EX. 99.1
SILVERLEAF RESORTS, INC.
1221 River Bend Drive, Suite 120
Dallas, Texas 75247
(214) 631-1166
Contact: Harry J. White, Jr.
Chief Financial Officer
(214) 631-1166
SILVERLEAF RESORTS, INC. REPORTS RESULTS FOR
THE 2005 THIRD QUARTER
DALLAS, TEXAS. (November 1, 2005) --- Silverleaf Resorts, Inc. (AMEX: SVL) today announced its financial results for the third quarter and nine months ended September 30, 2005.
Third Quarter 2005 Highlights:
| § | Total revenue increased 30% to $62.3 million |
| § | Vacation interval sales increased 14% to $41.8 million |
| § | Net income increased 219% to $12.9 million |
Net income for the third quarter increased to $12.9 million, or $0.33 per diluted share, compared to net income of $4.0 million, or $0.10 per diluted share, during the third quarter of 2004. Total revenue for the period increased to $62.3 million compared to $47.8 million during the same period in 2004. Revenue for 2005 third quarter includes a gain on sale of notes receivable of $5.8 million, which was previously disclosed on July 28, 2005, and gain on sale of land of $3.6 million. Net of tax, these items and a $.9 million gain on sale of utility assets contributed $7.2 million to the net income during the third quarter, or $0.18 per diluted share. Excluding these gains, the Company’s revenue for the third quarter increased 10.7% over the quarter ended September 30, 2004 while net income and EPS increased 40.7% and 50%, respectively.
Vacation interval sales increased 14% to $41.8 million during the third quarter of 2005 compared to $36.7 million during the third quarter of 2004. The increase in sales in the quarter ended September 30, 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 from 49.5% of sales in the third quarter of 2004 to 46.3% in 2005, as marketing expenses are lower for these sales. In addition, the provision for uncollectible notes was 15% of vacation interval sales for the third quarter of 2005, down from 20% in 2004, as a result of better performance of notes originated since the company began focusing on selling to customers with better credit characteristics.
“These results clearly reflect that we are successfully executing our two-pronged business strategy - 1) using our internally developed best customer model to identify qualified new buyers and 2) continuing to penetrate our existing owner base through sales of additional products,” commented Robert E. Mead, chairman and CEO. “This has resulted in the reduction of our sales and marketing expense ratio and an increase in net income and EPS. Our current plan includes building out our existing properties, strategically adding new resorts in select high-growth markets, and creating vacation showrooms in selected metropolitan markets within driving distance of our resorts. As a result, we believe that we will be able to maintain vacation interval sales growth. During the quarter we also completed our first securitization transaction, which we believe has afforded us greater future access to the capital markets.”
For the nine months ended September 30, 2005, net income was $19.6 million, or $0.50 per diluted share, compared to net income of $9.4 million during the first nine months of 2004 or $0.24 per diluted share in the first nine months of 2004. Total revenue for the period was $153.7 million, as compared to $138.4 million during the first nine months of 2004. Vacation interval sales were $109.3 million for the nine month period ended September 30, 2005, a $3.4 million increase from vacation interval sales in the same period of 2004.
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.
| |
CONSOLIDATED STATEMENTS OF INCOME | |
| (in thousands, except share and per share amounts) | |
| (Unaudited) | |
| | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2005 | | 2004 | | 2005 | | 2004 | |
Revenues: | | | | | | | | | | | | | |
| Vacation Interval sales | | $ | 41,833 | | $ | 36,738 | | $ | 109,304 | | $ | 105,869 | |
| Sampler sales | | | 617 | | | 571 | | | 1,759 | | | 1,485 | |
| Total sales | | | 42,450 | | | 37,309 | | | 111,063 | | | 107,354 | |
| | | | | | | | | | | | | | |
| Interest income | | | 9,067 | | | 9,354 | | | 28,937 | | | 27,575 | |
| Management fee income | | | 450 | | | 300 | | | 1,351 | | | 900 | |
| Gain on sales of notes receivable | | | 5,789 | | | — | | | 6,457 | | | 580 | |
| Other income | | | 4,549 | | | 808 | | | 5,931 | | | 2,011 | |
| Total revenues | | | 62,305 | | | 47,771 | | | 153,739 | | | 138,420 | |
| | | | | | | | | | | | | | |
Costs and Operating Expenses: | | | | | | | | | | | | | |
