Silverleaf Resorts Reports 1Q '08 Results

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. October 14, 2008

MAY 1, 2008. Silverleaf Resorts, Inc. (Nasdaq: SVLF) today reported the following results for its first quarter ended March 31, 2008.

Financial highlights for the first quarter of 2008 (compared to the first quarter of 2007):

o Vacation Interval sales increased 22.0% to $65.1 million

o Net income improved 13.4% to $7.4 million

o Diluted earnings per share improved 11.8% to $0.19

Sharon K. Brayfield, President, commented, "Our product remains well received despite the slowdown in the economy. The growth in net income for the quarter translates into a business that is fundamentally healthy. We will continue our focus on improving the credit quality of our sales while prudently managing our liquidity during these difficult times."

2008 First Quarter Results

Overall, total revenues for the first quarter of 2008 increased 13.9% to $67.0 million compared to $58.8 million for the first quarter of 2007. Total revenues consist of net sales, interest income, management fees, and other income.

Vacation Interval sales increased 22.0% to $65.1 million in the first quarter of 2008 compared to $53.4 million in the comparable prior-year period. The increase in Vacation Interval sales is primarily attributable to a 17.8% increase in tours and continued favorable closing percentages. Vacation Interval sales to existing customers increased 26.4% to $38.1 million while Vacation Interval sales to new customers increased 16.2% to $27.0 million. Vacation Interval sales to existing customers comprised 58.5% and 56.4% of total Vacation Interval sales in the first quarters of 2008 and 2007, respectively, which continues a favorable sales mix trend toward upgrades and second-week sales to existing customers.

The provision for estimated uncollectible revenue was 22.0% of Vacation Interval sales during the first quarter of 2008. This increase was necessary to maintain the allowance for uncollectible notes at a level management considers adequate to provide for anticipated losses resulting from customer defaults.

Cost of Vacation Interval sales decreased to 7.5% of Vacation Interval sales for the first quarter of 2008 compared to 10.8% in the 2007 comparable period. Although the Company's estimated inventory cost did not decrease, cost of sales decreased due to expected increases in our future relative sales value related to an increase in repossession and resale of timeshare intervals and an increase in expected future sales price on some of the Company's higher-end products.

Sales and marketing expense as a percentage of Vacation Interval sales remained fairly constant at 51.5% for the first quarter of 2008 compared to 51.4% in the prior-year comparable period. The $6.1 million increase in sales and marketing expense is primarily attributable to the increased volume of Vacation Interval sales.

Total positive net interest spread (interest income less interest expense and lender fees) was $8.4 million for the first quarter of 2008 compared to $6.9 million for the first quarter of 2007. In addition, interest expense and lender fees as a percentage of interest income declined to 42.1% in the first quarter of 2008 compared to 45.0% in the first quarter of 2007. This favorable variance is attributable to the overall decrease in the weighted average borrowing rate from 7.8% at March 31, 2007 to 6.4% at March 31, 2008 coupled with an overall increase in the weighted average yield on customer notes receivable from 15.9% at March 31, 2007 to 16.4% at March 31, 2008.

Net income for the quarter ended March 31, 2008 increased to $7.4 million, or $0.19 per diluted share, compared to net income of $6.6 million, or $0.17 per diluted share, for the quarter ended March 31, 2007.

Balance Sheet

Notes receivable and revolving debt balances as of March 31, 2008 have increased over comparative balances at December 31, 2007, which is consistent with increased Vacation Interval sales.

At March 31, 2008, senior credit facilities provided for loans of up to $496.7 million, of which $178.8 million is available for future advances. Considering forecasted sales and expansion plans, these senior credit facilities provide adequate liquidity through 2009. At March 31, 2008, the Company's debt consisted of 25% fixed-rate debt and 75% variable-rate debt.

Expansion at existing resorts, including construction of lodging units and additional amenities, decreased to $7.5 million for the first quarter of 2008 from $8.5 million for the comparable prior year period. This reduction in capital expenditures is consistent with our moderate growth initiative in effect for 2008.

Outlook

The Company reaffirmed forecasted 2008 net income and diluted EPS guidance of approximately $28 million and $0.70, respectively, which is consistent with full-year 2007 results.