Press Release
November 1, 2000
ORLANDO, FL -- Fairfield Communities, Inc. (NYSE: FFD) yesterday reported financial results for the third quarter
and nine months ended September 30, 2000.
Gross sales of vacation ownership interests (VOI), the largest component of revenue, reached a record $134.0 million
for the third quarter of 2000, a 20% increase compared to $112.0 million in the prior year quarter. Total revenue
for the third quarter increased 16% to a record $166.8 million, compared to $143.7 million in the year-ago period.
Fairfield's ownership base also reached a new record level, up 21% to 324,789 compared to 268,090 in the prior
year period.
EPS increased 18% to $0.45 per diluted share, up from $0.38 per diluted share in the 1999 third quarter. During
the quarter, the Company deferred an additional $4.9 million of revenues associated with sales in timeshare units
under construction with an associated operating profit of $1.1 million. The Company continues to add to its solid
base of recurring revenue, with Fairfield's owner financing providing a predictable interest income earnings stream.
Total contracts receivable increased 26% to $532.3 million for the period ending September 30, 2000, compared to
$422.2 million at September 30, 1999. Total contracts receivable also include those held by the Company's wholly
owned, unconsolidated special purpose entities.
``This was another quarter of record-setting performance for Fairfield demonstrating the Company's fundamental
strengths and industry leadership,'' said Jim Berk, President and Chief Executive Officer. ``We continue to broaden
our vacation services, increase our marketing alliances to enhance our sales and marketing initiatives, and continue
resort development activity at an impressive pace.''
Net VOI sales for the nine months ended September 30, 2000 increased 19% to $336.1 million from $282.9 million
in the prior year period. Gross VOI sales were $341.6 million for the first nine months of 2000, a 21% increase
from $281.4 million in the comparable period of 1999. Total revenue for the nine months ended September 30, 2000
was $440.4 million, an increase of 18% from $372.0 million in the prior year period. At September 30, 2000, the
Company had in excess of $12.2 million of deferred revenues associated with sales in timeshare units under construction.
This revenue and associated operating profit of $2.9 million will be recognized in future periods as construction
is completed. Net earnings for the nine months ended September 30, 2000 increased 16%, to $50.2 million or $1.14
per diluted share up from $43.2 million or $0.95 per diluted share in the year-ago period.
On March 2, 2000, Fairfield authorized a stock repurchase program of up to $60 million of its common stock through
August 31, 2000 in open market or privately negotiated transactions. As a result of the repurchase program, the
Company repurchased approximately 4.5 million shares. As of September 30, 2000, the Company had 42.3 million common
shares outstanding.
In the third quarter ended September 30, 2000, the Company significantly enhanced its funding resources. Specifically,
Fairfield expanded its capital availability to $145 million by increasing its syndicated warehouse facility commitment
from $100 million. Additionally, the Company's off-balance sheet non-recourse special purpose financing commitment
increased to $350 million, a $100 million increase. Furthermore, in October the Company completed the placement
of $75 million of Senior Notes. The proceeds of these notes will be used primarily for the construction and acquisition
of additional timeshare units.
Resort Update
This past quarter Fairfield's new tower resort on the beach in Destin opened. New phases opened in existing Fairfield
resorts in Nashville, Sedona, Smoky Mountains, Myrtle Beach, Gatlinburg, Ocean Ridge and Pagosa. New resort acquisition
and development efforts continue in Williamsburg, Las Vegas, Durango and Myrtle Beach.
Live Internet Broadcast
Fairfield will be hosting a conference call on the Internet to discuss earnings on Tuesday, October 31, 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 324,000 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 Nine Months Ended
September 30 September 30
------------------ --------------------
2000 1999 2000 1999
---- ---- ---- ----
Revenues
Vacation ownership
interests, net $129,054 $110,975 $336,116 $282,939
Resort management 12,811 10,677 38,585 33,492
Interest 8,135 7,780 22,608 21,744
Net interest
income and
fees from qualifying
special purpose
entities 6,569 5,337 18,613 14,696
Other 10,221 8,933 24,489 19,164
-------- -------- -------- --------
Total revenues 166,790 143,702 440,411 372,035
-------- -------- -------- --------
Expenses
Vacation ownership
interests -
costs of sales 34,034 28,755 88,903 73,813
Sales and marketing 62,987 53,400 164,754 136,464
Provision
for loan losses 6,501 5,702 16,241 14,456
Resort management 10,752 8,254 32,223 26,168
General and
administrative 10,306 9,262 29,686 25,319
Interest, net 1,648 1,711 3,765 4,667
Depreciation
and amortization 2,631 1,977 7,139 5,924
Other 7,086 6,542 17,038 16,604
Litigation expenses -- -- 4,700 --
-------- -------- -------- --------
Total expenses 135,945 115,603 364,449 303,415
-------- -------- -------- --------
Earnings before
