Hotel Online Special Report 
Trendwest Resorts, Inc. Reports 1999 Net Income of $34.9 million vs $24.0 million Vacation Credits Sold for the Year Up 26.5% Selected Operating Data REDMOND, Wash. – Feb. 2, 2000 – Trendwest Resorts, Inc. (Nasdaq:TWRI), one of the nation’s leading timeshare companies, today reported net income for the year of $34.9 million, or $2.03 per diluted share, a 45.4% increase over net income of $24.0 million, or $1.38 per diluted share, for fiscal 1998. Quarterly net income was $8.4 million, or $0.49 per diluted share, for the Company’s fourth quarter ended December 31, 1999. This represents an 18.3% increase over net income of $7.1 million, or $0.41 per diluted share, for the same period last year. Vacation Credit and Fractional Interest sales for the year increased 37.4% to $234.7 million, compared with $170.8 million a year ago. Total Fractional Interest sales at the Company’s Depoe Bay resort on the Oregon coast were $13.2 million for the year.
Fractional Interest sales for the quarter were $1.7 million, representing the remaining interests at the Depoe Bay resort. Trendwest recorded a 19.3% increase in the number of Vacation Credits sold for the quarter to 42.6 million, up from 35.7 million during the same period one year ago. Vacation Credits sold for the year were 165.8 million, up 26.5% from the 131.1 million Vacation Credits sold in 1998. The Company attributes this increase to the continued maturation of the seven sales offices opened in 1998, new sales offices opened in the third and fourth quarters of 1999, and the continued solid performance of more mature sales offices. One on-site office at Vistoso, Arizona, and another at Harbor Village on Utah’s Bear Lake, as well as an off-site sales office in Anchorage, Alaska, were opened in the third quarter. An additional off-site sales office was opened in Boise, Idaho, in November. Revenues from Upgrade sales increased 29.3% to $7.5 million for the three months ended December 31, 1999, up from $5.8 million for the comparable period last year.
“We are very pleased with the performance of our Anchorage, Alaska, off-site sales office,” stated William Peare, Chief Executive Officer. “This location has achieved a record closing percentage over any of our off-site sales offices and is the most successful start up of a sales office in our history.” The average price per Vacation Credit sold increased to $1.36 for the quarter ended December 31, 1999, compared to $1.32 per credit for the same period a year ago. This reflects an approximate 4.0% increase in the selling price of Vacation Credits effective June 28, 1999.
Vacation Credit and Fractional Interest cost of sales, as a percentage of sales, decreased to 27.7% for the three months ended December 31, 1999, from 29.3% for the comparable period last year. This decrease is a result of an overall mix of lower-cost product coming on-line in the fourth quarter of 1999. The inventory of unsold Vacation Credits at year end, along with the expected mix of lower-cost product expected in the first six months of 2000, are expected to result in a continuing improvement in product cost as a percentage of sales. Sales and marketing costs as a percentage of Vacation Credit and Fractional Interest sales for the three months ended December 31, 1999 decreased to 45.6%, compared with 47.0% for the same period last year. This decrease is the result of improved closing percentages at the seven new sales offices opened in 1998, the early success of the Anchorage sales office and continued strong performance at the Company’s more mature sales offices. General and administrative costs as a percent of total revenue increased to 10.5% for the three months ended December 31, 1999, from 8.6% for the three months ended December 31, 1998. As a percentage of Vacation Credit and Fractional Interest sales, the provision for doubtful accounts and recourse liability was comparable for the two periods at 7.1% and 7.0%, respectively.
The Company achieved total revenues of $274.5 million for the year, compared to $201.0 million for 1998, an increase of 36.6%. Total revenue for the fourth quarter was $69.3 million, up from $56.9 million for the fourth quarter of 1998. Finance income for the quarter increased slightly to $4.3 million, compared with $4.2 million for the fourth quarter of 1998. Gains on sales of Notes Receivable for the quarter decreased to $3.3 million from $3.9 million for the comparable period last year. Gains on sales of Notes Receivable and finance income were negatively impacted by rising interest rates during the fourth quarter, thus reducing net interest spreads. The Company continues to add new locations to the WorldMark network of resorts and to expand existing properties. These new locations include 33 units on Monterey Bay at Marina, California; 38 units on Denarau Island, Fiji; the first 19 units of 104 at Rancho Vistoso, Arizona; and 31 additional units at Wolf Creek resort in northeast Utah.
