Financial highlights for the quarter ended March 31, 2010:
— Net Income of $3.1 million or diluted earnings per share of $0.08
— Vacation Interval sales of $49.2 million
2010 First Quarter Results
Net income for the quarter ended March 31, 2010 was $3.1 million, or diluted earnings per share of $0.08, compared to net income of $4.6 million, or diluted earnings per share of $0.12, for the quarter ended March 31, 2009, which included an after tax business interruption insurance recovery of $0.9 million.
Robert E. Mead, Chief Executive Officer, commented, “We are pleased with our operating results for the first quarter of 2010 and our ability to remain profitable and sustain adequate liquidity despite current economic conditions. Response to our marketing programs remains strong and we believe the outlook for the remainder of 2010 is positive.”
Vacation Interval sales were $49.2 million in the first quarter of 2010 compared to $58.7 million in the comparable prior-year period. The decrease in Vacation Interval sales is primarily attributable to the sale of lower-priced product during the first quarter of 2010. Vacation Interval sales to existing customers comprised 57.4% and 61.1% of total Vacation Interval sales in the quarters ended March 31, 2010 and 2009, respectively, which maintains the Company’s favorable sales-mix trend toward upgrades and additional interval sales to existing customers as such sales have relatively lower associated sales and marketing costs.
Overall, total revenues for the first quarter of 2010 were $54.2 million compared to $63.2 million for the first quarter of 2009, primarily attributable to the $8.8 million reduction in net sales.
Cost of Vacation Interval sales was 5.2% of Vacation Interval sales for the first quarter of 2010 compared to 10.2% in the 2009 comparable period. This decrease primarily resulted from increased sales of lower cost-basis product during the first quarter of 2010 versus the first quarter of 2009.
Sales and marketing expense as a percentage of Vacation Interval sales was 55.7% for the first quarter of 2010 versus 52.4% for the comparable prior-year period. The increase was primarily attributable to the decrease in sales to existing customers, which have relatively lower related sales and marketing costs compared to new customer sales. Vacation Interval sales to existing customers comprised 57.4% and 61.1% of total Vacation Interval sales in the first quarters of 2010 and 2009, respectively.
Total positive net interest spread (interest income less interest expense and lender fees) increased to $9.2 million for the first quarter of 2010 from $8.4 million for the first quarter of 2009. Interest expense and lender fees as a percentage of interest income remained relatively flat at 46.0% for the first quarter of 2010 compared to 45.9% for the same period of 2009. Overall, interest expense and lender fees increased $731,000 for the first quarter of 2010 versus the same period of 2009 primarily due to a larger average debt balance outstanding during the first quarter of 2010, which was $407.6 million compared to $392.6 million for the prior-year comparative period, partially offset by a decrease in the weighted average cost of borrowings to 6.2% for the first quarter of 2010 from 6.4% for the first quarter of 2009.
At March 31, 2010, senior credit facilities provided for loans of up to $425.9 million, of which $40.2 million was unused. In February and April 2010, the Company completed the extension of three of its senior revolving credit facilities. Considering the extension of these senior credit facilities, forecasted sales, and limited expansion plans, the Company’s senior credit facilities provide adequate liquidity through 2010. The Company is continuing to work with certain of its lenders to extend upcoming maturities as well as identify additional financing arrangements. At March 31, 2010, the Company’s senior debt consisted of 18% fixed-rate debt and 82% variable-rate debt. However, the majority of the Company’s variable-rate debt is subject to interest-rate floors between 5.25% and 8.00%.
About Silverleaf Resorts
The provision for estimated uncollectible revenue as a percentage of Vacation Interval sales was 28.3% in the first quarter of 2010 versus 24.9% in the first quarter of 2009.
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, an indoor water park, 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 2009 Annual Report on Form 10-K filed on March 8, 2010.
For more information, the financial tables or to visit the Company’s website, click here: hhttp://www.b2i.us/irpass.asp?BzID=1358&Nav=0&S=0&L=1
Silverleaf Resorts, Inc., Dallas
Thomas J. Morris, 214-631-1166 x2218
SOURCE: Silverleaf Resorts, Inc.