | 142,712 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 10,002 | 2,887 | (3,481 | ) | 9,408 | 9,837 | 2,432 | (3,407 | ) | 8,862 | |||||||||||||||||||||
Consolidated resort operations | 8,333 | 1,269 | — | 9,602 | 6,183 | 1,131 | — | 7,314 | |||||||||||||||||||||||
Vacation Interest cost of sales | 18,121 | 484 | — | 18,605 | 16,121 | 657 | — | 16,778 | |||||||||||||||||||||||
Advertising, sales and marketing | 63,840 | 7,715 | (841 | ) | 70,714 | 46,721 | 3,405 | (572 | ) | 49,554 | |||||||||||||||||||||
Vacation Interest carrying cost, net | 7,394 | 3,783 | (1,023 | ) | 10,154 | 6,518 | 2,498 | (790 | ) | 8,226 | |||||||||||||||||||||
Loan portfolio | 2,267 | 650 | (621 | ) | 2,296 | 2,316 | 1,204 | (1,074 | ) | 2,446 | |||||||||||||||||||||
Other operating | 4,508 | 3,457 | (4,053 | ) | 3,912 | 2,973 | 1,523 | (2,042 | ) | 2,454 | |||||||||||||||||||||
General and administrative | 57,473 | 3,641 | — | 61,114 | 17,780 | 10,196 | — | 27,976 | |||||||||||||||||||||||
Depreciation and amortization | 3,847 | 3,736 | — | 7,583 | 2,348 | 2,857 | — | 5,205 | |||||||||||||||||||||||
Interest | 14,591 | 6,334 | — | 20,925 | 16,952 | 7,856 | — | 24,808 | |||||||||||||||||||||||
Loss on extinguishment of debt | 8,443 | 4,940 | — | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | 1,200 | — | 1,200 | 401 | — | — | 401 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (590 | ) | 5 | — | (585 | ) | (122 | ) | — | — | (122 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | (2,756 | ) | — | (2,756 | ) | — | 115 | — | 115 | |||||||||||||||||||||
Total costs and expenses | 198,229 | 37,345 | (10,019 | ) | 225,555 | 128,028 | 33,874 | (7,885 | ) | 154,017 | |||||||||||||||||||||
(Loss) income before (benefit) provision for income taxes | (20,314 | ) | (5,540 | ) | (8,099 | ) | (33,953 | ) | 5,411 | (9,544 | ) | (7,172 | ) | (11,305 | ) | ||||||||||||||||
(Benefit) provision for income taxes | (7,705 | ) | 79 | — | (7,626 | ) | 450 | (110 | ) | — | 340 | ||||||||||||||||||||
Net (loss) income | $ | (12,609 | ) | $ | (5,619 | ) | $ | (8,099 | ) | $ | (26,327 | ) | $ | 4,961 | $ | (9,434 | ) | $ | (7,172 | ) | $ | (11,645 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 93,171 | $ | 16,046 | $ | (12,913 | ) | $ | 96,304 | $ | 85,023 | $ | 9,173 | $ | (8,622 | ) | $ | 85,574 | |||||||||||||
Consolidated resort operations | 22,285 | 4,180 | — | 26,465 | 21,430 | 4,092 | — | 25,522 | |||||||||||||||||||||||
Vacation Interest sales, net of provision (adjustment) of $28,930, $801, $0, $29,731, $17,273, $(1,180), $0 and $16,093, respectively | 301,644 | 24,171 | — | 325,815 | 189,776 | 12,988 | — | 202,764 | |||||||||||||||||||||||
Interest | 34,829 | 6,330 | — | 41,159 | 28,853 | 10,201 | — | 39,054 | |||||||||||||||||||||||
Other | 32,884 | 33,267 | (36,967 | ) | 29,184 | 23,657 | 18,374 | (21,839 | ) | 20,192 | |||||||||||||||||||||
Total revenues | 484,813 | 83,994 | (49,880 | ) | 518,927 | 348,739 | 54,828 | (30,461 | ) | 373,106 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 30,285 | 8,070 | (10,403 | ) | 27,952 | 26,395 | 5,948 | (6,746 | ) | 25,597 | |||||||||||||||||||||
Consolidated resort operations | 22,166 | 4,003 | — | 26,169 | 18,949 | 3,671 | — | 22,620 | |||||||||||||||||||||||
Vacation Interest cost of sales | 43,139 | 2,312 | — | 45,451 | 16,249 | 926 | — | 17,175 | |||||||||||||||||||||||
Advertising, sales and marketing | 167,396 | 16,734 | (2,462 | ) | 181,668 | 119,072 | 6,507 | (988 | ) | 124,591 | |||||||||||||||||||||
