SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED OCTOBER 27, 1996
_____________________________
Commission File Number 333-9763
_____________________________
American Skiing Company
(Exact name of registrant as specified in its charter)
Maine 01-0503382
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 450
Bethel, Maine 04217
(Address of principal executive office) (Zip Code)
(207) 824-5196
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since
last report.)
Indicated by checkmark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [ ] No [X]
The number of shares outstanding of each of the issuer's classes of
common stock was 978,300 shares of common stock $.01 par value
outstanding as at October 27, 1996.<PAGE>
American Skiing Company and Subsidiaries
Table of Contents
Part I - Financial Information.....................1
Item 1 Financial Statements .......................1
Condensed Consolidated Statement of Operations
(Unaudited) for Three Months Ended
October 27, 1996 and October 29, 1995.........1
Condensed Consolidated Balance Sheet
(Unaudited) as of October 27, 1996 and
October 29, 1995..............................3
Condensed Consolidated Balance Sheet
(Unaudited) as of October 27, 1996 and
July 28, 1996.................................5
Condensed Consolidated Statement of Cash Flows
(Unaudited) for Three Months Ended
October 27, 1996 and October 29, 1995.........7
Notes to (Unaudited) Condensed Consolidated
Financial Statements...............................9
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operation.........................................11
General...........................................11
Liquidity and Capital Resources...................11
Changes in Results of Operations..................12
Changes in Financial Condition....................13
Part II Other Information.........................18
Item 6 Exhibits...................................19
i<PAGE>
American Skiing Company and Subsidiaries
Part I - Financial Information
Item 1
Financial Statements
This Form 10-Q is filed by the American Skiing Company for itself and its
following wholly-owned subsidiaries:
Sunday River Skiway Corporation Sunday River, Ltd.
Sunday River Transportation Perfect Turn, Inc.
LBO Holding, Inc. Sugarbush Resort Holdings, Inc.
Mountain Wastewater Treatment, Inc. Sugarbush Leasing Company
Sugarbush Restaurants, Inc. Cranmore, Inc.
LBO Hotel Co. S-K-I Limited
Killington, Ltd. Mount Snow, Ltd.
Waterville Valley Ski Area, Ltd. Sugarloaf Mountain Corporation
Killington Restaurants, Inc. Dover Restaurants, Inc.
Resort Technologies, Inc. Resort Software Services, Inc.
Mountainside Sugartech
Deerfield Operating Company Pico Ski Area Management Company.
As used herein the term the "Company" means and refers to American
Skiing Company and the subsidiary registrants listed above on a
consolidated basis.
Condensed Consolidated Statement of Operations
For the three Months Ended
October 27, 1996 October 29, 1995
(Unaudited) (Unaudited)
Revenues
Skiing, lodging and
other operations $11,541,000 $4,490,000
Real Estate 1,569,000 387,000
Total Revenues 13,110,000 4,877,000
Expenses
Cost of Operations 15,990,000 4,431,000
Real Estate & Payroll
Taxes 1,755,000 369,000
Utilities 1,334,000 360,000
Insurance 1,272,000 416,000
S. G. & A. 5,405,000 2,537,000
Depreciation &
Amortization 1,527,000 327,000
Total Operating
Expenses 27,283,000 8,440,000
1<PAGE>
American Skiing Company and Subsidiaries
Loss From Operations (14,173,000) (3,563,000)
Interest 7,593,000 670,000
Net Loss before
provision for income
taxes (21,766,000) (4,233,000)
Provision for Income
Taxes (benefit) (8,271,000) (119,000)
Net Loss (13,495,000) (4,114,000)
Net income per common
share (note 5) (13.79)
Retained Earnings,
beginning of the period 18,131,000 28,726,000
Subtract: Distributions - (342,000)
Subtract: Net
Loss (13,495,000) (4,114,000)
Retained earnings, end
of period 4,636,000 24,270,000
See accompanying Notes to (Unaudited) Condensed
Consolidated Financial Statements.
