Vail Resorts, Inc. announced financial results for the fourth quarter and fiscal year ended July 31, 2003.
The Company has historically used EBITDA when reporting its financial results for each of its reportable segments:
mountain, lodging, resort (the combination of mountain and lodging) and real estate. EBITDA was defined by the Company as segment net revenue less segment operating expense plus segment equity income. In conjunction with the recently adopted Securities and Exchange rules regarding the use of non-GAAP financial measures, the Company will henceforth use the term “Reported EBITDA”
when reporting financial results. The Company defines Reported EBITDA in the same manner in which it historically defined EBITDA.
FOURTH QUARTER
Mountain revenue for the fourth quarter of fiscal 2003 was $34.8 million,
a 9.3% increase from $31.9 million for the comparable period last year.
Lodging revenue for the fourth quarter fell $1.4 million, or 3.5%, to
$39.3 million.
Resort revenue, the combination of mountain and lodging revenues, rose
$1.6 million, or 2.2%, to $74.1 million. Real estate revenue for the fourth
quarter fell $4.5 million to $5.0 million, and total revenue declined $3.0
million, or 3.6%, to $79.1 million.
Loss from operations for the fourth quarter increased $7.7 million, or
16.8%, to a loss of $53.6 million compared to a loss of $45.9 million for the
same period last year.
Reported EBITDA for the mountain segment decreased 5.7% to a loss of $27.1
million compared to a loss of $25.7 million for the comparable period last
year.
Reported EBITDA for the lodging segment decreased $2.8 million to a loss
of $4.1 million for the quarter; $2.2 million of the decrease was attributed
to the Ritz-Carlton, Bachelor Gulch, which opened in November of fiscal 2003.
As the Company uses the equity method of accounting for the Ritz-Carlton,
Bachelor Gulch, included in the fourth quarter loss is $0.6 million of
depreciation and $0.9 million of interest expense.
Fourth quarter Resort Reported EBITDA was a loss of $31.2 million, a 16.0%
decrease from the comparable period last year, and “same-store” Resort
Reported EBITDA, excluding the Ritz-Carlton, fell 7.7% versus the fourth
quarter in fiscal 2002.
Real Estate Reported EBITDA for the quarter declined $2.3 million to a
loss of $1.0 million from a profit of $1.8 million in the same quarter a year
ago, due to the timing of real estate closings.
Fourth quarter net loss increased $0.4 million to a loss of $33.7 million,
or $0.96 per diluted share, compared to a loss of $33.3 million, or $0.95 per
diluted share, for the same period last year.
FISCAL YEAR ENDED JULY 31, 2003
Mountain revenue for the fiscal year ended July 31, 2003 was $470.1 million, a 17.4% increase from $400.5 million for the comparable period last year. Excluding the acquisition of the Heavenly Ski Resort, the fiscal year
“same-store” mountain revenue rose 2.6% compared to the same period last year.
Lodging revenue for the fiscal year rose $8.9 million, or 5.9%, to $159.8
million, and excluding the fiscal 2002 acquisitions, “same-store” lodging
revenue declined 1.9% compared to the same period last year.
Resort revenue increased $78.6 million, or 14.3%, to $630.0 million.
Excluding the fiscal 2002 acquisitions, “same-store” resort revenue increased
1.6% compared to the same period last year.
Real estate revenue for the period rose $16.5 million to $80.4 million, a
25.9% increase compared to the same period last year, and total revenue rose
$95.1 million, or 15.5%, to $710.4 million.
Income from operations for the fiscal year decreased $14.6 million, or
29.7%, to $34.5 million compared to the same period last year.
Mountain Reported EBITDA increased $7.0 million, or 7.6%, to $100.4
million. Excluding the Heavenly acquisition, “same-store” Reported EBITDA for
the mountain segment fell 13.0% compared to the same period last year.
