Exhibit 99.1
Diamond Resorts International®
Tel: 702.823.7069; Fax: 702.684.8705
media@diamondresorts.com
Diamond Resorts Corporation Announcing its Results for the Quarter Ended June 30, 2012
August 14, 2012, Las Vegas, NV - Diamond Resorts Corporation, together with Diamond Resorts Parent, LLC and its subsidiaries (“Diamond” or the “Corporation”), today announced results for the quarter ended June 30, 2012. “We are pleased with the year over year improvement in our operating performance and continue to remain focused on the growth of our core management and member services business and our sales and marketing platform,” said David F. Palmer, President and Chief Financial Officer.
Quarter Ended June 30, 2012 Financial Results
Adjusted EBITDA for Diamond Resorts Parent, LLC and restricted subsidiaries1 increased $7.4 million, or 39.1%, to $26.5 million for the quarter ended June 30, 2012 from $19.1 million for the quarter ended June 30, 2011.
After including the impact of the unrestricted subsidiaries, Adjusted EBITDA for the consolidated operations of Diamond increased $10.0 million, or 65.9% to $25.1 million for the quarter ended June 30, 2012 from $15.1 million for the quarter ended June 30, 2011.
The growth is attributable to increased profitability associated with both Vacation Interest sales and the management of our members and resorts.
Vacation Interest Sales Results for the Quarter Ended June 30, 2012
Vacation Interest sales for Diamond increased $18.1 million, or 34.5%, to $70.6 million for the quarter ended June 30, 2012 from $52.5 million for the quarter ended June 30, 2011. This increase in Vacation Interest sales revenue was due to higher Vacation Interest sales on a same-store basis as well as the revenue contribution from our Tempus sales center, which commenced operations in July 2011, and the PMR sales center, which commenced operations in May 2012. On a consolidated basis, we closed 6,006 Vacation Interest transactions and recorded a sales price of $12,347 per transaction for the quarter ended June 30, 2012, or 800 more transactions and $1,917 more per transaction as compared to the quarter ended June 30, 2011.
Diamond's advertising, sales and marketing expense as a percentage of Vacation Interest sales was 57.0% for the quarter ended June 30, 2012 compared to 63.3% for the quarter ended June 30, 2011. The decrease of such costs as a percentage of Vacation Interest sales revenue was primarily due to absorption of fixed costs through increased sales efficiencies. The advertising, sales and marketing costs incurred in previous years to generate additional tour flows continued to achieve their intended goals during the three months ended June 30, 2012.
Management and Member Services Results for the Quarter Ended June 30, 2012
Revenue from management and member services for Diamond increased $4.1 million, or 16.9%, to $28.3 million for the quarter ended June 30, 2012 from $24.2 million for the quarter ended June 30, 2011. Management fees increased as a result of increases in operating costs at the resort level, which generated higher same-store management fee revenue under our cost-plus management agreements, and the addition of the managed properties from the Tempus Resorts Acquisition and the PMR Acquisition. In addition, we entered into a sales and marketing fee-for-service arrangement with a third-party resort operator, which began to generate commission and management fee revenue towards the end of second quarter of 2011.
1 - Financial data for Diamond Resorts Parent, LLC and restricted subsidiaries excludes results of Diamond's unrestricted subsidiaries. As of June 30, 2012 and December 31, 2011, the Unrestricted Subsidiaries were FLRX, Inc. and its subsidiaries, ILX Acquisition and its subsidiaries, Tempus Acquisition, LLC and its subsidiaries, and DPMA and its subsidiaries. As of June 30, 2011, the Unrestricted Subsidiaries were FLRX, Inc. and its subsidiaries, ILX Acquisition and its subsidiaries, and Tempus Acquisition, LLC and its subsidiaries. For purposes of the Senior Secured Note Indenture, the financial position, results of operations, and statements of cash flow of Unrestricted Subsidiaries are excluded from the Company's financial results to determine whether the Company is in compliance with the financial covenants governing the Senior Secured Notes. Accordingly, management believes that the following presentation is helpful to current and potential investors in the Senior Secured Notes as well as others.
