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 February 19, 2014 (furnished herewith). | |
Diamond Resorts International, Inc. | |
February 19, 2014 | By: Name: David F. Palmer Title: President and Chief Executive Officer |
• | Total revenue increased $206.1 million, or 39.4%, to $729.8 million for 2013 from $523.7 million for 2012. |
• | Hospitality and Management Services revenue grew by $22.1 million, or 14.4%, for 2013 compared to 2012. This growth was driven by the full year ownership of Pacific Monarch Resorts (acquired in May 2012), the inclusion of the PMR Services Companies and Island One (both acquired in July 2013), increases in operating costs at the resort level which generated higher same-store management fee revenue, and increases in revenue from our club operations. |
• | Vacation Interest sales, net grew by $171.5 million, or 58.5%, for 2013 compared to 2012. This growth was driven by a: |
• | 14.4% increase in tours to 207,075 from 180,981 |
• | 12.0% increase in transactions to 29,955 from 26,734 (reflecting closing percentages of 14.5% for 2013 and 14.8% for 2012) |
• | 34.1% increase in average transaction price to $16,771 from $12,510 |
• | Advertising, sales and marketing expense for 2013 included a non-cash charge of $2.1 million related to stock based compensation. Excluding this charge, advertising, sales and marketing as a percentage of Vacation Interest sales revenue decreased 5.7 percentage points to 50.3%, from 56.0% in 2012. Including this non-cash charge, advertising, sales and marketing as a percentage of Vacation Interest sales revenue was 50.7%. This improvement was primarily due to improved leverage of fixed costs through increased sales efficiencies. |
• | Pre-tax income for 2013 and 2012 included non-cash and one-time charges and adjustments of $63.8 million and $12.3 million, respectively. The non-cash items were charges related to stock-based compensation of $40.5 million in 2013 and $3.3 million in 2012, a one-time charge of $5.5 million related to the final settlement of the FLRX Alter Ego suit (“FLRX litigation”) in 2013 (representing the carrying value of our interest in certain Mexican land transferred to the plaintiff), a charge of $6.6 million related to the early extinguishment of debt which was repaid with proceeds from our IPO in July 2013, and a gain on bargain purchase from business combinations of $2.9 million in 2013 and $20.6 million in 2012. In addition, 2013 included a cash charge of $9.0 million related to the early extinguishment of debt and a one-time cash charge of $5.0 million related to the final settlement of the FLRX litigation. In 2012, there was a one-time cash charge of $5.0 million related to the termination of consultants who had been executives of an acquired company (“Executive Termination”). Excluding these items, pre-tax income in 2013 would have been $67.0 million, an increase of $80.0 million from a pre-tax loss of $13.0 million in 2012. Including these items, pre-tax income in 2013 was $3.2 million and the pre-tax loss in 2012 was $0.7 million. |
• | Net cash used by operations in 2013 was $5.4 million. This includes a $128.8 million net working capital use from the buildup of receivables, net of repayments. Our receivables are generally monetized through a securitization transaction, or by pledging them under one of our funding facilities. This monetization is shown under “financing activities” on our statement of cash flows. During 2013 we generated $125.2 million of net cash related to the monetization of our receivables portfolio which included $38.5 million as of December 31, 2013 in receivables activity related to the DROT 2013-2 securitization. |
• | Adjusted EBITDA for the Company and its Restricted Subsidiaries was $219.0 million for 2013. Adjusted EBITDA for the Company on a consolidated basis was $220.2 million for 2013. Adjusted EBITDA for 2013 included a one-time charge of $10.5 million ($5.0 million of which was cash) related to the final settlement of the FLRX litigation. Adjusted EBITDA for the Company and its Restricted Subsidiaries was $123.3 million for 2012. On a consolidated basis, Adjusted EBITDA was $113.2 million for 2012. Adjusted EBITDA for 2012 included a $5.0 million charge related to the Executive Termination. |
• | In 2013 we completed three securitization transactions issuing notes with an aggregate face value of $349.6 million. |
• | Total revenue increased $60.3 million, or 40.0%, to $210.9 million for 2013 from $150.6 million for 2012. |
• | Hospitality and Management Services revenue grew by $6.8 million, or 17.6%, for 2013 compared to 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 (completed in July 2013) and increased revenues from our club operations. |
• | Vacation Interest sales, net grew by $48.5 million, or 53.6%, in 2013 compared to the same period in 2012. This growth was driven primarily by a 40.8% increase in average transaction price to $18,313 from $13,007. |
• | Advertising, sales and marketing as a percentage of Vacation Interest sales revenue decreased 4.0 percentage points to 49.9%, from 53.9% in 2012. This improvement was primarily due to improved leverage of fixed costs through increased sales efficiencies. |
• | Pre-tax income for 2013 and 2012 included non-cash and one-time charges of $14.6 million and $5.3 million, respectively. The non-cash items were charges related to stock-based compensation of $2.0 million in 2013 and $3.3 million in 2012, a one-time charge of $5.5 million related to the final settlement of the FLRX litigation in 2013, a charge of $2.2 million related to the early extinguishment of debt, a gain on bargain purchase from business combinations of $0.2 million in 2013 and an adjustment to bargain purchase from business combinations of $2.0 million in 2012. In addition, 2013 included a one-time cash charge of $5.0 million related to the final settlement of the FLRX litigation. Excluding these items, pre-tax income in 2013 would have been $30.7 million, an increase of $38.1 million from pre-tax loss of $7.4 million in 2012. Including these items, pre-tax income in 2013 was $16.1 million and the pre-tax loss in 2012 was $12.7 million. |
