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Section 1: 10-Q (10-Q)

20150131 10Q Q3

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2015.

OR

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                   to                  .

Commission file number 001-35363

Peak Resorts, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Missouri

 

43-1793922

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

17409 Hidden Valley Drive

 

63025

Wildwood, Missouri

 

(Zip Code)

(Address of principal executive offices)

 

 

 

(636) 938-7474
(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   No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer

Non-accelerated filer     (Do not check if a smaller reporting company)Smaller reporting company 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes   No

As of March 16 , 2015, 13,982,400 shares of the registrant’s common stock were outstanding.


 

TABLE OF CONTENTS

PART I FINANICAL INFORMATION

 

 

 

 

 

 

 

 

Page

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

 

 

Condensed Consolidated Balance Sheets as of January 31, 2015 (unaudited) and April 30, 2014

 

3

 

 

 

 

 

 

 

Condensed Consolidated Statements of Income (Loss) for the Three and Nine Months Ended January 31, 2015 and 2014 (unaudited)

 

4

 

 

 

 

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the Nine Months Ended January 31, 2015 (unaudited)

 

5

 

 

 

 

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 2015 and 2014 (unaudited)

 

6

 

 

 

 

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

7

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

14

 

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

26

 

 

 

 

 

 

Item 4.

Controls and Procedures

 

26

 

 

 

 

 

 

Part II

OTHER INFORMATION

 

 

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

27

 

 

 

 

 

 

Item 1A.

Risk Factors

 

27

 

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

39

 

 

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

39

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures

 

39

 

 

 

 

 

 

Item 5.

Other Information

 

39

 

 

 

 

 

 

Item 6.

Exhibits

 

39

 

 

 

 

 

 

SIGNATURES

 

40

 

 

 

 

 

EXHIBIT INDEX

 

41

 

 

 

 

 

 


 

 

 

PART I:  FINANCIAL INFORMATION

 

Item 1.    Financial Statements

Peak Resorts Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

January 31,

 

 

April 30,

 

 

 

 

2015

 

 

2014

 

Assets

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

20,931 

 

$

13,186 

 

Restricted cash balances

 

 

22,002 

 

 

13,063 

 

Deferred income taxes

 

 

875 

 

 

875 

 

Income tax receivable

 

 

7,438 

 

 

 -

 

Accounts receivable

 

 

1,291 

 

 

396 

 

Inventory

 

 

2,961 

 

 

1,541 

 

Prepaid expenses and deposits

 

 

2,051 

 

 

1,433 

 

 

 

 

57,549 

 

 

30,494 

 

Property and equipment-net

 

 

141,706 

 

 

136,696 

 

Land held for development

 

 

36,959 

 

 

36,877 

 

Other assets

 

 

3,793 

 

 

3,224 

 

 

 

$

240,007 

 

$

207,291 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

14,035 

 

$

5,050 

 

Accrued salaries, wages and related taxes and benefits

 

 

1,398 

 

 

886 

 

Unearned revenue

 

 

14,437 

 

 

7,458 

 

EB-5 investor funds in escrow

 

 

22,001 

 

 

 -

 

Current portion of deferred gain on sale/leaseback

 

 

333 

 

 

333 

 

Current portion of long-term debt and capitalized lease obligation

 

 

1,188 

 

 

1,059 

 

 

 

 

53,392 

 

 

14,786 

 

Long-term debt

 

 

98,469 

 

 

174,652 

 

Capitalized lease obligation

 

 

1,667 

 

 

191 

 

Deferred gain on sale/leaseback

 

 

3,594 

 

 

3,844 

 

Deferred income taxes

 

 

9,682 

 

 

9,682 

 

Other liabilities

 

 

621 

 

 

648 

 

Stockholders' Equity

 

 

 

 

 

 

 

Common stock, $.01 par value, 20,000,000 shares authorized, 13,982,400 and 3,982,400 shares issued

 

 

140 

 

 

40 

 

Additional paid-in capital

 

 

82,538 

 

 

385 

 

Retained earnings (deficit)

 

 

(10,096)

 

 

3,063 

 

 

 

 

72,582 

 

 

3,488 

 

 

 

$

240,007 

 

$

207,291 

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

3

 


 

Peak Resorts, Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Loss) (Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
January 31,

 

 

Nine months ended
January 31,

 

 

 

2015

 

 

2014

 

 

2015

 

 

2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

45,985 

 

$

46,193 

 

$

57,811 

 

$

57,400 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

Resort operating expenses

 

 

27,198 

 

 

29,146 

 

 

48,795 

 

 

49,723 

Depreciation and amortization

 

 

2,451 

 

 

2,021 

 

 

7,065 

 

 

6,595 

General and administrative expenses

 

 

1,046 

 

 

874 

 

 

3,079 

 

 

2,529 

Land and building rent

 

 

351 

 

 

383 

 

 

1,065 

 

 

1,079 

Real estate and other taxes

 

 

441 

 

 

397 

 

 

1,372 

 

 

1,345 

 

 

 

31,487 

 

 

32,821 

 

 

61,376 

 

 

61,271 

Other Operating Income-gain on settlement of lawsuit

 

 

 -

 

 

 -

 

 

2,100 

 

 

 -

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from Operations

 

 

14,498 

 

 

13,372 

 

 

(1,465)

 

 

