Intrawest interest only rumor

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— Officials of Intrawest Corp. said this week that the Steamboat Ski Area is "on their radar screen," but they have moved beyond their company's phase of aggressive acquisition and will focus $400 million of available cash flow on building commercial properties in their resort villages and retiring debt.

"We will continue to thoughtfully consider acquisitions, but they're going to have to be great deals to get our attention," Intrawest CEO Joe Houssian said during a conference call held to announce the company's third-quarter earnings report this week.

Intrawest owns and operates the Whistler/Blackcomb ski areas in British Columbia as well as Mammoth Mtn., Calif., and copper Mountain in Colorado, among others. However, the company describes itself as the leading developer and operator of "village-centered resorts" across North America, rather than as a ski-area operator.

Intrawest Chief Financial Officer Dan Jarvis said this week company officials have visited Steamboat in fact he visits fairly frequently because he has a cousin who lives here. Those family visits might be the source of rumors that Intrawest is interested in acquiring Steamboat, he said.

Although Jarvis didn't specifically address whether Intrawest is considering, or would consider, buying the Steamboat Ski Area, he talked freely about how his company goes about making acquisitions. He also talked about his perceptions of the situation in Steamboat, relative to his company's business plan.

Jarvis said that two years ago, Intrawest made the transition from a strong and aggressive acquisition mode to more of a "harvesting mode."

"We've been through there and muttered and mulled" Steamboat's potential as an acquisition, Jarvis said. "We've visited some resorts that would not work for us and Steamboat isn't one of those. Steamboat is definitely one of those on our radar screens."

In fact, there are not many locations left in North America that fit Intrawest's business plan of building intriguing resort villages, either with or without a ski area, Jarvis said. Steamboat at least has the potential, Jarvis said. The challenge that exists at Steamboat, Jarvis said, would be making Intrawest's concept of a resort village fit in with the existing base of the ski area.

"You don't have a green field situation," Jarvis said. "There are existing businesses (at the base of the ski area) which all have to be dealt with. We work very closely with communities to find out if two plus two equals four or five. It might take one and a half to two years to find out. Our process is very open. It's very transparent."

Intrawest just released its second consecutive quarterly earnings report reflecting fairly robust growth.

After announcing second-quarter earnings before interest, depreciation and amortization were taken into account, it had grown 33 percent in the second quarter, and Jarvis said there was evidence his company could continue to grow without looking for new resorts to buy.

"These strong quarterly results provide further evidence that the company is able to sustain significant rates of growth without acquisitions," Jarvis said Feb. 12.

On May 14, the company announced that income from continuing operations for the third quarter ended March 31 increased to $50.1 million, or $1.15 per share. Those figures are up from $47.7 million, or $1.10 per share, for the same period in 2000. Revenue for the quarter increased to $339 million, up from $306 million. And EBITDA for the period increased by 21 percent.

Ski and resort operations revenues were $267.9 million in the third quarter, up 12 percent from last year. Skier visits for the quarter increased 7 percent.

Houssian said three years of positive financial trends at Intrawest have put his company in the enviable position of having property owners coming to him, not for development capital, but for Intrawest's institutional knowledge.

"The company's strong cash flow puts it in a position to take advantage of any opportunity that comes our way," Houssian said. "We're inundated with people who want to make their land available and to utilize our expertise rather than our capital."

Jarvis said the key to driving shareholder value at Intrawest has been avoiding the pitfall of getting stuck with one primary visitor demographic and marketing one sport or activity to that single demographic during a single season. Intrawest tries to build its villages to appeal to different age groups at different times of the year. The company's "points based" timeshare real estate sales appeal to aging baby boomers, but they try to make sure their resort villages offer lively night life for 30-somethings. And they work hard at their family appeal as well.

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