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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: November 2, 2001
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: 333-26091
BOOTH CREEK SKI HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-1359604
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1000 South Frontage Road West, Suite 100
Vail, Colorado 81657
(970) 476-1311
(Address, including zip code and telephone number, including
area code, of registrant's principal executive offices)
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Securities registered pursuant to Section 12(b) of the Act:
None.
Securities registered pursuant to Section 12(g) of the Act:
None.
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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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of December 31, 2001, the number of shares outstanding of the
registrant's Common Stock, par value $.01 per share, was 1,000 shares. There is
no trading market for the registrant's Common Stock. Accordingly, the aggregate
market value of the Common Stock held by non-affiliates of the registrant is
not determinable. See Part II, Item 5 of this Report.
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TABLE OF CONTENTS
Item Page Number
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PART I
1. Business..................................................... 1
2. Properties................................................... 17
3. Legal Proceedings............................................ 17
4. Submission of Matters to a Vote of Security
Holders...................................................... 19
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters.......................................... 20
6. Selected Financial Data...................................... 20
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 22
7a. Quantitative and Qualitative Disclosures About
Market Risk.................................................. 33
8. Financial Statements and Supplementary Data.................. 33
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.......................... 33
PART III
10. Directors and Executive Officers of the Registrant........... 34
11. Executive Compensation....................................... 36
12. Security Ownership of Certain Beneficial Owners
and Management............................................... 41
13. Certain Relationships and Related Transactions............... 45
PART IV
14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K.......................................... 48
Signatures................................................... 54
Index of Financial Statements................................ F-1
PART I
Item 1. Business
Overview
As used in this Report, the "Company" or "Booth Creek" refers to Booth
Creek Ski Holdings, Inc. and its subsidiaries, unless the context otherwise
requires. The Company is a wholly-owned subsidiary of Booth Creek Ski Group,
Inc. ("Parent"). The Company currently owns and operates seven ski resort
complexes encompassing ten separate resorts, including the Northstar-at-Tahoe
("Northstar") and Sierra-at-Tahoe ("Sierra") ski resorts in the Lake Tahoe
region of Northern California, the Bear Mountain ski resort ("Bear Mountain") in
Southern California, the Waterville Valley ("Waterville Valley"), Mount Cranmore
("Mt. Cranmore") and Loon Mountain ("Loon Mountain") ski resorts in the White
Mountains of New Hampshire and the Summit at Snoqualmie (the "Summit") ski
resort complex, which consists of four separate resorts, in the Cascade
Mountains of Northwest Washington. The Company divested the Grand Targhee ski
resort ("Grand Targhee") on June 20, 2000.
The Company is the fourth largest ski resort operator in North America
based on approximately 2.5 million skier days recorded during the 2000/01 ski
season at its resorts. Booth Creek primarily operates regional ski resorts which
attract the majority of their guests from their regional ski markets, within a
200 mile driving radius of each resort. The Company's properties offer
approximately 6,281 acres of skiable terrain, 381 trails, 96 lifts (including 16
high-speed lifts and two gondolas) and on-mountain capacity to accommodate
approximately 52,000 guests daily. For the year ended November 2, 2001, the
Company generated revenues of $121.9 million and income from operations before
depreciation, depletion and amortization expense and the noncash cost of real
estate sales ("EBITDA") of $27.3 million, and incurred a net loss of $13.8
million. For the year ended October 27, 2000, the Company generated revenues of
$139.4 million and EBITDA of $43.9 million, and incurred a net loss of $357,000.
The Company's resort properties are located near major skiing populations,
including four of the five largest regional ski markets in the United States:
Los Angeles/San Diego, San Francisco/Sacramento, Boston and Seattle/Tacoma. The
Company believes this geographical diversification may help to limit the
Company's exposure to regional economic downturns and unfavorable weather
conditions.
The Company's resorts seek to differentiate themselves in their respective
markets by selectively upgrading on-mountain facilities and guest services,
employing targeted marketing strategies and offering extensive skier development
programs, all of which create a competitively-priced, high-quality guest
experience. The Company's resorts have collectively invested approximately $55.8
million (including $6.6 million of equipment acquired through capital leases and
other debt) in capital expenditures during the last three fiscal years,
including the addition of high-speed chairlifts, additional snowmaking
capabilities, improved trail grooming equipment, and enhanced on-mountain skier
service, retail and food service amenities. The Company believes its existing
resorts are well maintained. The Company also uses targeted advertising,
database marketing and strategic marketing alliances to enhance the image of its
resorts and increase regional market share. The Company also offers extensive
development programs to improve the technical skill level of all types of
skiers, which management believes is important to expand the total skier
population and increase skier visitation frequency.
The following is an organizational chart of Parent, the Company and the
Company's subsidiaries. Each subsidiary of the Company is, directly or
indirectly, wholly-owned by Booth Creek.
[GRAPHIC OF ORGANIZATIONAL CHART OMITTED]
The Company's principal executive offices are located at 1000 South
Frontage Road West, Suite 100, Vail, Colorado 81657. Its telephone number at
that location is (970) 476-1311. The Company was incorporated in Delaware on
October 8, 1996.
Industry
There are approximately 490 ski areas in the United States which, during
the 2000/01 ski season, generated approximately 57.3 million skier days. A
"skier day" represents one skier or snowboarder visiting one ski resort for one
day, including skiers and snowboarders using complimentary and season passes.
