-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QypqahsSrxVLFe4YdALaKHcz16CjR7NR5qQi3cGKtUYZLrlrV/akxEfUbnOqidYn XV9GiJ4sYCQJBcMvUwR+kQ== 0001005477-99-005220.txt : 19991115 0001005477-99-005220.hdr.sgml : 19991115 ACCESSION NUMBER: 0001005477-99-005220 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991110 ITEM INFORMATION: FILED AS OF DATE: 19991112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUIVEST FINANCE INC CENTRAL INDEX KEY: 0000820917 STANDARD INDUSTRIAL CLASSIFICATION: PERSONAL CREDIT INSTITUTIONS [6141] IRS NUMBER: 592346270 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-18201 FILM NUMBER: 99750803 BUSINESS ADDRESS: STREET 1: 100 NORTHFIELD STREET CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 3154229088 MAIL ADDRESS: STREET 1: 100 NORTHFIELD STREET CITY: GREENWICH STATE: CT ZIP: 06830 8-K 1 FORM 8-K 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 (Date of earliest event reported): November 10, 1999 EQUIVEST FINANCE, INC. (Exact name of registrant as specified in its charter) Delaware 333-29015 59-2346270 (State or other (Commission (I.R.S. Employer jurisdiction File Number) Identification No.) of incorporation) 100 NORTHFIELD STREET GREENWICH, CONNECTICUT 06830 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (315) 422-9088 INFORMATION TO BE INCLUDED IN REPORT Item 1. Changes in Control of Registrant Not Applicable. Item 2. Acquisition or Disposition of Assets Not Applicable. Item 3. Bankruptcy or Receivership Not Applicable. Item 4. Changes in Registrant's Certifying Accountant Not Applicable. Item 5. Other Events Press Release EQUIVEST FINANCE ANNOUNCES NET INCOME INCREASES 136%; EARNINGS PER SHARE INCREASE 120% to $.11 from $.05 Greenwich, Connecticut (Business Wire) - November 10, 1999 - Equivest Finance, Inc. (NASD:EQUI) announced today its financial results for the third quarter of 1999 and the nine months ended September 30, 1999. Third quarter diluted earnings per share were $0.11 on 26.2 million weighted average shares outstanding, an increase of 120% from $0.05 on 23.5 million shares in the year-earlier period. Diluted earnings per share were $0.26 for the nine months ended September 30, 1999, an increase of 73% compared with earnings per share of $0.15 for the previous year. Equivest provides high quality vacation ownership opportunities at 13 resorts located on the eastern and Gulf coasts of the United States and in St. Thomas, USVI, as well as financing independent resort developers. For the quarter ended September 30, 1999, revenues rose 243% to a record $27.2 million, compared with $7.9 million in the comparable quarter in 1998. Pretax net income for the quarter rose 138% to $5.0 million, up from $2.1 million reported in the year earlier period. Net income for the quarter was $2.9 million, an increase of 136% from $1.2 million in 1998. Total assets as of September 30, 1999 were $285.8 million, an increase of 45% compared with $197.4 million at year-end 1998. Total capital at September 30, 1999 was $62.7 million, an increase of 17% from $53.5 million at year-end 1998. For the nine months ended September 30, 1999, revenues were $65.6 million, an increase of 261% from $18.2 million in the year earlier period. Pretax income rose 99% to $12.3 million, compared with $6.2 million in the comparable period. Net income for the nine months rose 86% to $7.3 million compared with $3.9 million for the same period in 1998. Net income in the first nine months of 1998 benefited from the use of net operating loss carry forwards, which were fully utilized during the first quarter of 1998 and were not available in 1999. Net income for the nine months ended September 30, 1999 of $7.3 million was equal to 138% of the $5.2 million net income recorded for all of calendar year 1998. 2 During the third quarter of 1999, Equivest reported $11.9 million in sales of vacation ownership intervals ("VOI's"), or 44% of total revenues. Resort management operations generated $8.1 million in revenue, or 30% of total revenues. Interest income was $6.4 million, or 26% of overall revenues. As a percent of VOI sales, the company's cost of sales during the quarter was 24%, and sales and marketing expense was 44%. Resort operations expense was 93% of resort operations revenue. In the quarter ended September 30, 1999, interest expense as a percent of interest income was 53%, up from 37% in the year earlier period. General and administrative expense was 7% of total revenues during the quarter ended September 30, 1999, down from 15% during the third quarter of 1998. The company's loan portfolio grew 18% to $186 million during the third quarter of 1999, compared with $158 million as of September 30, 1998. During the quarter ended September 30, 1999, the company increased its total portfolio reserves and over collateralization to $37.4 million, or 20% of the overall loan portfolio, from $23.0 million or 15% at September 30, 1998. The allowance for doubtful accounts was $6.8 million at September 30, 1999, up 75% compared with $3.9 million