| Cost of Vacation Interval sales | | | 6,772 | | | 6,166 | | | 17,507 | | | 19,485 | |
| Sales and marketing | | | 19,648 | | | 18,477 | | | 54,985 | | | 53,643 | |
| Provision for uncollectible notes | | | 6,275 | | | 7,348 | | | 18,083 | | | 21,180 | |
| Operating, general and administrative | | | 7,344 | | | 6,549 | | | 21,177 | | | 19,386 | |
| Depreciation and amortization | | | 616 | | | 845 | | | 2,158 | | | 2,636 | |
| Interest expense and lender fees | | | 4,094 | | | 4,568 | | | 12,765 | | | 13,143 | |
| Total costs and operating expenses | | | 44,749 | | | 43,953 | | | 126,675 | | | 129,473 | |
| | | | | | | | | | | | | | |
| Income before provision for income taxes | | | | | | | | | | | | | |
| and discontinued operations | | | 17,556 | | | 3,818 | | | 27,064 | | | 8,947 | |
| Provision for income taxes | | | (5,306 | ) | | — | | | (8,189 | ) | | (23 | ) |
Net income from continuing operations | | | 12,250 | | | 3,818 | | | 18,875 | | | 8,924 | |
| | | | | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | | | | |
| Gain on sale of discontinued operations (net of taxes) | | | 613 | | | — | | | 613 | | | — | |
| Income from discontinued operations (net of taxes) | | | — | | | 214 | | | 128 | | | 503 | |
Net income from discontinued operations | | | 613 | | | 214 | | | 741 | | | 503 | |
| | | | | | | | | | | | | | |
Net income | | $ | 12,863 | | $ | 4,032 | | $ | 19,616 | | $ | 9,427 | |
| | | | | | | | | | | | | | |
Basic income per share: | | | | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.33 | | $ | 0.10 | | $ | 0.51 | | $ | 0.24 | |
| Net income from discontinued operations | | $ | 0.02 | | $ | 0.01 | | $ | 0.02 | | $ | 0.02 | |
| Net income | | $ | 0.35 | | $ | 0.11 | | $ | 0.53 | | $ | 0.26 | |
| | | | | | | | | | | | | | |
Diluted income per share: | | | | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.31 | | $ | 0.09 | | $ | 0.48 | | $ | 0.23 | |
| Net income from discontinued operations | | $ | 0.02 | | $ | 0.01 | | $ | 0.02 | | $ | 0.01 | |
| Net income | | $ | 0.33 | | $ | 0.10 | | $ | 0.50 | | $ | 0.24 | |
| | | | | | | | | | | | | | |
Weighted average basic shares outstanding: | | | 36,954,948 | | | 36,860,238 | | | 36,918,265 | | | 36,849,411 | |
| | | | | | | | | | | | | | |
Weighted average diluted shares outstanding: | | | 39,042,770 | | | 38,954,815 | | | 38,934,572 | | | 38,922,668 | |
| |
CONSOLIDATED BALANCE SHEETS | |
| (in thousands, except share and per share amounts) | |
| (Unaudited) | |
| | | | | | |
| | | | | | |
| | | September 30, | | December 31, | |
| ASSETS | | 2005 | | 2004 | |
| | | | | | |
| Cash and cash equivalents | | $ | 7,605 | | $ | 10,935 | |
| Restricted cash | | | 4,798 | | | 3,428 | |
| Notes receivable, net of allowance for uncollectible notes of | | | | | | | |
| $52,658 and $52,506, respectively | | | 163,596 | | | 196,466 | |
| Accrued interest receivable | | | 2,021 | | | 2,207 | |
| Investment in special purpose entities | | | 21,967 | | | 5,173 | |
| Amounts due from affiliates | | | 2,145 | | | 288 | |
| Inventories | | | 114,815 | | | 109,303 | |
| Land, equipment, buildings, and utilities, net | | | 10,664 | | | 24,375 | |
| Land held for sale | | | 495 | | | 2,991 | |
| Prepaid and other assets | | | 15,215 | | | 14,340 | |
| | | | | | | | |
| TOTAL ASSETS | | $ | 343,321 | | $ | 369,506 | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
| | | | | | | | |
| LIABILITIES | | | | | | | |
| Accounts payable and accrued expenses | | $ | 8,535 | | $ | 7,980 | |
| Accrued interest payable | | | 1,428 | | | 1,302 | |
| Amounts due to affiliates | | | 692 | | | 929 | |
| Unearned revenues | | | 5,376 | | | 4,634 | |
| Income taxes payable | | | 6,638 | | | - | |
| Notes payable and capital lease obligations | | | 165,509 | | | 218,310 | |
| Senior subordinated notes | | | 34,029 | | | 34,883 | |
| | | | | | | | |
| Total Liabilities | | | 222,207 | | | 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, | | | | | | | |
| 37,249,006 shares issued, 36,954,948 shares outstanding at September 30, | | | | | | | |
| 2005, and 36,860,238 shares outstanding at December 31, 2004 | | | 372 | | | 372 | |
| Additional paid-in capital | | | 115,522 | | | 116,614 | |
| Retained earnings (deficit) | | | 8,702 | | | (10,914 | ) |
| Treasury stock, at cost, 294,058 shares at September 30, 2005 and 388,768 | | | | | | | |
| shares at December 31, 2004 | | | (3,482 | ) | | (4,604 | ) |
| | | | | | | | |
| Total Shareholders' Equity | | | 121,114 | | | 101,468 | |
| | | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 343,321 | | $ | 369,506 | |