Calculation of skier days requires an estimate of visits by season passholders.
Although different ski resort operators may use different methodologies for
making such estimates, management believes that any resulting differences in
total skier days are immaterial. U.S. ski areas range from small ski resort
operators, which primarily cater to day skiers and regional overnight skiers
from nearby population centers, to larger resorts which, given the scope of
their operations and their accessibility, are able to attract skiers and
snowboarders from their regional ski markets as well as destination resort
guests who are seeking a comprehensive vacation experience. While regional ski
market skiers tend to focus primarily on lift ticket price and round-trip travel
time, destination travelers tend to be heavily influenced by the number of
amenities and activities offered as well as the perceived overall quality of the
vacation experience. The table below summarizes regional skier day information
from the 1996/97 ski season through the 2000/01 ski season.
U.S. Ski Industry Regions and Skier Days
(In thousands)
Rocky Pacific Lake
Season Northeast Southeast Midwest Mtns West Tahoe Total
- --------------------- --------- --------- ------- ------ ------- ----- ------
1996/97.............. 12,407 4,231 7,137 18,904 7,341 2,500 52,520
1997/98.............. 12,712 4,343 6,707 19,191 7,419 3,750 54,122
1998/99.............. 12,300 4,261 6,005 18,439 6,702 4,382 52,089
1999/00.............. 12,025 5,191 6,422 18,109 6,560 3,891 52,198
2000/01.............. 13,697 5,458 7,580 19,324 7,355 3,923 57,337
Five year average.... 12,628 4,697 6,770 18,793 7,076 3,689 53,653
Northeast: CT, MA, ME, NH, NY, VT, RI
Southeast: AL, GA, KY, MD, NC, NJ, PA, TN, VA, WV
Midwest: IA, IL, IN, MI, MN, MO, ND, NE, OH, SD, WI
Rocky Mtns: CO, ID, MT, NM, UT, WY
Pacific West: AK, AZ, CA (excluding Lake Tahoe Region), NV, OR, WA
Source: 2000/01 Kottke National End of Season Survey
Over the last fifteen years, the ski resort industry has experienced a
period of consolidation. The number of United States ski areas has declined from
709 in 1986 to 490 in 2001. The number of ski areas may decline further, as many
mountain resorts lack the infrastructure, capital and management capability to
effectively compete in this multi-dimensional and service-intensive industry. No
major new ski resort has opened in the United States since 1989. Of the 490 ski
areas, the 2000/01 Kottke National End of Season Survey estimates the average
resort recorded approximately 117,000 skier days. All of the Company's resorts
except Mt. Cranmore typically record more than 200,000 annual skier days. The
trend among leading resorts is toward investing in improving technology and
infrastructure, including high-speed lifts, attractive facilities and extensive
snowmaking capabilities, to deliver a more consistent, quality experience.
During the last three fiscal years, the Company has invested approximately $55.8
million in capital expenditures at its resorts to improve their competitive
position and to meet sustaining capital requirements. Management believes the
need for increased investment in resorts in general has required a greater
access to capital and has enhanced the position of resorts owned by larger,
better capitalized owners. Despite the recent consolidation in the ski industry,
the industry remains fragmented, with no one resort accounting for more than 3%,
and no one resort operator accounting for more than approximately 10%, of the
United States' 57.3 million skier days during the 2000/01 ski season. The four
largest ski resort companies, including the Company, accounted for approximately
28.4% of all U.S. skier days recorded during the 2000/01 ski season.
The Lake Tahoe region has averaged approximately 3.7 million annual skier
days over the last five years. Management estimates that approximately 70% to
75% of the skiers visiting Lake Tahoe resorts during the 2000/01 ski season were
from the San Francisco, Sacramento and Central California Valley metropolitan
areas and the Lake Tahoe region. Other guests come principally from Southern
California and states with large ski populations, such as Texas, Illinois and
Florida.
The Southern California market has averaged approximately 2.8 million
annual skier days over the last five years. Management estimates that
approximately 90% of the skiers visiting Southern California resorts during the
2000/01 ski season were drawn primarily from the Los Angeles, Orange County and
San Diego metropolitan areas.
The Northeast market (including New York) has averaged approximately 12.6
million annual skier days over the last five years. The Northeast market
consists of a significant percentage of day or weekend skiers due to the
relatively short driving radius to major metropolitan areas. While the Northeast
does not draw significant numbers of vacationing skiers from the Western regions
of the United States, it does compete with the Rocky Mountains and Pacific West
areas for Eastern vacationing skiers. The region's major ski areas and resorts
are concentrated in the mountainous areas of New England and Eastern New York,
with the bulk of skiers coming from the population centers located in eastern
Massachusetts, Southern New Hampshire, Connecticut, Eastern New York, New Jersey
and the Philadelphia area.
The Pacific West market has averaged approximately 7.1 million skier days
over the last five years. Management estimates that more than 90% of the skier
days recorded at Washington state resorts during the 2000/01 ski season were
attributable to residents of the Seattle/Tacoma metropolitan area. Other guests
come primarily from other parts of Washington, Oregon and Western Canada.
Washington state resorts do not attract a significant number of destination
skiers.
