Ex 99.1
SILVERLEAF RESORTS, INC. REPORTS EARNINGS FOR SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2006 AND OUTLOOK FOR FYE 2006
DALLAS, TEXAS. (August 3, 2006) --- Silverleaf Resorts, Inc. (AMEX: SVL) today announced its financial results for the three and six month periods ended June 30, 2006.
2006 Second Quarter Financial Highlights:
| | § | Vacation Interval sales increased by 30.3% to $48.6 million |
| | § | Net income increased by 59.8% to $6.8 million |
Sharon K. Brayfield, President, commented, “The first half of 2006 has been well ahead of our initially projected growth expectations for the period. We have achieved these results by continuing to increase sales efficiencies. This has allowed us to maximize our closing rate on Vacation Interval sales for new and existing customers. Based on reported results through the first half of 2006 we now expect this increased level of efficiency can be maintained through the remainder of 2006. Furthermore, sustaining these sales efficiencies should allow us to meet our plan of 10-15% top-line growth for 2007.
2006 Second Quarter Results:
Vacation Interval sales increased 30.3% to $48.6 million during the second quarter of 2006 compared to $37.3 million during the second quarter of 2005. Vacation Interval sales to new customers increased 36.9% to $22.0 million on a 13.8% increase in new customer tours. Vacation Interval sales to existing customers increased 25.3% to $26.7 million on a 6.9% increase in existing customer tours.
Total revenue for the second quarter of 2006 increased to $53.0 million compared to $49.4 million in the second quarter of 2005. Total revenue in the second quarter of 2006 is decreased by estimated uncollectible revenue of $8.4 million in accordance with SFAS No. 152, representing estimated future gross cancellations of notes receivable prior to any recoveries of inventory. In addition, under SFAS No. 152, sampler sales are accounted for as incidental operations, which requires that any such incidental revenues be recorded as a reduction of incremental costs or expenses. Accordingly, $0.7 million of sampler sales, which would have been reported as revenue prior to adoption of SFAS No. 152, were accounted for as a reduction to sales and marketing expense in the quarter ended June 30, 2006. Had these two changes mandated by SFAS No. 152 not been made, revenues would have increased by 25.9% to $62.2 million.
Sales and marketing expense decreased to 48.2% of Vacation Interval sales for the second quarter of 2006 from 48.6% for the second quarter of 2005. Had sales and marketing expense not been reduced by sampler sales, as described above, sales and marketing expense would have been 49.6% of Vacation Interval sales.
Cost of Vacation Interval sales decreased to 9.7% of Vacation Interval sales in 2006 from 16.1% in 2005, due predominantly to the requirement under SFAS No. 152 that cost of sales be reduced by the estimated future recoveries of inventory, as described above. Without this change, cost of vacation interval sales would have been 14.1% of Vacation Interval sales for the quarter ended June 30, 2006.
As required by SFAS No. 152, in 2006 there is no longer a cost and operating expense for the provision for uncollectible notes as it is now replaced by the estimated uncollectible revenue offset to sales and corresponding decrease in cost of sales described above. Without this change, the second quarter 2006 provision for uncollectible notes expense would have been $6.3 million, or 13.0% of second quarter 2006 Vacation Interval sales, compared to $6.5 million for 2005, or 17.5% of Vacation Interval sales.
During the second quarter of 2006, Silverleaf recorded income tax expense at 38.5% of pre-tax income, compared to 35.1% of pre-tax income in the second quarter of 2005. The increase in the effective rate is due to the transition in 2005 from fully reserved net deferred tax assets at December 31, 2004 to net deferred tax liabilities at December 31, 2005. Income tax expense for 2006 is therefore recorded at full statutory rates.
Net income for the quarter ended June 30, 2006 increased to $6.8 million, or $0.17 per diluted share compared to net income of $4.2 million, or $0.11 per diluted share for the quarter ended June 30, 2005.
2006 Year to Date Results:
Vacation Interval sales increased 33.5% to $90.1 million during the first six months of 2006 compared to $67.5 million during the first half of 2005. Vacation Interval sales to new customers increased 35.1% to $41.9 million on a 10.4% increase in new customer tours. Vacation Interval sales to existing customers increased 32.2% to $48.2 million on a 4.1% increase in existing customer tours.