(3,871)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Interest, net of interest capitalized of $101 and $387  in 2015 and $100 and $226 in 2014

 

 

(4,224)

 

 

(4,308)

 

 

(12,864)

 

 

(12,844)

Defeasance fee paid with debt restructure

 

 

(5,000)

 

 

 -

 

 

(5,000)

 

 

 -

Gain on sale/leaseback

 

 

84 

 

 

84 

 

 

250 

 

 

250 

Investment income

 

 

 

 

 

 

 

 

 

 

 

(9,139)

 

 

(4,223)

 

 

(17,607)

 

 

(12,587)

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) before income tax expense (benefit)

 

 

5,359 

 

 

9,149 

 

 

(19,072)

 

 

(16,458)

Income tax expense (benefit)

 

 

2,090 

 

 

3,567 

 

 

(7,438)

 

 

(6,419)

Net Income (Loss)

 

$

3,269 

 

$

5,582 

 

$

(11,634)

 

$

(10,039)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per share

 

$

0.27 

 

$

1.40 

 

$

(1.76)

 

$

(2.52)

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends declared per common share

 

$

0.1091 

 

$

 -

 

$

0.1091 

 

$

 -

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

4

 


 

Peak Resorts Inc. and Subsidiaries

Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

(In thousands except share data)

Nine Months ended January 31, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

 

 

 

Common Stock

 

Paid-in

 

Retained

 

 

 

 

 

 

Shares

 

Dollars

 

Capital

 

Earnings (deficit)

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, April 30, 2014

 

 

3,982,400 

 

$           40

 

$                   385

 

$                     3,063

 

 

$               3,488

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock, net of issuance cost

 

 

10,000,000 

 

100 

 

$              82,153

 

$                             -

 

 

$             82,253

Net loss

 

 

 -

 

 -

 

 -

 

(11,634)

 

 

(11,634)

Dividend

 

 

 -

 

 -

 

 -

 

(1,525)

 

 

(1,525)

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances, January 31, 2015

 

 

13,982,400 

 

$         140

 

$              82,538

 

$                 (10,096)

 

 

$             72,582

See Notes to Unaudited Condensed Consolidated Financial Statements. 

5

 


 

Peak Resorts, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Nine Months ended January 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2015

 

 

2014

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

Net loss

 

$

(11,634)

 

$

(10,039)

 

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

used in operating activities:

 

 

 

 

 

 

 

 Depreciation and amortization of property and equipment

 

 

6,988 

 

 

6,544 

 

 Amortization and write-off of deferred financing costs

 

 

154 

 

 

51 

 

 Amortization of other liabilities

 

 

(27)

 

 

(27)

 

 Gain on sale/leaseback

 

 

(250)

 

 

(250)

 

Changes in operating assets and liabilities, net of effect of acquisitions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  Income tax receivable

 

 

(7,438)

 

 

(6,419)

 

  Accounts receivable

 

 

(895)

 

 

(602)

 

  Inventory

 

 

(1,420)

 

 

(1,508)

 

  Prepaid expenses and deposits

 

 

(618)

 

 

(615)

 

  Other assets

 

 

(525)

 

 

(26)

 

  Accounts payable and accrued expenses

 

 

7,460 

 

 

4,103 

 

  Accrued salaries, wages and related taxes and benefits

 

 

512 

 

 

72 

 

  Unearned revenue

 

 

6,979 

 

 

8,441 

 

 

 

 

 

 

 

 

 

   Net cash used in operating activities

 

 

(714)

 

 

(275)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

Additions to property and equipment

 

 

(9,970)

 

 

(3,548)

 

Additions to land held for development

 

 

(82)

 

 

(1,229)

 

Change in restricted cash

 

 

(8,939)

 

 

7,448 

 

   Net cash (used in) provided by investing activities

 

 

(18,991)

 

 

2,671 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

Payments on long-term debt and capitalized lease obligation

 

 

(76,606)

 

 

(767)

 

Additions to EB-5 investor funds held in escrow

 

 

22,001 

 

 

 -

 

Net proceeds from issuance of common stock

 

 

82,253 

 

 

 -

 

Payment of deferred financing costs

 

 

(198)

 

 

 

 

Distributions to stockholders

 

 

 -

 

 

(79)

 

   Net cash provided by (used in) financing activities

 

 

27,450 

 

 

(846)

 

 

 

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

 

7,745 

 

 

1,550 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, April 30

 

 

13,186 

 

 

11,971 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents, January 31

 

$

20,931 

 

$

13,521 

 

 

 

 

 

 

 

 

 

Supplemental Schedule of Cash Flow Information

 

 

 

 

 

 

 

Cash paid for interest, including  $387 and $226 capitalized in 2015 and 2014, respectively

 

$

13,036 

 

$

13,070 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Noncash Investing

 

 

 

 

 

 

 

and Financing Activities

 

 

 

 

 

 

 

Capital lease agreements to acquire equipment

 

$

2,028 

 

$

373 

 

Acquisition of equipment with long-term borrowings

 

$

 -

 

$

1,266 

 

Alpine Valley improvements financed with long-term borrowings

 

$

 -

 

$

1,691 

 

Land held for development financed with long-term borrowings

 

$

 -

 

$

1,000 

 

 

 

 

 

 

 

 

 

                            See Notes to Unaudited Condensed Consolidated Financial Statements.

