Vail Resorts' Mountain revenue for the fiscal year ended July 31, 2004 was $500.4 million, a $36.3 million, or 7.8%, increase from $464.1 million for the comparable period last year. Mountain expense increased $2.5 million, or 0.7%, to $369.0 million.
Lodging revenue for the fiscal year grew $10.4 million, or 6.3%, to $176.3 million. Lodging expense increased $6.2 million, or 4.0%, to $161.1 million.
Resort revenue rose $46.8 million, or 7.4%, to $676.8 million, and Resort expense increased 1.7% to $530.1 million, up $8.7 million.
Real Estate revenue for the fiscal year fell $35.3 million to $45.1 million, as expected, due to the timing and mix of real estate projects, and real estate expense decreased $49.9 million to $16.8 million due to the timing and mix of real estate projects as well as the previously announced third quarter $15.1 million operating expense reduction associated with the Smith Creek Metropolitan District (“SCMD”) bond payoff.
Income from operations for the fiscal year improved $47.3 million, or 137.2%, to $81.8 million compared to $34.5 million for the same period last year.
Reported EBITDA for the Mountain segment improved $34.2 million, or 34.6%, to $132.8 million compared to $98.7 million for the comparable period last year.
Reported EBITDA for the Lodging segment improved from $4.9 million last year to $11.8 million, up 138.6%, in the current year. Fiscal 2004 includes $3.3 million of equity loss attributed to BG Resort, LLC, the entity that owns and operates the Ritz-Carlton, Bachelor Gulch, which represents a $2.5 million improvement over the same period last year. As the Company uses the equity method of accounting for BG Resort, included in the fiscal 2004 year-to-date Lodging Reported EBITDA is $2.2 million of depreciation expense and $2.3 million of interest expense.
Resort Reported EBITDA rose $41.0 million to $144.6 million, a 39.6% improvement over last year.
Real Estate Reported EBITDA for the year increased $13.2 million to $30.9 million from $17.7 million for the same period a year ago. The reversal of a liability associated with the third quarter payoff of the SCMD bonds by the Bachelor Gulch Metropolitan District resulted in a $15.1 million increase in Real Estate Reported EBITDA. The current year's Real Estate Reported EBITDA also includes a $2.1 million net gain from the transfer of property.
Net loss for the fiscal year was $6.0 million, or a loss of $0.17 per diluted share, compared to a net loss of $8.5 million, or a loss of $0.24 per diluted share, for the same period last year. Excluding the previously announced charges for early extinguishment of debt and mold remediation, the Company's net income for the fiscal year would have been an improvement to $20.4 million, or $0.58 per diluted share, using a normalized tax rate, compared to the net loss of $8.5 million, or $0.24 per diluted share, in the prior fiscal year. The charges associated with the early extinguishment of debt resulted from the successful refinancing in January 2004 of the Company's 10-year senior subordinated notes and other debt, which will save the Company more than $5.0 million in annual cash interest costs for at least the next five years.
FOURTH QUARTER PERFORMANCE
Mountain revenue for the fourth quarter of fiscal 2004 was $30.8 million, a $1.6 million, or 4.8%, decrease from $32.3 million for the comparable period last year. Mountain expense decreased $7.1 million, or 11.7%, to $53.3 million.
Lodging revenue for the quarter grew $3.3 million, or 7.8%, to $45.8 million. Lodging expense increased $1.4 million, or 3.2%, to $44.2 million.
Resort revenue, the combination of Mountain and Lodging revenues, rose $1.8 million, or 2.3%, to $76.5 million. Resort expense decreased $5.7 million, or 5.5%, to $97.5 million.
Real Estate revenue for the quarter rose $1.6 million to $6.6 million. Real Estate expense increased $2.0 million to $7.2 million for the quarter.
Total revenue increased $3.4 million, or 4.2%, to $83.1 million, and total operating expense decreased $6.7 million, or 5.0%, to $126.7 million.
Loss from operations for the quarter improved $10.0 million, or 18.7%, to a loss of $43.6 million compared to a loss of $53.6 million for the same period last year.
Reported EBITDA for the Mountain segment improved $6.1 million, or 21.5%, to negative $22.4 million compared to negative $28.5 million for the comparable period last year.
Reported EBITDA for the Lodging segment improved by $3.2 million, from negative $2.7 million in the fourth quarter of last year to positive $0.5 million in the current year fourth quarter. The fourth quarter of fiscal 2004 includes $1.1 million of equity loss attributed to BG Resort LLC, which represents a $1.2 million improvement over the same period last year. As the Company uses the equity method of accounting for the BG Resort, LLC, included in the fiscal 2004 fourth quarter Lodging Reported EBITDA is $0.6 million of depreciation and $0.4 million of interest expense.
