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 dated October 29, 2014, announcing financial results for the quarter ended September 30, 2014 (furnished herewith) | |
99.2 | Press Release dated October 29, 2014, announcing $100 million share repurchase program (furnished herewith) |
Diamond Resorts International, Inc. | |
October 29, 2014 | By: /s/ David F. Palmer Name: David F. Palmer |
Title: President and Chief Executive Officer |
• | Total revenue increased $30.4 million, or 15.8%, to $222.0 million for the third quarter of 2014 from $191.6 million for the third quarter of 2013. |
• | Hospitality and Management Services revenue grew by $6.1 million, or 13.9%, through higher same-store management fee revenue, the inclusion of acquired management contracts and increased revenues from Club operations. |
• | Vacation Interest Sales, net, grew by $19.5 million, or 15.7%. This growth was driven by a: |
• | 7.2% increase in sales presentations (“tours”) to 60,920 from 56,822; and |
• | 6.3% increase in volume per guest (“VPG”) to $2,635 from $2,478 |
• | Advertising, sales and marketing expense for the third quarter of 2014 and 2013 included a non-cash charge of $0.5 million and $2.0 million, respectively, related to stock-based compensation. Excluding these charges, advertising, sales and marketing expense as a percentage of Vacation Interest sales revenue increased 1.4 percentage points to 51.4% in the third quarter of 2014, from 50.0% in the third quarter of 2013. Including these non-cash charges, advertising, sales and marketing expense as a percentage of Vacation Interest sales revenue was, 51.8%. |
• | Pre-tax income for the third quarter of 2014 included a non-cash charge related to stock-based compensation of $3.3 million. Pre-tax income for the third quarter of 2013 included one-time and non-cash charges netting $49.1 million ($43.8 million were non-cash charges). Excluding these charges, pre-tax income in 2014 would have been $49.8 million, an increase of $34.6 million from pre-tax income of $15.2 million in the third quarter of 2013. Including these items, pre-tax income for the third quarter of 2014 was $46.5 million compared to a pre-tax loss in the third quarter of 2013 of $34.0 million. |
• | Cash and cash equivalents increased $64.0 million during the third quarter of 2014. $23.6 million was generated from operating activities, $4.0 million was spent in investing activities and $45.2 million was generated from financing activities. |
• | Adjusted EBITDA for the Company on a consolidated basis increased $24.2 million, or 40.1%, to $84.6 million for the third quarter of 2014 from $60.4 million for the third quarter of 2013. |
Updated Guidance | Year Ending December 31, 2014 | |||||||
($ in thousands) | Low | High | ||||||
Pre-tax income | $ | 95,000 | $ | 122,500 | ||||
Corporate interest expense | $ | 42,000 | $ | 40,000 | ||||
Loss on extinguishment of debt(a) | $ | 47,000 | $ | 47,000 | ||||
Vacation interest cost of sales(b) | $ | 65,000 | $ | 55,000 | ||||
Depreciation and amortization | $ | 34,000 | $ | 32,000 | ||||
Other non-cash items(c) | $ | 22,000 | $ | 18,500 |
Previous Guidance | Year Ending December 31, 2014 | |||||||
($ in thousands) | Low | High | ||||||
Pre-tax income | $ | 74,000 | $ | 106,500 | ||||
Corporate interest expense | $ | 43,000 | $ | 41,000 | ||||
Loss on extinguishment of debt(a) | $ | 47,000 | $ | 47,000 | ||||
Vacation interest cost of sales(b) | $ | 65,000 | $ | 55,000 | ||||
Depreciation and amortization | $ | 34,000 | $ | 32,000 | ||||
Other non-cash items(c) | $ | 22,000 | $ | 18,500 |
(a) | Reflects approximately $16.6 million of non-cash charges 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 $30.2 million paid in cash for the bond premium related to the redemption of the senior secured notes which was financed with a portion of the proceeds from the new term loan. |
