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 May 1, 2014 (furnished herewith). | |
Diamond Resorts International, Inc. | |
May 1, 2014 | By: /s/ David F. Palmer Name: David F. Palmer |
Title: President and Chief Executive Officer |
• | Total revenue increased $27.7 million, or 18.1%, to $181.2 million for the first quarter of 2014 from $153.5 million for the first quarter of 2013. |
• | Hospitality and Management Services revenue grew by $5.4 million, or 12.4%, for the first quarter of 2014 compared to the first quarter of 2013. 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 club operations. |
• | Vacation Interest Sales, net grew by $14.2 million, or 15.5%, for the first quarter of 2014 compared to the first quarter of 2013. This growth was driven by a: |
• | 4.6% increase in tours to 46,552 from 44,499 |
• | 6.3% increase in transactions to 6,556 from 6,169 (reflecting closing percentages of 14.1% for 2014 and 13.9% for 2013) |
• | 17.7% increase in average transaction price to $18,321 from $15,565 |
• | Advertising, sales and marketing for the first quarter of 2014 included a non-cash charge of $0.9 million related to stock-based compensation. Excluding this charge, advertising, sales and marketing as a percentage of Vacation Interest sales revenue decreased 0.2 percentage points to 51.0% in the first quarter of 2014, from 51.2% in Q1 2013. Including this non-cash charge, advertising, sales and marketing as a percentage of Vacation Interest sales revenue was 51.8%. |
• | Pre-tax income for the first quarter of 2014 included non-cash charges of $4.7 million related to stock-based compensation. Excluding these charges, pre-tax income in 2014 would have been $30.8 million, an increase of $28.1 million from pre-tax income of $2.7 million in the first quarter of 2013. Including these items, pre-tax income in 2014 was $26.1 million. |
• | Net cash provided by operating activities in the first quarter of 2014 was $33.7 million and was the result of net income of $14.0 million and non-cash revenues and expenses totaling $39.1 million, partially offset by other changes in operating assets and liabilities that resulted in a net credit of $19.5 million. Net cash provided by operating activities in the first quarter of 2013 was $10.3 million and was the result of net income of $2.3 million and non-cash revenues and expenses totaling $13.9 million, partially offset by other changes in operating assets and liabilities that resulted in a net credit of $5.9 million. |
• | Adjusted EBITDA for the Company and its Restricted Subsidiaries increased $19.5 million, or 40.9%, to $67.1 million for the first quarter of 2014 from $47.6 million for the first quarter of 2013. Adjusted EBITDA for the Company on a consolidated basis increased $18.1 million, or 37.0%, to $66.9 million for the first quarter of 2014 from $48.8 million for the first quarter of 2013. |
Updated Guidance | Year Ending December 31, 2014 | |||||||
($ in thousands) | Low | High | ||||||
Pre-tax income | $ | 44,700 | $ | 77,200 | ||||
Corporate interest expense(a) | $ | 43,300 | $ | 41,300 | ||||
Loss on extinguishment of debt(b) | $ | 47,000 | $ | 47,000 | ||||
Vacation interest cost of sales(c) | $ | 76,000 | $ | 66,000 | ||||
Depreciation and amortization | $ | 32,000 | $ | 30,000 | ||||
Other non-cash items(d) | $ | 22,000 | $ | 18,500 |
Original Guidance | Year Ending December 31, 2014 | |||||||
($ in thousands) | Low | High | ||||||
Pre-tax income | $ | 65,000 | $ | 92,500 | ||||
Corporate interest expense | $ | 56,500 | $ | 54,500 | ||||
Loss on extinguishment of debt | $ | — | $ | — | ||||
