ASC visits off 7.4% for winter

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Newry, Maine (press release) - Skier visits at American Skiing Co. resorts fell 4.9% for the quarter ending April 28, and 7.4% for the winter, excluding results from resorts recently sold.

Third quarter EBITDA from core resort operations was only slightly below the same period last year despite a decline in overall visitation. Steamboat ski resort, which began the season with significantly lower year-over-year reservation and call volume as well as concerns about air travel following September 11, experienced more than a 5% increase in skier visits for the quarter.

"Our resorts performed exceptionally well in the face of a number of significant challenges," said CEO B.J. Fair. "Aggressive marketing campaigns following the events of September 11, coupled with a focus on controlling costs, led to a stronger third quarter than we would have anticipated after 9/11. Following a slow start to the season, we experienced strong demand during critical holiday periods with skier visits higher than during the comparable periods in the prior year. Importantly, revenue per skier visit increased over the prior year which is a direct reflection of our renewed focus on yield management."

Accounting Changes and Non-Recurring Items
During the first nine months of fiscal 2002 and fiscal 2001, the Company incurred $2.4 million and $2.1 million, respectively, in non-recurring charges related to its previously announced restructuring program. All of the non-recurring charges relate to resort operations except for $0.2 million associated with real estate operations incurred during the second quarter of fiscal 2002. During the second quarter of fiscal 2002, the Company also took a $25.5 million asset impairment charge related to an agreement to sell Steamboat ski resort from which the Company withdrew in March 2002. During the third quarter of fiscal 2001, the Company incurred a $3.6 million charge related to its withdrawn merger plan with MeriStar Hotels & Resorts. In addition, the Company's real estate subsidiary incurred a $0.8 million loss from the sale of its interest in the Heavenly Grand Summit Hotel development subsidiary during the third quarter of fiscal 2001. During the first quarter of fiscal 2002, the Company incurred an $18.7 million non-recurring charge from the cumulative effect of a change in accounting principle related to the impairment of goodwill resulting from the adoption of Statement of Financial Accounting Standards (SFAS) No. 142. The net loss for the first quarter of fiscal 2001 included $0.8 million in pre-opening expenses at the Steamboat Grand Hotel, which opened in October 2000, and a $2.5 million benefit, net of taxes, from the cumulative effect of a change in accounting principle related to marking interest rate derivatives to their market value as a result of the adoption of Statement of Financial Accounting Standards (SFAS) No. 133. As previously announced, the Company does not expect to recognize any income tax expense or benefit in the foreseeable future. As a result, the Company did not incur an income tax expense or benefit for the third quarter or nine months of fiscal 2002. However, during the third quarter of fiscal 2001, the company recognized income tax expense of $13.7 million to reverse the income tax benefits recognized in the first and second quarters of fiscal 2001.

Sale of Heavenly Resort
As previously announced, on May 9, 2002, the Company closed on the sale of its Heavenly ski resort in South Lake Tahoe, a key element of its restructuring plan. In accordance with Financial Accounting Standards (SFAS) No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the financial statements for the three and nine month periods of fiscal 2001 and 2002 account for the operating results of Heavenly as income from discontinued operations. For additional information, please refer to disclosures made in the Company's Form 8-K, dated May 24, 2002, and Form 10-Q,ated June 12, 2002, on file with the Securities and Exchange Commission.

Fiscal 2002 Third Quarter Results
The net income available to common shareholders for the third quarter of fiscal 2002 was $26.4 million, or $0.83 per basic and diluted share, compared with net income of $7.2 million, or $0.24 per basic share and $0.11 per diluted share for the third fiscal quarter of 2001. Excluding non-recurring items, the operations of Heavenly and adjusting for the Company's previously announced decision not to recognize any tax benefit or expense, the net income available to common shareholders for the third quarter of fiscal 2002 was $16.5 million, or $0.52 per basic and diluted share versus net income of $19.0 million, or $0.62 per basic share and $0.30 per diluted share, during the third quarter of fiscal 2001.

