SILVERLEAF'S SALES AND MARKETING EXPENSES HIGHTER THAN ESTIMATED

Source: Silverleaf Resorts

May 21, 1999
Silverleaf Resorts, Inc. (NYSE:SVR) announced Wednesday that the sales and marketing expenses associated with the its growth plan and geographic diversity are higher than current analysts' estimates.

Robert E. Mead, Silverleaf's Chairman and CEO stated, "We produced 89 percent growth in our revenue in 1998 as compared to 1997. We geographically expanded our operations into new market areas. As part of our growth plan this year we opened the Apple Mountain Resort north of Atlanta and a new sales office at Holiday Hills Resort near Branson, Mo. in the first quarter.
Additionally during the quarter, we doubled the size of our Oak N' Spruce sales office, initiated new destination tour packages and are in the process of adding four new, upgraded state-of-the-art dialing systems and a new telemarketing center. These are strategic initiatives vital to our revenue growth.''

"During the first quarter and continuing into the second quarter, there has been pressure on sales and marketing expenses due to implementation issues with the Company's installation and upgrade of new dialing equipment in its telemarketing centers,'' commented Mead. ``We have addressed the technology issues and have made significant progress. We will continue to make advances on increasing the efficiency of these centers.''

Mead continued, "New sales offices historically do not operate as efficiently as established centers, and the new Apple Mountain, Holiday Hills and the expanded Oak N' Spruce sales offices additionally contributed to the higher-than-expected sales and marketing costs during the first quarter. However, these sales office efficiencies have been addressed and we
are encouraged by our progress.''

Mead continued, "We believe the overall sales and marketing costs will be slightly higher going forward given our larger size and geographic diversity and the addition of our destination vacation packages. While we saw initial signs of added pressure in our sales and marketing costs during the first quarter, we could not quantify their full effect until additional second quarter operating results were analyzed. We do expect that our top line revenue growth during 1999 and 2000 will be in line with estimates.''

First Call consensus EPS estimates for fiscal year 1999 are currently $1.83. Based on current projections by the Company, earnings for the year will approximate $1.60 per share, a growth rate of over 10 percent when compared to 1998 earnings per share of $1.45. The Company estimates that sales and marketing expenses as a percent of total product sales for fiscal 1999 will be approximately 49.4 percent, as opposed to analysts' estimates of 45.8 percent. The Company anticipates that the second and third quarter 1999 results will be approximately six and eight cents below current estimates respectively, with the remainder falling into the fourth quarter. The divergence in the fourth quarter estimates is also caused, in part, by a change in the sales mix during the quarter that has a smaller portion of vintage, low cost inventory.

For 2000, Silverleaf expects over a 25 percent bottom line growth with earnings of approximately $2.01 per share and for sales and marketing expenses to be approximately 48.0 percent, in line with industry norms.

Silverleaf met consensus estimates of $0.38 per share in the first quarter of 1999 and as of March 31, 1999, had a book value per share of $11.39.

Mr. Mead concluded, "We believe that these are realistic estimates. We see continued revenue growth for the Company as we build on our existing infrastructure and look toward entering new markets. Our management goal is to have this growth with increased profitability.''

Based in Dallas, Silverleaf Resorts, Inc. currently owns and/or operates 22 resort locations 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. Silverleaf has a managed ownership base of over 80,000.