Vacation interest cost of sales(c) | $ | 79,500 | $ | 69,500 | ||||
Depreciation and amortization | $ | 32,000 | $ | 30,000 | ||||
Other non-cash items(d) | $ | 22,000 | $ | 18,500 |
(a) | Reflects an annualized cash interest savings of $22 million based on the terms of our new $445 million seven-year term loan and $25 million revolving credit facility (the “New Bank Loan”) and the redemption of the $374 million principal amount outstanding of our senior secured notes and repayment of certain other debt assuming LIBOR at or below 1%. |
(b) | Reflects non-cash charges of approximately $16.5 million for the write-off of unamortized debt issuance costs and original issue discount relating to the refinancing of the senior secured notes, revolving line of credit, and inventory loans and approximately $30.5 million for the bond premium related to the redemption of the senior secured notes which is financed with a portion of the proceeds from the new term loan. |
(c) | 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 Company’s Annual Report on Form 10-K for the year ended December 31, 2013). 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. |
(d) | Other non-cash items include: stock based compensation, amortization of loan origination costs, and amortization of net portfolio discounts and premiums. |
(e) | 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 March 31, | |||||||
2014 | 2013 | ||||||
($ in thousands) | |||||||
Net cash provided by operating activities | $ | 33,668 | $ | 10,338 | |||
Provision for income taxes | 12,047 | 438 | |||||
Provision for uncollectible Vacation Interest sales revenue(a) | (11,433 | ) | (6,672 | ) | |||
Amortization of capitalized financing costs and original issue discounts(a) | (1,437 | ) | (1,874 | ) | |||
Deferred income taxes(b) | (11,260 | ) | — | ||||
Loss on foreign currency(c) | (88 | ) | (61 | ) | |||
Gain on mortgage purchase(a) | 49 | — | |||||
Cash to be received on insurance settlement | — | 2,203 | |||||
Unrealized loss on derivative instruments(d) | (199 | ) | — | ||||
Unrealized loss on post-retirement benefit plan(e) | (43 | ) | — | ||||
Corporate interest expense(f) | 13,246 | 20,764 | |||||
Change in operating assets and liabilities excluding acquisitions(g) | 19,468 | 5,852 | |||||
Vacation Interest cost of sales(h) | 12,902 | 17,846 | |||||
Adjusted EBITDA - Consolidated | 66,920 | 48,834 | |||||
Less: Adjusted EBITDA - Unrestricted Subsidiaries(i) | 7,433 | 7,974 | |||||
Plus: Intercompany elimination(j) | 7,611 | 6,751 | |||||
Adjusted EBITDA - Diamond Resorts International, Inc. and Restricted Subsidiaries | $ | 67,098 | $ | 47,611 |
(a) | Represents non-cash charge or gain. |
(b) | Represents the deferred income tax liability as a result of the provision for income taxes recorded for the three months ended March 31, 2014. |
(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 loss 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 March 31, | |||||||
2014 | 2013 | ||||||
($ in thousands) | |||||||
Net income | $ | 14,010 | $ | 2,273 | |||
Plus: Corporate interest expense(a) | 13,246 | 20,764 | |||||
Provision for income taxes | 12,047 | 438 | |||||
Depreciation and amortization(b) | 8,061 | 6,254 | |||||
Vacation Interest cost of sales(c) | 12,902 | 17,846 | |||||
Impairments and other non-cash write-offs(b) | 7 | 79 | |||||
Gain on disposal of assets(b) | (4 | ) | (50 | ) | |||
Amortization of loan origination costs(b) | 2,064 | 1,182 | |||||
Amortization of net portfolio (discount) premiums(b) | (109 | ) | 48 | ||||
Stock-based compensation(d) | 4,696 | — | |||||