Non-GAAP Financial Measures
Presentation of Certain Financial Metrics
We define Adjusted EBITDA as our income (loss) before provision (benefit) for income taxes, plus: (i) corporate interest expense; (ii) depreciation and amortization; (iii) Vacation Interest cost of sales; (iv) loss on extinguishment of debt; (v) impairments and other non-cash write-offs; (vi) loss on the disposal of assets; (vii) amortization of loan origination costs; and (viii) amortization of portfolio premium; less (ix) non-cash revenue outside the ordinary course of business; (x) gain on the disposal of assets; (xi) gain on bargain purchase from business combination; and (xii) amortization of portfolio discount. Adjusted EBITDA is a non-U.S. GAAP financial measure and should not be considered as an alternative to net income (loss), operating income (loss) or any other measure of financial performance calculated and presented in accordance with U.S. GAAP.
We believe Adjusted EBITDA is useful to investors in evaluating our operating performance for the following reasons:
| |
| • | it and similar non-U.S. 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 |
| |
| • | several of the financial covenants governing the Senior Secured 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 Senior Secured Notes, which definition approximates Adjusted EBITDA as presented here. |
Our management uses Adjusted EBITDA: (i) as a measure of our operating performance, because it does not include the impact of items that we do not consider indicative of our core operating performance; (ii) for planning purposes, including the preparation of our annual operating budget; (iii) to allocate resources to enhance the financial performance of our business; and (iv) to evaluate the effectiveness of our business strategies.
The following table presents a reconciliation of net income before benefit for income taxes to Adjusted EBITDA:
|
| | | | | | | | |
| | | Three Months Ended |
| | | June 30, 2012 | | June 30, 2011 |
| | | ($ in thousands) |
| Income before benefit for income taxes | | $ | 31,943 |
| | $ | 1,648 |
|
| Plus: Corporate interest expense(a) | | 18,453 |
| | 15,530 |
|
| Depreciation and amortization(b) | | 4,369 |
| | 3,142 |
|
| Vacation interest cost of sales(c) | | (7,834 | ) | | (5,681 | ) |
| Impairments and other write-offs(b) | | — |
| | 240 |
|
| Gain on the disposal of assets(b) | | (24 | ) | | (363 | ) |
| Gain on bargain purchase from business combinations(b) | | (22,698 | ) | | — |
|
| Amortization of loan origination costs(b) | | 788 |
| | 662 |
|
| Amortization of portfolio premiums (discounts)(b) | | 60 |
| | (74 | ) |
| Adjusted EBITDA - Consolidated(d) | | $ | 25,057 |
| | $ | 15,104 |
|
|
| | | | | | | | |
| Adjusted EBITDA—Diamond Resorts Parent, LLC and Restricted Subsidiaries(d) | | $ | 26,498 |
| | $ | 19,053 |
|
| Adjusted EBITDA—Unrestricted Subsidiaries(d) | | 2,068 |
| | (3,958 | ) |
| Adjusted EBITDA—Intercompany elimination(d) | | (3,509 | ) | | 9 |
|
| Adjusted EBITDA—Consolidated(d) | | $ | 25,057 |
| | $ | 15,104 |
|
| |
| (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/gains. |
| |
| (c) | We record Vacation Interest cost of sales using the relative sales value method in accordance with ASC 978, which requires us to make significant estimates which are subject to significant uncertainty. In determining the appropriate amount of costs using the relative sales value method, we rely on complex, multi-year financial models that incorporate a variety of estimated inputs. These models are reviewed on a regular basis, and the relevant estimates used in the models are revised based upon historical results and management’s new estimates. 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) | For purposes of certain covenants governing the Senior Secured Notes, our financial performance, including Adjusted EBITDA, is measured with reference to us and our Restricted Subsidiaries, and the performance of Unrestricted Subsidiaries is not considered. Therefore, we believe that this presentation of Adjusted EBITDA provides helpful information to readers of this quarterly report. |
We understand that, although measures similar to Adjusted EBITDA are frequently used by investors and securities analysts in their evaluation of companies, it has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results of operations as reported under U.S. GAAP. Some of these limitations are:
| |
| • | 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. |
To properly and prudently evaluate our business, we encourage you to review our U.S. GAAP financial statements included elsewhere in this quarterly report, and not to rely on any single financial measure to evaluate our business.
