windje2000
TUG Member
The First amendment to the Form 10 filed by VAC (Spinco) on September 9 included financial data through the 2nd quarter, 24 weeks ended June 17, 2011. Note 14 to those financial statements indicates all is not well with the numbers for Spinco, to wit:
Luxury is defined on page F-50 of the same document
It would appear that much of the problems with the operating performance of what will become VAC is related to the Luxury segment - Ritz Carlton.
Segment operating results appear on page F-51. Luxury clearly created virtually all of the operating loss and was the cause of much of the historical 2009 impairment hit, which is broken down by segment on page F-45.
Inventory is broken down on page F-63 of the same document
Also of interest is the only difference I found between the September 9, 2011 First Amended Form 10 and the September 30, 2011 Second amended Form 10. The last pages of the pdf file are Annex A, the draft solvency opinion of Duff & Phelps, which addresses the values of the assets and liabilities of both MAR and VAC post transaction. It makes its first appearance in the Second Amendment.
The actions described in the Subsequent Event note address actions taken late in the third quarter of 2011, when the Duff and Phelps appraisers/bankers were performing their engagement.
Was Duff & Phelps 'uncomfortable' with the MAR asset values? The timeline sure makes that look possible. And that in turn makes one wonder about the quality of E&Y audit of MAR.
(above source page F-72 of the Second Amendment to the VAC Form 10 - http://files.shareholder.com/downlo...70ea2691995/MVW_Form_10_Amd_No._2_9-30-11.pdf )14. SUBSEQUENT EVENT
In preparing our company to operate as an independent, publicly traded company following the spin-off of our common stock by Marriott International, our management assessed its plan for undeveloped land and built Luxury inventory, including unfinished units, and the current market conditions for such assets.
Given our strategies to match completed inventory with our sales pace and to pursue future “asset light”development opportunities, late in the third quarter of 2011, management approved a plan to accelerate cash flow through the monetization of certain excess undeveloped land and excess built Luxury inventory. If we are able to dispose of this excess land and built inventory, we will eliminate the associated carrying costs.
We identified certain excess undeveloped parcels of land in the United States, Mexico and the Bahamas that we will seek to sell over the course of the next eighteen to twenty-four months. We used recent comparable sales to estimate the current fair value of these land parcels. Management also intends to offer incentives to accelerate sales of excess built Luxury inventory over the next three years. We determined the fair value of our excess built inventory through an evaluation of the associated vacation ownership projects and cash flow projections that reflect current market conditions.
Because we expect that proceeds from our planned land sales and their estimated fair value will be less than their carrying values, and because the fair value of this built Luxury inventory is less than its current carrying value, we expect to record a non-cash charge of between $275 million and $325 million in our third quarter 2011 financial statements to write-down the value of these assets.
Luxury is defined on page F-50 of the same document
Definitions
We operate our business in four segments:
In our North America segment, we develop, market, sell and manage vacation ownership products under the Marriott Vacation Club and Grand Residences by Marriott brands in the United States and the Caribbean. We also develop, market, sell and manage resort residential real estate located within our vacation ownership developments under the Grand Residences by Marriott brand.
In our Luxury segment, we develop, market, sell and manage luxury vacation ownership products under the Ritz-Carlton Destinations Club brand. We also sell whole ownership luxury residential real estate under the Ritz-Carlton Residences brand.
In our Europe segment, we develop, market, sell and manage vacation ownership products in several locations in Europe.
In our Asia Pacific segment, we operate Marriott Vacation Club, Asia Pacific, a points program we introduced in 2006 that we specifically designed to appeal to vacation preferences of the Asian market.
It would appear that much of the problems with the operating performance of what will become VAC is related to the Luxury segment - Ritz Carlton.
Segment operating results appear on page F-51. Luxury clearly created virtually all of the operating loss and was the cause of much of the historical 2009 impairment hit, which is broken down by segment on page F-45.
Inventory is broken down on page F-63 of the same document
Also of interest is the only difference I found between the September 9, 2011 First Amended Form 10 and the September 30, 2011 Second amended Form 10. The last pages of the pdf file are Annex A, the draft solvency opinion of Duff & Phelps, which addresses the values of the assets and liabilities of both MAR and VAC post transaction. It makes its first appearance in the Second Amendment.
The actions described in the Subsequent Event note address actions taken late in the third quarter of 2011, when the Duff and Phelps appraisers/bankers were performing their engagement.
Was Duff & Phelps 'uncomfortable' with the MAR asset values? The timeline sure makes that look possible. And that in turn makes one wonder about the quality of E&Y audit of MAR.