Adjusted EBITDA - Consolidated | 66,920 | 48,834 | |||||
Less: Adjusted EBITDA - Unrestricted Subsidiaries(e) | 7,433 | 7,974 | |||||
Plus: Adjusted EBITDA - Intercompany elimination(f) | 7,611 | 6,751 | |||||
Adjusted EBITDA - Diamond Resorts International, Inc. and Restricted Subsidiaries | $ | 67,098 | $ | 47,611 |
(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 non-cash charge related to stock-based compensation due to stock options issued in connection with and since the consummation of the IPO. |
(e) | Represents the Adjusted EBITDA of unrestricted subsidiaries as defined in, and calculated in accordance with, the Notes Indenture. |
(f) | 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, |
Quarter Ended March 31, | |||||||
2014 | 2013 | ||||||
($ in thousands) | |||||||
Advertising, sales and marketing expense | $ | 60,775 | $ | 50,359 | |||
Stock-based compensation | (927 | ) | — | ||||
Advertising, sales and marketing expense after excluding stock-based compensation | $ | 59,848 | $ | 50,359 | |||
Quarter Ended March 31, | |||||||
2014 | 2013 | ||||||
($ in thousands) | |||||||
General and administrative expense | $ | 24,192 | $ | 22,800 | |||
Stock-based compensation | (2,827 | ) | — | ||||
General and administrative expense after excluding stock-based compensation | $ | 21,365 | $ | 22,800 | |||
Quarter Ended March 31, | |||||||
2014 | 2013 | ||||||
($ in thousands) | |||||||
Income before provision for income taxes | $ | 26,057 | $ | 2,711 | |||
Stock-based compensation | 4,696 | — | |||||
Income before provision for income taxes after excluding stock-based compensation | $ | 30,753 | $ | 2,711 | |||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Quarters Ended March 31, 2014 and 2013 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended March 31, 2014 | Quarter Ended March 31, 2013 | ||||||||||||||||||||||||||||||
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 | $ | 38,224 | $ | — | $ | — | $ | 38,224 | $ | 31,587 | $ | — | $ | — | $ | 31,587 | |||||||||||||||
Consolidated resort operations | 8,723 | — | — | 8,723 | 8,620 | — | — | 8,620 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $11,433, $0, $11,433, $0, $6,672, $0 and $6,672, respectively | — | 105,897 | — | 105,897 | — | 91,668 | — | 91,668 | |||||||||||||||||||||||
Interest | — | 15,257 | 417 | 15,674 | — | 12,858 | 397 | 13,255 | |||||||||||||||||||||||
Other | 2,161 | 10,546 | — | 12,707 | 3,490 | 4,832 | — | 8,322 | |||||||||||||||||||||||
Total revenues | 49,108 | 131,700 | 417 | 181,225 | 43,697 | 109,358 | 397 | 153,452 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 8,947 | — | — | 8,947 | 9,779 | — | — | 9,779 | |||||||||||||||||||||||
Consolidated resort operations | 7,771 | — | — | 7,771 | 7,722 | — | — | 7,722 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 12,902 | — | 12,902 | — | 17,846 | — | 17,846 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 60,775 | — | 60,775 | — | 50,359 | — | 50,359 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 7,875 | — | 7,875 | — | 8,237 | — | 8,237 | |||||||||||||||||||||||
Loan portfolio | 242 | 2,248 | — | 2,490 | 246 | 2,259 | — | 2,505 | |||||||||||||||||||||||
Other operating | — | 5,537 | — | 5,537 | — | 368 | — | 368 | |||||||||||||||||||||||
General and administrative | — | — | 24,192 | 24,192 | — | — | 22,800 | 22,800 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 8,061 | 8,061 | — | — | 6,254 | 6,254 | |||||||||||||||||||||||
Interest | — | 3,369 | 13,246 | 16,615 | — | 4,078 | 20,764 | 24,842 | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 7 | 7 | — | — | 79 | 79 | |||||||||||||||||||||||
