Press Release
April 9, 2001
GREENWICH, CO -- Equivest Finance, Inc. (NASDAQ:EQUI) announced April 6 its financial results for the fourth quarter
of 2000 and the year ended December 31, 2000.
The Company set all time records for net income, earnings per share and revenues for the full year, and also for
the fourth quarter. This is the fifth consecutive year that Equivest has recorded its highest ever net income,
earnings per share and revenues. Equivest is an integrated developer and operator of vacation ownership resort
properties headquartered in Greenwich, Connecticut. It owns or operates 29 resorts located principally on the east
and gulf coasts of the United States, as well as the U.S. Virgin Islands. The Company also operates a specialty
finance company providing financing for consumer purchases of vacation intervals in its own resorts and those of
independent developers.
During the year ended December 31, 2000, pretax income was $20.0 million, up 31% from $15.2 million in 1999 prior
to a one-time write-off of $1.6 million in accrued costs relating to a Registration Statement filed with the SEC
in 1998 (the ``1998 Registration'') covering a proposed public offering that was never completed. Net income in
2000 prior to the charge for the 1998 Registration was $11.4 million, up 31% from $8.7 million in 1999. Diluted
earnings per share prior to the impact of costs relating to the 1998 Registration rose 23% to $0.38 on 28.4 million
weighted average shares outstanding for the year ended December 31, 2000, compared with earnings per share of $0.31
for the previous year on 26.4 million weighted average shares outstanding. EBITDA prior to the charge for the 1998
Registration was $48.7 million, up 52.0% from $32.1 million in 1999.
For the year ended December 31, 2000, revenues were up 78% to $158.3 million, compared to $89.1 million in 1999.
Total sales of vacation ownership intervals (``VOIs'') rose to $97.4 million in 2000, up 138% from $40.9 million
in 1999. To a large degree these increases reflect revenues associated with companies or properties acquired in
1999 or 2000.
The costs of the 1998 Registration have previously been paid by the Company, and such costs have been previously
reported as accrued costs of an SEC registration. None of the costs were actually incurred in 2000, and most of
such costs were legal and accounting professional fees incurred in the fourth quarter of 1998. This one-time charge
has no impact on the Company's cash flow, and though recorded in the fourth quarter of 2000, the charge relates
entirely to prior years. The charge reduced net income by $1 million, or $0.03 per share.
Pretax income after the charge relating to the 1998 Registration was $18.3 million, up 21% from 1999. Net income
after the charge was $10.4 million, up 20% from 1999. Diluted earnings per share after the charge for the 1998
Registration rose 13% to $0.35.
Richard C. Breeden, Chairman, President and Chief Executive Officer of Equivest commented: ``Calendar year 2000
was an important year in which we set new records for earnings for the fifth straight year. During the last five
years, net income increased more than 585%, from $1.7 million to $11.4 million. Earnings per share diluted grew
more than 440%, from $0.07 to $0.38. Revenues increased more than 1,000%, from $14.3 million to $158.3 million.
Book value per share increased more than 600%, from $0.43 to $3.05.'' Net income and earnings per share described
above are based on results for 2000 prior to the charge relating to the 1998 Registration.
Mr. Breeden also noted: ``Throughout 2000, we worked to restructure our Peppertree subsidiary to eliminate marginal
operations and to reduce costs. Excessive Peppertree costs have been reduced by several million dollars per year,
and we believe it will begin to contribute to the bottom line in 2001. Sales and marketing costs as a percentage
of VOI sales revenue at Peppertree fell from 63.9% in 1999 for the short period following the acquisition to 51.2%
for 2000. We expect further reductions in 2001 as cuts made in the second half of 2000 will be in place for a full
year. Sales and marketing costs for the Company as a whole fell in 2000 to 47.2% from 47.6% in 1999 not withstanding
the higher cost levels at Peppertree.''
For the fourth quarter of 2000, before considering the impact of the charge for the 1998 Registration, the Company
had pretax income of $4.9 million compared to $2.9 million in the fourth quarter of 1999, an increase of 72%. Net
income on the same basis in the fourth quarter of 2000 was $2.7 million compared to $1.4 million in the comparable
period for 1999, an increase of 89%. Earnings per share fully diluted were $0.09 per share in the fourth quarter
of 2000 compared to $0.05 in the comparable period of 1999, up 80%. For the quarter ended December 31, 2000, revenues
rose 19% to a record $34.1 million, compared with $28.7 million in the comparable quarter in 1999.
After the impact of the charge relating to the 1998 Registration, pretax income for the quarter ended December
31, 2000 rose 14% to $3.3 million, up from $2.9 million reported in the year earlier period. Net income after the
charge was $1.8 million for the quarter, an increase of 23% from $1.4 million for the comparable period in 1999.
Earnings per share after the charge were $0.06 in the fourth quarter of 2000, an increase of 20.0% from the $0.05
in the fourth quarter of 1999.