• | Net cash used in 2013 was $0.4 million. This includes a $44.4 million net working capital use from the buildup of receivables, net of repayments while we generated $60.9 million in cash related to the monetization of our receivables portfolio. |
• | Adjusted EBITDA for the Company and its Restricted Subsidiaries was $53.5 million for 2013. Adjusted EBITDA for the Company on a consolidated basis was $55.5 million for 2013. Adjusted EBITDA for 2013 included a one-time charge of $10.5 million ($5.0 million of which was cash) related to the final settlement of the FLRX litigation. Adjusted EBITDA for the Company and its Restricted Subsidiaries was $35.6 million for 2012. On a consolidated basis, Adjusted EBITDA was $35.8 million for 2012. |
• | On November 20, 2013, we completed a securitization transaction and issued DROT 2013-2 Class A and B Notes with a face value of $225.0 million. |
Year Ending December 31, 2014 | ||||||||
($ in thousands) | Low | High | ||||||
Pre-tax income | $ | 65,000 | $ | 92,500 | ||||
Corporate interest expense | $ | 56,500 | $ | 54,500 | ||||
Vacation interest cost of sales(a) | $ | 79,500 | $ | 69,500 | ||||
Depreciation and amortization | $ | 32,000 | $ | 30,000 | ||||
Other non-cash items(b) | $ | 22,000 | $ | 18,500 |
(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. |
(b) | Other non-cash items include: stock based compensation, amortization of loan origination costs, and amortization of net portfolio discounts and 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 December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 367 | $ | (739 | ) | $ | (5,410 | ) | $ | 24,600 | |||||
Provision (benefit) for income taxes | 12,554 | (957 | ) | 5,777 | (14,310 | ) | |||||||||
Provision for uncollectible Vacation Interest sales revenue(a) | (14,939 | ) | (9,364 | ) | (44,670 | ) | (25,457 | ) | |||||||
Amortization of capitalized financing costs and original issue discounts(a) | (1,472 | ) | (1,551 | ) | (7,079 | ) | (6,293 | ) | |||||||
Deferred income taxes(b) | (11,304 | ) | (602 | ) | (3,264 | ) | 13,010 | ||||||||
Loss on foreign currency (c) | (30 | ) | (211 | ) | (245 | ) | (113 | ) | |||||||
Gain on mortgage purchase(a) | 40 | 1 | 111 | 27 | |||||||||||
Unrealized gain on derivative instruments(d) | 657 | — | — | — | |||||||||||
Unrealized loss on post-retirement benefit plan(e) | (113 | ) | — | (887 | ) | — | |||||||||
Corporate interest expense(f) | 14,105 | 21,704 | 72,215 | 77,422 | |||||||||||
Change in operating assets and liabilities excluding acquisitions(g) | 44,392 | 12,539 | 146,922 | 12,183 | |||||||||||
Vacation interest cost of sales(h) | 11,244 | 14,975 | 56,695 | 32,150 | |||||||||||
Adjusted EBITDA - Consolidated | 55,501 | 35,795 | 220,165 | 113,219 | |||||||||||
Less: Adjusted EBITDA - Unrestricted Subsidiaries(i) | 9,308 | 5,624 | 30,238 | 8,957 | |||||||||||
Plus: Intercompany elimination(j) | 7,339 | 5,472 | 29,095 | 19,058 | |||||||||||
Adjusted EBITDA - Diamond Resorts International, Inc. and Restricted Subsidiaries | $ | 53,532 | $ | 35,643 | $ | 219,022 | $ | 123,320 |
(a) | Represents non-cash charge or gain. |
(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 and the PMR Service Companies Acquisition in 2013 and the PMR Acquisition in 2012. |
(c) | Represents net realized losses on foreign exchange transactions settled at unfavorable exchange rates and unrealized net losses resulting from the devaluation of foreign currency-denominated assets and liabilities. |
(d) | Represents the effects of the changes in mark-to-market valuations of derivative liabilities. |
(e) | Represents unrealized losses on our post-retirement benefit plan related to a collective labor agreement entered into with the employees of our two resorts in St. Maarten. |
(f) | 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 VOI consumer loans. |
(g) | 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. |
(h) | 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. |
(i) | Represents the Adjusted EBITDA of unrestricted subsidiaries as defined in, and calculated in accordance with, the Notes Indenture. |
(j) | 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. |
Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Net income (loss) | $ | 3,573 | $ | (11,748 | ) | $ | (2,525 | ) | $ | 13,643 | |||||
Plus: Corporate interest expense(a) | 14,105 | 21,704 | 72,215 | 77,422 | |||||||||||
Provision (benefit) for income taxes | 12,554 | (957 | ) | 5,777 | (14,310 | ) | |||||||||
Depreciation and amortization(b) | 8,273 | 5,478 | 28,185 | 18,857 | |||||||||||
Vacation Interest cost of sales(c) | 11,244 | 14,975 | 56,695 | 32,150 | |||||||||||
Loss on extinguishment of debt(c) | 2,221 | — | 15,604 | — | |||||||||||
Impairments and other non-cash write-offs(b) | 308 | 619 | 1,587 | 1,009 | |||||||||||
Gain on the disposal of assets(b) | (309 | ) | (387 | ) | (982 | ) | (605 | ) | |||||||
(Gain) adjustment on bargain purchase from business combinations(d) | (153 | ) | 2,024 | (2,879 | ) | (20,610 | ) | ||||||||
Amortization of loan origination costs(b) | 1,543 | 904 | 5,419 | 3,295 | |||||||||||
Amortization of net portfolio premium (discounts)(b) | 104 | (138 | ) | 536 | (953 | ) | |||||||||
Stock-based compensation(e) | 2,038 | 3,321 | 40,533 | 3,321 | |||||||||||
Adjusted EBITDA - Consolidated | 55,501 | 35,795 | 220,165 | 113,219 | |||||||||||
Less: Adjusted EBITDA - Unrestricted Subsidiaries(f) | 9,308 | 5,624 | 30,238 | 8,957 | |||||||||||
Plus: Adjusted EBITDA - Intercompany elimination(g) | 7,339 | 5,472 | 29,095 | 19,058 | |||||||||||
Adjusted EBITDA - Diamond Resorts International, Inc. and Restricted Subsidiaries | $ | 53,532 | $ | 35,643 | $ | 219,022 | $ | 123,320 |
