Diamond Resorts International, Inc. (NYSE:DRII) (“Diamond”, “We”
or the “Company”), today announced results for the third quarter
ended September 30, 2015.
David F. Palmer, President and Chief Executive Officer, stated,
“The Company delivered its ninth consecutive quarter of record
results and the largest and most profitable quarter in Company
history. Our business generated $103 million in Adjusted EBITDA and
$112 million of free cash flow ending the quarter with $327 million
of cash. Our success is attributable to the integration of a high
level of hospitality and member experiences into our entire guest
journey, from resort stays through to our marketing and sales
platforms. We also are pleased that on October 16th we completed
the Gold Key acquisition at a great value for our shareholders,
bringing six new resorts in a very attractive market into our
system. In light of our performance this quarter, we are raising
the lower end of the range of our previous guidance and we
anticipate that our results will be towards the high end.”
Third Quarter 2015 Highlights
- Total revenue increased $29.4 million,
or 13.3%, to $251.4 million.
- Net income increased $10.6 million, or
40.3%, to $36.9 million.
- Pre-tax income, excluding non-cash
stock based compensation, increased $17.0 million, or 34.2%, to
$66.8 million.
- We generated $111.7 million in free
cash flow prior to spending $7.9 million on share repurchases, $5.0
million on the expansion of our Cabo Azul resort and $3.3 million
for repayments of notes payable.
- Cash and Cash Equivalents at September
30, 2015 were $326.6 million. Through September 30th of this year,
we repurchased $98.1 million of our shares since inception.
- Adjusted EBITDA increased $18.4
million, or 21.7%, to $103.0 million for the third quarter of 2015
from $84.6 million for the third quarter of 2014.
- On October 16, 2015, we completed the
acquisition of the vacation ownership business of Gold Key Resorts
for $167.5 million. This added five vacation ownership resorts in
Virginia Beach, VA and one in the Outer Banks, NC, bringing the
Company’s global portfolio to a total of 99 managed resorts.
Outlook
For the full year ending December 31, 2015, the Company is
adjusting guidance for pre-tax income upward due to our positive
year–to-date performance and expectations for the remainder of the
year which include, among other things, lower vacation interest
cost of sales and stock based compensation. We have narrowed the
guidance range and continue to anticipate that our operating
results for the year will be towards the high end of the range. In
addition, we anticipate higher cash flow than our previous guidance
due to lower cash tax payment requirements as a result of favorable
tax attributes relating to our financing business and higher
utilization of NOL carry forwards.
Adjusted
Guidance Year Ending December 31, 2015 ($ in thousands)
Low High Pre-tax income $ 202,000 $ 229,000
Corporate interest expense $ 28,000 $ 26,000 Vacation interest cost
of sales(a) $ 50,000 $ 40,000 Depreciation and amortization $
38,000 $ 36,000 Other non-cash items(b) $ 32,000 $ 29,000
Previous Guidance Year Ending December 31,
2015 ($ in thousands)
Low High Pre-tax income $
159,000 $ 191,000 Corporate interest expense $ 28,000 $ 26,000
Vacation interest cost of sales(a) $ 73,000 $ 63,000 Depreciation
and amortization $ 38,000 $ 36,000 Other non-cash items(b) $ 47,000
$ 44,000
For the year ending December 31, 2015, we
anticipate capital expenditures(c) to be between $25.0 million and
$30.0 million. In addition, we anticipate ordinary course cash
expenditures for the acquisition of inventory to be between $50.0
million and $55.0 million, and cash tax payments to be between $5.0
million and $10.0 million. The cash tax payment estimate has been
adjusted from the prior estimated range of $17 million to $23
million.
In addition, consistent with our capital
allocation philosophy, we anticipate investing approximately $24.0
million in projects expected to generate superior returns,
including the build-out of inventory at our Cabo Azul resort. This
reflects a reduction of $3.0 million from our previous guidance due
to the timing of payments in connection with the previously
announced Kona transaction. We continue to pursue other
opportunities to provide superior returns to our stockholders.
(a) In accordance with ASC 978, the Company records Vacation
Interest Cost of Sales using the relative sales value method (see
Note 2 - Summary of Significant Accounting Policies in the
Company’s Annual Report on Form 10-K for the year ended December
31, 2014). This method requires the Company to make a number of
projections and estimates, which are subject to significant
uncertainty and retroactive adjustment in future periods. These
"true-up" adjustments may result, and for the Company have resulted
in prior periods, in major swings (both positive and negative) in
the Company's pre-tax income computed in accordance with U.S. GAAP
that do not have a direct correlation to the operating performance
for the periods in which the "true-ups" are made. It is difficult
to predict with any degree of precision what the projections and
estimates used in connection with the relative sales value method
will be and what impact those projections and estimates will have
on the amount recorded in future periods as Vacation Interest Cost
of Sales. As a result, guidance for Vacation Interest Cost of Sales
(and as a result, pre-tax income) covers a wide range of outcomes
and does not impact Adjusted EBITDA. (b) Other non-cash items
include: stock based compensation, amortization of loan origination
costs, and amortization of net portfolio discounts and premiums.
(c) Principally for IT infrastructure and sales center
expansion/refurbishment. This does not include expenditures for the
acquisition of inventory, or resort-level capital improvements
which are paid by the homeowners associations.
Third Quarter Earnings Summary
Hospitality and Management Services
Total management and member services revenue increased $3.8
million, or 10.2%, to $41.6 million for the third quarter of 2015
from $37.8 million for the third quarter of 2014. Management fees
increased as a result of increases in operating costs at the resort
level, which generated higher management fee revenue on a
same-store basis from 107 cost-plus management agreements. In
addition, effective January 1, 2015, the Company deconsolidated the
operations of the two managed resorts in St. Maarten; thus removing
those resorts’ revenues and expenses from our consolidated resort
operations revenue and expense, respectively, while recognizing the
management fee revenue earned in this line item.
Management and member services expense in our Hospitality and
Management Services segment increased $0.4 million, or 4.3%, to
$8.9 million for the third quarter of 2015 from $8.5 million for
the third quarter of 2014. For the third quarter of 2015 and 2014,
management and member services expense included non-cash
stock-based compensation charges of $0.3 million and $0.4 million,
respectively. Excluding these non-cash items, management and member
services expense would have been $8.2 million for the third quarter
of 2014, and management and member services expense for the third
quarter of 2015 would have increased 4.7% from the 2014 quarter.