Vacation Interest carrying cost, net | 22,175 | 10,072 | (3,106 | ) | 29,141 | 22,875 | 5,708 | (1,909 | ) | 26,674 | |||||||||||||||||||||
Loan portfolio | 7,436 | 2,196 | (2,077 | ) | 7,555 | 6,960 | 2,143 | (1,923 | ) | 7,180 | |||||||||||||||||||||
Other operating | 8,702 | 7,892 | (10,076 | ) | 6,518 | 7,309 | 3,419 | (5,309 | ) | 5,419 | |||||||||||||||||||||
General and administrative | 94,084 | 11,528 | — | 105,612 | 51,923 | 19,014 | — | 70,937 | |||||||||||||||||||||||
Depreciation and amortization | 9,198 | 10,714 | — | 19,912 | 6,793 | 6,586 | — | 13,379 | |||||||||||||||||||||||
Interest | 47,984 | 22,577 | — | 70,561 | 50,534 | 19,424 | — | 69,958 | |||||||||||||||||||||||
Loss on extinguishment of debt | 8,443 | 4,940 | — | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 79 | 1,200 | — | 1,279 | 390 | — | — | 390 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (674 | ) | 1 | — | (673 | ) | (218 | ) | — | — | (218 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | (2,726 | ) | — | (2,726 | ) | — | (22,634 | ) | — | (22,634 | ) | |||||||||||||||||||
Total costs and expenses | 460,413 | 99,513 | (28,124 | ) | 531,802 | 327,231 | 50,712 | (16,875 | ) | 361,068 | |||||||||||||||||||||
Income (loss) before (benefit) provision for income taxes | 24,400 | (15,519 | ) | (21,756 | ) | (12,875 | ) | 21,508 | 4,116 | (13,586 | ) | 12,038 | |||||||||||||||||||
(Benefit) provision for income taxes | (6,946 | ) | 169 | — | (6,777 | ) | 209 | (13,562 | ) | — | (13,353 | ) | |||||||||||||||||||
Net income (loss) | $ | 31,346 | $ | (15,688 | ) | $ | (21,756 | ) | $ | (6,098 | ) | $ | 21,299 | $ | 17,678 | $ | (13,586 | ) | $ | 25,391 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||||||||||||||
As of September 30, 2013 and December 31, 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
September 30, 2013 (Unaudited) | December 31, 2012 (Audited) | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 22,868 | $ | 7,008 | $ | — | $ | 29,876 | $ | 16,963 | $ | 4,098 | $ | — | $ | 21,061 | |||||||||||||||
Cash in escrow and restricted cash | 58,544 | 2,698 | — | 61,242 | 40,785 | 1,526 | — | 42,311 | |||||||||||||||||||||||
Mortgages and contracts receivable, net of allowance of $91,904, $6,249, $0, $98,153, $61,067, $22,717, $0, and $83,784, respectively | 359,207 | 18,306 | — | 377,513 | 266,303 | 46,633 | (4 | ) | 312,932 | ||||||||||||||||||||||
Due from related parties, net | 240,915 | 2,460 | (206,917 | ) | 36,458 | 45,428 | 4,510 | (26,943 | ) | 22,995 | |||||||||||||||||||||
Other receivables, net | 28,112 | 4,865 | — | 32,977 | 40,292 | 5,757 | — | 46,049 | |||||||||||||||||||||||
Income tax receivable | 25 | 5,807 | (5,807 | ) | 25 | 927 | — | — | 927 | ||||||||||||||||||||||
Prepaid expenses and other assets, net | 71,547 | 17,862 | (528 | ) | 88,881 | 49,512 | 9,409 | (897 | ) | 58,024 | |||||||||||||||||||||
Unsold Vacation Interests, net | 272,869 | 72,858 | (44,018 | ) | 301,709 | 263,493 | 74,635 | (22,261 | ) | 315,867 | |||||||||||||||||||||
Property and equipment, net | 40,688 | 20,530 | — | 61,218 | 33,664 | 21,456 | — | 55,120 | |||||||||||||||||||||||
Assets held for sale | 5,326 | 5,855 | — | 11,181 | 5,070 | 154 | — | 5,224 | |||||||||||||||||||||||
Intangible assets, net | 107,685 | 123,440 | — | 231,125 | 30,914 | 81,584 | — | 112,498 | |||||||||||||||||||||||
Total assets | $ | 1,207,786 | $ | 281,689 | $ | (257,270 | ) | $ | 1,232,205 | $ | 793,351 | $ | 249,762 | $ | (50,105 | ) | $ | 993,008 | |||||||||||||