2<PAGE>
American Skiing Company and Subsidiaries
Condensed Consolidated Balance Sheet
October 27, 1996 October 29, 1995
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash and Short-term
Investments $ 3,889,000 $1,643,000
Investment held in
escrow 14,674,000 -
Accounts
Receivable 2,387,000 1,554,000
Income Taxes
Receivable 8,366,000 119,000
Inventories 5,587,000 1,868,000
Assets Held for Resale 14,921,000 -
Prepaid
Expenses 3,828,000 1,198,000
Other Current
Assets 2,890,000 91,000
Total Current Assets 56,542,000 6,473,000
Property and
Equipment, net 233,582,000 72,043,000
Long term Investment 4,841,000 953,000
Goodwill 6,498,000 -
Prepaid Loan
Fees 7,647,000 -
Other Assets 6,651,000 4,060,000
TOTAL ASSETS 315,761,000 83,529,000
See accompanying Notes to (Unaudited) Condensed Consolidated
Financial Statements.
3<PAGE>
American Skiing Company and Subsidiaries
Condensed Consolidated Balance Sheet
October 27, 1996 October 29, 1995
(Unaudited) (Unaudited)
LIABILITIES & STOCKHOLDERS EQUITY
Current
Liabilities
Current portion of
Long-term Debt $ 34,671,000 $ 2,042,000
Accounts Payable and
accrued expenses 16,547,000 5,153,000
Federal Income Tax
Payable 630,000 303,000
Due to Shareholder 4,754,000 -
Deposits and other
Unearned Revenue 14,977,000 3,132,000
Accrued Interest 4,708,000 -
Other Accrued Expenses 5,240,000 4,200,000
Total Current
Liabilities 81,527,000 14,830,000
Long-Term Debt 189,152,000 42,651,000
Deferred Income Taxes -
Long-term 31,310,000 -
Other Long-Term
Liabilities 5,364,000 -
TOTAL LIABILITIES 307,353,000 57,481,000
Stockholders'
Equity
Common Stock 10,000 118,000
Paid In Capital 3,762,000 1,660,000
Retained Earnings 4,636,000 24,270,000
Total Equity 8,408,000 26,048,000
TOTAL LIABILITIES AND
EQUITY $ 315,761,000 $ 83,529,000
See accompanying Notes to (Unaudited) Condensed Consolidated
Financial Statements.
4<PAGE>
American Skiing Company and Subsidiaries
Condensed Consolidated Balance Sheet
October 27, 1996 July 28, 1996
(Unaudited)
ASSETS
Current Assets
Cash and Short-term
Investments $ 3,889,000 $4,087,000
Investments Held in Escrow 14,674,000 14,497,000
Accounts
Receivable 2,387,000 2,458,000
Income Taxes Receivable 8,366,000 -
Inventories 5,587,000 5,025,000
Assets Held for Resale 14,921,000 14,921,000
Prepaid Expenses 3,828,000 3,371,000
Other Current
Assets 2,890,000 2,975,000
Total Current Assets 56,542,000 47,334,000
Property and Equipment, net 233,582,000 227,470,000
Long Term Investments 4,841,000 4,343,000
Goodwill 6,498,000 6,540,000
Prepaid Loan Fees 7,647,000 7,911,000
Other Assets 6,651,000 5,134,000
TOTAL ASSETS $ 315,761,000 $ 298,732,000
5<PAGE>
American Skiing Company and Subsidiaries
Condensed Consolidated Balance Sheet
October 27,1996 July 28, 1996
(Unaudited)
LIABILITIES & STOCKHOLDERS
EQUITY
Current Liabilities
Current portion of Long-term
Debt $ 34,671,000 $ 22,893,000
Accounts Payable 16,547,000 13,406,000
Federal Income Tax Payable 630,000 671,000
Due to Stockholder 4,754,000 5,375,000
Deposits and other Unearned
Revenue 14,977,000 3,541,000
Accrued Interest 4,708,000 1,491,000
Other Accrued Expenses 5,240,000 1,660,000
Total Current Liabilities 81,527,000 49,037,000
Long-Term Debt 189,152,000 187,827,000
Deferred Income Taxes - Long-
term 31,310,000 30,695,000
Minority Interest - 2,492,000
Other Long-Term Liabilities 5,364,000 6,778,000
TOTAL LIABILITIES 307,353,000 276,829,000
Stockholders'
Equity
Common Stock 10,000 10,000
Paid In Capital 3,762,000 3,762,000
Retained Earnings 4,636,000 18,131,000
Total Equity 8,408,000 21,903,000
TOTAL LIABILITIES AND EQUITY $ 315,761,000 $298,732,000
See accompanying Notes to (Unaudited) Condensed
Consolidated Financial Statements.