Including these non-cash items, management and member services
expense as a percentage of management and member services revenue
decreased to 21.4% compared to 22.6%.
Vacation Interest Sales and Financing
Vacation Interest sales, net, increased $22.0 million, or 15.4%,
to $165.2 million for the third quarter of 2015 from $143.2 million
for the third quarter of 2014. The increase in Vacation Interest
sales, net, was attributable to a $27.3 million increase in
Vacation Interest sales revenue, partially offset by a $5.3 million
increase in our provision for uncollectible Vacation Interest sales
revenue. The $27.3 million increase in Vacation Interest sales
revenue was generated by sales growth on a same-store basis from 48
sales centers primarily attributable to an increase in our volume
per guest ("VPG," which represents Vacation Interest sales revenue
divided by the number of tours). VPG increased by $423, or 16.1%,
to $3,058 from $2,635, as a result of a higher average sales price
per transaction and a higher closing percentage (which represents
the percentage of VOI sales transactions closed relative to the
total number of tours at our sales centers during the period
presented). The number of tours increased to 64,380 from 60,920 due
primarily to the expansion of our lead-generation and marketing
programs. Our closing percentage increased to 14.7% from 13.8% for
the third quarter of 2014. Our VOI sales transactions increased by
1,054, or 12.5% to 9,489 compared to 8,435, and VOI average sales
price per transaction increased $1,722, or 9.0%, to $20,750 from
$19,028. The increase in average sales price per transaction and
the higher closing percentage (and as a result, higher VPG) are due
principally to the continued focus on selling larger point packages
and the success of the hospitality-driven sales and marketing
initiatives implemented in association with our belief in the power
of vacations for happier and healthier living.
Provision for uncollectible Vacation Interest Sales revenue
increased $5.3 million to $21.1 million during the third quarter of
2015 from $15.8 million during the third quarter in 2014. This
increase is primarily due to higher gross Vacation Interest sales
and a higher percentage of financed sales; further, the increase is
related to the change of certain portfolio statistics during the
quarter. The allowance for uncollectible mortgages and contracts
receivable as a percentage of gross mortgages and contracts
receivable was 21.7% as of September 30, 2015, as compared to 21.4%
as of September 30, 2014. The weighted average FICO score of loans
written during the third quarter of 2015 and 2014 were 748 and 749,
respectively.
Advertising, sales and marketing expense for the third quarter
of 2015 and 2014 included non-cash charges of $0.8 million and $0.5
million, respectively, related to stock-based compensation.
Excluding these charges, advertising, sales and marketing expense
as a percentage of Vacation Interest sales revenue decreased 0.9
percentage points to 50.5% from 51.4%. This improvement was
primarily due to improved leverage of fixed costs through increased
sales efficiencies. Including the non-cash charges, advertising,
sales and marketing expense as a percentage of Vacation Interest
sales revenue was 50.9% compared to 51.8%.
Vacation Interest cost of sales increased $0.4 million, or 2.9%,
to $16.9 million for the third quarter of 2015 from $16.5 million
for the third quarter of 2014. This increase consisted of $2.5
million related to the increase in Vacation Interest Sales revenue
partially offset by a $2.1 million decrease resulting from changes
in estimates under the relative sales value method. Vacation
Interest cost of sales as a percentage of Vacation Interest sales,
net decreased to 10.3% for the three months ended September 30,
2015 from 11.5% for the three months ended September 30, 2014.
General and Administrative Expense
General and administrative expense for the third quarter of 2015
of $28.4 million and 2014 of $26.7 million included $3.2 million
and $2.3 million of non-cash stock-based compensation charges in
the third quarter of 2015 and 2014, respectively. Excluding these
charges, general and administrative expense as a percentage of
total revenue decreased 1.0 percentage point to 10.0% from 11.0%.
The reduction of general and administrative expense as a percentage
of total revenue reflects the improved leverage of fixed costs over
a higher revenue base. Including these charges, general and
administrative expense as a percentage of total revenue was 11.3%
as compared to 12.1%.
Pre-tax Income and Net Income
Pre-tax income for the third quarter of 2015 and 2014 included
non-cash charges of $4.5 million and $3.3 million, respectively,
related to stock-based compensation. Excluding the amounts
discussed above, pre-tax income in 2015 would have been $66.8
million, an increase of $17.0 million from $49.8 million. Including
these items, pre-tax income for the third quarter of 2015 was $62.3
million compared to $46.5 million in the third quarter of 2014.
Net income for the third quarter in 2015 and 2014 were inclusive
of the non-cash item discussed above. Net income increased $10.6
million to $36.9 million during the period for 2015 from $26.3
million during the period in 2014.
Capital Resources and Liquidity
As of September 30, 2015, the Company had cash and cash
equivalents of $326.6 million and corporate indebtedness of $425.8
million representing a net increase of $95.3 million in cash and
cash equivalents from June 30, 2015.
During the third quarter of 2015 and 2014, we used cash of $21.9
million and $16.1 million, respectively, for acquisitions of VOI
inventory pursuant to inventory recovery agreements and in open
market and bulk VOI inventory purchases, for capitalized legal,
title and trust fees and for the construction of VOI inventory. Of
these total cash amounts, $5.1 million and $0.1 million during the
three months ended September 30, 2015 and 2014, respectively, were
used for the construction of VOI inventory, primarily related to
construction of additional units at our Cabo Azul resort.
In addition, we had increases in unsold Vacation Interests, net,
that did not have an impact on our working capital during the
respective periods. Specifically, we capitalized $3.2 million and
$1.6 million during the three months ended September 30, 2015 and
2014, respectively, related to inventory recovery agreements in the
U.S., offset by an equal increase in due to related parties, net
where cash will be used in future periods to settle these amounts.
The Company also transferred $0.3 million and $0.2 million during
the three months ended September 30, 2015 and 2014, respectively,
from due from related parties, net, to unsold Vacation Interests,
net, as a result of our recovery of VOI inventory pursuant to
inventory recovery arrangements in Europe; cash was used in prior
periods when these amounts were recorded to due from related
parties, net. Furthermore, we transferred $10.3 million and $1.1
million from mortgages and contracts receivable, net, to unsold
Vacation Interests, net, during the three months ended September
30, 2015 and 2014, respectively, as a result of our recovery of
underlying VOI inventory due to loan defaults.
