Intrawest Corporation, for the first quarter of 2006, reported total revenue of $301.8 million, an increase of 47%. Net income increased significantly to $9.2 million, resulting in diluted earnings per share of $0.19. Total Company EBITDA more than tripled to $56.6 million for the quarter.

“Our first quarter results mark an excellent start to the fiscal year with record revenue and the unparalleled success of Abercrombie & Kent (A&K), the world leader in luxury adventure travel,” said Joe Houssian, chairman, president and chief executive officer. “The tremendous increase in core, recurring revenue at A&K provides a testament to the strength of the A&K brand and the revenue growth potential this entity provides when combined with our existing portfolio of customer experiences.”

Recent Highlights

  • Abercrombie & Kent reported a 30 per cent increase in adventure-travel
    revenue;

  • Announced an agreement to sell Mammoth Mountain Ski Area which will
    result in a pre-tax profit to Intrawest of approximately $101 million;

  • Unveiled plans for “The Village of Imagine,” a new 30-acre resort
    village in Orlando, Florida;

  • Completed the sale of Lot Three Ka'anapali, a 26-acre beachfront
    parcel in Maui, for a net profit before tax of approximately
    $25 million. Finalized plans for initial launch of the Honua Kai
    condo-hotel project on the adjacent site in Ka'anapali, Maui.

Houssian continued, “Our early success at Ka'anapali provides a key example of how Placemaking, our real estate division, delivers substantially to our bottom line by opportunistically seeking out highly profitable real estate transactions as well as future development opportunities. Going forward, we remain focused on accelerating our real estate production to maximize shareholder value.”

Traditionally, Intrawest has paid a semi-annual dividend of Cdn$0.08 per common share. Today, the Board has decided to double the dividend by declaring a quarterly dividend of Cdn$0.08 per common share payable on January 25, 2006 to shareholders of record on January 11, 2006.

Net income was $9.2 million ($0.19 per diluted share) in the 2005 quarter compared with a net loss of $7.1 million ($0.15 per diluted share) in the 2004 quarter. We normally incur a loss in our first fiscal quarter because of the seasonality of our businesses; however, we closed a major real estate transaction (the sale of a 26-acre beachfront property in Maui) during the 2005 quarter that generated $21.6 million of net income. Total Company EBITDA increased from $15.7 million to $56.6 million. A significant increase in EBITDA from real estate development was partially offset by reduced EBITDA from resort and travel operations and management services and higher corporate general and administrative expenses.

Resort and travel operations revenue increased from $129.3 million in the 2004 quarter to $166.1 million in the 2005 quarter. In December 2004 we increased our ownership in Alpine Helicopters from 45% to 100% and the incremental revenue in the 2005 quarter from our increased ownership interest was $9.1 million. In addition, in August 2005 we entered into a lease to operate Parque de Nieve, an indoor snowdome in Spain, and revenue in the 2005 quarter included $1.1 million from this new business. The rise in the value of the Canadian dollar from an average rate of US$0.76 in the 2004 quarter to US$0.83 in the 2005 quarter increased reported resort and travel operations revenue by $3.7 million.

On a same-business (i.e., excluding 55% of Alpine Helicopters and Parque de Nieve), constant exchange rate basis, resort and travel operations revenue increased by $22.8 million to $152.1 million. Adventure-travel tour revenue from Abercrombie & Kent (“A&K”) increased 30% from $66.3 million to $86.3 million as the industry continued its strong rebound. A&K saw significant growth in tour revenues from all its major destinations, particularly the Orient and East Africa, which increased by 120% and 31%, respectively. A&K also earned $1.5 million of licensing fees in the 2005 quarter compared with $3.9 million in the 2004 quarter as the licensing agreement was terminated in August 2005. Revenue from the mountain segment increased by $5.1 million, or 12%, led primarily by Whistler Blackcomb (due to growth in mountain bike park and sightseeing visits), Intrawest Retail Group (due to operating eight additional retail stores during the summer months) and Alpine Helicopters (due to consolidating an investment that was previously accounted for on an equity basis).

