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SECURITIES AND EXCHANGE COMMISSION
Maryland (State or other jurisdiction of incorporation or organization) | 7011 (Primary Standard Industrial Classification Code Number) | 95-4582157 (I.R.S. Employer Identification Number) |
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Tel: (702) 684-8000
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Executive Vice President and General Counsel
Diamond Resorts Corporation
10600 West Charleston Boulevard
Las Vegas, Nevada 89135
(702) 823-7550
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Howard S. Lanznar, Esq.
Katten Muchin Rosenman LLP
525 West Monroe Street
Chicago, Illinois 60661
(312) 902-5200
Large accelerated filero | Accelerated filero | Non-accelerated filerþ | Smaller reporting companyo | |||
(Do not check if a smaller reporting company) |
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction: | ||
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)o | ||
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)o |
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State or Other | I.R.S. | Industrial | ||||||||||
Jurisdiction of | Employer | Classification | ||||||||||
Exact Name of Registrant Guarantor as Specified in its Charter (or | Incorporation or | Identification | Code | |||||||||
Other Organizational Document) (1) | Organization | Number | Number | |||||||||
Diamond Resorts Parent, LLC | NV | 26-2349909 | 7011 | |||||||||
Diamond Resorts Holdings, LLC | NV | 27-5181614 | 7011 | |||||||||
AKGI-St. Maarten N.V. | DE | 59-3324734 | 7011 | |||||||||
Chestnut Farms, LLC | NV | 01-0905882 | 7011 | |||||||||
Cumberland Gate, LLC | DE | 61-1596179 | 7011 | |||||||||
Diamond Resorts California Collection Development, LLC | DE | 20-0292225 | 7011 | |||||||||
Diamond Resorts Centralized Services Company | DE | 82-0554601 | 7011 | |||||||||
Diamond Resorts Citrus Share Holding, LLC | DE | 33-1014939 | 7011 | |||||||||
Diamond Resorts Coral Sands Development, LLC | DE | 33-1014958 | 7011 | |||||||||
Diamond Resorts Cypress Pointe I Development, LLC | DE | 33-1014959 | 7011 | |||||||||
Diamond Resorts Cypress Pointe II Development, LLC | DE | 33-1014960 | 7011 | |||||||||
Diamond Resorts Cypress Pointe III Development, LLC | DE | 33-1014961 | 7011 | |||||||||
Diamond Resorts Daytona Development, LLC | DE | 33-1014956 | 7011 | |||||||||
Diamond Resorts Developer and Sales Holding Company | DE | 86-0787595 | 7011 | |||||||||
Diamond Resorts Epic Mortgage Holdings, LLC | DE | 33-1014921 | 7011 | |||||||||
Diamond Resorts Fall Creek Development, LLC | DE | 33-1014962 | 7011 | |||||||||
Diamond Resorts Finance Holding Company | DE | 82-0554621 | 7011 | |||||||||
Diamond Resorts Financial Services, Inc. | NV | 88-0410455 | 7011 | |||||||||
Diamond Resorts Grand Beach I Development, LLC | DE | 33-1014963 | 7011 | |||||||||
Diamond Resorts Grand Beach II Development, LLC | DE | 33-1014965 | 7011 | |||||||||
Diamond Resorts Greensprings Development, LLC | DE | 33-1014966 | 7011 | |||||||||
Diamond Resorts Hawaii Collection Development, LLC | DE | 33-1014926 | 7011 | |||||||||
Diamond Resorts Hilton Head Development, LLC | DE | 33-1014957 | 7011 | |||||||||
Diamond Resorts International Club, Inc. | FL | 59-3510037 | 7011 | |||||||||
Diamond Resorts International Marketing, Inc. | CA | 95-4484297 | 7011 | |||||||||
Diamond Resorts Las Vegas Development, LLC | DE | 33-1014971 | 7011 | |||||||||
Diamond Resorts Management and Exchange Holding Company | DE | 33-1014911 | 7011 | |||||||||
Diamond Resorts Management, Inc. | AZ | 86-0713421 | 7011 | |||||||||
Diamond Resorts Mortgage Holdings, LLC | DE | 82-0554625 | 7011 | |||||||||
Diamond Resorts Palm Springs Development, LLC | DE | 33-1014935 | 7011 | |||||||||
Diamond Resorts Poco Diablo Development, LLC | DE | 33-1014970 | 7011 | |||||||||
Diamond Resorts Poipu Development, LLC | DE | 33-1014968 | 7011 | |||||||||
Diamond Resorts Polo Development, LLC | NV | 26-0145739 | 7011 | |||||||||
Diamond Resorts Port Royal Development, LLC | DE | 33-1014973 | 7011 | |||||||||
Diamond Resorts Powhatan Development, LLC | DE | 33-1014974 | 7011 | |||||||||
Diamond Resorts Residual Assets Development, LLC | DE | 33-1014975 | 7011 | |||||||||
Diamond Resorts Residual Assets Finance, LLC | DE | 33-1014919 | 7011 | |||||||||
Diamond Resorts Residual Assets M&E, LLC | DE | 33-1014914 | 7011 | |||||||||
Diamond Resorts Ridge on Sedona Development, LLC | DE | 33-1014976 | 7011 | |||||||||
Diamond Resorts Ridge Pointe Development, LLC | DE | 33-1014977 | 7011 | |||||||||
Diamond Resorts San Luis Bay Development, LLC | DE | 33-1014978 | 7011 | |||||||||
Diamond Resorts Santa Fe Development, LLC | DE | 33-1014979 | 7011 | |||||||||
Diamond Resorts Scottsdale Development, LLC | DE | 33-1014954 | 7011 | |||||||||
Diamond Resorts Sedona Springs Development, LLC | DE | 33-1014980 | 7011 | |||||||||
Diamond Resorts Sedona Summit Development, LLC | DE | 33-1014981 | 7011 | |||||||||
Diamond Resorts St. Croix Development, LLC | DE | 33-1014982 | 7011 | |||||||||
Diamond Resorts Steamboat Development, LLC | DE | 33-1014984 | 7011 | |||||||||
Diamond Resorts Tahoe Beach & Ski Development, LLC | DE | 33-1014986 | 7011 | |||||||||
Diamond Resorts U.S. Collection Development, LLC | DE | 33-1014915 | 7011 | |||||||||
Diamond Resorts Villa Mirage Development, LLC | DE | 33-1014985 | 7011 | |||||||||
Diamond Resorts Villas of Sedona Development, LLC | DE | 33-1014987 | 7011 | |||||||||
Diamond Resorts West Maui Development, LLC | DE | 33-1014927 | 7011 |
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State or Other | I.R.S. | Industrial | ||||||||||
Jurisdiction of | Employer | Classification | ||||||||||
Exact Name of Registrant Guarantor as Specified in its Charter (or | Incorporation or | Identification | Code | |||||||||
Other Organizational Document) (1) | Organization | Number | Number | |||||||||
Foster Shores, LLC | MO | 01-0905934 | 7011 | |||||||||
George Acquisition Subsidiary, Inc. | NV | 58-2385599 | 7011 | |||||||||
Ginger Creek, LLC | DE | 32-0262324 | 7011 | |||||||||
Grand Escapes, LLC | DE | 20-1884181 | 7011 | |||||||||
International Timeshares Marketing, LLC | DE | 33-1014941 | 7011 | |||||||||
Lake Tahoe Resort Partners, LLC | CA | 95-4569152 | 7011 | |||||||||
Mazatlan Development Inc. | WA | 91-1491324 | 7011 | |||||||||
MMG Development Corp. | FL | 65-0530260 | 7011 | |||||||||
Poipu Resort Partners, L.P. | HI | 95-4501724 | 7011 | |||||||||
Resort Management International, Inc. | CA | 95-4582082 | 7011 | |||||||||
Resorts Development International, Inc. | NV | 88-0198739 | 7011 | |||||||||
Walsham Lake, LLC | MO | 01-0905847 | 7011 | |||||||||
West Maui Resort Partners, L.P. | DE | 99-0327624 | 7011 |
(1) | The address and telephone number of each registrant guarantor’s principal executive offices is 10600 West Charleston Boulevard, Las Vegas, Nevada 89135, (702) 684-8000. |
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The information in this prospectus is not complete and may be changed. We may not exchange these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to exchange these securities and it is not soliciting an offer to exchange these securities in any state where the offer or sale is not permitted. |
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• | We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes that are freely tradable. | |
• | You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer. | |
• | The exchange offer expires at 11:59 p.m., New York City time, on , 2011, unless extended. We do not currently intend to extend the expiration date. | |
• | The exchange of outstanding notes for exchange in the exchange offer will not be a taxable event for U.S. federal income tax purposes. | |
• | We will not receive any proceeds from the exchange offer. |
• | The exchange notes are being offered in order to satisfy certain of our obligations under the registration rights agreement entered into in connection with the placement of the outstanding notes. | |
• | The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradable. | |
• | Each of Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC and all of Diamond Resorts Corporation’s existing and future direct or indirect U.S. restricted subsidiaries jointly and severally, irrevocably and unconditionally guarantee, on a secured senior basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of Diamond Resorts Corporation under the outstanding notes, exchange notes and the indenture governing the notes. | |
• | The exchange notes and the guarantees will be secured by first-priority liens on all Diamond Resorts Corporation’s and the guarantors’ assets, other than real property and consumer loans, subject to certain exceptions and permitted liens. |
• | The exchange notes may be sold in theover-the-counter market, in negotiated transactions or through a combination of such methods. We do not plan to list the exchange notes on a national market. |
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• | adverse trends in economic conditions generally or in the vacation ownership, vacation rental and travel industries; | ||
• | adverse changes to, or interruptions in, relationships with our affiliates and other third parties, including our hospitality management contracts; | ||
• | our ability to maintain a sufficient inventory of vacation ownership interests, or VOIs, for sale to customers without expending significant capital to develop or acquire additional resort properties; | ||
• | our ability to sell, securitize or borrow against the consumer loans that we generate; | ||
• | decreased demand from prospective purchasers of VOIs; | ||
• | declines or disruptions in the travel industry; | ||
• | adverse events or trends in vacation destinations and regions where our resorts are located; | ||
• | changes in our senior management; | ||
• | our ability to comply with regulations applicable to the vacation ownership industry; | ||
• | the effects of our indebtedness and our compliance with the terms thereof; |
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• | our ability to successfully implement our growth strategy; | ||
• | our ability to compete effectively; and | ||
• | other risks and uncertainties discussed in “Risk Factors” and elsewhere in this prospectus. |
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• | Hospitality and Management Services.We manage 68 branded resort properties, as well as our five Collections which hold real estate in our resort properties underlying the VOIs that we sell. We also manage THE Club, our points-based exchange and member services program that enables our members to vacation throughout our resort network. We provide billing services, account collections, accounting and treasury functions and information technology services to our branded resorts and Collections. We also provide an online reservation system and customer service contact center, operate the front desks and amenities and furnish housekeeping, maintenance and human resources services for our branded resorts. Our management contracts are structured on a cost-plus basis, thereby providing us with a recurring and stable revenue stream. | ||
• | Marketing and Sales of VOIs.We market and sell VOIs in our resort network. We generate sales prospects by utilizing a variety of marketing programs and close substantially all of our VOI sales following presentations at our sales centers, which we refer to as tours. The number of points required to stay at one of our resorts varies according to the resort, the type and size of accommodation, the season and the length of stay. In 2010, the average cost to purchase points equivalent to a one-week vacation at one of our resorts was $17,965. | ||
• | Consumer Financing of VOIs.We provide loans to eligible customers who purchase VOIs through our U.S. sales centers and choose to finance their purchase. These loans are collateralized by the underlying VOIs and bear interest at a fixed rate. We manage the underwriting, services and collection of our consumer loan portfolio. | ||
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Managed and Branded Resorts | ||||
North America and the Caribbean | ||||
Arizona | 9 | |||
California | 2 | |||
Caribbean | 2 | |||
Colorado | 1 | |||
Florida | 2 | |||
Hawaii | 2 | |||
Indiana | 1 | |||
Mexico | 1 | |||
Missouri | 1 | |||
Nevada | 3 | |||
New Mexico | 1 | |||
Tennessee | 1 | |||
Virginia | 2 | |||
Subtotal | 28 | |||
Europe | ||||
Austria | 1 | |||
England | 12 | |||
France | 4 | |||
Italy | 1 | |||
Malta | 1 | |||
Ireland | 3 | |||
Portugal | 1 | |||
Scotland | 1 | |||
Spain | 16 | |||
Subtotal | 40 | |||
Total Managed and Branded Resorts | 68 | |||
Affiliated Resorts | ||||
North America and the Caribbean | ||||
Arizona | 6 | |||
California | 12 | |||
Colorado | 1 | |||
Canada | 2 | |||
Dominican Republic | 2 | |||
Florida | 8 | |||
Hawaii | 10 | |||
Idaho | 1 | |||
Jamaica | 1 | |||
Massachusetts | 3 | |||
Mexico | 13 | |||
Nevada | 3 | |||
New Hampshire | 2 | |||
North Carolina | 1 | |||
Ohio | 1 | |||
Oregon | 2 | |||
South Carolina | 3 |
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Tennessee | 3 | |||
Texas | 2 | |||
Utah | 1 | |||
Washington | 4 | |||
Wisconsin | 1 | |||
Subtotal | 82 | |||
Europe and Africa | ||||
Austria | 4 | |||
Czech Republic | 1 | |||
England | 3 | |||
Germany | 3 | |||
Greece | 1 | |||
Hungary | 1 | |||
Italy | 2 | |||
Morocco | 1 | |||
Norway | 1 | |||
Portugal | 4 | |||
South Africa | 6 | |||
Spain | 2 | |||
Sweden | 1 | |||
Turkey | 1 | |||
Subtotal | 31 | |||
Asia and Australia | ||||
Australia | 6 | |||
India | 3 | |||
Indonesia | 2 | |||
Thailand | 7 | |||
Subtotal | 18 | |||
Total Affiliated Resorts | 131 | |||
Cruise Ships | ||||
Alaska | 1 | |||
Caribbean | 1 | |||
Hawaiian Isles | 1 | |||
Mediterranean | 1 | |||
Total Cruise Ships | 4 | |||
Total Managed, Branded and Affiliated Resorts and Cruise Ships | 203 | |||
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* | A change in ARDA’s definition of the study population resulted in a decrease in the number of resorts included in the ARDA study from 2004 to 2005, which also resulted in a decrease in the number of vacation ownership week equivalents. This change focused ARDA’s analysis on traditional VOIs, including intervals and points, by removing non-comparable entities such as fractionals, non-equity clubs, private residence clubs and vacation clubs. Prior years were not restated to give effect to this change. | |
Source: Historical timeshare industry research conducted by Ragatz Associates, American Economic Group and Ernst & Young on behalf of the ARDA International Foundation, as of December 31, 2010. | ||
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• | implementing a new focus on service and hospitality to provide our members a premium experience; | ||
• | introducing the Diamond Resorts International brand throughout our network of managed resorts; | ||
• | renegotiating our hospitality management contracts to provide improved cost recovery; | ||
• | implementing a capital-light business model that does not require capital-intensive acquisitions, development or construction and reduces working capital requirements; |
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• | responding quickly to the credit crisis by substantially increasing our percentage of all-cash sales, thereby reducing our dependence on the receivables financing market; and | ||
• | adjusting our marketing and sales efforts by closing certain low margin sales centers, eliminating certain incentive programs and implementing a new sales commission structure. |
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(1) | Consists of approximately $85 million face value of (i) 16.5% preferred units and (ii) common units representing approximately 29% of Diamond Resorts Parent, LLC’s common equity. See Note 7 to the table under “Security Ownership of Certain Beneficial Owners and Management.” | |
(2) | Does not include warrants exercisable for an aggregate of 4.8% of the fully-diluted equity of Diamond Resorts Corporation. Each warrant is exercisable until April 26, 2014 and has an exercise price of $0.01 per share. The number of shares subject to each warrant and the exercise price are subject to certain anti-dilution adjustments. | |
(3) | Upstream guarantees provided by all of our direct and indirect domestic restricted subsidiaries, other than our special purpose vehicles (see footnote 4 below), including special purpose vehicles established in connection with certain acquisitions. See “Business—Business Strategies—Capitalizing on current industry dynamics to grow fee-based services.” | |
(4) | Consists of special purpose vehicles created to issue non-recourse indebtedness secured by our VOI consumer loans. See “Description of Other Indebtedness.” |
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• | the exchange notes have been registered under the Securities Act; | ||
• | the exchange notes are not entitled to certain registration rights which are applicable to the outstanding notes under the registration rights agreement; and | ||
• | certain special interest rate provisions are no longer applicable. |
The Exchange Offer | We are offering to exchange up to $425,000,000 aggregate principal amount of our 12% Senior Secured Notes due 2018, which have been registered under the Securities Act, for up to $425,000,000 aggregate principal amount of our existing 12% Senior Secured Notes due 2018. Outstanding notes may be exchanged only in denominations of $2,000 and integral multiples of $1,000 in excess of $2,000. | |
Resale | Based on an interpretation by the staff of the Securities and Exchange Commission (the “SEC”) set forth in no-action letters issued to third parties, we believe that the exchange notes issued pursuant to the exchange offer in exchange for the outstanding notes may be offered for resale, resold and otherwise transferred by you (unless you are our “affiliate” within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that: | |
• you are acquiring the exchange notes in the ordinary course of your business; and • you have not engaged in, do not intend to engage in, and have no arrangement or understanding with any person to participate in, a distribution of the exchange notes. | ||
If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making activities or other trading activities, you must acknowledge that you will deliver this prospectus in connection with any resale of the exchange notes. See “Plan of Distribution.” Any holder of outstanding notes who: | ||
• is our affiliate; | ||
• does not acquire exchange notes in the ordinary course of its business; or |
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• tenders its outstanding notes in the exchange offer with the intention to participate, or for the purpose of participating, in a distribution of exchange notes; | ||
cannot rely on the position of the staff of the SEC enunciated inMorgan Stanley & Co. Incorporated(available June 5, 1991) andExxon Capital Holdings Corporation(available May 13, 1988), as interpreted inShearman & Sterling (available July 2, 1993), or similar no-action letters and, in the absence of an exemption therefrom, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. | ||
Expiration Date; Withdrawal of Tender | The exchange offer will expire at 11:59 p.m., New York City time, on , 2011, unless extended by us. We do not currently intend to extend the expiration date. You may withdraw the tender of your outstanding notes at any time prior to the expiration of the exchange offer. We will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer. | |
Conditions to the Exchange Offer | The exchange offer is subject to customary conditions, which we may waive. See “The Exchange Offer—Conditions to the Exchange Offer” of this prospectus for more information. | |
Procedures for Tendering Outstanding Notes | If you wish to participate in the exchange offer and your outstanding notes are not held through The Depository Trust Company (“DTC”) you must complete, sign and date the accompanying letter of transmittal, or a facsimile of such letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of such letter of transmittal, together with your outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. | |
If you hold outstanding notes through DTC and wish to participate in the exchange offer, you must comply with the Automated Tender Offer Program procedures of DTC by which you will agree to be bound by the letter of transmittal. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things: | ||
• you are not our “affiliate” within the meaning of Rule 405 under the Securities Act; | ||
• you do not have an arrangement or understanding with any person or entity to participate in the distribution of the exchange notes; | ||
• you are acquiring the exchange notes in the ordinary course of your business; and | ||
• if you are a broker-dealer that will receive exchange notes for your own account in exchange for outstanding notes that were acquired as a result of market-making activities, you will deliver a prospectus, as required by law, in connection with any resale of such exchange notes. |
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Special Procedures for Beneficial Owners | If you are a beneficial owner of outstanding notes which are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender such outstanding notes in the exchange offer, you should contact such registered holder promptly and instruct such registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the letter of transmittal and delivering your outstanding notes, either make appropriate arrangements to register ownership of the outstanding notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. | |
Guaranteed Delivery Procedures | If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents, or you cannot comply with the procedures under DTC’s Automated Tender Offer Program for transfer of book-entry interests prior to the expiration date, you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer—Guaranteed Delivery Procedures.” | |
Effect on Holders of Outstanding Notes | As a result of the making of, and upon acceptance for exchange of all validly tendered outstanding notes pursuant to the terms of the exchange offer, we and the guarantors will have fulfilled a covenant contained in the registration rights agreement and, accordingly, there will be no increase in the interest rate on the outstanding notes under the circumstances described in the registration rights agreement. If you are a holder of outstanding notes and you do not tender your outstanding notes in the exchange offer, you will continue to hold such outstanding notes and you will be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture, except we and the guarantors will not have any further obligations to you to provide for the registration of untendered outstanding notes under the registration rights agreement. | |
To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for outstanding notes that are not so tendered and accepted could be adversely affected. | ||
Consequences of Failure to Exchange | All untendered outstanding notes will continue to be subject to the restrictions on transfer provided for in the outstanding notes and in the indenture. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we and the guarantors do not currently anticipate that we will register the outstanding notes under the Securities Act. | |
Certain United States Federal Tax Consequences | The exchange of outstanding notes in the exchange offer will not constitute a taxable event for United States federal income tax purposes. See “Certain United States Federal Tax Consequences.” | |
Accounting Treatment | We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchange. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will record the expenses of the exchange offer as incurred. |
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Regulatory Approvals | Other than compliance with the Securities Act and qualification of the indenture governing the notes under the Trust Indenture Act, there are no federal or state regulatory requirements that must be complied with or approvals that must be obtained in connection with the exchange offer. | |
Use of Proceeds | We will not receive any cash proceeds from the issuance of exchange notes pursuant to the exchange offer. See “Use of Proceeds.” | |
Exchange Agent | Wells Fargo Bank, National Association, is the exchange agent for the exchange offer. The address and telephone number of the exchange agent are set forth in the section captioned “The Exchange Offer—Exchange Agent” of this prospectus. |
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Issuer | Diamond Resorts Corporation | |
Securities Offered | $425,000,000 aggregate principal amount of 12% Senior Secured Notes due 2018. | |
Maturity | August 15, 2018. | |
Interest Payment Dates | February 15 and August 15, commencing on August 15, 2011. | |
Guarantees | The exchange notes will be guaranteed on a senior secured basis by Diamond Resorts Parent, LLC and Diamond Resorts Holdings, LLC, our indirect and direct parent companies, and all of our existing and future direct or indirect U.S. restricted subsidiaries other than our special purpose vehicles. | |
Collateral | The exchange notes and the guarantees will be secured by a first-priority lien (subject only to certain permitted liens such as tax, assessment and other statutory liens and pre-existing liens on acquired assets) on the capital stock of all subsidiaries (with certain limitations on the capital stock of foreign subsidiaries), property, equipment, contract rights, accounts, intellectual property and all other tangible and intangible assets of Diamond Resorts Corporation and each guarantor, other than their real property and consumer loans. See “Description of the Exchange Notes — Collateral.” | |
Ranking | The exchange notes and the guarantees will be our and the guarantors’ senior secured obligations. The indebtedness evidenced by the exchange notes and the guarantees will: | |
• rank senior in right of payment to any existing and future subordinated indebtedness; | ||
• be effectively senior to all of our and the guarantors’ existing and future unsecured indebtedness to the extent of the value of the collateral (after giving effect to any prior liens on the collateral); and; | ||
• be effectively junior to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries. | ||
Optional Redemption | We are entitled to redeem some or all of the exchange notes at our option, in whole or in part, at any time on or after August 15, 2014, at the redemption prices set forth in this prospectus, together with accrued and unpaid interest, if any, to the date of redemption. | |
We are also entitled to redeem up to 35% of the aggregate principal amount of the exchange notes, at our option, with the net proceeds from certain equity offerings from time to time prior to August 15, 2013, at a redemption price of 112%, plus accrued and unpaid interest, if any, to the date of redemption. | ||
We are also entitled to redeem some or all of the notes, at our option, at any time prior to August 15, 2014, at a redemption price equal to 100% of the principal amount of the notes plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, the date of redemption. | ||
Required Offers | Upon a change of control, we will be required to make an offer to purchase each holder’s notes at a price of 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. |
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Subject to certain conditions and limitations, within 105 days of the end of each twelve-month period ended December 31 beginning with the twelve-month period ended December 31, 2011, we will be required to make an offer to purchase notes in an amount equal to 50% of the Excess Cash Flow (as defined herein) generated during such twelve-month period, at a price equal to 101% of the principal amount thereof, together with accrued and unpaid interest, if any, to the date of purchase (provided that in the case of the twelve-month period ended December 31, 2011, the Excess Cash Flow generated during such twelve-month period shall be deemed to also include the Excess Cash Flow generated during the three-month period ended December 31, 2010). | ||
We will also be required to make an offer to purchase notes in an amount equal to 25% of the net proceeds of certain equity offerings at the purchase prices set forth in this prospectus, together with accrued and unpaid interest, if any, to the date of purchase. | ||
Certain Covenants | The indenture governing the exchange notes contains covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to: | |
• incur additional indebtedness or issue certain preferred shares; | ||
• create liens; | ||
• pay dividends or make other equity distributions; | ||
• purchase or redeem capital stock or subordinated debt; | ||
• make certain investments; | ||
• sell assets; | ||
• consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and | ||
• engage in transactions with affiliates. | ||
These limitations are subject to a number of important qualifications and exceptions. See “Description of the Exchange Notes—Certain Covenants.” | ||
Public Market | The exchange notes generally will be freely tradable but will also be a new issue of securities for which there is currently no established trading market. An active or liquid market may not develop for the exchange notes or, if developed, be maintained. We have not applied, and do not intend to apply, for the listing of the exchange notes on any exchange or automated dealer quotation system. | |
Use of Proceeds | There will be no cash proceeds to us from the exchange offer. | |
Risk Factors | See “Risk Factors” for a description of some of the risks relating to the exchange offer. |
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Three Months | Twelve Months | |||||||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||||||
December 31 | March 31 | March 31, | ||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||
(Audited) | (Audited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Statement of Operations Data: | ||||||||||||||||||||||||
Total revenues | $ | 402,414 | $ | 410,961 | $ | 370,825 | $ | 87,538 | $ | 87,532 | $ | 370,819 | ||||||||||||
Total costs and expenses | 489,577 | 432,757 | 391,258 | 92,321 | 92,778 | $ | 391,715 | |||||||||||||||||
Loss before provision (benefit) for income taxes | (87,163 | ) | (21,796 | ) | (20,433 | ) | (4,783 | ) | (5,246 | ) | (20,896 | ) | ||||||||||||
Provision (benefit) for income taxes | 1,809 | (799 | ) | (1,274 | ) | 705 | 1,473 | (506 | ) | |||||||||||||||
Net loss | $ | (88,972 | ) | $ | (20,997 | ) | $ | (19,159 | ) | $ | (5,488 | ) | $ | (6,719 | ) | $ | (20,390 | ) | ||||||
Other Operating Data (Unaudited): | ||||||||||||||||||||||||
Adjusted EBITDA(1) | $ | 97,685 | $ | 103,059 | $ | 85,689 | $ | 20,077 | $ | 12,939 | $ | 78,551 | ||||||||||||
Capital expenditures | 13,861 | 4,672 | 5,553 | 942 | 2,485 | 7,096 | ||||||||||||||||||
Ratio of earnings to fixed charges(2) | (0.2 | )x | 0.7 | x | 0.7 | x | 0.7 | x | 0.7 | x | 0.7 | x | ||||||||||||
Fixed charge coverage ratio(3) | 2.1 | x | 2.3 | x | 1.7 | x | 1.6 | x | 1.3 | x | 1.6 | x | ||||||||||||
Net Cash provided by (used in): | ||||||||||||||||||||||||
Operating activities | $ | 45,086 | $ | 87,793 | $ | 66,001 | $ | 29,215 | $ | 15,107 | $ | 51,893 | ||||||||||||
Investing activities | (7,263 | ) | (4,250 | ) | (37,399 | ) | (940 | ) | (1,898 | ) | (38,357 | ) | ||||||||||||
Financing activities | (60,024 | ) | (89,660 | ) | (18,271 | ) | (28,851 | ) | (22,091 | ) | (11,511 | ) | ||||||||||||
Other Operating Metrics: | ||||||||||||||||||||||||
Number of branded resorts(4) | 56 | 62 | 70 | 62 | 69 | 69 | ||||||||||||||||||
Number of affiliated resorts(4) | 77 | 99 | 109 | 99 | 124 | 124 | ||||||||||||||||||
Total number of vacation interest sale transactions(5) | 27,144 | 23,571 | 22,719 | 4,953 | 4,204 | 21,970 | ||||||||||||||||||
Average vacation interest sale price per transaction(6) | $ | 10,950 | $ | 9,712 | $ | 9,526 | $ | 9,838 | $ | 9,991 | $ | 9,544 | ||||||||||||
Total number of tours(7) | 150,912 | 123,045 | 130,801 | 26,796 | 29,004 | 133,009 | ||||||||||||||||||
Closing percentage(8) | 18.0 | % | 19.2 | % | 17.4 | % | 18.5 | % | 14.5 | % | 16.5 | % | ||||||||||||
Members in THE Club | 153,918 | 153,240 | 148,298 | 145,391 | 157,088 | 157,088 |
As of | As of | |||||||
December 31, | March 31, | |||||||
2010 | 2011 | |||||||
(Audited) | (Unaudited) | |||||||
($ in thousands) | ||||||||
Balance Sheet Data: | ||||||||
Cash and cash equivalents | $ | 27,329 | $ | 18,787 | ||||
Mortgages and contracts receivable, net | 245,287 | 234,536 | ||||||
Unsold vacation interests, net | 190,564 | 199,724 | ||||||
Total assets | 680,751 | 701,325 | ||||||
Senior secured notes, net of unamortized original issue discount | 414,722 | 414,915 | ||||||
Securitization notes and conduit facilities, net | 186,843 | 172,344 | ||||||
Total liabilities | $ | 807,998 | $ | 833,093 |
(1) | We define Adjusted EBITDA as our net loss before provision (benefit) for income taxes,plus: (i) corporate |
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interest expense; (ii) depreciation and amortization; (iii) vacation interest cost of sales; (iv) non-cash charges for change in estimated defaults on consumer loans originated in prior periods; (v) impairments and other non-cash write-offs; (vi) loss on extinguishment of debt; (vii) gain or loss on the disposal of assets; (viii) amortization of loan origination costs; and (ix) amortization of portfolio discount;lessnon-cash revenue outside the ordinary course of business. Adjusted EBITDA is a non-GAAP financial measure and should not be considered as an alternative to net income, operating income or any other measure of financial performance calculated and presented in accordance with generally accepted accounting principles in the U.S. (“GAAP”). We believe Adjusted EBITDA is useful to investors in evaluating our operating performance for a variety reasons as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Presentation of Certain Financial Metrics.” | ||
The following table presents a reconciliation of Adjusted EBITDA to net loss before provision (benefit) for income taxes: | ||
Three Months | Twelve Months | |||||||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||||||
December 31 | March 31 | March 31, | ||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||
(Audited) | (Audited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Loss before provision (benefit) for income taxes | $ | (87,163 | ) | $ | (21,796 | ) | $ | (20,433 | ) | $ | (4,783 | ) | $ | (5,246 | ) | $ | (20,896 | ) | ||||||
Plus: Corporate interest expense(a) | 50,563 | 44,119 | 48,959 | 10,752 | 14,317 | 52,524 | ||||||||||||||||||
Depreciation and amortization(b) | 16,687 | 13,366 | 11,939 | 2,797 | 3,170 | 12,312 | ||||||||||||||||||
Vacation interest cost of sales(c) | 67,551 | 55,135 | 39,730 | 10,625 | 67 | 29,172 | ||||||||||||||||||
Estimated defaults on consumer loans originated in prior periods(d) | 32,033 | — | — | — | — | — | ||||||||||||||||||
Impairments and other write-offs(b) | 17,168 | 1,125 | 3,330 | — | 83 | 3,413 | ||||||||||||||||||
Loss on extinguishment of debt(b) | — | 10,903 | 1,081 | — | — | 1,081 | ||||||||||||||||||
Gain on the disposal of assets(b) | (1,007 | ) | (137 | ) | (1,923 | ) | (2 | ) | (9 | ) | (1,930 | ) | ||||||||||||
Amortization of loan origination costs(b) | 2,620 | 3,878 | 3,436 | 836 | 646 | 3,246 | ||||||||||||||||||
Amortization of portfolio discount(b) | (767 | ) | (648 | ) | (430 | ) | (148 | ) | (89 | ) | (371 | ) | ||||||||||||
Less: Non-cash revenue(e) | — | (2,886 | ) | — | — | — | — | |||||||||||||||||
Adjusted EBITDA — Consolidated(f) | $ | 97,685 | $ | 103,059 | $ | 85,689 | $ | 20,077 | $ | 12,939 | $ | 78,551 | ||||||||||||