Total revenue for the first half of 2006 increased to $98.7 million compared to $91.4 million in the first half of 2005. Total revenue in the first half of 2006 is decreased by estimated uncollectible revenue of $15.6 million in accordance with SFAS No. 152, representing estimated future gross cancellations of notes receivable prior to any recoveries of inventory. In addition, under SFAS No. 152, sampler sales are accounted for as incidental operations, which requires that any such incidental revenues be recorded as a reduction of incremental costs or expenses. Accordingly, $1.5 million of sampler sales, which would have been reported as revenue prior to adoption of SFAS No. 152, were accounted for as a reduction to sales and marketing expense in the six-month period ended June 30, 2006. Had these two changes mandated by SFAS No. 152 not been made, revenues would have increased by 26.6% to $115.8 million.
Sales and marketing expense decreased to 47.3% of Vacation Interval sales for the first half of 2006 from 52.4% for the first half of 2005. Had sales and marketing expense not been reduced by sampler sales, as described above, sales and marketing expense would have been 49.0% of Vacation Interval sales.
Cost of Vacation Interval sales decreased to 9.9% of Vacation Interval sales in the first half of 2006 from 15.9% during the same period of 2005, due predominantly to the requirement under SFAS No. 152 that cost of sales be reduced by the estimated future recoveries of inventory, as described above. Without this change, cost of vacation interval sales would have been 14.2% of Vacation Interval sales for the six months ended June 30, 2006.
As required by SFAS No. 152, in 2006 there is no longer a cost and operating expense for the provision for uncollectible notes as it is now replaced by the estimated uncollectible revenue offset to sales and corresponding decrease in cost of sales described above. Without this change, the first half of 2006 provision for uncollectible notes expense would have been $11.7 million, or 13.0% of 2006 Vacation Interval sales, compared to $11.8 million for 2005, or 17.5% of Vacation Interval sales.
During the first half of 2006, Silverleaf recorded income tax expense at 38.5% of pre-tax income, compared to 30.3% of pre-tax income in the first half of 2005. The increase in the effective rate is due to the transition in 2005 from fully reserved net deferred tax assets at December 31, 2004 to net deferred tax liabilities at December 31, 2005. Income tax expense for 2006 is therefore recorded at full statutory rates.
Net income for the six months ended June 30, 2006 increased to $13.0 million, or $0.33 per diluted share compared to net income of $6.8 million, or $0.17 per diluted share for the six months ended June 30, 2005.
Adoption of SFAS No. 152:
As previously announced, the Company was required to adopt SFAS No. 152, “Accounting for Real Estate Time-Sharing Transactions” as of January 1, 2006. As a result, new line items are included in the Company’s Consolidated Statement of Operations and total revenue and total costs and expenses are reduced. However, adoption of SFAS No. 152 did not affect net income and did not have a material impact on consolidated results of operations or financial position. See the exhibit to this release entitled “Supplemental Consolidated Statements of Operations Demonstrating the Impact of Adoption of SFAS No. 152” for a comparison of the Company’s results as reported and as its results would have been reported had SFAS No. 152 not been adopted.
Outlook
The Company continues to anticipate that its net income for the year ended December 31, 2006 will be its previously issued guidance of $21 million to $22 million ($0.53 to $0.56 per diluted share).
About Silverleaf Resorts
Based in Dallas, Texas, Silverleaf Resorts, Inc. currently owns and operates timeshare resorts with a wide array of country club-like amenities, such as golf, clubhouses, swimming, tennis, boating, and many organized activities for children and adults. For additional information, please visit www.silverleafresorts.com.
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 “Risk Factors” in the Company’s reports filed with the Securities and Exchange Commission, including the Company’s 2005 Annual Report on Form 10-K (pages 22 through 30 thereof) filed on March 17, 2006.
