American Skiing Company Announces Record Fiscal 2006 3rd
Quarter Revenues and Net Income
ASC reports a 23% increase in net income compared to the fiscal 2005 3rd quarter
o 3rd quarter revenues and net income set a new record on a same-resort
portfolio basis
o Significant increase in real estate revenues and income relating to
successful sale of remaining fractional share inventory
o Geographic diversity in resorts allowed for solid resort operations
results amidst challenging weather conditions in the East
PARK CITY, UTAH - June 14, 2006 - American Skiing Company (OTCBB: AESK)
today announced its financial results for the third quarter of fiscal 2006. The
Company reported particularly strong visitation levels for its western resorts
in the winter operating season, bolstered by generally excellent skiing and
riding conditions. These strong results coupled with the successful sale of
nearly all remaining fractional inventory in the Company's real estate segment
resulted in an increase in net income of $5.6 million or 23% over the third
quarter of fiscal 2005. The Company's eastern resorts were challenged by adverse
weather conditions for much of the latter half of the winter operating season,
resulting in decreased Company-wide skier visits compared to the third quarter
of fiscal 2005.
The Canyons resort in Park City, Utah experienced explosive growth in fiscal
2006, with an increase in skier visits of over 16%, compared to nationwide
growth in skier visits of approximately 4%. The increase resulted in yet another
record year for skier visits at Utah's largest winter resort. The Company's
Steamboat resort in Colorado experienced growth in skier visits of 8% in fiscal
2006, to put the resort over one million skier visits yet again. Both resorts
reported excellent levels of natural snowfall throughout the season.
While the Company's eastern resorts were challenged by weather for a
considerable portion of the season, the snowmaking and grooming infrastructure
of the eastern resorts provided some of the very best snow conditions in the
East. Other highlights of the season include a year-to-date increase in revenues
of more than 8% in the Company's skier development (ski and snowboard school)
programs.
"I am extremely pleased with our results from many areas of the business in this
past winter season," commented Chief Financial Officer Betsy Wallace. "From the
large increases in skier visits in the West to the responsiveness and dedication
of our staff in the East in the midst of challenging conditions, our resort
operations performed extremely well. The successful sale of nearly all remaining
fractional inventory of our real estate subsidiary, Grand Summit, allows the
Company to look ahead towards exciting new opportunities in real estate. There
are a number of projects being considered that should result in new exciting
benefits to our guests and the Company," added Wallace.
Fiscal 2006 Third Quarter Results
On a GAAP basis, net income attributable to common shareholders for the third
quarter of fiscal 2006 was $10.7 million, or $0.34 per basic and diluted common
share, compared with net income attributable to common shareholders of $9.3
million, or $0.29 per basic and diluted common share for the third quarter of
fiscal 2005. Total consolidated revenue was $157.0 million for the third quarter
of fiscal 2006, compared with $135.2 million for the third quarter of fiscal
2005. Revenue from resort operations was $132.8 million for the third quarter of
fiscal 2006 compared with $132.3 million for the third quarter of fiscal 2005.
The increase in resort revenues reflects the higher business volumes at the
Company's western resorts, partially offset by relatively lower business volumes
at the Company's eastern resorts in fiscal 2006 relative to the prior fiscal
year. Revenue from real estate operations was $24.2 million for the quarter
versus $2.9 million for the comparable period in fiscal 2005. The increase was
primarily a result of the successful sale of nearly all remaining fractional
inventory relating to the Steamboat Grand Hotel, which generated approximately
$21.0 million in revenues for the third quarter of fiscal 2006.
Income from resort operations was $24.0 million for the third fiscal quarter of
2006 compared to income of $24.5 million for the third quarter of fiscal 2005.
The decrease in income was associated with a $2.7 million increase in interest
expense, partially offset by a $0.6 million increase in resort revenues, a $0.3
million decrease in cost of operations, a $0.4 million decrease in marketing,
general and administrative expenses, a $0.3 million decrease in depreciation
expense and a $0.6 million increase in the fair value of the interest rate swap
agreement.
Income from real estate operations was $5.4 million for the third fiscal
quarter of 2006 compared with a loss of $0.6 million for the comparable quarter
in fiscal 2005. The increase in income was associated with a $21.3 million
increase in revenues, a $0.1 million decrease in depreciation and amortization
expense and a $1.0 million decrease in interest expense due to the reduced
balance of the outstanding construction loans and to a $0.5 million year-to-date
correction in the amount of deferred interest attributable to the Subordinated
Construction Loan; partially offset by a $16.4 million increase in cost of real
estate operations due primarily to a $15.5 million increase in cost of sales
related to the sale of the remaining fractional inventory at the Steamboat Grand
Hotel.