Net cash provided by operating activities for the three months
ended September 30, 2015 was $49.9 million and was primarily the
result of net income of $36.9 million and non-cash revenues and
expenses totaling $48.5 million, partially offset by other changes
in operating assets and liabilities that resulted in a net credit
of $35.5 million which primarily includes decreases from mortgages
and contracts receivable, unsold vacation interest and deferred
revenues, increases from accrued liabilities and prepaid expenses
and other assets, as well as changes in other working capital
assets and liabilities. The significant non-cash revenues and
expenses included (i) $21.1 million in the provision for
uncollectible Vacation Interest sales revenue; (ii) $9.1 million in
deferred income taxes; (iii) $8.0 million in depreciation and
amortization; (iv) $4.5 million in stock-based compensation
expense; (v) $3.4 million in amortization of capitalized loan
origination costs and net portfolio discounts; and (vi) $1.7
million in amortization of capitalized financing costs and original
issue discounts. Net cash provided by operating activities for the
three months ended September 30, 2014 was $23.6 million and was the
result of net income of $26.3 million and non-cash revenues and
expenses totaling $50.8 million, partially offset by other changes
in operating assets and liabilities that resulted in a net credit
of $53.5 million which primarily includes decreases from mortgages
and contracts receivable, prepaid expenses and other assets, unsold
vacation interest and deferred revenues, increases from accrued
liabilities, as well as changes in other working capital assets and
liabilities.
Net cash used in investing activities for the three months ended
September 30, 2015 was $7.6 million used to purchase property and
equipment, primarily associated with information technology related
projects and equipment and renovation projects at certain sales
centers. Net cash used in investing activities for the three months
ended September 30, 2014 was $4.0 million, which was used to
purchase property and equipment.
Net cash provided by financing activities for the three months
ended September 30, 2015 was $53.4 million, consisting primarily of
(i) $277.7 million in proceeds from the issuance of securitization
notes and funding facilities; (ii) $2.6 million increase from cash
in escrow and restricted cash; offset by (a) $213.1 million of
payments on securitization notes and funding facilities; (b) $7.9
million for the repurchase of our stock; (c) $3.3 million in
repayments on notes payable; and (d) $3.0 million in payments for
debt issuance costs. During the three months ended September 30,
2014, net cash provided by financing activities was $45.2 million,
consisting primarily of (i) $91.2 million in proceeds from the
issuance of securitization notes and funding facilities; (ii) $7.8
million increase from cash in escrow and restricted cash; (iii)
$2.0 million in proceeds from exercise of stock options; offset by
(a) $51.7 million of payments on securitization notes and funding
facilities; (b) $2.7 million in repayments on notes payable and (c)
$1.1 million in repayments on our Senior Credit Facility.
Business Interruption Insurance Recovery
During the third quarter, the Company received $3.6 million as
the first installment from its insurance carrier under its business
interruption insurance policy related to lost profits during the
period that the Cabo Azul Resort remained closed as a result of the
damage suffered in Hurricane Odile in September 2014. This cash
receipt is recorded as other revenue in the Company's condensed
consolidated statement of income for the quarter ending September
30, 2015.
Stock Repurchase Program
In October 2014, we announced a plan to repurchase up to $100.0
million of our common stock. In July 2015, the Board of Directors
of the Company authorized the expenditure of up to an additional
$100 million for the repurchase of the Company’s common stock.
During the third quarter, we used cash of $7.9 million to
repurchase shares of our common stock. Since the quarter ended
September 30, 2015, we used additional cash of $24.7 million to
repurchase shares of our common stock. We have approximately $77.3
million available under the plan for additional share repurchases,
after giving effect to all repurchases to date.
Gold Key Resorts Acquisition
On October 16, 2015, the Company completed its acquisition of
substantially all of the assets of Ocean Beach Club, LLC, Gold Key
Resorts, LLC, Professional Hospitality Resources, Inc., Vacation
Rentals, LLC and Resort Promotions, Inc. (collectively, the “Gold
Key Companies”) relating to their operation of their vacation
ownership business in Virginia Beach, Virginia and the Outer Banks,
North Carolina. The Company acquired management contracts, real
property interests, unsold vacation ownership interests and other
assets of the Gold Key Companies, adding six additional managed
resorts to the Company’s resort network, in exchange for an
aggregate purchase price of approximately $167.5 million.
Additionally, $6.2 million was deposited into an escrow account in
connection with our agreements to service pre-closing Gold Key
consumer receivables and is treated as restricted cash.
We used cash from our balance sheet to complete the Gold Key
Companies purchase. Subject to credit market conditions, we plan to
amend our Senior Credit facility prior to year-end and refinance a
substantial portion of the acquisition price under that
facility.
Third Quarter 2015 Earnings Call
The company will be conducting a conference call to discuss the
third quarter financial results at 5:00 p.m. Eastern Time on
October 28, 2015, available via webcast on the Company's website at
http://investors.diamondresorts.com. A webcast replay will become
available within 2 hours of the call and will run for approximately
one year on the Company’s website. Alternatively, participants may
call into (888) 753-4238 from the United States, or (706) 643-3355
from outside the U.S. with conference ID 56485276; please dial in
fifteen minutes early to ensure a timely start.
Cautionary Notes Regarding Forward-Looking Statements
This press release contains forward-looking statements,
including the guidance for expected operating results presented
under “Outlook” above and other statements regarding the Company’s
current expectations, prospects and opportunities. These
forward-looking statements are covered by the "Safe Harbor for
Forward-Looking Statements" provided by the Private Securities
Litigation Reform Act of 1995. The Company has tried to identify
these forward looking statements by using words such as “expect,”
“anticipate,” “estimate,” “plan,” “will,” “would,” “should,”
“could,” “forecast,” “believe,” “guidance,” “projection,” “target”
or similar expressions, but these words are not the exclusive means
for identifying such statements. The Company cautions that a number
of risks, uncertainties and other factors could cause the Company's
actual results to differ materially from those expressed in, or
implied by, the forward-looking statements, including, without
limitation, adverse trends or disruptions in economic conditions
generally or in the vacation ownership, vacation rental and travel
industries; adverse changes to, or interruptions in, relationships
with the Company's affiliates and other third parties, including
termination of the Company's hospitality management contracts; the
Company's ability to maintain an optimal inventory of vacation
ownership interests for sale overall, as well as in specific
Collections; the market price of the Company's stock prevailing
from time to time; alternative uses of cash and investment
opportunities pursued by the Company from time to time; the
Company’s compliance with the financial and other covenants
contained in the credit agreement with respect to the Company’s
senior secured credit facility; the Company's ability to sell,
securitize or borrow against its consumer loans; decreased demand
from prospective purchasers of Vacation Interests; adverse events
or trends in vacation destinations and regions where the resorts in
our network are located; changes in the Company's senior
management; the Company's ability to comply with regulations
applicable to the vacation ownership industry; the effects of the
Company's indebtedness and its compliance with the terms thereof;
the Company's ability to successfully implement its growth
strategy; and the Company's ability to compete effectively. For a
detailed discussion of factors that could affect the Company's
future operating results, please see the Company's filings with the
Securities and Exchange Commission, including the disclosures under
“Risk Factors” in those filings. Except as expressly required by
the federal securities laws, the Company undertakes no obligation
to update or revise any forward-looking statements, whether as a
result of new information, changed circumstances or future events
or for any other reason.
