American Skiing Company reported improved financial performance at its western resorts that has helped mitigate the impact of challenging weather conditions in New England.
“Strong early season performance at Steamboat and The Canyons continued for the majority of the ski season,” said CFO Betsy Wallace. “The Canyons surpassed its prior record-setting skier visit season while Steamboat improved financial performance on similar year-over-year visitation. In the East, the weather challenges we experienced in the early season improved in the third quarter. The better weather conditions in the East during March allowed skier visits in the region to rebound from early season challenges. Nonetheless, our skier visits were slightly lower for the quarter as compared to the same quarter of the prior year. Despite these weather-related challenges, our resort financial performance has benefited from a coordinated marketing effort, aggressive cost controls, and an increase in season pass revenues which helped mitigate lower day lift ticket sales.”
Ski Season Update – Western Resorts
As previously reported, the Company's western resorts enjoyed excellent skiing and riding conditions for the majority of the season. The Canyons, located in Park City, Utah, received more than eight feet of natural snow by Thanksgiving Day and posted a significant increase in skier visits during Thanksgiving weekend. A major snowstorm added more than nine feet of snow during the two week December holiday period and the resort recorded a number of record skier visit days. The momentum in Utah continued and by the close of the Martin Luther King holiday weekend, The Canyons had received more than 23 feet of natural snow. Good conditions continued into Presidents' Day weekend. Above average temperatures and minimal natural snowfall in March slowed the visitation pace slightly, though the increase in total skier visits over fiscal 2003 was still an impressive 12%.
Steamboat opened on November 26th with more than six feet of natural snow and also posted strong Thanksgiving weekend visitation. The resort entered the peak December holiday period with more than 10 feet of natural snow and received another 4 feet during the two week holiday period. Steamboat recorded a number of record skier visit days during the December holiday period. Above average temperatures and minimal natural snowfall in March negatively impacted visitation pace. Though by season's end, total skier visits were almost unchanged from the fiscal 2003 season, structural changes, cost savings initiatives and improvements at the Steamboat Grand Resort Hotel allowed Steamboat to significantly improve its financial performance.
Ski Season Update – Eastern Resorts
In the East, the Company experienced less favorable weather conditions than in fiscal 2003. Eastern resorts received significant natural snowfall prior to the two week December holiday period. However, several rainstorms reduced available terrain relative to the prior year. As a result, total eastern skier visits during the two-week December holiday period were lower than during the comparable period in fiscal 2003 when conditions were superb. Weather challenges continued following the December holiday period with bitterly cold temperatures impacting skier visits throughout January and early February 2004. The weather in the East moderated slightly and the eastern resorts posted a 2.2% increase in skier visits during the Presidents' Day holiday weekend. Despite weather-related challenges, Attitash Bear Peak and Sunday River posted a strong increase in skier visits due primarily to a successful combined season pass offering. Weather allowed for solid visitation during certain weekends in the late season, though insufficient to overcome the impact of weather-related challenges for much of the winter season.
Fiscal 2004 Third Quarter Results
On a GAAP basis, net income available to common shareholders for the third quarter of fiscal 2004 was $24.5 million, or $0.77 per basic share and $0.35 per diluted share, compared with net income of $13.0 million, or $0.41 per basic share and $0.21 per diluted share for the third quarter of fiscal 2003.
Total consolidated revenue was $145.7 million for the third quarter of fiscal 2004, compared with $127.7 million for the third quarter of fiscal 2003. Resort revenue was $128.1 million for the quarter, compared with $122.1 million for the third quarter of fiscal 2003. The decline in resort revenue primarily reflects lower eastern skier visits attributable to unfavorable weather conditions. Real estate revenue was $17.6 million, versus $5.6 million for the comparable period in fiscal 2003. The primary driver of the increase was the successful auction sale of remaining fractional ownership inventory at The Canyons that generated a $12.0 million increase in real estate revenue over the third quarter of fiscal 2003.
The Company's net income was $24.5 million for the third quarter of fiscal 2004, compared with $22.5 million for the comparable period in fiscal 2003. Excluding restructuring and asset impairment charges, write off deferred financing costs and the accretion of preferred stock dividends, net income was $35.5 million for the third quarter of fiscal 2004 versus $25.1 million for the third quarter of fiscal 2003. Income from resort operations was $24.3 million for the third fiscal quarter of 2004 versus income of $27.3 million for the third quarter of fiscal 2003. Excluding the write off of deferred financing costs and accretion of preferred stock dividends, income from resort operations was $35.3 million for the third quarter of fiscal 2004 versus $30.1 million for the third quarter of fiscal 2003. Resort operating expenses narrowed as a result of aggressive cost control efforts, but were offset by higher costs associated with compliance with the Sarbanes-Oxley Act and other corporate and legal expenses. Income from real estate operations was $0.2 million for the third fiscal quarter of 2004, compared with a loss of $4.8 million for the third quarter of fiscal 2003. Excluding restructuring and asset impairment charges, income from real estate operations was $0.2 million for the third fiscal quarter of 2004, compared with a loss of $4.9 million for the third quarter of fiscal 2003. The Company has provided reconciliations from GAAP financial measures to non-GAAP financial measures in the tables following this discussion.
