Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 03, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'Interval Leisure Group, Inc. | ' |
Entity Central Index Key | '0001434620 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 57,098,459 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENTS OF INCOME | ' | ' | ' | ' |
Revenue | $146,683 | $119,156 | $447,252 | $379,020 |
Cost of sales (exclusive of depreciation and amortization shown separately below) | 58,995 | 41,991 | 182,606 | 131,788 |
Gross profit | 87,688 | 77,165 | 264,646 | 247,232 |
Selling and marketing expense | 14,799 | 12,951 | 43,177 | 40,958 |
General and administrative expense | 31,340 | 27,387 | 94,028 | 81,917 |
Amortization expense of intangibles | 2,879 | 1,950 | 8,740 | 5,858 |
Depreciation expense | 3,765 | 3,499 | 11,434 | 10,859 |
Operating income | 34,905 | 31,378 | 107,267 | 107,640 |
Other income (expense): | ' | ' | ' | ' |
Interest income | 55 | 60 | 154 | 282 |
Interest expense | -1,529 | -1,295 | -4,481 | -4,559 |
Other income (expense), net | 511 | -65 | 95 | 893 |
Total other expense, net | -963 | -1,300 | -4,232 | -3,384 |
Earnings before income taxes and noncontrolling interests | 33,942 | 30,078 | 103,035 | 104,256 |
Income tax provision | -11,838 | -12,973 | -36,843 | -41,571 |
Net income | 22,104 | 17,105 | 66,192 | 62,685 |
Net income attributable to noncontrolling interests | -809 | -4 | -2,822 | -10 |
Net income attributable to common stockholders | $21,295 | $17,101 | $63,370 | $62,675 |
Earnings per share attributable to common stockholders: | ' | ' | ' | ' |
Basic (in dollars per share) | $0.37 | $0.30 | $1.10 | $1.10 |
Diluted (in dollars per share) | $0.37 | $0.29 | $1.09 | $1.09 |
Weighted average number of shares of common stock outstanding: | ' | ' | ' | ' |
Basic (in shares) | 57,098 | 57,353 | 57,424 | 57,199 |
Diluted (in shares) | 57,683 | 57,986 | 57,976 | 57,738 |
Dividends declared per share of common stock (in dollars per share) | $0.11 | $0.11 | $0.33 | $0.22 |
CONSOLIDATED_STATEMENTS_OF_COM
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ' | ' | ' | ' |
Net income | $22,104 | $17,105 | $66,192 | $62,685 |
Other comprehensive income, net of tax: | ' | ' | ' | ' |
Foreign currency translation adjustments | -5,318 | 1,666 | -3,873 | -1,524 |
Total comprehensive income, net of tax | 16,786 | 18,771 | 62,319 | 61,161 |
Less: Net income attributable to noncontrolling interests, net of tax | -809 | -4 | -2,822 | -10 |
Less: Other comprehensive loss attributable to noncontrolling interest | 1,153 | ' | 733 | ' |
Total comprehensive loss (income) attributable to noncontrolling interests | 344 | -4 | -2,089 | -10 |
Total comprehensive income attributable to common stockholders | $17,130 | $18,767 | $60,230 | $61,151 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
ASSETS | ' | ' |
Cash and cash equivalents | $83,947 | $48,462 |
Restricted cash and cash equivalents | 6,011 | 7,421 |
Accounts receivable, net of allowance of $210 and $290, respectively | 42,822 | 39,819 |
Deferred income taxes | 15,827 | 17,714 |
Deferred membership costs | 8,990 | 9,828 |
Prepaid income taxes | 8,323 | 11,211 |
Prepaid expenses and other current assets | 24,196 | 24,107 |
Total current assets | 190,116 | 158,562 |
Property and equipment, net | 62,008 | 59,556 |
Goodwill | 540,545 | 540,839 |
Intangible assets, net | 215,536 | 225,864 |
Deferred membership costs | 11,293 | 10,741 |
Deferred income taxes | 3,764 | 3,820 |
Other non-current assets | 25,597 | 25,237 |
TOTAL ASSETS | 1,048,859 | 1,024,619 |
LIABILITIES: | ' | ' |
Accounts payable, trade | 11,482 | 13,793 |
Deferred revenue | 97,915 | 92,503 |
Accrued compensation and benefits | 22,882 | 23,214 |
Member deposits | 8,794 | 8,977 |
Accrued expenses and other current liabilities | 45,392 | 51,071 |
Total current liabilities | 186,465 | 189,558 |
Long-term debt | 258,000 | 253,000 |
Other long-term liabilities | 5,400 | 14,156 |
Deferred revenue | 97,370 | 100,494 |
Deferred income taxes | 88,764 | 90,452 |
Total liabilities | 635,999 | 647,660 |
Redeemable noncontrolling interest | 452 | 426 |
Commitments and contingencies | ' | ' |
EQUITY: | ' | ' |
Preferred stock-authorized 25,000,000 shares, of which 100,000 shares are designated Series A Junior Participating Preferred Stock; $0.01 par value; none issued and outstanding | ' | ' |
Common stock-authorized 300,000,000 shares; $0.01 par value; issued 59,459,009 and 59,124,834 shares, respectively | 595 | 591 |
Treasury stock-2,363,324 and 1,697,360 shares at cost, respectively | -35,034 | -20,913 |
Additional paid-in capital | 198,648 | 191,106 |
Retained earnings | 226,857 | 182,935 |
Accumulated other comprehensive loss | -13,034 | -9,894 |
Total ILG stockholders' equity | 378,032 | 343,825 |
Noncontrolling interest | 34,376 | 32,708 |
Total equity | 412,408 | 376,533 |
TOTAL LIABILITIES AND EQUITY | $1,048,859 | $1,024,619 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Accounts receivable, allowance (in dollars) | $210 | $290 |
Preferred stock, authorized shares | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $0.01 | ' |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, authorized shares | 300,000,000 | 300,000,000 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, issued shares | 59,459,009 | 59,124,834 |
Treasury stock, shares | 2,363,324 | 1,697,360 |
Series A Preferred Stock [Member] | ' | ' |
Preferred stock, authorized shares | 100,000 | 100,000 |
Preferred stock, par value (in dollars per share) | $0.01 | $0.01 |
CONSOLIDATED_STATEMENTS_OF_EQU
CONSOLIDATED STATEMENTS OF EQUITY (USD $) | Noncontrolling Interest [Member] | Parent [Member] | Common Stock [Member] | Treasury Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Total |
In Thousands, except Share data, unless otherwise specified | ||||||||
Balance at Dec. 31, 2013 | $32,708 | $343,825 | $591 | ($20,913) | $191,106 | $182,935 | ($9,894) | $376,533 |
Balance (in shares) at Dec. 31, 2013 | ' | ' | 59,124,834 | 1,697,360 | ' | ' | ' | 57,400,000 |
Increase (Decrease) in Stockholders' Equity | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | 2,795 | 63,370 | ' | ' | ' | 63,370 | ' | 66,165 |
Other comprehensive income, net of tax | -733 | -3,140 | ' | ' | ' | ' | -3,140 | -3,873 |
Non-cash compensation expense | ' | 8,297 | ' | ' | 8,297 | ' | ' | 8,297 |
Adjustment to noncontrolling interest from acquisition | -394 | ' | ' | ' | ' | ' | ' | -394 |
Issuance of common stock upon exercise of stock options | ' | 312 | ' | ' | 312 | ' | ' | 312 |
Issuance of common stock upon exercise of stock options (in shares) | ' | ' | 14,212 | ' | ' | ' | ' | ' |
Issuance of common stock upon vesting of restricted stock units, net of withholding taxes | ' | -3,941 | 4 | ' | -3,945 | ' | ' | -3,941 |
Issuance of common stock upon vesting of restricted stock units, net of withholding taxes (in shares) | ' | ' | 319,963 | ' | ' | ' | ' | ' |
Change in excess tax benefits from stock-based awards | ' | 1,894 | ' | ' | 1,894 | ' | ' | 1,894 |
Deferred stock compensation expense | ' | 497 | ' | ' | 497 | ' | ' | 497 |
Dividends declared on common stock | ' | -18,961 | ' | ' | 487 | -19,448 | ' | -18,961 |
Repurchases of common stock | ' | -14,121 | ' | -14,121 | ' | ' | ' | -14,121 |
Repurchases of common stock (in shares) | ' | ' | ' | 665,964 | ' | ' | ' | ' |
Balance at Sep. 30, 2014 | $34,376 | $378,032 | $595 | ($35,034) | $198,648 | $226,857 | ($13,034) | $412,408 |
Balance (in shares) at Sep. 30, 2014 | ' | ' | 59,459,009 | 2,363,324 | ' | ' | ' | 57,100,000 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Cash flows from operating activities: | ' | ' |
Net income | $66,192 | $62,685 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' |
Amortization expense of intangibles | 8,740 | 5,858 |
Amortization of debt issuance costs | 617 | 587 |
Depreciation expense | 11,434 | 10,859 |
Non-cash compensation expense | 8,297 | 7,753 |
Non-cash interest expense | 11 | 277 |
Deferred income taxes | 140 | 656 |
Excess tax benefits from stock-based awards | -1,912 | -2,602 |
Loss (gain) on disposal of property and equipment | 17 | 163 |
Change in fair value of contingent consideration | -1,606 | 485 |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -304 | -4,189 |
Prepaid expenses and other current assets | 230 | 6,863 |
Prepaid income taxes and income taxes payable | 3,488 | 5,824 |
Accounts payable and other current liabilities | 2,823 | -3,761 |
Payment of contingent consideration | -1,184 | ' |
Deferred revenue | 3,068 | -3,852 |
Other, net | -8,595 | 1,696 |
Net cash provided by operating activities | 91,456 | 89,302 |
Cash flows from investing activities: | ' | ' |
Capital expenditures | -14,266 | -9,338 |
Acquisition of assets | ' | -1,952 |
Proceeds from disposal of property and equipment | ' | 7 |
Investment in financing receivables | -750 | ' |
Payments received on financing receivables | ' | 9,876 |
Net cash provided by investing activities | -15,016 | -1,407 |
Cash flows from financing activities: | ' | ' |
Borrowings (payments) on revolving credit facility, net | 5,000 | -70,000 |
Payments of debt issuance costs | -1,711 | ' |
Payment of contingent consideration | -7,272 | ' |
Treasury stock purchases | -14,120 | ' |
Dividend payments | -18,961 | -12,617 |
Withholding taxes on vesting of restricted stock units | -3,948 | -4,478 |
Proceeds from the exercise of stock options | 311 | 399 |
Excess tax benefits from stock-based awards | 1,912 | 2,602 |
Net cash used in financing activities | -38,789 | -84,094 |
Effect of exchange rate changes on cash and cash equivalents | -2,166 | -1,400 |
Net increase in cash and cash equivalents | 35,485 | 2,401 |
Cash and cash equivalents at beginning of period | 48,462 | 101,162 |
Cash and cash equivalents at end of period | 83,947 | 103,563 |
Cash paid during the period for: | ' | ' |
Interest, net of amounts capitalized | 3,768 | 4,068 |
Income taxes, net of refunds | $33,215 | $35,091 |
ORGANIZATION_AND_BASIS_OF_PRES
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2014 | |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
ORGANIZATION AND BASIS OF PRESENTATION | ' |
NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION | |
Company Overview | |
Interval Leisure Group, Inc., or ILG, is a leading global provider of non-traditional lodging encompassing a portfolio of travel, leisure, membership, exchange, resort management, and rental businesses. ILG consists of two operating segments. Membership and Exchange offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients. Management and Rental provides hotel, condominium resort, timeshare resort and homeowners' association management, and rental services to both vacation property owners and vacationers. | |
On November 4, 2013, VRI Europe Limited, a subsidiary of ILG, purchased the European shared ownership resort management business of CLC World Resorts and Hotels (CLC). As part of this transaction, ILG issued to CLC shares totaling 24.5% of VRI Europe Limited. Additionally, on December 12, 2013, we acquired all of the equity of Aqua Hospitality LLC and Aqua Hotels and Resorts, Inc., referred to as Aqua, a Hawaii-based hotel and resort management company representing 29 properties in Hawaii and Guam. | |
The Membership and Exchange operating segment consists of Interval International Inc.'s businesses, referred to as Interval, and the membership and exchange related line of business of Trading Places International, or TPI, and Vacation Resorts International, or VRI. The Management and Rental operating segment consists of Aston Hotels & Resorts (referred to as Aston), Aqua, VRI Europe and the management and rental related line of business of VRI and TPI. | |
On October 1, 2014, ILG completed the previously announced acquisition of Hyatt Residential Group, now operating as Hyatt Vacation Ownership, from wholly-owned subsidiaries of Hyatt Hotels Corporation for approximately $220 million in cash. In connection with the acquisition, a subsidiary of ILG has entered into a global Master License Agreement which provides for an exclusive license for use of the Hyatt® brand with respect to the shared ownership business in exchange for license fees. | |
"Hyatt Vacation Ownership" refers to the group of businesses using that trademark pursuant to a master license agreement with a subsidiary of Hyatt Hotels Corporation. | |
Basis of Presentation | |
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of ILG's management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation have been included. Interim results are not indicative of the results that may be expected for a full year. | |
The accompanying unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2013 Annual Report on Form 10-K. | |
Seasonality | |
Revenue at ILG is influenced by the seasonal nature of travel. The Membership and Exchange businesses recognize exchange and Getaway revenue based on confirmation of the vacation, with the first quarter generally experiencing higher revenue and the fourth quarter generally experiencing lower revenue. The Management and Rental businesses recognize rental revenue based on occupancy, with the first and third quarters generally generating higher revenue and the second and fourth quarters generally generating lower revenue. The timeshare and homeowners' association management part of this business does not experience significant seasonality. | |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
NOTE 2—SIGNIFICANT ACCOUNTING POLICIES | ||||||||||||||
Our significant accounting policies were described in Note 2 to our audited consolidated financial statements included in our 2013 Annual Report on Form 10-K. Below we have included expanded descriptions of two of our significant accounting policies: our policy for accounting for business combinations to incorporate our process for determining the useful lives of identifiable intangible assets recognized separately from goodwill and a discussion which adds additional specificity to our policy on determining our allowance for doubtful accounts. Apart from these updates, there have been no significant changes in our significant accounting policies for the nine months ended September 30, 2014. | ||||||||||||||
Accounting for Business Combinations | ||||||||||||||
In accordance with ASC Topic 805, "Business Combinations," when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. | ||||||||||||||
The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. | ||||||||||||||
Additionally, as part of our accounting for business combinations we are required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: | ||||||||||||||
• | The expected use of the asset. | |||||||||||||
• | The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. | |||||||||||||
• | Any legal, regulatory, or contractual provisions that may limit the useful life. | |||||||||||||
• | Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. | |||||||||||||
• | The effects of obsolescence, demand, competition, and other economic factors. | |||||||||||||
• | The level of maintenance expenditures required to obtain the expected future cash flows from the asset. | |||||||||||||
If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. | ||||||||||||||
Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: | ||||||||||||||
• | the estimated fair value of the acquisition-related contingent consideration, which is performed using a probability-weighted income approach based upon the forecasted achievement of post-acquisition pre-determined targets; | |||||||||||||
• | the future expected cash flows from sales of products and services and related contracts and agreements; and | |||||||||||||
• | discount and long-term growth rates. | |||||||||||||
Unanticipated events and circumstances may occur which could affect the accuracy or validity of our assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes resulting from events that occur after the acquisition date, such as changes in our estimated fair value of the targets that are expected to be achieved, will be recognized in earnings in the period of the change in estimated fair value. | ||||||||||||||
Accounts Receivable | ||||||||||||||
Accounts receivable are stated at amounts due from customers, principally resort developers, members and managed properties, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. ILG determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, ILG's previous loss history, our judgment as to the specific customer's current ability to pay its obligation to ILG and the condition of the general economy. More specifically, ILG's policy for determining its allowance for doubtful accounts consists of both general and specific reserves. The general reserve methodology is distinct for each ILG business based on its historical collection experience and past practice. Predominantly, receivables greater than 120 days past due are applied a general reserve factor, while receivables 180 days or more past due are fully reserved. The determination of when to apply a specific reserve requires judgment and is directly related to the particular customer collection issue identified, such as known liquidity constraints, insolvency concerns or litigation. | ||||||||||||||
