Press Release: American Skiing Company
December 13, 2001
NEWRY, ME -- American Skiing Company (NYSE: SKI) yesterday 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 following 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.
Real Estate
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 hosted a conference call at 3:00 p.m. (EST) on Wednesday,
December 12, 2001.
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 was also broadcast live over the Internet. Investors can access an archived version of the
call on the Company's Web site at www.peaks.shareholder.com for
one week following the call.
About American Skiing Company
Headquartered in Newry, Maine, American Skiing Company is the largest operator 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; The Canyons in Utah; and Heavenly in California/Nevada.
More information is available on the Company's Web site, www.peaks.com.
This document contains both historical and forward-looking statements. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. 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 our objectives, plans or goals are or may be forward
looking statements. 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: failure to fully implement the
restructuring plan outlined in Company press releases and documents on file with the Securities Exchange Commission;
the Company's substantial leverage; restrictions on the Company's ability to access additional sources of capital;
a decrease in visitation at the Company's resorts as a result of the events of September 11th, and related events
thereafter; changes in regional and national business and economic conditions affecting both American Skiing Company's
resort operating and real estate segments; competition and pricing pressures; failure to renew or refinance existing
financial liabilities and obligations or attain new outside financing; adverse weather conditions regionally and
nationally; seasonal business activity; changes to federal, state and local regulations affecting both American
Skiing Company's resort operating and real estate segments; litigation involving anti-trust, consumer and other
issues; failure to renew land leases and forest service permits; disruptions in water supply that would impact
snowmaking operations and impact operations; the loss of any of our executive officers or key operating personnel;
and other factors listed from time-to-time in American Skiing Company's documents filed by the Company with the
Securities Exchange Commission. The forward looking statements included in this document are made only as of the
date of this document and under section 27A of the Securities Act and section 21E of the Securities 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
Consolidated Financial Statements
(in thousands of dollars except per share amounts)
For the quarter ended
Net revenues: October 28, 2001 October 29, 2000
Resort $20,317 $20,912
Real estate 2,791 27,216
Total net revenues 23,108 48,128
Operating expenses:
Resort 27,173 30,343
Real estate 4,109 23,578
Marketing, general and
administrative 11,391 10,443
Other non-recurring charges 1,626 -
Depreciation and amortization 4,256 4,002
Total operating expenses 48,555 68,366
Loss from operations (25,447) (20,238)
Interest expense 13,758 12,319
Loss before benefit from income taxes (39,205) (32,557)
Benefit from income taxes - (11,558)
Loss before accounting changes (39,205) (20,999)
Cumulative effect of change in
accounting principle, net of taxes of
$1,538 in fiscal 2001 18,658 (2,509)
Loss before preferred stock dividends (57,863) (18,490)
Accretion of discount and dividends
accrued on
mandatorily redeemable preferred
stock 7,588 5,686
Net loss available to common
shareholders $(65,451) $(24,176)
Basic and diluted loss per share:
Loss from operations $(1.49) $(0.87)
Cumulative effect of change in
accounting principle, net of taxes (0.60) 0.08
Net loss available to common
shareholders $(2.09) $(0.79)
Weighted average shares outstanding
(basic and diluted) 31,345 30,469
Other Data
Resort EBITDA $(19,873) $(19,874)
Real estate EBITDA (1,318) 3,638
Total EBITDA $(21,191) $(16,236)
Non-recurring items
Resort $(1,626) $(800)
Real Estate - -
Total non-recurring items $(1,626) $(800)
Sugarbush Resort EBITDA $(902) $(1,423)
Resort EBITDA excluding non-recurring
items $(17,345) $(17,651)
Real estate EBITDA excluding non-
recurring items (1,318) 3,638
Total EBITDA excluding non-recurring
items $(18,663) $(14,013)
American Skiing Company and Subsidiaries
Balance Sheet Data
(in thousands of dollars)
Real estate developed for sale $135,996
Total assets 773,666
Total resort debt 314,676
Total real estate debt 117,219
Total debt 431,895
Less: cash and cash equivalents 9,736
Net debt $422,159
American Skiing Company and
Subsidiaries
Supplemental Data
(in thousands of dollars)
For the quarter ended
October 28, October 29,
2001 2000 % Change
Resort revenues
Lift Tickets $39 $27 44%
Food and beverage 3,734 4,236 -12%
Retail sales 2,450 2,821 -13%
Skier Development 119 136 -12%
Golf, summer activities 5,067 4,377 16%
Lodging and Property 5,671 5,913 -4%
Misc. Revenue 3,237 3,402 -5%
Total resort revenues $20,317 $20,912 -3%
SOURCE: American Skiing Company