(b) | 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. |
(c) | Other non-cash items include: stock based compensation, amortization of loan origination costs, and amortization of net portfolio discounts and premiums. |
(d) | Principally for IT infrastructure and sales center expansion/refurbishment. This does not include expenditures for the acquisition of inventory, or resort-level capital improvements which are paid by the homeowners associations. |
• | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or Vacation Interest inventory; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect cash requirements for income taxes; |
• | Adjusted EBITDA does not reflect interest expense for our corporate indebtedness; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often |
• | we make expenditures to replenish Vacation Interests inventory (principally pursuant to our inventory recovery agreements and in connection with our strategic acquisitions), and Adjusted EBITDA does not reflect our cash requirements for these expenditures or certain costs of carrying such inventory (which are capitalized); and |
• | other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as |
Quarter Ended September 30, | Nine Months Ended | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Net cash provided by (used in) operating activities | $ | 23,549 | $ | (4,879 | ) | $ | 76,454 | $ | 2,325 | ||||||
Provision (benefit) for income taxes | 20,156 | (7,626 | ) | 32,860 | (6,777 | ) | |||||||||
Provision for uncollectible Vacation Interest sales revenue(a) | (15,847 | ) | (13,851 | ) | (40,123 | ) | (29,731 | ) | |||||||
Amortization of capitalized financing costs and original issue discounts(a) | (1,125 | ) | (1,804 | ) | (4,079 | ) | (5,607 | ) | |||||||
Deferred income taxes(b) | (19,679 | ) | 8,040 | (30,461 | ) | 8,040 | |||||||||
(Loss) gain on foreign currency(c) | (14 | ) | 3 | (98 | ) | (215 | ) | ||||||||
Gain on mortgage purchase(a) | 136 | 33 | 519 | 71 | |||||||||||
Unrealized gain (loss) on derivative instruments(d) | 15 | (657 | ) | (181 | ) | (657 | ) | ||||||||
Unrealized loss on post-retirement benefit plan(e) | (43 | ) | (774 | ) | (128 | ) | (774 | ) | |||||||
Cash to be received on insurance settlement(f) | — | — | — | 2,876 | |||||||||||
Corporate interest expense(g) | 7,429 | 16,658 | 34,502 | 58,110 | |||||||||||
Change in operating assets and liabilities excluding acquisitions(h) | 53,591 | 46,655 | 125,965 | 91,552 | |||||||||||
Vacation Interest cost of sales(i) | 16,476 | 18,605 | 44,840 | 45,451 | |||||||||||
Adjusted EBITDA - Consolidated | $ | 84,644 | $ | 60,403 | $ | 240,070 | $ | 164,664 |
(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 and nine months ended September 30, 2014 and 2013. |
(c) | Represents net realized (loss) gain on foreign exchange transactions settled at (unfavorable) favorable exchange rates and unrealized net (loss) gain resulting from the (devaluation) appreciation 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 insurance settlements receivables recorded in connection with property damage claims and reimbursement of defense costs related to litigation. |
(g) | 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. |
(h) | 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. |
(i) | 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 |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Net income (loss) | $ | 26,304 | $ | (26,327 | ) | $ | 37,583 | $ | (6,098 | ) | |||||
Plus: Corporate interest expense(a) | 7,429 | 16,658 | 34,502 | 58,110 | |||||||||||
Provision (benefit) for income taxes | 20,156 | (7,626 | ) | 32,860 | (6,777 | ) | |||||||||
Depreciation and amortization(b) | 8,271 | 7,583 | 24,601 | 19,912 | |||||||||||
Vacation Interest cost of sales(c) | 16,476 | 18,605 | 44,840 | 45,451 | |||||||||||
Loss on extinguishment of debt(d) | — | 13,383 | 46,807 | 13,383 | |||||||||||