Fiscal 2006 to Date Results
On a GAAP basis, net loss attributable to common shareholders for the 39 weeks
ended April 30, 2006 was $24.1 million, or $0.76 per basic and diluted common
share, compared with a net loss attributable to common shareholders of $36.0
million, or $1.14 per basic and diluted common share for the 40 weeks ended May
1, 2005. Total consolidated revenue was $289.6 million for the 39 weeks ended
April 30, 2006, compared with $260.8 million for the 40 weeks ended May 1, 2005.
Revenue from resort operations was $259.9 million for the 39 weeks ended April
30, 2006 compared with $253.5 million for the 40 weeks ended May 1, 2005. The
increase in resort revenues reflects the higher business volumes in December of
fiscal 2006 relative to the prior fiscal year, as well as an increase in
business volumes at the Company's western resorts offset by lower business
volumes at the Company's eastern resorts in the third quarter of fiscal 2006
compared to the prior fiscal year period. Revenue from real estate operations
was $29.8 million for 39 weeks ended April 30, 2006 versus $7.3 million for the
40 weeks ended May 1, 2005.
Excluding other items (for a reconciliation of other items, please see the
tables following this discussion), the net loss was $22.7 million for the 39
weeks ended April 30, 2006, compared to a net loss of $30.0 million for the 40
weeks ended May 1, 2005.
The loss from resort operations was $26.4 million for the 39 weeks ended April
30, 2006 compared to a loss of $34.1 million for the 40 weeks ended May 1, 2005.
The decreased loss was associated with a $6.4 million increase in resort
revenues, a $0.6 million decrease in depreciation expense, a $0.2 million
increase in net gain on sale of property, a $6.0 million decrease in write-off
of deferred financing costs and loss on extinguishment of senior subordinated
notes and a $1.7 million increase in the fair value of the interest rate swap
agreement; partially offset by a $2.0 million increase in marketing, general and
administrative expense and a $5.2 million increase in interest expense. Resort
operations costs were nearly unchanged compared to the prior year, despite the
fact that the fiscal 2006 period contained one less weekly operating period
relative to fiscal 2005. Operating costs for this corresponding additional
period (week ended August 1, 2004) in the previous fiscal year were
approximately $1.7 million. Revenues for the same period were approximately $1.6
million. Excluding other items, the loss from resort operations was $26.5
million for the 39 weeks ended April 30, 2006, compared to a loss of $28.1
million for the 40 weeks ended May 1, 2005.
Income from real estate operations was $2.2 million for the 39 weeks ended April
30, 2006 compared with a loss of $2.0 million for the 40 weeks ended May 1,
2005. The increase in income was associated with a $22.4 million increase in
revenues, a $0.5 million decrease in depreciation and amortization expense and a
$1.3 million decrease in interest costs due to lower construction loan balances
relative to the prior fiscal year; partially offset by an $18.5 million increase
in cost of operations, due to a $17.7 million increase in cost of sales related
to increased sales of fractional share units at the Steamboat Grand Hotel, a
$0.8 million provision for a probable settlement related to real estate
development obligations at The Canyons and a $1.5 million impairment loss on the
sale of retail commercial property at the Steamboat Grand Hotel. Excluding other
items, income from real estate operations was $3.8 million for the 39 weeks
ended April 30, 2006, compared to a loss of $2.0 million for the 40 weeks ended
May 1, 2005.
For the 39 weeks ended April 30, 2006 total skier visits at ASC's resorts
decreased by approximately 7% compared to the 40 weeks ended May 1, 2005,
reflecting weather difficulties in the East, partially offset by year over year
increases in business volumes in the Christmas/New Years holiday period and
considerable increases in skier visits at the Company's western resorts. Total
skier visits at the Company's western resorts increased by 10% compared to the
40 weeks ended May 1, 2005, reflecting generally positive operating conditions
throughout the winter operating season to date.
