UNITEDTable STATESof Contents

AsTable of November 10, 2010, 37,768,652 shares of the registrant's common stock, $0.01 par value, were outstanding.Contents

IndexTable of Contents

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RevenueTable and Expense Recognition (including Cost of Sales) — Vacation Interval sales are primarily consummated in exchange for installment notes receivable secured by deeds of trust on each Vacation Interval sold. If development costs related to a particular project or phase are complete, we recognize related Vacation Interval sales under the full accrual method after a binding sales contract has been executed, the buyer has made a down payment of at least 10%, and the statutory rescission period has expired. If all such criteria are met yet significant development costs remain to complete the project or phase, revenues are recognized on the percentage-of-completion basis. Under this method, once the sales criteria are met, revenues are recognized proportionate to costs already incurred relative to total costs expected for the project or phase. As of September 30, 2010, no sales were deferred related to the percentage-of-completion method.Contents

ServicesTable andof other income are recognized in the period such services are provided.Contents

PrepaidTable and Other Assets — Prepaid and other assets consist primarily of prepaid insurance, prepaid postage, commitment fees, debt issuance costs, deferred commissions, novelty inventories, deposits, collected cash in senior lender lock boxes which has not yet been applied to related loan balances, and miscellaneous receivables. Commitment fees and debt issuance costs are amortized over the lives of the related debt.Contents

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(a)Table The revolving period of the inventory / acquisition component of our $75.0 million consolidated receivables, inventory, and acquisition commitment expired on January 31, 2010. The revolving period for the receivables component of such credit facility will expire on January 31, 2011.Contents

TheTable Series 2010-A Notes are secured by customer notes receivable sold to SF-VII by SF-IV and Silverleaf. The customer notes receivable sold to SF-VII were previously sold to SF-IV or pledged as collateral by Silverleaf under revolving credit facilities with senior lenders. The cash proceeds from the sale of the customer notes receivable to SF-VII were primarily used to repay approximately $142.1 million in consolidated indebtedness to senior lenders. All customer notes receivable purchased by SF-VII were acquired without recourse, except in the case of breaches of customary representations and warranties made in connection with the sale of the notes. Pursuant to the terms of an agreement, we continue to service these customer notes receivable and receive fees for our services. These servicing fees are eliminated in consolidation and are therefore not reflected in our condensed consolidated financial statements.Contents

LitigationTable – We are currently subject to litigation arising in the normal course of our business. From time to time, such litigation includes claims regarding employment, tort, contract, truth-in-lending, the marketing and sale of Vacation Intervals, and other consumer protection matters. Litigation has been initiated from time to time by persons seeking individual recoveries for themselves, as well as, in some instances, persons seeking recoveries on behalf of an alleged class. In our judgment, none of the lawsuits currently pending against us, either individually or in the aggregate, is expected to have a material adverse effect on our business, results of operations, liquidity or financial position.Contents

17Table of Contents

•Table anof increase in interest rates on our variable rate indebtedness;Contents

EstimatedTable uncollectible revenue, which represents estimated future gross cancellations of notes receivable, was $15.1 million for the third quarter of 2010 compared to $36.7 million for the same period of 2009. The provision for estimated uncollectible revenue as a percentage of Vacation Interval sales was 28.3% in the third quarter of 2010 compared to 52.2% for the third quarter of 2009 and 33.3% for the full year of 2009. The ratio was substantially higher in the third quarter of 2009 as cancellations during the first nine months of 2009, and most notably during the third quarter of 2009, exceeded cancellations projected under our static-pool analysis of our notes receivable portfolio, which tracks uncollectible notes for each year's sales over the lives of the notes. Considering an increase in future cancels beyond that previously estimated, we increased our allowance for uncollectible notes by $18.5 million in the third quarter of 2009 above the 25.9% provision rate we had estimated in the second quarter of 2009. The allowance for uncollectible notes was 20.9% of our gross notes receivable portfolio as of September 30, 2010 compared to 21.0% as of December 31, 2009. Our receivables charged off as a percentage of beginning of period gross notes receivable was 2.7% for the third quarter of 2010 compared to 3.8% for the same period of 2009. Factors considered in the assessment of uncollectibility include the aging of notes receivable, historical collection experience and credit losses, customer credit scores (FICO® scores), and current economic factors. We believe our notes receivable are adequately reserved, however, there can be no assurance that defaults have stabilized or that they will not increase further. We review the allowance for uncollectible notes quarterly and make adjustments as necessary.Contents

CostTable of Vacation Interval sales increased to 10.8% of Vacation Interval sales for the third quarter of 2010 compared to 7.3% in the 2009 comparable period. This increase primarily resulted from revisions made to our future relative sales value for the third quarters of both 2010 and 2009 which had a greater impact on decreasing cost of sales in the third quarter of 2009. Contents

BenefitTable (Provision)of for Income TaxesContents

UnderTable the relative sales value method, cost of sales is estimated as a percentage of net sales using a cost of sales percentage which represents the ratio of total estimated cost, including costs already incurred plus estimated costs to complete the phase, if any, to total estimated Vacation Interval revenues under the project, including revenues already recognized and estimated future revenues. Common costs, including amenities, are allocated to inventory cost among the phases that those costs are expected to benefit. The estimate of total revenue for a phase considers factors such as trends in uncollectibles, changes in sales mix and unit sales prices, repossessions of Vacation Intervals, effects of upgrade programs, and past and expected future sales programs to sell slow-moving inventory units.Contents

InterestTable expense and lender fees as a percentage of interest income increased to 50.6% for the first nine months of 2010 compared to 45.4% for the same period of 2009. Overall, interest expense and lender fees increased $4.3 million for the first nine months of 2010 compared to the same period of 2009 primarily due to an increase in lender fees related to our SF-VII securitization which closed in June of 2010, and amendments to our other senior loan agreements since June 2009. In addition, the weighted average cost of borrowings increased to 7.0% for the nine months ended September 30, 2010 from 6.0% for the nine months ended September 30, 2009.Contents

24Table of Contents

WeTable are in compliance with these covenants as of September 30, 2010. However, there can be no assurance that we will continue to meet these or other financial covenants contained in our debt agreements with our senior lenders.Contents

26Table of Contents

GeographicTable Concentrationof — Our notes receivable and Vacation Interval inventories are primarily originated in Texas, Missouri, Illinois, Massachusetts, Georgia, and Florida. Risks inherent in such concentrations are:Contents

PARTTable II:of OTHER INFORMATIONContents

29Table of Contents

~~SECURITIES~~UNITED ~~AND~~STATES ~~EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~FORM~~Washington, ~~10-Q~~D.C. 20549

~~(Mark One)~~FORM 10-Q

~~x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One) ~~OF THE SECURITIESEXCHANGE ACT OF 1934~~

~~For~~ [X] QUARTERLY ~~the~~REPORT ~~quarterly~~PURSUANT ~~period~~TO ~~ended~~SECTION ~~September 30,~~13 ~~2010~~OR 15(d) OF THE

OR SECURITIES EXCHANGE ACT OF 1934

oFor ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~March 31, 132011 ~~OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~OR ~~the transition period from _____________ to _____________~~

~~Commission~~ [ ] TRANSITION ~~file~~REPORT ~~number:~~PURSUANT ~~001-13003~~TO SECTION 13 OR 15(d)

~~SILVERLEAF~~ OF ~~RESORTS,~~THE ~~INC.~~SECURITIES EXCHANGE ACT OF 1934

~~(Exact~~For ~~name~~the oftransition ~~registrant~~period ~~as specified in its charter)~~from to

TEXAS		75-2259890
(State of incorporation)		(I.R.S. Employer Identification No.)

Commission file number: 001-13003

~~1221~~SILVERLEAF ~~RIVER BEND DRIVE~~RESORTS, ~~SUITE~~INC. ~~120~~

~~DALLAS,~~(Exact ~~TEXAS~~name ~~75247~~of registrant as specified in its charter)

(Address of principal executive offices, including zip code)

1221 RIVER BEND DRIVE, SUITE 120 DALLAS, TEXAS 75247 (Address of principal executive offices, including zip code) 214-631-1166 (Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (~~Registrant's~~1) has ~~telephone~~filed ~~number,~~all ~~including~~reports ~~area~~required ~~code~~to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

~~Indicate~~Yes by[X] No ~~check~~[ ] mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x [ ] No o [ ]

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~large ~~and~~accelerated ~~posted~~filer, onan ~~its~~accelerated ~~corporate Web site~~filer, ifa ~~any~~non-accelerated filer, ~~every~~or ~~Interactive~~a ~~Data~~smaller ~~File~~reporting ~~required~~company. toSee bethe ~~submitted~~definitions ~~and posted pursuant to Rule 405~~ of ~~Regulation~~“large ~~S-T~~accelerated ~~during~~filer,” ~~the~~“accelerated ~~preceding~~filer” 12and ~~months~~“smaller ~~(or~~reporting company” ~~for~~in ~~such~~Rule ~~shorter~~12b-2 ~~period~~of ~~that~~ the ~~registrant~~Exchange ~~was~~Act. ~~required~~(Check ~~to submit and post such files~~one).: ~~Yes o No o~~

~~Indicate~~Large ~~by check mark whether the registrant is a large~~ accelerated filer, an[ ~~accelerated~~] ~~filer,~~Accelerated ~~a non-accelerated~~ filer, or[ a] ~~smaller reporting company. See the definitions of “large~~ Non-accelerated filer,” ~~“accelerated~~[ ~~filer”~~] ~~and~~Smaller ~~“smaller~~ reporting company” ~~in Rule 12b-2 of the Exchange Act. (Check one):~~[X]

~~Large~~Indicate ~~accelerated~~by ~~filer~~check omark ~~Accelerated~~whether the ~~filer~~registrant ois ~~Non-accelerated~~a ~~filer~~shell xcompany ~~Smaller~~(as ~~reporting~~defined ~~company~~in oRule 12b-2 of the Exchange Act).

~~Indicate~~Yes by[ ] No [X] ~~check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).~~

~~Yes~~As of May ~~o No x~~12, 2011, 38,136,921 shares of the registrant’s common stock, $0.01 par value, were outstanding.

SILVERLEAF RESORTS, INC.

INDEX

		~~Page~~	Page
PART I. FINANCIAL INFORMATION
Item 1.	~~Condensed Consolidated Statements of Operations for the three months and nine months ended September 30, 2010 and 2009~~	2Condensed Consolidated Statements of Operations for the threemonths ended March 31, 2011 and 2010		2
	Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009	3
		Condensed Consolidated Balance Sheets as of March 31, 2011and December 31, 2010		3
	Condensed Consolidated Statement of Shareholders' Equity for the nine months ended September 30, 2010	4
		Condensed Consolidated Statement of Shareholders’ Equity forthe three months ended March 31, 2011		4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2010 and 2009	5
		Condensed Consolidated Statements of Cash Flows for thethree months ended March 31, 2011 and 2010		5
	~~Notes to Condensed Consolidated Financial Statements~~	6Notes to Condensed Consolidated Financial Statements		6
Item 2.	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~	18Management’s Discussion and Analysis of Financial Condition andResults of Operations		18
Item 3.	~~Quantitative and Qualitative Disclosures about Market Risk~~	27Quantitative and Qualitative Disclosures about Market Risk		25
Item 4T.	Controls and Procedures	28
Item 4.		Controls and Procedures		26
PART II. OTHER INFORMATION
Item 1.	~~Legal Proceedings~~	28Legal Proceedings		26
Item 1A.	~~Risk Factors~~	30Risk Factors		28
Item 2.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	30Unregistered Sales of Equity Securities and Use of Proceeds		28
Item 5.	Exhibits	31
Item 6.		Exhibits		28
	~~Signatures~~	32Signatures		29

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

SILVERLEAF RESORTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
		Three Months EndedMarch 31,
	2010			2009			2010			2009
		2011			2010
Revenues:
Vacation Interval sales	$	~~53,162~~$	54,427	$	~~70,427~~$	49,195	$	~~157,557~~		$	~~194,217~~
Estimated uncollectible revenue	~~(15,072~~		(13,552)	~~(36,741~~		(13,947)	~~(44,668~~		)	~~(68,216~~		)
Net sales	~~38,090~~		40,875	~~33,686~~		35,248	~~112,889~~			~~126,001~~
Interest income	~~17,267~~		17,251	~~16,591~~		17,063	~~51,639~~			~~48,148~~
Management fee income	~~630~~		780	~~930~~		630	~~1,891~~			~~2,791~~
Other income	~~2,489~~		1,155	~~1,578~~		1,244	~~5,337~~			~~6,777~~
Total revenues	~~58,476~~		60,061	~~52,785~~		54,185	~~171,756~~			~~183,717~~
Costs and Operating Expenses:
Cost of Vacation Interval sales	~~5,719~~		2,962	~~5,125~~		2,562	~~13,777~~			~~18,882~~
Sales and marketing	~~28,161~~		29,610	~~33,293~~		27,405	~~85,283~~			~~97,024~~
Operating, general and administrative	~~10,882~~		10,925	~~11,797~~		9,727	~~30,967~~			~~35,673~~
Depreciation	~~1,629~~		1,575	~~1,641~~		1,618	~~4,875~~			~~4,594~~
Interest expense and lender fees:
Related to receivables-based credit facilities	~~7,835~~		9,165	~~5,362~~		6,065	~~20,816~~			~~16,604~~
Related to other indebtedness	~~1,650~~		1,629	~~2,026~~		1,780	~~5,307~~			~~5,242~~
Total costs and operating expenses	~~55,876~~		55,866	~~59,244~~		49,157	~~161,025~~			~~178,019~~
Income (loss) before benefit (provision) for income taxes	2,600			(6,459		)	10,731			5,698
Income before provision for income taxes			4,195			5,028
Benefit (provision) for income taxes	(975		)	2,584			(4,099		)	(2,258		)
Provision for income taxes			(1,552)			(1,961)
Net income (loss)	$	1,625		$	(3,875	)	$	6,632		$	3,440
Net income		$	2,643		$	3,067
Basic net income (loss) per share	$	0.04		$	(0.10	)	$	0.17		$	0.09
Basic net income per share		$	0.07		$	0.08
Diluted net income (loss) per share	$	0.04		$	(0.10	)	$	0.17		$	0.09
Diluted net income per share		$	0.07		$	0.08
Weighted average basic common shares outstanding	37,864,792			38,146,943			37,973,619			38,146,943
Weighted average basic common shares			38,091,910			38,120,517
Weighted average diluted common shares outstanding	38,718,291			38,146,943			38,853,865			39,027,021
Weighted average diluted common shares			38,621,199			38,936,439

The accompanying notes are an integral part of these condensed consolidated financial statements.

SILVERLEAF RESORTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

ASSETS	September 30, 2010			December 31, 2009
		March 31,			December 31,
	(Unaudited)
ASSETS		2011			2010
Cash and cash equivalents (including from VIEs of $10 and $11, respectively)	$	8,414		$	13,905
		(Unaudited)
Restricted cash (including from VIEs of $24,608 and $18,903, respectively)	26,357			20,668
Cash and cash equivalents (including from VIEs of $10 and $10, respectively)		$	12,040		$	11,805
Notes receivable, net of allowance for uncollectible notes of $95,826 and $94,585, respectively (including from VIEs of $209,617 and $204,813, respectively)	362,222			354,659
Restricted cash (including from VIEs of $17,257 and $29,578, respectively)			19,009			31,327
Accrued interest receivable (including from VIEs of $2,483 and $2,427, respectively)	4,511			4,686
Notes receivable, net of allowance for uncollectible notes of $88,421 and $91,731, respectively (including from VIEs of $255,200 and $275,953, net of allowance, respectively)			368,400			362,738
Amounts due from affiliates (including from VIEs of ($183) and ($192), respectively)	14,165			1,587
Accrued interest receivable (including from VIEs of $3,102 and $3,398, respectively)			4,373			4,480
Inventories	183,208			196,010
Amounts due from affiliates (including VIEs due to affiliates of $308 and $182, respectively)			12,526			10,707
Land, equipment, buildings, and leasehold improvements, net	47,871			51,117
Inventories			176,123			178,366
Prepaid and other assets (including from VIEs of $10,115 and $9,420, respectively)	28,149			23,856
Land, equipment, buildings, and leasehold improvements, net			45,598			46,966
TOTAL ASSETS	$	674,897		$	666,488
Prepaid and other assets (including from VIEs of $10,150 and $10,315, respectively)			37,666			33,757
LIABILITIES AND SHAREHOLDERS' EQUITY
TOTAL ASSETS		$	675,735		$	680,146
LIABILITIES
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and accrued expenses (including from VIEs of $20 and $22, respectively)	$	9,732		$	8,527
LIABILITIES
Accrued interest payable (including from VIEs of $1,369 and $813, respectively)	2,557			2,264
Accounts payable and accrued expenses (including from VIEs of $20 and $21, respectively)		$	14,113		$	9,875
Unearned samplers	7,304			6,501
Accrued interest payable (including from VIEs of $1,861 and $1,073, respectively)			2,826			2,062
Income taxes payable	712			706
Unearned samplers			7,126			6,967
Deferred income taxes	37,539			35,342
Income taxes payable			1,008			1,012
Notes payable and capital lease obligations (including from VIEs of $212,412 and $191,395, respectively)	401,496			395,017
Deferred income taxes			39,588			37,715
Senior subordinated notes	8,855			17,956
Notes payable and capital lease obligations (including from VIEs of$261,783 and $293,517, respectively)			394,589			408,891
Total Liabilities	468,195			466,313
Senior subordinated notes			7,682			7,682
COMMITMENTS AND CONTINGENCIES (Note 9)
Total Liabilities			466,932			474,204
SHAREHOLDERS' EQUITY
COMMITMENTS AND CONTINGENCIES (Note 9)
Preferred stock, 10,000,000 shares authorized, none issued and outstanding	—			—
SHAREHOLDERS’ EQUITY
Common stock, par value $0.01 per share, 100,000,000 shares authorized, 38,146,943 shares issued and 37,768,652 shares outstanding at September 30, 2010 and 38,146,943 shares issued and outstanding at December 31, 2009	381			381
Preferred stock, 10,000,000 shares authorized, none issued and outstanding			-			-
Additional paid-in capital	113,769			113,447
Common stock, par value $0.01 per share, 100,000,000 shares authorized,38,146,943 shares issued and 38,136,921 shares outstanding at March 31, 2011 and38,146,943 shares issued and 37,768,652 shares outstanding at December 31, 2010			381			381
Retained earnings	92,979			86,347
Additional paid-in capital			113,668			113,866
Treasury stock, at cost, 378,291 shares at September 30, 2010 and none at December 31, 2009	(427		)	—
Retained earnings			94,765			92,122
Total Shareholders' Equity	206,702			200,175
Treasury stock, at cost, 10,022 shares at March 31, 2011 and 378,291 shares atDecember 31, 2010			(11)			(427)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	674,897		$	666,488
Total Shareholders’ Equity			208,803			205,942
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	675,735		$	680,146
The abbreviation “VIEs” above represents Variable Interest Entities.

The ~~abbreviation~~accompanying ~~"VIEs"~~notes ~~above~~are ~~represents~~an ~~Variable~~integral ~~Interest~~part ~~Entities~~of these condensed consolidated financial statements.

~~The~~3 ~~accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Index~~SILVERLEAF RESORTS, INC.

~~SILVERLEAF~~CONDENSED ~~RESORTS,~~CONSOLIDATED ~~INC~~STATEMENT OF SHAREHOLDERS’ EQUITY

~~CONDENSED~~(in ~~CONSOLIDATED~~thousands, ~~STATEMENT~~except OFshare ~~SHAREHOLDERS'~~amounts) ~~EQUITY~~

(~~in thousands, except share amounts~~Unaudited)

(Unaudited)


	Common Stock
	Number of		$0.01		Additional
	Shares		Par		Paid-in		Retained		Treasury Stock
	Issued		Value		Capital		Earnings		Shares		Cost		Total

January 1, 2011		38,146,943	$	381	$	113,866	$	92,122		378,291	$	(427)	$	205,942

Stock-based compensation		-		-		102		-		-		-		102
Exercise of stock options		-		-		(300)		-		(368,269)		416		116
Net income		-		-		-		2,643		-		-		2,643


March 31, 2011		38,146,943	$	381	$	113,668	$	94,765		10,022	$	(11)	$	208,803

	Common Stock
	Number of Shares	$0.01 Par		Additional Paid-in		Retained		Treasury Stock
	Issued	Value		Capital		Earnings		Shares	Cost			Total
January 1, 2010	38,146,943	$	381	$	113,447	$	86,347	—	$	—		$	200,175
Stock-based compensation	—	—		322		—		—	—			322
Treasury stock purchases	—	—		—		—		378,291	(427		)	(427		)
Net income	—	—		—		6,632		—	—			6,632
September 30, 2010	38,146,943	$	381	$	113,769	$	92,979	378,291	$	(427	)	$	206,702

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~The~~4 ~~accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Index~~SILVERLEAF RESORTS, INC.

~~SILVERLEAF~~CONDENSED ~~RESORTS,~~CONSOLIDATED ~~INC.~~STATEMENTS OF CASH FLOWS

~~CONDENSED~~(in ~~CONSOLIDATED~~thousands) ~~STATEMENTS OF CASH FLOWS~~

(~~in thousands~~Unaudited)

(Unaudited)


	Three Months Ended March 31,
	2011		2010

OPERATING ACTIVITIES:
Net income	$	2,643	$	3,067
Adjustments to reconcile net income to net cash provided by operating activities:
Estimated uncollectible revenue		13,552		13,947
Deferred income taxes		1,873		1,698
Depreciation		1,575		1,618
Debt discount amortization		1,399		456
Gain on sale of water utility assets		-		(77)
Stock-based compensation		102		55
Cash effect from changes in operating assets and liabilities:
Restricted cash		(3)		(90)
Notes receivable		(19,214)		(16,223)
Accrued interest receivable		107		201
Amounts due from affiliates		(1,819)		(2,245)
Inventories		2,243		971
Prepaid and other assets		(3,909)		(414)
Accounts payable and accrued expenses		4,238		2,295
Accrued interest payable		764		(233)
Unearned samplers		159		(51)
Income taxes payable		(4)		261

Net cash provided by operating activities		3,706		5,236


INVESTING ACTIVITIES:
Additions to land, equipment, buildings, and leasehold improvements		(207)		(283)
Proceeds from sale of water utility assets		-		1,990

Net cash (used in) provided by investing activities		(207)		1,707


FINANCING ACTIVITIES:
Proceeds from borrowings of debt		47,382		50,326
Payments of debt and capital leases		(63,083)		(61,564)
Restricted cash reserved for payments of debt		12,321		1,414
Proceeds from exercise of stock options		116		-
Purchases of treasury shares		-		(248)

Net cash used in financing activities		(3,264)		(10,072)


Net change in cash and cash equivalents		235		(3,129)

CASH AND CASH EQUIVALENTS:
Beginning of period		11,805		13,905


End of period	$	12,040	$	10,776


SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized	$	7,220	$	6,198

Income taxes paid	$	30	$	3

Income tax refund	$	74	$	-

	Nine Months EndedSeptember 30,
	2010			2009
OPERATING ACTIVITIES:
Net income	$	6,632		$	3,440
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Estimated uncollectible revenue	44,668			68,216
Deferred income taxes	2,197			(1,299		)
Depreciation	4,875			4,594
Debt discount amortization	2,215			2,116
Gain on early extinguishment of debt	—			(316		)
Loss on disposal of property and equipment, net	—			183
Gain on sale of water utility assets	(77		)	—
Stock-based compensation	322			348
Cash effect from changes in operating assets and liabilities:
Restricted cash	16			1,625
Notes receivable	(52,231		)	(91,833		)
Accrued interest receivable	175			(593		)
Investment in special purpose entity	—			(655		)
Amounts due from affiliates	(12,578		)	(3,128		)
Inventories	10,889			(6,238		)
Prepaid and other assets	(4,293		)	5,049
Accounts payable and accrued expenses	1,205			(1,841		)
Accrued interest payable	293			(223		)
Unearned samplers	803			803
Income taxes payable	6			(1,051		)
Net cash provided by (used in) operating activities	5,117			(20,803		)
INVESTING ACTIVITIES:
Purchases of land, equipment, buildings, and leasehold improvements	(1,629		)	(2,007		)
Proceeds from sale of water utility assets	1,990			—
Net cash provided by (used in) investing activities	361			(2,007		)
FINANCING ACTIVITIES:
Proceeds from borrowings of debt	305,831			216,631
Payments of debt and capital leases	(310,668		)	(190,460		)
Restricted cash reserved for payments of debt	(5,705		)	(1,696		)
Purchases of treasury shares	(427		)	—
Net cash (used in) provided by financing activities	(10,969		)	24,475
Net change in cash and cash equivalents	(5,491		)	1,665
CASH AND CASH EQUIVALENTS:
Beginning of period	13,905			11,431
End of period	$	8,414		$	13,096
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid, net of amounts capitalized	$	19,518		$	15,825
Income taxes paid	$	1,914		$	4,880
Income tax refund	$	17		$	—
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Inventories acquired through financing	$	—		$	1,852

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~The~~5 ~~accompanying notes are an integral part of these condensed consolidated financial statements.~~

~~Index~~SILVERLEAF RESORTS, INC.

~~SILVERLEAF~~NOTES ~~RESORTS,~~TO ~~INC.~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~NOTES~~(UNAUDITED) ~~TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~Note 1 – Background

~~Note~~The 1primary –business ~~Background~~of Silverleaf Resorts, Inc. (the “Company,” “Silverleaf,” “we,” or “our”) is marketing and selling vacation intervals (“Vacation Intervals”) related to our 13 owned resorts. The condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes included in our Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission (“SEC”), as well as all financial information contained in interim and other reports filed with the SEC since then. The accounting policies used in preparing these condensed consolidated financial statements are consistent with those described in such Form 10-K. In addition, operating results for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

~~The~~Execution ~~primary business~~ of ~~Silverleaf~~an ~~Resorts,~~Agreement ~~Inc. (the “Company,” “Silverleaf,” “we,” or “our”) is marketing~~ and ~~selling~~Plan vacation intervals (“Vacation Intervals”) related to our 13 owned resorts. The condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes included in our Form 10-K for the year ended December 31, 2009, as filed with the Securities and Exchange Commission (“SEC”), as well as all financial information contained in interim and other reports filed with the SEC since then. The accounting policies used in preparing these condensed consolidated financial statements are consistent with those described in such Form 10-K. In addition, operating results for the nine months ended September 30, 2010 are not necessarily indicative of ~~the results that may be expected for the year ending December 31, 2010.~~Merger

~~Note~~Effective February 3, 2011, we entered into a definitive agreement (the “Merger Agreement”) to be acquired by SL Resort Holdings Inc. (“Resort Holdings”) and Resort Merger Sub Inc. (“Merger Sub”), a wholly-owned subsidiary of Resort Holdings. Both Resort Holdings and Merger Sub are affiliates of Cerberus Capital Management, L.P. (“Cerberus”). The transaction has been approved by our Board of Directors (the “Board”), and the Board has recommended that our shareholders approve the transaction. Under the Merger Agreement, our shareholders will receive, at the closing, $2.50 –in ~~Significant~~cash ~~Accounting~~for ~~Policies~~each ~~Summary~~share of our common stock they own, representing a premium of approximately 75% based on the closing price of $1.43 of our common stock on February 3, 2011. Cerberus has agreed to provide equity financing for the full amount of the merger consideration. Our Board of Directors received an opinion from its financial advisor, Gleacher & Company Securities, Inc. (“Gleacher”), that the consideration to be paid to our shareholders in the transaction is fair from a financial point of view. Completion of the transaction is subject to customary closing conditions, including approval by our shareholders. On May 11, 2011, we held a special meeting of our shareholders for the purpose of approving the merger. At this meeting, the merger was approved by holders of 28,946,503 shares of our outstanding common stock, representing approximately 75.9% of all votes entitled to be cast by holders of our common stock. Subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement and discussed in detail in the Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission by Silverleaf on April 18, 2011, as supplemented on May 9, 2011, we expect to close the merger on or about May 16, 2011. Consummation of the merger is subject to certain terms and conditions customary for transactions of this type. Upon completion of the transaction, we will become a private company, wholly-owned by Resort Holdings, our common stock will no longer be traded on The NASDAQ Capital Market (“NASDAQ”), and we will no longer be subject to informational requirements of the Securities Exchange Act of 1934 (the “Exchange Act”).

~~Basis~~Note of2 ~~Presentation~~– —Significant ~~The~~Accounting ~~accompanying~~Policies ~~condensed~~Summary consolidated financial statements have been prepared in conformity with accounting policies generally accepted in the United States of America for interim financial information and in accordance with the rules and regulations of the SEC. Accordingly, these condensed consolidated financial statements do not include certain information and disclosures required by GAAP for complete financial statements. However, in the opinion of management, all adjustments, consisting of normal recurring adjustments and accruals, considered necessary for a fair presentation have been included.

~~Adoption~~Basis of ~~ASC~~Presentation ~~“Consolidation~~— ofThe ~~Variable~~accompanying ~~Interest~~condensed ~~Entities”~~consolidated —financial ~~Effective~~statements ~~January~~have 1,been ~~2010,~~prepared wein ~~adopted~~conformity ~~the~~with accounting ~~Financial~~policies ~~Accounting~~generally ~~Standards~~accepted ~~Board~~in (the ~~“FASB”)~~United ~~Accounting~~States ~~Standards~~of ~~Codification~~America ~~(“ASC”)~~for ~~“Consolidation~~interim offinancial ~~Variable~~information ~~Interest~~and ~~Entities,”~~in ~~which~~accordance ~~resulted~~with inthe ~~enhanced~~rules ~~disclosures~~and ~~regarding~~regulations ~~our~~of ~~variable~~the ~~interest~~SEC. ~~entities~~Accordingly, ~~(“VIEs”).~~these ~~See~~financial ~~parenthetical~~statements do not include certain information and disclosures onrequired ~~our~~by ~~Condensed~~GAAP ~~Consolidated~~for ~~Balance~~complete ~~Sheets~~financial ~~that~~statements. ~~show~~However, in the ~~amounts~~opinion of ~~consolidated~~management, ~~assets~~all ~~and~~adjustments, ~~liabilities~~consisting ~~associated~~of ~~with~~normal ~~our~~recurring ~~VIEs~~adjustments and ~~Note~~accruals, 10considered necessary for a fair presentation have been included.