The allowance for bad debt is included within general and administrative expense within our consolidated statements of income. ILG writes off accounts receivable when they become uncollectible once we have exhausted all reasonable means of collection. | ||||||||||||||
Accounting Estimates | ||||||||||||||
ILG's management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. | ||||||||||||||
Significant estimates underlying the accompanying consolidated financial statements include: the recovery of long-lived assets as well as goodwill and other intangible assets; purchase price allocations of business combinations; the determination of deferred income taxes including related valuation allowances; the determination of deferred revenue and membership costs; and the determination of stock-based compensation. In the opinion of ILG's management, the assumptions underlying the historical consolidated financial statements of ILG and its subsidiaries are reasonable. | ||||||||||||||
Earnings per Share | ||||||||||||||
Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of restricted stock units ("RSUs") using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders do not include approximately 1.2 million and 1.0 million stock options and RSUs for the three and nine months ended September 30, 2014, respectively, and 0.8 million stock options and RSUs for each of the three and nine months ended September 30, 2013, as the effect of their inclusion would have been antidilutive to earnings per share. | ||||||||||||||
In connection with the spin-off, stock options to purchase ILG common stock were granted to non-ILG employees for which there is no future compensation expense to be recognized by ILG. As of September 30, 2014 and 2013, 0.8 million and 0.9 million, respectively, of stock options remained outstanding. | ||||||||||||||
The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended | Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Basic weighted average shares of common stock outstanding | 57,098 | 57,353 | 57,424 | 57,199 | ||||||||||
Net effect of common stock equivalents assumed to be vested related to RSUs | 583 | 627 | 547 | 532 | ||||||||||
Net effect of common stock equivalents assumed to be exercised related to stock options held by non- employees | 2 | 6 | 5 | 7 | ||||||||||
Diluted weighted average shares of common stock outstanding | 57,683 | 57,986 | 57,976 | 57,738 | ||||||||||
Recent Accounting Pronouncements | ||||||||||||||
With the exception of those discussed below, there are no recent accounting pronouncements or changes in accounting pronouncements since the recent accounting pronouncements described in our 2013 Annual Report on Form 10- K that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement. | ||||||||||||||
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, ("ASU 2014-15")." ASU 2014-15 requires management to perform interim and annual assessments on whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year of the date the financial statements are issued and to provide related disclosures, if required. The ASU is effective for fiscal years beginning after December 15, 2016 (and interim periods within those fiscal years), with early adoption permitted. The standard allows for either a full retrospective or modified retrospective transition method. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In June 2014, the FASB issued ASU No. 2014-12, "Compensation—Stock Compensation (Topic 718): Accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12")." ASU 2014- 12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity's satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under ASU 2014-12. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within that period), with early adoption permitted. In addition, all entities will have the option of applying the guidance either prospectively (i.e. only to awards granted or modified on or after the effective date of the issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at or after the beginning of the first annual period presented (i.e., the earliest presented comparative period). We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). The FASB and the International Accounting Standards Board ("IASB") initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification ("Codification") and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014-09 supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2016 (and interim periods within that period); early adoption is not permitted. Given the complexities of this new standard, we are unable to determine, at this time, whether adoption of this standard will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In April 2014, the FASB ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)" ("ASU 2014-08"). The amendments in ASU 2014-08 change the requirements for reporting and disclosing discontinued operations. Among other items, this new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and "represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results." The standard states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years), with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In January 2014, the FASB issued ASU No. 2014-04, "Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310- 40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure" ("ASU 2014-04"). Current US GAAP requires a loan to be reclassified to Other Real Estate Owned ("OREO") upon a troubled debt restructuring that is "in substance a repossession or foreclosure," where the creditor receives "physical possession" of the debtor's assets regardless of whether formal foreclosure proceedings take place. The amendments in ASU 2014-04 clarify when an "in substance a repossession or foreclosure" and "physical possession" has occurred as these terms are not defined in US GAAP, in addition to requiring certain supplementary interim and annual disclosures. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years) and shall be applied prospectively, with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
Adopted Accounting Pronouncements | ||||||||||||||
In July 2013, the FASB issued ASU 2013-10, "Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate, ("OIS")) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-10"). ASU 2013-10 ratified the Task Force's consensus to allow the Fed Funds effective swap rate to serve as a benchmark interest rate in the United States, which was previously defined in ASC 815 as either (1) a rate on direct obligations of the U.S. Department of the Treasury (UST) or (2) the LIBOR swap rate. ASU 2013-10 does not add to the disclosure requirements in ASC 815-10- 50; however, in order to comply with the required disclosures related to fair value in ASC 820 a separate process for determining the fair value hierarchy of derivatives when the OIS rate is an input may be required. The ASU is required to be applied prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The adoption of ASU 2013-10 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In March 2013, the FASB issued ASU 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment ("CTA") upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-05"). ASU 2013-05 applies to the release of the CTA into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those fiscal years) and shall be applied prospectively. The adoption of ASU 2013-05 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In February 2013, the FASB issued ASU 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date" ("ASU 2013-04"). ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date. The ASU requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangements among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co- obligors. ASU 2013-04 also requires an entity to disclose the nature and amount of those obligations. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those years), and shall be applied retrospectively. The adoption of ASU 2013-04 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
GOODWILL_AND_OTHER_INTANGIBLE_
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
NOTE 3—GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||
Pursuant to FASB guidance as codified within ASC 350, "Intangibles—Goodwill and Other," goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. ILG determined our Membership and Exchange and Management and Rental operating segments are individual reporting units which are also individual reportable segments of ILG pursuant to ASC 280, Segment Reporting ("ASC 280"). ILG tests goodwill and other indefinite-lived intangible assets for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the assets might be impaired. Goodwill is tested for impairment based on either a qualitative assessment or a two-step impairment test, as more fully described in Note 2 of our 2013 Annual Report on Form 10-K. When performing the two-step impairment test, if the carrying amount of a reporting unit's goodwill exceeds its implied fair value, an impairment loss equal to the excess is recorded. | ||||||||||||||||||||
As of October 1, 2013, we reviewed the carrying value of goodwill and other intangible assets of each of our two reporting units. Goodwill assigned to the Membership and Exchange and Management and Rental reporting units as of that date was $483.5 million and $22.3 million, respectively. We elected to bypass the qualitative assessment for the 2013 annual test and performed the first step of the impairment test on both our reporting units. Following the impairment test, we concluded that each reporting unit's fair value exceeded its carrying value and, therefore, the second step of the impairment test was not necessary. As of September 30, 2014, we did not identify any triggering events which required an interim impairment test subsequent to our annual impairment test on October 1, 2013. | ||||||||||||||||||||
The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill as of September 30, 2014 and December 31, 2013 (in thousands): | ||||||||||||||||||||
Balance as of | Additions | Deductions | Foreign | Goodwill Impairment | Balance as of | |||||||||||||||
January 1, | Currency | September 30, | ||||||||||||||||||
2014 | Translation | 2014 | ||||||||||||||||||
Membership and Exchange | $ | 483,462 | $ | — | $ | — | $ | — | $ | — | $ | 483,462 | ||||||||
Management and Rental | 57,377 | — | — | (294 | ) | — | 57,083 | |||||||||||||
Total | $ | 540,839 | $ | — | $ | — | $ | (294 | ) | $ | — | $ | 540,545 | |||||||
Balance as of | Additions | Deductions | Foreign | Goodwill | Balance as of | |||||||||||||||
January 1, | Currency | Impairment | December 31, | |||||||||||||||||
2013 | Translation | 2013 | ||||||||||||||||||
Membership and Exchange | $ | 483,462 | $ | — | $ | — | $ | — | $ | — | $ | 483,462 | ||||||||
Management and Rental | 22,312 | 34,533 | — | 532 | — | 57,377 | ||||||||||||||
Total | $ | 505,774 | $ | 34,533 | $ | — | $ | 532 | $ | — | $ | 540,839 | ||||||||
Other Intangible Assets | ||||||||||||||||||||
The balance of other intangible assets, net as of September 30, 2014 and December 31, 2013 is as follows (in thousands): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Intangible assets with indefinite lives | $ | 135,311 | $ | 136,713 | ||||||||||||||||
Intangible assets with definite lives, net | 80,225 | 89,151 | ||||||||||||||||||
Total intangible assets, net | $ | 215,536 | $ | 225,864 | ||||||||||||||||
The $1.4 million change in our indefinite-lived intangible assets during the nine months ended September 30, 2014 reflects the associated foreign currency translation of intangible assets carried on the books of an ILG entity whose functional currency is not the US dollar. | ||||||||||||||||||||
At September 30, 2014 and December 31, 2013, intangible assets with indefinite lives relate to the following (in thousands): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Resort management contracts | $ | 91,395 | $ | 92,797 | ||||||||||||||||
Trade names and trademarks | 43,916 | 43,916 | ||||||||||||||||||
Total | $ | 135,311 | $ | 136,713 | ||||||||||||||||
At September 30, 2014, intangible assets with definite lives relate to the following (in thousands): | ||||||||||||||||||||
Cost | Accumulated | Net | ||||||||||||||||||
Amortization | ||||||||||||||||||||
Purchase agreements | $ | 75,879 | $ | (75,324 | ) | $ | 555 | |||||||||||||
Resort management contracts | 107,958 | (34,354 | ) | 73,604 | ||||||||||||||||
Other | 21,832 | (15,766 | ) | 6,066 | ||||||||||||||||
Total | $ | 205,669 | $ | (125,444 | ) | $ | 80,225 | |||||||||||||
At December 31, 2013, intangible assets with definite lives relate to the following (in thousands): | ||||||||||||||||||||
Cost | Accumulated | Net | ||||||||||||||||||
Amortization | ||||||||||||||||||||
Purchase agreements | $ | 75,879 | $ | (74,967 | ) | $ | 912 | |||||||||||||
Resort management contracts | 108,202 | (27,518 | ) | 80,684 | ||||||||||||||||
Other | 21,817 | (14,262 | ) | 7,555 | ||||||||||||||||
Total | $ | 205,898 | $ | (116,747 | ) | $ | 89,151 | |||||||||||||
Amortization of intangible assets with definite lives is primarily computed on a straight-line basis. Total amortization expense for intangible assets with definite lives was $2.9 million and $2.0 million for the three months ended September 30, 2014 and 2013, respectively, and $8.7 million and $5.9 million for the nine months ended September 30, 2014 and 2013, respectively. Based on September 30, 2014 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in thousands): | ||||||||||||||||||||
Twelve month period ending September 30, | ||||||||||||||||||||
2015 | $ | 11,387 | ||||||||||||||||||
2016 | 10,407 | |||||||||||||||||||
2017 | 8,922 | |||||||||||||||||||
2018 | 8,138 | |||||||||||||||||||
2019 | 7,467 | |||||||||||||||||||
2020 and thereafter | 33,904 | |||||||||||||||||||
$ | 80,225 | |||||||||||||||||||
PROPERTY_AND_EQUIPMENT
PROPERTY AND EQUIPMENT | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
PROPERTY AND EQUIPMENT | ' | |||||||
PROPERTY AND EQUIPMENT | ' | |||||||
NOTE 4—PROPERTY AND EQUIPMENT | ||||||||
Property and equipment, net is as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Computer equipment | $ | 20,765 | $ | 20,084 | ||||
Capitalized software | 91,290 | 84,067 | ||||||
Land, buildings and leasehold improvements | 29,235 | 28,905 | ||||||
Furniture and other equipment | 15,588 | 14,830 | ||||||
Projects in progress | 12,021 | 8,296 | ||||||
168,899 | 156,182 | |||||||
Less: accumulated depreciation and amortization | (106,891 | ) | (96,626 | ) | ||||
Total property and equipment, net | $ | 62,008 | $ | 59,556 | ||||
LONGTERM_DEBT
LONG-TERM DEBT | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
LONG-TERM DEBT | ' | |||||||
LONG-TERM DEBT | ' | |||||||
NOTE 5—LONG-TERM DEBT | ||||||||
Long-term debt is as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Revolving credit facility (interest rate of 1.66% at September 30, 2014 and 1.67% at December 31, 2013) | $ | 258,000 | $ | 253,000 | ||||
Total long-term debt | $ | 258,000 | $ | 253,000 | ||||
Credit Facility | ||||||||
In April 2014, we entered into the first amendment to the June 21, 2012 amended and restated credit agreement (collectively, the "Amended Credit Agreement") which increases the revolving credit facility from $500 million to $600 million, extends the maturity of the credit facility to April 8, 2019 and provides for certain other amendments to covenants. The terms related to interest rates and commitment fees remain unchanged. As of September 30, 2014, there was $258 million outstanding on the revolving credit facility. Any principal amounts outstanding under the revolving credit facility are due at maturity. The interest rate on the Amended Credit Agreement is based on (at our election) either LIBOR plus a predetermined margin that ranges from 1.25% to 2.25%, or the Base Rate as defined in the Amended Credit Agreement plus a predetermined margin that ranges from 0.25% to 1.25%, in each case based on our leverage ratio. As of September 30, 2014, the applicable margin was 1.75% per annum for LIBOR revolving loans and 0.75% per annum for Base Rate loans. The Amended Credit Agreement has a commitment fee on undrawn amounts that ranges from 0.25% to 0.375% per annum based on our leverage ratio and as of September 30, 2014 the commitment fee was 0.275%. Interest expense for the three months ended September 30, 2014 and 2013 was $1.5 million and $1.3 million, respectively, and for the nine months ended September 30, 2014 and 2013 was $4.5 million and $4.6 million, respectively. | ||||||||
Pursuant to the Amended Credit Agreement, all obligations under the revolving credit facility are unconditionally guaranteed by ILG and certain of its subsidiaries. Borrowings are further secured by (1) 100% of the voting equity securities of ILG's U.S. subsidiaries and 65% of the equity in our first-tier foreign subsidiaries and (2) substantially all of our domestic tangible and intangible property. | ||||||||
Restrictions and Covenants | ||||||||