Impairments and other non-cash write-offs(b) | 11 | 1,200 | 53 | 1,279 | |||||||||||
Loss (gain) on disposal of assets(b) | 224 | (585 | ) | 71 | (673 | ) | |||||||||
Gain on bargain purchase from business combinations(e) | — | (2,756 | ) | — | (2,726 | ) | |||||||||
Amortization of loan origination costs(b) | 2,380 | 1,408 | 6,591 | 3,876 | |||||||||||
Amortization of net portfolio premiums (discount)(b) | 57 | 365 | (36 | ) | 432 | ||||||||||
Stock-based compensation(f) | 3,336 | 38,495 | 12,198 | 38,495 | |||||||||||
Adjusted EBITDA - Consolidated | $ | 84,644 | $ | 60,403 | $ | 240,070 | $ | 164,664 |
(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) | 2014 represents (i) $30.2 million of redemption premium paid on June 9, 2014 in connection with the redemption of the outstanding Senior Secured Notes using proceeds from the term loan portion of the Senior Credit Facility and (ii) $16.6 million of unamortized debt issuance costs and debt discount written off upon the extinguishment of the Senior Secured Notes, the 2013 Revolving Credit Facility, ILXA Inventory Loan and the Tempus Inventory Loan. 2013 represents (1) $6.1 million of redemption premium paid on August 23, 2013 in connection with the Tender Offer and $2.4 million of the unamortized debt discount and debt issuance cost associated with the Senior Secured Notes (2) $4.9 million of the unamortized debt issuance cost on both the Tempus Acquisition Loan and the PMR Acquisition Loan written off and the additional exit fees paid upon the extinguishment of the Tempus Acquisition Loan and the PMR Acquisition Loan on July 24, 2013 using the proceeds from the IPO. |
(e) | For the quarter and nine months ended September 30, 2013, represents the amount by which the fair value of the assets acquired net of the liabilities assumed in the PMR Service Companies Acquisition (completed in July 2013) exceeded the purchase price. |
(f) | Represents the non-cash charge related to stock-based compensation due to stock options issued in connection with and since the consummation of the IPO. |
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Advertising, sales and marketing expense | $ | 82,308 | $ | 70,714 | $ | 214,190 | $ | 181,668 | |||||||
Stock-based compensation | (537 | ) | (1,950 | ) | (1,804 | ) | (1,950 | ) | |||||||
Advertising, sales and marketing expense after excluding stock-based compensation | $ | 81,771 | $ | 68,764 | $ | 212,386 | $ | 179,718 | |||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
General and administrative expense | $ | 26,747 | $ | 61,114 | $ | 74,203 | $ | 105,612 | |||||||
Stock-based compensation | (2,282 | ) | (35,389 | ) | (8,530 | ) | (35,389 | ) | |||||||
General and administrative expense after excluding stock-based compensation | $ | 24,465 | $ | 25,725 | $ | 65,673 | $ | 70,223 | |||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
($ in thousands) | ($ in thousands) | ||||||||||||||
Income (loss) before provision (benefit) for income taxes | $ | 46,460 | $ | (33,953 | ) | $ | 70,443 | $ | (12,875 | ) | |||||
Stock-based compensation | 3,336 | 38,495 | 12,198 | 38,495 | |||||||||||
Non-cash charge from early extinguishment of debt | — | 5,281 | 16,564 | 5,281 | |||||||||||
Cash charge from early extinguishment of debt | — | 8,102 | 30,243 | 8,102 | |||||||||||
Gain on bargain purchase | — | (2,756 | ) | — | (2,726 | ) | |||||||||
Income before provision for income taxes after excluding stock-based compensation, loss from early extinguishment of debt and gain on bargain purchase | $ | 49,796 | $ | 15,169 | $ | 129,448 | $ | 36,277 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Quarters Ended September 30, 2014 and 2013 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Quarter Ended September 30, 2014 | Quarter Ended September 30, 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 | $ | 37,795 | $ | — | $ | — | $ | 37,795 | $ | 33,610 | $ | — | $ | — | $ | 33,610 | |||||||||||||||
