American Skiing Company Announces Fiscal 2004 Third Quarter Results
PARK CITY, UTAH - June 9, 2004 -- American Skiing Company (OTC: AESK) announced
today financial results for its third fiscal quarter and 39 weeks ended April
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.
"Strong early season performance at Steamboat and The Canyons continued for the
majority of the ski season," said CFO Betsy Wallace. "The Canyons surpassed its
prior record-setting skier visit season while Steamboat improved financial
performance on similar year-over-year visitation. In the East, the weather
challenges we experienced in the early season improved in the third quarter. The
better weather conditions in the East during March allowed skier visits in the
region to rebound from early season challenges. Nonetheless, our skier visits
were slightly lower for the quarter as compared to the same quarter of the prior
year. Despite these weather-related challenges, our resort financial performance
has benefited from a coordinated marketing effort, aggressive cost controls, and
an increase in season pass revenues which helped mitigate lower day lift ticket
sales."
Ski Season Update - Western Resorts
As previously reported, the Company's western resorts enjoyed excellent skiing
and riding conditions for the majority of the season. The Canyons, located 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.
Good conditions continued into Presidents' Day weekend. Above average
temperatures and minimal natural snowfall in March slowed the visitation pace
slightly, though the increase in total skier visits over fiscal 2003 was still
an impressive 12%.
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 with more than 10 feet of natural snow and received
another 4 feet during the two week holiday period. Steamboat recorded a number
of record skier visit days during the December holiday period. Above average
temperatures and minimal natural snowfall in March negatively impacted
visitation pace. Though by season's end, total skier visits were almost
unchanged from the fiscal 2003 season, structural changes, cost savings
initiatives and improvements at the Steamboat Grand Resort Hotel allowed
Steamboat to significantly improve its financial performance.
Ski Season Update - Eastern Resorts
In the East, the Company experienced 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. Weather challenges
continued following the December holiday period with bitterly cold temperatures
impacting skier visits throughout January and early February 2004. The weather
in the East moderated slightly and the eastern resorts posted a 2.2% increase in
skier visits during the Presidents' Day holiday weekend. Despite weather-related
challenges, Attitash Bear Peak and Sunday River posted a strong increase in
skier visits due primarily to a successful combined season pass offering.
Weather allowed for solid visitation during certain weekends in the late season,
though insufficient to overcome the impact of weather-related challenges for
much of the winter season.
Adoption of New Accounting Standard
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 third fiscal quarter and 39 weeks ended April 25, 2004,
approximately $11.0 million and $31.8 million of accretion of discount and
dividends on the preferred stock, respectively, was included in interest
expense. For the third fiscal quarter and 39 weeks ended April 27, 2003,
approximately $9.6 million and $27.7 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.
Fiscal 2004 Third Quarter Results
On a GAAP basis, net income available to common shareholders for the third
quarter of fiscal 2004 was $24.5 million, or $0.77 per basic share and $0.35 per
diluted share, compared with net income of $13.0 million, or $0.41 per basic
share and $0.21 per diluted share for the third quarter of fiscal 2003.
Total consolidated revenue was $145.7 million for the third quarter of fiscal
2004, compared with $127.7 million for the third quarter of fiscal 2003. Resort
revenue was $128.1 million for the quarter, compared with $122.1 million for the
third quarter of fiscal 2003. The decline in resort revenue primarily reflects
lower eastern skier visits attributable to unfavorable weather conditions. Real
estate revenue was $17.6 million, versus $5.6 million for the comparable period
in fiscal 2003. The primary driver of the increase was the successful auction
sale of remaining fractional ownership inventory at The Canyons that generated a
$12.0 million increase in real estate revenue over the third quarter of fiscal
2003.
The Company's net income was $24.5 million for the third quarter of fiscal 2004,
compared with $22.5 million for the comparable period in fiscal 2003. Excluding
restructuring and asset impairment charges, write off deferred financing costs
and the accretion of preferred stock dividends, net income was $35.5 million for
the third quarter of fiscal 2004 versus $25.1 million for the third quarter of
fiscal 2003. Income from resort operations was $24.3 million for the third
fiscal quarter of 2004 versus income of $27.3 million for the third quarter of
fiscal 2003. Excluding the write off of deferred financing costs and accretion
of preferred stock dividends, income from resort operations was $35.3 million
for the third quarter of fiscal 2004 versus $30.1 million for the third quarter
of fiscal 2003. 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. Income from
real estate operations was $0.2 million for the third fiscal quarter of 2004,
compared with a loss of $4.8 million for the third quarter of fiscal 2003.
