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Vail Resorts Inc. Reports a First Quarter Loss of $25.4 million; Expects a Profit of $2 to $10 million by Year End
  • Seasonally expected loss from operations improved 16.8% or $6.2 million
  • Net loss relatively flat to prior year - loss increased $289,000 or $0.01 per share
  • Resort Reported EBITDA improved $2.5 million
  • Real Estate Reported EBITDA improved $2.0 million
VAIL, Colo., Dec. 11, 2003 - Vail Resorts, Inc. (NYSE: MTN) announced today financial results for the first quarter of fiscal 2004 ending October 31, 2003. The Company historically used EBITDA when reporting its financial results for each of its reportable segments: mountain, lodging, resort (the combination of mountain and lodging) and real estate. In conjunction with the recently adopted Securities and Exchange rules regarding the use of non-GAAP financial measures, the Company currently uses the term "Reported EBITDA" when reporting financial results. The Company defines Reported EBITDA for the mountain, lodging and resort segments as segment net revenue less segment operating expense plus segment equity investment income. The Company defines Reported EBITDA for the real estate segment as segment net revenue less segment operating expense plus gain on transfer of property plus segment equity investment income.

FIRST QUARTER PERFORMANCE

Mountain revenue for the first quarter of fiscal 2004 was $34.1 million, a 1.3% increase from $33.6 million for the comparable period last year. Mountain expense decreased $2.7 million, or 4.2%, to $61.9 million.

Lodging revenue for the quarter grew $2.1 million, or 5.1%, to $42.7 million. Lodging expense increased $1.2 million, or 3.1%, to $40.5 million.

Resort revenue, the combination of mountain and lodging revenues, rose $2.5 million, or 3.4%, to $76.7 million. Resort expense decreased 1.5% to $102.4 million, down $1.5 million.

Real estate revenue for the quarter fell $12.5 million to $26.9 million, and real estate expense decreased $15.4 million to $12.1 million.

Total revenue declined $10.0 million, or 8.8%, to $103.6 million and total operating expense decreased $16.1 million, or 10.7%, to $134.0 million.

The expected seasonal loss from operations for the quarter improved $6.2 million, or 16.8%, to a loss of $30.4 million compared to a loss of $36.6 million for the same period last year.

Reported EBITDA for the mountain segment improved $2.1 million, or 7.0%, to negative $27.9 million compared to negative $29.9 million for the comparable period last year.

Reported EBITDA for the lodging segment increased from breakeven in the first quarter of last year to $0.4 million in the current year first quarter. The first quarter of fiscal 2004 includes $1.6 million of equity loss attributed to the Ritz-Carlton, Bachelor Gulch, which was open during the seasonally low occupancy period of the first quarter. Last year, in the first quarter of fiscal 2003, the equity loss attributed to the Ritz-Carlton was $1.3 million due to pre-opening and start-up expenses for the hotel. As the Company uses the equity method of accounting for the Ritz-Carlton, Bachelor Gulch, included in the fiscal 2004 first quarter loss is $0.6 million of depreciation and $0.6 million of interest expense.

First quarter Resort Reported EBITDA was negative $27.5 million, a $2.5 million or 8.3% improvement from negative $29.9 million for the comparable period last year.

Real Estate Reported EBITDA for the quarter rose $2.0 million to $16.9 million from $14.9 million in the same quarter a year ago. The current year's first quarter includes a $1.9 million net gain from the transfer of property.

First quarter net loss increased $0.3 million, or 1.2%, to a loss of $25.4 million, or $0.72 per diluted share, compared to a loss of $25.1 million, or $0.71 per diluted share, for the same period last year.

Adam Aron, Chairman and Chief Executive Officer, commented, "We are delighted to announce that Vail Resorts' financial performance for the first quarter of fiscal 2004 was better than anticipated. While the net loss was slightly higher than last year due to an expected increase in depreciation and interest expense, we are quite pleased with our Reported EBITDA results in this seasonally low profit quarter. Reported EBITDA for the mountain and lodging segments improved year-over-year through a combination of revenue growth and expense management. And the real estate division once again closed on a significant portion of its expected annual sales in the first quarter, giving it strong momentum towards hitting its target for the entire year."

