Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Interval Leisure Group, Inc. | |
Entity Central Index Key | 1,434,620 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
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 | 58,026,708 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Revenue | $ 185,922 | $ 184,552 |
Cost of sales (exclusive of depreciation and amortization shown separately below) | 82,688 | 82,357 |
Gross profit | 103,234 | 102,195 |
Selling and marketing expense | 17,991 | 18,208 |
General and administrative expense | 37,829 | 35,895 |
Amortization expense of intangibles | 3,201 | 3,501 |
Depreciation expense | 4,668 | 4,269 |
Operating income | 39,545 | 40,322 |
Other income (expense): | ||
Interest income | 284 | 267 |
Interest expense | (6,233) | (2,753) |
Other income, net | 556 | 921 |
Equity in earnings from unconsolidated entities | 1,242 | 1,524 |
Total other expense, net | (4,151) | (41) |
Earnings before income taxes and noncontrolling interests | 35,394 | 40,281 |
Income tax provision | (12,639) | (14,492) |
Net income | 22,755 | 25,789 |
Net income attributable to noncontrolling interests | (573) | (527) |
Net income attributable to common stockholders | $ 22,182 | $ 25,262 |
Earnings per share attributable to common stockholders: | ||
Basic (in dollars per share) | $ 0.38 | $ 0.44 |
Diluted (in dollars per share) | $ 0.38 | $ 0.44 |
Weighted average number of shares of common stock outstanding: | ||
Basic (in shares) | 57,619 | 57,179 |
Diluted (in shares) | 57,954 | 57,747 |
Dividends declared per share of common stock (in dollars per share) | $ 0.12 | $ 0.12 |
CONDENSED CONSOLIDATED STATEME3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 22,755 | $ 25,789 |
Other comprehensive loss, net of tax: | ||
Foreign currency translation adjustments | (4,556) | (7,421) |
Total comprehensive income, net of tax | 18,199 | 18,368 |
Less: Net income attributable to noncontrolling interests, net of tax | (573) | (527) |
Less: Other comprehensive loss (income) attributable to noncontrolling interests | (912) | 1,681 |
Total comprehensive loss (income) attributable to noncontrolling interests | (1,485) | 1,154 |
Comprehensive income attributable to common stockholders | $ 16,714 | $ 19,522 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 96,850 | $ 93,088 |
Restricted cash and cash equivalents | 12,043 | 16,638 |
Accounts receivable, net of allowance of $170 and $163, respectively | 83,908 | 47,959 |
Vacation ownership mortgages receivable, net | 5,741 | 5,913 |
Vacation ownership inventory | 44,979 | 47,006 |
Deferred membership costs | 8,109 | 8,126 |
Prepaid income taxes | 190 | 12,656 |
Prepaid expenses and other current assets | 30,684 | 25,993 |
Total current assets | 282,504 | 257,379 |
Vacation ownership mortgages receivable, net | 27,074 | 26,325 |
Investments in unconsolidated entities | 44,193 | 38,319 |
Property and equipment, net | 92,765 | 91,482 |
Goodwill | 560,904 | 561,413 |
Intangible assets, net | 244,413 | 250,367 |
Deferred membership costs | 9,650 | 9,830 |
Deferred income taxes | 273 | 277 |
Other non-current assets | 44,457 | 43,715 |
TOTAL ASSETS | 1,306,233 | 1,279,107 |
LIABILITIES: | ||
Accounts payable, trade | 22,490 | 35,998 |
Deferred revenue | 108,010 | 85,684 |
Accrued compensation and benefits | 29,125 | 26,880 |
Member deposits | 7,696 | 7,565 |
Accrued expenses and other current liabilities | 69,463 | 55,858 |
Total current liabilities | 236,784 | 211,985 |
Long-term debt | 402,988 | 415,700 |
Other long-term liabilities | 19,259 | 18,822 |
Deferred revenue | 87,424 | 87,061 |
Deferred income taxes | 82,273 | 79,420 |
Total liabilities | 828,728 | 812,988 |
Redeemable noncontrolling interest | $ 713 | $ 708 |
Commitments and contingencies | ||
STOCKHOLDERS' 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; $.01 par value; issued 60,390,032 and 59,853,933 shares, respectively | $ 604 | $ 599 |
Treasury stock—2,363,324 shares at cost, respectively | (35,034) | (35,034) |
Additional paid-in capital | 214,448 | 214,089 |
Retained earnings | 295,653 | 280,648 |
Accumulated other comprehensive loss | (31,953) | (28,309) |
Total ILG stockholders' equity | 443,718 | 431,993 |
Noncontrolling interests | 33,074 | 33,418 |
Total equity | 476,792 | 465,411 |
TOTAL LIABILITIES AND EQUITY | $ 1,306,233 | $ 1,279,107 |
CONDENSED CONSOLIDATED BALANCE5
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts receivable, allowance (in dollars) | $ 170 | $ 163 |
Preferred stock, authorized shares | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 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 | 60,390,032 | 59,853,933 |
Treasury stock, shares | 2,363,324 | 2,363,324 |
Series A Junior Participating Preferred Stock | ||
Preferred stock, authorized shares | 100,000 | 100,000 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Noncontrolling Interests | Total ILG Stockholders' Equity | Common Stock | Treasury Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Total |
Balance at Dec. 31, 2015 | $ 33,418 | $ 431,993 | $ 599 | $ (35,034) | $ 214,089 | $ 280,648 | $ (28,309) | $ 465,411 |
Balance (in shares) at Dec. 31, 2015 | 59,853,933 | 2,363,324 | 57,500,000 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 568 | 22,182 | 22,182 | $ 22,750 | ||||
Other comprehensive loss, net of tax | (912) | (3,644) | (3,644) | (4,556) | ||||
Non-cash compensation expense | 3,608 | 3,608 | 3,608 | |||||
Issuance of common stock upon vesting of restricted stock units, net of withholding taxes | (1,557) | $ 5 | (1,562) | (1,557) | ||||
Issuance of common stock upon vesting of restricted stock units, net of withholding taxes (in shares) | 536,099 | |||||||
Change in excess tax benefits from stock-based awards | (1,960) | (1,960) | (1,960) | |||||
Deferred stock compensation expense | 55 | 55 | 55 | |||||
Dividends declared on common stock | (6,959) | 218 | (7,177) | (6,959) | ||||
Balance at Mar. 31, 2016 | $ 33,074 | $ 443,718 | $ 604 | $ (35,034) | $ 214,448 | $ 295,653 | $ (31,953) | $ 476,792 |
Balance (in shares) at Mar. 31, 2016 | 60,390,032 | 2,363,324 | 58,000,000 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income | $ 22,755 | $ 25,789 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization expense of intangibles | 3,201 | 3,501 |
Amortization of debt issuance costs | 444 | 223 |
Depreciation expense | 4,668 | 4,269 |
Provision for loan losses | 489 | |
Non-cash compensation expense | 3,608 | 3,522 |
Deferred income taxes | 727 | (737) |
Equity in earnings from unconsolidated entities | (1,242) | (1,524) |
Excess tax benefits from stock-based awards | (197) | (1,817) |
Gain/(loss) on disposal of property and equipment | (1) | 218 |
Changes in operating assets and liabilities: | ||
Restricted cash | 4,595 | 4,801 |
Accounts receivable | (35,803) | (20,121) |
Vacation ownership mortgages receivable | (1,067) | 2,121 |
Vacation ownership inventory | 2,027 | 1,634 |
Prepaid expenses and other current assets | (4,429) | 3,215 |
Prepaid income taxes and income taxes payable | 12,339 | 13,914 |
Accounts payable and other current liabilities | 2,943 | 1,516 |
Deferred income | 23,113 | 22,313 |
Other, net | 1,937 | 1,868 |
Net cash provided by operating activities | 40,107 | 64,705 |
Cash flows from investing activities: | ||
Capital expenditures | (6,576) | (4,804) |
Investments in unconsolidated entities | (4,650) | |
Investment in financing receivables | (2,250) | |
Other | (2) | (6) |
Net cash used in investing activities | (13,478) | (4,810) |
Cash flows from financing activities: | ||
Payments on revolving credit facility | (13,000) | (30,000) |
Payments of debt issuance costs | (11) | (180) |
Dividend payments to stockholders | (6,959) | (6,892) |
Withholding taxes on vesting of restricted stock units | (1,557) | (4,333) |
Proceeds from the exercise of stock options | 63 | |
Excess tax benefits from stock-based awards | 197 | 1,817 |
Net cash used in financing activities | (21,330) | (39,525) |
Effect of exchange rate changes on cash and cash equivalents | (1,537) | (3,771) |
Net increase in cash and cash equivalents | 3,762 | 16,599 |
Cash and cash equivalents at beginning of period | 93,088 | 80,493 |
Cash and cash equivalents at end of period | 96,850 | 97,092 |
Cash paid during the period for: | ||
Interest, net of amounts capitalized | 897 | 2,443 |
Income taxes, net of refunds | $ (429) | $ 1,279 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2016 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION Organization Interval Leisure Group, Inc., or ILG, is a leading global provider of non-traditional lodging, encompassing a portfolio of leisure businesses from vacation exchange and rental to vacation ownership. We operate in the following two segments: Exchange and Rental and Vacation Ownership (VO). Exchange and Rental offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and operating vacation rental properties. Vacation Ownership engages in the management of vacation ownership resorts; sales, marketing, and financing of vacation ownership interests (VOIs); and related services to owners and associations. The Exchange and Rental operating segment consists of Interval International (referred to as Interval), the Hyatt Residence Club, the Trading Places International (known as TPI) operated exchange business, and Aqua-Aston Holdings, Inc. (referred to as Aqua-Aston). The Vacation Ownership operating segment consists of the management related lines of business of Vacation Resorts International (or VRI), TPI, VRI Europe and Hyatt Vacation Ownership (HVO), as well as the HVO sales and financing of VOIs. ILG was incorporated as a Delaware corporation in May 2008 in connection with a plan by IAC/InterActiveCorp, or IAC, to separate into five publicly traded companies, referred to as the "spin-off." ILG commenced trading on The NASDAQ Stock Market in August 2008 under the symbol "IILG." On April 20, 2016, our stockholders approved the issuance of ILG common stock in connection with the previously announced acquisition of the vacation ownership business of Starwood Hotels & Resorts Worldwide, Inc., or Starwood, known as Vistana Signature Experiences or Vistana. At closing, Starwood will spin-off Vistana to its stockholders immediately prior to the merger of Vistana with and into a wholly owned subsidiary of ILG. In the merger, ILG will issue approximately 72.4 million shares of ILG common stock to the holders who received Vistana common stock in the spin-off. Additionally, ILG will directly purchase certain Mexican entities and a note receivable for total consideration of approximately $125 million, which is subject to post-closing adjustment. In connection with the acquisition, Vistana will enter into an exclusive , 80 -year global license agreement with Starwood for the use of the Westin ® and Sheraton ® brands in vacation ownership. Also, Vistana will also have the non-exclusive license for the existing St. Regis ® and The Luxury Collection ® vacation ownership properties. Basis of Presentation The accompanying unaudited condensed 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 condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our 2015 Annual Report on Form 10 ‑K. Seasonality Revenue at ILG is influenced by the seasonal nature of travel. Within our Exchange and Rental segment, our vacation 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. Our vacation rental businesses recognize rental revenue based on occupancy, with the first and third quarters generally generating higher revenue as a result of increased leisure travel to our Hawaii-based managed properties during these periods, and the second and fourth quarters generally generating lower revenue. Within our Vacation Ownership segment, our sales and financing business experiences a modest impact from seasonality, with higher sales volumes during the traditional vacation periods. Our vacation ownership management businesses by and large do not experience significant seasonality. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2016 | |
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 2015 Annual Report on Form 10-K. There have been no significant changes in our significant accounting policies for the three months ended March 31, 2016. 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 condensed consolidated financial statements include: the recovery of long ‑lived assets as well as goodwill and other intangible assets; purchase price allocations of business combinations; loan loss reserves for vacation ownership mortgages receivable; 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 condensed 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 is 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 0.6 million RSUs and 0.9 million stock options and RSUs for the three months ended March 31, 2016 and 2015, respectively, 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 March 31, 2016, there were no stock options outstanding, and there were 0.8 million stock options outstanding as of March 31, 2015. 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 Ended March 31, 2016 2015 Basic weighted average shares of common stock outstanding Net effect of common stock equivalents assumed to be vested related to RSUs Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees — Diluted weighted average shares of common stock outstanding 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 2015 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 March 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). Also, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer to 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 amendments in these two ASUs are effective for fiscal years beginning after December 15, 2017 (and interim periods within that period). Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Given the complexities of this new revenue recognition standard (Topic 606), we are unable to determine, at this time, whether adoption of this standard and its associated ASUs 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 to our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-03”), to simplify the current accounting for Stock Compensation. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance will be effective for public entities for annual periods beginning after December 15, 2016 and interim periods therein. Early adoption of ASU 2016 ‑09 as of its issuance is permitted. We are currently assessing the future impact of adopting the new stock compensation standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323)” (“ASU 2016-07”). The amendments in this ASU require, among other items, that an equity method investor add the cost of acquiring an additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting, as well as eliminates certain other existing requirements. ASU 2016-07 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that would result in adoption of the equity method and earlier application is permitted. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. Adopted Accounting Pronouncements In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805).” The purpose of the ASU is to simplify the accounting for measurement-period adjustments related to business combinations. ASU 2015-16 requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period, in the reporting period in which the adjustment amounts are determined. The amendments in this update are effective for fiscal years beginning after December 31, 2015, including interim periods within the fiscal year and should be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). The FASB amended its guidance on internal use software to clarify how customers in cloud computing arrangements should determine whether the arrangement includes a software license. The guidance also eliminates the existing requirement for customers to account for software licenses they acquire by analogizing to the guidance on leases. Instead, entities will account for these arrangements as licenses of intangible assets. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). The amendments in this topic are intended to improve and simplify targeted areas of the consolidation guidance. ASU 2015-02 modifies the method for determining whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, it eliminates the presumption that a general partner should consolidate a limited partnership and impacts the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015 ‑01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225 ‑20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015 ‑01”). ASU 2015 ‑01 eliminates from generally accepted accounting principles (GAAP) the concept of extraordinary items as part of the FASB’s initiative to reduce complexity in accounting standards (the Simplification Initiative). Existing guidance requires a reporting entity to separately classify, present and disclose extraordinary events and transactions if the event or transaction meets both of the following criteria for extraordinary item classification: unusual nature and infrequency of occurrence. Under ASU 2015 ‑01, the concept of extraordinary item is eliminated from the ASC Master Glossary and replaced with definitions for infrequency of occurrence and unusual nature. The presentation and existing disclosure guidance for items that are unusual in nature or occur infrequently are retained and expanded to include items that are both unusual in nature and occur infrequently. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). A reporting entity may apply the amendments in the ASU prospectively and also may apply the amendments retrospectively to all prior periods presented in the financial statements. The adoption of this guidance did not have a material impact on our consolidated financial statements. In June 2014, the FASB issued ASU 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. 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). In addition, all entities will have the option of applying the guidance either prospectively or retrospectively. The adoption of this guidance, on a prospective basis, did not have a material impact on our consolidated financial statements. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2016 | |
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 is comprised of two operating and reportable segments: Exchange and Rental and Vacation Ownership, each of which contain two reporting units as follows: OPERATING SEGMENTS Exchange and Rental Vacation Ownership Exchange reporting unit VO management reporting unit Rental reporting unit VO sales and financing reporting unit The following tables present the balance of goodwill by reporting unit, including the changes in carrying amount of goodwill as of March 31, 2016 and December 31, 2015 (in thousands): Foreign Balance as of Currency Goodwill Balance as of January 1, 2016 Additions Deductions Translation Impairment March 31, 2016 Exchange $ $ — $ — $ — $ — $ Rental — — — — VO management — — — VO sales and financing — — — — Total $ $ — $ — $ $ — $ Foreign Balance as of Currency Goodwill Balance as of January 1, 2015 Additions Deductions Translation Impairment December 31, 2015 Exchange $ $ — $ — $ — $ — $ Rental — — — — VO management — — — VO sales and financing — — — — Total $ $ — $ — $ $ — $ Other Intangible Assets The balance of other intangible assets, net as of March 31, 2016 and December 31, 2015 is as follows (in thousands): March 31, December 31, 2016 2015 Intangible assets with indefinite lives $ $ Intangible assets with definite lives, net Total intangible assets, net $ $ The $ 2.4 million change in our indefinite-lived intangible assets during the three months ended March 31, 2016 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 March 31, 2016 and December 31, 2015, intangible assets with indefinite lives relate to the following (in thousands): March 31, December 31, 2016 2015 Resort management contracts $ $ Trade names and trademarks Total $ $ At March 31, 2016 , intangible assets with definite lives relate to the following (in thousands): Cost Accumulated Amortization Net Customer relationships $ $ $ Purchase agreements — Resort management contracts Technology — Other Total $ $ $ At December 31, 2015, intangible assets with definite lives relate to the following (in thousands): Cost Accumulated Amortization Net Customer relationships $ $ $ Purchase agreements — Resort management contracts Technology — Other Total $ $ $ In accordance with our policy on the recoverability of long-lived assets, we review the carrying value of all long-lived assets, primarily property and equipment and definite-lived intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of a long-lived asset (asset group) may be impaired. For the three months ended March 31, 2016 and the year ended December 31, 2015, we did not identify any events or changes in circumstances indicating that the carrying value of a long lived asset (or asset group) may be impaired; accordingly, a recoverability test was not warranted. 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 $ 3.2 million and $3.5 million for the three months ended March 31, 2016 and 2015, respectively. Based on March 31, 2016 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in thousands): Twelve month period ending March 31, 2017 $ 2018 2019 2020 2021 2022 and thereafter $ |
VACATION OWNERSHIP INVENTORY
VACATION OWNERSHIP INVENTORY | 3 Months Ended |
Mar. 31, 2016 | |
VACATION OWNERSHIP INVENTORY | |
VACATION OWNERSHIP INVENTORY | NOTE 4—VACATION OWNERSHIP INVENTORY As part of our acquisition of HVO on October 1, 2014, we acquired vacation ownership inventory which primarily consists of unsold vacation ownership intervals that are available for sale in their current form. As of March 31, 2016 and December 31, 2015, vacation ownership inventory is comprised of the following (in thousands): March 31, December 31, 2016 2015 Completed unsold vacation ownership interests $ $ Land held for development Total inventory $ $ |
VACATION OWNERSHIP MORTGAGES RE
VACATION OWNERSHIP MORTGAGES RECEIVABLE | 3 Months Ended |
Mar. 31, 2016 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | NOTE 5—VACATION OWNERSHIP MORTGAGES RECEIVABLE Vacation ownership mortgages receivable is comprised of various mortgage loans related to our financing of vacation ownership interval sales. As part of our acquisition of HVO on October 1, 2014, we acquired an existing portfolio of vacation ownership mortgages receivable. These loans are accounted for using the expected cash flows method of recognizing discount accretion based on the acquired loans’ expected cash flows pursuant to ASC 310-30, “Loans acquired with deteriorated credit quality.” At acquisition, we recorded these acquired loans at fair value, including a credit discount which is accreted as an adjustment to yield over the loan pools’ estimate life. Originated loans as of March 31, 2016 and December 31, 2015 represent vacation ownership mortgages receivable originated by ILG, or more specifically our Vacation Ownership segment, subsequent to the acquisition of HVO on October 1, 2014. Vacation ownership mortgages receivable carrying amounts as of March 31, 2016 and December 31, 2015 were as follows (in thousands): March 31, December 31, 2016 2015 Acquired vacation ownership mortgages receivable at various stated interest rates with varying payment through 2024 (see below) $ $ Originated vacation ownership mortgages receivable at various stated interest rates with varying payment through 2025 (see below) Less allowance for loan losses on originated loans Net vacation ownership mortgages receivable $ $ The fair value of our acquired loans as of the acquisition date was determined by use of a discounted cash flow approach which calculates a present value of expected future cash flows based on scheduled principal and interest payments over the term of the respective loans, while considering anticipated defaults and early repayments determined based on historical experience. Consequently, the fair value of these acquired loans recorded on our consolidated balance sheet as of the acquisition date includes an estimate for future loan losses which becomes the historical cost basis for that existing portfolio going forward. As of March 31, 2016 and December 31, 2015, the contractual outstanding balance of the acquired loans, which represents contractually-owed future principal amounts and accrued interest, was $24.4 million and $25.8 million, respectively. The table below presents a rollforward from December 31, 2015 of the accretable yield (interest income) expected to be earned related to our acquired loans, as well as the amount of non-accretable difference at the end of the period. Nonaccretable difference represents estimated contractually required payments in excess of estimated cash flows expected to be collected. The accretable yield represents the excess of estimated cash flows expected to be collected over the carrying amount of the acquired loans. Three Months Ended Accretable Yield March 31, 2016 Balance, beginning of period $ Accretion Reclassification between nonaccretable difference Balance, end of period $ Nonaccretable difference, end of period balance $ The accretable yield is recognized into interest income (within consolidated revenue) over the estimated life of the acquired loans using the level yield method. The accretable yield may change in future periods due to changes in the anticipated remaining life of the acquired loans, which may alter the amount of future interest income expected to be collected, and changes in expected future principal and interest cash collections which impacts the nonaccretable difference. Vacation ownership mortgages receivable as of March 31, 2016 are scheduled to mature as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending March 31, loans loans Total 2017 $ $ $ 2018 2019 2020 2021 2022 and thereafter Total Less: discount on acquired loans (1) — Less: allowance for losses — Net vacation ownership mortgages receivable $ $ $ Weighted average stated interest rate as of March 31, 2016 Range of stated interest rates as of March 31, 2016 12.5% to 17.9% 12.9% to 14.9% (1) The difference between the contractual principal amount of acquired loans of $24.4 million and the net carrying amount of $ 21.5 million as of March 31, 2016 is related to the application of ASC 310-30. Collectability We assess our vacation ownership mortgages receivable portfolio of loans for collectability on an aggregate basis. Estimates of uncollectability pertaining to our originated loans are recorded as provisions in the vacation ownership mortgages receivable allowance for losses. For originated loans, we record an estimate of uncollectability as a reduction of sales of vacation ownership intervals in the accompanying condensed consolidated statements of income at the time revenue is recognized on a vacation ownership interval sale. We evaluate our originated loan portfolio collectively as they are largely homogeneous, smaller-balance, vacation ownership mortgages receivable. We use a technique referred to as static pool analysis, which tracks uncollectibles over the entire life of those mortgages receivable, as the basis for determining our general reserve requirements on our vacation ownership mortgages receivable. The adequacy of the related allowance is determined by management through analysis of several factors, such as current economic conditions and industry trends, as well as the specific risk characteristics of the portfolio, including defaults, aging, and historical write-offs of these receivables. The allowance is maintained at a level deemed adequate by management based on a periodic analysis of the mortgage portfolio. As of March 31, 2016, allowance for losses of $ 2.3 million for uncollectability was recorded to the vacation ownership mortgages receivable allowance for losses related solely to our originated loans. Our acquired loans are remeasured at period end based on expected future cash flows which uses an estimated measure of anticipated defaults. We consider the loan loss provision on our originated loans and estimates of defaults used in the remeasurements of our acquired loans to be adequate and based on the economic environment and our assessment of the future collectability of the outstanding loans. At March 31, 2016, the weighted average FICO score within our acquired and originated loan pools was 703 and 713 , respectively, based upon the outstanding loan balance at time of origination. The average estimated rate for all future defaults for our outstanding pool of loans as of March 31, 2016 was 10.7% . On an ongoing basis, we monitor credit quality of our vacation ownership mortgages receivable portfolio based on payment activity as follows: · Current —The consumer’s note is in good standing as payments and reporting are current per the terms contractually stipulated in the agreement. · Past ‑due —We consider a vacation ownership mortgage receivable to be past ‑due based on the contractual terms of each individual financing agreement. · Non ‑performing —Vacation ownership mortgages receivable are considered non ‑performing if interest or principal is more than 120 days past due. All non ‑performing loans are placed on non ‑accrual status and we do not resume interest accrual until the receivable becomes contractually current. We apply payments we receive for vacation ownership notes receivable on non ‑performing status first to interest, then to principal, and any remainder to fees. Our aged analysis of past ‑due vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 90 days past ‑due as of March 31, 2016 is as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated loans loans Total Receivables past due $ $ $ Receivables greater than 90 days past due $ $ $ Our aged analysis of past ‑due vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 90 days past ‑due as of December 31, 2015 is as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated loans loans Total Receivables past due $ $ $ Receivables greater than 90 days past due $ $ $ |
