SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 19, 2001
TRENDWEST RESORTS, INC.
(Exact name of registrant as specified in its charter)
Oregon 000-22979 93-1004403
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
98052 Willows Road
Redmond, Washington 98052
(Address of principal executive office)
(425) 498-2500
(Registrant's telephone number including area code)
Item 9. Regulation FD Disclosure
Press release issued December 19, 2001:
TRENDWEST RESORTS PROJECTS STRONG FOURTH QUARTER;
ANNOUNCES 2002 PROJECTIONS
Company Projects FY 2001 Revenues and Net Income at Record Levels
REDMOND, Wash. - December 19, 2001 - Trendwest Resorts Inc. (Nasdaq: TWRI), a
leader in the vacation ownership industry, today announced that it expects FY
2001 net income to reach record levels, approximately 26% ahead of FY 2000
results, on revenues in excess of $460 million.
<Page>
Fourth Quarter 2001 estimates:
- - Vacation Credit and Fractional Sales are estimated to reach $88.4 million,
approximately 16% ahead of last year's fourth quarter;
- - Net income is expected to be approximately $12.4 million, 16% ahead of last
year's fourth quarter.
"This year's earnings growth began during the first quarter with strong revenues
and is continuing as we near year end. We have noted a slowing of our growth
momentum during this fourth quarter in reaction to the events of September 11th
and tighter economic conditions, however, we expect to end the year well ahead
of last year's levels," stated Bill Peare, President and CEO. "We believe our
continued success reflects our focus on drive-to locations and a product that
not only meets but also exceeds the expectations of today's consumers. We offer
our vacation credit owners strong customer service and a respite from today's
stress-filled world."
Company Projects Double-digit growth to continue in 2002
"Having achieved a leadership position in the industry, we believe that we are
well positioned to meet the future," continued Peare. "Next year, we plan to
focus our energies on deeper penetration within our existing sales markets and
completing the resorts that are currently in various stages of development.
During 2001, we opened 12 sales offices and brought seven resorts online while
breaking ground on three new resorts. Next year, we will push toward greater
efficiencies throughout our system with the goal of driving more sales dollars
to the bottom line."
2002 Projections
- - Net Income projected to grow approximately 26% over FY 2001;
- - Total Revenues projected to grow approximately 17% over FY 2001.
2002 Revenue Projections
U.S. Vacation credit sales - expected growth results from a full
year's revenue at all sales offices and increasing same store sales.
No new U.S. sales offices are planned in 2002.
South Pacific Vacation credit sales - expected growth reflects the
addition of one new sales office planned for the Sydney market in
early 2002 and increasing same store sales.
Fractional Interest sales - expected to come from the first phase of
the South Lake Tahoe project, with the balance of the revenue from the
Tahoe project recognized in 2003.
Financing Income & Gains on Sales of Notes Receivable - expected to
increase as a result of sales growth.
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<Page>
Resort management services - expected to increase as a result of a
dues increase to WorldMark owners in late 2001 and growth in the owner
base.
Expense Projections
Cost of Sales - as a percentage of 2002 Vacation credit sales, is
expected to remain comparable to 2001 levels.
Sales and marketing - expected to improve to 46% of Vacation credit
sales in 2002, from 47% in 2001, as maturing stores become
increasingly efficient and underperforming stores are improved or
closed.
General & Administrative & Other - as a percentage of total revenue in
2002 is expected to remain comparable to 2001 levels.
Provision for doubtful accounts & recourse liability - is expected to
increase to 7.7% of vacation credit sales for 2002, up from 7.5% in
2001, as a result of a changing sales mix and a continuation of
current delinquency experience.
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TRENDWEST RESORTS, INC.