Aron added, "We have begun the implementation of our expense savings plan as seen in the decrease in year-over-year mountain expense. The lodging division has also begun to realize savings; however, expense reductions are somewhat masked by two factors. First, operations increased at the Vail Marriott, which was partially closed for renovation in the first quarter last year. Second, we saw stronger summer business at the Grand Teton Lodge Company which resulted in both increased revenue and expense for the quarter."

Commenting on the current 2003-2004 ski season, Aron said, "We are pleased with the momentum we have going into the ski season. Our ski areas have received normal early season snowfall, and for the fifth year in a row we have had record season pass sales, with overall pass revenue for the five ski resorts up by about 20% year-over-year. While year-to-date revenue booked into our central reservation system is 2% ahead of last year at this time, air bookings into Vail's Eagle County airport are actually up 7% compared to last season."

Added Aron, "In addition to the season pass sales and bookings information we receive, we also track reservations for our ski school products. More encouraging is that advance reservations for our children's ski school are currently tracking 22% ahead of last year at our Colorado resorts. These are just a few of the barometers we monitor to track how our season is shaping up. With the normal early season snowfall, record season pass sales, strong advance ski school reservations and solid bookings, we continue to be upbeat about this year's ski season. Therefore, at this time, we are reiterating the year-end financial guidance we provided in November."
 

Vail Resorts, Inc.
Consolidated Financial Statements
(in thousands except per share amounts)
(unaudited)

                                                      Three Months Ended
                                                          October 31,
                                                      2003          2002
                                                               (as restated)
     Net revenue:
       Mountain                                      $34,079        $33,629
       Lodging                                        42,652         40,601
       Real estate                                    26,892         39,354
     Total net revenue                               103,623        113,584
     Operating expense:
       Mountain                                       61,914         64,656
       Lodging                                        40,518         39,294
       Real Estate                                    12,124         27,546
       Gain on transfer of property                   (1,913)            --
       Loss on disposal of fixed assets                1,010             16
       Depreciation & amortization                    20,366         18,625
     Total operating expense                         134,019        150,137
     Loss from operations                            (30,396)       (36,553)
     Other income (expense)
       Mountain equity investment loss                   (18)         1,089
       Lodging equity investment loss                 (1,740)        (1,306)
       Real estate equity investment income              203          3,070
       Interest income                                   565            206
       Interest expense                              (13,408)       (11,778)
       Loss on put option                               (610)            --
       Other income                                       --             30
       Minority interest in income of
        consolidated joint ventures                    2,091          2,024
     Loss before provision for income taxes          (43,313)       (43,218)
     Benefit for income taxes                         17,910         18,104
     Net loss                                       $(25,403)      $(25,114)

     Basic weighted average shares                    35,275         35,166
     Diluted weighted average shares                  35,275         35,166

     Per share amounts:
       Basic net loss per share                      $(0.72)        $(0.71)
       Diluted net loss per share                    $(0.72)        $(0.71)
     Other Data:
     Mountain Reported EBITDA                       $(27,853)      $(29,938)
     Lodging Reported EBITDA                             394              1
     Resort Reported EBITDA                          (27,459)       (29,937)
     Real estate Reported EBITDA                     $16,884        $14,878
 
 
 

Note: Certain reclassifications have been made to the Consolidated Financial Statements as of and for the three months ended October 31, 2002 to conform to the current period presentation.