INVESTMENTS IN UNCONSOLIDATED E
INVESTMENTS IN UNCONSOLIDATED ENTITIES | 3 Months Ended |
Mar. 31, 2016 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | NOTE 6—INVESTMENTS IN UNCONSOLIDATED ENTITIES Our investments in unconsolidated entities, recorded under the equity method of accounting in accordance with guidance in ASC 323, “Investments—Equity Method and Joint Ventures,” primarily consists of an ownership interest in Maui Timeshare Venture, LLC, a joint venture to develop and operate a vacation ownership resort in the state of Hawaii. This joint venture was acquired in connection with our acquisition of HVO and was recorded at fair value on the acquisition date. Our equity income from investments in unconsolidated entities, recorded in equity in earnings from unconsolidated entities in the accompanying condensed consolidated statement of income, was $1.2 million and $1.5 million for the three months ended March 31, 2016 and 2015, respectively. The ownership percentages of the Maui Timeshare Venture, LLC investment is 33.0% and ownership percentages of the other investments range from 25.0% to 50.0% . The carrying value of our investments in unconsolidated entities as of March 31, 2016 and December, 31, 2015 were as follows: March 31, December 31, 2016 2015 (in thousands) Maui Timeshare Venture, LLC $ $ Other Total $ $ The change from December 31, 2015 principally represents an investment made in the first quarter in a fee-for-service, real-estate brokerage firm that specializes in reselling resort timeshare properties on behalf of independent homeowners’ associations at legacy or sold-out resorts. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 3 Months Ended |
Mar. 31, 2016 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 7—PROPERTY AND EQUIPMENT Property and equipment, net is as follows (in thousands): March 31, December 31, 2016 2015 Computer equipment $ $ Capitalized software (including internally developed software) Land, buildings and leasehold improvements Furniture and other equipment Projects in progress Less: accumulated depreciation and amortization Total property and equipment, net $ $ |
LONG-TERM DEBT
LONG-TERM DEBT | 3 Months Ended |
Mar. 31, 2016 | |
LONG-TERM DEBT | |
LONG-TERM DEBT | NOTE 8—LONG-TERM DEBT Long ‑term debt is as follows (in thousands): March 31, December 31, 2016 2015 Revolving credit facility (interest rate of 2.69% at March 31, 2016 and 2.68% at December 31, 2015) $ $ 5.625% senior notes Unamortized debt issuance costs (revolving credit facility) Unamortized debt issuance costs (senior notes) Total long-term debt, net of debt issuance costs $ $ Credit Facility In April 2014, we entered into the first amendment to the June 21, 2012 amended and restated credit agreement (the “Amended Credit Agreement”) which increased the revolving credit facility from $500 million to $600 million, extended the maturity of the credit facility to April 8, 2019 and provided for certain other amendments to covenants. The terms related to interest rates and commitment fees remained unchanged. In November 2014, we entered into a second amendment 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. On April 10, 2015, we entered into a third amendment which changed the leverage-based financial covenant from a maximum consolidated total leverage to EBITDA ratio of 3.5 to 1.0 to a maximum consolidated secured leverage to EBITDA ratio of 3.25 to 1.0. In addition, the amendment adds an incurrence test allowing a maximum consolidated total leverage to EBITDA ratio of 4.5 to 1.0 on a pro forma basis in certain circumstances in which we make acquisitions or investments, incur additional indebtedness or make restricted payments. Also, the amendment added a new pricing level to the pricing grid applicable when the consolidated total leverage to EBITDA ratio equals or exceeds 3.5 to 1.0 . This pricing level is either LIBOR plus 2.5% or the base rate plus 1.5% and requires a commitment fee on undrawn amounts of 0.4% per annum. There were no other material changes under this amendment. Additionally, on May 5, 2015, we entered into a fourth amendment to the Amended Credit Agreement which changed the definition of change of control to remove the provision that certain changes in the composition of the board of directors would constitute a change of control and therefore be a default under the credit agreement. The amendment also included clarifying language regarding provisions that relate to our 5.625% senior notes due in 2023. There were no other material changes under this amendment. As of March 31, 2016, there was $62.0 million outstanding. Any principal amounts outstanding under the revolving credit facility are due at maturity. As of March 31, 2016, the interest rate on the Amended Credit Agreement is based on (at our election) either LIBOR plus a predetermined margin that ranged from 1.25% to 2.5% , or the Base Rate as defined in the Amended Credit Agreement plus a predetermined margin that ranged from 0.25% to 1.5% , in each case based on our consolidated total leverage ratio. As of March 31, 2016, the applicable margin was 2.25% per annum for LIBOR revolving loans and 1.25% per annum for Base Rate loans. As of March 31, 2016, the Amended Credit Agreement has a commitment fee on undrawn amounts that ranged from 0.25% to 0.40% per annum based on our leverage ratio and as of March 31, 2016 the commitment fee was 0.375% . 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. Senior Notes On April 10, 2015, we completed a private offering of $350 million in aggregate principal amount of our 5.625% senior notes due in 2023. The net proceeds from the offering, after deducting offering related expenses, were $343.1 million. We used the proceeds to repay indebtedness outstanding on our revolving credit facility. As of March 31, 2016, total unamortized debt issuance costs relating to these senior notes were $ 6.2 million, which are presented as a direct deduction from the principal amount. Interest on the senior notes is paid semi-annually in arrears on April 15 and October 15 of each year and the senior notes are fully and unconditionally guaranteed on a joint and several basis by our domestic subsidiaries that are required to guarantee the Amended Credit Facility. Additionally, the voting stock of the issuer and the subsidiary guarantors is 100% owned by ILG. The senior notes are redeemable from April 15, 2018 at a redemption price starting at 104.219% which declines over time. Restrictions and Covenants The senior notes and Amended Credit Agreement have 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 indenture governing the senior notes restricts our ability to issue additional debt in the event we are not in compliance with the minimum fixed charge coverage ratio of 2.0 to 1.0 and limits restricted payments and investments unless we are in compliance with the minimum fixed charge coverage ratio and the amount is within a bucket that grows with our consolidated net income. We are in compliance with this covenant as of March 31, 2016. In addition, the Amended Credit Agreement requires us to meet certain financial covenants regarding the maintenance of a maximum consolidated secured leverage ratio of consolidated secured debt, over consolidated Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”), as defined. We are also required to maintain a minimum consolidated interest coverage ratio of consolidated EBITDA over consolidated interest expense. As of March 31, 2016, the maximum consolidated secured leverage ratio was 3.25 x and the minimum consolidated interest coverage ratio was 3.0 x. As of March 31, 2016, ILG was in compliance in all material respects with the requirements of all applicable financial and operating covenants, and our consolidated secured leverage ratio and consolidated interest coverage ratio under the Amended Credit Agreement were 0.36 and 7.75 , respectively. Interest Expense and Debt Issuance Costs Interest expense for the three months ended March 31, 2016 and 2015 was $ 6 .2 million and $ 2.8 million, respectively. Interest expense for these periods is net of negligible capitalized interest relating to internally-developed software. As of March 31, 2016, total unamortized debt issuance costs were $9.0 million, net of $4.0 million of accumulated amortization, incurred in connection with the issuance and various amendments to our Amended Credit Agreement as well as the issuance of our senior notes in April 2015. As of December 31, 2015, total unamortized debt issuance costs were $9.3 million, net of $3.5 million of accumulated amortization. Unamortized debt issuance costs are presented as a reduction of long-term debt in the accompanying condensed consolidated balance sheets, pursuant to ASC 2015-03. Unamortized debt issuance costs are amortized to interest expense through the maturity date of our respective debt instruments using the effective interest method for those costs related to our senior notes, and on a straight-line basis for costs related to our Amended Credit Agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 9—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 months ended March 31, 2016. Our financial instruments are detailed in the following table. March 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Amount Value Amount Value (In thousands) Cash and cash equivalents $ $ $ $ Restricted cash and cash equivalents Financing receivables Vacation ownership mortgages receivable Investments in marketable securities Revolving credit facility (1) Senior notes (1) (1) As of March, 31, 2016, the carrying value of our revolving credit facility and senior notes include $ 2.8 million and $6.2 million of debt issuance costs, respectively, which are presented as a direct reduction of the corresponding liability. The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reflected in the accompanying condensed 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 financing receivables as of March 31, 2016 are presented in our consolidated balance sheet within other non ‑current assets and principally pertains to a convertible secured loan to CLC that matures October of 2019 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. The carrying value of this financing receivable approximates fair value through inputs inherent to the originating value of this loan, such as interest rates and ongoing credit risk accounted for through non ‑recurring adjustments for estimated credit losses as necessary (Level 2). The stated interest rate on this loan is comparable to market. Interest is recognized within our “Interest income” line item in our condensed consolidated statement of income for the three months ended March 31, 2016. We estimate the fair value of vacation ownership mortgages receivable using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model incorporates default rates, prepayment rates, coupon rates and loan terms respective to the portfolio based on current market assumptions for similar types of arrangements. Based upon the availability of market data, we have classified inputs used in the valuation of our vacation ownership mortgages receivable as Level 3. The primary sensitivity in these assumptions relates to forecasted defaults and projected prepayments which could cause the estimated fair value to vary. Investments in marketable securities consist of marketable securities (mutual funds) related to a deferred compensation plan that is funded in a Rabbi trust as of March 31, 2016 and classified as other noncurrent assets in the accompanying condensed consolidated balance sheets. This deferred compensation plan was created and funded in connection with the HVO acquisition. Participants in the deferred compensation plan unilaterally determine how their compensation deferrals are invested within the confines of the Rabbi trust which holds the marketable securities. Consequently, management has designated these marketable securities as trading investments, as allowed by applicable accounting guidance, even though there is no intent by ILG to actively buy or sell securities with the objective of generating profits on short ‑term differences in market prices. These marketable securities are recorded at a fair value of $11.4 million as of March 31, 2016 based on quoted market prices in active markets for identical assets (Level 1). Unrealized trading losses for the three months ended March 31, 2016 were less than $0.1 million, with an accompanying offsetting adjustment to employee compensation expense, and are each included within general and administrative expenses in the accompanying condensed consolidated statement of income. See Note 11 for further discussion in regards to this deferred compensation plan. Borrowings under our senior notes (issued April 2015) and revolving credit facility are carried at historical cost and adjusted for principal payments. The fair value of our senior notes was estimated at March 31, 2016 using an input of quoted prices from an inactive market due to the infrequency at which trades occur on our senior notes (Level 2). The carrying value of the outstanding balance under our revolving credit facility, exclusive of debt issuance costs, approximates fair value as of March 31, 2016 and December 31, 2015 through inputs inherent to the debt such as variable interest rates and credit risk (Level 2). |
EQUITY
EQUITY | 3 Months Ended |
Mar. 31, 2016 | |
EQUITY | |