Excluding restructuring and asset impairment charges, income from real estate
operations was $0.2 million for the third fiscal quarter of 2004, compared with
a loss of $4.9 million for the third quarter of fiscal 2003. The Company has
provided reconciliations from GAAP financial measures to non-GAAP financial
measures in the tables following this discussion.
Fiscal 2004 Year-to-Date Results
On a GAAP basis, net loss available to common shareholders for the 39 weeks
ended April 25, 2004 was $38.4 million, or $1.21 per basic and diluted share,
compared with a net loss of $42.8 million, or $1.35 per basic and diluted share
for the corresponding period of fiscal 2003. The net loss during the first 39
weeks of fiscal 2004 included a $0.1 million restructuring charge. The Company
reversed charges of $0.2 million from restructuring and wrote off $2.8 million
of deferred financing costs during the first 39 weeks of fiscal 2003.
Total consolidated revenue was $267.1 million for the first 39 weeks of fiscal
2004, compared with $248.7 million for the first 39 weeks of fiscal 2003. Resort
revenue was $237.1 million for the first 39 weeks of fiscal 2004, compared with
$238.0 million for the first 39 weeks 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 ski season weather challenges
previously discussed. Real estate revenue was $30.0 million, versus $10.7
million for the comparable period in fiscal 2003 primarily as a result of the
sale of remaining fractional ownership inventory at The Canyons.
The Company's net loss was $38.4 million for the first 39 weeks of fiscal 2004,
compared with a net loss of $15.1 million for the comparable period in fiscal
2003. Excluding the restructuring charge, write off of deferred financing costs
and the accretion of preferred stock dividends, the net loss was $6.5 million
for the first 39 weeks of fiscal 2004 versus $12.5 million for the comparable
period in fiscal 2003. The loss from resort operations was $29.3 million versus
income of $1.2 million for the comparable period in fiscal 2003. Excluding
restructuring charges, write off deferred financing costs and the accretion of
preferred stock dividends, income from resort operations was $2.7 million for
the first 39 weeks of fiscal 2004 compared to income of $3.9 million for the
comparable period of fiscal 2003. The loss from real estate operations was $9.2
million for the first 39 weeks of fiscal 2004, compared with a loss of $16.3
million for the first 39 weeks of fiscal 2003. Excluding restructuring and asset
impairment charges, the loss from real estate operations was $9.2 million for
the first 39 weeks of fiscal 2004, compared with a loss of $16.4 million for the
first 39 weeks of fiscal 2003. The Company has provided reconciliations from
GAAP financial measures to non-GAAP financial measures in the tables following
this discussion.
Use of Non-GAAP Financial Information
The Company uses both GAAP and non-GAAP metrics to measure its financial
results. Management believes that non-GAAP financial measures which exclude
certain items provides useful information to investors regarding the Company's
ongoing financial condition and results of operations. In addition, management
believes these non-GAAP metrics are useful to investors because they remove
certain items that occur in the affected periods (such as the Company's
restructuring charge and the impact of the reclassification to liabilities of
all of its mandatorily redeemable preferred stock following its adoption of SFAS
No. 150 in the first quarter of fiscal 2004) and provide a basis for measuring
the Company's results of operations and financial condition against other
periods. Since the Company has historically reported non-GAAP results to the
investment community, management also believes the inclusion of non-GAAP
measures provides consistency in its financial reporting. However, non-GAAP
financial measures should not be considered in isolation from, or as a
substitute for, financial information prepared in accordance with GAAP. In
addition to the information contained in this press release, investors should
also review information contained in the Company's Form 10-Q and Form 10-K,
dated June 9, 2004 and October 27, 2003, respectively, as well as other filings
with the Securities and Exchange Commission when assessing the Company's
financial condition and results of operations. The Company has provided
reconciliations from GAAP financial measures to non-GAAP financial measures in
the tables following this discussion.
About American Skiing Company
Headquartered in Park City, Utah, American Skiing Company is one of the largest
operators of alpine ski, snowboard and golf resorts in the United States. Its
resorts include Killington and Mount Snow in Vermont; Sunday River and
Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in
Colorado; and The Canyons in Utah. More information is available on the
Company's Web site, www.peaks.com.