Gain on disposal of assets | — | — | (4 | ) | (4 | ) | — | — | (50 | ) | (50 | ) | |||||||||||||||||||
Total costs and expenses | 16,960 | 92,706 | 45,502 | 155,168 | 17,747 | 83,147 | 49,847 | 150,741 | |||||||||||||||||||||||
Income (loss) before provision for income taxes | 32,148 | 38,994 | (45,085 | ) | 26,057 | 25,950 | 26,211 | (49,450 | ) | 2,711 | |||||||||||||||||||||
Provision for income taxes | — | — | 12,047 | 12,047 | — | — | 438 | 438 | |||||||||||||||||||||||
Net income (loss) | $ | 32,148 | $ | 38,994 | $ | (57,132 | ) | $ | 14,010 | $ | 25,950 | $ | 26,211 | $ | (49,888 | ) | $ | 2,273 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||||
For the Quarters Ended March 31, 2014 and 2013 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended March 31, 2014 | Quarter Ended March 31, 2013 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||
Management and member services | $ | 36,601 | $ | 6,048 | $ | (4,425 | ) | $ | 38,224 | $ | 31,098 | $ | 5,093 | $ | (4,604 | ) | $ | 31,587 | |||||||||||||
Consolidated resort operations | 7,866 | 857 | — | 8,723 | 6,863 | 1,757 | — | 8,620 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $10,780, $653, $0, $11,433, $6,402, $270, $0 and $6,672, respectively | 99,833 | 6,064 | — | 105,897 | 85,947 | 5,721 | — | 91,668 | |||||||||||||||||||||||
Interest | 14,880 | 794 | — | 15,674 | 10,717 | 2,538 | — | 13,255 | |||||||||||||||||||||||
Other | 13,131 | 12,554 | (12,978 | ) | 12,707 | 9,667 | 9,806 | (11,151 | ) | 8,322 | |||||||||||||||||||||
Total revenues | 172,311 | 26,317 | (17,403 | ) | 181,225 | 144,292 | 24,915 | (15,755 | ) | 153,452 | |||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 9,750 | 2,385 | (3,188 | ) | 8,947 | 10,980 | 2,492 | (3,693 | ) | 9,779 | |||||||||||||||||||||
Consolidated resort operations | 7,228 | 543 | — | 7,771 | 6,376 | 1,346 | — | 7,722 | |||||||||||||||||||||||
Vacation Interest cost of sales | 10,748 | 2,154 | — | 12,902 | 17,790 | 56 | — | 17,846 | |||||||||||||||||||||||
Advertising, sales and marketing | 58,505 | 3,674 | (1,404 | ) | 60,775 | 48,114 | 3,139 | (894 | ) | 50,359 | |||||||||||||||||||||
Vacation Interest carrying cost, net | 3,976 | 4,288 | (389 | ) | 7,875 | 7,171 | 2,122 | (1,056 | ) | 8,237 | |||||||||||||||||||||
Loan portfolio | 2,472 | 415 | (397 | ) | 2,490 | 2,475 | 792 | (762 | ) | 2,505 | |||||||||||||||||||||
Other operating | 6,181 | 3,738 | (4,382 | ) | 5,537 | 1,090 | 1,877 | (2,599 | ) | 368 | |||||||||||||||||||||
General and administrative | 20,571 | 3,653 | (32 | ) | 24,192 | 18,701 | 4,099 | — | 22,800 | ||||||||||||||||||||||
Depreciation and amortization | 4,159 | 3,902 | — | 8,061 | 2,586 | 3,668 | — | 6,254 | |||||||||||||||||||||||
Interest | 11,889 | 4,726 | — | 16,615 | 16,599 | 8,243 | — | 24,842 | |||||||||||||||||||||||
Impairments and other write-offs | 7 | — | — | 7 | 79 | — | — | 79 | |||||||||||||||||||||||
Gain on disposal of assets | (1 | ) | (3 | ) | — | (4 | ) | (50 | ) | — | — | (50 | ) | ||||||||||||||||||
Total costs and expenses | 135,485 | 29,475 | (9,792 | ) | 155,168 | 131,911 | 27,834 | (9,004 | ) | 150,741 | |||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 36,826 | (3,158 | ) | (7,611 | ) | 26,057 | 12,381 | (2,919 | ) | (6,751 | ) | 2,711 | |||||||||||||||||||
Provision (benefit) for income taxes | 12,686 | (639 | ) | — | 12,047 | 396 | 42 | — | 438 | ||||||||||||||||||||||
Net income (loss) | $ | 24,140 | $ | (2,519 | ) | $ | (7,611 | ) | $ | 14,010 | $ | 11,985 | $ | (2,961 | ) | $ | (6,751 | ) | $ | 2,273 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING BALANCE SHEETS | |||||||||||||||||||||||||||||||