Consolidated resort operations | 10,481 | — | — | 10,481 | 9,326 | — | — | 9,326 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $15,847, $0, $15,847, $0, $13,851, $0 and $13,851, respectively | — | 143,180 | — | 143,180 | — | 123,708 | — | 123,708 | |||||||||||||||||||||||
Interest | — | 16,783 | 347 | 17,130 | — | 13,971 | 326 | 14,297 | |||||||||||||||||||||||
Other | 2,018 | 11,361 | — | 13,379 | 1,227 | 9,434 | — | 10,661 | |||||||||||||||||||||||
Total revenues | 50,294 | 171,324 | 347 | 221,965 | 44,163 | 147,113 | 326 | 191,602 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 8,549 | — | — | 8,549 | 9,408 | — | — | 9,408 | |||||||||||||||||||||||
Consolidated resort operations | 9,216 | — | — | 9,216 | 9,602 | — | — | 9,602 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 16,476 | — | 16,476 | — | 18,605 | — | 18,605 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 82,308 | — | 82,308 | — | 70,714 | — | 70,714 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 5,162 | — | 5,162 | — | 10,154 | — | 10,154 | |||||||||||||||||||||||
Loan portfolio | 385 | 1,015 | — | 1,400 | 278 | 2,018 | — | 2,296 | |||||||||||||||||||||||
Other operating | — | 5,847 | — | 5,847 | — | 3,912 | — | 3,912 | |||||||||||||||||||||||
General and administrative | — | — | 26,747 | 26,747 | — | — | 61,114 | 61,114 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 8,271 | 8,271 | — | — | 7,583 | 7,583 | |||||||||||||||||||||||
Interest expense | — | 3,866 | 7,428 | 11,294 | — | 4,267 | 16,658 | 20,925 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | — | — | — | — | 13,383 | 13,383 | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 11 | 11 | — | — | 1,200 | 1,200 | |||||||||||||||||||||||
Loss (gain) on disposal of assets | — | — | 224 | 224 | — | — | (585 | ) | (585 | ) | |||||||||||||||||||||
Gain on bargain purchase from business combinations | — | — | — | — | — | — | (2,756 | ) | (2,756 | ) | |||||||||||||||||||||
Total costs and expenses | 18,150 | 114,674 | 42,681 | 175,505 | 19,288 | 109,670 | 96,597 | 225,555 | |||||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes | 32,144 | 56,650 | (42,334 | ) | 46,460 | 24,875 | 37,443 | (96,271 | ) | (33,953 | ) | ||||||||||||||||||||
Provision (benefit) for income taxes | — | — | 20,156 | 20,156 | — | — | (7,626 | ) | (7,626 | ) | |||||||||||||||||||||
Net income (loss) | $ | 32,144 | $ | 56,650 | $ | (62,490 | ) | $ | 26,304 | $ | 24,875 | $ | 37,443 | $ | (88,645 | ) | $ | (26,327 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS BY BUSINESS SEGMENT | |||||||||||||||||||||||||||||||
For the Nine Months Ended September 30, 2014 and 2013 | |||||||||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 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 | $ | 115,238 | $ | — | $ | — | $ | 115,238 | $ | 96,304 | $ | — | $ | — | $ | 96,304 | |||||||||||||||
Consolidated resort operations | 28,825 | — | — | 28,825 | 26,465 | — | — | 26,465 | |||||||||||||||||||||||
Vacation Interest sales, net of provision of $0, $40,123, $0, $40,123, $0, $29,731, $0 and $29,731, respectively | — | 379,082 | — | 379,082 | — | 325,815 | — | 325,815 | |||||||||||||||||||||||
Interest | — | 47,798 | 1,212 | 49,010 | — | 40,021 | 1,138 | 41,159 | |||||||||||||||||||||||
Other | 7,352 | 32,697 | — | 40,049 | 7,535 | 21,649 | — | 29,184 | |||||||||||||||||||||||
Total revenues | 151,415 | 459,577 | 1,212 | 612,204 | 130,304 | 387,485 | 1,138 | 518,927 | |||||||||||||||||||||||
Costs and Expenses: | |||||||||||||||||||||||||||||||
Management and member services | 23,377 | — | — | 23,377 | 27,952 | — | — | 27,952 | |||||||||||||||||||||||
Consolidated resort operations | 25,662 | — | — | 25,662 | 26,169 | — | — | 26,169 | |||||||||||||||||||||||
Vacation Interest cost of sales | — | 44,840 | — | 44,840 | — | 45,451 | — | 45,451 | |||||||||||||||||||||||