The Amended Credit Agreement has various financial and operating covenants that place significant restrictions on us, including our ability to incur additional indebtedness, incur additional liens, issue redeemable stock and preferred stock, pay dividends or distributions or redeem or repurchase capital stock, prepay, redeem or repurchase debt, make loans and investments, enter into agreements that restrict distributions from our subsidiaries, sell assets and capital stock of our subsidiaries, enter into certain transactions with affiliates and consolidate or merge with or into or sell substantially all of our assets to another person. | ||||||||
The Amended Credit Agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated leverage ratio of consolidated debt, less credit given for a portion of foreign cash, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), as defined in the Amended Credit Agreement. Additionally, we are required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense, as defined in the Amended Credit Agreement. Currently, the maximum consolidated leverage ratio is 3.5x and the minimum consolidated interest coverage ratio is 3.0x. As of September 30, 2014, ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated leverage ratio and consolidated interest coverage ratio under the Amended Credit Agreement were 1.38 and 32.95, respectively. | ||||||||
In November 2014, we entered into a second amendment to the Amended Credit Agreement which primarily provides for a second letter of credit issuer and certain other amendments to covenants. Under this amendment, the financial covenants, interest rates, commitment fees and other significant terms remain unchanged. | ||||||||
Debt Issuance Costs | ||||||||
In connection with entering into the Amended Credit Agreement in June 2012, we incurred $3.9 million of lender and third-party debt issuance costs and wrote-off the remaining unamortized balance of $0.6 million relating to the original revolving credit and term loan facilities. In connection with entering into the first amendment in April 2014, we carried over $2.5 million of unamortized debt issuance costs pertaining to our June 2012 Amended Credit Agreement and incurred and deferred an additional $1.7 million of debt issuance costs. As of September 30, 2014, total unamortized debt issuance costs were $3.9 million, net of $1.8 million of accumulated amortization. As of December 31, 2013, total debt issuance costs on outstanding debt were $2.7 million, net of $1.2 million of accumulated amortization. Unamortized debt issuance costs are included in "Other non-current assets" in our consolidated balance sheets and are amortized to "Interest expense" on a straight-line basis through the maturity date of the Amended Credit Agreement. | ||||||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
NOTE 6—FAIR VALUE MEASUREMENTS | ||||||||||||||
In accordance with ASC Topic 820, "Fair Value Measurement," ("ASC 820") the fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability's fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: | ||||||||||||||
Level 1— | Observable inputs that reflect quoted prices in active markets | |||||||||||||
Level 2— | Inputs other than quoted prices in active markets that are either directly or indirectly observable | |||||||||||||
Level 3— | Unobservable inputs in which little or no market data exists, therefore requiring the company to develop its own assumptions | |||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
The estimated fair value of financial instruments below has been determined using available market information and appropriate valuation methodologies, as applicable. There have been no changes in the methods and significant assumptions used to estimate the fair value of financial instruments during the three and nine months ended September 30, 2014. Our financial instruments include guarantees, letters of credit and surety bonds. | ||||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
(In thousands) | ||||||||||||||
Cash and cash equivalents | $ | 83,947 | $ | 83,947 | $ | 48,462 | $ | 48,462 | ||||||
Restricted cash and cash equivalents | 6,011 | 6,011 | 7,421 | 7,421 | ||||||||||
Long-term debt | (258,000 | ) | (258,000 | ) | (253,000 | ) | (253,000 | ) | ||||||
The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying consolidated balance sheets approximate fair value as they are redeemable at par upon notice or maintained with various high-quality financial institutions and have original maturities of three months or less. Under the fair value hierarchy established in ASC 820, cash and cash equivalents and restricted cash and cash equivalents are stated at fair value based on quoted prices in active markets for identical assets (Level 1). | ||||||||||||||
The carrying value of the outstanding balance under our revolving credit facility approximates fair value as of September 30, 2014 and December 31, 2013 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2). | ||||||||||||||
Fair Value of Contingent Consideration | ||||||||||||||
In connection with the VRI Europe transaction, we had an obligation to transfer additional consideration in the form of cash, resulting in incremental noncontrolling interest value in VRI Europe, based on final results of the acquired business for the twelve months ended December 31, 2013. During the second quarter of 2014, the parties reached final agreement resulting in a downward adjustment to the amount of contingent consideration by approximately $1.3 million, net of noncontrolling interest, which was recognized in earnings during that quarter. The final agreed upon liability of $6.5 million was settled in full during the second quarter of 2014. | ||||||||||||||
Additionally, in connection with our fourth quarter 2013 acquisitions, certain amounts related to the purchase consideration paid at closing were deposited into escrow to be held subject to specified future events which could occur over a period ranging from the respective acquisition dates up to 36 months thereafter, as applicable. Pursuant to ASC 805, we consider these escrowed funds to be contingent consideration whereby their release from escrow is subject to future performance. During the second quarter of 2014, the performance related to these escrowed funds was completed and consequently, the escrowed funds were released to the respective third parties and our contingent consideration liability (and corresponding asset representing the prepayment into escrow) was relieved on our consolidated balance sheet as of June 30, 2014. | ||||||||||||||
EQUITY
EQUITY | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
EQUITY | ' | |||||||
EQUITY | ' | |||||||
NOTE 7—EQUITY | ||||||||
ILG has 300 million authorized shares of common stock, par value of $.01 per share. At September 30, 2014, there were 59.5 million shares of ILG common stock issued, of which 57.1 million are outstanding with 2.4 million shares held as treasury stock. At December 31, 2013, there were 59.1 million shares of ILG common stock issued, of which 57.4 million were outstanding with 1.7 million shares held as treasury stock. | ||||||||
ILG has 25 million authorized shares of preferred stock, par value $.01 per share, none of which are issued or outstanding as of September 30, 2014 and December 31, 2013. The Board of Directors has the authority to issue the preferred stock in one or more series and to establish the rights, preferences, and dividends. | ||||||||
Dividends Declared | ||||||||
In February, May and August 2014, our Board of Directors declared quarterly dividend payments of $0.11 per share to shareholders of record on March 13, 2014, June 4, 2014 and September 3, 2014, respectively. In each of March, June and September 2014, a cash dividend of $6.3 million was paid. | ||||||||
In November 2014, our Board of Directors declared a $0.11 per share dividend payable December 17, 2014 to shareholders of record on December 3, 2014. | ||||||||
Stockholder Rights Plan | ||||||||
In June 2009, ILG's Board of Directors approved the creation of a Series A Junior Participating Preferred Stock, adopted a stockholders rights plan and declared a dividend of one right for each outstanding share of common stock held by our stockholders of record as of the close of business on June 22, 2009. The rights attach to any additional shares of common stock issued after June 22, 2009. These rights, which trade with the shares of our common stock, currently are not exercisable. Under the rights plan, these rights will be exercisable if a person or group acquires or commences a tender or exchange offer for 15% or more of our common stock. The rights plan provides certain exceptions for acquisitions by Liberty Interactive Corporation (formerly known as Liberty Media Corporation) in accordance with an agreement entered into with ILG in connection with its spin-off from IAC/InterActiveCorp (IAC). If the rights become exercisable, each right will permit its holder, other than the "acquiring person," to purchase from us shares of common stock at a 50% discount to the then prevailing market price. As a result, the rights will cause substantial dilution to a person or group that becomes an "acquiring person" on terms not approved by our Board of Directors. | ||||||||
Share Repurchase Program | ||||||||
Effective August 3, 2011 and June 4, 2014, ILG's Board of Directors authorized a share repurchase program for up to $25.0 million and $20.0 million, respectively, excluding commissions, of our outstanding common stock. Acquired shares of our common stock are held as treasury shares carried at cost on our consolidated financial statements. Common stock repurchases may be conducted in the open market or in privately negotiated transactions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements and other factors. This program may be modified, suspended or terminated by us at any time without notice. | ||||||||
During the nine months ended September 30, 2014, we repurchased 0.2 million shares of common stock for $4.1 million, including commissions, under the August 2011 repurchase program, and 0.5 million shares of common stock for $10.0 million, including commissions, under the June 2014 repurchase program. As of September 30, 2014, the remaining availability for future repurchases of our common stock was $10.0 million. | ||||||||
Accumulated Other Comprehensive Loss | ||||||||
Pursuant to final guidance issued by the FASB in February of 2013, entities are required to disclose additional information about reclassification adjustments within accumulated other comprehensive income/loss, referred to as AOCL for ILG, including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the nine months ended September 30, 2014, there were no significant items reclassified out of AOCL, and the change in AOCL pertains to current period foreign currency translation adjustments as disclosed in our accompanying consolidated statements of comprehensive income. | ||||||||
Noncontrolling Interest and Redeemable Noncontrolling Interest | ||||||||
Noncontrolling Interest | ||||||||
In connection with the VRI Europe transaction on November 4, 2013, CLC was issued a noncontrolling interest in VRI Europe representing 24.5% of the business, which was determined based on the purchase price paid by ILG for its 75.5% ownership interest as of the acquisition date. As of September 30, 2014 and December 31, 2013, this noncontrolling interest amounts to $34.4 million and $32.7 million, respectively, and is presented on our consolidated balance sheets as a component of equity. The change from December 31, 2013 to September 30, 2014 relates to the recognition of the noncontrolling interest holder's proportional share of VRI Europe's earnings, the translation effect on the foreign currency based amount, and a $0.4 million adjustment related to contingent consideration as discussed in Note 6 to the consolidated financial statements. | ||||||||
The parties have agreed not to transfer their interests in VRI Europe or CLC's related development business for a period of five years from the acquisition. In addition, they have agreed to certain rights of first refusal, and customary drag along and tag along rights, including a right by CLC to drag along ILG's VRI Europe shares in connection with a sale of the entire CLC resort business subject to minimum returns and a preemptive right by ILG. As of September 30, 2014, there have been no changes in ILG's ownership interest percentage in VRI Europe. | ||||||||
Additionally, in connection with this arrangement, ILG and CLC entered into a loan agreement whereby ILG has made available to CLC a convertible secured loan facility of $15.1 million that matures five years subsequent to the funding date with interest payable monthly. The outstanding loan is to be repaid in full at maturity either in cash or by means of a share option exercisable by ILG, at its sole discretion, which would allow for settlement of the loan in CLC's shares of VRI Europe for contractually determined equivalent value. The funding of this loan was subject to certain conditions precedent that were not met as of September 30, 2014 but were met in October 2014 and this loan was funded at that time. | ||||||||
Redeemable Noncontrolling Interest | ||||||||
The redeemable noncontrolling interest is presented as temporary equity in the mezzanine section between liabilities and equity on our consolidated balance sheet. This interest represents a noncontrolling ownership in the parent company of our Aston and Aqua businesses. In connection with the acquisition of Aston by ILG in May 2007, a member of senior management of this business purchased an ownership interest at the same per share price as ILG, a portion of which accrues preferred dividends at a rate of 10% per annum, and was granted an additional interest vesting over four and a half years. ILG is party to a fair value put and call arrangement with respect to this individual's holdings whereby this member of management could require ILG to purchase their interest or ILG could acquire such interest at fair value. The fair value of these shares upon exercise of the put or call is equal to their fair market value, determined by negotiation or arbitration, reduced by the accreted value of the preferred interest that was taken by ILG upon the purchase of Aston. The initial value of the preferred interest was equal to the acquisition price of Aston. An additional put right by the holder and call right by ILG would require, upon exercise, the purchase of these non-voting common shares by ILG immediately prior to a registered public offering by Aston, at the public offering price. | ||||||||
This put arrangement is exercisable by the counter-party outside the control of ILG and is accounted for in accordance with the ASC Topic 480, "Distinguishing Liabilities from Equity" ("ASC 480"). Pursuant to this guidance, we are required to adjust the carrying value of this noncontrolling interest, once redeemable, to its maximum redemption amount at each balance sheet date with a corresponding adjustment to retained earnings. Furthermore, if the noncontrolling interest is not currently redeemable yet probable of becoming redeemable, we are required to either (1) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the security will become redeemable, if later) to the earliest redemption date of the instrument using an appropriate methodology, usually the interest method, or (2) recognize changes in the redemption value (for example, fair value) immediately as they occur and adjust the carrying value of the security to equal the redemption value at the end of each reporting period. In applicable periods, we elect to use the second approach. | ||||||||
This put and call arrangement became redeemable in the first quarter of 2014 upon filing our 2013 Annual Report on Form 10-K, and is exercisable for a period of 60 days and annually thereafter. Upon exercise of the put or call, the consideration payable can be denominated in ILG shares, cash or a combination thereof at ILG's option. | ||||||||
As of September 30, 2014, the estimated redemption value of this redeemable interest is lower than the current carrying value on our consolidated balance sheet. Consequently, pursuant to the applicable accounting guidance, no adjustment to the balance of this noncontrolling interest was recorded for the nine months ended September 30, 2014. | ||||||||
The balance of redeemable noncontrolling interest as of September 30, 2014 and 2013 was $0.5 million and $0.4 million, respectively. Changes during the periods then ended are as follows (in thousands): | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Balance, beginning of period | $ | 444 | $ | 431 | ||||
Net income attributable to redeemable noncontrolling interest | 8 | 4 | ||||||
Balance, end of period | $ | 452 | $ | 435 | ||||
BENEFIT_PLANS
BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2014 | |
BENEFIT PLANS | ' |
BENEFIT PLANS | ' |
NOTE 8—BENEFIT PLANS | |