(a) | Corporate interest expense does not include interest expense related to non-recourse indebtedness incurred by our special-purpose vehicles that is secured by our VOI consumer loans. |
(b) | These items represent non-cash charges/gains. |
(c) | We record Vacation Interest cost of sales using the relative sales value method in accordance with ASC 978, 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. |
(d) | Represents the amount by which the fair value of the assets acquired net of the liabilities assumed in the PMR Service Companies Acquisition and the PMR Acquisition exceeded the respective purchase prices in 2013 and 2012, respectively. |
(e) | Represents the non-cash charge related to stock-based compensation due to stock options exercisable for approximately 6.6 million shares of common stock we issued in connection with the IPO. |
(f) | Represents the Adjusted EBITDA of unrestricted subsidiaries as defined in, and calculated in accordance with, the Notes Indenture. |
(g) | Represents the elimination of revenues and expenses related to agreements entered into between our restricted and unrestricted subsidiaries. The significant agreements include service agreements for sales and marketing management, 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. |
Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Advertising, sales and marketing expense | $ | 76,783 | $ | 53,774 | $ | 258,451 | $ | 178,365 | |||||||
Stock-based compensation | (155 | ) | — | (2,104 | ) | — | |||||||||
Advertising, sales and marketing expense excluding stock-based compensation | $ | 76,628 | $ | 53,774 | $ | 256,347 | $ | 178,365 | |||||||
Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
General and administrative expense | $ | 40,313 | $ | 28,078 | $ | 145,925 | $ | 99,015 | |||||||
Stock-based compensation | (1,655 | ) | (3,321 | ) | (37,044 | ) | (3,321 | ) | |||||||
Final settlement for the FLRX litigation | (10,500 | ) | — | (10,500 | ) | — | |||||||||
Executive Termination | — | — | — | (5,000 | ) | ||||||||||
General and administrative expense after excluding certain non-cash items | $ | 28,158 | $ | 24,757 | $ | 98,381 | $ | 90,694 | |||||||
Quarter Ended December 31, | Year Ended December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Income (loss) before provision (benefit) for income taxes | $ | 16,127 | $ | (12,705 | ) | $ | 3,252 | $ | (667 | ) | |||||
Plus: Non-cash charge from stock-based compensation | 2,038 | 3,321 | 40,533 | 3,321 | |||||||||||
Non-cash charge from early extinguishment of debt | 2,221 | — | 6,570 | — | |||||||||||
Non-cash charge from final settlement related to the FLRX litigation | 5,500 | — | 5,500 | — | |||||||||||
Cash charge from early extinguishment of debt | — | — | 9,034 | ||||||||||||
Cash charge from final settlement related to the FLRX litigation | 5,000 | — | 5,000 | — | |||||||||||
Cash charge related to the Executive Termination | — | — | — | 5,000 | |||||||||||
(Gain on) adjustment to bargain purchase | (153 | ) | 2,024 | (2,879 | ) | (20,610 | ) | ||||||||
Income (loss) before provision (benefit) for income taxes after excluding certain items | $ | 30,733 | $ | (7,360 | ) | $ | 67,010 | $ | (12,956 | ) | |||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Quarters Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended December 31, 2013 | Quarter Ended December 31, 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 | $ | 34,934 | $ | — | $ | — | $ | 34,934 | $ | 29,363 | $ | — | $ | — | $ | 29,363 | |||||||||||||||
Consolidated resort operations | 9,047 | — | — | 9,047 | 8,234 | — | — | 8,234 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $14,939, $0, $14,939, $0, $9,364, $0 and $9,364, respectively | — | 138,798 | — | 138,798 | — | 90,334 | — | 90,334 | |||||||||||||||||||||||
Interest | — | 15,580 | 305 | 15,885 | — | 13,754 | 398 | 14,152 | |||||||||||||||||||||||
Other | 1,137 | 11,060 | — | 12,197 | 760 | 7,719 | — | 8,479 | |||||||||||||||||||||||
Total revenues | 45,118 | 165,438 | 305 | 210,861 | 38,357 | 111,807 | 398 | 150,562 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 9,955 | — | — | 9,955 | 9,733 | — | — | 9,733 | |||||||||||||||||||||||
Consolidated resort operations | 8,164 | — | — | 8,164 | 7,691 | — | — | 7,691 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 11,244 | — | 11,244 | — | 14,975 | — | 14,975 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 76,783 | — | 76,783 | — | 53,774 | — | 53,774 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 12,206 | — | 12,206 | — | 9,689 | — | 9,689 | |||||||||||||||||||||||
Loan portfolio | 329 | 1,747 | — | 2,076 | 227 | 2,079 | — | 2,306 | |||||||||||||||||||||||
Other operating | — | 5,588 | — | 5,588 | — | 3,088 | — | 3,088 | |||||||||||||||||||||||
General and administrative | — | — | 40,313 | 40,313 | — | — | 28,078 | 28,078 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 8,273 | 8,273 | — | — | 5,478 | 5,478 | |||||||||||||||||||||||
Interest | — | 3,960 | 14,105 | 18,065 | — | 4,495 | 21,704 | 26,199 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 2,221 | 2,221 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 308 | 308 | — | — | 619 | 619 | |||||||||||||||||||||||
Gain on disposal of assets | — | — | (309 | ) | (309 | ) | — | — | (387 | ) | (387 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | — | (153 | ) | (153 | ) | — | — | 2,024 | 2,024 | |||||||||||||||||||||
Total costs and expenses | 18,448 | 111,528 | 64,758 | 194,734 | 17,651 | 88,100 | 57,516 | 163,267 | |||||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 26,670 | 53,910 | (64,453 | ) | 16,127 | 20,706 | 23,707 | (57,118 | ) | (12,705 | ) | ||||||||||||||||||||
Provision (benefit) for income taxes | — | — | 12,554 | 12,554 | — | — | (957 | ) | (957 | ) | |||||||||||||||||||||
Net income (loss) | $ | 26,670 | $ | 53,910 | $ | (77,007 | ) | $ | 3,573 | $ | 20,706 | $ | 23,707 | $ | (56,161 | ) | $ | (11,748 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Years Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 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 | $ | 131,238 | $ | — | $ | — | $ | 131,238 | $ | 114,937 | $ | — | $ | — | $ | 114,937 | |||||||||||||||