Total revenues were $131.6 million for the third quarter of fiscal 2002, compared with $151.9 million for the previous year's third quarter. Both quarters exclude Heavenly as it has been reclassified as an asset held for sale. Resort revenue was $124.1 million for the quarter, compared with $136.5 million in the third quarter of fiscal 2001. The decline in resort revenues reflects lower skier visits in the east than during the prior year and the Company's strategic decision to sell its Sugarbush resort during the first quarter of fiscal 2002. Adjusting for the sale of Sugarbush, resort revenue for the third quarter of fiscal 2001 would have been $128.1 million. Real estate revenue from ongoing quartershare sales was $7.6 million for the third quarter of fiscal 2002, versus $15.4 million for the same period in fiscal 2001. A decline in real estate revenues was expected as a result of the Company's strategy to sell its remaining quartershare inventory prior to commencing any new projects. In addition, western real estate sales were adversely impacted by economic weakness following September 11th and weakness in the Utah market resulting from the Olympics. To date, quartershare inventory in the east has been essentially sold out. The Canyons Grand Summit Hotel and Steamboat Grand Hotel are 75% and 51% sold out, respectively.

The Company's total earnings from operations before interest, income taxes, depreciation, and amortization ("EBITDA"), was $47.3 million in the third fiscal quarter of 2002, compared with $45.4 million in the same period in fiscal 2001. Resort EBITDA for the current quarter was $48.0 million versus $46.5 million for the previous year's third quarter. After adjusting for non-recurring items and results from Sugarbush, resort EBITDA from core operations was essentially flat, on substantially lower revenue, at $48.0 million compared to $49.0 million for the comparable period in fiscal 2001. Real estate EBITDA was a loss of $0.8 million compared with a loss of $1.1 million in the third fiscal quarter of 2001. Real estate EBITDA for the third quarter of fiscal 2001 was a loss of $0.3 million, excluding the loss on the sale of the Company's interest in the Heavenly Grand Summit Hotel development subsidiary.

Fiscal 2002 Nine Month Results
The net loss available to common shareholders for the nine months ended April 28, 2002 was $82.5 million, or $2.61 per basic and diluted share, compared with a net loss of $27.4 million, or $0.90 per basic and diluted share, in the corresponding period of fiscal 2001. The higher net loss in fiscal 2002 primarily reflects the $18.7 million charge for an accounting change and the $25.5 million asset impairment charge for Steamboat ski resort. Excluding non-recurring items in both years and the operations of Heavenly, the net loss available to common shareholders for the first nine months of fiscal 2002 was $45.8 million, or $1.45 per basic and diluted share versus a net loss of $29.5 million, or $0.97 per basic and diluted share, during the comparable period in fiscal 2001.

Total revenues were $251.8 million for the first nine months of fiscal 2002, compared with $333.5 million for the first nine months of fiscal 2001. Both periods exclude Heavenly as its has been classified as an asset held for sale. Resort revenue was $229.4 million compared with $260.2 million in fiscal 2001. Excluding results from Sugarbush, resort revenue was $228.7 million for the first nine months of fiscal 2002 versus $244.0 million in the prior year. The results for the first nine months of fiscal 2002 reflect poor early season weather in the east coupled with a softening economy and the impact of the Olympics in the Park City, Utah market. Real estate revenue was $22.5 million, versus $73.4 million during the same period last year. The expected decline in real estate revenues primarily reflects the delivery of the Steamboat Grand Hotel in October 2000 and a land sale to Marriott Vacation Club International, which generated $37.3 million and $8.5 million in real estate revenue, respectively, during the first nine months of fiscal 2001.

Total EBITDA for the first nine months of fiscal 2002 was $14.3 million versus $54.7 million in the comparable period in fiscal 2001. Resort EBITDA was $16.5 million compared to $47.7 million last year. After adjusting for non-recurring items and results from Sugarbush, resort EBITDA from core operations was $45.1 million compared to $51.5 million during the same period in fiscal 2001 reflecting the slow start to the ski season. Real estate EBITDA was a loss of $2.2 million compared to $7.1 million in fiscal 2001. Excluding non-recurring items, real estate EBITDA was a loss of $1.9 million for the first nine months of fiscal 2002 compared to $7.9 million in fiscal 2001.