Under a retirement savings plan sponsored by ILG, qualified under Section 401(k) of the Internal Revenue Code, participating employees may contribute up to 50.0% of their pre-tax earnings, but not more than statutory limits. ILG provides a discretionary match under the ILG plan of fifty cents for each dollar a participant contributed into the plan with a maximum contribution of 3% of a participant's eligible earnings, subject to Internal Revenue Service ("IRS") restrictions. Matching contributions for the ILG plan were approximately $0.4 million and $1.4 million for the three and nine months ended September 30, 2014, respectively. For the three and nine months ended September 30, 2013, matching contributions for the ILG plan were approximately $0.4 million and $1.2 million, respectively. Matching contributions were invested in the same manner as each participant's voluntary contributions in the investment options provided under the plan. | |
During the three and nine months ended September 30, 2014 and 2013, we also had or participated in various benefit plans, principally defined contribution plans, for non-U.S. employees. Our contributions for these plans were approximately $0.1 million and $0.2 million in the three and nine months ended September 30, 2014 and 2013, respectively. | |
Effective August 20, 2008, a deferred compensation plan (the "Director Plan") was established to provide non-employee directors of ILG an option to defer director fees on a tax-deferred basis. Participants in the Director Plan are allowed to defer a portion or all of their compensation and are 100% vested in their respective deferrals and earnings. With respect to director fees earned for services performed after the date of such election, participants may choose from receiving cash or stock at the end of the deferral period. ILG has reserved 100,000 shares of common stock for issuance pursuant to this plan, of which 45,322 share units were outstanding at September 30, 2014. ILG does not provide matching or discretionary contributions to participants in the Director Plan. Any deferred compensation elected to be received in stock is included in diluted earnings per share. | |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||
NOTE 9—STOCK-BASED COMPENSATION | ||||||||||||||
On May 21, 2013, ILG adopted the Interval Leisure Group, Inc. 2013 Stock and Incentive Plan and stopped granting awards under the ILG 2008 Stock and Annual Incentive Plan. Both plans provide for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. RSUs are awards in the form of phantom shares or units, denominated in a hypothetical equivalent number of shares of ILG common stock and with the value of each award equal to the fair value of ILG common stock at the date of grant. Each RSU is subject to service-based vesting, where a specific period of continued employment must pass before an award vests. We grant awards subject to graded vesting (i.e., portions of the award vest at different times during the vesting period) or to cliff vesting (i.e., all awards vest at the end of the vesting period). In addition, certain RSUs are subject to attaining specific performance criteria. | ||||||||||||||
ILG recognizes non-cash compensation expense for all RSUs held by ILG's employees. For RSUs to be settled in stock, the accounting charge is measured at the grant date as the fair value of ILG common stock and expensed as non-cash compensation over the vesting term using the straight-line basis for service awards and the accelerated basis for performance-based awards with graded vesting. Certain cliff vesting awards contain performance criteria which are tied to anticipated future results of operations in determining the fair value of the award, while other cliff vesting awards with performance criteria are tied to the achievement of certain market conditions. This value is recognized as expense over the service period, net of estimated forfeitures, using the straight-line recognition method. The expense associated with RSU awards to be settled in cash is initially measured at fair value at the grant date and expensed ratably over the vesting term, recording a liability subject to mark-to-market adjustments for changes in the price of the respective common stock, as compensation expense. | ||||||||||||||
Shares underlying RSUs are not issued or outstanding until vested. In relation to our quarterly dividend, unvested RSUs are credited with dividend equivalents, in the form of additional RSUs, when dividends are paid on our shares of common stock. Such additional RSUs are forfeitable and will have the same vesting dates and will vest under the same terms as the RSUs in respect of which such additional RSUs are credited. Given such dividend equivalents are forfeitable, we do not consider them to be participating securities and, consequently, they are not subject to the two-class method of determining earnings per share. | ||||||||||||||
Under the ILG 2013 Stock and Incentive Compensation Plan, the maximum aggregate number of shares of common stock reserved for issuance as of adoption is 4.1 million shares, less one share for every share granted under any prior plan after December 31, 2012. As of September 30, 2014, ILG has 2.9 million shares available for future issuance under the 2013 Stock and Incentive Compensation Plan. | ||||||||||||||
During the first quarter of 2014 and 2013, the Compensation Committee granted approximately 390,000 and 657,000 RSUs, respectively, vesting over three to five years, to certain officers and employees of ILG and its subsidiaries. Of these RSUs granted in 2014 and 2013, approximately 116,000 and 300,000 cliff vest in three to five years and approximately 84,000 and 58,000 of these RSUs, respectively, are subject to performance criteria that could result between 0% and 200% of these awards being earned either based on defined adjusted EBITDA or relative total shareholder return targets over the respective performance period, as specified in the award document. | ||||||||||||||
For the 2014 and 2013 RSUs subject to relative total shareholder return performance criteria, the number of RSUs that may ultimately be awarded depends on whether the market condition is achieved. We used a Monte Carlo simulation analysis to estimate a per unit grant date fair value of $36.90 for 2014 and $29.61 for 2013 for these performance based RSUs. This analysis estimates the total shareholder return ranking of ILG as of the grant date relative to two peer groups approved by the Compensation Committee, over the remaining performance period. The expected volatility of ILG's common stock at the date of grant was estimated based on a historical average volatility rate for the approximate three-year performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The risk-free interest rate assumption was based on observed interest rates consistent with the approximate three-year performance measurement period. | ||||||||||||||
Non-cash compensation expense related to RSUs for the three months ended September 30, 2014 and 2013 was $2.8 million and $2.6 million, respectively. For the nine months ended September 30, 2014 and 2013, non-cash compensation expense related to RSUs was $8.3 million and $7.8 million, respectively. At September 30, 2014, there was approximately $19.4 million of unrecognized compensation cost, net of estimated forfeitures, related to RSUs, which is currently expected to be recognized over a weighted average period of approximately 1.9 years. | ||||||||||||||
The amount of stock-based compensation expense recognized in the consolidated statements of income is reduced by estimated forfeitures, as the amount recorded is based on awards ultimately expected to vest. The forfeiture rate is estimated at the grant date based on historical experience and revised, if necessary, in subsequent periods for any changes to the estimated forfeiture rate from that previously estimated. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is at least equal to the portion of the grant-date value of the award tranche that is actually vested at that date. | ||||||||||||||
Non-cash stock-based compensation expense related to equity awards is included in the following line items in the accompanying consolidated statements of income for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended | Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of sales | $ | 189 | $ | 160 | $ | 572 | $ | 519 | ||||||
Selling and marketing expense | 301 | 292 | 998 | 906 | ||||||||||
General and administrative expense | 2,327 | 2,157 | 6,727 | 6,328 | ||||||||||
Non-cash compensation expense | $ | 2,817 | $ | 2,609 | $ | 8,297 | $ | 7,753 | ||||||
The following table summarizes RSU activity during the nine months ended September 30, 2014: | ||||||||||||||
Shares | Weighted-Average | |||||||||||||
Grant Date Fair | ||||||||||||||
Value | ||||||||||||||
(In thousands) | ||||||||||||||
Non-vested RSUs at January 1, 2014 | 1,495 | $ | 17.33 | |||||||||||
Granted | 521 | 25.94 | ||||||||||||
Vested | (466 | ) | 16.25 | |||||||||||
Forfeited | (13 | ) | 18.78 | |||||||||||
Non-vested RSUs at September 30, 2014 | 1,537 | $ | 20.55 | |||||||||||
INCOME_TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2014 | |
INCOME TAXES | ' |
INCOME TAXES | ' |
NOTE 10—INCOME TAXES | |
ILG calculates its interim income tax provision in accordance with ASC 740, "Income Taxes." At the end of each interim period, ILG makes its best estimate of the annual expected effective tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax or benefit related to significant, unusual, or extraordinary items that will be separately reported or reported net of their related tax effect are individually computed and recognized in the interim period in which those items occur. In addition, the effect of a change in enacted tax laws or rates, tax status, or judgment on the realizability of a beginning-of-the-year deferred tax asset in future years is recognized in the interim period in which the change occurs. | |
The computation of the annual expected effective tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected operating income for the year, projections of the proportion of income (or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is acquired, additional information is obtained or ILG's tax environment changes. To the extent that the estimated annual effective tax rate changes during a quarter, the effect of the change on prior quarters is included in tax expense for the current quarter. | |
A valuation allowance for deferred tax assets is provided when it is more likely than not that certain deferred tax assets will not be realized. Realization is dependent upon the generation of future taxable income or the reversal of deferred tax liabilities during the periods in which those temporary differences become deductible. We consider the history of taxable income in recent years, the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies to make this assessment. | |
For the three and nine months ended September 30, 2014, ILG recorded an income tax provision for continuing operations of $11.8 million and $36.8 million, respectively, which represents effective tax rates of 34.9% and 35.8% for the respective periods. These tax rates are different than the federal statutory rate of 35% due principally to state and local income taxes offset by foreign income taxed at lower rates. These tax rates decreased due to the shift in the projections of the proportion of income earned and taxed between the various jurisdictions. During the three months ended September 30, 2014, the effective tax rate further decreased due to the impact of favorable discrete items related to the decrease in unrecognized tax benefits associated with the expiration of the statute of limitations related to certain tax credits and other income tax items related to tax credits and state taxes. | |
For the three and nine months ended September 30, 2013, ILG recorded an income tax provision for continuing operations of $13.0 million and $41.6 million, respectively, which represents effective tax rates of 43.1% and 39.9% for the respective periods. These tax rates are higher than the federal statutory rate of 35% due principally to state and local income taxes partially offset by foreign income taxed at lower rates. During the three months ended September 30, 2013, the effective tax rate increased due to income taxes associated with the effect of changes in tax laws in certain states and other income tax items, the most significant of which related to the effect of changes in tax laws in the U.K, as discussed further below, that were enacted during the third quarter of 2013. During the nine months ended September 30, 2013, the effective tax rate increased due to the shift in the projections of the proportion of income earned and taxed between the various jurisdictions and the effect of changes in tax laws in certain states and in the U.K. that were enacted during the third quarter of 2013. However, this increase was partially offset by the U.S. tax consequences of foreign operations and the decrease during the first quarter of 2013 in unrecognized tax benefits associated with the expiration of the statute of limitations related to foreign taxes. | |
As of September 30, 2014 and December 31, 2013, ILG had unrecognized tax benefits of $0.3 million and $0.5 million, respectively, which if recognized, would favorably affect the effective tax rate. During the three months ended September 30, 2014, the unrecognized tax benefits decreased by a net amount of approximately $0.1 million primarily attributable to the decrease in unrecognized tax benefits associated with the expiration of the statute of limitations related to certain tax credits. Additionally, during the nine months ended September 30, 2014, the unrecognized tax benefits decreased during the first quarter of 2014 by approximately $0.1 million related to the decrease in unrecognized tax benefits as a result of the expiration of the statute of limitations related to foreign taxes. | |
ILG recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. There were no material accruals for interest for the three and nine months ended September 30, 2014. During the nine months ended September 30, 2014, interest and penalties decreased by approximately $0.1 million during the first quarter of 2014 as a result of the expiration of the statute of limitations related to foreign taxes. As of September 30, 2014, ILG had accrued $0.3 million for interest and penalties. | |
ILG believes that it is reasonably possible that its unrecognized tax benefits could decrease by approximately $0.1 million within twelve months of the current reporting date due primarily to the expiration of the statute of limitations related to foreign taxes and other tax credits. An estimate of other changes in unrecognized tax benefits cannot be made, but is not expected to be significant. | |
ILG has routinely been under audit by federal, state, local and foreign taxing authorities. These audits include questioning the timing and the amount of deductions and the allocation of income among various tax jurisdictions. Income taxes payable include amounts considered sufficient to pay assessments that may result from examination of prior year returns; however, the amount paid upon resolution of issues raised may differ from the amount provided. Differences between the reserves for tax contingencies and the amounts owed by ILG are recorded in the period they become known. Under a tax sharing agreement, IAC indemnifies ILG for all consolidated tax liabilities and related interest and penalties for the pre-spin period. | |
The statute of limitations for IAC's federal consolidated tax returns for the years 2001 through 2009, which includes our operations from September 24, 2002, our date of acquisition by IAC, until the spin-off in August 2008, expired on July 1, 2014. Various IAC consolidated tax returns that include our operations, filed with state and local jurisdictions, are currently under examination for various tax years beginning with 2006. The IRS is also currently examining ILG's federal consolidated tax return for the period ended December 31, 2012. This examination began during the current quarter. As of September 30, 2014, no other open tax years are under examination by the IRS or any material state and local jurisdictions. | |
During 2013, the U.K. Finance Act of 2013 was enacted, which further reduced the U.K. corporate income tax rate to 21%, effective April 1, 2014 and 20%, effective April 1, 2015. The impact of the U.K. rate reduction to 21% and 20%, which reduced our U.K. net deferred tax asset and increased income tax expense, was reflected in the reporting period when the law was enacted. The change in the corporate tax rate initially negatively impacted income tax expense as the future benefit expected to be realized from our U.K. net deferred tax assets decreased; however, going forward, the lower corporate tax rate will decrease income tax expense and favorably impact our effective tax rate. | |
SEGMENT_INFORMATION
SEGMENT INFORMATION | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
NOTE 11—SEGMENT INFORMATION | ||||||||||||||