Total assets as of December 31, 2000 were $437.0 million, an increase of 5% compared with $417.0 million at year-end
1999. Total capital at December 31, 2000 was $85.8 million, an increase of 14% from $75.3 million at year-end 1999.
For the full year 2000, the VOI cost of sales increased to 23.9% from 23.6% in 1999. Sales and marketing expense
declined to 47.2% of VOI sales, down from 47.6% in 1999. Resort operations expense for 2000 fell to 61.5% of resort
operations revenue, down from 80.0% in 1999. General and administrative expense increased to 11.7% of total revenues
for 2000, up from 10.3% for the prior year. Interest expense as a percent of interest income in 2000 was 61.8%,
up from 51.6% in the year earlier period.
The company's loan receivable portfolio grew 6% to $275.1 million for the year ended December 31, 2000, compared
with $260.1 million as of December 31, 1999. At December 31, 2000, past due loans totaled $5 million, or 1.8% of
the loan portfolio. This amount was down 23.8% from $6.5 million, or 2.5% of the loan portfolio, at December 31,
1999. During 2000 the Company took $9.1 million in provisions for loan losses, and wrote off $7.9 million in loans,
or 2.8% of the loan portfolio. At year end 2000 the Company maintained total portfolio reserves and over collateralization
of $35.2 million, or 12.8% of the total loan portfolio, up 7% from $32.9 million, or 12.6% of the total loan portfolio,
at December 31, 1999. The allowance for doubtful accounts included in total reserves was $11.8 million at December
31, 2000, up 16.8% compared with $10.1 million at December 31, 1999.
The Company has historically provided acquisition and development loans to third party developers as part of a
strategy for acquiring the right to finance consumer receivables relating to VOI purchases. Because of the high
risk of such loans and more attractive returns on capital available to the Company in other areas, the Company
recently announced that it does not currently plan to extend construction loans to third party developers in the
future beyond current commitments, which are not significant in amount, though it plans to continue financing consumer
receivables for third party borrowers. During the year ended December 31, 2000, 100% of the aggregate growth in
the Company's consumer receivable portfolio and interest income came from loans relating to purchases of VOIs in
the Company's own resorts.
During 2000, the Company sold over 8,200 VOI's at an average price of more than $10,800, and it sold over 1,700
VOI's at an average price of more than $11,400 during the fourth quarter. As of December 31, 2000, the company
held approximately 27,700 unsold VOI's in inventory, representing more than $300 million in potential gross sales
proceeds at the current average sales price as of December 31, 2000.
The Company recently reached agreements with two of its lenders on long term extensions of credit lines that had
maturities in November, 2000, and which have been the subject of short term extensions while longer extensions
were negotiated. The Bank of America has extended the maturity of the remaining balance of $15.4 million on an
original $20.7 million facility that was used for an acquisition until February 2003. This extension is subject
to existing covenants and certain conditions, including $3.5 million of additional principal payments out of the
proceeds of sales of land and other unused assets the company plans to sell over the next year.
Credit Suisse First Boston Mortgage Capital LLC (``CSFB'') had loaned the Company approximately $150 million, representing
a combination of revolving loan facilities to the Company that were originally extended in 1997, and first mortgage
loans on certain properties the Company acquired in an acquisition from a troubled timeshare company. Of this amount,
approximately $39 million remains outstanding, and CSFB has extended the maturity of the remaining principal amount
until February 2002.
Certain statements in this press release are forward-looking. They 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 or indebtedness, inability of developers to honor
replacement obligations for defaulted consumer notes, and competition from organizations with greater financial
resources.
EQUIVEST FINANCE, INC. and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
2000 1999
ASSETS
Cash and cash equivalents $ 4,805 $ 8,010
Receivables, net 258,950 247,082
Investment in real estate
joint venture -- 4,416
Inventory 95,577 87,925
Property and equipment, net 21,580 18,123
Goodwill, net 44,110 41,374
Other assets 11,952 10,055
Total Assets $ 436,974 $ 416,985
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Accounts Payable and Other