at September 30, 1998. During the quarter, the company sold 1,154 VOI's at an average price of approximately $10,370. As of September 30, 1999, the company held approximately 24,500 unsold VOI's in inventory, representing more than $250 million in potential gross sales proceeds at the current average sales price as of September 30, 1999. The six resorts in St. Thomas, USVI, New Orleans, LA, St. Augustine, FL, and Ocean City, MD acquired in March, 1999 from the Kosmas Group International ("KGI") had total revenues of approximately $11.0 million during the quarter. For the same period, ERC, the company's preexisting New England timeshare development division, had total revenues of $10.7 million. The former KGI resorts had pretax income during the quarter of approximately $1.0 million, compared with approximately $1.8 million for the Company's seven ERC resorts. Richard C. Breeden, Chairman, President and Chief Executive Officer of Equivest commented: "This is the eleventh straight quarter in which Equivest has posted a quarterly year-on-year increase in pretax profits exceeding 30%. During the quarter, the company set new records for revenues, net income and earnings per share. Cost reductions to date at the former KGI properties enabled those locations to record solid profitability compared with much weaker performance prior to their acquisition, though they have not yet achieved profit margins as high as ERC's. Earnings per share rose significantly to $.11 during the third quarter of 1999, and $.26 for the nine months ended September 30, 1999. Also during the quarter we were in active negotiations that led to our agreement in principle to acquire Peppertree Resorts, Ltd. of Asheville, NC." 3 As previously announced, Equivest has reached an agreement in principle to acquire all the outstanding stock of Peppertree Resorts, Ltd. of Asheville, N.C. and certain related assets. Assuming completion of the proposed transaction, Equivest will have 28 operating resorts, together with a new resort in Washington, D.C. where construction is expected to commence in 2000. Equivest will have a combined owner and existing customer base following the Peppertree transaction of approximately 100,000 families. Equivest today has more than 45,000 families in its customer base. Including its own 13 resorts, Equivest finances consumer purchases at nearly 80 resorts in the U.S., Canada and the Caribbean. Certain statements in this press release are forward-looking. These may be identified by the use of forward-looking words or phrases such as "believe," "expect," "anticipate," "should," "planned," "estimated," and "potential." These forward-looking statements are based on the Company's current expectations. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for such forward-looking statements. In order to comply with the terms of the safe harbor, the Company notes that a variety of factors could cause actual results and experience to differ materially from the anticipated results or other expectations expressed in such forward-looking statements. The risks and uncertainties that may affect the operations, performance, development, and results of the Company's businesses include a downturn in the real estate cycle, lack of available qualified prospects to tour the Company's resorts, competition from other developers, lack of appropriate sites for future developments, failure to complete construction in a timely and cost-efficient manner, or other factors which result in lower sales of vacation ownership interests, possible financial difficulties of one or more of the developers with whom the Company does business, including the risk of carrying non-performing assets or losses if defaulted loans prove to have insufficient collateral backing, fluctuations in interest rates, prepayments by consumers of indebtedness, inability of developers to honor replacement obligations for defaulted consumer notes, and competition from organizations with greater financial resources. For Information Contact: Gerald L. Klaben, Jr., Chief Financial Officer (203) 618-0065 4 EQUIVEST FINANCE, INC. AND SUBSIDIARIES COMPARATIVE CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) September December --------- -------- 30, 1999 31, 1998 -------- -------- ASSETS (Unaudited) - --------------------------------------------------- ----------- Cash and cash equivalents $ 5,895 $ 3,487 Receivables, net 167,402 142,326 Investment in real estate joint venture 4,202 2,971 Timeshare inventory 60,880 10,361 Deferred financing costs, net 2,453 3,756 Cash - restricted 2,664 1,422 Accrued interest receivable 1,335 971 Property and equipment, net 11,223 3,048 Goodwill, net 26,731 27,247 Stock registration costs 1,596 1,480 Other assets 1,413 315 -------- -------- Total Assets $285,794 $197,384 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - --------------------------------------------------- Liabilities: Accounts payable $ 4,968 $ 2,213 Accrued expenses and other liabilities 9,648 3,985 Taxes payable 2,976 