About Diamond Resorts International®
Diamond Resorts International® (NYSE: DRII), with its network of
more than 350 vacation destinations located in 34 countries
throughout the continental United States, Hawaii, Canada, Mexico,
the Caribbean, South America, Central America, Europe, Asia,
Australasia and Africa, provides guests with choice and flexibility
to let them create their dream vacation, whether they are traveling
an hour away or around the world. Our relaxing vacations have the
power to give guests an increased sense of happiness and
satisfaction in their lives, while feeling healthier and more
fulfilled in their relationships, by enjoying memorable and
meaningful experiences that let them Stay Vacationed.™
Diamond Resorts International® manages vacation ownership
resorts and sells vacation ownership points that provide members
and owners with Vacations for Life® at over 350 managed and
affiliated properties and cruise itineraries.
Reconciliation of GAAP to Non-GAAP Measures
We believe supplementing our consolidated financial statements
presented in accordance with U.S. GAAP with non-U.S. GAAP measures
provides investors with useful information regarding our liquidity
and short-term and long-term trends.
We define Adjusted EBITDA as our net income, plus: (i) corporate
interest expense; (ii) provision (benefit) for income taxes; (iii)
depreciation and amortization; (iv) Vacation Interest cost of
sales; (v) loss on extinguishment of debt; (vi) impairments and
other non-cash write-offs; (vii) loss on the disposal of assets;
(viii) amortization of loan origination costs; (ix) amortization of
net portfolio premiums; and (x) stock-based compensation; less (a)
gain on the disposal of assets; (b) gain on bargain purchase from
business combination; and (c) amortization of net portfolio
discounts. Adjusted EBITDA is a non-U.S. GAAP financial measure and
should not be considered in isolation, or as an alternative to net
cash provided by operating activities or any other measure of
liquidity, or as an alternative to net income, operating income or
any other measure of financial performance, in any such case
calculated and presented in accordance with U.S. GAAP. Additional
information regarding our calculation of Adjusted EBITDA is
provided below.
We present Adjusted EBITDA primarily because the Senior Credit
Facility Agreement includes covenants which are determined by
reference to the Adjusted EBITDA of the Company and its “restricted
subsidiaries,” and other of our debt-related agreements include
covenants that are determined by reference to measures calculated
in a manner similar to the calculation of Adjusted EBITDA. As a
result, we believe that supplementing our consolidated financial
statements presented in accordance with U.S. GAAP with this
non-U.S. GAAP measure provides investors with useful information
with respect to our liquidity. As of September 30, 2015, all of our
subsidiaries were designated as restricted subsidiaries, as defined
in the Senior Credit Facility Agreement.
In addition to its application under the Senior Credit Facility
Agreement, our management uses Adjusted EBITDA: (i) for planning
purposes, including the preparation of our annual operating budget;
(ii) to allocate resources to enhance the financial performance of
our business; (iii) to evaluate the effectiveness of our business
strategies; and (iv) as a factor for determining compensation for
certain personnel.
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,
including:
- Adjusted EBITDA does not reflect our
cash expenditures or future requirements for capital
expenditures;
- 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, and Adjusted EBITDA does not
reflect any cash requirements for these replacements;
- we make expenditures to replenish
Vacation Interests inventory (principally pursuant to our inventory
recovery agreements and in connection with our strategic
acquisitions), and Adjusted EBITDA does not reflect our cash
requirements for these expenditures or certain costs of carrying
such inventory (which are capitalized); and
- other companies in our industry may
calculate Adjusted EBITDA differently than we do, limiting its
usefulness as a comparative measure.
In this release, we present Adjusted EBITDA excluding the
one-time cash charge related to the termination of certain
contractual relationships with our Chairman, Stephen J. Cloobeck
and the one-time benefit related to the contract renegotiation with
Interval International in April 2014 because management excludes
these items from its forecasts and evaluation of our operational
performance and because we believe that Adjusted EBITDA including
these items are not indicative of our core cash flows or operating
results.
The following tables present Adjusted EBITDA, excluding the
one-time charge related to the contract termination and the
one-time benefit related to the contract renegotiation reconciled
to each of (i) our net cash provided by operating activities and
(ii) our net income for the periods presented. These tables further
reconcile to free cash flow for the periods presented.
We define Free Cash Flow as our Adjusted EBITDA, less: (i) cash
interest paid on corporate indebtedness; (ii) impact of receivables
financing; (iii) cash spent for acquisitions of VOI inventory
pursuant to inventory recovery agreements and in open market and
bulk VOI inventory purchases, for capitalized legal and title and
trust fees; (iv) cash spent for corporate capital expenditures; and
(v) other changes in net working capital. In arriving at free cash
flow, we also adjust for certain net changes in working
capital.
We believe that free cash flow is an important measure of our
operating performance and, more specifically, that our presentation
of free cash flow provides useful information regarding our
generation of cash from our operations and our ability to execute
our business and growth strategies (including potential strategic
transactions) from a financial perspective. We also anticipate
that free cash flow will be incorporated into the factors used to
determine compensation for certain of our employees.