Liabilities and Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||
Accounts payable | $ | 8,569 | $ | 5,997 | $ | — | $ | 14,566 | $ | 13,467 | $ | 2,252 | $ | — | $ | 15,719 | |||||||||||||||
Due to related parties, net | 41,730 | 253,798 | (216,249 | ) | 79,279 | 42,632 | 57,179 | (35,607 | ) | 64,204 | |||||||||||||||||||||
Accrued liabilities | 85,199 | 14,802 | (1,055 | ) | 98,946 | 91,511 | 16,004 | (1,064 | ) | 106,451 | |||||||||||||||||||||
Income taxes payable | 1,091 | — | — | 1,091 | 701 | — | — | 701 | |||||||||||||||||||||||
Deferred income taxes | 17,706 | — | (5,807 | ) | 11,899 | — | — | — | — | ||||||||||||||||||||||
Deferred revenues | 83,406 | 6,332 | — | 89,738 | 92,490 | 1,343 | — | 93,833 | |||||||||||||||||||||||
Senior Secured Notes, net of unamortized original issue discount of $6,798, $0, $0, $6,798, $8,509, $0, $0, and $8,509, respectively | 367,642 | — | — | 367,642 | 416,491 | — | — | 416,491 | |||||||||||||||||||||||
Securitization notes and Funding Facilities, net of unamortized original issue discount for $515, $0, $0, $515, $753, $0, $0, $753, respectively | 324,364 | 5,698 | — | 330,062 | 209,450 | 46,852 | — | 256,302 | |||||||||||||||||||||||
Revolving credit facility | 15,000 | — | — | 15,000 | — | — | — | — | |||||||||||||||||||||||
Derivative liabilities | 657 | — | — | 657 | — | — | — | — | |||||||||||||||||||||||
Notes payable | 3,347 | 19,519 | — | 22,866 | 3,238 | 134,668 | — | 137,906 | |||||||||||||||||||||||
Total liabilities | 948,711 | 306,146 | (223,111 | ) | 1,031,746 | 869,980 | 258,298 | (36,671 | ) | 1,091,607 | |||||||||||||||||||||
Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||
Common stock $0.01 par value; authorized - 250,000,000 shares; issued and outstanding - 75,458,402, 0, 0 and 75,458,402, 54,057,867, 0, 0 and 54,057,867 shares | 755 | — | — | 755 | 541 | — | — | 541 | |||||||||||||||||||||||
Additional paid-in capital | 461,733 | 9,675 | (9,675 | ) | 461,733 | 155,027 | 9,675 | (9,675 | ) | 155,027 | |||||||||||||||||||||
Accumulated deficit | (184,753 | ) | (33,251 | ) | (25,528 | ) | (243,532 | ) | (215,433 | ) | (17,563 | ) | (4,438 | ) | (237,434 | ) | |||||||||||||||
Accumulated other comprehensive (loss) income | (18,660 | ) | (881 | ) | 1,044 | (18,497 | ) | (16,764 | ) | (648 | ) | 679 | (16,733 | ) | |||||||||||||||||
Total stockholders' equity (deficit) | 259,075 | (24,457 | ) | (34,159 | ) | 200,459 | (76,629 | ) | (8,536 | ) | (13,434 | ) | (98,599 | ) | |||||||||||||||||
Total liabilities and stockholders' equity (deficit) | $ | 1,207,786 | $ | 281,689 | $ | (257,270 | ) | $ | 1,232,205 | $ | 793,351 | $ | 249,762 | $ | (50,105 | ) | $ | 993,008 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2013 | Quarter Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||||||||||
Net (loss) income | $ | (12,609 | ) | $ | (5,619 | ) | $ | (8,099 | ) | $ | (26,327 | ) | $ | 4,961 | $ | (9,434 | ) | $ | (7,172 | ) | $ | (11,645 | ) | ||||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |||||||||||||||||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 13,494 | 357 | — | 13,851 | 6,639 | (363 | ) | — | 6,276 | ||||||||||||||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,688 | 116 | — | 1,804 | 1,433 | 227 | — | 1,660 | |||||||||||||||||||||||
Amortization of capitalized loan origination costs and net portfolio discount | 1,372 | 401 | — | 1,773 | 823 | 153 | — | 976 | |||||||||||||||||||||||
