American Skiing Company reported particularly strong visitation levels for its western resorts in the winter operating season, bolstered by skiing and riding conditions. These strong results coupled with the successful sale of nearly all remaining fractional inventory in the Company’s real estate segment resulted in an increase in net income of $5.6 million or 23% over the third quarter of fiscal 2005. The Company’s eastern resorts were challenged by adverse weather conditions for much of the latter half of the winter operating season, resulting in decreased Company-wide skier visits compared to the third quarter of fiscal 2005.
The Canyons resort in Park City, Utah experienced explosive growth in fiscal 2006, with an increase in skier visits of over 16%, compared to nationwide growth in skier visits of approximately 4%. The increase resulted in yet another record year for skier visits at Utah’s largest winter resort. The Company’s Steamboat resort in Colorado experienced growth in skier visits of 8% in fiscal 2006, to put the resort over one million skier visits yet again. Both resorts reported excellent levels of natural snowfall throughout the season.
While the Company’s eastern resorts were challenged by weather for a considerable portion of the season, the snowmaking and grooming infrastructure of the eastern resorts provided some of the very best snow conditions in the East. Other highlights of the season include a year-to-date increase in revenues of more than 8% in the Company’s skier development (ski and snowboard school) programs.
“I am extremely pleased with our results from many areas of the business in this past winter season,” commented Chief Financial Officer Betsy Wallace. “From the large increases in skier visits in the West to the responsiveness and dedication of our staff in the East in the midst of challenging conditions, our resort operations performed extremely well. The successful sale of nearly all remaining fractional inventory of our real estate subsidiary, Grand Summit, allows the Company to look ahead towards exciting new opportunities in real estate. There are a number of projects being considered that should result in new exciting benefits to our guests and the Company,” added Wallace.
Fiscal 2006 Third Quarter Results
On a GAAP basis, net income attributable to common shareholders for the third quarter of fiscal 2006 was $10.7 million, or $0.34 per basic and diluted common share, compared with net income attributable to common shareholders of $9.3 million, or $0.29 per basic and diluted common share for the third quarter of fiscal 2005. Total consolidated revenue was $157.0 million for the third quarter of fiscal 2006, compared with $135.2 million for the third quarter of fiscal 2005. Revenue from resort operations was $132.8 million for the third quarter of fiscal 2006 compared with $132.3 million for the third quarter of fiscal 2005. The increase in resort revenues reflects the higher business volumes at the Company’s western resorts, partially offset by relatively lower business volumes at the Company’s eastern resorts in fiscal 2006 relative to the prior fiscal year. Revenue from real estate operations was $24.2 million for the quarter versus $2.9 million for the comparable period in fiscal 2005. The increase was primarily a result of the successful sale of nearly all remaining fractional inventory relating to the Steamboat Grand Hotel, which generated approximately $21.0 million in revenues for the third quarter of fiscal 2006.
Income from resort operations was $24.0 million for the third fiscal quarter of 2006 compared to income of $24.5 million for the third quarter of fiscal 2005. The decrease in income was associated with a $2.7 million increase in interest expense, partially offset by a $0.6 million increase in resort revenues, a $0.3 million decrease in cost of operations, a $0.4 million decrease in marketing, general and administrative expenses, a $0.3 million decrease in depreciation expense and a $0.6 million increase in the fair value of the interest rate swap agreement.
Income from real estate operations was $5.4 million for the third fiscal quarter of 2006 compared with a loss of $0.6 million for the comparable quarter in fiscal 2005. The increase in income was associated with a $21.3 million increase in revenues, a $0.1 million decrease in depreciation and amortization expense and a $1.0 million decrease in interest expense due to the reduced balance of the outstanding construction loans and to a $0.5 million year-to-date correction in the amount of deferred interest attributable to the Subordinated Construction Loan; partially offset by a $16.4 million increase in cost of real estate operations due primarily to a $15.5 million increase in cost of sales related to the sale of the remaining fractional inventory at the Steamboat Grand Hotel.