Adjusted EBITDA — Diamond Resorts Parent, LLC and Restricted Subsidiaries(f) | 97,676 | 108,381 | 92,223 | 20,128 | 18,068 | 90,163 | ||||||||||||||||||
Adjusted EBITDA — Unrestricted Subsidiaries(f) | 9 | (5,322 | ) | (6,534 | ) | (51 | ) | (5,129 | ) | (11,612 | ) |
(a) | Excludes interest expense related to non-recourse indebtedness incurred by our special purpose vehicles that is secured by our VOI consumer loans. | |
(b) | These items represent non-cash charges/revenues. | |
(c) | We record vacation interest cost of sales using the relative sales value method in accordance with ASC 978, which requires us to make significant estimates which are subject to significant uncertainty. In determining the appropriate amount of costs using the relative sales value method, we rely on complex, multi-year financial models that incorporate a variety of estimated inputs. These models are reviewed on a regular basis, and the relevant estimates used in the models are revised based upon historical results and management’s new estimates. Small changes in any of the numerous assumptions in the model can have a significant financial statement impact as ASC 978 requires a retroactive adjustment back to the time of the Sunterra Corporation acquisition in the current period. Much like depreciation or amortization, for us vacation interest cost of sales is essentially a non-cash expense item. | |
(d) | Represents a one-time charge resulting from increased estimated defaults on our consumer loans originated prior to 2008. | |
(e) | Consists of non-cash revenue outside the ordinary course of business, including VOI sales revenue recognized upon the completion of construction of certain units sold prior to the acquisition of Sunterra Corporation in April 2007. | |
(f) | For purposes of certain covenants governing the exchange notes, the Company’s financial performance, including Adjusted EBITDA, is measured with reference to the Company and its Restricted Subsidiaries, and the performance of Unrestricted Subsidiaries is not considered. Therefore, we believe that this presentation of Adjusted EBITDA provides helpful information to investors in the exchange notes. See Note 22 of our audited financial statements included elsewhere in this prospectus. | |
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To properly and prudently evaluate our business, we encourage you to review our GAAP financial statements included elsewhere in this prospectus, and not to rely on any single financial measure to evaluate our business. | ||
(2) | For purposes of calculating this ratio, “earnings” consist of earnings (loss) before provision (benefit) for income taxes plus fixed charges, and “fixed charges” consist of interest expense, including amortization of deferred financing costs and amortization of original issue discount. See “Selected Consolidated Financial and Operating Data” for more information. | |
(3) | This ratio is calculated as provided in the indenture governing the notes. See “Description of the Exchange Notes — Certain Definitions — Fixed Charge Coverage Ratio.” This ratio should not be viewed as a substitute for the ratio of earnings to fixed charges presented herein. | |
(4) | As of the end of each period. | |
(5) | Represents the number of VOI sale transactions during the period presented. | |
(6) | Represents the average purchase price of VOIs sold during the period presented. | |
(7) | Represents the number of sales presentations at our sales centers during the period presented. | |
(8) | Represents the percentage of VOI sales closed relative to the total number of sales presentations at our sales centers during the period presented. |
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• | the presence of construction defects or other structural or building damage at any of our resorts, including resorts we may develop in the future; | ||
• | any noncompliance with or liabilities under applicable environmental, health or safety regulations or requirements relating to our resorts; | ||
• | any damage resulting from natural disasters, such as hurricanes, earthquakes, fires, floods and windstorms and from any increases in the frequency or severity of such occurrences due to climate change; | ||
• | any losses arising from acts of war, civil unrest and terrorism; and | ||
• | claims by employees, members and their guests for injuries sustained on our resort properties. |
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• | exposure to local economic conditions; | ||
• | potential adverse changes in the diplomatic relations of foreign countries with the United States; | ||
• | hostility from local populations; |
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• | restrictions and taxes on the withdrawal of foreign investment and earnings; | ||
• | the imposition of government policies and regulations against business and real estate ownership by foreigners; | ||
• | foreign investment restrictions or requirements; | ||
• | limitations on our ability to legally enforce our contractual rights in foreign countries; | ||
• | regulations restricting the sale of VOIs, as described in “Business — Governmental Regulation”; | ||
• | foreign exchange restrictions and the impact of exchange rates on our business; | ||
• | conflicts in local laws with U.S. laws; | ||
• | withholding and other taxes on remittances and other payments by our subsidiaries; and | ||
• | changes in and application of foreign taxation structures, including value added taxes. |
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• | our level of indebtedness could make it more difficult for us to satisfy our obligations with respect to the exchange notes, including any repurchase obligations that may arise thereunder; | ||
• | our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, restructuring, acquisitions or general corporate purposes may be impaired, which could be exacerbated by further volatility in the credit markets; | ||
• | we must use a substantial portion of our cash flow from operations to pay interest on our indebtedness, which will reduce the funds available to us for operations and other purposes; | ||
• | our level of indebtedness could place us at a competitive disadvantage to competitors that may have proportionately less debt; | ||
• | our flexibility in planning for, or reacting to, changes in our business and industry may be limited; and | ||
• | our level of indebtedness makes us more vulnerable to economic downturns and adverse developments in our business. |
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• | incur additional indebtedness or issue certain preferred shares; |
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• | create liens on our assets; | ||
• | pay dividends or make other equity distributions; | ||
• | purchase or redeem equity interests or subordinated debt; | ||
• | make certain investments; | ||
• | sell assets; | ||
• | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and | ||
• | engage in transactions with affiliates. |
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• | to enable the sale, transfer or other disposal of such collateral in a transaction not prohibited under the indenture, including the sale of any entity in its entirety that owns or holds such collateral; and | ||
• | with respect to collateral held by a guarantor, upon the release of such guarantor from its guarantee. |
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• | the guarantor was insolvent or rendered insolvent by reason of the incurrence of the indebtedness; | ||
• | the guarantor was left with an unreasonably small amount of capital to carry on its business; or | ||
• | the guarantor intended to, or believed that it would, incur debts beyond its ability to pay as they mature. |
• | the sum of its debts, including contingent liabilities, was greater than the fair saleable value of all its assets; | ||
• | the present fair saleable value of its assets was less than the amount that would be required to pay its probable liability on its existing debts and liabilities, including contingent liabilities, as they become absolute and mature; or | ||
• | it could not pay its debts as they become due. |
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As of | ||||
March 31, 2011 | ||||
($ in thousands) | ||||
Cash and cash equivalents | $ | 18,787 | ||
Debt: | ||||
$425 million principal amount of senior secured notes offered hereby (net of unamortized original issue discount of $10.3 million) | $ | 414,915 | ||
Securitization notes and conduit facilities (1) | 172,344 | |||
Notes payable (2) | 26,625 | |||
Total debt | 613,884 | |||
Total member capital (deficit) | (230,760 | ) | ||
Total capitalization | $ | 383,124 | ||
(1) | Consists of certain non-recourse indebtedness related to our consumer financing business incurred by our special purpose vehicles. See “Description of Other Indebtedness” for additional information. | |
(2) | Consists primarily of (a) the ILXA Inventory Loan and the Tempus Acquisition Loan described in “Description of Other Indebtedness” and (b) financed premiums on certain insurance policies under unsecured notes. For additional information, see “Description of Other Indebtedness.” |
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Predecessor | Company | ||||||||||||||||||||||||||||||||
Year | October 1, | ||||||||||||||||||||||||||||||||
Ended | 2008 | April 27- | Three Months Ended | ||||||||||||||||||||||||||||||
September 30, | April 20, | December 31, | Year Ended December 31, | March 31, | |||||||||||||||||||||||||||||
2008 | 2007 | 2007 | 2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Audited) | (Audited) | (Audited) | (Audited) | (Unaudited) | (Unaudited) | ||||||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||||||
Statement of Operations Data: | |||||||||||||||||||||||||||||||||
Total revenues | $ | 406,865 | $ | 226,479 | $ | 263,969 | $ | 402,414 | $ | 410,961 | $ | 370,825 | $ | 87,538 | $ | 87,532 | |||||||||||||||||
Total costs and expenses | 396,656 | 230,500 | 309,595 | 489,577 | 432,757 | 391,258 | 92,321 | 92,778 | |||||||||||||||||||||||||
Income (loss) before provision (benefit) for income taxes, discontinued operations and cumulative effect of change in accounting principle | 10,209 | (4,021 | ) | (45,626 | ) | (87,163 | ) | (21,796 | ) | (20,433 | ) | (4,783 | ) | (5,246 | ) | ||||||||||||||||||
Provision (benefit) for income taxes | 4,534 | (3,061 | ) | 1,594 | 1,809 | (799 | ) | (1,274 | ) | 705 | 1,473 | ||||||||||||||||||||||
Income (loss) before discontinued operations and cumulative effect of change in accounting principle | 5,675 | (960 | ) | (47,220 | ) | (88,972 | ) | (20,997 | ) | (19,159 | ) | (5,488 | ) | (6,719 | ) | ||||||||||||||||||
Loss on discontinued operations | — | (2,559 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||
Cumulative effect of change in accounting principle | (21,010 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Net loss | �� | $ | (15,335 | ) | $ | (3,519 | ) | $ | (47,220 | ) | $ | (88,972 | ) | $ | (20,997 | ) | $ | (19,159 | ) | $ | (5,488 | ) | $ | (6,719 | ) | ||||||||
Ratio of Earnings to Fixed Charges: | |||||||||||||||||||||||||||||||||
Ratio of earning to fixed charges(1) | 1.4 | x | 0.6 | x | 0.2 | x | (0.2)x | 0.7 | x | 0.7 | x | 0.7 | x | 0.7 | x |
Predecessor | Company | ||||||||||||||||||||||||||||
As of | As of | As of | |||||||||||||||||||||||||||
September 30, | April 26, | As of December 31, | March 31, | ||||||||||||||||||||||||||
2006 | 2007 | 2007 | 2008 | 2009 | 2010 | 2011 | |||||||||||||||||||||||
(Unaudited) | (Unaudited) | (Audited) | (Audited) | (Audited) | (Audited) | (Unaudited) | |||||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||||||
Balance Sheet Data: | |||||||||||||||||||||||||||||
Mortgages and contracts receivable, net | $ | 236,522 | $ | 240,469 | $ | 325,254 | $ | 300,795 | $ | 263,556 | $ | 245,287 | $ | 234,536 | |||||||||||||||
Unsold vacation interests, net | 226,442 | 215,759 | 246,639 | 218,116 | 203,225 | 190,564 | 199,724 | ||||||||||||||||||||||
Total assets | 666,292 | 759,356 | 891,129 | 749,318 | 672,118 | 680,751 | 701,325 | ||||||||||||||||||||||
Borrowings under line of credit agreements | 175,343 | 196,858 | 412,250 | 389,000 | 393,954 | — | — | ||||||||||||||||||||||
Securitization notes and conduit facilities | 83,542 | 69,113 | 316,557 | 291,965 | 222,913 | 186,843 | 172,344 | ||||||||||||||||||||||
Convertible bonds(2) | 95,000 | 95,000 | — | — | — | — | — | ||||||||||||||||||||||
Senior secured notes, net of unamortized original issue discount | — | — | — | — | — | 414,722 | 414,915 | ||||||||||||||||||||||
Total liabilities | $ | 464,241 | $ | 486,271 | $ | 867,986 | $ | 837,066 | $ | 775,979 | $ | 807,998 | $ | 833,093 |
(1) | For purposes of calculating this ratio, “earnings” consist of earnings (loss) before provision (benefit) for income taxes plus fixed charges, and “fixed charges” consist of interest expense, including amortization of deferred financing costs and amortization of original issue discount. For the years ended December 31, 2007, 2008, 2009 and 2010, and the three months ended March 31, 2010 and 2011, our earnings were insufficient to cover fixed charges, and the amount of additional earnings needed to cover fixed charges for such periods were $47.4 million, $87.5 million, $21.8 million, $20.4 million, $4.8 million and $5.2 million, respectively. | |
(2) | Convertible bonds that were issued in March 2004. These bonds were repaid in full in connection with the acquisition of Sunterra Corporation. |
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AND RESULTS OF OPERATIONS
• | improving selling and marketing efficiencies through the reduction in the use of certain sales incentives such as the payment of first year maintainance fees on behalf of the VOI purchasers and the issuance of travel vouchers and entertainment tickets; | ||
• | maximizing our fee-for-service revenue, primarily in our hospitality and management services business; |
• | closing certain low margin sales centers; and | ||
• | reducing head count in our sales force and related staffing at the corporate level. |
• | implementing incentive programs to increase cash sales; |
• | increasing interest rates on new consumer loans; and |
• | tightening credit requirements. |
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• | Management fee revenues are recognized in accordance with the terms of our management contracts. We collect management fees from our HOAs and Collections under our management agreements, which are recognized ratably throughout the year as earned. All of these revenues are allocated to our Hospitality and Management Services business segment. The management fees we earn are included in establishing HOA and Collections operating budgets which, in turn, are used to establish the annual maintenance fees owed directly by each owner of VOIs. | ||
• | We charge an annual fee for membership in THE Club, our internal exchange, reservation and membership service organization. In addition to annual dues associated with THE Club, we earn revenue associated with customer conversions into THE Club, which involve the payment of a one-time fee by interval owners who wish to retain their intervals but also participate in THE Club. We also earn revenue through our provision of travel-related services and other affinity programs. All of these revenues are allocated to our Hospitality and Management Services business segment. |
• | Other services revenue includes (i) collection fees paid by owners when they bring their accounts current after collection efforts have been made by us on behalf of HOAs; (ii) travel services revenue from our European travel operations, which we discontinued during the second quarter of 2008; (iii) reservation protection plan revenue, which is an optional fee paid by customers when making a reservation to protect their points should they need to cancel their reservation; (iv) closing costs on sales of VOIs; (v) revenue associated with certain sales incentives given to customers as motivation to purchase a VOI, which is recorded upon recognition of the related VOI sales revenue; and (vi) late/impound fees assessed on delinquent consumer loans. Revenues associated with items (i), (ii) and (iii) above are allocated to our Hospitality and Management Services business segment, and revenues associated with items (iv), (v) and (vi) above are allocated to our Vacation Interest Sales and Financing business segment. |
• | For our properties located in the Caribbean, we provide services traditionally administered by an HOA. Consolidated resort operations revenue includes the maintenance fees billed to owners and the Collections by our St. Maarten HOAs, which are recognized ratably over the year. In addition, these HOAs also bill the owners for capital project assessments to repair and replace the amenities of these resorts, as well as special assessments to reserve the out-of-pocket deductibles for hurricanes and other natural disasters. These assessments are deferred until refurbishment activity occurs, at which time the amounts collected are recognized as a direct reduction to refurbishment expense in consolidated resort operations expense. All operating revenues and expenses associated with these |
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properties are consolidated within our financial statements, except for intercompany transactions, such as maintenance fees for our owned inventory and management fees, which are eliminated. |
• | Food and beverage revenue at certain resorts whose restaurants we manage directly; |
• | Greens fees, equipment rental and operation of food services at the golf courses owned and managed by us at certain resorts; |
• | Revenue from providing cable, telephone, and technology services to HOAs; and |
• | Other incidental revenues generated at the resorts including, but not limited to, retail and gift shops, activity fees for arts and crafts, sport equipment rental, and safe rental. |
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• | it and similar non-GAAP measures are widely used by investors and securities analysts to measure a company’s operating performance without regard to items that can vary substantially from company to company depending upon financing and accounting methods, book values of assets, capital structures and the methods by which assets were acquired; |
• | by comparing Adjusted EBITDA in different historical periods, we can evaluate our operating results without the additional variations of interest income (expense), income tax provision (benefit), depreciation and amortization expense and the vacation interest cost of sales expense; and |
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• | several of the financial covenants governing the exchange notes and 2008 conduit facility, including the limitation on our ability to incur additional indebtedness, are determined by reference to our EBITDA as defined in the notes, which definition approximates Adjusted EBITDA as presented here. |
Three Months | Twelve Months | |||||||||||||||||||||||||||||||
Year Ended | Ended | Ended | ||||||||||||||||||||||||||||||
December 31 | March 31, | March 31, | ||||||||||||||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | 2011 | |||||||||||||||||||||||||||
(Audited) | (Audited) | (Audited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||||||||
Loss before provision (benefit) for income taxes | $ | (87,163 | ) | $ | (21,796 | ) | $ | (20,433 | ) | $ | (4,783 | ) | $ | (5,246 | ) | $ | (20,896 | ) | ||||||||||||||
Plus: Corporate interest expense(a) | 50,563 | 44,119 | 48,959 | 10,752 | 14,317 | 52,524 | ||||||||||||||||||||||||||
Depreciation and amortization(b) | 16,687 | 13,366 | 11,939 | 2,797 | 3,170 | 12,312 | ||||||||||||||||||||||||||
Vocation interest cost of sales(c) | 67,551 | 55,135 | 39,730 | 10,625 | 67 | 29,172 | ||||||||||||||||||||||||||
Estimated defaults on consumer loans originated in prior periods(d) | 32,033 | — | — | — | — | — | ||||||||||||||||||||||||||
Impairments and other write-offs(b) | 17,168 | 1,125 | 3,330 | — | 83 | 3,413 | ||||||||||||||||||||||||||
Loss on extinguishment of debt(b) | — | 10,903 | 1,081 | — | — | 1,081 | ||||||||||||||||||||||||||
Gain on the disposal of assets(b) | (1,007 | ) | (137 | ) | (1,923 | ) | (2 | ) | (9 | ) | (1,930 | ) | ||||||||||||||||||||
Amortization of loan origination costs(b) | 2,620 | 3,878 | 3,436 | 836 | 646 | 3,246 | ||||||||||||||||||||||||||
Amortization of portfolio discount(b) | 767 | (648 | ) | (430 | ) | (148 | ) | (89 | ) | (371 | ) | |||||||||||||||||||||
Less: Non-cash revenue(e) | — | (2,886 | ) | — | — | — | — | |||||||||||||||||||||||||
Adjusted EBITDA—Consolidated(f) | $ | 97,685 | $ | 103,059 | $ | 85,689 | $ | 20,077 | $ | 12,939 | $ | 78,551 | ||||||||||||||||||||
Adjusted EBITDA—Diamond Resorts Parent, LLC and Restricted Subsidiaries(f) | 97,676 | 108,381 | 92,223 | 20,128 | 18,068 | 90,163 | ||||||||||||||||||||||||||
Adjusted EBITDA—Unrestricted Subsidiaries(f) | 9 | (5,322 | ) | (6,534 | ) | (51 | ) | (5,129 | ) | (11,612 | ) |
(a) | Excludes interest expense related to non-recourse indebtedness incurred by our special purpose vehicles that is secured by our VOI consumer loans. | |
(b) | These items represent non-cash charges/revenues. | |
(c) | We record vacation interest cost of sales using the relative sales value method in accordance with ASC 978, which requires us to make significant estimates which are subject to significant uncertainty. In determining the appropriate amount of costs using the relative sales value method, we rely on complex, multi-year financial models that incorporate a variety of estimated inputs. These models are reviewed on a regular basis, and the relevant estimates used in the models are revised based upon historical results and management’s new estimates. Small changes in any of the numerous assumptions in the model can have a significant financial statement impact as ASC 978 requires a retroactive adjustment back to the time of the Sunterra Corporation acquisition in the current period. Much like depreciation or amortization, for us vacation interest cost of sales is essentially a non-cash expense item. | |
(d) | Represents a one-time charge resulting from increased estimated defaults on our consumer loans originated prior to 2008. | |
(e) | Consists of non-cash revenue outside the ordinary course of business, including VOI sales revenue recognized upon the completion of construction of certain units sold prior to the acquisition of Sunterra Corporation in April 2007. | |
(f) | For purposes of certain covenants governing the exchange notes, the Company’s financial performance, including Adjusted EBITDA, is measured with reference to the Company and its Restricted Subsidiaries, and the performance of Unrestricted Subsidiaries is not considered. Therefore, we believe that this presentation of Adjusted EBITDA provides helpful information to investors in the exchange notes. See Note 22 of our audited financial statements included elsewhere in this prospectus. |
• | Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or VOI inventory; |
• | Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; |
• | Adjusted EBITDA does not reflect cash requirements for income taxes; |
• | Adjusted EBITDA does not reflect interest expense for our corporate indebtedness; |
• | Although depreciation and amortization are non-cash charges, the assets being depreciated or amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for these replacements; |
• | Although vacation interest cost of sales is also a non-cash item, we may in the future be required to develop or acquire new resort properties to replenish VOI inventory, and Adjusted EBITDA does not reflect any cash requirements for these expenditures; and |
• | Other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure. |
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Three Months Ended March 31, 2011 | Three Months Ended March 31, 2010 | |||||||||||||||||||||||||||||||
Hospitality | Hospitality | Vacation | ||||||||||||||||||||||||||||||
and | Vacation | and | Interest Sales | |||||||||||||||||||||||||||||
Management | Interest Sales | Corporate | Management | and | Corporate | |||||||||||||||||||||||||||
Services | and Financing | and Other | Total | Services | Financing | and Other | Total | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Vacation Interest sales | $ | — | $ | 41,933 | $ | — | $ | 41,933 | $ | — | $ | 48,082 | $ | — | $ | 48,082 | ||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (2,990 | ) | — | (2,990 | ) | — | (1,622 | ) | — | (1,622 | ) | ||||||||||||||||||||
Vacation Interest, net | — | 38,943 | — | 38,943 | — | 46,460 | — | 46,460 | ||||||||||||||||||||||||
Management, member and other services | 29,643 | 2,142 | — | 31,785 | 21,991 | 2,734 | — | 24,725 | ||||||||||||||||||||||||
Consolidated resort operations | 6,946 | — | — | 6,946 | 6,501 | — | — | 6,501 | ||||||||||||||||||||||||
Interest | — | 9,415 | 414 | 9,829 | — | 9,794 | 22 | 9,816 | ||||||||||||||||||||||||
Gain on mortgage repurchase | — | 29 | — | 29 | — | 36 | — | 36 | ||||||||||||||||||||||||
Total revenues | 36,589 | 50,529 | 414 | 87,532 | 28,492 | 59,024 | 22 | 87,538 | ||||||||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||||||
Vacation Interest cost of sales | — | 67 | — | 67 | — | 10,625 | — | 10,625 | ||||||||||||||||||||||||
Advertising, sales and marketing | — | 28,436 | — | 28,436 | — | 25,465 | — | 25,465 | ||||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 8,560 | — | 8,560 | — | 7,435 | — | 7,435 | ||||||||||||||||||||||||
Management, member and other services | 6,005 | 255 | — | 6,260 | 6,057 | 465 | — | 6,522 | ||||||||||||||||||||||||
Consolidated resort operations | 6,168 | — | 6,168 | 5,877 | — | — | 5,877 | |||||||||||||||||||||||||
Loan portfolio | 179 | 2,439 | — | 2,618 | 252 | 2,351 | — | 2,603 | ||||||||||||||||||||||||
General and administrative | — | — | 19,053 | 19,053 | — | — | 15,320 | 15,320 | ||||||||||||||||||||||||
Gain on disposal of assets | — | — | (9 | ) | (9 | ) | — | — | (2 | ) | (2 | ) | ||||||||||||||||||||
Depreciation and amortization | — | — | 3,170 | 3,170 | — | — | 2,797 | 2,797 | ||||||||||||||||||||||||
Interest | — | 4,055 | 14,317 | 18,372 | — | 4,927 | 10,752 | 15,679 | ||||||||||||||||||||||||
Impairments and other write-offs | — | — | 83 | 83 | — | — | — | — | ||||||||||||||||||||||||
Total costs and expenses | 12,352 | 43,812 | 36,614 | 92,778 | 12,186 | 51,268 | 28,867 | 92,321 | ||||||||||||||||||||||||
Income (loss) before provision for income taxes | 24,237 | 6,717 | (36,200 | ) | (5,246 | ) | 16,306 | 7,756 | (28,845 | ) | (4,783 | ) | ||||||||||||||||||||
Provision for income taxes | — | — | 1,473 | 1,473 | — | — | 705 | 705 | ||||||||||||||||||||||||
Net income (loss) | $ | 24,237 | $ | 6,717 | $ | (37,673 | ) | $ | (6,719 | ) | $ | 16,306 | $ | 7,756 | $ | (29,550 | ) | $ | (5,488 | ) | ||||||||||||
Adjusted EBITDA — Diamond Resorts Parent, LLC and Restricted Subsidiaries | $ | 18,068 | $ | 20,128 | ||||||||||||||||||||||||||||
Adjusted EBITDA — Unrestricted Subsidiaries | (5,129 | ) | (51 | ) | ||||||||||||||||||||||||||||
Adjusted EBITDA — Consolidated | $ | 12,939 | $ | 20,077 | ||||||||||||||||||||||||||||
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Year Ended December 31, 2010 | Year Ended December 31, 2009 | |||||||||||||||||||||||||||||||
Hospitality | Vacation | Hospitality | Vacation | |||||||||||||||||||||||||||||
and | Interest | and | Interest | |||||||||||||||||||||||||||||
Management | Sales and | Corporate | Management | Sales and | Corporate | |||||||||||||||||||||||||||
Services | Financing | and Other | Total | Services | Financing | and Other | Total | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Vacation Interest sales | $ | — | $ | 214,764 | $ | — | $ | 214,764 | $ | — | $ | 248,643 | $ | — | $ | 248,643 | ||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (12,655 | ) | — | (12,655 | ) | — | (14,153 | ) | — | (14,153 | ) | ||||||||||||||||||||
Vacation Interest, net | — | 202,109 | — | 202,109 | — | 234,490 | — | 234,490 | ||||||||||||||||||||||||
Management, member and other services | 91,156 | 11,495 | — | 102,651 | 93,431 | 14,772 | — | 108,203 | ||||||||||||||||||||||||
Consolidated resort operations | 26,547 | — | — | 26,547 | 23,814 | — | — | 23,814 | ||||||||||||||||||||||||
Interest | — | 39,150 | 177 | 39,327 | — | 43,200 | 972 | 44,172 | ||||||||||||||||||||||||
Gain on mortgage repurchase | — | 191 | — | 191 | — | 282 | — | 282 | ||||||||||||||||||||||||
Total revenues | 117,703 | 252,945 | 177 | 370,825 | 117,245 | 292,744 | 972 | 410,961 | ||||||||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||||||
Vacation Interest cost of sales | — | 39,730 | — | 39,730 | — | 55,135 | — | 55,135 | ||||||||||||||||||||||||
Advertising, sales and marketing | — | 114,029 | — | 114,029 | — | 116,098 | — | 116,098 | ||||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 29,821 | — | 29,821 | — | 32,992 | — | 32,992 | ||||||||||||||||||||||||
Management, member and other services | 21,916 | 1,730 | — | 23,646 | 26,449 | 4,714 | — | 31,163 | ||||||||||||||||||||||||
Consolidated resort operations | 23,972 | — | — | 23,972 | 22,456 | — | — | 22,456 | ||||||||||||||||||||||||
Loan portfolio | 1,025 | 9,541 | — | 10,566 | 954 | 8,881 | — | 9,835 | ||||||||||||||||||||||||
General and administrative | — | — | 67,905 | 67,905 | — | — | 71,306 | 71,306 | ||||||||||||||||||||||||
Gain on disposal of assets | — | — | (1,923 | ) | (1,923 | ) | — | — | (137 | ) | (137 | ) | ||||||||||||||||||||
Depreciation and amortization | — | — | 11,939 | 11,939 | — | — | 13,366 | 13,366 | ||||||||||||||||||||||||
Interest, net of capitalized interest | — | 18,203 | 48,959 | 67,162 | — | 24,396 | 44,119 | 68,515 | ||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 1,081 | 1,081 | — | — | 10,903 | 10,903 |
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Year Ended December 31, 2010 | Year Ended December 31, 2009 | |||||||||||||||||||||||||||||||
Hospitality | Vacation | Hospitality | Vacation | |||||||||||||||||||||||||||||
and | Interest | and | Interest | |||||||||||||||||||||||||||||
Management | Sales and | Corporate | Management | Sales and | Corporate | |||||||||||||||||||||||||||
Services | Financing | and Other | Total | Services | Financing | and Other | Total | |||||||||||||||||||||||||
Impairments and other write-offs | — | — | 3,330 | 3,330 | — | — | 1,125 | 1,125 | ||||||||||||||||||||||||
Total costs and expenses | 46,913 | 213,054 | 131,291 | 391,258 | 49,859 | 242,216 | 140,682 | 432,757 | ||||||||||||||||||||||||
Income (loss) before (benefit) for income taxes | 70,790 | 39,891 | (131,114 | ) | (20,433 | ) | 67,386 | 50,528 | (139,710 | ) | (21,796 | ) | ||||||||||||||||||||
Benefit for income taxes | — | — | (1,274 | ) | (1,274 | ) | — | — | (799 | ) | (799 | ) | ||||||||||||||||||||
Net income (loss) | $ | 70,790 | $ | 39,891 | $ | (129,840 | ) | $ | (19,159 | ) | $ | 67,386 | $ | 50,528 | $ | (138,911 | ) | $ | (20,997 | ) | ||||||||||||
Adjusted EBITDA — Diamond Resorts Parent, LLC and Restricted Subsidiaries | $ | 92,223 | $ | 108,381 | ||||||||||||||||||||||||||||
Adjusted EBITDA — Unrestricted Subsidiaries | $ | (6,534 | ) | $ | (5,322) | |||||||||||||||||||||||||||
Adjusted EBITDA — Consolidated | $ | 85,689 | $ | 103,059 | ||||||||||||||||||||||||||||
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Year ended December 31, 2009 | Year ended December 31, 2008 | |||||||||||||||||||||||||||||||
Hospitality | Vacation | Hospitality | Vacation | |||||||||||||||||||||||||||||
and | Interest | and | Interest | |||||||||||||||||||||||||||||
Management | Sales and | Corporate | Management | Sales and | Corporate | |||||||||||||||||||||||||||
Services | Financing | and Other | Total | Services | Financing | and Other | Total | |||||||||||||||||||||||||
Revenues: | ||||||||||||||||||||||||||||||||
Vacation Interest sales | $ | — | $ | 248,643 | $ | — | $ | 248,643 | $ | — | $ | 285,442 | $ | — | $ | 285,442 | ||||||||||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (14,153 | ) | — | (14,153 | ) | — | (51,166 | ) | — | (51,166 | ) | ||||||||||||||||||||
Vacation Interest, net | — | 234,490 | — | 234,490 | — | 234,276 | — | 234,276 | ||||||||||||||||||||||||
Management, member and other services | 93,431 | 14,772 | — | 108,203 | 76,570 | 16,671 | — | 93,241 | ||||||||||||||||||||||||
Consolidated resort operations | 23,814 | — | — | 23,814 | 21,006 | — | — | 21,006 | ||||||||||||||||||||||||
Interest | — | 43,200 | 972 | 44,172 | 1,812 | 49,979 | 1,835 | 53,626 | ||||||||||||||||||||||||
Gain on mortgage repurchase | — | 282 | — | 282 | — | 265 | — | 265 | ||||||||||||||||||||||||
Total revenues | 117,245 | 292,744 | 972 | 410,961 | 99,388 | 301,191 | 1,835 | 402,414 | ||||||||||||||||||||||||
Costs and Expenses: | ||||||||||||||||||||||||||||||||
Vacation Interest cost of sales | — | 55,135 | — | 55,135 | — | 67,551 | — | 67,551 | ||||||||||||||||||||||||
Advertising, sales and marketing | — | 116,098 | — | 116,098 | — | 148,565 | — | 148,565 | ||||||||||||||||||||||||
Vacation Interest carrying cost, net | — | 32,992 | — | 32,992 | — | 22,831 | — | 22,831 | ||||||||||||||||||||||||
Management, member and other services | 26,449 | 4,714 | — | 31,163 | 28,747 | 6,599 | — | 35,346 | ||||||||||||||||||||||||
Consolidated resort operations | 22,456 | — | — | 22,456 | 23,685 | — | — | 23,685 | ||||||||||||||||||||||||
Loan portfolio | 954 | 8,881 | — | 9,835 | 661 | 8,092 | — | 8,753 | ||||||||||||||||||||||||
General and administrative | — | — | 71,306 | 71,306 | — | — | 78,618 | 78,618 | ||||||||||||||||||||||||
Gain on disposal of assets | — | — | (137 | ) | (137 | ) | — | — | (1,007 | ) | (1,007 | ) | ||||||||||||||||||||
Depreciation and amortization | — | — | 13,366 | 13,366 | — | — | 16,687 | 16,687 | ||||||||||||||||||||||||
Interest, net of capitalized interest | — | 24,396 | 44,119 | 68,515 | — | 20,817 | 50,563 | 71,380 | ||||||||||||||||||||||||
Loss on extinguishment of debt | — | — | 10,903 | 10,903 | — | — | — | — | ||||||||||||||||||||||||
Impairments and other write-offs | — | — | 1,125 | 1,125 | — | — | 17,168 | 17,168 | ||||||||||||||||||||||||
Total costs and expenses | 49,859 | 242,216 | 140,682 | 432,757 | 53,093 | 274,455 | 162,029 | 489,577 | ||||||||||||||||||||||||
Income (loss) before (benefit) provision for income taxes | 67,386 | 50,528 | (139,710 | ) | (21,796 | ) | 46,295 | 26,736 | (160,194 | ) | (87,163 | ) | ||||||||||||||||||||
(Benefit) provision for income taxes | — | — | (799 | ) | (799 | ) | — | — | 1,809 | 1,809 | ||||||||||||||||||||||
Net income (loss) | $ | 67,386 | $ | 50,528 | $ | (138,911 | ) | $ | (20,997 | ) | $ | 46,295 | $ | 26,736 | $ | (162,003 | ) | $ | (88,972 | ) | ||||||||||||
Adjusted EBITDA — Diamond Resorts Parent, LLC and Restricted Subsidiaries | $ | 108,381 | $ | 97,676 | ||||||||||||||||||||||||||||
Adjusted EBITDA — Unrestricted Subsidiaries | $ | (5,322 | ) | $ | 9 | |||||||||||||||||||||||||||
Adjusted EBITDA — Consolidated | $ | 103,059 | $ | 97,685 | ||||||||||||||||||||||||||||
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This reduction was partially offset by a decrease in sales incentives given to customers as motivation to purchase a vacation interest and an adjustment related to deferred revenue recognition under ASC 978. The adjustment was the result of a shift to increased cash sales and lower sales incentives given at the time of purchase for the year ended December 31, 2009. The shift to increased cash sales and lower sales incentives led to more customers meeting the buyer’s commitment test under ASC 978 and, therefore, more net revenue being recognized in 2009. As a percentage of vacation interest sales revenue, sales incentives were 3.1% and 5.0%, for the years ended December 31, 2009 and 2008, respectively.