Resort Operations
The Company's seven resort complexes offer a variety of ski and non-ski
activities. The table below provides a summary of each resort's ski operations
and is followed by a more detailed description of each resort.
Approx.
Snow- Approx.
Vertical making Beds
Skiable Drop Trail Within
Resort Acres (Feet) Trails Lifts Coverage 12 Miles
- -------------------- ------- -------- ------ ------------- -------- --------
Northstar-at-Tahoe.. 2,420 2,280 70 1 High-Speed 50% 15,000
Gondola
5 High-Speed
Quads (1)
4 Fixed Grip
5 Surface
Sierra-at-Tahoe..... 1,680 2,212 46 3 High-Speed 4% 30,000
Quads
6 Fixed Grip
3 Surface
Bear Mountain....... 195 1,665 34 2 High-Speed 100% 11,000
Quads
7 Fixed Grip
3 Surface
Waterville Valley... 255 2,020 52 2 High-Speed 100% 6,500
Quads
6 Fixed Grip
4 Surface
Mt. Cranmore........ 183 1,270 39 1 High-Speed 100% 16,000
Quad
4 Fixed Grip
4 Surface
Loon Mountain....... 250 2,100 44 1 High-Speed 96% 13,000
Gondola
1 High-Speed
Quad
5 Fixed Grip
3 Surface
The Summit.......... 1,298 2,200 96 2 High-Speed 0% 1,000
Quads
18 Fixed Grip
6 Surface
(1)High-Speed Quads are four-person chairlifts which decelerate and detach from
a cable during passenger loading and unloading and reattach and accelerate
thereafter.
Total skier visits generated by each of the Company's resorts during the
2000/01, 1999/00 and 1998/99 ski seasons were as follows:
2000/01 1999/00 1998/99
(In thousands)
Northstar....................... 519 477 530
Sierra.......................... 391 310 355
Bear Mountain................... 333 251 294
Waterville Valley............... 235 204 239
Mt. Cranmore.................... 129 100 112
Loon Mountain................... 385 304 297
The Summit...................... 508 504 485
--------- --------- ----------
Current Resorts............... 2,500 2,150 2,312
Grand Targhee................... - 137 121
--------- --------- ----------
2,500 2,287 2,433
========= ========= ==========
Northstar-at-Tahoe
Northstar-at-Tahoe, located near the north end of Lake Tahoe, California,
offers extensive activities and services in both winter and summer. The resort's
8,600-foot Mt. Pluto features 2,420 acres of skiable terrain and a 2,280 foot
vertical drop. Northstar's 70 ski trails are served by 15 operating lifts,
including one gondola, 5 high-speed quads, two triple lifts and two double
lifts, which combine to transport up to approximately 23,000 skiers uphill per
hour. Northstar also has approximately 65 kilometers of groomed trails for
cross-country skiing and snowshoeing and several on-mountain terrain parks for
snowboarders and adventurous skiers. Other facilities at Northstar include a
village consisting of condominium/hotel accommodations, restaurants, bars,
shops, a child-care center and conference facilities, a 22,700 square foot
on-mountain ski lodge, a 9,000 square foot rental equipment facility, and a
5,800 square foot on-mountain children's ski school facility. Summer recreation
facilities include an 18-hole golf course, ten tennis courts, a horseback riding
stable, fly fishing, mountain bike rentals and trails and swimming pools.
Northstar currently ranks third in total skier days in the Lake Tahoe area. In
2001, Northstar was ranked by Ski magazine as the 22nd best ski resort in North
America and received gold medals in a number of important categories including
guest service, family programs, grooming and favorable weather.
Northstar has invested in a number of improvements for the 2001/02 ski
season, including snowmaking infrastructure enhancements to increase the
efficiency and effectiveness of Northstar's snowmaking operations, a new
mid-mountain rental equipment and snowsports school facility and a mountain-top
food and beverage facility. These improvements augment a number of key expansion
projects made in 2000, including a 200 acre terrain expansion onto Lookout
Mountain. The Lookout expansion provided Northstar with additional advanced
terrain, and is served by a detachable quad lift.
Northstar's snowmaking system is engineered to cover approximately 50% of
its ski trails. Annual snowfall at the resort has averaged 304 inches per year
during the past five years. Northstar has water rights from various sources
which, when coupled with its 60 million gallon water storage capacity, have been
sufficient to support the resort's needs.
Northstar consists of approximately 8,000 acres of land privately owned by
the Company. Management believes that Northstar has significant opportunities to
develop additional ski terrain, as well as certain real estate development
opportunities. Moreover, management believes that the planned expansion of the
existing on-mountain bed base at the resort from the East West development will
result in increased skier days, thereby enhancing the value and profitability of
Northstar's resort operations. Such bed base development is also expected to
make additional ski terrain expansion at Northstar even more attractive. See
Part I, Item 1. "Business - Real Estate Development."
