EQUIVEST FINANCE INC
8-K, 2000-08-17
PERSONAL CREDIT INSTITUTIONS
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                       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): August 16, 2000

                             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)

 100 NORTHFIELD STREET
 GREENWICH, CONNECTICUT                          06830
(Address of principal executive offices)       (Zip Code)

       Registrant's telephone number, including area code: (203) 618-0065


                      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.

Item 4.  Changes in Registrant's Certifying Accountant

                  Not Applicable.

Item 5.  Other Events

                  Press Release

<PAGE>

                           EQUIVEST FINANCE ANNOUNCES
                 RECORD SECOND QUARTER AND FIRST HALF REVENUES;
                         NET INCOME OF $.08 PER DILUTED
                            SHARE FOR SECOND QUARTER


         Greenwich,  Connecticut  (Business  Wire) - August 16,  2000 - Equivest
Finance, Inc.  (NASDAQSC:EQUI)  reported record revenue of $40.4 million for its
second  quarter ended June 30, 2000, up 67% from $24.2 million in the comparable
period last year.  Revenues  for the first six months of 2000 rose 119% to $78.6
million,  compared with $35.9 million in the comparable 1999 period. For the six
months  ended June 30,  2000,  net income was $5.1  million,  or $0.17 per share
diluted, up 18% from $4.3 million, and $0.16 per share, in 1999. For the quarter
ended June 30, 2000,  net income was $2.5 million,  or $0.08 per share  diluted,
down 10% from $2.8 million and $0.10 per diluted share, in the comparable period
of 1999. Equivest provides high quality vacation ownership opportunities to more
than 87,000 owners at 30 resort  locations on the eastern and Gulf coasts of the
United States,  and in St.  Thomas,  USVI.  During the second  quarter  Equivest
opened new resorts in San Antonio,  Texas and Williamsburg,  Virginia.  Equivest
also provides financing for independent developers of vacation ownership resorts
and their customers.

         Total  assets as of June 30, 2000 were $436.2  million,  an increase of
57% compared  with $278.6  million at June 30, 1999.  Total  capital at June 30,
2000 was $80.5 million,  an increase of 35% from $59.8 million at June 30, 1999.
The growth in  revenues,  assets and net worth as of June 30, 2000  reflects the
acquisition of Peppertree Resorts, Ltd. and certain affiliates ("Peppertree") in
late 1999, as well as the Company's operating results.

         For the six months ended June 30, 2000,  pretax income increased 21% to
$8.9 million from $7.3  million last year.  Net income  during the first half of
2000 increased 18% to $5.1 million,  up from $4.3 million for the same period in
1999.  Diluted  earnings per share in the first half were $0.17 in 2000 compared
with $0.16 in 1999.

                                       2

<PAGE>


         As  previously  announced,  results in the second  quarter of 1999 were
benefited by the one-time  recognition of approximately $1.9 million of deferred
sales  revenue  and $0.7  million of  deferred  pretax  income  relating  to the
completion of two resort  buildings  under  construction in St. Thomas that were
acquired in March,  1999. If the one-time  gains in 1999 are excluded from first
half 1999 results,  2000 first half pretax income of $8.9 million  increased 33%
from $6.6 million in 1999.  Similarly,  excluding the 1999 one-time  gains,  net
income for the first six months of 2000 was $5.1  million,  or $0.17 per diluted
share,  up 31% compared with $3.9 million,  or $0.14 per diluted  share,  in the
first half of 1999.

         For the quarter ended June 30, 2000, pretax income was $4.2 million,  a
decline of 7% compared with 1999. Net income was $2.5 million,  a decline of 10%
compared  with $2.8 million in 1999.  However,  as noted  above,  results in the
second quarter of 1999 were significantly  benefited by the one-time recognition
of  approximately  $1.9  million of deferred  sales  revenue and $0.7 million of
deferred  pretax  income.  If this  non-recurring  income is  excluded  from the
Company's  second  quarter 1999  results,  pretax income of $4.2 million for the
second quarter of 2000  represents a 10% increase  compared with $3.9 million in
1999.  Similarly,  if such non-recurring income is excluded,  net income of $2.5
million  for the second  quarter in 2000  represents  an increase of 6% compared
with $2.3 million in 1999.

         On a comparable basis,  diluted earnings per share in the quarter ended
June 30, 2000 were flat,  with $0.08 on 28.3  million  weighted  average  shares
outstanding compared with earnings per share of $0.08 during the comparable 1999
period,  excluding non-recurring income, on 26.1 million weighted average shares
outstanding.  If the  non-recurring  income  in the  second  quarter  of 1999 is
included in results, diluted earnings per share in 1999 were $0.10.

         During the second  quarter of 2000,  the Company  increased its rate of
provisioning  for doubtful  receivables  to 8% of vacation  ownership  intervals
("VOIs"),  compared with 3.5% in the prior year. This increase reflects what the
Company's "Target Reserve Methodology," or "TRM," suggests is a more appropriate
long-term  rate of  provisioning  for doubtful  receivables.  If the Company had
utilized  the  same  percentage  of  VOI  sales  as  a  provision  for  doubtful
receivables  in the second  quarter  of 2000 as it did in the second  quarter of
1999, the amount of provisions taken would have decreased by approximately  $1.1
million.  Under the Company's TRM system, the Company assigns reserve targets of
5%, 10%, 50% and 95% to consumer  receivables  relating to purchasers in its own
resorts that are current, 30, 60 or over 90 days past due, respectively. In this
manner the level of provisioning for doubtful  receivables  required to maintain
adequate  coverage of the actual  volume of consumer  notes in  different  aging
categories is monitored over time, with  adjustment  where necessary to maintain
adequate reserve coverage ratios, or "RCRs".