Beginning in fiscal 2006, the Company revised the methodology used to estimate
skier visitation at its eastern resorts. The Company now uses scanning of
certain lift ticket products to estimate skier visitation and believes this
methodology to be a more accurate reflection of skier visitation levels. While
this methodology has changed, the Company believes that any discrepancies in
such methods in comparison with prior years are immaterial to total skier
visitation levels reported. The scanning methodology used to estimate skier
visitation the Company's western resorts is unchanged compared to the prior
fiscal year.
Recent Trends
The Company reported early results for the fourth fiscal quarter,
reflecting a 1% increase in revenues for the first five weeks of its fiscal 2006
fourth quarter over the first five weeks of its fiscal 2005 fourth quarter.
Company-wide hotel bookings for the remainder of the fourth quarter are 10%
ahead of pace compared to the same period in the prior fiscal year.
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 provide useful information to investors regarding the company's
ongoing financial condition and results of operations. In particular, the
company has excluded gain on sale of property, impairment loss on property sold
and write-off of deferred financing costs and loss on extinguishment of Senior
Subordinated Notes from net income or loss, income or loss from resort
operations and income or loss from real estate operations, where applicable.
Management believes these non-GAAP metrics are useful to investors because they
remove certain items that occur in the affected periods 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 14, 2006 and October 31, 2005, 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, Pico and Mount Snow in Vermont; Sunday River and
Sugarloaf/USA in Maine; Attitash in New Hampshire; Steamboat in Colorado; and
The Canyons in Utah. More information is available on the Company's web site,
www.peaks.com.
Certain statements contained in this press release constitute 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 our current expectations
concerning future results and events. Similarly, statements that describe our
objectives, plans or goals are or may be forward-looking statements. We have
tried, wherever possible, to identify such statements by using words such as
"anticipate", "assume", "believe", "expect", "intend", "plan", and words and
terms of similar 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: the loss or
termination of our leasehold rights at The Canyons as a result of a failure to
adequately cure alleged defaults under governing lease documents; changes in
regional and national business and economic conditions affecting both our resort
operating and real estate operating segments; competition and pricing pressures;
adverse weather conditions regionally and nationally; changes in weather
patterns resulting from global warming; seasonal business activity; increased
gas and energy prices; 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; 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. We caution the reader
that this list is not exhaustive. We operate 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 document and under
Section 27A of the Securities Act and Section 21E of the Exchange Act, we do 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)
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 40 Weeks Ended
Net revenues: April 30, 2006 May 1, 2005 April 30, 2006 May 1, 2005
-------------- -------------- -------------- --------------
Resort $ 132,837 $ 132,266 $ 259,871 $ 253,497
Real estate 24,185 2,928 29,766 7,317
--------------- -------------- -------------- --------------
Total net revenues 157,022 135,194 289,637 260,814
--------------- -------------- -------------- --------------
Operating expenses:
Resort 61,269 61,615 152,998 153,010
Real estate 18,832 2,461 24,217 5,724
Marketing, general and administrative 13,861 14,261 43,314 41,288
Depreciation and amortization 12,602 13,020 28,573 29,699
Gain on sale of property - - (169) -
Impairment loss on property sold - - 1,533 -
--------------- -------------- -------------- --------------
Total operating expenses 106,564 91,357 250,466 229,721
--------------- -------------- -------------- --------------
Income from operations 50,458 43,837 39,171 31,093
Interest expense (21,719) (20,002) (64,988) (61,139)
Write-off of deferred financing costs and loss
on extinguishment of senior subordinated notes - - - (5,983)
Increase in fair value of interest rate swap
agreement 674 - 1,710 -
--------------- -------------- -------------- --------------
Net income (loss) 29,413 23,835 (24,107) (36,029)
--------------- -------------- -------------- --------------
Less: amounts allocated to participating
securites (18,720) (14,510) - -
--------------- -------------- -------------- --------------
Net income (loss) attributable to common
shareholders 10,693 9,325 (24,107) (36,029)
=============== ============== ============== ==============
Basic and diluted net income (loss) per common
share:
Net income (loss) per common share $ 0.34 $ 0.29 $ (0.76) $ (1.14)
=============== ============== ============== ==============
Weighted average common shares outstanding -
basic and diluted 31,738 31,738 31,738 31,738
=============== ============== ============== ==============
For more information, please refer to the Company's Form 10-Q, filed on
June 14, 2006, with the Securities and Exchange Commission.