($ in thousands) (Unaudited)
Quarter Ended September 30, Nine Months Ended
September 30, 2015 2014 2015
2014 Net cash provided by operating activities $ 49,870 $
23,597 $ 141,265 $ 76,502 Provision for income taxes 25,410 20,156
72,394 32,860 Provision for uncollectible Vacation Interest sales
revenue(a) (21,100 ) (15,847 ) (56,007 ) (40,123 ) Amortization of
capitalized financing costs and original
issue discounts(a)
(1,660 ) (1,125 ) (4,461 ) (4,079 ) Deferred income taxes(b) (9,125
) (19,679 ) (32,391 ) (30,461 ) Loss on foreign currency(c) (458 )
(14 ) (656 ) (98 ) Gain on mortgage purchase(a) 133 136 412 519
Unrealized (loss) gain on derivative instruments(d) (495 ) 15 (600
) (181 ) Unrealized gain (loss) on post-retirement benefit plan(e)
86 (43 ) — (128 ) Corporate interest expense(f) 7,935 7,429 22,937
34,502 Change in operating assets and liabilities excluding
acquisitions(g)
35,474 53,543 99,033 125,917 Vacation Interest cost of sales(h)
16,946 16,476 25,535 44,840 Adjusted
EBITDA - Consolidated 103,016 84,644 267,461 240,070 One-time
charge related to the contract termination(i) — — 7,830 — One-time
benefit related to the contract renegotiation(j) — —
— (1,780 )
Adjusted EBITDA excluding the one-time
charge related
to the contract termination and
one-time benefit related to
the contract renegotiation
103,016 84,644 275,291 238,290 Less: One-time charge related to the
contract termination(i) — — (7,830 ) — Add: One-time benefit
related to the contract renegotiation(j) — — — 1,780 Cash interest
paid on corporate indebtedness(k) (6,072 ) (6,318 ) (18,235 )
(48,877 ) Impact of receivables financing(l) 25,417 799 19,985
20,397 Cash spent on inventory purchases(m) (16,723 ) (16,102 )
(44,466 ) (39,216 ) Cash spent on corporate capital expenditures(n)
(7,566 ) (3,999 ) (18,483 ) (13,902 ) Other changes in working
capital, net(o) 13,581 7,665 19,039 371
Free Cash Flow $ 111,653 $ 66,689 $ 225,301 $
158,843 (a) Represents non-cash charge or
gain. (b) Represents the deferred income tax liability as a result
of the provision for income taxes recorded for the quarter and nine
months ended September 30, 2015 and 2014. (c) Represents net
realized loss on foreign exchange transactions settled at
unfavorable exchange rates and unrealized net loss resulting from
the devaluation of foreign currency-denominated assets and
liabilities. (d) Represents the effects of the changes in
mark-to-market valuations of derivative assets and liabilities. (e)
Represents unrealized gain (loss) on our post-retirement benefit
plan related to a collective labor agreement entered into with the
employees of our two resorts in St. Maarten; this plan was
deconsolidated during the quarter ended September 30, 2015. (f)
Represents corporate interest expense; does not include interest
expense related to non-recourse indebtedness incurred by our
special-purpose subsidiaries that is secured by our VOI consumer
loans and is included in Adjusted EBITDA. (g) Represents the net
change in operating assets and liabilities excluding acquisitions,
as computed directly from the statements of cash flows. Vacation
Interest cost of sales is included in the net changes in unsold
Vacation Interests, net, as presented in the statements of cash
flows. (h) We record Vacation Interest cost of sales using the
relative sales value method in accordance with ASC 978,
"Real-estate Time-Sharing Activities," 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. (i) Represents a one-time cash charge related to the
termination of certain contractual relationships with our Chairman,
Stephen J. Cloobeck. (j) Represents a one-time benefit related to
the contract renegotiation with Interval International in April
2014. (k) Represents cash interest paid on corporate indebtedness.
(l) Represents the net impact of all receivables-backed financing
activities, including securitization and funding facilities
collection and reserve cash, mortgages and contracts receivable,
provision for uncollectible Vacation Interests sales revenue and
proceeds from issuance of securitization notes and funding
facilities, net of payments made on securitization notes and
funding facilities. (m) Represents cash spent on (i) acquisitions
of VOI inventory pursuant to inventory recovery agreements and in
open market and bulk VOI inventory purchases; and (ii) capitalized
legal, title and trust fees. (n) Represents cash spent on property
and equipment capital expenditure, primarily related to information
technology related projects and equipment and renovation projects
at certain sales centers. (o) Represents net changes in other
working capital items not specifically mentioned above.
($ in thousands) (Unaudited)
Quarter Ended September 30, Nine Months Ended
September 30, 2015 2014 2015
2014 Net income $ 36,897 $ 26,304 $ 99,742 $ 37,583 Plus:
Corporate interest expense(a) 7,935 7,429 22,937 34,502 Provision
for income taxes 25,410 20,156 72,394 32,860 Depreciation and
amortization(b) 8,030 8,271 25,127 24,601 Vacation Interest cost of
sales(c) 16,946 16,476 25,535 44,840 Loss on extinguishment of
debt(d) — — — 46,807 Impairments and other non-cash write-offs(b) —
11 12 53 (Gain) loss on disposal of assets(b) (95 ) 224 (57 ) 71
Amortization of loan origination costs(b) 3,332 2,380 9,461 6,591
Amortization of net portfolio premiums (discount)(b) 24 57 56 (36 )
Stock-based compensation(e) 4,537 3,336 12,254
12,198 Adjusted EBITDA - Consolidated 103,016 84,644 267,461
240,070 One-time charge related to the contract termination(f) — —
7,830 — One-time benefit related to the contract renegotiation (g)
— — — (1,780 ) Adjusted EBITDA excluding the
one-time charge related
to the contract termination and the
one-time benefit
related to the contract renegotiation
103,016 84,644 275,291 238,290 Less: One-time charge related to the
contract
termination(f)
— — (7,830 ) — Add: One-time benefit related to the contract
renegotiation (g)
— — — 1,780 Cash interest paid on corporate indebtedness(h) (6,072
) (6,318 ) (18,235 ) (48,877 ) Impact of receivables financing(i)
25,417 799 19,985 20,397 Cash spent on inventory purchases(j)
(16,723 ) (16,102 ) (44,466 ) (39,216 ) Cash spent on corporate
capital expenditures(k) (7,566 ) (3,999 ) (18,483 ) (13,902 ) Other
changes in working capital, net(l) 13,581 7,665
19,039 371 Free Cash Flow $ 111,653 $ 66,689
$ 225,301 $ 158,843 (a)
Corporate interest expense does not include 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. (d) For the nine months ended September 30, 2014,
represents (i) $30.2 million of redemption premium paid on June 9,
2014 in connection with the redemption of the outstanding Senior
Secured Notes using proceeds from the term loan portion of the
Senior Credit Facility and (ii) $16.6 million of unamortized debt
issuance costs and debt discount written off upon the
extinguishment of the Senior Secured Notes and certain other
indebtedness. (e) Represents the non-cash charge related to
stock-based compensation expense. (f) Represents a one-time cash
charge related to the termination of certain contractual
relationships with our Chairman, Stephen J. Cloobeck. (g)
Represents a one-time benefit related to the contract renegotiation
with Interval International in April 2014. (h) Represents cash
interest paid on corporate indebtedness. (i) Represents the net
impact of all receivables-backed financing activities, including
securitization and funding facilities collection and reserve cash,
mortgages and contracts receivable, provision for uncollectible
Vacation Interests sales revenue and proceeds from issuance of
securitization notes and funding facilities, net of payments made
on securitization notes and funding facilities. (j) Represents cash
spent on (i) acquisitions of VOI inventory pursuant to inventory
recovery agreements and in open market and bulk VOI inventory
purchases; and (ii) capitalized legal, title and trust fees. (k)
Represents cash spent on property and equipment capital
expenditure, primarily related to information technology related
projects and equipment and renovation projects at certain sales
centers. (l) Represents net changes in other working capital items
not specifically mentioned above.