Depreciation and amortization | 3,847 | 3,736 | — | 7,583 | 2,348 | 2,857 | — | 5,205 | |||||||||||||||||||||||
Stock-based compensation | 38,495 | — | — | 38,495 | — | — | — | — | |||||||||||||||||||||||
Loss on extinguishment of debt | 8,443 | 4,940 | — | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | 1,200 | — | 1,200 | 401 | — | — | 401 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (590 | ) | 5 | — | (585 | ) | (122 | ) | — | — | (122 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | (2,756 | ) | — | (2,756 | ) | — | 115 | — | 115 | |||||||||||||||||||||
Deferred income taxes | (611 | ) | (1,622 | ) | (5,807 | ) | (8,040 | ) | — | (159 | ) | — | (159 | ) | |||||||||||||||||
Gain on foreign currency exchange | (1 | ) | (2 | ) | — | (3 | ) | (154 | ) | — | — | (154 | ) | ||||||||||||||||||
Loss (gain) on mortgage repurchase | 6 | (39 | ) | — | (33 | ) | (7 | ) | — | — | (7 | ) | |||||||||||||||||||
Unrealized loss on derivative instrument | 657 | — | — | 657 | — | — | — | — | |||||||||||||||||||||||
Unrealized loss on post-retirement benefit plan | 774 | — | — | 774 | — | — | — | — | |||||||||||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||||||||||||||||||
Mortgages and contracts receivable | (67,110 | ) | 23,294 | (1 | ) | (43,817 | ) | (24,609 | ) | 2,271 | — | (22,338 | ) | ||||||||||||||||||
Due from related parties, net | (164,795 | ) | 4,339 | 159,928 | (528 | ) | 7,678 | (381 | ) | 4,248 | 11,545 | ||||||||||||||||||||
Other receivables, net | 352 | 963 | — | 1,315 | (46 | ) | 330 | 16 | 300 | ||||||||||||||||||||||
Prepaid expenses and other assets, net | 23,041 | 2,470 | 197 | 25,708 | 19,822 | 4,346 | 51 | 24,219 | |||||||||||||||||||||||
Unsold Vacation Interests, net | 1,532 | 2,094 | 8,098 | 11,724 | (11,763 | ) | (3,840 | ) | 7,171 | (8,432 | ) | ||||||||||||||||||||
Accounts payable | (1,386 | ) | 1,558 | — | 172 | (938 | ) | (525 | ) | — | (1,463 | ) | |||||||||||||||||||
Due to related parties, net | (17,156 | ) | 158,870 | (160,079 | ) | (18,365 | ) | (5,163 | ) | 6,854 | (4,247 | ) | (2,556 | ) | |||||||||||||||||
Accrued liabilities | (15,900 | ) | (4,913 | ) | (44 | ) | (20,857 | ) | (6,635 | ) | 7,977 | (67 | ) | 1,275 | |||||||||||||||||
Income taxes payable | 76 | (5,807 | ) | 5,807 | 76 | (457 | ) | — | — | (457 | ) | ||||||||||||||||||||
Deferred revenues | (12,863 | ) | 2,678 | — | (10,185 | ) | (9,477 | ) | (413 | ) | — | (9,890 | ) | ||||||||||||||||||
Net cash (used in) provided by operating activities | (199,244 | ) | 186,263 | — | (12,981 | ) | (15,266 | ) | 10,015 | — | (5,251 | ) | |||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Property and equipment capital expenditures | (4,263 | ) | (48 | ) | — | (4,311 | ) | (5,150 | ) | (16 | ) | — | (5,166 | ) | |||||||||||||||||
Cash acquired in connection with the Island One Acquisition | 725 | — | — | 725 | — | — | — | — | |||||||||||||||||||||||
Purchase of assets in connection with the PMR Service Companies Acquisition, net of cash acquired of $0, $0, $0, $0, $0, $0, $0 and $0, respectively | — | (47,758 | ) | — | (47,758 | ) | — | — | — | — | |||||||||||||||||||||
Proceeds from sale of assets | 1,656 | — | — | 1,656 | 177 | — | — | 177 | |||||||||||||||||||||||
Net cash used in investing activities | $ | (1,882 | ) | $ | (47,806 | ) | $ | — | $ | (49,688 | ) | $ | (4,973 | ) | $ | (16 | ) | $ | — | $ | (4,989 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2013 | Quarter Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Financing activities: | |||||||||||||||||||||||||||||||
