SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
Filed Pursuant To Section 12, 13, or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
FAIRFIELD COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its current report dated September 23,
1994, on Form 8-K as set forth in the pages attached hereto:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The following pro forma condensed consolidated statements for
Fairfield Communities, Inc. and subsidiaries are included
herein pursuant to Article 11 of Regulation S-X:
Pro Forma Condensed Consolidated Balance Sheet (Unaudited)
- June 30, 1994
Pro Forma Condensed Consolidated Statement of Earnings
(Unaudited)
- Year Ended December 31, 1993
Pro Forma Condensed Consolidated Statement of Earnings
(Unaudited)
- Six Months Ended June 30, 1994
Notes to Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
FAIRFIELD COMMUNITIES, INC.
Date: October 28, 1994 /s/ William G. Sell
-------------------- ----------------------------------------------
William G. Sell, Vice President and Controller
(Chief Accounting Officer)
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FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The following unaudited pro forma condensed consolidated balance sheet of
Fairfield Communities, Inc. and Subsidiaries ("Fairfield") as of June 30, 1994
and the unaudited pro forma condensed consolidated statements of earnings for
the year ended December 31, 1993 and six months ended June 30, 1994 give effect
to the use of funds from the sale of all of the outstanding stock of First
Federal Savings and Loan Association of Charlotte ("First Federal") and proceeds
from Fairfield's revolving credit agreement to fund the purchase of the Excluded
Association Assets and Contracts Receivable (collectively, the "Excluded
Assets"). The unaudited pro forma information is based on the historical
financial statements of Fairfield giving effect to the transactions under the
assumptions and adjustments in the accompanying notes to the unaudited pro forma
condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial statements have
been prepared by Fairfield's management based upon available documentation and
may not be indicative of the results that actually would have occurred if the
transactions had been effected on the dates indicated. The unaudited pro forma
condensed consolidated financial statements should be read in conjunction with
Fairfield's financial statements and notes thereto contained in the Annual
Report on Form 10-K for the year ended December 31, 1993, as amended and
restated, and the Quarterly Report on Form 10-Q for the six months ended
June 30, 1994.
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FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1994
(Dollars in thousands)
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
ASSETS
Cash and cash equivalents $ 2,638 $ 39,592 (a) $ 2,236
17,667 (b)
(57,661)(a)
Loans receivable, net 148,574 38,828 (a) 144,771
(38,828)(c)
(3,803)(e)
Real estate inventories 35,063 531 (a) 35,594
Restricted cash accounts 12,533 12,533
Property and equipment, net 5,610 5,610
Other assets 21,788 344 (a) 21,788
(344)(c)
Net assets held for sale - 14,114 (a) 14,114
Net assets of discontinued operations 7,897 7,897
-------- --------- --------
$234,103 $ 10,440 $244,543
======== ========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Financing arrangements $119,514 $ 17,667 (b) $137,181
Deferred revenue 19,305 19,305
Other liabilities 30,535 444 (b) 30,979
Net liabilities held for sale 12,427 30,548 (a) -
(57,661)(c)
18,489 (c)
(3,803)(e)
-------- -------- --------
181,781 5,684 187,465
-------- -------- --------
Stockholders' equity 52,322 5,200 (a) 57,078
(444)(b)
-------- -------- --------
$234,103 $ 10,440 $244,543
======== ======== ========
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
-3-
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1993
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments Pro Forma
--------- ----------- ---------
REVENUES
Vacation ownership, net $ 34,332 $ $34,332
Homes and lots, net 12,073 12,073
Property management 10,876 10,876
Interest 39,894 (15,805)(d) 24,089
Other 12,553 (2,957)(d) 9,596
-------- -------- -------
109,728 (18,762) 90,966
-------- -------- -------
EXPENSES
Vacation ownership 9,942 9,942
Homes and lots 5,212 5,212
Provision for loan losses 3,586 (334)(d) 3,252
Selling 21,850 21,850
Property management 11,057 11,057
General and administrative 18,267 (8,431)(d) 9,836
Interest, net 24,927 (10,478)(d) 15,887
1,438 (b)
Other 4,560 (102)(d) 4,458
-------- -------- -------
99,401 (17,907) 81,494
-------- -------- -------
Earnings from continuing operations before
gain on the sale of First Federal
and provision for income taxes 10,327 (855) 9,472
Provision for income taxes 3,157 (665)(d) 2,492
-------- -------- -------
Earnings from continuing operations
before gain on the sale
of First Federal $ 7,170 $ (190) $ 6,980
======== ======== =======
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS BEFORE GAIN ON THE SALE OF
FIRST FEDERAL:
Primary $.65 $.63
==== ====
Fully diluted $.61 $.60
==== ====
WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary 11,037,765 11,037,765
========== ==========
Fully diluted 11,692,667 11,692,667
========== ==========
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
-4-
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
SIX MONTHS ENDED JUNE 30, 1994
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
REVENUES
Vacation ownership, net $22,533 $ $22,533
Homes and lots, net 6,252 6,252
Property management 5,696 5,696
Interest 10,229 10,229
Other 5,715 5,715
------- -------- -------
50,425 - 50,425
------- -------- -------
EXPENSES
Vacation ownership 6,982 6,982
Homes and lots 2,764 2,764
Provision for loan losses 1,976 1,976
Selling 13,315 13,315
Property management 4,845 4,845
General and administrative 5,074 5,074
Interest, net 5,539 719 (b) 6,258
Other 4,570 4,570
------- -------- -------
45,065 719 45,784
------- -------- -------
Earnings from continuing operations
before gain on the sale of First
Federal and provision
for income taxes 5,360 (719) 4,641
Provision for income taxes 1,608 (275)(b) 1,333
------- -------- -------
Earnings from continuing operations
before gain on the sale
of First Federal $ 3,752 $ (444) $ 3,308
======= ======== =======
EARNINGS PER SHARE FROM CONTINUING
OPERATIONS BEFORE GAIN ON THE SALE OF
FIRST FEDERAL:
Primary $.34 $.30
==== ====
Fully diluted $.32 $.28
==== ====
WEIGHTED AVERAGE SHARES OUTSTANDING:
Primary 11,071,780 11,071,780
========== ==========
Fully diluted 11,707,953 11,707,953
========== ==========
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
-5-
FAIRFIELD COMMUNITIES, INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The unaudited pro forma condensed consolidated financial statements reflect
the sale of all of the outstanding stock of First Federal for approximately $41
million. The amount of available cash proceeds due Fairfield at closing has been
reduced by approximately $1.4 million due to the Litigation Indemnity. The
amount of these escrowed funds has been included in "Net assets held for sale"
in the unaudited pro forma condensed consolidated balance sheet.