6<PAGE>
American Skiing Company and Subsidiaries
Condensed Consolidated Statement of Cash Flows
For the Three Months Ended
October 27, 1996 October 29, 1995
Cash flows from operating activities: (Unaudited) (Unaudited)
Net Income (Loss) $ (13,495,000) $ (4,114,000)
Non-cash items included in net income (loss)
depreciation and amortization 1,527,000 327,000
Deferred Income taxes 615,000 -
Cash flows from operating activities before
changes in assets and liabilities (11,353,000) (3,787,000)
Change in assets and liabilities
Decrease (Increase) in investments held in
escrow (177,000) -
Decrease (Increase) in Accounts Receivable 71,000 147,000
Decrease (Increase) in Income Taxes
Receivable (8,366,000) -
Decrease (Increase) in inventories (562,000) (487,000)
Decrease (Increase) in assets held for
resale (166,000)
Decrease (Increase) in prepaid expenses (457,000) (628,000)
Decrease (Increase) in other current assets 85,000 -
Decrease (Increase) in Other Assets 904,000 -
Increase (Decrease) accounts payable 3,141,000 1,143,000
Increase (Decrease) income taxes payable (41,000) (443,000)
Increase (Decrease) in deposits and
unearned revenue 11,436,000 2,595,000
Increase (Decrease) in other accrued
Interest 3,217,000 -
Increase (Decrease) in other accrued
expenses 3,580,000 2,617,000
Cash flow provided by operating
activities after change in assets
and liabilities 1,478,000 991,000
7<PAGE>
American Skiing Company and Subsidiaries
Cash flows from investing activities:
Additions to Property and Equipment (7,333,000) (8,793,000)
Additions to Assets held for resale (2,421,000) (1,523,000)
Purchase of ski resort minority interest (2,492,000) -
Purchase of long term investments (498,000) -
Other 2,000
Net cash provided (Used) for investing
activities (12,744,000) (10,314,000)
Cash flows from financing activities:
Reductions in Note payable to Shareholder (621,000) -
Distributions to Shareholder - (342,000)
Additions to long term debt 11,689,000 9,637,000
Net cash provided (used) for in financing
activities 11,068,000 9,295,000
Net increase (decrease) in cash and short
term investments (198,000) (28,000)
Cash and short term investments at
beginning of year 4,087,000 1,671,000
Cash and short term investments at end of
period $3,889,000 $1,643,000
See accompanying Notes to (Unaudited) Condensed Consolidated Financial
Statements.
8<PAGE>
American Skiing Company and Subsidiaries
Notes to (Unaudited) Condensed Consolidated Financial Statements
1. General. In the opinion of the Company the accompanying
unaudited condensed consolidated financial statements contain all
adjustments necessary to present fairly the financial position of the
Company as of October 27, 1996, July 28, 1996, and October 29, 1995, the
results of operations for the three months ended October 27, 1996 and
October 29, 1995, and statement of cash flows for the three months ended
October 27, 1996 and October 29, 1995. All adjustments are of a normal
recurring nature. The unaudited condensed consolidated financial
statements should be read in conjunction with the following notes and the
consolidated financial statements in the Amendment No. 2 to S-4 filed
with the Securities and Exchange Commission November 22, 1996.