Results of Operations
See the following tables for the determination of the operating results of the Company:
DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
For the three months ended June, 2012 and 2011
(Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, 2012 | | Three Months Ended June 30, 2011 |
| | Diamond Resorts Parent, LLC and Restricted Subsidiaries | | Unrestricted Subsidiaries | | Elimination | | Total | | Diamond Resorts Parent, LLC and Restricted Subsidiaries | | Unrestricted Subsidiaries | | Elimination | | Total |
| | | | | | | | | | | | | | | | |
| Revenues: | | | | | | | | | | | | | | | |
| Vacation Interest sales | $ | 67,191 |
| | $ | 3,385 |
| | $ | — |
| | $ | 70,576 |
| | $ | 50,508 |
| | $ | 1,962 |
| | $ | — |
| | $ | 52,470 |
|
Provision for uncollectible Vacation Interest sales revenue | (6,535 | ) | | 833 |
| | — |
| | (5,702 | ) | | (3,754 | ) | | 1 |
| | — |
| | (3,753 | ) |
| Vacation Interest, net | 60,656 |
| | 4,218 |
| | — |
| | 64,874 |
| | 46,754 |
| | 1,963 |
| | — |
| | 48,717 |
|
| Management and member services | 27,782 |
| | 2,970 |
| | (2,457 | ) | | 28,295 |
| | 24,351 |
| | 996 |
| | (1,139 | ) | | 24,208 |
|
| Consolidated resort operations | 7,336 |
| | 1,291 |
| | — |
| | 8,627 |
| | 7,012 |
| | 230 |
| | — |
| | 7,242 |
|
| Interest | 9,392 |
| | 3,120 |
| | — |
| | 12,512 |
| | 9,357 |
| | 444 |
| | — |
| | 9,801 |
|
| Other | 8,509 |
| | 5,228 |
| | (6,601 | ) | | 7,136 |
| | 4,196 |
| | 19 |
| | (396 | ) | | 3,819 |
|
| Total revenues | 113,675 |
| | 16,827 |
| | (9,058 | ) | | 121,444 |
| | 91,670 |
| | 3,652 |
| | (1,535 | ) | | 93,787 |
|
| Costs and Expenses: | | | | | | | | | | | | | | | |
| Vacation Interest cost of sales | (7,976 | ) | | 142 |
| | — |
| | (7,834 | ) | | (5,759 | ) | | 78 |
| | — |
| | (5,681 | ) |
| Advertising, sales and marketing | 38,765 |
| | 1,689 |
| | (236 | ) | | 40,218 |
| | 32,009 |
| | 1,332 |
| | (144 | ) | | 33,197 |
|
| Vacation Interest carrying cost, net | 8,270 |
| | 1,632 |
| | (726 | ) | | 9,176 |
| | 6,360 |
| | 1,161 |
| | (174 | ) | | 7,347 |
|
| Management and member services | 8,434 |
| | 2,231 |
| | (2,205 | ) | | 8,460 |
| | 5,076 |
| | 1,642 |
| | (1,030 | ) | | 5,688 |
|
| Consolidated resort operations | 6,935 |
| | 1,289 |
| | — |
| | 8,224 |
| | 6,838 |
| | 268 |
| | — |
| | 7,106 |
|
| Loan portfolio | 2,329 |
| | 599 |
| | (545 | ) | | 2,383 |
| | 1,960 |
| | 64 |
| | — |
| | 2,024 |
|
| Other operating | 2,502 |
| | 1,142 |
| | (1,837 | ) | | 1,807 |
| | 1,069 |
| | 24 |
| | (231 | ) | | 862 |
|
| General and administrative | 17,410 |
| | 4,791 |
| | — |
| | 22,201 |
| | 15,742 |
| | 2,892 |
| | 35 |
| | 18,669 |
|
| Depreciation and amortization | 2,217 |
| | 2,152 |
| | — |
| | 4,369 |
| | 2,602 |
| | 540 |
| | — |
| | 3,142 |
|
| Interest | 16,917 |
| | 6,302 |
| | — |
| | 23,219 |
| | 18,655 |
| | 1,253 |
| | — |
| | 19,908 |
|
| Impairments and other write-offs | — |
| | — |
| | — |
| | — |
| | 230 |
| | 10 |
| | — |
| | 240 |
|
| Gain on disposal of assets | (24 | ) | | — |
| | — |
| | (24 | ) | | (363 | ) | | — |
| | — |
| | (363 | ) |
Gain on bargain purchase from business combination | — |
| | (22,698 | ) | | — |
| | (22,698 | ) | | — |
| | — |
| | — |
| | — |
|
| Total costs and expenses | 95,779 |
| | (729 | ) | | (5,549 | ) | | 89,501 |