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December | ||||||||||||||||
March 31, 2011 | 31, 2010 | |||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Principal | Interest | Principal | ||||||||||||||
Balance | Rate | Maturity | Balance | |||||||||||||
Senior Secured Notes | $ | 425,000 | 12.0 | % | 8/15/18 | $ | 425,000 | |||||||||
Original issue discount related to Senior Secured Notes | (10,085 | ) | (10,278 | ) | ||||||||||||
Diamond Resorts Owners Trust Series 2009-1* | 110,788 | 9.5 | % | 3/20/26 | 121,843 | |||||||||||
Original issue discount related to Diamond Resorts Owners Trust Series 2009-1 | (885 | ) | (899 | ) | ||||||||||||
2008 Conduit Facility* | 37,387 | 5.5 | % | 8/30/11 | 39,467 | |||||||||||
ILXA Inventory Loan* | 18,539 | 7.5 | % | 8/31/15 | 18,541 | |||||||||||
Quorum Facility* | 15,680 | 8.0 | % | 4/30/12 | 12,942 | |||||||||||
ILXA Receivables Loan* | 9,374 | 10.0 | % | 8/31/15 | 10,292 | |||||||||||
Tempus Acquisition Loan | 4,100 | 10.0 | % | Less than one year | 3,300 | |||||||||||
Polo Towers Lines of Credit | — | N/A | N/A | 2,060 | ||||||||||||
Notes payable-insurance policies | 3,938 | 3.3 | % | Various | 1,366 | |||||||||||
Polo Towers Securitization Notes Payable | — | N/A | N/A | 1,138 | ||||||||||||
Notes payable-other | 48 | 3.8 | % | Various | 66 | |||||||||||
Total borrowings | $ | 613,884 | $ | 624,838 | ||||||||||||
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Less than | 1-3 | 3-5 | More than | |||||||||||||||||
Contractual Obligations | Total | 1 year | years | years | 5 years | |||||||||||||||
Senior secured notes, including interest payable | $ | 813,875 | $ | 51,000 | $ | 102,000 | $ | 102,000 | $ | 558,875 | ||||||||||
Securitization notes payable, including interest payable | 169,913 | 73,066 | 73,023 | 23,824 | — | |||||||||||||||
Conduit facilities, including interest payable | 40,914 | 40,914 | — | — | — | |||||||||||||||
Notes payable , including interest payable (1) | 25,943 | 10,120 | 10,241 | 5,582 | — | |||||||||||||||
Purchase obligations | 283 | 283 | — | — | — | |||||||||||||||
Operating lease obligations | 38,794 | 7,480 | 10,451 | 9,150 | 11,713 | |||||||||||||||
Total | $ | 1,089,722 | $ | 182,863 | $ | 195,715 | $ | 140,556 | $ | 570,588 | ||||||||||
(1) | Assumes certain estimates for payments and cancellations on collateralized outstanding mortgage receivables. |
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For the Three Months Ended | ||||||||||||||||||||
For the Years Ended December 31, | March 31, | |||||||||||||||||||
2008 | 2009 | 2010 | 2010 | 2011 | ||||||||||||||||
Revenue | ||||||||||||||||||||
North America | $ | 348,129 | $ | 359,790 | $ | 325,710 | $ | 77,904 | $ | 78,510 | ||||||||||
Europe | 54,285 | 51,171 | 45,115 | 9,634 | 9,022 | |||||||||||||||
Total Revenues | $ | 402,414 | $ | 410,961 | $ | 370,825 | $ | 87,538 | $ | 87,532 | ||||||||||
As of | ||||||||||||||||
As of December 31, | March 31, | |||||||||||||||
2008 | 2009 | 2010 | 2011 | |||||||||||||
Mortgages and contracts receivable, net | ||||||||||||||||
North America | $ | 300,364 | $ | 263,007 | $ | 244,541 | $ | 233,707 | ||||||||
Europe | 431 | 549 | 746 | 829 | ||||||||||||
Total mortgages and contracts receivable, net | $ | 300,795 | $ | 263,556 | $ | 245,287 | $ | 234,536 | ||||||||
Unsold Vacation Interest, net | �� | |||||||||||||||
North America | $ | 193,088 | $ | 174,675 | $ | 174,642 | $ | 177,303 | ||||||||
Europe | 25,028 | 28,550 | 15,922 | 22,421 | ||||||||||||
Total unsold vacation interest, net | $ | 218,116 | $ | 203,225 | $ | 190,564 | $ | 199,724 | ||||||||
Property and equipment, net | ||||||||||||||||
North America | $ | 21,864 | $ | 19,794 | $ | 24,248 | $ | 29,873 | ||||||||
Europe | 6,648 | 5,914 | 4,849 | 5,308 | ||||||||||||
Total property and equipment, net | $ | 28,512 | $ | 25,708 | $ | 29,097 | $ | 35,181 | ||||||||
Intangible assets, net | ||||||||||||||||
North America | $ | 40,287 | $ | 35,664 | $ | 40,926 | $ | 39,682 | ||||||||
Europe | 7,665 | 6,969 | 4,787 | 4,765 | ||||||||||||
Total intangible assets, net | $ | 47,952 | $ | 42,633 | $ | 45,713 | $ | 44,447 | ||||||||
Total long-term assets, net | ||||||||||||||||
North America | $ | 555,603 | $ | 493,140 | $ | 484,357 | $ | 480,565 | ||||||||
Europe | 39,772 | 41,982 | 26,304 | 33,323 | ||||||||||||
Total long-term assets, net | $ | 595,375 | $ | 535,122 | $ | 510,661 | $ | 513,888 | ||||||||
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• | Hospitality and Management Services.We manage 68 branded resort properties, which are located in the continental United States, Hawaii, Mexico, the Caribbean and Europe. We also manage five multi-resort trusts or similar arrangements, which we refer to as our Collections. Each Collection holds real estate in our resort properties underlying the VOIs that we sell. As manager of our branded resorts and our Collections, we provide billing services, account collections, accounting and treasury functions and information technology services. In addition, for our branded resorts we also provide an online reservation system and customer service contact center, operate the front desks and amenities and furnish housekeeping, maintenance and human resources services. Our management contracts typically have an initial term of three to five years with automatic renewals and are structured on a cost-plus basis, thereby providing us with a recurring and stable revenue stream. In addition, we earn recurring fees by operating THE Club, our points-based exchange and member services program that enables our members to vacation at any of the 203 destinations in our network. |
• | Marketing and Sales of VOIs.We market and sell VOIs in our resort network. We generate sales prospects by utilizing a variety of marketing programs, including targeted mailings, telemarketing, gift certificates, presentations at our resorts targeted to current members, guests and renters, overnight mini-vacation packages and various destination-specific marketing efforts. We close substantially all of our VOI sales following presentations at our sales centers, which we refer to as tours. Currently, we sell our VOIs only in the form of points, which can be utilized for vacations for varying lengths of stay at any resort in our network. In the past, we also sold VOIs in the form of deeded intervals, which provide the right to vacation at a particular resort for a specified length of time, but we no longer sell intervals because we believe that points offer our members greater choice and flexibility in planning their vacations. The number of points required to stay at one of our resorts varies according to the resort, the type and size of accommodation, the season and the length of stay. In 2010, the average cost to purchase points equivalent to a one-week vacation at one of our resorts was $17,965. |
• | Consumer Financing of VOIs.We provide loans to eligible customers who purchase VOIs through our U.S. sales centers and choose to finance their purchase. These loans are collateralized by the underlying VOI and bear interest at a fixed rate. Our consumer finance servicing operations include underwriting, collection and servicing of our consumer loan portfolio. The liquidity to support our consumer finance program is provided through conduit and securitization financings. |
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![(LINE GRAPH)](https://capedge.com/proxy/S-4A/0000950123-11-060293/c63279a2c6327960.gif)
* | A change in ARDA’s definition of the study population resulted in a decrease in the number of resorts included in the ARDA study from 2004 to 2005, which also resulted in a decrease in the number of vacation ownership week equivalents. This change focused ARDA’s analysis on traditional VOIs, including intervals and points, by removing non-comparable entities such as fractionals, non-equity clubs, private residence clubs and vacation clubs. Prior years were not restated to give effect to this change. |
Source: Historical timeshare industry research conducted by Ragatz Associates, American Economic Group and Ernst & Young on behalf of the ARDA International Foundation, as of December 31, 2010. | |||
![(LINE GRAPH)](https://capedge.com/proxy/S-4A/0000950123-11-060293/c63279a2c6327961.gif)
Source: Historical timeshare industry research conducted by Ragatz Associates, American Economic Group and Ernst & Young on behalf of the ARDA International Foundation, as of December 31, 2010. | |||
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• | implementing a new focus on service and hospitality to provide our members a premium experience; |
• | introducing the Diamond Resorts International brand throughout our network of managed resorts; |
• | renegotiating our hospitality management contracts to provide improved cost recovery; |
• | implementing a capital-light business model that does not require capital-intensive acquisitions, development or construction; |
• | responding quickly to the credit crisis by substantially increasing our percentage of all-cash sales, thereby reducing our dependence on the receivables financing market; and |
• | adjusting our marketing and sales efforts by closing certain low margin sales centers, eliminating certain incentive programs and implementing a new sales commission structure. |
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• | Expanding THE Club by adding new affiliated resorts, thereby increasing its value to our members and driving more potential customers to our resorts. Through new and expanded affiliation agreements, we have launched 89 new resort destinations worldwide since the beginning of 2007. |
• | Entering into marketing arrangements with third parties whereby we offer their products and services to our member base. We currently offer our members the opportunity to purchase products and services (such as consumer electronics, home appliances and identity theft protection services) at discounted prices using our global purchasing platform, and we receive a percentage of the related sales revenue from those transactions. We intend to expand these initiatives in the future to enhance the value proposition to our membership base and increase our revenue. |
• | Pursuing management contracts and other services arrangements with resorts that we do not currently manage. For example, we may seek to leverage our affiliate resort network to identify and enter into new management contracts for these resorts. In addition, we intend to pursue discussions with vacation ownership and hotel operators to provide a suite of services, including billing and collections, purchasing, rental management and other services. |
• | Expanding programs to incentivize our members to refer their friends and family.As a result of our large ownership base, high levels of customer satisfaction and brand recognition, we believe there is an opportunity to grow revenues by referrals from our existing members. |
• | Strengthening our brand. Since the acquisition of Sunterra Corporation in 2007, we have deployed the Diamond Resorts International brand across our managed resorts. Our goal is to associate our brand with a premium hospitality experience that offers simplicity, choice and comfort to our members. In pursuit of that goal, we will continue to take steps to improve our members’ experience, including improving our reservations system and customer service contact center, upgrading amenities in many of our resort units and common areas, and increasing the quality and variety of vacation experiences available through THE |
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Resort | Location | Units | ||||
Scottsdale Villa Mirage | Scottsdale, Arizona | 154 | ||||
Located 25 minutes from the Phoenix airport, this 154 unit resort has a heated outdoor pool, children’s pool, whirlpools, tennis courts, playground, fitness center and games room to provide for guests and families of all ages. | ||||||
Scottsdale Links Resort | Scottsdale, Arizona | 217 | ||||
This 217 unit resort with one-, two- and three-bedroom accommodations is located between the TPC Desert Golf |
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Resort | Location | Units | ||||
Course and the McDowell Mountains in Scottsdale, within easy reach of Phoenix. With a spa, fitness center, outdoor heated pool and spacious units, this resort is ideal for families making it a base for exploring the area. | ||||||
Sedona Summit | Sedona, Arizona | 278 | ||||
Sedona Summit is located four miles from Sedona town centre, and within easy reach of Grand Canyon National Park. The 278 units are spread across 39 two-story buildings with six pools and whirlpools located throughout the resort complex. | ||||||
The Ridge on Sedona Golf Resort | Sedona, Arizona | 175 | ||||
Situated 15 minutes away from Sedona town center, The Ridge on Sedona Golf Resort has 175 units surrounding five whirlpools and pools with a fitness center, games room and clubhouse. | ||||||
Lake Tahoe Vacation Resort | South Lake Tahoe, California | 181 | ||||
Located on the edge of Lake Tahoe, America’s largest alpine lake and only a mile away from the Heavenly Mountain Resort base lodge, Lake Tahoe Vacation Resort is ideally placed for a winter skiing vacation as well as for summer activities such as hiking, horseback riding and water sports. The resort has 181 units with both indoor and outdoor pools and hot tubs, fitness center and game room. | ||||||
Flamingo Beach Resort | St. Maarten, Caribbean | 208 | ||||
Located on the Dutch side of St. Maarten, this resort is situated on a private beachfront with 208 studio and one-bedroom units. The resort offers a restaurant and snack bar, as well as an outdoor pool and tennis courts. | ||||||
Royal Palm Beach Resort | St. Maarten, Caribbean | 140 | ||||
Located on the Dutch side of the island, all 140 of the one-, two- and three-bedroom units at this resort face the beach and have balconies or terraces. Facilities at the resort include a restaurant, swimming pool and poolside bar, gym and beauty salon. | ||||||
Daytona Beach Regency | Daytona Beach, Florida | 87 | ||||
This resort is situated on beachfront of the world famous Daytona Beach. Close to the Speedway attractions, it provides 87, one- and two-bedroom units, indoor and outdoor pools with slides and hot tubs, poolside bar, fitness center, volleyball courts and games room. | ||||||
Grand Beach | Orlando, Florida | 192 | ||||
Located minutes from Florida’s Walt Disney World, SeaWorld and Universal Studios, this 192 unit resort is located on the edge of Lake Bryan. All units contain three bedrooms, three bathrooms, and fully-equipped kitchens, which provide spacious family accommodations, as well as an outdoor pool, whirlpool, children’s pool, playground, game room and fitness center. | ||||||
The Point at Poipu | Kauai, Hawaii | 215 | ||||
Located on the island of Kauai, this resort offers 215 units with lush garden or ocean views across Shipwreck Beach to every suite. The resort has an outdoor beach entry pool as well as a children’s pool, hot tub, fitness center, spa and sauna. | ||||||
Ka’anapali Beach Club | Maui, Hawaii | 411 | ||||
With 411 units in a 12 story building, Ka’anapali Beach Club is located on the beach front of Maui’s famous North Shore. The resort has a newly opened restaurant and pool bar, newly refurbished pools, as well as a fitness center, spa, sauna, hair salon and gift shop. | ||||||
The Suites at Fall Creek | Branson, Missouri | 214 | ||||
This resort offers 214 units, many with lake views over Lake Taneycomo. Ten minutes away from Branson town center, the resort is ideally located to explore this destination, while providing a selection of amenities onsite, including a fitness center, basketball courts, boating, fishing, indoor and outdoor pools, hot tubs, mini golf, playground, shuffle board and tennis courts. | ||||||
Desert Paradise Resort | Las Vegas, Nevada | 142 | ||||
This Las Vegas resort is tucked away from The Strip but provides a good base to explore the area. The resort has 142 |
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Resort | Location | Units | ||||
units across two-story buildings, all with balconies or terraces. It also has two central pool areas equipped with hot tubs and children’s pools, as well as barbeque areas and a fitness center. | ||||||
Polo Towers Suites | Las Vegas, Nevada | 300 | ||||
This resort is located in the heart of the Las Vegas Strip and shares facilities with Polo Towers Villas. With 300 units, the resort offers a new and comprehensive fitness center, and two outdoor pool areas including a roof top pool. | ||||||
Polo Towers Villas | Las Vegas, Nevada | 208 | ||||
This resort has 208 units and shares facilities with Polo Towers Suites, including a new fitness center, outdoor pools and spa. | ||||||
Villas de Santa Fe | Santa Fe, New Mexico | 105 | ||||
This resort is situated in Santa Fe, halfway between Taos and Albuquerque. With 105 one- and two-bedroom units, the resort offers a base to explore the surrounding area, which is rich in culture, as well as providing a heated outdoor pool and hot tub, fitness center, game room and clubhouse. | ||||||
Bent Creek Golf Village | Gatlinburg, Tennessee | 47 | ||||
A combination of 47 one- and two- bedroom units and cabins make up Bent Creek Golf Village situated amid a Gary Player golf course. Located 11 miles away from the center of Gatlinburg and the Great Smoky Mountains National Park, this resort offers indoor and outdoor heated pools, fitness center, games room, and volleyball and basketball courts. | ||||||
Greensprings Vacation Resort | Williamsburg, Virginia | 147 | ||||
Offering 147, two- and four- bedroom units this resort is ideally placed to explore the historical town of Colonial Williamsburg as well as the areas theme parks. The resort is equipped with indoor and outdoor pools, hot tubs, a fitness center, playgrounds, sauna and tennis, volleyball and basketball courts. | ||||||
The Historic Powhatan Resort | Williamsburg, Virginia | 443 | ||||
Amid 256 acres of woodland and located a short drive to Colonial Williamsburg and the area’s theme parks, this resort offers one-, two- and three-bedroom accommodations totaling 443 units. Amenities include indoor and outdoor pools and hot tubs, two restaurants open for breakfast, lunch and dinner and a gift shop. | ||||||
Bell Rock Inn and Suites | Sedona, Arizona | 85 | ||||
Framed by extraordinary views along the Red Rock Scenic Byway with its sandstone formations and rich red landscape of Arizona’s backcountry, this resort is set amid the natural beauty of Sedona and provides easy access to the sights, sounds and wonder of the Coconino National Forest. In addition to a laid-back and friendly ambience, the resort offers a poolside barbeque and in-suite fireplaces. | ||||||
Los Abrigados Resort & Spa | Sedona, Arizona | 193 | ||||
Nestled against the banks of the famous Oak Creek in Sedona, Arizona, and rests upon twenty-two acres filled with winding walkways, cascading fountains and shady nooks in the foothills of Arizona’s Red Rock Country, this resort is within walking distance to many restaurants, galleries, shops and hiking trails. From the scenic and quaint Oak Creek to the stunning red rock formations and new age energy of Sedona, Los Abrigados Resort & Spa provides a comfortable, quiet and relaxing selection of accommodation styles with easy access to many outdoor adventure and activities. | ||||||
Kohl’s Ranch Lodge | Payson, Arizona | 66 | ||||
Located on the Banks of Tonto Creek in the largest Ponderosa Pine Forest in the world, Kohl’s Ranch Lodge is historically famous for its western hospitality. Situated at the base of the Mogollon Rim in the area that author Zane Grey made famous with his popular adventures of the Old West, the friendly and casual atmosphere of Kohl’s Ranch Lodge makes each stay an inviting experience where guests can enjoy a classic stay in Arizona’s back country. | ||||||
PVC at The Roundhouse | Pine Top, Arizona | 20 | ||||
Nestled in eastern Arizona’s White Mountains where Pinetop-Lakeside’s motto is “Celebrate the Seasons” and where guests can enjoy year-round adventures, The log-sided mountain homes at this resort feature fireplaces, jetted spa, large fully equipped kitchens, covered porches and private yards and are a perfect getaway for family cabin fun. After a day of outdoor play, guests can look forward to a relaxing master suite spa retreat. |
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Resort | Location | Units | ||||
Varsity Club of America — Tucson | Tucson, Arizona | 59 | ||||
This resort provides all-suite guest accommodations with convenient proximity to the University of Arizona and a number of golf courses, including a variety of municipal and championship style luxurious courses. Tucson affords travelers an oasis under the Sonoran Sun. Affectionately known as Old Pueblo, Tucson is built upon a deep Native American, Spanish, Mexican and Old West foundation and the Varsity Clubs of America-Tucson affords a relaxing getaway whether traveling for business, game day, family and friends, or just a little down time. | ||||||
The Historic Crags Lodge | Estes Park, Colorado | 33 | ||||
Nestled quietly on the north shoulder of Prospect Mountain, The Historic Crags Lodge offers breathtaking and majestic views of the Continental Divide to the west and a bird’s eye view of downtown Estes Park to the east. The Historic Crags Lodge is everything you would imagine from a quiet Colorado mountain retreat. The Historic Crags Lodge is set high amid the mountain pines of the Colorado Rockies and boasts comfortable guest suites complete with dining and group services suitable for families, couples, weddings and conferences, all within easy access of the Estes Park Aerial Tramway and the spectacular Rocky Mountain National Park. | ||||||
Varsity Club of America — South Bend | Mishawaka, Indiana | 86 | ||||
Located in Mishawaka, Indiana, this all-suite hotel offers unique and convenient accommodations in the heart of a college town. With its close proximity and easy access to the University of Notre Dame, the Varsity Clubs of America — South Bend provides comfortable guest suites, indoor and outdoor swimming pools, a spacious indoor billiards parlor and plenty of outdoor barbeque grills for game days and family fun. The South Bend/Mishawaka area boasts a variety of enriching and entertaining attractions from outdoor recreation and sports to museums, nightlife and shopping. | ||||||
Sea of Cortez Beach Club | Sonora, Mexico | 24 | ||||
The Sea of Cortez, with its laid back seaside havens dotted along the coast, provides a soothing escape in any season. Stroll pristine soft sand beaches that hug the deep blue waters of the Sea of Cortez along the Baja coast and enjoy the Sea of Cortez Beach Club. Oceanfront, the Sea of Cortez Beach Club offers luxurious suites with private patios or balconies and is the perfect starting point to soak in the sunshine filled days of the Baja surf. Water sport excitement abounds with spectacular diving and snorkeling adventures, calm open sea kayaking, deep sea fishing or taking it slow with a relaxing poolside escape, whale and dolphin sightings or long and lazy beach strolls. | ||||||
Marquis Villa ** | Palm Springs, California | 101 | ||||
Located in the heart of Palm Springs with a spectacular mountain setting at the base of the beautiful San Jacinto Mountains in Palm Springs, California, Marquis Villas Resort provides elegantly furnished, oversized accommodations satisfying the most discriminating traveler’s expectations with fully equipped kitchens and private patios or balconies. | ||||||
North America and Caribbean Subtotal | 4,531 | |||||
Resort | Location | Units | ||||
The Alpine Club | Schladming, Austria | 69 | ||||
Overlooking the town of Schladming, this resort is located amidst stunning scenery one hour from Salzburg, Austria and two and a half hours from Munich, Germany. With accommodation choices across 69 units The Alpine Club also offers a sauna and solarium, tennis, badminton and game room. | ||||||
Alvechurch Marina * | Alvechurch, England | 2 | ||||
With three-, four- and six-berth canal boats based at this marina in Worcestershire, there are many round trip routes through the Black Country that can be followed. As a unique way to see the English countryside, visits to Birmingham city center, Worcester Cathedral, historic houses and theme parks can also be incorporated into a vacation itinerary. | ||||||
Anderton Marina * | Cheshire, England | 3 |
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Resort | Location | Units | ||||
Anderton Marina is based on the Trent and Mersey canals and has three boats available. From this location routes include a journey to the old city of Chester as well as Middlewich. | ||||||
Gayton Marina * | Cheshire, England | 3 | ||||
Four- and six-berth canal boats are available to navigate through Warwick to Warwick Castle or the university city of Chester. Whichever route is taken, these boats provide the easiest access to the rolling English countryside in the midlands. | ||||||
Woodford Bridge Country Club | Devon, England | 103 | ||||
Originally an old coaching inn from the 15th century this resort in Devon has 103 units, the majority of which have either a terrace or balcony. With a heated indoor pool and whirlpool and a restaurant and bar onsite, this resort offers a base to explore the Devonshire countryside with Dartmoor and Exmoor, which are short drives away along with the well known Eden Project. | ||||||
Blackwater Marina * | Ellesmere, England | 2 | ||||
This marina is located in Shropshire in the heart of the English countryside and has one four-berth and one six-berth canal boat based there. Numerous itineraries include visits to Wales, Chirk Castle, and navigating across Chirk Viaduct standing over 70 feet above the ground. | ||||||
Broome Park Golf and Country Club | Kent, England | 14 | ||||
The resort is located on the grounds of a Grade I listed manor house in the county of Kent and is 15 minutes from the historic city of Canterbury, famous for its cathedral and historic buildings. With 14 two-bedroom lodges, this resort offers an 18 hole golf course onsite, as well as a restaurant and bar in the mansion house. Other resort amenities include a newly constructed gym, indoor pool, solarium, sauna and squash courts, as well as tennis courts and croquet. The resort is 10 minutes away from the coast and the cliffs of Dover and provides easy access to the Euro Star train. | ||||||
Pine Lake Resort | Lancashire, England | 124 | ||||
Based on the edge of the Lake District and the Lune Valley, this resort is surrounded by superb English countryside and based around a lake. The resort is made up of 124 Scandinavian style two-bedroom lodges and a selection of studio apartments with a central reception building that includes the restaurant, bar, entertainment and meeting rooms, with a separate indoor heated pool and whirlpool. | ||||||
Thurnham Hall | Lancaster, England | 51 | ||||
With 51 accommodation choices located either in the 12th century mansion house or in buildings within the 30 acre grounds, this resort is offers a large indoor swimming pool and state of the art fitness center. The restaurant is located in the old mansion house along with a member’s lounge and a restored chapel house providing huge fireplaces and original exposed stone walls. | ||||||
Thurnham Hall Tarnbrook | Lancaster, England | 10 | ||||
This building is located within the grounds of Thurnham Hall and shares the amenities there. It is a newly built building with 10 spacious two-bedroom apartments. | ||||||
Cromer Country Club | Norfolk, England | 85 | ||||
This resort has 85 units, all with balconies or terraces that provide views over the gardens and woodlands. This resort is less than one mile from the sea and marina in Cromer, and includes an indoor heated pool and whirlpool, a gym, spa, sauna, steam room, badminton courts and a game room. | ||||||
Wychnor Park Country Club | Staffordshire, England | 44 | ||||
This resort is situated within the 55 acre estate of Wychnor Park which dates from the time of Queen Anne in the 17th century. The main mansion house is a grade II listed building and houses some of the 44 units that are available, most of which have a terrace or balcony. The resort has a restaurant and member lounge bar, as well as a heated indoor pool, sauna, solarium and spa. | ||||||
Worcester Marina * | Worcester, England | 2 | ||||
Based at the southern end of the Worcester Birmingham canal, two four- and six-berth canal boats are available for |
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itineraries that include Worcester Cathedral, the Royal Worcester Porcelain factory and the home of Shakespeare: Stratford-upon-Avon. | ||||||
La Manoir des Deux Amants | Connelles, France | 35 | ||||
Set amid the stunning landscaped parkland in the heart of Normandy countryside, the resort is one and a half hours from Paris and 100 kilometers from Le Havre. The resort offers 35 units situated on the banks of the famous River Seine and includes an onsite restaurant, a leisure centre and an indoor swimming pool. | ||||||
Le Résidence Normande | Connelles, France | 14 | ||||
This resort has 14 units and is situated next to Le Manoir des Deux Amants and shares its facilities. | ||||||
Le Club Mougins | Mougins, France | 58 | ||||
Located 10 minutes from the beautiful beaches of Cannes and a half hour from Nice on the French Riviera, this resort has 58 units and a restaurant and bar and lounge onsite, as well as an outdoor pool, gymnasium and sauna. | ||||||
Royal Regency | Paris, France | 51 | ||||
Located 20 minutes from the centre of Paris on the Metro Line, this resort is ideally suited to exploring this beautiful European city. The resort has 51 units. | ||||||
Palazzo Catalani | Soriano, Italy | 20 | ||||
This resort is a hideaway in the Italian countryside. Located in the medieval village of Soriano nel Cimino, this 17th century building perched on the top of a hill and now housing 20 units was once the mansion of a nobleman. The onsite restaurant specializes in Italian cuisine and features a bar and lounge. | ||||||
Dangan Lodge Cottages | Ennis, Ireland | 6 | ||||
Converted from an original farmhouse and associated farm buildings, this small resort of six units provides unusual, but traditional, Irish accommodations with exposed stone walls, solid fuel stoves and inglenook fireplaces. | ||||||
East Clare Golf Village | Bodyke, Ireland | 51 | ||||
With 51 two-bedroom units, this recently constructed resort is located next to East Clare Golf course in County Clare, Ireland, approximately one hour outside of Shannon. The resort provides a great base to explore the neighbouring countryside and tourist attractions of Bunnratty Castle and the Cliffs of Moher. | ||||||
Fisherman’s Lodge | Scarriff, Ireland | 6 | ||||
Located on the edge of the shores of Lough Derg in County Clare, the largest lake in Ireland, this resort is made up of six split level open plan studio units with spiral staircases to the upper floor. | ||||||
Diamond Suites on Malta | St Julians, Malta | 46 | ||||
Located within the luxury five-star Intercontinental Malta Hotel, this resort offers 46 accommodation choices, most with balconies or terraces. The resort is situated in St Georges Bay in St Julians and is less than five miles from the capital of Valletta. | ||||||
Vilar Do Golf | Loulé, Portugal | 61 | ||||
Located on the southern coast of Portugal, this resort has 61, one- and two-bedroom units situated around a golf course all with balconies or terraces. Located two kilometers from the beach in the Algarve, the resort amenities include indoor and outdoor pools, gymnasium, sauna, badminton, basketball, volleyball, game room and an onsite restaurant as well as a poolside bar and grill. | ||||||
The Kenmore Club | Perthshire, Scotland | 58 | ||||
With 58 cottage style units located on the shores of Loch Tay, this is a special resort at the heart of the Scottish |
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highlands, with easy access to explore the local whisky distilleries, 90-minute drive from Dundee and less than two hours from the historic city of Edinburgh. | ||||||
Garden Lago | Majorca, Spain | 85 | ||||
Situated at the north of the island of Majorca, this resort offers 85 accommodation choices in two- and three-bedroom units. It is located one kilometer from the beach and includes an outdoor pool and whirlpool, gymnasium and sauna, onsite restaurant as well as many amenities nearby. | ||||||
White Sands Beach Club | Menorca, Spain | 77 | ||||
This resort has 77 units on a beachfront location built up into the hillside situated on the island of Menorca. With a central infinity edge pool and convenient snack bar restaurant onsite, this destination is a relaxing place to vacation and is available 44 weeks of the year, but is closed during the winter season. | ||||||
White Sands Country Club | Menorca, Spain | 51 | ||||
Built in a traditional Spanish style, this resort has 51 units, all with balconies or terraces many of which surround a central pool area. This resort is available 42 weeks of the year, but closed during the winter season. | ||||||
Cala Blanca | Gran Canaria, Spain | 93 | ||||
Situated on Gran Canaria in the Canary Islands this resort provides 93, one- and two-bedroom units. Built on a beautiful hillside every room has a seaview and a sunny balcony or terrace. The resort is located 10 minutes away from Puerto de Mogan (known as Canarian Little Venice) and includes an outdoor pool and pool bar and grill, as well as an onsite restaurant. | ||||||
Club del Carmen | Lanzarote, Spain | 66 | ||||
Located on Puerto del Carmen, this resort is perfectly situated two minutes from the beaches of Playa Grande and Playa Chica. With 66 units, this resort offers an outdoor pool and poolside bar, extensive sun terraces and rooftop deck and onsite restaurant. | ||||||
Jardines del Sol | Lanzarote, Spain | 48 | ||||
Situated on the southern tip of Lanzarote near Playa Blanca, this resort has been built in the style of a Spanish pueblo blanco or white village. Offering 48 two-bedroom bungalows, this resort also provides an onsite restaurant and outdoor pool. | ||||||
Royal Sunset Beach Club | Tenerife, Spain | 126 | ||||
Located conveniently close to Playa de las Americas abundant shops, restaurants and nightlife, this resort has a range of facilities situated in sub-tropical gardens and a beautifully landscaped outdoor pool. This resort has 126 units with a private clubhouse with a bar, lounge, restaurant, gymnasium, squash courts and sauna. | ||||||
Royal Tenerife Country Club | Tenerife, Spain | 77 | ||||
Set amid the greens of the challenging Golf del Sur course, with a focal point of a central landscaped swimming pool and the beach six kilometers away, the resort includes 77 one- and two-bedroom units, tennis courts, a gym, restaurant and supermarket. | ||||||
Santa Barbara Golf & Ocean Club | Tenerife, Spain | 279 | ||||
This resort exhibits Moorish inspired architecture and includes 279 units, most of which have a sea view. The resort amenities include a central pool and whirlpool, two onsite restaurants, a poolside bar and grill, gymnasium, sauna, spa and solarium. | ||||||
Sunset Bay Club | Tenerife, Spain | 206 | ||||
This village-style resort of 206 units is situated at Torviscas on the outskirts of Playa de las Americas, and is a 10 minute walk from the beach. It has two outdoor pools and a children’s pool, and there are several local shops and restaurants on the property. | ||||||
Sunset Harbour Club | Tenerife, Spain | 124 | ||||
This resort has been built in the traditional style of an Andalusian pueblo blanco or white village. Situated on the |
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Resort | Location | Units | ||||
outskirts of Playa de las Americas, this resort is located near nightlife and many local restaurants and bars. The resort has 124 units, including studio, one- and two-bedroom accommodation choices. | ||||||
Sunset View Club | Tenerife, Spain | 52 | ||||
With panoramic views of the ocean and a backdrop of the snow capped Mount Teide volcano, this resort offers 52 one-and two-bedroom units, with easy access to the golf courses of the Golf del Sur and numerous local shops and restaurants. | ||||||
Los Amigos Beach Club | Costa del Sol, Spain | 140 | ||||
This resort has 140 units and is situated 300 meters from the beach. It is a short drive to the beautiful cities of Malaga, Marbella, Granada and Seville. Amenities include two outdoor and one indoor swimming pools, tennis courts, mini-golf, as well as two restaurants onsite, a supermarket and a gift shop. | ||||||
Royal Oasis Club at Benal Beach | Costa del Sol, Spain | 108 | ||||
Built around one of the largest privately owned outdoor swimming pool complexes in Europe, this resort includes 108 units and is located 200 meters from the beach. In addition, the resort has an indoor swimming pool, fitness center and sauna. | ||||||
Royal Oasis Club at Pueblo Quinta | Costa del Sol, Spain | 58 | ||||
This resort is situated in lush gardens and contrasts with the hotel blocks of the Costa del Sol, with 58 one- and two-bedroom units, many of which have balconies or terraces. This resort also offers a central outdoor pool, indoor pool, gym and onsite restaurant. | ||||||
Sahara Sunset | Costa del Sol, Spain | 150 | ||||
Styled with Moorish architecture, this resort offers 150 units, all with a balcony or terrace. With a feature landscaped pool, this resort also features an additional outdoor pool, an indoor pool, an onsite restaurant, and newly constructed gym, sauna, spa and steamroom. | ||||||
Europe Subtotal | 2,658 | |||||
Total Branded and Managed Resorts | 7,189 | |||||
* | Denotes canal boat marinas; number of units denotes number of boats managed. |
Resort | Location | |
London Bridge Resort | Lake Havasu City, Arizona | |
The Roundhouse Resort | Pinetop, Arizona | |
Sedona Springs Resort | Sedona, Arizona | |
Villas at Poco Diablo | Sedona, Arizona | |
Villas of Sedona | Sedona, Arizona | |
Scottsdale Camelback | Scottsdale, Arizona | |
Mountain Retreat | Arnold, Arizona | |
San Luis Bay Inn | Avila Beach, California | |
Grand Pacific at Carlsbad Seapointe Resort | Carlsbad, California | |
Grand Pacific at Carlsbad Inn Beach Resort | Carlsbad, California |
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Resort | Location | |
Grand Pacific Palisades Resort and Hotel | Palisades, California | |
RVC’s Cimarron Golf Resort, Palm Springs | Cathedral City, California | |
Grand Pacific at Coronado Beach Resort | Coronado, California | |
Grand Pacific at RiverPointe Napa Valley | Napa, California | |
Grand Pacific at Red Wolf Lodge | Olympic Valley, California | |
Oasis Resort | Palm Springs, California | |