Contact:
Silverleaf Resorts, Inc., Dallas
Thomas J. Morris, 214-631-1166 x2218
or
Investor Relations
Erica Pettit, 212-850-5614
or
Media
Jessy Adams, 212-850-5684
For more information or to visit our website, click here:
http://www.b2i.us/irpass.asp?BzID=1358&Nav=0&S=0&L=1
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(Unaudited)
| | | Three Months Ended | | Six Months Ended | |
| | | June 30, | | June 30, | |
| | | 2006 | | 2005 | | 2006 | | 2005 | |
Revenues: | | | | | | | | | | | | | |
| Vacation Interval sales | | $ | 48,635 | | $ | 37,334 | | $ | 90,102 | | $ | 67,471 | |
| Estimated uncollectible revenue | | | (8,428 | ) | | - | | | (15,615 | ) | | - | |
| Sampler sales | | | - | | | 501 | | | - | | | 1,142 | |
| Net sales | | | 40,207 | | | 37,835 | | | 74,487 | | | 68,613 | |
| | | | | | | | | | | | | | |
| Interest income | | | 11,323 | | | 10,113 | | | 21,418 | | | 19,871 | |
| Management fee income | | | 465 | | | 450 | | | 930 | | | 900 | |
| Gain on sale of notes receivable | | | - | | | - | | | - | | | 669 | |
| Other income | | | 1,038 | | | 957 | | | 1,870 | | | 1,382 | |
| Total revenues | | | 53,033 | | | 49,355 | | | 98,705 | | | 91,435 | |
| | | | | | | | | | | | | | |
Costs and Operating Expenses: | | | | | | | | | | | | | |
| Cost of Vacation Interval sales | | | 4,736 | | | 6,017 | | | 8,917 | | | 10,735 | |
| Sales and marketing | | | 23,423 | | | 18,153 | | | 42,655 | | | 35,337 | |
| Provision for uncollectible notes | | | - | | | 6,534 | | | - | | | 11,808 | |
| Operating, general and administrative | | | 8,181 | | | 7,105 | | | 15,370 | | | 13,833 | |
| Depreciation and amortization | | | 584 | | | 744 | | | 1,123 | | | 1,542 | |
| Interest expense and lender fees | | | 5,117 | | | 4,286 | | | 9,542 | | | 8,671 | |
| Total costs and operating expenses | | | 42,041 | | | 42,839 | | | 77,607 | | | 81,926 | |
| | | | | | | | | | | | | | |
| Income before provision for income taxes | | | | | | | | | | | | | |
| and discontinued operations | | | 10,992 | | | 6,516 | | | 21,098 | | | 9,509 | |
| Provision for income taxes | | | (4,232 | ) | | (2,285 | ) | | (8,123 | ) | | (2,884 | ) |
Income from continuing operations | | | 6,760 | | | 4,231 | | | 12,975 | | | 6,625 | |
| | | | | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | | | | |
| Income from discontinued operations (net of taxes) | | | - | | | - | | | - | | | 128 | |
| | | | | | | | | | | | | | |
Net income | | $ | 6,760 | | $ | 4,231 | | $ | 12,975 | | $ | 6,753 | |
| | | | | | | | | | | | | | |
Basic income per share: | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.18 | | $ | 0.11 | | $ | 0.35 | | $ | 0.18 | |
| Income from discontinued operations | | $ | - | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.18 | | $ | 0.11 | | $ | 0.35 | | $ | 0.18 | |
| | | | | | | | | | | | | | |
Diluted income per share: | | | | | | | | | | | | | |
| Income from continuing operations | | $ | 0.17 | | $ | 0.11 | | $ | 0.33 | | $ | 0.17 | |
| Income from discontinued operations | | $ | - | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.17 | | $ | 0.11 | | $ | 0.33 | | $ | 0.17 | |
| | | | | | | | | | | | | | |
Weighted average basic common shares outstanding | | | 37,501,246 | | | 36,937,648 | | | 37,497,794 | | | 36,899,620 | |
| | | | | | | | | | | | | | |
Weighted average diluted common shares outstanding | | | 39,250,633 | | | 38,933,675 | | | 39,217,335 | | | 38,874,506 | |
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
| | | June 30, | | December 31, | |
| ASSETS | | 2006 | | 2005 | |
| | | (Unaudited) | | | |