EQUITY | NOTE 10—EQUITY ILG has 300 million authorized shares of common stock, par value of $0.01 per share. At March 31, 2016, there were 60.4 million shares of ILG common stock issued, of which 58.0 million are outstanding with 2.4 million shares held as treasury stock. At December 31, 2015, there were 59. 9 million shares of ILG common stock issued, of which 57. 5 million were outstanding with 2.4 million shares held as treasury stock. ILG has 25 million authorized shares of preferred stock, par value of $0.01 per share, none of which are issued or outstanding as of March 31, 2016 and December 31, 2015. 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. Dividend Declared In February 2016, our Board of Directors declared a quarterly dividend payment of $0.12 per share paid in March 2016 of $ 7.0 million. In May 2016, our Board of Directors declared a $0.12 per share dividend payable June 21, 2016 to shareholders of record on June 7, 2016. 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 In February 2015, ILG’s Board of Directors increased the remaining share repurchase authorization to a total of $25 million. Acquired shares of our common stock are held as treasury shares carried at cost on our condensed 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 year ended December 31, 2015, there were no repurchases of common stock. As of March 31, 2016, the remaining availability for future repurchases of our common stock was $ 25.0 million. There were no repurchases of common stock during the three months ended March 31, 2016. Accumulated Other Comprehensive Loss Entities are required to disclose additional information about reclassification adjustments within accumulated other comprehensive income/loss, referred to as AOCL including (1) changes in AOCL balances by component and (2) significant items reclassified out of AOCL in the period. For the year ended December 31, 2015 and for the three months ended March 31, 2016, 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 condensed consolidated statements of comprehensive income. Noncontrolling Interests Noncontrolling Interest—VRI Europe 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 March 31, 2016 and December 31, 2015, this noncontrolling interest amounts to $ 31.2 million and $31.3 million, respectively, and is presented on our condensed consolidated balance sheets as a component of equity. The change from December 31, 2015 to March 31, 2016 relates to the recognition of the noncontrolling interest holder’s proportional share of VRI Europe’s earnings, as well as the translation effect on the foreign currency based amount. 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 achieving minimum returns and a preemptive right by ILG. As of March 31, 2016, there have been no changes in ILG’s ownership interest in VRI Europe. Additionally, in connection with this arrangement, ILG and CLC entered into a loan agreement whereby ILG made available to CLC a convertible secured loan facility of $15.1 million that matures in October of 2019 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. ILG has the right to exercise this share option at any time prior to maturity of the loan; however, the equivalent value for these shares would be measured at a 20% premium to its acquisition date value. We have determined the value of this embedded derivative is not material to warrant bifurcating from the host instrument (loan) at this time. Noncontrolling Interest—Hyatt Vacation Ownership In connection with the HVO acquisition on October 1, 2014, ILG assumed a noncontrolling interest in a joint venture entity, which we fully consolidate, formed for the purpose of developing and selling VOIs. The fair value of the noncontrolling interest at acquisition was determined based on the noncontrolling party’s ownership interest applied against the fair value allocated to the respective joint venture entity. As of March 31, 2016 and December 31, 2015, this noncontrolling interest amounted to $ 1.7 million and $2.0 million, respectively, and is presented on our condensed consolidated balance sheets as a component of equity. |
BENEFIT PLANS
BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2016 | |
BENEFIT PLANS | |
BENEFIT PLANS | NOTE 11—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 $0.6 million and $0. 5 million for the three months ended March 31, 2016 and 2015, respectively. Matching contributions were invested in the same manner as each participant’s voluntary contributions in the investment options provided under the plan. 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 55, 136 share units were outstanding at March 31, 2016. 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. Effective October 1, 2014, a non-qualified deferred compensation plan (the “DCP”) was established to allow certain eligible employees of ILG an option to defer compensation on a tax-deferred basis. The establishment of the DCP was intended to receive a transfer of deferred compensation liabilities in connection with the acquisition of HVO. Participants in the DCP are currently limited to certain HVO employees. These participants make an election prior to the first of each year to defer an amount of compensation payable for services to be rendered beginning in the next calendar year, or to receive distributions. Participants are fully vested in all amounts held in their individual accounts. The DCP is fully funded in a Rabbi trust. The Rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the Rabbi trust are not available for general corporate purposes. Amounts in the Rabbi trust are invested in mutual funds, as selected by participants, which are designated as trading securities and carried at fair value. Subsequent to the acquisition of HVO, there was a net transfer of $10.6 million into the Rabbi trust related to participants acquired with the acquisition. As of March 31, 2016, the fair value of the investments in the Rabbi trust was $ 11.4 million which is recorded in other non-current assets with the corresponding deferred compensation liability recorded in other long-term liabilities in the condensed consolidated balance sheet. We recorded unrealized losses of less than $0.1 million for the three months ended March 31, 2016, respectively, to general and administrative expense related to the investment gains, and a charge to compensation expense also within general and administrative expense related to the increase in deferred compensation liabilities to reflect the DCP liability, in the condensed consolidated statement of income. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 12—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 (“2008 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 March 31, 2016, ILG has 1.6 million shares available for future issuance under the 2013 Stock and Incentive Compensation Plan. During the first quarter of 2016 and 2015, the Compensation Committee granted 750,000 and 423,000 RSUs, respectively, vesting over three to f our years, to certain officers and employees of ILG and its subsidiaries. Of these RSUs granted in 2016 and 2015, approximately 140,000 and 105,000 , respectively, cliff vest in three years and approximately 105,000 and 54,000 , 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 2016 and 2015 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 $13.13 for 2016 and $40.71 for 2015 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 March 31, 2016 and 2015 was $ 3.6 million and $3.5 million, respectively. At March 31, 2016, there was approximately $ 22.5 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 2.0 years. The amount of stock ‑based compensation expense recognized in the condensed 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 condensed consolidated statements of income for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Cost of sales $ $ Selling and marketing expense General and administrative expense Non-cash compensation expense $ $ The following table summarizes RSU activity during the three months ended March 31, 2016: Weighted-Average Grant Date Shares Fair Value (In thousands) Non-vested RSUs at January 1, 2016 $ Granted Vested Non-vested RSUs at March 31, 2016 $ |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | NOTE 13—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 months ended March 31, 2016 and 2015, ILG recorded income tax provisions for continuing operations of $ 12.6 million and $14.5 million, respectively, which represent effective tax rates of 35.7% and 36.0% for the respective periods. These tax rates are higher than the federal statutory rate of 35% due principally to state and local income taxes offset by foreign income taxed at lower rates. As of March 31, 2016, there were no material changes to ILG’s unrecognized tax benefits and related interest. ILG recognizes interest and, if applicable, penalties related to unrecognized tax benefits in income tax expense. ILG files income tax returns in the U.S. federal jurisdiction and various state, local, and foreign jurisdictions. As of March 31, 2016, no open tax years are currently under examination by the IRS or any material state and local jurisdictions. However, in April of 2016, ILG was notified by the State of Florida that the consolidated state tax return for the tax years ended December 31, 2012 through 2014 will be examined. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 14—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 is comprised of two operating and reportable segments: Exchange and Rental and Vacation Ownership. Our Exchange and Rental segment offers access to vacation accommodations and other travel ‑related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and managing vacation properties. Our Vacation Ownership segment engages in the management, sales, marketing, financing, and development of VOIs and related services to owners and associations. ILG provides certain corporate functions that benefit the organization as a whole. Such corporate functions include corporate services relating to oversight, accounting, legal, treasury, tax, internal audit, human resources, and certain IT functions. Costs relating to such corporate functions that are not directly cross ‑charged to individual businesses are being allocated to our two operating and reportable segments based on a pre ‑determined measure of profitability relative to total ILG. All such allocations relate only to general and administrative expenses. The condensed consolidated statements of income are not impacted by this cross ‑segment allocation. Information on reportable segments and reconciliation to consolidated operating income is as follows (in thousands): Three Months Ended March 31, 2016 2015 Exchange and Rental: Transaction revenue $ $ Membership fee revenue Ancillary member revenue Total member revenue Other revenue Rental management revenue Pass-through revenue Total revenues Cost of sales Gross profit Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ Three Months Ended March 31, 2016 2015 Vacation Ownership: Management fee revenue $ $ Vacation ownership sales and financing revenue Pass-through revenue Total revenue Cost of sales Gross profit Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ Three Months Ended March 31, 2016 2015 Consolidated: Revenue $ $ Cost of sales Gross profit Direct segment operating expenses Operating income $ $ Selected financial information by reporting segment is presented below (in thousands). March 31, December 31, 2016 2015 Total Assets: Exchange and Rental $ $ Vacation Ownership Total $ $ Geographic Information We conduct operations through offices in the U.S. and 15 other countries. For the three months ended March 31, 2016 and 2015 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 months ended March 31, 2016 and 2015. 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 March 31, 2016 2015 Revenue: United States $ $ Europe All other countries (1) Total $ $ (1) Includes countries within the following continents: Africa, Asia, Australia, North America and South America. March 31, December 31, 2016 2015 Long-lived assets (excluding goodwill and intangible assets): United States $ $ Europe All other countries Total $ $ |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 15—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 13 for a discussion of income tax contingencies. Other items, such as certain purchase commitments and guarantees are not recognized as liabilities in our condensed 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 March 31, 2016, guarantees, surety bonds and letters of credit totaled $82.6 million, with the highest annual amount of $61.1 million occurring in year one. The total includes a guarantee by us of up to $36.7 million of the construction loan for the Maui project. This amount represents the maximum exposure under guarantee related to this construction loan from a legal perspective; however, our reasonable expectation of our exposure under this guarantee based on the agreements among guarantors is proportionally reduced by our ownership percentage in the Maui project to $11.2 million as of March 31, 2016. Additionally, the total also includes maximum exposure under guarantees of $35.1 million primarily relating to our vacation rental business’s hotel and resort management agreements, including those with guaranteed dollar amounts, and accommodation leases supporting the rental management activities that are 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 party. In addition, certain of our rental management agreements provide that owners receive specified percentages of the rental revenue generated under its 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 or guaranteed amounts, and our vacation rental business either retains the balance (if any) as its fee or makes up the deficit. Although such deficits are reasonably possible in a few of these agreements, as of March 31, 2016, future amounts are not expected to be significant either individually or in the aggregate. Additionally, as of March 31, 2016, our letters of credit totaled $8.6 million and were principally related to our Vacation Ownership sales and financing activities. More specifically, these letters of credit provide alternate assurance on amounts required to be held in escrow which enable our developer entities to access purchaser deposits prior to closings, as well as provide a guarantee of maintenance fees owed by our developer entities during subsidy periods at a particular vacation ownership resort, among other items. Our operating and purchase obligations primarily relate to future guaranteed purchases of rental inventory, operational support services, marketing related benefits and membership fulfillment benefits. Certain of our vacation rental businesses also enter into agreements, as principal, for services purchased on behalf of property owners for which we are subsequently reimbursed. As such, we are the primary obligor and may be liable for unreimbursed costs. As of March 31, 2016, amounts pending reimbursements are not significant. |
