EX-99.1 2 v037175_ex99-1.htm

SILVERLEAF RESORTS, INC.
1221 River Bend Drive, Suite 120
Dallas, Texas 75247
(214) 631-1166

Contact:
Thomas J. Morris
SVP-Capital Markets
(214) 631-1166

SILVERLEAF RESORTS, INC. REPORTS INCREASES IN REVENUE,
VACATION INTERVAL SALES & NET INCOME FOR 2005

2006 Core Net Income is Projected to Increase 21% to 25%

DALLAS, TEXAS. (March 7, 2006) --- Silverleaf Resorts, Inc. (AMEX: SVL) today announced its financial results for the year ended December 31, 2005.

2005 Financial Highlights:

 
§
Total revenue increased to $201.9 million
 
§
Vacation interval sales increased to $146.4 million
 
§
Improved efficiency leads to increased net income of $23.2 million

“Our efforts these past couple of years and specifically our results for 2005 clearly demonstrate that we are successfully executing on our strategy,” commented Robert Mead, Chairman and CEO. “More importantly, our results reflect the strength of our business model as sales to existing customers enabled our net income growth to outpace our revenue increase. We entered 2006 in a stronger financial position compared to this time a year ago, enabling us to add new facilities and resorts and the introduction of Silverleaf’s first off-site sales center, which is scheduled to open on March 8th, in the Dallas, TX area. These investments in our business, combined with our expense management, will enable us to have another strong year in 2006, as we are currently estimating core net income to increase 21% to 25% over 2005.”

Total revenue for 2005 increased to $201.9 million compared to $183.7 million in 2004. Revenue for 2005 includes a gain on the sale of notes receivable under a term securitization of $5.8 million, and a gain on the sale of undeveloped land of $3.6 million. Net income for the year ended December 31, 2005 increased to $23.2 million, or $0.59 per diluted share compared to net income of $13.8 million, or $0.35 per diluted share for the year ended December 31, 2004.

Vacation interval sales increased 6.1% to $146.4 million during the year ended December 31, 2005 compared to $138.0 million during the year ended December 31, 2004. The increase in sales for 2005 compared to 2004 is due primarily to an increase in sales to existing owners, which contributed to a reduction in sales and marketing expense to 50.1% of sales for all of 2005 from 51.3% for all of 2004, as marketing expenses are lower for these sales. In addition, the provision for uncollectible notes was 16.2% of vacation interval sales for 2005, down from 19.4% in 2004, as a result of better performance of notes originated since the company began focusing on selling to customers with better credit characteristics.

 
 
 
2005 Fourth Quarter Financial Highlights:

 
§
Total revenue increased 6.4% to $48.2 million
 
§
Vacation interval sales increased 15.3% to $37.1 million
 
§
Pre-tax income increased 20.8% to $5.1 million

Total revenue for the fourth quarter of 2005 increased to $48.2 million from $45.3 million during the same period in 2004. Vacation interval sales increased 15.3% to $37.1 million during the fourth quarter of 2005 compared to $32.2 million during the fourth quarter of 2004. The increase in sales in the quarter ended December 31, 2005 compared to 2004 is due primarily to an increase in sales to existing owners, which contributed to a reduction in sales and marketing expense to 51.8% in the fourth quarter of 2005 from 55.6% of sales in the fourth quarter of 2004, as marketing expenses are lower for these sales.

During the fourth quarter of 2004, the company recorded a gain on sale of notes receivable of $1.3 million, which did not recur in the fourth quarter of 2005. In addition, the provision for uncollectible notes was 15% of vacation interval sales for the fourth quarter of 2005, down from 17.5% in 2004, as a result of better performance of notes originated since the company began focusing on selling to customers with better credit characteristics. During the fourth quarter of 2005, the company recorded income tax expense at 30.2% pre-tax income, while in the fourth quarter of 2004, the company did not record income tax expense due to utilizing various NOL items. As a result of the increased tax provision in 2005, and gain on sale of notes receivable in the fourth quarter of 2004, net income for the fourth quarter decreased to $3.6 million, or $0.09 per diluted share, compared to net income of $4.3 million, or $0.11 per diluted share, for the fourth quarter of 2004.
 
