Bankruptcy? This was from their 10-K filed last Friday -- I don't think they are a bankruptcy risk at this time, but it's worth following in the future.
If they can continue to generate the type of cash flow outlined below, they should be fine.
From their 10-K
Cash Flow Outlook for 2009
During 2009, we anticipate cash flow will be neutral to positive. Borrowings outstanding on our revolving credit facility are expected to remain consistent at December 31, 2009 as compared to December 31, 2008. Our current forecast is based upon the following primary assumptions (all amounts are approximated):
i. Net income of $271 million to $304 million including after-tax restructuring charges of $18 million to $27 million,
ii. Depreciation and amortization of $185 million to $195 million,
iii. Provision for loan losses of $325 million (24% of $1.2 billion gross VOI sales plus $150 million to $200 million of previously deferred percentage-of-completion revenue. The 24% is consistent with 2008.),
iv. Deferred tax increase of $65 million to $75 million based upon our cash tax rate being 25% as compared to our provision for income tax rate of 39%,
v. Stock-based compensation of $40 million,
vi. Net change of zero to $50 million decrease of vacation ownership inventory comprised of spending of $175 million to $225 million offset by $225 million in VOI cost of sales (16% of $1.2 billion gross VOI sales plus $150 million to $200 million of previously deferred percentage-of-completion revenue. The 16% assumption is comprised of cost of sales of 25%, partially offset by inventory recoveries.),
vii. Vacation ownership contract receivables portfolio growth representing originations, net of collections, of $150 million to $175 million,
viii. Net decrease in securitized debt of $325 million to $350 million resulting from a continued decline in vacation ownership securitized debt leverage,
ix. Working capital and other use of $225 million primarily related to the recognition of previously deferred vacation ownership percentage-of-completion revenue,
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x. Capital expenditures of $120 million to $130 million, and
xi. Dividend payments totaling $30 million.
For example, using the mid-points of the ranges noted above, the estimated change in cash for the full year of 2009 would be as follows:
Amount
Net income $ 288
Depreciation and amortization 190
Provision for loan losses 325
Deferred income taxes 70
Stock-based compensation 40
Vacation ownership inventory 25
Vacation ownership contract receivables (163 )
Securitized borrowings, net (338 )
Working capital and other (225 )
Capital expenditures (125 )
Dividend to shareholders (30 )
Estimated change in cash for 2009 $ 57