Fiscal 2006 to Date Results
On a GAAP basis, net loss attributable to common shareholders for the 39 weeks ended April 30, 2006 was $24.1 million, or $0.76 per basic and diluted common share, compared with a net loss attributable to common shareholders of $36.0 million, or $1.14 per basic and diluted common share for the 40 weeks ended May 1, 2005. Total consolidated revenue was $289.6 million for the 39 weeks ended April 30, 2006, compared with $260.8 million for the 40 weeks ended May 1, 2005. Revenue from resort operations was $259.9 million for the 39 weeks ended April 30, 2006 compared with $253.5 million for the 40 weeks ended May 1, 2005. The increase in resort revenues reflects the higher business volumes in December of fiscal 2006 relative to the prior fiscal year, as well as an increase in business volumes at the Company’s western resorts offset by lower business volumes at the Company’s eastern resorts in the third quarter of fiscal 2006 compared to the prior fiscal year period. Revenue from real estate operations was $29.8 million for 39 weeks ended April 30, 2006 versus $7.3 million for the 40 weeks ended May 1, 2005.
Excluding other items (for a reconciliation of other items, please see the tables following this discussion), the net loss was $22.7 million for the 39 weeks ended April 30, 2006, compared to a net loss of $30.0 million for the 40 weeks ended May 1, 2005.
The loss from resort operations was $26.4 million for the 39 weeks ended April 30, 2006 compared to a loss of $34.1 million for the 40 weeks ended May 1, 2005. The decreased loss was associated with a $6.4 million increase in resort revenues, a $0.6 million decrease in depreciation expense, a $0.2 million increase in net gain on sale of property, a $6.0 million decrease in write-off of deferred financing costs and loss on extinguishment of senior subordinated notes and a $1.7 million increase in the fair value of the interest rate swap agreement; partially offset by a $2.0 million increase in marketing, general and administrative expense and a $5.2 million increase in interest expense. Resort operations costs were nearly unchanged compared to the prior year, despite the fact that the fiscal 2006 period contained one less weekly operating period relative to fiscal 2005. Operating costs for this corresponding additional period (week ended August 1, 2004) in the previous fiscal year were approximately $1.7 million. Revenues for the same period were approximately $1.6 million. Excluding other items, the loss from resort operations was $26.5 million for the 39 weeks ended April 30, 2006, compared to a loss of $28.1 million for the 40 weeks ended May 1, 2005.
Income from real estate operations was $2.2 million for the 39 weeks ended April 30, 2006 compared with a loss of $2.0 million for the 40 weeks ended May 1, 2005. The increase in income was associated with a $22.4 million increase in revenues, a $0.5 million decrease in depreciation and amortization expense and a $1.3 million decrease in interest costs due to lower construction loan balances relative to the prior fiscal year; partially offset by an $18.5 million increase in cost of operations, due to a $17.7 million increase in cost of sales related to increased sales of fractional share units at the Steamboat Grand Hotel, a $0.8 million provision for a probable settlement related to real estate development obligations at The Canyons and a $1.5 million impairment loss on the sale of retail commercial property at the Steamboat Grand Hotel. Excluding other items, income from real estate operations was $3.8 million for the 39 weeks ended April 30, 2006, compared to a loss of $2.0 million for the 40 weeks ended May 1, 2005.
For the 39 weeks ended April 30, 2006 total skier visits at ASC’s resorts decreased by approximately 7% compared to the 40 weeks ended May 1, 2005, reflecting weather difficulties in the East, partially offset by year over year increases in business volumes in the Christmas/New Years holiday period and considerable increases in skier visits at the Company’s western resorts. Total skier visits at the Company’s western resorts increased by 10% compared to the 40 weeks ended May 1, 2005, reflecting generally positive operating conditions throughout the winter operating season to date.
