UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended January 28, 2005
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 333-26091
BOOTH CREEK SKI HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 84-1359604 | |
| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification Number) | |
| 1000 South Frontage Road West, Suite 100 Vail, Colorado |
81657 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(970) 476-1311
(Registrant’s Telephone Number, Including Area Code)
Indicate by check mark 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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). Yes ¨ No x
As of February 28, 2005, the number of shares outstanding of the registrant’s Common Stock, par value $.01 per share, was 1,000 shares.
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(Unaudited)
| January 28, 2005 |
October 29, 2004 |
January 30, 2004 |
||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 1,052 | $ | 846 | $ | 3,526 | ||||||
| Accounts receivable, net of allowance of $61, $39 and $56, respectively |
3,495 | 1,951 | 2,885 | |||||||||
| Inventories |
3,081 | 2,560 | 2,995 | |||||||||
| Prepaid expenses and other current assets |
3,413 | 1,550 | 3,225 | |||||||||
| Total current assets |
11,041 | 6,907 | 12,631 | |||||||||
| Property and equipment, net |
109,407 | 111,219 | 109,921 | |||||||||
| Real estate held for development and sale |
6,549 | 6,089 | 5,583 | |||||||||
| Deferred financing costs, net of accumulated amortization of $6,897, $6,430 and $5,515, respectively |
2,061 | 2,510 | 2,489 | |||||||||
| Timber rights and other assets |
5,727 | 5,802 | 5,404 | |||||||||
| Goodwill |
22,938 | 22,938 | 22,938 | |||||||||
| Total assets |
$ | 157,723 | $ | 155,465 | $ | 158,966 | ||||||
| LIABILITIES AND SHAREHOLDER’S EQUITY (DEFICIT) | ||||||||||||
| Current liabilities: |
||||||||||||
| Revolving credit facility |
$ | 5,600 | $ | 17,250 | $ | — | ||||||
| Current portion of long-term debt |
25,764 | 28,233 | 6,641 | |||||||||
| Accounts payable and accrued liabilities |
27,065 | 18,050 | 25,110 | |||||||||
| Unearned revenue and deposits - resort operations |
19,093 | 14,602 | 16,904 | |||||||||
| Total current liabilities |
77,522 | 78,135 | 48,655 | |||||||||
| Long-term debt |
82,801 | 81,085 | 98,731 | |||||||||
| Other long-term liabilities |
874 | 874 | 741 | |||||||||
| Commitments and contingencies |
||||||||||||
| Shareholder’s equity (deficit): |
||||||||||||
| Common stock, $.01 par value; 1,000 shares authorized, issued and outstanding |
— | — | — | |||||||||
| Additional paid-in capital |
72,000 | 72,000 | 72,000 | |||||||||
| Accumulated deficit |
(75,474 | ) | (76,629 | ) | (61,161 | ) | ||||||
| Total shareholder’s equity (deficit) |
(3,474 | ) | (4,629 | ) | 10,839 | |||||||
| Total liabilities and shareholder’s equity (deficit) |
$ | 157,723 | $ | 155,465 | $ | 158,966 | ||||||
See accompanying notes.
1
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
| Three Months Ended |
||||||||
| January 28, 2005 |
January 30, 2004 |
|||||||
| Revenue: |
||||||||
| Resort operations |
$ | 42,777 | $ | 47,315 | ||||
| Real estate and other (including $5,610 in revenues with a related party in 2004) |
— | 8,498 | ||||||
| Total revenue |
42,777 | 55,813 | ||||||
| Operating expenses: |
||||||||
| Cost of sales - resort operations |
26,646 | 26,273 | ||||||
| Cost of sales - real estate and other |
7 | 1,791 | ||||||
| Depreciation |
3,267 | 3,603 | ||||||
| Selling, general and administrative expense |
7,969 | 7,257 | ||||||
| Total operating expenses |
37,889 | 38,924 | ||||||
| Operating income |
4,888 | 16,889 | ||||||
| Other income (expense): |
||||||||
| Interest expense |
(3,267 | ) | (3,056 | ) | ||||
| Amortization of deferred financing costs |
(467 | ) | (280 | ) | ||||
| Other income |
1 | 84 | ||||||
| Other income (expense), net |
(3,733 | ) | (3,252 | ) | ||||
| Net income |
$ | 1,155 | $ | 13,637 | ||||
See accompanying notes.
2
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended |
||||||||
| January 28, 2005 |
January 30, 2004 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 1,155 | $ | 13,637 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation |
3,267 | 3,603 | ||||||
| Noncash cost of real estate sales |
— | 1,590 | ||||||
| Amortization of deferred financing costs |
467 | 280 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable |
(1,544 | ) | (1,058 | ) | ||||
| Inventories |
(521 | ) | (605 | ) | ||||
| Prepaid expenses and other current assets |
(1,863 | ) | (1,943 | ) | ||||
| Accounts payable and accrued liabilities |
9,015 | 5,487 | ||||||
| Unearned revenue and deposits - resort operations |
4,491 | 2,165 | ||||||
| Net cash provided by operating activities |
14,467 | 23,156 | ||||||
| Cash flows from investing activities: |
||||||||
| Capital expenditures for property and equipment |
(96 | ) | (1,625 | ) | ||||
| Capital expenditures for real estate held for development and sale |
(460 | ) | (546 | ) | ||||
| Other assets |
75 | 137 | ||||||
| Net cash used in investing activities |
(481 | ) | (2,034 | ) | ||||
| Cash flows from financing activities: |
||||||||
| Borrowings under revolving credit facility |
12,850 | 6,150 | ||||||
| Repayments under revolving credit facility |
(24,500 | ) | (23,900 | ) | ||||
| Principal payments of long-term debt |
(2,112 | ) | (655 | ) | ||||
| Deferred financing costs |
(18 | ) | — | |||||
| Net cash used in financing activities |
(13,780 | ) | (18,405 | ) | ||||
| Increase in cash and cash equivalents |
206 | 2,717 | ||||||
| Cash and cash equivalents at beginning of period |
846 | 809 | ||||||
| Cash and cash equivalents at end of period |
$ | 1,052 | $ | 3,526 | ||||
See accompanying notes.