2. Acquisition of S-K-I. On June 28, 1996, the Company acquired S-
K-I Limited, including all its subsidiaries (the "S-K-I Group"), for a
total purchase price, including direct costs, of $104.6 million plus
liabilities assumed (excluding deferred taxes) of $58.5 million for all
of the shares outstanding of S-K-I Limited common stock (the
"Acquisition"). Pursuant to the transaction, S-K-I Limited became a
wholly-owned subsidiary of the Company. The acquisition was accounted
for using the purchase accounting method. The consolidated financial
statements contained herein reflect the results of operations of the
acquired S-K-I Group subsequent to June 28, 1996 and include the balance
sheet accounts of the acquired S-K-I Group at July 28, 1996, and October
27, 1996.
The purchase price was allocated to the fair value of S-K-I
Limited's assets and liabilities at the date of acquisition as follows:
Fair Value of Net
Assets Required
Cash $7,540,000
Accounts Receivable, net 1,625,000
Inventory 3,271,000
Prepaid expenses 2,153,000
Property and equipment, net 163,745,000
Long-term investments 3,893,000
Goodwill 6,554,000
2,156,000
Other assets
$190,937,000
Total Assets
Accounts payable and accrued expenses $(16,567,000)
Other liabilities (5,301,000)
Minority interest (2,600,000)
Debt acquired (34,029,000)
(27,820,000)
Deferred income taxes
$(86,317,000)
Total liabilities
$104,620,000
Total
9<PAGE>
American Skiing Company and Subsidiaries
Concurrent with the closing of the Acquisition, the stockholder
contributed all of his outstanding capital stock of the corporations
comprising the Sunday River, Sugarbush, Attitash/Bear Peak and Mt.
Cranmore resorts to the Company.
As of the date of the Acquisition S-K-I Limited owned 51% of the
outstanding stock of Sugarloaf Mountain Corporation ("Sugarloaf"). On
August 30, 1996, the Company purchased the remaining 49% minority
interest in Sugarloaf for $2.0 million cash and payment of a $600,000
prepayment penalty related to certain indebtedness of Sugarloaf. Up to
$1 million additional purchase price may be paid pursuant to an earnings
based formula covering the period from August 31, 1996 through November
30, 2002.
On November 27, 1996, pursuant to a consent decree with the United
States Department of Justice ("DOJ"), the Company divested the Waterville
Valley and Mt. Cranmore resorts through an asset sale generating a
purchase price of $17,500,000, with $14,750,000 paid in cash at closing
and $2,750,000 paid by a note from the purchaser. The assets held for
sale of the Mt. Cranmore resort included in the accompanying consolidated
balance sheet as of July 28, 1996 are approximately $4.4 million and the
net income for the year ended July 28, 1996 of the Mt. Cranmore resort
included in the accompanying consolidated statement of operations is
approximately $251,000. The assets held for sale of the Waterville
Valley resort included in the accompanying consolidated balance sheet as
of July 28, 1996 are approximately $12.3 million and the net loss for the
period June 28 through July 28, 1996 of the Waterville Valley resort
included in the accompanying consolidated statement of operations is
approximately $269,000.
3. Income Taxes. The provision for taxes on income is based on a
projected annual effective tax rate of 38%. Deferred income taxes
include the cumulative reduction in current income taxes payable
resulting principally from the excess of depreciation reported for income
tax purposes over that reported for financial reporting purposes.
4. Seasonal Business. Results for interim periods are not
indicative of the results expected for the year due to the seasonal
nature of the Company's business which is ownership and operation of ski
resorts.
5. Net Income per Common Share. Net income per common share
figures are based on the average shares outstanding during the first
quarter of fiscal 1997 of 978,300. Prior to June 28, 1996 all of the
Company's outstanding common stock was owned by the same individual, and
accordingly earnings per share has not been presented for the three
months ended October 29, 1995.