6

 


 

 


PEAK RESORTS, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three and Nine Months Ended January 31, 2015 and 2014

Note 1. Nature of Business

Description of business:  Peak Resorts, Inc. (the “Company”) and its subsidiaries operate in a single business segment—ski resort operations. The Company’s ski resort operations consist of snow skiing, snowboarding and snow sports areas in Wildwood and Weston, Missouri; Bellefontaine and Cleveland, Ohio; Paoli, Indiana; Blakeslee and Lake Harmony, Pennsylvania; Bartlett, Bennington and Pinkham Notch, New Hampshire; and West Dover, Vermont and an 18 hole golf course in West Dover, Vermont. The Company also manages hotels in Bartlett, New Hampshire and West Dover, Vermont and operates a restaurant in Lake Harmony, Pennsylvania.

In the opinion of management, the accompanying financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial information and with Rule 10‑01 of Regulation S‑X and include all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation of the interim periods presented.

Results for interim periods are not indicative of the results expected for a full fiscal year due to the seasonal nature of the Company’s business. Due to the seasonality of the ski industry, the Company typically incurs significant operating losses during its first and second fiscal quarters. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the April 30, 2014 audited consolidated financial statements, including notes thereto, as included in the Company’s final prospectus filed with the Securities and Exchange Commission (“SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended, dated November 20, 2014. 

Note 2. New Accounting Standards

Recent accounting pronouncements:  In July 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013‑11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013‑11, requires an unrecognized tax benefit, or a portion of an unrecognized tax benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward. If a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined with deferred tax assets. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company is permitted to adopt the standard for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption and retrospective application is permitted. The Company is currently evaluating the impact of the adoption of ASU 2013‑11 on the consolidated financial statements.

In May 2014, the FASB issued ASU 2014‑09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance under U.S. generally accepted accounting principles when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Pursuant to the JOBS Act, the Company is permitted to adopt the standard for annual reporting periods beginning after December 15, 2017 and interim periods within annual periods beginning after December 15, 2018. The Company has not yet selected a transition method and is currently evaluating the effect that the updated standard will have on the consolidated financial statements.

Note 3. Income Taxes

Deferred income tax assets and liabilities are measured at enacted tax rates in the respective jurisdictions where the Company operates. In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not that some portion or all deferred tax assets will not be realized and a valuation allowance would be provided if necessary. The FASB Accounting Standards Codification (“ASC”) Topic 740, “Income Taxes,” also provides guidance with respect to the accounting for uncertainty in income taxes recognized in a Company’s consolidated financial statements, and it prescribes a recognition threshold and measurement attribute criteria for the consolidated financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not have any material uncertain tax positions, and therefore, the adoption did not have a material impact on the Company’s financial position or results of operations.

The income tax receivable is a result of the expected tax rate for the fiscal year ending April 30, 2015 applied to the net income (loss) before income tax for the quarters ended July 31, 2014, October 31, 2014 and January 31, 2015. Due to the seasonality of the ski industry, the Company typically incurs significant operating losses during its first and second fiscal quarters.

Note 4. Long‑term Debt

Long‑term debt at January 31, 2015 and April 30, 2014 consisted of borrowings pursuant to the loans and other credit facilities discussed below, as follows (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 31, 2015

 

April 30, 2014

 

 

 

Attitash/Mount Snow Debt; payable in monthly interest only payments at an increasing interest rate (10.93% at January 31, 2015 and April 30, 2014); remaining principal and interest due on December 1, 2034 

 

$

51,050 

 

$

63,500 

 

 

 

Credit Facility Debt; payable in monthly interest only payments at an increasing interest rate (10.13% at January 31, 2015 and 9.98% at April 30, 2014); remaining principal and interest due on December 1, 2034

 

 

37,562 

 

 

47,029 

 

 

 

Mount Snow Development Debt (interest at 10.00% at April 30, 2014). Paid in full in December 2014.

 

 

 -

 

 

42,907 

 

 

 

Crotched Mountain Debt (interest at 10.27% at  April 30, 2014). Paid in full December 2014.

 

 

 -

 

 

10,972 

 

 

 

Sycamore Lake (Alpine Valley) Debt; payable in monthly interest only payments at an increasing interest rate (10.35% at January 31, 2015 and 10.20% at  April 30, 2014); remaining principal and interest due on December 1, 2034

 

 

4,550 

 

 

4,550 

 

 

 

Wildcat Mountain Debt; payable in monthly installments of $27,300, including interest at a rate of 4.00%, with remaining principal and interest due on December 22, 2020 

 

 

3,833 

 

 

3,962 

 

 

 

Other debt

 

 

2,022 

 

 

2,311 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

99,017 

 

 

175,231 

 

 

 

Less: current maturities

 

 

548 

 

 

579 

 

 

 

 

 

$

98,469 

 

$

174,652 

 

 

 

 

On November 10, 2014, in connection with the Company’s initial public offering, the Company entered into a Restructure Agreement (the “Restructure Agreement”) with certain affiliates of EPR Properties (“EPR”), the Company’s primary lender, providing for the (i) prepayment of approximately $75.8 million of formerly non-prepayable debt secured by the Crotched Mountain, Attitash, Paoli Peaks, Hidden Valley and Snow Creek resorts and (ii) retirement of one of the notes associated with the future development of Mount Snow (the “Debt Restructure”). On December 1, 2014, the Company entered into various agreements in order to effectuate the Debt Restructure, as more fully described in the Company’s Current Report on Form 8-K filed with the SEC on December 5, 2014.  Pursuant to the Debt Restructure, the Company paid a defeasance fee of $5.0 million to EPR in addition to the consideration described below.