~~Use~~Adoption of ~~Estimates~~ASC —“Consolidation ~~The preparation~~ of ~~these~~Variable ~~condensed~~Interest ~~consolidated~~Entities” ~~financial~~— ~~statements~~Effective ~~requires~~January 1, ~~the use of management’s estimates and assumptions in determining the carrying values of certain assets and liabilities~~2010, ~~the~~we adopted ~~disclosure~~FASB ofASC ~~contingent~~“Consolidation ~~assets and liabilities at the date~~ of ~~the~~Variable ~~condensed~~Interest ~~consolidated financial statements~~Entities,” ~~and~~which ~~the~~resulted ~~reported~~in ~~amounts~~enhanced ~~for~~disclosures ~~certain~~regarding ~~revenues~~our ~~and~~variable ~~expenses~~interest ~~during~~entities ~~the reporting period~~(“VIEs”). ~~Actual~~See ~~results~~parenthetical ~~could~~disclosures ~~differ~~on ~~from~~our ~~those~~Condensed ~~estimates.~~Consolidated ~~Significant~~Balance ~~management~~Sheets that ~~estimates~~show ~~include~~ the ~~allowance~~amounts ~~for~~of ~~uncollectible~~consolidated ~~notes,~~assets ~~estimates for income taxes,~~ and ~~the~~liabilities ~~future~~associated ~~sales~~with ~~plan~~our ~~and~~VIEs ~~estimated recoveries used to allocate certain costs to inventory phases~~ and ~~cost~~Note ~~of sales~~10.

~~Principles~~Use of ~~Consolidation~~ Estimates — The preparation of these condensed consolidated financial statements ~~include~~requires the ~~accounts~~use of ~~the~~management’s ~~Company~~estimates and ~~its~~assumptions ~~wholly-owned~~in ~~subsidiaries,~~determining ~~excluding~~the ~~Silverleaf~~carrying ~~Finance~~values ~~III,~~of ~~LLC~~certain ~~(“SF-III”)~~assets and liabilities, ~~our~~the ~~former~~disclosure ~~wholly-owned~~of ~~off-balance-sheet~~contingent ~~qualified~~assets ~~special~~and liabilities ~~purpose~~at ~~finance~~the ~~subsidiary~~date of the condensed consolidated financial statements, ~~which~~and wethe ~~dissolved~~reported inamounts for certain revenues and expenses during the ~~fourth~~reporting ~~quarter~~period. ofActual ~~2009~~results could differ from those estimates. ~~All~~Significant ~~significant~~management ~~intercompany~~estimates include ~~accounts~~the ~~and~~allowance ~~transactions~~for ~~have~~uncollectible ~~been~~notes, ~~eliminated~~estimates infor income taxes, and the ~~condensed~~future ~~consolidated~~sales ~~financial~~plan ~~statements~~and estimated recoveries used to allocate certain costs to inventory phases and cost of sales.

~~Timeshare~~6 Accounting Practices — We follow industry specific guidance established by the FASB ASC as required by the topic “Real Estate – Timesharing Activities.” In general, this accounting standard provides guidance on determining revenue recognition for timeshare transactions, evaluation of uncollectibility of Vacation Interval receivables, accounting for costs of Vacation Interval sales, accounting for operations during holding periods (or incidental operations), and other accounting transactions specific to timeshare operations.

6Principles of Consolidation — The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements.

~~Index~~Timeshare Accounting Practices — We follow industry specific guidance established by the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) as required by the topic “Real Estate – Timesharing Activities.” In general, this accounting standard provides guidance on determining revenue recognition for timeshare transactions, evaluation of uncollectibility of Vacation Interval receivables, accounting for costs of Vacation Interval sales, accounting for operations during holding periods (or incidental operations), and other accounting transactions specific to timeshare operations.

~~Both~~Revenue ofand ~~these~~Expense ~~revenue~~Recognition ~~recognition~~(including ~~methods~~Cost ~~employ~~of ~~the~~Sales) ~~relative~~— Vacation Interval sales ~~value~~are ~~method~~primarily consummated in ~~determining~~exchange ~~related~~for ~~costs~~installment ofnotes ~~sales~~receivable ~~and~~secured ~~inventory~~by ~~applicable~~deeds toof trust on each Vacation Interval ~~sale recognized~~sold. ~~Under~~If ~~the~~development ~~relative~~costs related to a particular project or phase are complete, we recognize related Vacation Interval sales ~~value~~under the full accrual method after a binding sales contract has been executed, the buyer has made a ~~cost~~down payment of ~~sales~~at ~~percentage~~least is10%, ~~used~~and the statutory rescission period has expired. If all such criteria are met yet significant development costs remain to ~~apply~~complete the project or phase, revenues are recognized on the percentage-of-completion basis. Under this method, once the sales criteria are met, revenues are recognized proportionate to costs already incurred relative to ~~related~~total costs expected for the project or phase. As of March 31, 2011, no sales aswere ~~follows:~~deferred related to the percentage-of-completion method.

•Both ~~Total~~of ~~revenues~~these torevenue berecognition ~~recognized~~methods ~~over~~employ anthe ~~entire~~relative ~~project~~sales orvalue ~~phase,~~method ~~considering~~in ~~both~~determining ~~revenues~~related ~~recognized~~costs toof ~~date~~sales ~~plus~~and ~~estimated~~inventory ~~revenues~~applicable to beeach Vacation Interval sale recognized. ~~over~~Under ~~future~~the relative ~~periods~~sales ~~(considering~~value anmethod, ~~estimate~~a cost of ~~uncollectibility~~sales ~~and~~percentage ~~subsequent~~is ~~resale~~used ofto ~~recovered~~apply ~~Vacation~~costs ~~Intervals),~~to ~~are~~related ~~determined.~~sales as follows:

• Total ~~costs~~revenues ofto abe recognized over an entire project or phase, considering both ~~costs~~revenues ~~already~~recognized ~~incurred~~to date plus estimated ~~costs~~revenues to ~~complete~~be ~~the~~recognized ~~phase,~~over iffuture ~~any,~~periods ~~are~~(considering ~~determined.~~an ~~Common~~estimate ~~costs,~~of ~~including~~uncollectibility ~~amenities, are included in total estimated costs~~ and ~~allocated~~subsequent toresale ~~inventory~~of ~~phases~~recovered ~~that~~Vacation ~~such~~Intervals), ~~costs~~ are ~~expected to benefit~~determined.

• ~~The~~Total ~~cost~~costs of ~~sales~~a ~~ratio~~project ~~applied~~or tophase, ~~each~~considering ~~sale~~both ~~represents~~costs ~~total~~already incurred plus estimated costs asto acomplete ~~percentage~~the ofphase, ~~total~~if ~~estimated~~any, ~~revenues~~are determined. Common costs, ~~which~~including isamenities, ~~specific~~are toincluded ~~each~~in ~~inventory~~total ~~phase.~~estimated ~~Generally,~~costs ~~each~~and ~~building~~allocated ~~type~~to isinventory ~~considered~~phases athat ~~separate~~such ~~phase~~costs are expected to benefit.

• The estimate of total revenue for a particular phase also considers factors such as trends in uncollectibles, changes in sales mix and unit sales prices, repossessions of Vacation Intervals, effects of upgrade programs, and past and expected sales programs to sell slow-moving inventory units. At least quarterly, we evaluate the estimated cost of sales ~~percentage~~ratio applied to each sale ~~using~~represents ~~updated information for~~ total estimated ~~phase revenue and total estimated phase~~ costs. ~~The~~as ~~effects~~a percentage of ~~changes~~total inestimated ~~estimates~~revenues, ~~are accounted for in the period in~~ which ~~such~~is ~~changes~~specific ~~first~~to ~~become~~each ~~known~~inventory onphase. ~~a retrospective basis~~Generally, ~~such~~each ~~that~~building ~~the~~type ~~balance~~is ~~sheet~~considered ata ~~the~~separate ~~end of the period of change and the accounting in subsequent periods reflect the revised estimates as if such estimates had been the original estimates~~phase.

AsThe ~~mentioned,~~estimate ~~certain~~of ~~Vacation~~total revenue ~~Interval~~for a particular phase also considers factors such as trends in uncollectibles, changes in sales ~~transactions~~mix ~~are~~and ~~deferred~~unit ~~until~~sales ~~the~~prices, ~~minimum~~repossessions ~~down~~of ~~payment~~Vacation ~~has~~Intervals, ~~been~~effects ~~received.~~of Weupgrade ~~account~~programs, ~~for~~and ~~these~~past ~~transactions~~and ~~utilizing~~expected ~~the~~sales ~~deposit~~programs ~~method~~to sell slow-moving inventory units. ~~Under~~At ~~this~~least ~~method~~quarterly, we evaluate the estimated cost of sales percentage applied to each sale isusing ~~not~~updated ~~recognized,~~information afor ~~receivable~~total isestimated ~~not~~phase ~~recorded,~~revenue and ~~inventory~~total isestimated ~~not~~phase ~~relieved~~costs. ~~Any~~The ~~cash~~effects ~~received~~of ischanges ~~carried~~in asestimates are aaccounted ~~deposit~~for ~~until~~in the ~~sale~~period ~~can~~in bewhich ~~recognized.~~such ~~When~~changes ~~these~~first ~~types~~become ofknown ~~sales~~on ~~are~~a ~~canceled~~retrospective ~~without~~basis, asuch ~~refund,~~that ~~deposits~~the ~~forfeited~~balance ~~are~~sheet ~~recognized~~at asthe ~~other~~end ~~income~~of the period of change and the ~~interest~~accounting ~~portion~~in issubsequent ~~recognized~~periods reflect the revised estimates as ~~interest~~if ~~income~~such estimates had been the original estimates.

WeAs ~~also~~mentioned, ~~sell~~certain ~~additional and upgraded~~ Vacation ~~Intervals~~Interval tosales ~~existing~~transactions ~~owners. Revenues~~ are ~~recognized~~deferred onuntil anthe minimum ~~additional~~down ~~Vacation~~payment ~~Interval~~has ~~sale,~~been ~~which~~received. ~~represents~~We aaccount ~~new~~for ~~Vacation~~these ~~Interval~~transactions ~~sale~~utilizing ~~treated~~the asdeposit amethod. ~~separate~~Under ~~transaction~~this ~~from~~method, the ~~original~~sale ~~Vacation~~is ~~Interval~~not ~~sale~~recognized, ~~when the buyer makes~~ a ~~down~~receivable ~~payment~~is ofnot ~~at least 10%~~recorded, ~~excluding~~and ~~any~~inventory ~~equity~~is ~~from~~not ~~the original Vacation Interval purchased~~relieved. ~~Revenues~~Any ~~are~~cash ~~recognized~~received onis ancarried ~~upgrade~~as ~~Vacation Interval sale, which is~~ a deposit ~~modification~~until ~~and continuation of~~ the ~~original~~ sale, bycan ~~including~~be ~~the~~recognized. ~~buyer’s~~When ~~equity~~these ~~from~~types ~~the original Vacation Interval towards the down payment~~ of ~~at least 10%. Revenue recognized on upgrade Vacation Interval~~ sales ~~represents~~are ~~the~~cancelled ~~difference~~without ~~between~~a ~~the upgrade sales price and traded-in sales price~~refund, ~~while~~deposits ~~related~~forfeited ~~cost~~are ofrecognized ~~sales~~as ~~represents~~other ~~the~~income ~~incremental~~and ~~increase in~~ the ~~cost~~interest ofportion ~~the~~is ~~Vacation~~recognized ~~Interval~~as ~~purchased~~interest income.

~~Interest~~We ~~income~~also issell additional and upgraded Vacation Intervals to existing owners. Revenues are recognized on an additional Vacation Interval sale, which represents a new Vacation Interval sale treated as ~~earned.~~a ~~Interest~~separate ~~income~~transaction isfrom ~~accrued~~the onoriginal ~~notes~~Vacation ~~receivable~~Interval sale, ~~net~~when the buyer makes a down payment of at least 10%, excluding any equity from the original Vacation Interval purchased. Revenues are recognized on an ~~estimated~~upgrade ~~amount~~Vacation ~~that~~Interval ~~will~~sale, ~~not~~which beis ~~collected~~a modification and continuation of the original sale, ~~until~~by including the ~~individual~~buyer’s ~~notes~~equity ~~become~~from 90the ~~days~~original ~~delinquent~~Vacation Interval towards the down payment of at least 10%. ~~Once~~Revenue recognized aon ~~note~~upgrade ~~becomes~~Vacation 90Interval ~~days~~sales ~~delinquent,~~represents the ~~accrual~~difference between the upgrade sales price and traded-in sales price, while related cost of ~~interest~~sales ~~income~~represents ~~ceases~~the ~~until~~incremental ~~collection~~increase isin ~~deemed~~the ~~probable~~cost of the Vacation Interval purchased.

~~Management~~7 ~~fees for services provided to Silverleaf Club and Orlando Breeze Resort Club are recognized in the period such services are provided if collection is deemed probable.~~

~~Sales~~Interest ~~and~~income ~~marketing~~is ~~costs~~recognized ~~are~~as ~~recognized~~earned. inInterest ~~the~~income ~~period~~is ~~incurred.~~accrued ~~Commissions,~~on ~~however~~notes receivable, ~~are~~net of ~~recognized~~an inestimated amount that will not be collected, until the ~~period~~individual notes become 90 days delinquent. Once a note becomes 90 days delinquent, the ~~related~~accrual ~~revenues~~of ~~are~~interest ~~recognized~~income ceases until collection is deemed probable.

~~Cash~~Management ~~and~~fees ~~Cash~~for ~~Equivalents~~services —provided ~~Cash~~to ~~and~~Silverleaf ~~cash~~Club ~~equivalents~~and ~~consist~~Orlando ofBreeze ~~all~~Resort ~~highly~~Club ~~liquid~~are ~~investments~~recognized ~~with~~in ~~an original maturity at~~ the ~~date~~period ofsuch ~~purchase~~services ofare provided ~~three~~if ~~months~~collection oris ~~less.~~deemed ~~Cash and cash equivalents include cash, certificates of deposit, and money market funds~~probable.

~~Restricted~~Services ~~Cash~~and —other ~~Restricted~~income ~~cash~~are ~~consists~~recognized ofin ~~certificates~~the ofperiod ~~deposit,~~such ~~collateral~~services ~~for~~are ~~construction bonds, surety bonds, and cash reserved for payments of debt~~provided.

~~Allowance~~Sales ~~for~~and ~~Uncollectible~~marketing ~~Notes~~costs —are ~~Estimated~~recognized ~~uncollectible~~in ~~revenue is recorded at an amount sufficient to maintain~~ the ~~allowance~~period ~~for uncollectible notes at a level management considers adequate to provide for anticipated losses resulting from customers' failure to fulfill their obligations under the terms of their notes~~incurred. ~~The~~Commissions, ~~allowance for uncollectible notes is adjusted based upon a periodic static-pool analysis of the notes receivable portfolio~~however, ~~which~~are ~~tracks~~recognized ~~uncollectible notes for each year’s sales over the lives of the notes. Other factors considered~~ in the ~~assessment~~period ~~of uncollectibility include~~ the related ~~aging~~revenues ofare ~~notes receivable, historical collection experience and credit losses, customer credit scores (FICO® scores), and current economic factors~~recognized.

7Cash and Cash Equivalents — Cash and cash equivalents consist of all highly liquid investments with an original maturity at the date of purchase of three months or less. Cash and cash equivalents include cash, certificates of deposit, and money market funds.

~~Index~~Restricted Cash — Restricted cash consists of certificates of deposit, collateral for construction bonds, surety bonds, and cash reserved for payments of debt.

~~The~~Allowance for Uncollectible Notes — Estimated uncollectible revenue is recorded at an amount sufficient to maintain the allowance for uncollectible notes isat ~~reduced~~a bylevel ~~actual~~management ~~credit~~considers adequate to provide for anticipated losses ~~experienced~~resulting from customers’ failure to fulfill their obligations under the terms of their notes. The ~~three~~allowance ~~types~~for uncollectible notes is adjusted based upon a periodic static-pool analysis of the notes receivable portfolio, which tracks uncollectible notes for each year’s sales over the lives of the notes. Other factors considered in the assessment of uncollectibility include the aging of notes receivable, historical collection experience and credit losses, ~~are~~customer ascredit ~~follows:~~scores (FICO® scores), and current economic factors.

•The allowance Afor ~~full~~uncollectible ~~cancellation,~~notes ~~whereby~~is areduced ~~customer~~by isactual ~~relieved~~credit oflosses ~~the~~experienced. ~~note~~The ~~obligation~~three ~~and~~types weof ~~recover~~credit ~~the~~losses ~~underlying~~are ~~inventory,~~as follows:

• A ~~deemed~~full cancellation, whereby wea ~~record~~customer ~~the~~is ~~cancellation~~relieved of ~~all~~the ~~notes~~note ~~that~~obligation ~~become~~and 90we ~~days~~recover ~~delinquent,~~the ~~net~~underlying ~~of notes that are no longer 90 days delinquent~~inventory, ~~and~~

• A ~~note~~deemed ~~receivable~~cancellation, ~~reduction~~whereby ~~that~~we ~~occurs~~record ~~when~~the acancellation ~~customer~~of ~~trades~~all anotes ~~higher~~that ~~value~~become ~~product~~90 ~~for~~days adelinquent, ~~lower~~net ~~value~~of ~~product~~notes orthat ~~when~~are ano ~~portion~~longer of90 adays ~~customer’s~~delinquent, ~~note obligation is relieved.~~and

~~Investment~~• inA ~~Special~~note ~~Purpose~~receivable ~~Entity~~reduction —that Inoccurs ~~2005,~~when ~~we consummated~~ a ~~securitization~~customer ~~transaction~~trades ~~with SF-III, which was~~ a ~~qualified~~higher ~~special~~value ~~purpose~~product ~~entity (“QSPE”) formed~~ for ~~the purpose of issuing $108.7 million of Timeshare Loan-Backed Notes Series 2005-A (“Series 2005-A Notes”) in~~ a ~~private~~lower ~~placement.~~value Inproduct connection with this transaction, we sold SF-III $132.8 million in timeshare receivables that were previously pledged as collateral under revolving credit facilities with our senior lenders and Silverleaf Finance I, Inc. (“SF-I”), our former QSPE which was dissolved in 2005. This transaction qualified as a sale for accounting purposes. In October 2009, we exercised a cleanup call on the balance of the Series 2005-A Notes and paid off the SF-III credit facility. The total payment of $10.2 million consisted of the principal balance of the Series 2005-A Notes, plus accrued and unpaid interest and other fees through October 30, 2009. We dissolved SF-III simultaneously with the execution of the cleanup call. We did not record a gain or ~~loss~~when as a ~~result~~portion of the dissolution as our investment in SF-III was carried on our books at fair value. The Series 2005-A Notes were secured by timeshare receivables we sold to SF-III, without recourse, except for breaches of certain representations and warranties at the time of sale. Pursuant to the terms of an agreement, we continued to service these timeshare receivables and received fees for our services. As such fees approximated both our internal cost of servicing such timeshare receivables and fees a ~~third~~customer’s ~~party~~note ~~would~~obligation ~~charge~~is ~~to service such receivables, the related servicing asset or liability was estimated to be insignificant~~relieved.

WeInventories ~~accounted~~— ~~for~~Inventories ~~and~~are ~~evaluated~~stated at the ~~investment~~lower of incost ~~our~~or ~~QSPE~~market invalue ~~accordance~~less ~~with~~cost ~~the~~to ~~following~~sell. ~~FASB~~Cost ~~ASC~~includes ~~topics~~amounts for land, asconstruction ~~applicable:~~materials, ~~“Transfers~~amenities and ~~Servicing~~common costs,” ~~“Beneficial~~direct ~~Interests~~labor inand ~~Securitized~~overhead, ~~Assets~~taxes,” ~~“Investments~~and –capitalized ~~Debt~~interest ~~and~~incurred ~~Equity~~in ~~Securities~~the construction or through the acquisition of resort dwellings held for timeshare sale. At March 31,” ~~and~~2011, ~~“Fair~~the ~~Value~~estimated ~~Measurements~~costs ~~and~~not ~~Disclosures~~yet incurred but expected to complete promised amenities was $469,000.” ~~See~~Inventory ~~Note~~costs 7are ~~for~~allocated ~~disclosures~~to ~~regarding~~cost of Vacation Interval sales using the ~~fair~~relative sales value ~~measurement~~method, ofas described previously. We periodically review the ~~investment~~carrying invalue of our ~~QSPE~~inventory ~~and~~on ~~the~~an ~~activity~~individual inproject basis for impairment to ensure that the ~~investment~~carrying invalue ~~our~~does ~~QSPE~~not ~~during~~exceed ~~2009~~market value.

~~Inventories~~Vacation —Intervals ~~Inventories~~may ~~are~~be ~~stated~~reacquired atas ~~the~~a ~~lower~~result of ~~cost~~(i) foreclosure (or ~~market~~deed ~~value less cost to sell. Cost includes amounts for land, construction materials, amenities and common costs, direct labor and overhead, taxes, and capitalized interest incurred~~ in ~~the~~lieu ~~construction or through the acquisition~~ of ~~resort~~foreclosure) ~~dwellings~~or ~~held for timeshare sale. At September~~(ii) ~~30,~~trade-in associated ~~2010,~~with the ~~estimated~~purchase ~~costs~~of ~~not~~an ~~yet~~upgraded ~~incurred~~or ~~but~~downgraded ~~expected to complete promised amenities was $685,000. Inventory costs are allocated to cost of~~ Vacation Interval ~~sales using the relative sales value method, as described above~~. WeVacation ~~periodically~~Intervals ~~review~~reacquired ~~the~~are ~~carrying~~recorded ~~value~~in ~~of our~~ inventory onat ~~an individual project basis for impairment to ensure that~~ the ~~carrying~~lower ~~value~~of ~~does~~their ~~not~~original ~~exceed~~cost or market value.

~~Vacation~~Land, ~~Intervals~~Equipment, ~~may~~Buildings, beand ~~reacquired~~Leasehold asImprovements a— ~~result~~Land, ofequipment (iincluding equipment under capital lease), buildings, ~~foreclosure~~and ~~(or~~leasehold ~~deed~~improvements inare ~~lieu~~stated at cost. When assets are disposed of, ~~foreclosure)~~the cost and related accumulated depreciation are removed, and any resulting gain or ~~(ii)~~loss ~~trade-~~is reflected in ~~associated~~income ~~with~~for the ~~purchase~~period. ofMaintenance anand ~~upgraded~~repairs orare charged ~~downgraded~~to ~~Vacation~~expense ~~Interval~~as incurred. ~~Vacation~~Significant ~~Intervals~~betterments ~~reacquired~~and renewals, which extend the useful life of a particular asset, are ~~recorded~~capitalized. inDepreciation ~~inventory~~is atcalculated for all fixed assets, other than land, using the ~~lower~~straight-line method over the estimated useful life of ~~their~~the ~~original~~assets, ~~cost~~which orrange ~~market~~from ~~value~~3 to 20 years.

~~Land,~~Valuation ~~Equipment,~~of ~~Buildings,~~Long-Lived ~~and~~Assets ~~Leasehold~~— ~~Improvements~~We —assess potential ~~Land,~~impairments ~~equipment~~to ~~(including~~our ~~equipment~~long-lived ~~under~~assets, ~~capital~~including ~~lease)~~land, equipment, buildings, and leasehold improvements, ~~are~~whenever ~~stated~~events ator ~~cost.~~changes ~~When~~in ~~assets~~circumstances ~~are~~indicate ~~disposed~~that ~~of,~~ the ~~cost~~carrying ~~and~~amount ~~related~~of ~~accumulated~~an ~~depreciation~~asset ~~are~~may ~~removed,~~not ~~and~~be ~~any~~recoverable. ~~resulting~~If ~~gain~~circumstances require ora ~~loss~~long-lived isasset ~~reflected~~be intested ~~income~~ for ~~the~~possible ~~period.~~impairment, ~~Maintenance~~we ~~and~~compare ~~repairs~~undiscounted ~~are~~cash ~~charged~~flows expected to ~~expense~~be asgenerated ~~incurred.~~by ~~Significant~~an ~~betterments~~asset ~~and~~to ~~renewals, which extend~~ the ~~useful~~carrying ~~life~~value of athe ~~particular~~ asset~~, are capitalized~~. ~~Depreciation~~If ~~is calculated for all fixed assets, other than land, using~~ the ~~straight-line~~carrying ~~method~~value ~~over the estimated useful life~~ of the ~~assets, which range from 3 to 20 years.~~

~~Valuation~~8 of Long-Lived Assets — We assess potential impairments to our long-lived assets, including land, equipment, buildings, and leasehold improvements, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset be tested for possible impairment, we compare undiscounted cash flows expected to be generated by an asset to the carrying value of the asset. If the carrying value of the long-lived asset is not recoverable on an undiscounted cash-flow basis, an impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash-flow models, quoted market values, and third-party independent appraisals, as considered necessary. We did not recognize any impairments for our long-lived assets in the first nine months of 2010 and 2009.

8 long-lived asset is not recoverable on an undiscounted cash-flow basis, impairment is recognized to the extent that the carrying value exceeds its fair value. Fair value is determined through various valuation techniques including discounted cash-flow models, quoted market values, and third-party independent appraisals, as considered necessary. We did not recognize any impairment for our long-lived assets in the first three months of 2011 and 2010.

~~Index~~Prepaid and Other Assets — Prepaid and other assets consist primarily of prepaid insurance, prepaid postage, commitment fees, debt issuance costs, deferred commissions, novelty inventories, deposits, collected cash in senior lender lock boxes which has not yet been applied to related loan balances, merger-related costs refundable from Cerberus, and miscellaneous receivables. Commitment fees and debt issuance costs are amortized over the lives of the related debt.

Income Taxes — Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded for the future tax consequences attributable to temporary differences between the basis of assets and liabilities as recognized by tax laws and their carrying value as reported in the condensed consolidated financial statements. A provision or benefit is recognized for deferred income taxes relating to such temporary differences, and is measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be settled or recovered. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. The effect of income tax positions are recorded only if those positions are “more likely than not” of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Although we do not currently have any material charges related to interest and penalties, such costs, if incurred, are reported within the provision for income taxes. Our federal tax return includes all items of income, gain, loss, expense, and credit of SF-III, which was a non-consolidated subsidiary for reporting purposes and a disregarded entity for federal income tax purposes. We had a tax sharing agreement with SF-III.

We file U.S. federal income tax returns as well as income tax returns in various states. We are no longer subject to income tax examinations by the Internal Revenue Service for years prior to ~~2005~~2007, although carryforward attributes that were generated prior to ~~2005~~2007 may still be subject to examination. For the majority of state tax jurisdictions, we are no longer subject to income tax examinations for years prior to ~~2005~~2007. In the state of Texas, we are no longer subject to franchise tax examinations for years prior to ~~2004~~2006.

As of ~~September~~March 3031, ~~2010~~2011, we had no unrecognized tax benefits and, as a result, no benefits that would affect our effective income tax rate. We do not anticipate any significant changes related to unrecognized tax benefits in the next 12 months. As of ~~September~~March 3031, ~~2010~~2011, we did not require an accrual for interest and penalties related to unrecognized tax benefits.

Derivative Financial Instruments — All derivatives, whether designed as hedging relationships or not, are required to be recorded on the balance sheet at fair value. Our objective in using derivatives is to increase stability related to interest expense and to manage our exposure to interest rate movements or other identified risks. To accomplish this objective, we primarily use interest rate swaps and caps within our cash-flow hedging strategy. Interest rate swaps involve the receipt of variable-rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. Interest rate caps provide interest rate protection above the strike rate on the cap and result in our receipt of interest payments when actual rates exceed the cap strike. We recognize changes in fair value of our derivatives in earnings based on accounting guidance for these instruments. The amounts recognized for such derivatives for the ~~nine~~three months ended ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010 were not significant.

Earnings ~~(Loss)~~ Per Share -— Basic earnings ~~(loss)~~ per share is computed by dividing net income ~~(loss)~~ by the weighted average common shares outstanding during the period. Earnings ~~(loss)~~ per share assuming dilution is computed by dividing net income ~~(loss)~~ by the weighted average number of common shares and potentially dilutive shares outstanding during the period. The number of potentially dilutive shares is computed using the treasury stock method, which assumes that the increase in the number of common shares resulting from the exercise of stock options is reduced by the number of common shares that we could have repurchased with the proceeds from the exercise of stock options. ~~For the three months ended September 30, 2009, the weighted average shares outstanding assuming dilution was anti-dilutive due to the loss for the quarter.~~

Stock-Based Compensation — We account for stock-based compensation expense in accordance with FASB ASC “Compensation – Stock.” We recognize stock-based compensation expense for all stock options granted over the requisite service period using the fair value for these options as estimated at the date of grant using the Black-Scholes option-pricing model.

For the ~~nine~~three months ended ~~September~~March 3031, 2011 ~~2010~~ and ~~2009~~2010, we recognized stock-based compensation expense of $~~322~~102,000 and $~~348~~55,000, respectively. As of ~~September~~March 3031, ~~2010~~2011, unamortized stock-based compensation expense was $~~1.2 million~~904,000, which will be fully recognized by the third quarter of 2013.