Advertising, sales and marketing | — | 214,190 | — | 214,190 | — | 181,668 | — | 181,668 | |||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 19,766 | — | 19,766 | — | 29,141 | — | 29,141 | |||||||||||||||||||||||
Loan portfolio | 895 | 5,354 | — | 6,249 | 782 | 6,773 | — | 7,555 | |||||||||||||||||||||||
Other operating | — | 16,650 | — | 16,650 | — | 6,518 | — | 6,518 | |||||||||||||||||||||||
General and administrative | — | — | 74,203 | 74,203 | — | — | 105,612 | 105,612 | |||||||||||||||||||||||
Depreciation and amortization | — | — | 24,601 | 24,601 | — | — | 19,912 | 19,912 | |||||||||||||||||||||||
Interest expense | — | 10,790 | 34,502 | 45,292 | — | 12,451 | 58,110 | 70,561 | |||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 46,807 | 46,807 | — | — | 13,383 | 13,383 | |||||||||||||||||||||||
Impairments and other write-offs | — | — | 53 | 53 | — | — | 1,279 | 1,279 | |||||||||||||||||||||||
Loss (gain) on disposal of assets | — | — | 71 | 71 | — | — | (673 | ) | (673 | ) | |||||||||||||||||||||
Gain on bargain purchase from business combinations | — | — | — | — | — | — | (2,726 | ) | (2,726 | ) | |||||||||||||||||||||
Total costs and expenses | 49,934 | 311,590 | 180,237 | 541,761 | 54,903 | 282,002 | 194,897 | 531,802 | |||||||||||||||||||||||
Income (loss) before provision (benefit)for income taxes | 101,481 | 147,987 | (179,025 | ) | 70,443 | 75,401 | 105,483 | (193,759 | ) | (12,875 | ) | ||||||||||||||||||||
Provision (benefit) for income taxes | — | — | 32,860 | 32,860 | — | — | (6,777 | ) | (6,777 | ) | |||||||||||||||||||||
Net income (loss) | $ | 101,481 | $ | 147,987 | $ | (211,885 | ) | $ | 37,583 | $ | 75,401 | $ | 105,483 | $ | (186,982 | ) | $ | (6,098 | ) |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
As of September 30, 2014 and December 31, 2013 | |||||||
(In thousands, except share data) | |||||||
September 30, 2014 (Unaudited) | December 31, 2013 (Audited) | ||||||
Assets: | |||||||
Cash and cash equivalents | $ | 181,923 | $ | 35,945 | |||
Cash in escrow and restricted cash | 69,707 | 92,231 | |||||
Mortgages and contracts receivable, net of allowance of $121,189 and $105,590, respectively | 464,400 | 405,454 | |||||
Due from related parties, net | 45,213 | 46,262 | |||||
Other receivables, net | 34,030 | 54,588 | |||||
Income tax receivable | 29 | 25 | |||||
Prepaid expenses and other assets, net | 107,048 | 68,258 | |||||
Unsold Vacation Interests, net | 277,066 | 298,110 | |||||
Property and equipment, net | 70,661 | 60,396 | |||||
Assets held for sale | 14,706 | 10,662 | |||||
Goodwill | 30,632 | 30,632 | |||||
Intangible assets, net | 183,493 | 198,632 | |||||
Total assets | $ | 1,478,908 | $ | 1,301,195 | |||
Liabilities and Stockholder's Equity: | |||||||
Accounts payable | $ | 15,754 | $ | 14,629 | |||
Due to related parties, net | 57,475 | 44,644 | |||||
Accrued liabilities | 106,374 | 117,435 | |||||
Income taxes payable | 1,195 | 1,069 | |||||
Deferred income taxes | 52,865 | 22,404 | |||||
Deferred revenues | 90,670 | 110,892 | |||||
Senior Credit Facility, net of unamortized original issue discount of $2,122 and $0, respectively | 441,766 | — | |||||
Senior secured notes, net of unamortized original issue discount of $0 and $6,548, respectively | — | 367,892 | |||||
Securitization notes and Funding Facilities, net of unamortized original issue discount of $172 and $226, respectively | 451,441 | 391,267 | |||||
Derivative liabilities | 181 | — | |||||
Notes payable | 2,414 | 23,150 | |||||
Total liabilities | 1,220,135 | 1,093,382 | |||||
Stockholders' equity: | |||||||
Common stock $0.01 par value per share; authorized - 250,000,000 shares, issued and outstanding - 75,660,588 and 75,458,402 shares, respectively | 757 | 755 | |||||
Additional paid in capital | 477,867 | 463,194 | |||||
Accumulated deficit | (202,376 | ) | (239,959 | ) | |||