6. Acquisitions. The Company purchased the Pico Ski Mountain
Resort on December 9, 1996. This resort is located in Sherburne, Vermont
10<PAGE>
American Skiing Company and Subsidiaries
in close proximity to the Killington resort. The purchase price of the
resort was $2,909,000 in cash and $1,626,000 present value of contingent
liabilities based upon the occurrence of certain future events relating
to the development and growth of the resort.
Item 2
Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
Set forth below is management's discussion and analysis of (i ) the
liquidity and capital resources of the Company, (ii) changes in financial
condition of the Company, including (a) a discussion of changes in
financial condition from the end of the 1996 fiscal year through the
quarter ended October 27, 1996, and (b) a comparison of financial
condition between the first quarter of fiscal 1997 as compared to the
first quarter of fiscal 1996, and (iii) the results of operations for the
first quarter of fiscal 1997 as compared to the corresponding quarter of
fiscal 1996.
Liquidity and Capital Resources
1. Liquidity. The Company's business is highly seasonal, with the
vast majority of its annual revenues historically being generated in the
second and third fiscal quarters. Operating losses are expected in the
first and fourth fiscal quarters.
The first quarter of fiscal 1997 generated net loss of
$13,495,000. Cash flow from operations was, as anticipated, insufficient
to cover fixed charges. The Company utilized its senior credit facility
to fund liquidity requirements, drawing 90% of the availability under
that facility as of October 27, 1996. The Company's liquidity was
affected by additional transaction costs associated with the acquisition
of S-K-I Limited and the timing of capital lease reimbursements.
The Company's liquidity will be positively affected by the sale of
the Waterville Valley and Mount Cranmore resorts closed November 27,
1996. The purchase price for the resorts was $17,500,000, with
$14,750,000 paid in cash at closing. The net proceeds from the sale will
be used to reduce indebtedness under the Company's senior credit
facility, thereby increasing availability under that facility.
Management believes cash flow from second and third quarter
operations, combined with borrowings under its senior credit facility,
will be sufficient to meet its cash operating requirements for the 1997
fiscal year.
2. Capital Resources. The Company's only material commitments for
capital expenditures as of October 27, 1996 were (i) completion of
construction of the Grand Summit at Attitash/Bear Peak, through its
11<PAGE>
American Skiing Company and Subsidiaries
wholly-owned subsidiary LBO Hotel Co., (ii) completion of construction of
5 new quad chairlifts at its Killington and Mt. Snow resorts and (iii)
the acquisition of the Pico Mountain Ski Resort adjacent to the
Killington resort in Sherburne, Vermont. Each capital commitment is
funded through a separate source. The approximate $13.3 million cost of
the Grand Summit at Attitash/Bear Peak is funded through cash provided by
the Company, and a $8,500,000 construction loan provided through Key Bank
of Maine. The chairlifts are funded through $7,000,000 of capital lease
commitments for the full cost of acquisition and installation. The
acquisition of the Pico Mountain Ski resort on December 9, 1996 was
funded through a combination of $2,909,000 in borrowings under the
Company's senior credit facility and $1,626,000 present value of seller
financing in the form of deferred and contingent purchase price.
The Company does not expect any material changes in the Company's
capital resources. The Company's capital improvement plan for summer
1997 will not be finalized until operating results for the second and
third 1997 fiscal quarters are known. Construction of Grand Summit
Hotels at up to four resorts scheduled for summer 1997 are expected to be
funded primarily through borrowings by the Company's wholly-owned
subsidiary, LBO Hotel Co., without recourse to the Company or any of its
restricted subsidiaries.
Changes in Results of Operations
Changes for the First Quarter of Fiscal 1997 compared to the First
Quarter of Fiscal 1996.
1. Revenues. Revenues increased from $4,877,000 in the first
quarter of fiscal 1996 to $13,110,000 for the first quarter of fiscal
1997. Approximately 77% of this increase resulted from including
revenues generated by the S-K-I Group resorts (the "S-K-I Resorts"). The
remaining 23% of the increase resulted primarily from an increase in real
estate sales and season pass sales at the resorts owned by the Company on
a pre-merger basis (the "Pre-Merger Resorts").