Liabilities:
Accounts payable $ 9,624 $ 6,288
Accrued expenses and other
liabilities 23,194 20,832
Taxes payable 8,239 5,609
Deferred income taxes 21,736 19,536
Total Accounts Payable and
Other Liabilities 62,793 52,265
Notes payable 288,375 289,358
Total Liabilities 351,168 341,623
STOCKHOLDERS' EQUITY
Cumulative Redeemable Preferred
Stock--Series 2 Class A, $3 par
value; 15,000 shares authorized,
10,000 shares Issued and
outstanding 30 30
Common Stock, $.01 par value;
50,000,000 shares authorized,
28,089,722 shares outstanding 281 281
Additional paid-in capital 62,246 62,246
Retained earnings 23,249 12,805
Total Stockholders' Equity 85,806 75,362
Total Liabilities and
Stockholders' Equity $ 436,974 $ 416,985
EQUIVEST FINANCE, INC. and SUBSIDIARIES
COMPARATIVE CONDENSED STATEMENT OF INCOME
(Dollars in thousands except per share data)
Three months ended Year ended
December 31, December 31,
2000 1999 2000 1999
Revenues:
Timeshare interval sales $ 19,606 $ 12,677 $ 97,367 $ 40,910
Interest 9,236 7,953 38,137 25,962
Resort operations 4,296 7,751 20,741 20,568
Other income 1,002 315 2,011 1,650
Total revenues 34,140 28,696 158,256 89,090
Expenses:
Provision for doubtful
accounts 2,880 742 9,079 2,192
Interest 4,534 4,543 23,560 13,389
Cost of timeshare
intervals sold 4,305 2,919 23,240 9,667
Depreciation and
amortization 1,567 1,305 5,145 3,512
Sales and marketing 9,153 7,292 45,923 19,464
Resort management 1,629 5,561 12,745 16,453
Nonrecurring stock
registration costs 1,649 -- 1,649 --
General and
administrative 5,143 3,468 18,571 9,217
Total expenses 30,860 25,830 139,912 73,894
Income before provision
for taxes 3,280 2,866 18,344 15,196
Provision for income taxes 1,500 1,425 7,900 6,500
Net income $ 1,780 $ 1,441 $ 10,444 $ 8,696
Basic earnings per share $ 0.06 $ 0.05 $ 0.35 $ 0.31
Diluted earnings per share $ 0.06 $ 0.05 $ 0.35 $ 0.31
Summary results excluding
1998 Registration:
Revenues $ 34,140 $ 28,696 $158,256 $ 89,090
Expenses 29,211 25,830 138,263 73,894
Income before provision
for taxes 4,929 2,866 19,993 15,196
Provision for income taxes 2,200 1,425 8,600 6,500
Net income $ 2,729 $ 1,441 $ 11,393 $ 8,696
Basic earnings per share $ 0.09 $ 0.05 $ 0.38 $ 0.31
Diluted earnings per share $ 0.09 $ 0.05 $ 0.38 $ 0.31
EQUIVEST FINANCE, INC. and SUBSIDIARIES
Selected Financial Data as a Percentage of Total Revenues
Three months ended Year ended
December 31, December 31,
2000 1999 2000 1999
Revenues:
As a percentage of total
revenues:
Timeshare interval sales 57.4 % 44.2 % 61.5 % 45.9 %
Interest 27.1 % 27.7 % 24.1 % 29.1 %
Resort operations 12.6 % 27.0 % 13.1 % 23.1 %
Other income 2.9 % 1.1 % 1.3 % 1.9 %
Total revenues 100.0 % 100.0 % 100.0 % 100.0 %
Expenses:
As a percentage of VOI sales:
Cost of timeshare intervals
sold 22.0 % 23.0 % 23.9 % 23.6 %
Sales and marketing 46.7 % 57.5 % 47.2 % 47.6 %
Provision for doubtful
accounts (1) 14.7 % 5.9 % 9.3 % 5.0 %
As a percentage of interest
income:
Interest 49.1 % 57.1 % 61.8 % 51.6 %
As a percentage of resort
operations:
Resort management 37.9 % 71.7 % 61.5 % 80.0 %
As a percentage of total
revenues:
Provision for doubtful
accounts (2) 0.0 % 0.0 % 0.0 % 0.2 %
Depreciation and
amortization 4.6 % 4.5 % 3.3 % 3.9 %
General and administrative 15.1 % 12.1 % 11.7 % 10.3 %
Total expenses 90.4 % 90.0 % 88.4 % 82.9 %
Income before taxes 9.6 % 10.0 % 11.6 % 17.1 %
Provision for income taxes 4.4 % 5.0 % 5.0 % 7.3 %
Net income 5.2 % 5.0 % 6.6 % 9.8 %
(1) Based on provision for doubtful receivables recorded on timeshare
development.
(2) Based on provision for doubtful receivables recorded on timeshare
financing.
EQUIVEST FINANCE, INC. and SUBSIDIARIES
Selected Financial Data
(Dollars in thousands)
December 31, December 31,
2000 1999
A&D loans $ 15,956 $ 27,945
Purchased receivables 80,208 91,028
Hypothecation loans 27,068 16,925
Consumer loans, owned 147,810 120,895
Other loans 4,040 3,297
Total loans outstanding $ 275,082 $ 260,090
Specific reserves $ 17,406 $ 18,507
General reserves 11,763 10,073
Overcollateralization 5,981 4,308
Total reserves and
overcollateralization $ 35,150 $ 32,888
Total reserves and
overcollateralization as
% of total loans 12.8% 12.6%
Chargebacks 5,796 5,542
Chargebacks as % of Consumer
Financings (1) 5.4% 5.1%
Allowance for doubtful
accounts, beginning of year 10,073 $ 3,835
Provision for loan losses 9,078 2,192
Allowance related to an
acquisition 501 6,639
Charges to allowance for
doubtful accounts (7,889) (2,593)
Allowance for doubtful
accounts, end of year $ 11,763 $ 10,073
(1) Consumer Financing includes Purchased receivables and
Hypothecation loans.
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Contact:
Gerald L. Klaben, Jr., Chief Financial Officer
203/618-0065