Lodge at Lake Tahoe | South Lake Tahoe, California | |
Tahoe Beach and Ski Club | South Lake Tahoe, California | |
The Village at Steamboat Springs | Steamboat Springs, Colorado | |
Clock Tower | Whistler, British Columbia, Canada | |
RVC at Whiski Jack | Whistler, British Columbia, Canada | |
Lifestyle at Crown Residences | Puerto Plata, Dominican Republic | |
Lifestyle at Presidential Suites | Puerto Plata, Dominican Republic | |
Coconut Mallory Resort and Marina | Key West, Florida | |
Polynesian Isles | Kissimmee, Florida | |
Westgate at South Beach | Miami Beach, Florida | |
Coconut Palms Beach Resort | New Smyrna Beach, Florida | |
Ocean Beach Club | New Smyrna Beach, Florida | |
Ocean Sands Beach Club | New Smyrna Beach, Florida | |
Sea Villas | New Smyrna Beach, Florida | |
Cypress Pointe Resort and Grande Villas | Orlando, Florida | |
Sea Mountain | Big Island, Hawaii | |
Sea Village | Big Island, Hawaii | |
Grand Pacific at Alii Kai Resort | Kauai, Hawaii | |
Kapaa Shore | Kauai, Hawaii | |
Pono Kai | Kauai, Hawaii | |
RVC at Kona Reef | Kona, Hawaii | |
Papakea Resort | Maui, Hawaii | |
Valley Isle | Maui, Hawaii | |
Fairway Villa | Oahu, Hawaii | |
Royal Kuhio | Oahu, Hawaii | |
Elkhorn Resort | Sun Valley, Idaho | |
Grand Palladium Jamaica Resort and Spa | Lucea, Jamaica | |
Edgewater Beach Resort | Dennis Port, Massachusetts | |
Beachside Village Resort | Falmouth, Massachusetts | |
Cove at Yarmouth | Yarmouth, Massachusetts | |
RVC’s Villa Vera, Acapulco | Acapulco, Mexico | |
Cabo Villas Beach Resort | Cabo San Lucas, Mexico | |
El Dorado Royale | Cancun, Mexico |
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Resort | Location | |
RVC’s Club Regina Cancun | Cancun, Mexico | |
RVC’s Villa Vera Puerto Isla Mujeres | Isla Mujeres, Mexico | |
RVC’s Club Regina Los Cabos | San Jose del Cabo, Mexico | |
RVC’s Las Cupúlas Oaxaca | Oaxaca, Mexico | |
RVC’s Villa Vera Oaxaca | Oaxaca, Mexico | |
RVC’s Club Regina Puerto Vallarta | Puerto Vallarta, Mexico | |
El Dorado Seaside Suites | Riviera, Mexico | |
Grand Palladium Kantenah Resort and Spa | Riviera Maya, Mexico | |
Grand Palladium Riviera Resort and Spa | Riviera Maya, Mexico | |
RVC’s Villa Vera Puerto Mio, Zihuatanejo | Zihuatenajo, Mexico | |
The Carriage House | Las Vegas, Nevada | |
Kingsbury of Tahoe | Stateline, Nevada | |
The Ridge Pointe | Stateline, Nevada | |
Village of Loon Mountain | Lincoln, New Hampshire | |
The Valley Inn at Waterville Valley | Waterville Valley, New Hampshire | |
Great Wolf Lodge Charlotte-Concord | Concord, North Carolina | |
Great Wolf Lodge Cincinnati-Mason | Mason, Ohio | |
Embarcadero | Newport, Oregon | |
The Pines at Sunriver | Sunriver, Oregon | |
Island Links Resort | Hilton Head Island, South Carolina | |
Royal Dunes | Hilton Head Island, South Carolina | |
Ellington at Wachesaw Plantation | Murrells Inlet, South Carolina | |
Gatlinburg Town Square | Gatlinburg, Tennessee | |
Gatlinburg Town Village | Gatlinburg, Tennessee | |
Mountain Meadows | Pigeon Forge, Tennessee | |
Great Wolf Lodge Grapevine | Grapevine, Texas | |
Villas on Lake at Lake Conroe | Montgomery, Texas | |
RVC’s The Miner’s Club | Park City, Utah | |
RVC’s Sandcastle, Birch Bay | Birch Bay, Washington | |
Great Wolf Lodge Grand Mound | Grand Mound, Washington | |
Blackbird Lodge | Leavenworth, Washington | |
Point Brown | Ocean Shores, Washington | |
Great Wolf Lodge Wisconsin Dells | Wisconsin Dells, Wisconsin |
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Resort | Location | |
Holiday Club Siesta | Austria | |
Holiday Club Schloesslhof | Austria | |
MondiHoliday Hotel Grundlsee | Austria | |
MondiHoliday Hotel Bellevue | Austria | |
Hapimag Prague | Prague, Czech Republic | |
Broome Park Mansion House | Kent, England | |
Burnside Park | Bowness-on-Windermere, England | |
Stouts Hill | Uley, England | |
MondiHoliday Hotel Oberstaufen | Germany | |
MondiHoliday Hotel Mitterfels | Germany | |
Hapimag Damnoni | Crete, Greece | |
Hapimag Budapest | Budapest, Hungary | |
Holiday Club Breitenbergerhof | Italy | |
MondiHoliday Hotel Tirolensis | Italy | |
Hapimag Palmeraie Marrakech | Marrakech, Morocco | |
Gålå Fjellgrend | Gudbrandsdalen, Norway | |
Pestana Alvor Park | Alvor, Portugal | |
Pestana Grand | Funchal, Portugal | |
Pestana Miramir | Funchal, Portugal | |
Pestana Porches | Porches, Portugal | |
The Peninsula | Cape Town, South Africa | |
Avalon Springs | Montagu, Garden Route, South Africa | |
Wilderness Dunes | Wilderness, Garden Route, South Africa | |
Breakers Resort | KwaZulu-Natal, South Africa | |
Champagne Sports Resorts | Kwazulu-Natal, South Africa | |
Jackalberry Ridge | Mpumalanga, South Africa | |
Hapimag Mas Nou | Girona, Spain | |
Cala de Mar | Majorca, Spain | |
Blajfell Village | Kabdalis, Sweden | |
Hapimag Bodrum Sea Garden Village | Yaliciftlik, Turkey | |
AlpenClub Schliersee | Germany | |
Bellbrae Country Club | Victoria, Australia | |
Mt Martha Valley Resort | Victoria, Australia | |
Tamarind Sands | New South Wales, Australia |
Resort | Location | |
Beach House Seaside Resort | Coolangatta, Australia | |
Vacation Village Resort | Port Macquarie, Australia | |
Tiki Village International Resort | Surfer’s Paradise, Australia | |
Royal Bali Beach Club at Candidasa | Bali, Indonesia |
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Resort | Location | |
Royal Bali Beach Club at Jimbaran Bay | Bali, Indonesia | |
Royal Goan Beach Club at MonteRio | Goa, India | |
Royal Goan Beach Club at Royal Palms | Goa, India | |
Royal Goan Beach Club at Haathi Mahal | Goa, India | |
Royal Bella Vista Country Club at Chiang Mai | Chiang Mai, Thailand | |
Absolute at Q Signature Samui Spa and Resort | Koh Samui, Thailand | |
MTC at View Talay Holidays | Pattaya, Thailand | |
Absolute at Nirvana Place | Pattaya, Thailand | |
Absolute Bangla Suites | Phuket, Thailand | |
Absolute Sea Pearl Beach Resort | Phuket, Thailand | |
Royal Lighthouse Villas at Boat Lagoon | Phuket, Thailand |
Caribbean
Hawaiian Isles
Mediterranean
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• | our existing member base; | ||
• | participants in third-party vacation ownership exchange programs, such as Interval International or RCI, who stay at our resorts; | ||
• | renters who stay at our resorts; | ||
• | member referrals; | ||
• | off property contacts who are solicited from the premises of hospitality, entertainment, gaming and retail locations; and | ||
• | other people who we target through the various marketing programs described above. |
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• | our global corporate headquarters located in Las Vegas, Nevada, which is approximately 80,000 square feet; | ||
• | our European headquarters located in Lancaster, United Kingdom, which is approximately 32,400 square feet; | ||
• | a telemarketing call center located in Wakefield, United Kingdom, which is approximately 6,200 square feet; | ||
• | an off-site sales center in Lanzarote, Canary Islands, Spain, which is approximately 1,600 square feet; and | ||
• | an administrative office in Mougin, France, which is approximately 1,200 square feet. |
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Name | Age | Principal Position | ||||
Stephen J. Cloobeck | 49 | Chief Executive Officer and Chairman of the Board | ||||
David F. Palmer | 49 | President, Chief Financial Officer and Manager | ||||
Lowell D. Kraff | 50 | Manager | ||||
B. Scott Minerd | 52 | Manager | ||||
Zachary Warren | 38 | Manager |
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• | each of its managers; | ||
• | each of its named executive officers; | ||
• | each person or group known to us to beneficially own 5% or more of such units; and | ||
• | all of its executive officers and managers as a group. |
Amount and Nature of | ||||||||
Beneficial Ownership of | Percentage of Common Units | |||||||
Beneficial Owner | Common Units | Outstanding(1) | ||||||
Managers and Executive Officers | ||||||||
Stephen J. Cloobeck(2) | 788.0 | 70.7 | % | |||||
David F. Palmer(3) | — | — | ||||||
Lowell D. Kraff(4) | — | — | ||||||
B. Scott Minerd(5) | — | — | ||||||
Zachary Warren(6) | — | — | ||||||
All managers and executive officers as a group | 788.0 | 70.7 | % | |||||
5% Beneficial Owners | ||||||||
Cloobeck Diamond Parent, LLC(2) | 788.0 | 70.7 | % | |||||
DRP Holdco, LLC(7) | 269.3 | 24.2 | % |
(1) | Represents the percentage of total voting power and the percentage ownership of common equity units beneficially owned by each identified unitholder and all managers and executive officers as a group. As of June 1, 2010, there were 1,115.1 common equity units outstanding. | |
(2) | Mr. Cloobeck controls two entities which hold 100% of the outstanding voting securities of Cloobeck Diamond Parent, LLC, a Nevada limited liability company, or CDP, and a majority of the outstanding non-voting equity securities (which have the same economic rights as the voting securities). Mr. Cloobeck and certain trusts, of which Mr. Cloobeck is trustee, beneficially own all outstanding equity interests in such entities. As a result, Mr. Cloobeck has sole power to vote and dispose of all common units of Diamond Resorts Parent, LLC held by CDP. | |
(3) | Mr. Palmer holds equity interests in Trivergance Diamond Holdings, LLC, a Delaware limited liability company, or TDH, which in turn holds non-voting equity interests in CDP. Mr. Palmer also directly holds non-voting equity interests in CDP. Although Mr. Palmer does not beneficially own the common equity units of Diamond Resorts Parent, LLC held by CDP (see Note 2 above), by virtue of his ownership of equity interests of CDP and TDH, Mr. Palmer will receive economic benefits relating to up to 10.0% of Diamond Resorts Parent, LLC pursuant to the respective operating agreements of CDP and TDH. | |
(4) | Mr. Kraff holds equity interests in TDH, which in turn holds non-voting interests in CDP. Although Mr. Kraff |
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does not beneficially own the common units of Diamond Resorts Parent, LLC held by CDP (see Note 2 above), by virtue of his ownership of equity interests of TDH, Mr. Kraff receives economic benefits relating to approximately 4.0% of Diamond Resorts Parent, LLC pursuant to the respective operating agreements of CDP and TDH. | ||
(5) | Mr. Minerd is a managing partner of Guggenheim Partners. Clients of and funds managed by affiliates of Guggenheim Partners beneficially own 269.3 of the common units, as well as all of the outstanding preferred units, of Diamond Resorts Parent, LLC. See Note 7 below. | |
(6) | Mr. Warren is a managing director of Guggenheim Partners. Clients of and funds managed by affiliates of Guggenheim Partners beneficially own 269.3 of the common units, as well as all of the outstanding preferred units, of Diamond Resorts Parent, LLC. See Note 7 below. | |
(7) | The address for DRP Holdco, LLC, or DRP, is 135 East 57th Street, New York, NY 10022. DRP is an investment vehicle managed by an affiliate of Guggenheim, and has members that are clients of affiliates of Guggenheim. In addition to the 269.3 common units held by DRP, DRP is also the beneficial owner of outstanding preferred units of Diamond Resorts Parent, LLC, which have an initial face value of $75 million. The preferred units have a priority return of 16.5% per annum, compounded quarterly, as well as a liquidation preference with respect to the common units. The preferred units do not provide to the holder any participation or conversion rights. |
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• | you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 of the Securities Act; | ||
• | you have no arrangement or understanding with any person to participate in a distribution (within the meaning of the Securities Act) of the exchange notes in violation of the provisions of the Securities Act; | ||
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and | ||
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 under the Securities Act; | ||
• | you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes; | ||
• | you are not engaged in, and do not intend to engage in, a distribution of the exchange notes; and | ||
• | you are acquiring the exchange notes in the ordinary course of your business. |
• | you cannot rely on the position of the SEC set forth inMorgan Stanley & Co. Incorporated(available June 5, 1991) andExxon Capital Holdings Corporation(available May 13, 1988), as interpreted in the SEC’s letter toShearman & Sterling, dated July 2, 1993, or similar no-action letters; and | ||
• | in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes. |
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• | to delay accepting for exchange any outstanding notes (only in the case that we amend or extend the exchange offer); | ||
• | to extend the exchange offer or to terminate the exchange offer and refuse to accept outstanding notes not previously accepted if any of the conditions set forth below under “—Conditions to the Exchange Offer” have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; and | ||
• | subject to the terms of the registration rights agreement, to amend the terms of the exchange offer in any manner. In the event of a material change in the exchange offer, including the waiver of a material condition, we will extend the offer period, if necessary, so that at least five business days remain in such offer period following notice of the material change. |
• | the exchange offer or the making of any exchange by a holder violates any applicable law or interpretation of the SEC; or | ||
• | any action or proceeding has been instituted or threatened in writing in any court or by or before any governmental agency with respect to the exchange offer that, in our judgment, would reasonably be expected to impair our ability to proceed with the exchange offer. | ||
In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made to us: | |||
• | the representations described under “—Purpose and Effect of the Exchange Offer,” “—Procedures for Tendering Outstanding Notes” and “Plan of Distribution”; or | ||
• | any other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act. |
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• | complete, sign and date the letter of transmittal, or a facsimile of the letter of transmittal, have the signature(s) on the letter of transmittal guaranteed if required by the letter of transmittal and mail; or | ||
• | deliver such letter of transmittal or facsimile thereof to the exchange agent at the address set forth below under “—Exchange Agent” prior to the expiration date; or | ||
• | comply with DTC’s Automated Tender Offer Program procedures described below. | ||
In addition, either: | |||
• | the exchange agent must receive certificates for the outstanding notes along with the letter of transmittal prior to the expiration date; | ||
• | the exchange agent must receive a timely confirmation of book-entry transfer of the outstanding notes into the exchange agent’s account at DTC according to the procedures for book-entry transfer described below or a properly transmitted agent’s message prior to the expiration date; or | ||
• | you must comply with the guaranteed delivery procedures described below. |
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• | make appropriate arrangements to register ownership of the outstanding notes in your name; or | ||
• | obtain a properly completed bond power from the registered holder of outstanding notes. |
• | by a registered holder of the outstanding notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or |
• | for the account of an eligible guarantor institution. |
• | DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation; | ||
• | the participant has received and agrees to be bound by the terms of the letter of transmittal, or in the case of an agent’s message relating to guaranteed delivery, that such participant has received and agrees to be bound by the notice of guaranteed delivery; and | ||
• | we may enforce that agreement against such participant. DTC is referred to herein as a “book-entry transfer facility.” |
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• | outstanding notes or a timely book-entry confirmation of such outstanding notes into the exchange agent’s account at the book-entry transfer facility; and | ||
• | a properly completed and duly executed letter of transmittal and all other required documents or a properly transmitted agent’s message. |
• | you are not our affiliate or an affiliate of any guarantor within the meaning of Rule 405 under the Securities Act; | ||
• | you do not have an arrangement or understanding with any person or entity to participate in a distribution of the exchange notes; and | ||
• | you are acquiring the exchange notes in the ordinary course of your business. |
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• | the tender is made through an eligible guarantor institution; | ||
• | prior to the expiration date, the exchange agent receives from such eligible guarantor institution either a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission, mail, or hand delivery or a properly transmitted agent’s message and notice of guaranteed delivery, that (1) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (2) states that the tender is being made thereby; and (3) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the eligible guarantor institution with the exchange agent; and | ||
• | the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date. |
• | the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “—Exchange Agent”; or | ||
• | you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system. | ||
Any notice of withdrawal must: | |||
• | specify the name of the person who tendered the outstanding notes to be withdrawn; |
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• | identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and | ||
• | where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder. |
• | the serial numbers of the particular certificates to be withdrawn; and | ||
• | a signed notice of withdrawal with signatures guaranteed by an eligible institution unless you are an eligible guarantor institution. |
By Regular, Registered or Certified Mail, Overnight Courier or Hand Delivery: Wells Fargo Bank, National Association 608 2nd Avenue South, 12th Floor MAC: N9303-121 Minneapolis, MN 55402 Attn: Bondholder Communications Telephone: 800-344-5128 | By Facsimile Transmission (eligible institutions only): 866-969-1290 Telephone Inquiries: 800-344-5128 |
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• | certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered; | ||
• | tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or | ||
• | a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer. |
• | as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes pursuant to the exemption from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws; and | ||
• | as otherwise set forth in the offering memorandum distributed in connection with the private offering of the outstanding notes. |
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The Notes: | |||
• | will be senior obligations of the Issuer; | ||
• | will be secured by a first-priority security interest in the Collateral owned by the Issuer; | ||
• | will be guaranteed on a senior secured basis by the Company, the Intermediate Holdco and each Subsidiary Guarantor; | ||
• | will rank senior in right of payment to any future Subordinated Obligations of the Issuer; | ||
• | will be effectively subordinated to any existing and future Indebtedness of the Issuer that is secured with property or assets that do not constitute the Collateral to the extent of the value of the assets securing such Indebtedness; | ||
• | will be effectively subordinated to any existing and future Indebtedness of Subsidiaries of the Issuer that are not Guarantors (including obligations under the 2008 Conduit Facility, the Quorum Facility, and the DROT 2009 Notes); and | ||
• | will be subject to registration with the SEC pursuant to the Registration Rights Agreement. | ||
The Guarantee of the Notes by each Guarantor: | |||
• | will be a senior obligation of such Guarantor; | ||
• | will be secured by a first priority security interest in the Collateral owned by such Guarantor; | ||
• | will rank senior in right of payment to any future Subordinated Obligations of such Guarantor; and |
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• | will be effectively subordinated to any existing and future Indebtedness of such Guarantor that is secured with property or assets that do not constitute Collateral to the extent of the value of the assets securing such Indebtedness. |
Year | Percentage | |||
2014 | 106.000 | % | ||
2015 | 103.000 | % | ||
2016 and thereafter | 100.000 | % |
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(1) | any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interests in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or | ||
(2) | any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. |
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(1) | DTC (a) notifies the Issuer that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in each case, a successor depositary is not appointed; | ||
(2) | the Issuer, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Certificated Notes; or | ||
(3) | there has occurred and is continuing a Default with respect to the Notes. |
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10600 West Charleston Boulevard
Las Vegas, Nevada 89135
Tel: (702) 684-8000
Attn: Ms. Yanna Huang, Treasurer
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PAGE | ||||
NUMBER | ||||
Audited Consolidated Financial Statements: | ||||
F-2 | ||||
Consolidated Financial Statements: | ||||
F-3 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-9 | ||||
Unaudited Consolidated Financial Statements: | ||||
F-65 | ||||
F-66 | ||||
F-67 | ||||
F-68 | ||||
F-70 |
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Diamond Resorts Parent, LLC and Subsidiaries
Las Vegas, Nevada
Las Vegas, Nevada
March 11, 2011 (except for Note 25, as to which the date is April 29, 2011)
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2010 | 2009 | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 27,329 | $ | 17,186 | ||||
Cash in escrow and restricted cash | 30,048 | 40,544 | ||||||
Mortgages and contracts receivable, net of allowance of $55,151 and $60,911, respectively | 245,287 | 263,556 | ||||||
Due from related parties, net | 20,958 | 15,378 | ||||||
Other receivables, net | 35,980 | 33,884 | ||||||
Income tax receivable | 10 | 1,176 | ||||||
Prepaid expenses and other assets, net | 46,248 | 28,828 | ||||||
Unsold Vacation Interests, net | 190,564 | 203,225 | ||||||
Property and equipment, net | 29,097 | 25,708 | ||||||
Assets held for sale | 9,517 | — | ||||||
Intangible assets, net | 45,713 | 42,633 | ||||||
Total assets | $ | 680,751 | $ | 672,118 | ||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||
Accounts payable | $ | 7,655 | $ | 10,956 | ||||
Due to related parties, net | 36,251 | 36,695 | ||||||
Accrued liabilities | 67,533 | 48,914 | ||||||
Income taxes payable | 3,936 | 441 | ||||||
Deferred income taxes | — | 389 | ||||||
Deferred revenues | 67,706 | 59,461 | ||||||
Senior secured notes, net of unamortized original issue discount of $10,278 and $0, respectively | 414,722 | — | ||||||
Borrowings under line of credit agreements | — | 393,954 | ||||||
Securitization notes and conduit facilities, net | 186,843 | 222,913 | ||||||
Derivative liabilities | 79 | 464 | ||||||
Notes payable | 23,273 | 1,792 | ||||||
Total liabilities | 807,998 | 775,979 | ||||||
Commitments and contingencies | ||||||||
Redeemable preferred units (1,000 shares authorized, issued and outstanding) | 84,502 | 103,528 | ||||||
Member capital (deficit): | ||||||||
Member capital (authorized 1,090 common units, no par value; issued 1,090 and 1,000 common units, respectively) | 7,335 | 7,335 | ||||||
Accumulated deficit | (201,338 | ) | (198,317 | ) | ||||
Accumulated other comprehensive loss | (17,746 | ) | (16,407 | ) | ||||
Total member capital (deficit) | (211,749 | ) | (207,389 | ) | ||||
Total liabilities and member capital (deficit) | $ | 680,751 | $ | 672,118 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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2010 | 2009 | 2008 | ||||||||||
Revenues: | ||||||||||||
Vacation Interest sales | $ | 214,764 | $ | 248,643 | $ | 285,442 | ||||||
Provision for uncollectible Vacation Interest sales revenue | (12,655 | ) | (14,153 | ) | (51,166 | ) | ||||||
Vacation Interest, net | 202,109 | 234,490 | 234,276 | |||||||||
Management, member and other services | 102,651 | 108,203 | 93,241 | |||||||||
Consolidated resort operations | 26,547 | 23,814 | 21,006 | |||||||||
Interest | 39,327 | 44,172 | 53,626 | |||||||||
Gain on mortgage repurchase | 191 | 282 | 265 | |||||||||
Total revenues | 370,825 | 410,961 | 402,414 | |||||||||
Costs and Expenses: | ||||||||||||
Vacation Interest cost of sales | 39,730 | 55,135 | 67,551 | |||||||||
Advertising, sales and marketing | 114,029 | 116,098 | 148,565 | |||||||||
Vacation Interest carrying cost, net | 29,821 | 32,992 | 22,831 | |||||||||
Management, member and other services | 23,646 | 31,163 | 35,346 | |||||||||
Consolidated resort operations | 23,972 | 22,456 | 23,685 | |||||||||
Loan portfolio | 10,566 | �� | 9,835 | 8,753 | ||||||||
General and administrative | 67,905 | 71,306 | 78,618 | |||||||||
Gain on disposal of assets | (1,923 | ) | (137 | ) | (1,007 | ) | ||||||
Depreciation and amortization | 11,939 | 13,366 | 16,687 | |||||||||
Interest, net of capitalized interest of $0, $0 and $352, respectively | 67,162 | 68,515 | 71,380 | |||||||||
Loss on extinguishment of debt | 1,081 | 10,903 | — | |||||||||
Impairments and other write-offs | 3,330 | 1,125 | 17,168 | |||||||||
Total costs and expenses | 391,258 | 432,757 | 489,577 | |||||||||
Loss before (benefit) provision for income taxes | (20,433 | ) | (21,796 | ) | (87,163 | ) | ||||||
(Benefit) provision for income taxes | (1,274 | ) | (799 | ) | 1,809 | |||||||
Net loss | $ | (19,159 | ) | $ | (20,997 | ) | $ | (88,972 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
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AND COMPREHENSIVE INCOME (LOSS)
Temporary Member Capital | Permanent Member Capital | |||||||||||||||||||||||||||||||
Accumulated | Total | |||||||||||||||||||||||||||||||
Preferred Redeemable | Common | Other | Member | |||||||||||||||||||||||||||||
Units | Units | Member | Accumulated | Comprehensive | Capital | Comprehensive | ||||||||||||||||||||||||||
Shares | Amount | Shares | Capital | Deficit | Income (Loss) | (Deficit) | Loss | |||||||||||||||||||||||||
Balance at December 31, 2007 | 1,000 | $ | 72,047 | 1,000 | $ | 7,149 | $ | (56,867 | ) | $ | 814 | $ | (48,904 | ) | ||||||||||||||||||
Net loss for the year ended December 31, 2008 | (88,972 | ) | (88,972 | ) | $ | (88,972 | ) | |||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||
Currency translation adjustments, net of tax of $0 | (21,917 | ) | (21,917 | ) | (21,917 | ) | ||||||||||||||||||||||||||
Priority returns and redemption premiums | 13,051 | (13,051 | ) | (13,051 | ) | |||||||||||||||||||||||||||
Balance at December 31, 2008 | 1,000 | 85,098 | 1,000 | 7,149 | $ | (158,890 | ) | (21,103 | ) | (172,844 | ) | |||||||||||||||||||||
Comprehensive loss for the year ended December 31, 2008 | $ | (110,889 | ) | |||||||||||||||||||||||||||||
Second Lien warrants | 186 | 186 | ||||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2009 | (20,997 | ) | (20,997 | ) | $ | (20,997 | ) | |||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||
Currency translation adjustments, net of tax of $0 | 4,696 | 4,696 | 4,696 | |||||||||||||||||||||||||||||
Priority returns and redemption premiums | 18,430 | (18,430 | ) | (18,430 | ) | |||||||||||||||||||||||||||
Balance at December 31, 2009 | 1,000 | 103,528 | 1,000 | 7,335 | (198,317 | ) | (16,407 | ) | (207,389 | ) | ||||||||||||||||||||||
Comprehensive loss for the year ended December 31, 2009 | $ | (16,301 | ) | |||||||||||||||||||||||||||||
Guggenheim equity investment | 1,000 | 75,000 | 269.3 | |||||||||||||||||||||||||||||
Repurchase of equity previously held by another minority institutional investor | (1,000 | ) | (111,680 | ) | (179.3 | ) | 36,680 | 36,680 | ||||||||||||||||||||||||
Costs related to issuance of common and preferred units | (2,888 | ) | (2,888 | ) | ||||||||||||||||||||||||||||
Net loss for the year ended December 31, 2010 | (19,159 | ) | (19,159 | ) | $ | (19,159 | ) | |||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||
Currency translation adjustments, net of tax of $0 | (1,339 | ) | (1,339 | ) | (1,339 | ) | ||||||||||||||||||||||||||
Priority returns and redemption premiums | 17,654 | (17,654 | ) | (17,654 | ) | |||||||||||||||||||||||||||
Balance at December 31, 2010 | 1,000 | $ | 84,502 | 1,090 | $ | 7,335 | $ | (201,338 | ) | $ | (17,746 | ) | $ | (211,749 | ) | |||||||||||||||||
Comprehensive loss for the year ended December 31, 2010 | $ | (20,498 | ) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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2010 | 2009 | 2008 | ||||||||||
Operating activities: | ||||||||||||
Net loss | $ | (19,159 | ) | $ | (20,997 | ) | $ | (88,972 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 11,939 | 13,366 | 16,687 | |||||||||
Provision for uncollectible Vacation Interest sales revenue | 12,655 | 14,153 | 51,166 | |||||||||
Amortization of capitalized financing costs and original issue discount | 2,521 | 1,989 | 8,860 | |||||||||
Amortization of capitalized loan origination costs and portfolio discount | 3,007 | 3,230 | 1,853 | |||||||||
Loss (gain) on foreign currency exchange | 42 | 182 | (487 | ) | ||||||||
Gain on disposal of assets | (1,923 | ) | (137 | ) | (1,007 | ) | ||||||
Gain on mortgage repurchase | (191 | ) | (282 | ) | (265 | ) | ||||||
Loss on extinguishment of debt | 1,081 | 10,903 | — | |||||||||
Deferred income taxes | (377 | ) | 7 | (566 | ) | |||||||
Unrealized (gain) loss on derivative instruments | (314 | ) | (3,885 | ) | 4,032 | |||||||
Impairments and other write-offs | 3,330 | 1,125 | 17,168 | |||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||
Mortgages and contracts receivable | 12,190 | 19,495 | (29,235 | ) | ||||||||
Due from related parties, net | (5,776 | ) | 8,968 | 22,625 | ||||||||
Other receivables, net | 3,041 | 1,657 | (1,077 | ) | ||||||||
Prepaid expenses and other assets, net | (115 | ) | 2,516 | 1,871 | ||||||||
Unsold Vacation Interests, net | 10,308 | 19,236 | 20,731 | |||||||||
Accounts payable | (3,224 | ) | 2,518 | (11,799 | ) | |||||||
Due to related parties, net | 5,255 | 7,589 | 19,567 | |||||||||
Accrued liabilities | 18,447 | 5,306 | (6,944 | ) | ||||||||
Income taxes payable (receivable) | 4,632 | (1,925 | ) | 2,085 | ||||||||
Deferred revenues | 8,632 | 2,779 | 18,793 | |||||||||
Net cash provided by operating activities | 66,001 | 87,793 | 45,086 | |||||||||
Investing activities: | ||||||||||||
Property and equipment capital expenditures | (5,553 | ) | (4,672 | ) | (13,861 | ) | ||||||
Purchase of assets from ILX Resorts, Inc. | (30,722 | ) | — | — | ||||||||
Disbursement of Tempus Acquisition note receivable | (3,005 | ) | — | — | ||||||||
Acquisition of Sunterra Corporation | — | — | (2,910 | ) | ||||||||
Intangible assets acquired by Diamond Europe | — | — | (1,358 | ) | ||||||||
Proceeds from sale of assets | 1,881 | 422 | 10,866 | |||||||||
Net cash used in investing activities | $ | (37,399 | ) | $ | (4,250 | ) | $ | (7,263 | ) | |||
The accompanying notes are an integral part of these consolidated financial statements.
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For the years ended December 31, 2010, 2009 and 2008
(In thousands)
2010 | 2009 | 2008 | ||||||||||
Financing activities: | ||||||||||||
Changes in cash in escrow and restricted cash | $ | 10,526 | $ | 8,455 | $ | (445 | ) | |||||
Proceeds from issuance of Senior Secured Notes, net of original issue discount of $10,570, $0 and $0, respectively | 414,430 | — | — | |||||||||
Proceeds from issuance of Quorum Facility | 16,697 | — | — | |||||||||
Proceeds from issuance of Tempus Acquisition Loan | 3,300 | — | — | |||||||||
Proceeds from issuance of Diamond Resorts Owners Trust 2009-1 | — | 181,012 | — | |||||||||
Proceeds from issuance of 2008 Conduit Facility | 25,533 | 29,033 | 16,520 | |||||||||
Proceeds from issuance of 2007 Conduit Facility | — | — | 32,669 | |||||||||
Proceeds from issuance of ILXA Receivables Loan | 11,870 | — | — | |||||||||
Proceeds from issuance of ILXA Inventory Loan | 17,513 | — | — | |||||||||
Proceeds from issuance of First and Second Lien Facilities | — | — | 23,500 | |||||||||
Payments on Quorum Facility | (3,755 | ) | — | — | ||||||||
Payments on Diamond Resorts Owners Trust 2009-1 | (47,855 | ) | (12,303 | ) | — | |||||||
Payments on 2008 Conduit Facility | (4,307 | ) | (192,469 | ) | (34,572 | ) | ||||||
Payments on 2007 Conduit Facility | — | (51,153 | ) | (8,296 | ) | |||||||
Payments on ILXA Receivables Loan | (1,578 | ) | — | — | �� | |||||||
Payments on First and Second Lien Facilities | (397,609 | ) | (1,139 | ) | (46,750 | ) | ||||||
Payments on Polo Towers lines of credit and securitization notes | (11,009 | ) | (9,955 | ) | (12,530 | ) | ||||||
Payment on 2004 Securitization Notes | (21,722 | ) | (13,251 | ) | (18,383 | ) | ||||||
Payments on notes payable | (8,221 | ) | (9,638 | ) | (7,962 | ) | ||||||
Payments of debt issuance costs | (19,125 | ) | (9,428 | ) | (3,775 | ) | ||||||
Proceeds from Guggenheim equity investment | 75,000 | — | — | |||||||||
Repurchase of equity previously held by another minority institutional investor | (75,000 | ) | — | — | ||||||||
Payments of costs related to issuance of common and preferred units | (2,888 | ) | — | — | ||||||||
Payments for derivative instrument | (71 | ) | (8,824 | ) | — | |||||||
Net cash used in financing activities | (18,271 | ) | (89,660 | ) | (60,024 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 10,331 | (6,117 | ) | (22,201 | ) | |||||||
Effect of changes in exchange rates on cash and cash equivalents | (188 | ) | 596 | (4,295 | ) | |||||||
Cash and cash equivalents, beginning of period | 17,186 | 22,707 | 49,203 | |||||||||
Cash and cash equivalents, end of period | $ | 27,329 | $ | 17,186 | $ | 22,707 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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For the years ended December 31, 2010, 2009 and 2008
(In thousands)
2010 | 2009 | 2008 | ||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||
Cash paid for interest | $ | 44,633 | $ | 63,297 | $ | 58,735 | ||||||
Cash paid for taxes, net of tax refunds | $ | (5,514 | ) | $ | 1,239 | $ | (482 | ) | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Priority returns and redemption premiums on preferred units | $ | 17,654 | $ | 18,430 | $ | 13,051 | ||||||
Insurance premiums financed through issuance of note payable | $ | 7,897 | $ | 8,573 | $ | 7,416 | ||||||
Assets held for sale reclassified to unsold Vacation Interests | $ | — | $ | 4,220 | $ | — | ||||||
Unsold Vacation Interests reclassified to assets held for sale | $ | 10,064 | $ | — | $ | — | ||||||
Property and equipment reclassified to assets to be disposed but not actively marketed (prepaid expenses and other assets) | $ | 588 | $ | — | $ | — | ||||||
Management contracts reclassified to assets held for sale | $ | 587 | $ | — | $ | — | ||||||
Proceeds from issuance of ILXA Inventory Loan in transit | $ | 1,028 | $ | — | $ | — | ||||||
Purchase of assets from ILX Resorts, Inc.: | ||||||||||||
Fair value of assets acquired | $ | 34,876 | $ | — | $ | — | ||||||
Cash paid | (30,722 | ) | — | — | ||||||||
Liabilities assumed | $ | 4,154 | $ | — | $ | — | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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• | Hospitality and Management Services.The Company manages 68 branded resort properties, which are located in the continental United States, Hawaii, the Caribbean and Europe. The Company also manages five multi-resort trusts or similar arrangements (the “Collections”). Each Collection holds real estate in the Company’s resort properties underlying the Vacation Interests that the Company sells. As manager of the Company’s branded resorts and Collections, it provides billing services, account collections, accounting and treasury functions and information technology services. In addition, for branded resorts, the Company also provides an online reservation system and customer service contact center, operates the front desks and amenities and furnishes housekeeping, maintenance and human resources services. Management contracts typically have an initial term of three to five years with automatic renewals and are structured on a cost-plus basis, thereby providing the Company with a recurring and stable revenue stream. In addition, the Company earns recurring fees by operating THE Club, the points-based exchange and member services program that enables members to vacation at any of the 203 destinations in the Company’s network. These items are included in management, member and other services revenue and expense in the accompanying consolidated statements of operations. | ||
In addition, the Company serves as the homeowners’ association (“HOA”) for its two resorts in St. Maarten and earns maintenance fees and incurs operating expenses at these two resorts. At certain resorts, the Company also operates golf courses, food and beverage venues, retail shops, a campground and a marina and earns incidental revenue and incurs operating expense. Finally, the Company provides cable, telephone, and technology services to HOAs. These items are included in consolidated resort operations revenue and expense in the accompanying consolidated statements of operations. | |||
• | Marketing and Sales of Vacation Interests.The Company markets and sells Vacation Interests in its resort network. Sales prospects are generated by utilizing a variety of marketing programs. Currently, the Company sells Vacation Interests only in the form of points, which can be utilized for vacations for varying lengths of stay at any resort in its network. In the past, the Company also sold Vacation Interests in the |
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form of deeded intervals, which provide the right to vacation at a particular resort for a specified length of time. | |||
• | Consumer Financing of Vacation Interests. The Company provides loans to eligible customers who purchase Vacation Interests through sales centers and choose to finance their purchase. These loans are collateralized by the underlying Vacation Interests and bear interest at a fixed rate. The Company’s consumer finance servicing operations include underwriting, collection and servicing of its consumer loan portfolio. | ||