2. Cost of Operations. Cost of operations increased from
$4,431,000 in the first quarter of fiscal 1996 to $15,990,000 in the
first quarter of fiscal 1997. Approximately 90% of this increase
resulted from inclusion of cost of operations at the S-K-I Resorts.
Portions of the remaining 10% were due to the need for reorganizing the
Company following the merger, increasing coordination between the resorts
in the services offered, training of the new resort staff in preferred
resort operation practices and costs related to the increased revenues.
3. Real Estate and Payroll Taxes. This item increased
predominantly due to the addition of the S-K-I Resorts. Expenses at the
Company's Pre-Merger Resorts were comparable to the same quarter in
fiscal 1996.
12<PAGE>
American Skiing Company and Subsidiaries
4. Utilities. Utilities Expense increased from $360,000 for the
first quarter of fiscal 1996 to $1,334,000 for the first quarter of
fiscal 1997. The increase was primarily caused by the inclusion of the
S-K-I Resorts which accounted for approximately 90% of the increase. The
remaining 10% was attributable to the Company's Pre-Merger Resorts
experiencing colder than normal temperatures, which provided the
opportunity for increased early snowmaking efforts at pricing levels at
least 5% higher than the previous year.
5. Insurance. Insurance increased from $416,000 in the first
quarter of fiscal 1996 to $1,272,000 for the first quarter of fiscal
1997. The increase was attributable primarily to the acquisition of S-K-
I Limited.
6. Selling, General and Administrative. SG&A expense increased
from $2,537,000 in the first quarter of fiscal 1996 to $5,405,000 in the
first quarter of fiscal 1997. The increase resulted entirely from the
acquisition of the S-K-I Resorts. The Company's Pre-Merger Resorts
showed a 20% reduction compared to the prior fiscal year's quarter.
Increased co-operative marketing campaigns accounted for most of this
reduction.
7. Depreciation & Amortization. Depreciation and amortization
increased from $327,000 to $1,527,000 from the first quarter of fiscal
1996 compared to the first quarter of fiscal 1997. Approximately 95% of
this increase relates to the acquisition of S-K-I Limited and the
resulting amortization of goodwill and prepaid loan fees. The remaining
5% resulted from capital improvements over the last year at Pre-Merger
Resorts.
8. Interest. Interest increased from $670,000 in the first quarter
of fiscal 1996 to $7,593,000 in the first quarter of fiscal 1997. The
increase was caused by the increase in the Company's indebtedness in
conjunction with the acquisition of S-K-I Limited and the Company's
summer 1996 capital improvement program.
9. Income Tax Benefits. Income tax benefit increased from $119,000
for the first quarter of fiscal 1996 to $8,271,000 for the first quarter
of fiscal 1997. This significant increase is from two main factors: (i)
several of the Pre-Merger Resorts were owned by _S_ corporations that had
no income tax expense or benefit, and (ii) the loss generated in the
first quarter by the S-K-I Resorts represents over 70% of the Companies'
total loss for the quarter.
13<PAGE>
American Skiing Company and Subsidiaries
Changes in Financial Condition
Changes for the First Quarter of Fiscal 1997 Compared to the
First Quarter of Fiscal 1996.
1. Cash and Short Term Investments. Cash and short term
investments increased approximately $2.2 million (137%). Approximately
56% of this increase results from the acquisition of the S-K-I resorts
and 44% from an increase in the cash from Pre-Merger Resort operations.
2. Investments Held in Escrow. This item increased $14.7 million.
This increase is wholly attributable to the interest escrow account
required in connection with the Company's 12% Senior Subordinated Notes
due 2006.
3. Income Taxes Receivable. The $8.2 million increase is
attributable to (i) the acquisition of the S-K-I Resorts and the
inclusion of their loss in the first quarter and (ii) the change in the
federal income tax status of several subsidiaries from "S" to "C"
companies in connection with the merger.
4. Inventories. Inventory increased $3.7 million over the prior
fiscal year's quarter. The increase is principally due to the
acquisition of the S-K-I Resorts. There were minor increases in the
inventory at the Company's Pre-Merger Resorts.