As part of the transactions, Fairfield purchased (i) approximately $16
million (net book value) of certain real estate, classified loans, joint venture
interests and other assets owned by First Federal (the "Excluded Association
Assets") and (ii) lot and vacation ownership contracts receivable and related
assets which First Federal previously acquired from Fairfield (the "Contracts
Receivable"), having a net book value of approximately $41.6 million. The
Excluded Association Assets and the Contracts Receivable are collectively
referred to as the "Excluded Assets".
The unaudited pro forma condensed consolidated financial statements reflect
First Federal's sale and Fairfield's purchase of the Excluded Assets, with
Fairfield's purchase funded by the net cash proceeds totaling approximately
$39.6 million from the sale of First Federal's stock and borrowings of approxi-
mately $17.7 million under available financing arrangements.The interest expense
associated with the additional borrowings of approximately $17.7 million
incurred by Fairfield to purchase the Excluded Assets,using an interest rate of
8.125% (i.e., the Company's incremental borrowing rate), results in calculated
additional interest expense of approximately $1.4 million for the year ended
December 31, 1993 and approximately $.7 million for the six months ended June 30
1994. Interest expense included in the preceding pro forma financial statements
may not be indicative of the future cost to the Company considering that the
disposition of the deposit base of First Federal will result in probable future
increased cost of funds.
The purchase of the Excluded Assets by Fairfield is a condition to the
consummation of the sale of the stock of First Federal. As most of the Excluded
Association Assets are dissimilar to the assets of continuing operations, the
Company anticipates disposing of these assets in a manner different than First
Federal. Therefore, the Company has recorded valuation allowances related to the
Excluded Assets of approximately $3.5 million, based upon the expected change in
Fairfield's method of disposal of such assets subsequent to the consummation of
the transactions. The net gain on the sale of the stock of First Federal of
approximately $5.2 million, net of selling expenses, is composed primarily of an
(i) expected sales price of $41 million (ii) a basis of the investment in the
stock of First Federal of approximately $30.5 million and (iii) valuation
allowances of the Excluded Assets of approximately $3.5 million. The gain on the
sale of First Federal's stock did not result in an increase in income taxes due
to the additional tax basis in First Federal's stock and underlying assets (tax
goodwill) for which no deferred tax asset was previously recorded under the
provisions of SFAS 109.
-6-
For purposes of determining the pro forma effects of the above mentioned
transactions, the following pro forma adjustments have been made (In
thousands):
(a) Reflects (1) the sale of the stock of First Federal and (2) the
purchase of Excluded Assets by the Company:
Debit Credit
------ ------
(1) Cash $39,592
(2) Loans receivable (contracts) 38,828
(2) Other assets (accrued interest - contracts) 344
(2) Real estate inventories 531
(2) Net assets held for sale, net
of $2.2 million valuation allowance 14,114
(2) Cash $57,661
(1) Net liabilities held for sale 30,548
Gain on the sale of stock 5,200
The gain on the sale of the stock of First Federal is not
included in the Pro Forma Condensed Consolidated Statements of
Earnings as Rule 11-02(b)(5) of Regulation S-X states that pro forma
financial statements are to be presented based on earnings from
continuing operations before nonrecurring charges or credits directly
attributable to the transaction.
(b) Reflects the additional borrowings under available financing
arrangements and additional interest expense:
Debit Credit
----- ------
Cash $17,667
Financing arrangements $17,667
December 31, 1993:
Interest expense 1,438
Accrued interest 1,438
June 30, 1994:
Interest expense 719
Other liabilities - accrued income taxes 275
Other liabilities - accrued interest 719
Provision for income taxes 275
-7-
(c) Reflects First Federal's sale of the Excluded Assets:
Debit Credit
----- ------
Cash (included in net liabilities held for sale) $57,661
Loans receivable (continuing operations) $38,828
Net liabilities held for sale,
($16,069 - Excluded Association Assets and
$2,420 - Contracts Receivable/REO) 18,489
Other assets 344
(d) Reflects the historical earnings related to the net liabilities held for
sale for year ended December 31, 1993:
Debit Credit
----- ------
Interest income $15,805
Other income 2,957
Retained earnings 1,248
Provision for income taxes $ 665
Provision for loan losses 334
General and administrative 8,431
Interest expense, net 10,478
Other expense 102
(e) Reflects the change in Excluded Assets between June 30, 1994 and the date
of closing (September 23, 1994):
Debit Credit
----- ------
Net liabilities held for sale $3,803
Loans receivable (continuing operations) $3,803 <PAGE>
-8-