 
 
 

Outlook

For the purposes of providing more transparency, the Company’s estimates in this press release include core operations, and exclude historical gains and discontinued operations, and assume 2004 and 2005 amounts were fully taxed at the 2006 effective income tax rate of 38.5%.

   
2004
  
2005
  
2006 Guidance
  
   
Actual
  
Actual
  
Low
  
High
  
Net income, as reported
  
$
13.8
  
$
23.2
              
Adjustments between net income as reported, and
                          
core net income:
                          
Gain on sale of notes receivable under a term
securitization
    
-
    
(5.8
)
            
Gain on sale of undeveloped land
    
-
    
(3.6
)
            
Income from discontinued operations, net of taxes
    
(0.6
)
  
(0.7
)
            
Provision for income taxes, as reported
    
-
    
9.7
              
Core income before provision for income taxes
    
13.2
    
22.8
              
Provision for income taxes at 38.5% core rate
    
(5.1
)
  
(8.8
)
            
Core Net Income
  
$
8.1
  
$
14.0
  
$
17.0
  
$
17.5
  
                           
 Core Fully Diluted EPS
  
$
0.21
  
$
0.36
  
$
0.43
  
$
0.45
  

The Company is forecasting 2006 net income in the range of $17.0 million to $17.5 million, or $0.43 to $0.45 per diluted share. This represents a 21% to 25% increase compared to 2005 core net income of $14.0 million, or $0.36 per diluted share. In 2004, the Company’s core net income was $8.1 million, or $0.21 per diluted share.

About Silverleaf Resorts

Based in Dallas, Texas, Silverleaf Resorts, Inc. currently owns and operates 13 timeshare resorts in various stages of development. Silverleaf Resorts offer a wide array of country club-like amenities, such as golf, swimming, horseback riding, boating, and many organized activities for children and adults.

This release contains certain forward-looking statements that involve risks and uncertainties and actual results may differ materially from those anticipated. The Company is subject to specific risks associated with the timeshare industry, the regulatory environment, and various economic factors. These risks and others are more fully discussed under the heading “Cautionary Statements” in the Company’s reports filed with the Securities and Exchange Commission, including the Company’s 2004 Annual Report on Form 10-K (pages 19 through 27 thereof) filed on March 25, 2005.
 
 
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
(Unaudited)

   
Three Months Ended
  
Year Ended
  
   
December 31,
  
December 31,
  
   
2005
  
2004
  
2005
  
2004
  
Revenues:
                          
Vacation Interval sales
  
$
37,112
  
$
32,177
  
$
146,416
  
$
138,046
  
Sampler sales
    
864
   
666
   
2,623
   
2,150
 
Total sales
    
37,976
   
32,843
   
149,039
   
140,196
 
                           
Interest income
    
9,216
   
10,268
   
38,154
   
37,843
 
Management fee income
    
505
   
300
   
1,856
   
1,201
 
Gain on sales of notes receivable
    
-
   
1,335
   
6,457
   
1,915
 
Other income
    
471
   
511
   
6,402
   
2,522
 
Total revenues
    
48,168
   
45,257
   
201,908
   
183,677
 
                           
Costs and Operating Expenses:
                          
Cost of Vacation Interval sales
    
5,920
   
5,478
   
23,427
   
24,964
 
Sales and marketing
    
19,681
   
18,248
   
74,667
   
71,890
 
Provision for uncollectible notes
    
5,566
   
5,631
   
23,649
   
26,811
 
Operating, general and administrative
    
6,861
   
6,253
   
28,038
   
25,639
 
Depreciation and amortization
    
566
   
952
   
2,723
   
3,588
 
Interest expense and lender fees
    
4,488
   
4,484
   
17,253
   
17,627
 
Total costs and operating expenses
    
43,082
   
41,046
   
169,757
   
170,519
 
                           
Income before provision for income taxes
                         
and discontinued operations
    
5,086
   
4,211
   
32,151
   
13,158
 
Provision for income taxes
   
(1,536
)
  