The following table summarizes our outstanding stock options for the ~~nine~~three months ended ~~September~~ March 3031, ~~2010~~2011 and ~~2009~~2010:

	2010			2009
		2011				2010
Options outstanding, January 1	~~3,638,807~~		3,281,807	~~3,790,307~~			3,638,807
Granted	—		—	~~75,000~~			—
Exercised	—		(368,269	—)			—
Expired	~~(77,000~~	)	—	~~(5,000~~	)		(2,000	)
Forfeited	~~(175,000~~	)	(70,000	~~(80,000~~)	)		(175,000	)
Options outstanding, September 30	3,386,807			3,780,307
Options outstanding, March 31			2,843,538				3,461,807
Options exercisable, September 30	2,303,057			2,176,557
Options exercisable, March 31			1,864,788				1,998,057

Stock Repurchase Program — During the first quarter of 2010, our Board of Directors approved the extension of our stock repurchase program which authorized the repurchase of up to two million shares of our common stock. This stock repurchase program, which was originally scheduled to expire in July 2010, will now expire in July 2011. We suspended ~~repurchased~~the ~~157~~stock repurchase program on September 15,~~767~~ ~~treasury~~2010 ~~shares~~in ~~during~~conjunction with the ~~third~~hiring ~~quarter~~ of ~~2010~~Gleacher ~~and~~as ~~378,291~~our ~~treasury~~Board’s ~~shares~~financial ~~during~~advisor. The stock repurchase program will remain suspended until the ~~nine~~merger ~~months~~is ~~ended~~either ~~September~~consummated ~~30,~~or terminated ~~2010~~under the terms of the Merger Agreement. As of ~~September~~March 3031, ~~2010~~2011, ~~over~~approximately 1.5 6 million shares remain available for repurchase under this program.

Other Recent Accounting Pronouncements —

~~Accounting~~Fair ~~for~~Value Measurements ~~Transfers~~and ofDisclosures ~~Financial~~– ~~Assets~~In –January We2010, ~~adopted~~the FASB ~~ASC~~issued ~~“Accounting~~amended ~~for~~guidance ~~Transfers~~to ofFASB ~~Financial~~ASC ~~Assets”~~“Fair onValue ~~January~~Measurements 1,and ~~2010.~~Disclosures ~~This~~– ~~accounting~~Improving ~~standard~~Disclosures ~~(i)~~about ~~eliminated~~Fair ~~the~~Value ~~concept~~Measurements.” ofThe aamendment ~~qualified~~requires ~~special~~an ~~purpose~~ entity, ~~(ii)~~to disclose ~~clarified~~separately the ~~derecognition~~amounts ~~criteria~~of ~~for~~significant atransfers ~~transfer~~between toLevel be1 ~~accounted~~and ~~for~~Level as2 aof ~~sale,~~the ~~(iii)~~fair ~~clarified~~value ~~the~~hierarchy, ~~unit~~and ofthe ~~account~~reasons ~~eligible~~ for ~~sale~~the ~~accounting,~~transfers. ~~and~~In ~~(iv)~~addition, ~~required~~companies ~~that~~will abe ~~transferor~~required ~~initially~~to ~~measure~~disclose atquantitative ~~fair~~information ~~value~~about ~~and~~the ~~recognize~~inputs ~~all~~used in ~~assets~~determining ~~obtained~~fair (values for ~~example~~Level ~~beneficial~~2 ~~interests)~~ and ~~liabilities~~Level ~~incurred~~3 asinputs. aThe ~~result~~updated ofstandard awill ~~transfer~~also ofrequire anadditional ~~entire~~disclosure ~~financial~~regarding ~~asset~~purchases, orsales, ~~group~~issuances and settlements of ~~financial~~Level ~~assets~~3 ~~accounted~~measurements. ~~for~~This asaccounting astandard ~~sale.~~update ~~Additionally,~~is oneffective for interim and ~~after~~annual ~~the~~periods ~~effective~~beginning ~~date~~after December 15, ~~existing~~2009, ~~QSPEs~~except ~~(as~~for ~~defined~~the ~~under~~additional ~~previous~~disclosure ~~accounting~~of ~~standards)~~Level ~~must~~3 bemeasurements, ~~evaluated~~which ~~for~~is ~~consolidation~~effective byfor ~~reporting~~fiscal ~~entities~~years inbeginning ~~accordance~~after ~~with~~December 15, ~~the~~2010. ~~applicable~~The ~~consolidation~~adoption ~~guidance.~~of ~~FASB~~the ~~ASC~~amended ~~“Accounting~~requirements for Level ~~Transfers~~1 ofand ~~Financial~~Level ~~Assets”~~2 ~~further~~fair ~~requires~~value ~~enhanced disclosures~~measurements, ~~including~~in athe ~~transferor’s~~first ~~continuing~~quarter ~~involvement~~of ~~with~~2010, ~~transfers~~did ofnot ~~financial~~impact ~~assets~~our ~~accounted~~consolidated ~~for~~financial asposition, ~~sales~~results of operations, ~~the~~or ~~risks~~cash ~~inherent~~flows inas ~~the~~it ~~transferred~~only ~~financial~~amends ~~assets~~required ~~that~~disclosures. ~~have~~See ~~been~~additional ~~retained,~~disclosure ~~and~~regarding the inputs ~~nature~~used ~~and~~to ~~financial~~determine ~~effect~~the fair value of ~~restrictions~~our oninterest ~~the~~rate ~~transferor’s~~cap ~~assets~~derivative ~~that~~in ~~continue~~Note to7. beThe ~~reported~~adoption inof the ~~statement~~additional ofdisclosure ~~financial~~requirements ~~position.~~for ~~The~~Level ~~adoption~~3 offair ~~this~~value ~~accounting~~measurements, ~~standard~~in onthe ~~January~~first 1,quarter ~~2010~~of 2011, did not impact our consolidated financial position, results of operations, ~~and~~or cash flows, asnor wewill ~~exercised~~it arequire ~~cleanup~~additional ~~call~~disclosures, onas ~~the~~we ~~balance~~no oflonger ~~the~~have ~~Series~~assets ~~2005-A~~or ~~Notes~~liabilities ~~previously~~that ~~sold~~fall byinto ~~SF-III~~the ~~effective~~Level ~~October~~3 ~~30,~~fair ~~2009.~~value ~~The cleanup call resulted in the dissolution of SF-III~~hierarchy.

~~Consolidation~~Disclosures ofabout ~~Variable~~the ~~Interest~~Credit ~~Entities~~Quality –of WeFinancing ~~adopted~~Receivables ~~FASB~~and ~~ASC~~the ~~“Amendments~~Allowance tofor ~~FASB~~Credit ~~ASC~~Losses -– ~~Consolidation~~In ofJuly ~~Variable~~2010, ~~Interest~~the ~~Entities”~~FASB issued onFASB ~~January~~ASC 1,“Disclosures ~~2010.~~about ~~This~~the ~~amendment~~Credit ~~changes~~Quality ~~the~~of ~~consolidation~~Financing ~~guidance~~Receivables ~~applicable~~and tothe ~~variable~~Allowance ~~interest~~for ~~entities~~Credit Losses.” ItThis ~~also~~standard amends ~~the~~existing guidance ~~governing~~by ~~the~~requiring ~~determination~~more ofrobust ~~whether~~and andisaggregated ~~enterprise~~disclosures isby ~~the~~an ~~primary~~entity ~~beneficiary~~about ~~of a VIE and therefore required to consolidate~~ the credit ~~VIE~~quality byof ~~requiring~~its afinancing ~~qualitative~~receivables ~~analysis~~and ~~rather~~its ~~than~~allowance afor ~~quantitative~~credit ~~analysis~~losses. ~~The~~These ~~qualitative~~disclosures ~~analysis~~will ~~includes,~~provide ~~among~~financial ~~other~~statement ~~things,~~users ~~consideration~~with ofadditional ~~who~~information ~~has~~about the ~~power~~nature toof ~~direct~~credit ~~the~~risks ~~activities~~inherent ofin ~~the~~our ~~entity~~financing ~~that~~receivables, ~~most~~how ~~significantly~~we analyze ~~impact~~and ~~the~~assess ~~entity’s~~credit ~~economic~~risk ~~performance,~~in ~~who~~determining ~~has~~our ~~the~~allowance ~~obligation~~for tocredit ~~absorb~~ losses, orand the ~~right~~reasons tofor ~~receive~~any ~~benefits~~changes ofwe ~~the~~may ~~VIE~~make ~~that~~in ~~could~~our ~~potentially~~allowance befor ~~significant~~credit tolosses. ~~the~~This ~~VIE,~~amendment ~~and~~is ~~whether~~generally aeffective ~~variable~~for ~~interest~~interim inand aannual ~~VIE~~reporting ~~exists.~~periods ~~This~~ending ~~accounting~~on or ~~standard~~after ~~further~~December 15, ~~requires~~2010. ~~continuous~~However, ~~reassessments~~certain aspects of ~~whether~~the anamendment ~~enterprise~~pertaining isto ~~the~~activity ~~primary~~that ~~beneficiary~~occurs ofduring a ~~VIE,~~reporting ~~whereas~~period ~~such~~are ~~reassessments~~effective ~~were~~for ~~previously~~interim ~~required~~and ~~only~~annual ~~when~~reporting ~~specific~~periods ~~events~~beginning ~~had~~on ~~occurred.~~or Inafter ~~addition~~December 15, ~~QSPEs~~2010, which ~~were~~for ~~previously~~us is ~~exempt from~~ the ~~application~~first ofquarter ~~FASB ASC “Consolidation~~ of ~~Variable~~2011. ~~Interest~~The ~~Entities,”~~adoption ~~are subject to the provisions~~ of this amendment. ~~The~~in ~~amendment~~December ~~also~~2010 ~~requires~~resulted ~~enhanced~~in ~~disclosures~~increased ~~about~~notes anreceivable ~~enterprise’s~~disclosures ~~involvement~~in ~~with~~our aForm ~~VIE.~~10-K ~~The~~but ~~adoption of this accounting standard on January 1, 2010~~ did not impact our consolidated financial position, results of operations, ~~and~~or cash flows ~~as we have 100% ownership in our fully-consolidated VIEs (Silverleaf Finance II, Inc~~. ~~(“SF-II”),~~The adoption ~~Silverleaf~~of ~~Finance~~this ~~IV,~~amendment ~~LLC~~for ~~(“SF-IV”),~~activity ~~Silverleaf~~that ~~Finance~~occurs ~~V, L.P.~~during ~~(“SF-V”), Silverleaf Finance VI, LLC (“SF-VI”), and Silverleaf Finance VII, LLC (“SF-VII”). In addition, as noted above, we exercised~~ a ~~cleanup~~reporting ~~call on the balance of the Series 2005-A Notes previously sold to SF-III~~period, ~~our QSPE,~~ effective ~~October 30, 2009, which resulted~~ in the ~~dissolution~~first quarter of ~~SF-III. Lastly~~2011, weresulted ~~determined our management fee is not a variable financial interest and we hold no other financial interests~~ in ~~Silverleaf~~further ~~Club~~enhancements ~~and~~to ~~Orlando~~our ~~Breeze~~notes ~~Resort~~receivable ~~Club~~disclosures; ~~therefore~~however ~~consolidation~~such ofadoption ~~these~~did ~~entities is~~ not ~~required.~~impact ~~See the parenthetical disclosures on~~ our ~~condensed~~ consolidated financial ~~balance~~position, ~~sheets~~results ~~regarding the assets and liabilities~~ of ~~our~~operations, ~~VIEs~~or ~~that~~cash ~~are consolidated therein and Note 10 for additional disclosures regarding our VIEs~~flows.

~~Fair~~Receivables: ~~Value~~A ~~Measurements~~Creditor’s ~~and~~Determination ~~Disclosures~~of Whether a Restructuring is a Troubled Debt Restructuring – In ~~January~~April ~~2010~~2011, the FASB issued ~~amended~~FASB ASC “Receivables: A Creditor’s Determination of Whether a Restructuring is a Troubled Debt Restructuring.” This amendment provides additional guidance related to ~~FASB~~a ~~ASC~~creditor’s ~~“Fair~~evaluation ~~Value~~of ~~Measurements~~whether a restructuring constitutes a concession and ~~Disclosures~~whether –the ~~Improving~~debtor ~~Disclosures~~is ~~about~~experiencing ~~Fair~~financial ~~Value~~difficulties. ~~Measurements~~Both of these factors must be present for a restructuring to constitute a troubled debt restructuring.” The provisions of this amendment ~~requires~~are aneffective ~~entity~~for public companies in the first interim or annual reporting period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. The amendment is effective for nonpublic entities for annual reporting periods ending on or after December 15, 2012, including interim periods within those annual periods. The

disclose separately the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy, and the reasons for the transfers. In addition, companies will be required to disclose quantitative information about the inputs used in determining fair values for Level 2 and Level 3 inputs. The updated standard will also require additional disclosure regarding purchases, sales, issuances and settlements of Level 3 measurements. This accounting standard update is effective for interim and annual periods beginning after December 15, 2009, except for the additional disclosure of Level 3 measurements, which is effective for fiscal years beginning after December 15, 2010. The adoption of ~~the~~this ~~amended~~amendment requirements for Level 1 and Level 2 fair value measurements, in the first quarter of 2010, did not impact our consolidated financial position, results of operations, or cash flows as it only amends required disclosures. See additional disclosure regarding the inputs used to determine the fair value of our interest rate cap derivative in Note 7. The adoption of the additional disclosure requirements for Level 3 fair value measurements, effective January 1, 2011, is not expected to impact our consolidated financial position, results of operations, or cash flows,; ~~nor~~however ~~will~~ it may require additional disclosures~~, as we no longer have assets or liabilities that fall into the Level 3 fair value hierarchy~~.

~~Disclosures~~Note ~~about~~3 ~~the Credit Quality of Financing Receivables and the Allowance for Credit Losses~~ – InEarnings ~~July~~per ~~2010,~~Share the FASB issued FASB ASC "Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses." This standard amends existing guidance by requiring more robust and disaggregated disclosures by an entity about the credit quality of its financing receivables and its allowance for credit losses. These disclosures will provide financial statement users with additional information about the nature of credit risks inherent in our financing receivables, how we analyze and assess credit risk in determining our allowance for credit losses, and the reasons for any changes we may make in our allowance for credit losses. This update is generally effective for interim and annual reporting periods ending on or after December 15, 2010, which for us is the 2010 fourth quarter; however, certain aspects of the update pertaining to activity that occurs during a reporting period are effective for interim and annual reporting periods beginning on or after December 15, 2010, which for us is the 2011 first quarter. We believe the adoption of this update will primarily result in increased notes receivable disclosures, but will not have any other impact on our financial statements.

~~Note~~The 3following –table ~~Earnings~~illustrates ~~Per~~the ~~Share~~reconciliation between basic and diluted weighted average common shares outstanding for the three months ended March 31, 2011 and 2010:

The following table illustrates the reconciliation between basic and diluted weighted average common shares outstanding for the three and nine-month periods ended September 30, 2010 and 2009:


	2011		2010
Weighted average shares outstanding - basic		38,091,910		38,120,517
Issuance of shares from stock options exercisable		2,888,549		1,294,807
Repurchase of shares from stock options proceeds		(2,359,260)		(478,885)

Weighted average shares outstanding - diluted		38,621,199		38,936,439

	Three Months EndedSeptember 30,			Nine Months EndedSeptember 30,
	2010		2009	2010		2009
Weighted average shares outstanding - basic	37,864,792		38,146,943	37,973,619		38,146,943
Issuance of shares from stock options exercisable	1,294,807		—	1,294,807		1,294,807
Repurchase of shares from stock options proceeds	(441,308	)	—	(414,561	)	(414,729	)
Weighted average shares outstanding - diluted	38,718,291		38,146,943	38,853,865		39,027,021

Outstanding stock options totaling 2.8 million and 1.3 million were dilutive securities that were included in the computation of diluted earnings per share for each of the three months ended March 31, 2011 and 2010, respectively. Outstanding stock options totaling 2.2 million were not dilutive at March 31, 2010 because the exercise price for such options exceeded the average market price for our common shares for the three-month period ended March 31, 2010.

~~Outstanding~~Note ~~stock~~4 ~~options~~– ~~totaling~~Notes ~~1.3~~Receivable million were dilutive securities that were included in the computation of diluted earnings per share for the three months ended September 30, 2010. For the three months ended September 30, 2009, the weighted average shares outstanding assuming dilution was anti-dilutive due to the quarterly loss. Outstanding stock options totaling 1.3 million at September 30, 2009 were excluded from the computation of diluted earnings (loss) per share for this period because including such stock options would have been anti-dilutive. Outstanding stock options totaling 2.1 million and 2.5 million were not dilutive at September 30, 2010 and 2009, respectively, because the exercise price for such options exceeded the average market price for our common shares for the three-month periods ended September 30, 2010 and 2009, respectively.

~~Outstanding~~Silverleaf ~~stock~~has ~~options~~only ~~totaling~~one ~~1.3~~class ~~million~~of ~~were~~financing ~~dilutive~~receivables ~~securities~~- ~~that~~loans ~~were~~to ~~included~~purchasers of our Vacation Intervals, in the ~~computation~~form of ~~diluted~~notes ~~earnings~~receivable, ~~per~~which ~~share~~are ~~for~~collateralized ~~each~~by their interest in such Vacation Intervals. Such notes receivable generally have initial terms of ~~the~~seven ~~nine-month-periods~~to ~~ended~~ten ~~September~~years. The 30weighted average yield on outstanding notes receivable was 16.7% and 16.8% at March 31, ~~2010~~2011 and ~~2009~~2010, respectively., ~~Outstanding~~with ~~stock~~individual ~~options~~rates ranging ~~totaling~~from 20% to 17.19%. ~~million~~As ~~and~~of 2March 31, 2011, $4.54 million ~~were~~of ~~not~~timeshare ~~dilutive~~notes atreceivable ~~September~~have ~~30,~~interest ~~2010~~rates ~~and~~below ~~2009,~~10%. ~~respectively,~~In ~~because~~connection with the ~~exercise~~sampler ~~price~~program, ~~for~~we ~~such~~routinely ~~options~~enter ~~exceeded~~into ~~the~~notes ~~average~~receivable ~~market~~with ~~price~~terms ~~for~~of ~~our~~10 ~~common~~months. Notes receivable ~~shares~~from ~~for~~sampler ~~the~~sales ~~nine-month~~were ~~periods~~$3.2 ~~ended~~million ~~September~~and 30$2.8 million at March 31, ~~2010~~2011 and ~~2009~~2010, respectively, and are non-interest bearing.

11We consider accounts over 60 days past due to be delinquent. We record the cancellation of all notes that become 90 days delinquent, net of notes that are no longer 90 days delinquent. We continue collection efforts with regard to all timeshare notes receivable from customers until all collection techniques that we utilize have been exhausted.

~~Index~~The aging of our gross notes receivable is as follows as of March 31, 2011 and 2010 (in thousands):

Note 4 – Notes Receivable


	2011				2010
	Principal		Percentage		Principal		Percentage

Current	$	439,985		96.3%	$	425,483		95.1%
1 to 60 days past due		11,848		2.6%		14,005		3.1%
61 to 90 days past due		5,109		1.1%		7,907		1.8%
Greater than 90 days		—		0.0%		—		0.0%

Balance, end of period	$	456,942		100.0%	$	447,395		100.0%

WeAs ~~provide financing to the purchasers~~ of ~~Vacation~~March 31, ~~Intervals in the form of notes receivable~~2011, ~~which~~an ~~are~~additional ~~collateralized by their interest in such Vacation Intervals~~$61.3 ~~Such~~million ~~notes receivable generally have initial terms~~ of ~~seven to ten years. The weighted average yield on outstanding~~ notes receivable ~~was 16.7% and 16.8% at September 30~~, ~~2010 and 2009, respectively, with individual rates ranging from 0% to 17.5%. As~~ of ~~September 30,~~which ~~2010,~~ $449.94 million ofis pledged ~~timeshare~~to ~~notes~~senior ~~receivable~~lenders, would have ~~interest~~been ~~rates~~considered ~~below~~to ~~10%.~~be Indelinquent ~~connection~~had ~~with the sampler program,~~ we ~~routinely~~not ~~enter~~granted ~~into~~payment ~~notes~~concessions ~~receivable~~to ~~with~~the ~~terms~~customers, ofwhich 10brings ~~months.~~a ~~Notes~~delinquent ~~receivable~~note ~~from~~current ~~sampler~~and ~~sales~~extends ~~were~~the ~~$3.3~~maturity ~~million~~date atonce ~~both~~a ~~September 30,~~payment ~~2010~~is ~~and 2009, and are non-interest bearing~~made.

WeThe ~~consider~~activity ~~accounts~~in ~~over~~gross ~~60 days past due to be delinquent. As of September 30, 2010, $6.4 million of~~ notes receivable, ~~net of accounts charged off, were considered delinquent. An additional $54.8 million of notes receivable, of which $42.9 million~~ is ~~pledged~~as tofollows ~~senior~~for ~~lenders,~~the ~~would~~three ~~have~~months ~~been~~ended ~~considered to be delinquent had we not granted payment concessions to the customers~~March 31, ~~which~~2011 ~~brings a delinquent note current~~ and ~~extends~~2010 ~~the~~(in ~~maturity~~thousands): ~~date once a payment is made.~~

Notes receivable are scheduled to mature as follows at September 30, 2010 (in thousands):


	2011			2010

Balance, beginning of period	$	454,593		$	449,407
Sales		41,633			38,011
Collections		(22,422	)		(21,829	)
Receivables charged off		(16,862	)		(18,194	)

Balance, end of period	$	456,942		$	447,395

For the 12-Month Period Ending September 30,
2011	$	57,381
2012	54,532
2013	60,168
2014	63,552
2015	66,054
Thereafter	156,506
Notes receivable, gross	458,193
Less allowance for uncollectible notes	(95,826		)
Less discount on notes receivable	(145		)
Notes receivable, net	$	362,222

We provide for estimated Vacation Interval defaults at the time the Vacation Interval revenue is recorded as a reduction to Vacation Interval sales. The estimated uncollectible revenue represents gross losses for newly originated Vacation Interval sales. Estimated inventory recoveries are a component of the relative sales value method in determining cost of sales.

~~The~~11 ~~activity in gross notes receivable is as follows for the three and nine-month periods ended September 30, 2010 and September 30, 2009 (in thousands):~~

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2010			2009			2010			2009
Balance, beginning of period	$	454,133		$	423,571		$	449,407		$	397,002
Sales	40,763			56,616			121,635			154,537
Collections	(24,412		)	(20,939		)	(69,422		)	(62,633		)
Receivables charged off	(12,291		)	(16,122		)	(43,427		)	(45,780		)
Balance, end of period	$	458,193		$	443,126		$	458,193		$	443,126

12The activity in the allowance for uncollectible notes is as follows for the three months ended March 31, 2011 and 2010 (in thousands):

Index


	2011			2010

Balance, beginning of period	$	91,731		$	94,585
Estimated uncollectible revenue		13,552			13,947
Receivables charged off		(16,862	)		(18,194	)

Balance, end of period	$	88,421		$	90,338

The ~~activity~~provision infor estimated uncollectible revenue as a percentage of Vacation Interval sales was 24.9% for the first quarter of 2011 and 28.3% for the first quarter of 2010. The allowance for uncollectible notes is as ~~follows~~a ~~for~~percentage ~~the~~of ~~three~~gross notes receivable was 19.4% and ~~nine-month~~20.2% ~~periods~~as ~~ended~~of ~~September~~March 3031, ~~2010~~2011 and ~~2009~~2010, ~~(in~~respectively. ~~thousands):~~

	Three Months EndedSeptember 30,						Nine Months EndedSeptember 30,
	2010			2009			2010			2009
Balance, beginning of period	$	93,045		$	78,513		$	94,585		$	76,696
Estimated uncollectible revenue	15,072			36,741			44,668			68,216
Receivables charged off	(12,291		)	(16,122		)	(43,427		)	(45,780		)
Balance, end of period	$	95,826		$	99,132		$	95,826		$	99,132

Estimated uncollectible revenue is recorded at an amount sufficient to maintain the allowance for uncollectible notes at a level management considers adequate to provide for anticipated losses resulting from customers’ failure to fulfill their obligations under the terms of their notes. The allowance for uncollectible notes is adjusted based upon a periodic static-pool analysis of the notes receivable portfolio, which tracks uncollectible notes for each year’s sales over the lives of the notes. We use various mass marketing techniques, thus a certain percentage of our sales are generated from customers who may be considered to have marginal credit quality. As a result, the primary credit quality indicator we use to calculate the allowance for uncollectible accounts for our Vacation Interval notes receivable is the customer’s credit score (FICO® scores). Other factors considered in the assessment of uncollectibility include the aging of notes receivable, historical collection experience and credit losses, and current economic factors. The weighted average FICO® score for Vacation Interval sales financed during the quarters ended March 31, 2011 and 2010 was 677 and 679, respectively. The weighted average FICO® score of our loan portfolio as of March 31, 2011 and 2010 was 659 and 656, respectively.

~~The~~Our provision for estimated uncollectible revenue as a percentage of Vacation Interval sales was 28.3% for the third quarter of 2010 and 52.2% for the third quarter of 2009. The ratio was substantially higher in the third quarter of 2009 as cancellations during the first nine months of 2009, and most notably during the third quarter of 2009, exceeded cancellations projected under our static-pool analysis of our notes receivable portfolio, which tracks uncollectible notes for each year's sales over the lives of the notes. Considering an increase in future cancels beyond that previously estimated, we increased our allowance for uncollectible notes by ~~$18.5~~FICO® ~~million~~score inband ~~the~~is ~~third~~as ~~quarter~~follows ~~of 2009 above the 25.9% provision rate we had estimated in the second quarter of 2009. The allowance for uncollectible notes was 20.9% of our gross notes receivable portfolio~~ as of ~~September~~March 3031, ~~2010~~2011 ~~compared~~and to2010 ~~21.0%~~(in asthousands): ~~of December 31, 2009.~~


	2011				2010
FICO® Score Band	Principal		Percentage		Principal		Percentage

600 and below, including no score	$	109,662		24.0%	$	104,671		23.4%
601 to 700		215,832		47.2%		214,721		48.0%
701 and above		131,448		28.8%		128,003		28.6%

Totals	$	456,942		100.0%	$	447,395		100.0%

~~Index~~We believe our notes receivable are adequately reserved, however, we will continue to evaluate our collections process and marketing programs with a view toward establishing procedures aimed at reducing note defaults and improving the credit quality of our customers. However, there can be no assurance that these efforts will be successful, that defaults have stabilized, or that defaults will not increase further. We review the allowance for uncollectible notes quarterly and make adjustments as necessary.

~~Note~~Notes 5receivable –are ~~Debt~~scheduled to mature as follows at March 31, 2011 (in thousands):

The following table summarizes our notes payable, capital lease obligations, and senior subordinated notes at September 30, 2010 and December 31, 2009 (in thousands):


For the 12-Month Period Ending March 31,
2012	$	57,747
2013		54,873
2014		60,738
2015		65,176
2016		65,677
Thereafter		152,731

Notes receivable, gross		456,942
Less allowance for uncollectible notes		(88,421	)
Less discount on notes receivable		(121	)

Notes receivable, net	$	368,400

	September 30, 2010		December 31, 2009		Revolving Term	Maturity
$75 million receivables-based revolver ($75 million maximum combined receivable, inventory, and acquisition commitments, see inventory/acquisition component below)	$	30,118	$	29,035	1/31/11 (a)	1/31/13
$20 million receivables-based revolver	16,439		16,886		6/30/11	6/30/11
$50 million receivables-based revolver	35,766		28,439		8/31/11	8/31/14
$75 million receivables-based revolver (limited in funded amounts to $40 million, pending a new participating lender)	35,211		52,696		6/09/12	6/09/15
$100 million receivables-based revolver	32,259		111,824		2/12/11	2/12/13
$66.4 million receivables-based non-revolving conduit loan	—		2,021		—	3/22/14
$26.3 million receivables-based non-revolving conduit loan	—		1,621		—	9/22/11
$128.1 million receivables-based non-revolver	16,226		24,163		—	7/16/18
$115.4 million receivables-based non-revolver, including a total remaining discount of approximately $1.9 million	37,108		51,767		—	3/16/20
$151.5 million receivables-based non-revolver, including a total remaining discount of approximately $5.0 million	126,818		—		—	7/15/22
Inventory / acquisition loan agreement (see $75 million receivables-based revolver above)	14,518		24,674		— (a)	1/31/12
$50 million inventory loan agreement	49,228		45,198		4/30/11	4/30/13
Various notes, due from September 2011 through August 2016, collateralized by various assets	7,241		5,700		—	various
Total notes payable	400,932		394,024
Capital lease obligations	564		993		—	various
Total notes payable and capital lease obligations	401,496		395,017
8.0% senior subordinated notes	—		7,956		—	4/01/10
10.0% senior subordinated notes	8,855		10,000		—	4/01/12
Total senior subordinated notes	8,855		17,956
Total	$	410,351	$	412,973

AtNote ~~September 30,~~5 ~~2010,~~– ~~our~~Debt senior credit facilities provided for loans of up to $501.6 million, of which $107.9 million was available for future advances. Our weighted average cost of borrowings for the nine months ended September 30, 2010 was 7.0% compared to 6.0% for the nine months ended September 30, 2009.

~~Our~~The ~~fixed-to-floating~~following ~~debt~~table ~~ratio~~summarizes atour ~~September 30~~notes payable, ~~2010~~capital ~~was~~lease ~~46% fixed to 54% floating. However~~obligations, ~~the majority of our floating-rate debt is subject to interest-rate floors between 6.00%~~ and ~~8.00%.~~senior ~~The~~subordinated ~~credit~~notes ~~facilities that bear interest~~ at ~~variable~~March 31, ~~rates~~2011 ~~are~~and ~~tied to the Prime rate or LIBOR. At September~~December 3031, 2010, ~~the~~(in ~~annual~~thousands): ~~Prime rate on our senior credit facilities was 3.25% and the one-month LIBOR rate on these facilities was 0.26%.~~

In February 2010, we extended our receivables-based revolving credit facility through SF-IV, our wholly-owned and fully consolidated VIE. The initial maximum commitment amount of the variable funding note (“VFN”) was decreased to $106 million, which commitment amount was further decreased to $100 million on September 30, 2010. The scheduled funding period under


	March 31,			December 31,		Revolving
	2011			2010		Term		Maturity
$60 million receivables-based revolver ($60 million maximum combined receivable, inventory, and acquisition commitments, see inventory / acquisition component below)	$	17,636		$	7,073		1/31/12	1/31/13
$20 million receivables-based revolver		(22	)		1,087		6/30/11	6/30/11
$75 million receivables-based revolver		26,831			10,506		8/31/13	8/31/16
$75 million receivables-based revolver (limited in funded amounts to $40 million, pending a new participating lender)		24,780			28,793		6/09/12	6/09/15
$100 million receivables-based revolver		345			—		5/12/11	2/12/13
$115.4 million receivables-based non-revolver, including a total remaining discount of approximately $1.3 million		29,759			33,466		—	3/16/20
$151.5 million receivables-based non-revolver, including a total remaining discount of approximately $3.8 million		95,607			110,211		—	7/15/22
$104.4 million receivables-based non-revolver, including a total remaining discount of approximately $50,000		93,649			104,376		—	5/15/22
$48.4 million receivables-based non-revolver, including a total remaining discount of approximately $2.4 million		42,424			45,464		—	7/15/22
Inventory / acquisition loan agreement (see $60 million receivables-based revolver above)		10,877			12,479		—	1/31/12
$50 million inventory / acquisition loan agreement		44,975			47,543		11/30/13	11/30/16
Various notes, due from September 2011 through July 2020, collateralized by various assets		6,943			7,008		—	various

Total notes payable		393,804			408,006
Capital lease obligations		785			885		—	various

Total notes payable and capital lease obligations		394,589			408,891
12.0% senior subordinated notes		7,682			7,682		—	4/01/12


Total	$	402,271		$	416,573

14At March 31, 2011, our senior credit facilities provided for loans of up to $598.4 million, of which $211.5 million was available for future advances. Our weighted average cost of borrowings for the three months ended March 31, 2011 was 8.8% compared to 6.2% for the three months ended March 31, 2010.

