NEWRY, Maine, Dec. 12 /PRNewswire/ — American Skiing Company (NYSE: SKI) today announced results for its first quarter of fiscal 2002, which ended October 28, 2001.
“The Company continues to make progress on the remaining elements of our previously announced restructuring plan,” said CEO B.J. Fair. “On December 6th we closed on a $14 million financing facility for our Heavenly Gondola and proceeds were applied to reduce borrowings under our senior revolving credit facility. As a result of this transaction, we have significantly improved the liquidity of our resort operating company as originally contemplated under our restructuring plan. Oak Hill Capital, our largest investor, guaranteed the transaction illustrating their commitment to the Company and support of our current business plan. We continue to pursue the final key element of the plan, the sale of our Steamboat resort.”
Heavenly Gondola Financing
The Company reported that on December 6, 2001, it closed a $14 million financing facility for the Heavenly Gondola at its Heavenly resort in South Lake Tahoe, California. Securing long term financing for the gondola was a key part of the Company’s previously announced restructuring plan. Proceeds from the transaction, of approximately $14 million, were used to reduce outstanding amounts under the Company’s resort revolving credit facility.
Accounting Changes and Non-Recurring Items
During the first quarter of fiscal 2002, the Company incurred a $1.6 million non-recurring charge related to its previously announced restructuring program, and as previously anticipated, an $18.7 million non-recurring charge from the cumulative effect of a change in accounting principle related to the impairment of goodwill resulting from the adoption of Statement of Financial Accounting Standards No. 142. The net loss for the first quarter of fiscal 2001 included $0.8 million in pre-opening expenses at the Steamboat Grand Hotel, which opened in October 2000, and a $2.5 million benefit, net of taxes, from the cumulative effect of a change in accounting principle related to marking interest rate derivatives to their market value as a result of the adoption of Statement of Financial Accounting Standards No. 133.
Fiscal 2002 First Quarter Results
The net loss available to common shareholders for the first quarter of fiscal 2002 was $65.5 million, or $2.09 per basic and diluted share, compared with a net loss of $24.2 million, or $0.79 per basic and diluted share for the first fiscal quarter of fiscal 2001. Excluding non-recurring items in both periods, and adjusting for the Company’s previously announced decision not to recognize any income tax benefit or expense, the fiscal 2002 net loss available to common shareholders was $45.2 million, or $1.44 per basic and diluted share compared to a net loss of $37.4 million, or $1.23 per basic and diluted share in fiscal 2001.
Total revenues were $23.1 million for the first quarter of fiscal 2002, compared with $48.1 million for the previous year’s first quarter. Resort revenue was $20.3 million for the quarter, compared with $20.9 million in the first quarter of fiscal 2001. Excluding revenues from Sugarbush resort, which the Company sold on September 28, 2001, resort revenues were $19.6 million during the first quarter of fiscal 2002 compared to $19.8 million in the prior year. Real estate revenue was $2.8 million, versus $27.2 million for the same period in fiscal 2000.
“The decline in real estate revenue was anticipated,” said CFO Mark Miller. “During the first quarter of fiscal 2002, we did not deliver any new projects and focused our energy on debt reduction and the sell-out of remaining quartershare inventory. We have seen weaker than anticipated demand for our western real estate as a result of the softening economy and concerns about our financial condition. We are cautiously optimistic about our ability to move a significant number of units at Steamboat and The Canyons this season and are carefully monitoring economic conditions and adjusting our real estate operations and plans accordingly.”
During the first quarter of fiscal 2001, the Company recognized $15.6 million in revenues from closing on pre-sold units at the Steamboat Grand Hotel, $4.4 million in revenue as a result of a land sale to Marriott Vacation Club International and $6.1 million in revenues from ongoing quartershare sales.
The Company’s total earnings from operations before interest, income taxes, depreciation, and amortization (“EBITDA”), was a loss of $21.2 million in the first fiscal quarter of 2002, compared with an EBITDA loss of $16.2 million in the same period in fiscal 2001. Excluding non-recurring charges and results from Sugarbush in both periods, total EBITDA was a loss of $18.7 million in fiscal 2002 versus a loss of $14.0 million in fiscal 2001. Resort EBITDA for the quarter was a loss of $19.9 million in both periods. Excluding non-recurring charges and results from Sugarbush in both years, resort EBITDA was a loss $17.3 million during the first quarter of fiscal 2002 compared to a loss of $17.7 million in the same period in fiscal 2001. Real estate EBITDA was a loss of $1.3 million compared with earnings of $3.6 million in the first fiscal quarter of 2001.
