Vail Resorts expects typical first-quarter loss
By Cliff Thompson Vail correspondent
December 8, 2004
AVON - When Vail Resorts announces its
first-quarter financial results Friday, the normal early ski season
operating loss is expected.
While revenues don't match expenses
because the ski slopes aren't open during the quarter that runs from
Aug. 1 to Oct. 31, far lower expenses are expected.
The resort
company will be reaping the full benefits of a $25 million cost-cutting
program implemented 18 months ago, and it will also see the benefits of
lower interest rates from refinancing $490 million in long-term debt
that's expected to save up to $5 million annually.
Expenses
were pared from budgets across Vail Resorts' four Colorado ski resorts
and one Lake Tahoe-area resort as well as at its 10 RockResorts and
other hotel and leisure properties. Along with Vail Mountain and Beaver
Creek, Vail Resorts owns Breckenridge and Keystone in Summit County and
Heavenly in California.
The company's stock last month bumped
up to better than $22 a share - its initial public offering price - on
speculation that the company may sell some of its hotel properties.
That possibility was also broached by Vail Resorts' chief executive,
Adam Aron, during a conference call on the first quarter earnings.
Hotels, like the company's luxury RockResorts, are selling for a
premium as the travel and leisure industry returns to profitability
after three tough years.
Speculators may also be eyeing the
upside from the company's more than $500 million in slopeside
redevelopment over the next five years in Vail and Lionshead. The
renovation is expected to boost profits.
Last year Vail Resorts
lost $6 million on record revenues of $721.9 million, largely because
of $37 million in one-time refinancing charges and $5 million spent
cleaning mold from an employee housing facility the company owns in
Breckenridge.
Without those additional expenses, the company
would have posted a $20 million profit, an improvement from the
previous year's $8.5 million loss.
The company is projecting it will earn $152 to $160 million this year in pretax profit.
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