Accumulated other comprehensive loss | (17,475 | ) | (16,177 | ) | |||
Total stockholders' equity | 258,773 | 207,813 | |||||
Total liabilities and stockholders' equity | $ | 1,478,908 | $ | 1,301,195 |
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||
For the Quarters and Nine Months ended September 30, 2014 and 2013 | |||||||||||||||
(In thousands) | |||||||||||||||
(Unaudited) | |||||||||||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Activities: | |||||||||||||||
Net income (loss) | $ | 26,304 | $ | (26,327 | ) | $ | 37,583 | $ | (6,098 | ) | |||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 15,847 | 13,851 | 40,123 | 29,731 | |||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,125 | 1,804 | 4,079 | 5,607 | |||||||||||
Amortization of capitalized loan origination costs and net portfolio discount | 2,437 | 1,773 | 6,555 | 4,308 | |||||||||||
Depreciation and amortization | 8,271 | 7,583 | 24,601 | 19,912 | |||||||||||
Stock-based compensation | 3,336 | 38,495 | 12,198 | 38,495 | |||||||||||
Loss on extinguishment of debt | — | 13,383 | 46,807 | 13,383 | |||||||||||
Impairments and other write-offs | 11 | 1,200 | 53 | 1,279 | |||||||||||
Loss (gain) on disposal of assets | 224 | (585 | ) | 71 | (673 | ) | |||||||||
Gain on bargain purchase from business combinations | — | (2,756 | ) | — | (2,726 | ) | |||||||||
Deferred income taxes | 19,679 | (8,040 | ) | 30,461 | (8,040 | ) | |||||||||
Loss (gain) on foreign currency exchange | 14 | (3 | ) | 98 | 215 | ||||||||||
Gain on mortgage repurchase | (136 | ) | (33 | ) | (519 | ) | (71 | ) | |||||||
Unrealized (gain) loss on derivative instrument | (15 | ) | 657 | 181 | 657 | ||||||||||
Unrealized loss on post-retirement benefit plan | 43 | 774 | 128 | 774 | |||||||||||
Gain on insurance settlement | — | — | — | (2,876 | ) | ||||||||||
Changes in operating assets and liabilities excluding acquisitions: | |||||||||||||||
Mortgages and contracts receivable | (53,820 | ) | (43,817 | ) | (105,158 | ) | (84,469 | ) | |||||||
Due from related parties, net | (5,237 | ) | (528 | ) | 5,786 | (9,563 | ) | ||||||||
Other receivables, net | 2,256 | 1,315 | 20,572 | 18,806 | |||||||||||
Prepaid expenses and other assets, net | 28,229 | 25,708 | (41,500 | ) | (28,313 | ) | |||||||||
Unsold Vacation Interests, net | 8,105 | 11,724 | 9,881 | 7,370 | |||||||||||
Accounts payable | 624 | 172 | 1,123 | (2,417 | ) | ||||||||||
Due to related parties, net | (28,324 | ) | (18,365 | ) | 14,400 | 17,833 | |||||||||
Accrued liabilities | 12,255 | (12,755 | ) | (11,344 | ) | (4,978 | ) | ||||||||
Income taxes payable | (350 | ) | 76 | 135 | 1,294 | ||||||||||
Deferred revenues | (17,329 | ) | (10,185 | ) | (19,860 | ) | (7,115 | ) | |||||||
Net cash provided by (used in) operating activities | 23,549 | (4,879 | ) | 76,454 | 2,325 | ||||||||||
Investing activities: | |||||||||||||||
Property and equipment capital expenditures | (3,943 | ) | (4,311 | ) | (13,846 | ) | (12,792 | ) | |||||||
Cash acquired in connection with the Island One Acquisition | — | 725 | — | 725 | |||||||||||
Purchase of assets in connection with the PMR Service Companies Acquisition, net of cash acquired of $0, $0, $0, and $0, respectively | — | (47,758 | ) | — | (47,758 | ) | |||||||||
Proceeds from sale of assets | (12 | ) | 1,656 | 257 | 3,126 | ||||||||||
Net cash used in investing activities | $ | (3,955 | ) | $ | (49,688 | ) | $ | (13,589 | ) | $ | (56,699 | ) | |||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||
For the Quarters and Nine Months ended September 30, 2014 and 2013 | |||||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
Financing activities: | |||||||||||||||
Changes in cash in escrow and restricted cash | $ | 7,838 | $ | (344 | ) | $ | 22,460 | $ | (17,670 | ) | |||||
Proceeds from issuance of Senior Credit Facility | — | — | 442,775 | — | |||||||||||
Proceeds from issuance of Revolving Credit Facility | — | 15,000 | — | 15,000 | |||||||||||