The following tables present a reconciliation of (i) management
and member services expense as reported to management and member
services expense after excluding non-cash stock-based compensation
and including one-time non-cash benefit related to the contract
renegotiation with Interval International; (ii) advertising, sales
and marketing expense as reported to advertising, sales and
marketing expense after excluding non-cash stock-based
compensation; (iii) general and administrative expense as reported
to general and administrative expense after excluding non-cash
stock-based compensation and the one-time cash charge related to
the contract termination referenced above; and (iv) income before
provision for income taxes to income before provision for income
taxes after excluding non-cash stock-based compensation, cash and
non-cash charges from early extinguishment of debt, the one-time
cash charge related to the contract termination and the one-time
non-cash benefit related to the contract renegotiation with
Interval International. We exclude these non-cash and one-time
items because management excludes them from its forecasts and
evaluation of our operational performance and because we believe
that the U.S. GAAP measures including these items are not
indicative of our core operating results.
($ in thousands) (Unaudited)
Quarter Ended September 30, Nine Months Ended September
30, 2015 2014 2015 2014 Management
and member services expenses
$
8,913
$ 8,549 $ 25,310 $ 23,377 Less: Stock-based compensation (326 )
(350 ) (951 ) (1,314 ) Plus: One-time benefit related to the
contract renegotiation — — — 1,780
Management and member services expenses
after
excluding stock-based compensation and
one-time
benefit related to the contract
renegotiation
$ 8,587 $ 8,199 $ 24,359 $ 23,843
($ in thousands) (Unaudited) Quarter Ended
September 30, Nine Months Ended September 30,
2015
2014 2015 2014 Advertising, sales and
marketing expense $ 94,876 $ 82,308 $ 248,267 $ 214,190 Stock-based
compensation
(829
) (537 ) (1,745 ) (1,804 ) Advertising, sales and marketing expense
after excluding stock-based compensation $ 94,047 $ 81,771
$ 246,522 $ 212,386
($ in
thousands) (Unaudited) Quarter Ended September
30, Nine Months Ended September 30,
2015
2014 2015 2014 General and administrative
expense $ 28,372 $ 26,747 $ 84,159 $ 74,203 Stock-based
compensation
(3,243
) (2,282 ) (9,123 ) (8,530 ) One-time cash charge related to the
contract termination
—
— (7,830 ) —
General and administrative expense after
excluding
stock-based compensation and one-time cash
charge
related to the contract termination
$ 25,129 $ 24,465 $ 67,206 $ 65,673
($ in thousands) (Unaudited) Quarter Ended
September 30, Nine Months Ended September 30,
2015 2014 2015 2014 Income before
provision for income taxes $ 62,307 $ 46,460 $ 172,136 $ 70,443
Stock-based compensation
4,537
3,336 12,254 12,198 Non-cash charge related to early extinguishment
of debt
—
— — 16,564 One-time cash charge related to early extinguishment of
debt
—
— — 30,243 One-time cash charge related to the contract termination
—
— 7,830 — One-time benefit related to the contract renegotiation
—
— — (1,780 ) Income before provision for
income taxes after
excluding stock-based compensation,
non-cash and one-
time cash charges related to early
extinguishment of
debt, one-time cash charge related to the
contract
termination and a one-time non-cash
benefit related to
the Interval International contract
renegotiation
$ 66,844 $ 49,796 $ 192,220 $ 127,668
To properly and prudently evaluate our business, we encourage
you to review our U.S. GAAP consolidated financial statements
included in this press release, and not to rely on any single
financial measure to evaluate our business. The non-U.S. GAAP
financial measures included in this press release should not be
considered in isolation, or as an alternative to net cash provided
by operating activities or any other measure of liquidity, or as an
alternative to net income, operating income or any other measure of
financial performance, in any such case calculated and presented in
accordance with U.S. GAAP.
Segment Reporting
The Company presents its results of operations in two segments:
(i) Hospitality and Management Services, which includes operations
related to the management of resort properties and the Diamond
Collections, revenue from its operations of the Clubs and the
provision of other services; and (ii) Vacation Interest Sales and
Financing, which includes operations relating to the marketing and
sales of Vacation Interests, as well as the consumer financing
activities related to such sales. While certain line items
reflected on the statement of income and comprehensive income fall
completely into one of these business segments, other line items
relate to revenues or expenses which are applicable to more than
one segment. For line items that are applicable to more than one
segment, revenues or expenses are allocated by management, which
involves significant estimates. Certain expense items (principally
corporate interest expense, depreciation and amortization and
provision for income taxes) are not, in management's view,
allocable to either of these business segments as they apply to the
entire Company. In addition, general and administrative expenses
are not allocated to either of these business segments because,
historically, management has not allocated these expenses for
purposes of evaluating the Company's different operational
divisions. Accordingly, these expenses are presented under
Corporate and Other.