Changes in cash in escrow and restricted cash | $ | 914 | $ | (1,258 | ) | $ | — | $ | (344 | ) | $ | 4,304 | $ | (200 | ) | $ | — | $ | 4,104 | ||||||||||||
Proceeds from issuance of revolving credit facility | 15,000 | — | — | 15,000 | — | — | — | — | |||||||||||||||||||||||
Proceeds from issuance of securitization notes and Funding Facilities | 94,584 | — | — | 94,584 | 36,878 | 101 | — | 36,979 | |||||||||||||||||||||||
Proceeds from issuance of notes payable | — | 1,407 | — | 1,407 | 1,124 | 13 | — | 1,137 | |||||||||||||||||||||||
Payments on securitization notes and Funding Facilities | (37,818 | ) | (29,467 | ) | — | (67,285 | ) | (19,096 | ) | (4,888 | ) | — | (23,984 | ) | |||||||||||||||||
Payments on senior secured notes | (50,560 | ) | — | — | (50,560 | ) | — | — | — | — | |||||||||||||||||||||
Payments on notes payable | (2,844 | ) | (109,040 | ) | — | (111,884 | ) | (2,378 | ) | (5,451 | ) | — | (7,829 | ) | |||||||||||||||||
Payments of debt issuance costs | (2,152 | ) | 41 | — | (2,111 | ) | — | — | — | — | |||||||||||||||||||||
Proceeds from issuance of common stock, net of related costs | 204,705 | — | — | 204,705 | — | — | — | — | |||||||||||||||||||||||
Repurchase of remaining outstanding warrants | (10,346 | ) | — | — | (10,346 | ) | — | — | — | — | |||||||||||||||||||||
Payments of costs related to issuance of common units | 10 | — | — | 10 | (26 | ) | — | — | (26 | ) | |||||||||||||||||||||
Net cash provided by (used in) financing activities | 211,493 | (138,317 | ) | — | 73,176 | 20,806 | (10,425 | ) | — | 10,381 | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 10,367 | 140 | — | 10,507 | 567 | (426 | ) | — | 141 | ||||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 447 | 75 | — | 522 | 230 | — | — | 230 | |||||||||||||||||||||||
Cash and cash equivalents, beginning of period | 12,054 | 6,793 | — | 18,847 | 17,001 | 875 | — | 17,876 | |||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 22,868 | $ | 7,008 | $ | — | $ | 29,876 | $ | 17,798 | $ | 449 | $ | — | $ | 18,247 | |||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||||||||||||||||||
Cash paid for interest | $ | 24,630 | $ | 9,957 | $ | — | $ | 34,587 | $ | 28,778 | $ | 4,259 | $ | — | $ | 33,037 | |||||||||||||||
Cash paid for taxes, net of cash tax refunds | $ | 332 | $ | 60 | $ | — | $ | 392 | $ | 941 | $ | 49 | $ | — | $ | 990 | |||||||||||||||
Purchase of assets in connection with the Island One Acquisition: | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | 83,164 | $ | — | $ | — | $ | 83,164 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Goodwill acquired | 27,665 | — | — | 27,665 | — | — | — | — | |||||||||||||||||||||||
DRII common stock issued | (73,307 | ) | — | — | (73,307 | ) | — | — | — | — | |||||||||||||||||||||
Deferred tax liability | (18,317 | ) | — | — | (18,317 | ) | — | — | — | — | |||||||||||||||||||||
Liabilities assumed | $ | 19,205 | $ | — | $ | — | $ | 19,205 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Purchase of assets in connection with the PMR Service Companies Acquisition: | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | — | $ | 52,291 | $ | — | $ | 52,291 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Gain on bargain purchase recognized | — | (2,756 | ) | — | (2,756 | ) | — | — | — | — | |||||||||||||||||||||
