Killington's owner posts more losses - Mar. 11, 2004


By BRUCE EDWARDS Herald Staff

American Skiing Company is continuing its downhill financial slide, with
the company reporting Wednesday a fiscal second-quarter loss of $21.7
million - nearly triple the loss it posted in the first quarter a year
ago.

Through the first six months of its fiscal year, the owner of the
Killington/Pico and Mount Snow resorts in Vermont lost a total of $63
million, compared to $37.6 million for the same period last year.

The company, based in Park City, Utah, also reported a total debt of
$642.8 million at the end of the quarter in January.

ASC has been mired in debt since embarking on an aggressive expansion plan
under founder and former CEO Leslie Otten.

Those expansion plans included resort acquisitions and real estate
development.

In its quarterly filing with the Securities and Exchange Commission, ASC
said its financial results were affected by "extremely challenging weather
conditions" in the East, with a 16 percent drop in skier visits at its
eastern resorts. Overall, skier visits were down 10 percent through
January at ASC's seven resorts, declining from 1.7 million skier visits
last year to 1.55 million this year.

"This included warmer-than-normal weather conditions in November which
required us to delay planned opening dates, followed by alternating record
snowfalls and record rains in early December, rain over Christmas - New
Year's holiday period, and unrelenting sub-zero temperatures and wind on
weekends in January," the company stated in its 10-Q report.

ASC said problems in the East were partially offset by a 2 percent
increase in skier visits at its Western resorts.

Total revenue (resort and real estate) was $102 million for the three-
month period that ended in January - an increase of $2.6 million from the
same quarter a year earlier.

Through the first two quarters, revenue totaled $121.4 million compared to
$121 million for the prior year.

While total operating expenses increased $4.7 million to $139 million
through the first two quarters, interest on the company's outstanding debt
nearly doubled during the period to $45.4 million compared to the same
period a year earlier.

ASC spokesman Erik Preusse said the large increase in the second-quarter
loss can be attributed to a change in accounting standards that requires
preferred stock dividends to be treated as a liability.

Excluding preferred stock, Preusse said the company lost $11.1 million
during the second quarter and $42 million through the first six months of
the fiscal year.

The $628 million in debt includes $319.4 million in preferred stock.

Preusse declined to comment when asked when the company might return to
profitability.

"Our long-term focus for us is to improve our existing operations," he
said. "We address the debt issues as they approach and the initiatives are
designed to improve our operations which put us in a favorable position to
refinance debt."

However, Edwin Fowler, a stockbroker with Gunn Allen Financial and a
longtime resident of Killington, offered a bleak assessment of ASC's
future.

"I predicted they don't have a chance in hell," Fowler said.

Fowler laid the blame for ASC's troubles squarely at the feet of Otten,
and current and former management.

Fowler ticked off a list of missteps including "excess borrowing,
overpaying for ski resorts and just plain lousy management."

He noted the fate of the company is now largely in the hands of the major
creditors, which include FleetBoston, the company's lead lender.

ASC's common stock, which went public at $18 a share in 1997, was worth 12
cents a share Wednesday, down a penny.

According to Fowler's calculations, if ASC sold off all its resorts, it
wouldn't be enough to pay off all its debt.

Brad McCurtain of Maine Securities Corp. in Portland, Maine, doesn't
foresee ASC's situation improving either.

"It's not going to get any better," he said. "They have far more debt than
they have assets on the books."

Oak Hill Capital Partners, which invested heavily in the company several
years ago and has controlling interest in the company, has made it
impossible for the company to work its way out, McCurtain said, noting
that the interest on much of ASC's debt is in the double digits.

McCurtain said what's also disturbing is the decline in skier visits at
Killington, ASC's flagship Eastern resort.

Citing ASC figures, McCurtain said that skier visits at Killington
declined 18 percent through January, from 482,384 last year to 394,120
this year. Mount Snow in Wilmington has fared even worse, with skier
visits off 27 percent to 188,642.

Killington historically registers 1 million skier visits a year, but
McCurtain said he doubts the resort is on track this season to reach that
mark.

Skier visits are down nationally this season, but McCurtain said ASC
should be doing better.

"If you can't make money in the quarter that includes Christmas and Martin
Luther King Day, when are you ever going to make it in that business?" he
said. "Every year they have an excuse why they couldn't show a profit."

As far as rumors that Vail Resorts might be interested in buying
Killington, Fowler said that's an unlikely scenario since both Vail and
Intrawest, which owns Stratton Mountain Resort, would be reluctant to take
on more debt and make the necessary investment in Killington's
infrastructure.

Preusse said the company's strategy is to retain its existing resorts. And
he said the company's financial problems have not hindered resort
operations.

"We haven't cut back on operations at all," he said. "The company's
financial problems haven't inhibited our ability to make snow or provide
our guests with a quality ski experience."

In addition to Killington/Pico and Mount Snow, ASC owns Sunday River and
Sugarloaf/USA in Maine, Attitash Bear Peak in New Hampshire, Steamboat in
Colorado and The Canyons in Utah.

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