DIAMOND RESORTS INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME BY BUSINESS
SEGMENT For the Quarters Ended September 30, 2015 and
2014 (In thousands) (Unaudited)
Quarter
Ended September 30, 2015 Quarter Ended September 30,
2014
Hospitality and
Management Services
Vacation Interest Sales
and Financing
Corporate and
Other
Total
Hospitality and
Management Services
Vacation Interest Sales
and Financing
Corporate and
Other
Total Revenues: Management and member services
$ 41,647 $ — $ — $ 41,647 $ 37,795 $ — $ — $ 37,795 Consolidated
resort operations 4,004 — — 4,004 10,481 — — 10,481
Vacation Interest sales, net of
provision of $0, $21,100, $0,
$21,100, $0, $15,847, $0 and
$15,847, respectively
—
165,208 — 165,208 — 143,180 — 143,180 Interest — 19,858 262 20,120
— 16,783 347 17,130 Other 1,804 18,606 —
20,410 2,018 11,361 — 13,379 Total
revenues 47,455 203,672 262 251,389
50,294 171,324 347 221,965
Costs and
Expenses: Management and member services 8,913 — — 8,913 8,549
— — 8,549 Consolidated resort operations 3,365 — — 3,365 9,216 — —
9,216 Vacation Interest cost of sales — 16,946 — 16,946 — 16,476 —
16,476 Advertising, sales and marketing — 94,876 — 94,876 — 82,308
— 82,308 Vacation Interest carrying cost, net — 7,430 — 7,430 —
5,162 — 5,162 Loan portfolio 371 953 — 1,324 385 1,015 — 1,400
Other operating — 7,849 — 7,849 — 5,847 — 5,847 General and
administrative — — 28,372 28,372 — — 26,747 26,747 Depreciation and
amortization — — 8,030 8,030 — — 8,271 8,271 Interest expense —
4,137 7,935 12,072 — 3,866 7,428 11,294 Impairments and other
write-offs — — — — — — 11 11 (Gain) loss on disposal of assets —
— (95 ) (95 ) — — 224 224 Total
costs and expenses 12,649 132,191 44,242
189,082 18,150 114,674 42,681 175,505
Income (loss) before provision for income taxes 34,806 71,481
(43,980
)
62,307 32,144 56,650 (42,334 ) 46,460 Provision for income taxes —
— 25,410 25,410 — —
20,156 20,156 Net income (loss) $ 34,806 $ 71,481
$ (69,390 ) $ 36,897 $ 32,144 $ 56,650
$ (62,490 ) $ 26,304
DIAMOND RESORTS
INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATING
STATEMENTS OF INCOME BY BUSINESS SEGMENT For the Nine Months
Ended September 30, 2015 and 2014 (In thousands)
(Unaudited) Nine Months Ended September 30,
2015 Nine Months Ended September 30, 2014
Hospitality and
Management Services
Vacation Interest Sales
and Financing
Corporate and
Other
Total
Hospitality and
Management Services
Vacation Interest Sales
and Financing
Corporate and
Other
Total Revenues: Management and member services
$ 124,325 $ — $ — $ 124,325 $ 115,238 $ — $ — $ 115,238
Consolidated resort operations 11,338 — — 11,338 28,825 — — 28,825
Vacation Interest sales, net of
provision of $0, $56,007 $0,
$56,007, $0, $40,123, $0 and
$40,123, respectively — 438,055 — 438,055 — 379,082 — 379,082
Interest — 56,694 1,027 57,721 — 47,798 1,212 49,010 Other 6,109
42,863 — 48,972 7,352 32,697
— 40,049 Total revenues 141,772 537,612
1,027 680,411 151,415 459,577 1,212
612,204
Costs and Expenses: Management and member
services 25,310 — — 25,310 23,377 — — 23,377 Consolidated resort
operations 11,114 — — 11,114 25,662 — — 25,662 Vacation Interest
cost of sales — 25,535 — 25,535 — 44,840 — 44,840 Advertising,
sales and marketing — 248,267 — 248,267 — 214,190 — 214,190
Vacation Interest carrying cost, net — 27,171 — 27,171 — 19,766 —
19,766 Loan portfolio 1,031 5,211 — 6,242 895 5,354 — 6,249 Other
operating — 20,198 — 20,198 — 16,650 — 16,650 General and
administrative — — 84,159 84,159 — — 74,203 74,203 Depreciation and
amortization — — 25,127 25,127 — — 24,601 24,601 Interest expense —
12,260 22,937 35,197 — 10,790 34,502 45,292 Loss on extinguishment
of debt — — — — — — 46,807 46,807 Impairments and other write-offs
— — 12 12 — — 53 53 (Gain) loss on disposal of assets — —
(57 ) (57 ) — — 71 71 Total costs and
expenses 37,455 338,642 132,178 508,275
49,934 311,590 180,237 541,761
Income (loss) before provision
for income taxes
104,317 198,970 (131,151 ) 172,136 101,481 147,987 (179,025 )
70,443 Provision for income taxes — — 72,394
72,394 — — 32,860 32,860 Net income
(loss) $ 104,317 $ 198,970 $ (203,545 ) $ 99,742
$ 101,481 $ 147,987 $ (211,885 ) $ 37,583
DIAMOND RESORTS INTERNATIONAL, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS As
of September 30, 2015 and December 31, 2014 (In thousands,
except share data) September
30,
2015
(Unaudited)
December 31, 2014
(Audited)
Assets: Cash and cash equivalents $ 326,589 $ 242,486 Cash
in escrow and restricted cash 87,775 80,914
Mortgages and contracts receivable, net of
allowance of $153,373 and $130,639, respectively
571,267 498,662 Due from related parties, net 25,155 51,651 Other
receivables, net 29,671 59,821 Income tax receivable 1,033 467
Deferred tax asset 354 423 Prepaid expenses and other assets, net
116,100 86,439 Unsold Vacation Interests, net 323,150 262,172
Property and equipment, net 76,908 70,871 Assets held for sale
1,271 14,452 Goodwill 30,642 30,632 Intangible assets, net 174,210
178,786 Total assets $ 1,764,125 $ 1,577,776
Liabilities and Stockholder's Equity: Accounts
payable $ 22,248 $ 14,084 Due to related parties, net 68,804 34,768
Accrued liabilities 175,671 134,680 Income taxes payable 29 108
Deferred income taxes 79,755 47,250 Deferred revenues 83,733
124,997
Senior Credit Facility, net of unamortized
original issue discount of $1,839 and
$2,055, respectively
422,826 440,720
Securitization notes and Funding
Facilities, net of unamortized original issue
discount of $115 and
$156, respectively
601,127 509,208 Derivative liabilities 284 — Notes payable 3,004
4,612 Total liabilities 1,457,481 1,310,427
Stockholders' equity:
Common stock $0.01 par value per share;
