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Intrawest downgrades outlook

VANCOUVER, British Columbia – Things were going well for ski area operator and real estate developer Intrawest until March, and then war, a sour economy and, finally, health scares began to take their toll on corporate revenue.

Intrawest, the Canadian-based owner of Copper Mountain and new operator of Winter Park, released its third-quarter financial report Tuesday. Company officials reported only a slight increase in income over the third quarter of 2002. Earnings per share for the quarter ending March 31 dropped eight cents to $1.20, and fully diluted earnings per share dropped six cents to $1.19.

“We’ve gone through a difficult period in the last three months with war, a slow economy and now SARS,” Intrawest chairman, president and chief executive officer Joe Houssian said in a telephone conference call Tuesday morning. “We certainly haven’t been insulated from the effects of all that.”



Houssian said company officials “expected to be further along” in the early part of the quarter and are now downgrading the outlook for the rest of the year.

Earnings before interest, taxes, depreciation and amortization, commonly referred to as EBITDA, rose 11 percent compared to last year’s third quarter, according to the financial report.



Skier visits across the company’s properties dropped 2 percent for the third quarter. Ski and resort operations revenue was $313.1 million, compared to $273.1 million in 2002.

Intrawest closed on the sale of 242 units during the third quarter, helping the company post an improvement of more than $20 million in real estate revenue, which totaled $87.1 million. The company expects to close an additional $280 million in pre-sale real estate contracts in the fourth quarter of this year.

“We did suffer some construction delays on three projects and shifted some closings into the first quarter of 2004,” Houssian said. “Across our whole system, we have 13 projects at nine resorts.”

In February, Intrawest announced the creation of a partnership with the newly created Leisura Developments in the United States and Canada. Through the partnership, Intrawest officials said, they planned to remove as much as $300 million in debt from Intrawest ledgers, reducing their capital investment and increasing cash flow. Intrawest will sell real estate parcels to Leisura and provide management expertise in developing property.

“Two years ago, we shifted our strategy away from acquisitions,” Houssian said. “We established as a priority a desire to strengthen our balance sheet and increase our cash flow. I think that through Leisura, that’s been accomplished.”

Intrawest also announced Tuesday that JPMorgan Fleming Asset Management would offer its financing power to the Leisura partnership.

“Through our institutional JPMorgan Fleming Special Situation Property Fund, Leisura gives our clients access to a portfolio of irreplaceable resort assets and an opportunity to invest alongside Intrawest, a top-tier developer with a successful track record in resort condominium development throughout North America,” Larry Ellman, managing director and head of acquisitions for JPMorgan Fleming’s Real Estate Investment Group, said in a press release. “We look forward to a successful long-term relationship with Intrawest.”

Intrawest’s stock price on the New York Stock Exchange dropped 82 cents to $12.17 in heavy trading following the announcements.

Reid Williams can be reached at (970) 668-3998, ext. 237, or rwilliams@summitdaily.com.


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