American Skiing Company announced its financial results for its second fiscal quarter and six months ended January 25, 2004. The Company reported improved financial performance at its western resorts that has helped mitigate the impact of challenging weather conditions in New England.
“Steamboat and The Canyons have exceeded our expectations this winter,” said CFO Betsy Wallace. “The Canyons is on track for another record skier visit season while Steamboat has shown significant improvement on similar year-over-year visitation. In the East, our second quarter performance was negatively impacted by unfavorable weather conditions. Despite the challenges in the East, our resort financial performance has benefited from a coordinated marketing effort, significantly higher season pass revenues and aggressive cost control. We remain cautiously optimistic about the remainder of the season given excellent conditions in the West, moderating weather in the East and the successful introduction of our $229 “March Into Spring Pass” which we expect to drive late season visitation.”
As previously reported, the Company enjoyed excellent early season skiing and riding conditions at its western resorts. The Canyons Resort, 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 with year-to-date skier visits tracking 11.5% higher than at the same time in fiscal 2003. The Canyons is on track for another record ski season with skier visits more than 10% higher during the key Presidents' Day holiday weekend.
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 having received more than 10 feet of natural snow and another 4 feet during the two week holiday period. Steamboat recorded a number of record skier visit days during the December holiday period.
In the East, the Company has had 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. Attitash Bear Peak and Sunday River shrugged off the weather challenges and posted a strong increase in skier visits during the December holiday period due primarily to a successful combined season pass offering. Weather challenges continued following the December holiday period with bitterly cold temperatures impacting skier visits throughout January 2004. More recently, the weather in the East has moderated and the Eastern resorts posted a 2.2% increase in skier visits during the Presidents' Day holiday weekend.
Effective July 28, 2003, the Company adopted Statement of Financial Accounting Standards No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (SFAS No. 150). SFAS No. 150 establishes standards for how financial instruments with characteristics of both liabilities and equity should be measured and classified and requires that an issuer classify a financial instrument that is within its scope as a liability. All public entities are required to adopt SFAS No. 150. As a result of adopting SFAS No. 150, approximately $298.7 million of mezzanine-level securities were reclassified to liabilities in the Company's consolidated balance sheet in the first quarter of fiscal 2004.
This represents the carrying value of all of the classes of mandatorily redeemable preferred stock. In addition, approximately $43.1 million of accretion of discount and dividends on the preferred stock in fiscal 2004 will be included in interest expense, whereas previously it was reported as accretion of discount and dividends on mandatorily redeemable preferred stock. For the second fiscal quarter and six months ended January 25, 2004, approximately $10.6 million and $20.8 million of accretion of discount and dividends on the preferred stock, respectively, was included in interest expense.
For the second fiscal quarter and six months ended January 26, 2003, approximately $9.2 million and $18.2 million of accretion of discount and dividends on the preferred stock, respectively, was included in accretion of discount and dividends on mandatorily redeemable preferred stock.
On a GAAP basis, net loss available to common shareholders for the second quarter of fiscal 2004 was $21.7 million, or $0.68 per basic and diluted share, compared with a net loss of $16.7 million, or $0.53 per basic and diluted share for the second quarter of fiscal 2003.
Total consolidated revenue was $103.0 million for the second quarter of fiscal 2004, compared with $100.3 million for the second quarter of fiscal 2003. Resort revenue was $92.9 million for the quarter, compared with $99.0 million for the second quarter of fiscal 2003. The decline in resort revenue primarily reflects lower eastern skier visits attributable to unfavorable weather conditions. Real estate revenue was $10.1 million, versus $1.3 million for the comparable period in fiscal 2003. The primary driver of the increase was the sale of three land parcels at Steamboat resort that generated proceeds of $8.9 million.
The Company's net loss was $21.7 million for the second quarter of fiscal 2004, compared with $7.4 million for the comparable period in fiscal 2003. Excluding the accretion of preferred stock dividends, the net loss was $11.1 million for the second quarter of fiscal 2004. The loss from resort operations was $17.7 million for the second fiscal quarter of 2004 versus a loss of $1.3 million for the second quarter of fiscal 2003. Excluding the accretion of preferred stock dividends, the loss from resort operations was $7.1 million for the second quarter of fiscal 2004. The larger resort operations loss was driven almost entirely by lower revenues that resulted from a decrease in skier visitation in the East. 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. The loss from real estate operations was $4.0 million for the second fiscal quarter of 2004, compared with a loss of $6.2 million for the second quarter of fiscal 2003. The Company has provided reconciliations from GAAP financial measures to non-GAAP financial measures in the tables following this discussion.
On a GAAP basis, net loss available to common shareholders for the six months ended January 25, 2004 was $62.9 million, or $1.98 per basic and diluted share, compared with a net loss of $55.8 million, or $1.76 per basic and diluted share in the corresponding period of fiscal 2003. The net loss during the first six months of fiscal 2004 included a $0.1 million restructuring charge. The Company did not incur restructuring charges during the first six months of fiscal 2003.
Total consolidated revenue was $121.4 million for the first six months of fiscal 2004, compared with $120.9 million for the first six months of fiscal 2003. Resort revenue was $109.0 million for the first six months of fiscal 2004, compared with $115.9 million for the first six months 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 early ski season weather challenges previously discussed. Real estate revenue was $12.4 million, versus $5.0 million for the comparable period in fiscal 2003 primarily as a result of selling three land parcels at Steamboat resort.
The Company's net loss was $62.9 million for the first six months of fiscal 2004, compared with a net loss of $37.6 million for the comparable period in fiscal 2003.
Excluding the restructuring charge and the accretion of preferred stock dividends, the net loss was $42.0 million for the first six months of fiscal 2004. The loss from resort operations was $53.6 million versus a loss of $26.1 million for the comparable period in fiscal 2003.
Excluding the restructuring charge and the accretion of preferred stock dividends, the loss from resort operations was $32.6 million for the first six months of fiscal 2004 compared to a loss of $26.1 million for the comparable quarter of fiscal 2003. The loss from real estate operations was $9.4 million for the first six months of fiscal 2004, compared with a loss of $11.5 million for the first six months of fiscal 2003. The Company has provided reconciliations from GAAP financial measures to non-GAAP financial measures in the tables following this discussion.