In exchange for the prepayment right, the Company granted EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties, subject to certain conditions.  If EPR exercises a purchase option, EPR will enter into an agreement with the Company for the lease of each such acquired property for an initial term of 20 years, plus options to extend the lease for two additional periods of ten years each. All previously existing option agreements between the Company and EPR were terminated.

Over the years, the Company has depreciated the book value of these properties pursuant to applicable accounting rules, and as such, it has a low basis in the properties. As a result, the Company will realize significant gains on the sale of the properties to EPR if the option is exercised. The Company will be required to pay capital gains tax on the difference between the purchase price of the properties and the tax basis in the properties, which is expected to be a substantial cost. To date, EPR has not exercised the option.

Additionally, the Company agreed to extend the maturity dates on all non-prepayable notes and mortgages secured by the Mount Snow, Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties remaining after the Debt Restructure by seven years to December 1, 2034, and to extend the lease for the Mad River property, previously terminating in 2026, until December 31, 2034.

The Company also granted EPR a right of first refusal to provide all or a portion of the financing associated with any purchase, ground lease, sale/leaseback, management or financing transaction contemplated by the Company with respect to any new or existing ski resort property for a period of seven years or until financing provided by EPR for such transactions equals or exceeds $250 million in the aggregate. Proposed financings from certain types of institutional lenders providing a loan to value ratio of less than 60% (as relates to the applicable property being financed) are excluded from the right of first refusal. The Company granted EPR a separate right of first refusal in the event that the Company wishes to sell, transfer, convey or otherwise dispose of any or all of the Attitash ski resort for seven years.  The Attitash right excludes the financing or mortgaging of Attitash.

In connection with the Debt Restructure, the Company entered into a Master Credit and Security Agreement with EPR (the “Master Credit Agreement”) governing the restructured debt with EPR. Pursuant to the Master Credit Agreement, EPR agreed to maintain the following loans to the Company following the prepayment of certain outstanding debt with proceeds from the Company’s initial public offering: (i) a term loan in the amount of approximately $51.1 million to the Company and its subsidiary Mount Snow, Ltd., (included in the table above as the “Attitash/Mount Snow Debt”); (ii) a term loan in the amount of approximately $23.3 million to the Company and its subsidiaries Brandywine Ski Resort, Inc. and Boston Mills Ski Resort, Inc. (the “Boston Mills/Brandywine Debt”); (iii) a term loan in the amount of approximately $14.3 million to the Company and its subsidiary JFBB Ski Areas, Inc. (the “JFBB Debt” and together with the Boston Mills/Brandywine Debt, included in the table above as the “Credit Facility Debt”); and (iv) a term loan in the amount of approximately $4.6 million to the Company and its subsidiary Sycamore Lake, Inc. (included in the table above as the “Sycamore Lake (Alpine Valley) Debt”).

Interest will be charged at a rate of (i) 10.13% per annum as to each of the Boston Mills/Brandywine Debt and JFBB Debt; (ii) 10.35% per annum as to the Sycamore Lake (Alpine Valley) Debt; and (iii) 10.93% per annum pursuant to the Attitash/Mount Snow Debt.  Each of the notes governing the restructured debt provides that interest will increase each year by the lesser of the following: (x) three times the percentage increase in the Consumer Price Index as defined in the notes (“CPI”) from the CPI in effect on the applicable adjustment date over the CPI in effect on the immediately preceding adjustment date or (y) 1.5% (the “Capped CPI Index).  Past due amounts will be charged a higher interest rate and be subject to late charges.

 The Master Credit Agreement further provides that in addition to interest payments, the Company must pay the following with respect to all restructured debt other than the Attitash/Mount Snow Debt: an additional annual payment equal to 10% of the gross receipts attributable to the properties serving as collateral of the restructured debt (other than Mount Snow) for such year in excess of an amount equal to the quotient obtained by dividing (i) the annual interest payments payable pursuant to the notes governing the restructured debt (other than with respect to the Attitash/Mount Snow Debt) for the immediately preceding year by (ii) 10%.  The Company must pay the following with respect to the Attitash/Mount Snow Debt: an additional annual payment equal to 12% of the gross receipts generated at Mount Snow for such year in excess of an amount equal to the quotient obtained by dividing (i) the annual interest payments payable under the note governing the Attitash/Mount Snow Debt for the immediately preceding year by (ii) 12%. No additional interest payments were due for the nine months ended January 31, 2015 and the year ended April 30, 2014.

 The Master Credit Agreement includes restrictions on certain transactions, including mergers, acquisitions, leases, asset sales, loans to third parties, and the incurrence of certain additional debt and liens. Financial covenants set forth in the Master Credit Agreement consist of a maximum leverage ratio (as defined in the Master Credit Agreement) of 65%, above which the Company and certain of its subsidiaries are prohibited from incurring additional indebtedness, and a consolidated fixed charge coverage ratio (as defined in the Master Credit Agreement) covenant, which (i) requires the Company to increase the balance of its debt service reserve account if the Company’s consolidated fixed charge coverage ratio falls below 1.50:1.00 and (ii) prohibits the Company from paying dividends if the ratio is below 1.25:1.00. The payment of dividends is also prohibited during default situations.