Consolidated resort operations | 35,512 | — | — | 35,512 | 33,756 | — | — | 33,756 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $44,670, $0, $44,670, $0, $25,457, $0 and $25,457, respectively | — | 464,613 | — | 464,613 | — | 293,098 | — | 293,098 | |||||||||||||||||||||||
Interest | — | 55,601 | 1,443 | 57,044 | — | 51,769 | 1,437 | 53,206 | |||||||||||||||||||||||
Other | 8,673 | 32,708 | — | 41,381 | 4,595 | 24,076 | — | 28,671 | |||||||||||||||||||||||
Total revenues | 175,423 | 552,922 | 1,443 | 729,788 | 153,288 | 368,943 | 1,437 | 523,668 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 37,907 | — | — | 37,907 | 35,330 | — | — | 35,330 | |||||||||||||||||||||||
Consolidated resort operations | 34,333 | — | — | 34,333 | 30,311 | — | — | 30,311 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 56,695 | — | 56,695 | — | 32,150 | — | 32,150 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 258,451 | — | 258,451 | — | 178,365 | — | 178,365 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 41,347 | — | 41,347 | — | 36,363 | — | 36,363 | |||||||||||||||||||||||
Loan portfolio | 1,111 | 8,520 | — | 9,631 | 858 | 8,628 | — | 9,486 | |||||||||||||||||||||||
Other operating | — | 12,106 | — | 12,106 | — | 8,507 | — | 8,507 | |||||||||||||||||||||||
General and administrative | — | — | 145,925 | 145,925 | — | — | 99,015 | 99,015 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 28,185 | 28,185 | — | — | 18,857 | 18,857 | |||||||||||||||||||||||
Interest | — | 16,411 | 72,215 | 88,626 | — | 18,735 | 77,422 | 96,157 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 15,604 | 15,604 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 1,587 | 1,587 | — | — | 1,009 | 1,009 | |||||||||||||||||||||||
Gain on disposal of assets | — | — | (982 | ) | (982 | ) | — | — | (605 | ) | (605 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | — | (2,879 | ) | (2,879 | ) | — | — | (20,610 | ) | (20,610 | ) | |||||||||||||||||||
Total costs and expenses | 73,351 | 393,530 | 259,655 | 726,536 | 66,499 | 282,748 | 175,088 | 524,335 | |||||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 102,072 | 159,392 | (258,212 | ) | 3,252 | 86,789 | 86,195 | (173,651 | ) | (667 | ) | ||||||||||||||||||||
Provision (benefit) for income taxes | — | — | 5,777 | 5,777 | — | — | (14,310 | ) | (14,310 | ) | |||||||||||||||||||||
Net income (loss) | $ | 102,072 | $ | 159,392 | $ | (263,989 | ) | $ | (2,525 | ) | $ | 86,789 | $ | 86,195 | $ | (159,341 | ) | $ | 13,643 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||
For the Quarters Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended December 31, 2013 | Quarter Ended December 31, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 33,597 | $ | 6,160 | $ | (4,823 | ) | $ | 34,934 | $ | 29,166 | $ | 3,859 | $ | (3,662 | ) | $ | 29,363 | |||||||||||||
Consolidated resort operations | 8,191 | 856 | — | 9,047 | 6,922 | 1,312 | — | 8,234 | |||||||||||||||||||||||
Vacation Interest sales, net of provision (adjustment) of $14,307, $632, $0, $14,939, $9,807, $(443), $0 and $9,364, respectively | 128,337 | 10,461 | — | 138,798 | 80,714 | 9,620 | — | 90,334 | |||||||||||||||||||||||
Interest | 15,267 | 618 | — | 15,885 | 11,061 | 3,091 | — | 14,152 | |||||||||||||||||||||||
Other | 12,973 | 12,032 | (12,808 | ) | 12,197 | 8,885 | 9,679 | (10,085 | ) | 8,479 | |||||||||||||||||||||
Total revenues | 198,365 | 30,127 | (17,631 | ) | 210,861 | 136,748 | 27,561 | (13,747 | ) | 150,562 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 10,890 | 2,834 | (3,769 | ) | 9,955 | 10,489 | 2,775 | (3,531 | ) | 9,733 | |||||||||||||||||||||
Consolidated resort operations | 7,697 | 467 | — | 8,164 | 6,417 | 1,274 | — | 7,691 | |||||||||||||||||||||||
Vacation Interest cost of sales | 12,300 | (1,056 | ) | — | 11,244 | 14,043 | 932 | — | 14,975 | ||||||||||||||||||||||
Advertising, sales and marketing | 71,971 | 5,852 | (1,040 | ) | 76,783 | 49,833 | 4,906 | (965 | ) | 53,774 | |||||||||||||||||||||
Vacation Interest carrying cost, net | 8,835 | 4,321 | (950 | ) | 12,206 | 7,208 | 3,135 | (654 | ) | 9,689 | |||||||||||||||||||||
Loan portfolio | 2,050 | 464 | (438 | ) | 2,076 | 2,279 | 893 | (866 | ) | 2,306 | |||||||||||||||||||||
Other operating | 6,019 | 3,664 | (4,095 | ) | 5,588 | 3,376 | 1,971 | (2,259 | ) | 3,088 | |||||||||||||||||||||
General and administrative | 37,285 | 3,028 | — | 40,313 | 22,401 | 5,677 | — | 28,078 | |||||||||||||||||||||||
Depreciation and amortization | 4,088 | 4,185 | — | 8,273 | 2,438 | 3,040 | — | 5,478 | |||||||||||||||||||||||
Interest | 13,015 | 5,050 | — | 18,065 | 16,858 | 9,341 | — | 26,199 | |||||||||||||||||||||||
Loss on extinguishment of debt | 2,221 | — | — | 2,221 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 308 | — | — | 308 | 619 | — | — | 619 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (309 | ) | — | — | (309 | ) | (418 | ) | 31 | — | (387 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | (153 | ) | — | (153 | ) | — | 2,024 | — | 2,024 | |||||||||||||||||||||
Total costs and expenses | 176,370 | 28,656 | (10,292 | ) | 194,734 | 135,543 | 35,999 | (8,275 | ) | 163,267 | |||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 21,995 | 1,471 | (7,339 | ) | 16,127 | 1,205 | (8,438 | ) | (5,472 | ) | (12,705 | ) | |||||||||||||||||||
Provision (benefit) for income taxes | 11,718 | 836 | — | 12,554 | (1,615 | ) | 658 | — | (957 | ) | |||||||||||||||||||||
Net income (loss) | $ | 10,277 | $ | 635 | $ | (7,339 | ) | $ | 3,573 | $ | 2,820 | $ | (9,096 | ) | $ | (5,472 | ) | $ | (11,748 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||
For the Years Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 126,768 | $ | 22,206 | $ | (17,736 | ) | $ | 131,238 | $ | 114,189 | $ | 13,032 | $ | (12,284 | ) | $ | 114,937 | |||||||||||||