-
   
(9,725
)
  
(23
)
Net income from continuing operations
    
3,550
   
4,211
   
22,426
   
13,135
 
                           
Discontinued Operations
                          
Gain on sale of discontinued operations (net of taxes)
   
-
   
-
   
613
   
-
 
Income from discontinued operations (net of taxes)
    
-
   
121
   
128
   
624
 
Net income from discontinued operations
    
-
   
121
   
741
   
624
 
                           
Net income
  
$
3,550
  
$
4,332
  
$
23,167
  
$
13,759
  
                           
Basic income per share:
                          
Net income from continuing operations
  
$
0.10
  
$
0.12
  
$
0.61
  
$
0.35
  
Net income from discontinued operations
  
$
-
  
$
-
  
$
0.02
  
$
0.02
  
Net income
  
$
0.10
  
$
0.12
  
$
0.63
  
$
0.37
  
                           
Diluted income per share:
                          
Net income from continuing operations
  
$
0.09
  
$
0.11
  
$
0.57
  
$
0.33
  
Net income from discontinued operations
  
$
-
  
$
-
  
$
0.02
  
$
0.02
  
Net income
 
$
0.09
  
$
0.11
  
$
0.59
  
$
0.35
  
                           
Weighted average basic shares outstanding:
    
37,190,670
   
36,860,238
   
36,986,926
   
36,852,133
 
                           
Weighted average diluted shares outstanding:
    
39,259,107
   
39,015,786
   
39,090,921
   
38,947,854
 
 
 
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
(Unaudited)
 
   
December 31,
  
December 31,
  
ASSETS
  
2005
  
2004
  
           
Cash and cash equivalents
  
$
10,990
  
$
10,935
  
Restricted cash
    
4,893
   
3,428
 
Notes receivable, net of allowance for uncollectible notes of
              
$52,479 and $52,506, respectively
    
177,572
   
196,466
 
Accrued interest receivable
    
2,243
   
2,207
 
Investment in special purpose entities
    
22,802
   
5,173
 
Amounts due from affiliates
    
680
   
288
 
Inventories
    
117,597
   
109,303
 
Land, equipment, buildings, and utilities, net
    
10,441
   
24,375
 
Land held for sale
    
495
   
2,991
 
Prepaid and other assets
    
14,083
   
14,340
 
               
TOTAL ASSETS
  
$
361,796
  
$
369,506
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
               
LIABILITIES
              
Accounts payable and accrued expenses
  
$
9,556
  
$
7,980
  
Accrued interest payable
    
1,354
   
1,302
 
Amounts due to affiliates
    
544
   
929
 
Unearned revenues
    
5,310
   
4,634
 
Taxes payable
    
1,268
   
-
 
Deferred taxes payable, net
    
8,485
   
-
 
Notes payable and capital lease obligations
    
177,269
   
218,310
 
Senior subordinated notes
    
33,175
   
34,883
 
               
Total Liabilities
    
236,961
   
268,038
 
               
COMMITMENTS AND CONTINGENCIES
              
               
SHAREHOLDERS' EQUITY
              
Preferred stock, 10,000,000 shares authorized, none issued and outstanding
    
-
   
-
 
Common stock, par value $0.01 per share, 100,000,000 shares authorized,
              
37,494,304 shares issued, 37,494,304 shares outstanding at December 31,
              
2005, and 36,860,238 shares outstanding at December 31, 2004
    
375
   
372
 
Additional paid-in capital
    
112,207
   
116,614
 
Retained earnings (deficit)
    
12,253
   
(10,914
)
Treasury stock, at cost, 0 shares at December 31, 2005 and 388,768
              
shares at December 31, 2004
    
-
   
(4,604
)
               
Total Shareholders' Equity
    
124,835
   
101,468
 
               
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
  
$
361,796
  
$
369,506