3
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
January 28, 2005
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies
Booth Creek Ski Holdings, Inc. (“Booth Creek”) owns and operates various ski resorts, including Northstar-at-Tahoe (“Northstar”), Sierra-at-Tahoe (“Sierra”), Waterville Valley, Mt. Cranmore, Loon Mountain and the Summit at Snoqualmie (the “Summit”). Booth Creek also conducts certain real estate development activities, primarily at Northstar and Loon Mountain.
The consolidated financial statements include the accounts of Booth Creek and its subsidiaries (collectively referred to as the “Company”), all of which are wholly-owned. All significant intercompany transactions and balances have been eliminated.
Booth Creek is a wholly-owned subsidiary of Booth Creek Ski Group, Inc. (“Parent”).
The accompanying consolidated financial statements as of January 28, 2005 and January 30, 2004 and for the three month periods then ended are unaudited, but include all adjustments (consisting only of normal and recurring adjustments) which, in the opinion of management of the Company, are considered necessary for a fair presentation of the Company’s financial position at January 28, 2005 and January 30, 2004, and its operating results and cash flows for the three month periods then ended. Due to the highly seasonal nature of the Company’s business, the results for the interim periods are not indicative of results for the entire year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to generally accepted accounting principles applicable for interim periods. Management believes that the disclosures made are adequate to make the information presented not misleading. The unaudited consolidated financial statements should be read in conjunction with the following notes and the Company’s consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 29, 2004.
The Company is currently undertaking a proposed refinancing of its Senior Credit Facility (as defined herein), which matures on May 31, 2005, as well as the outstanding indebtedness relating to its Senior Notes (as defined herein). See further discussion at Note 3.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of January 30, 2004, cash equivalents consisted of money market funds (none at January 28, 2005 and October 29, 2004).
Included in cash at January 28, 2005 is restricted cash of $460,000 relating to advance deposits and rental fees due to property owners for lodging and property rentals.
Inventories
Inventories are valued at the lower of cost (first-in, first-out method) or market. The components of inventories were as follows:
| January 28, 2005 |
October 29, 2004 |
January 30, 2004 | |||||||
| (In thousands) | |||||||||
| Retail products |
$ | 1,796 | $ | 1,776 | $ | 1,644 | |||
| Supplies |
650 | 580 | 681 | ||||||
| Food and beverage |
635 | 204 | 670 | ||||||
| $ | 3,081 | $ | 2,560 | $ | 2,995 | ||||
4
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
1. Organization, Basis of Presentation and Summary of Significant Accounting Policies - (Continued)
Revenue Recognition
Revenues from resort operations are generated from a wide variety of sources, including lift ticket sales, snow school lessons, equipment rentals, retail product sales, food and beverage operations, lodging and property management services and other recreational activities. Revenues from resort operations are recognized in accordance with Staff Accounting Bulletin No. 104 (“SAB No. 104”). The requirements of SAB No. 104 are generally met as services are provided and products are sold and collectibility is assured. Sales of season passes are initially deferred in unearned revenue and recognized ratably over the expected ski season.
Sales and profits on real estate sales are recognized using the full accrual method at the point that the Company’s receivables from land sales are deemed collectible and the Company has no significant remaining obligations for construction or development, which typically occurs upon transfer of title. If such conditions are not met, the recognition of all or part of the sales and profit is postponed. The Company thoroughly evaluates the contractual agreements and underlying facts and circumstances relating to its real estate transactions, including the involvement of related parties, to determine the appropriate revenue recognition treatment of such transactions in accordance with Statement of Financial Accounting Standards No. 66, “Accounting for Sales of Real Estate,” and related pronouncements.
Contingencies and Related Accrual Estimates
The Company’s operations are affected by various contingencies, including commercial litigation, personal injury claims relating principally to snow sports activities, self-insured workers’ compensation matters and self-insured employee health and welfare arrangements. The Company performs periodic evaluations of these contingencies, and based on information provided by third-party claims administrators and other pertinent information, provides accruals for its best estimate of the eventual outcome of these matters in accordance with Statement of Financial Accounting Standards No. 5, “Accounting for Contingencies.” These estimated liabilities are reviewed and appropriately adjusted as the facts and circumstances related to these contingencies change.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
2. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following:
| January 28, 2005 |
October 29, 2004 |
January 30, 2004 | |||||||
| (In thousands) | |||||||||
| Accounts payable |
$ | 9,376 | $ | 7,226 | $ | 8,172 | |||
| Accrued compensation and benefits |
4,408 | 3,279 | 3,974 | ||||||
| Taxes other than income taxes |
1,552 | 966 | 1,443 | ||||||
| Interest |
4,166 | 1,514 | 3,856 | ||||||
| Other |
7,563 | 5,065 | 7,665 | ||||||
| $ | 27,065 | $ | 18,050 | $ | 25,110 | ||||
5
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(UNAUDITED)
3. Financing Arrangements
Senior Credit Facility