Consolidated resort operations | 30,476 | 5,036 | — | 35,512 | 28,352 | 5,404 | — | 33,756 | |||||||||||||||||||||||
Vacation Interest sales, net of provision (adjustment) of $43,237, $1,433, $0, $44,670, $27,080, $(1,623), $0 and $25,457, respectively | 429,981 | 34,632 | — | 464,613 | 270,490 | 22,608 | — | 293,098 | |||||||||||||||||||||||
Interest | 50,096 | 6,948 | — | 57,044 | 39,914 | 13,292 | — | 53,206 | |||||||||||||||||||||||
Other | 45,857 | 45,299 | (49,775 | ) | 41,381 | 32,542 | 28,053 | (31,924 | ) | 28,671 | |||||||||||||||||||||
Total revenues | 683,178 | 114,121 | (67,511 | ) | 729,788 | 485,487 | 82,389 | (44,208 | ) | 523,668 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 41,175 | 10,904 | (14,172 | ) | 37,907 | 36,884 | 8,723 | (10,277 | ) | 35,330 | |||||||||||||||||||||
Consolidated resort operations | 29,863 | 4,470 | — | 34,333 | 25,366 | 4,945 | — | 30,311 | |||||||||||||||||||||||
Vacation Interest cost of sales | 55,439 | 1,256 | — | 56,695 | 30,292 | 1,858 | — | 32,150 | |||||||||||||||||||||||
Advertising, sales and marketing | 239,367 | 22,586 | (3,502 | ) | 258,451 | 168,905 | 11,413 | (1,953 | ) | 178,365 | |||||||||||||||||||||
Vacation Interest carrying cost, net | 31,010 | 14,393 | (4,056 | ) | 41,347 | 30,083 | 8,843 | (2,563 | ) | 36,363 | |||||||||||||||||||||
Loan portfolio | 9,486 | 2,660 | (2,515 | ) | 9,631 | 9,239 | 3,036 | (2,789 | ) | 9,486 | |||||||||||||||||||||
Other operating | 14,721 | 11,556 | (14,171 | ) | 12,106 | 10,685 | 5,390 | (7,568 | ) | 8,507 | |||||||||||||||||||||
General and administrative | 131,369 | 14,556 | — | 145,925 | 74,324 | 24,691 | — | 99,015 | |||||||||||||||||||||||
Depreciation and amortization | 13,286 | 14,899 | — | 28,185 | 9,231 | 9,626 | — | 18,857 | |||||||||||||||||||||||
Interest | 60,999 | 27,627 | — | 88,626 | 67,392 | 28,765 | — | 96,157 | |||||||||||||||||||||||
Loss on extinguishment of debt | 10,664 | 4,940 | — | 15,604 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 387 | 1,200 | — | 1,587 | 1,009 | — | — | 1,009 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (983 | ) | 1 | — | (982 | ) | (636 | ) | 31 | — | (605 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | (2,879 | ) | — | (2,879 | ) | — | (20,610 | ) | — | (20,610 | ) | |||||||||||||||||||
Total costs and expenses | 636,783 | 128,169 | (38,416 | ) | 726,536 | 462,774 | 86,711 | (25,150 | ) | 524,335 | |||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 46,395 | (14,048 | ) | (29,095 | ) | 3,252 | 22,713 | (4,322 | ) | (19,058 | ) | (667 | ) | ||||||||||||||||||
Provision (benefit) for income taxes | 4,772 | 1,005 | — | 5,777 | (1,406 | ) | (12,904 | ) | — | (14,310 | ) | ||||||||||||||||||||
Net income (loss) | $ | 41,623 | $ | (15,053 | ) | $ | (29,095 | ) | $ | (2,525 | ) | $ | 24,119 | $ | 8,582 | $ | (19,058 | ) | $ | 13,643 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||||||||||||||
As of December 31, 2013 and December 31, 2012 | |||||||||||||||||||||||||||||||
(In thousands, except share data) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 26,678 | $ | 9,266 | $ | — | $ | 35,944 | $ | 16,963 | $ | 4,098 | $ | — | $ | 21,061 | |||||||||||||||
Cash in escrow and restricted cash | 90,363 | 1,868 | — | 92,231 | 40,785 | 1,526 | — | 42,311 | |||||||||||||||||||||||
Mortgages and contracts receivable, net of allowance of $98,549, $7,041, $0, $105,590, $61,067, $22,717, $0, and $83,784, respectively | 388,538 | 16,915 | 1 | 405,454 | 266,303 | 46,633 | (4 | ) | 312,932 | ||||||||||||||||||||||
Due from related parties, net | 261,422 | 11,463 | (226,623 | ) | 46,262 | 45,428 | 4,510 | (26,943 | ) | 22,995 | |||||||||||||||||||||
Other receivables, net | 50,422 | 4,166 | — | 54,588 | 40,292 | 5,757 | — | 46,049 | |||||||||||||||||||||||
Income tax receivable | 25 | 16,706 | (16,706 | ) | 25 | 927 | — | — | 927 | ||||||||||||||||||||||
Prepaid expenses and other assets, net | 53,388 | 14,460 | 410 | 68,258 | 49,512 | 9,409 | (897 | ) | 58,024 | ||||||||||||||||||||||
Unsold Vacation Interests, net | 276,717 | 72,750 | (51,357 | ) | 298,110 | 263,493 | 74,635 | (22,261 | ) | 315,867 | |||||||||||||||||||||
Property and equipment, net | 40,359 | 20,037 | — | 60,396 | 33,664 | 21,456 | — | 55,120 | |||||||||||||||||||||||
Assets held for sale | 1,207 | 9,455 | — | 10,662 | 5,070 | 154 | — | 5,224 | |||||||||||||||||||||||
Intangible assets, net | 109,183 | 120,082 | — | 229,265 | 30,914 | 81,584 | — | 112,498 | |||||||||||||||||||||||
Total assets | $ | 1,298,302 | $ | 297,168 | $ | (294,275 | ) | $ | 1,301,195 | $ | 793,351 | $ | 249,762 | $ | (50,105 | ) | $ | 993,008 | |||||||||||||
Liabilities and Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||
Accounts payable | $ | 11,798 | $ | 2,831 | $ | — | $ | 14,629 | $ | 13,467 | $ | 2,252 | $ | — | $ | 15,719 | |||||||||||||||
Due to related parties, net | 15,750 | 263,377 | (234,483 | ) | 44,644 | 42,632 | 57,179 | (35,607 | ) | 64,204 | |||||||||||||||||||||
Accrued liabilities | 106,570 | 10,993 | (128 | ) | 117,435 | 91,511 | 16,004 | (1,064 | ) | 106,451 | |||||||||||||||||||||
Income taxes payable | 1,069 | — | — | 1,069 | 701 | — | — | 701 | |||||||||||||||||||||||
Deferred income taxes | 27,715 | 11,395 | (16,706 | ) | 22,404 | — | — | — | — | ||||||||||||||||||||||
Deferred revenues | 103,745 | 7,147 | — | 110,892 | 92,490 | 1,343 | — | 93,833 | |||||||||||||||||||||||
Senior Secured Notes, net of unamortized original issue discount of $6,548, $0, $0, $6,548, $8,509, $0, $0, and $8,509, respectively | 367,892 | — | — | 367,892 | 416,491 | — | — | 416,491 | |||||||||||||||||||||||
Securitization notes and Funding Facilities, net of unamortized original issue discount for $226, $0, $0, $226, $753, $0, $0, $753, respectively | 386,501 | 4,766 | — | 391,267 | 209,450 | 46,852 | — | 256,302 | |||||||||||||||||||||||
Revolving credit facility | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Derivative liabilities | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Notes payable | 3,302 | 19,848 | — | 23,150 | 3,238 | 134,668 | — | 137,906 | |||||||||||||||||||||||