provision for
income taxes and
extraordinary item 30,845 28,099 75,962 68,620
Provision for
income taxes 11,603 10,755 28,655 25,402
-------- -------- -------- --------
Net earnings
before
extraordinary
item 19,242 17,344 47,307 43,218
Extraordinary
gain - extinguishment
of debt -- -- 2,900 --
Net earnings $ 19,242 $ 17,344 $ 50,207 $ 43,218
======== ======== ======== ========
Basic earnings
per share
Before
extraordinary gain $ 0.46 $ 0.39 $ 1.12 $ 0.98
Extraordinary
gain -- -- 0.07 --
-------- -------- -------- --------
Net earnings $ 0.46 $ 0.39 $ 1.19 $ 0.98
======== ======== ======== ========
Diluted
earnings
per share
Before
extraordinary
gain $ 0.45 $ 0.38 $ 1.07 $ 0.95
Extraordinary
gain -- -- 0.07 --
-------- -------- -------- --------
Net earnings $ 0.45 $ 0.38 $ 1.14 $ 0.95
======== ======== ======== ========
Weighted average
shares outstanding:
Basic 41,720 44,074 42,098 43,995
======== ======== ======== ========
Diluted 43,105 45,734 44,043 45,556
======== ======== ======== ========
FAIRFIELD COMMUNITIES, INC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
Assets
Cash and cash
equivalents $ 5,515 $ 17,716
Receivables, net 292,977 234,061
Real estate inventories 163,973 133,874
Investments in
and net amounts due from
qualifying special
purpose entities 53,705 39,385
Property and equipment, net 50,428 41,578
Restricted cash 12,951 8,624
Other assets 27,349 23,398
--------- ---------
Total assets $ 606,898 $ 498,636
========= =========
Liabilities and
Stockholders' Equity
Liabilities:
Financing arrangements $ 93,502 $ 53,537
Deferred revenue 28,906 23,011
Accrued income taxes 45,187 38,300
Accounts payable 55,925 38,251
Other liabilities 75,809 62,582
--------- ---------
Total liabilities 299,329 215,681
--------- ---------
Stockholders Equity:
Common stock, $.01 par
value, 100,000,000 shares
authorized, 52,756,471
and 50,849,153 shares issued
as of September 30, 2000
and December 31, 1999,
respectively 530 509
Paid-in capital 137,694 124,120
Retained earnings 229,783 179,576
Unamortized value of
restricted stock (1,828) (259)
Treasury stock, at
cost, 10,419,474 and
6,245,723 shares
as of September 30, 2000
and December 31, 1999,
respectively (58,610) (20,991)
--------- ---------
Total stockholders' equity 307,569 282,955
--------- ---------
Total liabilities and
stockholders' equity $ 606,898 $ 498,636
========= =========
FAIRFIELD COMMUNITIES, INC.
SCHEDULE OF SELECTED FINANCIAL DATA (1)
(Dollars in Thousands)
Quarters Ended
09/30/2000 06/30/2000 03/31/2000
---------- ---------- ----------
Contracts receivable:
Balance $ 532,290 $ 487,367 $ 451,422
Weighted average coupon rate 15.1% 15.0% 15.0%
Delinquency (60-day basis) 1.3% 1.4% 1.5%
Allowance for cancellations $ 32,238 $ 28,612 $ 28,167
Write-offs, net $ 3,937 $ 3,500 $ 4,669
Total financing arrangements $ 312,323 $ 282,669 $ 260,941
Weighted average funding cost 8.8% 8.1% 7.7%
Number of Discovery sales 8,363 6,903 4,290
Discovery receivables $ 23,600 $ 17,956 $ 16,595
Gross VOI revenue $ 134,000 $ 118,644 $ 88,982
Net VOI revenue
(deferral) recognition $ (4,946) $ (465) $ (99)
VOI deferred revenue
at quarter end $ 12,234 $ 7,288 $ 6,823
Number of equivalent weeks sold 8,110 7,099 5,231
Average price per equivalent week $ 16,522 $ 16,714 $ 17,012
Condensed statements
of earnings of
unconsolidated subsidiaries:
Interest income $ 10,789 $ 9,849 $ 9,648
Interest expense:
Financing arrangements 4,219 3,853 3,601
Subordinated note to parent 1,936 1,687 1,444
General and administrative - - -
-----------------------------------
Total expenses 6,155 5,540 5,045
-----------------------------------
Pretax earnings 4,634 4,309 4,603
Provision for income taxes 1,610 1,496 1,597
-----------------------------------
Net earnings $ 3,024 $ 2,813 $ 3,006
===================================
Quarters Ended
12/31/1999 09/30/1999 06/30/1999
---------- ---------- ----------
Contracts receivable:
Balance $ 434,746 $ 422,224 $ 386,402
Weighted average coupon rate 15.1% 15.3% 15.1%
Delinquency (60-day basis) 1.5% 1.1% 1.3%
Allowance for cancellations $ 29,053 $ 29,405 $ 24,806
Write-offs, net $ 3,784 $ 1,103 $ 2,338
Total financing arrangements $ 241,122 $ 234,246 $ 233,303
Weighted average funding cost 7.8% 7.6% 7.0%
Number of Discovery sales 4,075 6,013 5,014
Discovery receivables $ 16,419 $ 18,644 $ 14,667
Gross VOI revenue $ 87,900 $ 112,024 $ 97,193
Net VOI revenue
(deferral) recognition $ (73) $ (1,049) $ 2,013
VOI deferred revenue
at quarter end $ 6,724 $ 6,651 $ 5,602
Number of equivalent weeks sold 5,992 7,525 6,481
Average price per equivalent week $ 14,670 $ 14,887 $ 14,997
Condensed statements of
earnings of unconsolidated
subsidiaries:
Interest income $ 9,221 $ 8,430 $ 7,568
Interest expense:
Financing arrangements 3,371 3,061 2,613
Subordinated note to parent 766 657 528
General and administrative 546 519 472
----------------------------------
Total expenses 4,683 4,237 3,613
----------------------------------
Pretax earnings 4,538 4,193 3,955
Provision for income taxes 1,569 1,545 1,425
----------------------------------
Net earnings $ 2,969 $ 2,648 $ 2,530
==================================
(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, 407/370-5250
Chief Financial Officer
or
Morgen-Walke Associates
Michele Katz/Michael Polyviou
Press: Steven DiMattia
212/850-5600