~~Index~~Our fixed-to-floating debt ratio at March 31, 2011 was 68% fixed to 32% floating. However, the majority of our floating-rate debt is subject to interest-rate floors between 6.00% and 8.00%. The credit facilities that bear interest at variable rates are tied to the Prime rate or LIBOR. At March 31, 2011, the annual Prime rate on our senior credit facilities was 3.25% and the one-month LIBOR rate on these facilities was 0.24%.

~~the~~In ~~VFN~~February ~~initially~~2011, ~~ended~~we inextended ~~September~~the ~~2009,~~revolving period ~~but~~of ~~was~~our ~~reinstated~~receivables-based ~~and~~credit ~~extended~~facility tothrough ~~February~~Silverleaf ~~2011.~~Finance ~~The~~IV, ~~scheduled~~LLC ~~maturity~~(“SF-IV”) ~~date~~for ~~was~~90 ~~extended~~days, from ~~September~~February 12, 2011 to ~~February~~May 12, ~~2013~~2011. ~~The interest rate was increased from Prime to LIBOR plus 5.00% with a floor of 6.00%.~~

In ~~February~~March ~~2010~~2011, inwe ~~accordance~~amended ~~with~~our ~~the~~$50 ~~terms~~million ofreceivables-based ~~the~~revolver ~~first~~to ~~amendment~~increase availability to $75 million, extended the ~~inventory~~revolving ~~facility~~period ~~dated~~from ~~June~~August ~~2008~~2011 to August 2013, weand extended the maturity date from August 2014 to August 2016. The maximum aggregate commitment under the facility is the amount by which $75 million exceeds the aggregate amount outstanding under our Timeshare Loan-Backed Notes Series 2008-A (“Series 2008-A Notes”) purchased by the senior lender, which was $508.1 million ~~inventory~~at ~~line~~March 31, 2011. The interest rate was adjusted from Prime with a floor of ~~credit~~6% to LIBOR plus 3% with ~~one~~a floor of ~~our~~6%. ~~senior~~In ~~lenders~~addition, certain financial covenants were modified under the terms of the amendment. ~~Both~~The tangible net worth minimum was adjusted to not less than the ~~revolving~~sum ~~period~~of ~~and~~(i) the amount that is 80% of our tangible net worth, calculated based on the ~~maturity~~balance ~~date~~sheet of our audited financial statements for the ~~facility~~year ~~were~~ended December 31, ~~extended~~2010, ~~one~~plus (ii) 50% of our consolidated net income for each calendar year, toif ~~April~~positive, ~~2011~~ending ~~and~~on ~~April~~or ~~2013~~after December 31, ~~respectively~~2011. The ~~commitment~~maximum allowable limit on the ~~line~~ratio ~~remained~~of ~~the~~debt ~~same~~to tangible net worth which previously could not exceed 6.0 to 1 at ~~$50~~any ~~million~~time during the term of the facility was modified and this ratio must now be less than or equal to 4.5 to 1.

InNote ~~April~~6 ~~2010,~~– inFair ~~accordance~~Value ~~with the terms~~ of ~~the~~Financial ~~fourth~~Instruments amendment to the receivables-based revolving credit facility dated June 2008, we extended our $20 million receivables-based line of credit with one of our senior lenders. The revolving term and maturity date of the facility were extended one year to June 2011. The commitment on the line will remain the same at $20 million.

InThe ~~April~~carrying ~~2010~~value of cash and cash equivalents, weother ~~paid~~receivables, ~~off~~amounts ~~the~~due ~~two~~from ~~conduit~~or ~~loans~~to ~~with~~affiliates, ~~SF-II.~~and ~~The~~accounts ~~total~~payable ~~payment~~and ofaccrued ~~$1.7~~expenses ~~million~~approximates ~~consisted~~fair ofvalue due to the ~~principal~~relatively ~~balance~~short-term nature of the ~~conduit~~financial ~~loans,~~instruments. ~~plus~~The ~~accrued~~carrying ~~and~~value ~~unpaid~~of ~~interest~~the ~~and~~notes ~~other~~receivable ~~fees~~approximates ~~through~~fair ~~April~~value ~~27,~~because ~~2010.~~the Weweighted ~~dissolved~~average ~~SF-II~~interest ~~simultaneously~~rate ~~with~~on the ~~execution~~portfolio of ~~the~~notes ~~loan~~receivable ~~payout.~~approximates Wecurrent ~~did~~interest ~~not~~rates ~~record~~charged aon ~~gain~~similar orcurrent notes ~~loss~~receivable. asThe acarrying ~~result~~value of certain notes payable (other than discussed below) approximates fair value because the ~~dissolution.~~interest rates on these instruments

~~Effective~~13 June 8, 2010, we executed a term securitization transaction through a newly-formed, wholly-owned and fully consolidated VIE, Silverleaf Finance VII, LLC. SF-VII was formed for the purpose of issuing approximately $151.5 million of its Timeshare Loan-Backed Notes Series 2010-A (“Series 2010-A Notes”) in a private offering and sale through certain financial institutions. The Series 2010-A Notes were issued in three classes with a blended coupon rate of 7.366% and at discounts totaling approximately $6.0 million. These discounts are amortized as an adjustment to interest expense over the terms of the related loans using the effective interest method, which generates a blended effective interest rate on these notes of approximately 9.5% as of September 30, 2010. The Series 2010-A Notes have a final maturity date of July 2022.

In are ~~June~~adjustable ~~2010,~~or weapproximate ~~amended~~current our $72.5 million receivables-based revolver to increase availability to $75.0 million, limited in funded amounts to $40.0 million until a new participating lender joins the credit agreement. Upon execution of the amendment, we prepaid in full the balances owed to two lenders who were participants in $32.5 million of the aggregate maximum amount. The revolving period was extended from July 2010 to June 2012 and the maturity date was extended from July 2013 to June 2015. The interest ~~rate~~rates ~~was~~charged increased from LIBOR plus 2.40% with a floor of 5.25% to LIBOR plus 5.00% with a floor of 6.25%. In addition, we established a depository account with the senior lender for an initial amount of $250,000 with increases to $500,000 and $750,000 on ~~July~~similar 1,current ~~2011 and December 1, 2011, respectively~~borrowings.

~~Note~~The 6fair –value ~~Fair~~of ~~Value~~our 12.0% senior subordinated notes approximates its carrying value of ~~Financial~~$7.7 ~~Instruments~~million at March 31, 2011 as these notes were initially issued at 10.0% in a private transaction in June 2009 in a one-for-one exchange for our 8.0% senior subordinated notes, and then subsequently amended in November 2010 to increase the interest rate to 12.0% effective October 1, 2010.

~~The~~Considerable ~~carrying~~judgment ~~value~~is ofrequired ~~cash and cash equivalents, other receivables, amounts due from or~~ to ~~affiliates,~~interpret ~~and~~market ~~accounts~~data ~~payable and accrued expenses approximates fair value due~~ to ~~the~~develop ~~relatively~~estimates ~~short-term nature~~ of ~~the financial instruments. The carrying value of the notes receivable approximates~~ fair value. ~~because~~Accordingly, the ~~weighted~~estimates ~~average~~presented herein ~~interest~~are ~~rate~~not onnecessarily ~~the~~indicative ~~portfolio~~ of ~~notes~~the ~~receivable~~amounts ~~approximates~~we ~~current~~could ~~interest~~realize ~~rates~~in ~~charged~~a ~~on similar~~ current ~~notes~~market ~~receivable~~exchange. The ~~carrying~~use ~~value~~ of ~~notes~~different ~~payable~~market ~~approximates~~assumptions ~~fair~~and ~~value~~estimation ~~because~~methodologies ~~the~~may ~~interest~~have ~~rates~~a onmaterial ~~these~~effect ~~instruments~~on ~~are~~the ~~adjustable~~estimated orfair ~~approximate~~value ~~current interest rates charged on similar current borrowings~~amounts.

~~The~~Note ~~fair~~7 ~~value~~– ofFair ~~our~~Value ~~10.0%~~Measurements senior subordinated notes approximates its carrying value of $8.9 million at September 30, 2010 as these notes were issued in a private transaction in June 2009 in a one-for-one exchange for our 8.0% senior subordinated notes.

~~Considerable~~We ~~judgment~~follow isFASB ~~required~~ASC to“Fair ~~interpret~~Value ~~market~~Measurements ~~data~~and Disclosures” which established a fair value hierarchy to ~~develop~~increase ~~estimates~~consistency ofand comparability in fair value measurements and related disclosures. ~~Accordingly,~~Fair value is defined as the ~~estimates~~exchange ~~presented~~price ~~herein~~that ~~are~~would ~~not~~be ~~necessarily~~received ~~indicative~~to ofsell ~~the~~an ~~amounts~~asset weor ~~could~~paid ~~realize~~to intransfer a ~~current~~liability in an orderly transaction between market ~~exchange~~participants at the measurement date. The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use ofin ~~different~~pricing an asset or liability based on market ~~assumptions~~data ~~and~~obtained ~~estimation~~from ~~methodologies~~independent sources ~~may~~while ~~have~~unobservable inputs reflect a ~~material~~reporting ~~effect~~entity’s onpricing ~~the~~based ~~estimated~~upon its own market assumptions. The fair value ~~amounts.~~hierarchy consists of the following three levels:


Level 1	-	Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2	-	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and market-corroborated inputs derived principally from or corroborated by observable market data.
Level 3	-	Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

~~Index~~The following table represents our assets measured at fair value on a recurring basis as of March 31, 2011 and the basis for that measurement (in thousands):

Note 7 – Fair Value Measurements


	Level 1		Level 2		Level 3

Interest rate cap derivative	$	—	$	104	$	—

Total	$	—	$	104	$	—

We ~~follow~~estimate FASB ASC “Fair Value Measurements and Disclosures” which established a fair value hierarchy to increase consistency and comparability in fair value measurements and related disclosures. Fair value is defined as the ~~exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The~~ fair value ~~hierarchy~~of isour ~~based~~interest onrate ~~inputs~~cap toderivative ~~valuation~~using ~~techniques~~quoted ~~used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions~~ market ~~participants~~prices ~~would~~for ~~use~~similar assets in ~~pricing~~ an ~~asset~~active ~~or liability based on~~ market ~~data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions~~. ~~The fair value hierarchy consists of the following three levels:~~

~~Level~~Assets 1Measured at Fair Value on a Non- ~~Inputs~~Recurring ~~are~~Basis ~~quoted~~— ~~prices~~We assess potential impairments to our long-lived assets, including land, equipment, buildings, and leasehold improvements, whenever events or changes in ~~active~~circumstances ~~markets~~indicate ~~for~~that ~~identical~~the carrying amount of an asset may not be recoverable. For these assets, measurement at fair value in periods subsequent to their initial recognition is applicable if one or ~~liabilities~~more is determined to be impaired. During the three months ended March 31, 2011 and 2010, we had no impairments related to these assets. See Note 2 for an additional disclosure regarding our long-lived assets.

~~Level~~Note 28 ~~- Inputs~~– ~~are~~Subsidiary ~~quoted~~Guarantees prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and market-corroborated inputs derived principally from or corroborated by observable market data.

~~Level~~All 3subsidiaries of the Company, except SF- ~~Inputs~~IV, ~~are~~Silverleaf ~~derived~~Finance ~~from~~VI, ~~valuation~~LLC ~~techniques~~(“SF-VI”), inSilverleaf ~~which~~Finance ~~one~~VII, orLLC (“SF-VII”), ~~more~~Silverleaf ~~significant~~Finance ~~inputs~~VIII, orLLC ~~value~~(“SF-VIII”), ~~drivers~~and Silverleaf Finance IX, LLC (“SF-IX”), have guaranteed our 12.0% senior subordinated notes with a balance of $7.7 million at March 31, 2011. Separate financial statements and other disclosures concerning these guarantor subsidiaries are ~~unobservable~~not presented herein because such guarantees are full and unconditional and joint and several, and such subsidiaries represent wholly-owned subsidiaries of the Company. In addition, these subsidiaries had nominal balance sheets at March 31, 2011 and December 31, 2010, and no operations for the three months ended March 31, 2011 and 2010.

~~The~~14 ~~following table represents our assets measured at fair value on a recurring basis as of September 30, 2010 and the basis for that measurement (in thousands):~~

	Level 1		Level 2		Level 3
Interest rate cap derivative	$	—	$	57	$	—
Total	$	—	$	57	$	—

WeNote ~~estimate~~9 ~~the~~– ~~fair~~Commitments ~~value~~and ofContingencies ~~our interest rate cap derivative using quoted market prices for similar assets in an active market.~~

~~Prior~~Litigation – We are currently subject to litigation arising in the ~~dissolution~~normal course of ~~SF-III~~our business. From time to time, such litigation includes claims regarding employment, tort, contract, truth-in-lending, the ~~fourth~~marketing ~~quarter~~and sale of ~~2009~~Vacation Intervals, ~~the~~and ~~investment~~other inconsumer ~~our~~protection ~~QSPE~~matters. ~~was~~Litigation ~~measured~~has atbeen ~~fair~~initiated ~~value~~from ontime ato ~~recurring~~time ~~basis~~by ~~using~~persons seeking ~~significant~~individual ~~unobservable~~recoveries ~~inputs~~for ~~(Level~~themselves, ~~3).~~as ~~The~~well ~~activity~~as, in some instances, persons seeking recoveries on behalf of an alleged class. In our judgment, none of the ~~investment~~lawsuits currently pending against us, either individually or in ~~our~~the ~~QSPE~~aggregate, is expected asto ~~follows~~have ~~for~~a ~~the~~material ~~three~~adverse ~~and~~effect ~~nine-month~~on ~~periods~~our ~~ended~~business, ~~September 30~~results of operations, ~~2009~~liquidity ~~(in~~or ~~thousands):~~financial position.

	Three Months EndedSeptember 30, 2009		Nine Months EndedSeptember 30, 2009
Balance, beginning of period	$	4,988	$	4,908
Net investment appreciation	575		655
Balance, end of period	$	5,563	$	5,563

Various legal actions and claims may be instituted or asserted in the future against us and our subsidiaries, including those arising out of our sales and marketing activities and contractual arrangements. Some of these matters may involve claims, which, if granted, could be materially adverse to our financial position.

~~Assets~~Litigation ~~Measured~~is atsubject ~~Fair Value on a Non-Recurring Basis — We assess potential impairments~~ to ~~our~~many ~~long-lived assets~~uncertainties, ~~including~~and ~~land,~~the ~~equipment,~~outcome of ~~buildings,~~individual ~~and~~litigated ~~leasehold~~matters ~~improvements,~~is ~~whenever~~not ~~events~~predictable orwith ~~changes~~assurance. inWe ~~circumstances~~will ~~indicate~~establish ~~that~~reserves ~~the~~from ~~carrying~~time ~~amount~~to oftime anwhen ~~asset~~deemed ~~may~~appropriate ~~not~~under begenerally ~~recoverable.~~accepted ~~For~~accounting ~~these~~principles. ~~assets~~However, ~~measurement~~the atoutcome ~~fair~~of ~~value~~a inclaim ~~periods~~for ~~subsequent~~which towe ~~their~~have ~~initial~~not ~~recognition~~deemed isa reserve ~~applicable~~to ifbe ~~one~~necessary ormay ~~more is determined to~~ be ~~impaired.~~decided ~~During~~unfavorably ~~the~~against ~~nine~~us ~~months~~and ~~ended~~could ~~September 30,~~require ~~2010~~us ~~and~~to ~~2009,~~pay wedamages ~~had~~or noincur ~~impairments~~other ~~related~~expenditures tothat ~~these~~could ~~assets.~~be ~~See~~materially ~~Note~~adverse 2to ~~for~~our anbusiness, ~~additional~~results ~~disclosure~~of ~~regarding~~operations, ~~our~~or ~~long-lived~~financial ~~assets~~position.

~~Note~~Guarantee 8of –SF-IX ~~Subsidiary~~Debt ~~Guarantees~~- Silverleaf entered into a guaranty regarding the SF-IX Series 2010-C Notes in which the Company will be liable for all aggregate defaulted timeshare loan make-whole amounts, if any, determined prior to each monthly payment date. Silverleaf has unconditionally and irrevocably agreed to pay, in immediately available funds, to a collection account: (i) prior to each payment date, an amount equal to the aggregate defaulted timeshare loan make-whole amount for the related payment date; (ii) prior to each payment date, if there are insufficient available funds (after giving effect to payment of aggregate defaulted timeshare loan make-whole amounts, if any) to pay in full all interest due on such payment date, the amount of such insufficiency; and (iii) on the stated maturity, if there are insufficient funds to pay in full the aggregate outstanding note balance of the Series 2010-C Notes, the amount of such insufficiency.

~~All~~Litigation ~~subsidiaries~~Related ofto the Company, except SF-IV, SF-V, SF-VI, and SF-VII, have guaranteed our 10.0% senior subordinated notes with a balance of $8.9 million at September 30, 2010. Separate financial statements and other disclosures concerning these guarantor subsidiaries are not presented herein because such guarantees are full and unconditional and joint and several, and such subsidiaries represent wholly-owned subsidiaries of the Company. In addition, these subsidiaries had nominal balance sheets at September 30, 2010 and December 31, 2009, and no operations for the nine months ended September 30, 2010 and 2009.Merger

16In February 2011, three purported shareholder derivative suits were filed in Dallas County state district court arising out of the Agreement and Plan of Merger between Silverleaf and Resort Holdings. The three suits have been consolidated into one action before the 116th District Court styled In re: Silverleaf Resorts, Inc. Derivative Litigation, Cause No. DC-11-1419-F (the “Consolidated Action”). In their Consolidated Amended Derivative Petition, the plaintiffs purport to assert claims on behalf of Silverleaf against each member of the Company’s Board, as well as Cerberus and its affiliate companies, Resort Holdings and Merger Sub. The plaintiffs’ allegations include that the consideration in the proposed transaction is inadequate; that the Board entered into the proposed transaction to procure significant financial benefits for themselves and senior management; that the Board and senior management unreasonably favored Cerberus throughout the sales process; the Board agreed to deal protective devices that precluded a successful competing offer for Silverleaf; that, based on the Silverleaf’s March 10, 2011 preliminary proxy statement, the Board failed to make adequate disclosures to allow Silverleaf’s shareholders to cast an informed vote regarding the proposed transaction; and that such alleged conduct constitutes a breach of the Board’s duties of loyalty, due care, independence, candor, good faith, and fair dealing. The plaintiffs also claim that Silverleaf and the Cerberus entities aided and abetted in the alleged breaches of fiduciary duty by the Company’s directors. On March 15, 2011, another purported shareholder derivative suit was filed in Dallas County state district court, styled Jose Dias, on behalf of himself and others similarly situated vs. Robert E. Mead, et al (the “Dias Action”). In that suit, the plaintiff purports to assert claims on behalf of the Company against each of its directors based on similar allegations as in the consolidated petition and asserts claims for breach of fiduciary duty and breach of the duty of disclosure. Under the consolidation order issued by the 116th District Court, Silverleaf anticipates that the Dias Action will be transferred and consolidated with the other suits in the Consolidated Action. Among other relief, the plaintiffs in these derivative suits seek to enjoin the proposed transaction or recover damages if the transaction is consummated. None of the defendants have responded to the derivative lawsuits.

~~Index~~In addition, on or about February 16, 2011, Silverleaf received a written demand from legal counsel for Frank Parker, Carlos Tapia, and Leslie Neil Hull, purported shareholders of the Company. Further, on or about March 1, 2011, Silverleaf received a written demand from legal counsel for Igor Zlokarmik, also a purported shareholder of the Company. These purported shareholders allege that the directors breached their fiduciary duties in connection with the proposed acquisition based on similar allegations as set forth in the derivative lawsuits and they demand that the Company pursue legal action against the directors. Silverleaf has not responded to the written demands.

~~Note~~15 ~~9 – Commitments and Contingencies~~

~~Various~~At ~~legal~~the ~~actions~~Company’s ~~and~~request, ~~claims~~on ~~may~~April 4, be2011, ~~instituted~~the or116th ~~asserted~~District inCourt appointed Paul R. Bessette, a shareholder of the ~~future~~law ~~against~~firm usGreenberg Traurig, LLP and ~~our~~Co-Chair ~~subsidiaries~~of the firm’s National Securities Litigation group, ~~including~~to ~~those~~perform ~~arising~~an ~~out~~independent review of ~~our~~the ~~sales~~allegations ~~and~~made ~~marketing~~in ~~activities~~the derivative lawsuits and ~~contractual~~in ~~arrangements~~the written demands from shareholders pursuant to Section 21.554(a)(3) ~~Some~~of the Texas Business Organizations Code (“TBOC”). Mr. Bessette has been delegated full and complete authority to exercise the business judgment of ~~these~~the ~~matters~~Company ~~may~~and ~~involve~~to determine ~~claims~~and implement or cause to be implemented any actions to be taken by Silverleaf in response to the findings he makes, ~~which~~including but not limited to: (i) whether it is in the best interests of Silverleaf that the derivative suits be continued or whether the derivative suits should be terminated and (ii) the terms, if ~~granted~~any, ~~could~~upon which any claim within the scope of his responsibility and authority should be ~~materially~~dismissed, ~~adverse~~settled, and/or released. The Court stayed the derivative proceedings pending Mr. Bessette’s review pursuant to ~~our~~Section 21.555 ~~financial~~of ~~position~~the TBOC.

~~Litigation~~On isApril 26, ~~subject~~2011, Mr. Bessette submitted to ~~many~~the ~~uncertainties~~Company his report with respect to the claims asserted in the Consolidated Action. This report was the result of Mr. Bessette’s comprehensive investigation of plaintiff’s claims in the purported derivative lawsuits. His investigation consisted primarily of documentary and testimonial due diligence conducted over an approximately four-week period, including, without limitation: (i) a review of all pleadings and other documents filed in the ~~outcome~~Consolidated Action; (ii) in-person meetings with and telephonic interviews of ~~individual~~counsel ~~litigated~~for ~~matters~~Silverleaf isand ~~not~~the ~~predictable~~plaintiffs; (iii) a review of draft and definitive documents, agreements, communications, reports, presentations and corporate books and records, including Silverleaf’s public announcements of and filings with ~~assurance~~the SEC, the U.S. WeFederal ~~will~~Trade ~~establish~~Commission ~~reserves~~and ~~from~~the ~~time~~U.S. toDepartment ~~time~~of ~~when~~Justice, ~~deemed~~and ~~appropriate~~all ~~under~~other ~~generally~~documents ~~accepted~~and ~~accounting~~information ~~principles~~produced by Silverleaf and its counsel at the request of Mr. Bessette; ~~However~~(iv) comprehensive interviews of principal parties to the Consolidated Action, the ~~outcome~~representatives of athe ~~claim~~constituent ~~for~~parties ~~which~~involved wein ~~have~~Cerberus’ ~~not~~acquisition ~~deemed~~of aSilverleaf ~~reserve~~through tothe bemerger, and other third-party witnesses Mr. Bessette deemed relevant and necessary ~~may~~in bethe ~~decided~~conduct ~~unfavorably~~of ~~against~~his usinvestigation; and ~~could~~(v) research ~~require~~under usapplicable toTexas ~~pay~~and ~~damages~~Delaware orstate ~~incur~~corporate ~~other~~and ~~expenditures~~U.S. ~~that~~federal ~~could~~securities belaw ~~materially~~and ~~adverse~~a toreview ~~our~~of ~~business,~~recent public ~~results~~company sale of ~~operations~~control transactions processes, oragreements, ~~financial~~terms ~~position~~and conditions which Mr. Bessette, in his judgment and experience, deemed reasonably comparable to the merger and relevant to the conduct of his investigation.

~~Note~~As 10a –result ~~Consolidation~~of this investigation, Mr. Bessette concluded that the continuation of ~~Variable~~the ~~Interest~~Consolidated ~~Entities~~Action is not in the best interests of Silverleaf and that, for reasons detailed in the full report, the Silverleaf directors named in the Consolidated Action complied with their fiduciary obligations to Silverleaf under Texas law in connection with the sale of Silverleaf to Cerberus.

WeOn ~~sell~~May 9, ~~customer~~2011, ~~notes~~Silverleaf ~~receivable~~and ~~originated~~the inother ~~connection~~parties ~~with~~to the ~~sale~~Consolidated ofAction ~~Vacation~~(through ~~Intervals~~their torespective ~~our~~counsel) reached ~~variable~~a ~~interest~~settlement ~~entities~~in ~~(SF-IV~~principle, ~~SF-V,~~which ~~SF-VI,~~provides for the dismissal with prejudice of the Consolidated Action and ~~SF-VII).~~a ~~The~~release ~~primary~~of ~~purpose~~the ~~for~~defendants ~~which~~from ~~these~~all ~~entities~~present ~~were~~and ~~created~~future ~~was~~claims toasserted ~~provide~~in ~~Silverleaf~~the ~~with~~Consolidated ~~access~~Action toin ~~liquidity~~exchange for, among other things, providing the ~~origination~~Company’s ofshareholders ~~notes~~with ~~receivable~~the supplemental disclosure contained in the ~~sale~~May 9, of2011 ~~its~~Supplement ~~timeshare~~#1 ~~intervals.~~to ~~These~~the ~~entities~~Company’s ~~have~~Definitive noProxy ~~equity~~Statement, ~~investment~~filed atApril 18, ~~risk~~2011. In addition, ~~making~~as ~~them~~part ~~variable~~of ~~interest~~the ~~entities.~~settlement ~~The~~in principle, ~~debt~~Silverleaf ~~securities~~has ~~that~~agreed ~~our~~to ~~four~~pay ~~VIEs~~an ~~issue~~amount ~~are~~not ~~collateralized~~to byexceed ~~the~~$200,000 ~~customer~~to ~~notes~~plaintiffs’ ~~receivable~~counsel ~~sold~~for their fees and ~~transferred~~expenses, subject to ~~these~~court ~~entities~~approval. WeSilverleaf ~~continue~~has tohad ~~service~~preliminary ~~the~~conversations ~~notes~~with ~~receivable~~representatives ~~and~~of ~~transfer~~its ~~all~~insurers ~~proceeds~~and expects ~~collected~~such insurers to ~~these~~contribute ~~VIEs.~~$75,000 ~~These~~toward ~~servicing~~such fees ~~are~~and ~~eliminated~~expenses. inThe ~~consolidation~~proposed ~~and~~settlement ~~are~~is ~~therefore~~subject ~~not~~to ~~reflected~~further indefinitive ~~our~~documentation ~~consolidated~~and ~~financial~~to ~~statements.~~a Asnumber ~~the~~of ~~servicer~~conditions, weincluding, ~~manage~~without limitation, the ~~delinquent~~consolidation ~~loans~~of ~~and~~the ~~determine~~Dias ~~which~~Action ~~loss~~into the ~~mitigation~~Consolidated ~~strategy~~Action, ~~will~~the ~~maximize~~completion ~~recoveries~~of oncertain areasonable ~~particular~~discovery ~~loan.~~by Wethe ~~have~~plaintiffs, ~~consolidated~~the ~~these~~drafting ~~VIEs~~and inexecution ~~our~~of ~~condensed~~a ~~consolidated~~formal ~~financial~~Stipulation ~~statements~~of ~~since~~Settlement, ~~their~~and ~~inception~~court asapproval weof ~~have~~the ~~100%~~proposed ~~ownership~~settlement. inThere ~~them~~is ~~and~~no ~~are~~assurance ~~the~~that ~~primary~~these ~~beneficiary~~conditions will be satisfied.