Citrus Insurance Company, Inc.
DRI Quorum 2010 LLC
Diamond Resorts (Europe) Ltd. and subsidiaries
Diamond Resorts Centralized Services Company
Diamond Resorts Corporation
Diamond Resorts Developer and Sales Holding Company and subsidiaries
Diamond Resorts Finance Holding Company and subsidiaries
Diamond Resorts Holdings, LLC
Diamond Resorts Issuer 2008, LLC
Diamond Resorts Management and Exchange Holding Company and subsidiaries
Diamond Resorts Owner Trust 2009-1
Diamond Resorts Polo Development, LLC
Diamond Resorts Services, LLC
FLRX, Inc. and subsidiaries
George Acquisition Subsidiary, Inc.
ILX Acquisition, Inc. and subsidiaries
Sunterra Owner Trust 2004-1
Tempus Acquisition, LLC
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F-11
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• | Management fee revenues are recognized in accordance with the terms of the Company’s management contracts. The Company collects maintenance fees from the HOAs and Collections under the Company’s management agreements, which are recognized ratably throughout the year as earned. | ||
• | The Company charges an annual fee for membership in THE Club, an internal exchange, reservation and membership service organization. In addition to annual dues associated with THE Club, the Company earns revenue associated with customer conversions into THE Club, which involve the payment of a one-time fee by interval owners who wish to retain their intervals but also participate in THE Club. The Company also earns revenue through the Company’s travel-related services and other affinity programs. | ||
• | Other services revenue includes (1) closing costs on sales of Vacation Interests; (2) collection fees paid by owners when they bring their accounts current after collection efforts have been made by the Company on behalf of HOAs; (3) reservation protection plan revenue, which is an optional fee paid by customers when making a reservation to protect their points should they need to cancel their reservation; (4) travel services revenue from the Company’s European travel operations, which the Company discontinued during the second quarter of 2008; (5) revenue associated with certain sales incentives given to customers as motivation to purchase a Vacation Interest, which is recorded upon recognition of the related Vacation Interest sales revenue; and (6) late/impound fees assessed on delinquent customer accounts. |
• | For the Company’s properties located in the Caribbean, the Company provides services traditionally administered by an HOA. Consolidated resort operations revenue includes the maintenance fees billed to owners and the Collections by the Company’s St. Maarten HOAs, which are recognized ratably over the year. In addition, these HOAs also bill the owners for capital project assessments to repair and replace the amenities of these resorts, as well as special assessments to reserve the out-of-pocket deductibles for hurricanes and other natural disasters. These assessments are deferred until refurbishment activity occurs, at which time the amounts collected are recognized as a direct reduction to refurbishment expense in consolidated resort operations expense. All operating revenues and expenses associated with these properties are consolidated within the Company’s financial statements, except for intercompany transactions, such as maintenance fees for the Company’s owned inventory and management fees, which are eliminated. | ||
• | Food and beverage revenue at certain resorts whose restaurants the Company manages directly; | ||
• | Greens fees, equipment rental and operation of food services at the golf courses owned and managed by the Company at certain resorts; | ||
• | Revenue from providing cable, telephone, and technology services to HOAs; and | ||
• | Other incidental revenues generated at the resorts including, but not limited to, retail and gift shops, activity fees for arts and crafts, sport equipment rental, and safe rental. |
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2010 | 2009 | |||||||
Securitization and conduit collection and reserve cash | $ | 14,040 | $ | 26,953 | ||||
Escrow | 4,615 | 5,152 | ||||||
Bonds and deposits | 2,229 | 5,025 | ||||||
Rental trust | 3,717 | 2,023 | ||||||
Collected on behalf of HOAs and other | 5,447 | 1,391 | ||||||
Total cash in escrow and restricted cash | $ | 30,048 | $ | 40,544 | ||||
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2010 | 2009 | |||||||
Mortgages and contracts receivable, acquired — April 27, 2007 Merger | $ | 71,200 | $ | 106,682 | ||||
Mortgages and contracts receivable, contributed | 11,125 | 18,672 | ||||||
Mortgages and contracts receivable, originated | 198,959 | 191,478 | ||||||
Mortgages and contracts receivable, purchased (unrestricted subsidiaries) | 12,043 | — | ||||||
Mortgages and contracts receivable, gross | 293,327 | 316,832 | ||||||
Allowance for Loan and Contract Losses | (51,551 | ) | (60,911 | ) | ||||
Allowance for Loan and Contract Losses (unrestricted subsidiaries) | (3,600 | ) | — | |||||
Deferred profit on Vacation Interest transactions | (2,349 | ) | (2,693 | ) | ||||
Deferred loan and contract origination costs, net of accumulated amortization | 2,823 | 3,672 | ||||||
Inventory value of defaulted mortgages that were previously contributed and acquired | 7,439 | 7,888 | ||||||
Discount on mortgages and contracts receivable, net of accumulated amortization | (802 | ) | (1,232 | ) | ||||
Mortgages and contracts receivable, net | $ | 245,287 | $ | 263,556 | ||||
2011 | $ | 47,205 | ||
2012 | 44,141 | |||
2013 | 40,785 | |||
2014 | 37,123 |
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2015 | 34,075 | |||
2016 and thereafter | 89,998 | |||
$ | 293,327 | |||
2010 | 2009 | |||||||
Balance, beginning of period | $ | 60,911 | $ | 71,467 | ||||
Provision on purchased loans | — | 57 | ||||||
Provision on purchased loans (unrestricted subsidiaries) | 4,414 | — | ||||||
Provision for uncollectible Vacation Interest sales revenue | 12,367 | 10,214 | ||||||
Mortgages and contracts receivable charged off | (25,837 | ) | (28,518 | ) | ||||
Mortgages and contracts receivable charged off (unrestricted subsidiaries) | (814 | ) | — | |||||
Recoveries | 4,169 | 7,505 | ||||||
Effect of translation rate | (59 | ) | 186 | |||||
Balance, end of period | $ | 55,151 | $ | 60,911 | ||||
Diamond | Unrestricted | |||||||||||||||
Resorts | Subsidiaries | |||||||||||||||
Mortgages and | Mortgages and | |||||||||||||||
FICO Scores | Contracts | Contracts | Total | |||||||||||||
>799 | $ | 17,055 | $ | 90 | $ | 17,145 | ||||||||||
700 – 799 | 123,558 | 2,888 | 126,446 | |||||||||||||
600 – 699 | 96,087 | 3,977 | 100,064 | |||||||||||||
<600 | 38,373 | 2,128 | 40,501 | |||||||||||||
No FICO Scores | 6,211 | 2,960 | 9,171 | |||||||||||||
$ | 281,284 | $ | 12,043 | $ | 293,327 | |||||||||||
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2010 | 2009 | |||||||
Amounts due from HOAs | $ | 19,941 | $ | 14,871 | ||||
Amounts due from trusts | 1,017 | 507 | ||||||
Total due from related parties, net | $ | 20,958 | $ | 15,378 | ||||
2010 | 2009 | |||||||
Amounts owed to HOAs | $ | 30,377 | $ | 27,565 | ||||
Amounts owed to trusts | 5,874 | 4,630 | ||||||
Other | — | 4,500 | ||||||
Total due to related parties, net | $ | 36,251 | $ | 36,695 | ||||
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2010 | 2009 | 2008 | ||||||||||
Reduction of management, member, and other services expenses | $ | 6,701 | $ | 5,222 | $ | 4,696 | ||||||
Reduction of general and administrative expenses | 24,065 | 19,245 | 9,947 | |||||||||
Total allocation of expenses | $ | 30,766 | $ | 24,467 | $ | 14,643 | ||||||
2010 | 2009 | |||||||
THE Club dues receivable | $ | 29,534 | $ | 26,076 | ||||
Mortgage interest receivable | 3,651 | 3,925 | ||||||
Rental receivables and other resort management-related receivables | 2,893 | 2,686 | ||||||
THE Club conversion receivable | 1,409 | 2,101 | ||||||
Owner maintenance fee receivable | 2,097 | 1,647 |
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2010 | 2009 | |||||||
Mini-vacations and sampler program receivables | 1,060 | 976 | ||||||
Insurance claims receivable | 533 | 598 | ||||||
Tempus Note Receivable | 3,005 | — | ||||||
Proceeds from ILXA Inventory Loan in transit | 1,028 | — | ||||||
Other receivables | 2,970 | 3,884 | ||||||
Total other receivables, gross | 48,180 | 41,893 | ||||||
Provision for doubtful accounts | (12,200 | ) | (8,009 | ) | ||||
Total other receivables, net | $ | 35,980 | $ | 33,884 | ||||
2010 | 2009 | |||||||
Debt issuance costs, net | $ | 24,098 | $ | 8,227 | ||||
Prepaid and unamortized maintenance fees | 5,663 | 6,035 | ||||||
Other inventory/consumables | 3,019 | 2,543 | ||||||
Prepaid insurance | 2,061 | 2,461 | ||||||
Deferred commissions | 2,494 | 2,334 | ||||||
Assets to be disposed (not actively marketed) | 2,169 | 1,628 | ||||||
Deposits and advances | 2,457 | 1,462 | ||||||
Vacation Interest purchases in transit | 1,099 | 1,384 | ||||||
Prepaid rent | 255 | 254 | ||||||
Prepaid sales and marketing costs | 239 | 232 | ||||||
Other | 2,694 | 2,268 | ||||||
Total prepaid expenses and other assets, net | $ | 46,248 | $ | 28,828 | ||||
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2010 | 2009 | |||||||
Completed unsold Vacation Interests, net | $ | 157,491 | $ | 170,443 | ||||
Undeveloped land | 32,159 | 31,970 | ||||||
Vacation Interest construction in progress | 914 | 812 | ||||||
Unsold Vacation Interests, net | $ | 190,564 | $ | 203,225 | ||||
2010 | 2009 | |||||||
Land and improvements | $ | 4,021 | $ | 1,140 | ||||
Buildings and leasehold improvements | 18,468 | 16,800 | ||||||
Furniture and office equipment | 8,674 | 7,714 | ||||||
Computer software | 9,110 | 6,972 | ||||||
Computer equipment | 4,776 | 4,290 | ||||||
Construction in progress | 433 | 610 | ||||||
Property and equipment, gross | 45,482 | 37,526 | ||||||
Less accumulated depreciation | (16,385 | ) | (11,818 | ) | ||||
Property and equipment, net | $ | 29,097 | $ | 25,708 | ||||
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Gross Carrying | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Management contracts | $ | 48,700 | $ | (9,239 | ) | $ | 39,461 | |||||
Member relationships | 26,953 | (21,753 | ) | 5,200 | ||||||||
Distributor relationships and other | 1,227 | (175 | ) | 1,052 | ||||||||
$ | 76,880 | $ | (31,167 | ) | $ | 45,713 | ||||||
Gross Carrying | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Management contracts | $ | 42,745 | $ | (6,690 | ) | $ | 36,055 | |||||
Member relationships | 25,923 | (19,839 | ) | 6,084 | ||||||||
Distributor relationships and other | 626 | (132 | ) | 494 | ||||||||
$ | 69,294 | $ | (26,661 | ) | $ | 42,633 | ||||||
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December 31, | ||||||||||||||
December 31, 2010 | 2009 | |||||||||||||
Weighted | ||||||||||||||
Average | ||||||||||||||
Principal | Interest | Principal | ||||||||||||
Balance | Rate | Maturity | Balance | |||||||||||
Senior Secured Notes | $ | 425,000 | 12.0 | % | 8/15/18 | $ | — | |||||||
Unamortized original issue discount related to Senior Secured Notes | (10,278 | ) | — | |||||||||||
First and Second Lien Facilities | — | 393,954 | ||||||||||||
2008 Conduit Facility | 39,467 | 5.5 | % | 8/30/11 | 18,241 | |||||||||
Diamond Resorts Owners Trust Series 2009-1 | 121,843 | 9.5 | % | 3/20/26 | 169,698 | |||||||||
Unamortized original issue discount related to Diamond Resorts Owners Trust Series 2009-1 | (899 | ) | (954 | ) | ||||||||||
2004 Securitization Notes | — | 21,721 | ||||||||||||
Quorum Facility | 12,942 | 8.0 | % | 4/30/12 | — | |||||||||
Polo Towers Lines of Credit | 2,060 | 4.8 | % | 12/31/12 | 9,591 | |||||||||
Polo Towers Securitization Notes Payable | 1,138 | 7.4 | % | 1/20/13 | 4,616 | |||||||||
ILXA Receivables Loan | 10,292 | 10.0 | % | 8/31/15 | — | |||||||||
ILXA Inventory Loan | 18,541 | 7.5 | % | 8/31/15 | — | |||||||||
Tempus Acquisition Loan | 3,300 | 10.0 | % | Less than one year | — | |||||||||
Notes payable-insurance policies | 1,366 | 3.7 | % | Various | 1,232 | |||||||||
Notes payable-other | 66 | 3.4 | % | Various | 560 | |||||||||
Total borrowings | $ | 624,838 | $ | 618,659 | ||||||||||
F-33
Table of Contents
2011 | $ | 110,349 | ||
2012 | 47,670 | |||
2013 | 25,389 | |||
2014 | 19,126 | |||
2015 | 8,481 | |||
2016 and thereafter | 425,000 | |||
Total contractual obligations | 636,015 | |||
Unamortized original issue discount, net | (11,177 | ) | ||
Total borrowings at December 31, 2010 | $ | 624,838 | ||
F-34
Table of Contents
2010 | 2009 | |||||||
Accrued interest | $ | 20,365 | $ | 3,699 | ||||
Accrued payroll and related | 14,953 | 13,599 | ||||||
Accrued marketing expenses | 5,405 | 6,080 | ||||||
Accrued commissions | 4,787 | 4,029 | ||||||
Accrued other taxes | 3,299 | 5,763 | ||||||
Accrued liability related to business combinations | 3,744 | — | ||||||
Accrued exchange company fees | 1,206 | 1,523 | ||||||
Accrued contingent litigation liabilities | 2,642 | 2,889 | ||||||
Accrued operating lease liabilities | 2,046 | 1,917 | ||||||
Accrued insurance | 2,766 | 1,475 | ||||||
Accrued professional fees | 2,648 | 2,708 | ||||||
Accrued call center cost | 1,114 | 1,196 | ||||||
Accrued construction costs | 247 | 1,050 | ||||||
Other | 2,311 | 2,986 | ||||||
Total accrued liabilities | $ | 67,533 | $ | 48,914 | ||||
F-35
Table of Contents
F-36
Table of Contents
2010 | 2009 | |||||||
THE Club deferred revenue | $ | 36,535 | $ | 33,554 | ||||
Deferred maintenance and reserve fee revenue | 13,491 | 11,759 | ||||||
Deferred mini-vacations and sampler programs revenue | 11,465 | 9,029 | ||||||
Deferred revenue from an exchange company | 3,246 | 3,742 | ||||||
Other | 2,969 | 1,377 | ||||||
Total deferred revenues | $ | 67,706 | $ | 59,461 | ||||
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Federal | $ | 268 | $ | (1,307 | ) | $ | 891 | |||||
State | 210 | 89 | 249 | |||||||||
Foreign | (1,752 | ) | 419 | 973 | ||||||||
Total current (benefit) provision for income taxes | (1,274 | ) | (799 | ) | 2,113 | |||||||
Deferred: | ||||||||||||
Federal | 5,016 | (7,918 | ) | (34,972 | ) | |||||||
State | 674 | (2,552 | ) | (2,696 | ) | |||||||
Foreign | (9,644 | ) | (4,387 | ) | (11,864 | ) | ||||||
(3,954 | ) | (14,857 | ) | (49,532 | ) | |||||||
Change in valuation allowance | 3,954 | 14,857 | 49,228 | |||||||||
Total deferred benefit for income taxes | — | — | (304 | ) | ||||||||
(Benefit) provision for income taxes | $ | (1,274 | ) | $ | (799 | ) | $ | 1,809 | ||||
F-37
Table of Contents
2010 | 2009 | 2008 | ||||||||||
Income tax benefit at U.S. federal statutory rate of 35% | $ | (1,333 | ) | $ | (7,032 | ) | $ | (30,507 | ) | |||
State tax provision (benefit), net of federal tax effect | 574 | (647 | ) | (1,446 | ) | |||||||
Income of pass-through entities not taxed at corporate level | (138 | ) | (1,818 | ) | 6,124 | |||||||
Adjustment to NOL carry forwards as a result of IRS Examination | — | — | (11,886 | ) | ||||||||
Tax impact of non-U.S. disregarded entities | (1,055 | ) | (1,216 | ) | (1,867 | ) | ||||||
Differences between U.S. and foreign jurisdictions | (887 | ) | 249 | 719 | ||||||||
Foreign currency and rate change adjustment | (8,792 | ) | 7 | (7,236 | ) | |||||||
Meals and entertainment | 159 | — | — | |||||||||
Alternative minimum tax | 1,251 | — | — | |||||||||
Change in deferred tax asset | 5,016 | — | — | |||||||||
Other | (23 | ) | (5,199 | ) | (1,320 | ) | ||||||
Change in valuation allowance | 3,954 | 14,857 | 49,228 | |||||||||
(Benefit) provision for income taxes | $ | (1,274 | ) | $ | (799 | ) | $ | 1,809 | ||||
2010 | 2009 | |||||||
Allowance for losses | $ | 34,481 | $ | 28,747 | ||||
Unsold Vacation Interests adjustments | 19,439 | 17,580 | ||||||
Net operating loss carryover | 115,171 | 123,631 | ||||||
Accruals, expenses and prepaid assets | 14,335 | 15,268 | ||||||
Other | 21,957 | 19,662 | ||||||
Total gross deferred tax assets | 205,383 | 204,888 | ||||||
Valuation allowance | (108,990 | ) | (105,036 | ) | ||||
Total net deferred tax assets | 96,393 | 99,852 | ||||||
Installment sales | 91,971 | 95,351 | ||||||
Other | 4,422 | 4,890 | ||||||
Total deferred tax liabilities | 96,393 | 100,241 | ||||||
Net deferred tax liabilities | $ | — | $ | 389 | ||||
Valuation | ||||
Allowance | ||||
Balance at January 1, 2008 | $ | 40,951 | ||
Additions — Increases | 58,363 | |||
Deductions — Recoveries | (9,135 | ) | ||
Balance at December 31, 2008 | 90,179 | |||
Additions — Increases | 38,012 | |||
Deductions — Recoveries | (23,155 | ) | ||
Balance at December 31, 2009 | 105,036 | |||
Additions — Increases | 13,487 | |||
Deductions — Recoveries | (9,533 | ) | ||
Balance at December 31, 2010 | $ | 108,990 | ||
F-38
Table of Contents
Tax Jurisdiction | Tax Years No Longer Subject to Examination | |
United States | 2006 and prior | |
United Kingdom | 2002 and prior | |
Spain | Generally 2005 and prior* |
F-39
Table of Contents
* | although several Spanish entities are subject to examination for 2001-2005 |
2011 | $ | 7,480 | ||
2012 | 5,480 | |||
2013 | 4,971 | |||
2014 | 4,638 | |||
2015 | 4,512 | |||
2016 and thereafter | 11,713 | |||
Total minimum lease payments | $ | 38,794 | ||
F-40
Table of Contents
F-41
Table of Contents
• | Level 1: Quoted prices for identical instruments in active markets. | ||
• | Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. | ||
• | Level 3: Unobservable inputs used when little or no market data is available. |
F-42
Table of Contents
Derivative | Derivative | |||||||
Assets | Liabilities | |||||||
Balance at December 31, 2007 | $ | 36 | $ | 9,177 | ||||
Total loss included in interest expense | (25 | ) | 4,007 | |||||
Balance at December 31, 2008 | 11 | 13,184 | ||||||
Total (loss) gain included in interest expense | (11 | ) | (3,896 | ) | ||||
Total cash paid | — | (8,824 | ) | |||||
Balance at December 31, 2009 | — | 464 | ||||||
Cash paid for 2010 Cap | 71 | — | ||||||
Total (loss) gain included in interest expense | (71 | ) | (385 | ) | ||||
Balance at December 31, 2010 | $ | — | $ | 79 | ||||
F-43
Table of Contents
F-44
Table of Contents
Consideration: | ||||
Cash | $ | 30,722 | ||
Fair value of total consideration transferred | $ | 30,722 | ||
F-45
Table of Contents
Recognized amounts of identifiable assets and liabilities assumed as of August 31, 2010: | ||||
Cash in escrow and restricted cash | $ | 54 | ||
Mortgages and contracts receivable | 9,802 | |||
Other receivables | 184 | |||
Prepaid expenses and other assets | 181 | |||
Unsold Vacation Interests | 10,100 | |||
Property and equipment | 5,705 | |||
Intangible assets | 8,850 | |||
Total assets | 34,876 | |||
Current liabilities | 4,154 | |||
Total identifiable net assets | $ | 30,722 | ||
Weighted | Estimated Fair | |||||||
Average | Market Value | |||||||
Useful Life in | at August 31, | |||||||
Years | 2010 | |||||||
Member relationships | 10 | $ | 1,100 | |||||
Management contracts | 5 | 7,120 | ||||||
Trade name | 5 | 600 | ||||||
Domain name | 5 | 30 | ||||||
Total acquired intangible assets | $ | 8,850 | ||||||
F-46
Table of Contents
For the year ended December 31, 2010
(In thousands)
Hospitality and | Vacation | |||||||||||||||
Management | Interest Sales | Corporate and | ||||||||||||||
Services | and Financing | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | — | $ | 214,764 | $ | — | $ | 214,764 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (12,655 | ) | — | (12,655 | ) | ||||||||||
Vacation Interest, net | — | 202,109 | — | 202,109 | ||||||||||||
Management, member and other services | 91,156 | 11,495 | — | 102,651 | ||||||||||||
Consolidated resort operations | 26,547 | — | — | 26,547 | ||||||||||||
Interest | — | 39,150 | 177 | 39,327 | ||||||||||||
Gain on mortgage repurchase | — | 191 | — | 191 | ||||||||||||
Total revenues | 117,703 | 252,945 | 177 | 370,825 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | — | 39,730 | — | 39,730 | ||||||||||||
Advertising, sales and marketing | — | 114,029 | — | 114,029 | ||||||||||||
Vacation Interest carrying cost, net | — | 29,821 | — | 29,821 | ||||||||||||
Management, member and other services | 21,916 | 1,730 | — | 23,646 | ||||||||||||
Consolidated resort operations | 23,972 | — | — | 23,972 | ||||||||||||
Loan portfolio | 1,025 | 9,541 | — | 10,566 | ||||||||||||
General and administrative | — | — | 67,905 | 67,905 | ||||||||||||
Gain on disposal of assets | — | — | (1,923 | ) | (1,923 | ) | ||||||||||
Depreciation and amortization | — | — | 11,939 | 11,939 | ||||||||||||
Interest | — | 18,203 | 48,959 | 67,162 | ||||||||||||
Loss on extinguishment of debt | — | — | 1,081 | 1,081 | ||||||||||||
Impairments and other write-offs | — | — | 3,330 | 3,330 | ||||||||||||
Total costs and expenses | 46,913 | 213,054 | 131,291 | 391,258 | ||||||||||||
Income (loss) before benefit for income taxes | 70,790 | 39,891 | (131,114 | ) | (20,433 | ) | ||||||||||
Benefit for income taxes | — | — | (1,274 | ) | (1,274 | ) | ||||||||||
Net income (loss) | $ | 70,790 | $ | 39,891 | $ | (129,840 | ) | $ | (19,159 | ) | ||||||
F-47
Table of Contents
For the year ended December 31, 2009
(In thousands)
Hospitality and | Vacation | |||||||||||||||
Management | Interest Sales | Corporate and | ||||||||||||||
Services | and Financing | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | — | $ | 248,643 | $ | — | $ | 248,643 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (14,153 | ) | — | (14,153 | ) | ||||||||||
Vacation Interest, net | — | 234,490 | — | 234,490 | ||||||||||||
Management, member and other services | 93,431 | 14,772 | — | 108,203 | ||||||||||||
Consolidated resort operations | 23,814 | — | — | 23,814 | ||||||||||||
Interest | — | 43,200 | 972 | 44,172 | ||||||||||||
Gain on mortgage repurchase | — | 282 | — | 282 | ||||||||||||
Total revenues | 117,245 | 292,744 | 972 | 410,961 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | — | 55,135 | — | 55,135 | ||||||||||||
Advertising, sales and marketing | — | 116,098 | — | 116,098 | ||||||||||||
Vacation Interest carrying cost, net | — | 32,992 | — | 32,992 | ||||||||||||
Management, member and other services | 26,449 | 4,714 | — | 31,163 | ||||||||||||
Consolidated resort operations | 22,456 | — | — | 22,456 | ||||||||||||
Loan portfolio | 954 | 8,881 | — | 9,835 | ||||||||||||
General and administrative | — | — | 71,306 | 71,306 | ||||||||||||
Gain on disposal of assets | — | — | (137 | ) | (137 | ) | ||||||||||
Depreciation and amortization | — | — | 13,366 | 13,366 | ||||||||||||
Interest, net of capitalized interest | — | 24,396 | 44,119 | 68,515 | ||||||||||||
Loss on extinguishment of debt | — | — | 10,903 | 10,903 | ||||||||||||
Impairments and other write-offs | — | — | 1,125 | 1,125 | ||||||||||||
Total costs and expenses | 49,859 | 242,216 | 140,682 | 432,757 | ||||||||||||
Income (loss) before benefit for income taxes | 67,386 | 50,528 | (139,710 | ) | (21,796 | ) | ||||||||||
Benefit for income taxes | — | — | (799 | ) | (799 | ) | ||||||||||
Net income (loss) | $ | 67,386 | $ | 50,528 | $ | (138,911 | ) | $ | (20,997 | ) | ||||||
F-48
Table of Contents
For the year ended December 31, 2008
(In thousands)
Hospitality and | Vacation Interest | |||||||||||||||
Management | Sales and | Corporate and | ||||||||||||||
Services | Financing | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | — | $ | 285,442 | $ | — | $ | 285,442 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (51,166 | ) | — | (51,166 | ) | ||||||||||
Vacation Interest, net | — | 234,276 | — | 234,276 | ||||||||||||
Management, member and other services | 76,570 | 16,671 | — | 93,241 | ||||||||||||
Consolidated resort operations | 21,006 | — | — | 21,006 | ||||||||||||
Interest | 1,812 | 49,979 | 1,835 | 53,626 | ||||||||||||
Gain on mortgage repurchase | — | 265 | — | 265 | ||||||||||||
Total revenues | 99,388 | 301,191 | 1,835 | 402,414 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | — | 67,551 | — | 67,551 | ||||||||||||
Advertising, sales and marketing | — | 148,565 | — | 148,565 | ||||||||||||
Vacation Interest carrying cost, net | — | 22,831 | — | 22,831 | ||||||||||||
Management, member and other services | 28,747 | 6,599 | — | 35,346 | ||||||||||||
Consolidated resort operations | 23,685 | — | — | 23,685 | ||||||||||||
Loan portfolio | 661 | 8,092 | — | 8,753 | ||||||||||||
General and administrative | — | — | 78,618 | 78,618 | ||||||||||||
Gain on disposal of assets | — | — | (1,007 | ) | (1,007 | ) | ||||||||||
Depreciation and amortization | — | — | 16,687 | 16,687 | ||||||||||||
Interest, net of capitalized interest | — | 20,817 | 50,563 | 71,380 | ||||||||||||
Impairments and other write-offs | — | — | 17,168 | 17,168 | ||||||||||||
Total costs and expenses | 53,093 | 274,455 | 162,029 | 489,577 | ||||||||||||
Income (loss) before provision for income taxes | 46,295 | 26,736 | (160,194 | ) | (87,163 | ) | ||||||||||
Provision for income taxes | — | — | 1,809 | 1,809 | ||||||||||||
Net income (loss) | $ | 46,295 | $ | 26,736 | $ | (162,003 | ) | $ | (88,972 | ) | ||||||
F-49
Table of Contents
December 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 27,163 | $ | 166 | $ | — | $ | 27,329 | ||||||||
Cash in escrow and restricted cash | 29,868 | 180 | — | 30,048 | ||||||||||||
Mortgages and contracts receivable, net of allowance of $51,551, $3,600 and $0, respectively | 236,846 | 8,454 | (13 | ) | 245,287 | |||||||||||
Due from related parties, net | 20,789 | 223 | (54 | ) | 20,958 | |||||||||||
Other receivables, net | 31,650 | 4,330 | — | 35,980 | ||||||||||||
Income tax receivable | 10 | — | — | 10 | ||||||||||||
Prepaid expenses and other assets, net | 45,260 | 1,038 | (50 | ) | 46,248 | |||||||||||
Investment in subsidiaries | — | 1,624 | (1,624 | ) | — | |||||||||||
Unsold Vacation Interests, net | 180,464 | 10,100 | — | 190,564 | ||||||||||||
Property and equipment, net | 23,468 | 5,629 | — | 29,097 | ||||||||||||
Assets held for sale | 9,517 | — | — | 9,517 | ||||||||||||
Intangible assets, net | 37,411 | 8,302 | — | 45,713 | ||||||||||||
Total assets | $ | 642,446 | $ | 40,046 | $ | (1,741 | ) | $ | 680,751 | |||||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||||||||||
Accounts payable | $ | 7,409 | $ | 246 | $ | — | $ | 7,655 | ||||||||
Due to related parties, net | 29,197 | 13,724 | (6,670 | ) | 36,251 | |||||||||||
Accrued liabilities | 62,367 | 6,853 | (1,687 | ) | 67,533 | |||||||||||
Income taxes payable | 3,936 | — | — | 3,936 | ||||||||||||
Deferred revenues | 67,706 | — | — | 67,706 | ||||||||||||
Senior secured notes, net of original issue discount of $10,278, $0 and $0, respectively | 414,722 | — | — | 414,722 | ||||||||||||
Securitization notes and conduit facility, net | 176,551 | 10,292 | — | 186,843 | ||||||||||||
Derivative liabilities | 79 | — | — | 79 | ||||||||||||
Notes payable | 1,432 | 21,841 | — | 23,273 | ||||||||||||
Total liabilities | 763,399 | 52,956 | (8,357 | ) | 807,998 | |||||||||||
Redeemable preferred units | 84,502 | — | — | 84,502 | ||||||||||||
Member capital | 7,335 | 9,675 | (9,675 | ) | 7,335 | |||||||||||
Accumulated deficit | (195,044 | ) | (22,197 | ) | 15,903 | (201,338 | ) | |||||||||
Accumulated other comprehensive (loss) income | (17,746 | ) | (388 | ) | 388 | (17,746 | ) | |||||||||
Total member capital (deficit) | (205,455 | ) | (12,910 | ) | 6,616 | (211,749 | ) | |||||||||
Total liabilities and member capital (deficit) | $ | 642,446 | $ | 40,046 | $ | (1,741 | ) | $ | 680,751 | |||||||
F-50
Table of Contents
For the Year Ended December 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | 214,764 | $ | — | $ | — | $ | 214,764 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | (12,655 | ) | — | — | (12,655 | ) | ||||||||||
Vacation Interest, net | 202,109 | — | — | 202,109 | ||||||||||||
Management, member and other services | 102,630 | 1,173 | (1,152 | ) | 102,651 | |||||||||||
Consolidated resort operations | 26,163 | 384 | — | 26,547 | ||||||||||||
Interest | 38,718 | 609 | — | 39,327 | ||||||||||||
Gain on mortgage repurchase | 191 | — | — | 191 | ||||||||||||
Total revenues | 369,811 | 2,166 | (1,152 | ) | 370,825 | |||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | 39,730 | — | — | 39,730 | ||||||||||||
Advertising, sales and marketing | 113,520 | 509 | — | 114,029 | ||||||||||||
Vacation Interest carrying cost, net | 30,226 | (405 | ) | — | 29,821 | |||||||||||
Management, member and other services | 23,339 | 1,459 | (1,152 | ) | 23,646 | |||||||||||
Consolidated resort operations | 23,547 | 425 | — | 23,972 | ||||||||||||
Loan portfolio | 9,918 | 648 | — | 10,566 | ||||||||||||
General and administrative | 62,216 | 5,689 | — | 67,905 | ||||||||||||
Gain on disposal of assets | (1,923 | ) | — | — | (1,923 | ) | ||||||||||
Depreciation and amortization | 11,249 | 690 | — | 11,939 | ||||||||||||
Interest | 65,394 | 1,768 | — | 67,162 | ||||||||||||
Loss on extinguishment of debt | 1,081 | — | — | 1,081 | ||||||||||||
Impairments and other write-offs | 3,330 | — | — | 3,330 | ||||||||||||
Total costs and expenses | 381,627 | 10,783 | (1,152 | ) | 391,258 | |||||||||||
Loss before benefit for income taxes | (11,816 | ) | (8,617 | ) | — | (20,433 | ) | |||||||||
Benefit for income taxes | (1,274 | ) | — | — | (1,274 | ) | ||||||||||
Net loss | $ | (10,542 | ) | $ | (8,617 | ) | $ | — | $ | (19,159 | ) | |||||
F-51
Table of Contents
Year Ended December 31, 2010
(In thousands)
Diamond | ||||||||||||||||
Resorts Parent, | ||||||||||||||||
LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (10,542 | ) | $ | (8,617 | ) | $ | — | $ | (19,159 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 11,249 | 690 | — | 11,939 | ||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 12,655 | — | — | 12,655 | ||||||||||||
Amortization of capitalized financing costs and original issue discounts | 2,465 | 56 | — | 2,521 | ||||||||||||
Amortization of capitalized loan origination costs and portfolio discount | 3,007 | — | — | 3,007 | ||||||||||||
Loss on foreign currency exchange | 42 | — | — | 42 | ||||||||||||
Gain on disposal of assets | (1,923 | ) | — | — | (1,923 | ) | ||||||||||
Gain on mortgage repurchase | (191 | ) | — | — | (191 | ) | ||||||||||
Loss on extinguishment of debt | 1,081 | — | — | 1,081 | ||||||||||||
Deferred income taxes | (377 | ) | — | — | (377 | ) | ||||||||||
Unrealized gain on derivative instruments | (314 | ) | — | — | (314 | ) | ||||||||||
Impairments and other write-offs | 3,330 | — | — | 3,330 | ||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||||||
Mortgages and contracts receivable | 10,829 | 1,369 | (8 | ) | 12,190 | |||||||||||
Due from related parties, net | (5,737 | ) | (93 | ) | 54 | (5,776 | ) | |||||||||
Other receivables, net | 3,154 | (113 | ) | — | 3,041 | |||||||||||
Prepaid expenses and other assets, net | (190 | ) | 24 | 51 | (115 | ) | ||||||||||
Unsold Vacation Interests, net | 10,308 | — | — | 10,308 | ||||||||||||
Accounts payable | (3,470 | ) | 246 | — | (3,224 | ) | ||||||||||
Due to related parties, net | (3,893 | ) | 9,099 | 49 | 5,255 | |||||||||||
Accrued liabilities | 17,436 | 1,157 | (146 | ) | 18,447 | |||||||||||
Income taxes payable (receivable) | 4,632 | — | — | 4,632 | ||||||||||||
Deferred revenues | 8,632 | — | — | 8,632 | ||||||||||||
Net cash provided by operating activities | 62,183 | 3,818 | — | 66,001 | ||||||||||||
Investing activities: | ||||||||||||||||
Property and equipment capital expenditures | (5,487 | ) | (66 | ) | — | (5,553 | ) | |||||||||
Purchase of assets from ILX Resorts, Inc. | — | (30,722 | ) | — | (30,722 | ) | ||||||||||
Disbursement of Tempus Acquisition note receivable | — | (3,005 | ) | — | (3,005 | ) | ||||||||||
Proceeds from sale of assets | 1,881 | — | — | 1,881 | ||||||||||||
Net cash used in investing activities | $ | (3,606 | ) | $ | (33,793 | ) | $ | — | $ | (37,399 | ) | |||||
F-52
Table of Contents
Year Ended December 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Financing activities: | ||||||||||||||||
Changes in cash in escrow and restricted cash | $ | 10,652 | $ | (126 | ) | $ | — | $ | 10,526 | |||||||
Proceeds from issuance of Senior Secured Notes, net of original issue discount of $10,570, $0 and $0, respectively | 414,430 | — | — | 414,430 | ||||||||||||
Proceeds from issuance of Quorum Facility | 16,697 | — | — | 16,697 | ||||||||||||
Proceeds from issuance of Tempus Acquisition Loan | — | 3,300 | — | 3,300 | ||||||||||||
Proceeds from issuance of 2008 Conduit Facility | 25,533 | — | — | 25,533 | ||||||||||||
Proceeds from issuance of ILXA Receivables Loan | — | 11,870 | — | 11,870 | ||||||||||||
Proceeds from issuance of ILXA Inventory Loan | — | 17,513 | — | 17,513 | ||||||||||||
Payments on Quorum Facility | (3,755 | ) | — | — | (3,755 | ) | ||||||||||
Payments on Diamond Resorts Owners Trust 2009-1 | (47,855 | ) | — | — | (47,855 | ) | ||||||||||
Payments on 2008 Conduit Facility | (4,307 | ) | — | — | (4,307 | ) | ||||||||||
Payments on ILXA Receivables Loan | — | (1,578 | ) | — | (1,578 | ) | ||||||||||
Payments on First and Second Lien Facilities | (397,609 | ) | — | — | (397,609 | ) | ||||||||||
Payments on Polo Towers lines of credit and securitization notes | (11,009 | ) | — | — | (11,009 | ) | ||||||||||
Payments on 2004 Securitization Notes | (21,722 | ) | — | — | (21,722 | ) | ||||||||||
Payments on notes payable | (8,221 | ) | — | — | (8,221 | ) | ||||||||||
Payments of debt issuance costs | (18,287 | ) | (838 | ) | — | (19,125 | ) | |||||||||
Proceeds from Guggenheim equity investment | 75,000 | 75,000 | ||||||||||||||
Repurchase of equity previously held by another minority institutional investor | (75,000 | ) | — | — | (75,000 | ) | ||||||||||
Payments of costs related to issuance of common and preferred units | (2,888 | ) | — | — | (2,888 | ) | ||||||||||
Payments for derivative instrument | (71 | ) | — | — | (71 | ) | ||||||||||
Net cash (used in) provided by financing activities | (48,412 | ) | 30,141 | — | (18,271 | ) | ||||||||||
Net increase in cash and cash equivalents | 10,165 | 166 | — | 10,331 | ||||||||||||
Effect of changes in exchange rates on cash and cash equivalents | (188 | ) | — | — | (188 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 17,186 | — | — | 17,186 | ||||||||||||
Cash and cash equivalents, end of period | $ | 27,163 | $ | 166 | $ | — | $ | 27,329 | ||||||||
F-53
Table of Contents
Year Ended December 31, 2010
(In thousands)
Diamond | ||||||||||||||||
Resorts Parent, | ||||||||||||||||
LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 44,183 | $ | 450 | $ | — | $ | 44,633 | ||||||||
Cash tax refunds, net of cash paid for taxes | $ | (5,514 | ) | $ | — | $ | — | $ | (5,514 | ) | ||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Priority returns and redemption premiums on preferred units | $ | 17,654 | $ | — | $ | — | $ | 17,654 | ||||||||
Insurance premiums financed through issuance of note payable | $ | 7,897 | $ | — | $ | — | $ | 7,897 | ||||||||
Unsold Vacation Interests reclassified to assets held for sale | $ | 10,064 | $ | — | $ | — | $ | 10,064 | ||||||||
Property and equipment reclassified to assets to be disposed but not actively marketed (prepaid expenses and other assets) | $ | 588 | $ | — | $ | — | $ | 588 | ||||||||
Management contracts (intangible assets) reclassified to assets held for sale | $ | 587 | $ | — | $ | — | $ | 587 | ||||||||
Proceeds from issuance of ILXA Inventory Loan in transit | $ | — | $ | 1,028 | $ | — | $ | 1,028 | ||||||||
Purchase of assets from ILX Resorts, Inc.: | ||||||||||||||||
Fair value of assets acquired | $ | — | $ | 34,876 | — | $ | 34,876 | |||||||||
Cash paid | — | (30,722 | ) | — | (30,722 | ) | ||||||||||
Liabilities assumed | $ | — | $ | 4,154 | $ | — | $ | 4,154 |
F-54
Table of Contents
December 31, 2009
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 17,186 | $ | — | $ | — | $ | 17,186 | ||||||||
Cash in escrow and restricted cash | 40,544 | — | — | 40,544 | ||||||||||||
Mortgages and contracts receivable, net of allowance of $60,911, $0 and $0, respectively | 263,556 | 21 | (21 | ) | 263,556 | |||||||||||
Due from related parties, net | 15,378 | — | — | 15,378 | ||||||||||||
Other receivables, net | 33,884 | — | — | 33,884 | ||||||||||||
Income tax receivable | 1,176 | — | — | 1,176 | ||||||||||||
Prepaid expenses and other assets, net | 28,828 | — | — | 28,828 | ||||||||||||
Investment in subsidiaries | — | 2,022 | (2,022 | ) | — | |||||||||||
Unsold Vacation Interests, net | 203,225 | — | — | 203,225 | ||||||||||||
Property and equipment, net | 25,708 | — | — | 25,708 | ||||||||||||
Intangible assets, net | 42,633 | — | — | 42,633 | ||||||||||||
Total assets | $ | 672,118 | $ | 2,043 | $ | (2,043 | ) | $ | 672,118 | |||||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||||||||||
Accounts payable | $ | 10,956 | $ | — | $ | — | $ | 10,956 | ||||||||
Due to related parties, net | 36,695 | 4,625 | (4,625 | ) | 36,695 | |||||||||||
Accrued liabilities | 48,914 | 1,542 | (1,542 | ) | 48,914 | |||||||||||
Income taxes payable | 441 | — | — | 441 | ||||||||||||
Deferred income taxes | 389 | — | — | 389 | ||||||||||||
Deferred revenues | 59,461 | — | — | 59,461 | ||||||||||||
Borrowings under line of credit agreements | 393,954 | — | — | 393,954 | ||||||||||||
Securitization notes and conduit facility, net | 222,913 | — | — | 222,913 | ||||||||||||
Derivative liabilities | 464 | — | — | 464 | ||||||||||||
Notes payable | 1,792 | — | — | 1,792 | ||||||||||||
Total liabilities | 775,979 | 6,167 | (6,167 | ) | 775,979 | |||||||||||
Redeemable preferred units | 103,528 | — | — | 103,528 | ||||||||||||
Member capital | 7,335 | 9,675 | (9,675 | ) | 7,335 | |||||||||||
Accumulated deficit | (198,317 | ) | (13,281 | ) | 13,281 | (198,317 | ) | |||||||||
Accumulated other comprehensive loss | (16,407 | ) | (518 | ) | 518 | (16,407 | ) | |||||||||
Total member capital (deficit) | (207,389 | ) | (4,124 | ) | 4,124 | (207,389 | ) | |||||||||
Total liabilities and member capital (deficit) | $ | 672,118 | $ | 2,043 | $ | (2,043 | ) | $ | 672,118 | |||||||
F-55
Table of Contents
For the Year Ended December 31, 2009
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | 248,643 | $ | — | $ | — | $ | 248,643 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | (14,153 | ) | — | — | (14,153 | ) | ||||||||||
Vacation Interest, net | 234,490 | — | — | 234,490 | ||||||||||||
Management, member and other services | 108,203 | — | — | 108,203 | ||||||||||||
Consolidated resort operations | 23,814 | — | — | 23,814 | ||||||||||||
Interest | 44,167 | 5 | — | 44,172 | ||||||||||||
Gain on mortgage repurchase | 282 | — | — | 282 | ||||||||||||
Total revenues | 410,956 | 5 | — | 410,961 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | 55,135 | — | — | 55,135 | ||||||||||||
Advertising, sales and marketing | 116,098 | — | — | 116,098 | ||||||||||||
Vacation Interest carrying cost, net | 32,992 | — | — | 32,992 | ||||||||||||