                                Vail Resorts, Inc.
                 Resort Revenue by Business Line and Skier Visits
                                  (in thousands)

                                               Three Months Ended
                                                  October 31,

                                      2003           2002         % Change
     Business Line
     Lift tickets                       $26           $(113)       123.0%
     Ski school                          23              71       (67.6)%
     Dining                           3,914           3,818          2.5%
     Retail/rental                   17,040          16,330          4.3%
     Other                           13,076          13,523        (3.3)%
     Total Mountain Revenue          34,079          33,629          1.3%

     Total Lodging Revenue           42,652          40,601          5.1%

     Total Resort Revenue           $76,731         $74,230          3.4%
 

                                      As of October 31,
                                     2003           2002
     Key Balance Sheet Data:
     Real estate held for
      sale and investment          $115,570        $152,760
     Total stockholders' equity     470,909         479,279

     Total debt                     580,431         628,529
     Less: cash and
      cash equivalents               18,525          25,165
       Net debt                    $561,906        $603,364
 
 
 

Note: Certain reclassifications have been made to the Consolidated Financial Statements as of and for the three months ended October 31, 2002 to conform to the current period presentation.

Reconciliation of Non-GAAP Financial Measures

Resort, mountain, lodging and real estate Reported EBITDA have been presented herein as measures of the Company's financial operating performance. Reported EBITDA is not a measurement of financial performance under accounting principles generally accepted in the United States ("GAAP"), and it might not be comparable to similarly titled measures. Reported EBITDA does not purport to represent cash provided by operating activities and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The Company believes that Reported EBITDA is an indicative measure of the Company's operating performance, and it is generally used by investors to evaluate companies in the resort and lodging industries. In addition, because of the significance of long-lived assets to the operations of the Company and the level of the Company's indebtedness, the Company also believes that Reported EBITDA is useful in measuring the Company's ability to fund capital expenditures and service debt. The Company uses Reported EBITDA targets in determining management bonuses.

Presented below is a reconciliation of Reported EBITDA to net income for the Company calculated in accordance with GAAP for the three months ended October 31, for the fiscal years 2004 and 2003.

                                Three Months Ended
                                 October 31, 2003
                                  Real
                    Total       Estate      Resort*    Mountain     Lodging

    Net Income   $(25,403)

    Adjustments
     to reconcile
     income to
     Reported
     EBITDA:
    Loss on
     disposal of
     fixed assets   1,010
    Depreciation
     and
     amortization  20,366
    Interest
     income          (565)
    Interest
     expense       13,408
    Loss on
     put option       610
    Other income       --
    Minority
     interest in
     income of
     consolidated
     joint
     ventures      (2,091)
    Benefit from
     income
     taxes        (17,910)          --           --          --          --

    Reported
     EBITDA      $(10,575)     $16,884     $(27,459)   $(27,853)       $394
 
 

                                Three Months Ended
                                 October 31, 2002

                                  Real
                    Total       Estate      Resort*    Mountain     Lodging

    Net Income   $(25,114)

    Adjustments
     to reconcile
     income to
     Reported
     EBITDA:
    Loss on
     disposal of
     fixed assets      16
    Depreciation
     and
     amortization  18,625
    Interest
     income          (206)
    Interest
     expense       11,778
    Loss on
     put option        --
    Other income      (30)
    Minority
     interest in
     income of
     consolidated
     joint
     ventures      (2,024)
    Benefit from
     income
     taxes        (18,104)          --           --          --          --

    Reported
     EBITDA      $(15,059)     $14,878     $(29,937)   $(29,938)         $1
 

    * Resort represents the sum of Mountain and Lodging.

Vail Resorts, Inc. is the premier mountain resort operator in North America. The Company's subsidiaries operate the mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado, Heavenly Resort in California and Nevada and the Grand Teton Lodge Company in Jackson Hole, Wyoming. In addition, the Company's RockResorts luxury resort hotel company operates 10 resort hotels throughout the United States. 

Statements in this press release, other than statements of historical information, are forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 

 

 
Contact:
Vail Resorts, Inc.
www.vailresorts.com
Also See: Vail Resorts Restates Prior Years' Net Income; Reductions to Net Income Total $3.3 Million Due to Errors, Including Accounting for CEO's Compensation / November 2003
Vail Resorts Inc. Pushes Cost-cutting to Extreme: Eliminates President Andrew Daly's Position; Stock Near All-time Low / October 2002


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