As of March 31, 2014 and December 31, 2013 | |||||||||||||||||||||||||||||||
(In thousands, except share data) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
March 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 69,592 | $ | 6,184 | $ | — | $ | 75,776 | $ | 26,680 | $ | 9,265 | $ | — | $ | 35,945 | |||||||||||||||
Cash in escrow and restricted cash | 76,185 | 1,437 | — | 77,622 | 90,363 | 1,868 | — | 92,231 | |||||||||||||||||||||||
Mortgages and contracts receivable, net of allowance of $101,715, $7,047, $0, $108,762, $98,549, $7,041, $0, and $105,590, respectively | 394,724 | 16,525 | 1 | 411,250 | 388,538 | 16,915 | 1 | 405,454 | |||||||||||||||||||||||
Due from related parties, net | 244,899 | 12,044 | (213,039 | ) | 43,904 | 261,422 | 11,463 | (226,623 | ) | 46,262 | |||||||||||||||||||||
Other receivables, net | 38,199 | 2,929 | — | 41,128 | 50,422 | 4,166 | — | 54,588 | |||||||||||||||||||||||
Income tax receivable | 25 | 17,602 | (17,602 | ) | 25 | 25 | 16,706 | (16,706 | ) | 25 | |||||||||||||||||||||
Prepaid expenses and other assets, net | 116,012 | 31,534 | 319 | 147,865 | 53,388 | 14,460 | 410 | 68,258 | |||||||||||||||||||||||
Unsold Vacation Interests, net | 283,844 | 68,808 | (58,999 | ) | 293,653 | 276,717 | 72,750 | (51,357 | ) | 298,110 | |||||||||||||||||||||
Property and equipment, net | 43,341 | 19,694 | — | 63,035 | 40,359 | 20,037 | — | 60,396 | |||||||||||||||||||||||
Assets held for sale | 1,170 | 9,455 | — | 10,625 | 1,206 | 9,456 | — | 10,662 | |||||||||||||||||||||||
Goodwill | 30,632 | — | 30,632 | 30,632 | — | — | 30,632 | ||||||||||||||||||||||||
Intangible assets, net | 77,018 | 116,615 | — | 193,633 | 78,550 | 120,082 | — | 198,632 | |||||||||||||||||||||||
Total assets | $ | 1,375,641 | $ | 302,827 | $ | (289,320 | ) | $ | 1,389,148 | $ | 1,298,302 | $ | 297,168 | $ | (294,275 | ) | $ | 1,301,195 | |||||||||||||
Liabilities and Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||
Accounts payable | $ | 11,150 | $ | 3,272 | $ | — | $ | 14,422 | $ | 11,798 | $ | 2,831 | $ | — | $ | 14,629 | |||||||||||||||
Due to related parties, net | 45,852 | 271,892 | (221,132 | ) | 96,612 | 15,750 | 263,377 | (234,483 | ) | 44,644 | |||||||||||||||||||||
Accrued liabilities | 95,009 | 9,622 | (161 | ) | 104,470 | 106,570 | 10,993 | (128 | ) | 117,435 | |||||||||||||||||||||
Income taxes payable | 1,508 | 140 | — | 1,648 | 1,069 | — | — | 1,069 | |||||||||||||||||||||||
Deferred income taxes | 39,871 | 11,395 | (17,602 | ) | 33,664 | 27,715 | 11,395 | (16,706 | ) | 22,404 | |||||||||||||||||||||
Deferred revenues | 116,144 | 9,403 | — | 125,547 | 103,745 | 7,147 | — | 110,892 | |||||||||||||||||||||||
Senior Secured Notes, net of unamortized original issue discount of $6,290, $0, $0, $6,290, $6,548, $0, $0, and $6,548, respectively | 368,150 | — | — | 368,150 | 367,892 | — | — | 367,892 | |||||||||||||||||||||||
Securitization notes and Funding Facilities, net of unamortized original issue discount for $208, $0, $0, $208, $226, $0, $0, $226, respectively | 387,534 | 4,526 | — | 392,060 | 386,501 | 4,766 | — | 391,267 | |||||||||||||||||||||||
Derivative liabilities | 199 | — | — | 199 | — | — | — | — | |||||||||||||||||||||||
Notes payable | 7,150 | 18,257 | — | 25,407 | 3,302 | 19,848 | — | 23,150 | |||||||||||||||||||||||
Total liabilities | 1,072,567 | 328,507 | (238,895 | ) | 1,162,179 | 1,024,342 | 320,357 | (251,317 | ) | 1,093,382 | |||||||||||||||||||||
Stockholders' equity (deficit): | |||||||||||||||||||||||||||||||
