Intrawest Profit Gains on Flat Revenues

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SAM Magazine-Vancouver, Sept. 13, 2006-Intrawest Corporation reported its full-year profit for the fiscal year ended June 30, 2006 rose to $115.2 million from last year's $32.8 million, largely on gains from the sale of Mammoth Mountain. Income from continuing operations totalled $55.3 million, compared with $24.1 million in 2005. Total company EBITDA increased 19 percent, to $267.5 million from $225.1 million during the same period last year.

Total revenue was $1.61 billion, a slight decline from $1.62 billion in 2005.

Resort and travel operations, which account for 59 percent of revenues, rose 16 percent, to $936.1 million from $806.6 million in 2005. This category includes winter and summer resorts plus as active and adventure travel tours at Abercrombie & Kent and Alpine Helicopters. Expanded operations in Europe and at A & K led the increase.

However, operating expenses also rose for resort and travel operations, from $707.0 million in 2005 to $847.4 million in 2006. The mountain segment increased by $88.7 million to $494.4 million, while the non-mountain segment increased by $51.7 million to $353.0 million. As a result, resort and travel EBITDA dropped from $99.6 million to $88.7 and the operating margin shrunk from 12.3 percent to 9.5 percent.

The sale of Mammoth Mountain Ski Area generated an after-tax gain of $61.3 million and the company's Mammoth real-estate holdings netted pre-tax profit of $56.8 million. Intrawest has retained a minority interest in both these ventures.

Beyond the resort and travel business, real estate development provided 30 percent of total revenue and management services added another 11 percent.

How did mountain-related operations fare? Revenue from the mountain segment increased from $489.4 million to $569.8 million, boosted in part by acquiring all of Alpine Helicopters and operating an indoor snowdome in Spain. In addition, the rise of the Canadian dollar, from an average rate of US$0.80 in 2005 to US$0.86 in 2006, increased reported mountain segment revenue by $22.8 million.

On a same-business, constant exchange rate basis, mountain resort and travel operations revenue increased by $37.2 million in 2006. Increased skier visits added $21.3 million and non-skier-visit revenue (from golf and other summer activities, particularly at Whistler/Blackcomb, plus retail and Alpine Helicopters) added $18.2 million. But a decrease in revenue per visit cost Intrawest an estimated $2.3 million.

Skier visits increased 6 percent from 6,322,000 in 2005 to 6,688,000 in 2006 as a decrease in visits of 3 percent at Eastern resorts cut into an increase of 11 percent at western resorts. (Intrawest hosted 7.0 million skier visits in fiscal 2006, 9 percent of the Canadian and U.S. markets.) Whistler Blackcomb saw a 15 percent increase in skier visits compared with 2005, when heavy rain fell in mid-January followed by warm, dry conditions through mid-March. Even so, Whistler Blackcomb's skier visits in 2006 were 2 percent lower than 2004. Copper and Winter Park benefited from the best snow conditions in many years, enabling the resorts to increase skier visits by 8 percent on a combined basis in 2006. Skier visits at Tremblant were impacted by a strike by 1,500 unionized workers over the Christmas/New Year's holiday and poor weather through March, and were down 11 percent.

Mountain segment revenue decreased by $2.3 million due to a 1 percent decrease in revenue per skier visit from $58.13 in 2005 to $57.78 in 2006 (on a constant exchange rate basis). Revenue per skier visit from ticket sales increased moderately, from $29.38 to $29.72. Revenue per visit from non-ticket sources decreased 2 percent, from $28.74 to $28.07.

A shift in the mix of visits from higher-yielding destination visitors to lower-yielding regional visitors at Whistler Blackcomb reduced our effective ticket price and revenue per visit from non-ticket sources. A lack of bookings from long-haul U.S. markets, which decreased by 32 percent compared with 2005, was the main reason for the decline in destination visits. The high Canadian dollar, the cost of flights into Vancouver and generally excellent conditions at resorts in the western U.S. contributed to the reduced bookings. Discounted tickets at Tremblant during the workers' strike and afterwards reduced the area's effective ticket price by 7 percent.

The increase of $18.2 million in non-skier visit revenue stemmed mostly from growth in revenue from mountain biking and sightseeing at Whistler Blackcomb (45.9 million) and from retail operations ($5.9 million), the latter fueled by strong Colorado visits and the opening of nine new stores.

As announced earlier, Intrawest plans to sell to Fortress Investment Group, with closing expected in late October.