AtThe ~~September 30,~~settlement ~~2010,~~will ~~the~~not ~~carrying~~affect ~~amount of~~ the ~~consolidated~~merger ~~assets~~consideration ~~included~~to ~~within~~be ~~our~~paid ~~condensed~~to ~~consolidated~~shareholders ~~balance sheet for these variable interest entities totaled $246.6 million, comprised~~ of ~~$209.6~~Silverleaf ~~million~~in connection ofwith ~~notes~~the ~~receivable,~~proposed ~~net of allowance for uncollectible notes~~merger, ~~$24.6 million of restricted cash for payments of debt, $10.1 million of prepaid~~ and ~~other~~it ~~assets,~~did ~~$2.5~~not ~~million~~affect ~~of accrued interest receivable, $10,000 of cash and cash equivalents, and $183,000 of amounts due to affiliates. At September 30, 2010,~~ the ~~carrying~~timing ~~amount~~ of the ~~consolidated~~special ~~liabilities~~meeting ~~included within our condensed consolidated balance sheet for these variable interest entities totaled $213.8 million, comprised~~ of ~~$212.4~~shareholders ~~million~~held ofon ~~notes payable~~May 11, $12011.4 ~~million of accrued interest payable, and $20,000 of other accounts payable and accrued expenses.~~

Note 1110 – ~~Subsequent~~Consolidation ~~Events~~of Variable Interest Entities

InWe ~~October~~sell ~~2010,~~customer wenotes ~~amended~~receivable ~~our~~originated ~~$75~~in ~~million~~connection ~~consolidated~~with ~~receivables,~~the ~~inventory~~sale ~~and~~of ~~acquisition~~Vacation ~~revolving~~Intervals ~~line~~to ofour ~~credit. The maximum~~variable ~~aggregate~~interest ~~commitment~~entities ~~under~~(SF-IV, ~~the~~SF-VI, ~~facility~~SF-VII, ~~which~~SF-VIII, ~~was~~and ~~$75~~SF-IX). ~~million~~The atprimary ~~September~~purpose ~~30,~~for ~~2010,~~which these ~~will~~entities bewere ~~$60~~created ~~million~~was ~~effective~~to ~~January~~provide ~~31,~~Silverleaf ~~2011,~~with ~~$50~~access ~~million~~to ~~effective~~liquidity ~~July~~for ~~31,~~the ~~2011,~~origination ~~and~~of ~~$40~~notes ~~million~~receivable ~~effective~~in ~~January~~the ~~31,~~sale ~~2012.~~of ~~The~~its ~~revolving~~timeshare ~~period~~intervals. ofThese ~~the~~entities ~~receivables~~have ~~component~~no ~~was~~equity ~~extended~~investment ~~one~~at ~~year~~risk, ~~from~~making ~~January~~them ~~31,~~VIEs. ~~2011~~The todebt ~~January~~securities that ~~31,~~our ~~2012,~~VIEs ~~provided~~issue ~~that~~are ifcollateralized by the ~~maximum~~customer ~~amount~~notes ~~outstanding~~receivable ~~exceeds~~sold ~~the~~and ~~maximum~~transferred ~~aggregate~~to ~~commitment~~these onentities. ~~any~~We ofcontinue to service the ~~respective~~notes ~~dates~~receivable onand ~~which~~transfer ~~the~~all ~~maximum~~proceeds ~~aggregate~~collected ~~commitment~~to isthese ~~reduced,~~VIEs. ~~the~~These ~~revolving~~servicing ~~term~~fees ~~shall~~are ~~end~~eliminated onin consolidation ~~that~~and ~~date.~~are ~~The~~therefore ~~maturity~~not ~~date~~reflected ~~will~~in ~~remain~~our atcondensed ~~January~~consolidated ~~31,~~financial ~~2013~~statements. ~~The~~As ~~interest~~the ~~rate~~servicer, ~~for~~we manage the ~~receivables~~delinquent ~~component~~loans and determine which loss mitigation strategy will ~~remain~~maximize atrecoveries ~~the~~on ~~prime~~a ~~rate~~particular ~~with~~loan. anWe ~~increase~~have consolidated these VIEs in ~~the~~our ~~floor~~condensed ~~interest~~consolidated ~~rate~~financial ~~from~~statements ~~6.00%~~since totheir ~~6.25%.~~inception ~~The~~as ~~terms~~we ofhave ~~the~~100% ~~inventory~~ownership ~~and~~in ~~acquisition~~them ~~components~~and ~~remained~~are the ~~same~~primary beneficiary.

In16 November 2010, we entered into a note modification agreement to amend our 10% senior subordinated notes ("Notes") issued in June 2009 with an original principal balance of $10.0 million. Under the terms of the note modification agreement, the interest rate on the Notes will be increased to 12% effective October 1, 2010, and quarterly principal payments will be eliminated. Quarterly interest payments will continue through maturity with the next such interest payment due on January 1, 2011. The remaining $7.7 million in outstanding principal balance will be due at maturity on April 1, 2012. The note modification agreement is subject to customary closing conditions.

~~Index~~At March 31, 2011, the carrying amount of the consolidated assets included within our condensed consolidated balance sheet for these VIEs totaled $285.4 million, comprised of $255.2 million of notes receivable, net of allowance for uncollectible notes, $17.3 million of restricted cash, $10.2 million of prepaid and other assets, $3.1 million of accrued interest receivable, $10,000 of cash and cash equivalents, and $308,000 of amounts due to affiliates. At March 31, 2011, the carrying amount of the consolidated liabilities included within our condensed consolidated balance sheet for these VIEs totaled $263.7 million, comprised of $261.8 million of notes payable, $1.9 million of accrued interest payable, and $20,000 of other accounts payable and accrued expenses.

~~Item~~Note ~~2. Management’s~~11 ~~Discussion~~– ~~and~~Subsequent ~~Analysis~~Events ~~of Financial Condition and Results of Operations~~

~~Forward~~Effective May 12, 2011, we executed a new term securitization transaction through a newly-~~Looking~~formed, ~~Statements~~wholly-owned and fully consolidated VIE, Silverleaf Finance X, LLC (“SF-X”). SF-X was formed for the purpose of issuing approximately $23.8 million of its Timeshare Loan-Backed Notes Series 2011-A (“Series 2011-A Notes”) in a private placement under Regulation D of the Securities Act of 1933. The Series 2011-A Notes were issued as a single class of notes with a coupon rate of 9.00% and at a discount totaling approximately $1.5 million. The discount is amortized as an adjustment to interest expense over the terms of the related loans using the effective interest method, which generates an effective interest rate on these notes of approximately 13.9% as of May 12, 2011. The Series 2011-A Notes have a final maturity date of June 2023. Approximately $6.0 million of the proceeds received by SF-X will be held in a special prefunding account in restricted cash under the terms of the indenture through the prefunding termination date of August 31, 2011. We have until the prefunding termination date to sell up to approximately $8.5 million in additional qualifying timeshare loans to SF-X. All funds held in the prefunding account that are not used by SF-X to finance the purchase of additional qualifying timeshare loans from us during the prefunding period will be returned to the holders of the Series 2011-A Notes as a distribution of principal. We entered into a guaranty regarding the SF-X Series 2011-A Notes in which we will be liable for all aggregate defaulted timeshare loan make-whole amounts, if any, determined prior to each monthly payment date.

~~Throughout~~The ~~this~~Series ~~report~~2011-A ~~and~~Notes ~~any~~are ~~documents~~secured ~~incorporated~~by ~~herein~~customer bynotes ~~reference,~~receivable we ~~make~~sold ~~forward~~to SF-~~looking~~X. ~~statements~~The ~~within~~customer ~~the~~notes receivable ~~meaning~~sold ofto ~~the~~SF-X ~~Private~~were ~~Securities~~previously ~~Litigation~~pledged ~~Reform~~as ~~Act~~collateral ofunder ~~1995,~~revolving ~~Section 27A~~credit offacilities ~~the~~with ~~Securities~~our ~~Act~~senior oflenders. ~~1933,~~The ~~and~~cash ~~Section 21E~~proceeds offrom the ~~Securities~~sale ~~Exchange Act~~ of ~~1934,~~the ~~including~~customer innotes ~~particular,~~receivable ~~statements~~to ~~about~~SF-X ~~our~~were ~~plans,~~used ~~objectives,~~to ~~expectations,~~repay ~~and~~approximately ~~prospects~~$7.4 ~~You~~million ~~can~~in consolidated ~~identify~~indebtedness ~~these~~to ~~statements~~senior bylenders ~~forward-looking~~and ~~words~~for ~~such~~working ascapital ~~“will,” “may,” “should,” “believes,” “anticipates,” “intends,” “estimates,” “expects,” “projects,” “plans,” “seeks,” and similar expressions~~needs. ~~Although~~Pursuant weto ~~believe that~~ the ~~plans,~~terms ~~objectives,~~of ~~expectations,~~an ~~and prospects reflected in or suggested by our forward-looking statements are reasonable~~agreement, ~~those statements involve uncertainties and risks, and~~ we ~~can~~continue ~~give~~to noservice ~~assurance~~these ~~that~~customer ~~our~~notes ~~plans,~~receivable ~~objectives, expectations,~~ and ~~prospects~~receive ~~will~~fees befor ~~achieved~~our services. ~~You~~These ~~should~~servicing ~~understand~~fees ~~that~~are ~~the~~eliminated ~~following~~in consolidation ~~important factors could affect our future results~~ and ~~could~~are ~~cause~~therefore ~~actual~~not ~~results~~reflected toin ~~differ~~our ~~materially~~condensed ~~from~~consolidated ~~those~~financial ~~expressed in such forward-looking~~ statements:.

•Shareholder ~~adverse~~Approval ~~developments~~of ~~in general business and economic conditions;~~Merger

•As ~~our~~previously ~~inability~~disclosed, toon ~~access~~February 3, ~~the~~2011 ~~capital~~Silverleaf ~~markets~~entered into a Merger Agreement with Resort Holdings and~~/or~~ Merger ~~the~~Sub, ~~asset~~a wholly-~~backed~~owned ~~securitization~~subsidiary ~~markets~~of onResort Holdings. Both Resort Holdings and Merger Sub are affiliates of Cerberus. On May 11, 2011, Silverleaf held a ~~favorable~~special ~~basis;~~meeting of its shareholders, and received approval for the merger.

•Subject ~~our~~to ~~substantial~~the ~~amount~~satisfaction or waiver of ~~outstanding~~certain ~~indebtedness~~conditions ~~which~~set ~~requires~~forth usin tothe ~~operate~~Merger Agreement and discussed in detail in the Definitive Proxy Statement on Schedule 14A filed with the SEC by Silverleaf on April 18, 2011, and as asupplemented ~~highly-leveraged~~on ~~company;~~May 9, 2011, Silverleaf expects to close the merger on or about May 16, 2011.

•Upon ~~our~~completion ~~future~~of ~~operating~~the ~~results~~merger, ~~could~~Silverleaf ~~impact~~will ~~our~~become ~~ability~~a toprivate ~~service~~company, ~~our~~wholly-owned ~~debt~~by Resort Holdings, an affiliate of Cerberus, and its ~~meet~~common ~~our~~stock ~~debt~~will ~~obligations~~no aslonger ~~they~~be ~~come~~traded ~~due;~~on NASDAQ.

•17 ~~our ability to comply with the covenants relating to our indebtedness;~~

•Item 2. ~~the~~Management’s ~~global~~Discussion ~~credit market crisis~~ and ~~economic~~Analysis ~~weakness~~of ~~that~~Financial ~~may~~Condition and ~~adversely~~Results ~~affect~~of ~~our~~Operations ~~customers and suppliers;~~

~~• our failure to comply with laws and regulations and any changes in laws and regulations, including timeshare~~Forward-~~related~~Looking ~~regulations,~~Statements ~~consumer protection laws, employment and labor laws, environmental laws, telemarketing regulations, privacy policy regulations, and state and federal tax laws;~~

•Throughout ~~seasonal~~this ~~fluctuation~~report and any documents incorporated herein by reference, we make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including in particular, statements about our plans, objectives, expectations, and prospects. You can identify these statements by forward-looking words such as “will,” “may,” “should,” “believes,” “anticipates,” “intends,” “estimates,” “expects,” “projects,” “plans,” “seeks,” and similar expressions. Although we believe that the ~~timeshare~~plans, ~~business;~~objectives, expectations, and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve uncertainties and risks, and we can give no assurance that our plans, objectives, expectations, and prospects will be achieved. You should understand that the following important factors could affect our future results and could cause actual results to differ materially from those expressed in such forward-looking statements:

• ~~local~~adverse ~~and~~developments ~~regional~~in ~~economic~~general ~~conditions~~business ~~that affect the travel~~ and ~~tourism~~economic ~~industry in the areas where we operate~~conditions;

• our inability to access the ~~loss~~capital ofmarkets ~~any~~and/or ofthe ~~our~~asset-backed ~~senior~~securitization ~~management;~~markets ~~and~~on a favorable basis;

• ~~competition~~our insubstantial ~~the~~amount ~~timeshare~~of ~~industry~~outstanding ~~and~~indebtedness ~~the~~which ~~financial~~requires ~~resources~~us ofto ~~our~~operate ~~competitors.~~as a highly-leveraged company;

~~Other~~• ~~factors not identified above, include, among others, those discussed in~~ our ~~2009~~future ~~Form~~operating ~~10-K~~results ~~as filed with the Securities and Exchange Commission on March 8, 2010. Any or all of these factors~~ could ~~cause~~impact our ~~actual~~ability ~~results and financial or legal status for future periods~~ to ~~differ~~service materially from those expressed or referred to in any forward-looking statement. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. In addition, forward-looking statements speak only as of the date on which they are made. Such forward-looking statements are based on our ~~beliefs,~~debt ~~assumptions,~~ and ~~expectations~~meet of our ~~future~~debt ~~performance~~obligations ~~taking into account all information known to us at the time such statements are made. These beliefs, assumptions, and expectations can change~~ as athey ~~result~~come of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. We caution investors that while forward-looking statements reflect our good-faith beliefs at the time such statements are made, such statements are not guarantees of future performance and are affected by actual events that occur after said statements are made. We expressly disclaim any responsibility to update forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which were based on results and trends existing when those statements were made, to anticipate future results or trends.due;

18• our ability to comply with the covenants relating to our indebtedness;

~~Index~~• an increase in interest rates on our variable rate indebtedness;

~~Executive~~• ~~Overview~~the global credit market crisis and economic weakness that may adversely affect our customers and suppliers;

As• ofour ~~September 30,~~failure ~~2010,~~to wecomply ~~own~~with laws and ~~operate~~regulations 13and ~~timeshare~~any ~~resorts~~changes in ~~various~~laws ~~stages of development in Texas, Missouri, Illinois, Georgia, Massachusetts,~~ and ~~Florida~~regulations, ~~and~~including ~~a hotel near the Winter Park recreational area in Colorado. Our resorts offer a wide array of country club~~timeshare-~~like~~related ~~amenities~~regulations, ~~such~~consumer asprotection ~~golf~~laws, anemployment ~~indoor~~and ~~water~~labor ~~park~~laws, ~~swimming,~~environmental ~~horseback riding~~laws, ~~boating,~~telemarketing ~~and many organized activities for children and adults. We have a Vacation Interval ownership base of over 115~~regulations,~~000~~ ~~members.~~privacy ~~Our~~policy ~~condensed consolidated financial statements include the accounts of Silverleaf Resorts~~regulations, ~~Inc.~~ and ~~its~~state ~~subsidiaries,~~and ~~all~~federal oftax ~~which are wholly-owned and consolidated.~~laws;

~~Results~~• ofseasonal ~~Operations~~fluctuation in the timeshare business;

~~The~~• ~~following~~local ~~table~~and ~~summarizes~~regional ~~key~~economic ~~ratios~~conditions ~~from~~that ~~our~~affect ~~condensed consolidated statements of operations for~~ the ~~three~~travel and ~~nine-month~~tourism ~~periods~~industry ~~ended~~in ~~September 30,~~the ~~2010~~areas ~~and~~where ~~2009:~~we operate;

	Three Months EndedSeptember 30,				Nine Months EndedSeptember 30,
	2010		2009		2010		2009
As a percentage of total revenues:
Vacation Interval sales	90.9	%	133.4	%	91.7	%	105.7	%
Estimated uncollectible revenue	(25.8	)%	(69.6	)%	(26.0	)%	(37.1	)%
Net sales	65.1	%	63.8	%	65.7	%	68.6	%
Interest income	29.5	%	31.4	%	30.1	%	26.2	%
Management fee income	1.1	%	1.8	%	1.1	%	1.5	%
Other income	4.3	%	3.0	%	3.1	%	3.7	%
Total revenues	100.0	%	100.0	%	100.0	%	100.0	%
As a percentage of Vacation Interval sales:
Cost of Vacation Interval sales	10.8	%	7.3	%	8.7	%	9.7	%
Sales and marketing	53.0	%	47.3	%	54.1	%	50.0	%
As a percentage of total revenues:
Operating, general and administrative	18.6	%	22.3	%	18.0	%	19.4	%
Depreciation	2.8	%	3.1	%	2.8	%	2.5	%
As a percentage of interest income:
Interest expense and lender fees	54.9	%	44.5	%	50.6	%	45.4	%

•

the loss of any of our senior management;

~~Results~~• ofcompetition ~~Operations~~in ~~for~~ the ~~Three~~timeshare ~~Months~~industry ~~Ended~~and ~~September 30,~~the ~~2010~~financial ~~and~~resources ~~September 30,~~of ~~2009~~our competitors;

~~Revenues~~• the merger may involve unexpected costs or unexpected liabilities;

~~Revenues~~• ~~for~~if the ~~quarter~~merger ~~ended~~is ~~September 30,~~not ~~2010~~completed ~~were~~under ~~$58.5~~certain ~~million~~circumstances, ~~representing~~Silverleaf amay ~~$5.7~~be ~~million,~~required ~~or 10.8%, increase compared~~ to ~~revenues~~repay ~~for~~expenses ~~the~~incurred ~~quarter~~by ~~ended~~Resort ~~September 30,~~Holdings ~~2009.~~and AsMerger ~~discussed below~~Sub, ~~the~~or ~~increase~~even ispay ~~primarily attributable to~~ a ~~$21.7~~termination ~~million decrease in estimated uncollectible revenue, offset by a $17.3 million decrease in Vacation Interval sales during the quarter ended September 30, 2010.~~fee;

19• the likely decline of the market price for the Company’s common stock in the event the merger is not completed, to the extent that the current market price of the stock reflects the assumption that the merger will be consummated;

~~Index~~• the risk that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger;

~~The~~• ~~following~~any ~~table~~adjustment ~~summarizes our Vacation Interval sales for the three months ended September 30~~to, ~~2010~~or ~~and~~event ~~2009~~of ~~(dollars~~default ~~in thousands~~under, ~~except~~our ~~average~~warehouse ~~price):~~facilities; and

	2010					2009
	Sales		Intervals	Average Price		Sales		Intervals	Average Price
Interval Sales to New Customers	$	21,942	2,012	$	10,906	$	26,629	2,579	$	10,325
Upgrade Interval Sales to Existing Customers	20,919		2,733	7,654		32,284		3,670	8,797
Additional Interval Sales to Existing Customers	10,301		892	11,548		11,514		1,148	10,030
Total	$	53,162				$	70,427

•

volatility in the stock markets.

~~Vacation~~18 Interval sales decreased 24.5% during the third quarter of 2010 compared to the same period of 2009 primarily due to a reduction in marketing to existing customers which resulted in lower sales of upgrade intervals. We implemented more stringent underwriting policies at the end of 2009 to improve the collection of notes receivable. The number of interval sales to new customers decreased 22.0% but average prices increased 5.6%, resulting in a 17.6% net decrease in sales to new customers in the third quarter of 2010 compared to the same period of 2009. The number of upgrade interval sales to existing customers decreased 25.5%, while average prices decreased 13.0%, resulting in a 35.2% decrease in upgrade interval sales to existing customers during the third quarter of 2010 compared to the same period of 2009. The number of additional interval sales to existing customers decreased 22.3% but average prices increased 15.1% resulting in a 10.5% net decrease in additional interval sales to existing customers during the third quarter of 2010 compared to the same period of 2009. Vacation Interval sales to existing owners comprised 58.7% and 62.2% of total Vacation Interval sales in the third quarters of 2010 and 2009, respectively, which maintains our favorable sales-mix trend toward upgrades and second-week sales to existing customers as such sales have relatively lower associated sales and marketing costs.

~~Interest~~Other ~~income~~factors ~~increased~~not ~~$676~~identified above,~~000~~ include, oramong ~~4.1%~~others, tothose ~~$17.3~~discussed ~~million~~in ~~for~~our 2010 Form 10-K as filed with the ~~third~~Securities ~~quarter~~and ofExchange ~~2010~~Commission ~~from~~on $March 16, 2011.6 ~~million~~Any or all of these factors could cause our actual results and financial or legal status for ~~the~~future ~~third~~periods ~~quarter~~to ofdiffer ~~2009~~materially from those expressed or referred to in any forward-looking statement. ~~The~~All ~~increase~~written ~~primarily~~or ~~resulted~~oral ~~from~~forward-looking astatements ~~higher~~attributable ~~average~~to ~~notes~~us ~~receivable~~are ~~balance~~expressly ~~during~~qualified in their entirety by these cautionary statements. In addition, forward-looking statements speak only as of the ~~third~~date ~~quarter~~on which they are made. Such forward-looking statements are based on our beliefs, assumptions, and expectations of ~~2010~~our ~~compared~~future performance taking into account all information known to us at the ~~same~~time ~~period~~such ofstatements ~~2009~~are made. These beliefs, ~~partially~~assumptions, ~~offset~~and expectations bycan change as a ~~decrease~~result inof ~~the~~many ~~weighted~~potential ~~average~~events ~~yield~~or onfactors, ~~our~~not ~~outstanding~~all ~~notes~~of ~~receivable~~which are known to 16us.7% If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those 16expressed in our forward-looking statements.8% ~~for~~We caution investors that while forward-looking statements reflect our good-faith beliefs at the ~~third~~time ~~quarters~~such statements are made, such statements are not guarantees of ~~2010~~future performance and ~~2009~~are affected by actual events that occur after said statements are made. We expressly disclaim any responsibility to update forward-looking statements, ~~respectively~~whether as a result of new information, future events, or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which were based on results and trends existing when those statements were made, to anticipate future results or trends.

~~Management~~Executive ~~fee~~Overview income, which consists of management fees collected from the resorts’ management clubs, cannot exceed the management clubs’ net income. Management fee income decreased $300,000 to $630,000 for the third quarter of 2010 compared to $930,000 for the same period of 2009, due primarily to an anticipated decrease in profitability of the resorts’ management clubs.

~~Other~~As ~~income~~of ~~consists~~March 31, 2011, we own and operate 13 timeshare resorts in various stages of ~~water~~development ~~park~~in ~~income~~Texas, ~~marina~~Missouri, ~~income~~Illinois, ~~golf~~Georgia, ~~course~~Massachusetts, and ~~pro~~Florida, ~~shop~~and ~~income,~~a hotel ~~income,~~near ~~and~~the ~~other~~Winter ~~miscellaneous~~Park ~~items~~recreational area in Colorado. ~~Other~~Our ~~income~~resorts ~~increased~~offer toa ~~$2.5~~wide ~~million~~array ~~for~~of ~~the~~country ~~third~~club-like ~~quarter~~amenities, ofsuch as ~~2010~~golf, ~~from~~an ~~$1.6~~indoor ~~million~~water park, swimming, horseback riding, boating, and many organized activities for ~~the~~children ~~third~~and ~~quarter~~adults. ofWe ~~2009~~have ~~primarily~~a ~~due~~Vacation toInterval anownership ~~increase~~base inof ~~forfeited~~over ~~deposits~~115,000 ~~during~~members. Our condensed consolidated financial statements include the ~~third~~accounts ~~quarter~~of Silverleaf Resorts, Inc. and its subsidiaries, all of ~~2010~~which are wholly-owned and consolidated.

20Results of Operations

~~Index~~The following table summarizes key ratios from our condensed consolidated statements of operations for the three-month periods ended March 31, 2011 and 2010:

Cost of Vacation Interval Sales


	2011		2010

As a percentage of total revenues:
Vacation Interval sales		90.6%		90.8%
Estimated uncollectible revenue		(22.5)%		(25.7)%
Net sales		68.1%		65.1%

Interest income		28.7%		31.5%
Management fee income		1.3%		1.1%
Other income		1.9%		2.3%
Total revenues		100.0%		100.0%

As a percentage of Vacation Interval sales:
Cost of Vacation Interval sales		5.4%		5.2%
Sales and marketing		54.4%		55.7%

As a percentage of total revenues:
Operating, general and administrative		18.2%		18.0%
Depreciation		2.6%		3.0%

As a percentage of interest income:
Interest expense and lender fees		62.6%		46.0%

~~Under~~19 the relative sales value method, cost of sales is estimated as a percentage of net sales using a cost of sales percentage which represents the ratio of total estimated cost, including costs already incurred plus estimated costs to complete the phase, if any, to total estimated Vacation Interval revenues under the project, including revenues already recognized and estimated future revenues. Common costs, including amenities, are allocated to inventory cost among the phases that those costs are expected to benefit. The estimate of total revenue for a phase considers factors such as trends in uncollectibles, changes in sales mix and unit sales prices, repossessions of Vacation Intervals, effects of upgrade programs, and past and expected future sales programs to sell slow-moving inventory units.

~~Sales~~Results of Operations for the Three Months Ended March 31, 2011 and ~~Marketing~~2010

~~Sales~~Revenues and marketing expense as a percentage of Vacation Interval sales increased to 53.0% for the third quarter of 2010 compared to 47.3% for the same period of 2009. The increase in sales and marketing expense as a percentage of Vacation Interval sales is primarily due to the decrease in sales to existing customers, which have relatively lower related sales and marketing costs compared to new customer sales. In the third quarter of 2010, 58.7% of our sales were to existing customers compared to 62.2% in the third quarter of 2009.

InRevenues ~~accordance with~~ for the ~~FASB~~quarter ~~ASC~~ended ~~“Real~~March 31, ~~Estate~~2011 –were ~~Timesharing~~$60.1 ~~Activities~~million,” ~~sampler~~representing ~~sales~~a ~~and~~$5.9 ~~related~~million, ~~costs~~or ~~are accounted for as incidental operations~~10.8%, ~~whereby~~increase ~~incremental~~compared ~~costs~~to ~~in excess of related incremental~~ revenues ~~are~~for ~~charged~~the toquarter ~~expense~~ended asMarch 31, ~~incurred~~2010. ~~Since~~As ~~our~~discussed ~~sampler sales primarily function as a marketing program~~below, ~~providing~~the usincrease ~~additional~~is ~~opportunities~~primarily toattributable ~~sell Vacation Intervals~~ to ~~prospective~~a ~~customers, the incremental costs of our sampler sales typically exceed incremental sampler revenues. Accordingly,~~ $~~797,000 and $1~~5.16 million increase ofin ~~sampler~~net ~~revenues~~Vacation ~~were~~Interval ~~recorded as a reduction to~~ sales ~~and marketing expense for the quarters ended September 30, 2010 and 2009, respectively~~.

~~Operating~~The following table summarizes our Vacation Interval sales for the three months ended March 31, ~~General~~2011 and ~~Administrative~~2010 (dollars in thousands, except average price):

Operating, general and administrative expenses as a percentage of total revenues was 18.6% in the third quarter of 2010 compared to 22.3% for the same period of 2009. Overall, operating, general and administrative expenses decreased $915,000 for the third quarter of 2010 compared to the same period of 2009, primarily due to a $952,000 decrease in legal fees and a $509,000 decrease in professional fees, which resulted from legal and professional fees in 2009 for a possible securitization which did not occur, partially offset by an increase in the costs of collections of our notes receivable of $360,000.


	2011						2010
					Average						Average
	Sales		Intervals		Price		Sales		Intervals		Price
Interval Sales to New Customers	$	23,086		2,293	$	10,068	$	20,977		2,378	$	8,821
Upgrade Interval Sales to Existing Customers		20,237		2,422		8,355		18,908		2,938		6,437
Additional Interval Sales to Existing Customers		11,104		935		11,876		9,310		911		10,220

Total	$	54,427					$	49,195

~~Depreciation~~Vacation Interval sales increased 10.6% during the first quarter of 2011 versus the same period of 2010 primarily due to sales of higher-end products in the first quarter of 2011 and a 10.2% increase in tours. The number of interval sales to new customers decreased 3.6% but average prices increased 14.1%, resulting in a 10.1% net increase in sales to new customers in the first quarter of 2011 versus the same period of 2010. The number of upgrade interval sales to existing customers decreased 17.6% but average prices increased 29.8%, resulting in a 7.0% net increase in upgrade interval sales to existing customers during the first quarter of 2011 compared to the same period of 2010. The number of additional interval sales to existing customers increased 2.6% and average prices increased 16.2% resulting in a 19.3% increase in additional interval sales to existing customers during the first quarter of 2011 versus the same period of 2010. Vacation Interval sales to existing owners comprised 57.6% and 57.4% of total Vacation Interval sales in the first quarters of 2011 and 2010, respectively. Sales to existing owners have lower associated sales and marketing costs compared to sales to new customers.

~~Depreciation~~Estimated ~~expense~~uncollectible revenue, which represents estimated future gross cancellations of notes receivable, was $13.6 million for the first quarter of 2011 versus $13.9 million for the same period of 2010. The provision for estimated uncollectible revenue as a percentage of ~~total~~Vacation ~~revenue~~Interval sales was 224.89% in the first quarter of 2011 compared to 28.3% for the first quarter ~~ended~~of ~~September~~2010. The allowance for uncollectible notes as a percentage of gross notes receivable was 19.4% and 20.2% as of March 3031, 2011 and 2010, respectively. Our receivables charged off as a percentage of beginning of period gross notes receivable was 3.7% for the first quarter of 2011 compared to 34.10% for the same period ~~quarter~~of 2010. Factors considered in the assessment of ~~2009~~uncollectibility include the aging of notes receivable, historical collection experience and credit losses, customer credit scores (FICO® scores), and current economic factors. We believe our notes receivable are adequately reserved, however, there can be no assurance that defaults have stabilized or that they will not increase further. We review the allowance for uncollectible notes quarterly and make adjustments as necessary.

Interest ~~Expense~~income remained fairly constant at $17.3 million for the first quarter of 2011 and ~~Lender~~$17.1 ~~Fees~~million for the first quarter of 2010.

~~Interest~~Management ~~expense~~fee ~~and~~income, ~~lender~~which ~~fees~~consists ~~as a percentage~~ of ~~interest~~management ~~income~~fees ~~increased~~collected tofrom ~~54.9% for~~ the ~~third~~resorts’ ~~quarter~~management ofclubs, ~~2010~~cannot ~~compared~~exceed ~~to 44.5% for~~ the ~~same~~management clubs’ ~~period~~excess of ~~2009.~~revenues ~~Overall,~~over ~~interest~~expenses. ~~expense~~Management ~~and~~fee ~~lender~~income ~~fees~~ increased $~~2.1~~150,000 ~~million~~to $780,000 for the ~~third~~first quarter of ~~2010~~2011 ~~compared~~versus to$630,000 for the same period of ~~2009~~2010, ~~primarily~~ due primarily to an increase in ~~lender~~profitability ~~fees related to our SF-VII securitization which closed in June 2010, and amendments to our other senior loan agreements since September 2009. In addition, the weighted average cost~~ of ~~borrowings increased to 7.8% for~~ the ~~three~~resorts’ management ~~months ended September 30, 2010 from 5~~clubs.6% ~~for the three months ended September 30, 2009 which was primarily related to SF-VII.~~

~~Income~~Other ~~(Loss)~~income ~~before~~consists ~~Benefit~~of ~~(Provision)~~water park income, marina income, golf course and pro shop income, hotel income, and other miscellaneous items. Other income remained the same at $1.2 million for ~~Income~~each ~~Taxes~~of the three-month periods ended March 31, 2011 and 2010.