SUPPLEMENTAL GUARANTOR INFORMAT
SUPPLEMENTAL GUARANTOR INFORMATION | 3 Months Ended |
Mar. 31, 2016 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
SUPPLEMENTAL GUARANTOR INFORMATION | NOTE 16— SUPPLEMENTAL GUARANTOR INFORMATION The senior notes are guaranteed by ILG and certain other subsidiaries that are 100% owned directly or indirectly by ILG (collectively, the “Guarantor Subsidiaries”). These guarantees are full and unconditional and joint and several. The guarantees of the Guarantor Subsidiaries are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The indenture governing the senior notes contains covenants that, among other things, limit the ability of Interval Acquisition Corp. (the “Issuer”) and the Guarantor Subsidiaries to pay dividends to us or make distributions, loans or advances to us. The following tables present condensed consolidating financial information as of March 31, 2016 and December 31, 2015 and for the three months ended March 31, 2016 and 2015 for ILG on a stand ‑alone basis, the Issuer on a stand ‑alone basis, the combined Guarantor Subsidiaries of ILG, the combined non-guarantor subsidiaries of ILG (collectively, the “Non-Guarantor Subsidiaries”) and ILG on a consolidated basis (in thousands). Balance Sheet as of March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ Balance Sheet as of December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ Statement of Income for the Three Months Ended March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - Other income, net (1) Income tax benefit (provision) - Equity in earnings from unconsolidated entities - - - - Net income Net income (loss) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Three Months Ended March 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - Other income, net (1) Income tax benefit (provision) - Equity in earnings from unconsolidated entities - - - - Net income Net income (loss) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ (1) Includes equity in net income of wholly-owned subsidiaries. Statement of Cash Flows for the Three Months Ended March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rates changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of the period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Three Months Ended March 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rates changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of the period - - Cash and cash equivalents at end of period $ - $ - $ $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 17— SUBSEQUENT EVENTS On April 20, 2016, our stockholders approved the issuance of ILG common stock in connection with the previously announced acquisition of the vacation ownership business of Starwood Hotels & Resorts Worldwide, Inc., or Starwood, known as Vistana Signature Experiences or Vistana. At closing, Starwood will spin-off Vistana to its stockholders immediately prior to the merger of Vistana with and into a wholly owned subsidiary of ILG. In the merger, ILG will issue approximately 72 .4 million shares of ILG common stock to the holders who received Vistana common stock in the spin-off. Additionally, ILG will directly purchase certain Mexican entities and a note receivable for total consideration of approximately $1 25 million, which is subject to post-closing adjustment. In connection with the acquisition, Vistana will enter into an exclusive, 80 -year global license agreement with Starwood for the use of the Westin ® and Sheraton ® brands in vacation ownership. Also, Vistana will also have the non-exclusive license for the existing St. Regis ® and The Luxury Collection ® vacation ownership properties. |
SIGNIFICANT ACCOUNTING POLICI25
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES | |
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 condensed consolidated financial statements include: the recovery of long ‑lived assets as well as goodwill and other intangible assets; purchase price allocations of business combinations; loan loss reserves for vacation ownership mortgages receivable; 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 condensed 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 is 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 0.6 million RSUs and 0.9 million stock options and RSUs for the three months ended March 31, 2016 and 2015, respectively, 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 March 31, 2016, there were no stock options outstanding, and there were 0.8 million stock options outstanding as of March 31, 2015. 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 Ended March 31, 2016 2015 Basic weighted average shares of common stock outstanding Net effect of common stock equivalents assumed to be vested related to RSUs Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees — Diluted weighted average shares of common stock outstanding |
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 2015 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 March 2016, the FASB issued ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing” (“ASU 2016-10”). The purpose of ASU 2016-10 is to clarify two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance (while retaining the related principles for those areas). Also, in March 2016, the FASB issued ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations” (“ASU 2016-08”). The amendments in ASU 2016-08 serve to clarify the implementation guidance on principal vs. agent considerations. The core principle of the guidance in Topic 606 is that an entity should recognize revenue to depict the transfer to 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 amendments in these two ASUs are effective for fiscal years beginning after December 15, 2017 (and interim periods within that period). Early adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. Given the complexities of this new revenue recognition standard (Topic 606), we are unable to determine, at this time, whether adoption of this standard and its associated ASUs 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 to our consolidated financial statements. In March 2016, the FASB issued ASU 2016-09, “Compensation – Stock Compensation (Topic 718)” (“ASU 2016-03”), to simplify the current accounting for Stock Compensation. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The new guidance will be effective for public entities for annual periods beginning after December 15, 2016 and interim periods therein. Early adoption of ASU 2016 ‑09 as of its issuance is permitted. We are currently assessing the future impact of adopting the new stock compensation standard on our consolidated financial statements. In March 2016, the FASB issued ASU 2016-07, “Investments – Equity Method and Joint Ventures (Topic 323)” (“ASU 2016-07”). The amendments in this ASU require, among other items, that an equity method investor add the cost of acquiring an additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting, as well as eliminates certain other existing requirements. ASU 2016-07 is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that would result in adoption of the equity method and earlier application is permitted. We are currently assessing the future impact of this accounting standard update on our consolidated financial statements. Adopted Accounting Pronouncements In September 2015, the FASB issued ASU 2015-16, “Business Combinations (Topic 805).” The purpose of the ASU is to simplify the accounting for measurement-period adjustments related to business combinations. ASU 2015-16 requires an acquirer to recognize adjustments to provisional amounts that are identified during the measurement period, in the reporting period in which the adjustment amounts are determined. The amendments in this update are effective for fiscal years beginning after December 31, 2015, including interim periods within the fiscal year and should be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued ASU 2015-05, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). The FASB amended its guidance on internal use software to clarify how customers in cloud computing arrangements should determine whether the arrangement includes a software license. The guidance also eliminates the existing requirement for customers to account for software licenses they acquire by analogizing to the guidance on leases. Instead, entities will account for these arrangements as licenses of intangible assets. The ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements. In February 2015, the FASB issued ASU 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis” (“ASU 2015-02”). The amendments in this topic are intended to improve and simplify targeted areas of the consolidation guidance. ASU 2015-02 modifies the method for determining whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities. Further, it eliminates the presumption that a general partner should consolidate a limited partnership and impacts the consolidation analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). The adoption of this guidance did not have a material impact on our consolidated financial statements. In January 2015, the FASB issued ASU 2015 ‑01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225 ‑20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015 ‑01”). ASU 2015 ‑01 eliminates from generally accepted accounting principles (GAAP) the concept of extraordinary items as part of the FASB’s initiative to reduce complexity in accounting standards (the Simplification Initiative). Existing guidance requires a reporting entity to separately classify, present and disclose extraordinary events and transactions if the event or transaction meets both of the following criteria for extraordinary item classification: unusual nature and infrequency of occurrence. Under ASU 2015 ‑01, the concept of extraordinary item is eliminated from the ASC Master Glossary and replaced with definitions for infrequency of occurrence and unusual nature. The presentation and existing disclosure guidance for items that are unusual in nature or occur infrequently are retained and expanded to include items that are both unusual in nature and occur infrequently. The ASU is effective for fiscal years beginning after December 15, 2015 (and interim periods within those fiscal years). A reporting entity may apply the amendments in the ASU prospectively and also may apply the amendments retrospectively to all prior periods presented in the financial statements. The adoption of this guidance did not have a material impact on our consolidated financial statements. In June 2014, the FASB issued ASU 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. 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). In addition, all entities will have the option of applying the guidance either prospectively or retrospectively. The adoption of this guidance, on a prospective basis, did not have a material impact on our consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI26
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 Ended March 31, 2016 2015 Basic weighted average shares of common stock outstanding Net effect of common stock equivalents assumed to be vested related to RSUs Net effect of common stock equivalents assumed to be exercised related to stock options held by non-employees — Diluted weighted average shares of common stock outstanding |
GOODWILL AND OTHER INTANGIBLE27
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 and December 31, 2015 (in thousands): Foreign Balance as of Currency Goodwill Balance as of January 1, 2016 Additions Deductions Translation Impairment March 31, 2016 Exchange $ $ — $ — $ — $ — $ Rental — — — — VO management — — — VO sales and financing — — — — Total $ $ — $ — $ $ — $ Foreign Balance as of Currency Goodwill Balance as of January 1, 2015 Additions Deductions Translation Impairment December 31, 2015 Exchange $ $ — $ — $ — $ — $ Rental — — — — VO management — — — VO sales and financing — — — — Total $ $ — $ — $ $ — $ |
Schedule of balance of intangible assets, net | The balance of other intangible assets, net as of March 31, 2016 and December 31, 2015 is as follows (in thousands): March 31, December 31, 2016 2015 Intangible assets with indefinite lives $ $ Intangible assets with definite lives, net Total intangible assets, net $ $ |
Schedule of intangible assets with indefinite lives | At March 31, 2016 and December 31, 2015, intangible assets with indefinite lives relate to the following (in thousands): March 31, December 31, 2016 2015 Resort management contracts $ $ Trade names and trademarks Total $ $ |
Schedule of intangible assets with definite lives | At March 31, 2016 , intangible assets with definite lives relate to the following (in thousands): Cost Accumulated Amortization Net Customer relationships $ $ $ Purchase agreements — Resort management contracts Technology — Other Total $ $ $ At December 31, 2015, intangible assets with definite lives relate to the following (in thousands): Cost Accumulated Amortization Net Customer relationships $ $ $ Purchase agreements — Resort management contracts Technology — Other Total $ $ $ |
Schedule of amortization expense of intangible assets with definite lives | Based on March 31, 2016 balances, amortization expense for the next five years and thereafter is estimated to be as follows (in thousands): Twelve month period ending March 31, 2017 $ 2018 2019 2020 2021 2022 and thereafter $ |
VACATION OWNERSHIP INVENTORY (T
VACATION OWNERSHIP INVENTORY (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
VACATION OWNERSHIP INVENTORY | |
Schedule of ownership inventory | As of March 31, 2016 and December 31, 2015, vacation ownership inventory is comprised of the following (in thousands): March 31, December 31, 2016 2015 Completed unsold vacation ownership interests $ $ Land held for development Total inventory $ $ |
VACATION OWNERSHIP MORTGAGES 29
VACATION OWNERSHIP MORTGAGES RECEIVABLE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
VACATION OWNERSHIP MORTGAGES RECEIVABLE | |
