Fairfield Communities Reports 27% Net Earnings Growth; Diluted EPS Increases 22% to
$0.28
BusinessWire, Thursday, July 23, 1998 at 07:20
LITTLE ROCK, Ark.--(BUSINESS WIRE)--July 23, 1998--Fairfield
Communities, Inc. (NYSE:FFD) today reported its financial results for
the second quarter and six months ended June 30, 1998. Net earnings
for the quarter increased 27% to $13.1 million from $10.3 million in
the 1997 second quarter. Diluted earnings per share were $0.28 in the
second quarter of 1998, a 22% increase from $0.23 in the second
quarter of 1997.
Total revenue for the second quarter of 1998 was $106.3 million,
an increase of 12% from $95.2 million in the second quarter of 1997.
Gross sales of vacation ownership interests (VOI), the largest
component of revenue, were $82.6 million in the second quarter of
1998, a 14% increase from $72.7 million in the prior year quarter. Net
VOI sales increased 10% to $80.2 million in the second quarter, as
compared with $73.2 million in the prior year quarter.
"Our points-based Fairshare Plus Program continues to demonstrate
its attractiveness to consumers. During the second quarter, gross VOI
growth was 29% at the properties already included in the points-based
system. These results are consistent with our performance in previous
quarters," said John McConnell, Fairfield's President and Chief
Executive Officer. "The timeframe for completing the registration
approval process of the South Florida properties and certain marketing
programs took longer than projected, which resulted in lower overall
VOI revenue growth for the quarter."
"The newest property in South Florida, Royal Vista, has been
registered as a points-based product, and sales commenced during the
first week of July. Essentially all of the previously delayed
marketing programs have been approved by the regulatory authorities,
and we expect to see improvements in Florida tour flow during the
third quarter," Mr. McConnell continued. "The marketing programs will
begin to ramp up with positive revenue impact in the third quarter,
with the full benefit being realized during the fourth quarter.
Included in other revenue, for the quarter, was $0.9 million ($0.6
million after taxes) representing the gain on sale of the last company
owned golf course and the completion of the disposition plan for those
non-essential assets."
Bob Howeth, Chief Financial Officer, added, "As we had projected,
general and administrative expenses continued to decline for the
quarter as we progressed with the consolidation of Vacation Break and
realized the operating synergies we had identified with the merger."
For the six months ended June 30, 1998, the Company reported net
earnings of $21.5 million, a 31% increase over the $16.4 million
reported in the prior year period. Diluted earnings per share were
$0.46, a 28% increase from $0.36 for the same period in 1997.
Total revenue for the six months ended June 30, 1998 was $192.1
million, an increase of 17% from $163.9 million in the prior year
period. Gross VOI sales were $142.9 million for the period, a 20%
increase from $119.6 million in the comparable period of 1997. Net VOI
sales, which increased 16%, were $140.4 million for the six months
ended June 30, 1998, as compared with $121.1 million in the prior year
period.
"During the quarter, we continued to see the impact of our
refinancings as we made further progress in lowering our funding costs
and increasing interest spreads. For the quarter, the net interest
spread on financed contracts increased by approximately 250 basis
points as compared with the previous year and contributed to the
success of the quarter," Mr. Howeth said.
Specifically, net interest income on contracts receivable
increased to $8.6 million in the second quarter of 1998 from $5.8
million in the second quarter of 1997, representing a 48% increase.
This increase is due to the continued growth of the Company's
contracts receivable portfolio coupled with a decrease in the weighted
average cost of funds to 7.5% for t he second quarter of 1998 from
9.9% for the second quarter of 1997. Contracts receivable totaled
approximately $331.5 million at June 30, 1998, a 24% increase over
June 30, 1997. The contracts receivable and related income and expense
items discussed above are inclusive of Fairfield Receivables
Corporation (a wholly owned, unconsolidated qualifying special purpose
subsidiary of Fairfield Communities Inc.). Statement of Financial
Accounting Standards No. 125 requires that qualifying special purpose
entities, which engage in qualified sales of financial assets with
affiliated companies, be accounted for on an unconsolidated basis. As
of June 30, 1998, approximately $117.6 million of contracts receivable
and $93.4 million of borrowings were held by Fairfield Receivables
Corporation and are not included in the consolidated balance sheet of
Fairfield Communities, Inc.
Fairfield Communities, Inc., incorporated in 1969, is one of the
nation's largest vacation ownership companies, providing quality
recreational experiences at twenty-six locations in 11 states and the
Bahamas, to approximately 211,000 Fairfield property owners.
This release may contain forward-looking statements. Such
statements reflect the current views of Fairfield with respect to
future events and are subject to certain risks and uncertainties,
including uncertainties relating to Fairfield's estimates of the
amounts of costs and expenses that will ultimately be incurred in
connection with the mergers and related activities and to assumptions
and judgements made in applying generally accepted accounting
principles thereto. As a result of those matters and the factors
identified in the last paragraph of Management's Discussion and
Analysis entitled "Forward-Looking Information" of Fairfield's 1997
Annual Report to Stockholders, actual results may vary significantly
from those contemplated herein.