| Cash and cash equivalents | | $ | 7,883 | | $ | 10,990 | |
| Restricted cash | | | 9,267 | | | 4,893 | |
| Notes receivable, net of allowance for uncollectible notes of | | | | | | | |
| $68,171 and $52,479, respectively | | | 202,430 | | | 177,572 | |
| Accrued interest receivable | | | 2,618 | | | 2,243 | |
| Investment in special purpose entity | | | 17,375 | | | 22,802 | |
| Amounts due from affiliates | | | 2,595 | | | 680 | |
| Inventories | | | 143,442 | | | 117,597 | |
| Land, equipment, and leasehold improvements, net | | | 15,718 | | | 10,441 | |
| Land held for sale | | | 203 | | | 495 | |
| Prepaid and other assets | | | 16,588 | | | 14,083 | |
| | | | | | | | |
| TOTAL ASSETS | | $ | 418,119 | | $ | 361,796 | |
| | | | | | | | |
| | | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | | | |
| | | | | | | | |
| LIABILITIES | | | | | | | |
| Accounts payable and accrued expenses | | $ | 9,197 | | $ | 9,556 | |
| Accrued interest payable | | | 1,612 | | | 1,354 | |
| Amounts due to affiliates | | | 855 | | | 544 | |
| Unearned Vacation Interval sales | | | 591 | | | - | |
| Unearned samplers | | | 5,675 | | | 5,310 | |
| Income taxes payable | | | 3,068 | | | 1,268 | |
| Deferred income taxes payable | | | 12,832 | | | 8,485 | |
| Notes payable and capital lease obligations | | | 213,978 | | | 177,269 | |
| Senior subordinated notes | | | 32,321 | | | 33,175 | |
| | | | | | | | |
| Total Liabilities | | | 280,129 | | | 236,961 | |
| | | | | | | | |
| 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, | | | | | | | |
| 37,545,972 shares issued and outstanding at June 30, 2006, and | | | | | | | |
| 37,494,304 shares issued and outstanding at December 31, 2005 | | | 375 | | | 375 | |
| Additional paid-in capital | | | 112,387 | | | 112,207 | |
| Retained earnings | | | 25,228 | | | 12,253 | |
| | | | | | | | |
| Total Shareholders' Equity | | | 137,990 | | | 124,835 | |
| | | | | | | | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | | $ | 418,119 | | $ | 361,796 | |
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
DEMONSTRATING IMPACT OF ADOPTION OF SFAS NO. 152
(in thousands, except share and per share amounts)
(Unaudited)
| | | Three Months Ended June 30, 2006 | | Three Months | |
| | | As Reported - | | Comparable to 2005 - | | Ended | |
| | | Reflects Adoption | | Does Not Reflect | | June 30, | |
| | | of SFAS No.152 | | SFAS No. 152 | | 2005 | |
Revenues: | | | | | | | | | | |
| Vacation Interval sales | | $ | 48,635 | | $ | 48,635 | | $ | 37,334 | |
| Estimated uncollectible revenue | | | (8,428 | ) | | - | | | - | |
| Sampler sales | | | - | | | 691 | | | 501 | |
| All other revenue | | | 12,826 | | | 12,826 | | | 11,520 | |
| Total revenues | | | 53,033 | | | 62,152 | | | 49,355 | |
| | | | | | | | | | | |
Costs and Operating Expenses: | | | | | | | | | | |
| Cost of Vacation Interval sales | | | 4,736 | | | 6,842 | | | 6,017 | |
| Sales and marketing | | | 23,423 | | | 24,114 | | | 18,153 | |
| Provision for uncollectible notes | | | - | | | 6,322 | | | 6,534 | |
| All other costs and expenses | | | 13,882 | | | 13,882 | | | 12,135 | |
| Total costs and operating expenses | | | 42,041 | | | 51,160 | | | 42,839 | |
| | | | | | | | | | | |
| Income before provision for income taxes | | | | | | | | | | |
| and discontinued operations | | | 10,992 | | | 10,992 | | | 6,516 | |
| Provision for income taxes | | | (4,232 | ) | | (4,232 | ) | | (2,285 | ) |
Net income from continuing operations | | | 6,760 | | | 6,760 | | | 4,231 | |
| | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | |
| Net income from discontinued operations (net of taxes) | | | - | | | - | | | - | |
| | | | | | | | | | | |
Net income | | $ | 6,760 | | $ | 6,760 | | $ | 4,231 | |
| | | | | | | | | | | |
Basic income per share: | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.18 | | $ | 0.18 | | $ | 0.11 | |
| Net income from discontinued operations | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.18 | | $ | 0.18 | | $ | 0.11 | |
| | | | | | | | | | | |
Diluted income per share: | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.17 | | $ | 0.17 | | $ | 0.11 | |
| Net income from discontinued operations | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.17 | | $ | 0.17 | | $ | 0.11 | |
| | | | | | | | | | | |
Weighted average basic common shares outstanding | | | 37,501,246 | | | 37,501,246 | | | 36,937,648 | |
| | | | | | | | | | | |
Weighted average diluted common shares outstanding | | | 39,250,633 | | | 39,250,633 | | | 38,933,675 | |
SILVERLEAF RESORTS, INC. AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATIONS
DEMONSTRATING IMPACT OF ADOPTION OF SFAS NO. 152
(in thousands, except share and per share amounts)
(Unaudited)
| | | Six Months Ended June 30, 2006 | | Six Months | |
| | | As Reported - | | Comparable to 2005 - | | Ended | |
| | | Reflects Adoption | | Does Not Reflect | | June 30, | |
| | | of SFAS No.152 | | SFAS No. 152 | | 2005 | |
Revenues: | | | | | | | | | | |
| Vacation Interval sales | | $ | 90,102 | | $ | 90,102 | | $ | 67,471 | |
| Estimated uncollectible revenue | | | (15,615 | ) | | - | | | - | |
| Sampler sales | | | - | | | 1,459 | | | 1,142 | |
| All other revenue | | | 24,218 | | | 24,218 | | | 22,822 | |
| Total revenues | | | 98,705 | | | 115,779 | | | 91,435 | |
| | | | | | | | | | | |
Costs and Operating Expenses: | | | | | | | | | | |
| Cost of Vacation Interval sales | | | 8,917 | | | 12,819 | | | 10,735 | |
| Sales and marketing | | | 42,655 | | | 44,114 | | | 35,337 | |
| Provision for uncollectible notes | | | - | | | 11,713 | | | 11,808 | |
| All other costs and expenses | | | 26,035 | | | 26,035 | | | 24,046 | |
| Total costs and operating expenses | | | 77,607 | | | 94,681 | | | 81,926 | |
| | | | | | | | | | | |
| Income before provision for income taxes | | | | | | | | | | |
| and discontinued operations | | | 21,098 | | | 21,098 | | | 9,509 | |
| Provision for income taxes | | | (8,123 | ) | | (8,123 | ) | | (2,884 | ) |
Net income from continuing operations | | | 12,975 | | | 12,975 | | | 6,625 | |
| | | | | | | | | | | |
Discontinued Operations | | | | | | | | | | |
| Net income from discontinued operations (net of taxes) | | | - | | | - | | | 128 | |
| | | | | | | | | | | |
Net income | | $ | 12,975 | | $ | 12,975 | | $ | 6,753 | |
| | | | | | | | | | | |
Basic income per share: | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.35 | | $ | 0.35 | | $ | 0.18 | |
| Net income from discontinued operations | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.35 | | $ | 0.35 | | $ | 0.18 | |
| | | | | | | | | | | |
Diluted income per share: | | | | | | | | | | |
| Net income from continuing operations | | $ | 0.33 | | $ | 0.33 | | $ | 0.17 | |
| Net income from discontinued operations | | $ | - | | $ | - | | $ | - | |
| Net income | | $ | 0.33 | | $ | 0.33 | | $ | 0.17 | |
| | | | | | | | | | | |
Weighted average basic common shares outstanding | | | 37,497,794 | | | 37,497,794 | | | 36,899,620 | |
| | | | | | | | | | | |
Weighted average diluted common shares outstanding | | | 39,217,335 | | | 39,217,335 | | | 38,874,506 | |