Common stock $0.01 par value; authorized - 250,000,000 shares; issued and outstanding - 75,475,402, 0, 0 and 75,475,402, 75,458,402, 0, 0 and 75,458,402 shares | 755 | — | — | 755 | 755 | — | — | 755 | |||||||||||||||||||||||
Additional paid-in capital | 467,926 | 9,675 | (9,675 | ) | 467,926 | 463,194 | 9,675 | (9,675 | ) | 463,194 | |||||||||||||||||||||
Accumulated deficit | (149,816 | ) | (34,935 | ) | (41,198 | ) | (225,949 | ) | (173,722 | ) | (32,416 | ) | (33,821 | ) | (239,959 | ) | |||||||||||||||
Accumulated other comprehensive (loss) income | (15,791 | ) | (420 | ) | 448 | (15,763 | ) | (16,267 | ) | (448 | ) | 538 | (16,177 | ) | |||||||||||||||||
Total stockholders' equity (deficit) | 303,074 | (25,680 | ) | (50,425 | ) | 226,969 | 273,960 | (23,189 | ) | (42,958 | ) | 207,813 | |||||||||||||||||||
Total liabilities and stockholders' equity (deficit) | $ | 1,375,641 | $ | 302,827 | $ | (289,320 | ) | $ | 1,389,148 | $ | 1,298,302 | $ | 297,168 | $ | (294,275 | ) | $ | 1,301,195 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||||||||||
For the Quarters Ended March 31, 2014 and 2013 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
Quarter Ended March 31, 2014 | Quarter Ended March 31, 2013 | ||||||||||||||||||||||||||||||
Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | Diamond and Restricted Subsidiaries | Unrestricted Subsidiaries | Elimination | Total | ||||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||||||||||
Net income (loss) | $ | 24,140 | $ | (2,519 | ) | $ | (7,611 | ) | $ | 14,010 | $ | 11,985 | $ | (2,961 | ) | $ | (6,751 | ) | $ | 2,273 | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 10,780 | 653 | — | 11,433 | 6,402 | 270 | — | 6,672 | |||||||||||||||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,388 | 49 | — | 1,437 | 1,569 | 305 | — | 1,874 | |||||||||||||||||||||||
Amortization of capitalized loan origination costs and net portfolio discounts | 1,955 | — | — | 1,955 | 1,182 | 48 | — | 1,230 | |||||||||||||||||||||||
Depreciation and amortization | 4,159 | 3,902 | — | 8,061 | 2,586 | 3,668 | — | 6,254 | |||||||||||||||||||||||
Stock-based compensation | 4,696 | — | — | 4,696 | — | — | — | — | |||||||||||||||||||||||
Impairments and other write-offs | 7 | — | — | 7 | 79 | — | — | 79 | |||||||||||||||||||||||
Gain on disposal of assets | (1 | ) | (3 | ) | — | (4 | ) | (50 | ) | — | — | (50 | ) | ||||||||||||||||||
Deferred income taxes | 12,156 | — | (896 | ) | 11,260 | — | — | — | — | ||||||||||||||||||||||
Loss (gain) on foreign currency exchange | 90 | (2 | ) | — | 88 | 163 | (102 | ) | — | 61 | |||||||||||||||||||||
Gain on mortgage repurchase | (1 | ) | (48 | ) | — | (49 | ) | — | — | — | — | ||||||||||||||||||||
Unrealized loss on derivative instruments | 199 | — | — | 199 | — | — | — | — | |||||||||||||||||||||||
Unrealized loss on post-retirement benefit plan | 43 | — | — | 43 | — | — | — | — | |||||||||||||||||||||||
Gain on insurance settlement | — | — | — | — | (2,203 | ) | — | — | (2,203 | ) | |||||||||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||||||||||||||||||
Mortgages and contracts receivable | (18,908 | ) | (207 | ) | — | (19,115 | ) | (18,941 | ) | 2,884 | (1 | ) | (16,058 | ) | |||||||||||||||||
Due from related parties, net | 22,268 | (411 | ) | (13,584 | ) | 8,273 | (7,505 | ) | 195 | 9,399 | 2,089 | ||||||||||||||||||||
Other receivables, net | 12,362 | 1,237 | — | 13,599 | 11,676 | 517 | — | 12,193 | |||||||||||||||||||||||
Prepaid expenses and other assets, net | (63,556 | ) | (17,091 | ) | — | (80,647 | ) | (49,834 | ) | (14,654 | ) | 81 | (64,407 | ) | |||||||||||||||||
Unsold Vacation Interests, net | (6,779 | ) | 3,960 | 7,642 | 4,823 | 6,387 | 72 | 6,751 | 13,210 | ||||||||||||||||||||||
