Intrawest earnings decline for second year in a row 

Intrawest’s earnings for the year ending June 30 were down slightly from last year, although total revenue increased 10 per cent to $1.09 billion US.

Total company EBITDA (earnings before interest, income taxes, non-controlling interest, depreciation and amortization) for the year were $209.2 million, down from $211.1 million in 2002 (all figures US).

Income from continuing operations for the year was $34.8 million (after taking a write-down of $12.3 million against technology assets) compared with $58.6 million in 2002. Income per share from continuing operations for the year, on a fully diluted basis, was $0.73 ($0.96 before the write-down of technology assets), down from $1.31 per share in 2002.

"Our resort performance was strong to the beginning of March, at which point war in Iraq followed by the outbreak of SARS had a significant negative impact on resort visits," said Joe Houssian, chairman, president and chief executive officer. "Our full-year operating results exceeded our guidance of last May thanks to stronger than anticipated late-season business at Whistler and Mammoth and a very busy early summer at Sandestin in Florida."

Intrawest’s year-end statement, released Tuesday, was the second consecutive year of declining results for the owner of Whistler-Blackcomb and numerous other resorts following eight consecutive years of earnings growth. But the company has also undergone some significant restructuring in the last year.

The Leisura Developments partnerships were established earlier in 2003 to take on the ownership and financing of Intrawest’s real estate development business. Manulife Capital in Canada and JPMorgan Fleming in the U.S. are partners in Leisura. The first projects were sold to the partnerships in August and September, including two major projects in Whistler.

The restructuring separates Intrawest’s resort operation business from its real estate development business. The businesses complement one another but they have different capital structures. "Combining the capital structures of these businesses produces a debt-to-equity profile that is uncharacteristically high for a publicly traded operating company," the company states on its Web site.

The Leisura partnerships, combined with cash flow from ongoing business, is expected to result in free cash flow of approximately $250 million for fiscal 2004, which will be used to pay down debt, the company stated in a release this week.

Real estate revenue increased 17.5 per cent, to $512.7 million from $487.8 million in 2002. The company delivered 1,239 real estate units in 2003, compared to 1,290 in 2002. However, real estate profit was $75 million, compared to $85.1 million in 2002. A continuing slow market for resort real estate in Colorado, construction delays on several projects and reduced margins at the Intrawest Resort Club were blamed for the decline.

Intrawest also sold the majority of its commercial properties at Mont Tremblant this year.

Ski and resort operations was a better story for Intrawest. Revenue was $571.5 million in 2003, compared to $485.1 million in 2002. EBITDA for the year was $116.7 million compared with $107.3 million last year.


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