Cash paid | — | (47,758 | ) | — | (47,758 | ) | — | — | — | — | |||||||||||||||||||||
Deferred tax liability | — | (1,622 | ) | — | (1,622 | ) | — | — | — | — | |||||||||||||||||||||
Liabilities assumed | $ | — | $ | 155 | $ | — | $ | 155 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Unsold Vacation Interests, net reclassified to assets held for sale | $ | 14 | $ | — | $ | — | $ | 14 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2013 | Quarter Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Assets held for sale reclassified to management contracts (intangible assets, net) | $ | — | $ | — | $ | — | $ | — | $ | 5 | $ | — | $ | — | $ | 5 | |||||||||||||||
Assets held for sale reclassified to unsold Vacation Interests, net | $ | — | $ | — | $ | — | $ | — | $ | 38 | $ | — | $ | — | $ | 38 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 31,346 | $ | (15,688 | ) | $ | (21,756 | ) | $ | (6,098 | ) | $ | 21,299 | $ | 17,678 | $ | (13,586 | ) | $ | 25,391 | |||||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 28,930 | 801 | — | 29,731 | 17,273 | (1,180 | ) | — | 16,093 | ||||||||||||||||||||||
Amortization of capitalized financing costs and original issue discounts | 4,860 | 747 | — | 5,607 | 4,163 | 579 | — | 4,742 | |||||||||||||||||||||||
Amortization of capitalized loan origination costs and net portfolio discounts (premiums) | 3,815 | 493 | — | 4,308 | 2,282 | (706 | ) | — | 1,576 | ||||||||||||||||||||||
Depreciation and amortization | 9,198 | 10,714 | — | 19,912 | 6,793 | 6,586 | — | 13,379 | |||||||||||||||||||||||
Stock-based compensation | 38,495 | — | — | 38,495 | — | — | — | — | |||||||||||||||||||||||
Loss on extinguishment of debt | 8,443 | 4,940 | — | 13,383 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 79 | 1,200 | — | 1,279 | 390 | — | — | 390 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (674 | ) | 1 | — | (673 | ) | (218 | ) | — | — | (218 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | (2,726 | ) | — | (2,726 | ) | — | (22,634 | ) | — | (22,634 | ) | |||||||||||||||||||
Deferred income taxes | (611 | ) | (1,622 | ) | (5,807 | ) | (8,040 | ) | — | (13,612 | ) | — | (13,612 | ) | |||||||||||||||||
Loss (gain) on foreign currency exchange | 138 | 77 | — | 215 | (98 | ) | — | — | (98 | ) | |||||||||||||||||||||
Loss (gain) on mortgage repurchase | 7 | (78 | ) | — | (71 | ) | (26 | ) | — | — | (26 | ) | |||||||||||||||||||
Unrealized loss on derivative instruments | 657 | — | — | 657 | — | — | — | — | |||||||||||||||||||||||
Unrealized loss on post-retirement benefit plan | 774 | — | — | 774 | — | — | — | — | |||||||||||||||||||||||
Gain on insurance settlement | (2,876 | ) | — | — | (2,876 | ) | — | — | — | — | |||||||||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||||||||||||||||||
Mortgages and contracts receivable | (111,575 | ) | 27,110 | (4 | ) | (84,469 | ) | (42,828 | ) | 11,803 | (2 | ) | (31,027 | ) | |||||||||||||||||
Due from related parties, net | (191,209 | ) | 1,825 | 179,821 | (9,563 | ) | 9,225 | 348 | 8,735 | 18,308 | |||||||||||||||||||||
Other receivables, net | 16,860 | 1,946 | — | 18,806 | 14,783 | (1,422 | ) | 19 | 13,380 | ||||||||||||||||||||||
Prepaid expenses and other assets, net | (16,448 | ) | (11,973 | ) | 108 | (28,313 | ) | (20,289 | ) | 1,638 | (21 | ) | (18,672 | ) | |||||||||||||||||
Unsold Vacation Interests, net | (9,229 | ) | (5,158 | ) | 21,757 | 7,370 | (39,266 | ) | (7,745 | ) | 12,737 | (34,274 | ) | ||||||||||||||||||