Management, member and other services | 31,163 | — | — | 31,163 | ||||||||||||
Consolidated resort operations | 22,456 | — | — | 22,456 | ||||||||||||
Loan portfolio | 9,835 | — | — | 9,835 | ||||||||||||
General and administrative | 65,979 | 5,327 | — | 71,306 | ||||||||||||
Gain on disposal of assets | (137 | ) | — | — | (137 | ) | ||||||||||
Depreciation and amortization | 13,366 | — | — | 13,366 | ||||||||||||
Interest | 68,191 | 324 | — | 68,515 | ||||||||||||
Loss on extinguishment of debt | 10,903 | — | — | 10,903 | ||||||||||||
Impairments and other write-offs | 1,125 | — | — | 1,125 | ||||||||||||
Total costs and expenses | 427,106 | 5,651 | — | 432,757 | ||||||||||||
Loss before benefit for income taxes | (16,150 | ) | (5,646 | ) | — | (21,796 | ) | |||||||||
Benefit for income taxes | (799 | ) | — | — | (799 | ) | ||||||||||
Net loss | $ | (15,351 | ) | $ | (5,646 | ) | $ | — | $ | (20,997 | ) | |||||
F-56
Table of Contents
Year Ended December 31, 2009
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (15,351 | ) | $ | (5,646 | ) | $ | — | $ | (20,997 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 13,366 | — | — | 13,366 | ||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 14,153 | — | — | 14,153 | ||||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,989 | — | — | 1,989 | ||||||||||||
Amortization of capitalized loan origination costs and portfolio discount | 3,230 | — | — | 3,230 | ||||||||||||
Loss on foreign currency exchange | 182 | — | — | 182 | ||||||||||||
Gain on disposal of assets | (137 | ) | — | — | (137 | ) | ||||||||||
Gain on mortgage repurchase | (282 | ) | — | — | (282 | ) | ||||||||||
Loss on extinguishment of debt | 10,903 | — | — | 10,903 | ||||||||||||
Deferred income taxes | 7 | — | — | 7 | ||||||||||||
Unrealized gain on derivative instruments | (3,885 | ) | — | — | (3,885 | ) | ||||||||||
Impairments and other write-offs | 1,125 | — | — | 1,125 | ||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||||||
Mortgages and contracts receivable | 19,495 | 18 | (18 | ) | 19,495 | |||||||||||
Due from related parties, net | 8,968 | — | — | 8,968 | ||||||||||||
Other receivables, net | 1,657 | — | — | 1,657 | ||||||||||||
Prepaid expenses and other assets, net | 2,516 | — | — | 2,516 | ||||||||||||
Unsold Vacation Interests, net | 19,236 | — | — | 19,236 | ||||||||||||
Accounts payable | 2,518 | — | — | 2,518 | ||||||||||||
Due to related parties, net | 1,943 | 4,086 | 1,560 | 7,589 | ||||||||||||
Accrued liabilities | 5,306 | 1,542 | (1,542 | ) | 5,306 | |||||||||||
Income taxes payable (receivable) | (1,925 | ) | — | — | (1,925 | ) | ||||||||||
Deferred revenues | 2,779 | — | — | 2,779 | ||||||||||||
Net cash provided by operating activities | 87,793 | — | — | 87,793 | ||||||||||||
Investing activities: | ||||||||||||||||
Property and equipment capital expenditures | (4,672 | ) | — | — | (4,672 | ) | ||||||||||
Proceeds from sale of assets | 422 | — | — | 422 | ||||||||||||
Net cash used in investing activities | $ | (4,250 | ) | $ | — | $ | — | $ | (4,250 | ) | ||||||
F-57
Table of Contents
Year Ended December 31, 2009
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Financing activities: | ||||||||||||||||
Changes in cash in escrow and restricted cash | $ | 8,455 | $ | — | $ | — | $ | 8,455 | ||||||||
Proceeds from issuance of Diamond Resorts Owners Trust 2009-1 | 181,012 | — | — | 181,012 | ||||||||||||
Proceeds from issuance of 2008 Conduit Facility | 29,033 | — | — | 29,033 | ||||||||||||
Payments on Diamond Resorts Owners Trust 2009-1 | (12,303 | ) | — | — | (12,303 | ) | ||||||||||
Payments on 2008 Conduit Facility | (192,469 | ) | — | — | (192,469 | ) | ||||||||||
Payments on 2007 Conduit Facility | (51,153 | ) | — | — | (51,153 | ) | ||||||||||
Payments on First and Second Lien Facilities | (1,139 | ) | — | — | (1,139 | ) | ||||||||||
Payments on Polo Towers lines of credit and securitization notes | (9,955 | ) | — | — | (9,955 | ) | ||||||||||
Payment on 2004 Securitization Notes | (13,251 | ) | — | — | (13,251 | ) | ||||||||||
Payments on notes payable | (9,638 | ) | — | — | (9,638 | ) | ||||||||||
Payments of debt issuance costs | (9,428 | ) | — | — | (9,428 | ) | ||||||||||
Payments for derivative instrument | (8,824 | ) | — | — | (8,824 | ) | ||||||||||
Net cash used in financing activities | (89,660 | ) | — | — | (89,660 | ) | ||||||||||
Net decrease in cash and cash equivalents | (6,117 | ) | — | — | (6,117 | ) | ||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 596 | — | — | 596 | ||||||||||||
Cash and cash equivalents, beginning of period | 22,707 | — | — | 22,707 | ||||||||||||
Cash and cash equivalents, end of period | $ | 17,186 | $ | — | $ | — | $ | 17,186 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 63,297 | $ | — | $ | — | $ | 63,297 | ||||||||
Cash paid for taxes, net of tax refunds | $ | 1,239 | $ | — | $ | — | $ | 1,239 | ||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Priority returns and redemption premiums on preferred units | $ | 18,430 | $ | — | $ | — | $ | 18,430 | ||||||||
Insurance premiums financed through issuance of note payable | $ | 8,573 | $ | — | $ | — | $ | 8,573 | ||||||||
Assets held for sale reclassified to unsold Vacation Interests | $ | 4,220 | $ | — | $ | — | $ | 4,220 | ||||||||
F-58
Table of Contents
For the Year Ended December 31, 2008
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | 285,442 | $ | — | $ | — | $ | 285,442 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | (51,166 | ) | — | — | (51,166 | ) | ||||||||||
Vacation Interest, net | 234,276 | — | — | 234,276 | ||||||||||||
Management, member and other services | 93,241 | — | — | 93,241 | ||||||||||||
Consolidated resort operations | 21,006 | — | — | 21,006 | ||||||||||||
Interest | 53,618 | 8 | — | 53,626 | ||||||||||||
Gain on mortgage repurchase | 265 | — | — | 265 | ||||||||||||
Total revenues | 402,406 | 8 | — | 402,414 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | 67,551 | — | — | 67,551 | ||||||||||||
Advertising, sales and marketing | 148,565 | — | — | 148,565 | ||||||||||||
Vacation Interest carrying cost, net | 22,831 | — | — | 22,831 | ||||||||||||
Management, member and other services | 35,346 | — | — | 35,346 | ||||||||||||
Consolidated resort operations | 23,685 | — | — | 23,685 | ||||||||||||
Loan portfolio | 8,753 | — | — | 8,753 | ||||||||||||
General and administrative | 78,618 | — | — | 78,618 | ||||||||||||
Gain on disposal of assets | (1,007 | ) | — | — | (1,007 | ) | ||||||||||
Depreciation and amortization | 16,687 | — | — | 16,687 | ||||||||||||
Interest | 71,321 | 59 | — | 71,380 | ||||||||||||
Impairments and other write-offs | 17,168 | — | — | 17,168 | ||||||||||||
Total costs and expenses | 489,518 | 59 | — | 489,577 | ||||||||||||
Loss before provision for income taxes | (87,112 | ) | (51 | ) | — | (87,163 | ) | |||||||||
Provision for income taxes | 1,809 | — | — | 1,809 | ||||||||||||
Net loss | $ | (88,921 | ) | $ | (51 | ) | $ | — | $ | (88,972 | ) | |||||
F-59
Table of Contents
Year Ended December 31, 2008
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (88,921 | ) | $ | (51 | ) | $ | — | $ | (88,972 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 16,687 | — | — | 16,687 | ||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 51,166 | — | — | 51,166 | ||||||||||||
Amortization of capitalized financing costs and original issue discounts | 8,860 | — | — | 8,860 | ||||||||||||
Amortization of capitalized loan origination costs and portfolio discount | 1,853 | — | — | 1,853 | ||||||||||||
Gain on foreign currency exchange | (487 | ) | — | — | (487 | ) | ||||||||||
Gain on disposal of assets | (1,007 | ) | — | — | (1,007 | ) | ||||||||||
Gain on mortgage repurchase | (265 | ) | — | — | (265 | ) | ||||||||||
Deferred income taxes | (566 | ) | — | — | (566 | ) | ||||||||||
Unrealized loss on derivative instruments | 4,032 | — | — | 4,032 | ||||||||||||
Impairments and other write-offs | 17,168 | — | — | 17,168 | ||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||||||
Mortgages and contracts receivable | (29,234 | ) | 46 | (47 | ) | (29,235 | ) | |||||||||
Due from related parties, net | 22,625 | — | — | 22,625 | ||||||||||||
Other receivables, net | (1,078 | ) | 1 | — | (1,077 | ) | ||||||||||
Prepaid expenses and other assets, net | 1,871 | — | — | 1,871 | ||||||||||||
Unsold Vacation Interests, net | 20,731 | — | — | 20,731 | ||||||||||||
Accounts payable | (11,799 | ) | — | — | (11,799 | ) | ||||||||||
Due to related parties, net | 19,516 | 4 | 47 | 19,567 | ||||||||||||
Accrued liabilities | (6,944 | ) | — | — | (6,944 | ) | ||||||||||
Income taxes payable (receivable) | 2,085 | — | — | 2,085 | ||||||||||||
Deferred revenues | 18,793 | — | — | 18,793 | ||||||||||||
Net cash provided by operating activities | 45,086 | — | — | 45,086 | ||||||||||||
Investing activities: | ||||||||||||||||
Property and equipment capital expenditures | (13,861 | ) | — | — | (13,861 | ) | ||||||||||
Acquisition of Sunterra Corporation | (2,910 | ) | — | — | (2,910 | ) | ||||||||||
Intangible assets acquired by Diamond Europe | (1,358 | ) | — | — | (1,358 | ) | ||||||||||
Proceeds from sale of assets | 10,866 | — | — | 10,866 | ||||||||||||
Net cash used in investing activities | $ | (7,263 | ) | $ | — | $ | — | $ | (7,263 | ) | ||||||
F-60
Table of Contents
Year Ended December 31, 2008
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Financing activities: | ||||||||||||||||
Changes in cash in escrow and restricted cash | $ | (445 | ) | $ | — | $ | — | $ | (445 | ) | ||||||
Proceeds from issuance of 2008 Conduit Facility | 16,520 | — | — | 16,520 | ||||||||||||
Proceeds from issuance of 2007 Conduit Facility | 32,669 | — | — | 32,669 | ||||||||||||
Proceeds from issuance of First and Second Lien Facilities | 23,500 | — | — | 23,500 | ||||||||||||
Payments on 2008 Conduit Facility | (34,572 | ) | — | — | (34,572 | ) | ||||||||||
Payments on 2007 Conduit Facility | (8,296 | ) | — | — | (8,296 | ) | ||||||||||
Payments on First and Second Lien Facilities | (46,750 | ) | — | — | (46,750 | ) | ||||||||||
Payments on Polo Towers lines of credit and securitization notes | (12,530 | ) | — | — | (12,530 | ) | ||||||||||
Payment on 2004 Securitization Notes | (18,383 | ) | — | — | (18,383 | ) | ||||||||||
Payments on notes payable | (7,962 | ) | — | — | (7,962 | ) | ||||||||||
Payments of debt issuance costs | (3,775 | ) | — | — | (3,775 | ) | ||||||||||
Net cash used in financing activities | (60,024 | ) | (60,024 | ) | ||||||||||||
Net decrease in cash and cash equivalents | (22,201 | ) | — | — | (22,201 | ) | ||||||||||
Effect of changes in exchange rates on cash and cash equivalents | (4,295 | ) | — | — | (4,295 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 49,203 | — | — | 49,203 | ||||||||||||
Cash and cash equivalents, end of period | $ | 22,707 | $ | — | $ | — | $ | 22,707 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 58,735 | $ | — | $ | — | $ | 58,735 | ||||||||
Cash tax refunds, net of cash paid for taxes | $ | (482 | ) | $ | — | $ | — | $ | (482 | ) | ||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Priority returns and redemption premiums on preferred units | $ | 13,051 | $ | — | $ | — | $ | 13,051 | ||||||||
Insurance premiums financed through issuance of note payable | $ | 7,416 | $ | — | $ | — | $ | 7,416 | ||||||||
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For the Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Revenue | ||||||||||||
North America | $ | 325,710 | $ | 359,790 | $ | 348,129 | ||||||
Europe | 45,115 | 51,171 | 54,285 | |||||||||
Total Revenues | $ | 370,825 | $ | 410,961 | $ | 402,414 | ||||||
As of December 31, | ||||||||
2010 | 2009 | |||||||
Mortgages and contracts receivable, net | ||||||||
North America | $ | 244,541 | $ | 263,007 | ||||
Europe | 746 | 549 | ||||||
Total mortgages and contracts receivable, net | $ | 245,287 | $ | 263,556 | ||||
Unsold vacation interest, net | ||||||||
North America | $ | 174,642 | $ | 174,675 | ||||
Europe | 15,922 | 28,550 | ||||||
Total unsold vacation interest, net | $ | 190,564 | $ | 203,225 | ||||
Property and equipment, net | ||||||||
North America | $ | 24,248 | $ | 19,794 | ||||
Europe | 4,849 | 5,914 | ||||||
Total property and equipment, net | $ | 29,097 | $ | 25,708 | ||||
Intangible assets, net | ||||||||
North America | $ | 40,926 | $ | 35,664 | ||||
Europe | 4,787 | 6,969 | ||||||
Total intangible assets, net | $ | 45,713 | $ | 42,633 | ||||
Total long-term assets, net | ||||||||
North America | $ | 484,357 | $ | 493,140 | ||||
Europe | 26,304 | 41,982 | ||||||
Total long-term assets, net | $ | 510,661 | $ | 535,122 | ||||
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2010 | 2009 | 2008 | ||||||||||
European resorts held for sale (lower of cost or net realizable value) | $ | 2,319 | $ | — | $ | — | ||||||
Write-down of an inventory recovery receivable related to a terminated HOA management contract | 942 | — | — | |||||||||
Land held for sale adjacent to a managed timeshare resort property (lower of cost or net realizable value) | — | — | 6,984 | |||||||||
Unsold Vacation Interests at one resort | — | — | 3,122 | |||||||||
Abandoned construction project costs | — | 1,636 | — | |||||||||
Goodwill related to a call center acquisition in Europe | — | — | 873 | |||||||||
Slow moving consumables inventory | — | 138 | 774 | |||||||||
Uncollectible notes receivable related to sale of a resort in London, England (recovered) | — | (649 | ) | 596 | ||||||||
Abandoned merger and acquisition expenses | — | — | 4,699 | |||||||||
Other | 69 | — | 120 | |||||||||
Total impairments and other write-offs | $ | 3,330 | $ | 1,125 | $ | 17,168 | ||||||
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March 31, 2011 and December 31, 2010
(In thousands, except share data)
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | (Audited) | |||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 18,787 | $ | 27,329 | ||||
Cash in escrow and restricted cash | 36,200 | 30,048 | ||||||
Mortgages and contracts receivable, net of allowance of $52,992 and $55,151, respectively | 234,536 | 245,287 | ||||||
Due from related parties, net | 9,886 | 20,958 | ||||||
Other receivables, net | 22,308 | 35,980 | ||||||
Income tax receivable | 27 | 10 | ||||||
Prepaid expenses and other assets, net | 94,375 | 46,248 | ||||||
Unsold Vacation Interests, net | 199,724 | 190,564 | ||||||
Property and equipment, net | 35,181 | 29,097 | ||||||
Assets held for sale | 5,854 | 9,517 | ||||||
Intangible assets, net | 44,447 | 45,713 | ||||||
Total assets | $ | 701,325 | $ | 680,751 | ||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||
Accounts payable | $ | 10,721 | $ | 7,655 | ||||
Due to related parties, net | 64,510 | 36,251 | ||||||
Accrued liabilities | 61,251 | 67,533 | ||||||
Income taxes payable | 5,088 | 3,936 | ||||||
Deferred revenues | 77,639 | 67,706 | ||||||
Senior secured notes, net of unamortized original issue discount of $10,085 and $10,278, respectively | 414,915 | 414,722 | ||||||
Securitization notes and conduit facilities, net | 172,344 | 186,843 | ||||||
Derivative liabilities | — | 79 | ||||||
Notes payable | 26,625 | 23,273 | ||||||
Total liabilities | 833,093 | 807,998 | ||||||
Commitments and contingencies | ||||||||
Redeemable preferred units (1,133.33 and 1,000 shares authorized, issued and outstanding, respectively) | 98,992 | 84,502 | ||||||
Member capital (deficit): | ||||||||
Member capital (authorized 1,115.1 common units, no par value; issued 1,115.1 and 1,090 common units, respectively) | 7,190 | 7,335 | ||||||
Accumulated deficit | (222,450 | ) | (201,338 | ) | ||||
Accumulated other comprehensive loss | (15,500 | ) | (17,746 | ) | ||||
Total member capital (deficit) | (230,760 | ) | (211,749 | ) | ||||
Total liabilities and member capital (deficit) | $ | 701,325 | $ | 680,751 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
Three months | Three months | |||||||
ended | ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Revenues: | ||||||||
Vacation Interest sales | $ | 41,933 | $ | 48,082 | ||||
Provision for uncollectible Vacation Interest sales revenue | (2,990 | ) | (1,622 | ) | ||||
Vacation Interest, net | 38,943 | 46,460 | ||||||
Management, member and other services | 31,785 | 24,725 | ||||||
Consolidated resort operations | 6,946 | 6,501 | ||||||
Interest | 9,829 | 9,816 | ||||||
Gain on mortgage repurchase | 29 | 36 | ||||||
Total revenues | 87,532 | 87,538 | ||||||
Costs and Expenses: | ||||||||
Vacation Interest cost of sales | 67 | 10,625 | ||||||
Advertising, sales and marketing | 28,436 | 25,465 | ||||||
Vacation Interest carrying cost, net | 8,560 | 7,435 | ||||||
Management, member and other services | 6,260 | 6,522 | ||||||
Consolidated resort operations | 6,168 | 5,877 | ||||||
Loan portfolio | 2,618 | 2,603 | ||||||
General and administrative | 19,053 | 15,320 | ||||||
Gain on disposal of assets | (9 | ) | (2 | ) | ||||
Depreciation and amortization | 3,170 | 2,797 | ||||||
Interest | 18,372 | 15,679 | ||||||
Impairments and other write-offs | 83 | — | ||||||
Total costs and expenses | 92,778 | 92,321 | ||||||
Loss before provision for income taxes | (5,246 | ) | (4,783 | ) | ||||
Provision for income taxes | 1,473 | 705 | ||||||
Net loss | $ | (6,719 | ) | $ | (5,488 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
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AND COMPREHENSIVE INCOME (LOSS)
For the three months ended March 31, 2011 and 2010
(Unaudited)
($ in thousands)
Temporary Capital | Permanent Capital | |||||||||||||||||||||||||||||||
Member | ||||||||||||||||||||||||||||||||
Accumulated | ||||||||||||||||||||||||||||||||
Member Preferred | Common | Other | Total Member | |||||||||||||||||||||||||||||
Redeemable Units | Units | Member | Accumulated | Comprehensive | Capital | Comprehensive | ||||||||||||||||||||||||||
Shares | Amount | Shares | Capital | Deficit | Income (Loss) | (Deficit) | Loss | |||||||||||||||||||||||||
Balance at December 31, 2009 | 1,000 | $ | 103,528 | 1,000 | $ | 7,335 | $ | (198,317 | ) | $ | (16,407 | ) | $ | (207,389 | ) | |||||||||||||||||
Net loss for the three months ended March 31, 2010 | (5,488 | ) | (5,488 | ) | $ | (5,488 | ) | |||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||||||||
Currency translation adjustments, net of tax of $0 | (2,017 | ) | (2,017 | ) | (2,017 | ) | ||||||||||||||||||||||||||
Priority returns and redemption premiums | 4,340 | (4,340 | ) | (4,340 | ) | |||||||||||||||||||||||||||
Balance at March 31, 2010 | 1,000 | $ | 107,868 | 1,000 | $ | 7,335 | $ | (208,145 | ) | $ | (18,424 | ) | $ | (219,234 | ) | |||||||||||||||||
Comprehensive loss for the three months ended March 31, 2010 | $ | (7,505 | ) | |||||||||||||||||||||||||||||
Balance at December 31, 2010 | 1,000 | $ | 84,502 | 1,090 | $ | 7,335 | $ | (201,338 | ) | $ | (17,746 | ) | $ | (211,749 | ) | |||||||||||||||||
Equity investment | 133.33 | 10,151 | 25.1 | |||||||||||||||||||||||||||||
Repurchase of a portion of outstanding warrants | (97 | ) | (10,054 | ) | (10,151 | ) | ||||||||||||||||||||||||||
Costs related to issuance of common and preferred units | (48 | ) | (48 | ) | ||||||||||||||||||||||||||||
Net loss for the three months ended March 31, 2011 | (6,719 | ) | (6,719 | ) | $ | (6,719 | ) | |||||||||||||||||||||||||
Other comprehensive income: | ||||||||||||||||||||||||||||||||
Currency translation adjustments, net of tax of $0 | 2,246 | 2,246 | 2,246 | |||||||||||||||||||||||||||||
Priority returns and redemption premiums | 4,339 | (4,339 | ) | (4,339 | ) | |||||||||||||||||||||||||||
Balance at March 31, 2011 | 1,133.33 | $ | 98,992 | 1,115.1 | $ | 7,190 | $ | (222,450 | ) | $ | (15,500 | ) | $ | (230,760 | ) | |||||||||||||||||
Comprehensive loss for the three months ended March 31, 2011 | $ | (4,473 | ) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
Three Months | Three Months | |||||||
Ended March 31, | Ended March 31, | |||||||
2011 | 2010 | |||||||
Operating activities: | ||||||||
Net loss | $ | (6,719 | ) | $ | (5,488 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 3,170 | 2,797 | ||||||
Provision for uncollectible Vacation Interest sales revenue | 2,990 | 1,622 | ||||||
Amortization of capitalized financing costs and original issue discounts | 1,118 | 291 | ||||||
Amortization of capitalized loan origination costs and portfolio discount | 557 | 688 | ||||||
(Gain) loss on foreign currency exchange | (8 | ) | 17 | |||||
Gain on disposal of assets | (9 | ) | (2 | ) | ||||
Gain on mortgage repurchase | (29 | ) | (36 | ) | ||||
Deferred income taxes | — | (3 | ) | |||||
Unrealized gain on derivative instruments | (79 | ) | (161 | ) | ||||
Gain on insurance settlement | (3,535 | ) | — | |||||
Impairments and other write-offs | 83 | — | ||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||
Mortgages and contracts receivable | 5,538 | 6,060 | ||||||
Due from related parties, net | 13,985 | 8,791 | ||||||
Other receivables, net | 14,458 | 15,239 | ||||||
Prepaid expenses and other assets, net | (48,410 | ) | (34,974 | ) | ||||
Unsold Vacation Interests, net | (5,262 | ) | 4,120 | |||||
Accounts payable | 3,020 | (2,236 | ) | |||||
Due to related parties, net | 30,282 | 13,060 | ||||||
Accrued liabilities | (6,487 | ) | 4,189 | |||||
Income taxes payable | 1,002 | 4,769 | ||||||
Deferred revenues | 9,442 | 10,472 | ||||||
Net cash provided by operating activities | 15,107 | 29,215 | ||||||
Investing activities: | ||||||||
Property and equipment capital expenditures | (2,485 | ) | (942 | ) | ||||
Disbursement of Tempus Acquisition note receivable | (863 | ) | — | |||||
Proceeds from sale of assets | 1,450 | 2 | ||||||
Net cash used in investing activities | $ | (1,898 | ) | $ | (940 | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
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For the three months ended March 31, 2011 and 2010
(Unaudited)
(In thousands)
Three Months | Three Months | |||||||
Ended March 31, | Ended March 31, | |||||||
2011 | 2010 | |||||||
Financing activities: | ||||||||
Changes in cash in escrow and restricted cash | $ | (6,113 | ) | $ | (7,794 | ) | ||
Proceeds from issuance of Quorum Facility | 5,821 | — | ||||||
Proceeds from issuance of Tempus Acquisition Loan | 800 | — | ||||||
Proceeds from issuance of 2008 Conduit Facility | 1,488 | 2,264 | ||||||
Payments on Quorum Facility | (3,083 | ) | — | |||||
Payments on Diamond Resorts Owners Trust 2009-1 | (11,055 | ) | (14,929 | ) | ||||
Payments on 2008 Conduit Facility | (3,568 | ) | (503 | ) | ||||
Payments on ILXA Receivables and Inventory Loans | (920 | ) | — | |||||
Payments on First and Second Lien Facilities | — | (569 | ) | |||||
Payments on Polo Towers lines of credit and securitization notes | (3,198 | ) | (2,722 | ) | ||||
Payments on 2004 Securitization Notes | — | (2,360 | ) | |||||
Payments on notes payable | (1,916 | ) | (2,143 | ) | ||||
Payments of debt issuance costs | (299 | ) | (95 | ) | ||||
Proceeds from equity investment | 10,151 | — | ||||||
Repurchase of a portion of outstanding warrants | (10,151 | ) | — | |||||
Payments of costs related to issuance of common and preferred units | (48 | ) | — | |||||
Net cash used in financing activities | (22,091 | ) | (28,851 | ) | ||||
Net decrease in cash and cash equivalents | (8,882 | ) | (576 | ) | ||||
Effect of changes in exchange rates on cash and cash equivalents | 340 | (354 | ) | |||||
Cash and cash equivalents, beginning of period | 27,329 | 17,186 | ||||||
Cash and cash equivalents, end of period | $ | 18,787 | $ | 16,256 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Cash paid for interest | $ | 30,347 | $ | 17,151 | ||||
Cash paid for taxes, net of tax refunds | $ | 488 | $ | (4,087 | ) | |||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Priority returns and redemption premiums on preferred units | $ | 4,339 | $ | 4,340 | ||||
Insurance premiums financed through issuance of note payable | $ | 4,469 | $ | 4,794 | ||||
Assets held for sale reclassified to unsold Vacation Interests | $ | 3,086 | $ | — | ||||
The accompanying notes are an integral part of these consolidated financial statements.
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(Unaudited)
• | Hospitality and Management Services.The Company manages 68 branded resort properties, which are located in the continental United States, Hawaii, the Caribbean and Europe. The Company also manages five multi-resort trusts or similar arrangements (the “Collections”). Each Collection holds real estate in the Company’s resort properties underlying the Vacation Interests that the Company sells. As manager of the Company’s branded resorts and Collections, it provides billing services, account collections, accounting and treasury functions and information technology services. In addition, for branded resorts, the Company also provides an online reservation system and customer service contact center, operates the front desks and amenities and furnishes housekeeping, maintenance and human resources services. Management contracts typically have an initial term of three to five years with automatic renewals and are structured on a cost-plus basis, thereby providing the Company with a recurring and stable revenue stream. In addition, the Company earns recurring fees by operating THE Club, the points-based exchange and member services program that enables members to vacation at any of the 193 resorts in the Company’s network. These items are included in management, member and other services revenue and expense in the accompanying consolidated statements of operations. | ||
In addition, the Company serves as the homeowners’ association (“HOA”) for its two resorts in St. Maarten and earns maintenance fees and incurs operating expenses at these two resorts. At certain resorts, the Company also operates golf courses, food and beverage venues, retail shops, a campground and a marina and earns incidental revenue and incurs operating expense. Finally, the Company provides cable, telephone, and technology services to HOAs. These items are included in consolidated resort operations revenue and expense in the accompanying consolidated statements of operations. |
• | Marketing and Sales of Vacation Interests.The Company markets and sells Vacation Interests in its resort network. Sales prospects are generated by utilizing a variety of marketing programs. Currently, the Company sells Vacation Interests only in the form of points, which can be utilized for vacations for varying lengths of stay at any resort in its network. In the past, the Company also sold Vacation Interests in the |
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form of deeded intervals, which provide the right to vacation at a particular resort for a specified length of time. |
• | Consumer Financing of Vacation Interests. The Company provides loans to eligible customers who purchase Vacation Interests through sales centers and choose to finance their purchase. These loans are collateralized by the underlying Vacation Interests and bear interest at a fixed rate. The Company’s consumer finance servicing operations include underwriting, collection and servicing of its consumer loan portfolio. |
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Securitization and conduit collection and reserve cash | $ | 10,798 | $ | 14,040 | ||||
Collected on behalf of HOAs and other | 13,180 | 5,447 | ||||||
Escrow | 5,618 | 4,615 | ||||||
Rental trust | 4,337 | 3,717 | ||||||
Bonds and deposits | 2,267 | 2,229 | ||||||
Total cash in escrow and restricted cash | $ | 36,200 | $ | 30,048 | ||||
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgages and contracts receivable, acquired — April 27, 2007 Merger | $ | 64,574 | $ | 71,200 | ||||
Mortgages and contracts receivable, contributed | 9,741 | 11,125 | ||||||
Mortgages and contracts receivable, originated | 194,719 | 198,959 | ||||||
Mortgages and contracts receivable, purchased (unrestricted subsidiaries) | 10,372 | 12,043 | ||||||
Mortgages and contracts receivable, originated (unrestricted subsidiaries) | 245 | — | ||||||
Mortgages and contracts receivable, gross | 279,651 | 293,327 | ||||||
Allowance for Loan and Contract Losses | (48,476 | ) | (51,551 | ) | ||||
Allowance for Loan and Contract Losses (unrestricted subsidiaries) | (4,516 | ) | (3,600 | ) | ||||
Deferred profit on Vacation Interest transactions | (2,061 | ) | (2,349 | ) | ||||
Deferred loan and contract origination costs, net of accumulated amortization | 2,659 | 2,823 | ||||||
Inventory value of defaulted mortgages that were previously contributed and acquired | 7,992 | 7,439 | ||||||
Discount on mortgages and contracts receivable, net of accumulated amortization | (713 | ) | (802 | ) | ||||
Mortgages and contracts receivable, net | $ | 234,536 | $ | 245,287 | ||||
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Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Balance, beginning of period | $ | 55,151 | $ | 60,911 | ||||
Provision for uncollectible Vacation Interest sales revenue | 2,866 | 1,424 | ||||||
Provision for uncollectible Vacation Interest sales revenue — unrestricted subsidiaries | 73 | — | ||||||
Mortgages and contracts receivable charged off | (6,716 | ) | (6,112 | ) | ||||
Mortgages and contracts receivable charged off — unrestricted subsidiaries | (817 | ) | — | |||||
Recoveries | 761 | 694 | ||||||
Increase in allowance based on final ILX appraisal — unrestricted subsidiaries | 1,660 | — | ||||||
Effect of translation rate | 14 | (111 | ) | |||||
Balance, end of period | $ | 52,992 | $ | 56,806 | ||||
Diamond | Unrestricted | |||||||||||
Resorts | Subsidiaries | |||||||||||
Mortgages and | Mortgages and | |||||||||||
FICO Scores | Contracts | Contracts | Total | |||||||||
>799 | $ | 14,883 | $ | 333 | $ | 15,216 | ||||||
700 — 799 | 116,012 | 3,066 | 119,078 | |||||||||
600 — 699 | 90,595 | 3,892 | 94,487 | |||||||||
<600 | 41,487 | 2,633 | 44,120 | |||||||||
No FICO Scores | 6,057 | 693 | 6,750 | |||||||||
$ | 269,034 | $ | 10,617 | $ | 279,651 | |||||||
Diamond | Unrestricted | |||||||||||
Resorts | Subsidiaries | |||||||||||
Mortgages and | Mortgages and | |||||||||||
FICO Scores | Contracts | Contracts | Total | |||||||||
>799 | $ | 17,055 | $ | 90 | $ | 17,145 | ||||||
700 — 799 | 123,558 | 2,888 | 126,446 | |||||||||
600 — 699 | 96,087 | 3,977 | 100,064 | |||||||||
<600 | 38,373 | 2,128 | 40,501 | |||||||||
No FICO Scores | 6,211 | 2,960 | 9,171 | |||||||||
$ | 281,284 | $ | 12,043 | $ | 293,327 | |||||||
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Amounts due from HOAs | $ | 9,886 | $ | 19,941 | ||||
Amounts due from trusts | — | 1,017 | ||||||
Total due from related parties, net | $ | 9,886 | $ | 20,958 | ||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Amounts owed to HOAs | $ | 46,673 | $ | 30,377 | ||||
Amounts owed to trusts | 17,837 | 5,874 | ||||||
Total due to related parties, net | $ | 64,510 | $ | 36,251 | ||||
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Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Reduction of management, member and other services expenses | $ | 2,209 | $ | 1,676 | ||||
Reduction of general and administrative expenses | 6,507 | 6,021 | ||||||
Total allocation of expenses | $ | 8,716 | $ | 7,697 | ||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
THE Club dues receivable | $ | 15,160 | $ | 29,534 | ||||
Mortgage interest receivable | 3,403 | 3,651 | ||||||
Tempus Note Receivable | 3,868 | 3,005 | ||||||
Rental receivables and other resort management-related receivables | 3,403 | 2,893 | ||||||
Owner maintenance fee receivable | 4,386 | 2,097 | ||||||
THE Club conversion receivable | 1,147 | 1,409 | ||||||
Mini-vacations and sampler program receivables | 994 | 1,060 | ||||||
Proceeds from ILXA Inventory Loan in transit | — | 1,028 | ||||||
Insurance claims receivable | 190 | 533 | ||||||
Other receivables | 2,291 | 2,970 | ||||||
Total other receivables, gross | 34,842 | 48,180 | ||||||
Provision for doubtful accounts | (12,534 | ) | (12,200 | ) | ||||
Total other receivables, net | $ | 22,308 | $ | 35,980 | ||||
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Debt issuance costs, net | $ | 23,486 | $ | 24,098 | ||||
Prepaid and unamortized maintenance fees | 43,921 | 5,663 | ||||||
Other inventory/consumables | 3,061 | 3,019 | ||||||
Deferred commissions | 2,540 | 2,494 | ||||||
Deposits and advances | 2,156 | 2,457 | ||||||
Assets to be disposed (not actively marketed) | 2,256 | 2,169 | ||||||
Prepaid insurance | 4,037 | 2,061 | ||||||
Vacation Interest purchases in transit | 978 | 1,099 | ||||||
Prepaid rent | 498 | 255 | ||||||
Prepaid sales and marketing costs | 521 | 239 | ||||||
Unamortized exchange fees | 6,129 | — | ||||||
Other | 4,792 | 2,694 | ||||||
Total prepaid expenses and other assets, net | $ | 94,375 | $ | 46,248 | ||||
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Completed unsold Vacation Interests, net | $ | 166,175 | $ | 157,491 | ||||
Undeveloped land | 32,477 | 32,159 | ||||||
Vacation Interest construction in progress | 1,072 | 914 | ||||||
Unsold Vacation Interests, net | $ | 199,724 | $ | 190,564 | ||||
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March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Land and improvements | $ | 7,322 | $ | 4,021 | ||||
Buildings and leasehold improvements | 20,480 | 18,468 | ||||||
Furniture and office equipment | 10,001 | 8,674 | ||||||
Computer software | 9,898 | 9,110 | ||||||
Computer equipment | 4,959 | 4,776 | ||||||
Construction in progress | 688 | 433 | ||||||
Property and equipment, gross | 53,348 | 45,482 | ||||||
Less accumulated depreciation | (18,167 | ) | (16,385 | ) | ||||
Property and equipment, net | $ | 35,181 | $ | 29,097 | ||||
Gross Carrying | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Management contracts | $ | 48,969 | $ | (10,300 | ) | $ | 38,669 | |||||
Member relationships | 26,947 | (22,152 | ) | 4,795 | ||||||||
Distributor relationships and other | 1,250 | (267 | ) | 983 | ||||||||
$ | 77,166 | $ | (32,719 | ) | $ | 44,447 | ||||||
Gross Carrying | Accumulated | Net Book | ||||||||||
Cost | Amortization | Value | ||||||||||
Management contracts | $ | 48,700 | $ | (9,239 | ) | $ | 39,461 | |||||
Member relationships | 26,953 | (21,753 | ) | 5,200 | ||||||||
Distributor relationships and other | 1,227 | (175 | ) | 1,052 | ||||||||
$ | 76,880 | $ | (31,167 | ) | $ | 45,713 | ||||||
F-81
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F-82
Table of Contents
December 31, | ||||||||||||||||
March 31, 2011 | 2010 | |||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Principal | Interest | Principal | ||||||||||||||
Balance | Rate | Maturity | Balance | |||||||||||||
Senior Secured Notes | $ | 425,000 | 12.0 | % | 8/15/18 | $ | 425,000 | |||||||||
Original issue discount related to Senior Secured Notes | (10,085 | ) | (10,278 | ) | ||||||||||||
Diamond Resorts Owners Trust Series 2009-1 | 110,788 | 9.5 | % | 3/20/26 | 121,843 | |||||||||||
Original issue discount related to Diamond Resorts Owners Trust Series 2009-1 | (885 | ) | (899 | ) | ||||||||||||
2008 Conduit Facility | 37,387 | 5.5 | % | 8/30/11 | 39,467 | |||||||||||
ILXA Inventory Loan | 18,539 | 7.5 | % | 8/31/15 | 18,541 | |||||||||||
Quorum Facility | 15,680 | 8.0 | % | 4/30/12 | 12,942 | |||||||||||
ILXA Receivables Loan | 9,374 | 10.0 | % | 8/31/15 | 10,292 | |||||||||||
Tempus Acquisition Loan | 4,100 | 10.0 | % | Less than one year | 3,300 | |||||||||||
Polo Towers Lines of Credit | — | N/A | N/A | 2,060 | ||||||||||||
Notes payable-insurance policies | 3,938 | 3.3 | % | Various | 1,366 | |||||||||||
Polo Towers Securitization Notes Payable | — | N/A | N/A | 1,138 | ||||||||||||
Notes payable-other | 48 | 3.8 | % | Various | 66 | |||||||||||
Total borrowings | $ | 613,884 | $ | 624,838 | ||||||||||||
F-83
Table of Contents
F-84
Table of Contents
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Accrued interest | $ | 7,351 | $ | 20,365 | ||||
Accrued payroll and related | 13,004 | 14,953 | ||||||
Accrued marketing expenses | 5,737 | 5,405 | ||||||
Accrued commissions | 5,462 | 4,787 | ||||||
Accrued liability related to business combinations | 3,744 | 3,744 | ||||||
Accrued other taxes | 3,509 | 3,299 | ||||||
Accrued insurance | 2,750 | 2,766 | ||||||
Accrued professional fees | 2,767 | 2,648 | ||||||
Accrued contingent litigation liabilities | 2,713 | 2,642 | ||||||
Accrued operating lease liabilities | 2,063 | 2,046 | ||||||
Accrued exchange company fees | 8,451 | 1,206 | ||||||
Accrued call center cost | 1,024 | 1,114 | ||||||
Accrued construction costs | 242 | 247 | ||||||
Other | 2,434 | 2,311 | ||||||
Total accrued liabilities | $ | 61,251 | $ | 67,533 | ||||
F-85
Table of Contents
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
THE Club deferred revenue | $ | 27,176 | $ | 36,535 | ||||
Deferred maintenance and reserve fee revenue | 29,631 | 13,491 | ||||||
Deferred mini-vacations and sampler programs revenue | 11,980 | 11,465 | ||||||
Deferred revenue from an exchange company | 3,166 | 3,246 | ||||||
Other | 5,686 | 2,969 | ||||||
Total deferred revenues | $ | 77,639 | $ | 67,706 | ||||
F-86
Table of Contents
F-87
Table of Contents
• | Level 1: Quoted prices for identical instruments in active markets. |
• | Level 2: Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs or significant value drivers are observable. |
• | Level 3: Unobservable inputs used when little or no market data is available. |
Derivative | ||||
Liabilities | ||||
Balance at December 31, 2010 | $ | 79 | ||
Total gain included in interest expense | (79 | ) | ||
Balance at March 31, 2011 | $ | — | ||
F-88
Table of Contents
F-89
Table of Contents
F-90
Table of Contents
Based on | Adjustments | |||||||||||
Preliminary | Recorded | |||||||||||
Appraisal as | During the | |||||||||||
Previously | Quarter Ended | Based on Final | ||||||||||
Reported | March 31, 2011 | Appraisal | ||||||||||
Consideration: | ||||||||||||
Cash | $ | 30,722 | $ | — | $ | 30,722 | ||||||
Fair value of total consideration transferred | $ | 30,722 | $ | — | $ | 30,722 | ||||||
Recognized amounts of identifiable assets and liabilities assumed as of August 31, 2010: | ||||||||||||
Cash in escrow and restricted cash | $ | 54 | $ | — | $ | 54 | ||||||
Mortgages and contracts receivable | 9,802 | (1,660 | ) | 8,142 | ||||||||
Prepaid expenses and other assets | 365 | (31 | ) | 334 | ||||||||
Unsold Vacation Interests | 10,100 | — | 10,100 | |||||||||
Property and equipment | 5,705 | 1,679 | 7,384 | |||||||||
Intangible assets | 8,850 | (100 | ) | 8,750 | ||||||||
Total assets | 34,876 | (112 | ) | 34,764 | ||||||||
Current liabilities | 4,154 | (112 | ) | 4,042 | ||||||||
Total identifiable net assets | $ | 30,722 | $ | — | $ | 30,722 | ||||||
Based on | Adjustments | |||||||||||||||
Weighted | Preliminary | Recorded | ||||||||||||||
Average | Appraisal as | During the | Based on | |||||||||||||
Useful Life | Previously | Quarter Ended | Final | |||||||||||||
