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Intrawest revenues up with A&K acquisition

Third quarter income grows despite snow conditions, 16 per cent decline in skier visits to Whistler

Intrawest Corporation, the parent company of Whistler-Blackcomb, weathered the storm – or rather lack of storms – in their third quarter to announce a net earnings increase of 23 per cent compared to the same period last year.

If nothing else the report shows that it pays to diversify – lost revenues at B.C. resorts were cushioned by stronger results in Ontario, Quebec, Florida and the Western U.S., and by Intrawest’s shares in tour company Abercrombie & Kent and Alpine Helicopters.

"I think the story from Intrawest’s perspective is that Whistler-Blackcomb having lower numbers didn’t impact whole picture of the company extent that the market was expecting," said Tim McNulty, head of investor relations for Intrawest.

"Diversification is good. Certainly the weather impacted Whistler-Blackcomb’s results to a significant extent. If not for the weather our results would have been outstanding. But we don’t expect to see the same impact next year, this was a once in a lifetime kind of event."

In the third quarter of 2004, Intrawest reporter $437.9 million US of total revenue. That figure was up to $504.8 million US in 2005, largely due to the company’s 2004 acquisition of the Abercrombie & Kent adventure travel company last summer.

The company’s earnings rose to $68.8 million US from $56.2 million US a year ago, although overall earnings for the first nine months of this fiscal year are still down.

The third quarter ended on March 31, just as snow conditions were turning around for B.C. resorts. For most of the quarter, Intrawest’s B.C. resorts struggled with the worst snow conditions in 40 years. Operations continued, but costs skyrocketed as B.C. resorts offered substantial discounts to guests and went to unusual lengths to keep operations going – at one point Whistler-Blackcomb even used helicopters to lift snow down the mountain and keep key runs open.

"The strong performance across our network of resorts and from A&K has allowed us to deliver solid results despite the adverse weather conditions that impacted our resorts in British Columbia," said Joe Houssian, the chairman, president and Chief Executive Officer of Intrawest.

Intrawest’s real estate division delivered lower earnings, down to $52.1 million US from $91.5 million the year before – something Intrawest expected with fewer new projects completed.

Intrawest Management Services revenues increased to $59.2 million US in the third quarter, up from $46.4 million the year before. Corporate operations also reported an income increase of $2.7 million US compared to last year.

But while total revenues were up, the company’s earnings before interest, income taxes, non-controlling interest, depreciation and amortization (EBITDA) was down to $126.1 U.S. million compared with $128.1 million U.S. last year.

Some of the highlights of quarterly report include:

• A 16 per cent decrease in revenue from British Columbia resorts, which was offset by a 7 per cent increase in revenues from eastern resorts and a nine per cent increase in revenue from Western U.S. resorts.

• Skier visits also declined 16 per cent at Whistler Blackcomb and 10 per cent at Panorama. To compensate for the snow conditions, the mountains offered discounts which led to a flat revenue per visit at Whistler-Blackcomb and a 14 per cent decline at Panorama.

• Resort and travel operations revenues increased three per cent to $308.4 million, with mountain resorts seeing an increase from $289.3 million to $295 million and warm weather resorts increasing to $12.9 million from $10.2 million. Mountain resort revenues would have fallen one per cent overall without the acquisition of the remaining 55 per cent of Alpine Helicopters.

• The rise in the Canadian dollar from an average of US$0.76 in the third quarter of 2004 to an average of US$0.80 is the third quarter this year also boosted mountain resort revenue by $7.4 million.

• U.S. resorts saw a three per cent increase in skier visits. Numbers would have been higher but torrential rains in California closed roads and impacted the number of visitors to Mammoth, which had a record snowfall.