5. Assets Held for Resale. The increase of $14.9 million
represents the assets of the Waterville Valley and Mt. Cranmore resorts
divested subsequent to October, 1996 pursuant to the consent decree with
the DOJ.
6. Prepaid Expenses. The increase of $2.6 million in prepaid
expenses is entirely attributable to the acquisition of the S-K-I
Resorts.
7. Other Current Assets. The $2.8 million in other current assets is
comprised of the current portion of prepaid loan fees, the current portion of
deferred taxes and other miscellaneous current assets. The prepaid loan fees
and some other miscellaneous current assets relate entirely to post-merger
transactions.
8. Property and Equipment, Net. Fixed assets increased $161.5
million. Over $150 million of this increase is associated with
14<PAGE>
American Skiing Company and Subsidiaries
the acquisition of the S-K-I Resorts. The remainder of approximately $10
million is from capital improvements at the Company's Pre-Merger Resorts.
9. Long-Term Investments. Long-Term Investments increased $3.9
million, the balance of this account is comprised of the long-term
investments constituting reserves of S-K-I Insurance Company. The
increase in this account relates entirely to the inclusion of the S-K-I
Resorts.
10. Goodwill. The $6.5 million increase is attributably entirely
to the acquisition of the S-K-I Resorts.
11. Prepaid Loan Fees. The Company incurred $8.7 million in loan
fees related to the financing of the S-K-I Limited acquisition. These
fees represent one-time non-recurring items. Approximately $7.6 million
is included in this account with the balance included in "Other Current
Assets."
12. Other Assets. These items increased $2.6 million. This
increase is primarily from the acquisition of the S-K-I Resorts. There
were some minor increases at the Company's Pre-Merger Resorts related to
the costs of research and permitting real estate development projects.
13. Current Portion of Long Term Debt. The $32.6 million increase
is primarily attributable to the increase in amounts outstanding under
the Company's senior credit facility and the requirement that the
outstanding balance be reduced to $25 million on or before March 31,
1997.
14. Accounts Payable and Accrued Expenses. Accounts payable increased by
$11.4 million due to the acquisition of the S-K-I Resorts. The consolidated
balance of the Pre-Merger Resorts decreased slightly.
15. Due to Shareholder. This $4.7 million item is a note payable
to Leslie B. Otten established prior to the Acquisition to fund Mr.
Otten's personal tax liability generated by certain of the Pre-Merger
Resorts' federal income tax status as "S" corporations.
16. Deposits and Unearned Revenue. This item is comprised of
season pass sales and deposits on lodging stays. Of the $11.8 million
increase, approximately $600,000 is attributable to operation of
the Pre-Merger Resorts, while the remainder is from the addition of the
S-K-I Resorts.
17. Accrued Interest. Accrued Interest increased $4.7 million.
This increase reflects scheduled accrual of interest on the Company's
$120 million senior subordinated notes due 2006 and $39 million
15<PAGE>
American Skiing Company and Subsidiaries
subordinated discount notes due 2007. Interest payments are made semi-
annually on the senior subordinated notes.
18. Long-Term Debt. Long-term debt increased by $146.5 million.
The increase in long-term debt is directly attributable to (i) the
financing of the Acquisition, and (ii) the financing of approximately $18
million in capital improvement at the Company's resorts during the first
quarter.
19. Deferred Income Taxes. The increase of $31.3 million dollars
in deferred income taxes is attributable to three principal sources: (i)
approximately $6 million of the increase relates to several subsidiaries
that were previously "S" corporations for federal income tax purposes
losing their "S" status as a result of becoming subsidiaries of the
Company; (ii) S-K-I Limited carried approximately $10 million of deferred
taxes into the merger; and (iii) approximately $15.3 million of the increase
relates to basis adjustment in conjunction with the purchase of the S-K-I
Resorts. Assets were adjusted upward to equal the purchase price in accordance
with generally accepted accounting principles for financial reporting purposes,
while these same assets are not adjusted for tax reporting purposes.