Lodging Reported EBITDA decreased $10.4 million, or 76.3%, to $3.2 million
for the year, with $5.8 million of the decrease attributed to the Ritz-
Carlton, Bachelor Gulch, including $1.5 million of depreciation and $1.8
million of interest expense. Excluding the Ritz-Carlton and the acquisitions
made in fiscal 2002, Reported EBITDA for the lodging segment fell 16.2%.
Resort Reported EBITDA for the year was $103.6 million, a 3.1% decrease
from the comparable period last year, and “same-store” Resort Reported EBITDA
(excluding Heavenly, the fiscal 2002 lodging acquisitions, and the Ritz-
Carlton) fell 13.3% versus the prior year.
Real Estate Reported EBITDA for the fiscal year rose $2.4 million, or
16.0%, to $17.7 million.
Net loss for the year was $8.5 million, or a loss of $0.24 per diluted
share, compared to net income of $7.1 million, or income of $0.20 per diluted
share, for the same period last year.
Adam Aron, Chairman and Chief Executive Officer, commented, “Obviously,
Vail Resorts' financial results for fiscal 2003 are very disappointing.
Several factors combined to generate Vail Resorts' first net loss in ten years
and the first since becoming a public company in 1997. Far and away, the
biggest problem we had to address in fiscal 2003 was the build up to and
actual war with Iraq during our most profitable months, as well as the war's
aftermath, which taken together depressed the Company's mountain and lodging
revenues from January through fiscal year-end in July. Also notable are: pre-
opening startup expenses and first year net losses of approximately $6 million
associated with the Ritz-Carlton, Bachelor Gulch; approximately $3 million in
severance expense resulting from our efforts to streamline the Company's
costs; an increase in workers compensation expenses and reserves; the national
rise in employee health care costs from which we are not immune; and a
surprising court ruling, which we have appealed, in litigation concerning
undeveloped land near Vail Mountain, causing the Company to take a $4.8
million asset impairment charge.”
Aron added, “Even so, Vail Resorts made notable progress in fiscal 2003.
Highlights in our mountain division include Beaver Creek having a record ski
season with over 718,000 skier visits up from 658,000 in the prior year,
primarily due to the November 2002 opening of the impressive new Ritz-Carlton,
Bachelor Gulch. Also, as we said earlier in the year, Heavenly performed much
better than expected, even with the challenges presented by world events.
Heavenly's skier visits rose by more than 125,000 and confirmed our judgement
in acquiring Lake Tahoe's leading ski resort in May of 2002 on favorable
terms. As for lodging, the Vail Marriott underwent an extensive renovation
and esthetics upgrade. And, revenues markedly improved at the Snake River
Lodge and Spa as a result of its comprehensive renovation in fiscal 2002. Our
real estate group had another record financial year. It also submitted formal
plans for approval to the town of Vail for 'Vail's New Dawn,' the long awaited
re-development for a refined Vail Village and a new Lionshead. Additionally,
we received final zoning approval for a new residential base village at
Breckenridge's Peak 7 and Peak 8.”
FISCAL 2004
Aron said, “We continue to believe that Vail Resorts is very well
positioned for 2004 and beyond. Our confidence stems from improving economic
conditions, the hope that new military conflict does not erupt, and the
inherent consumer appeal of our ski resorts, luxury hotels and new real estate
developments. We are always proud when others recognize the excellence of our
resorts. SKI Magazine, in October 2003 in its annual readers' poll, once
again selected Vail as the number one ski resort in North America.
Breckenridge, Keystone and Heavenly each moved up four spots in the rankings,
such that three of our five resorts now rank in North America's top ten, and
all five of our resorts rank in the top 15. Similarly, our lodging group
fared well. Conde Nast Traveler, in its 2003 annual Gold List readers poll,
praised three of our 10 RockResorts as well as our Grand Teton Lodge Company's
Jenny Lake Lodge. As for the efforts of our real estate group, Golf Magazine,
in its March 2003 editor's picks, named Red Sky Ranch one of the ten best new
golf courses to open in the United States in the past year.”