~~Income~~Cost ~~(loss) before benefit (provision) for income taxes was income~~ of ~~$2.6~~Vacation ~~million~~Interval ~~for~~Sales ~~the quarter ended September 30, 2010 compared to a loss of $6.5 million for the quarter ended September 30, 2009 as a result of the above-mentioned operating results.~~

21Under the relative sales value method, cost of sales is estimated as a percentage of net sales using a cost of sales percentage which represents the ratio of total estimated cost, including costs already incurred plus estimated costs to complete the phase, if any, to total estimated Vacation Interval revenues under the project, including revenues already recognized and estimated future revenues. Common costs, including amenities, are allocated to inventory cost among the phases that those costs are expected to benefit. The estimate of total revenue for a phase considers factors such as trends in uncollectibles, changes in sales mix and unit sales prices, repossessions of Vacation Intervals, effects of upgrade programs, and past and

~~Index~~20

~~Benefit~~ expected ~~(provision)~~future ~~for~~sales ~~income~~programs ~~taxes as a percentage of income (loss) before benefit (provision) for income taxes was a provision of 37.5% for the third quarter of 2010 compared~~ to asell ~~benefit~~slow-moving ofinventory 40units.0% ~~for the third quarter of 2009. Our effective rates differ from the statutory federal rate of 35% for certain items, such as state and local taxes, and non-deductible expenses.~~

~~Net~~Cost ~~Income~~of ~~(Loss)~~Vacation Interval sales remained fairly constant at 5.4% of Vacation Interval sales for the first quarter of 2011 compared to 5.2% for the first quarter of 2010.

~~Net~~Sales ~~income~~and ~~(loss)~~Marketing ~~was income of $1.6 million for the quarter ended September 30, 2010 compared to a loss of $3.9 million for the quarter ended September 30, 2009 as a result of the above-mentioned operating results.~~

~~Results~~Sales and marketing expense as a percentage of ~~Operations~~Vacation Interval sales decreased to 54.4% for the ~~Nine~~first ~~Months~~quarter ~~Ended~~of ~~September 30~~2011 versus 55.7% for the comparable prior-year period. The decrease in sales and marketing expense as a percentage of Vacation Interval sales is primarily due to sales of higher-end product, which have a higher profit margin than our lower-end product, in the first quarter of 2011 compared to the first quarter of 2010. ~~and~~The ~~2009~~sales mix remained fairly steady at 57.6% of sales to existing customers in the first quarter of 2011 compared to 57.4% in the first quarter of 2010.

~~Revenues~~In accordance with the FASB ASC “Real Estate – Timesharing Activities,” sampler sales and related costs are accounted for as incidental operations, whereby incremental costs in excess of related incremental revenues are charged to expense as incurred. Since our sampler sales primarily function as a marketing program, providing us additional opportunities to sell Vacation Intervals to prospective customers, the incremental costs of our sampler sales typically exceed incremental sampler revenues. Accordingly, $881,000 and $879,000 of sampler revenues were recorded as a reduction to sales and marketing expense for the quarters ended March 31, 2011 and 2010, respectively.

~~Revenues for the nine months ended September 30~~Operating, ~~2010~~General ~~were~~and ~~$171.8~~Administrative million, representing a $12.0 million, or 6.5%, decrease compared to revenues for the nine months ended September 30, 2009. As discussed below, the decrease is primarily attributable to a $36.7 million decrease in Vacation Interval sales, partially offset by a $23.5 million decrease in estimated uncollectible revenue.

~~The~~Operating, ~~following~~general ~~table~~and ~~summarizes~~administrative ~~our~~expenses ~~Vacation~~as ~~Interval~~a ~~sales~~percentage of total revenues increased to 18.2% in the first quarter of 2011 from 18.0% for the ~~nine~~same ~~months~~period ~~ended~~of ~~September 30~~2010. Overall, ~~2010~~operating, general and administrative ~~2009~~expenses ~~(dollars~~increased by $1.2 million during the first quarter of 2011 as compared to the first quarter of 2010, primarily due to an increase in ~~thousands~~professional fees of $480,000, ~~except~~an ~~average~~increase ~~price):~~of $305,000 in salaries, and an increase of $285,000 in group insurance.

	2010					2009
	Sales		Intervals	Average Price		Sales		Intervals	Average Price
Interval Sales to New Customers	$	66,747	6,855	$	9,737	$	73,406	7,219	$	10,168
Upgrade Interval Sales to Existing Customers	59,071		8,524	6,930		89,397		9,990	8,949
Additional Interval Sales to Existing Customers	31,739		2,913	10,896		31,414		3,043	10,323
Total	$	157,557				$	194,217

Depreciation

~~Vacation~~Depreciation ~~Interval~~expense ~~sales~~as ~~decreased 18.9% during the first nine months of 2010 compared to the same period of 2009 primarily due to~~ a ~~reduction~~percentage ~~in marketing to existing customers which resulted in lower sales~~ of ~~upgrade~~total ~~intervals.~~revenues Wedecreased ~~implemented more stringent underwriting policies at the end of 2009~~ to ~~improve the collection of notes receivable. The number of interval sales to new customers decreased 5.0% while average prices decreased 4.~~2~~%, resulting in a 9~~.16% ~~decrease~~for ~~in sales to new customers in~~ the ~~first~~quarter ~~nine~~ended ~~months of 2010 compared to the same period of 2009. The number of upgrade interval sales to existing customers decreased 14.7%~~March 31, ~~while~~2011 ~~average~~versus ~~prices decreased 22~~3.60%, ~~resulting~~for ~~in a 33.9% decrease in upgrade interval sales to existing customers during~~ the ~~first nine months of 2010 compared to the~~ same ~~period~~quarter of ~~2009~~2010. ~~The number of additional interval sales to existing customers decreased 4.3% but average prices increased 5.6%~~Overall, ~~resulting~~depreciation inexpense awas $1.~~0% net increase in additional interval sales to existing customers during the first nine months of 2010 compared to the same period of 2009. Vacation Interval sales to existing owners comprised 57.~~6% ~~and~~million for ~~62.2% of total Vacation Interval sales in~~ the first ~~nine~~quarters ~~months~~ of ~~2010~~2011 and ~~2009, respectively, which maintains our favorable sales-mix trend toward upgrades and second-week sales to existing customers as such sales have relatively lower associated sales and marketing costs~~2010.

~~Estimated~~Interest ~~uncollectible~~Expense revenue, which represents estimated future gross cancellations of notes receivable, was $44.7 million for the first nine months of 2010 compared to $68.2 million for the same period of 2009. The provision for estimated uncollectible revenue as a percentage of Vacation Interval sales decreased to 28.3% for the first nine months of 2010 compared to 35.1% for the first nine months of 2009 and ~~33.3%~~Lender ~~for~~Fees the full year of 2009. Cancellations during the first nine months of 2009, and most notably during the third quarter of 2009, exceeded cancellations projected under our static-pool analysis of our notes receivable portfolio, which tracks uncollectible notes for each year's sales over the lives of the notes. Considering an increase in future cancels beyond that previously estimated, we increased our allowance for uncollectible notes by $18.5 million in the third quarter of 2009 above the 25.9% provision rate we had estimated in the second quarter of 2009. The allowance for uncollectible notes was 20.9% of our gross notes receivable portfolio as of September 30, 2010 compared to 21.0% as of December 31, 2009. Our receivables charged off as a percentage of beginning of period gross notes receivable was 9.7% for the nine months ended September 30, 2010 compared to 11.5% for the same period of 2009. Factors considered in the assessment of uncollectibility include the aging of notes receivable, historical collection experience and credit losses, customer credit scores (FICO® scores), and current economic factors. We believe our notes receivable are adequately reserved, however, there can be no assurance that defaults have stabilized or that they will not increase further. We review the allowance for uncollectible notes quarterly and make adjustments as necessary.

22Interest expense and lender fees as a percentage of interest income increased to 62.6% for the first quarter of 2011 compared to 46.0% for the same period of 2010. Overall, interest expense and lender fees increased $2.9 million for the first quarter of 2011 versus the same period of 2010 primarily due to an increase in lender fees related to our SF-VII securitization which closed in June of 2010, our SF-VIII and SF-IX securitizations which closed in December 2010, and amendments to our other senior loan agreements since March 31, 2010. In addition, the weighted average cost of borrowings increased to 8.8% for the first quarter of 2011 from 6.2% for the first quarter of 2010. Although interest rates remained fairly constant throughout 2010 and the first quarter of 2011, the increase in the weighted average cost of borrowings is primarily due to the interest rates on our SF-VII and SF-IX securitizations which are higher than the floor interest rates on our receivables-based and inventory revolvers. Our SF-VII securitization was issued with a blended coupon rate of 7.366% and at a discount of $6.0 million and our SF-IX securitization was issued with a blended coupon rate of 12.00% and at a discount of $3.0 million. The discounts are amortized as an adjustment to interest expense over the term of the related loans using the effective interest method, which generates a blended effective interest rate on our SF-VII and SF-IX notes of approximately 9.6% and 16.6% as of March 31, 2011.

~~Index~~Income before Provision for Income Taxes

~~Interest~~Income ~~income~~before ~~increased~~provision ~~$3.5~~for ~~million,~~income ortaxes ~~7.2%,~~was to $514.62 million ~~during~~for the ~~first~~quarter ~~nine~~ended ~~months~~March 31, of2011 ~~2010~~compared ~~from~~to $485.10 million ~~during~~for the ~~same~~quarter ~~period~~ended ofMarch 31, ~~2009.~~2010 ~~The~~as ~~increase primarily resulted from~~ a ~~higher~~result ~~average notes receivable balance during the first nine months~~ of ~~2010 compared to~~ the ~~same~~above-mentioned operating ~~period of 2009~~results.

~~Management~~Provision ~~fee income, which consists of management fees collected from the resorts’ management clubs, cannot exceed the management clubs’ net income. Management fee income decreased $900,000 to $1.9 million~~ for ~~the~~Income ~~first~~Taxes ~~nine months of 2010 compared to $2.8 million for the same period of 2009, due primarily to an anticipated decrease in profitability of the resorts’ management clubs.~~

~~Other~~Provision ~~income~~for ~~consists of water park~~ income, ~~marina~~taxes ~~income,~~as ~~golf~~a ~~course~~percentage ~~and~~of ~~pro shop~~ income, ~~hotel~~before ~~income,~~provision ~~and~~for ~~other miscellaneous items. Other~~ income ~~decreased~~taxes towas $537.30% ~~million~~and ~~for the first nine months of 2010 from $6~~39.80% ~~million~~ for the ~~first~~quarters ~~nine~~ended ~~months of 2009. The decrease is primarily attributable to the receipt during 2009 of $2.4 million in business-interruption proceeds related to Hurricane Ike~~March 31, ~~which~~2011 ~~struck our Seaside Resort in Galveston, Texas in September 2008,~~ and ~~a $316~~2010,~~000~~ ~~gain on the early extinguishment of senior subordinated debt in 2009, partially offset by an increase in forfeited deposits during the first nine months of 2010~~respectively.

~~Cost~~21 ~~of Vacation Interval Sales~~

~~Cost~~Net ofIncome Vacation Interval sales decreased to 8.7% of Vacation Interval sales for the first nine months of 2010 compared to 9.7% in the 2009 comparable period. This decrease primarily resulted from increased sales of lower cost-basis inventory during the first nine months of 2010 compared to the first nine months of 2009. In addition, the sale of the water and sewer assets at Seaside Resort in the first quarter of 2010 resulted in a one-time $544,000 decrease in cost of sales.

Net income was $2.6 million for the quarter ended March ~~Sales~~31, ~~and~~2011 ~~Marketing~~compared to $3.1 million for the quarter ended March 31, 2010 as a result of the above-mentioned operating results.

~~Sales~~Liquidity and ~~marketing~~Capital ~~expense~~Resources as a percentage of Vacation Interval sales increased to 54.1% for the nine-month period ended September 30, 2010 compared to 50.0% for the comparable prior-year period. The increase in sales and marketing expense as a percentage of Vacation Interval sales is primarily due to the decrease in sales to existing customers, which have relatively lower related sales and marketing costs compared to new customer sales. In the first nine months of 2010, 57.6% of our sales were to existing customers compared to 62.2% in the first nine months of 2009.

InAt ~~accordance~~March 31, ~~with the FASB ASC “Real Estate – Timesharing Activities~~2011,” ~~sampler~~our ~~sales~~senior ~~and~~credit ~~related~~facilities ~~costs~~provided ~~are accounted~~ for asloans ~~incidental~~of ~~operations,~~up ~~whereby~~to ~~incremental~~$598.4 ~~costs~~million, ~~in excess~~ of ~~related~~which ~~incremental~~$386.9 ~~revenues~~million ~~are~~of ~~charged~~principal related to ~~expense~~advances asunder ~~incurred.~~the ~~Since~~credit ~~our~~facilities ~~sampler~~was ~~sales~~outstanding ~~primarily~~and $211.5 ~~function~~million aswas aavailable ~~marketing~~for ~~program,~~future ~~providing~~advances. The usfollowing ~~additional~~table ~~opportunities~~summarizes toour ~~sell~~credit ~~Vacation~~agreements ~~Intervals~~with toour ~~prospective~~senior ~~customers~~lenders, ~~the incremental costs of~~ our ~~sampler~~wholly-owned ~~sales~~and ~~typically~~consolidated ~~exceed~~special ~~incremental~~purpose ~~sampler~~finance ~~revenues. Accordingly~~subsidiaries, ~~$2.3 million~~ and ~~$3.0~~our ~~million~~senior ofsubordinated ~~sampler~~debt ~~revenues~~and ~~were~~other debt, ~~recorded~~ as aof ~~reduction to sales and marketing expense for the nine months ended September~~March 3031, ~~2010~~2011 ~~and~~(in ~~2009,~~thousands): ~~respectively.~~

Operating, General and Administrative


	Maximum Amount Available		Outstanding Balance
Receivables-Based Revolvers	$	276,052	$	69,570
Receivables-Based Non-Revolvers		261,439		261,439
Inventory Loans		60,877		55,852

Subtotal Senior Credit Facilities		598,368		386,861
Senior Subordinated Debt		7,682		7,682
Other Debt		7,728		7,728

Grand Total	$	613,778	$	402,271

~~Operating,~~We ~~general~~use ~~and~~these ~~administrative~~credit ~~expenses~~agreements ~~as a percentage of total revenues decreased~~ to ~~18.0%~~finance ~~for~~ the ~~first~~sale ~~nine months~~ of ~~2010~~Vacation ~~compared to 19.4% for the same period of 2009. Overall~~Intervals, ~~operating, general and administrative expenses decreased $4.7 million for the first nine months of 2010 compared~~ to ~~the~~finance ~~same period of 2009~~construction, primarily due to the write-off of $2.7 million predevelopment costs associated with the termination of a potential land acquisition in June 2009. Other contributing factors are a decrease in legal fees of $1.4 million and ~~a decrease in professional fees of $949,000, which primarily resulted from legal and professional fees in the second and third quarters of 2009~~ for working acapital ~~possible securitization which did not occur, and a decrease in recording fees of $974,000, partially offset by an increase in the costs of collections of our notes receivable of $1~~needs.1 ~~million.~~

23Our senior credit facilities mature between June 2011 and July 2022 and are collateralized (or cross-collateralized) by customer notes receivable, inventory, construction in process, land, improvements, and related equipment at certain of our resorts. Our fixed-to-floating debt ratio at March 31, 2011 was 68% fixed to 32% floating. However, the majority of our floating-rate debt is subject to interest-rate floors between 6.00% and 8.00%. The credit facilities that bear interest at variable rates are tied to the Prime rate or LIBOR. At March 31, 2011, the annual Prime rate on our senior credit facilities was 3.25% and the one-month LIBOR rate on these facilities was 0.24%. For the quarter ended March 31, 2011, the weighted average cost of funds for all borrowings was 8.8%. The credit facilities secured by customer notes receivable allow advances of 75% to 80% of eligible customer notes receivable. Customer defaults have a significant impact on our cash available from financing customer notes receivable in that notes more than 60 days past due are not eligible as collateral. As a result, we must repay borrowings against such delinquent notes. As of March 31, 2011, $5.1 million of notes, net of accounts charged off, were more than 60 days past due.

~~Index~~In addition, we have $7.7 million of 12.0% senior subordinated notes due April 2012 which are guaranteed by all of our present and future domestic restricted subsidiaries. Payment terms related to these notes require quarterly interest payments through maturity. The remaining $7.7 million in outstanding principal balance will be due at maturity on April 1, 2012.

~~Depreciation~~We anticipate a continuation of the difficult economic environment we experienced throughout 2010 and the first quarter of 2011. These economic weaknesses present formidable challenges related to constrained consumer spending, collection of customer receivables, access to capital markets, and ability to manage inventory levels. Our customers may be more vulnerable to deteriorating economic conditions than consumers in the luxury or upscale timeshare markets. Additionally, significant increases in the cost of transportation may limit the number of potential customers who travel to our resorts for a sales presentation. A sustained weakness or weakening in business and economic conditions generally or specifically in the principal markets in which we do business could also cause an increase in the number of our customers who become delinquent, file for protection under bankruptcy laws, or default on their loans. This could result in further increases in our provision for estimated uncollectible revenue in 2011.

~~Depreciation~~During ~~expense~~2010, aswe aextended ~~percentage~~certain of ~~total~~our ~~revenues~~existing ~~increased~~senior credit facilities. In connection with such extensions, we have in certain cases, agreed to 2pay higher interest rates and fees.8% ~~for~~In ~~the~~June ~~nine~~2010, ~~months~~we executed ~~ended~~a ~~September 30~~new term securitization transaction through SF-VII, a wholly-owned and fully consolidated VIE. The Series 2010-A ~~compared~~Notes towere 2issued in this securitization at a discount of approximately $6.50 million, have a blended coupon rate of 7.366% and ~~for~~a ~~the~~blended ~~same~~effective ~~period~~interest rate of ~~2009~~approximately 9.6% ~~Overall~~as of March 31, ~~depreciation~~2011. ~~expense~~In ~~increased~~December ~~$281~~2010,~~000~~ ~~for~~we ~~the~~executed ~~first~~two ~~nine~~new ~~months~~term ofsecuritization transactions through SF-VIII and SF-IX, two wholly-owned and fully consolidated VIEs. The Series 2010-B Notes ~~compared~~which towere ~~the~~issued ~~same~~through ~~period~~SF-VIII at a discount of ~~2009~~approximately ~~due~~$57,000, tohave ~~capital~~a ~~expenditures~~blended coupon rate of $16.847% ~~million~~and ~~since~~a ~~September 30,~~blended ~~2009.~~effective

~~Interest~~22 ~~Expense and Lender Fees~~

~~Income~~ interest ~~before~~rate ~~Provision~~of ~~for~~approximately ~~Income~~6.5% ~~Taxes~~as of March 31, 2011. The Series 2010-C Notes which were issued through SF-IX at a discount of approximately $3.0 million, have a blended coupon rate of 12.00% and a blended effective interest rate of approximately 16.6% as of March 31, 2011. In addition, current conditions in the commercial credit markets are such that an increase in interest rates is likely on new debt we may obtain in the future. Any such increased interest rates would increase our expenses and could adversely impact our results of operations.

~~Income~~Although ~~before~~we ~~provision~~have ~~for~~no ~~income~~immediate ~~taxes~~growth ~~increased~~plans, to ~~$10.7~~finance ~~million~~our ~~for~~future ~~the~~operations, ~~nine~~development, ~~months~~and ~~ended~~any ~~September 30~~potential expansion plans, ~~2010~~we ~~compared~~may toat some ~~$5.7~~time ~~million~~be ~~for~~required to consider the ~~nine~~issuance ~~months~~of ~~ended~~other ~~September~~debt, equity, or collateralized mortgage-backed securities. 30Any debt we incur or issue may be secured or unsecured, ~~2009~~have fixed or variable-rate interest, include warrants or other equity component, and may be subject to such terms as awe ~~result~~deem prudent. In addition, certain existing debt agreements include restrictions on our ability to pay dividends based on minimum levels of ~~the~~net ~~above-mentioned~~income ~~operating~~and ~~results~~cash flow. Our ability to pay dividends might also be restricted by the TBOC.

~~Provision~~Our ~~for~~senior ~~Income~~credit ~~Taxes~~facilities provide certain financial covenants that we must satisfy. Any failure to comply with the financial covenants in any single loan agreement will result in a cross default under the various facilities. Such financial covenants include:

~~Provision~~• ~~for~~a ~~income~~profitable ~~taxes~~operations ascovenant awhich ~~percentage~~requires ofour ~~income~~consolidated ~~before~~net ~~provision~~income (i) for ~~income~~any ~~taxes~~fiscal ~~was~~year 38to not be less than $1.2%00, (ii) for ~~the~~any ~~nine~~two ~~months~~consecutive ~~ended~~fiscal ~~September 30~~quarters, ~~2010~~determined ~~compared~~on an individual rather than an aggregate basis, to 39not be less than $1.6%00, and (iii) for ~~the~~any ~~same~~rolling 12-month period ofto ~~2009~~not be less than $1.00, and

~~Net~~• ~~Income~~a debt service covenant which requires our ratio of (i) earnings before interest, income taxes, depreciation, and amortization, less capital expenditures as determined in accordance with generally accepted accounting principles, to (ii) the interest expense minus all non-cash items constituting interest expense to not be less than 1.25 to 1 as of the last day of each fiscal quarter, for the latest rolling 12 months then ending, or for the average of the last four quarters.

~~Net~~We ~~income~~are ~~was~~in compliance ~~$6.6~~with ~~million~~these ~~for~~covenants ~~the~~as ~~nine~~of ~~months~~March 31, ~~ended~~2011. ~~September 30~~However, ~~2010~~there ~~compared~~can tobe ~~$3.4~~no ~~million~~assurance ~~for~~that ~~the~~we ~~nine~~will ~~months~~continue ~~ended~~to ~~September 30,~~meet ~~2009~~these asor aother ~~result~~financial ofcovenants ~~the~~contained ~~above-mentioned~~in ~~operating~~our ~~results~~debt agreements with our senior lenders.

~~Liquidity~~One of our senior lenders, Textron Financial Corporation, and ~~Capital~~other ~~Resources~~timeshare industry lenders have announced that they will cease or modify their commercial lending activities in the future. While we have received no notice from any of our other lenders that our current financing arrangements will be impacted by these decisions, our ability to obtain financing in the future to replace these facilities may be limited by a lack of commercial lenders. At March 31, 2011, we had a total of $28.5 million outstanding under our senior credit facility with Textron, which comprises 7.1% of our total outstanding debt of $402.3 million. Our availability for future advances under our senior credit facilities was $211.5 million at March 31, 2011, of which $31.5 million, or 14.9%, was related to our Textron senior credit facility. While we do not currently anticipate a material impact to our liquidity as a result of Textron’s announcement about its future as a timeshare lender, we will continue to monitor the effect of this announcement on our operations.

AtIn ~~September 30,~~October 2010, we amended our ~~senior~~consolidated ~~credit~~receivables, ~~facilities~~inventory ~~provided~~and ~~for~~acquisition ~~loans~~revolving line of upcredit towith ~~$501~~Textron.6 The maximum aggregate commitment under the facility, which was $60 million at March 31, of2011, ~~which~~will be $~~393.7~~50 million ofeffective ~~principal~~July 31, ~~related~~2011, toand ~~advances~~$40 ~~under~~million effective January 31, 2012. The revolving period of the ~~credit~~receivables ~~facilities~~component was extended one year from January 31, 2011 to January 31, 2012, provided that if the maximum amount outstanding ~~and~~exceeds ~~$107~~the maximum aggregate commitment on any of the respective dates on which the maximum aggregate commitment is reduced, the revolving term shall end on that date.9 ~~million~~The ~~was~~maturity ~~available~~date ~~for~~will ~~future~~remain ~~advances~~at January 31, 2013. The ~~following~~interest ~~table~~rate ~~summarizes~~for ~~our~~the ~~credit~~receivables ~~agreements~~component ~~with~~will ~~our~~remain ~~senior~~at ~~lenders,~~the ~~our~~prime ~~wholly-owned~~rate ~~and~~with ~~consolidated~~an ~~variable~~increase ~~interest~~in ~~entities,~~the ~~and~~floor ~~our~~interest ~~senior~~rate ~~subordinated~~from ~~debt~~6.00% ~~and~~to ~~other~~6.25%. ~~debt,~~The asterms of ~~September 30,~~the inventory ~~2010~~and ~~(in~~acquisition ~~thousands):~~components remained the same.

	Maximum Amount Available		Outstanding Balance
Receivables-Based Revolvers	$	256,956	$	149,793
Receivables-Based Non-Revolvers	180,152		180,152
Inventory Loans	64,518		63,746
Subtotal Senior Credit Facilities	501,626		393,691
Senior Subordinated Debt	8,855		8,855
Other Debt	7,805		7,805
Grand Total	$	518,286	$	410,351

We implemented what we believe to have been conservative business decisions and cash flow management during 2010 and the first quarter of 2011 which we believe will allow us to maintain adequate liquidity through 2011. However, there can be no assurance that economic conditions will not deteriorate further, which could increase customer loan delinquencies and defaults. Increases in loan delinquencies and defaults could impair our ability to pledge or sell such loans to lenders in order to obtain sufficient cash advances to meet our obligations through 2011.

Cash Flows from Operating Activities. We ~~use~~generate ~~these~~cash ~~credit~~primarily ~~agreements~~from todown ~~finance~~payments received from the sale of Vacation Intervals, the financing and collection of customer notes receivable from Vacation Interval owners, the sale of notes receivable to ~~finance~~our ~~construction~~variable interest entities, management fees, sampler sales, marina income, golf course and ~~for~~pro ~~working~~shop income, ~~capital~~water ~~needs~~park income, and hotel income. We typically receive a 10% to 15% down payment on sales of Vacation

~~Our~~23 senior credit facilities mature between June 2011 and July 2022 and are collateralized (or cross-collateralized) by customer notes receivable, inventory, construction in process, land, improvements, and related equipment at certain of our resorts. Our fixed-to-floating debt ratio at September 30, 2010 was 46% fixed to 54% floating. However, the majority of our floating-rate debt is subject to interest-rate floors between 6.00% and 8.00%. The credit facilities that bear interest at variable rates are tied to the Prime rate or LIBOR. At September 30, 2010, the annual Prime rate on our senior credit facilities was 3.25% and the one-month LIBOR rate on these facilities was 0.26%. For the nine months ended September 30, 2010, the weighted average cost of funds for all borrowings was 7.0%. The credit facilities secured by customer notes receivable allow advances of 75% to 80% of eligible customer

~~Index~~ Intervals and finance the remainder with the issuance of a seven-to-ten-year customer promissory note. We generate cash from customer notes receivable (i) by borrowing at an advance rate of 75% to 80% of eligible customer notes receivable, (ii) by selling notes receivable, and (iii) from the spread between interest received on customer notes receivable and interest paid on related borrowings. Because we use significant cash in the development and marketing of Vacation Intervals but collect cash on customer notes receivable over a seven-to-ten-year period, borrowing against receivables has historically been a necessary part of normal operations.

~~notes~~During ~~receivable.~~the ~~Customer~~three ~~defaults~~months ~~have~~ended aMarch 31, ~~significant~~2011, ~~impact~~cash onprovided ~~our~~by ~~cash~~operating ~~available~~activities ~~from~~was ~~financing~~$3.7 ~~customer~~million ~~notes~~compared ~~receivable~~to in$5.2 million ~~that~~during ~~notes~~the ~~more~~same ~~than~~period 60of ~~days~~2010. ~~past~~The ~~due~~$1.5 ~~are~~million ~~not~~decrease ~~eligible~~in ascash ~~collateral.~~provided Asby aoperating ~~result,~~activities weduring ~~must~~2011 ~~repay~~primarily ~~borrowings~~resulted ~~against~~from ~~such~~an ~~delinquent~~increase ~~notes.~~in Asthe growth of ~~September 30,~~our ~~2010,~~gross ~~$6.4~~notes ~~million~~receivable ofin ~~notes,~~the ~~net~~first three months of ~~accounts~~2011 ~~charged~~and ~~off,~~the ~~were~~timing of ~~more~~payments ~~than~~on 60prepaid ~~days~~and ~~past~~other ~~due~~assets.

InCash ~~addition~~Flows from Investing Activities. During the first quarter of 2011, wenet ~~have~~cash used in investing activities was $8207,000 compared to cash provided of $1.97 million during the first quarter of 102010.0% ~~senior~~Net ~~subordinated~~cash ~~notes~~used ~~due~~of ~~April~~$207,000 ~~2012~~in ~~which~~2011 ~~are~~was ~~guaranteed~~the byresult ~~all~~of purchases of ~~our~~equipment, ~~present~~leasehold improvements, and ~~future~~other general ~~domestic~~capital ~~restricted subsidiaries~~expenditures. ~~Payment~~Net ~~terms~~cash ~~related~~provided toof ~~these~~$1.7 ~~notes~~million ~~require~~in ~~quarterly~~2010 ~~principal~~was ~~and~~primarily ~~interest~~the ~~payments~~result of ~~approximately~~ $12.40 million ~~through~~of ~~maturity~~proceeds received from the sale of water utility assets at ~~April~~our 1Seaside Resort, ~~2012~~partially offset by $283,000 of purchases of equipment, leasehold improvements, and other general capital expenditures. The gain resulting from the sale of the water utility assets was $77,000.