authorized - 250,000,000 shares, issued
- 73,108,856 and 75,732,088 shares,
respectively
731 757
Preferred stock $0.01 par value per share;
authorized 5,000,000 shares
— — Additional paid in capital 414,148 482,732 Accumulated deficit
(80,760 ) (180,502 ) Accumulated other comprehensive loss (19,555 )
(19,561 ) Subtotal 314,564 283,426 Less: Treasury stock at cost;
313,763 and 642,900 shares, respectively (7,920 ) (16,077 ) Total
stockholders' equity 306,644 267,349 Total
liabilities and stockholders' equity $ 1,764,125 $ 1,577,776
DIAMOND RESORTS INTERNATIONAL, INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS For the Quarters and Nine Months ended September 30,
2015 and 2014 (In thousands) (Unaudited)
Quarter Ended September
30, Nine Months Ended September 30, 2015
2014 2015 2014 Operating Activities: Net
income $ 36,897 $ 26,304 $ 99,742 $ 37,583
Adjustments to reconcile net income to net
cash provided
by operating activities:
Provision for uncollectible Vacation Interest sales revenue 21,100
15,847 56,007 40,123 Amortization of capitalized financing costs
and original issue discounts 1,660 1,125 4,461 4,079 Amortization
of capitalized loan origination costs and net portfolio discount
3,356 2,437 9,517 6,555 Depreciation and amortization 8,030 8,271
25,127 24,601 Stock-based compensation 4,537 3,336 12,254 12,198
Loss on extinguishment of debt — — — 46,807 Impairments and other
write-offs — 11 12 53 (Gain) loss on disposal of assets (95 ) 224
(57 ) 71 Deferred income taxes 9,125 19,679 32,391 30,461 Loss on
foreign currency exchange 458 14 656 98 Gain on mortgage repurchase
(133 ) (136 ) (412 ) (519 ) Unrealized loss (gain) on derivative
instrument 495 (15 ) 600 181 Unrealized (gain) loss on
post-retirement benefit plan (86 ) 43 — 128 Changes in operating
assets and liabilities excluding acquisitions: Mortgages and
contracts receivable (60,294 ) (53,801 ) (137,721 ) (105,139 ) Due
from related parties, net 14,337 (5,362 ) 33,898 5,661 Other
receivables, net (1,509 ) 2,362 30,222 20,678 Prepaid expenses and
other assets, net 33,609 27,966 (19,994 ) (41,763 ) Unsold Vacation
Interests, net (6,756 ) 8,066 (49,285 ) 9,842 Accounts payable
(1,412 ) 685 8,312 1,184 Due to related parties, net (26,210 )
(28,101 ) 35,491 14,623 Accrued liabilities 22,237 12,455 41,367
(11,144 ) Income taxes receivable/payable (254 ) (349 ) (645 ) 136
Deferred revenues (9,222 ) (17,464 ) (40,678 ) (19,995 ) Net cash
provided by operating activities 49,870 23,597
141,265 76,502 Investing activities: Property
and equipment capital expenditures (7,566 ) (3,999 ) (18,483 )
(13,902 ) Purchase of intangible assets — — (8,993 ) — Investment
in joint venture in Asia — — (1,500 ) — Proceeds from sale of
assets 1 (5 ) 239 264 Net cash used in
investing activities $ (7,565 ) $ (4,004 ) $ (28,737 ) $ (13,638 )
DIAMOND RESORTS
INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS—Continued For the Quarters and Nine
Months ended September 30, 2015 and 2014 (Unaudited)
(In thousands) Quarter Ended September 30,
Nine Months Ended September 30, 2015 2014
2015 2014 Financing activities: Changes in cash in
escrow and restricted cash $ 2,590 $ 7,839 $ (6,915 ) $ 22,461
Proceeds from issuance of Senior Credit Facility — — — 442,775
Proceeds from issuance of securitization notes and Funding
Facilities 277,711 91,227 431,201 206,325 Proceeds from issuance of
notes payable — — — 1,113 Payments on Senior Credit Facility —
(1,112 ) (18,109 ) (1,112 ) Payments on senior secured notes,
including redemption premium — — — (404,683 ) Payments on
securitization notes and Funding Facilities (213,066 ) (51,733 )
(339,342 ) (146,206 ) Payments on notes payable (3,251 ) (2,659 )
(10,100 ) (28,492 ) Payments of debt issuance costs (2,979 ) (379 )
(5,329 ) (11,048 ) Excess tax benefits from stock-based
compensation — — 375 — Common stock repurchases under the share
repurchase program (7,920 ) — (82,046 ) — Proceeds from exercise of
stock options 316 2,010 2,521 2,309 Payments for derivative
instrument — — (316 ) — Net cash provided by
(used in) financing activities 53,401 45,193 (28,060
) 83,442 Net increase in cash and cash equivalents
95,706 64,786 84,468 146,306 Effect of changes in exchange rates on
cash and cash equivalents (363 ) (745 ) (365 ) (328 ) Cash and cash
equivalents, beginning of period 231,246 117,882
242,486 35,945 Cash and cash equivalents, end of
period $ 326,589 $ 181,923 $ 326,589 $ 181,923
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash interest paid on corporate indebtedness $ 6,072 $ 6,318
$ 18,235 $ 48,877 Cash interest paid on
securitization notes and Funding Facilities $ 3,865 $ 3,815
$ 11,957 $ 10,814 Cash paid for taxes, net of
cash tax refunds $ 783 $ 772 $ 1,269 $ 2,012
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Insurance premiums financed through issuance of notes payable $ —
$ — $ 8,492 $ 6,173 Unsold Vacation
Interests, net reclassified to property and equipment $ — $
478 $ — $ 6,094 Assets held for sale
reclassified to unsold Vacation Interests $ — $ — $
12,978 $ — Unsold Vacation Interests reclassified to
assets held for sale $ 4 $ 4,257 $ — $ 4,257
Assets to be disposed but not actively marketed
(prepaid expenses and other assets)
reclassified to
property and equipment
$ — $ 272 $ — $ 272 Information
technology software and support financed through issuance of notes
payable $ — $ — $ — $ 472
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151028006692/en/
Media:Diamond Resorts International®Stevi Wara,
702-823-7069media@diamondresorts.comorInvestor:Sloane and
CompanyJoshua Hochberg, 212-486-9500jhochberg@sloanepr.com
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