Schedule of mortgages receivable | Vacation ownership mortgages receivable carrying amounts as of March 31, 2016 and December 31, 2015 were as follows (in thousands): March 31, December 31, 2016 2015 Acquired vacation ownership mortgages receivable at various stated interest rates with varying payment through 2024 (see below) $ $ Originated vacation ownership mortgages receivable at various stated interest rates with varying payment through 2025 (see below) Less allowance for loan losses on originated loans Net vacation ownership mortgages receivable $ $ |
Schedule of changes in accretable yield | Three Months Ended Accretable Yield March 31, 2016 Balance, beginning of period $ Accretion Reclassification between nonaccretable difference Balance, end of period $ Nonaccretable difference, end of period balance $ |
Schedule to mature mortgages receivables | Vacation ownership mortgages receivable as of March 31, 2016 are scheduled to mature as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated Twelve month period ending March 31, loans loans Total 2017 $ $ $ 2018 2019 2020 2021 2022 and thereafter Total Less: discount on acquired loans (1) — Less: allowance for losses — Net vacation ownership mortgages receivable $ $ $ Weighted average stated interest rate as of March 31, 2016 Range of stated interest rates as of March 31, 2016 12.5% to 17.9% 12.9% to 14.9% (1) The difference between the contractual principal amount of acquired loans of $24.4 million and the net carrying amount of $ 21.5 million as of March 31, 2016 is related to the application of ASC 310-30. |
Schedule of past-due and nonaccrual status of mortgages receivable | Our aged analysis of past ‑due vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 90 days past ‑due as of March 31, 2016 is as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated loans loans Total Receivables past due $ $ $ Receivables greater than 90 days past due $ $ $ Our aged analysis of past ‑due vacation ownership mortgages receivable and the gross balance of vacation ownership mortgages receivable greater than 90 days past ‑due as of December 31, 2015 is as follows (in thousands): Vacation Ownership Mortgages Receivable Acquired Originated loans loans Total Receivables past due $ $ $ Receivables greater than 90 days past due $ $ $ |
INVESTMENTS IN UNCONSOLIDATED30
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
INVESTMENTS IN UNCONSOLIDATED ENTITIES | |
Schedule of ownership percentages and carrying value of our investments in unconsolidated entities | March 31, December 31, 2016 2015 (in thousands) Maui Timeshare Venture, LLC $ $ Other Total $ $ |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
PROPERTY AND EQUIPMENT | |
Schedule of Property and equipment, net | Property and equipment, net is as follows (in thousands): March 31, December 31, 2016 2015 Computer equipment $ $ Capitalized software (including internally developed software) Land, buildings and leasehold improvements Furniture and other equipment Projects in progress Less: accumulated depreciation and amortization Total property and equipment, net $ $ |
LONG-TERM DEBT (Tables)
LONG-TERM DEBT (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
LONG-TERM DEBT | |
Schedule of Long-term debt | Long ‑term debt is as follows (in thousands): March 31, December 31, 2016 2015 Revolving credit facility (interest rate of 2.69% at March 31, 2016 and 2.68% at December 31, 2015) $ $ 5.625% senior notes Unamortized debt issuance costs (revolving credit facility) Unamortized debt issuance costs (senior notes) Total long-term debt, net of debt issuance costs $ $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
FAIR VALUE MEASUREMENTS | |
Schedule of estimated fair value of financial instruments | March 31, 2016 December 31, 2015 Carrying Fair Carrying Fair Amount Value Amount Value (In thousands) Cash and cash equivalents $ $ $ $ Restricted cash and cash equivalents Financing receivables Vacation ownership mortgages receivable Investments in marketable securities Revolving credit facility (1) Senior notes (1) As of March, 31, 2016, the carrying value of our revolving credit facility and senior notes include $ 2.8 million and $6.2 million of debt issuance costs, respectively, which are presented as a direct reduction of the corresponding liability. |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 condensed consolidated statements of income for the three months ended March 31, 2016 and 2015 (in thousands): Three Months Ended March 31, 2016 2015 Cost of sales $ $ Selling and marketing expense General and administrative expense Non-cash compensation expense $ $ |
Schedule of RSU award activity | Weighted-Average Grant Date Shares Fair Value (In thousands) Non-vested RSUs at January 1, 2016 $ Granted Vested Non-vested RSUs at March 31, 2016 $ |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
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 March 31, 2016 2015 Exchange and Rental: Transaction revenue $ $ Membership fee revenue Ancillary member revenue Total member revenue Other revenue Rental management revenue Pass-through revenue Total revenues Cost of sales Gross profit Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ Three Months Ended March 31, 2016 2015 Vacation Ownership: Management fee revenue $ $ Vacation ownership sales and financing revenue Pass-through revenue Total revenue Cost of sales Gross profit Selling and marketing expense General and administrative expense Amortization expense of intangibles Depreciation expense Segment operating income $ $ Three Months Ended March 31, 2016 2015 Consolidated: Revenue $ $ Cost of sales Gross profit Direct segment operating expenses Operating income $ $ |
Schedule of financial information by reportable segment | Selected financial information by reporting segment is presented below (in thousands). March 31, December 31, 2016 2015 Total Assets: Exchange and Rental $ $ Vacation Ownership Total $ $ |
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 March 31, 2016 2015 Revenue: United States $ $ Europe All other countries (1) Total $ $ (1) Includes countries within the following continents: Africa, Asia, Australia, North America and South America. March 31, December 31, 2016 2015 Long-lived assets (excluding goodwill and intangible assets): United States $ $ Europe All other countries Total $ $ |
SUPPLEMENTAL GUARANTOR INFORM36
SUPPLEMENTAL GUARANTOR INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
SUPPLEMENTAL GUARANTOR INFORMATION | |
Schedule of condensed consolidating balance sheet | Balance Sheet as of March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ Balance Sheet as of December 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Current assets $ $ $ $ $ - $ Property and equipment, net - - Goodwill and intangible assets, net - - Investments in subsidiaries - - Other assets - - - Total assets $ $ $ $ $ $ Current liabilities $ $ $ $ $ - $ Other long-term liabilities - - - Long term debt - - Intercompany liabilities (receivables) / equity - - Redeemable noncontrolling interest - - - - ILG stockholders' equity Noncontrolling interests - - - Total liabilities and equity $ $ $ $ $ $ |
Schedule of condensed consolidating statement of income | Statement of Income for the Three Months Ended March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - Other income, net (1) Income tax benefit (provision) - Equity in earnings from unconsolidated entities - - - - Net income Net income (loss) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ Statement of Income for the Three Months Ended March 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries Total Eliminations ILG Consolidated Revenue $ - $ - $ $ $ - $ Operating expenses - Interest (expense) income, net - - Other income, net (1) Income tax benefit (provision) - Equity in earnings from unconsolidated entities - - - - Net income Net income (loss) attributable to noncontrolling interests - - - Net income attributable to common stockholders $ $ $ $ $ $ |
Schedule of condensed consolidating statement of cash flows | Statement of Cash Flows for the Three Months Ended March 31, 2016 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rates changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of the period - - Cash and cash equivalents at end of period $ - $ - $ $ $ Statement of Cash Flows for the Three Months Ended March 31, 2015 ILG Interval Acquisition Corp. Guarantor Subsidiaries Non-Guarantor Subsidiaries ILG Consolidated Cash flows provided by (used in) operating activities $ $ $ $ $ Cash flows used in investing activities - - Cash flows provided by (used in) financing activities Effect of exchange rates changes on cash and cash equivalents - - - Cash and cash equivalents at beginning of the period - - Cash and cash equivalents at end of period $ - $ - $ $ $ |
ORGANIZATION AND BASIS OF PRE37
ORGANIZATION AND BASIS OF PRESENTATION (Details) shares in Millions, $ in Millions | Apr. 20, 2016USD ($)shares | May. 31, 2008company | Mar. 31, 2016item |
Organization | |||
Number of operating segments | item | 2 | ||
Number of publicly traded companies formed upon spin-off | company | 5 | ||
Vistana | Subsequent Event | |||
Organization | |||
Common stock issued (in shares) | shares | 72.4 | ||
Aggregate purchase price in cash | $ | $ 125 | ||
Global license agreement term | 80 years |
SIGNIFICANT ACCOUNTING POLICI38
SIGNIFICANT ACCOUNTING POLICIES (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock options | ||
Securities not included in the computations of diluted earnings per share | ||
Outstanding stock options (in shares) | 0 | 0.8 |
RSUs | ||
Securities not included in the computations of diluted earnings per share | ||
Securities excluded from computation of diluted earnings per share (in shares) | 0.6 | |
Stock Options and RSUs | ||
Securities not included in the computations of diluted earnings per share | ||
Securities excluded from computation of diluted earnings per share (in shares) | 0.9 |
SIGNIFICANT ACCOUNTING POLICI39
SIGNIFICANT ACCOUNTING POLICIES (Details 2) - shares shares in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
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 | 57,619 | 57,179 |
Diluted weighted average shares of common stock outstanding | 57,954 | 57,747 |
Non-vested RSUs | ||
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) | 335 | 565 |
Stock options | ||
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) | 3 |
GOODWILL AND OTHER INTANGIBLE40
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
GOODWILL AND OTHER INTANGIBLE ASSETS | ||
Number of reporting units | item | 2 | |
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | $ 561,413 | $ 562,250 |
Foreign Currency Translation | (509) | (837) |
Balance at the end of the period | 560,904 | 561,413 |
Exchange reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 495,748 | 495,748 |
Balance at the end of the period | 495,748 | 495,748 |
Rental reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 20,396 | 20,396 |
Balance at the end of the period | 20,396 | 20,396 |
VO management reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 38,323 | 39,160 |
Foreign Currency Translation | (509) | (837) |
Balance at the end of the period | 37,814 | 38,323 |
VO sales and financing reporting unit | ||
Changes in carrying amount of goodwill | ||
Balance at the beginning of the period | 6,946 | 6,946 |
Balance at the end of the period | $ 6,946 | $ 6,946 |
GOODWILL AND OTHER INTANGIBLE41
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Intangibles assets, net | ||
Intangible assets with indefinite lives | $ 124,920 | $ 127,345 |
Intangible assets with definite lives, net | 119,493 | 123,022 |
Total intangible assets, net | 244,413 | 250,367 |
Change in indefinite-lived intangible assets | 2,400 | |
Resort management contracts | ||
Intangibles assets, net | ||
Intangible assets with indefinite lives | 81,003 | 83,429 |
Trade names and trademarks | ||
Intangibles assets, net | ||
Intangible assets with indefinite lives | $ 43,917 | $ 43,916 |
GOODWILL AND OTHER INTANGIBLE42
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Other intangible assets | |||
Cost | $ 419,888 | $ 420,321 | |
Accumulated Amortization | (300,395) | (297,299) | |
Net | 119,493 | 123,022 | |
Amortization expense for intangible assets | 3,201 | $ 3,501 | |
Amortization of intangible assets | |||
2,017 | 12,275 | ||
2,018 | 11,180 | ||
2,019 | 10,567 | ||
2,020 | 10,028 | ||
2,021 | 10,028 | ||
2022 and thereafter | 65,415 | ||
Net | 119,493 | 123,022 | |
Customer relationships | |||
Other intangible assets | |||
Cost | 168,400 | 168,400 | |
Accumulated Amortization | (132,152) | (131,710) | |
Net | 36,248 | 36,690 | |
Amortization of intangible assets | |||
Net | 36,248 | 36,690 | |
Purchase agreements | |||
Other intangible assets | |||
Cost | 75,879 | 75,879 | |
Accumulated Amortization | (75,879) | (75,879) | |
Resort management contracts | |||
Other intangible assets | |||
Cost | 128,745 | 129,168 | |
Accumulated Amortization | (48,819) | (46,576) | |
Net | 79,926 | 82,592 | |
Amortization of intangible assets | |||
Net | 79,926 | 82,592 | |
Technology | |||
Other intangible assets | |||
Cost | 25,076 | 25,076 | |
Accumulated Amortization | (25,076) | (25,076) | |
Other | |||
Other intangible assets | |||
Cost | 21,788 | 21,798 | |
Accumulated Amortization | (18,469) | (18,058) | |
Net | 3,319 | 3,740 | |
Amortization of intangible assets | |||
Net | $ 3,319 | $ 3,740 |
VACATION OWNERSHIP INVENTORY (D
VACATION OWNERSHIP INVENTORY (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
VACATION OWNERSHIP INVENTORY | ||
Completed unsold VOIs | $ 44,352 | $ 46,379 |
Land held for development | 627 | 627 |
Inventory, Net, Total | $ 44,979 | $ 47,006 |
VACATION OWNERSHIP MORTGAGES 44
VACATION OWNERSHIP MORTGAGES RECEIVABLE (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Schedule of maturities for vacation ownership mortgages receivable | ||
2,016 | $ 5,741 | |
2,017 | 5,066 | |
2,018 | 4,366 | |
2,019 | 4,179 | |
2,020 | 4,344 | |
2021 and thereafter | 15,040 | |
Total | 38,736 | |
Less: discount on acquired loans | (3,630) | |
Less: allowance for loan losses on originated loans | (2,291) | $ (1,935) |
Net vacation ownership mortgages receivable | 32,815 | 32,238 |
Accretable yield expected to be collected over the carrying amount | ||
Balance, beginning of period | 11,706 | |
Accretion | (918) | |
Reclassification between nonaccretable difference | (179) | |
Balance, end of period | 10,609 | |
Nonaccretable difference, end of period balance | $ 4,804 | |
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Weighted average FICO score within acquired loan pool | item | 703 | |
