Steamboat sale won't be finalized before Jan. 1

ASC reports first-quarter losses

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— Top executives of American Skiing Co. confirmed for the first time Wednesday they do not expect to finalize the sale of the Steamboat Ski Area before the first of the year, as they had hoped.

"We are in the final stages of negotiations," ASC's Chief Executive Officer B.J. Fair said. "Both parties remain firmly committed to completion of the sale. But it's unlikely to be complete by our target date."

ASC officials have been saying since late summer the sale process was on track to be consummated by the end of the year.

Fair's remarks were made in the context of grim news about the company's first-quarter losses.

ASC reported losses of $65.5 million for the first fiscal quarter that began in August, compared to losses of $24.2 million for the same period a year ago. Even when one-time events were subtracted from the equation, ASC still reported a loss of $45.2 million, or $1.44 per share.

The outlook for the second quarter, which will reflect operating revenues form ASC's ski areas, weren't optimistic either. Among the eight ski resorts, advance reservations are down 10 percent, Fair said. And even though it is the West that has snow and the East that is struggling to keep ski areas open, Fair said the decline in reservations over last year in the East is a modest 2 percent. That compares to 19 percent in the West.

ASC's western resorts include Steamboat; The Canyons, near Park City, Utah, where many Olympic events will be held this winter; and Heavenly, Calif.

Steamboat is being sold as part of ASC's financial reorganization. The company signed a nonbinding letter of intent with a prospective buyer in November. Although ASC officials will not confirm the identity of the purchasers, they are known to be Tim and Diane Mueller, who operate Okemo Mountain ski area in Vermont and are partners in the Catamount real estate development here.

A spokesperson at Okemo Mountain Resort declined to speak on the record about the status of the pending sale this week. The Muellers are known to have conducted a series of presentations here during late fall to seek a local investment component to help with the purchase of the ski area.

Fair blamed the lack of progress in the sale on the current economic climate and "difficult conditions in the capital markets," which have made the sale more complicated than it might have been in another year.

ASC Chief Financial Officer Mark Miller cited figures that attribute the disparity between this year's first-quarter losses and those of last year to declining real estate sales. ASC's total revenue fell 52 percent to $23.1 million from $48.1 million a year earlier. Resort revenue was down slightly to $20.3 million from $20.9 million. The biggest revenue hit came from real estate revenue. ASC realized just $2.8 million compared to $27.2 million for the same period in fiscal 2000.

During the first quarter of fiscal 2001, ASC "recognized" $15.6 million in revenues from closings on presold units at the Steamboat Grand, Miller said.

The company expects an additional $1.5 million to be realized in the second quarter from the sale of newly completed penthouse units at the Grand, Miller added. However, he said, unlike last year, ASC did not bring new real estate products to the market, and that contributed to the first-quarter losses.

"We remain guardedly optimistic about our ability to move units at Steamboat," Miller said.

ASC is in the process of closing $3.8 million in sales attributed to the sale at auction of quartershare units in the Attitash Grand Hotel this fall. But those sales won't be reflected until the second quarter, Miller said.

Fair said ASC recently obtained a permanent loan for its new gondola at Heavenly, allowing it to free up $14 million to the company's resort revolving credit facility.

Miller said ASC has been able to reduce its overall debt from $459 million to $432 million.

Fair said all of ASC's western resorts now enjoy abundant snow cover, but the snow arrived too late to stave off a disappointing Thanksgiving weekend. Advance reservations in the East, which were up over last year as recently as six weeks ago, are now a couple of points behind last year's pace. Fair attributed the slide to unusually warm weather conditions in New England.

In the ski industry, fourth- and first-quarter earnings reports typically aren't strong because the chairlifts don't run in late spring, summer and early fall. However, ASC's latest earnings report comes on the heels of heavy losses in the last quarter.

For its fourth quarter, ending July 29, American Skiing said it lost $114.2 million, or $3.73 per diluted share, compared with a loss of $30.8 million, or $1.01 per diluted share, a year earlier.

Those figures included a write-down of $52 million on the Steamboat sale, a $15.1 million write-down on the Sugarbush resort (which was sold), several other nonrecurring items and restructuring charges.

Excluding all of these items in both years, the company would have lost $28.2 million, or 92 cents per diluted share, compared with $29.6 million, or 97 cents per diluted share, a year earlier.

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