Pursuant to FASB guidance as codified in ASC 280, an operating segment is a component of a public entity (1) that engages in business activities that may earn revenues and incur expenses; (2) for which operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segments and assess its performance; and (3) for which discrete financial information is available. We also considered how the businesses are organized as to segment management, and the focus of the businesses with regards to the types of products or services offered. ILG consists of two operating segments which are also reportable segments. Membership and Exchange offers leisure and travel-related products and services to owners of vacation interests and others mostly through various membership programs, as well as related services to resort developer clients. Management and Rental provides hotel, condominium resort, timeshare resort and homeowners' association management, and vacation rental services to both vacation property owners and vacationers. | ||||||||||||||
Information on reportable segments and reconciliation to consolidated operating income is as follows (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Membership and Exchange | ||||||||||||||
Revenue | $ | 86,606 | $ | 86,615 | $ | 268,891 | $ | 284,227 | ||||||
Cost of sales | 19,487 | 20,442 | 64,462 | 68,679 | ||||||||||
Gross profit | 67,119 | 66,173 | 204,429 | 215,548 | ||||||||||
Selling and marketing expense | 13,856 | 11,919 | 39,987 | 37,973 | ||||||||||
General and administrative expense | 23,120 | 21,519 | 68,915 | 64,211 | ||||||||||
Amortization expense of intangibles | 322 | 337 | 990 | 1,011 | ||||||||||
Depreciation expense | 3,315 | 3,186 | 10,061 | 9,872 | ||||||||||
Segment operating income | $ | 26,506 | $ | 29,212 | $ | 84,476 | $ | 102,481 | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Management and Rental | ||||||||||||||
Management fee revenue | $ | 35,095 | $ | 16,209 | $ | 104,050 | $ | 47,825 | ||||||
Pass-through revenue | 24,982 | 16,332 | 74,311 | 46,968 | ||||||||||
Total revenue | 60,077 | 32,541 | 178,361 | 94,793 | ||||||||||
Cost of sales | 39,508 | 21,549 | 118,144 | 63,109 | ||||||||||
Gross profit | 20,569 | 10,992 | 60,217 | 31,684 | ||||||||||
Selling and marketing expense | 943 | 1,032 | 3,190 | 2,985 | ||||||||||
General and administrative expense | 8,220 | 5,868 | 25,113 | 17,706 | ||||||||||
Amortization expense of intangibles | 2,557 | 1,613 | 7,750 | 4,847 | ||||||||||
Depreciation expense | 450 | 313 | 1,373 | 987 | ||||||||||
Segment operating income (loss) | $ | 8,399 | $ | 2,166 | $ | 22,791 | $ | 5,159 | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Consolidated | ||||||||||||||
Revenue | $ | 146,683 | $ | 119,156 | $ | 447,252 | $ | 379,020 | ||||||
Cost of sales | 58,995 | 41,991 | 182,606 | 131,788 | ||||||||||
Gross profit | 87,688 | 77,165 | 264,646 | 247,232 | ||||||||||
Direct segment operating expenses | 52,783 | 45,787 | 157,379 | 139,592 | ||||||||||
Operating income | $ | 34,905 | $ | 31,378 | $ | 107,267 | $ | 107,640 | ||||||
Selected financial information by reporting segment is presented below (in thousands): | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Total Assets: | ||||||||||||||
Membership and Exchange | $ | 767,122 | $ | 732,161 | ||||||||||
Management and Rental | 281,737 | 292,458 | ||||||||||||
Total | $ | 1,048,859 | $ | 1,024,619 | ||||||||||
Geographic Information | ||||||||||||||
We conduct operations through offices in the U.S. and 15 other countries. For the nine months ended September 30, 2014 and 2013 revenue is sourced from over 100 countries worldwide. Other than the United States and Europe, revenue sourced from any individual country or geographic region did not exceed 10% of consolidated revenue for the three and nine months ended September 30, 2014 and 2013. | ||||||||||||||
Geographic information on revenue, based on sourcing, and long-lived assets, based on physical location, is presented in the table below (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue: | ||||||||||||||
United States | $ | 112,973 | $ | 98,252 | $ | 345,201 | $ | 310,722 | ||||||
Europe | 18,337 | 6,530 | 55,046 | 19,609 | ||||||||||
All other countries(a) | 15,373 | 14,374 | 47,005 | 48,689 | ||||||||||
Total | $ | 146,683 | $ | 119,156 | $ | 447,252 | $ | 379,020 | ||||||
(a) | Includes countries within the following continents: Africa, Asia, Australia, North America and South America. | |||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Long-lived assets (excluding goodwill and other intangible assets): | ||||||||||||||
United States | $ | 56,320 | $ | 53,056 | ||||||||||
Europe | 5,172 | 5,812 | ||||||||||||
All other countries | 516 | 688 | ||||||||||||
Total | $ | 62,008 | $ | 59,556 | ||||||||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
COMMITMENTS AND CONTINGENCIES | ' |
COMMITMENTS AND CONTINGENCIES | ' |
NOTE 12—COMMITMENTS AND CONTINGENCIES | |
In the ordinary course of business, ILG is a party to various legal proceedings. ILG establishes reserves for specific legal matters when it determines that the likelihood of an unfavorable outcome is probable and the loss is reasonably estimable. ILG does not establish reserves for identified legal matters when ILG believes that the likelihood of an unfavorable outcome is not probable. Although management currently believes that an unfavorable resolution of claims against ILG, including claims where an unfavorable outcome is reasonably possible, will not have a material impact on the liquidity, results of operations, or financial condition of ILG, these matters are subject to inherent uncertainties and management's view of these matters may change in the future. ILG also evaluates other contingent matters, including tax contingencies, to assess the probability and estimated extent of potential loss. See Note 10 for a discussion of income tax contingencies. | |
Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. These funding commitments could potentially require our performance in the event of demands by third parties or contingent events. At September 30, 2014, guarantees, surety bonds and letters of credit totaled $20.2 million, with the highest annual amount of $11.6 million in year one. The total includes the maximum potential amount of future payments (undiscounted) under guarantees of $17.7 million, which primarily relates to the Management and Rental segment's hotel and resort management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the segment's management activities, entered into on behalf of the property owners for which either party generally may terminate such leases upon 60 to 90 days prior written notice to the other. | |
In addition, certain of the Management and Rental segment's hotel and resort management agreements provide that owners receive specified percentages of the revenue generated under management. In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages, and we either retain the balance (if any) as our management fee or make up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of September 30, 2014, future amounts are not expected to be significant, individually or in the aggregate. Certain of our Management and Rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which they are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of September 30, 2014, amounts pending reimbursements are not significant. | |
European Union Value Added Tax Matter | |
In 2009, the European Court of Justice issued a judgment related to Value Added Tax ("VAT") in Europe against an unrelated party. The judgment affects companies who transact within the European Union ("EU"), specifically providers of vacation interest exchange services, and altered the manner in which the Membership and Exchange segment accounts for VAT on its revenues as well as to which EU country VAT is owed. | |
As of September 30, 2014 and December 31, 2013, ILG had an accrual of $2.2 million and $2.9 million, respectively, representing the net exposure of any VAT reclaim refund receivable and accrued VAT liabilities related to this matter. The net change in the accrual relates to a decrease in the change in estimate primarily to update the periods for which the accrued VAT liabilities are due, as well as the effect of foreign currency remeasurements. The change in estimate resulted in $0.1 million and $0.7 million of favorable adjustments to earnings in our consolidated statements of income for the three and nine months ended September 30, 2014, respectively. | |
Because of the uncertainty surrounding the ultimate outcome and settlement of these VAT liabilities, it is reasonably possible that future costs to settle these VAT liabilities as of September 30, 2014 may range from $2.2 million up to approximately $2.9 million based on quarter-end exchange rates. ILG believes that the $2.2 million accrual at September 30, 2014 is our best estimate of probable future obligations for the settlement of these VAT liabilities. The difference between the probable and reasonably possible amounts is primarily attributable to the assessment of certain potential penalties. | |
SUBSEQUENT_EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Sep. 30, 2014 | |
SUBSEQUENT EVENT | ' |
SUBSEQUENT EVENT | ' |
NOTE 13—SUBSEQUENT EVENT | |
On October 1, 2014, ILG completed the previously announced acquisition of Hyatt Residential Group, now operating as Hyatt Vacation Ownership, from wholly-owned subsidiaries of Hyatt Hotels Corporation for approximately $220 million in cash. In connection with the acquisition, a subsidiary of ILG has entered into a global Master License Agreement which provides for an exclusive license for use of the Hyatt® brand with respect to the shared ownership business in exchange for license fees. Additionally, in connection with the acquisition, we have agreed to guarantee up to $36.7 million of the construction loans for the Maui project. | |
We are currently in the process of completing the purchase price allocation for this acquisition. At this time, it is not practicable to disclose the preliminary purchase price allocation or consolidated pro forma financial information for this transaction given the short period of time between the acquisition date and the filing of this Form 10-Q. | |
During the three and nine months ended September 30, 2014, ILG incurred $0.7 million and $3.5 million of acquisition related costs in connection with this transaction, which are included in general and administrative expense in our consolidated statements of income. | |
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
Accounting for Business Combinations | ' | |||||||||||||
Accounting for Business Combinations | ||||||||||||||
In accordance with ASC Topic 805, "Business Combinations," when accounting for business combinations we are required to recognize the assets acquired, liabilities assumed, contractual contingencies, noncontrolling interests and contingent consideration at their fair value as of the acquisition date. These items are recorded on our consolidated balance sheets as of the respective acquisition dates based upon their estimated fair values at such dates. The results of operations of acquired businesses are included in the consolidated statements of income since their respective acquisition dates. | ||||||||||||||
The purchase price allocation process requires management to make significant estimates and assumptions with respect to intangible assets, estimated contingent consideration payments and/or pre-acquisition contingencies, all of which ultimately affect the fair value of goodwill established as of the acquisition date. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date and is then subsequently tested for impairment at least annually. | ||||||||||||||
Additionally, as part of our accounting for business combinations we are required to determine the useful lives of identifiable intangible assets recognized separately from goodwill. The useful life of an intangible asset is the period over which the asset is expected to contribute directly or indirectly to the future cash flows of the acquired business. An intangible asset with a finite useful life shall be amortized; an intangible asset with an indefinite useful life shall not be amortized. We base the estimate of the useful life of an intangible asset on an analysis of all pertinent factors, in particular, all of the following factors with no one factor being more presumptive than the other: | ||||||||||||||
• | The expected use of the asset. | |||||||||||||
• | The expected useful life of another asset or a group of assets to which the useful life of the intangible asset may relate. | |||||||||||||
• | Any legal, regulatory, or contractual provisions that may limit the useful life. | |||||||||||||
• | Our own historical experience in renewing or extending similar arrangements, consistent with our intended use of the asset, regardless of whether those arrangements have explicit renewal or extension provisions. | |||||||||||||
• | The effects of obsolescence, demand, competition, and other economic factors. | |||||||||||||
• | The level of maintenance expenditures required to obtain the expected future cash flows from the asset. | |||||||||||||
If no legal, regulatory, contractual, competitive, economic, or other factors limit the useful life of an intangible asset to the reporting entity, the useful life of the asset shall be considered to be indefinite. The term indefinite does not mean the same as infinite or indeterminate. The useful life of an intangible asset is indefinite if that life extends beyond the foreseeable horizon—that is, there is no foreseeable limit on the period of time over which it is expected to contribute to the cash flows of the acquired business. | ||||||||||||||
Although we believe the assumptions and estimates we have made have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired entity and are inherently uncertain. Examples of critical estimates in accounting for acquisitions include but are not limited to: | ||||||||||||||
• | the estimated fair value of the acquisition-related contingent consideration, which is performed using a probability-weighted income approach based upon the forecasted achievement of post-acquisition pre-determined targets; | |||||||||||||
• | the future expected cash flows from sales of products and services and related contracts and agreements; and | |||||||||||||
• | discount and long-term growth rates. | |||||||||||||
Unanticipated events and circumstances may occur which could affect the accuracy or validity of our assumptions, estimates or actual results. Additionally, any change in the fair value of the acquisition-related contingent consideration subsequent to the acquisition date, including changes resulting from events that occur after the acquisition date, such as changes in our estimated fair value of the targets that are expected to be achieved, will be recognized in earnings in the period of the change in estimated fair value. | ||||||||||||||
Accounts Receivable | ' | |||||||||||||
Accounts Receivable | ||||||||||||||
Accounts receivable are stated at amounts due from customers, principally resort developers, members and managed properties, net of an allowance for doubtful accounts. Accounts receivable outstanding longer than the contractual payment terms are considered past due. ILG determines its allowance by considering a number of factors, including the length of time accounts receivable are past due, ILG's previous loss history, our judgment as to the specific customer's current ability to pay its obligation to ILG and the condition of the general economy. More specifically, ILG's policy for determining its allowance for doubtful accounts consists of both general and specific reserves. The general reserve methodology is distinct for each ILG business based on its historical collection experience and past practice. Predominantly, receivables greater than 120 days past due are applied a general reserve factor, while receivables 180 days or more past due are fully reserved. The determination of when to apply a specific reserve requires judgment and is directly related to the particular customer collection issue identified, such as known liquidity constraints, insolvency concerns or litigation. | ||||||||||||||
The allowance for bad debt is included within general and administrative expense within our consolidated statements of income. ILG writes off accounts receivable when they become uncollectible once we have exhausted all reasonable means of collection. | ||||||||||||||
Accounting Estimates | ' | |||||||||||||
Accounting Estimates | ||||||||||||||
ILG's management is required to make certain estimates and assumptions during the preparation of its consolidated financial statements in accordance with GAAP. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during any period. Actual results could differ from those estimates. | ||||||||||||||
Significant estimates underlying the accompanying consolidated financial statements include: the recovery of long-lived assets as well as goodwill and other intangible assets; purchase price allocations of business combinations; the determination of deferred income taxes including related valuation allowances; the determination of deferred revenue and membership costs; and the determination of stock-based compensation. In the opinion of ILG's management, the assumptions underlying the historical consolidated financial statements of ILG and its subsidiaries are reasonable. | ||||||||||||||
Earnings per Share | ' | |||||||||||||
Earnings per Share | ||||||||||||||