Sierra-at-Tahoe
Sierra-at-Tahoe is conveniently located near the large bed base of South
Lake Tahoe, California and is the closest major ski resort to Sacramento and the
Central California Valley. The resort's 8,852-foot peak offers 1,680 skiable
acres and a 2,212 foot vertical drop. Sierra's 46 ski trails are served by
twelve operating lifts, including three high-speed quads, one triple lift and
five double lifts, which combine to transport up to approximately 15,000 skiers
uphill per hour. Sierra operates a 46,000 square foot base lodge which offers a
variety of food and beverage, retail and other skier services. Management
believes that Sierra's investment in its ski infrastructure has made it the best
ski value in the South Lake Tahoe area. Sierra does not offer summertime
activities. In 2001, Ski magazine ranked Sierra as one of the ten best ski
resorts in the Pacific region.
Sierra owns 20 acres of its 1,689 gross acreage and leases the remainder
under a Term Special Use Permit from the United States Forest Service. See Part
I, Item 1. "Business - Regulation and Legislation." Due to its abundant annual
snowfall, which has averaged approximately 476 inches per year over the past
five years, Sierra's snowmaking equipment covers only 4% of Sierra's total
terrain.
Bear Mountain
Bear Mountain is located in the San Bernardino mountains of Southern
California. Its 8,805-foot peak features 195 acres of skiable terrain and a
1,665 foot vertical drop. Bear Mountain's 34 ski trails are served by 12 lifts,
including two high-speed quads, one fixed grip quad, two triple lifts and four
double lifts, which combine to transport up to approximately 17,000 skiers
uphill per hour. Since its acquisition by Booth Creek, Bear Mountain has made
significant improvements to its base lodge facilities, and installed a new
high-speed quad lift to provide improved access to key portions of its beginner
and advanced terrain. Other facilities at Bear Mountain include three lodges
which provide an aggregate of approximately 31,000 square feet of space for food
and beverage services (restaurants and cafeterias), skier services and
entertainment. Summer recreation facilities include a nine-hole golf course.
Bear Mountain owns 116 of its 819 gross acreage, leases 698 acres of
mountain terrain under a United States Forest Service Term Special Use Permit
and leases five acres from third parties. See Part I, Item 1. "Business -
Regulation and Legislation." Bear Mountain's snowmaking system covers 100% of
its ski trails. Bear Mountain also has access to three reservoirs capable of
holding six million gallons of water for snowmaking.
Waterville Valley
Waterville Valley's major base facilities are located on the 4,004 foot
high Mt. Tecumseh and offer 255 skiable acres and a vertical drop of 2,020 feet.
Waterville Valley's 52 trails are served by 12 operating lifts, including two
high-speed quads, two triple lifts and four double lifts, which combine to
transport up to approximately 16,000 skiers uphill per hour. The resort operates
a 41,872 square foot base lodge (complete with multiple food service centers and
child care), three other base area facilities comprising approximately 27,500
square feet, a mid-mountain lodge featuring a cafeteria and deli and a
mountain-top lodge with snack bar and restaurant dining.
The Waterville Valley resort has a year-round Adventure Center offering
mountain bikers, cross-country skiers and hikers access to 105 kilometers of
trails in the White Mountain National Forest. Other resort amenities include an
ice skating arena, golf course, tennis center, sports and fitness center,
horsedrawn sleigh rides, skateboard park, beach and paddle boats. Waterville
Valley's Conference Center has 17,000 square feet of meeting space and provides
banquet facilities for up to 1,000 people. With 11 meeting rooms, a business
center, audio-visual capabilities and a self-contained pub, the Conference
Center's on-site staff supports events year-round. In 2001, Waterville Valley
was recognized as the tenth best ski resort in the East by Ski magazine.
Waterville Valley owns 35 acres on Snow Mountain and two acres at the
Conference Center. It leases 790 acres of land on Mt. Tecumseh under a Term
Special Use Permit issued by the United States Forest Service. See Part I, Item
1. "Business - Regulation and Legislation." Waterville Valley's snowmaking
system is engineered to cover 100% of the ski trails on Mt. Tecumseh. Water for
snowmaking is currently pumped from a local river and a pond. Waterville Valley
is in the process of seeking permits for additional water sources and water
storage facilities for snowmaking.
Mt. Cranmore
Mt. Cranmore is the oldest continuously operated ski area in the United
States. Located in the hub of New Hampshire's Mount Washington Valley, Mt.
Cranmore's 1,714 foot summit offers 183 skiable acres and a 1,270 foot vertical
drop. Mt. Cranmore's 39 trails are served by nine operating lifts, including one
high-speed quad, one triple lift and three double lifts, which combine to
transport up to approximately 6,000 skiers uphill per hour. The mountain is
serviced by two base lodges, offering multiple eating locations and
pub/restaurant facilities, as well as a restaurant at the summit. In addition,
Mt. Cranmore owns a year-round 46,000 square foot athletic facility which
includes five outdoor tennis courts, four indoor tennis courts, a pool, a spa, a
weight-lifting area, aerobic training rooms, an indoor climbing wall, locker
rooms, a kitchen area and nursery service. Mt. Cranmore also operates on-site
retail and rental shops.
Mt. Cranmore owns 754 acres and holds easements enabling it to develop an
additional 500 acres of ski terrain. Mt. Cranmore does not lease any of its land
from the federal government. Mt. Cranmore's snowmaking equipment consists of a
computerized weather-monitoring and snowmaking system which covers 100% of the
resort's ski trails. In addition to pumping rights from a nearby stream, Mt.
Cranmore has an understanding with the local water district for an additional
reservoir of one million gallons of water for snowmaking. In addition, Mt.