7

 


 

The table below illustrates the potential interest rates applicable to the Company’s fluctuating interest rate debt for each of the next five years, assuming an effective rate increase by the Capped CPI Index:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Attitash/Mount Snow Debt

 

Credit Facility Debt

 

Sycamore Lake/(Alpine Valley) Debt

 

 

2014 (1)

 

10.93% 

 

10.13% 

 

10.35% 

 

 

2015

 

11.09% 

 

10.28% 

 

10.51% 

 

 

2016

 

11.26% 

 

10.43% 

 

10.67% 

 

 

2017

 

11.43% 

 

10.59% 

 

10.83% 

 

 

2018

 

11.60% 

 

10.75% 

 

10.99% 

 

 

 

 

 

 

 

 

 

 

 

 

(1)  For 2014, the dates of the rates presented are as follows: (i) April 1, 2014 for the Attitash/Mount Snow Debt; (ii) October 1, 2014 for the Credit Facility Debt; and (iii) December 1, 2014 for the Sycamore Lake (Alpine Valley) Debt.

The Wildcat Mountain Debt due December 22, 2020 represents amounts owed pursuant to a promissory note in the principal amount of $4.5 million made by WC Acquisition Corp. in favor of Wildcat Mountain Ski Area, Inc., Meadow Green‑Wildcat Skilift Corp. and Meadow Green‑Wildcat Corp. (the “Wildcat Note”). The Wildcat Note, dated November 22, 2010, was made in connection with the acquisition of Wildcat Mountain, which was effective as of October 20, 2010. The interest rate as set forth in the Wildcat Note is fixed at 4.00%.

A Substantial portion of the Company’s assets serve as collateral for the Company’s long‑term debt.

Future aggregate annual principal payments under all indebtedness are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

January 31, 2015

 

 

 

 

 

 

 

 

 

 

2016

 

$

548 

 

 

 

2017

 

 

814 

 

 

 

2018

 

 

574 

 

 

 

2019

 

 

468 

 

 

 

2020

 

 

580 

 

 

 

Thereafter

 

 

96,033 

 

 

 

 

 

$

99,017 

 

 

 

 

The Mount Snow Development Debt represented obligations incurred to provide financing for the acquisition of land at Mount Snow that is in development stages. The Crotched Mountain Debt represented amounts incurred to pay off outstanding debt secured by the Crotched Mountain ski resort and for general working capital purposes. The Mount Snow Development Debt and Crotched Mountain Debt were paid in full in connection with the Debt Restructure.

 

 

 

 

 

 

Note 5. Financial Instruments and Concentrations of Credit Risk

The following methods and assumptions were used to estimate the fair value of each class of financial instruments to which the Company is a party:

Cash and cash equivalents, restricted cash:  Due to the highly liquid nature of the Company’s short‑term investments, the carrying values of cash and cash equivalents and restricted cash approximate their fair values.

Accounts receivable:  The carrying value of accounts receivable approximate their fair value because of their short‑term nature.

Accounts payable and accrued expenses:  The carrying value of accounts payable and accrued liabilities approximates fair value due to the short‑ term maturities of these amounts.

Long‑term debt:  The fair value of the Company’s long‑term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The interest rates on the Company’s long‑term debt instruments are consistent with those currently available to the Company for borrowings with similar maturities and terms and, accordingly, their fair values are consistent with their carrying values.

Concentrations of credit risk:  The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and cash equivalents and restricted cash. The Company’s cash and cash equivalents and restricted cash are on deposit with financial institutions where such balances will, at times, be in excess of federally insured limits. Excess cash balances are collateralized by the backing of government securities. The Company has not experienced any loss as a result of those deposits.

Note 6. Commitments and Contingencies

Restricted cash:  The provisions of certain of the Company’s debt instruments generally require that the Company make and maintain a deposit, to be held in escrow for the benefit of the lender, in an amount equal to the estimated minimum interest payment for the upcoming fiscal year.  In addition, the Company has funds it is holding in escrow in connection with its efforts to raise funds under the EB-5 Program.  The Company intends to use the current and future funds for future development.  The EB-5 Program was created in 1990 under the Immigration and Nationality Act.  The Act offers immigrants an opportunity to obtain a Visa Green Card in return for an approved investment in targeted employment areas.    

Loss contingencies:  The Company is periodically involved in various claims and legal proceedings, many of which occur in the normal course of business. Management routinely assesses the likelihood of adverse judgments or outcomes, including consideration of its insurable coverage and discloses or records estimated losses in accordance with ASC 450, “Contingencies”. After consultation with legal counsel, the Company does not anticipate that liabilities arising out of these claims would, if plaintiffs are successful, have a material adverse effect on its business, operating results or financial condition.

Leases:  The Company leases certain land, land improvements, buildings and equipment under non‑cancelable operating leases. Certain of the leases contain escalation provisions based generally on changes in the CPI with maximum annual percentage increases capped at 1.5% to 4.5%. Additionally, certain leases contain contingent rental provisions which are based on revenue. The amount of contingent rentals was insignificant in all periods presented. Total rent expense under such operating leases was $430,000 and $1,312,000 for the three and nine months ended January 31, 2015, respectively and $436,000 and $1,309,900 for the three and nine months ended January 31, 2014, respectively. The Company also leases certain equipment under capital leases.