Beginning in fiscal 2006, the Company revised the methodology used to estimate skier visitation at its eastern resorts. The Company now uses scanning of certain lift ticket products to estimate skier visitation and believes this methodology to be a more accurate reflection of skier visitation levels. While this methodology has changed, the Company believes that any discrepancies in such methods in comparison with prior years are immaterial to total skier visitation levels reported. The scanning methodology used to estimate skier visitation the Company’s western resorts is unchanged compared to the prior fiscal year.
Recent Trends
The Company reported early results for the fourth fiscal quarter, reflecting a 1% increase in revenues for the first five weeks of its fiscal 2006 fourth quarter over the first five weeks of its fiscal 2005 fourth quarter. Company-wide hotel bookings for the remainder of the fourth quarter are 10% ahead of pace compared to the same period in the prior fiscal year.
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Financial Statement Information
(in thousands, except per share amounts)13 Weeks 13 Weeks 39 Weeks 40 Weeks
Ended Ended Ended Ended
Net revenues: April 30, 2006 May 1, 2005 April 30, 2006 May 1, 2005
Resort $132,837 $132,266 $259,871 $253,497
Real estate 24,185 2,928 29,766 7,317
Total net
revenues 157,022 135,194 289,637 260,814Operating expenses:
Resort 61,269 61,615 152,998 153,010
Real estate 18,832 2,461 24,217 5,724
Marketing,
general and
administrative 13,861 14,261 43,314 41,288
Depreciation and
amortization 12,602 13,020 28,573 29,699
Gain on sale
of property -- -- (169) --
Impairment loss
on property sold -- -- 1,533 --
Total operating
expenses 106,564 91,357 250,466 229,721Income from
operations 50,458 43,837 39,171 31,093Interest expense (21,719) (20,002) (64,988) (61,139)
Write-off of
deferred financing
costs and loss on
extinguishment of
senior subordinated
notes -- -- -- (5,983)
Increase in fair
value of interest
rate swap agreement 674 -- 1,710 --
Net income (loss) 29,413 23,835 (24,107) (36,029)Less: amounts
allocated to
participating
securities (18,720) (14,510) -- --
Net income (loss)
attributable to
common shareholders 10,693 9,325 (24,107) (36,029)Basic and diluted
net income (loss)
per common share:
Net income (loss)
per common share $0.34 $0.29 $(0.76) $(1.14)
Weighted average
common shares
outstanding -
basic and diluted 31,738 31,738 31,738 31,738American Skiing Company and Subsidiaries
Unaudited Supplemental Revenue Data
(in thousands of dollars)13 Weeks 13 Weeks % Change 39 Weeks 40 Weeks % Change
Ended Ended Ended Ended
April 30, May 1, April 30, May 1,
2006 2005 2006 2005(1)
Resort
revenues
Lift tickets $67,247 $67,829 (0.9%) $123,011 $120,743 1.9%
Food and
beverage 18,064 18,064 0.0% 36,700 35,978 2.0%
Retail sales 12,521 13,457 (7.0%) 24,635 25,604 (3.8%)
Skier
development 15,276 14,271 7.0% 26,105 24,139 8.1%
Golf and summer
activities 64 82 (21.5%) 2,948 3,612 (18.4%)
Lodging and
property 15,143 14,563 4.0% 35,751 33,835 5.7%
Miscellaneous
revenue 4,522 4,000 13.0% 10,721 9,586 11.8%
Total resort
revenues $132,837 $132,266 0.4% $259,871 $253,497 2.5%Fiscal Year Total
Unaudited Skier Visits 2006 2005 % Change
Attitash 186,693 211,301 (11.6%)
The Canyons 467,799 403,043 16.1%
Killington 795,400 985,962 (19.3%)
Mount Snow 429,822 523,698 (17.9%)
Sugarloaf/USA 310,583 366,382 (15.2%)
Sunday River 473,159 524,861 (9.9%)
Steamboat 1,046,650 971,770 7.7%
Total Skier Visits 3,710,106 3,987,017 (6.9%)