Real Estate Lending Agreements
As disclosed in the Company's Form 8-K filed with the Securities and Exchange Commission on May 20, 2002, and Form 10-Q filed on June 12, 2002, the Company's real estate development subsidiary, American Skiing Company Resort Properties, Inc. ("ASCRP"), is in payment default under its senior secured credit facility with Fleet National Bank. The Company continues to negotiate terms of the agreement and is hopeful that a mutually agreeable revision to the terms can be reached.

In addition, as a result of a cross default provision to the ASCRP facility and non-payment of a $3.8 million note to the general contractor at the Steamboat Grand Hotel, the Company's hotel development subsidiary, Grand Summit Resort Properties, Inc. ("GSRP"), was in default under its construction loan facility with Textron Financial Corporation. The Company has reached a verbal agreement with Textron and participating lenders regarding a restructuring of that facility. In addition, Textron's and the participating lenders' willingness to execute the restructuring may be affected by the Company's ability to negotiate a successful restructuring of the ASCRP facility.

"Reducing debt at both the resort and the real estate companies was always a critical element of our restructuring program," said CFO Mark Miller. "We achieved a significant debt reduction with the recent sale of Heavenly and remain committed to restructuring our real estate debt agreements so we can continue to reduce our real estate debt through the sale of remaining quartershare inventory and through land sales. We are working diligently with our real estate lenders to revise the terms of the agreements and accommodate ongoing operations and future growth opportunities."

On April 19, 2002, the Company completed an amendment to the Indenture governing its $120 million senior subordinated notes due July 2006. Pursuant to the amendment, the notes are no longer subject to a cross-default resulting from a default by the Company's real estate subsidiaries under certain debt which is non-recourse to the Company, including the ASCRP and GSRP facilities. As a result, management expects that defaults under these agreements, or any actions that the lenders may take, will not impact the operations of resorts or cr002, compared with $333.5 million for the first nine months of fiscal 2001. Both periods exclude Heavenly as its has been classified as an asset held for sale. Resort revenue was $229.4 million compared with $260.2 million in fiscal 2001. Excluding results from Sugarbush, resort revenue was $228.7 million for the first nine months of fiscal 2002 versus $244.0 million in the prior year. The results for the first nine months of fiscal 2002 reflect poor early season weather in the east coupled with a softening economy and the impact of the Olympics in the Park City, Utah market. Real estate revenue was $22.5 million, versus $73.4 million during the same period last year. The expected decline in real estate revenues primarily reflects the delivery of the Steamboat Grand Hotel in October 2000 and a land sale to Marriott Vacation Club International, which generated $37.3 million and $8.5 million in real estate revenue, respectively, during the first nine months of fiscal 2001.

Total EBITDA for the first nine months of fiscal 2002 was $14.3 million versus $54.7 million in the comparable period in fiscal 2001. Resort EBITDA was $16.5 million compared to $47.7 million last year. After adjusting for non-recurring items and results from Sugarbush, resort EBITDA from core operations was $45.1 million compared to $51.5 million during the same period in fiscal 2001 reflecting the slow start to the ski season. Real estate EBITDA was a loss of $2.2 million compared to $7.1 million in fiscal 2001. Excluding non-recurring items, real estate EBITDA was a loss of $1.9 million for the first nine months of fiscal 2002 compared to $7.9 million in fiscal 2001.

Real Estate Lending Agreements
As disclosed in the Company's Form 8-K filed with the Securities and Exchange Commission on May 20, 2002, and Form 10-Q filed on June 12, 2002, the Company's real estate development subsidiary, American Skiing Company Resort Properties, Inc. ("ASCRP"), is in payment default under its senior secured credit facility with Fleet National Bank. The Company continues to negotiate terms of the agreement and is hopeful that a mutually agreeable revision to the terms can be reached.