20. Other Long-Term Liabilities. This is almost entirely related
to the acquisition of the S-K-I companies. Less than one percent relates
to the Pre-Merger Resorts.
21. Paid in Capital. Paid in capital increased $2.1 million. The
increase results both from capital contributed to the Company on a pre-
merger basis and additional capital contributed through purchase of
investment units consisting of both the Company's 13 3/4% Subordinated
Discount Notes and its common stock.
22. Retained Earnings. Retained earnings decreased $19.6 million from
October 29, 1995 to October 27, 1996. The decrease is attributable to
the following factors:
1) $5.2 million from the establishment of the note payable to Mr. Otten
to fund "S" corporation tax liability.
2) $2.8 million from the payment of estimated tax payments on behalf of
Mr. Otten from tax liability generated from companies that were
previously S corporations.
3) $11.6 net loss for the period November 1, 1995 to October 29, 1996.
16<PAGE>
American Skiing Company and Subsidiaries
Changes in Financial Condition
Changes for the First Quarter of Fiscal 1997 Compared to Year-End Fiscal
1996.
1. Income Taxes Receivable. Income taxes receivable are
attributable in full to the first quarter loss experienced by the
Company.
2. Other Assets. Other assets increased $1.5 million, all of which
is attributable to the construction and development of various real
estate and hotel projects.
3. Current Portion of Long-Term Debt. Current portion of long-term
debt increased approximately $11.8 million (51.45%). The increase
reflects drawdown under the Company's senior credit facility to fund
first quarter operating losses. The requirement that the Company pay
down its senior credit facility to a maximum outstanding balance of $25
million as of March 31, 1997, requires the increase to be classified as
current. Cash from operations during the second and third fiscal 1997
quarters are expected to be sufficient to satisfy the paydown
requirement.
4. Accounts Payable and Accrued Expenses. Accounts payable reflect an
increase of $3.1 million (23.43%). That increase is attributable to normal
purchasing patterns in which supplies and inventory are acquired during the
first quarter in preparation for second and third quarter operations.
5. Deposits and other Unearned Revenue. The increase of
approximately $11.4 million reflects expected unearned deposits for
lodging and seasons pass sales for the 1996-1997 ski season.
6. Accrued Interest. Accrued interest increased by approximately
$3.2 million. The increase reflects scheduled accrual of interest
on the Company's $120 million senior subordinated notes due 2006 and $39
million subordinated discount notes due 2007. Interest payments are made
semi-annually on the senior subordinated notes.
7. Other Accrued Expenses. Accrued expenses increased $3.6 million
from July 28, 1996 to October 27, 1996. This increase represents
increased operational activities related to the start of the ski season.
17<PAGE>
American Skiing Company and Subsidiaries
8. Minority Interest. The reduction in minority interest of
$2,492,000 represents the acquisition of the minority interest in
Sugarloaf in August, 1996.
9. Other Long-Term Liabilities. The $1.4 million (-20.86%)
decrease in other long-term liabilities represents scheduled amortization
of capital leases and other long-term obligations.
10. Retained Earnings. The decrease of $13.5 million (-74.43%) in
retained earnings is attributable to the seasonally related first quarter
loss of the Company and its subsidiaries.
18<PAGE>
American Skiing Company and Subsidiaries
Part II - Other Information
Item 6
Exhibits
Included herewith is the Financial Data Schedule submitted as
Exhibit 27 in accordance with Item 601(c) of Regulation S-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
AMERICAN SKIING COMPANY
Date: January 10, 1997 THOMAS M. RICHARDSON
Thomas M. Richardson
Senior Vice President Finance
Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: January 10, 1997 CHRISTOPHER E. HOWARD
Christopher E. Howard
Chief Administrative Officer and
General Counsel
(Duly Authorized Officer)
19<PAGE>
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<FISCAL-YEAR-END> JUL-27-1997 JUL-28-1996
<PERIOD-END> OCT-27-1996 JUL-28-1996
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