Company Press Release
May 3, 2000
ORLANDO, FL -- Fairfield Communities, Inc. (NYSE:FFD) yesterday reported financial results for the first quarter
ended March 31, 2000.
Net earnings for the quarter ended March 31, 2000 increased 28% to $12.7 million from $9.9 million in the prior
year period. Diluted earnings per share were $0.28 in the first quarter of 2000, a 27% increase from $0.22 in the
first quarter of 1999. Total revenue for the first quarter of 2000 increased 22% to $121.0 million, up from $99.1
million in the first quarter of 1999.
Gross sales of vacation ownership interests (VOI), the largest component of revenue, increased 23% during the first
quarter of 2000 to $89.0 million from $72.1 million in the prior year quarter. Net VOI sales increased 22% to $88.9
million in the first quarter of 2000, compared to $72.8 million in the first quarter of 1999. Fairfield's ownership
base increased 20% to 288,000, compared to 240,000 in the prior year period.
Resort management and interest income increased 10% to $20.4 million compared to $18.4 million in the year-ago
period, remaining relatively unchanged as a percentage of total revenue at 17%. Discovery Sales increased 24% to
4,290 from 3,447 in the 1999 first quarter.
Total receivables at March 31, 2000 increased $93 million, or 24% to $468 million, compared to $374 million at
March 31, 1999, and up $17 million, or 4% compared to December 31, 1999. The Company's 60-day delinquency rate
for contract receivables decreased to 1.5% in the first quarter ended March 31, 2000, compared to 2.0% in the year-ago
period and unchanged compared to the fourth quarter ended December 31, 1999.
``Fairfield's VOI sales and earnings growth reflects our ability to generate quality tour flows internally, our
strong sales and marketing operations and the strength of our financial position,'' commented Jim Berk, President
and Chief Executive Officer. ``Our success is driven by several other key factors: Our growing brand recognition,
integrated marketing systems and the continued expansion of our resort portfolio.''
On March 2, 2000, the Company authorized a stock repurchase program of up to $60 million of its common stock from
time to time in open market or privately negotiated transactions. Through the end of April, the Company purchased
in excess of 3.6 million shares. ``Although Fairfield continues to post record earnings and is in the high growth
leisure segment, our performance is not reflected in the current stock price. Therefore, we intend to aggressively
purchase shares at these levels because it provides a very attractive investment opportunity for us and for our
shareholders,'' concluded Berk.
Live Internet Broadcast
Fairfield will be hosting a conference call on the Internet to discuss earnings on Tuesday, May 2, 2000 at 9:00
a.m. EST. To participate in this call please visit the Financial & Investor Information section of the Fairfield
Web site at www.efairfield.com approximately 15 minutes before the call. The replay of the call will be made available
on the Web site after the call.
Fairfield Communities, Inc., is one of the largest vacation ownership companies in North America. The Company markets
vacation products and manages resort properties that provide quality recreational experiences at 33 locations in
twelve states and the Bahamas, to more than 288,000 vacation owning households.
Except for historical information contained herein, this press release contains forward-looking statements that
involve risks and uncertainties, including, but not limited to, general industry and economic conditions; interest
rate trends; regulatory changes; availability of real estate properties; competition from national hospitality
companies and other competitive factors and pricing pressures; shifts in customer demands; the continued availability
of financing in the amounts and at the terms necessary to support the Company's future business as well as other
risks detailed from time to time in the Company's reports filed with the Securities and Exchange Commission, including
the Annual Report and report on Form 10-K for the year ended December 31, 1999.
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31
-------------------
2000 1999
---- ----
Revenues
Vacation ownership interests, net $ 88,883 $ 72,758
Resort management 13,282 11,516
Interest 7,076 6,924
Net interest income and fees from qualifying
special purpose entities 6,047 4,434
Other 5,687 3,433
-------- --------
Total revenues 120,975 99,065
-------- --------
Expenses
Vacation ownership interests - costs of
units sold 23,912 19,447
Sales and marketing 44,208 35,455
Provision for loan losses 4,084 3,622
Resort management 10,809 9,304
General and administrative 9,848 7,866
Interest, net 1,023 1,612
Depreciation and amortization 2,220 2,007
Other 4,365 3,951
-------- --------
Total costs and operating expenses 100,469 83,264
-------- --------
Earnings before provision for income taxes 20,506 15,801
Provision for income taxes 7,792 5,867
-------- --------
Net earnings $ 12,714 $ 9,934
======== ========
Basic earnings per share $ 0.29 $ 0.23
======== ========
Diluted earnings per share $ 0.28 $ 0.22
======== ========
Weighted average shares outstanding:
Basic 44,037 43,879
======== ========
Diluted 45,318 45,275
======== ========
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
Assets
Cash and cash equivalents $ 8,179 $ 17,716
Receivables, net 231,454 234,061
Real estate inventories 131,614 133,874
Investments in and net amounts due from
qualifying special purpose entities 45,046 39,385
Property and equipment, net 42,995 41,578
Restricted cash 10,531 8,624
Other assets 27,289 23,398
------------ ------------
Total assets $ 497,108 $ 498,636
============ ============
Liabilities and Stockholders' Equity
Liabilities:
Financing arrangements $ 60,304 $ 53,537
Deferred revenue 23,138 23,011
Accrued income taxes 38,053 38,300
Accounts payable 35,302 38,251
Other liabilities 62,321 62,582
------------ ------------
Total liabilities 219,118 215,681
------------ ------------
Stockholders' Equity:
Common stock, $.01 par value,
100,000,000 shares authorized,
50,870,125 and 50,849,153 shares
issued as of March 31, 2000 and
December 31, 1999, respectively 509 509
Paid-in capital 124,568 124,120
Retained earnings 192,290 179,576
Unamortized value of restricted stock (242) (259)
Treasury stock, at cost, 8,832,986
and 6,245,723 shares as of
March 31, 2000 and December 31, 1999,
respectively (39,135) (20,991)
------------ ------------
Total stockholders' equity 277,990 282,955
------------ ------------
Total liabilities and stockholders'
equity $ 497,108 $ 498,636
============ ============
FAIRFIELD COMMUNITIES, INC.