Accounts payable | (6,039 | ) | 3,622 | — | (2,417 | ) | 1,270 | 1,042 | — | 2,312 | |||||||||||||||||||||
Due to related parties, net | 1,179 | 196,628 | (179,974 | ) | 17,833 | 41,079 | 15,613 | (7,896 | ) | 48,796 | |||||||||||||||||||||
Accrued liabilities | (14,263 | ) | 1,135 | 48 | (13,080 | ) | 1,515 | 10,912 | 14 | 12,441 | |||||||||||||||||||||
Income taxes payable | 1,294 | (5,807 | ) | 5,807 | 1,294 | (2,046 | ) | — | — | (2,046 | ) | ||||||||||||||||||||
Deferred revenues | (12,105 | ) | 4,990 | — | (7,115 | ) | (10,139 | ) | 1,277 | — | (8,862 | ) | |||||||||||||||||||
Net cash (used in) provided by operating activities | (218,954 | ) | 213,177 | — | (5,777 | ) | 5,162 | 20,177 | — | 25,339 | |||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Property and equipment capital expenditures | (12,183 | ) | (609 | ) | — | (12,792 | ) | (11,005 | ) | (268 | ) | — | (11,273 | ) | |||||||||||||||||
Cash acquired in connection with the Island One Acquisition | 725 | — | — | 725 | — | — | — | — | |||||||||||||||||||||||
Purchase of assets in connection with the PMR Service Companies Acquisition, net of cash acquired of $0, $0, $0, $0, $0, $0, $0, and $0, respectively | — | (47,758 | ) | — | (47,758 | ) | — | — | — | — | |||||||||||||||||||||
Purchase of assets in connection with the PMR Acquisition, net of cash acquired of $0, $0, $0, $0, $0, $0, $0, and $0, respectively | — | — | — | — | — | (51,635 | ) | — | (51,635 | ) | |||||||||||||||||||||
Proceeds from sale of assets | 3,126 | — | — | 3,126 | 497 | — | — | 497 | |||||||||||||||||||||||
Net cash used in investing activities | $ | (8,332 | ) | $ | (48,367 | ) | $ | — | $ | (56,699 | ) | $ | (10,508 | ) | $ | (51,903 | ) | $ | — | $ | (62,411 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Financing activities: | |||||||||||||||||||||||||||||||
Changes in cash in escrow and restricted cash | $ | (16,496 | ) | $ | (1,174 | ) | $ | — | $ | (17,670 | ) | $ | (4,521 | ) | $ | (232 | ) | $ | — | $ | (4,753 | ) | |||||||||
Proceeds from issuance of revolving credit facility | 15,000 | — | — | 15,000 | — | — | — | — | |||||||||||||||||||||||
Proceeds from issuance of securitization notes and Funding Facilities | 265,160 | 713 | — | 265,873 | 80,997 | 1,867 | — | 82,864 | |||||||||||||||||||||||
Proceeds from issuance of notes payable | — | 3,882 | — | 3,882 | 1,124 | 64,138 | — | 65,262 | |||||||||||||||||||||||
Payments on securitization notes and Funding Facilities | (159,717 | ) | (41,867 | ) | — | (201,584 | ) | (66,937 | ) | (15,358 | ) | — | (82,295 | ) | |||||||||||||||||
Payments on senior secured notes | (50,560 | ) | — | — | (50,560 | ) | — | — | — | — | |||||||||||||||||||||
Payments on notes payable | (8,409 | ) | (123,423 | ) | — | (131,832 | ) | (7,426 | ) | (15,919 | ) | — | (23,345 | ) | |||||||||||||||||
Payments of debt issuance costs | (6,147 | ) | (16 | ) | — | (6,163 | ) | (24 | ) | (2,570 | ) | — | (2,594 | ) | |||||||||||||||||
Proceeds from issuance of Common Stock, net of related costs | 204,705 | — | — | 204,705 | — | — | — | — | |||||||||||||||||||||||
Repurchase of remaining outstanding warrants | (10,346 | ) | — | — | (10,346 | ) | — | — | — | — | |||||||||||||||||||||
Payments of costs related to issuance of common and preferred units | — | — | — | — | (35 | ) | — | — | (35 | ) | |||||||||||||||||||||