“Looking to fiscal 2004, we proceed with optimism that the outbreak and
aftermath of war with Iraq will not scar our fiscal 2004 financial results,
and that the underlying national economy is picking up strength. We are
heartened that cold temperatures and natural snowfall have arrived, as but one
example with almost three feet of fresh snow at Beaver Creek since November
first. We are similarly comforted that year-to-date revenues booked into our
central reservations system across all five of our ski resorts combined are up
8% versus this time last year, and bookings for the Christmas holidays look
especially bright for Vail and Breckenridge, the two most visited of our
resorts. Similarly, air bookings into the Vail Valley's Eagle County airport
are also encouraging, up 3% year-over-year so far. This is all particularly
positive news, considering we had a strong early season last year, while our
weakness in bookings occurred last year deeper into the ski season as talk of
war escalated. Also, Colorado Front Range advance season pass sales, which
account for approximately 20% of annual lift ticket revenues for our four
Colorado resorts, have also been robust this year, up 5%. And finally, and
perhaps of greatest importance, in June we announced that our management group
has worked diligently to identify year-over-year expense reduction initiatives
totaling more than $25 million that we believe will be realized in the 2004
fiscal year, all the while preserving Vail Resorts' longstanding commitment to
providing an exceptional guest experience,” added Aron.
Aron further stated, “For these reasons, we are upbeat about the potential
growth in the financial results for our mountain and lodging segments in
fiscal 2004. Of course, this assumes normal snowfall, no new significant war
or terrorism activity, and no additional adverse conclusions to matters in
litigation.”
Aron concluded by saying, “As such, we currently expect Mountain Reported
EBITDA for fiscal 2004 to range from $120 million to $130 million and Lodging
Reported EBITDA to range from $6 to $12 million, with total Resort Reported
EBITDA between $130 and $140 million. We also anticipate another good year in
our real estate operations and are comfortable giving guidance of $13 to $19
million for Real Estate Reported EBITDA in fiscal 2004. We are also currently
projecting positive net income in fiscal 2004, ranging from $2 million to $10
million.”
Vail Resorts, Inc.
Consolidated Financial Statements
(in thousands except per share amounts)
Three Months Ended Year Ended
July 31, July 31,
2003 2002 2003 2002
Net revenue:
Mountain $34,834 $31,858 $470,148 $400,478
Lodging 39,291 40,708 159,849 150,928
Real estate 4,968 9,501 80,401 63,854
Total net revenue 79,093 82,067 710,398 615,260
Operating expense:
Mountain 61,511 58,426 370,779 308,896
Lodging 41,039 42,036 150,624 137,259
Real Estate 5,211 7,727 66,642 51,326
Depreciation &
amortization 19,600 19,632 82,242 68,480
Asset impairment
charge 4,830 -- 4,830 --
Loss on disposal
of fixed assets 506 134 794 226
Total operating
expense 132,697 127,955 675,911 566,187
Income from
operations (53,601) (45,888) 34,487 49,073
Other income
(expense)
Mountain equity
investment
income, net (458) 886 1,009 1,748
Lodging equity
investment loss,
net (2,324) 104 (5,995) (57)
Real estate equity
investment income,
net (760) 70 3,962 2,744
Investment income 927 335 2,011 1,295
Interest expense (12,519) (11,272) (50,001) (38,788)
Gain on put
option, net 198 -- 1,569 --
Other income
(expense), net (2) 223 17 155
Minority interest
in income of
consolidated joint
ventures 1,832 2,640 (1,064) (569)
Income (loss) before
provision for
income taxes (66,710) (52,902) (14,005) 15,601
Benefit (provision)
for income taxes 33,037 19,642 5,478 (6,843)
Income (loss) before
cumulative effect
of change in
accounting
principle (33,673) (33,258) (8,527) 8,758
Cumulative effect
of change in
accounting principle,
net of income
taxes of $1,046 -- -- -- (1,708)
Net income (loss) $(33,673) $(33,258) $(8,527) $7,050
Basic weighted
average shares 35,191 35,150 35,170 35,141
Diluted weighted
average shares 35,191 35,150 35,170 35,182
Per share
amounts (basic):
Income (loss) before
cumulative effect
of change in
accounting
principle $(0.96) $(0.95) $(0.24) $0.25
Cumulative effect
of change in
accounting
principle,
net of income
taxes -- -- -- (0.05)
Net income (loss) $(0.96) $(0.95) $(0.24) $0.20
Per share amounts
(diluted):
Income (loss) before
cumulative effect
of change in
accounting
principle $(0.96) $(0.95) $(0.24) $0.25
Cumulative effect
of change in
accounting principle,
net of income taxes -- -- -- (0.05)
Net income $ (0.96) $ (0.95) $ (0.24) $0.20
Other Data:
Mountain Reported
EBITDA $(27,135) $(25,681) $100,378 $93,330
Lodging Reported
EBITDA (4,072) (1,224) 3,230 13,612
Resort Reported
EBITDA (31,207) (26,905) 103,608 106,942
Real Estate Reported
EBITDA $(1,003) $1,844 $17,721 $15,272
Vail Resorts, Inc.