Due to the seasonality of the ski industry, the Company typically posts losses related to resort operations during its first and fourth fiscal quarters.
Fiscal 2002 Business Outlook
“All of our resorts are now open and providing our guests with the skiing and riding experience that has made us an industry leader,” said Fair. “During the last several years we have made significant investments in on- mountain infrastructure and our operations continue to improve as they mature. Warm weather from coast-to-coast impacted Thanksgiving week business volume compared to last year’s exceptional results, however, recent heavy snowfall in the west and a return to colder weather in the east position us for significantly improved activity.”
Thanksgiving Week and Recent Trends
The Company reported that results for Thanksgiving week were weaker than during the prior year as a result of warmer than normal weather conditions at all of its resorts. In the east, all of the Company’s resorts were open during Thanksgiving week, with the exception of Attitash Bear Peak, but with significantly less terrain than in the prior year when it benefited from excellent early season conditions. As a result, skier visits in the east were substantially less than the levels achieved last season. All of the Company’s resorts in the east, excluding Sunday River, were closed following Thanksgiving week due to warmer than normal weather which impacted snowmaking operations. A return to colder weather in the east has allowed snowmaking operations to resume and all of the Company’s eastern resorts were open as of December 11th.
All of the Company’s western resorts opened later than last season as a result of warmer weather and a lack of snowfall. The Canyons resort, in Park City, Utah, was open by Thanksgiving weekend as a result of significant natural snowfall. However, the late arrival of the snow impacted reservation activity, and results for Thanksgiving week were weaker than during the prior year. To date, heavy snowfall has allowed The Canyons to offer visitors more than double the amount of terrain than at the same time last season. Heavenly resort, in South Lake Tahoe, opened on November 23rd with significantly less terrain than last season resulting in lower visitation. Warm weather and a lack of natural snowfall in the Colorado Rockies delayed the opening of Steamboat until November 30th. However, all of the Company’s western resorts have seen significant snowfall since Thanksgiving week and skiing and riding conditions have improved and are significantly better than last year.
With improved ski conditions in the west, the Company’s reservation and call activity have increased significantly after a sharp decline follow
ing the events of September 11th. Total winter reservations are down approximately 10% year-to-date across the resort network, with eastern resorts showing a 2% decrease and western resorts showing about a 19% decline. The Company anticipates that a return to colder weather in the east will also improve call volume and reservation activity.
Season pass sales are tracking approximately 6% higher year-over-year, as of December 9, 2001, with a number of resorts experiencing double digit increases. Season pass revenues are recognized during the 2nd and 3rd fiscal quarters.
As previously announced, the Company successfully completed an auction of most of its remaining quartershare inventory at the Attitash Grand Summit Hotel. The auction was completed sooner than planned and generated in excess of $3.8 million in sales, which are expected to close and be recognized as revenue during the 2nd quarter. The Company also reported that demand for western real estate has been weaker than anticipated as a result of the softening economy and concerns about its financial condition. While sales in the west have rebounded recently as ski conditions have improved dramatically, the Company is monitoring developing economic conditions carefully and making necessary adjustments.
Conference Call and Webcast Information
In conjunction with this release, American Skiing Company will host a conference call at 3:00 p.m. (EST) on Wednesday, December 12, 2001.
Investors can listen to the call by dialing 800-230-1085 or 612-288-0337. This call will replay from 6:30 p.m. (EST) December 12, 2001 until midnight (EST) December 19, 2001. Investors can listen to the replay by dialing 800- 475-6701 or 320-365-3844 (password 616017).
The conference call will be also be broadcast live over the Internet. Investors interested in listening to the call should log on to the “Investor Relations” section of the Company’s Web site at www.peaks.shareholder.com at least 15 minutes prior to the broadcast. Investors can also access an archived version of the call on the Company’s Web site for one week following the call.