In addition, as a result of a cross default provision to the ASCRP facility and non-payment of a $3.8 million note to the general contractor at the Steamboat Grand Hotel, the Company's hotel development subsidiary, Grand Summit Resort Properties, Inc. ("GSRP"), was in default under its construction loan facility with Textron Financial Corporation. The Company has reached a verbal agreement with Textron and participating lenders regarding a restructuring of that facility. In addition, Textron's and the participating lenders' willingness to execute the restructuring may be affected by the Company's ability to negotiate a successful restructuring of the ASCRP facility.

"Reducing debt at both the resort and the real estate companies was always a critical element of our restructuring program," said CFO Mark Miller. "We achieved a significant debt reduction with the recent sale of Heavenly and remain committed to restructuring our real estate debt agreements so we can continue to reduce our real estate debt through the sale of remaining quartershare inventory and through land sales. We are working diligently with our real estate lenders to revise the terms of the agreements and accommodate ongoing operations and future growth opportunities."

On April 19, 2002, the Company completed an amendment to the Indenture governing its $120 million senior subordinated notes due July 2006. Pursuant to the amendment, the notes are no longer subject to a cross-default resulting from a default by the Company's real estate subsidiaries under certain debt which is non-recourse to the Company, including the ASCRP and GSRP facilities. As a result, management expects that defaults under these agreements, or any actions that the lenders may take, will not impact the operations of resorts or create defaults under the Company's resort senior secured credit facility. For additional information, please refer to the Company's 10-Q filing dated June 12, 2002 on file with the Securities and Exchange Commission.

Debt Reclassification
As a result of the slow start to the ski season and delays in completing a major asset sale associated with its restructuring program, the Company was not in compliance with several financial covenants under its $156.1 million resort senior credit facility as of the end of the third quarter of fiscal 2002. In conjunction with the sale of its Heavenly ski resort on May 9, 2002, the Company completed an amendment to its resort senior credit facility that revised covenants to reflect the Company's ongoing operations and business plan and cured the existing and pending financial covenant defaults. However, since the sale of Heavenly closed after the end of the third fiscal quarter ended April 28, 2002, long term resort debt was classified as short term pending closing of the sale. Management anticipates that in the future it will reclassify the appropriate portion of resort debt as long term if it can reasonably expect to remain in compliance with its covenants based on internally developed forecasts.

As a result of defaults under lending agreements for its real estate subsidiary, ASCRP and its hotel development subsidiary, GSRP, the Company has classified all of the debt associated with these real estate subsidiaries as short term. If the Company is successful in restructuring its credit facilities, and can reasonably expect to remain in compliance based on internally developed forecasts, it will reclassify the appropriate portion of real estate debt as long term.r create defaults under the Company's resort senior secured credit facility. For additional information, please refer to the Company's 10-Q filing dated June 12, 2002 on file with the Securities and Exchange Commission.

Debt Reclassification
As a result of the slow start to the ski season and delays in completing a major asset sale associated with its restructuring program, the Company was not in compliance with several financial covenants under its $156.1 million resort senior credit facility as of the end of the third quarter of fiscal 2002. In conjunction with the sale of its Heavenly ski resort on May 9, 2002, the Company completed an amendment to its resort senior credit facility that revised covenants to reflect the Company's ongoing operations and business plan and cured the existing and pending financial covenant defaults. However, since the sale of Heavenly closed after the end of the third fiscal quarter ended April 28, 2002, long term resort debt was classified as short term pending closing of the sale. Management anticipates that in the future it will reclassify the appropriate portion of resort debt as long term if it can reasonably expect to remain in compliance with its covenants based on internally developed forecasts.

As a result of defaults under lending agreements for its real estate subsidiary, ASCRP and its hotel development subsidiary, GSRP, the Company has classified all of the debt associated with these real estate subsidiaries as short term. If the Company is successful in restructuring its credit facilities, and can reasonably expect to remain in compliance based on internally developed forecasts, it will reclassify the appropriate portion of real estate debt as long term.