                                       3

<PAGE>


         The company's loan receivable  portfolio grew 48% to $270.4 million for
the quarter ended June 30, 2000, compared to $182.2 million as of June 30, 1999.
Of this amount $137.6 million represented  receivables relating to VOI purchases
in the Company's own resorts, $101.0 million represented receivables relating to
consumer loans at third party  developer  resorts,  and the balance  represented
acquisition  and  development  and other loans.  At June 30,  2000,  the Company
maintained total portfolio reserves and over  collateralization  of $34 million,
or 12.6% of total loans. The allowance for doubtful  accounts  included in total
reserves was $10.8  million at June 30, 2000,  up 63% compared with $6.6 million
at June 30,  1999.  As of June 30, 2000 the  Company's  Reserve  Coverage  Ratio
showed total  reserves and over  collateralization  equal to 4.4 times the total
volume of  consumer  receivables  over 60 days past  due.  However,  there is no
assurance that the Company's TRM will not require  higher  reserves for doubtful
accounts in the future.

         During the  second  quarter of 2000,  sales of VOIs  increased  108% to
$23.8 million, or 59% of total revenues,  from $11.4 million for the same period
in 1999.  During the second quarter of 2000,  the Company sold 1,008  fixed-week
VOIs at an  average  price of  approximately  $11,684,  as well as 1,400  points
packages. As of June 30, 2000, the company held approximately 27,200 unsold VOIs
in  inventory,  representing  more than $315  million in  potential  gross sales
proceeds at the current fixed week average sale price as of June 30, 2000.

         During the second  quarter of 2000,  sales and marketing  costs rose to
48.1% of VOI  sales,  compared  with  42.5%  for the  prior  year  period.  To a
significant  degree,  the increase in the Company's sales and marketing  expense
levels  reflects  higher  costs and  lower  efficiencies  at its  newly-acquired
Peppertree  division.   For  example,   sales  and  marketing  expense  for  the
non-Peppertree  sales centers was 44% in the second quarter,  while Peppertree's
sales and  marketing  expense  during the same period was 52.3% of VOI revenues.
The Company has embarked on a wide-ranging  program of cost cutting  designed to
bring Peppertree's  costs into line with Equivest's  historic costs in its other
sales centers.  This program of cost cutting has included  elimination of senior
and  mid-level  management,  closure of certain  high-cost  operations,  greater
efficiency  in  the  use of  personnel  resources  and  outsourcing  of  various
functions.  The Company believes that  Peppertree's  cost levels will be reduced
during the balance of 2000 as a result of cost-cutting  measures,  but it cannot
predict  when or if levels  similar  to the  historic  costs at its other  sales
centers  will be  achieved.  The  Company  also  believes  that  high  sales and
marketing  costs  and  low  gross  sales  totals  at  Peppertree  are in  part a
reflection of the  long-term  effects of the severe  hurricane-related  flooding
experienced in many of Peppertree's  traditional  marketing areas in the fall of
1999. The Company  believes that such adverse effects have been  declining,  but
cannot predict the extent or precise timing of further market place improvement,
to the extent it occurs.

                                       4

<PAGE>


         Interest  expense as a percent of interest income increased to 67.6% in
the  second  quarter  of 2000  from  53.2%  in the  comparable  period  in 1999,
reflecting  greater  levels  of  outstanding  indebtedness  and  higher  average
interest  rates  payable.   This  in  large  part  reflects  the  assumption  of
outstanding  Peppertree  debt carrying much higher  average  interest rates than
Equivest's own obligations. The Company recently repaid more than $20 million in
high-cost loans to Peppertree from Liberty Bank,  refinancing  these liabilities
at a significant  cost reduction.  The Company  anticipates that it will seek to
refinance Peppertree's  outstanding  liabilities wherever it has the right to do
so, and that it will realize future savings in interest expense to the extent it
is successful in repricing Peppertree's liabilities.

         Interest income for the second quarter of 2000 was $9.6 million, or 24%
of total  revenues,  an increase of 58%  compared to $6.1 million for the second
quarter of 1999. Resort management operations generated $6.7 million in revenue,
representing  17% of total revenues,  an increase of 6% compared to $6.3 million
for the first quarter of 1999. Resort operations  expense as a percent of resort
management  revenues fell to 74.1% in the quarter ended June 30, 2000 from 80.8%
in the second quarter of 1999.  Second  quarter 2000 general and  administrative
expense was 11.2% of total revenues, up from 10.1% in the second quarter 1999.

         Richard C. Breeden, Chairman,  President and Chief Executive Officer of
Equivest   commented:   "During  the  second  quarter  Equivest  continued  work
integrating  our  Peppertree  acquisition,  with  a  strong  focus  on  reducing
Peppertree's  sales  and  marketing  costs to  bring  those  costs in line  with
Equivest's  other sales centers.  We also brought two new resorts - San Antonio,
Texas and Williamsburg, Virginia - on line during the period, and we are working
to integrate product  offerings across the entire company better.  While revenue
increased  substantially  over  1999,  we intend to  continue  our focus on cost
cutting to improve profit margins from their current levels."

         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:  Gerald L. Klaben, Jr., Chief Financial Officer (203) 618-0065

                                       5

<PAGE>





                                   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: August 16, 2000           By:        /s/Gerald L. Klaben, Jr.
                                    -------------------------------------------
                                     Name: Gerald L. Klaben, Jr.
                                     Title:  Senior Vice President &
                                             Chief Financial Officer



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