Basic earnings per share attributable to common stockholders is computed by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders are computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the assumed exercise of common stock options and the vesting of restricted stock units ("RSUs") using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. The computations of diluted earnings per share available to common stockholders do not include approximately 1.2 million and 1.0 million stock options and RSUs for the three and nine months ended September 30, 2014, respectively, and 0.8 million stock options and RSUs for each of the three and nine months ended September 30, 2013, as the effect of their inclusion would have been antidilutive to earnings per share. | ||||||||||||||
In connection with the spin-off, stock options to purchase ILG common stock were granted to non-ILG employees for which there is no future compensation expense to be recognized by ILG. As of September 30, 2014 and 2013, 0.8 million and 0.9 million, respectively, of stock options remained outstanding. | ||||||||||||||
The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended | Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Basic weighted average shares of common stock outstanding | 57,098 | 57,353 | 57,424 | 57,199 | ||||||||||
Net effect of common stock equivalents assumed to be vested related to RSUs | 583 | 627 | 547 | 532 | ||||||||||
Net effect of common stock equivalents assumed to be exercised related to stock options held by non- employees | 2 | 6 | 5 | 7 | ||||||||||
Diluted weighted average shares of common stock outstanding | 57,683 | 57,986 | 57,976 | 57,738 | ||||||||||
Recent Accounting Pronouncements/Adopted Accounting Pronouncements | ' | |||||||||||||
Recent Accounting Pronouncements | ||||||||||||||
With the exception of those discussed below, there are no recent accounting pronouncements or changes in accounting pronouncements since the recent accounting pronouncements described in our 2013 Annual Report on Form 10- K that are of significance, or potential significance, to ILG based on our current operations. The following summary of recent accounting pronouncements is not intended to be an exhaustive description of the respective pronouncement. | ||||||||||||||
In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2014-15, "Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern, ("ASU 2014-15")." ASU 2014-15 requires management to perform interim and annual assessments on whether there are conditions or events that raise substantial doubt about the entity's ability to continue as a going concern within one year of the date the financial statements are issued and to provide related disclosures, if required. The ASU is effective for fiscal years beginning after December 15, 2016 (and interim periods within those fiscal years), with early adoption permitted. The standard allows for either a full retrospective or modified retrospective transition method. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In June 2014, the FASB issued ASU No. 2014-12, "Compensation—Stock Compensation (Topic 718): Accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period ("ASU 2014-12")." ASU 2014- 12 clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity's satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under ASU 2014-12. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within that period), with early adoption permitted. In addition, all entities will have the option of applying the guidance either prospectively (i.e. only to awards granted or modified on or after the effective date of the issue) or retrospectively. Retrospective application would only apply to awards with performance targets outstanding at or after the beginning of the first annual period presented (i.e., the earliest presented comparative period). We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). The FASB and the International Accounting Standards Board ("IASB") initiated a joint project to clarify the principles for recognizing revenue and to develop a common revenue standard for U.S. GAAP and IFRS that would: (i) remove inconsistencies and weaknesses in revenue requirements; (ii) provide a more robust framework for addressing revenue issues; (iii) improve comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets; (iv) provide more useful information to users of financial statements through improved disclosure requirements; and (v) simplify the preparation of financial statements by reducing the number of requirements to which an entity must refer. To meet those objectives, the FASB amended the FASB Accounting Standards Codification ("Codification") and created a new Topic 606, Revenue from Contracts with Customers. The core principle of the guidance in ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in this ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry specific guidance throughout the Industry Topics of the Codification. Additionally, ASU 2014-09 supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts. The ASU is effective for fiscal years beginning after December 15, 2016 (and interim periods within that period); early adoption is not permitted. Given the complexities of this new standard, we are unable to determine, at this time, whether adoption of this standard will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In April 2014, the FASB ASU No. 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360)" ("ASU 2014-08"). The amendments in ASU 2014-08 change the requirements for reporting and disclosing discontinued operations. Among other items, this new guidance defines a discontinued operation as a disposal of a component or group of components that is disposed of or is classified as held for sale and "represents a strategic shift that has (or will have) a major effect on an entity's operations and financial results." The standard states that a strategic shift could include a disposal of (i) a major geographical area of operations, (ii) a major line of business, (iii) a major equity method investment, or (iv) other major parts of an entity. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years), with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
In January 2014, the FASB issued ASU No. 2014-04, "Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310- 40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure" ("ASU 2014-04"). Current US GAAP requires a loan to be reclassified to Other Real Estate Owned ("OREO") upon a troubled debt restructuring that is "in substance a repossession or foreclosure," where the creditor receives "physical possession" of the debtor's assets regardless of whether formal foreclosure proceedings take place. The amendments in ASU 2014-04 clarify when an "in substance a repossession or foreclosure" and "physical possession" has occurred as these terms are not defined in US GAAP, in addition to requiring certain supplementary interim and annual disclosures. The ASU is effective for fiscal years beginning after December 15, 2014 (and interim periods within those fiscal years) and shall be applied prospectively, with early adoption permitted. We do not currently anticipate the adoption of this guidance will have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures; however, we will continue to assess through the effective date the future impact, if any, of this new accounting update to our consolidated financial statements. | ||||||||||||||
Adopted Accounting Pronouncements | ||||||||||||||
In July 2013, the FASB issued ASU 2013-10, "Derivatives and Hedging (Topic 815): Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate, ("OIS")) as a Benchmark Interest Rate for Hedge Accounting Purposes (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-10"). ASU 2013-10 ratified the Task Force's consensus to allow the Fed Funds effective swap rate to serve as a benchmark interest rate in the United States, which was previously defined in ASC 815 as either (1) a rate on direct obligations of the U.S. Department of the Treasury (UST) or (2) the LIBOR swap rate. ASU 2013-10 does not add to the disclosure requirements in ASC 815-10- 50; however, in order to comply with the required disclosures related to fair value in ASC 820 a separate process for determining the fair value hierarchy of derivatives when the OIS rate is an input may be required. The ASU is required to be applied prospectively for qualifying new or re-designated hedging relationships entered into on or after July 17, 2013. The adoption of ASU 2013-10 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In March 2013, the FASB issued ASU 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment ("CTA") upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force)" ("ASU 2013-05"). ASU 2013-05 applies to the release of the CTA into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. The ASU does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those fiscal years) and shall be applied prospectively. The adoption of ASU 2013-05 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
In February 2013, the FASB issued ASU 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation is Fixed at the Reporting Date" ("ASU 2013-04"). ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date. The ASU requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangements among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co- obligors. ASU 2013-04 also requires an entity to disclose the nature and amount of those obligations. The ASU is effective for fiscal years beginning after December 15, 2013 (and interim periods within those years), and shall be applied retrospectively. The adoption of ASU 2013-04 did not have a material impact on our consolidated financial position, results of operations, cash flows or related disclosures. | ||||||||||||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | |||||||||||||
Schedule of computation of weighted average common and common equivalent shares | ' | |||||||||||||
The computation of weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share is as follows (in thousands): | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended | Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Basic weighted average shares of common stock outstanding | 57,098 | 57,353 | 57,424 | 57,199 | ||||||||||
Net effect of common stock equivalents assumed to be vested related to RSUs | 583 | 627 | 547 | 532 | ||||||||||
Net effect of common stock equivalents assumed to be exercised related to stock options held by non- employees | 2 | 6 | 5 | 7 | ||||||||||
Diluted weighted average shares of common stock outstanding | 57,683 | 57,986 | 57,976 | 57,738 | ||||||||||
GOODWILL_AND_OTHER_INTANGIBLE_1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended | |||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
Schedule of balance of goodwill by reporting unit | ' | |||||||||||||||||||
The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill as of September 30, 2014 and December 31, 2013 (in thousands): | ||||||||||||||||||||
Balance as of | Additions | Deductions | Foreign | Goodwill Impairment | Balance as of | |||||||||||||||
January 1, | Currency | September 30, | ||||||||||||||||||
2014 | Translation | 2014 | ||||||||||||||||||
Membership and Exchange | $ | 483,462 | $ | — | $ | — | $ | — | $ | — | $ | 483,462 | ||||||||
Management and Rental | 57,377 | — | — | (294 | ) | — | 57,083 | |||||||||||||
Total | $ | 540,839 | $ | — | $ | — | $ | (294 | ) | $ | — | $ | 540,545 | |||||||
Balance as of | Additions | Deductions | Foreign | Goodwill | Balance as of | |||||||||||||||
January 1, | Currency | Impairment | December 31, | |||||||||||||||||
2013 | Translation | 2013 | ||||||||||||||||||
Membership and Exchange | $ | 483,462 | $ | — | $ | — | $ | — | $ | — | $ | 483,462 | ||||||||
Management and Rental | 22,312 | 34,533 | — | 532 | — | 57,377 | ||||||||||||||
Total | $ | 505,774 | $ | 34,533 | $ | — | $ | 532 | $ | — | $ | 540,839 | ||||||||
Schedule of balance of intangible assets, net | ' | |||||||||||||||||||
The balance of other intangible assets, net as of September 30, 2014 and December 31, 2013 is as follows (in thousands): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Intangible assets with indefinite lives | $ | 135,311 | $ | 136,713 | ||||||||||||||||
Intangible assets with definite lives, net | 80,225 | 89,151 | ||||||||||||||||||
Total intangible assets, net | $ | 215,536 | $ | 225,864 | ||||||||||||||||
Schedule of intangible assets with indefinite lives | ' | |||||||||||||||||||
At September 30, 2014 and December 31, 2013, intangible assets with indefinite lives relate to the following (in thousands): | ||||||||||||||||||||
September 30, | December 31, | |||||||||||||||||||
2014 | 2013 | |||||||||||||||||||
Resort management contracts | $ | 91,395 | $ | 92,797 | ||||||||||||||||
Trade names and trademarks | 43,916 | 43,916 | ||||||||||||||||||
Total | $ | 135,311 | $ | 136,713 | ||||||||||||||||
Schedule of intangible assets with definite lives | ' | |||||||||||||||||||
At September 30, 2014, intangible assets with definite lives relate to the following (in thousands): | ||||||||||||||||||||
Cost | Accumulated | Net | ||||||||||||||||||
Amortization | ||||||||||||||||||||
Purchase agreements | $ | 75,879 | $ | (75,324 | ) | $ | 555 | |||||||||||||
Resort management contracts | 107,958 | (34,354 | ) | 73,604 | ||||||||||||||||
Other | 21,832 | (15,766 | ) | 6,066 | ||||||||||||||||
Total | $ | 205,669 | $ | (125,444 | ) | $ | 80,225 | |||||||||||||
At December 31, 2013, intangible assets with definite lives relate to the following (in thousands): | ||||||||||||||||||||
Cost | Accumulated | Net | ||||||||||||||||||
Amortization | ||||||||||||||||||||
Purchase agreements | $ | 75,879 | $ | (74,967 | ) | $ | 912 | |||||||||||||
Resort management contracts | 108,202 | (27,518 | ) | 80,684 | ||||||||||||||||
Other | 21,817 | (14,262 | ) | 7,555 | ||||||||||||||||
Total | $ | 205,898 | $ | (116,747 | ) | $ | 89,151 | |||||||||||||
Schedule of amortization expense of intangible assets with definite lives | ' | |||||||||||||||||||
Based on September 30, 2014 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in thousands): | ||||||||||||||||||||
Twelve month period ending September 30, | ||||||||||||||||||||
2015 | $ | 11,387 | ||||||||||||||||||
2016 | 10,407 | |||||||||||||||||||
2017 | 8,922 | |||||||||||||||||||
2018 | 8,138 | |||||||||||||||||||
2019 | 7,467 | |||||||||||||||||||
2020 and thereafter | 33,904 | |||||||||||||||||||
$ | 80,225 | |||||||||||||||||||
PROPERTY_AND_EQUIPMENT_Tables
PROPERTY AND EQUIPMENT (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
PROPERTY AND EQUIPMENT | ' | |||||||
Schedule of Property and equipment, net | ' | |||||||
Property and equipment, net is as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Computer equipment | $ | 20,765 | $ | 20,084 | ||||
Capitalized software | 91,290 | 84,067 | ||||||
Land, buildings and leasehold improvements | 29,235 | 28,905 | ||||||
Furniture and other equipment | 15,588 | 14,830 | ||||||
Projects in progress | 12,021 | 8,296 | ||||||
168,899 | 156,182 | |||||||
Less: accumulated depreciation and amortization | (106,891 | ) | (96,626 | ) | ||||
Total property and equipment, net | $ | 62,008 | $ | 59,556 | ||||
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
LONG-TERM DEBT | ' | |||||||
Schedule of Long-term debt | ' | |||||||
Long-term debt is as follows (in thousands): | ||||||||
September 30, | December 31, | |||||||
2014 | 2013 | |||||||
Revolving credit facility (interest rate of 1.66% at September 30, 2014 and 1.67% at December 31, 2013) | $ | 258,000 | $ | 253,000 | ||||
Total long-term debt | $ | 258,000 | $ | 253,000 | ||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
FAIR VALUE MEASUREMENTS | ' | |||||||||||||
Schedule of estimated fair value of financial instruments | ' | |||||||||||||
September 30, 2014 | December 31, 2013 | |||||||||||||
Carrying | Fair Value | Carrying | Fair Value | |||||||||||
Amount | Amount | |||||||||||||
(In thousands) | ||||||||||||||
Cash and cash equivalents | $ | 83,947 | $ | 83,947 | $ | 48,462 | $ | 48,462 | ||||||
Restricted cash and cash equivalents | 6,011 | 6,011 | 7,421 | 7,421 | ||||||||||
Long-term debt | (258,000 | ) | (258,000 | ) | (253,000 | ) | (253,000 | ) | ||||||
EQUITY_Tables
EQUITY (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
EQUITY | ' | |||||||
Schedule of changes in redeemable noncontrolling interest | ' | |||||||
Changes during the periods then ended are as follows (in thousands): | ||||||||
September 30, | ||||||||
2014 | 2013 | |||||||
Balance, beginning of period | $ | 444 | $ | 431 | ||||
Net income attributable to redeemable noncontrolling interest | 8 | 4 | ||||||
Balance, end of period | $ | 452 | $ | 435 | ||||
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||
Schedule of allocation of recognized compensation cost | ' | |||||||||||||
Non-cash stock-based compensation expense related to equity awards is included in the following line items in the accompanying consolidated statements of income for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||
Three Months | Nine Months | |||||||||||||