Total liabilities | 1,024,342 | 320,357 | (251,317 | ) | 1,093,382 | 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 | 463,194 | 9,675 | (9,675 | ) | 463,194 | 155,027 | 9,675 | (9,675 | ) | 155,027 | |||||||||||||||||||||
Accumulated deficit | (173,722 | ) | (32,416 | ) | (33,821 | ) | (239,959 | ) | (215,433 | ) | (17,563 | ) | (4,438 | ) | (237,434 | ) | |||||||||||||||
Accumulated other comprehensive (loss) income | (16,267 | ) | (448 | ) | 538 | (16,177 | ) | (16,764 | ) | (648 | ) | 679 | (16,733 | ) | |||||||||||||||||
Total stockholders' equity (deficit) | 273,960 | (23,189 | ) | (42,958 | ) | 207,813 | (76,629 | ) | (8,536 | ) | (13,434 | ) | (98,599 | ) | |||||||||||||||||
Total liabilities and stockholders' equity (deficit) | $ | 1,298,302 | $ | 297,168 | $ | (294,275 | ) | $ | 1,301,195 | $ | 793,351 | $ | 249,762 | $ | (50,105 | ) | $ | 993,008 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||
For the Quarters Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended December 31, 2013 | Quarter Ended December 31, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 10,277 | $ | 635 | $ | (7,339 | ) | $ | 3,573 | $ | 2,820 | $ | (9,096 | ) | $ | (5,472 | ) | $ | (11,748 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||||||||||||||||
Provision (benefit) for uncollectible Vacation Interest sales revenue | 14,307 | 632 | — | 14,939 | 9,807 | (443 | ) | — | 9,364 | ||||||||||||||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,433 | 39 | — | 1,472 | 1,463 | 88 | — | 1,551 | |||||||||||||||||||||||
Amortization of capitalized loan origination costs and net portfolio discounts (premiums) | 1,576 | 71 | — | 1,647 | 835 | (69 | ) | — | 766 | ||||||||||||||||||||||
Depreciation and amortization | 4,088 | 4,185 | — | 8,273 | 2,438 | 3,040 | — | 5,478 | |||||||||||||||||||||||
Stock-based compensation | 2,038 | — | — | 2,038 | 3,321 | — | — | 3,321 | |||||||||||||||||||||||
Loss on extinguishment of debt | 2,221 | — | — | 2,221 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 308 | — | — | 308 | 619 | — | — | 619 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (309 | ) | — | — | (309 | ) | (418 | ) | 31 | — | (387 | ) | |||||||||||||||||||
(Gain) adjustment on bargain purchase from business combinations | — | (153 | ) | — | (153 | ) | — | 2,024 | — | 2,024 | |||||||||||||||||||||
Deferred income taxes | 10,923 | 11,280 | (10,899 | ) | 11,304 | — | 602 | — | 602 | ||||||||||||||||||||||
(Gain) loss on foreign currency exchange | (14 | ) | 44 | — | 30 | 142 | 69 | — | 211 | ||||||||||||||||||||||
(Gain) on mortgage repurchase | — | (40 | ) | — | (40 | ) | (1 | ) | — | — | (1 | ) | |||||||||||||||||||
Unrealized gain on derivative instruments | (657 | ) | — | — | (657 | ) | — | — | — | — | |||||||||||||||||||||
Unrealized loss on post-retirement benefit plan | 113 | — | — | 113 | — | — | — | — | |||||||||||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||||||||||||||||||
Mortgages and contracts receivable | (45,106 | ) | 742 | (1 | ) | (44,365 | ) | (25,834 | ) | 5,145 | — | (20,689 | ) | ||||||||||||||||||
Due from related parties, net | (11,960 | ) | (9,420 | ) | 19,859 | (1,521 | ) | (26,323 | ) | (495 | ) | 10,388 | (16,430 | ) | |||||||||||||||||
Other receivables, net | (22,865 | ) | 1,027 | — | (21,838 | ) | (22,230 | ) | 1,094 | — | (21,136 | ) | |||||||||||||||||||
Prepaid expenses and other assets, net | 19,512 | 3,448 | (1,168 | ) | 21,792 | 13,250 | 1,192 | (65 | ) | 14,377 | |||||||||||||||||||||
Unsold Vacation Interests, net | 817 | (3,431 | ) | 7,339 | 4,725 | 2,318 | 1,611 | 6,320 | 10,249 | ||||||||||||||||||||||
Accounts payable | (449 | ) | (3,565 | ) | — | (4,014 | ) | 371 | (3,185 | ) | — | (2,814 | ) | ||||||||||||||||||
Due to related parties, net | (29,027 | ) | 10,126 | (19,706 | ) | (38,607 | ) | (13,363 | ) | (1,176 | ) | (11,236 | ) | (25,775 | ) | ||||||||||||||||
Accrued liabilities | 20,091 | (3,395 | ) | 1,016 | 17,712 | 20,706 | (1,026 | ) | 65 | 19,745 | |||||||||||||||||||||
Income taxes payable | (34 | ) | (10,899 | ) | 10,899 | (34 | ) | (1,186 | ) | — | — | (1,186 | ) | ||||||||||||||||||
Deferred revenues | 20,954 | 804 | — | 21,758 | 31,433 | (313 | ) | — | 31,120 | ||||||||||||||||||||||
Net cash (used in) provided by operating activities | (1,763 | ) | 2,130 | — | 367 | 168 | (907 | ) | — | (739 | ) | ||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Property and equipment capital expenditures | (2,471 | ) | 59 | — | (2,412 | ) | (2,989 | ) | (73 | ) | — | (3,062 | ) | ||||||||||||||||||
Cash acquired in connection with the Island One Acquisition | (156 | ) | — | — | (156 | ) | — | — | — | — | |||||||||||||||||||||
Purchase of assets in connection with the Pacific Monarch and Post Net of : $0, $0, $0, $0, $0, $0, $0, and $0, respectively cash acquired | — | 341 | — | 341 | — | — | — | — | |||||||||||||||||||||||
Purchase of assets in connection with the Aegean Blue Acquisition, net of cash acquired of $0, $0, $0, $0, $0, $2,072, $0, and $2,072, respectively | — | — | — | — | — | (4,471 | ) | — | (4,471 | ) | |||||||||||||||||||||
Proceeds from sale of assets | 1,001 | — | — | 1,001 | 606 | — | — | 606 | |||||||||||||||||||||||
Net cash (used in) provided by investing activities | $ | (1,626 | ) | $ | 400 | $ | — | $ | (1,226 | ) | $ | (2,383 | ) | $ | (4,544 | ) | $ | — | $ | (6,927 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Quarters Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended December 31, 2013 | Quarter Ended December 31, 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 | $ | (31,904 | ) | $ | 849 | $ | — | $ | (31,055 | ) | $ | (2,854 | ) | $ | 1,226 | $ | — | $ | (1,628 | ) | |||||||||||
Proceeds from issuance of securitization notes and Funding Facilities | 286,804 | — | — | 286,804 | 35,357 | 1,586 | — | 36,943 | |||||||||||||||||||||||
Proceeds from issuance of notes payable | — | 1,475 | — | 1,475 | — | 15,403 | — | 15,403 | |||||||||||||||||||||||
