From the SVR 10-K. Most of the company's assets are these receivables. Then they also have a bunch of inventories. I didn't get far enough to understand how a time share resort can book inventories. Sounds strange to me. I would think this would be a business with a lot of fixed assets, i.e. real estate. I'd be real careful doing the straight net-net calculation on this puppy. Just a suspicion based on very little work, but something doesn't look right here. I'll wait for Mike to clear this up.
<<As part of the Vacation Interval sales process, the Company offers potential purchasers financing of up to 90% of the purchase price over a seven to ten year period. The Company has historically financed its operations by borrowing from third-party lending institutions at an advance rate of up to 70% of eligible customer receivables. At December 31, 1998, the Company had a portfolio of approximately 36,075 customer promissory notes totaling approximately $196.9 million with an average yield of 14.2% per annum, which compares favorably to the Company's weighted average cost of borrowings of 9.6% per annum. At December 31, 1998, approximately $8.8 million in principal, or 4.5% of the Company's loans to Silverleaf Owners, were 61 to 120 days past due, and approximately $17.8 million in principal, or 9.0% of the Company's loans to Silverleaf Owners,were more than 120 days past due. The Company provides for uncollectible notes by reserving an amount which management believes is sufficient to cover anticipated losses from customer defaults.>>
Yikes. Wouldn't want to be near this one when the economy turns sour.
JJC |