Ended | Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Cost of sales | $ | 189 | $ | 160 | $ | 572 | $ | 519 | ||||||
Selling and marketing expense | 301 | 292 | 998 | 906 | ||||||||||
General and administrative expense | 2,327 | 2,157 | 6,727 | 6,328 | ||||||||||
Non-cash compensation expense | $ | 2,817 | $ | 2,609 | $ | 8,297 | $ | 7,753 | ||||||
Schedule of RSU award activity | ' | |||||||||||||
Shares | Weighted-Average | |||||||||||||
Grant Date Fair | ||||||||||||||
Value | ||||||||||||||
(In thousands) | ||||||||||||||
Non-vested RSUs at January 1, 2014 | 1,495 | $ | 17.33 | |||||||||||
Granted | 521 | 25.94 | ||||||||||||
Vested | (466 | ) | 16.25 | |||||||||||
Forfeited | (13 | ) | 18.78 | |||||||||||
Non-vested RSUs at September 30, 2014 | 1,537 | $ | 20.55 | |||||||||||
SEGMENT_INFORMATION_Tables
SEGMENT INFORMATION (Tables) | 9 Months Ended | |||||||||||||
Sep. 30, 2014 | ||||||||||||||
SEGMENT INFORMATION | ' | |||||||||||||
Schedule of information on reportable segments and reconciliation to consolidated operating income | ' | |||||||||||||
Information on reportable segments and reconciliation to consolidated operating income is as follows (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Membership and Exchange | ||||||||||||||
Revenue | $ | 86,606 | $ | 86,615 | $ | 268,891 | $ | 284,227 | ||||||
Cost of sales | 19,487 | 20,442 | 64,462 | 68,679 | ||||||||||
Gross profit | 67,119 | 66,173 | 204,429 | 215,548 | ||||||||||
Selling and marketing expense | 13,856 | 11,919 | 39,987 | 37,973 | ||||||||||
General and administrative expense | 23,120 | 21,519 | 68,915 | 64,211 | ||||||||||
Amortization expense of intangibles | 322 | 337 | 990 | 1,011 | ||||||||||
Depreciation expense | 3,315 | 3,186 | 10,061 | 9,872 | ||||||||||
Segment operating income | $ | 26,506 | $ | 29,212 | $ | 84,476 | $ | 102,481 | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Management and Rental | ||||||||||||||
Management fee revenue | $ | 35,095 | $ | 16,209 | $ | 104,050 | $ | 47,825 | ||||||
Pass-through revenue | 24,982 | 16,332 | 74,311 | 46,968 | ||||||||||
Total revenue | 60,077 | 32,541 | 178,361 | 94,793 | ||||||||||
Cost of sales | 39,508 | 21,549 | 118,144 | 63,109 | ||||||||||
Gross profit | 20,569 | 10,992 | 60,217 | 31,684 | ||||||||||
Selling and marketing expense | 943 | 1,032 | 3,190 | 2,985 | ||||||||||
General and administrative expense | 8,220 | 5,868 | 25,113 | 17,706 | ||||||||||
Amortization expense of intangibles | 2,557 | 1,613 | 7,750 | 4,847 | ||||||||||
Depreciation expense | 450 | 313 | 1,373 | 987 | ||||||||||
Segment operating income (loss) | $ | 8,399 | $ | 2,166 | $ | 22,791 | $ | 5,159 | ||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Consolidated | ||||||||||||||
Revenue | $ | 146,683 | $ | 119,156 | $ | 447,252 | $ | 379,020 | ||||||
Cost of sales | 58,995 | 41,991 | 182,606 | 131,788 | ||||||||||
Gross profit | 87,688 | 77,165 | 264,646 | 247,232 | ||||||||||
Direct segment operating expenses | 52,783 | 45,787 | 157,379 | 139,592 | ||||||||||
Operating income | $ | 34,905 | $ | 31,378 | $ | 107,267 | $ | 107,640 | ||||||
Schedule of financial information by reportable segment | ' | |||||||||||||
Selected financial information by reporting segment is presented below (in thousands): | ||||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Total Assets: | ||||||||||||||
Membership and Exchange | $ | 767,122 | $ | 732,161 | ||||||||||
Management and Rental | 281,737 | 292,458 | ||||||||||||
Total | $ | 1,048,859 | $ | 1,024,619 | ||||||||||
Schedule of geographic information on revenue, based on sourcing, and long-lived assets, based on physical location | ' | |||||||||||||
Geographic information on revenue, based on sourcing, and long-lived assets, based on physical location, is presented in the table below (in thousands): | ||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||
Revenue: | ||||||||||||||
United States | $ | 112,973 | $ | 98,252 | $ | 345,201 | $ | 310,722 | ||||||
Europe | 18,337 | 6,530 | 55,046 | 19,609 | ||||||||||
All other countries(a) | 15,373 | 14,374 | 47,005 | 48,689 | ||||||||||
Total | $ | 146,683 | $ | 119,156 | $ | 447,252 | $ | 379,020 | ||||||
(a) | Includes countries within the following continents: Africa, Asia, Australia, North America and South America. | |||||||||||||
September 30, | December 31, | |||||||||||||
2014 | 2013 | |||||||||||||
Long-lived assets (excluding goodwill and other intangible assets): | ||||||||||||||
United States | $ | 56,320 | $ | 53,056 | ||||||||||
Europe | 5,172 | 5,812 | ||||||||||||
All other countries | 516 | 688 | ||||||||||||
Total | $ | 62,008 | $ | 59,556 | ||||||||||
ORGANIZATION_AND_BASIS_OF_PRES1
ORGANIZATION AND BASIS OF PRESENTATION (Details) (USD $) | 9 Months Ended | 0 Months Ended | 1 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Nov. 04, 2013 | Dec. 12, 2013 | Oct. 31, 2014 |
item | World Resorts and Hotels [Member] | Aqua Hospitality LLC and Aqua Hotels and Resorts Inc [Member] | Hyatt Corporation | |
Vacation Resorts International Europe Limited [Member] | item | |||
ORGANIZATION AND BASIS OF PRESENTATION | ' | ' | ' | ' |
Number of operating segments | 2 | ' | ' | ' |
Definitive agreements | ' | ' | ' | ' |
Equity of VRIE issued as consideration for acquisition (as a percent) | ' | 24.50% | ' | ' |
Number of properties | ' | ' | 29 | ' |
Acquisition cost | ' | ' | ' | $220 |
SIGNIFICANT_ACCOUNTING_POLICIE3
SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 |
Securities not included in the computations of diluted earnings per share | ' | ' | ' |
Securities excluded from computation of diluted earnings per share (in shares) | 1.2 | 1 | 0.8 |
Employee and Nonemployee Stock Options [Member] | ' | ' | ' |
Securities not included in the computations of diluted earnings per share | ' | ' | ' |
Securities excluded from computation of diluted earnings per share (in shares) | 1 | 1 | ' |
Outstanding stock options (in shares) | 0.8 | 0.8 | 0.9 |
SIGNIFICANT_ACCOUNTING_POLICIE4
SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | ' | ' | ' | ' |
Basic weighted average shares of common stock outstanding | 57,098 | 57,353 | 57,424 | 57,199 |
Diluted weighted average shares of common stock outstanding | 57,683 | 57,986 | 57,976 | 57,738 |
Restricted Stock Units (RSUs) [Member] | ' | ' | ' | ' |
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | ' | ' | ' | ' |
Net effect of common stock equivalents (in shares) | 583 | 627 | 547 | 532 |
Employee and Nonemployee Stock Options [Member] | ' | ' | ' | ' |
Weighted average common and common equivalent shares used in the calculation of basic and diluted earnings per share | ' | ' | ' | ' |
Net effect of common stock equivalents (in shares) | 2 | 6 | 5 | 7 |
GOODWILL_AND_OTHER_INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $) | 9 Months Ended | ||||||||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 02, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 02, 2013 | Dec. 31, 2012 |
item | Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Management and Rental Segment [Member] | Management and Rental Segment [Member] | Management and Rental Segment [Member] | Management and Rental Segment [Member] | |||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of reporting units | 2 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goodwill | $540,545 | $540,839 | $505,774 | $483,462 | $483,462 | $483,500 | $483,462 | $57,083 | $57,377 | $22,300 | $22,312 |
GOODWILL_AND_OTHER_INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) (USD $) | 9 Months Ended | 12 Months Ended | 9 Months Ended | 12 Months Ended | |||||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 02, 2013 | Dec. 31, 2012 | Sep. 30, 2014 | Dec. 31, 2013 | Oct. 02, 2013 |
Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Membership and Exchange Segment [Member] | Management and Rental Segment [Member] | Management and Rental Segment [Member] | Management and Rental Segment [Member] | |||
Changes in carrying amount of goodwill | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Balance at the beginning of the period | $540,839 | $505,774 | $483,462 | $483,462 | $483,500 | $483,462 | $57,377 | $22,312 | $22,300 |
Additions | ' | 34,533 | ' | ' | ' | ' | ' | 34,533 | ' |
Foreign Currency Translation | -294 | 532 | ' | ' | ' | ' | -294 | 532 | ' |
Balance at the end of the period | $540,545 | $540,839 | $483,462 | $483,462 | $483,500 | $483,462 | $57,083 | $57,377 | $22,300 |
GOODWILL_AND_OTHER_INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) (USD $) | 9 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | |
Intangibles assets, net | ' | ' | ' |
Intangible assets with indefinite lives | $135,311,000 | $136,713,000 | ' |
Intangible assets with definite lives, net | 80,225,000 | 89,151,000 | 89,151,000 |
Total intangible assets, net | 215,536,000 | 225,864,000 | ' |
Change in indefinite-lived intangible assets | 1,400,000 | ' | ' |
Resort Management Contracts [Member] | ' | ' | ' |
Intangibles assets, net | ' | ' | ' |
Intangible assets with indefinite lives | 91,395,000 | 92,797,000 | ' |
Trademarks and Trade Names [Member] | ' | ' | ' |
Intangibles assets, net | ' | ' | ' |
Intangible assets with indefinite lives | $43,916,000 | $43,916,000 | ' |
GOODWILL_AND_OTHER_INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 4) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
Other intangible assets | ' | ' | ' | ' | ' |
Cost | $205,669 | ' | $205,669 | ' | $205,898 |
Accumulated Amortization | -125,444 | ' | -125,444 | ' | -116,747 |
Net | 80,225 | 89,151 | 80,225 | 89,151 | 89,151 |
Amortization expense for intangible assets | 2,879 | 1,950 | 8,740 | 5,858 | ' |
Amortization of intangible assets | ' | ' | ' | ' | ' |
2015 | 11,387 | ' | 11,387 | ' | ' |
2016 | 10,407 | ' | 10,407 | ' | ' |
2017 | 8,922 | ' | 8,922 | ' | ' |
2018 | 8,138 | ' | 8,138 | ' | ' |
2019 | 7,467 | ' | 7,467 | ' | ' |
2020 and thereafter | 33,904 | ' | 33,904 | ' | ' |
Net | 80,225 | 89,151 | 80,225 | 89,151 | 89,151 |
Purchase Agreements [Member] | ' | ' | ' | ' | ' |
Other intangible assets | ' | ' | ' | ' | ' |
Cost | 75,879 | 75,879 | 75,879 | 75,879 | ' |
Accumulated Amortization | -75,324 | -74,967 | -75,324 | -74,967 | ' |
Net | 555 | 912 | 555 | 912 | ' |
Amortization of intangible assets | ' | ' | ' | ' | ' |
Net | 555 | 912 | 555 | 912 | ' |
Resort Management Contracts [Member] | ' | ' | ' | ' | ' |
Other intangible assets | ' | ' | ' | ' | ' |
Cost | 107,958 | 108,202 | 107,958 | 108,202 | ' |
Accumulated Amortization | -34,354 | -27,518 | -34,354 | -27,518 | ' |
Net | 73,604 | 80,684 | 73,604 | 80,684 | ' |
Amortization of intangible assets | ' | ' | ' | ' | ' |
Net | 73,604 | 80,684 | 73,604 | 80,684 | ' |
Other Intangible Assets [Member] | ' | ' | ' | ' | ' |
Other intangible assets | ' | ' | ' | ' | ' |
Cost | 21,832 | 21,817 | 21,832 | 21,817 | ' |
Accumulated Amortization | -15,766 | -14,262 | -15,766 | -14,262 | ' |
Net | 6,066 | 7,555 | 6,066 | 7,555 | ' |
Amortization of intangible assets | ' | ' | ' | ' | ' |
Net | $6,066 | $7,555 | $6,066 | $7,555 | ' |
PROPERTY_AND_EQUIPMENT_Details
PROPERTY AND EQUIPMENT (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | $168,899 | $156,182 |
Less: accumulated depreciation and amortization | -106,891 | -96,626 |
Total property and equipment, net | 62,008 | 59,556 |
Computer Equipment [Member] | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 20,765 | 20,084 |
Software and Software Development Costs [Member] | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 91,290 | 84,067 |
Land, Buildings and Leasehold Improvements [Member] | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 29,235 | 28,905 |
Furniture and Other Equipment [Member] | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | 15,588 | 14,830 |
Construction in Progress [Member] | ' | ' |
PROPERTY AND EQUIPMENT | ' | ' |
Property and equipment, gross | $12,021 | $8,296 |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
LONG-TERM DEBT | ' | ' |
Total long-term debt | $258,000 | $253,000 |
Revolving Credit Facility [Member] | ' | ' |
LONG-TERM DEBT | ' | ' |
Stated interest rate (as a percent) | 1.66% | 1.67% |
Total long-term debt | $258,000 | $253,000 |
LONGTERM_DEBT_Details_2
LONG-TERM DEBT (Details 2) (USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 1 Months Ended | ||||||||||||||||||
Jun. 30, 2012 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Apr. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Apr. 08, 2014 | Apr. 07, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Jun. 30, 2012 | |
Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Revolving Credit Facility [Member] | Prior Credit Agreement [Member] | |||||||
Scenario, Actual [Member] | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | Base Rate [Member] | Base Rate [Member] | Base Rate [Member] | London Interbank Offered Rate (LIBOR) [Member] | London Interbank Offered Rate (LIBOR) [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||||||||||||
Scenario, Financial Covenant [Member] | Scenario, Financial Covenant [Member] | Minimum [Member] | Maximum [Member] | Minimum [Member] | Maximum [Member] | |||||||||||||||||||||
Senior Secured Credit Facility and Covenants | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Principal amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $600,000,000 | $500,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount outstanding | ' | 258,000,000 | ' | 258,000,000 | ' | 253,000,000 | ' | 258,000,000 | ' | 258,000,000 | ' | ' | ' | 253,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reference rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'Base Rate | ' | ' | 'LIBOR | ' | ' | ' |
Applicable margin (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.75% | 0.25% | 1.25% | 1.75% | 1.25% | 2.25% | ' |
Commitment fee (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.28% | ' | ' | ' | ' | ' | 0.25% | ' | 0.38% | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of voting equity securities of the Borrower and its U.S. subsidiaries by which credit facility is secured | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of equity in the first-tier foreign subsidiaries of the Borrower by which credit facility is secured | ' | ' | ' | ' | ' | ' | ' | ' | ' | 65.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated leverage ratio of debt over EBITDA | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1.38 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Consolidated interest coverage ratio | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 32.95 | ' | 3 | ' | 3.5 | ' | ' | ' | ' | ' | ' | ' |
Debt issuance costs incurred | 3,900,000 | ' | ' | ' | ' | ' | 1,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unamortized debt issuance costs | ' | 3,900,000 | ' | 3,900,000 | ' | 2,700,000 | 2,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated amortization on debt issuance costs | ' | 1,800,000 | ' | 1,800,000 | ' | 1,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense | ' | 1,529,000 | 1,295,000 | 4,481,000 | 4,559,000 | ' | ' | 1,500,000 | 1,300,000 | 4,500,000 | 4,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Write-off of remaining unamortized balance of deferred debt issuance costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $600,000 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Fair Value of Financial Instruments | ' | ' |
Restricted cash and cash equivalents | $6,011 | $7,421 |
Reported Value Measurement [Member] | ' | ' |
Fair Value of Financial Instruments | ' | ' |
Cash and cash equivalents | 83,947 | 48,462 |
Restricted cash and cash equivalents | 6,011 | 7,421 |
Long-term debt | -258,000 | -253,000 |
Estimate of Fair Value Measurement [Member] | ' | ' |
Fair Value of Financial Instruments | ' | ' |
Cash and cash equivalents | 83,947 | 48,462 |
Restricted cash and cash equivalents | 6,011 | 7,421 |
Long-term debt | ($258,000) | ($253,000) |
FAIR_VALUE_MEASUREMENTS_Detail1
FAIR VALUE MEASUREMENTS (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Jun. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 |
Vacation Resorts International Europe [Member] | Vacation Resorts International Europe [Member] | Series of Individually Immaterial Business Acquisitions [Member] | |
Maximum [Member] | |||
Contingent consideration related to business acquisition | ' | ' | ' |
Decrease in contingent consideration liability | $1.30 | ' | ' |
Fair value of contingent consideration | ' | 6.5 | ' |
Period for payment of contingent consideration | ' | ' | '36 months |
Net change in fair value of the contingent consideration | ($1.30) | ' | ' |
EQUITY_Details
EQUITY (Details) (USD $) | 0 Months Ended | 1 Months Ended | 3 Months Ended | 9 Months Ended | 9 Months Ended | 0 Months Ended | ||||||||||||||
Jun. 04, 2014 | Nov. 30, 2014 | Sep. 30, 2014 | Aug. 31, 2014 | Jun. 30, 2014 | 31-May-14 | Aug. 31, 2011 | Jun. 30, 2009 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Nov. 04, 2013 | Nov. 04, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
item | Repurchase program August 2011 [Member] | Repurchase program June 2014 [Member] | Vacation Resorts International Europe Limited [Member] | World Resorts and Hotels [Member] | World Resorts and Hotels [Member] | World Resorts and Hotels [Member] | World Resorts and Hotels [Member] | |||||||||||||