Weighted average FICO score within originated loan pool | item | 713 | |
Average estimated rate of default for all outstanding loans | 10.70% | |
Receivables Past Due | $ 1,209 | 1,289 |
Receivables greater than 90 Days Past Due | 93 | 233 |
Acquired vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,016 | 4,935 | |
2,017 | 4,160 | |
2,018 | 3,358 | |
2,019 | 3,048 | |
2,020 | 3,073 | |
2021 and thereafter | 6,510 | |
Total | 25,084 | |
Less: discount on acquired loans | (3,630) | |
Net vacation ownership mortgages receivable | $ 21,454 | 23,362 |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.90% | |
Expected remaining principal payment and accrued interest | $ 24,400 | 25,800 |
Fair value of acquired loans | 24,400 | |
Net carrying amount | 21,500 | |
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | 932 | 1,046 |
Receivables greater than 90 Days Past Due | $ 81 | 206 |
Interest rate on vacation ownership mortgage receivables, minimum | 12.50% | |
Interest rate on vacation ownership mortgage receivables, maximum | 17.90% | |
Originated vacation | ||
Schedule of maturities for vacation ownership mortgages receivable | ||
2,016 | $ 806 | |
2,017 | 906 | |
2,018 | 1,008 | |
2,019 | 1,131 | |
2,020 | 1,271 | |
2021 and thereafter | 8,530 | |
Total | 13,652 | 10,811 |
Less: allowance for loan losses on originated loans | (2,291) | |
Net vacation ownership mortgages receivable | $ 11,361 | |
Weighted-average interest rate on vacation ownership mortgage receivables | 13.90% | |
Allowance for Vacation Ownership Mortgage Receivable Losses | ||
Receivables Past Due | $ 277 | 243 |
Receivables greater than 90 Days Past Due | $ 12 | $ 27 |
Interest rate on vacation ownership mortgage receivables, minimum | 12.90% | |
Interest rate on vacation ownership mortgage receivables, maximum | 14.90% |
INVESTMENTS IN UNCONSOLIDATED45
INVESTMENTS IN UNCONSOLIDATED ENTITIES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Carrying value of our investments in unconsolidated entities | |||
Equity income from investments in unconsolidated entities | $ 1,242 | $ 1,524 | |
Carrying value of investments in unconsolidated entities | $ 44,193 | $ 38,319 | |
Maui Timeshare Venture, LLC | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 33.00% | ||
Carrying value of investments in unconsolidated entities | $ 39,016 | 37,762 | |
Other | |||
Carrying value of our investments in unconsolidated entities | |||
Carrying value of investments in unconsolidated entities | $ 5,177 | $ 557 | |
Other | Minimum | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 25.00% | ||
Other | Maximum | |||
Carrying value of our investments in unconsolidated entities | |||
Ownership percentages of investments in unconsolidated entities | 50.00% |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 224,211 | $ 218,174 |
Less: accumulated depreciation and amortization | (131,446) | (126,692) |
Total property and equipment, net | 92,765 | 91,482 |
Computer equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 23,354 | 23,172 |
Capitalized software (including internally developed software) | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 110,236 | 108,614 |
Land, buildings and leasehold improvements | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 51,346 | 50,978 |
Furniture and other equipment | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | 17,528 | 16,681 |
Projects in progress | ||
PROPERTY AND EQUIPMENT | ||
Property and equipment, gross | $ 21,747 | $ 18,729 |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Apr. 10, 2015 |
LONG-TERM DEBT | |||
Total long-term debt, net of unamortized debt issuance costs | $ 402,988 | $ 415,700 | |
5.625% Senior Notes | |||
LONG-TERM DEBT | |||
Stated interest rate (as a percent) | 5.625% | 5.625% | 5.625% |
5.625% senior notes | $ 350,000 | $ 350,000 | $ 350,000 |
Unamortized debt issuance costs | (6,214) | (6,285) | |
Revolving credit facility | |||
LONG-TERM DEBT | |||
Revolving credit facility | $ 62,000 | $ 75,000 | |
Stated interest rate (as a percent) | 2.69% | 2.68% | |
Unamortized debt issuance costs | $ (2,798) | $ (3,015) |
LONG-TERM DEBT (Details 2)
LONG-TERM DEBT (Details 2) $ in Thousands | Apr. 10, 2015USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | May. 05, 2015 | Apr. 30, 2014USD ($) | Jun. 21, 2012USD ($) |
Senior Secured Credit Facility and Covenants | |||||||
Total unamortized debt issuance costs | $ 9,000 | $ 9,300 | |||||
Accumulated amortization on debt issuance costs | 4,000 | 3,500 | |||||
Interest expense | $ (6,233) | $ (2,753) | |||||
Minimum fixed charge coverage ratio | 2 | ||||||
5.625% Senior Notes | |||||||
Senior Secured Credit Facility and Covenants | |||||||
5.625% senior notes | $ 350,000 | $ 350,000 | $ 350,000 | ||||
Proceeds from issuance of senior notes | $ 343,100 | ||||||
Stated interest rate (as a percent) | 5.625% | 5.625% | 5.625% | ||||
Unamortized debt issuance costs | $ 6,214 | $ 6,285 | |||||
Redemption price ( as a percent) | 104.219% | ||||||
Issuer and subsidiary guarantors | 5.625% Senior Notes | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Ownership interest ( as a percent) | 100.00% | ||||||
Revolving credit facility | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Principal amount | $ 600,000 | $ 500,000 | |||||
Amount outstanding | $ 62,000 | $ 75,000 | |||||
Commitment fee (as a percent) | 0.375% | ||||||
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% | ||||||
Stated interest rate (as a percent) | 2.69% | 2.68% | |||||
Unamortized debt issuance costs | $ 2,798 | $ 3,015 | |||||
Revolving credit facility | Actual | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated leverage ratio of debt over EBITDA | 0.36 | ||||||
Consolidated interest coverage ratio | 7.75 | ||||||
Revolving credit facility | Minimum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Commitment fee (as a percent) | 0.25% | ||||||
Revolving credit facility | Minimum | Financial covenant | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated interest coverage ratio | 3 | ||||||
Revolving credit facility | Maximum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Commitment fee (as a percent) | 0.40% | ||||||
Revolving credit facility | Maximum | Financial covenant | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated leverage ratio of debt over EBITDA | 3.25 | ||||||
Revolving credit facility | Base rate | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Reference rate | Base Rate | ||||||
Applicable margin (as a percent) | 1.25% | ||||||
Revolving credit facility | Base rate | Minimum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Applicable margin (as a percent) | 0.25% | ||||||
Revolving credit facility | Base rate | Maximum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Applicable margin (as a percent) | 1.50% | ||||||
Revolving credit facility | LIBOR | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Reference rate | LIBOR | ||||||
Applicable margin (as a percent) | 2.25% | ||||||
Revolving credit facility | LIBOR | Minimum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Applicable margin (as a percent) | 1.25% | ||||||
Revolving credit facility | LIBOR | Maximum | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Applicable margin (as a percent) | 2.50% | ||||||
Third Amendment To Credit Agreement | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Commitment fee (as a percent) | 0.40% | ||||||
Third Amendment To Credit Agreement | Actual | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated leverage ratio of debt over EBITDA | 3.5 | ||||||
Third Amendment To Credit Agreement | Maximum | Financial covenant | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated leverage ratio of debt over EBITDA | 3.25 | ||||||
Third Amendment To Credit Agreement | Maximum | Pro Forma | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Consolidated leverage ratio of debt over EBITDA | 4.50 | ||||||
Third Amendment To Credit Agreement | Base rate | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Reference rate | Base Rate | ||||||
Applicable margin (as a percent) | 1.50% | ||||||
Third Amendment To Credit Agreement | LIBOR | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Reference rate | LIBOR | ||||||
Applicable margin (as a percent) | 2.50% | ||||||
Fourth Amendment To Credit Agreement Member | 5.625% Senior Notes | |||||||
Senior Secured Credit Facility and Covenants | |||||||
Stated interest rate (as a percent) | 5.625% |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016 | Dec. 31, 2015 | Apr. 10, 2015 | ||
Fair Value of Financial Instruments | ||||
Restricted cash and cash equivalents | $ 12,043 | $ 16,638 | ||
5.625% Senior Notes | ||||
Fair Value of Financial Instruments | ||||
Senior notes | (350,000) | (350,000) | $ (350,000) | |
Debt issuance costs | 6,214 | 6,285 | ||
Revolving credit facility | ||||
Fair Value of Financial Instruments | ||||
Revolving credit facility | (62,000) | (75,000) | ||
Debt issuance costs | 2,798 | 3,015 | ||
HVO | ||||
Fair Value of Financial Instruments | ||||
Investments in marketable securities | 11,400 | |||
Unrealized trading losses | (100) | |||
Carrying Amount | ||||
Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 96,850 | 93,088 | ||
Restricted cash and cash equivalents | 12,043 | 16,638 | ||
Financing receivables | 18,101 | 16,133 | ||
Vacation ownership mortgages receivable | 32,815 | 32,238 | ||
Investments in marketable securities | 11,386 | 11,392 | ||
Revolving credit facility | [1] | (59,202) | (71,985) | |
Senior notes | [1] | (343,786) | (343,715) | |
Carrying Amount | 5.625% Senior Notes | ||||
Fair Value of Financial Instruments | ||||
Debt issuance costs | 6,200 | |||
Carrying Amount | Revolving credit facility | ||||
Fair Value of Financial Instruments | ||||
Debt issuance costs | 2,800 | |||
Fair Value | ||||
Fair Value of Financial Instruments | ||||
Cash and cash equivalents | 96,850 | 93,088 | ||
Restricted cash and cash equivalents | 12,043 | 16,638 | ||
Financing receivables | 18,101 | 16,133 | ||
Vacation ownership mortgages receivable | 33,990 | 33,573 | ||
Investments in marketable securities | 11,386 | 11,392 | ||
Revolving credit facility | [1] | (62,000) | (75,000) | |
Senior notes | [1] | $ (354,375) | $ (348,250) | |
[1] | As of March, 31, 2016, the carrying value of our revolving credit facility and senior notes include $2.8 million and $6.2 million of debt issuance costs, respectively, which are presented as a direct reduction of the corresponding liability. |
EQUITY (Details)
EQUITY (Details) $ / shares in Units, $ in Thousands | Nov. 04, 2013USD ($) | May. 31, 2016$ / shares | Mar. 31, 2016USD ($)$ / sharesshares | Feb. 29, 2016$ / shares | Jun. 30, 2009shares | Mar. 31, 2016USD ($)item$ / sharesshares | Mar. 31, 2015$ / shares | Dec. 31, 2015USD ($)$ / sharesshares | Feb. 28, 2015USD ($) |
Equity | |||||||||
Authorized shares of common stock | 300,000,000 | 300,000,000 | 300,000,000 | ||||||
Par value of common stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Shares of common stock issued | 60,390,032 | 60,390,032 | 59,853,933 | ||||||
Shares of common stock outstanding | 58,000,000 | 58,000,000 | 57,500,000 | ||||||
Shares held as treasury stock | 2,363,324 | 2,363,324 | 2,363,324 | ||||||
Authorized shares of preferred stock | 25,000,000 | 25,000,000 | 25,000,000 | ||||||
Par value of preferred stock (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Preferred stock, issued shares | 0 | 0 | 0 | ||||||
Preferred stock, outstanding shares | 0 | 0 | 0 | ||||||
Minimum number of series to issue preferred stock | item | 1 | ||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.12 | $ 0.12 | $ 0.12 | ||||||
Cash dividend paid | $ | $ 7,000 | ||||||||
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% | ||||||||
Equity and Share Repurchase Program | |||||||||
Amount authorized under share repurchase program | $ | $ 25,000 | ||||||||
Number of shares of common stock repurchased | 0 | 0 | |||||||
Remaining availability for future repurchases of common stock | $ | 25,000 | $ 25,000 | |||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ | 33,074 | 33,074 | $ 33,418 | ||||||
CLC | |||||||||
Equity and Share Repurchase Program | |||||||||
Premium upon exercise of share options to settle loan (as a percent) | 20.00% | ||||||||
CLC | Convertible Debt | |||||||||
Equity and Share Repurchase Program | |||||||||
Convertible secured loan available, subject to certain conditions being met | $ | $ 15,100 | ||||||||
CLC | VRI Europe Limited | |||||||||
Equity and Share Repurchase Program | |||||||||
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 | $ | 31,200 | 31,200 | 31,300 | ||||||
Period from acquisition during which parties have agreed not to transfer their interests | 5 years | ||||||||
HVO | |||||||||
Equity and Share Repurchase Program | |||||||||
Stockholders' Equity Attributable to Noncontrolling Interest | $ | $ 1,700 | $ 1,700 | $ 2,000 | ||||||
Subsequent Event | |||||||||
Equity | |||||||||
Dividends declared per common share (in dollars per share) | $ / shares | $ 0.12 |
BENEFIT PLANS (Details)
BENEFIT PLANS (Details) - USD ($) $ in Millions | Oct. 01, 2014 | Mar. 31, 2016 | Mar. 31, 2015 |
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 | $ 0.6 | $ 0.5 | |
Deferred compensation plan | |||
Vesting percentage under deferred compensation plan | 100.00% | ||
Shares of common stock reserved for issuance pursuant to deferred compensation plan | 100,000 | ||
Shares outstanding under the deferred compensation plan | 55,136 | ||
Maximum | |||
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% | ||
HVO | |||
Deferred compensation plan | |||
Net transfer into deferred compensation plan | $ 10.6 | ||
Fair value of investments in the Rabbi Trust | $ 11.4 | ||
HVO | Maximum | |||
Deferred compensation plan | |||
Unrealized investment losses related to deferred compensation plan | $ (0.1) |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) $ / shares in Units, $ in Thousands | May. 21, 2013shares | Mar. 31, 2016USD ($)item$ / sharesshares | Mar. 31, 2015USD ($)$ / sharesshares |
STOCK-BASED COMPENSATION | |||
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 11.64 | ||
Non-cash compensation expense | $ | $ 3,608 | $ 3,522 | |
Non-vested RSUs | |||
STOCK-BASED COMPENSATION | |||
New awards granted (in shares) | 750,000 | 423,000 | |
Non-cash compensation expense | $ | $ 3,600 | $ 3,500 | |
Unrecognized compensation expense | |||
Unrecognized compensation cost, net of estimated forfeitures | $ | $ 22,500 | ||