| | 84,419 |
| | 9,264 |
| | (1,544 | ) | | 92,139 |
|
Income (loss) before benefit for income taxes | 17,896 |
| | 17,556 |
| | (3,509 | ) | | 31,943 |
| | 7,251 |
| | (5,612 | ) | | 9 |
| | 1,648 |
|
| Benefit for income taxes | (1,216 | ) | | (13,452 | ) | | — |
| | (14,668 | ) | | (795 | ) | | (96 | ) | | — |
| | (891 | ) |
| Net income (loss) | $ | 19,112 |
| | $ | 31,008 |
| | $ | (3,509 | ) | | $ | 46,611 |
| | $ | 8,046 |
| | $ | (5,516 | ) | | $ | 9 |
| | $ | 2,539 |
|
DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of June 30, 2012 and December 31, 2011
(Unaudited)
(In thousands)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | June 30, 2012 (Unaudited) | | December 31, 2011 (Unaudited) |
| | Diamond Resorts Parent, LLC and Restricted Subsidiaries | | Unrestricted Subsidiaries | | Elimination | | Total | | Diamond Resorts Parent, LLC and Restricted Subsidiaries | | Unrestricted Subsidiaries | | Elimination | | Total |
| ASSETS | | | | | | | | | | | | | | | |
| Cash and cash equivalents | $ | 17,001 |
| | $ | 875 |
| | $ | — |
| | $ | 17,876 |
| | $ | 19,648 |
| | $ | 249 |
| | $ | — |
| | $ | 19,897 |
|
| Cash in escrow and restricted cash | 42,206 |
| | 638 |
| | — |
| | 42,844 |
| | 33,370 |
| | 618 |
| | — |
| | 33,988 |
|
Mortgages and contracts receivable, net of allowance of $52,184, $28,717, $0 $80,901, $50,519, $33,579, $0 and $84,809, respectively | 233,952 |
| | 49,294 |
| | (4 | ) | | 283,242 |
| | 227,835 |
| | 55,473 |
| | (6 | ) | | 283,302 |
|
| Due from related parties, net | 34,421 |
| | (6,127 | ) | | (2,511 | ) | | 25,783 |
| | 33,687 |
| | (3,413 | ) | | (2,009 | ) | | 28,265 |
|
| Other receivables, net | 17,650 |
| | 7,173 |
| | 16 |
| | 24,839 |
| | 32,579 |
| | 2,455 |
| | 19 |
| | 35,053 |
|
| Income tax receivable | 2,045 |
| | — |
| | — |
| | 2,045 |
| | 629 |
| | — |
| | — |
| | 629 |
|
| Prepaid expenses and other assets, net | 84,099 |
| | 14,353 |
| | (1,074 | ) | | 97,378 |
| | 45,402 |
| | 9,221 |
| | (1,146 | ) | | 53,477 |
|
| Unsold Vacation Interests, net | 254,722 |
| | 74,760 |
| | (8,770 | ) | | 320,712 |
| | 225,375 |
| | 34,634 |
| | (3,204 | ) | | 256,805 |
|
| Property and equipment, net | 28,990 |
| | 22,829 |
| | — |
| | 51,819 |
| | 25,943 |
| | 22,234 |
| | — |
| | 48,177 |
|
| Assets held for sale | 3,958 |
| | 154 |
| | — |
| | 4,112 |
| | 5,517 |
| | — |
| | — |
| | 5,517 |
|
| Intangible assets, net | 32,614 |
| | 76,495 |
| | — |
| | 109,109 |
| | 34,050 |
| | 34,059 |
| | — |
| | 68,109 |
|
| Total assets | $ | 751,658 |
| | $ | 240,444 |
| | $ | (12,343 | ) | | $ | 979,759 |
| | $ | 684,035 |
| | $ | 155,530 |
| | $ | (6,346 | ) | | $ | 833,219 |
|
| | | | | | | | | | | | | | | | |
LIABILITIES AND MEMBER CAPITAL (DEFICIT) | | | | | | | | | | | | | | | |
| Accounts payable | $ | 13,913 |
| | $ | 2,257 |
| | $ | — |
| | $ | 16,170 |
| | $ | 11,663 |
| | $ | 690 |
| | — |
| | $ | 12,353 |
|
| Due to related parties, net | 70,926 |
| | 41,161 |
| | (9,691 | ) | | 102,396 |
| | 28,684 |
| | 36,450 |
| | (9,612 | ) | | 55,522 |
|
| Accrued liabilities | 76,605 |
| | 5,697 |
| | (1,062 | ) | | 81,240 |
| | 68,316 |
| | 3,153 |
| | (1,143 | ) | | 70,326 |
|
| Income taxes payable | 3,354 |
| | — |
| | — |
| | 3,354 |
| | 3,491 |
| | — |
| | — |
| | 3,491 |
|
| Deferred revenues | 70,196 |