Future minimum rentals under all non‑cancelable leases with remaining lease terms of one year or more for years subsequent to January 31, 2015 are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital

 

Operating

 

 

Leases

 

Leases

2016

 

$

751 

 

$

1,562 

2017

 

 

588 

 

 

1,490 

2018

 

 

448 

 

 

1,442 

2019

 

 

444 

 

 

1,434 

2020

 

 

291 

 

 

1,473 

Thereafter

 

 

 

 

20,493 

 

 

 

2,522 

 

$

27,894 

Less: amount representing interest

 

 

215 

 

 

 

 

 

 

2,307 

 

 

 

Less: current portion

 

 

640 

 

 

 

Long-term portion

 

$

1,667 

 

 

 

 

 

 

 

 

 

 

Note 7. Earnings (Loss) Per Share

The computation of basic and diluted earnings  (loss) per share for the three and nine month periods ended January 31, 2015 and 2014 is as follows (in thousands except share and per share data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months ended January 31,

 

 

Nine Months ended January 31,

 

 

2015

 

2014

 

2015

 

2014

Net income (loss)

 

$

3,269 

 

$

5,582 

 

$

(11,634)

 

$

(10,039)

Weighted number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding for basic and diluted earnings (loss) per share

 

 

11,971,183 

 

 

3,982,400 

 

 

6,627,328 

 

 

3,982,400 

Basic and diluted  earnings (loss) per share

 

$

0.27 

 

$

1.40 

 

$

(1.76)

 

$

(2.52)

 

 

 

 

 

 

 

Note 8. Subsequent Events

On March 6, 2015, the Company declared a cash dividend of 13.75 cents per share of common stock. The dividend is payable on May 20, 2015, to stockholders of record on April 7, 2015. The current indicated annualized dividend would be 55 cents per share.

 

 

 

 

 

 

 

 

 

8

 


 

ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our prospectus filed with the Securities and Exchange Commission (the “SEC”), pursuant to Rule 424(b) under the Securities Act of 1933 (the “Securities Act”), as amended, dated November 20, 2014. In addition to historical condensed consolidated financial information, the following discussion contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. See “Cautionary Note About Forward-Looking Statements” included elsewhere in this Quarterly Report on Form 10-Q.

Unless the context suggests otherwise, references in this Quarterly Report on Form 10-Q to the “Company”, “Peak”, “our”, “us”, or “we” refer to Peak Resorts, Inc. and its consolidated subsidiaries.

Overview

 

We are a leading owner and operator of high-quality, individually branded ski resorts in the U.S.  We currently operate 13 ski resorts primarily located in the Northeast and Midwest, 12 of which we own. The majority of our resorts are located within 100 miles of major metropolitan markets, including New York City, Boston, Philadelphia, Cleveland and St. Louis, enabling day and overnight drive accessibility. Our resorts are comprised of nearly 1,650 acres of skiable terrain that appeal to a wide range of ages and abilities. We offer a breadth of activities, services and amenities, including skiing, snowboarding, terrain parks, tubing, dining, lodging, equipment rentals and sales, ski and snowboard instruction and mountain biking and other summer activities. We believe that both the day and overnight drive segments of the ski industry are appealing given their stable revenue base, high margins and attractive risk-adjusted returns. We have successfully acquired and integrated ten ski resorts since our incorporation in 1997, and we expect to continue executing this strategy.

 

Factors Affecting our Business

 

Economic Conditions. Weak economic conditions in the U.S. could have a material adverse effect on our industry. An economic downturn could reduce consumer spending on recreational activities such as those our resorts offer, resulting in decreased skier visits and consumer spending at our ski resorts. Such events could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. In addition, we may be unable to increase the price of our lift tickets, season passes or other offerings during an economic downturn despite our history of being successful in raising such prices under a variety of economic conditions.

 

Weather. The ability to attract visitors to our resorts is influenced by weather conditions and by the number of cold weather days during the ski season. Unseasonably warm weather can adversely affect skier visits and our revenue and profits. For example, warm weather may result in inadequate natural snowfall and render snowmaking wholly or partially ineffective in maintaining quality skiing conditions. Also, the early season snow conditions and skier perceptions of early season snow conditions influence the momentum and success of the overall season. There is no way for us to predict future weather patterns or the impact that weather patterns may have on our results of operations or visitation.

 

Seasonality and Fluctuations in Quarterly Results. Our resort operations are highly seasonal. Although the air temperatures and timing and amount of snowfall can influence the number and type of skier visits, the majority of the skier visits are from mid-December to early April. Our resorts typically experience operating losses and negative cash flows during the first and second quarters of each fiscal year as a result of the seasonality of our business. Operating results for any three-month period are not indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.

 

A high degree of seasonality in our revenues and our dependence on weekends and the three major ski holidays increases the impact of certain events on our operating results. Adverse weather conditions, equipment failures, and other developments of even moderate or limited duration occurring during these peak business periods could significantly reduce our revenues.

 

Variation in peak periods. Depending on how peak periods, holidays and weekends fall on the calendar, in any given year we may have more or fewer peak periods, holidays and weekends in our third fiscal quarter compared to prior years, with a corresponding difference in our fourth fiscal quarter. These differences can result in material differences in our quarterly results of operations and affect the comparability of our results of operations.