Cranmore's base area pond holds 1.5 million gallons of water.
Loon Mountain
Loon Mountain is located in the White Mountains of New Hampshire in the
town of Lincoln. The resort's 3,050 foot peak features 250 skiable acres and a
2,100 foot vertical drop. Loon Mountain's 44 trails are served by ten operating
lifts, including a four-passenger gondola, a high-speed quad, two triple lifts
and three double lifts, which combine to transport over 10,000 skiers uphill per
hour. Loon Mountain's trails cater mostly to intermediate level skiers (64%),
with trails provided for beginners (20%) and experts (16%) as well. Resort
amenities include a base lodge with a cafeteria and coffee shop, a restaurant
and deck at the summit, the Governor Adams lodge (which provides traditional
lodge facilities and also serves as a venue for summer outdoor activities and
concerts), trails for cross-country skiing, horseback riding and mountain biking
and a steam engine railroad for shuttling visitors. Loon Mountain has the
snowmaking capacity to cover approximately 96% of its skiable terrain. In 2001,
Loon Mountain was ranked as the ninth best ski resort in the East by Ski
magazine.
Loon Mountain owns 565 acres and leases 778 acres of land in the White
Mountain National Forest under a Term Special Use Permit issued by the United
States Forest Service permitting year-round recreational use. See Part I, Item
1. "Business - Regulation and Legislation." Adjacent to such land, an additional
581 acres are leased on "South Mountain" under a separate Special Use Permit
permitting certain limited activities, including mountain biking, cross-country
skiing and horseback riding. These 581 acres have been designated by management
for the eventual development, subject to permitting, of skiing terrain to
complement the current skiing area. See Part I, Item 1. "Business - Real Estate
Development."
The Summit at Snoqualmie
The Summit at Snoqualmie is located in the Cascade Mountains of Northwest
Washington and consists of four separate resorts, Alpental at the Summit
("Alpental"), Summit West, Summit Central, and Summit East, which collectively
offer 1,298 acres of skiable terrain. Individually, Alpental has a 5,400 foot
top elevation, a 2,200 foot vertical drop, 170 acres of skiable trails and runs
(93 acres of which are lighted for night skiing) and approximately 600 acres of
backcountry terrain; Summit West has a 3,860 foot top elevation, an 810 foot
vertical drop and 172 acres of skiable trails and runs (166 acres of which are
lighted for night skiing); Summit Central has a 3,860 foot top elevation, a
1,020 foot vertical drop and 246 acres of skiable trails and runs (176 acres of
which are lighted for night skiing); and Summit East has a 3,760 foot top
elevation, a 1,080 foot vertical drop and 110 acres of skiable trails and runs
(58 acres of which are lighted for night skiing). In total, the Summit complex
has 96 designated trails and runs served by 26 operating lifts, including two
high-speed quads, four triple lifts, 14 double lifts and six surface lifts,
which combine to transport up to approximately 33,000 skiers uphill per hour.
The Summit Nordic Center also offers approximately 55 kilometers of
cross-country skiing on an expert trail system and a lighted beginner student
trail which hosts a season-long night racing series. In addition, the Summit
West, Summit Central, and Summit East areas are interconnected by a cross-over
trail system. The Summit operates seven lodges which provide an aggregate of
approximately 111,175 square feet of space for food and beverage services
(restaurants and cafeterias), skier services and entertainment.
Overall, the Summit complex is one of the largest learn-to-ski areas in the
United States, with approximately 25% of its 2000/01 skier days being
attributable to guests enrolled in ski school programs. In addition, the Summit
is the largest night skiing complex in the United States, with approximately 20%
to 25% of its skier visits each season being recorded at night.
The Summit owns 686 acres of its 4,152 gross acreage, leases over 1,400
acres under a private permit and utilizes 1,864 acres of mountain terrain under
a United States Forest Service Term Special Use Permit. See Part I, Item 1.
"Business - Regulation and Legislation." The Summit typically enjoys abundant
annual snowfall, averaging 482 inches annually over the past five years. As a
result, there are no man-made snowmaking capabilities at any of the Summit
resorts. The Company does, however, possess water rights that would allow it to
engage in snowmaking, if necessary or desired in the long term.
Business Segments and Principal Products
The Company operates in two business segments: resort operations and real
estate and other. Business segment information is presented in Note 14 to the
accompanying consolidated financial statements.
The Company's principal products from resort operations include lift
tickets, season passes, snow school lessons, equipment rentals, retail sales,
food and beverage operations and other ancillary products and services. See Part
II, Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operations - General," for information regarding the composition of
the Company's resort operations revenues for the last three fiscal years.
Real Estate Development
The Company has certain holdings of land suitable for either the expansion
of ski terrain or the development of residential and commercial properties. The
Company also has terrain expansion opportunities on land within its current
United States Forest Service permits as well as land owned by third parties. In
management's view, increasing the on-mountain bed base, expanding retail and
other commercial services and developing additional skiable terrain at a resort
can accelerate growth in skier days and ski-related revenues.
The Company's real estate development strategy for residential and
commercial properties is comprised of the following components: (1) to build
recurring resort cash flow through increased bed base and diversification of
revenue sources, (2) to partner with proven real estate developers, (3) to
invest on a limited basis in land and infrastructure development in conjunction
with the development of single family lots at Northstar, and (4) to refrain from
investment in vertical or commercial development except in conjunction with the
development of ski related facilities.