WeCash ~~anticipate~~Flows afrom ~~continuation~~Financing ofActivities. ~~the~~During ~~difficult economic environment we experienced~~ the ~~last~~first ~~two~~three ~~years.~~months ~~These economic weaknesses present formidable challenges related to constrained consumer spending, collection~~ of ~~customer receivables~~2011, ~~access~~financing toactivities ~~capital~~used ~~markets, and ability to manage inventory levels~~$3.3 ~~Our~~million ~~customers~~of ~~may~~net becash ~~more~~compared ~~vulnerable~~ to ~~deteriorating~~$10.1 ~~economic~~million ~~conditions than consumers~~ in the ~~luxury~~comparable or2010 ~~upscale timeshare markets~~period. ~~Additionally,~~Net cash ~~significant~~used ~~increases in the cost~~ of ~~transportation may limit the number of potential customers who travel to our resorts for a sales presentation~~$3.3 Amillion ~~sustained weakness or weakening~~ in ~~business~~2011 ~~and~~was ~~economic~~primarily ~~conditions generally or specifically in~~ the ~~principal~~result ~~markets~~of in$47.4 ~~which~~million ~~we do business could also cause an increase in the number~~ of ~~our~~proceeds ~~customers~~received ~~who~~from ~~become~~borrowings ~~delinquent,~~against ~~file~~pledged ~~for~~notes ~~protection~~receivable ~~under~~and ~~bankruptcy~~inventory ~~laws~~loans, ora ~~default on their loans~~$12.3 ~~This~~million ~~could~~release ~~result~~of inrestricted ~~further~~cash ~~increases~~previously inreserved ~~our provision~~ for ~~estimated~~payments ~~uncollectible revenue in 2010. However~~of debt, ~~we believe that conservative business decisions~~ and ~~cash flow management during 2010~~$116,000 ~~along~~of ~~with~~proceeds ~~other~~received ~~measures~~from in the ~~coming~~exercise ~~year,~~of ~~will~~stock ~~allow~~options, usoffset toby ~~maintain adequate liquidity through mid-2011~~$63.1 ~~These~~million ~~other~~of ~~measures~~payments ~~include continuing to focus~~ on ~~improving~~borrowings ~~the~~against ~~credit~~pledged ~~quality of our~~ notes receivable, ~~a continued favorable sales-mix trend toward upgrades~~ and ~~second-week~~inventory ~~sales~~loans. toNet ~~existing~~cash ~~customers~~used asof ~~such~~$10.1 ~~sales~~million ~~have relatively lower associated sales and marketing costs, reductions~~ in ~~capital~~2010 ~~expenditures~~was ~~for~~primarily ~~expansion~~the atresult ~~existing~~of $50.3 ~~resorts,~~million ~~including construction~~ of ~~lodging~~proceeds ~~units~~received ~~and~~from ~~additional~~borrowings ~~amenities,~~against ~~negotiation~~pledged ofnotes ~~extensions~~receivable toand ~~our~~inventory ~~existing~~loans ~~credit facilities,~~ and ~~the~~a ~~management of our liquidity through business efficiencies~~$1.4 ~~However,~~million ~~there~~release ~~can~~of berestricted nocash ~~assurance~~previously ~~that~~reserved ~~economic~~for ~~conditions~~payments ~~will~~of ~~not deteriorate further~~debt, ~~which~~offset ~~could~~by ~~increase~~$61.6 ~~customer~~million ~~loan~~of ~~delinquencies~~payments ~~and~~on ~~defaults.~~borrowings ~~Increases~~against pledged innotes ~~loan~~receivable ~~delinquencies~~ and ~~defaults~~inventory ~~could impair our ability to pledge or sell such~~ loans toand ~~lenders~~$248,000 infor ~~order~~the topurchase ~~obtain~~of ~~sufficient~~treasury ~~cash advances to meet our obligations through mid-2011~~shares.

~~Since~~Income ~~2009,~~Taxes. weIncome taxes ~~have~~are ~~extended~~accounted ~~certain~~for ofunder ~~our~~the ~~existing~~asset ~~senior~~and ~~credit~~liability ~~facilities~~method. Deferred ~~(see~~tax ~~Note~~assets 5and liabilities are recorded for ~~further~~the ~~information).~~future Intax ~~connection~~consequences ~~with~~attributable ~~such~~to ~~extensions,~~temporary wedifferences ~~have~~between inthe ~~certain~~basis ~~cases,~~of ~~agreed~~assets toand ~~pay~~liabilities ~~higher~~as ~~interest~~recognized ~~rates~~by tax laws and ~~fees~~their carrying value as reported in the consolidated financial statements. A Inprovision ~~June~~or ~~2010,~~benefit weis ~~executed~~recognized afor ~~new~~deferred ~~term~~income ~~securitization~~taxes ~~transaction~~relating ~~through~~to ~~our~~such ~~newly-formed~~temporary differences, ~~wholly-owned~~ and ~~fully~~is ~~consolidated~~measured ~~VIE,~~using ~~SF-VII.~~enacted ~~The~~tax ~~Series~~rates ~~2010-A~~expected ~~Notes~~to apply to taxable income in the years in which ~~were~~those ~~issued~~temporary atdifferences aare ~~discount~~expected ofto ~~approximately~~be $6settled or recovered.0 The ~~million,~~effect ~~have~~of a ~~blended~~change ~~coupon~~in ~~rate~~tax ofrates ~~7.366%~~on deferred tax assets and aliabilities ~~blended~~is ~~effective~~recognized ~~interest~~in ~~rate~~income ofin ~~approximately~~the 9period that includes the enactment date.~~5%.~~ The Ineffect ~~addition,~~of ~~current~~income ~~conditions~~tax inpositions ~~the~~are ~~commercial~~recorded ~~credit~~only ~~markets~~if those positions are ~~such~~“more ~~that~~likely anthan ~~increase~~not” inof ~~interest~~being ~~rates~~sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely onof ~~new~~being ~~debt~~realized. Changes wein ~~may~~recognition ~~obtain~~or measurement are reflected in the ~~future~~period in which the change in judgment occurs. Although ~~Any~~we ~~such~~do ~~increased~~not ~~interest~~currently ~~rates~~have ~~would~~any ~~increase~~material ~~our~~charges ~~expenses~~related to interest and ~~could~~penalties, ~~adversely~~such ~~impact~~costs, if ~~our~~incurred, ~~results~~are ofreported ~~operations~~within the provision for income taxes.

~~Although~~In addition, we ~~have~~are nosubject ~~immediate~~to ~~growth~~current ~~plans,~~AMT toas ~~finance~~a ~~our~~result ~~future~~of ~~operations,~~the deferred ~~development,~~income ~~and~~that ~~any~~results ~~potential~~from ~~expansion~~the ~~plans,~~installment wesales ~~may~~treatment. Payment atof ~~some~~AMT ~~time~~creates bea ~~required~~deferred totax ~~consider~~asset in the ~~issuance~~form of ~~other~~a ~~debt~~minimum tax credit, ~~equity~~which, orunless ~~collateralized~~otherwise ~~mortgage-backed~~limited, ~~securities.~~reduces ~~Any~~the ~~debt~~future weregular ~~incur~~tax orliability ~~issue~~attributable ~~may~~to Vacation beInterval ~~secured~~sales. This ordeferred ~~unsecured,~~tax ~~have~~asset ~~fixed~~has oran ~~variable~~unlimited ~~rate~~carryover ~~interest,~~period. The ~~include~~AMT ~~warrants~~credit orcan ~~other~~be ~~equity~~utilized ~~component,~~to ~~and~~the ~~may~~extent beregular ~~subject~~tax toexceeds ~~such~~AMT ~~terms~~tax asliability wefor ~~deem~~a ~~prudent~~given year. Due Into ~~addition,~~AMT ~~certain~~losses ~~existing~~in ~~debt~~certain ~~agreements~~years ~~include~~prior ~~restrictions~~to on2003, which ~~our~~offset ~~ability~~all toAMT ~~pay~~income ~~dividends~~for ~~based~~years onprior ~~minimum~~to ~~levels~~2003, ofno ~~net~~minimum ~~income~~tax ~~and~~credit ~~cash~~exists ~~flow.~~for ~~Our~~years ~~ability~~prior to ~~pay~~2003. However, ~~dividends~~AMT ~~might~~has ~~also~~been bepaid ~~restricted~~in bysubsequent ~~the~~years ~~Texas~~and ~~Business~~is ~~Organizations~~anticipated ~~Code~~in future periods.

~~Our~~Federal ~~senior~~net ~~credit~~operating ~~facilities~~losses ~~provide~~(“NOLs”) ~~certain~~of ~~financial~~$141.5 ~~covenants~~million ~~that~~existing weat ~~must~~December 31, ~~satisfy.~~2010 ~~Any~~expire ~~failure~~between to2020 ~~comply~~and ~~with~~2029. Realization of the ~~financial~~deferred ~~covenants~~tax inassets ~~any~~arising ~~single~~from ~~loan~~NOLs ~~agreement~~is ~~will~~dependent ~~result~~on ingenerating asufficient ~~cross~~taxable ~~default~~income ~~under~~prior to the ~~various~~expiration ~~facilities.~~of ~~Such~~the ~~financial~~loss ~~covenants~~carryforwards. ~~include:~~

•Due to a ~~profitable~~2002 ~~operations~~corporate ~~covenant~~restructuring, ~~which~~an ~~requires~~ownership ~~our~~change ~~consolidated~~within ~~net~~the ~~income~~meaning of Section 382(ig) ~~for~~of ~~any~~the ~~fiscal~~Internal ~~year~~Revenue toCode ~~not~~(the be“Code”) ~~less~~occurred. ~~than~~As ~~$1.00~~a result, ~~(ii)~~a portion of our NOL is subject to an annual limitation for ~~any~~the ~~two~~current ~~consecutive~~and ~~fiscal~~future ~~quarters,~~taxable ~~determined~~years. onThis anannual ~~individual~~limitation ~~rather~~may ~~than~~be anincreased ~~aggregate~~for ~~basis,~~any recognized built-in gain to ~~not~~the beextent ~~less~~allowed ~~than~~in $1Section 382(h) of the Code.00 The current annual limitation of $768,000 represents ~~and~~the ~~(iii)~~value ~~for~~of ~~any~~our ~~rolling~~stock ~~12-month~~immediately ~~period~~before tothe ~~not~~ownership bechange ~~less~~multiplied ~~than~~by the applicable long-term tax-exempt rate. We believe that $18.~~00,~~5 ~~and~~million of our net operating

•24 a debt service covenant which requires our ratio of (i) earnings before interest, income taxes, depreciation, and amortization, less capital expenditures as determined in accordance with generally accepted accounting principles, to (ii) the interest expense minus all non-cash items constituting interest expense to not be less than 1.25 to 1 as of the last day of each fiscal quarter, for the latest rolling 12 months then ending, or for the average of the last four quarters.

~~One~~ loss ofcarryforwards ~~our~~as ~~senior~~of ~~lenders~~December 31, ~~Textron~~2010 ~~Financial~~were ~~Corporation~~subject ~~(“Textron”),~~to ~~and other timeshare industry lenders have announced that they will cease or modify their commercial lending activities in~~ the ~~future~~Section 382 limitations. ~~While we have received no notice from any of our other lenders that our current financing arrangements will be impacted by these decisions, our ability to obtain financing in the~~

25Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Index~~General — Interest on our notes receivable portfolio, senior subordinated debt, capital leases, and miscellaneous notes is fixed, whereas interest on our primary loan agreements, with an outstanding loan balance of $386.9 million at March 31, 2011, have a fixed-to-floating debt ratio of 68% fixed to 32% floating. However, the majority of our floating-rate debt is subject to interest-rate floors between 6.00% and 8.00%.

~~future to replace these facilities may be limited by a lack of commercial lenders.~~ At ~~September~~March 3031, ~~2010~~2011, ~~our~~the ~~senior~~carrying ~~credit~~value ~~facilities provided for loans~~ of upour tonotes ~~$501.6~~receivable ~~million,~~portfolio ofapproximates ~~which~~fair ~~$75.0~~value ~~million,~~because orthe ~~15.0%,~~weighted average ~~was~~interest ~~related~~rate toon ~~Textron.~~the Inportfolio ~~addition,~~approximates ~~our~~current ~~availability~~interest ~~for~~rates ~~future~~received ~~advances~~on atsimilar ~~September 30, 2010, under these senior credit facilities was $107~~notes.9 ~~million,~~Our offixed-rate ~~which~~notes ~~$16.8~~receivable ~~million,~~are orsubject ~~15.6%,~~to ~~was~~interest ~~related~~rate torisk ~~our~~and ~~Textron~~will ~~senior~~decrease ~~credit~~in ~~facility.~~fair ~~While~~value weif domarket ~~not~~rates ~~currently~~increase, ~~anticipate~~which amay ~~material~~ negatively impact to our ~~liquidity~~ability asto asell ~~result~~our offixed-rate ~~Textron’s~~notes ~~announcement~~in ~~about its future as a timeshare lender, we will continue to monitor~~ the ~~effect of this announcement on our operations~~marketplace.

~~Cash~~Credit ~~Flows~~Risk ~~from~~— ~~Operating~~We ~~Activities.~~are Weexposed ~~generate~~to ~~cash~~credit ~~primarily~~risk related ~~from~~to ~~down~~our ~~payments~~notes ~~received~~receivable. We ~~from~~offer financing to the ~~sale~~buyers of Vacation Intervals, at our resorts. These buyers generally make a down payment of 10% to 15% of the ~~financing~~purchase price and ~~collection~~deliver ofa ~~customer~~promissory note to us for the balance. The promissory notes ~~receivable~~generally ~~from~~bear interest at a fixed rate, are payable over a seven to ten year period, and are secured by a deed of trust on the Vacation Interval. We ~~owners,~~bear the ~~sale~~risk of defaults on these promissory notes. Although ~~receivable~~we toprescreen ~~our~~prospects ~~variable~~via ~~interest~~credit ~~entities,~~scoring ~~management~~techniques ~~fees,~~in ~~sampler~~the ~~sales,~~early ~~marina~~stages ~~income,~~of ~~golf~~the ~~course~~marketing and ~~pro~~sales ~~shop income~~process, ~~water~~we ~~park~~generally ~~income,~~do ~~and~~not ~~hotel~~perform ~~income.~~a Wedetailed ~~typically~~credit ~~receive~~history areview ~~10%~~of our customers. Due to ~~15%~~the ~~down~~state ~~payment~~of onthe ~~sales~~economy ofthe last ~~Vacation~~two ~~Intervals~~years, and ~~finance~~related deterioration of the ~~remainder~~residential ~~with~~real estate market and sub-prime mortgage markets, the ~~issuance~~risk of aVacation ~~seven-to-ten-year~~Interval ~~customer~~defaults ~~promissory~~has ~~note~~heightened. Because Wewe ~~generate~~use ~~cash~~various mass-marketing techniques, a certain percentage of our sales are generated from ~~customer~~customers ~~notes~~who ~~receivable~~may ~~(i)~~be byconsidered ~~borrowing~~to athave marginal credit quality. In addition, during the past two years we experienced an ~~advance~~increase ~~rate~~in ofdefaults ~~75%~~in toour ~~80%~~loan ofportfolio ~~eligible~~as ~~customer~~compared ~~notes~~to ~~receivable~~historical rates. Due to existing economic conditions, ~~(ii)~~there bycan ~~selling~~be ~~notes~~no ~~receivable~~assurance that defaults have stabilized or will not increase further. Customer default levels, ~~and~~other ~~(iii)~~adverse ~~from~~changes in the ~~spread~~credit ~~between~~markets, ~~interest~~and ~~received~~related onuncertain ~~customer~~economic ~~notes~~conditions ~~receivable~~may ~~and~~eliminate ~~interest~~or ~~paid~~reduce the onavailability ~~related~~or ~~borrowings.~~increase ~~Because~~the wecost ~~use~~of significant ~~cash~~sources of funding for us in the ~~development~~future. Our ~~and~~estimated ~~marketing~~uncollectible revenue as a percentage of Vacation ~~Intervals~~Interval ~~but~~sales ~~collect~~was ~~cash~~24.9% onfor ~~customer~~the ~~notes~~first ~~receivable~~quarter ~~over~~of a2011 ~~seven-to-ten-~~and 28.3% for both the first quarter of 2010 and the full year ~~period,~~of ~~borrowing~~2010. ~~against~~We ~~receivables~~will ~~has~~continue ~~historically~~to ~~been~~evaluate our collections process and marketing programs with a ~~necessary~~view ~~part~~toward establishing procedures aimed at reducing note defaults and improving the credit quality of ~~normal~~our customers. However, ~~operations~~there can be no assurance that these efforts will be successful.

~~During~~If ~~the~~a ~~nine~~buyer ~~months~~of ~~ended~~a ~~September 30,~~Vacation ~~2010~~Interval defaults, ~~cash~~we ~~provided~~generally bymust ~~operating~~foreclose ~~activities~~on ~~was~~the ~~$5.1~~Vacation ~~million~~Interval ~~compared~~and attempt to ~~cash~~resell ~~used~~it; ofthe ~~$20.8~~associated ~~million~~marketing, ~~during~~selling, and administrative costs from the ~~same~~original ~~period~~sale ofare ~~2009.~~not ~~The~~recovered; ~~favorable~~and ~~spread~~such ofcosts ~~$25.9~~must ~~million~~be ~~primarily~~incurred ~~resulted~~again ~~from~~to aresell ~~decrease~~the Vacation Interval. Although in ~~the~~many ~~growth~~cases ofwe ~~our~~may ~~gross~~have ~~notes~~recourse ~~receivable~~against ina ~~the~~Vacation ~~first~~Interval ~~nine~~buyer ~~months~~for ofthe ~~2010~~unpaid note balance, ~~partially~~certain ~~offset~~states byhave anlaws ~~increase~~that inlimit ~~the~~our ~~amounts~~ability ~~due~~to ~~from~~recover ~~affiliates~~personal ofjudgments ~~$12~~against customers who have defaulted on their loans.6 Accordingly, ~~million~~we have generally not pursued this remedy.

~~Cash~~Interest ~~Flows~~Rate ~~from~~Risk ~~Investing~~— ~~Activities.~~We ~~During~~have historically ~~the~~derived ~~first~~net ~~nine~~interest ~~months~~income offrom ~~2010,~~our ~~net~~financing ~~cash~~activities ~~provided~~because bythe ~~investing~~interest ~~activities~~rates ~~was~~we ~~$361,000~~charge ~~compared~~our tocustomers ~~cash~~who ~~used~~finance the purchase of ~~$2.0~~their ~~million~~Vacation ~~during~~Intervals exceed the ~~first~~interest ~~nine~~rates ~~months~~we ofpay ~~2009.~~to ~~Net~~our ~~cash~~senior ~~provided~~lenders. As 32% of ~~$361,000~~our senior inindebtedness ~~2010~~bears ~~was~~interest ~~primarily~~at ~~the~~variable ~~result~~rates ofand ~~$2.0~~our ~~million~~customer ofnotes ~~proceeds~~receivable ~~received~~bear ~~from~~interest ~~the~~at ~~sale~~fixed ofrates, ~~water~~increases ~~utility~~in ~~assets~~interest atrates ~~our~~will ~~Seaside~~erode ~~Resort,~~the ~~partially~~spread ~~offset~~in byinterest ~~$1.6~~rates ~~million~~that ofwe ~~purchases~~have ofhistorically ~~equipment,~~experienced ~~leasehold improvements,~~ and ~~other~~could ~~general~~cause ~~capital~~our interest ~~expenditures.~~expense ~~The~~on ~~gain~~borrowings ~~resulting~~to ~~from~~exceed ~~the~~our ~~sale~~interest ofincome ~~the~~on ~~water~~our ~~utility~~portfolio ~~assets~~of ~~was~~customer ~~$77,000~~loans. Although ~~The~~interest ~~$2.0~~rates ~~million~~have ~~cash~~remained ~~used~~fairly inconstant ~~investing~~throughout ~~activities~~2010 inand the first ~~nine~~quarter ~~months~~ of ~~2009~~2011, ~~represents~~any ~~purchases~~increase ofin ~~equipment,~~interest ~~leasehold~~rates ~~improvements,~~above applicable ~~and~~floor ~~other~~rates, ~~general~~particularly ~~capital~~if ~~expenditures.~~sustained, ~~The~~could ~~reduction~~have ina ~~capital~~material ~~expenditures~~adverse iseffect ~~consistent~~on ~~with~~ our ~~business~~results ~~plan~~of inoperations, ~~effect~~cash ~~for~~flows, ~~2010~~and financial position.

~~Cash~~A ~~Flows~~hypothetical ~~from~~one-point ~~Financing~~interest ~~Activities.~~rate ~~During~~increase in the ~~first~~marketplace ~~nine~~at ~~months of 2010~~March 31, ~~net~~2011 ~~cash~~would ~~used~~result in ~~financing~~a ~~activities~~fair ~~was~~value ~~$11.0~~decrease ~~million compared to cash provided by financing activities~~ of ~~$24.5~~approximately ~~million in the comparable 2009 period. Net cash used of~~ $1114.09 million inon ~~2010~~our ~~was~~notes ~~primarily~~receivable ~~the result of $305~~portfolio.8 ~~million~~The impact of ~~proceeds~~a ~~received~~one-point ~~from~~effective ~~borrowings~~interest ~~against~~rate ~~pledged~~change ~~notes~~on ~~receivable~~the ~~and inventory loans, offset by~~ $~~310~~125.74 million balance of ~~payments~~variable-rate ondebt ~~borrowings~~instruments ~~against~~at ~~pledged notes receivable and inventory loans~~March 31, ~~$5.7~~2011 ~~million~~would ~~restricted~~be ~~cash~~approximately ~~reserved for payments of debt, and~~ $~~427~~35,000 ~~for~~on ~~the~~our ~~purchase~~results of ~~treasury shares. The securitization transaction we closed in June 2010 through our newly-formed~~operations, ~~wholly-owned~~after ~~and~~income ~~fully consolidated variable interest entity~~taxes, ~~SF-VII, generated $145.5 million of the $305.8 million of proceeds received from borrowings and $142.1 million of the $310.7 million of payments on borrowings~~ for the ~~nine~~three months ended ~~September~~ March 3031, ~~2010.~~2011, ~~Net~~due ~~cash~~to ~~provided of $24.5 million in 2009 was primarily~~ the ~~result~~interest ofrate ~~$216.6~~floors ~~million~~we ofare ~~proceeds~~subject ~~received~~to ~~from~~on ~~borrowings~~the ~~against~~majority ~~pledged notes receivable and inventory loans, offset by $190.5 million~~ of ~~payments~~our onvariable-rate ~~borrowings against pledged notes receivable and inventory loans and $1.7 million restricted cash reserved for payments of~~ debt.

~~Income~~Our variable ~~Taxes.~~funding ~~For~~note ~~regular~~(“VFN”) ~~federal~~with ~~income~~SF-IV ~~tax~~acts ~~purposes,~~as wean ~~report~~interest ~~substantially~~rate ~~all~~hedge ofto ~~the~~partially ~~Vacation~~offset ~~Interval~~potential ~~sales~~increases wein ~~finance~~interest ~~under the installment method. Under this method~~rates, ~~income~~since onit ~~sales~~contains ~~of Vacation Intervals is not recognized until cash is received, either in the form of~~ a ~~down~~provision ~~payment~~for oran asinterest ~~installment~~rate ~~payments on customer notes receivable~~cap. The ~~deferral~~principal ofbalance ~~income tax liability conserves cash resources on a current basis. Interest is imposed, however, on the amount~~ of ~~tax attributable to~~ the ~~installment~~SF-IV ~~payments~~line ~~for the period beginning on the date~~ of credit ~~sale~~was ~~and~~$345,000 ~~ending~~at onMarch 31, ~~the date the payment is received~~2011. IfIn weFebruary ~~are not subject to tax in a particular year~~2011, ~~no interest is imposed since~~ the ~~interest~~revolving isperiod ~~based on the amount~~ of ~~tax~~such ~~paid~~VFN inwas ~~that~~extended ~~year. The condensed consolidated financial statements do not contain an accrual~~ for ~~any~~90 ~~interest~~days, ~~expense~~from ~~that~~February 12, ~~would~~2011 ~~be paid on the deferred taxes related~~ to ~~the~~May 12, ~~installment~~2011, ~~method~~ as ~~the~~discussed ~~interest~~in ~~expense~~Note is5, ~~not reasonably estimable. As we expect to realize our deferred tax assets on a~~ “~~more likely than not~~Debt.” ~~basis, we do not currently have a valuation reserve for deferred taxes.~~

In25 addition, we are subject to current alternative minimum tax ("AMT") as a result of the deferred income that results from the installment sales treatment. Payment of AMT creates a deferred tax asset in the form of a minimum tax credit, which, unless otherwise limited, reduces the future regular tax liability attributable to Vacation Interval sales. This deferred tax asset has an unlimited carryover period. The AMT credit can be utilized to the extent regular tax exceeds AMT tax liability for a given year. Due to AMT losses in certain years prior to 2003, which offset all AMT income for years prior to 2003, no minimum tax credit exists for years prior to 2003. However, AMT has been paid in subsequent years and is anticipated in future periods.

~~Index~~Availability of Funding Sources — We fund substantially all of our notes receivable, timeshare inventories, and land inventories which we originate or purchase with borrowings through our financing facilities, sales of notes receivable, internally generated funds, and proceeds from public debt and equity offerings. Borrowings are in turn repaid with the proceeds we receive from collections on such notes receivable. To the extent that we are not successful in maintaining or replacing existing financings, we would have to curtail our operations or sell assets, which would have a material adverse effect on our results of operations, cash flows, and financial position.

~~Federal~~Geographic ~~net~~Concentration ~~operating~~— ~~losses~~Our ~~(“NOLs”)~~notes ofreceivable ~~$146.0 million existing at December 31, 2009 expire between 2020~~ and ~~2029.~~Vacation ~~Realization~~Interval ofinventories ~~the~~are ~~deferred~~primarily ~~tax~~originated ~~assets~~in ~~arising~~Texas, Missouri, ~~from~~Illinois, ~~NOLs~~Massachusetts, isGeorgia, ~~dependent~~and onFlorida. ~~generating~~Risks ~~sufficient~~inherent ~~taxable~~in ~~income~~such ~~prior~~concentrations toare: ~~the expiration of the loss carryforwards.~~

~~Due~~• toregional aand ~~2002~~general ~~corporate~~economic ~~restructuring~~stability, anwhich ~~ownership~~affects ~~change~~property ~~within~~values ~~the meaning of Section 382(g) of the Internal Revenue Code (the “Code”) occurred. As a result, a portion of our NOL is subject to an annual limitation for the current~~ and ~~future taxable years. This annual limitation may be increased for any recognized built-in gain to~~ the ~~extent~~financial ~~allowed~~stability ~~in Section 382(h)~~ of the ~~Code. The current annual limitation of $768~~borrowers,~~000~~ represents the value of our stock immediately before the ownership change multiplied by the applicable long-term tax-exempt rate. We believe that $10.9 million of our net operating loss carryforwards as of December 31, 2009 were subject to the Section 382 limitations.and

~~Item~~• ~~3. Quantitative~~the continued popularity of our resort destinations, which affects the marketability of our products and ~~Qualitative~~the ~~Disclosures~~collection ~~About~~of ~~Market~~notes ~~Risk~~receivable.