Payments on revolving credit facility | (15,000 | ) | — | — | (15,000 | ) | — | — | — | — | |||||||||||||||||||||
Payments on securitization notes and Funding Facilities | (224,956 | ) | (932 | ) | — | (225,888 | ) | (28,433 | ) | (3,973 | ) | — | (32,406 | ) | |||||||||||||||||
Payments on senior secured notes | — | — | — | — | — | — | — | — | |||||||||||||||||||||||
Payments on notes payable | (3,704 | ) | (1,686 | ) | — | (5,390 | ) | (2,837 | ) | (5,085 | ) | — | (7,922 | ) | |||||||||||||||||
Payments of debt issuance costs | (3,833 | ) | — | — | (3,833 | ) | (89 | ) | 100 | — | 11 | ||||||||||||||||||||
Proceeds from issuance of Common Stock, net of related costs | (373 | ) | — | — | (373 | ) | — | — | — | — | |||||||||||||||||||||
Payments of costs related to issuance of common and preferred units | — | — | — | — | 35 | — | — | 35 | |||||||||||||||||||||||
Net cash provided by (used in) financing activities | 7,034 | (294 | ) | — | 6,740 | 1,179 | 9,257 | — | 10,436 | ||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 3,645 | 2,236 | — | 5,881 | (1,036 | ) | 3,806 | — | 2,770 | ||||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 165 | 22 | — | 187 | 201 | (157 | ) | — | 44 | ||||||||||||||||||||||
Cash and cash equivalents, beginning of period | 22,868 | 7,008 | — | 29,876 | 17,798 | 449 | — | 18,247 | |||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 26,678 | $ | 9,266 | $ | — | $ | 35,944 | $ | 16,963 | $ | 4,098 | $ | — | $ | 21,061 | |||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||||||||||||||||||
Cash paid for interest | $ | 3,935 | $ | 1,191 | $ | — | $ | 5,126 | $ | 3,209 | $ | 5,059 | $ | — | $ | 8,268 | |||||||||||||||
Cash paid for taxes, net of cash tax refunds (cash tax refunds, net of cash paid for taxes) | $ | 1,242 | $ | 87 | $ | — | $ | 1,329 | $ | (432 | ) | $ | 56 | $ | — | $ | (376 | ) | |||||||||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | ||||||||||||||||||||||||||||||||
For the Quarters Ended December 31, 2013 and 2012 | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Quarter Ended December 31, 2013 | Quarter Ended December 31, 2012 | |||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | |||||||||||||||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||
Insurance premiums financed through issuance of notes payable | $ | 3,658 | $ | — | $ | — | $ | 3,658 | $ | 2,931 | $ | — | $ | — | $ | 2,931 | ||||||||||||||||
Assets held for sale reclassified to unsold vacation interests | $ | 3,995 | $ | — | $ | — | $ | 3,995 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Unsold Vacation Interests, net reclassified to assets held for sale | $ | — | $ | 3,600 | $ | — | $ | 3,600 | $ | 1,784 | $ | — | $ | — | $ | 1,784 | ||||||||||||||||
Other receivables reclassified to assets held for sale | $ | — | $ | — | $ | — | $ | — | $ | 54 | $ | — | $ | — | $ | 54 | ||||||||||||||||
Management contracts reclassified to assets held for sale | $ | — | $ | — | $ | — | $ | — | $ | 205 | $ | — | $ | — | $ | 205 | ||||||||||||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||
For the Years Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 41,623 | $ | (15,053 | ) | $ | (29,095 | ) | $ | (2,525 | ) | $ | 24,119 | $ | 8,582 | $ | (19,058 | ) | $ | 13,643 | |||||||||||
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | |||||||||||||||||||||||||||||||
Provision (benefit) for uncollectible Vacation Interest sales revenue | 43,237 | 1,433 | — | 44,670 | 27,080 | (1,623 | ) | — | 25,457 | ||||||||||||||||||||||
Amortization of capitalized financing costs and original issue discounts | 6,293 | 786 | — | 7,079 | 5,626 | 667 | — | 6,293 | |||||||||||||||||||||||
Amortization of capitalized loan origination costs and net portfolio discounts (premiums) | 5,391 | 564 | — | 5,955 | 3,117 | (775 | ) | — | 2,342 | ||||||||||||||||||||||
Depreciation and amortization | 13,286 | 14,899 | — | 28,185 | 9,231 | 9,626 | — | 18,857 | |||||||||||||||||||||||
Stock-based compensation | 40,533 | — | — | 40,533 | 3,321 | — | — | 3,321 | |||||||||||||||||||||||
Loss on extinguishment of debt | 10,664 | 4,940 | — | 15,604 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 387 | 1,200 | — | 1,587 | 1,009 | — | — | 1,009 | |||||||||||||||||||||||
(Gain) loss on disposal of assets | (983 | ) | 1 | — | (982 | ) | (636 | ) | 31 | — | (605 | ) | |||||||||||||||||||
Gain on bargain purchase from business combinations | — | (2,879 | ) | — | (2,879 | ) | — | (20,610 | ) | — | (20,610 | ) | |||||||||||||||||||
Deferred income taxes | 10,312 | 9,658 | (16,706 | ) | 3,264 | — | (13,010 | ) | — | (13,010 | ) | ||||||||||||||||||||
Loss on foreign currency exchange | 124 | 121 | — | 245 | 44 | 69 | — | 113 | |||||||||||||||||||||||
Loss (gain) on mortgage repurchase | 7 | (118 | ) | — | (111 | ) | (27 | ) | — | — | (27 | ) | |||||||||||||||||||
Unrealized loss on post-retirement benefit plan | 887 | — | — | 887 | — | — | — | — | |||||||||||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||||||||||||||||||
Mortgages and contracts receivable | (156,681 | ) | 27,852 | (5 | ) | (128,834 | ) | (68,662 | ) | 16,948 | (2 | ) | (51,716 | ) | |||||||||||||||||
Due from related parties, net | (203,169 | ) | (7,595 | ) | 199,680 | (11,084 | ) | (17,098 | ) | (147 | ) | 19,123 | 1,878 | ||||||||||||||||||
Other receivables, net | (8,881 | ) | 2,973 | — | (5,908 | ) | (7,447 | ) | (328 | ) | 19 | (7,756 | ) | ||||||||||||||||||
Prepaid expenses and other assets, net | 3,064 | (8,525 | ) | (1,060 | ) | (6,521 | ) | (7,039 | ) | 2,830 | (86 | ) | (4,295 | ) | |||||||||||||||||
Unsold Vacation Interests, net | (8,412 | ) | (8,589 | ) | 29,096 | 12,095 | (36,948 | ) | (6,134 | ) | 19,057 | (24,025 | ) | ||||||||||||||||||
Accounts payable | (6,488 | ) | 57 | — | (6,431 | ) | 1,641 | (2,143 | ) | — | (502 | ) | |||||||||||||||||||
Due to related parties, net | (27,848 | ) | 206,754 | (199,680 | ) | (20,774 | ) | 27,716 | 14,437 | (19,132 | ) | 23,021 | |||||||||||||||||||