American Skiing Company and Subsidiaries
Unaudited Segment Information and Reconciliation of GAAP to Non-GAAP Metrics
(in thousands of dollars)
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 40 Weeks Ended
April 30, 2006 May 1, 2005 April 30, 2006 May 1, 2005
----------------------------------------------------------------
Income (loss) from resort operations $ 24,022 $ 24,489 $ (26,375) $ (34,059)
Income (loss) from real estate operations 5,391 (654) 2,268 (1,970)
--------------- -------------- -------------- --------------
Net income (loss) $ 29,413 $ 23,835 $ (24,107) $ (36,029)
=============== ============== ============== ==============
Net income (loss) $ 29,413 $ 23,835 $ (24,107) $ (36,029)
Gain on sale of property - - 169 -
Impairment loss on property sold - - (1,533) -
Write-off of deferred financing costs and loss on
extinguishment of senior subordinated notes - - - (5,983)
--------------- -------------- -------------- --------------
Net income (loss) excluding gain on sale of property,
impairment loss on property sold and write-off of
deferred financing costs and loss on extinguishment
of senior subordinated notes $ 29,413 $ 23,835 $ (22,743) $ (30,046)
=============== ============== ============== ==============
Income (loss) from resort operations $ 24,022 $ 24,489 $ (26,375) $ (34,059)
Gain on sale of property - - 169 -
Write-off of deferred financing costs and loss on
extinguishment of senior subordinated notes - - - (5,983)
--------------- -------------- -------------- --------------
Income (loss) from resort operations excluding gain on
sale of property and write-off of deferred financing
costs and loss on extinguishment of senior subordinated
notes $ 24,022 $ 24,489 $ (26,544) $ (28,076)
=============== ============== ============== ==============
Income (loss) from real estate operations $ 5,391 $ (654) $ 2,268 $ (1,970)
Impairment loss on property sold - - (1,533) -
--------------- -------------- -------------- --------------
Income (loss) from real estate operations excluding
impairment loss on property sold $ 5,391 $ (654) $ 3,801 $ (1,970)
=============== ============== ============== ==============
American Skiing Company and Subsidiaries
Unaudited Balance Sheet Data - April 30, 2006
(in thousands of dollars)
Real estate developed for sale $ 3,848
=============
Total assets $ 409,324
=============
Total resort debt (1) $ 661,752
Total real estate debt 2,068
-------------
Total debt (1) $ 663,820
=============
(1) Includes preferred stock of $345,463 as a result of the adoption of SFAS
No. 150.
Excluding preferred stock, total resort debt would be $316,289 and total debt
would be $318,357.
For more information, please refer to the Company's Form 10-Q, filed on
June 14, 2006, with the Securities and Exchange Commission.
American Skiing Company and Subsidiaries
Unaudited Supplemental Revenue Data
(in thousands of dollars)
13 Weeks Ended 13 Weeks Ended 39 Weeks Ended 40 Weeks Ended
April 30, 2006 May 1, 2005 % Change April 30, 2006 May 1, 2005 (1) % Change
--------------- -------------- -------- --------------- -------------- --------
Resort revenues
Lift tickets $ 67,247 $ 67,829 (0.9%) $ 123,011 $ 120,743 1.9%
Food and beverage 18,064 18,064 0.0% 36,700 35,978 2.0%
Retail sales 12,521 13,457 (7.0%) 24,635 25,604 (3.8%)
Skier development 15,276 14,271 7.0% 26,105 24,139 8.1%
Golf and summer 64 82 (21.5%) 2,948 3,612 (18.4%)
Lodging and property 15,143 14,563 4.0% 35,751 33,835 5.7%
Miscellaneous revenue 4,522 4,000 13.0% 10,721 9,586 11.8%
---------------------------------- --------------------------------
Total resort revenues $ 132,837 $ 132,266 0.4% $ 259,871 $ 253,497 2.5%
================================== ================================
Fiscal Year Total
------------------------------------
Unaudited Skier Visits 2006 2005 % Change
---------------- ---------------- ----------
Attitash 186,693 211,301 (11.6%)
The Canyons 467,799 403,043 16.1%
Killington 795,400 985,962 (19.3%)
Mount Snow 429,822 523,698 (17.9%)
Sugarloaf/USA 310,583 366,382 (15.2%)
Sunday River 473,159 524,861 (9.9%)
Steamboat 1,046,650 971,770 7.7%
------------------------------------
Total Skier Visits 3,710,106 3,987,017 (6.9%)
====================================
(1) Includes an additional fiscal week of operations relative to fiscal 2006.