American Skiing Company announced its financial results for its fiscal 2006 year end and fourth quarter. The company cited strong season pass sales, continued growth at The Canyons resort and excellent performance of Steamboat resort as factors behind its record-setting revenue year. Other highlights of the fiscal year include payment in full of the principal balances of all real estate related debt as a result of the sale of remaining fractional share inventory at the Steamboat Grand Hotel and Condominiums.
The Canyons resort in Park City, Utah experienced another year of explosive growth in fiscal 2006, with an increase in skier visits of 17%, compared to nationwide and Utah growth in skier visits of approximately 4%. The increase resulted in the 8th record year for skier visits in the nine year history of Utah's largest winter resort. The company's Steamboat resort in Colorado experienced growth in skier visits of nearly 8% in fiscal 2006, putting the resort over one million skier visits. Both resorts reported excellent levels of natural snowfall throughout the season.
Performance of the company's functional revenue centers remained strong in the face of weather related difficulties in the East. Areas such as lift tickets, food and beverage and lodging posted modest revenue increases. Skier development posted an increase in revenues of 8.0% – an impressive accomplishment in a year of considerable weather related challenges in the East.
“The structural changes we have implemented at our resorts were reflected in our results this year,” stated President and CEO B.J. Fair. “I believe we protected our financial performance considerably through the successful introduction of the All For One pass program in the East. Coupling this with another record year at The Canyons and Steamboat's fantastic performance enabled the company to set a new same-resort portfolio revenue record in a marginal eastern weather year. Our team truly did a fantastic job delivering record results amidst significant challenges,” added Fair.
The company also reported capital improvements of more than $26 million in progress or scheduled at its resorts for the upcoming winter season.
“Consistent with our strategy, principal balances of our real estate debt have been paid off,” said Fair. “We are now squarely focused on new development opportunities and reinvestment into our resorts. I'm confident our guests and employees will soon enjoy the results of our reinvestment. In addition to our own investment, we plan to enter into joint venture agreements and third party participation to continue reinvestment in our resort operations,” added Fair.
Fiscal 2006 Results
On a GAAP basis, net loss attributable to common stockholders for fiscal 2006 was $65.7 million, or $2.07 per basic and diluted common share, compared with a net loss attributable to common stockholders of $73.3 million, or $2.31 per basic and diluted common share for fiscal 2005. This loss includes $60.0 million of non-cash interest expense associated with the company's outstanding preferred stock and subordinated notes and $31.1 million of non-cash depreciation and amortization expense in fiscal 2006, and $54.9 million of non-cash interest expense associated with the company's outstanding preferred stock and subordinated notes and $31.8 million of non-cash depreciation and amortization expense in fiscal 2005. Net cash provided by operating activities increased by $13.6 million or 39% from $34.6 million for fiscal 2005 to $48.2 million for fiscal 2006.
Total consolidated revenue was $307.8 million for fiscal 2006, compared with $276.5 million for fiscal 2005. Revenue from resort operations was $274.4 million for fiscal 2006 compared with $267.3 million for fiscal 2005. The increase in resort revenues reflects the higher business volumes at the company's western resorts relative to the prior fiscal year, as well as an increase in season pass sales at the company's eastern resorts; partially offset by lower visitation at the company's eastern resorts compared to the prior fiscal year. Revenue from real estate operations was $33.4 million for fiscal 2006 versus $9.2 million for fiscal 2005. The increase was principally a result of increased sales of fractional share inventory from the Steamboat Grand fractional inventory auction in and after March 2006.
The loss from resort operations was $68.5 million for fiscal 2006 compared to a loss of $71.5 million for fiscal 2005. The improved performance was associated with a $7.1 million increase in resort revenues, a $0.5 million decrease in depreciation and amortization expense, a $6.0 million decrease in write-off of financing costs as a result of the restructuring of the resort senior credit facility in the prior fiscal year and a $1.5 million increase in the fair value of the interest rate swap agreement; partially offset by a $1.5 million increase in cost of resort operations, a $1.8 million increase in marketing, general and administrative expense, a $7.3 million increase in interest expense, a decrease in net gain on sale of resort assets of $0.6 million due to the non-recurring nature of the Haystack resort sale in fiscal 2005 and an increase of $0.9 million in loss on disposal of commercial property.
During the 2005-06 ski season, skier visits at the company's eastern resorts decreased approximately 16% from approximately 2,612,000 to 2,196,000, primarily due to the unfavorable weather conditions experienced from late December throughout the remainder of the ski season. Furthermore, beginning in fiscal 2006, the company revised the methodology used to estimate skier visitation at its eastern resorts. The company now uses electronic scanning of certain lift ticket products to estimate skier visitation at its eastern resorts and believes this methodology to be a more accurate reflection of skier visitation levels. If fiscal 2006 skier visits were measured under the methodology employed in prior years, the decline in total skier visits would have been approximately 5% rather than 16%. Skier visits at the company's western resorts increased approximately 10% during the 2005-06 ski season from approximately 1,375,000 to approximately 1,518,000, due to better than normal snow conditions experienced at Steamboat for much of the season and continued growth at The Canyons. The company has used electronic scanning to estimate skier visitation at its western resorts since 1998. Over the entire ASC resort network, total skier visits were down approximately 7% compared to the 2004-05 ski season from 3,987,000 to 3,714,000. If fiscal 2006 skier visits were measured under the methodology employed in prior years, total reported skier visits would have been flat with last year.
