SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 4, 1999
EQUIVEST FINANCE, INC.
(Exact name of registrant as specified in its charter)
Delaware 333-29015 59-2346270
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
2 CLINTON SQUARE
SYRACUSE, NEW YORK 13202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 422-9088
INFORMATION TO BE INCLUDED IN REPORT
Item 1. Changes in Control of Registrant
Not Applicable.
Item 2. Acquisition or Disposition of Assets
Not Applicable.
Item 3. Bankruptcy or Receivership
Not Applicable.
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Item 4. Changes in Registrant's Certifying Accountant
Not Applicable.
Item 5. Other Events
PRESS RELEASE
Equivest Finance, Inc. Reports Record Fourth
Quarter and Year End Results
1998 Pretax Earnings Increase 149%; 1998 Revenues Increase 86%
Fourth Quarter Pretax Earnings Increase 128% on Revenue Increase of 158%
Greenwich, Connecticut, March 4, 1999. Equivest Finance, Inc. (NASD:EQUI)
today announced record financial performance for the three months and year ended
December 31, 1998.
Fourth quarter 1998 pretax income increased 128% to a record $2.3 million,
compared with $1.0 million for fourth quarter 1997. Revenues increased 158% to a
record $11.4 million in the fourth quarter of 1998, compared with $4.4 million
in the fourth quarter of 1997. Fourth quarter net income increased by 34% to
$1.3 million, or $.05 per diluted share, compared with $1.0 million, or $.04 per
diluted share, in the fourth quarter of 1997.
Net income for 1997 was essentially the same as pretax income due to the
ability of the company in 1997 to utilize net operating loss carry-forwards.
Remaining NOL's were exhausted in the first quarter of 1998. Therefore, the
increase in net income reported for the fourth quarter 1998 came after absorbing
the transition to a fully taxable status, compared with the fourth quarter of
1997 when only minimal tax was paid.
For the 1998 full year, pretax net income increased by 149% to $8.5
million from $3.4 million for the full year 1997. Revenues for the year
increased 86% to $29.6 million for 1998, compared with $16.0 million for 1997.
Net income for the full year 1998 rose 62% to a record $5.2 million, or
$.20 per share on a fully diluted basis, compared with $3.2 million or $.15 per
diluted share for 1997. The company had 25,198,351 shares outstanding at year
end 1998.
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Net income for 1998 reflects the impact of federal income taxation
following the exhaustion of remaining NOL's in early 1998, compared with 1997
when NOL's eliminated most federal income taxation. None of the earnings
reported today resulted from gain on the sale of notes or other financial
instruments.
Richard C. Breeden, Equivest's Chairman, President and CEO, stated:
"Equivest's performance for 1998 marks the second consecutive year with
pretax profit growth of more than 100% compared with the prior year."
"The performance in 1998 reflects in part the company's acquisition of
Eastern Resorts Corporation in August of 1998, which owns or operates seven
timeshare resorts in New England. Eastern Resorts was responsible for much of
the revenue increase in 1998, as well as a portion of the growth in pretax
profitability and overall portfolio growth. Another important factor in the
increased pretax profitability in 1998 was an overall reduction in interest cost
notwithstanding a significant increase in the total amount of loans outstanding.
This was due in large part to a reduction in interest costs at Resort Funding
due to a conversion in the fourth quarter of 1997 of $25 million in debt owed by
Resort Funding into equity."
The Company recently announced that it is acquiring six timeshare resorts
and hotel properties, together with an additional resort site, management
contracts and a portfolio of consumer notes receivable from the Kosmas Group
International, Inc. of New Smyrna Beach, Florida. The properties involved in the
proposed transaction had total sales of vacation intervals in 1998 of more than
$20 million, compared with sales of vacation intervals for the full year 1998 by
Eastern Resorts of approximately $13 million. These properties are located in
Maryland, Florida, New Orleans, Washington, D.C., and the Caribbean.
Certain statements in this press release are forward-looking. These 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 of indebtedness, inability of
developers to honor replacement obligations for defaulted consumer notes, and
competition from organizations with greater financial resources.
Contact: Alan Eisner or Alexander Caswell of Regan Communications at
617-742-8180.