Resort Revenue by Business Line and Skier Visits
(in thousands)
Three Months Ended Year Ended
July 31, July 31,
2003 2002 % Change 2003 2002 % Change
Business Line
Lift tickets $61 $(123) 149.6% $196,150 $161,923 21.1%
Ski school 26 (76) 134.2% 55,392 46,000 20.4%
Dining 4,031 4,646 (13.2)% 51,444 45,378 13.4%
Retail/
rental 13,271 11,827 12.2% 107,714 94,982 13.4%
Other 17,445 15,584 11.9% 59,448 52,195 13.9%
Total
Mountain
Revenue 34,834 31,858 9.3% 470,148 400,478 17.4%
Total
Lodging
Revenue 39,291 40,708 (3.5)% 159,849 150,928 5.9%
Total
Resort
Revenue $74,125 $72,566 2.1% $629,997 $551,406 14.3%
Three Months Ended Year Ended
July 31, July 31,
2003 2002 % Change 2003 2002 % Change
Skier Visits
Vail -- -- 0.0% 1,611 1,536 4.9%
Beaver Creek -- -- 0.0% 718 658 9.1%
Keystone -- -- 0.0% 1,039 1,069 (2.8)%
Breckenridge -- -- 0.0% 1,425 1,469 (3.0)%
Heavenly 2 -- 100.0% 937 -- 100.0%
Total Skier
Visits 2 -- 100.0% 5,730 4,732 21.1%
Vail Resorts, Inc.
Selected Quarterly Information
(in thousands, except per share amounts)
Fiscal 2003
Quarter Quarter Quarter Quarter Fiscal Year
Ended Ended Ended Ended Ended
October 31, January 31, April 30, July 31, July 31,
2002 2003 2003 2003 2003
Mountain
revenue $34,441 $189,163 $211,710 $34,834 $470,148
Lodging
revenue 40,058 34,981 45,519 39,291 159,849
Real estate
revenue 39,354 24,191 11,888 4,968 80,401
Total net
revenue 113,853 248,335 269,117 79,093 710,398
Mountain
expense 65,480 124,300 119,489 61,510 370,779
Lodging
expense 38,739 37,334 33,513 41,038 150,624
Real estate
expense 27,546 22,294 11,592 5,210 66,642
Income (loss)
from
operations (36,553) 43,266 81,375 (53,601) 34,487
Mountain
equity
investment
income 1,089 451 (74) (457) 1,009
Lodging
equity
investment
income (1,307) (1,975) (390) (2,323) (5,995)
Real estate
equity
investment
income 3,070 771 881 (760) 3,962
Pretax
income (43,218) 29,002 66,922 (66,711) (14,005)
Net
income (25,114) 16,724 33,536 (33,673) (8,527)
Earning
per share:
Basic $(0.71) $0.48 $0.95 $(0.96) $(0.24)
Diluted $(0.71) $0.47 $0.95 $(0.96) $(0.24)