Fourth quarter Resort Reported EBITDA improved $9.3 million to negative $21.9 million, a 29.9% improvement over the negative $31.2 million in the comparable period last year.
Real Estate Reported EBITDA, which was negative $0.8 million for the quarter, improved $0.2 million compared to the fourth quarter last year.
The Company reported a fourth quarter net loss of $36.3 million, or $1.03 per diluted share, compared to a net loss of $33.7 million, or $0.96 per diluted share, for the same period last year.
Adam Aron, Chairman and Chief Executive Officer, commented, “Vail Resorts has just completed what we believe is the most successful year in our 42-year history, registering record Resort revenue and record Resort Reported EBITDA, the latter up an extraordinary 39.6% year-over-year. We are thrilled with the financial performance of all of our business segments during fiscal 2004. The success of our ski resorts this past year is especially notable, considering low early season snowfall and uncharacteristically warm weather in our peak ski month of March. Similarly, our Lodging business showed dramatic signs of recovery, with Reported EBITDA more than doubling year-over-year. And not only did our Real Estate division post strong financial results in fiscal 2004, with Vail's New Dawn at hand, it is poised to carry out some of the most exciting real estate development projects ever for our Company.”
“The Mountain segment had a remarkably strong year, growing Reported EBITDA 34.6% over last year, with the Mountain segment Reported EBITDA margin increasing from 21.3% last year to 26.5% this year. Both Beaver Creek and Heavenly resorts have now experienced record skier visits for two straight years, and the 10.4% growth in our average realized price for the ski season is reflective of increases at all five of our ski resorts. The slight increase in Mountain expense year-over-year of only 0.7% is compelling evidence of our success in implementing our company-wide $25 million savings plan. These savings were instrumental in offsetting inflationary increases, variable costs, and other expenses incurred during the normal course of business. It is especially impressive that despite our cost reduction efforts Ski Magazine's prestigious ski rankings have just been issued, with all our resorts ranking highly and among the best ski resorts in North America. Vail ranked at #1, Beaver Creek at #4, Breckenridge at #6, Keystone #15 and Heavenly #16, out of some 800 ski resorts in North America. Overall, our ski areas performed exceptionally well during the 2003/2004 ski season,” continued Aron.
Aron added, “The Lodging segment results are likewise quite gratifying. All year long we said that our lodging properties were benefiting from the rebound in the national economy and the improving fortune of the U.S. travel industry. With a detailed focus on revenue growth, expense containment and service enhancements, we saw improved financial results at property after property. Indeed, Vail Resorts enjoyed a 6.3% year-over-year increase in lodging revenues as well as a whopping 138.6% increase in Lodging Reported EBITDA.”
Aron further added, “Our Real Estate division continues to perform well with Reported EBITDA growth of 74.6% over fiscal 2003, primarily due to the third quarter payoff of the Smith Creek Metropolitan District outstanding bonds. In addition to positive financial results for the year, we are excited with the momentum we have established, as important and lucrative real estate projects are in our sights. Vail's New Dawn is coming to fruition after years of effort. We broke ground last May on a $100,000-per-space parking structure in Vail Village, and pre-sales for phase one of the Gore Creek Place townhomes, located next to the Vail Marriott in Lionshead, have been a blowout success. In addition to the momentum in Vail, we have also successfully pre-sold phase one of the cabin and homesite development at the Jackson Hole Golf and Tennis Club.”
Aron continued, “Another important strategic enhancement for Vail Resorts in fiscal 2004 was improvement to aspects of our capital structure, primarily the result of a purposeful management effort and the surge in Reported EBITDA during fiscal 2004. Specifically, Vail Resorts' revolving credit line was fully repaid, with a zero outstanding balance and positive invested cash at year-end. Further, Vail Resorts has reduced its leverage ratio (defined as net debt divided by Reported EBITDA) by over a full turn. And perhaps of greatest importance, Vail Resorts successfully locked in historically low interest rates for a decade to come. By refinancing all its senior subordinated notes, Vail Resorts reduced the interest rate on the majority of its long-term debt by 200 basis points and extended its maturity until 2014. Similarly, the $100 Million Term Loan was refinanced, with the interest rate margin reduced by 50 basis points and the maturity extended until 2010.”