Convertible Debt [Member] | Vacation Resorts International Europe Limited [Member] | Vacation Resorts International Europe Limited [Member] | Vacation Resorts International Europe Limited [Member] | |||||||||||||||||
Noncontrolling Interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity of VRIE issued as consideration for acquisition (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 24.50% | ' | ' |
Ownership interest ( as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75.50% | ' | ' |
Stockholders' Equity Attributable to Noncontrolling Interest | ' | ' | $34,376,000 | ' | ' | ' | ' | ' | $34,376,000 | ' | $34,376,000 | ' | $32,708,000 | ' | ' | ' | ' | ' | $34,400,000 | $32,700,000 |
Period from acquisition during which parties have agreed not to transfer their interests | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' |
Convertible secured loan available, subject to certain conditions being met | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 15,100,000 | ' | ' | ' |
Convertible secured loan maturity period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | ' | ' | ' |
Changes during the period in redeemable noncontrolling interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Foreign currency translation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000 | ' | ' | ' | ' |
Share Repurchase Program | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Amount authorized under share repurchase program | 20,000,000 | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of common stock repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | 500,000 | ' | ' | ' | ' | ' |
Common stock repurchased | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14,120,000 | ' | ' | 4,100,000 | 10,000,000 | ' | ' | ' | ' | ' |
Remaining availability for future repurchases of common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stockholder Rights Plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Rights per common stock share declared as dividend | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum percentage of common stock to be acquired before rights become exercisable | ' | ' | ' | ' | ' | ' | ' | 15.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of discount on prevailing market price of common stock | ' | ' | ' | ' | ' | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Authorized shares of common stock | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | 300,000,000 | ' | 300,000,000 | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' |
Par value of common stock (in dollars per share) | ' | ' | $0.01 | ' | ' | ' | ' | ' | $0.01 | ' | $0.01 | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock issued | ' | ' | 59,459,009 | ' | ' | ' | ' | ' | 59,459,009 | ' | 59,459,009 | ' | 59,124,834 | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock outstanding | ' | ' | 57,100,000 | ' | ' | ' | ' | ' | 57,100,000 | ' | 57,100,000 | ' | 57,400,000 | ' | ' | ' | ' | ' | ' | ' |
Shares held as treasury stock | ' | ' | 2,363,324 | ' | ' | ' | ' | ' | 2,363,324 | ' | 2,363,324 | ' | 1,697,360 | ' | ' | ' | ' | ' | ' | ' |
Authorized shares of preferred stock | ' | ' | 25,000,000 | ' | ' | ' | ' | ' | 25,000,000 | ' | 25,000,000 | ' | 25,000,000 | ' | ' | ' | ' | ' | ' | ' |
Par value of preferred stock (in dollars per share) | ' | ' | $0.01 | ' | ' | ' | ' | ' | $0.01 | ' | $0.01 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, issued shares | ' | ' | 0 | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' |
Preferred stock, outstanding shares | ' | ' | 0 | ' | ' | ' | ' | ' | 0 | ' | 0 | ' | 0 | ' | ' | ' | ' | ' | ' | ' |
Minimum number of series to issue preferred stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividends declared per common share (in dollars per share) | ' | $0.11 | ' | $0.11 | ' | $0.11 | ' | ' | $0.11 | $0.11 | $0.33 | $0.22 | ' | ' | ' | ' | ' | ' | ' | ' |
Cash dividend paid | ' | ' | $6,300,000 | ' | $6,300,000 | ' | ' | ' | ' | ' | $18,961,000 | $12,617,000 | ' | ' | ' | ' | ' | ' | ' | ' |
EQUITY_Details_2
EQUITY (Details 2) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Redeemable Noncontrolling Interest | ' | ' |
Adjustment to the redemption value to noncontrolling interest | $0 | ' |
Changes during the period in redeemable noncontrolling interest | ' | ' |
Balance, beginning of period | 426,000 | 431,000 |
Net income attributable to redeemable noncontrolling interest | 8,000 | 4,000 |
Balance, end of period | $452,000 | $435,000 |
Aston Hotels and Resorts, LLC and Maui Condo and Home, LLC [Member] | Member of Senior Management [Member] | ' | ' |
Redeemable Noncontrolling Interest | ' | ' |
Rate at which preferred dividends accrue (as a percent) | 10.00% | ' |
Additional interest vesting period | '4 years 6 months | ' |
Exercisable period of shares subsequent to the filing of entity's annual report on Form 10-K | '60 days | ' |
BENEFIT_PLANS_Details
BENEFIT PLANS (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ' | ' | ' | ' |
Employee contribution as maximum percentage of pre-tax earnings | ' | ' | 50.00% | ' |
Employer contribution against each dollar contributed by employee (as a percent) | ' | ' | 50.00% | ' |
Matching contributions | $0.40 | $0.40 | $1.40 | $1.20 |
Benefit plan cost, non-US employees | $0.10 | $0.10 | $0.20 | $0.20 |
Director Plan | ' | ' | ' | ' |
Vesting percentage under deferred compensation plan | ' | ' | 100.00% | ' |
Shares of common stock reserved for issuance pursuant to deferred compensation plan | 100,000 | ' | 100,000 | ' |
Shares outstanding under the deferred compensation plan | 45,322 | ' | 45,322 | ' |
Maximum [Member] | ' | ' | ' | ' |
Retirement savings plan qualified under Section 401(k) of the Internal Revenue Code and other various benefit plans | ' | ' | ' | ' |
Employer's maximum contribution of participant's eligible earnings (as a percent) | ' | ' | 3.00% | ' |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 0 Months Ended | ||||||||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Mar. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | 21-May-13 | Sep. 30, 2014 | |
Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Restricted Stock Units (RSUs) [Member] | Stock and Incentive Compensation Plan 2013 [Member] | Stock and Incentive Compensation Plan 2013 [Member] | |||||
Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | Vesting Based on Performance [Member] | |||||||||||||
item | Minimum [Member] | Minimum [Member] | Maximum [Member] | Maximum [Member] | |||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of common stock reserved for issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,100,000 | ' |
Reduction from common stock reserved for issuance for every share granted under prior plan | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' |
Remaining shares available for future issuance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,900,000 |
New awards granted (in shares) | ' | ' | ' | ' | ' | 390,000 | ' | 657,000 | ' | ' | ' | ' | ' | ' | 84,000 | 58,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Award vesting period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | '3 years | '5 years | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares granted expected to cliff vest | ' | ' | ' | ' | ' | 116,000 | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percentage of target shares which can be earned by the participants (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | 0.00% | 200.00% | 200.00% | ' | ' |
Per unit grant date fair value (in dollars per unit) | ' | ' | ' | ' | ' | ' | ' | ' | $25.94 | ' | ' | ' | ' | ' | ' | ' | ' | $36.90 | $29.61 | ' | ' | ' | ' | ' | ' |
Number of peer groups for estimating total shareholder return ranking | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2 | ' | ' | ' | ' | ' | ' | ' | ' |
The estimated performance period to be considered for historical average volatility rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' |
The performance measurement period to be considered for risk free interest rate assumption | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' |
Non-cash compensation expense | $2,817,000 | $2,609,000 | $8,297,000 | $7,753,000 | $2,800,000 | ' | $2,600,000 | ' | $8,300,000 | $7,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized compensation cost, net of estimated forfeitures | ' | ' | ' | ' | $19,400,000 | ' | ' | ' | $19,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average period for recognition of unrecognized compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | '1 year 10 months 24 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Non-cash stock-based compensation expense | ' | ' | ' | ' |
Non-cash compensation expense before income taxes | $2,817 | $2,609 | $8,297 | $7,753 |
Cost of Sales [Member] | ' | ' | ' | ' |
Non-cash stock-based compensation expense | ' | ' | ' | ' |
Non-cash compensation expense before income taxes | 189 | 160 | 572 | 519 |
Selling and Marketing Expense [Member] | ' | ' | ' | ' |
Non-cash stock-based compensation expense | ' | ' | ' | ' |
Non-cash compensation expense before income taxes | 301 | 292 | 998 | 906 |
General and Administrative Expense [Member] | ' | ' | ' | ' |
Non-cash stock-based compensation expense | ' | ' | ' | ' |
Non-cash compensation expense before income taxes | $2,327 | $2,157 | $6,727 | $6,328 |
STOCKBASED_COMPENSATION_Detail2
STOCK-BASED COMPENSATION (Details 3) (Restricted Stock Units (RSUs) [Member], USD $) | 9 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 |
Restricted Stock Units (RSUs) [Member] | ' |
Shares | ' |
Outstanding at the beginning of the period (in shares) | 1,495 |
Granted (in shares) | 521 |
Vested (in shares) | -466 |
Forfeited (in shares) | -13 |
Outstanding at the end of the period (in shares) | 1,537 |
Weighted-Average Grant Date Fair Value | ' |
Outstanding at the beginning of the period (in dollars per share) | $17.33 |
Granted (in dollars per share) | $25.94 |
Vested (in dollars per share) | $16.25 |
Forfeited (in dollars per share) | $18.78 |
Outstanding at the end of the period (in dollars per share) | $20.55 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Mar. 31, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Reconciliation of total income tax provision | ' | ' | ' | ' | ' | ' |
Income tax provision | $11,838,000 | ' | $12,973,000 | $36,843,000 | $41,571,000 | ' |
Effective tax rate (as a percent) | 34.90% | ' | 43.10% | 35.80% | 39.90% | ' |
Federal statutory rate (as a percent) | 35.00% | ' | 35.00% | 35.00% | 35.00% | ' |
Unrecognized tax benefits that would favorably affect the effective tax rate, if recognized | 300,000 | ' | ' | 300,000 | ' | 500,000 |
Net decrease in unrecognized tax benefits | 100,000 | 100,000 | ' | ' | ' | ' |
Accruals for interest | 0 | ' | ' | 0 | ' | ' |
Decrease in interest and penalties | ' | 100,000 | ' | ' | ' | ' |
Accrued interest and penalties | 300,000 | ' | ' | 300,000 | ' | ' |
Estimated decrease in unrecognized tax benefits within next twelve months | $100,000 | ' | ' | $100,000 | ' | ' |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (Change in Enacted Tax Law Three [Member]) | 1 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Change in Enacted Tax Law Three [Member] | ' | ' |
Income Taxes | ' | ' |
U.K. corporate income tax rate (as a percent) | 20.00% | 21.00% |
SEGMENT_INFORMATION_Details
SEGMENT INFORMATION (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
item | |||||
SEGMENT INFORMATION | ' | ' | ' | ' | ' |
Number of operating segments which are also reportable segments | ' | ' | 2 | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' |
Revenue | $146,683 | $119,156 | $447,252 | $379,020 | ' |
Cost of sales | 58,995 | 41,991 | 182,606 | 131,788 | ' |
Gross profit | 87,688 | 77,165 | 264,646 | 247,232 | ' |
Selling and marketing expense | 14,799 | 12,951 | 43,177 | 40,958 | ' |
General and administrative expense | 31,340 | 27,387 | 94,028 | 81,917 | ' |
Amortization expense of intangibles | 2,879 | 1,950 | 8,740 | 5,858 | ' |
Depreciation expense | 3,765 | 3,499 | 11,434 | 10,859 | ' |
Direct segment operating expenses | 52,783 | 45,787 | 157,379 | 139,592 | ' |
Operating income | 34,905 | 31,378 | 107,267 | 107,640 | ' |
Total assets | ' | ' | ' | ' | ' |
Total assets | 1,048,859 | ' | 1,048,859 | ' | 1,024,619 |
Membership and Exchange Segment [Member] | ' | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' |
Revenue | 86,606 | 86,615 | 268,891 | 284,227 | ' |
Cost of sales | 19,487 | 20,442 | 64,462 | 68,679 | ' |
Gross profit | 67,119 | 66,173 | 204,429 | 215,548 | ' |
Selling and marketing expense | 13,856 | 11,919 | 39,987 | 37,973 | ' |
General and administrative expense | 23,120 | 21,519 | 68,915 | 64,211 | ' |
Amortization expense of intangibles | 322 | 337 | 990 | 1,011 | ' |
Depreciation expense | 3,315 | 3,186 | 10,061 | 9,872 | ' |
Operating income | 26,506 | 29,212 | 84,476 | 102,481 | ' |
Total assets | ' | ' | ' | ' | ' |
Total assets | 767,122 | ' | 767,122 | ' | 732,161 |
Management and Rental Segment [Member] | ' | ' | ' | ' | ' |
SEGMENT INFORMATION | ' | ' | ' | ' | ' |
Management fee revenue | 35,095 | 16,209 | 104,050 | 47,825 | ' |
Pass-through revenue | 24,982 | 16,332 | 74,311 | 46,968 | ' |
Revenue | 60,077 | 32,541 | 178,361 | 94,793 | ' |
Cost of sales | 39,508 | 21,549 | 118,144 | 63,109 | ' |
Gross profit | 20,569 | 10,992 | 60,217 | 31,684 | ' |
Selling and marketing expense | 943 | 1,032 | 3,190 | 2,985 | ' |
General and administrative expense | 8,220 | 5,868 | 25,113 | 17,706 | ' |
Amortization expense of intangibles | 2,557 | 1,613 | 7,750 | 4,847 | ' |
Depreciation expense | 450 | 313 | 1,373 | 987 | ' |
Operating income | 8,399 | 2,166 | 22,791 | 5,159 | ' |
Total assets | ' | ' | ' | ' | ' |
Total assets | $281,737 | ' | $281,737 | ' | $292,458 |
SEGMENT_INFORMATION_Details_2
SEGMENT INFORMATION (Details 2) (USD $) | 3 Months Ended | 9 Months Ended | |||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 |
item | item | ||||
Geographic Information | ' | ' | ' | ' | ' |
Number of other countries in which entity operates | 15 | ' | 15 | ' | ' |
Revenue: | ' | ' | ' | ' | ' |
Revenue | $146,683 | $119,156 | $447,252 | $379,020 | ' |
Long-lived assets (excluding goodwill and intangible assets): | ' | ' | ' | ' | ' |
Total long-lived assets | 62,008 | ' | 62,008 | ' | 59,556 |
Minimum [Member] | ' | ' | ' | ' | ' |
Geographic Information | ' | ' | ' | ' | ' |
Number of countries from which revenue is sourced | ' | ' | 100 | 100 | ' |
UNITED STATES | ' | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' | ' |
Revenue | 112,973 | 98,252 | 345,201 | 310,722 | ' |
Long-lived assets (excluding goodwill and intangible assets): | ' | ' | ' | ' | ' |
Total long-lived assets | 56,320 | ' | 56,320 | ' | 53,056 |
Europe [Member] | ' | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' | ' |
Revenue | 18,337 | 6,530 | 55,046 | 19,609 | ' |
Long-lived assets (excluding goodwill and intangible assets): | ' | ' | ' | ' | ' |
Total long-lived assets | 5,172 | ' | 5,172 | ' | 5,812 |
All Other Countries [Member] | ' | ' | ' | ' | ' |
Revenue: | ' | ' | ' | ' | ' |
Revenue | 15,373 | 14,374 | 47,005 | 48,689 | ' |
Long-lived assets (excluding goodwill and intangible assets): | ' | ' | ' | ' | ' |
Total long-lived assets | $516 | ' | $516 | ' | $688 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) (USD $) | 9 Months Ended |
In Millions, unless otherwise specified | Sep. 30, 2014 |
Guarantees Surety Bonds Letters of Credit [Member] | ' |
Commitments and guarantees | ' |
Guarantees and commitments amount | 20.2 |
Amount of guarantees and commitments, year one | 11.6 |
Indirect Guarantee of Indebtedness [Member] | ' |
Commitments and guarantees | ' |
Guarantees and commitments amount | 17.7 |
Indirect Guarantee of Indebtedness [Member] | Minimum [Member] | ' |
Commitments and guarantees | ' |
Notice period for termination of lease | '60 days |
Indirect Guarantee of Indebtedness [Member] | Maximum [Member] | ' |
Commitments and guarantees | ' |
Notice period for termination of lease | '90 days |
COMMITMENTS_AND_CONTINGENCIES_1
COMMITMENTS AND CONTINGENCIES (Details 2) (European Union Value Added Tax Matter [Member], USD $) | 3 Months Ended | 9 Months Ended | |
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 |
European Union Value Added Tax Matter [Member] | ' | ' | ' |
COMMITMENTS AND CONTINGENCIES | ' | ' | ' |
Accrual of VAT liability | $2.20 | $2.20 | $2.90 |
Favorable adjustments to earnings | 0.1 | 0.7 | ' |
Possible future costs to settle VAT liabilities, lower range | 2.2 | 2.2 | ' |
Possible future costs to settle VAT liabilities, higher range | $2.90 | $2.90 | ' |
SUBSEQUENT_EVENT1
SUBSEQUENT EVENT (Hyatt Corporation, USD $) | 1 Months Ended | 3 Months Ended | 9 Months Ended | 1 Months Ended | |
In Millions, unless otherwise specified | Oct. 31, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Oct. 31, 2014 | Oct. 01, 2014 |
Subsequent Event [Member] | Subsequent Event [Member] | ||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' |
Acquisition cost | $220 | ' | ' | $220 | ' |
Construction Loan | ' | ' | ' | ' | 36.7 |
Acquisition related costs | ' | $0.70 | $3.50 | ' | ' |