Revenue from the non-mountain segment increased by $0.3 million, or 2%, as the worst hurricane season on record in the Gulf Coast region reduced visitors to Sandestin, restricting revenue growth to 1% at that resort.

The breakdown of resort and travel operations revenue by major business component was as follows:


                            2005          2004         INCREASE
    (MILLIONS)             QUARTER       QUARTER      (DECREASE)    CHANGE(%)
    -------------------------------------------------------------------------
    Mountain operations    $  25.8       $  11.7       $  14.1           121
    Adventure-travel tours    86.3          66.3          20.0            30
    Retail and rental shops   13.2          10.6           2.6            25
    Food and beverage         15.1          13.4           1.7            13
    Ski school                 0.8           1.1          (0.3)          (27)
    Golf                      11.5          11.4           0.1             1
    Other                     13.4          14.8          (1.4)           (9)
    -----------------------------------------------------------
                           $ 166.1       $ 129.3       $  36.8            28
    -----------------------------------------------------------
    -----------------------------------------------------------

The growth in mountain operations revenue reflects our increased ownership interest in, and revenue growth at, Alpine Helicopters, our lease of Parque de Nieve and strong year-over-year growth in summer lift ride revenue, particularly at Whistler Blackcomb. The decline in other revenue was due mainly to the decrease in licensing fees earned by A&K.

Resort and travel operations expenses increased from $122.2 million in the 2004 quarter to $159.8 million in the 2005 quarter, of which $7.4 million and $1.5 million, respectively, were due to the acquisition of the remaining 55% of Alpine Helicopters and the lease of Parque de Nieve and $3.3 million came from the impact on reported expenses of the higher Canadian dollar. Expenses of A&K increased by $14.9 million in response to the higher business volumes and expenses of the mountain and non-mountain segments increased by $6.8 million and $1.5 million, respectively. The balance of the increase in resort and travel operations expenses came from increased general and administrative costs of the Leisure and Travel Group, including $0.5 million in connection with process improvement initiatives in our retail and food and beverage businesses, $0.4 million in call center marketing and $0.6 million in advance sales and resort operations information technology.

Resort and travel operations EBITDA decreased from $7.1 million in the 2004 quarter to $6.3 million in the 2005 quarter. Our additional ownership interest of Alpine Helicopters, the lease of Parque de Nieve and the impact on reported EBITDA of the higher Canadian dollar in aggregate increased EBITDA by $1.7 million. EBITDA from A&K grew from $8.2 million to $10.9 million as an increase in EBITDA from adventure-travel tours from $4.4 million to $9.4 million was partially offset by a decrease in EBITDA from licensing fees from $3.9 million to $1.5 million. These positive factors were offset by reduced EBITDA from other businesses and higher general and administrative costs of the Leisure and Travel Group. The impact of the hurricanes reduced EBITDA at Sandestin by $1.2 million and we expect to recover some of this shortfall through business interruption insurance. The EBITDA margins of 3.8% in the 2005 quarter and 5.5% in the 2004 quarter reflect the seasonality of our mountain resort and travel operations, which generate most of their EBITDA during our third fiscal quarter.

Interest and other income decreased from $2.0 million in the 2004 quarter to $0.5 million in the 2005 quarter. Interest and other income in the 2004 quarter included $0.4 million of rental income on a property we sold in the fourth quarter of fiscal 2005 and $0.3 million of equity income from an investment owned by Alpine Helicopters that has now been consolidated because of the VIE rules. The balance of the change was due mainly to lower interest income in the 2005 quarter.

Interest expense was $10.3 million in the 2005 quarter, down from $11.4 million in the 2004 quarter due mainly to the refinancing of senior notes in the second quarter of our past fiscal year. During that quarter we redeemed 10.5% senior notes primarily by issuing 7.50% and 6.875% senior notes.

