American Skiing sees $10 million + loss

Corporation throws 'horsepower' behind Grand

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— Top executives of the American Skiing Company said Wednesday they are focusing intently on sales of quartershares at the Steamboat Grand Hotel as the 2001 ski season enters its final weeks.

However, they say despite an encouraging sales report at the hotel for the last four to five weeks, they don't expect to sell it out for at least another 18 to 24 months. That means the Grand would not be sold out at the end of ski season 2002.

"We're throwing a lot of horsepower on that project right now," American Skiing Chief Financial Officer Mark Miller said. "Hernan Martinez is giving it a lot of his attention right now. We are carefully evaluating Steamboat and by the end of the ski season, expect to develop strategies and look at what our options are for the future."

Miller made his remarks during a conference call held to discuss American Skiing's earnings report for the second quarter of fiscal year 2001. Martinez is the chief operating officer of American Skiing's real estate division.

American Skiing reported that it lost $10.4 million during the second quarter of 2001, but Miller and Chairman Les Otten said their outlook for the company is buoyed by the fact that those losses were almost $5 million less than during the corresponding period a year ago, and by the fact that the company generated record revenues during the second quarter. Total revenues were $156.3 million for the second quarter compared with $126.6 million for the second quarter of 2001. The company's total earnings before before interest, income taxes, depreciation and amortization (EBITDA) was $27.9 million compared with $14.3 million during the same period a year ago.

Otten attributed much of that earnings growth to a return to more normal winter weather patterns, particularly in the East. American Skiing's ski resort at Heavenly Valley, Calif., was hurt by an early-season drought and is just now operating 100 percent of its terrain, Otten said.

Otten said in early December that the company would place heavy emphasis in fiscal 2001 on reducing real estate debt and that sales of interval ownerships in a new hotel at The Canyons in Utah, and the Steamboat Grand would play a pivotal role in that process.

At the time, he said he wanted to wait until 45 days after the arrival of holiday crowds in late December, to reach any conclusions about how those sales were progressing. This week, he said the Steamboat Grand was only 40 percent sold, but he is encouraged by the trend. Still, he said, he realizes the Steamboat Grand will not sell out quickly.

"We'd like to sell them sooner than later," Otten said. "I don't want to be overly optimistic. But the last four to five weeks, we've been pleased with the results. We continue to be optimistic about the project and the community."

Otten acknowledged that the carrying cost of debt on the Steamboat Grand, about 12 percent, is close to the earnings margin the company expects to realize from the sales of its quartershares, and that lends more urgency to the drive to sell the remaining real estate.

"Demand in the market has increased, however, real estate sales (at the Steamboat Grand) will remain a significant challenge and will remain a significant focus for our real estate group," Otten said.

Miller said he continues to believe American Skiing is on track to reduce total company debt by $29 million at the end of the fiscal year from $416 million to $387 million.

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