| | 1,721 |
| | — |
| | 71,917 |
| | 70,743 |
| | 31 |
| | — |
| | 70,774 |
|
Senior secured notes, net of original issue discount of $8,997, $0, $0, $8,997, $9,454, $0, $0 and $9,454, respectively | 416,003 |
| | — |
| | — |
| | 416,003 |
| | 415,546 |
| | — |
| | — |
| | 415,546 |
|
Securitization notes and conduit facility, net of original issue discount of $913, $0, $0, $913, $1,054, $0, $0 and $1,054, respectively | 184,584 |
| | 54,026 |
| | — |
| | 238,610 |
| | 188,165 |
| | 62,730 |
| | — |
| | 250,895 |
|
| Notes payable | 4,396 |
| | 125,545 |
| | — |
| | 129,941 |
| | 1,871 |
| | 69,643 |
| | — |
| | 71,514 |
|
| Total liabilities | 839,977 |
| | 230,407 |
| | (10,753 | ) | | 1,059,631 |
| | 788,479 |
| | 172,697 |
| | (10,755 | ) | | 950,421 |
|
| | | | | | | | | | | | | | | | |
| Member capital (deficit) | 152,238 |
| | 9,675 |
| | (9,675 | ) | | 152,238 |
| | 152,247 |
| | 9,675 |
| | (9,675 | ) | | 152,247 |
|
| (Accumulated deficit) retained earnings | (222,516 | ) | | 967 |
| | 7,508 |
| | (214,041 | ) | | (238,345 | ) | | (26,140 | ) | | 13,408 |
| | (251,077 | ) |
Accumulated other comprehensive (loss) income
| (18,041 | ) | | (605 | ) | | 577 |
| | (18,069 | ) | | (18,346 | ) | | (702 | ) | | 676 |
| | (18,372 | ) |
| Total member (deficit) capital | (88,319 | ) | | 10,037 |
| | (1,590 | ) | | (79,872 | ) | | (104,444 | ) | | (17,167 | ) | | 4,409 |
| | (117,202 | ) |
Total liabilities and member capital (deficit) | $ | 751,658 |
| | $ | 240,444 |
| | $ | (12,343 | ) | | $ | 979,759 |
| | $ | 684,035 |
| | $ | 155,530 |
| | $ | (6,346 | ) | | $ | 833,219 |
|
DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2012 and 2011
(Unaudited)
(In thousands)
|
| | | | | | | |
| | Six months ended |
| | June 30, 2012 |
| | June 30, 2011 |
|
| | | |
| Net income (loss) | $ | 37,036 |
| | $ | (4,180 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | |
| Provision for uncollectible Vacation Interest sales revenue | 9,817 |
| | 6,743 |
|
Amortization of capitalized financing costs and original issue discounts | 3,082 |
| | 3,334 |
|
Amortization of capitalized loan origination costs and portfolio discount | 600 |
| | 1,145 |
|
| Depreciation and amortization | 8,174 |
| | 6,312 |
|
| Impairments and other write-offs | (11 | ) | | 323 |
|
| Gain on disposal of assets | (96 | ) | | (372 | ) |
| Gain on bargain purchase from business combination | (22,749 | ) | | — |
|
| Deferred income taxes | (13,453 | ) | | — |
|
| Loss (Gain) on foreign currency exchange | 56 |
| | (17 | ) |
| Gain on mortgage repurchase | (19 | ) | | (120 | ) |
| Unrealized gain on derivative instruments | — |
| | (79 | ) |
| Gain on insurance settlement | — |
| | (3,535 | ) |
| Changes in operating assets and liabilities excluding acquisitions: | | | |
| Mortgages and contracts receivable | (8,689 | ) | | 5,898 |
|
| Due from related parties, net | 6,763 |
| | (305 | ) |
| Other receivables, net | 13,080 |
| | 18,497 |
|
| Prepaid expenses and other assets, net | (42,891 | ) | | (35,151 | ) |
| Unsold Vacation Interests, net | (25,842 | ) | | (28,287 | ) |
| Accounts payable | 3,775 |
| | 842 |
|
| Due to related parties, net | 51,352 |
| | 43,297 |
|
| Accrued liabilities | 11,166 |
| | 7,225 |
|
| Income taxes (receivable) payable | (1,589 | ) | | 947 |
|