This press release contains both historical and forward-looking statements. All
statements other than statements of historical facts are, or may be deemed to
be, forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). These
forward-looking statements are not based on historical facts, but rather reflect
American Skiing Company's current expectations concerning future results and
events. Similarly, statements that describe the Company's objectives, plans or
goals are or may be forward-looking statements. American Skiing Company has
tried wherever possible to identify such statements by using words such as
"anticipate," "assume," "believe," "expect," "intend," "plan," and words and
terms similar in substance in connection with any discussion of operating or
financial performance. Such forward-looking statements involve a number of risks
and uncertainties. In addition to factors discussed above, other factors that
could cause actual results, performances or achievements to differ materially
from those projected include, but are not limited to, the following: changes in
regional and national business and economic conditions affecting both our resort
operating and real estate segments; competition and pricing pressures; negative
impact on demand for our products resulting from terrorism and availability of
air travel (including the effect of airline bankruptcies); any redemption of or
legal requirement to redeem our Series A Preferred Stock; failure to maintain
improvements to resort operating performance at the covenant levels required by
our resort senior credit facility; a final determination against the Company in
the Steamboat sale litigation which leads to material monetary damages or an
order for specific performance for the sale of Steamboat resort; the possibility
of domestic terrorist activities and their respective effects on the ski, golf,
resort, leisure and travel industries; failure of on-mountain improvements and
other capital expenditures to generate incremental revenue; adverse weather
conditions regionally and nationally; seasonal business activity; changes to
federal, state and local regulations affecting both our resort operating and
real estate segments; failure to renew land leases and forest service permits;
disruptions in water supply that would impact snowmaking operations; long and
short-term changes in weather patterns resulting from global warming; the loss
of any of our executive officers or key operating personnel; and other factors
listed from time to time in our documents we have filed with the Securities and
Exchange Commission. The Company cautions the reader that this list is not
exhaustive. The Company operates in a changing business environment and new
risks arise from time to time. The forward-looking statements included in this
press release are made only as of the date of this press release and under
Section 27A of the Securities Act and Section 21E of the Exchange Act, American
Skiing Company does not have or undertake any obligation to publicly update any
forward-looking statements to reflect subsequent events or circumstances.
American Skiing Company and Subsidiaries
Unaudited Condensed Consolidated Financial Statement Information
(in thousands except per share amounts)
Quarter Ended 39 Weeks Ended
Net revenues: April 25, 2004 April 27, 2003 April 25, 2004 April 27, 2003
Resort $ 128,099 $ 122,129 $ 237,131 $ 238,001
Real estate 17,571 5,614 29,972 10,653
------------- ------------- ------------- ------------
Total net revenues 145,670 127,743 267,103 248,654
------------- ------------- ------------- ------------
Operating expenses:
Resort 61,737 60,903 146,672 149,197
Real estate 11,696 4,941 21,892 10,415
Marketing, general and administrative 13,758 13,600 44,528 40,185
Restructuring and asset impairment charges - (160) 137 (160)
Write-off of deferred financing costs - 2,761 - 2,761
Depreciation and amortization 11,203 11,335 24,137 25,201
------------- ------------- ------------- ------------
Total operating expenses 98,394 93,380 237,366 227,599
------------- ------------- ------------- ------------
Income from operations 47,276 34,363 29,737 21,055
Interest expense, net (1) 22,770 11,825 68,178 36,140
------------- ------------- ------------- ------------
Net income (loss) 24,506 22,538 (38,441) (15,085)
Accretion of discount and dividends on
mandatorily redeemable preferred stock (1) - (9,567) - (27,741)
------------- ------------- ------------- ------------
Net income (loss) available to common
shareholders $ 24,506 $ 12,971 $ (38,441) $ (42,826)
============= ============= ============= ============
Basic net income (loss) per common share:
Net income (loss) available to common
shareholders $ 0.77 $ 0.41 $ (1.21) $ (1.35)
============= ============= ============= ============
Weighted average common shares
outstanding - basic 31,738 31,724 31,738 31,724
============= ============= ============= ============
Diluted net income (loss) per common share:
Net income (loss) available to common
shareholders $ 0.35 $ 0.21 $ (1.21) $ (1.35)
============= ============= ============= ============
Weighted average common shares
outstanding - diluted 74,257 69,514 31,738 31,724
============= ============= ============= ============
(1) For more information, please refer to the Company's Form 10-Q, dated June
9, 2004, on file with the Securities and Exchange Commission.