Net cash provided by (used in) financing activities | 233,190 | (161,885 | ) | — | 71,305 | 3,178 | 31,926 | — | 35,104 | ||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 5,904 | 2,925 | — | 8,829 | (2,168 | ) | 200 | — | (1,968 | ) | |||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 1 | (15 | ) | — | (14 | ) | 318 | — | — | 318 | |||||||||||||||||||||
Cash and cash equivalents, beginning of period | 16,963 | 4,098 | — | 21,061 | 19,648 | 249 | — | 19,897 | |||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 22,868 | $ | 7,008 | $ | — | $ | 29,876 | $ | 17,798 | $ | 449 | $ | — | $ | 18,247 | |||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||||||||||||||||||
Cash paid for interest | $ | 55,505 | $ | 18,922 | $ | — | $ | 74,427 | $ | 61,067 | $ | 11,032 | $ | — | $ | 72,099 | |||||||||||||||
(Cash tax refunds, net of cash paid for taxes) Cash paid for taxes, net of cash tax refunds | $ | (138 | ) | $ | 150 | $ | — | $ | 12 | $ | 2,337 | $ | — | $ | — | $ | 2,337 | ||||||||||||||
Purchase of assets in connection with the Island One Acquisition: | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | 83,164 | $ | — | $ | — | $ | 83,164 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Goodwill acquired | 27,665 | — | — | 27,665 | — | — | — | — | |||||||||||||||||||||||
DRII common stock issued | (73,307 | ) | — | — | (73,307 | ) | — | — | — | — | |||||||||||||||||||||
Deferred tax liability | (18,317 | ) | — | — | (18,317 | ) | — | — | — | — | |||||||||||||||||||||
Liabilities assumed | $ | 19,205 | $ | — | $ | — | $ | 19,205 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Purchase of assets in connection with the PMR Service Companies Acquisition: | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | — | $ | 52,291 | $ | — | $ | 52,291 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Gain on bargain purchase recognized | — | (2,756 | ) | — | (2,756 | ) | — | — | — | — | |||||||||||||||||||||
Cash paid | — | (47,758 | ) | — | (47,758 | ) | — | — | — | — | |||||||||||||||||||||
Deferred tax liability | — | (1,622 | ) | — | (1,622 | ) | — | — | — | — | |||||||||||||||||||||
Liabilities assumed | $ | — | $ | 155 | $ | — | $ | 155 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2013 | Nine Months Ended September 30, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Purchase of assets in connection with the PMR Acquisition: | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 89,760 | $ | — | $ | 89,760 | |||||||||||||||
Gain on bargain purchase recognized | — | — | — | — | — | (22,765 | ) | — | (22,765 | ) | |||||||||||||||||||||
Cash paid | — | — | — | — | — | (51,635 | ) | — | (51,635 | ) | |||||||||||||||||||||
Deferred tax liability | — | — | — | — | — | (13,612 | ) | — | (13,612 | ) | |||||||||||||||||||||
Liabilities assumed | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,748 | $ | — | $ | 1,748 | |||||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Insurance premiums financed through issuance of notes payable | $ | 7,822 | $ | — | $ | — | $ | 7,822 | $ | 7,573 | $ | — | $ | — | $ | 7,573 | |||||||||||||||
Assets held for sale reclassified to unsold vacation interests | $ | — | $ | — | $ | — | $ | — | $ | 1,353 | $ | — | $ | — | $ | 1,353 | |||||||||||||||
Unsold Vacation Interests, net reclassified to assets held for sale | $ | 4,464 | $ | 5,701 | $ | — | $ | 10,165 | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
Assets held for sale reclassified to management contracts (intangible assets, net) | $ | — | $ | — | $ | — | $ | — | $ | 192 | $ | — | $ | — | $ | 192 |