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EQUIVEST FINANCE, INC. and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
December 31, December 31,
1998 (Unaudited) 1997
---------------- ------------
ASSETS
Cash and cash equivalents $ 3,487 $ 4,620
Receivables, net 142,326 122,230
Investment in real estate joint venture 2,971 -0-
Inventory 10,361 -0-
Deferred financing costs, net 3,756 4,126
Cash - restricted 1,422 855
Accrued interest receivable 971 341
Deferred taxes -0- 1,142
Property and equipment, net 3,048 27
Goodwill, net 27,247 -0-
Stock registration costs 1,480 -0-
Other Assets 315 143
--------- ---------
Total Assets $ 197,384 $ 133,484
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts Payable and Other Liabilities:
Accounts payable $ 2,213 $ 434
Accounts payable - related parties -0- 11
Accrued expenses and other liabilities 3,985 519
Taxes payable 1,994 -0-
Deferred income taxes 2,569 -0-
--------- ---------
Total Accounts Payable and Other
Liabilities 10,761 964
--------- ---------
Notes payable 133,117 99,961
--------- ---------
Total Liabilities 143,878 100,925
--------- ---------
12.5% REDEEMABLE CONVERTIBLE PREFERRED STOCK
$3 par value; 1,000,000 shares
authorized, -0- shares outstanding in
1998 and 9,915 shares outstanding in 1997 -0- 30
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--1998;
$.05 par value--1997;50,000,000
shares authorized, 25,198,351 shares
outstanding in 1998 and 21,834,443
outstanding in 1997 252 1,092
Additional paid-in capital 49,115 32,079
Retained earnings (deficit) 4,109 (672)
--------- ---------
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Total Stockholders' Equity 53,506 32,559
--------- ---------
Total Liabilities and Stockholders' Equity $ 197,384 $ 133,484
========= =========
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EQUIVEST FINANCE, INC. and SUBSIDARIES
COMPARATIVE CONDENSED STATEMENT OF INCOME
(Dollars in thousands except per share data)
Three months ended Year ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
Revenues:
Interest $ 5,388 $ 4,182 $ 20,399 $15,511
Timeshare interval sales 3,450 -- 4,553 --
Resort operations 2,431 -- 3,646 --
Gain on sale of contracts -- -- -- 30
Other income 171 248 1,039 423
--------- ------- --------- -------
Total revenues 11,440 4,430 29,637 15,964
Expenses:
Provision for doubtful
accounts 142 700 791 925
Interest 2,139 1,775 7,458 8,077
Cost of timeshare intervals
sold 872 -- 1,145 --
Debt related costs 588 294 1,924 1,063
Goodwill amortization 172 -- 238 --
Sales and marketing 1,607 -- 2,175 --
Resort management 2,281 -- 3,270 --
General and administrative 1,335 650 4,122 2,475
--------- ------- --------- -------
Total expenses 9,136 3,419 21,123 12,540
--------- ------- --------- -------
Income before provision for
taxes 2,304 1,011 8,514 3,424
Provision for income taxes 970 13 3,270 193
--------- ------- --------- -------
Net income 1,334 998 5,244 3,231
Basic earnings per share $ 0.05 $ 0.05 $ 0.20 $ 0.22
Diluted earnings per share $ 0.05 $ 0.04 $ 0.20 $ 0.15
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EQUIVEST FINANCE, INC. and SUBSIDIARIES
Selected Financial Data as a Percentage of Total Revenues
Three months ended Year ended
December 31, December 31,
1998 1997 1998 1997
---- ---- ---- ----
(unaudited) (unaudited)
Revenues:
Interest 47.1% 94.4% 68.8% 97.2%
Vacation ownership 30.1 -- 15.4 --
Resort operations 21.3 -- 12.3 --
Gain on sale of contracts -- -- -- 0.2
Other income 1.5 5.6 3.5 2.6
----- ----- ----- -----
Total revenues 100.0% 100.0% 100.0% 100.0%
Expenses:
Provision for doubtful
accounts 1.2% 15.8% 2.7% 5.8%
Interest 18.7 40.1 25.2 50.6
Cost of property sold 7.6 -- 3.9 --
Debt related costs 5.1 6.6 6.5 6.7
Goodwill amortization 1.5 -- 0.8 --
Sales and marketing 14.1 -- 7.3 --
Resort management 19.9 -- 11.0 --
Selling, general,
administrative 11.7 14.7 13.9 15.5
----- ----- ----- -----
Total expenses 79.8% 77.2% 71.3% 78.6%
----- ----- ----- -----
Income before taxes 20.2% 22.8% 28.7% 21.4%
Provision for income taxes 8.5% 0.3% 11.0% 1.2%
----- ----- ----- -----
Net income 11.7% 22.5% 17.7% 20.2%
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EQUIVEST FINANCE, INC. and SUBSIDIARIES
Selected Financial Data
(Dollars in thousands)
December 31, December 31,
1998 1997
------------ ------------
A&D loans $ 33,434 $ 39,390
Purchased receivables 95,289 91,102
Hypothecation loans 11,904 5,275
Consumer loans, owned 18,012 -0-
Other loans 2,313 763
--------- ---------
Total loans outstanding $ 160,952 $ 136,530
Specific reserves $ 18,392 $ 17,320
General reserves 3,835 2,442
Overcollateralization 3,588 1,006
--------- ---------
Total reserves and
overcollateralization $ 25,815 $ 20,768
Total reserves and
overcollateralization as
% of total loans 16.0% 15.2%
Chargebacks 5,875 6,376
Chargebacks as% of Consumer
Financings (1) 5.5% 6.6%
Allowance for doubtful accounts,
beginning of year $ 2,442 $ 1,979
Provision for loan losses 791 925
Allowance related to the
acquisition of Eastern Resort 793 -0-
Charges to allowance for doubtful
accounts (216) (601)
Charges against Specific developer
reserves 25 139
--------- ---------
Allowance for doubtful accounts,
end of year $ 3,835 $ 2,442
(1) Consumer Financing includes Purchased receivables and Hypothecation loans.
Item 6. Resignation of Registrant's Directors
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Not Applicable.
Item 7. Financial Statements and Exhibits
Not Applicable.
Item 8. Change in Fiscal Year
Not Applicable.
Item 9. Sales of Equity Securities Pursuant to Regulation S
Not Applicable.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUIVEST FINANCE, INC.
Date: March 9, 1999 By: /s/ Gerald L. Klaben, Jr.
-------------------------------------
Name: Gerald L. Klaben, Jr.
Title: Senior Vice President/CFO
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