Corporate general and administrative expenses increased from $4.5 million in the 2004 quarter to $5.4 million in the 2005 quarter due mainly to higher compensation costs resulting from mark-to-market adjustments of long-term (stock-based) incentive plans and increased audit and corporate governance expenses.

Depreciation and amortization expense was $12.9 million in the 2005 quarter, up from $11.3 million in the 2004 quarter. The acquisition of the remaining 55% of Alpine Helicopters in December 2004 increased depreciation and amortization expense by $0.8 million and the balance of the increase was due to depreciation of capital expenditures made during fiscal 2005.

We provided for $2.1 million of income taxes, based on $32.7 million of pre-tax income in the 2005 quarter compared with a recovery of $1.0 of income taxes, based on a pre-tax loss of $7.2 million in the 2004 quarter. We expect our income tax rate to be in the range of 10% to 15% for the current fiscal year. This rate will increase if we complete the sale of the majority of our interest in Mammoth (see liquidity and capital resources below) since the gain on sale will be taxed for accounting purposes at about 40%.

Non-controlling interest increased from $0.9 million in the 2004 quarter to $21.4 million in the 2005 quarter due mainly to the inclusion of $18.5 million for our partner's profits on the sale of the property in Maui, as described in Review of Real Estate Development above. The balance of the increase was due to improved results of A&K in the 2005 quarter.


    RESORT AND TRAVEL OPERATIONS EBITDA

                                                          2005          2004
    (MILLIONS)                                         Quarter       Quarter
    -------------------------------------------------------------------------
    Resort and travel operations revenue                $166.1        $129.3
    Resort and travel operations expenses                159.8         122.2
    -------------------------------------------------------------------------
    Resort and travel operations EBITDA                   $6.3          $7.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------




    INTRAWEST CORPORATION
    CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
    FOR THE THREE MONTHS ENDED SEPTEMBER 30
    (in thousands of United States dollars except per share amounts)
    (unaudited)
                                                           2005         2004
    -------------------------------------------------------------------------
                                                                   (Restated)

    RESORT AND TRAVEL OPERATIONS:
      Revenue                                      $    166,083  $   129,300
      Expenses                                          159,806      122,224
      -----------------------------------------------------------------------
      Resort and travel operations contribution           6,277        7,076
      -----------------------------------------------------------------------
    MANAGEMENT SERVICES:
      Revenue                                            35,968       35,080
      Expenses                                           32,107       29,370
      -----------------------------------------------------------------------
      Management services contribution                    3,861        5,710
      -----------------------------------------------------------------------
    REAL ESTATE DEVELOPMENT:
      Revenue                                            98,694       38,792
      Expenses                                           48,586       34,111
      -----------------------------------------------------------------------
                                                         50,108        4,681
      Income from equity accounted investments              589          460
      -----------------------------------------------------------------------
      Real estate development contribution               50,697        5,141
      -----------------------------------------------------------------------
    Income before undernoted items                       60,835       17,927
    Interest and other income                               479        2,045
    Interest expense                                    (10,296)     (11,372)
    Corporate general and administrative expenses        (5,375)      (4,453)
    Depreciation and amortization                       (12,908)     (11,337)
    -------------------------------------------------------------------------
    Income (loss) before income taxes and
     non-controlling interest                            32,735       (7,190)
    Provision for income taxes                           (2,136)       1,001
    Non-controlling interest                            (21,432)        (879)
    -------------------------------------------------------------------------
    Net income (loss) for the period                      9,167       (7,068)
    -------------------------------------------------------------------------
    Retained earnings, beginning of period,
     as previously stated                               345,348      318,883
    Prior period adjustment                              (3,335)      (3,536)
    -------------------------------------------------------------------------
    Retained earnings, beginning of period,
     as restated                                        342,013      315,347
    -------------------------------------------------------------------------
    Retained earnings, end of period               $    351,180  $   308,279
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Income (loss) per common share:
      Basic                                        $       0.19  $     (0.15)
      Diluted                                      $       0.19  $     (0.15)
    -------------------------------------------------------------------------
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