Accrued liabilities | 5,828 | (2,260 | ) | 1,064 | 4,632 | 22,221 | 9,886 | 79 | 32,186 | ||||||||||||||||||||||
Income taxes payable | 1,260 | (16,706 | ) | 16,706 | 1,260 | (3,232 | ) | — | — | (3,232 | ) | ||||||||||||||||||||
Deferred revenues | 8,849 | 5,794 | — | 14,643 | 21,294 | 964 | — | 22,258 | |||||||||||||||||||||||
Net cash (used in) provided by operating activities | (220,717 | ) | 215,307 | — | (5,410 | ) | 5,330 | 19,270 | — | 24,600 | |||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Property and equipment capital expenditures | (14,654 | ) | (550 | ) | — | (15,204 | ) | (13,994 | ) | (341 | ) | — | (14,335 | ) | |||||||||||||||||
Cash acquired in connection with the Island One Acquisition | 569 | — | — | 569 | — | — | — | — | |||||||||||||||||||||||
Purchase of assets in connection with the Pacific Monarch and Post Net of : $0, $0, $0, $0, $0, $0, $0, and $0, respectively cash acquired | — | (47,417 | ) | — | (47,417 | ) | — | (51,635 | ) | — | (51,635 | ) | |||||||||||||||||||
Purchase of assets in connection with the Aegean Blue Acquisition, net of cash acquired of $0, $0, $0, $0, $0, $2,072, $0, and $2,072, respectively | — | — | — | — | — | (4,471 | ) | — | (4,471 | ) | |||||||||||||||||||||
Proceeds from sale of assets | 4,127 | — | — | 4,127 | 1,103 | — | — | 1,103 | |||||||||||||||||||||||
Net cash used in investing activities | $ | (9,958 | ) | $ | (47,967 | ) | $ | — | $ | (57,925 | ) | $ | (12,891 | ) | $ | (56,447 | ) | $ | — | $ | (69,338 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Years Ended December 31, 2013 and 2012 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 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 | $ | (48,400 | ) | $ | (325 | ) | $ | — | $ | (48,725 | ) | $ | (7,375 | ) | $ | 994 | $ | — | $ | (6,381 | ) | ||||||||||
Proceeds from issuance of revolving credit facility | 15,000 | — | — | 15,000 | — | — | — | — | |||||||||||||||||||||||
Proceeds from issuance of securitization notes and Funding Facilities | 551,964 | 713 | — | 552,677 | 116,354 | 3,453 | — | 119,807 | |||||||||||||||||||||||
Proceeds from issuance of notes payable | — | 5,357 | — | 5,357 | 1,124 | 79,541 | — | 80,665 | |||||||||||||||||||||||
Payments on revolving credit facility | (15,000 | ) | — | — | (15,000 | ) | — | — | — | — | |||||||||||||||||||||
Payments on securitization notes and Funding Facilities | (384,673 | ) | (42,799 | ) | — | (427,472 | ) | (95,370 | ) | (19,331 | ) | — | (114,701 | ) | |||||||||||||||||
Payments on senior secured notes | (50,560 | ) | — | — | (50,560 | ) | — | — | — | — | |||||||||||||||||||||
Payments on notes payable | (12,113 | ) | (125,109 | ) | — | (137,222 | ) | (10,263 | ) | (21,004 | ) | — | (31,267 | ) | |||||||||||||||||
Payments of debt issuance costs | (9,980 | ) | (16 | ) | — | (9,996 | ) | (113 | ) | (2,470 | ) | — | (2,583 | ) | |||||||||||||||||
Proceeds from issuance of Common Stock, net of related costs | 204,332 | — | — | 204,332 | — | — | — | — | |||||||||||||||||||||||
Repurchase of remaining outstanding warrants | (10,346 | ) | — | — | (10,346 | ) | — | — | — | — | |||||||||||||||||||||
Net cash provided by (used in) financing activities | 240,224 | (162,179 | ) | — | 78,045 | 4,357 | 41,183 | — | 45,540 | ||||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 9,549 | 5,161 | — | 14,710 | (3,204 | ) | 4,006 | — | 802 | ||||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 166 | 7 | — | 173 | 519 | (157 | ) | — | 362 | ||||||||||||||||||||||
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 | $ | 26,678 | $ | 9,266 | $ | — | $ | 35,944 | $ | 16,963 | $ | 4,098 | $ | — | $ | 21,061 | |||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||||||||||||||||||
Cash paid for interest | $ | 59,440 | $ | 20,113 | $ | — | $ | 79,553 | $ | 64,276 | $ | 16,091 | $ | — | $ | 80,367 | |||||||||||||||
Cash paid for taxes, net of cash tax refunds | $ | 1,104 | $ | 237 | $ | — | $ | 1,341 | $ | 1,960 | $ | — | $ | — | $ | 1,960 | |||||||||||||||
Purchase of assets from Island One, PMR Service Cos (2013) and PMR (2012): | |||||||||||||||||||||||||||||||
Fair value of assets acquired based on valuation reports | $ | 81,281 | $ | 52,554 | $ | — | $ | 133,835 | $ | — | $ | 103,780 | $ | — | $ | 103,780 | |||||||||||||||
Gain on bargain purchase recognized | — | (2,879 | ) | — | (2,879 | ) | — | (20,741 | ) | — | (20,741 | ) | |||||||||||||||||||
Goodwill acquired | 30,632 | — | — | 30,632 | — | — | — | — | |||||||||||||||||||||||
Cash paid | 569 | (47,417 | ) | — | (46,848 | ) | — | (56,106 | ) | — | (56,106 | ) | |||||||||||||||||||
DRII common stock issued | (73,307 | ) | — | — | (73,307 | ) | — | — | — | — | |||||||||||||||||||||
Deferred tax liability | (17,403 | ) | (1,737 | ) | — | (19,140 | ) | — | (13,010 | ) | — | (13,010 | ) | ||||||||||||||||||
Liabilities assumed | $ | 21,772 | $ | 521 | $ | — | $ | 22,293 | $ | — | $ | 13,923 | $ | — | $ | 13,923 | |||||||||||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||
CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | ||||||||||||||||||||||||||||||||
For the Years Ended December 31, 2013 and 2012 | ||||||||||||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | |||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | |||||||||||||||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||||||||||||||||||
Insurance premiums financed through issuance of notes payable | $ | 11,480 | $ | — | $ | — | $ | 11,480 | $ | 10,504 | $ | — | $ | — | $ | 10,504 | ||||||||||||||||
Unsold Vacation Interests, net reclassified to assets held for sale | $ | 469 | $ | 9,301 | $ | — | $ | 9,770 | $ | 431 | $ | — | $ | — | $ | 431 | ||||||||||||||||
Other receivables reclassified to assets held for sale | $ | — | $ | — | $ | — | $ | — | $ | 54 | $ | — | $ | — | $ | 54 | ||||||||||||||||
Management contracts reclassified to assets held for sale | $ | — | $ | — | $ | — | $ | — | $ | 13 | $ | — | $ | — | $ | 13 | ||||||||||||||||