1,994 Deferred income taxes 5,902 2,569 Notes payable 199,579 133,117 -------- -------- Total Liabilities 223,073 143,878 -------- -------- STOCKHOLDERS' EQUITY Cumulative Redeemable Preferred Stock--Series 2 Class A, $3 par value; 15,000 shares authorized, 10,000 shares Outstanding 30 30 Common Stock, $.01 par value; 50,000,000 shares authorized, 25,688,351 shares issued and outstanding in 1999, and 25,198,351 shares issued and outstanding in 1998 257 252 Additional paid-in capital 51,071 49,115 Retained earnings 11,363 4,109 -------- -------- Total Stockholder's Equity 62,721 53,506 -------- -------- Total Liabilities and Stockholders' Equity $285,794 $197,384 ======== ======== 5 EQUIVEST FINANCE, INC. and SUBSIDIARIES COMPARATIVE CONDENSED STATEMENT OF INCOME (Dollars in thousands except per share data) Three months ended Nine months ended September 30, September 30, 1999 1998 1999 1998 ---- ---- ---- ---- (unaudited) (unaudited) (unaudited)(unaudited) Revenues: Interest $ 6,422 $ 5,303 $ 18,009 $ 15,011 Timeshare interval sales 11,890 1,103 28,233 1,103 Resort operations 8,164 1,215 18,042 1,215 Other income 691 297 1,335 868 ------- ------- ------- ------- Total revenues 27,167 7,918 65,619 18,197 Expenses: Interest 3,396 1,947 8,847 5,318 Cost of timeshare intervals sold 2,854 273 6,747 273 Sales and marketing 5,202 567 12,172 568 Resort management 7,589 990 16,118 990 Depreciation and amortization 608 692 2,207 1,402 Provision for doubtful receivables 621 200 1,450 650 General and administrative 1,910 1,155 5,749 2,786 ------- ------- ------- ------- Total expenses 22,180 5,824 53,290 11,987 ------- ------- ------- ------- Income before provision for taxes 4,987 2,094 12,329 6,210 Provision for income taxes 2,075 860 5,075 2,300 ------- ------- ------- ------- Net income 2,912 $ 1,234 $ 7,254 $ 3,910 ======= ======= ======= ======= Basic earnings per common share $ 0.11 $ 0.05 $ 0.27 $ 0.16 Diluted earnings per common share $ 0.11 $ 0.05 $ 0.26 $ 0.15 6 EQUIVEST FINANCE, INC. and SUBSIDIARIES Selected Financial Data
Three months ended Nine months ended September 30, September 30, 1999 1998 1999 1998 ---- ---- ---- ---- (unaudited) (unaudited) (unaudited) (unaudited) Revenues: As a percentage of total revenues: Interest 23.6% 67.0% 27.4% 82.4% Timeshare interval sales 43.8% 14.0% 43.0% 6.1% Resort operations 30.1% 15.3% 27.5% 6.7% Other income 2.5% 3.7% 2.1% 4.8% ----- ----- ----- ----- Total revenues 100.0% 100.0% 100.0% 100.0% Expenses: As a percentage of VOI sales: Cost of timeshare intervals sold 24.0% 24.7% 23.9% 24.7% Sales and marketing 43.8% 51.4% 43.1% 51.4% Provision for doubtful receivables (1) 5.2% 5.9% 4.6% 5.9% As a percentage of interest income: Interest 52.9% 36.7% 49.1% 35.4% As a percentage of resort operations: Resort management 93.0% 81.5% 89.3% 81.5% As a percentage of total revenues: Provision for doubtful receivables (2) 0.0% 1.7% 0.2% 3.2% Depreciation and amortization 2.2% 8.7% 3.4% 7.7% General and administrative 7.0% 14.6% 8.8% 15.3% ----- ----- ----- ----- Total expenses 81.7% 73.5% 81.2% 65.9% ----- ----- ----- ----- Income before taxes 18.3% 26.5% 18.8% 34.1% Provision for income taxes 7.6% 10.9% 7.7% 12.6% Net income 10.7% 15.6% 11.1% 21.5% ===== ===== ===== =====
(1) Based on provision for doubtful receivables recorded on timeshare development. (2) Based on provision for doubtful receivables recorded on timeshare financing. 7 EQUIVEST FINANCE, INC. and SUBSIDIARIES Selected Financial Data (Dollars in thousands) September 30, September 30, 1999 1998 ---- ---- A&D loans $ 29,885 $ 38,258 Purchased receivables 92,581 90,473 Hypothecation loans 15,306 9,581 Consumer loans, owned 45,267 17,744 Other loans 3,405 2,046 --------- --------- Total loans outstanding $ 186,444 $ 158,102 Specific reserves $ 18,622 $ 17,476 General reserves 6,814 3,881 Overcollateralization 11,958 1,639 --------- --------- Total reserves and overcollateralization $ 37,394 $ 22,996 Total reserves and overcollateralization as % of total loans 20.1% 14.5% Chargebacks $ 4,367 $ 4,624 Chargebacks as % of Consumer Financings (1&2) 4.1% 4.6% Allowance for doubtful accounts, beginning of year $ 3,835 $ 2,442 Provision for loan losses 1,450 650 Allowance related to the acquisition of ERC and Kosmas transaction 2,157 800 Charges to allowance for doubtful accounts (628) (11) --------- --------- Allowance for doubtful accounts, end of period $ 6,814 $ 3,881 (1) Consumer Financing includes Purchased receivables and Hypothecation loans. (2) Represents year-to-date amounts. 8 Item 6. Resignation of Registrant's Directors Not Applicable. Item 7. Financial Statements and Exhibits Not Applicable Item 8. Change in Fiscal Year Not Applicable. Item 9. Sales of Equity Securities Pursuant to Regulation S Not Applicable. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. EQUIVEST FINANCE, INC. Date: November 11, 1999 By: /s/ ---------------------------- Name: Gerald L. Klaben, Jr. Title:Senior Vice President & Chief Financial Officer 9 -----END PRIVACY-ENHANCED MESSAGE-----