| Deferred revenues | 1,028 |
| | (8,494 | ) |
| Net cash provided by operating activities | 30,590 |
| | 14,023 |
|
| | | | |
| Investing activities: | | | |
| Property and equipment capital expenditures | (6,107 | ) | | (3,304 | ) |
| Disbursement of Tempus Acquisition note receivable | — |
| | (3,493 | ) |
| Purchase of assets in connection with PMR Acquisition | (51,635 | ) | | — |
|
| Proceeds from sale of assets | 320 |
| | 2,004 |
|
| Net cash used in investing activities | $ | (57,422 | ) | | $ | (4,793 | ) |
DIAMOND RESORTS PARENT, LLC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS —Continued
For the six months ended June 30, 2012 and 2011
(Unaudited)
(In thousands)
|
| | | | | | | |
| | Six months ended |
| | June 30, 2012 |
| | June 30, 2011 |
|
| Financing activities: | | | |
| Changes in cash in escrow and restricted cash | $ | (8,857 | ) | | $ | (3,285 | ) |
| Proceeds from issuance of securitization notes and funding facilities | 45,885 |
| | 80,554 |
|
| Proceeds from issuance of notes payable | 64,125 |
| | 3,200 |
|
| Payments on securitization notes and funding facilities | (58,311 | ) | | (81,510 | ) |
| Payments on notes payable | (15,516 | ) | | (4,397 | ) |
| Payments of debt issuance costs | (2,594 | ) | | (2,740 | ) |
| Proceeds from issuance of common and preferred units | — |
| | 10,151 |
|
| Repurchase of a portion of outstanding warrants | — |
| | (10,151 | ) |
Payments of costs related to issuance of common and preferred units | (9 | ) | | (76 | ) |
| Net cash provided by (used in) financing activities | 24,723 |
| | (8,254 | ) |
| Net (decrease) increase in cash and cash equivalents | (2,109 | ) | | 976 |
|
Effect of changes in exchange rates on cash and cash equivalents | 88 |
| | 313 |
|
| Cash and cash equivalents, beginning of period | 19,897 |
| | 27,329 |
|
| Cash and cash equivalents, end of period | $ | 17,876 |
| | $ | 28,618 |
|
| | | | |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | | | |
| Cash paid for interest | $ | 39,062 |
| | $ | 35,220 |
|
| Cash paid for taxes, net of tax refunds | $ | 1,347 |
| | $ | (340 | ) |
| | | | |
Purchase of assets in connection with PMR acquisition based on a preliminary report: | | | |
| Fair value of assets acquired | $ | 89,704 |
| | $ | — |
|
| Gain on bargain purchase recognized | (22,880 | ) | | — |
|
| Cash paid | (51,635 | ) | | — |
|
| Deferred tax liability | (13,453 | ) | | — |
|
| Liabilities assumed | $ | 1,736 |
| | $ | — |
|
| | | | |
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | |
| Priority returns and redemption premiums on preferred units | $ | — |
| | $ | 8,412 |
|
| Insurance premiums financed through issuance of note payable | $ | 7,573 |
| | $ | 5,713 |
|
| Assets held for sale reclassified to unsold Vacation Interests | $ | 1,315 |
| | $ | 3,082 |
|
| Assets held for sale reclassified to other intangibles | $ | 187 |
| | $ | — |
|
About Diamond Resorts Corporation
Diamond Resorts Corporation and its subsidiaries develop, own, operate and manage vacation ownership resorts and, through resort and partner affiliation agreements, provide owners and members with access to 74 managed resorts and 164 affiliated resorts and four cruise itineraries through THE Club® at Diamond Resorts International®. To learn more, visit DiamondResorts.com.