The Company's strategy with regard to the expansion of skiable terrain at
its resorts is based on the evaluation of several key factors, including (i) the
anticipated growth of the skier base within the relevant market and the
Company's ability to improve its competitive position in that market, as
measured by the potential increase in the number of skier days and revenue per
skier on a long-term basis which the Company believes it can capture through
expansion and upgrades, and (ii) the return on capital expected to be realized
from an expansion project versus alternative projects. Management undertakes
extensive planning and pre-development steps prior to investing significant
capital into any development project. Currently, the Company is in the process
of developing comprehensive master plans and obtaining entitlements (e.g.,
zoning approvals) for Northstar, Loon Mountain, Waterville Valley and the
Summit. In management's view, the expansion projects at Northstar and Loon
Mountain represent the Company's highest development opportunities, and would
likely take priority over the pursuit of expansion and development initiatives
at the Company's other resorts.
The Company's resorts have traditionally taken a conservative approach
toward residential and commercial development and real estate development
efforts have taken place primarily at Northstar. Beginning in 1995, the resort
developed a single family home community on Mt. Pluto ("Big Springs") consisting
of 158 private residential lots. The last two phases of Big Springs, which
consisted of 47 lots, were substantially sold out during the summer of 1999. The
average price for a one third acre lot was $305,000.
Current and future single family residential development at Northstar is
limited based on the present real estate master development plan. The plan calls
for the development of approximately 56 additional single family lots in three
phases or subdivisions known as "Unit 7", "Unit 7A" and "Unit 7B."
The property underlying the Unit 7 development lots was sold by Trimont
Land Company ("TLC"), the owner and operator of Northstar and a wholly-owned
subsidiary of the Company, to Trimont Land Holdings, Inc. ("TLH"), a
wholly-owned subsidiary of Parent and an affiliate of the Company, on November
17, 1999. The Company obtained a fairness opinion for the transaction from an
independent firm qualified in the subject matter of the transaction. See Note 9
to the accompanying consolidated financial statements. Under the terms of the
transaction with TLH, the Company is entitled to receive any excess net cash
proceeds (over the proceeds received in November 1999) from the subsequent
resale of the lots by TLH.
During December 2001, TLH consummated the sale of seven Unit 7 lots for net
proceeds of approximately $3,300,000. As the net proceeds of the seven lot sales
were less than the $6,000,000 in cash initially paid by TLH for the underlying
real estate, no additional cash proceeds were distributed to TLC. TLH intends to
market and sell the remaining 19 unsold Unit 7 lots during 2002.
The Company is currently proceeding with the entitlement process and
pre-construction activities for the Unit 7A subdivision, which is expected to
consist of approximately 15 single family lots. Depending on market conditions
and demand for the remaining Unit 7 lots, the Company expects to develop and
market the Unit 7A lots during either the Summer/Fall of 2002 or sometime in
2003. The entitlement and approval process for the Unit 7B subdivision, which is
expected to consist of approximately 15 lots, is at a preliminary stage.
On September 22, 2000, TLC and TLH entered into an Agreement for Purchase
and Sale of Real Property (the "Northstar Real Estate Agreement") relating to
certain development real estate at Northstar. Pursuant to the Northstar Real
Estate Agreement, TLC agreed to sell to TLH certain development real estate
consisting of approximately 550 acres of land located at Northstar (the
"Development Real Estate") for a total purchase price of $27,600,000, of which
85% is payable in cash and 15% is payable in the form of convertible secured
subordinated promissory notes. The purchase price was based on an appraisal
obtained from an independent third party appraiser. In addition to receiving the
fair market value for the Development Real Estate, under the terms of the
Northstar Real Estate Agreement (i) TLH or its joint venture partner, East West
Partners, Inc. (together with its affiliates, "East West"), is required, at its
expense, to pay for substantially all mitigation costs associated with the
development project, and (ii) TLH is obligated to reconvey to TLC certain excess
land following the subdivision of the Development Real Estate. TLC maintained
significant approval rights over various aspects of the real estate development,
as well as development activities that could impact resort operations at
Northstar.
In connection with the execution of the Northstar Real Estate Agreement,
TLH and East West entered into a joint venture agreement (the "East West Joint
Venture") providing for the development of the property purchased by TLH and
subsequently transferred to the East West Joint Venture. The proposed project
contemplated by the East West Joint Venture includes the development of a
mixture of at least 1,800 hotel, condominium, townhome and time share units, as
well as significant additional commercial/retail space in and around Northstar.
Under the East West Joint Venture, TLH retains financial responsibility for
approximately $5,000,000 of costs associated with the development of the
infrastructure of the Development Real Estate.
On September 22, 2000, TLC and TLH consummated the sale of the initial land
parcels contemplated by the Northstar Real Estate Agreement, and TLC transferred
the bulk of the Development Real Estate to TLH for a total purchase price of
$21,000,000, of which $17,850,000, or 85%, was paid in cash and $3,150,000, or
15%, was paid in the form of a convertible secured subordinated promissory note.
The sale of the remaining Development Real Estate under the Northstar Real
Estate Agreement is subject to certain subdivision requirements to effect the
transfer of such property and other normal and customary closing conditions, and
is expected to be consummated in 2002.