American Skiing Company and Subsidiaries
Unaudited Reconciliation of GAAP to Non-GAAP Metrics
(in thousands of dollars)
Quarter Ended 39 Weeks Ended
April 25, 2004 April 27, 2003 April 25, 2004 April 27, 2003
---------------------------------------------------------
Net income (loss) available to common shareholders $ 24,506 $ 12,971 $ (38,441) $ (42,826)
Restructuring and asset impairment charges - (160) 137 (160)
Write-off of deferred financing costs - 2,761 - 2,761
------------ ----------- ------------ -----------
Net income (loss) available to common shareholders excluding
other items $ 24,506 $ 15,572 $ (38,304) $ (40,225)
============ =========== ============ ===========
Quarter Ended 39 Weeks Ended
April 25, 2004 April 27, 2003 April 25, 2004 April 27, 2003
---------------------------------------------------------
Net income (loss) $ 24,506 $ 22,538 $ (38,441) $ (15,085)
Restructuring and asset impairment charges - (160) 137 (160)
Write-off of deferred financing costs - 2,761 - 2,761
------------ ----------- ------------ -----------
Net income (loss) excluding other items 24,506 25,139 (38,304) (12,484)
Accretion of discount and dividends on preferred stock (1) 10,974 - 31,793 -
Net income (loss) excluding other items and accretion of
discount and dividends on preferred stock $ 35,480 $ 25,139 $ (6,511) $ (12,484)
============ =========== ============ ===========
Income (loss) from resort operations $ 24,315 $ 27,319 $ (29,258) $ 1,179
Restructuring and asset impairment charges - - 137 -
Write-off of deferred financing costs - 2,761 - 2,761
------------ ----------- ------------ -----------
Income (loss) from resort operations excluding restructuring charges 24,315 30,080 (29,121) 3,940
Accretion of discount and dividends on preferred stock (1) 10,974 - 31,793 -
Income from resort operations excluding restructuring charges and
accretion of discount and dividends on preferred stock $ 35,289 $ 30,080 $ 2,672 $ 3,940
============ =========== ============ ===========
Income (loss) from real estate operations $ 191 $ (4,781) $ (9,183) $ (16,264)
Restructuring and asset impairment charges - (160) - (160)
------------ ----------- ------------ -----------
Income (loss) from real estate operations excluding restructuring
charges $ 191 $ (4,941) $ (9,183) $ (16,424)
============ =========== ============ ===========
(1) For more information, please refer to the Company's Form 10-Q, dated June
9, 2004, on file with the Securities and Exchange Commission.
American Skiing Company and Subsidiaries
Unaudited Balance Sheet Data - April 25, 2004
(in thousands of dollars)
Real estate developed for sale $ 31,110
----------------
Total assets $ 444,200
================
Total resort debt (1) $ 535,283
Total real estate debt 94,825
----------------
Total debt (1) 630,108
Less: cash and cash equivalents 10,328
----------------
Net debt (2) $ 619,780
================
(1) Includes preferred stock as a result of the adoption of SFAS No. 150
(2) Includes preferred stock as a result of the adoption of SFAS No. 150
Excluding preferred stock, net debt would be $289,288.
American Skiing Company and Subsidiaries
Unaudited Supplemental Revenue Data
(in thousands of dollars)
For the quarter ended For the 39 weeks ended
------------------------------------- -----------------------------------
April 25, 2004 April 27, 2003 % Change April 25, 2004 April 27, 2003 % Change
Resort revenues
Lift tickets $ 65,452 $ 60,917 7% $ 111,782 $ 110,967 1%
Food and beverage 17,241 16,849 2% 32,577 33,770 -4%
Retail sales 12,218 12,752 -4% 23,545 25,384 -7%
Skier development 13,549 12,064 12% 22,663 21,015 8%
Golf, summer activities 95 73 30% 3,537 3,696 -4%
Lodging and property 15,111 14,289 6% 32,920 31,636 4%
Miscellaneous revenue 4,433 5,185 -15% 10,107 11,533 -12%
----------------------------------- ---------------------------------
Total resort revenues $ 128,099 $ 122,129 5% $ 237,131 $ 238,001 0%
=================================== =================================
Total Skier Visits
-----------------------------------
Unaudited Skier Visits Fiscal 2004 Fiscal 2003 % Change
Attitash Bear Peak 207,400 196,023 6%
The Canyons 374,458 333,738 12%
Killington 954,853 1,044,640 -9%
Mount Snow 489,411 546,304 -10%
Sugarloaf/USA 334,830 354,634 -6%
Sunday River 522,927 500,790 4%
Steamboat 1,002,821 1,001,020 0%
-----------------------------------
Total Skier Visits 3,886,700 3,977,149 -2%
===================================