AND SUBSIDIARIES
Projected Operating Results
2001 and 2002
($ in millions, except per share data)
<Table>
<Caption>
2001 2002
-------- --------
Revenue Outlook
Vacation Credit & Fractional Interest sales, net $ 403.4 $ 471.0
Financing Income & Gains on sales of Notes Receivable 48.7 55.0
Resort management services 3.8 7.6
Other 7.3 10.4
-------- --------
Total revenues 463.2 544.0
Expense Outlook
Vacation Credit & Fractional Interest cost of sales 111.1 130.1
Sales and marketing 190.4 216.8
Resort management services 1.5 2.0
General & Administrative & Other 42.8 50.1
Provision for doubtful accounts & recourse liability 30.1 36.4
-------- --------
Total costs and operating expenses 375.9 435.4
-------- --------
Income before income taxes 87.3 108.6
Income tax expense 33.3 40.6
-------- --------
Net income $ 54.0 $ 68.0
======== ========
Basic net income per common share (pre-split) $ 2.14 $ 2.68
Basic net income per common share (post-split*) $ 1.42 $ 1.79
Diluted net income per common share (pre-split) $ 2.10 $ 2.63
Diluted net income per common share (post-split*) $ 1.40 $ 1.76
Weighted average shares of common stock and
dilutive potential common stock outstanding:
Basic (pre-split) 25,277,021 25,387,284
Basic (post-split*) 37,915,532 38,080,926
Diluted(pre-split) 25,701,313 25,811,576
Diluted(post-split*) 38,551,970 38,717,364
*Adjusted for a three-for-two stock split effective December 17, 2001
</Table>
<Table>
<Caption>
Distribution of Net Income by Quarter
2001 2002
-------- --------
First Quarter 22% 18%
Second Quarter 26% 25%
Third Quarter 29% 29%
Fourth Quarter 23% 28%
-------- --------
Total 100% 100%
======== ========
</Table>
"We are confident we can meet or exceed the projected results for 2001 and 2002
and want to clarify the expected per share earnings based on the 3 for 2 stock
split that took effect December 17th," Peare concluded.
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Trendwest Resorts, Inc., headquartered in Redmond, Washington, is a leader in
the timeshare industry and recently ranked 33rd in Forbes List of 200 Best Small
Companies. Through its exclusive relationships with WorldMark, the Club, and
WorldMark South Pacific Club, the Company provides a flexible vacation ownership
system, based on use of Vacation Credits. At September 30, 2001, Trendwest had
46 sales offices, and nearly 141,000 WorldMark and WorldMark South Pacific
owners enjoyed over 2,640 condominium units at 47 resort locations in the United
States, British Columbia, Mexico, Fiji and Australia. For more information visit
Trendwest and WorldMark at www.trendwestresorts.com, and
www.worldmarktheclub.com.
This press release contains forward looking statements concerning Trendwest's
future revenues, expenses, the addition of new resorts, the results from sales
offices and other statements about our plans, objectives, expectations and
intentions and other statements that are not historical facts. These forward
looking statements are based on current beliefs and expectations of our
management and are inherently subject to significant business, economic and
competitive uncertainties and contingencies, many of which are beyond our
control. In addition, these forward looking statements are subject to
assumptions with respect to future business strategies and decisions that are
subject to change.
Actual results may vary materially from those set forth in the forward looking
statements contained in this press release due to, among other things, the
following factors:
Our revenues may not meet the projections because:
- - we may not be able to obtain the amount of debt or equity financing
required to finance our operations or the terms of such financing could be
materially different than we have assumed;
- - a prolonged recession in the U.S. or Australia could adversely affect our
sales of vacation credits;
- - a prolonged recession in the U.S. could cause delinquencies and defaults on
our notes receivable to increase, thereby decreasing the amount of revenue
from financing activities;
- - an increase in interest rates could adversely affect our expected revenues
from financing activities; and - our expected increases in sales from
existing sales offices may not occur.
Our expenses may be higher than anticipated because:
- - our costs of new resort development may exceed our estimates;
- - our sales and marketing costs may need to be increased if we are not
meeting our sales targets;
- - we may not be able to reduce our overhead expenses in a timely manner if
our revenue estimates are not being met; and
- - our provision for doubtful accounts may be higher than estimated if the
recession is prolonged and has an adverse effect on the credit quality of
our receivables.
Additional factors that could cause actual results to vary materially from those
set forth in the forward looking statements are included in our Annual Report on
Form 10-K under the heading "Risk Factors."
The forward looking statements contained in this press release are based on
management's best estimates as of the date of this release. We do not undertake
any obligation to update any forward looking statements to reflect circumstances
or events that occur after the date the forward looking statements are made.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TRENDWEST RESORTS, INC.
By: /S/ Timothy P. O'Neil
-----------------------------------
Timothy P. O'Neil
Chief Financial Officer
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