in Years | Reported | March 31, 2011 | Appraisal | |||||||||||||
Member relationships | 10 | $ | 1,100 | $ | (100 | ) | $ | 1,000 | ||||||||
Management contracts | 5 | 7,120 | — | 7,120 | ||||||||||||
Trade name | 5 | 600 | — | 600 | ||||||||||||
Domain name | 5 | 30 | — | 30 | ||||||||||||
Total acquired intangible assets | $ | 8,850 | $ | (100 | ) | $ | 8,750 | |||||||||
F-91
Table of Contents
F-92
Table of Contents
For the three months ended March 31, 2011
(Unaudited)
(In thousands)
Hospitality and | Vacation | |||||||||||||||
Management | Interest Sales | Corporate and | ||||||||||||||
Services | and Financing | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | — | $ | 41,933 | $ | — | $ | 41,933 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (2,990 | ) | — | (2,990 | ) | ||||||||||
Vacation Interest, net | — | 38,943 | — | 38,943 | ||||||||||||
Management, member and other services | 29,643 | 2,142 | — | 31,785 | ||||||||||||
Consolidated resort operations | 6,946 | — | 6,946 | |||||||||||||
Interest | — | 9,415 | 414 | 9,829 | ||||||||||||
Gain on mortgage repurchase | — | 29 | — | 29 | ||||||||||||
Total revenues | 36,589 | 50,529 | 414 | 87,532 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | — | 67 | — | 67 | ||||||||||||
Advertising, sales and marketing | — | 28,436 | — | 28,436 | ||||||||||||
Vacation Interest carrying cost, net | — | 8,560 | — | 8,560 | ||||||||||||
Management, member and other services | 6,005 | 255 | — | 6,260 | ||||||||||||
Consolidated resort operations | 6,168 | — | — | 6,168 | ||||||||||||
Loan portfolio | 179 | 2,439 | — | 2,618 | ||||||||||||
General and administrative | — | — | 19,053 | 19,053 | ||||||||||||
Gain on disposal of assets | — | — | (9 | ) | (9 | ) | ||||||||||
Depreciation and amortization | — | — | 3,170 | 3,170 | ||||||||||||
Interest | — | 4,055 | 14,317 | 18,372 | ||||||||||||
Impairments and other write-offs | — | — | 83 | 83 | ||||||||||||
Total costs and expenses | 12,352 | 43,812 | 36,614 | 92,778 | ||||||||||||
Income (loss) before provision for income taxes | 24,237 | 6,717 | (36,200 | ) | (5,246 | ) | ||||||||||
Provision for income taxes | — | — | 1,473 | 1,473 | ||||||||||||
Net income (loss) | $ | 24,237 | $ | 6,717 | $ | (37,673 | ) | $ | (6,719 | ) | ||||||
F-93
Table of Contents
For the three months ended March 31, 2010
(Unaudited)
(In thousands)
Hospitality and | Vacation | |||||||||||||||
Management | Interest Sales | Corporate and | ||||||||||||||
Services | and Financing | Other | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | — | $ | 48,082 | $ | — | $ | 48,082 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | — | (1,622 | ) | — | (1,622 | ) | ||||||||||
Vacation Interest, net | — | 46,460 | — | 46,460 | ||||||||||||
Management, member and other services | 21,991 | 2,734 | — | 24,725 | ||||||||||||
Consolidated resort operations | 6,501 | — | — | 6,501 | ||||||||||||
Interest | — | 9,794 | 22 | 9,816 | ||||||||||||
Gain on mortgage repurchase | — | 36 | — | 36 | ||||||||||||
Total revenues | 28,492 | 59,024 | 22 | 87,538 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | — | 10,625 | — | 10,625 | ||||||||||||
Advertising, sales and marketing | — | 25,465 | — | 25,465 | ||||||||||||
Vacation Interest carrying cost, net | — | 7,435 | — | 7,435 | ||||||||||||
Management, member and other services | 6,057 | 465 | — | 6,522 | ||||||||||||
Consolidated resort operations | 5,877 | — | — | 5,877 | ||||||||||||
Loan portfolio | 252 | 2,351 | — | 2,603 | ||||||||||||
General and administrative | — | — | 15,320 | 15,320 | ||||||||||||
Gain on disposal of assets | — | — | (2 | ) | (2 | ) | ||||||||||
Depreciation and amortization | — | — | 2,797 | 2,797 | ||||||||||||
Interest, net of capitalized interest | — | 4,927 | 10,752 | 15,679 | ||||||||||||
Total costs and expenses | 12,186 | 51,268 | 28,867 | 92,321 | ||||||||||||
Income (loss) before provision for income taxes | 16,306 | 7,756 | (28,845 | ) | (4,783 | ) | ||||||||||
Provision for income taxes | — | — | 705 | 705 | ||||||||||||
Net income (loss) | $ | 16,306 | $ | 7,756 | $ | (29,550 | ) | $ | (5,488 | ) | ||||||
F-94
Table of Contents
F-95
Table of Contents
March 31, 2011
(Unaudited)
(In thousands)
Diamond | ||||||||||||||||
Resorts | ||||||||||||||||
Parent, LLC | ||||||||||||||||
and Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 18,485 | $ | 302 | $ | — | $ | 18,787 | ||||||||
Cash in escrow and restricted cash | 35,938 | 262 | — | 36,200 | ||||||||||||
Mortgages and contracts receivable, net of allowance of $48,476, $4,516 and $0, respectively | 228,445 | 6,100 | (9 | ) | 234,536 | |||||||||||
Due from related parties, net | 10,447 | (477 | ) | (84 | ) | 9,886 | ||||||||||
Other receivables, net | 18,085 | 4,223 | — | 22,308 | ||||||||||||
Income tax receivable | 27 | 113 | (113 | ) | 27 | |||||||||||
Prepaid expenses and other assets, net | 88,422 | 6,003 | (50 | ) | 94,375 | |||||||||||
Investment in subsidiaries | — | 1,662 | (1,662 | ) | — | |||||||||||
Unsold Vacation Interests, net | 189,656 | 10,068 | — | 199,724 | ||||||||||||
Property and equipment, net | 28,055 | 7,126 | — | 35,181 | ||||||||||||
Assets held for sale | 5,854 | — | — | 5,854 | ||||||||||||
Intangible assets, net | 36,665 | 7,782 | — | 44,447 | ||||||||||||
Total assets | $ | 660,079 | $ | 43,164 | $ | (1,918 | ) | $ | 701,325 | |||||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||||||||||
Accounts payable | $ | 10,601 | $ | 120 | $ | — | $ | 10,721 | ||||||||
Due to related parties, net | 47,921 | 23,601 | (7,012 | ) | 64,510 | |||||||||||
Accrued liabilities | 56,539 | 6,432 | (1,720 | ) | 61,251 | |||||||||||
Income taxes payable | 5,201 | — | (113 | ) | 5,088 | |||||||||||
Deferred revenues | 77,226 | 413 | — | 77,639 | ||||||||||||
Senior secured notes, net of original issue discount of $10,085, $0 and $0, respectively | 414,915 | — | — | 414,915 | ||||||||||||
Securitization notes and conduit facility, net | 162,970 | 9,374 | — | 172,344 | ||||||||||||
Notes payable | 3,986 | 22,639 | — | 26,625 | ||||||||||||
Total liabilities | 779,359 | 62,579 | (8,845 | ) | 833,093 | |||||||||||
Redeemable preferred units | 98,992 | — | — | 98,992 | ||||||||||||
Member capital | 7,190 | 9,675 | (9,675 | ) | 7,190 | |||||||||||
Accumulated deficit | (209,962 | ) | (28,793 | ) | 16,305 | (222,450 | ) | |||||||||
Accumulated other comprehensive loss | (15,500 | ) | (297 | ) | 297 | (15,500 | ) | |||||||||
Total member capital (deficit) | (218,272 | ) | (19,415 | ) | 6,927 | (230,760 | ) | |||||||||
Total liabilities and member capital (deficit) | $ | 660,079 | $ | 43,164 | $ | (1,918 | ) | $ | 701,325 | |||||||
F-96
Table of Contents
December 31, 2010
(In thousands)
Diamond | ||||||||||||||||
Resorts Parent, | ||||||||||||||||
LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 27,163 | $ | 166 | $ | — | $ | 27,329 | ||||||||
Cash in escrow and restricted cash | 29,868 | 180 | — | 30,048 | ||||||||||||
Mortgages and contracts receivable, net of allowance of $51,551, $3,600 and $0, respectively | 236,846 | 8,454 | (13 | ) | 245,287 | |||||||||||
Due from related parties, net | 20,789 | 223 | (54 | ) | 20,958 | |||||||||||
Other receivables, net | 31,650 | 4,330 | — | 35,980 | ||||||||||||
Income tax receivable | 10 | — | — | 10 | ||||||||||||
Prepaid expenses and other assets, net | 45,260 | 1,038 | (50 | ) | 46,248 | |||||||||||
Investment in subsidiaries | — | 1,624 | (1,624 | ) | — | |||||||||||
Unsold Vacation Interests, net | 180,464 | 10,100 | — | 190,564 | ||||||||||||
Property and equipment, net | 23,468 | 5,629 | — | 29,097 | ||||||||||||
Assets held for sale | 9,517 | — | — | 9,517 | ||||||||||||
Intangible assets, net | 37,411 | 8,302 | — | 45,713 | ||||||||||||
Total assets | $ | 642,446 | $ | 40,046 | $ | (1,741 | ) | $ | 680,751 | |||||||
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | ||||||||||||||||
Accounts payable | $ | 7,409 | $ | 246 | $ | — | $ | 7,655 | ||||||||
Due to related parties, net | 29,197 | 13,724 | (6,670 | ) | 36,251 | |||||||||||
Accrued liabilities | 62,367 | 6,853 | (1,687 | ) | 67,533 | |||||||||||
Income taxes payable | 3,936 | — | — | 3,936 | ||||||||||||
Deferred revenues | 67,706 | — | — | 67,706 | ||||||||||||
Senior secured notes, net of original issue discount of $10,278, $0 and $0, respectively | 414,722 | — | — | 414,722 | ||||||||||||
Securitization notes and conduit facility, net | 176,551 | 10,292 | — | 186,843 | ||||||||||||
Derivative liabilities | 79 | — | — | 79 | ||||||||||||
Notes payable | 1,432 | 21,841 | — | 23,273 | ||||||||||||
Total liabilities | 763,399 | 52,956 | (8,357 | ) | 807,998 | |||||||||||
Redeemable preferred units | 84,502 | — | — | 84,502 | ||||||||||||
Member capital | 7,335 | 9,675 | (9,675 | ) | 7,335 | |||||||||||
Accumulated deficit | (195,044 | ) | (22,197 | ) | 15,903 | (201,338 | ) | |||||||||
Accumulated other comprehensive loss (income) | (17,746 | ) | (388 | ) | 388 | (17,746 | ) | |||||||||
Total member capital (deficit) | (205,455 | ) | (12,910 | ) | 6,616 | (211,749 | ) | |||||||||
Total liabilities and member capital (deficit) | $ | 642,446 | $ | 40,046 | $ | (1,741 | ) | $ | 680,751 | |||||||
F-97
Table of Contents
For the Three Months Ended March 31, 2011
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | 41,451 | $ | 481 | $ | 1 | $ | 41,933 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | (2,917 | ) | (73 | ) | — | (2,990 | ) | |||||||||
Vacation Interest, net | 38,534 | 408 | 1 | 38,943 | ||||||||||||
Management, member and other services | 32,031 | 765 | (1,011 | ) | 31,785 | |||||||||||
Consolidated resort operations | 6,784 | 162 | — | 6,946 | ||||||||||||
Interest | 9,376 | 453 | — | 9,829 | ||||||||||||
Gain on mortgage repurchase | 29 | — | — | 29 | ||||||||||||
Total revenues | 86,754 | 1,788 | (1,010 | ) | 87,532 | |||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | 36 | 31 | — | 67 | ||||||||||||
Advertising, sales and marketing | 28,087 | 379 | (30 | ) | 28,436 | |||||||||||
Vacation Interest carrying cost, net | 7,285 | 1,470 | (195 | ) | 8,560 | |||||||||||
Management, member and other services | 5,518 | 1,563 | (821 | ) | 6,260 | |||||||||||
Consolidated resort operations | 5,944 | 224 | — | 6,168 | ||||||||||||
Loan portfolio | 2,547 | 71 | — | 2,618 | ||||||||||||
General and administrative | 16,055 | 2,964 | 34 | 19,053 | ||||||||||||
(Gain) loss on disposal of assets | (137 | ) | 128 | — | (9 | ) | ||||||||||
Depreciation and amortization | 2,666 | 504 | — | 3,170 | ||||||||||||
Interest | 17,209 | 1,163 | — | 18,372 | ||||||||||||
Impairments and other write-offs | 83 | — | — | 83 | ||||||||||||
Total costs and expenses | 85,293 | 8,497 | (1,012 | ) | 92,778 | |||||||||||
Income (loss) before provision (benefit) for income taxes | 1,461 | (6,709 | ) | 2 | (5,246 | ) | ||||||||||
Provision (benefit) for income taxes | 1,586 | (113 | ) | — | 1,473 | |||||||||||
Net (loss) income | $ | (125 | ) | $ | (6,596 | ) | $ | 2 | $ | (6,719 | ) | |||||
F-98
Table of Contents
For the Three Months Ended March 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Revenues: | ||||||||||||||||
Vacation Interest sales | $ | 48,082 | $ | — | $ | — | $ | 48,082 | ||||||||
Provision for uncollectible Vacation Interest sales revenue | (1,622 | ) | — | — | (1,622 | ) | ||||||||||
Vacation Interest, net | 46,460 | — | — | 46,460 | ||||||||||||
Management, member and other services | 24,725 | — | — | 24,725 | ||||||||||||
Consolidated resort operations | 6,501 | — | — | 6,501 | ||||||||||||
Interest | 9,815 | 1 | — | 9,816 | ||||||||||||
Gain on mortgage repurchase | 36 | — | — | 36 | ||||||||||||
Total revenues | 87,537 | 1 | — | 87,538 | ||||||||||||
Costs and Expenses: | ||||||||||||||||
Vacation Interest cost of sales | 10,625 | — | — | 10,625 | ||||||||||||
Advertising, sales and marketing | 25,465 | — | — | 25,465 | ||||||||||||
Vacation Interest carrying cost, net | 7,435 | — | — | 7,435 | ||||||||||||
Management, member and other services | 6,522 | — | — | 6,522 | ||||||||||||
Consolidated resort operations | 5,877 | — | — | 5,877 | ||||||||||||
Loan portfolio | 2,603 | — | — | 2,603 | ||||||||||||
General and administrative | 15,268 | 52 | — | 15,320 | ||||||||||||
Gain on disposal of assets | (2 | ) | — | — | (2 | ) | ||||||||||
Depreciation and amortization | 2,797 | — | — | 2,797 | ||||||||||||
Interest | 15,679 | — | — | 15,679 | ||||||||||||
Total costs and expenses | 92,269 | 52 | — | 92,321 | ||||||||||||
Loss before provision for income taxes | (4,732 | ) | (51 | ) | — | (4,783 | ) | |||||||||
Provision for income taxes | 705 | — | — | 705 | ||||||||||||
Net loss | $ | (5,437 | ) | $ | (51 | ) | $ | — | $ | (5,488 | ) | |||||
F-99
Table of Contents
Three Months Ended March 31, 2011
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Operating activities: | ||||||||||||||||
Net (loss) income | $ | (125 | ) | $ | (6,596 | ) | $ | 2 | $ | (6,719 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 2,666 | 504 | — | 3,170 | ||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 2,917 | 73 | — | 2,990 | ||||||||||||
Amortization of capitalized financing costs and original issue discounts | 1,080 | 38 | — | 1,118 | ||||||||||||
Amortization of capitalized loan origination costs and portfolio discount | 557 | — | — | 557 | ||||||||||||
Loss on foreign currency exchange | (8 | ) | — | — | (8 | ) | ||||||||||
(Gain) loss on disposal of assets | (137 | ) | 128 | — | (9 | ) | ||||||||||
Gain on mortgage repurchase | (29 | ) | — | — | (29 | ) | ||||||||||
Unrealized gain on derivative instruments | (79 | ) | — | — | (79 | ) | ||||||||||
Gain on insurance settlement | (3,535 | ) | — | (3,535 | ) | |||||||||||
Impairments and other write-off’s | 83 | — | — | 83 | ||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||||||
Mortgages and contracts receivable | 4,921 | 621 | (4 | ) | 5,538 | |||||||||||
Due from related parties, net | 13,255 | 700 | 30 | 13,985 | ||||||||||||
Other receivables, net | 13,488 | 970 | — | 14,458 | ||||||||||||
Prepaid expenses and other assets, net | (43,329 | ) | (5,081 | ) | — | (48,410 | ) | |||||||||
Unsold Vacation Interests, net | (5,294 | ) | 32 | — | (5,262 | ) | ||||||||||
Accounts payable | 3,146 | (126 | ) | — | 3,020 | |||||||||||
Due to related parties, net | 20,309 | 9,968 | 5 | 30,282 | ||||||||||||
Accrued liabilities | (6,141 | ) | (313 | ) | (33 | ) | (6,487 | ) | ||||||||
Income taxes payable | 1,115 | (113 | ) | — | 1,002 | |||||||||||
Deferred revenues | 9,029 | 413 | — | 9,442 | ||||||||||||
Net cash provided by operating activities | 13,889 | 1,218 | — | 15,107 | ||||||||||||
Investing activities: | ||||||||||||||||
Property and equipment capital expenditures | (2,456 | ) | (29 | ) | — | (2,485 | ) | |||||||||
Disbursement of Tempus Acquisition note receivable | — | (863 | ) | — | (863 | ) | ||||||||||
Proceeds from sale of assets | 1,449 | 1 | — | 1,450 | ||||||||||||
Net cash used in investing activities | $ | (1,007 | ) | $ | (891 | ) | $ | — | $ | (1,898 | ) | |||||
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Three Months Ended March 31, 2011
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Financing activities: | ||||||||||||||||
Changes in cash in escrow and restricted cash | $ | (6,031 | ) | $ | (82 | ) | $ | — | $ | (6,113 | ) | |||||
Proceeds from issuance of Quorum Facility | 5,821 | — | — | 5,821 | ||||||||||||
Proceeds from issuance of Tempus Acquisition Loan | — | 800 | — | 800 | ||||||||||||
Proceeds from issuance of 2008 Conduit Facility | 1,488 | — | — | 1,488 | ||||||||||||
Payments on Quorum Facility | (3,083 | ) | — | — | (3,083 | ) | ||||||||||
Payments on Diamond Resorts Owners Trust 2009-1 | (11,055 | ) | — | — | (11,055 | ) | ||||||||||
Payments on 2008 Conduit Facility | (3,568 | ) | — | — | (3,568 | ) | ||||||||||
Payments on ILXA Receivables and Inventory Loans | — | (920 | ) | — | (920 | ) | ||||||||||
Payments on Polo Towers lines of credit and securitization notes | (3,198 | ) | — | — | (3,198 | ) | ||||||||||
Payments on notes payable | (1,916 | ) | — | — | (1,916 | ) | ||||||||||
Payments of debt issuance costs | (310 | ) | 11 | — | (299 | ) | ||||||||||
Proceeds from equity investment | 10,151 | — | — | 10,151 | ||||||||||||
Repurchase of certain outstanding warrants | (10,151 | ) | (10,151 | ) | ||||||||||||
Payments of costs related to issuance of common and preferred units | (48 | ) | — | — | (48 | ) | ||||||||||
Net cash used in financing activities | (21,900 | ) | (191 | ) | — | (22,091 | ) | |||||||||
Net (decrease) increase in cash and cash equivalents | (9,018 | ) | 136 | — | (8,882 | ) | ||||||||||
Effect of changes in exchange rates on cash and cash equivalents | 340 | — | — | 340 | ||||||||||||
Cash and cash equivalents, beginning of period | 27,163 | 166 | — | 27,329 | ||||||||||||
Cash and cash equivalents, end of period | $ | 18,485 | $ | 302 | $ | — | $ | 18,787 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 29,672 | $ | 675 | $ | — | $ | 30,347 | ||||||||
Cash paid for taxes, net of tax refunds | $ | 488 | $ | — | $ | — | $ | 488 | ||||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Priority returns and redemption premiums on preferred units | $ | 4,339 | $ | — | $ | — | $ | 4,339 | ||||||||
Insurance premiums financed through issuance of note payable | $ | 4,469 | $ | — | $ | — | $ | 4,469 | ||||||||
Assets held for sale reclassified to unsold Vacation Interests | $ | 3,086 | $ | — | $ | — | $ | 3,086 | ||||||||
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Three Months Ended March 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (5,437 | ) | $ | (51 | ) | $ | — | $ | (5,488 | ) | |||||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||||||
Depreciation and amortization | 2,797 | — | — | 2,797 | ||||||||||||
Provision for uncollectible Vacation Interest sales revenue | 1,622 | — | — | 1,622 | ||||||||||||
Amortization of capitalized financing costs and original issue discounts | 291 | — | — | 291 | ||||||||||||
Amortization of capitalized loan origination costs and portfolio discount | 688 | — | — | 688 | ||||||||||||
Loss on foreign currency exchange | 17 | — | — | 17 | ||||||||||||
Gain on disposal of assets | (2 | ) | — | — | (2 | ) | ||||||||||
Gain on mortgage repurchase | (36 | ) | — | — | (36 | ) | ||||||||||
Deferred income taxes | (3 | ) | — | — | (3 | ) | ||||||||||
Unrealized gain on derivative instruments | (161 | ) | — | — | (161 | ) | ||||||||||
Impairments and other write-offs | — | — | ||||||||||||||
Changes in operating assets and liabilities excluding acquisitions: | ||||||||||||||||
Mortgages and contracts receivable | 6,060 | 2 | (2 | ) | 6,060 | |||||||||||
Due from related parties, net | 8,791 | — | — | 8,791 | ||||||||||||
Other receivables, net | 15,239 | — | — | 15,239 | ||||||||||||
Prepaid expenses and other assets, net | (34,974 | ) | — | — | (34,974 | ) | ||||||||||
Unsold Vacation Interests, net | 4,120 | — | — | 4,120 | ||||||||||||
Accounts payable | (2,236 | ) | — | — | (2,236 | ) | ||||||||||
Due to related parties, net | 13,009 | 49 | 2 | 13,060 | ||||||||||||
Accrued liabilities | 4,189 | — | — | 4,189 | ||||||||||||
Income taxes payable (receivable) | 4,769 | — | — | 4,769 | ||||||||||||
Deferred revenues | 10,472 | — | — | 10,472 | ||||||||||||
Net cash provided by operating activities | 29,215 | — | — | 29,215 | ||||||||||||
Investing activities: | ||||||||||||||||
Property and equipment capital expenditures | (942 | ) | — | — | (942 | ) | ||||||||||
Proceeds from sale of assets | 2 | — | — | 2 | ||||||||||||
Net cash used in investing activities | $ | (940 | ) | $ | — | $ | — | $ | (940 | ) | ||||||
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Three Months Ended March 31, 2010
(In thousands)
Diamond Resorts | ||||||||||||||||
Parent, LLC and | ||||||||||||||||
Restricted | Unrestricted | |||||||||||||||
Subsidiaries | Subsidiaries | Elimination | Total | |||||||||||||
Financing activities: | ||||||||||||||||
Changes in cash in escrow and restricted cash | $ | (7,794 | ) | $ | — | $ | — | $ | (7,794 | ) | ||||||
Proceeds from issuance of 2008 Conduit Facility | 2,264 | — | — | 2,264 | ||||||||||||
Payments on Diamond Resorts Owners Trust 2009-1 | (14,929 | ) | — | — | (14,929 | ) | ||||||||||
Payments on 2008 Conduit Facility | (503 | ) | — | — | (503 | ) | ||||||||||
Payments on First and Second Lien Facilities | (569 | ) | — | — | (569 | ) | ||||||||||
Payments on Polo Towers lines of credit and securitization notes | (2,722 | ) | — | — | (2,722 | ) | ||||||||||
Payments on 2004 Securitization Notes | (2,360 | ) | — | — | (2,360 | ) | ||||||||||
Payments on notes payable | (2,143 | ) | — | — | (2,143 | ) | ||||||||||
Payments of debt issuance costs | (95 | ) | — | — | (95 | ) | ||||||||||
Net cash used in financing activities | (28,851 | ) | — | — | (28,851 | ) | ||||||||||
Net decrease in cash and cash equivalents | (576 | ) | — | — | (576 | ) | ||||||||||
Effect of changes in exchange rates on cash and cash equivalents | (354 | ) | — | — | (354 | ) | ||||||||||
Cash and cash equivalents, beginning of period | 17,186 | — | — | 17,186 | ||||||||||||
Cash and cash equivalents, end of period | $ | 16,256 | $ | — | $ | — | $ | 16,256 | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||||||||||
Cash paid for interest | $ | 17,151 | $ | — | $ | — | $ | 17,151 | ||||||||
Cash tax refunds, net of cash paid for taxes | $ | (4,087 | ) | $ | — | $ | — | $ | (4,087 | ) | ||||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
Priority returns and redemption premiums on preferred units | $ | 4,340 | $ | — | $ | — | $ | 4,340 | ||||||||
Insurance premiums financed through issuance of note payable | $ | 4,794 | $ | — | $ | — | $ | 4,794 | ||||||||
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Three Months | Three Months | |||||||
Ended | Ended | |||||||
March 31, 2011 | March 31, 2010 | |||||||
Revenue | ||||||||
North America | $ | 78,510 | $ | 77,904 | ||||
Europe | 9,022 | 9,634 | ||||||
Total Revenues | $ | 87,532 | $ | 87,538 | ||||
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
Mortgages and contracts receivable, net | ||||||||
North America | $ | 233,707 | $ | 244,541 | ||||
Europe | 829 | 746 | ||||||
Total mortgages and contracts receivable, net | $ | 234,536 | $ | 245,287 | ||||
Unsold Vacation Interest, net | ||||||||
North America | $ | 177,303 | $ | 174,642 | ||||
Europe | 22,421 | 15,922 | ||||||
Total unsold Vacation Interest, net | $ | 199,724 | $ | 190,564 | ||||
Property and equipment, net | ||||||||
North America | $ | 29,873 | $ | 24,248 | ||||
Europe | 5,308 | 4,849 | ||||||
Total property and equipment, net | $ | 35,181 | $ | 29,097 | ||||
Intangible assets, net | ||||||||
North America | $ | 39,682 | $ | 40,926 | ||||
Europe | 4,765 | 4,787 | ||||||
Total intangible assets, net | $ | 44,447 | $ | 45,713 | ||||
Total long-term assets, net | ||||||||
North America | $ | 480,565 | $ | 484,357 | ||||
Europe | 33,323 | 26,304 | ||||||
Total long-term assets, net | $ | 513,888 | $ | 510,661 | ||||
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![(DIAMOND RESORTS LOGO)](https://capedge.com/proxy/S-4A/0000950123-11-060293/c63279a2c6327962.gif)
Offer to exchange
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Exhibit | Description | |
2.1* | Asset Purchase Agreement, dated as of August 31, 2010, by and between ILX Acquisition, Inc. and ILX Resorts Incorporated and certain related entities identified therein. (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
2.2* | Securities Purchase Agreement, dated as of June 17, 2010, by and between Diamond Resorts Parent, LLC and DRP Holdco, LLC (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
2.3* | Securities Purchase Agreement, dated as of February 18, 2011, by and between Diamond Resorts Parent, LLC and the purchasers named therein (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
3.1* | Articles of Incorporation of Diamond Resorts Corporation, as amended (f/k/a Sunterra Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.) | |
3.2** | Second Amended and Restated Bylaws of Diamond Resorts Corporation, (f/k/a Sunterra Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.) | |
3.3* | Articles of Organization of Diamond Resorts Parent, LLC | |
3.4* | Third Amended and Restated Operating Agreement of Diamond Resorts Parent, LLC | |
3.5* | Articles of Organization of Diamond Resorts Holdings, LLC, as amended (f/k/a DR Resort Holdings, LLC) | |
3.6* | Operating Agreement of Diamond Resorts Holdings, LLC (f/k/a DR Resort Holdings, LLC) | |
3.7* | Certificate of Incorporation of AKGI-St. Maarten N.V. | |
3.8* | Bylaws of AKGI-St. Maarten N.V. | |
3.9* | Articles of Organization of Chestnut Farms, LLC | |
3.10* | Limited Liability Company Agreement of Chestnut Farms, LLC | |
3.11* | Certificate of Formation of Cumberland Gate, LLC | |
3.12* | Limited Liability Company Agreement of Cumberland Gate, LLC | |
3.13* | Certificate of Formation of Diamond Resorts California Collection Development, LLC, as amended (f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC) | |
3.14* | First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts California Collection Development, LLC (f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC) | |
3.15* | Certificate of Formation of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC) | |
3.16* | Limited Liability Company Agreement of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC) | |
3.17* | Certificate of Formation of Diamond Resorts Coral Sands Development, LLC, as amended (f/k/a Sunterra Coral Sands Development, LLC) | |
3.18* | Limited Liability Company Agreement of Diamond Resorts Coral Sands Development, LLC (f/k/a Sunterra Coral Sands Development, LLC) | |
3.19* | Certificate of Formation of Diamond Resorts Cypress Pointe I Development, LLC, as amended (f/k/a Sunterra Cypress Pointe I Development, LLC) | |
3.20* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe I Development, LLC (f/k/a Sunterra Cypress Pointe I Development, LLC) |
Table of Contents
Exhibit | Description | |
3.21* | Certificate of Formation of Diamond Resorts Cypress Pointe II Development, LLC, as amended (f/k/a Sunterra Cypress Pointe II Development, LLC) | |
3.22* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe II Development, LLC (f/k/a Sunterra Cypress Pointe II Development, LLC) | |
3.23* | Certificate of Formation of Diamond Resorts Cypress Pointe III Development, LLC, as amended (f/k/a Sunterra Cypress Pointe III Development, LLC) | |
3.24* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe III Development, LLC (f/k/a Sunterra Cypress Pointe III Development, LLC) | |
3.25* | Certificate of Formation of Diamond Resorts Daytona Development, LLC, as amended (f/k/a Sunterra Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC) | |
3.26* | Limited Liability Company Agreement of Diamond Resorts Daytona Development, LLC (f/k/a Sunterra Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC) | |
3.27* | Certificate of Incorporation of Diamond Resorts Centralized Services Company, as amended (f/k/a Sunterra Centralized Services Company) | |
3.28* | Bylaws of Diamond Resorts Centralized Services Company (f/k/a Sunterra Centralized Services Company) | |
3.29* | Certificate of Incorporation of Diamond Resorts Developer and Sales Holding Company, as amended (f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.) | |
3.30* | Bylaws of Diamond Resorts Developer and Sales Holding Company (f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.) | |
3.31* | Certificate of Formation of Diamond Resorts Epic Mortgage Holdings, LLC, as amended (f/k/a Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC) | |
3.32* | Limited Liability Company Agreement of Diamond Resorts Epic Mortgage Holdings, LLC (f/k/a Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC) | |
3.33* | Certificate of Formation of Diamond Resorts Fall Creek Development, LLC, as amended (f/k/a Sunterra Fall Creek Development, LLC) | |
3.34* | Limited Liability Company Agreement of Diamond Resorts Fall Creek Development, LLC (f/k/a Sunterra Fall Creek Development, LLC) | |
3.35* | Certificate of Incorporation of Diamond Resorts Finance Holding Company, as amended (f/k/a Sunterra Finance Holding Company) | |
3.36* | Bylaws of Diamond Resorts Finance Holding Company (f/k/a Sunterra Finance Holding Company) | |
3.37* | Articles of Incorporation of Diamond Resorts Financial Services, Inc., as amended (f/k/a Sunterra Financial Services, Inc.) | |
3.38* | Bylaws of Diamond Resorts Financial Services, Inc. (f/k/a Sunterra Financial Services, Inc.) | |
3.39* | Certificate of Formation of Diamond Resorts Grand Beach I Development, LLC, as amended (f/k/a Sunterra Grand Beach I Development, LLC) | |
3.40* | Limited Liability Company Agreement of Diamond Resorts Grand Beach I Development, LLC (f/k/a Sunterra Grand Beach I Development, LLC) | |
3.41* | Certificate of Formation of Diamond Resorts Grand Beach II Development, LLC, as amended (f/k/a Sunterra Grand Beach II Development, LLC) | |
3.42* | Limited Liability Company Agreement of Diamond Resorts Grand Beach II Development, LLC (f/k/a Sunterra Grand Beach II Development, LLC) | |
3.43* | Certificate of Formation of Diamond Resorts Greensprings Development, LLC, as amended (f/k/a Sunterra Greensprings Development, LLC) |
Table of Contents
Exhibit | Description | |
3.44* | Limited Liability Company Agreement of Diamond Resorts Greensprings Development, LLC (f/k/a Sunterra Greensprings Development, LLC) | |
3.45* | Certificate of Formation of Diamond Resorts Hawaii Collection Development, LLC, as amended (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East Marketing, LLC) | |
3.46* | Amended and Restated Limited Liability Company Agreement of Diamond Resorts Hawaii Collection Development, LLC (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East Marketing, LLC) | |
3.47* | Certificate of Formation of Diamond Resorts Hilton Head Development, LLC, as amended (f/k/a Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC) | |
3.48* | Limited Liability Company Agreement of Diamond Resorts Hilton Head Development, LLC (f/k/a Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC) | |
3.49* | Articles of Incorporation of Diamond Resorts International Club, Inc., as amended (f/k/a Club Sunterra, Inc.) | |
3.50* | Bylaws of Diamond Resorts International Club, Inc. (f/k/a Club Sunterra, Inc.) | |
3.51* | Articles of Incorporation of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing International, Inc.) | |
3.52* | Bylaws of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing International, Inc.) | |
3.53* | Certificate of Formation of Diamond Resorts Las Vegas Development, LLC, as amended (f/k/a Sunterra Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC) | |
3.54* | Limited Liability Company Agreement of Diamond Resorts Las Vegas Development, LLC (f/k/a Sunterra Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC) | |
3.55* | Certificate of Incorporation of Diamond Resorts Management & Exchange Holding Company, as amended (f/k/a Sunterra Management and Exchange Holding Company) | |
3.56* | Bylaws of Diamond Resorts Management & Exchange Holding Company (f/k/a Sunterra Management and Exchange Holding Company) | |
3.57* | Articles of Incorporation of Diamond Resorts Management, Inc., as amended (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM Management, Inc.) | |
3.58* | Bylaws of Diamond Resorts Management, Inc. (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM Management, Inc.) | |
3.59* | Certificate of Formation of Diamond Resorts Mortgage Holdings, LLC, as amended (f/k/a Sunterra Mortgage Holdings, LLC) | |
3.60* | Limited Liability Company Agreement of Diamond Resorts Mortgage Holdings, LLC (f/k/a Sunterra Mortgage Holdings, LLC) | |
3.61* | Certificate of Formation of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC) | |
3.62* | Limited Liability Company Agreement of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC) | |
3.63* | Certificate of Formation of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a Sunterra Poco Diablo Development, LLC) | |
3.64* | Limited Liability Company Agreement of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a Sunterra Poco Diablo Development, LLC) | |
3.65* | Certificate of Formation of Diamond Resorts Poipu Development, LLC, as amended (f/k/a Sunterra Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC) |
Table of Contents
Exhibit | Description | |
3.66* | Limited Liability Company Agreement of Diamond Resorts Poipu Development, LLC (f/k/a Sunterra Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC) | |
3.67* | Articles of Organization of Diamond Resorts Polo Development, LLC, as amended (f/k/a Polo Sunterra Development, LLC) | |
3.68* | Operating Agreement of Diamond Resorts Polo Development, LLC (f/k/a Polo Sunterra Development, LLC) | |
3.69* | Certificate of Formation of Diamond Resorts Port Royal Development, LLC, as amended (f/k/a Sunterra Port Royal Development, LLC) | |
3.70* | Limited Liability Company Agreement of Diamond Resorts Port Royal Development, LLC (f/k/a Sunterra Port Royal Development, LLC) | |
3.71* | Certificate of Formation of Diamond Resorts Powhatan Development, LLC, as amended (f/k/a Sunterra Powhatan Development, LLC) | |
3.72* | Limited Liability Company Agreement of Diamond Resorts Powhatan Development, LLC (f/k/a Sunterra Powhatan Development, LLC) | |
3.73* | Certificate of Formation of Diamond Resorts Residual Assets Development, LLC, as amended (f/k/a Sunterra Residual Assets Development, LLC) | |
3.74* | Limited Liability Company Agreement of Diamond Resorts Residual Assets Development, LLC (f/k/a Sunterra Residual Assets Development, LLC) | |
3.75* | Certificate of Formation of Diamond Resorts Residual Assets Finance, LLC, as amended (f/k/a Sunterra Residual Assets Finance, LLC) | |
3.76* | Limited Liability Company Agreement of Diamond Resorts Residual Assets Finance, LLC (f/k/a Sunterra Residual Assets Finance, LLC) | |
3.77* | Certificate of Formation of Diamond Resorts Residual Assets M&E, LLC, as amended (f/k/a Sunterra Residual Assets M&E, LLC) | |
3.78* | Limited Liability Company Agreement of Diamond Resorts Residual Assets M&E, LLC (f/k/a Sunterra Residual Assets M&E, LLC) | |
3.79* | Certificate of Formation of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a Sunterra Ridge on Sedona Development, LLC) | |
3.80* | Limited Liability Company Agreement of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a Sunterra Ridge on Sedona Development, LLC) | |
3.81* | Certificate of Formation of Diamond Resorts Ridge Pointe Development, LLC, as amended (f/k/a Sunterra Ridge Pointe Development, LLC) | |
3.82* | Limited Liability Company Agreement of Diamond Resorts Ridge Pointe Development, LLC (f/k/a Sunterra Ridge Pointe Development, LLC) | |
3.83* | Certificate of Formation of Diamond Resorts San Luis Bay Development, LLC, as amended (f/k/a Sunterra San Luis Bay Development, LLC) | |
3.84* | Limited Liability Company Agreement of Diamond Resorts San Luis Bay Development, LLC (f/k/a Sunterra San Luis Bay Development, LLC) | |
3.85* | Certificate of Formation of Diamond Resorts Santa Fe Development, LLC, as amended (f/k/a Sunterra Santa Fe Development, LLC) | |
3.86* | Limited Liability Company Agreement of Diamond Resorts Santa Fe Development, LLC (f/k/a Sunterra Santa Fe Development, LLC) | |
3.87* | Certificate of Formation of Diamond Resorts Scottsdale Development, LLC, as amended (f/k/a Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC) | |
3.88* | Limited Liability Company Agreement of Diamond Resorts Scottsdale Development, LLC (f/k/a Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC) |
Table of Contents
Exhibit | Description | |
3.89* | Certificate of Formation of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a Sunterra Sedona Springs Development, LLC) | |
3.90* | Limited Liability Company Agreement of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a Sunterra Sedona Springs Development, LLC) | |
3.91* | Certificate of Formation of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a Sunterra Sedona Summit Development, LLC) | |
3.92* | Limited Liability Company Agreement of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a Sunterra Sedona Summit Development, LLC) | |
3.93* | Certificate of Formation of Diamond Resorts St. Croix Development, LLC, as amended (f/k/a Sunterra St. Croix Development, LLC) | |
3.94* | Limited Liability Company Agreement of Diamond Resorts St. Croix Development, LLC (f/k/a Sunterra St. Croix Development, LLC) | |
3.95* | Certificate of Formation of Diamond Resorts Steamboat Development, LLC, as amended (f/k/a Sunterra Steamboat Development, LLC) | |
3.96* | Limited Liability Company Agreement of Diamond Resorts Steamboat Development, LLC (f/k/a Sunterra Steamboat Development, LLC) | |
3.97* | Certificate of Formation of Diamond Resorts Tahoe Beach & Ski Development, LLC, as amended (f/k/a Sunterra Tahoe Beach & Ski Development, LLC) | |
3.98* | Limited Liability Company Agreement of Diamond Resorts Tahoe Beach & Ski Development, LLC (f/k/a Sunterra Tahoe Beach & Ski Development, LLC) | |
3.99* | Certificate of Formation of Diamond Resorts U.S. Collection Development, LLC, as amended (f/k/a Club Sunterra Development, LLC; f/k/a Club Sunterra, LLC) | |
3.100* | First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts U.S. Collection Development, LLC (f/k/a Club Sunterra Development, LLC; Club Sunterra, LLC) | |
3.101* | Certificate of Formation of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a Sunterra Villa Mirage Development, LLC) | |
3.102* | Limited Liability Company Agreement of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a Sunterra Villa Mirage Development, LLC) | |
3.103* | Certificate of Formation of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a Sunterra Villas of Sedona Development, LLC) | |
3.104* | Limited Liability Company Agreement of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a Sunterra Villas of Sedona Development, LLC) | |
3.105* | Certificate of Formation of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC) | |
3.106* | Limited Liability Company Agreement of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC) | |
3.107* | Articles of Organization of Foster Shores, LLC | |
3.108* | Limited Liability Company Agreement of Foster Shores, LLC | |
3.109* | Articles of Incorporation of George Acquisition Subsidiary, Inc. | |
3.110* | Bylaws of George Acquisition Subsidiary, Inc. | |
3.111* | Certificate of Formation of Ginger Creek, LLC | |
3.112* | Limited Liability Company Agreement of Ginger Creek, LLC | |
3.113* | Certificate of Formation of Grand Escapes, LLC | |
3.114* | Limited Liability Company Agreement of Grand Escapes, LLC | |
3.115* | Certificate of Formation of International Timeshares Marketing, LLC, as amended |
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Exhibit | Description | |