Fiscal 2006 Fourth Quarter Results
On a GAAP basis, net loss attributable to common stockholders for the fourth quarter of fiscal 2006 was $41.5 million, or $1.31 per basic and diluted common share, compared with net loss attributable to common stockholders of $37.3 million, or $1.17 per basic and diluted common share for the fourth quarter of fiscal 2005. Total consolidated revenue was $18.2 million for the fourth quarter of fiscal 2006, compared with $15.7 million for the fourth quarter of fiscal 2005. Revenue from resort operations was $14.5 million for the fourth quarter of fiscal 2006 compared with $13.8 million for the fourth quarter of fiscal 2005. Revenue from real estate operations was $3.7 million for the quarter versus $1.8 million for the comparable period in fiscal 2005. The increase was primarily a result of increased sales of fractional inventory at the Steamboat Grand Hotels and Condominiums. Due to the seasonal nature of the company's business, its fourth quarter typically generates a loss, as winter seasonal revenues terminate, without a commensurate decrease in operating expenses or increase in summer season revenues on a scale resembling those of winter operations.
The loss from resort operations was $41.9 million for the fourth quarter of fiscal 2006 compared to a loss of $36.8 million for the fourth quarter of fiscal 2005. The increased loss was associated with a $1.6 million increase in resort operating expenses, a $0.4 million increase in depreciation expense, a $2.1 million increase interest expense, a decrease in gain on sale of assets of $0.8 million due to the non-recurring nature of the Haystack resort sale in 2005, an increase of $0.9 million in loss on disposal of commercial property, and a $0.3 million reduction in increase in fair value of interest rate swap agreement, offset by a $0.7 million increase in revenues and a $0.3 million decrease in marketing, general and administrative expenses.
In the fourth quarter of fiscal 2006 and fourth quarter of fiscal 2005, a total of approximately $14.8 million and $13.9 million of non-cash interest, respectively, was included in interest expense.
Recent Trends
The company reported that eastern resort season pass sales for the 2006-07 ski season are pacing slightly behind sales at the same point in time last year while western resorts season pass sales are pacing well ahead, driving company-wide pacing ahead by approximately 2%. Hotel lodging transient bookings at the eastern resorts for first quarter fiscal 2007 are pacing behind compared to last year, driving overall lodging pacing for the quarter to be lower by 4% in the East. Hotel lodging bookings for first quarter fiscal 2007 at our western resorts are pacing 15% ahead of last year. As for the upcoming ski season (our 2nd and 3rd quarters for fiscal 2007), hotel lodging bookings are pacing flat to the same period last year led primarily by improved bookings at our western resorts offset slightly by a decrease in bookings at our eastern resorts.
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Financial Statement Information
(in thousands, except per share amounts)
13 Weeks 13 Weeks 52 Weeks
Ended Ended Ended 53 Weeks
July 30, July 31, July 30, Ended (a)
Net revenues: 2006 2005 2006 July 31, 2005
---------- ---------- ----------- -------------
Resort $14,498 $13,817 $274,369 $267,314
Real estate 3,675 1,846 33,441 9,163
---------- ---------- ----------- -------------
Total net
revenues 18,173 15,663 307,810 276,477
---------- ---------- ----------- -------------
Operating expenses:
Resort 21,428 19,845 174,426 172,855
Real estate 3,342 1,461 27,559 7,185
Marketing, general
and administrative 9,853 10,151 53,167 51,439
Depreciation and
amortization 2,543 2,099 31,116 31,798
Impairment loss on
commercial
property sold - - 1,533 -
Loss on disposal of
commercial
property 917 - 917 -
Write off of
financing costs - - - 5,983
---------- ---------- ----------- -------------
Total operating
expenses 38,083 33,556 288,718 269,260
---------- ---------- ----------- -------------
Income (loss) from
operations (19,910) (17,893) 19,092 7,217
Interest expense, net (21,687) (20,529) (86,675) (81,668)
Gain on sale of
resort assets - 822 169 822
Increase in fair
value of interest
rate swap agreement 51 314 1,761 314
---------- ---------- ----------- -------------
Net loss attributable
to common
stockholders (41,546) (37,286) (65,653) (73,315)
---------- ---------- ----------- -------------
Basic and diluted net
loss per common
share:
Net loss per common
share $(1.31) $(1.17) $(2.07) $(2.31)
========== ========== =========== =============
Weighted average
common shares
outstanding - basic
and diluted 31,738 31,738 31,738 31,738
========== ========== =========== =============
(a) Includes an additional fiscal week of operations relative to
fiscal 2006.
