SAM Magazine--Park City, Utah, December 10, 2003--This reporter must first confess that she has absolutely no background in financial matters. So, when American Skiing Company released its first quarter figures today with a caveat about the company adopting Statement of Financial Accounting Standards No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity" (SFAS No. 150), she can only offer limited interpretation. In this case, as a result of adopting SFAS No. 150, American Skiing reclassified $298.7 million of mezzanine-level securities to liabilities. Ouch. That's going from the plus column to the minus column, we think. In addition, approximately $43.1 million of accretion of discount and dividends on the preferred stock in fiscal 2004 will be included in interest expense, whereas previously it was reported as accretion of discount and dividends on mandatorily redeemable stock. Another ouch, we think.

But let's get to the numbers, of which there are two sets. There are the numbers with the new accounting standards, which show very large increases in losses, but American Skiing has also added the "what if" numbers--what if they excluded the restructuring charge and the accretion of preferred stock dividends.

For example, the net loss available to common shareholders for the first quarter of fiscal 2004 was $41.3 million compared with a net loss of $39.1 million for the same quarter last year. However, this year's number includes a $0.1 million restructuring charge. Moving on to consolidated loss from continuing operations, this year's first quarter's figure was $41.3 million compared with a loss of $30.2 million last year. What if they didn't incur those extra charges this quarter? The number would have been $30.9 miilion. The loss from continuing resort operations was $35.9 million for the quarter compared to a loss of $24.9 million last year. The "what if" number comes in at $25.5 million. Still a greater loss, but certainly not as bad.

Total consolidated revenue was $18.5 million compared to $20.6 million last year. Resort revenue for the quarter was $16.1 million compared with $16.9 million. Real estate revenue was $2.3 million compared to $3.7 million for the first quarter in fiscal 2003. The company blames the decline in revenues on a soft economy and slower-than-usual summer business.

The one bright spot in American Skiing's numbers were season pass sales. Year-to-date season pass sales (as of November 30) were 27.4 percent higher than last year, thanks in large part to the combined Attitash Bear Peak/Sunday River pass. Season pass sales for the two resorts increased 100 percent over last year. Across all the eastern resorts, sales are up 38.6 percent versus 5.2 percent in the West.

But hope springs eternal over at American Skiing Company. "We have enjoyed abundant early season snowfall in the West and conditions in the East have steadily improved," said CEO BJ Fair. "We remain cautiously optimistic given a number of positive indicators as we approach the heart of the season." So do we, so long as there are no new accounting changes.