3.116* | Limited Liability Company Agreement of International Timeshares Marketing, LLC, as amended | |
3.117* | Articles of Organization of Lake Tahoe Resort Partners, LLC | |
3.118* | Operating Agreement of Lake Tahoe Resort Partners, LLC, as amended | |
3.119* | Articles of Incorporation of Mazatlan Development, Inc., as amended (f/k/a Mazatlan Villas, Inc.) | |
3.120* | Bylaws of Mazatlan Development, Inc. (f/k/a Mazatlan Villas, Inc.) | |
3.121* | Articles of Incorporation of MMG Development Corp. | |
3.122* | Bylaws of MMG Development Corp. | |
3.123* | Certificate of Limited Partnership of Poipu Resort Partners, L.P., as amended (f/k/a Pointe Resort Partners) | |
3.124* | Amended and Restated Agreement of Limited Partnership of Poipu Resort Partners, L.P. (f/k/a Pointe Resort Partners) | |
3.125* | Articles of Incorporation of Resort Management International, Inc. | |
3.126* | Bylaws of Resort Management International, Inc., as amended | |
3.127* | Articles of Incorporation of Resorts Development International, Inc. | |
3.128* | Bylaws of Resorts Development International, Inc. | |
3.129* | Articles of Organization of Walsham Lake, LLC | |
3.130* | Limited Liability Company Agreement of Walsham Lake, LLC | |
3.131* | Second Amended and Restated Certificate of Limited Partnership of West Maui Resort Partners, L.P., as amended (f/k/a West Maui Partners, L.P.) | |
3.132* | Second Amended and Restated Agreement of Limited Partnership of West Maui Resort Partners, L.P. (f/k/a West Maui Partners, L.P.) | |
4.1* | Indenture, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as trustee | |
4.2* | Registration Rights Agreement, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein, Credit Suisse Securities (USA) LLC, as representative of the initial purchasers, Banc of America Securities LLC, as representative of the initial purchasers, and Guggenheim Securities, LLC, as representative of the initial purchasers | |
4.3* | Security Agreement, dated August 13, 2010, among Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, Diamond Resorts Corporation, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as collateral agent | |
4.4* | Form of 12.00% Senior Secured Notes due 2018 (included in Exhibit 4.1) | |
5.1** | Opinion of Katten Muchin Rosenman LLP | |
5.2* | Opinion of Ballard Spahr LLP | |
5.3** | Opinion of Holland & Knight LLP | |
5.4* | Opinion of Imanaka Kudo & Fujimoto | |
5.5* | Opinion of Summers Compton Wells PC | |
10.1* | Second Amended and Restated Sale Agreement, dated as of August 31, 2010, by and between Diamond Resorts Depositor 2008 LLC and Diamond Resorts Issuer 2008 LLC, and acknowledged and agreed to by Diamond Resorts Finance Holding Company | |
10.2* | Second Amended and Restated Purchase Agreement, dated as of August 31, 2010, by and between Diamond Resorts Finance Holding Company and Diamond Resorts Depositor 2008 LLC |
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Exhibit | Description | |
10.3* | Third Amended and Restated Indenture, dated as of August 31, 2010, by and among Diamond Resorts Issuer 2008 LLC, Diamond Resorts Financial Services, Inc., Wells Fargo Bank, National Association and Credit Suisse AG, Cayman Islands Branch | |
10.4** | Indenture, dated as of October 1, 2009, by and among Diamond Resorts Owner Trust 2009-1, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank, National Association | |
10.5* | Note Purchase Agreement, dated as of October 9, 2009, by and between Diamond Resorts Owner Trust 2009-1 and Diamond Resorts Corporation, and confirmed and accepted by Credit Suisse Securities (USA) LLC | |
10.6* | Third Amended and Restated Securityholders Agreement, dated as of February 18, 2011, by and among Diamond Resorts Parent, LLC and the other parties named therein | |
10.7* | Amended and Restated Registration Rights Agreement, dated as of June 17, 2010, by and among Diamond Resorts Parent, LLC and the other parties named therein, as amended | |
10.8* | Receivables Loan and Security Agreement, dated as of August 31, 2010, by and between Textron Financial Corporation and ILX Acquisition, Inc. | |
10.9* | Inventory Loan and Security Agreement, dated as of August 31, 2010, by and between Textron Financial Corporation and ILX Acquisition, Inc. | |
10.10** | Loan Sale and Servicing Agreement, dated as of April 30, 2010, by and among DRI Quorum 2010 LLC, Quorum Federal Credit Union, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank, National Association | |
10.11* | Purchase Agreement, dated as of April 30, 2010, by and between Diamond Resorts Finance Holding Company and DRI Quorum 2010 LLC | |
10.12** | Credit and Security Agreement, dated as of November 23, 2010, by and among Tempus Acquisition, LLC, the lenders from time to time party thereto and Guggenheim Corporate Funding, LLC | |
10.13* | Pledge Agreement, dated as of November 23, 2010, by and between Tempus Holdings, LLC and Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein | |
10.14* | Guaranty, dated as of November 23, 2010, by Diamond Resorts Corporation, in favor of Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein | |
10.15* | Lease, dated as of January 16, 2008, by and between H/MX Health Management Solutions, Inc. and Diamond Resorts Corporation | |
10.16*† | Terms of Engagement Agreement for Individual Independent Contractor, dated as of June 2009, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services USA, LLC, as amended by the Extension Agreement, effective as of June 1, 2010, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company, successor to Diamond Resorts Centralized Services USA, LLC, and the Amendment to Extension Agreement, dated as of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company, successor to Diamond Resorts Centralized Services USA, LLC | |
10.17*† | Terms of Additional Engagement Agreement for Individual Independent Contractor, dated as of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company | |
10.18**† | Homeowner Association Oversight, Consulting and Executive Management Services Agreement, dated as of December 31, 2010, by and between Diamond Resorts Corporation and Hospitality Management and Consulting Service, L.L.C. | |
12.1* | Statement of Computation of Ratio of Earnings to Fixed Charges | |
21.1* | Subsidiaries of Diamond Resorts Parent, LLC | |
23.1** | Consent of BDO USA, LLP | |
23.2** | Consent of Katten Muchin Rosenman LLP (included as part of its opinion filed as Exhibit 5.1 hereto) | |
23.3* | Consent of Ballard Spahr LLP (included as part of its opinion filed as Exhibit 5.2 hereto) | |
23.4** | Consent of Holland & Knight LLP (included as part of its opinion filed as Exhibit 5.3 hereto) |
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Exhibit | Description | |
23.5* | Consent of Imanaka Kudo & Fujimoto LLP (included as part of its opinion filed as Exhibit 5.4 hereto) | |
23.6* | Consent of Summers Compton Wells PC LLP (included as part of its opinion filed as Exhibit 5.5 hereto) | |
24.1* | Powers of Attorney | |
25.1* | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wells Fargo Bank, National Association, with respect to the Indenture governing the 12.00% Senior Secured Notes due 2018 | |
99.1* | Form of Letter of Transmittal | |
99.2** | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
99.3* | Form of Letter to Clients | |
99.4* | Form of Notice of Guaranteed Delivery |
* | Previously filed | |
** | Filed herewith | |
† | Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit to the registration statement |
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(a) | Each of the undersigned registrants hereby undertakes: |
(1) | To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | to include any prospectus required by section 10(a)(3) of the Securities Act of 1933; | ||
(ii) | to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | ||
(iii) | to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | that, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; | ||
(3) | to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; | ||
(4) | that, for the purpose of determining liability under the Securities Act of 1933 to any purchaser: each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use; and | ||
(5) | that, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
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(ii) | any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; | ||
(iii) | the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and | ||
(iv) | any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(b) | Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. | |
(c) | Each of the undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. | |
(d) | Each of the undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
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DIAMOND RESORTS PARENT, LLC | ||||
By: | /s/ David F. Palmer | |||
David F. Palmer | ||||
President and Chief Financial Officer | ||||
Name | Title | Date | ||||
* | Chairman of the Board and Chief Executive Officer | June 20, 2011 | ||||
Stephen J. Cloobeck | (Principal Executive Officer) | |||||
/s/ David F. Palmer | President, Chief Financial Officer | June 20, 2011 | ||||
David F. Palmer | (Principal Financial Officer) and Manager | |||||
* | Chief Accounting Officer (Principal Accounting Officer) of | June 20, 2011 | ||||
Lisa M. Gann | Diamond Resorts Corporation, the subsidiary of Diamond Resorts Parent, LLC | |||||
* | Manager | June 20, 2011 | ||||
Lowell D. Kraff | ||||||
* | Manager | June 20, 2011 | ||||
B. Scott Minerd | ||||||
* | Manager | June 20, 2011 | ||||
Zachary Warren | ||||||
* By: | /s/ David F. Palmer | |||||
David F. Palmer Attorney-in-fact |
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DIAMOND RESORTS HOLDINGS, LLC | ||||
By: | /s/ David F. Palmer | |||
David F. Palmer | ||||
President and Chief Financial Officer | ||||
Name | Title | Date | ||||
* | Chairman of the Board and Chief Executive Officer | June 20, 2011 | ||||
Stephen J. Cloobeck | (Principal Executive Officer) and Sole Manager | |||||
/s/ David F. Palmer | President and Chief Financial Officer | June 20, 2011 | ||||
David F. Palmer | (Principal Financial Officer) | |||||
* | Chief Accounting Officer (Principal Accounting Officer) of | June 20, 2011 | ||||
Lisa M. Gann | Diamond Resorts Corporation, the subsidiary of Diamond Resorts Parent, LLC | |||||
* By: | /s/ David F. Palmer | |||||
David F. Palmer Attorney-in-fact |
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DIAMOND RESORTS CORPORATION | ||||
By: | /s/ David F. Palmer | |||
David F. Palmer | ||||
President and Chief Financial Officer | ||||
Name | Title | Date | ||
* | Chairman of the Board and Chief Executive Officer (Principal Executive Officer) and Sole Director | June 20, 2011 | ||
/s/ David F. Palmer | President and Chief Financial Officer (Principal Financial Officer) | June 20, 2011 | ||
* | Chief Accounting Officer (Principal Accounting Officer) | June 20, 2011 |
* | By: | /s/ David F. Palmer | |||
David F. Palmer Attorney-in-fact |
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REGISTRANTS (as listed on the attached Schedule I of Subsidiary Registrants, the “Schedule I Registrants”) | ||||
By: | * | |||
Stephen J. Cloobeck | ||||
Chief Executive Officer | ||||
Name | Title | Date | ||
* | Chief Executive Officer (Principal Executive Officer) of each of the Schedule I Registrants, and Sole Manager or Sole Director, as applicable, of each of the Schedule I Registrants | June 20, 2011 | ||
/s/ David F. Palmer | Chief Financial Officer (Principal Financial Officer) of Diamond Resorts Corporation, the indirect parent of each of the Schedule I Registrants | June 20, 2011 | ||
* | Chief Accounting Officer (Principal Accounting Officer) of Diamond Resorts Corporation, the indirect parent of each of the Schedule I Registrants | June 20, 2011 |
* | By: | /s/ David F. Palmer | |||
David F. Palmer | |||||
Attorney-in-fact | |||||
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DIAMOND RESORTS FINANCIAL SERVICES, INC. | ||||
By: | * | |||
David Womer | ||||
President | ||||
Name | Title | Date | ||
* | President (Principal Executive Officer) and Sole Director | June 20, 2011 | ||
/s/ David F. Palmer | Chief Financial Officer (Principal Financial Officer) of Diamond Resorts Corporation, the indirect parent of Diamond Resorts Financial Services, Inc. | June 20, 2011 | ||
* | Chief Accounting Officer (Principal Accounting Officer) of Diamond Resorts Corporation, the indirect parent of Diamond Resorts Financial Services, Inc. | June 20, 2011 |
* | By: | /s/ David F. Palmer | |||
David F. Palmer | |||||
Attorney-in-fact |
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POIPU RESORT PARTNERS, L.P. | ||||
By: | Diamond Resorts Poipu Development, LLC, its general partner | |||
By: | * | |||
Stephen J. Cloobeck | ||||
Chief Executive Officer | ||||
Name | Title | Date | ||
* | Chief Executive Officer (Principal Executive Officer) of Diamond Resorts Poipu Development, LLC, the general partner of Poipu Resort Partners, L.P. | June 20, 2011 | ||
/s/ David F. Palmer | Chief Financial Officer (Principal Financial Officer) of Diamond Resorts Poipu Development, LLC, the general partner of Poipu Resort Partners, L.P. | June 20, 2011 | ||
* | Chief Accounting Officer (Principal Accounting Officer) of Diamond Resorts Poipu Development, LLC, the general partner of Poipu Resort Partners, L.P. | June 20, 2011 |
* | By: | /s/ David F. Palmer | |||
David F. Palmer Attorney-in-fact |
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WEST MAUI RESORT PARTNERS, L.P. | ||||
By: | Diamond Resorts West Maui Development, LLC, its general partner | |||
By: | * | |||
Stephen J. Cloobeck | ||||
Chief Executive Officer | ||||
Name | Title | Date | ||
* | Chief Executive Officer (Principal Executive Officer) of Diamond Resorts West Maui Development, LLC, the general partner of West Maui Resort Partners, L.P. | June 20, 2011 | ||
/s/ David F. Palmer | Chief Financial Officer (Principal Financial Officer) of Diamond Resorts West Maui Development, LLC, the general partner of West Maui Resort Partners, L.P. | June 20, 2011 | ||
* | Chief Accounting Officer (Principal Accounting Officer) of Diamond Resorts West Maui Development, LLC, the general partner of West Maui Resort Partners, L.P. | June 20, 2011 |
* | By: | /s/ David F. Palmer | |||
David F. Palmer | |||||
Attorney-in-fact | |||||
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Exhibit | Description | |
2.1* | Asset Purchase Agreement, dated as of August 31, 2010, by and between ILX Acquisition, Inc. and ILX Resorts Incorporated and certain related entities identified therein. (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
2.2* | Securities Purchase Agreement, dated as of June 17, 2010, by and between Diamond Resorts Parent, LLC and DRP Holdco, LLC (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
2.3* | Securities Purchase Agreement, dated as of February 18, 2011, by and between Diamond Resorts Parent, LLC and the purchasers named therein (Certain schedules were omitted and registrant agrees to furnish supplementally a copy of such omitted schedules to the Commission upon request) | |
3.1* | Articles of Incorporation of Diamond Resorts Corporation, as amended (f/k/a Sunterra Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.) | |
3.2** | Second Amended and Restated Bylaws of Diamond Resorts Corporation, (f/k/a Sunterra Corporation; f/k/a Signature Resorts, Inc.; f/k/a KGK Resorts, Inc.) | |
3.3* | Articles of Organization of Diamond Resorts Parent, LLC | |
3.4* | Third Amended and Restated Operating Agreement of Diamond Resorts Parent, LLC | |
3.5* | Articles of Organization of Diamond Resorts Holdings, LLC, as amended (f/k/a DR Resort Holdings, LLC) | |
3.6* | Operating Agreement of Diamond Resorts Holdings, LLC (f/k/a DR Resort Holdings, LLC) | |
3.7* | Certificate of Incorporation of AKGI-St. Maarten N.V. | |
3.8* | Bylaws of AKGI-St. Maarten N.V. | |
3.9* | Articles of Organization of Chestnut Farms, LLC | |
3.10* | Limited Liability Company Agreement of Chestnut Farms, LLC | |
3.11* | Certificate of Formation of Cumberland Gate, LLC | |
3.12* | Limited Liability Company Agreement of Cumberland Gate, LLC | |
3.13* | Certificate of Formation of Diamond Resorts California Collection Development, LLC, as amended (f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC) | |
3.14* | First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts California Collection Development, LLC (f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra Development II, LLC; f/k/a Club Sunterra Development St. Maarten, LLC; f/k/a Sunterra Texas Development, LLC) | |
3.15* | Certificate of Formation of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC) | |
3.16* | Limited Liability Company Agreement of Diamond Resorts Citrus Share Holding, LLC, as amended (f/k/a Sunterra Citrus Share Holding, LLC; f/k/a Sunterra South Marketing, LLC) | |
3.17* | Certificate of Formation of Diamond Resorts Coral Sands Development, LLC, as amended (f/k/a Sunterra Coral Sands Development, LLC) | |
3.18* | Limited Liability Company Agreement of Diamond Resorts Coral Sands Development, LLC (f/k/a Sunterra Coral Sands Development, LLC) | |
3.19* | Certificate of Formation of Diamond Resorts Cypress Pointe I Development, LLC, as amended (f/k/a Sunterra Cypress Pointe I Development, LLC) | |
3.20* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe I Development, LLC (f/k/a Sunterra Cypress Pointe I Development, LLC) |
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Exhibit | Description | |
3.21* | Certificate of Formation of Diamond Resorts Cypress Pointe II Development, LLC, as amended (f/k/a Sunterra Cypress Pointe II Development, LLC) | |
3.22* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe II Development, LLC (f/k/a Sunterra Cypress Pointe II Development, LLC) | |
3.23* | Certificate of Formation of Diamond Resorts Cypress Pointe III Development, LLC, as amended (f/k/a Sunterra Cypress Pointe III Development, LLC) | |
3.24* | Limited Liability Company Agreement of Diamond Resorts Cypress Pointe III Development, LLC (f/k/a Sunterra Cypress Pointe III Development, LLC) | |
3.25* | Certificate of Formation of Diamond Resorts Daytona Development, LLC, as amended (f/k/a Sunterra Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC) | |
3.26* | Limited Liability Company Agreement of Diamond Resorts Daytona Development, LLC (f/k/a Sunterra Daytona Development, LLC; f/k/a Sunterra Bent Creek Golf Course Development, LLC) | |
3.27* | Certificate of Incorporation of Diamond Resorts Centralized Services Company, as amended (f/k/a Sunterra Centralized Services Company) | |
3.28* | Bylaws of Diamond Resorts Centralized Services Company (f/k/a Sunterra Centralized Services Company) | |
3.29* | Certificate of Incorporation of Diamond Resorts Developer and Sales Holding Company, as amended (f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.) | |
3.30* | Bylaws of Diamond Resorts Developer and Sales Holding Company (f/k/a Sunterra Developer and Sales Holding Company; f/k/a Avcom International, Inc.; f/k/a American Vacation Company, Inc.) | |
3.31* | Certificate of Formation of Diamond Resorts Epic Mortgage Holdings, LLC, as amended (f/k/a Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC) | |
3.32* | Limited Liability Company Agreement of Diamond Resorts Epic Mortgage Holdings, LLC (f/k/a Sunterra Epic Mortgage Holdings, LLC; f/k/a Sunterra KGK Partners Finance, LLC) | |
3.33* | Certificate of Formation of Diamond Resorts Fall Creek Development, LLC, as amended (f/k/a Sunterra Fall Creek Development, LLC) | |
3.34* | Limited Liability Company Agreement of Diamond Resorts Fall Creek Development, LLC (f/k/a Sunterra Fall Creek Development, LLC) | |
3.35* | Certificate of Incorporation of Diamond Resorts Finance Holding Company, as amended (f/k/a Sunterra Finance Holding Company) | |
3.36* | Bylaws of Diamond Resorts Finance Holding Company (f/k/a Sunterra Finance Holding Company) | |
3.37* | Articles of Incorporation of Diamond Resorts Financial Services, Inc., as amended (f/k/a Sunterra Financial Services, Inc.) | |
3.38* | Bylaws of Diamond Resorts Financial Services, Inc. (f/k/a Sunterra Financial Services, Inc.) | |
3.39* | Certificate of Formation of Diamond Resorts Grand Beach I Development, LLC, as amended (f/k/a Sunterra Grand Beach I Development, LLC) | |
3.40* | Limited Liability Company Agreement of Diamond Resorts Grand Beach I Development, LLC (f/k/a Sunterra Grand Beach I Development, LLC) | |
3.41* | Certificate of Formation of Diamond Resorts Grand Beach II Development, LLC, as amended (f/k/a Sunterra Grand Beach II Development, LLC) | |
3.42* | Limited Liability Company Agreement of Diamond Resorts Grand Beach II Development, LLC (f/k/a Sunterra Grand Beach II Development, LLC) | |
3.43* | Certificate of Formation of Diamond Resorts Greensprings Development, LLC, as amended (f/k/a Sunterra Greensprings Development, LLC) |
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Exhibit | Description | |
3.44* | Limited Liability Company Agreement of Diamond Resorts Greensprings Development, LLC (f/k/a Sunterra Greensprings Development, LLC) | |
3.45* | Certificate of Formation of Diamond Resorts Hawaii Collection Development, LLC, as amended (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East Marketing, LLC) | |
3.46* | Amended and Restated Limited Liability Company Agreement of Diamond Resorts Hawaii Collection Development, LLC (f/k/a Club Sunterra Development Hawaii, LLC; f/k/a Club Sunterra Development III, LLC; f/k/a Club Sunterra Development California, LLC; f/k/a Club Sunterra MergerClub, LLC; f/k/a Sunterra East Marketing, LLC) | |
3.47* | Certificate of Formation of Diamond Resorts Hilton Head Development, LLC, as amended (f/k/a Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC) | |
3.48* | Limited Liability Company Agreement of Diamond Resorts Hilton Head Development, LLC (f/k/a Sunterra Hilton Head Development, LLC; f/k/a Sunterra Bent Creek Village Development, LLC) | |
3.49* | Articles of Incorporation of Diamond Resorts International Club, Inc., as amended (f/k/a Club Sunterra, Inc.) | |
3.50* | Bylaws of Diamond Resorts International Club, Inc. (f/k/a Club Sunterra, Inc.) | |
3.51* | Articles of Incorporation of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing International, Inc.) | |
3.52* | Bylaws of Diamond Resorts International Marketing, Inc., as amended (f/k/a Resort Marketing International, Inc.) | |
3.53* | Certificate of Formation of Diamond Resorts Las Vegas Development, LLC, as amended (f/k/a Sunterra Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC) | |
3.54* | Limited Liability Company Agreement of Diamond Resorts Las Vegas Development, LLC (f/k/a Sunterra Las Vegas Development, LLC; f/k/a Sunterra Polynesian Isles Development, LLC) | |
3.55* | Certificate of Incorporation of Diamond Resorts Management & Exchange Holding Company, as amended (f/k/a Sunterra Management and Exchange Holding Company) | |
3.56* | Bylaws of Diamond Resorts Management & Exchange Holding Company (f/k/a Sunterra Management and Exchange Holding Company) | |
3.57* | Articles of Incorporation of Diamond Resorts Management, Inc., as amended (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM Management, Inc.) | |
3.58* | Bylaws of Diamond Resorts Management, Inc. (f/k/a Sunterra Resort Management, Inc.; f/k/a RPM Management, Inc.) | |
3.59* | Certificate of Formation of Diamond Resorts Mortgage Holdings, LLC, as amended (f/k/a Sunterra Mortgage Holdings, LLC) | |
3.60* | Limited Liability Company Agreement of Diamond Resorts Mortgage Holdings, LLC (f/k/a Sunterra Mortgage Holdings, LLC) | |
3.61* | Certificate of Formation of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC) | |
3.62* | Limited Liability Company Agreement of Diamond Resorts Palm Springs Development, LLC, as amended (f/k/a Sunterra Palm Springs Development, LLC; f/k/a Sunterra North Marketing, LLC) | |
3.63* | Certificate of Formation of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a Sunterra Poco Diablo Development, LLC) | |
3.64* | Limited Liability Company Agreement of Diamond Resorts Poco Diablo Development, LLC, as amended (f/k/a Sunterra Poco Diablo Development, LLC) | |
3.65* | Certificate of Formation of Diamond Resorts Poipu Development, LLC, as amended (f/k/a Sunterra Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC) |
Table of Contents
Exhibit | Description | |
3.66* | Limited Liability Company Agreement of Diamond Resorts Poipu Development, LLC (f/k/a Sunterra Poipu Development, LLC; f/k/a Sunterra Lake Tahoe Development, LLC) | |
3.67* | Articles of Organization of Diamond Resorts Polo Development, LLC, as amended (f/k/a Polo Sunterra Development, LLC) | |
3.68* | Operating Agreement of Diamond Resorts Polo Development, LLC (f/k/a Polo Sunterra Development, LLC) | |
3.69* | Certificate of Formation of Diamond Resorts Port Royal Development, LLC, as amended (f/k/a Sunterra Port Royal Development, LLC) | |
3.70* | Limited Liability Company Agreement of Diamond Resorts Port Royal Development, LLC (f/k/a Sunterra Port Royal Development, LLC) | |
3.71* | Certificate of Formation of Diamond Resorts Powhatan Development, LLC, as amended (f/k/a Sunterra Powhatan Development, LLC) | |
3.72* | Limited Liability Company Agreement of Diamond Resorts Powhatan Development, LLC (f/k/a Sunterra Powhatan Development, LLC) | |
3.73* | Certificate of Formation of Diamond Resorts Residual Assets Development, LLC, as amended (f/k/a Sunterra Residual Assets Development, LLC) | |
3.74* | Limited Liability Company Agreement of Diamond Resorts Residual Assets Development, LLC (f/k/a Sunterra Residual Assets Development, LLC) | |
3.75* | Certificate of Formation of Diamond Resorts Residual Assets Finance, LLC, as amended (f/k/a Sunterra Residual Assets Finance, LLC) | |
3.76* | Limited Liability Company Agreement of Diamond Resorts Residual Assets Finance, LLC (f/k/a Sunterra Residual Assets Finance, LLC) | |
3.77* | Certificate of Formation of Diamond Resorts Residual Assets M&E, LLC, as amended (f/k/a Sunterra Residual Assets M&E, LLC) | |
3.78* | Limited Liability Company Agreement of Diamond Resorts Residual Assets M&E, LLC (f/k/a Sunterra Residual Assets M&E, LLC) | |
3.79* | Certificate of Formation of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a Sunterra Ridge on Sedona Development, LLC) | |
3.80* | Limited Liability Company Agreement of Diamond Resorts Ridge on Sedona Development, LLC, as amended (f/k/a Sunterra Ridge on Sedona Development, LLC) | |
3.81* | Certificate of Formation of Diamond Resorts Ridge Pointe Development, LLC, as amended (f/k/a Sunterra Ridge Pointe Development, LLC) | |
3.82* | Limited Liability Company Agreement of Diamond Resorts Ridge Pointe Development, LLC (f/k/a Sunterra Ridge Pointe Development, LLC) | |
3.83* | Certificate of Formation of Diamond Resorts San Luis Bay Development, LLC, as amended (f/k/a Sunterra San Luis Bay Development, LLC) | |
3.84* | Limited Liability Company Agreement of Diamond Resorts San Luis Bay Development, LLC (f/k/a Sunterra San Luis Bay Development, LLC) | |
3.85* | Certificate of Formation of Diamond Resorts Santa Fe Development, LLC, as amended (f/k/a Sunterra Santa Fe Development, LLC) | |
3.86* | Limited Liability Company Agreement of Diamond Resorts Santa Fe Development, LLC (f/k/a Sunterra Santa Fe Development, LLC) | |
3.87* | Certificate of Formation of Diamond Resorts Scottsdale Development, LLC, as amended (f/k/a Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC) | |
3.88* | Limited Liability Company Agreement of Diamond Resorts Scottsdale Development, LLC (f/k/a Sunterra Scottsdale Development, LLC; f/k/a Sunterra Poipu GP Development, LLC) |
Table of Contents
Exhibit | Description | |
3.89* | Certificate of Formation of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a Sunterra Sedona Springs Development, LLC) | |
3.90* | Limited Liability Company Agreement of Diamond Resorts Sedona Springs Development, LLC, as amended (f/k/a Sunterra Sedona Springs Development, LLC) | |
3.91* | Certificate of Formation of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a Sunterra Sedona Summit Development, LLC) | |
3.92* | Limited Liability Company Agreement of Diamond Resorts Sedona Summit Development, LLC, as amended (f/k/a Sunterra Sedona Summit Development, LLC) | |
3.93* | Certificate of Formation of Diamond Resorts St. Croix Development, LLC, as amended (f/k/a Sunterra St. Croix Development, LLC) | |
3.94* | Limited Liability Company Agreement of Diamond Resorts St. Croix Development, LLC (f/k/a Sunterra St. Croix Development, LLC) | |
3.95* | Certificate of Formation of Diamond Resorts Steamboat Development, LLC, as amended (f/k/a Sunterra Steamboat Development, LLC) | |
3.96* | Limited Liability Company Agreement of Diamond Resorts Steamboat Development, LLC (f/k/a Sunterra Steamboat Development, LLC) | |
3.97* | Certificate of Formation of Diamond Resorts Tahoe Beach & Ski Development, LLC, as amended (f/k/a Sunterra Tahoe Beach & Ski Development, LLC) | |
3.98* | Limited Liability Company Agreement of Diamond Resorts Tahoe Beach & Ski Development, LLC (f/k/a Sunterra Tahoe Beach & Ski Development, LLC) | |
3.99* | Certificate of Formation of Diamond Resorts U.S. Collection Development, LLC, as amended (f/k/a Club Sunterra Development, LLC; f/k/a Club Sunterra, LLC) | |
3.100* | First Amended and Restated Limited Liability Company Operating Agreement of Diamond Resorts U.S. Collection Development, LLC (f/k/a Club Sunterra Development, LLC; Club Sunterra, LLC) | |
3.101* | Certificate of Formation of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a Sunterra Villa Mirage Development, LLC) | |
3.102* | Limited Liability Company Agreement of Diamond Resorts Villa Mirage Development, LLC, as amended (f/k/a Sunterra Villa Mirage Development, LLC) | |
3.103* | Certificate of Formation of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a Sunterra Villas of Sedona Development, LLC) | |
3.104* | Limited Liability Company Agreement of Diamond Resorts Villas of Sedona Development, LLC, as amended (f/k/a Sunterra Villas of Sedona Development, LLC) | |
3.105* | Certificate of Formation of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC) | |
3.106* | Limited Liability Company Agreement of Diamond Resorts West Maui Development, LLC, as amended (f/k/a Sunterra West Maui Development, LLC; f/k/a Sunterra West Marketing, LLC) | |
3.107* | Articles of Organization of Foster Shores, LLC | |
3.108* | Limited Liability Company Agreement of Foster Shores, LLC | |
3.109* | Articles of Incorporation of George Acquisition Subsidiary, Inc. | |
3.110* | Bylaws of George Acquisition Subsidiary, Inc. | |
3.111* | Certificate of Formation of Ginger Creek, LLC | |
3.112* | Limited Liability Company Agreement of Ginger Creek, LLC | |
3.113* | Certificate of Formation of Grand Escapes, LLC | |
3.114* | Limited Liability Company Agreement of Grand Escapes, LLC | |
3.115* | Certificate of Formation of International Timeshares Marketing, LLC, as amended |
Table of Contents
Exhibit | Description | |
3.116* | Limited Liability Company Agreement of International Timeshares Marketing, LLC, as amended | |
3.117* | Articles of Organization of Lake Tahoe Resort Partners, LLC | |
3.118* | Operating Agreement of Lake Tahoe Resort Partners, LLC, as amended | |
3.119* | Articles of Incorporation of Mazatlan Development, Inc., as amended (f/k/a Mazatlan Villas, Inc.) | |
3.120* | Bylaws of Mazatlan Development, Inc. (f/k/a Mazatlan Villas, Inc.) | |
3.121* | Articles of Incorporation of MMG Development Corp. | |
3.122* | Bylaws of MMG Development Corp. | |
3.123* | Certificate of Limited Partnership of Poipu Resort Partners, L.P., as amended (f/k/a Pointe Resort Partners) | |
3.124* | Amended and Restated Agreement of Limited Partnership of Poipu Resort Partners, L.P. (f/k/a Pointe Resort Partners) | |
3.125* | Articles of Incorporation of Resort Management International, Inc. | |
3.126* | Bylaws of Resort Management International, Inc., as amended | |
3.127* | Articles of Incorporation of Resorts Development International, Inc. | |
3.128* | Bylaws of Resorts Development International, Inc. | |
3.129* | Articles of Organization of Walsham Lake, LLC | |
3.130* | Limited Liability Company Agreement of Walsham Lake, LLC | |
3.131* | Second Amended and Restated Certificate of Limited Partnership of West Maui Resort Partners, L.P., as amended (f/k/a West Maui Partners, L.P.) | |
3.132* | Second Amended and Restated Agreement of Limited Partnership of West Maui Resort Partners, L.P. (f/k/a West Maui Partners, L.P.) | |
4.1* | Indenture, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as trustee | |
4.2* | Registration Rights Agreement, dated as of August 13, 2010, among Diamond Resorts Corporation, Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, the subsidiary guarantors named therein, Credit Suisse Securities (USA) LLC, as representative of the initial purchasers, Banc of America Securities LLC, as representative of the initial purchasers, and Guggenheim Securities, LLC, as representative of the initial purchasers | |
4.3* | Security Agreement, dated August 13, 2010, among Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, Diamond Resorts Corporation, the subsidiary guarantors named therein and Wells Fargo Bank, National Association, as collateral agent | |
4.4* | Form of 12.00% Senior Secured Notes due 2018 (included in Exhibit 4.1) | |
5.1** | Opinion of Katten Muchin Rosenman LLP | |
5.2* | Opinion of Ballard Spahr LLP | |
5.3** | Opinion of Holland & Knight LLP | |
5.4* | Opinion of Imanaka Kudo & Fujimoto | |
5.5* | Opinion of Summers Compton Wells PC | |
10.1* | Second Amended and Restated Sale Agreement, dated as of August 31, 2010, by and between Diamond Resorts Depositor 2008 LLC and Diamond Resorts Issuer 2008 LLC, and acknowledged and agreed to by Diamond Resorts Finance Holding Company | |
10.2* | Second Amended and Restated Purchase Agreement, dated as of August 31, 2010, by and between Diamond Resorts Finance Holding Company and Diamond Resorts Depositor 2008 LLC |
Table of Contents
Exhibit | Description | |
10.3* | Third Amended and Restated Indenture, dated as of August 31, 2010, by and among Diamond Resorts Issuer 2008 LLC, Diamond Resorts Financial Services, Inc., Wells Fargo Bank, National Association and Credit Suisse AG, Cayman Islands Branch | |
10.4** | Indenture, dated as of October 1, 2009, by and among Diamond Resorts Owner Trust 2009-1, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank, National Association | |
10.5* | Note Purchase Agreement, dated as of October 9, 2009, by and between Diamond Resorts Owner Trust 2009-1 and Diamond Resorts Corporation, and confirmed and accepted by Credit Suisse Securities (USA) LLC | |
10.6* | Third Amended and Restated Securityholders Agreement, dated as of February 18, 2011, by and among Diamond Resorts Parent, LLC and the other parties named therein | |
10.7* | Amended and Restated Registration Rights Agreement, dated as of June 17, 2010, by and among Diamond Resorts Parent, LLC and the other parties named therein, as amended | |
10.8* | Receivables Loan and Security Agreement, dated as of August 31, 2010, by and between Textron Financial Corporation and ILX Acquisition, Inc. | |
10.9* | Inventory Loan and Security Agreement, dated as of August 31, 2010, by and between Textron Financial Corporation and ILX Acquisition, Inc. | |
10.10** | Loan Sale and Servicing Agreement, dated as of April 30, 2010, by and among DRI Quorum 2010 LLC, Quorum Federal Credit Union, Diamond Resorts Financial Services, Inc. and Wells Fargo Bank, National Association | |
10.11* | Purchase Agreement, dated as of April 30, 2010, by and between Diamond Resorts Finance Holding Company and DRI Quorum 2010 LLC | |
10.12** | Credit and Security Agreement, dated as of November 23, 2010, by and among Tempus Acquisition, LLC, the lenders from time to time party thereto and Guggenheim Corporate Funding, LLC | |
10.13* | Pledge Agreement, dated as of November 23, 2010, by and between Tempus Holdings, LLC and Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein | |
10.14* | Guaranty, dated as of November 23, 2010, by Diamond Resorts Corporation, in favor of Guggenheim Corporate Funding, LLC, as administrative agent for the lenders identified therein | |
10.15* | Lease, dated as of January 16, 2008, by and between H/MX Health Management Solutions, Inc. and Diamond Resorts Corporation | |
10.16*† | Terms of Engagement Agreement for Individual Independent Contractor, dated as of June 2009, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services USA, LLC, as amended by the Extension Agreement, effective as of June 1, 2010, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company, successor to Diamond Resorts Centralized Services USA, LLC, and the Amendment to Extension Agreement, dated as of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company, successor to Diamond Resorts Centralized Services USA, LLC | |
10.17*† | Terms of Additional Engagement Agreement for Individual Independent Contractor, dated as of January 1, 2011, by and between Praesumo Partners, LLC and Diamond Resorts Centralized Services Company | |
10.18**† | Homeowner Association Oversight, Consulting and Executive Management Services Agreement, dated as of December 31, 2010, by and between Diamond Resorts Corporation and Hospitality Management and Consulting Service, L.L.C. | |
12.1* | Statement of Computation of Ratio of Earnings to Fixed Charges | |
21.1* | Subsidiaries of Diamond Resorts Parent, LLC | |
23.1** | Consent of BDO USA, LLP | |
23.2** | Consent of Katten Muchin Rosenman LLP (included as part of its opinion filed as Exhibit 5.1 hereto) | |
23.3* | Consent of Ballard Spahr LLP (included as part of its opinion filed as Exhibit 5.2 hereto) | |
23.4** | Consent of Holland & Knight LLP (included as part of its opinion filed as Exhibit 5.3 hereto) |
Table of Contents
Exhibit | Description | |
23.5* | Consent of Imanaka Kudo & Fujimoto LLP (included as part of its opinion filed as Exhibit 5.4 hereto) | |
23.6* | Consent of Summers Compton Wells PC LLP (included as part of its opinion filed as Exhibit 5.5 hereto) | |
24.1* | Powers of Attorney | |
25.1* | Form T-1 Statement of Eligibility under the Trust Indenture Act of 1939 of Wells Fargo Bank, National Association, with respect to the Indenture governing the 12.00% Senior Secured Notes due 2018 | |
99.1* | Form of Letter of Transmittal | |
99.2** | Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees | |
99.3* | Form of Letter to Clients | |
99.4* | Form of Notice of Guaranteed Delivery |
* | Previously filed | |
** | Filed herewith | |
† | Management contract or compensatory plan, contract or arrangement required to be filed as an exhibit to the registration statement |