Fiscal 2004 Year-to-Date Results
On a GAAP basis, net loss available to common shareholders for the 39 weeks ended April 25, 2004 was $38.4 million, or $1.21 per basic and diluted share, compared with a net loss of $42.8 million, or $1.35 per basic and diluted share for the corresponding period of fiscal 2003. The net loss during the first 39 weeks of fiscal 2004 included a $0.1 million restructuring charge. The Company reversed charges of $0.2 million from restructuring and wrote off $2.8 million of deferred financing costs during the first 39 weeks of fiscal 2003.
Total consolidated revenue was $267.1 million for the first 39 weeks of fiscal 2004, compared with $248.7 million for the first 39 weeks of fiscal 2003. Resort revenue was $237.1 million for the first 39 weeks of fiscal 2004, compared with $238.0 million for the first 39 weeks of fiscal 2003. The decrease reflects the impact of soft conference business and poor weather conditions in the East that impacted first quarter results coupled with ski season weather challenges previously discussed. Real estate revenue was $30.0 million, versus $10.7 million for the comparable period in fiscal 2003 primarily as a result of the sale of remaining fractional ownership inventory at The Canyons.
The Company's net loss was $38.4 million for the first 39 weeks of fiscal 2004, compared with a net loss of $15.1 million for the comparable period in fiscal 2003. Excluding the restructuring charge, write off of deferred financing costs and the accretion of preferred stock dividends, the net loss was $6.5 million for the first 39 weeks of fiscal 2004 versus $12.5 million for the comparable period in fiscal 2003. The loss from resort operations was $29.3 million versus income of $1.2 million for the comparable period in fiscal 2003. Excluding restructuring charges, write off deferred financing costs and the accretion of preferred stock dividends, income from resort operations was $2.7 million for the first 39 weeks of fiscal 2004 compared to income of $3.9 million for the comparable period of fiscal 2003. The loss from real estate operations was $9.2 million for the first 39 weeks of fiscal 2004, compared with a loss of $16.3 million for the first 39 weeks of fiscal 2003. Excluding restructuring and asset impairment charges, the loss from real estate operations was $9.2 million for the first 39 weeks of fiscal 2004, compared with a loss of $16.4 million for the first 39 weeks of fiscal 2003. The Company has provided reconciliations from GAAP financial measures to non- GAAP financial measures in the tables following this discussion.
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Financial Statement Information
(in thousands except per share amounts)Quarter Ended 39 Weeks Ended
April 25, April 27, April 25, April 27,
Net revenues: 2004 2003 2004 2003
Resort $128,099 $122,129 $237,131 $238,001
Real estate 17,571 5,614 29,972 10,653
Total net revenues 145,670 127,743 267,103 248,654Operating expenses:
Resort 61,737 60,903 146,672 149,197
Real estate 11,696 4,941 21,892 10,415
Marketing, general and
administrative 13,758 13,600 44,528 40,185
Restructuring and asset
impairment charges - (160) 137 (160)
Write-off of deferred
financing costs - 2,761 - 2,761
Depreciation and amortization 11,203 11,335 24,137 25,201
Total operating expenses 98,394 93,380 237,366 227,599Income from operations 47,276 34,363 29,737 21,055
Interest expense, net (1) 22,770 11,825 68,178 36,140
Net income (loss) 24,506 22,538 (38,441) (15,085)Accretion of discount and
dividends on
mandatorily redeemable
preferred stock (1) - (9,567) - (27,741)Net income (loss) available to
common shareholders $24,506 $12,971 $(38,441) $(42,826)Basic net income (loss) per common
share:
Net income (loss) available to
common shareholders $0.77 $0.41 $(1.21) $(1.35)
Weighted average common shares
outstanding - basic 31,738 31,724 31,738 31,724Diluted net income (loss) per
common share:
Net income (loss) available to
common shareholders $0.35 $0.21 $(1.21) $(1.35)
Weighted average common shares
outstanding - diluted 74,257 69,514 31,738 31,724