 

Competition. The skiing industry is highly competitive and capital intensive. Our ski resorts located in the Northeastern U.S., such as Mount Snow, Attitash and Wildcat Mountain, and those located in the Southeastern U.S. (which includes Pennsylvania for purposes of ski industry statistics), such as Jack Frost and Big Boulder, compete against other ski resorts in their markets for both day and overnight drive skiers. Our competitive position depends on a number of factors, such as the quality and coverage of snowmaking operations, resort size, the attractiveness of terrain, lift ticket prices, prevailing weather conditions, the appeal of related services and resort reputation. Some of our competitors have stronger competitive positions in respect of one or more of these factors, which may adversely affect our ability to maintain or grow our customer base.

 

We believe that while our Midwestern U.S. ski resorts face only limited competition from other ski resorts in the area, our competitors in the Midwest primarily include other recreation resorts, including warm weather resorts and various alternative leisure activities. Our resorts in the Northeastern and Southeastern U.S. face similar competition, in addition to the competition outlined above. Our ability to maintain our levels of skier visits depends on, among other things, weather conditions, costs of lift tickets and related skier services relative to the costs of other leisure activities and our ability to attract people interested in recreational sports.

 

Consumer tastes and preferences. Our success depends on our ability to attract visitors to our ski resorts. Changes in consumer tastes and preferences, particularly those affecting the popularity of skiing, snowboarding and tubing, and other social and demographic trends could adversely affect the number of skier visits during a ski season. Furthermore, a reduction in average household income in some of the areas near our resorts, compared to historic levels, combined with the increasing cost of skiing, snowboarding and tubing, may make these activities unaffordable for a large percentage of that population. A significant decline in skier visits compared to historical levels would have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.

 

Recent Events

Initial Public Offering

On November 20, 2014, we completed our initial public offering of our common stock, selling 10,000,000 shares of our common stock at $9.00 per share. After deducting $6.3 million of underwriting discounts and commissions and $1.4 million of offering expenses payable by us, we received net proceeds of $82.3 million.

Debt Restructure

On November 10, 2014, in connection with our initial public offering, we entered into a Restructure Agreement (the “Restructure Agreement”) with certain affiliates of EPR Properties (“EPR”), our primary lender, providing for the (i) prepayment of approximately $75.8 million of formerly non-prepayable debt secured by the Crotched Mountain, Attitash, Paoli Peaks, Hidden Valley and Snow Creek resorts and (ii) retirement of one of the notes associated with the future development of Mount Snow (the “Debt Restructure”). On December 1, 2014, we entered into various agreements in order to effectuate the Debt Restructure, as more fully described in the Company’s Current Report on Form 8-K filed with the SEC on December 5, 2014.  Pursuant to the Debt Restructure, we paid a defeasance fee of $5 million to EPR in addition to the consideration described below.

In exchange for the prepayment right, we granted EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties, subject to certain conditions.  If EPR exercises a purchase option, EPR will enter into an agreement with the Company for the lease of each such acquired property for an initial term of 20 years, plus options to extend the lease for two additional periods of ten years each. All previously existing option agreements between the Company and EPR were terminated.

Additionally, we agreed to extend the maturity dates on all non-prepayable notes and mortgages secured by the Mount Snow, Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties remaining after the Debt Restructure by seven years to December 1, 2034, and to extend the lease for the Mad River property, previously terminating in 2026, until December 31, 2034.

We also granted EPR a right of first refusal to provide all or a portion of the financing associated with any purchase, ground lease, sale/leaseback, management or financing transaction contemplated by the Company with respect to any new or existing ski resort property for a period of seven years or until financing provided by EPR for such transactions equals or exceeds $250 million in the aggregate. Proposed financings from certain types of institutional lenders providing a loan to value ratio of less than 60% (as relates to the applicable property being financed) are excluded from the right of first refusal. We granted EPR a separate right of first refusal in the event that the Company wishes to sell, transfer, convey or otherwise dispose of any or all of the Attitash ski resort for seven years.  The Attitash right excludes the financing or mortgaging of Attitash.

In connection with the Debt Restructure, we entered into a Master Credit and Security Agreement with EPR containing additional terms and conditions governing our restructure debt with EPR, including restrictions on certain transactions and the payment of dividends and required financial covenants.

 

Results of Operations

 

The following historical unaudited consolidated statements of operations during the three and nine months ended January 31, 2015 and 2014 have been derived from the condensed unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

 

Comparison of Operating Results for the Three Months Ended January 31, 2015 and 2014

 

The following table presents our condensed unaudited consolidated statements of operations for the three months ended January 31, 2015 and 2014 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
January 31,

 

 

 

 

 

 

 

 

2015

 

 

2014

 

 

$ change

 

% change

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

  Lift and tubing tickets

 

$

24,652 

 

$

25,359 

 

$

(707)

 

-2.8%

  Food and beverage

 

 

7,415 

 

 

7,162 

 

 

253 

 

3.5% 

  Equipment rental

 

 

4,066 

 

 

4,369 

 

 

(303)

 

-6.9%

  Ski instruction

 

 

3,970 

 

 

3,712 

 

 

258 

 

7.0% 

  Hotel/lodging

 

 

2,358 

 

 

2,247 

 

 

111 

 

4.9% 

  Retail

 

 

2,622 

 

 

2,422 

 