SCHEDULE OF SELECTED FINANCIAL DATA (1)
(Dollars in Thousands)
Quarters Ended
03/31/2000 12/31/1999 09/30/1999
----------------------------------
Contracts receivable:
Balance $ 451,422 $ 434,746 $ 422,224
Weighted average coupon rate 15.0% 15.1% 15.3%
Delinquency (60-day basis) 1.5% 1.5% 1.1%
Allowance for cancellations $ 28,167 $ 29,053 $ 29,405
Write-offs, net $ 4,669 $ 3,784 $ 1,103
Total financing arrangements $ 260,941 $ 241,122 $ 234,246
Weighted average funding cost 7.7% 7.8% 7.6%
Number of Discovery sales 4,290 4,075 6,013
Discovery receivables $ 16,595 $ 16,419 $ 18,644
Gross VOI revenue $ 88,982 $ 87,900 $ 112,024
Net VOI revenue (deferral)
recognition $ (99) $ (73) $ (1,049)
VOI deferred revenue at
quarter end $ 6,823 $ 6,724 $ 6,651
Condensed statements of earnings of unconsolidated subsidiaries:
Interest income $ 9,648 $ 9,221 $ 8,430
Interest expense:
Financing arrangements 3,601 3,371 3,061
Subordinated note to parent 1,444 766 657
General and administrative - 546 519
----------------------------------
Total expenses 5,045 4,683 4,237
----------------------------------
Pretax earnings 4,603 4,538 4,193
Provision for income taxes 1,597 1,569 1,545
----------------------------------
Net earnings $ 3,006 $ 2,969 $ 2,648
==================================
06/30/1999 03/31/1999 12/31/1998
----------------------------------
Contracts receivable:
Balance $ 386,402 $ 363,398 $ 360,736
Weighted average coupon rate 15.1% 14.9% 14.6%
Delinquency (60-day basis) 1.3% 2.0% 2.3%
Allowance for cancellations $ 24,806 $ 22,012 $ 22,343
Write-offs, net $ 2,338 $ 3,953 $ 4,029
Total financing arrangements $ 233,303 $ 233,905 $ 222,304
Weighted average funding cost 7.0% 7.2% 7.5%
Number of Discovery sales 5,014 3,447 3,887
Discovery receivables $ 14,667 $ 11,303 $ 9,256
Gross VOI revenue $ 97,193 $ 72,148 $ 74,687
Net VOI revenue (deferral)
recognition $ 2,013 $ 610 $ (200)
VOI deferred revenue at
quarter end $ 5,602 $ 7,615 $ 8,225
Condensed statements of earnings of unconsolidated subsidiaries:
Interest income $ 7,568 $ 6,925 $ 6,181
Interest expense:
Financing arrangements 2,613 2,463 2,270
Subordinated note to parent 528 461 385
General and administrative 472 442 384
----------------------------------
Total expenses 3,613 3,366 3,039
----------------------------------
Pretax earnings 3,955 3,559 3,142
Provision for income taxes 1,425 1,342 1,157
----------------------------------
Net earnings $ 2,530 $ 2,217 $ 1,985
==================================
(1) The Schedule of Selected Financial Data includes the related
financial information of FRC and FFC II, wholly owned,
unconsolidated qualifying special purpose entities of Fairfield
Acceptance Corporation-Nevada.
--------------------------------------------------------------------------------
Contact:
Fairfield Communities, Inc.
Robert W. Howeth
Chief Financial Officer
501/312-3856
or
Morgen-Walke Associates
Michele Katz/Michael Polyviou
Press: Heather Fox
212/850-5600