Weighted average period for recognition of unrecognized compensation expense | 2 years | ||
Non-vested RSUs | Minimum | |||
STOCK-BASED COMPENSATION | |||
Award vesting period | 3 years | 3 years | |
Non-vested RSUs | Maximum | |||
STOCK-BASED COMPENSATION | |||
Award vesting period | 4 years | 4 years | |
Non-vested RSUs | Cliff vesting | |||
STOCK-BASED COMPENSATION | |||
New awards granted (in shares) | 140,000 | 105,000 | |
Award vesting period | 3 years | 3 years | |
Non-vested RSUs | Performance-based | |||
STOCK-BASED COMPENSATION | |||
New awards granted (in shares) | 105,000 | 54,000 | |
Per unit grant date fair value (in dollars per unit) | $ / shares | $ 13.13 | $ 40.71 | |
Number of peer groups for estimating total shareholder return ranking | item | 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-vested RSUs | Performance-based | Minimum | |||
STOCK-BASED COMPENSATION | |||
Percentage of target shares which can be earned by the participants (as a percent) | 0.00% | 0.00% | |
Non-vested RSUs | Performance-based | Maximum | |||
STOCK-BASED COMPENSATION | |||
Percentage of target shares which can be earned by the participants (as a percent) | 200.00% | 200.00% | |
2013 Stock and Incentive Compensation Plan | |||
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 | 1,600,000 |
STOCK-BASED COMPENSATION (Det53
STOCK-BASED COMPENSATION (Details 2) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Non-cash stock-based compensation expense | ||
Non-cash compensation expense before income taxes | $ 3,608 | $ 3,522 |
Cost of sales | ||
Non-cash stock-based compensation expense | ||
Non-cash compensation expense before income taxes | 245 | 230 |
Selling and marketing expense | ||
Non-cash stock-based compensation expense | ||
Non-cash compensation expense before income taxes | 521 | 473 |
General and administrative expense | ||
Non-cash stock-based compensation expense | ||
Non-cash compensation expense before income taxes | $ 2,842 | $ 2,819 |
STOCK-BASED COMPENSATION (Det54
STOCK-BASED COMPENSATION (Details 3) shares in Thousands | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Shares | |
Outstanding at the beginning of the period (in shares) | shares | 1,685 |
Granted (in shares) | shares | 752 |
Vested (in shares) | shares | (649) |
Outstanding at the end of the period (in shares) | shares | 1,788 |
Weighted-Average Grant Date Fair Value | |
Outstanding at the beginning of the period (in dollars per share) | $ / shares | $ 22.98 |
Granted (in dollars per share) | $ / shares | 11.64 |
Vested (in dollars per share) | $ / shares | 20.53 |
Outstanding at the end of the period (in dollars per share) | $ / shares | $ 19.10 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Reconciliation of total income tax provision | ||
Income tax provision | $ 12,639 | $ 14,492 |
Effective tax rate (as a percent) | 35.70% | 36.00% |
Federal statutory rate (as a percent) | 35.00% | 35.00% |
ILG | ||
Reconciliation of total income tax provision | ||
Income tax provision | $ (423) | $ (306) |
SEGMENT INFORMATION (Details)
SEGMENT INFORMATION (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | |
SEGMENT INFORMATION | |||
Number of operating segments which are also reportable segments | item | 2 | ||
SEGMENT INFORMATION | |||
Total revenues | $ 185,922 | $ 184,552 | |
Cost of sales | 82,688 | 82,357 | |
Gross profit | 103,234 | 102,195 | |
Selling and marketing expense | 17,991 | 18,208 | |
General and administrative expense | 37,829 | 35,895 | |
Amortization expense of intangibles | 3,201 | 3,501 | |
Depreciation expense | 4,668 | 4,269 | |
Direct segment operating expenses | 63,689 | 61,873 | |
Operating income | 39,545 | 40,322 | |
Total assets | |||
Total assets | 1,306,233 | $ 1,279,107 | |
Exchange And Rental | |||
SEGMENT INFORMATION | |||
Transaction Revenue | 57,780 | 56,337 | |
Membership fee revenue | 30,645 | 32,275 | |
Ancillary member revenue | 1,241 | 1,399 | |
Total member revenue | 89,666 | 90,011 | |
Other revenue | 8,840 | 8,705 | |
Rental management revenue | 12,495 | 14,199 | |
Pass-through revenue | 22,941 | 22,721 | |
Total revenues | 133,942 | 135,636 | |
Cost of sales | 51,061 | 51,224 | |
Gross profit | 82,881 | 84,412 | |
Selling and marketing expense | 13,919 | 15,321 | |
General and administrative expense | 24,566 | 26,075 | |
Amortization expense of intangibles | 2,001 | 2,155 | |
Depreciation expense | 4,207 | 3,826 | |
Operating income | 38,188 | 37,035 | |
Total assets | |||
Total assets | 921,188 | 905,021 | |
Vacation Ownership | |||
SEGMENT INFORMATION | |||
Management fee revenue | 24,567 | 25,058 | |
Vacation ownership sales and financing revenue | 11,985 | 8,596 | |
Pass-through revenue | 15,428 | 15,262 | |
Total revenues | 51,980 | 48,916 | |
Cost of sales | 31,627 | 31,133 | |
Gross profit | 20,353 | 17,783 | |
Selling and marketing expense | 4,072 | 2,887 | |
General and administrative expense | 13,263 | 9,820 | |
Amortization expense of intangibles | 1,200 | 1,346 | |
Depreciation expense | 461 | 443 | |
Operating income | 1,357 | $ 3,287 | |
Total assets | |||
Total assets | $ 385,045 | $ 374,086 |
SEGMENT INFORMATION (Details 2)
SEGMENT INFORMATION (Details 2) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($)item | Dec. 31, 2015USD ($) | ||
Geographic Information | ||||
Number of other countries in which entity operates | item | 15 | 15 | ||
Revenue: | ||||
Revenue | $ 185,922 | $ 184,552 | ||
Long-lived assets (excluding goodwill and intangible assets): | ||||
Total long-lived assets | $ 92,765 | $ 91,482 | ||
Minimum | ||||
Geographic Information | ||||
Number of countries from which revenue is sourced | item | 100 | 100 | ||
United States | ||||
Revenue: | ||||
Revenue | $ 155,754 | $ 154,586 | ||
Long-lived assets (excluding goodwill and intangible assets): | ||||
Total long-lived assets | 88,184 | 86,813 | ||
Europe | ||||
Revenue: | ||||
Revenue | 17,183 | 17,850 | ||
Long-lived assets (excluding goodwill and intangible assets): | ||||
Total long-lived assets | 4,278 | 4,335 | ||
All other countries | ||||
Revenue: | ||||
Revenue | [1] | 12,985 | $ 12,116 | |
Long-lived assets (excluding goodwill and intangible assets): | ||||
Total long-lived assets | $ 303 | $ 334 | ||
[1] | Includes countries within the following continents: Africa, Asia, Australia, North America and South America. |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Commitments and guarantees | |
Letter of credit outstanding amount | $ 8.6 |
Guarantees, surety bonds, and letters of credit | |
Commitments and guarantees | |
Guarantees and commitments amount | 82.6 |
Amount of guarantees and commitments, year one | 61.1 |
Guarantees | |
Commitments and guarantees | |
Guarantees and commitments amount | 35.1 |
Reasonable expectation of guarantees and commitments amount | $ 11.2 |
Guarantees | Minimum | |
Commitments and guarantees | |
Notice period for termination of lease | 60 days |
Guarantees | Maximum | |
Commitments and guarantees | |
Notice period for termination of lease | 90 days |
Guarantees construction loan | |
Commitments and guarantees | |
Guarantees and commitments amount | $ 36.7 |
SUPPLEMENTAL GUARANTOR INFORM59
SUPPLEMENTAL GUARANTOR INFORMATION - Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Balance Sheet | ||
Current assets | $ 282,504 | $ 257,379 |
Property and equipment, net | 92,765 | 91,482 |
Goodwill and intangible assets, net | 805,317 | 811,780 |
Other assets | 125,647 | 118,466 |
TOTAL ASSETS | 1,306,233 | 1,279,107 |
Current liabilities | 236,784 | 211,985 |
Other long term liabilities | 188,956 | 185,303 |
Long-term debt | 402,988 | 415,700 |
Redeemable noncontrolling interest | 713 | 708 |
ILG stockholders' equity | 443,718 | 431,993 |
Noncontrolling interests | 33,074 | 33,418 |
TOTAL LIABILITIES AND EQUITY | 1,306,233 | 1,279,107 |
Total Eliminations | ||
Balance Sheet | ||
Investments in subsidiaries | (2,007,821) | (1,996,229) |
TOTAL ASSETS | (2,007,821) | (1,996,229) |
ILG stockholders' equity | (2,007,821) | (1,996,229) |
TOTAL LIABILITIES AND EQUITY | (2,007,821) | (1,996,229) |
ILG | ||
Balance Sheet | ||
Current assets | 447 | 502 |
Property and equipment, net | 114 | 144 |
Investments in subsidiaries | 557,524 | 538,860 |
TOTAL ASSETS | 558,085 | 539,506 |
Current liabilities | 1,084 | 956 |
Intercompany liabilities (receivables)/equity | 113,283 | 106,557 |
ILG stockholders' equity | 443,718 | 431,993 |
TOTAL LIABILITIES AND EQUITY | 558,085 | 539,506 |
Interval Acquisition Corp | ||
Balance Sheet | ||
Current assets | 12 | 27 |
Goodwill and intangible assets, net | 267,445 | 267,602 |
Investments in subsidiaries | 1,352,998 | 1,321,242 |
TOTAL ASSETS | 1,620,455 | 1,588,871 |
Current liabilities | 9,629 | 4,717 |
Long-term debt | 402,988 | 415,700 |
Intercompany liabilities (receivables)/equity | 650,314 | 629,594 |
ILG stockholders' equity | 557,524 | 538,860 |
TOTAL LIABILITIES AND EQUITY | 1,620,455 | 1,588,871 |
Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 173,799 | 147,891 |
Property and equipment, net | 66,591 | 65,240 |
Goodwill and intangible assets, net | 424,372 | 427,000 |
Investments in subsidiaries | 97,299 | 136,127 |
Other assets | 109,998 | 102,729 |
TOTAL ASSETS | 872,059 | 878,987 |
Current liabilities | 194,325 | 175,147 |
Other long term liabilities | 169,533 | 163,115 |
Long-term debt | (12,113) | (7,871) |
Intercompany liabilities (receivables)/equity | (835,270) | (775,496) |
Redeemable noncontrolling interest | 713 | 708 |
ILG stockholders' equity | 1,352,998 | 1,321,242 |
Noncontrolling interests | 1,873 | 2,142 |
TOTAL LIABILITIES AND EQUITY | 872,059 | 878,987 |
Non-Guarantor Subsidiaries | ||
Balance Sheet | ||
Current assets | 108,246 | 108,959 |
Property and equipment, net | 26,060 | 26,098 |
Goodwill and intangible assets, net | 113,500 | 117,178 |
Other assets | 15,649 | 15,737 |
TOTAL ASSETS | 263,455 | 267,972 |
Current liabilities | 31,746 | 31,165 |
Other long term liabilities | 19,423 | 22,188 |
Long-term debt | 12,113 | 7,871 |
Intercompany liabilities (receivables)/equity | 71,673 | 39,345 |
ILG stockholders' equity | 97,299 | 136,127 |
Noncontrolling interests | 31,201 | 31,276 |
TOTAL LIABILITIES AND EQUITY | $ 263,455 | $ 267,972 |
SUPPLEMENTAL GUARANTOR INFORM60
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Income | ||
Revenue | $ 185,922 | $ 184,552 |
Operating expenses | (146,377) | (144,230) |
Interest (expense) income, net | (5,949) | (2,486) |
Other income (expense), net | 556 | 921 |
Income tax benefit (provision) | (12,639) | (14,492) |
Equity in earnings from unconsolidated entities | 1,242 | 1,524 |
Net income | 22,755 | 25,789 |
Net income attributable to noncontrolling interests | (573) | (527) |
Net income attributable to common stockholders | 22,182 | 25,262 |
Total Eliminations | ||
Statement of Income | ||
Other income (expense), net | (52,588) | (56,345) |
Net income | (52,588) | (56,345) |
Net income attributable to common stockholders | (52,588) | (56,345) |
ILG | ||
Statement of Income | ||
Operating expenses | (1,096) | (792) |
Other income (expense), net | 22,855 | 25,748 |
Income tax benefit (provision) | 423 | 306 |
Net income | 22,182 | 25,262 |
Net income attributable to common stockholders | 22,182 | 25,262 |
Interval Acquisition Corp | ||
Statement of Income | ||
Operating expenses | (159) | (157) |
Interest (expense) income, net | (6,407) | (2,800) |
Other income (expense), net | 26,888 | 27,565 |
Income tax benefit (provision) | 2,533 | 1,140 |
Net income | 22,855 | 25,748 |
Net income attributable to common stockholders | 22,855 | 25,748 |
Guarantor Subsidiaries | ||
Statement of Income | ||
Revenue | 159,656 | 158,341 |
Operating expenses | (124,114) | (122,416) |
Interest (expense) income, net | 557 | 391 |
Other income (expense), net | 2,798 | 2,870 |
Income tax benefit (provision) | (13,515) | (13,404) |
Equity in earnings from unconsolidated entities | 1,242 | 1,524 |
Net income | 26,624 | 27,306 |
Net income attributable to noncontrolling interests | 264 | 259 |
Net income attributable to common stockholders | 26,888 | 27,565 |
Non-Guarantor Subsidiaries | ||
Statement of Income | ||
Revenue | 26,266 | 26,211 |
Operating expenses | (21,008) | (20,865) |
Interest (expense) income, net | (99) | (77) |
Other income (expense), net | 603 | 1,083 |
Income tax benefit (provision) | (2,080) | (2,534) |
Net income | 3,682 | 3,818 |
Net income attributable to noncontrolling interests | (837) | (786) |
Net income attributable to common stockholders | $ 2,845 | $ 3,032 |
SUPPLEMENTAL GUARANTOR INFORM61
SUPPLEMENTAL GUARANTOR INFORMATION - Statement of Cash Flows (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | $ 40,107 | $ 64,705 |
Cash flows provided by (used in) investing activities | (13,478) | (4,810) |
Cash flows provided by (used in) financing activities | (21,330) | (39,525) |
Effect of exchange rate changes on cash and cash equivalents | (1,537) | (3,771) |
Cash and cash equivalents at beginning of period | 93,088 | 80,493 |
Cash and cash equivalents at end of period | 96,850 | 97,092 |
ILG | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | (233) | (1,799) |
Cash flows provided by (used in) financing activities | 233 | 1,799 |
Interval Acquisition Corp | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | 1,100 | (1,113) |
Cash flows provided by (used in) financing activities | (1,100) | 1,113 |
Guarantor Subsidiaries | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | 34,556 | 59,006 |
Cash flows provided by (used in) investing activities | (13,192) | (4,538) |
Cash flows provided by (used in) financing activities | (14,622) | (40,406) |
Cash and cash equivalents at beginning of period | 14,415 | 16,851 |
Cash and cash equivalents at end of period | 21,157 | 30,913 |
Non-Guarantor Subsidiaries | ||
Statement of Cash Flows | ||
Cash flows provided by (used in) operating activities | 4,684 | 8,611 |
Cash flows provided by (used in) investing activities | (286) | (272) |
Cash flows provided by (used in) financing activities | (5,841) | (2,031) |
Effect of exchange rate changes on cash and cash equivalents | (1,537) | (3,771) |
Cash and cash equivalents at beginning of period | 78,673 | 63,642 |
Cash and cash equivalents at end of period | $ 75,693 | $ 66,179 |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) - Vistana - Subsequent Event shares in Millions, $ in Millions | Apr. 20, 2016USD ($)shares |
SUBSEQUENT EVENTS | |
Common stock issued (in shares) | shares | 72.4 |
Aggregate purchase price in cash | $ | $ 125 |
Global license agreement term | 80 years |