The Company previously announced the opening of its South Pacific region and the newly-formed Trendwest South Pacific, PTY. Over the course of the coming year, Trendwest will establish itself in two additional regions: the Midwest and Las Vegas.
The Company is currently developing two resorts in its Midwest region and expects to commence off-site sales early in the second quarter of 2000. Trendwest continues its development of a flagship resort on a 14-acre parcel of land on Las Vegas Boulevard South in Las Vegas, Nevada, with an off-site sales office planned to open in the second quarter, as well. The Company also expanded its presence in Southern California with the January 2000 opening of an off-site sales office in Oceanside, California. “These new sales offices and others planned for 2000 will sustain the growth levels in revenue and profits that Shareholders have come to expect from Trendwest,” said Peare.
“We are very proud of the net income growth we achieved while incurring the large expenses that are involved in expanding our business to these three new regions,” said Gary Florence, Chief Financial Officer. “There is a substantial amount of start-up expense involved when we embark in a new territory. We are pleased that we can recognize the up-front costs associated with these new regions and still report impressive earnings. We look forward to recognizing the revenues from these efforts during the second quarter.”
Trendwest completed a $75.0 million receivables warehouse facility with Banc One Capital Markets in January 2000. This commercial paper-backed conduit funding source provides attractive pricing and additional liquidity. “We are pleased with the rates and flexibility of this latest receivables facility,” said Florence “The large commitment from a single lender is another indicator of the quality of our Receivables portfolio and the demand for our paper in the capital markets.” At December 31, 1999, 1.91% of the Company’s total Notes Receivable portfolio was more than 60 days past due. This compares with 1.97% for 1998. Under the authorized share repurchase program, the Company repurchased approximately 135,000 shares in 1999 at an average price of $20.59 per share.
Trendwest Resorts, Inc., is a leader in the timeshare industry. Through its exclusive relationship with WorldMark, The Club, the Company provides a flexible vacation ownership system, based on the use of Vacation Credits, to over 87,000 owners through 1,635 condominium units at 31 locations in the continental Western United States, Hawaii, British Columbia, Mexico and Fiji.
The addresses for the Company and WorldMark on the World Wide Web are www.trendwestresorts.com and www.worldmarktheclub.com.
Statements herein contain forward-looking information concerning the Company’s future prospects and other forecasts and statements of expectations. Actual results may differ materially from those expressed in the forward looking statements made by the Company due to, among other things, the Company’s ability to develop or acquire additional resort properties, find acceptable debt or equity capital to fund such development, achieve planned sales levels, as well as other risk factors described in the Company’s SEC reports and filings.
Selected Operating Data: Three months ended December 31, Twelve months ended December 31, 1999 1998 1999 1998 Number of WorldMark Resorts (at end of period) – – 31 34 Number of Units (at end of period) – – 1,635 1,272 Number of Vacation Credits sold (in thousands) 42,626 35,663 165,829 131,058 Average price per Vacation Credit sold $ 1.36 1.32 1.34 1.28 Average cost per Vacation Credit sold $ .39 .39 .37 .37 Total number of WorldMark Owners (at end of period) — — 87,432 67,982 Average purchase price for new WorldMark Owners(1) $8,991 8,471 8,855 8,477 (1) Before consideration of deferred gross profit. Selected Operating Data: Three months ended December 31, Twelve months ended December 31, 1999 1998 1999 1998 Number of WorldMark Resorts (at end of period) – – 31 34 Number of Units (at end of period) – – 1,635 1,272 Number of Vacation Credits sold (in thousands) 42,626 35,663 165,829 131,058 Average price per Vacation Credit sold $ 1.36 1.32 1.34 1.28 Average cost per Vacation Credit sold $ .39 .39 .37 .37 Total number of WorldMark Owners (at end of period) — — 87,432 67,982 Average purchase price for new WorldMark Owners(1) $8,991 8,471 8,855 8,477 Contact: Trendwest Resorts, Inc. Gary Florence, 425/498-2500 (Chief Financial Officer) Also See: Trendwest Acquires Depoe Bay (Oregon) Resort and Closes On a New Receivables Finance Facility / April 1999 Trendwest Resorts, Inc. Has 67,982 Timeshare Owners at End of 1998 / Feb 1999