Proceeds from issuance of securitization notes and conduit facility | 91,227 | 94,584 | 206,325 | 265,873 | |||||||||||
Proceeds from issuance of notes payable | — | 1,407 | 1,113 | 3,882 | |||||||||||
Payments on Senior Credit Facility | (1,112 | ) | — | (1,112 | ) | — | |||||||||
Payments on senior secured notes, including redemption premium | — | (56,628 | ) | (404,683 | ) | (56,628 | ) | ||||||||
Payments on securitization notes and conduit facility | (51,733 | ) | (67,285 | ) | (146,206 | ) | (201,584 | ) | |||||||
Payments on notes payable | (2,659 | ) | (111,884 | ) | (28,492 | ) | (131,832 | ) | |||||||
Payments of debt issuance costs | (379 | ) | (2,111 | ) | (11,048 | ) | (6,163 | ) | |||||||
Proceeds from exercise of stock options | 2,010 | 204,705 | 2,309 | 204,705 | |||||||||||
Repurchase of a portion of outstanding warrants | — | (10,346 | ) | — | (10,346 | ) | |||||||||
Payments related to early extinguishment of notes payable | — | (2,034 | ) | — | (2,034 | ) | |||||||||
Payments of costs related to issuance of common units | — | 10 | — | — | |||||||||||
Net cash provided by financing activities | 45,192 | 65,074 | 83,441 | 63,203 | |||||||||||
Net increase in cash and cash equivalents | 64,786 | 10,507 | 146,306 | 8,829 | |||||||||||
Effect of changes in exchange rates on cash and cash equivalents | (745 | ) | 522 | (328 | ) | (14 | ) | ||||||||
Cash and cash equivalents, beginning of period | 117,882 | 18,847 | 35,945 | 21,061 | |||||||||||
Cash and cash equivalents, end of period | $ | 181,923 | $ | 29,876 | $ | 181,923 | $ | 29,876 | |||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||||||||||||||
Cash interest paid on corporate indebtedness | $ | 6,318 | $ | 30,524 | $ | 48,877 | $ | 61,926 | |||||||
Cash interest paid on securitization notes and funding facilities | $ | 3,815 | $ | 4,063 | $ | 10,814 | $ | 12,501 | |||||||
Cash paid for taxes, net of cash tax refunds | $ | 715 | $ | 392 | $ | 1,972 | $ | 12 | |||||||
Purchase of assets in connection with the Island One Acquisition: | |||||||||||||||
Fair value of assets acquired based on valuation reports | $ | — | $ | 83,164 | $ | — | $ | 83,164 | |||||||
Goodwill acquired | — | 27,665 | — | 27,665 | |||||||||||
DRII common stock issued | — | (73,307 | ) | — | (73,307 | ) | |||||||||
Deferred tax liability | — | (18,317 | ) | — | (18,317 | ) | |||||||||
Liabilities assumed | $ | — | $ | 19,205 | $ | — | $ | 19,205 | |||||||
Purchase of assets in connection with the PMR Service Companies Acquisition: | |||||||||||||||
Fair value of assets acquired based on valuation reports | $ | — | $ | 52,291 | $ | — | $ | 52,291 | |||||||
Gain on bargain purchase recognized | — | (2,756 | ) | — | (2,756 | ) | |||||||||
Cash paid | — | (47,758 | ) | — | (47,758 | ) | |||||||||
Deferred tax liability | — | (1,622 | ) | — | (1,622 | ) | |||||||||
Liabilities assumed | $ | — | $ | 155 | $ | — | $ | 155 | |||||||
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS—Continued | |||||||||||||||
For the Quarters and Nine Months ended September 30, 2014 and 2013 | |||||||||||||||
(Unaudited) | |||||||||||||||
(In thousands) | |||||||||||||||
Quarter Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||||||
Insurance premiums financed through issuance of notes payable | $ | — | $ | — | $ | 6,173 | $ | 7,822 | |||||||
Unsold Vacation Interests, net reclassified to assets held for sale | $ | 4,250 | $ | 14 | $ | 4,250 | $ | 10,165 | |||||||
Unsold Vacation Interests, net reclassified to property and equipment | $ | 464 | $ | — | $ | 6,080 | $ | — | |||||||
Assets to be disposed but not actively marketed (prepaid expenses and other assets) reclassified to property and equipment | $ | 265 | $ | — | $ | 265 | $ | — | |||||||
Information technology software and support financed through issuance of notes payable | $ | — | $ | — | $ | 472 | $ | — |