 

200 

 

8.3% 

  Other

 

 

902 

 

 

922 

 

 

(20)

 

-2.2%

 

 

 

45,985 

 

 

46,193 

 

 

(208)

 

-0.5%

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

Resort operating expenses

 

 

 

 

 

 

 

 

 

 

 

 Labor and labor related expenses

 

 

13,836 

 

 

14,816 

 

 

(980)

 

-6.6%

 Retail and food and beverage cost of sales

 

 

4,331 

 

 

4,121 

 

 

210 

 

5.1% 

 Power and utilities

 

 

3,245 

 

 

4,365 

 

 

(1,120)

 

-25.7%

 Other

 

 

5,786 

 

 

5,844 

 

 

(58)

 

-1.0%

 

 

 

27,198 

 

 

29,146 

 

 

(1,948)

 

-6.7%

Depreciation and amortization

 

 

2,451 

 

 

2,021 

 

 

430 

 

21.3% 

General and administrative expenses

 

 

1,046 

 

 

874 

 

 

172 

 

19.7% 

Land and building rent

 

 

351 

 

 

383 

 

 

(32)

 

-8.4%

Real estate and other taxes

 

 

441 

 

 

397 

 

 

44 

 

11.1% 

 

 

 

31,487 

 

 

32,821 

 

 

(1,334)

 

-4.1%

Other operating income-gain on settlement of lawsuit

 

 

 -

 

 

 -

 

 

 -

 

0.0% 

Income from Operations

 

 

14,498 

 

 

13,372 

 

 

1,126 

 

8.4% 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (expense)

 

 

 

 

 

 

 

 

 

 

 

Interest, net of interest capitalized of $101 and $100 in 2015 and 2014, respectively

 

 

(4,224)

 

 

(4,308)

 

 

84 

 

-1.9%

Defeasance fee paaid with debt restructure

 

 

(5,000)

 

 

 -

 

 

(5,000)

 

100.0% 

Gain on sale/leaseback

 

 

84 

 

 

84 

 

 

 -

 

0.0% 

Investment income

 

 

 

 

 

 

 -

 

0.0% 

 

 

 

(9,139)

 

 

(4,223)

 

 

(4,916)

 

116.4% 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

 

5,359 

 

 

9,149 

 

 

(3,790)

 

41.4% 

Income tax expense

 

 

2,090 

 

 

3,567 

 

 

(1,477)

 

41.4% 

Net Income

 

$

3,269 

 

$

5,582 

 

$

(2,313)

 

-41.4%

Total reported EBITDA

 

$

16,949 

 

$

15,433 

 

$

1,516 

 

9.8% 

 

 

 

 

 

 

Revenue decreased $0.2 million, or 0.5%, for the three months ended January 31, 2015 compared to the three months ended January 31, 2014. The decrease is primarily the result of a decrease in ski and tube visits of approximately 4%. Visits to our Eastern resorts were up 10% while visits to our Midwestern resorts were down 21%. The decrease in visits in the Midwest is a result of later resort openings because of unfavorable weather conditions. Our Midwestern resorts did not open until the last week in December as compared to opening from late November through mid-December for the 2013/2014 ski season. The impact of the decrease in skier visits was mostly offset by price increases implemented at the resorts.

Labor and labor related expenses decreased $1.0 million, or 6.6%, for the three months ended January 31, 2015  compared to the three months ended January 31, 2014. Later openings at the Midwest resorts resulted in a reduction in labor  and labor related expenses of $0.6 million. Labor efficiencies contributed an addition $0.4 million in labor and labor related expense savings.

Retail and food and beverage cost of sales increased $0.2 million, or 5.1%, for the three months ended January 31, 2015 compared to the three months ended January 31, 2014,  as a result of increased retail and food and beverage revenue.

Power and utility expense decreased $1.1 million, or 25.7%, for the three months ended January 31, 2015 compared to the three months ended January 31, 2014, as a result of a reduction in kilowatt hours used at our Attitash, Wildcat and Mount Snow resorts. This reduction in kilowatt hour usage is a result of the replacement of snowguns with new energy saving snowgun technology in the current fiscal year.

Depreciation and amortization increased $0.4 million, or 21.3%, for the three months ended January 31, 2015 compared to the three months ended January 31, 2014, as a result of assets put in service in the current fiscal year.

General and administrative expenses increased $0.2  million, or 19.7%, for the three months ended January 31, 2015  compared to the three months ended January 31, 2014 primarily due to an increase in professional fees related to incremental public company expenses. 

The decrease in interest expense net, of $0.8 million, was a result of an increase in interest rates for the three months ended January 31, 2015 compared to the three months ended January 31, 2014, offset by the reduced interest resulting from the pay down of debt. In addition, the Company paid $0.8 million in disputed interest related to the Attitash/Mount Snow Debt discussed herein.

In connection with the Debt Restructure, the Company paid a $5.0 million defeasance fee. 

Income tax expense decreased $1.5 million as a result of an decrease in the income before income tax expense of $3.8 million for the three months ended January 31, 2015 compared to the three months ended January 31, 2014.  

 

 

9

 


 

Comparison of Operating Results for the Nine Months Ended January 31, 2015 and January 31, 2014 

 

The following table presents our condensed unaudited consolidated statements of operations for the nine months ended January 31, 2015 and January 31, 2014 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine months ended
January 31,