ASC loses $16.7 million

Despite increased revenue, company reports loss in second quarter

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— Abundant early snowfall in New England and the Colorado Rockies helped American Skiing Company improve its balance sheet in the second fiscal quarter. However, even a 12 percent increase in resort revenues translated into a $16.7 million loss for the three months ending Jan. 26.

The parent company of the Steamboat Ski and Resort Corp. revealed in its quarterly earnings statement Wednesday that skier visits here were up 16,000 during the first three months of the ski season when compared to last year. Steamboat totaled 418,878 skier visits Nov. 22, 2002, through Jan. 26. ASC resorts in Vermont showed even stronger growth.

Overall, ASC's second-quarter resort revenues climbed to $98.9 million, up from $87.9 million the previous year. Operating expenses were down sharply, and still, the company lost money.

ASC spokesman Erik Preusse said the loss can be attributed primarily to $9.2 million in mandatory dividends that came due on preferred stock and $11 million in interest expenses. The company's debt now stands at $313.3 million. Other than those significant items on the negative side of the ledger, "It was a great quarter," Preusse said.

Last year, by comparison, the company posted losses of $43.7 million for the same quarter.

ASC's resort at Killington, Vt., eclipsed Steamboat during the early part of the ski season, with skier visits increasing by 67,700 to 482,384 for the period. Mt. Snow, Vt., which is closer to Boston than Killington is, was the percentage champion, growing by 61,000 skier days to 257,332. Sunday River, Maine, which missed out on early snow this season, was the only one of seven ASC resorts that didn't improve its skier day totals during the early ski season.

The full earning report filed with the Securities and Exchange Commission Wednesday sounded an ominous note for the balance of the ski season.

"Although our operating results through Jan. 26 were stronger than the comparable period of the prior year, we have experienced significant softening in skier visits, call volume and reservations in recent weeks," the company reported.

The report did not elaborate on how different resorts are expected to fare in late ski season.

ASC's real estate division showed a revenue decline of $9.8 million in the second quarter, but almost two-thirds of that amount is explained by the fact that the company has sold out all of its inventory at its eastern resorts. ASC reported it saw a $3.8 million decrease in revenues recognized on closings of shares of units at the Steamboat Grand and at The Canyons in Park City.

The company had bolstered its real estate sales staff and marketing budget in preparation for this ski season, but acknowledged the results have not met its expectations. Preusse declined to elaborate.

This week's filings also detail how ASC hopes to cure its default on a $71.7 million loan from Fleet National Bank (the lead lender among several institutions). The notes is secured by undeveloped real estate owned by ASC, including the 44-acre Tennis Meadows and 6.2-acre Snowflower II hotel site in Steamboat.

Fleet pursued foreclosure proceedings last spring, but agreed to delay a trustees sale in November 2002. The current strategy, according to ASC, is to form a new entity to hold the real estate assets, with the lenders owning a share of the new entity. Essentially, Preusse said, the debt would be converted to equity ownership. The terms of that conversion are still being negotiated.

Tennis Meadows is adjacent to the ski area's primary remote parking lot, however, the land subject to foreclosure does not include the parking lot itself.

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