Aron further added, “With the momentum we're experiencing in all of our operating segments, we look to fiscal 2005 and beyond into the future with both enthusiasm and optimism. Early indications for fiscal 2005 are positive, including that sales of season passes and other advance purchase products for the 2004/2005 ski season are currently running up 25.7% year-over-year in Colorado, that bookings made into Vail Resorts central reservations are up 7.3% over this time last year, and that airline capacity into the Vail/Eagle airport is up 3.5%. Assuming normal weather conditions this coming ski season, no major terrorist incidents, and no new military conflict, we expect to see continued growth in Resort Reported EBITDA and anticipate having a profitable year in fiscal 2005. As such, we currently expect Mountain Reported EBITDA for fiscal 2005 to range from $138 million to $146 million and Lodging Reported EBITDA to range from $10 to $18 million, with total Resort Reported EBITDA between $152 and $160 million. As for Real Estate, fiscal 2005 will be a year of construction, laying the groundwork for the Company to realize significant cash flow and Reported EBITDA in future years. As such, at this time we are comfortable giving Real Estate Reported EBITDA guidance of $10 to $16 million for fiscal 2005. We are also currently projecting net income in fiscal 2005, ranging from $14 million to $22 million.”
Vail Resorts, Inc.
Consolidated Financial Statements
(in thousands except per share amounts)
(unaudited)Three Months Ended Year ended
July 31, July 31,
2004 2003 2004 2003
Net revenue:
Mountain $30,762 $32,313 $500,436 $464,104
Lodging 45,776 42,473 176,334 165,893
Real estate 6,570 4,968 45,123 80,401
Total net revenue 83,108 79,754 721,893 710,398
Operating expense:
Mountain 53,306 60,361 368,984 366,442
Lodging 44,222 42,849 161,124 154,961
Real estate 7,179 5,211 16,790 66,642
Gain on transfer of
property -- -- (2,146) --
Depreciation &
amortization 21,037 19,600 86,377 82,242
Asset impairment charge 175 4,830 1,108 4,830
Mold remediation charge -- -- 5,500 --
Loss on disposal of
fixed assets, net 779 506 2,345 794
Total operating expense 126,698 133,357 640,082 675,911
Income (loss) from
operations (43,590) (53,603) 81,811 34,487
Other income (expense)
Mountain equity investment
income (loss), net 154 (458) 1,376 1,009
Lodging equity investment
loss, net (1,051) (2,324) (3,432) (5,995)
Real estate equity
investment income (loss),
net (229) (760) 460 3,962
Investment income 548 927 1,886 2,011
Interest expense (10,550) (12,520) (47,479) (50,001)
Loss on extinguishment
of debt (889) -- (37,084) --
Gain (loss) on put options,
net (136) 198 (1,875) 1,569
Other income (expense), net (170) (2) (179) 17
Minority interest in
(income) loss of
consolidated subsidiaries,
net 2,181 1,832 (4,000) (1,064)
Loss before benefit from
income taxes (53,732) (66,710) (8,516) (14,005)
Benefit from income
taxes 17,428 33,037 2,557 5,478
Net loss $(36,304) $(33,673) $(5,959) $(8,527)Basic weighted average
shares 35,313 35,191 35,294 35,170
Diluted weighted average
shares 35,313 35,191 35,294 35,170Per share amounts:
Basic net loss per share $(1.03) $(0.96) $(0.17) $(0.24)
Diluted net loss per share $(1.03) $(0.96) $(0.17) $(0.24)
Other Data:
Mountain Reported EBITDA $(22,390) $(28,506) $132,828 $98,671
Lodging Reported EBITDA 503 (2,700) 11,778 4,937
Resort Reported EBITDA (21,887) (31,206) 144,606 103,608
Real Estate Reported EBITDA $(838) $(1,003) $30,939 $17,721Vail Resorts, Inc.
Net Resort Revenue by Business Line and Skier Visits
(in thousands)Three Months Ended Year Ended
July 31, July 31,2004 2003 % Change 2004 2003 % Change
Business Line
Lift tickets $371 $61 505.6% $213,059 $196,150 8.6%
Ski school 355 26 1275.5% 58,526 55,392 5.7%
Dining 4,094 3,377 21.2% 51,511 48,333 6.6%
Retail/rental 13,053 13,271 (1.6)% 115,044 107,714 6.8%
Other 12,889 15,578 (17.3)% 62,296 56,515 10.2%
Total Mountain
Net Operating
Revenue 30,762 32,313 (4.8)% 500,436 464,104 7.8%Total Lodging
Net Operating
Revenue 45,776 42,473 7.8% 176,334 165,893 6.3%Total Net
Resort Revenue $76,538 $74,786 2.3% $676,770 $629,997 7.4%Year Ended
July 31,2004 2003 % Change
Skier Visits
Vail 1,556 1,611 (3.4)%
Breckenridge 1,402 1,425 (1.6)%
Heavenly 965 937 3.0%
Keystone 944 1,039 (9.1)%
Beaver Creek 769 718 7.1%
Total Skier Visits 5,636 5,730 (1.6)%Effective Ticket Price $37.80 $34.23 10.4%