Management believes that the expected substantial increase in on-mountain
bed base from the East West development will result in increased visitation to
Northstar and increased skier days, thereby enhancing the value and
profitability of Northstar's resort operations. The Company has been able to
secure these benefits without incurring the economic risks associated with real
estate development.
The Company intends to enhance the ski terrain at the Northstar resort by
upgrading the existing trails and lifts, reducing or eliminating on-mountain
bottlenecks and providing better access to and from the resort's existing base
area. During 1999 and 2000, five trails were cut on Lookout Mountain and a new
detachable quad lift was constructed to provide new advanced skiing terrain at
the resort. The Company has preliminarily identified a number of other sites
within Northstar's present boundaries that are suitable for future expansion.
Such expansion is expected to occur concurrently with the anticipated bed base
expansion resulting from the East West development. In addition, in 2000 and
2001 the Company expanded and improved the existing snowmaking system at
Northstar in order to lessen the influence of unfavorable weather, which can
negatively impact operating conditions at the resort. The Company is studying
further alternatives for the continued expansion and improvement of Northstar's
snowmaking system. Any lift construction or terrain expansion would require
customary permits and approvals, and no assurance can be given that the Company
will be able to develop any additional terrain at Northstar or, if completed,
any such projects will be successful.
In addition, Northstar has a program to harvest timber through third party
contracting. The timber harvesting program, which produced revenues of $276,000
during the year ended November 2, 2001, is managed carefully to avoid
interference with Northstar's resort operations and prevent any diminution in
the quality of the resort's natural environment.
Loon Mountain currently leases approximately 581 acres known as "South
Mountain" from the Forest Service. Although currently limited to recreational
uses other than downhill skiing, this permitted area has been designated by both
Loon Mountain and the Forest Service as an area for expanded skiing activities
and the development of additional trails and lifts. A permit allowing this
expansion was issued by the United States Forest Service in 1993, but was
subsequently invalidated by the U.S. Court of Appeals due to litigation brought
by third parties. See Part I, Item 3. "Legal Proceedings." Pending the issuance
of additional permits, expansion on South Mountain depends upon the Company and
United States Forest Service fulfilling the requirements, including the
preparation of supplemental National Environmental Policy Act ("NEPA")
documentation, of a court order issued by the federal district court to which
the related litigation was remanded. Based on discussions with the United States
Forest Service, the Company expects final NEPA documentation to be issued in the
first half of 2002. The available South Mountain land is located in an area
directly adjacent to the present Loon Mountain ski area and would be able to
accommodate alpine and cross country trails, ski lifts (including one connecting
the current ski area with South Mountain) and snowmaking from newly installed
snowmaking facilities. Expansion and upgrades to the resort would serve to
better meet and fulfill the anticipated needs of guests by enhancing the quality
and diversity of skiable terrain. Loon Mountain owns 327 acres of land located
at the base of South Mountain and approximately 5 acres at the base of the
existing ski area. The current zoning for this property is rural residential and
general use, and would allow for, subject to approvals, construction of a
maximum of 997 units. Loon Mountain also owns (1) approximately 32 acres of land
with existing approvals for development of 31 single family lots, and (2) 49
acres of land which is zoned rural residential and could accommodate up to a
maximum of 147 additional units, subject to receipt of applicable approvals. The
timing and scope of development will depend on market conditions, the Company's
financial position and an evaluation of the Company's other expansion
opportunities.
Bear Mountain has received approval from the United States Forest Service
and local governmental authorities of an expansion plan that would, among other
things, increase the resort's skiable terrain by 114 acres and increase daily
skier capacity by approximately 25%. The approval, however, is subject to
numerous mitigation conditions, including a requirement that Bear Mountain
acquire and dedicate to the United States Forest Service two acres of spotted
owl habitat and one acre of flying squirrel habitat in exchange for each acre
proposed for development. Bear Mountain has also entered into a developer's
agreement with the City of Big Bear Lake that generally authorizes, subject to
certain conditions, the construction of up to 56 condominium units on resort
operating property owned by Bear Mountain. However, portions of the potential
condominium development property are currently used in the operation of the
existing ski resort, and any proposed development plans could possibly be
constrained by operating requirements at Bear Mountain. The Company does not
presently have any immediate expansion or development plans for Bear Mountain,
and any future expansion or development would depend on a variety of factors,
including local market conditions, the Company's financial position and the
resolution of regulatory and United States Forest Service permitting issues.
Mt. Cranmore holds a perpetual easement entitling it to develop at least
500 acres of additional ski terrain known as the "Black Cap Mountain area" or
"Black Cap." The Black Cap easement was granted in 1951 and allows the Company
to expand Mt. Cranmore's existing ski and recreational infrastructure and
develop additional trails. The Black Cap property underlying the Company's
easement is privately owned by a third party. The Black Cap land available for
development by the Company is high-quality, mostly north and west-facing ski
terrain located in an area that can accommodate alpine and cross-country trails,
ski lifts and snowmaking. Expansion could increase Mt. Cranmore's skier
capacity, and could enhance the quality and diversity of its skiable terrain.