*T
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
Revenues
Vacation ownership, net $ 80,155 $ 73,196 $ 140,360 $ 121,148
Resort management 9,947 6,927 19,547 13,967
Interest 8,567 8,541 18,866 16,842
Other 7,631 6,499 13,321 11,990
---------------------------------------
106,300 95,163 192,094 163,947
-------- -------------------------------
Expenses
Vacation ownership 22,945 19,068 39,620 32,120
Selling 37,083 32,550 65,675 56,325
Provision for loan losses 3,993 3,183 6,910 4,958
Resort management 8,387 6,347 16,089 11,984
General and administrative 6,141 8,069 13,283 15,254
Interest, net 1,828 2,720 5,452 4,913
Depreciation and
amortization 1,677 1,243 3,329 2,407
Other 4,593 4,929 8,829 9,147
------- -------------------------------
86,647 78,109 159,187 137,108
------- -------------------------------
Earnings before net earnings of
unconsolidated subsidiary and
provision for income taxes 19,653 17,054 32,907 26,839
Net earnings of unconsolidated
subsidiary 1,064 - 1,315 -
--------------------------------------
Earnings before provision for
income taxes 20,717 17,054 34,222 26,839
Provision for income taxes 7,579 6,710 12,679 10,444
------- -------------------------------
Net earnings 13,138 10,344 21,543 16,395
------- -------------------------------
Basic earnings per share $ .29 $ .24 $ .48 $ .38
=======================================
Diluted earnings per share .28 .23 .46 .36
=======================================
Weighted average shares outstanding
Basic 44,940 43,710 44,608 43,187
=======================================
Diluted 47,416 45,973 47,264 46,022
=======================================
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
June 30, December 31,
1998 1997
(Unaudited)
Assets
Cash and cash equivalents $ 7,438 $ 3,074
Loans receivable, net 207,774 291,209
Real estate inventories 102,637 93,139
Property and equipment, net 25,925 24,370
Restricted cash and escrow accounts 20,488 25,607
Investment in and net amount due
from unconsolidated subsidiary 28,562 -
Other assets 30,820 26,533
$ 423,644 $ 463,932
Liabilities and Stockholders' Equity
Liabilities:
Financing arrangements $ 84,130 $ 170,081
Deferred revenue 26,841 29,769
Accounts payable 19,708 20,398
Accrued income taxes 18,505 12,566
Other liabilities 56,174 43,936
205,358 276,750
Stockholders' Equity:
Common stock, $.01 par value, 100,000,000
shares authorized, 50,364,680 and 49,491,666
shares issued as of June 30, 1998 and
December 31, 1997, respectively 504 495
Paid-in capital 118,024 107,920
Retained earnings 100,626 79,083
Unamortized value of restricted stock (144) (316)
Treasury stock, at cost, 4,546,214 shares in
1998 and 4,573,266 in 1997 (724) -
218,286 187,182
423,644 463,932
FAIRFIELD COMMUNITIES, INC.
SCHEDULE OF SELECTED FINANCIAL DATA (1)
(In Thousands)
Quarters Ended
6/30/98 3/31/98 12/31/97 9/30/97 6/30/97
Contracts receivable $331,459 $312,861 $302,519 $289,294 $267,455
Weighted average coupon
rate 14.7% 14.6% 14.6% 14.5% 14.6%
Weighted average
funding cost 7.5% 8.7% 9.4% 9.4% 9.9%
Delinquency (60-day basis) 2.2% 1.2% 1.8% 1.8% 1.6%
Allowance for loan
losses $ 22,766 $20,023 $20,848 $20,099 $ 17,446
Write-offs of contracts
receivable, net $ 1,099 $ 3,614 $ 2,111 $1,615 $ 1,911
Number of Discovery sales 4,428 2,762 2,739 4,070 2,861
Total financing
arrangements $177,485 $180,721 $170,081 $151,924 $126,594
Fairfield Receivables Corporation:
Interest income $ 3,775 $ 662 N/A N/A N/A
Expenses, primarily
interest 2,091 264
-----------------
Pretax earnings 1,684 398
Provision for income taxes 620 147
------------------
Net earnings $ 1,064 $ 251
------------------
(1) The Schedule of Selected Financial Data includes the related
financial information of Fairfield Receivables Corporation ("FRC"), a
wholly owned, unconsolidated qualifying special purpose entity of
Fairfield Acceptance Corporation. FRC was incorporated on January 13,
1998.
*T
CONTACT: Fairfield Communities, Inc.
Robert W. Howeth, 501/312-3856
or
Morgen-Walke Associates
Michele Katz/Connie Bienfait/
Randy Hecht/Ian Hirsch
Press: Miriam Adler
212/850-5600
KEYWORD: ARKANSAS
INDUSTRY KEYWORD: REAL ESTATE EARNINGS
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