General — Interest on our notes receivable portfolio, senior subordinated debt, capital leases, and miscellaneous notes is fixed, whereas interest on our primary loan agreements, with an outstanding balance of $393.7 million at SeptemberItem ~~30, 2010, have a fixed-to-floating debt ratio of 46% fixed to 54% floating~~4. ~~However,~~Controls ~~the majority of our floating-rate debt is subject to interest-rate floors between 6.00%~~ and ~~8.00%.~~Procedures

AtEvaluation ~~September 30, 2010, the carrying value~~ of ~~our~~Disclosure ~~notes~~Controls receivable portfolio approximates fair value because the weighted average interest rate on the portfolio approximates current interest rates received on similar notes. Our fixed-rate notes receivable are subject to interest rate risk and ~~will~~Procedures ~~decrease in fair value if market rates increase, which may negatively impact our ability to sell our fixed-rate notes in the marketplace.~~

~~Credit~~As ~~Risk~~of ~~— We are exposed to credit risk related to our notes receivable. We offer financing to~~ the ~~buyers~~end of ~~Vacation~~the ~~Intervals~~period atcovered ~~our~~by ~~resorts.~~this ~~These~~quarterly ~~buyers~~report ~~generally~~on ~~make~~Form a10-Q, ~~down~~as ~~payment~~required ofby ~~10%~~Rule to 13a-15%(b) ofunder the ~~purchase~~Exchange ~~price and deliver a promissory note to us for the balance. The promissory notes generally bear interest at a fixed rate~~Act, ~~are~~we ~~payable~~have ~~over~~carried aout ~~seven~~an ~~to ten year period~~evaluation, ~~and~~under ~~are secured by a deed of trust on~~ the ~~Vacation~~supervision ~~Interval.~~and Wewith ~~bear~~ the participation ~~risk~~ of ~~defaults~~our onmanagement, ~~these~~including ~~promissory~~our ~~notes.~~Chief ~~Although~~Executive weOfficer ~~prescreen~~and ~~prospects~~Chief ~~via~~Financial ~~credit~~Officer, ~~scoring~~of ~~techniques in~~ the ~~early~~effectiveness ~~stages~~ of the ~~marketing~~design and ~~sales~~operation ~~process, we generally do not perform a detailed credit history review~~ of our ~~customers.~~disclosure ~~Due~~controls ~~to the state of the economy in general,~~ and ~~related~~procedures ~~deterioration~~(as ofsuch ~~the~~term ~~residential~~is ~~real~~defined ~~estate~~in ~~market~~Rules 13a-15(e) and ~~sub~~15d-~~prime~~15(e) under ~~mortgage markets,~~ the ~~risk~~Exchange ofAct). ~~Vacation~~Management ~~Interval~~necessarily ~~defaults~~applied ~~has~~its ~~heightened.~~judgment ~~Because~~in weassessing ~~use~~the ~~various mass~~cost-~~marketing~~benefit ~~techniques,~~relationship ~~a certain percentage~~ of ~~our~~such ~~sales~~controls ~~are~~and ~~generated~~procedures, ~~from~~which, ~~customers~~by ~~who~~their ~~may be considered to have marginal credit quality. In addition~~nature, ~~during~~can ~~2009~~provide weonly ~~experienced~~reasonable anassurance ~~increase~~regarding inmanagement’s ~~defaults~~control objectives. inWe ~~our~~believe ~~loan~~that ~~portfolio~~a ascontrols ~~compared~~system, tono ~~historical~~matter ~~rates.~~how ~~Due~~well todesigned ~~existing~~and ~~economic conditions~~operated, ~~there~~cannot ~~can~~provide beabsolute no assurance that ~~defaults~~the ~~have~~objectives ~~stabilized~~of orthe ~~will~~controls ~~not~~system ~~increase~~are ~~further. Customer default levels~~met, ~~other adverse changes in the credit markets,~~ and ~~related~~no ~~uncertain~~evaluation ~~economic~~of ~~conditions~~controls ~~may~~can ~~eliminate~~provide orabsolute ~~reduce~~assurance ~~the~~that ~~availability~~all control orissues ~~increase~~and ~~the~~instances ~~cost~~ of ~~significant~~fraud, ~~sources~~if ofany, ~~funding~~within ~~for~~a uscompany inhave ~~the~~been ~~future~~detected. ~~Our~~Based ~~estimated~~upon ~~uncollectible~~the ~~revenue~~foregoing evaluation as ~~a percentage~~ of ~~Vacation~~March 31, 2011, ~~Interval~~our ~~sales~~Chief ~~was~~Executive ~~28.3%~~Officer ~~for~~and ~~the~~Chief ~~first~~Financial ~~nine~~Officer ~~months~~concluded ofthat ~~2010~~our ~~compared~~disclosure tocontrols and ~~35.1%~~procedures ~~for~~were ~~the~~effective ~~same period of 2009,~~ and ~~33.3%~~operating ~~for~~as ~~the~~of ~~year ended December~~March 31, 2011, ~~2009.~~to ~~See~~provide ~~Note~~reasonable 4assurance ~~"Notes~~that ~~Receivable"~~information ~~for~~required ato ~~discussion~~be ofdisclosed ~~the~~by ~~higher~~us ~~provision rate~~ in ~~2009,~~the ~~which~~reports ~~resulted~~we ~~primarily~~file ~~from~~or asubmit ~~provision~~under ~~of 52.2% in~~ the ~~third~~Exchange ~~quarter~~Act ofis ~~2009. If~~recorded, ~~default~~processed, ~~rates~~summarized, and ~~for~~reported ~~our~~within ~~borrowers~~the ~~were~~time toperiods ~~continue~~specified toin ~~rise,~~the itrules ~~may~~and ~~require~~forms anof ~~increase~~the inSEC, ~~our~~and ~~estimated~~to ~~uncollectible~~provide ~~revenue.~~reasonable Weassurance ~~will~~that ~~continue~~such toinformation ~~evaluate~~is ~~our~~accumulated ~~collections process~~ and ~~marketing~~communicated ~~programs~~to ~~with~~our amanagement, ~~view~~including ~~toward~~our ~~establishing~~Chief ~~procedures~~Executive ~~aimed~~Officer ~~at reducing note defaults~~ and ~~improving~~Chief ~~the~~Financial Officer, ~~credit~~as ~~quality of our customers. However~~appropriate, ~~there~~to ~~can~~allow betimely nodecisions ~~assurance~~regarding ~~that~~required ~~these efforts will be successful~~disclosure.

IfChanges a buyer of a Vacation Interval defaults, we generally must foreclose on the Vacation Interval and attempt to resell it; the associated marketing, selling, and administrative costs from the original sale are not recovered; and such costs must be incurred again to resell the Vacation Interval. Although in ~~many~~Internal ~~cases~~Control weover ~~may~~Financial have recourse against a Vacation Interval buyer for the unpaid note balance, certain states have laws that limit our ability to recover personal judgments against customers who have defaulted on their loans. Accordingly, we have generally not pursued this remedy.Reporting

~~Interest~~During ~~Rate Risk — We have historically derived net interest income from~~ our ~~financing~~most ~~activities~~recent ~~because~~fiscal the interest rates we charge our customers who finance the purchase of their Vacation Intervals exceed the interest rates we pay to our senior lenders. As 54% of our senior indebtedness bears interest at variable rates and our customer notes receivable bear interest at fixed ratesquarter, ~~increases~~there inwere ~~interest~~no ~~rates~~changes ~~will erode the spread~~ in ~~interest rates that we have historically experienced and could cause~~ our ~~interest~~internal ~~expense~~control onover ~~borrowings~~financial toreporting ~~exceed~~that ~~our interest income on our portfolio of customer loans. Although interest rates~~ have materially ~~remained fairly constant the last two years~~affected, ~~any~~or ~~increase~~are inreasonably ~~interest~~likely ~~rates~~to ~~above~~materially ~~applicable floor rates~~affect, ~~particularly if sustained, could have a material adverse effect on~~ our ~~results~~internal ofcontrol ~~operations,~~over ~~cash flows, and~~ financial ~~position~~reporting.

APART ~~hypothetical~~II: ~~one-point~~OTHER ~~interest~~INFORMATION rate increase in the marketplace at September 30, 2010 would result in a fair value decrease of approximately $14.9 million on our notes receivable portfolio. The impact of a one-point effective interest rate change on the $213.5 million balance of variable-rate debt instruments at September 30, 2010 would be approximately $39,000 on our results

27Item 1. Legal Proceedings

~~Index~~We are currently subject to litigation arising in the normal course of our business. From time to time, such litigation includes claims regarding employment, tort, contract, truth-in-lending, the marketing and sale of Vacation Intervals, and other consumer protection matters. Litigation has been initiated from time to time by persons seeking individual recoveries for themselves, as well as, in some instances, persons seeking recoveries on behalf of an alleged class. In our judgment, none of the lawsuits currently pending against us, either individually or in the aggregate, is expected to have a material adverse effect on our business, results of operations, liquidity or financial position.

Various legal actions and claims may be instituted or asserted in the future against us and our subsidiaries, including those arising out of ~~operations~~our sales and marketing activities and contractual arrangements. Some of these matters may involve claims, ~~after~~which, ~~income~~if ~~taxes~~granted, ~~for~~could ~~the~~be ~~nine~~materially ~~months~~adverse ~~ended~~to ~~September 30,~~our ~~2010~~financial position.

~~Our~~Litigation ~~variable~~is ~~funding~~subject ~~note~~to ~~with~~many ~~SF-IV~~uncertainties, ~~acts~~and asthe anoutcome ~~interest~~of ~~rate~~individual ~~hedge~~litigated matters is not predictable with assurance. We will establish reserves from time to ~~partially~~time ~~offset~~when ~~potential~~deemed ~~increases~~appropriate inunder ~~interest~~generally ~~rates~~accepted accounting principles. However, ~~since~~the itoutcome ~~contains~~of a ~~provision~~claim for anwhich ~~interest~~we ~~rate~~have ~~cap.~~not ~~The~~deemed ~~principal~~a ~~balance~~reserve ofto ~~the~~be ~~SF-IV~~necessary ~~line~~may ofbe ~~credit~~decided ~~was~~unfavorably ~~$32.3~~against ~~million~~us atand ~~September~~could require ~~30,~~us ~~2010.~~to ~~Such~~pay ~~variable~~damages ~~funding~~or ~~note~~incur ~~will~~other ~~mature~~expenditures inthat ~~February~~could ~~2013.~~be materially adverse to our business,

~~Availability~~26 of Funding Sources — We fund substantially all of our notes receivable, timeshare inventories, and land inventories which we originate or purchase with borrowings through our financing facilities, sales of notes receivable, internally generated funds, and proceeds from public debt and equity offerings. Borrowings are in turn repaid with the proceeds we receive from collections on such notes receivable. To the extent that we are not successful in maintaining or replacing existing financings, we would have to curtail our operations or sell assets, which would have a material adverse effect on our results of operations, cash flows, and financial position.

• results ~~regional~~of ~~and general economic stability~~operations, ~~which~~or ~~affects property values and the~~ financial ~~stability~~position. ~~of the borrowers, and~~

•Litigation ~~the~~Related ~~continued~~to ~~popularity of our resort destinations, which affects~~ the ~~marketability of our products and the collection of notes receivable.~~Merger

~~Item~~In 4TFebruary 2011, three purported shareholder derivative suits were filed in Dallas County state district court arising out of the Agreement and Plan of Merger between Silverleaf and Resort Holdings. ~~Controls~~The three suits have been consolidated into one action before the 116th District Court styled In re: Silverleaf Resorts, Inc. Derivative Litigation, Cause No. DC-11-1419-F, the Consolidated Action. In their Consolidated Amended Derivative Petition, the plaintiffs purport to assert claims on behalf of Silverleaf against each member of the Company’s Board, as well as Cerberus and ~~Procedures~~its affiliate companies, Resort Holdings and Merger Sub. The plaintiffs’ allegations include that the consideration in the proposed transaction is inadequate; that the Board entered into the proposed transaction to procure significant financial benefits for themselves and senior management; that the Board and senior management unreasonably favored Cerberus throughout the sales process; the Board agreed to deal protective devices that precluded a successful competing offer for Silverleaf; that, based on the Silverleaf’s March 10, 2011 preliminary proxy statement, the Board failed to make adequate disclosures to allow Silverleaf’s shareholders to cast an informed vote regarding the proposed transaction; and that such alleged conduct constitutes a breach of the Board’s duties of loyalty, due care, independence, candor, good faith, and fair dealing. The plaintiffs also claim that Silverleaf and the Cerberus entities aided and abetted in the alleged breaches of fiduciary duty by the Company’s directors. On March 15, 2011, another purported shareholder derivative suit was filed in Dallas County state district court, styled Jose Dias, on behalf of himself and others similarly situated vs. Robert E. Mead, et al, the Dias Action. In that suit, the plaintiff purports to assert claims on behalf of the Company against each of its directors based on similar allegations as in the consolidated petition and asserts claims for breach of fiduciary duty and breach of the duty of disclosure. Under the consolidation order issued by the 116th District Court, Silverleaf anticipates that the Dias Action will be transferred and consolidated with the other suits in the Consolidated Action. Among other relief, the plaintiffs in these derivative suits seek to enjoin the proposed transaction or recover damages if the transaction is consummated. None of the defendants have responded to the derivative lawsuits.

~~Evaluation~~In addition, on or about February 16, 2011, Silverleaf received a written demand from legal counsel for Frank Parker, Carlos Tapia, and Leslie Neil Hull, purported shareholders of ~~Disclosure~~the ~~Controls~~Company. Further, on or about March 1, 2011, Silverleaf received a written demand from legal counsel for Igor Zlokarmik, also a purported shareholder of the Company. These purported shareholders allege that the directors breached their fiduciary duties in connection with the proposed acquisition based on similar allegations as set forth in the derivative lawsuits and ~~Procedures~~they demand that the Company pursue legal action against the directors. Silverleaf has not responded to the written demands.

AsSilverleaf’s ofBoard ~~the~~appointed ~~end~~Paul ofR. ~~the period covered by this quarterly report on Form 10-Q~~Bessette, asa shareholder ~~required by Rule 13a-15(b) under the Securities Exchange Act~~ of ~~1934 (“~~the ~~Exchange~~law ~~Act”),~~firm weGreenberg ~~have carried out an evaluation~~Traurig, ~~under~~LLP ~~the supervision~~ and ~~with~~co-chair ~~the participation~~ of ~~our~~the ~~management,~~firm’s ~~including~~National ~~our~~Securities ~~Chief~~Litigation ~~Executive~~group, ~~Officer~~to ~~and~~perform ~~Chief~~an ~~Financial~~independent ~~Officer,~~review of the ~~effectiveness~~allegations ofmade in the ~~design~~derivative ~~and~~lawsuits ~~operation of our disclosure controls~~ and ~~procedures~~in ~~(as~~the ~~such~~written ~~term~~demands isfrom ~~defined~~shareholders pursuant into ~~Rules 13a-15~~Section 21.554(ea) ~~and 15d-15~~(e3) ~~under~~of the ~~Exchange~~Texas ~~Act).~~Business ~~Management~~Organizations ~~necessarily~~Code. applied its judgment in assessing the cost-benefit relationship of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectivesMr. Bessette Wehas ~~believe~~been ~~that~~delegated afull ~~controls system, no matter how well designed~~ and ~~operated,~~complete ~~cannot~~authority ~~provide~~to ~~absolute~~exercise ~~assurance that~~ the ~~objectives~~business judgment of the ~~controls~~Company ~~system are met,~~ and noto ~~evaluation~~determine ~~of controls can provide absolute assurance that all control issues~~ and ~~instances~~implement ofor ~~fraud,~~cause ifto be implemented any, ~~within~~actions ato ~~company~~be ~~have~~taken ~~been~~by ~~detected.~~Silverleaf ~~Based~~in ~~upon~~response to the ~~foregoing~~findings ~~evaluation~~he ~~as of September 30~~makes, ~~2010,~~including ~~our~~but ~~Chief~~not ~~Executive~~limited ~~Officer~~to: ~~and~~(i) whether ~~Chief~~it ~~Financial~~is ~~Officer~~in ~~concluded~~the ~~that~~best ~~our~~interests ~~disclosure controls and procedures were effective and operating as~~ of ~~September 30,~~Silverleaf ~~2010, to provide reasonable assurance~~ that ~~information~~the ~~required~~derivative tosuits be ~~disclosed~~continued byor uswhether in the ~~reports~~derivative wesuits should ~~file~~be orterminated ~~submit~~and ~~under~~ (ii) the ~~Exchange~~terms, ~~Act~~if ~~is recorded~~any, ~~processed,~~upon ~~summarized,~~which ~~and~~any ~~reported~~claim within the ~~time~~scope ~~periods~~of ~~specified~~his inresponsibility ~~the rules~~ and ~~forms~~authority ofshould ~~the~~be ~~SEC~~dismissed, ~~and~~settled, ~~to provide reasonable assurance that such information is accumulated~~ and/or ~~communicated~~released. toThe ~~our~~Court ~~management,~~stayed ~~including~~the ~~our~~derivative ~~Chief~~proceedings ~~Executive~~pending Mr. Bessette’s ~~Officer~~review ~~and~~pursuant ~~Chief Financial Officer, as appropriate,~~ to ~~allow~~Section 21.555 ~~timely~~of ~~decisions~~the ~~regarding required disclosure~~TBOC.

~~Changes~~On April 26, 2011, Mr. Bessette submitted to the Company his report with respect to the claims asserted in ~~Internal~~the ~~Control~~Consolidated Action. This report was the result of Mr. Bessette’s comprehensive investigation of plaintiff’s claims in the purported derivative lawsuits. His investigation consisted primarily of documentary and testimonial due diligence conducted over ~~Financial~~an ~~Reporting~~approximately four-week period, including, without limitation: (i) a review of all pleadings and other documents filed in the Consolidated Action; (ii) in-person meetings with and telephonic interviews of counsel for Silverleaf and the plaintiffs; (iii) a review of draft and definitive documents, agreements, communications, reports, presentations and corporate books and records, including Silverleaf’s public announcements of and filings with the SEC, the U.S. Federal Trade Commission and the U.S. Department of Justice, and all other documents and information produced by Silverleaf and its counsel at the request of Mr. Bessette; (iv) comprehensive interviews of principal parties to the Consolidated Action, the representatives of the constituent parties involved in Cerberus’ acquisition of Silverleaf through the merger, and other third-party witnesses Mr. Bessette deemed relevant and necessary in the conduct of his investigation; and (v) research under applicable Texas and Delaware state corporate and U.S. federal securities law and a review of recent public company sale of control transactions processes, agreements, terms and conditions which Mr. Bessette, in his judgment and experience, deemed reasonably comparable to the merger and relevant to the conduct of his investigation.

~~During~~27 our most recent fiscal quarter, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Item~~As 1a result of this investigation, Mr. ~~Legal~~ Bessette ~~Proceedings~~concluded that the continuation of the Consolidated Action is not in the best interests of Silverleaf and that, for reasons detailed in the full report, the Silverleaf directors named in the Consolidated Action complied with their fiduciary obligations to Silverleaf under Texas law in connection with the sale of Silverleaf to Cerberus.

WeOn ~~are~~May 9, ~~currently~~2011, ~~subject~~Silverleaf and the other parties to ~~litigation~~the ~~arising~~Consolidated Action (through their respective counsel) reached a settlement in principle, which provides for the ~~normal~~dismissal ~~course~~with prejudice of ~~our~~the ~~business.~~Consolidated ~~From~~Action ~~time~~and toa ~~time,~~release ~~such~~of ~~litigation~~the ~~includes~~defendants from all present and future claims ~~regarding~~asserted ~~employment,~~in ~~tort~~the Consolidated Action in exchange for, ~~contract~~among other things, ~~truth-~~providing the Company’s shareholders with the supplemental disclosure contained in~~-lending~~ the May 9, 2011 Supplement #1 to the ~~marketing~~Company’s ~~and~~Definitive ~~sale~~Proxy ofStatement, ~~Vacation~~filed ~~Intervals~~April 18, ~~and~~2011. ~~other~~In addition, ~~consumer~~as ~~protection~~part ~~matters.~~of ~~Litigation~~the ~~has~~settlement ~~been~~in ~~initiated~~principle, ~~from~~Silverleaf ~~time~~has agreed to ~~time~~pay byan ~~persons~~amount ~~seeking~~not ~~individual~~to ~~recoveries~~exceed $200,000 to plaintiffs’ counsel for ~~themselves,~~their asfees ~~well~~and asexpenses, insubject ~~some~~to ~~instances,~~court ~~persons~~approval. ~~seeking~~Silverleaf ~~recoveries~~has onhad ~~behalf~~preliminary conversations with representatives of anits ~~alleged~~insurers ~~class~~and expects such insurers to contribute $75,000 toward such fees and expenses. InThe ~~our~~proposed ~~judgment~~settlement is subject to further definitive documentation and to a number of conditions, ~~none~~including, without limitation, the consolidation of the ~~lawsuits~~Dias ~~currently~~Action ~~pending~~into ~~against~~the usConsolidated Action, ~~either~~the ~~individually~~completion orof incertain reasonable discovery by the ~~aggregate~~plaintiffs, isthe ~~expected~~drafting toand ~~have~~execution of a ~~material~~formal ~~adverse~~Stipulation ~~effect~~of onSettlement, ~~our~~and ~~business,~~court ~~results~~approval of ~~operations,~~the ~~liquidity~~proposed orsettlement. ~~financial~~There is ~~position~~no assurance that these conditions will be satisfied.

~~Various~~The ~~legal~~settlement ~~actions~~will ~~and~~not ~~claims~~affect ~~may be instituted or asserted in~~ the ~~future~~merger ~~against~~consideration usto ~~and~~be ~~our~~paid to ~~subsidiaries,~~shareholders ~~including~~of ~~those~~Silverleaf ~~arising~~in ~~out~~connection ofwith ~~our~~the ~~sales~~proposed merger, and ~~marketing~~it ~~activities~~did ~~and~~not ~~contractual~~affect ~~arrangements.~~the ~~Some~~timing of ~~these~~the ~~matters~~special ~~may~~meeting ~~involve~~of ~~claims,~~shareholders ~~which,~~held ifon ~~granted~~May 11, ~~could be materially adverse to our financial position~~2011.

28Item 1A. Risk Factors

~~Index~~No changes.

~~Litigation is subject to many uncertainties, and the outcome of individual litigated matters is not predictable with assurance~~Item 2. WeUnregistered ~~will~~Sales ~~establish reserves from time to time when deemed appropriate under generally accepted accounting principles. However, the outcome~~ of aEquity ~~claim~~Securities ~~for which we have not deemed a reserve to be necessary may be decided unfavorably against us~~ and ~~could~~Use ~~require us to pay damages or incur other expenditures that could be materially adverse to our business, results~~ of ~~operations,~~Proceeds ~~or financial position.~~

WeDuring ~~have been a co-plaintiff with one other party in two related matters brought in~~ the ~~Land~~first ~~Court~~quarter ~~Department~~ of ~~the Trial Court of the Commonwealth of Massachusetts~~2010, ~~each~~ ~~styled~~our ~~as Silverleaf Resorts, Inc., et al. v. Zoning~~ Board of ~~Appeals~~Directors ofapproved the ~~Town~~extension of ~~Lanesborough,~~our etstock ~~al.,~~repurchase ~~Civil~~program ~~Action~~which ~~No.~~authorized ~~07 MISC 351155 and Civil Action No. 09 MISC 393464. In these actions, we and~~ the repurchase ~~co-plaintiff challenged the validity~~ of aup ~~special permit issued in June 2004 by the Lanesborough Zoning Board of Appeals~~ to ~~Berkshire~~two ~~Wind~~million ~~Power~~shares ~~Cooperative Corporation's (the “Wind Cooperative”) predecessor-in-interest for construction and use~~ of aour ~~private~~common ~~access~~stock. ~~road~~This ~~that~~stock ~~runs~~repurchase ~~from~~program, ~~Brodie~~which ~~Mountain~~was ~~Road~~originally inscheduled ~~Lanesborough~~ to ~~Sheep's~~expire ~~Heaven Mountain that the Wind Cooperative needs to access the property on the ridge line of Brodie Mountain~~ in ~~Hancock,~~July ~~Massachusetts~~2010, ~~where~~will itnow isexpire ~~constructing~~in aJuly ~~wind farm~~2011. We ~~initiated~~suspended ~~these lawsuits in 2007 because~~ the ~~Wind~~stock ~~Cooperative's~~repurchase ~~predecessor-in-interest~~program ~~had~~on ~~plans to construct a multi-turbine wind farm directly adjacent (in part) to the property line of a 500-acre tract of land we own in Berkshire County~~September 15, ~~Massachusetts.~~2010 ~~Our concern was that if the Wind Cooperative were ultimately successful~~ in conjunction ~~developing this neighboring site in accordance~~ with ~~its plans,~~ the ~~proximity~~hiring of ~~such~~Gleacher aas ~~wind farm facility to~~ our ~~property line could adversely affect our property'~~Board’s ~~development.~~financial ~~Our suit sought a court decree that the special permit had expired from non-use and is therefore no longer valid, and also, that the road was not built as permitted~~advisor. The ~~cases~~stock ~~were~~repurchase ~~tried~~program inwill ~~August~~remain ~~2009,~~suspended ~~and~~until ~~while we were awaiting~~ the ~~final~~merger ~~decision~~is ofeither ~~the~~consummated ~~Land~~or ~~Court,~~terminated ~~the~~under ~~Land Court granted our motion for a preliminary injunction, finding that we were likely to prevail on~~ the ~~merits~~terms of the ~~suit~~Merger ~~and that we would suffer irreparable injury if the Wind Cooperative used the access road to continue construction of the wind farm~~Agreement. ~~The~~As ~~Wind Cooperative filed an interlocutory appeal~~ of ~~the preliminary injunction to the Massachusetts Appeals Court~~March 31, 2011, ~~but~~approximately no1.6 million ~~action~~shares ~~was~~remain ~~ever~~available ~~taken~~for onrepurchase ~~that~~under ~~appeal~~this program.

~~On April 7, 2010, the Land Court issued a decision in these cases~~Item 6. Exhibits In the case in which we claimed that the special permit had expired, the Land Court ruled in our favor, set aside the decision of the Lanesborough Zoning Board of Appeals and entered a permanent injunction barring the Wind Cooperative from using the private access road for any purpose related to or in connection with the construction of the Wind Farm, including servicing and maintaining it. In the companion case, the Court concluded that no decision was needed but indicated a willingness to make a decision if we asked for it to do so. We asked the Court not to act on the second claim while we explore settlement with the Wind Cooperative. The Wind Cooperative appealed the Decision but no action was taken on that appeal.

~~In a related matter, in September 2009, we filed an action against the Massachusetts Municipal Wholesale Electric Cooperative~~ (~~the “Electric Cooperative”~~a) inExhibits the Berkshire Superior Court, styled Silverleaf Resorts, Inc. et al v. Massachusetts Municipal Wholesale Electric Cooperative, Cause No. 09-267. The action was brought on our behalf and on behalf of the former owners. We alleged that the Electric Cooperative, an affiliate of the Wind Cooperative, acted in an ultra vires manner when it condemned approximately 50 acres that we own at the top of Brodie Mountain for use by the Wind Cooperative in building and operating its wind farm. We acquired the 50 acres in question in an arms-length transaction with an unrelated third party. Our acquisition cost attributable to this tract is approximately $100,000. The Electric Cooperative filed a counterclaim alleging abuse of process as a result of our filing this suit. The Electric Cooperative seeks unspecified damages. We filed a special motion with the court to dismiss the counterclaim filed by the Electric Cooperative as we believe that we are protected under Massachusetts law from counterclaims filed by entities such as the Electric Cooperative as a result of our challenging the taking of the property by the Electric Cooperative. In addition, we believe that we are entitled to compensation under Massachusetts law at least equal to our original investment in this tract. No date was set by the court to hear our motion. herewith:

We have been actively engaged in settlement discussions with both the Electric Cooperative and the Wind Cooperative since October 2009 and agreed with the Electric Cooperative to stay proceedings in the action related to the condemned 50 acres while we continued to explore a comprehensive settlement of all claims by and against the Electric Cooperative and the Wind Cooperative. With regard to our actions against the Wind Cooperative, we concluded that we would be able to reach an agreement with the Wind Cooperative that would allow us to fully develop the property in the manner that we originally intended while minimizing the visual impact to our property from the development of the proposed wind farm. Our pending action against the Electric Cooperative regarding the condemned acres has also been discussed as part of the overall settlement, and we were confident that we would be fully reimbursed for our original purchase price for this acreage in the event of a settlement with the Electric Cooperative. We do not believe a loss is reasonably possible for either of these two matters.


10.1		Indenture dated as of May 1, 2011 between the Registrant, Silverleaf Finance X, LLC, and Wells Fargo Bank, National Association

10.2		Standard Definitions to Indenture

10.3		Transfer Agreement dated as of May 1, 2011 between the Registrant and Silverleaf Finance X, LLC

10.4		Guaranty Agreement dated as of May 1, 2011 between the Registrant, Silverleaf Finance X, LLC, and Wells Fargo Bank, National Association

31.1		Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

31.2		Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

32.1		Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

32.2		Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

~~During~~28 July and August, 2010, we negotiated a comprehensive settlement of all outstanding issues involving the Wind Cooperatives' proposed wind farm. A Settlement Agreement (together with related implementing agreements) was then executed dated as of August 30, 2010, between us and the Wind Cooperative. It was joined in by the Electric Cooperative for the limited purposes set out in that Agreement. The Wind Cooperative agreed in the Settlement Agreement to move the three turbines located closest to

75-2259890

(State of incorporation)

(I.R.S. Employer

Identification No.)

~~Index~~SIGNATURES

~~our~~Pursuant ~~property line~~ to ~~locations~~the ~~where~~requirements ~~their~~of ~~visual impact on our project will be minimized. The Wind Cooperative also agreed not to construct any further wind turbines in~~ the ~~land~~Securities ~~being~~Exchange ~~used~~Act ~~for~~of ~~its~~1934, ~~wind farm in~~ the ~~easements~~registrant ithas ~~holds~~duly ~~for~~caused this ~~purpose~~report ~~on top of Brodie Mountain. We agreed not~~ to ~~oppose~~be ~~the~~signed ~~Wind~~on ~~Cooperative's application for a new road permit or for~~ its behalf ~~further~~by ~~construction~~the orundersigned ~~for~~thereunto ~~its~~duly ~~operation of the wind farm~~authorized.

In a separate agreement, entered into by us, the Wind Cooperative and the Electrical Cooperative, we agreed to give up our claim of title to the disputed fifty acres and to deed that property to the Electrical Cooperative. The Electrical Cooperative agreed in turn to reimburse us the $100,000 we paid to acquire that property.


Dated: May 12, 2011	By:	/s/ ROBERT E. MEAD
		Robert E. Mead
		Chairman of the Board, Chief Executive Officer, and President

Dated: May 12, 2011	By:	/s/ HARRY J. WHITE, JR.
		Harry J. White, Jr.
		Chief Financial Officer

~~Finally,~~29 ~~all parties to the outstanding suits and appeals agreed to dismiss those actions with prejudice and with all parties to bear their own fees and costs.~~

The various actions required by the Settlement Agreement and the related implementing agreements are in the process of being completed.

Item 1A. Risk Factors

No changes.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES (1)

Period	Total NumberOf SharesPurchased	Average PricePaid per Share		Total Number of SharesPurchased as Part Of PubliclyAnnounced Plan	MaximumNumber of Shares that May YetBe PurchasedUnder the Plan
July 1 through July 31	—	$	—	—	1,723,265
August 1 through August 31	111,200	1.04		111,200	1,612,065
September 1 through September 30	46,567	1.04		46,567	1,565,498
Total	157,767			157,767

_________________________

(1) During the first quarter of 2010, our Board of Directors approved the extension of our stock repurchase program which authorized the repurchase of up to two million shares of our common stock. This stock repurchase program, which was originally scheduled to expire in July 2010, will now expire in July 2011.

Index

Item 5. Exhibits

(a)	Exhibits filed herewith:
	10.1	Note Modification Agreement dated November 10, 2010 by and between Grace Brothers, Ltd., Bradford Whitmore and Silverleaf Resorts, Inc. for the Registrant's 10% Senior Subordinated Notes due 2012
	10.2	Third Amendment to Amended and Restated Sale and Servicing Agreement dated as of August 6, 2010 , by and among Silverleaf Finance IV, LLC, Silverleaf Resorts, Inc. and Wells Fargo Bank, National Association
	31.1	Certification of CEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	31.2	Certification of CFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
	32.1	Certification of CEO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
	32.2	Certification of CFO Pursuant to Section 906 of Sarbanes-Oxley Act of 2002

Index

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:	November 10, 2010	By:	/s/ ROBERT E. MEAD
			Robert E. Mead
			Chairman of the Board and
			Chief Executive Officer

Dated:	November 10, 2010	By:	/s/ HARRY J. WHITE, JR.
			Harry J. White, Jr.
			Chief Financial Officer

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