Accounts payable | (671 | ) | 423 | — | (248 | ) | (3,554 | ) | 1,670 | — | (1,884 | ) | |||||||||||||||||||
Due to related parties, net | 30,706 | 8,424 | 13,585 | 52,715 | 25,730 | 19,384 | (9,562 | ) | 35,552 | ||||||||||||||||||||||
Accrued liabilities | (12,516 | ) | (1,422 | ) | — | (13,938 | ) | (6,189 | ) | 3,218 | (80 | ) | (3,051 | ) | |||||||||||||||||
Income taxes payable | 433 | (756 | ) | 896 | 573 | 1,089 | — | — | 1,089 | ||||||||||||||||||||||
Deferred revenues | 12,285 | 2,212 | — | 14,497 | 12,948 | 2,467 | — | 15,415 | |||||||||||||||||||||||
Net cash provided by (used in) operating activities | 35,235 | (1,599 | ) | 32 | 33,668 | (6,480 | ) | 16,981 | (163 | ) | 10,338 | ||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Property and equipment capital expenditures | (5,636 | ) | (85 | ) | — | (5,721 | ) | (2,392 | ) | (132 | ) | — | (2,524 | ) | |||||||||||||||||
Net cash used in investing activities | $ | (5,636 | ) | $ | (85 | ) | $ | — | $ | (5,721 | ) | $ | (2,392 | ) | $ | (132 | ) | $ | — | $ | (2,524 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||||||||||||||||||
For the Quarters Ended March 31, 2014 and 2013 | |||||||||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended March 31, 2014 | Quarter Ended March 31, 2013 | ||||||||||||||||||||||||||||||
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 | $ | 14,197 | $ | 440 | $ | — | $ | 14,637 | $ | (14,456 | ) | $ | 267 | $ | — | $ | (14,189 | ) | |||||||||||||
Proceeds from issuance of securitization notes and Funding Facilities | 45,909 | — | — | 45,909 | 126,967 | 713 | — | 127,680 | |||||||||||||||||||||||
Proceeds from issuance of notes payable | — | 1,113 | — | 1,113 | — | 1,319 | — | 1,319 | |||||||||||||||||||||||
Payments on securitization notes and Funding Facilities | (44,894 | ) | (240 | ) | — | (45,134 | ) | (96,605 | ) | (8,546 | ) | — | (105,151 | ) | |||||||||||||||||
Payments on notes payable | (2,323 | ) | (2,704 | ) | — | (5,027 | ) | (2,566 | ) | (7,250 | ) | — | (9,816 | ) | |||||||||||||||||
Refunds (payments) of debt issuance costs | 70 | — | — | 70 | (1,974 | ) | — | — | (1,974 | ) | |||||||||||||||||||||
Proceeds from exercise of stock options | 236 | — | — | 236 | — | — | — | — | |||||||||||||||||||||||
Net cash provided by (used in) financing activities | 13,195 | (1,391 | ) | — | 11,804 | 11,366 | (13,497 | ) | — | (2,131 | ) | ||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 42,794 | (3,075 | ) | 32 | 39,751 | 2,494 | 3,352 | (163 | ) | 5,683 | |||||||||||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 118 | (6 | ) | (32 | ) | 80 | (1 | ) | (702 | ) | 163 | (540 | ) | ||||||||||||||||||
Cash and cash equivalents, beginning of period | 26,680 | 9,265 | — | 35,945 | 16,963 | 4,098 | — | 21,061 | |||||||||||||||||||||||
Cash and cash equivalents, end of period | $ | 69,592 | $ | 6,184 | $ | — | $ | 75,776 | $ | 19,456 | $ | 6,748 | $ | — | $ | 26,204 | |||||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||||||||||||||||||
Cash paid for interest | $ | 21,635 | $ | 4,628 | $ | — | $ | 26,263 | $ | 28,382 | $ | 4,307 | $ | — | $ | 32,689 | |||||||||||||||
Cash paid for taxes, net of cash tax refunds (cash tax refunds, net of cash paid for taxes) | $ | 120 | $ | 98 | $ | — | $ | 218 | $ | (698 | ) | $ | 42 | $ | — | $ | (656 | ) | |||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||||||||||||||||||||||
Insurance premiums financed through issuance of notes payable | $ | 6,173 | $ | — | $ | — | $ | 6,173 | $ | 5,914 | $ | — | $ | — | $ | 5,914 | |||||||||||||||