Given the resort's location in the heart of the Mt. Washington region, the
dominant tourist destination in New Hampshire, the Company believes that
expansion into Black Cap could position Mt. Cranmore as a premier attraction in
the White Mountains and one of the larger and more appealing resorts in New
Hampshire. Additionally, Mt. Cranmore has 35 acres of privately owned land at
the southwest flank of the mountain. This southwest facing ski-in/ski-out land
is very suitable for development. The Company does not have any immediate
expansion or development plans for Mt. Cranmore and the timing and scope of any
development will depend on market conditions, the Company's financial position
and the Company's other expansion opportunities.
The Summit owns 66 acres of real property on various parcels on and around
its resorts, a portion of which is available for residential development. The
developmental real estate at the Summit is owned by DRE, L.L.C. (the "Real
Estate LLC"), a subsidiary of the Company. The Summit also owns 39 acres of real
property at Summit East that is ski-to/ski-from and is zoned as high-density
residential and commercial. Any potential real estate development activities at
the Summit could be constrained by existing or future planned resort operations
at the Summit. The Summit's development parcels will be studied for future
development potential when market conditions warrant.
The Company has no agreements, arrangements or understandings with respect
to financing the development of any of the real estate projects discussed
herein. Any future development would be subject to, among other things, the
Company's ability to obtain the necessary financing and all necessary permits
and approvals. The Senior Credit Facility, the Indenture and the Securities
Purchase Agreements (as defined herein) each contain restrictive covenants that
may significantly limit the Company's ability to pursue real estate development
opportunities. No assurance can be given that the Company will develop any
additional properties or, if completed, any such projects will be successful.
Moreover, there can be no assurances that the East West development at Northstar
will be successful or be completed as currently planned, or that such
development will have the currently anticipated favorable effects on the
Company's resort operations. In addition, there are significant risks inherent
in any expansion project and in the implementation of the Company's development
strategy.
Marketing and Sales
Staff
The Company has a marketing and sales staff of approximately 50 persons,
including a marketing director at each resort who reports to the Vice President
of Marketing and Sales, as well as to each resort's general manager. The
marketing staff at each resort is responsible for the development of
resort-specific marketing plans including advertising, sales, public relations,
events, promotions, Internet strategies and research. Each resorts' marketing
personnel also participate in the development of the Company's overall marketing
strategy.
Strategy
The Company's marketing plans are designed to attract both day skiers and
vacationers by emphasizing the Company's diverse facilities and services and
proximity to approximately 20% of the total skiers in the United States. The
Company has positioned each of its resorts as an attractive alternative to
competing regional resorts and to other forms of leisure and entertainment. The
primary objectives of the Company's marketing efforts are to (i) increase each
of its resorts' relative market share, (ii) expand the number of skiers in each
of its markets, (iii) increase skier visitation frequency, (iv) increase the
expenditures of each of its visitors, (v) attract and retain new guests to the
Company's resorts by expanding the scope of Booth Creek's resorts to winter
recreation centers offering a multitude of snowsport options in addition to
skiing and snowboarding, and (vi) develop products and execute sales efforts
that provide advance bookings and sales.
The Company's marketing efforts are predicated on knowing its guests and
understanding the markets in which it competes. Accordingly, the Company's
resorts, typically through professional firms, conduct extensive market
research, including on-site guest surveys, focus groups, advertising tests and
phone and Internet surveys. Each of the Company's resorts develops its own
resort-specific marketing program based upon its unique qualities and
characteristics as well as the demographics of its skier base.
Programs
The Company has developed a number of specific marketing and sales programs
to achieve its objectives, including the following:
o Customer loyalty and season pass programs
o Sales initiatives
o Multimedia advertising (including Internet strategies)
o Data-base marketing programs (including e-mail broadcasting)
o Snowsport development programs (programs include a multitude of
snowsport options such as snowbikes, snowscoots and tubing as well as
more traditional skiing and snowboarding)
o Strategic marketing alliances
o School, group and business affiliations
Customer loyalty and season pass programs. The Company believes that the
success of each of its resorts depends, in large part, on its ability to retain
and increase the skier visitation frequency of its existing customer base. The
Company believes a critical component to developing customer frequency will be
the success of its customer loyalty programs, including its Vertical Plus
frequent skier programs in place at the Company's California resorts. For an
annual membership fee, Vertical Plus members receive a special, personalized
identification wristband containing a preprogrammed computer microchip which
acts as their lift access for the season. In addition to offering daily ticket
discounts, the system tracks the amount of vertical feet skied at participating
resorts and rewards members with prizes based on the number of vertical feet
skied in a season. Other benefits of the program include members-only lift
lines, direct lift access, the convenience of being able to make cashless retail
transactions and electronic messaging. In addition, over the past several years,
the Company's resorts successfully introduced new season pass products that were
attractively priced to entice visitation during non-peak periods, stimulate
demand, attract market share and develop guest loyalty. The Company is
continuing its successful season pass initiatives for the 2001/02 ski season.
Sales Initiatives. The Company's sales initiatives include a variety of
programs designed to increase and enhance buying opportunities for its customers
in order to provide a complete vacation experience. Through merchandising
efforts, increasing sales outlets and channels, sales training for front-line
employees, on-site and Internet-based promotions and other marketing efforts,
the Company seeks to increase sales of products and services to its customers
and generate additional revenue per skier visit.
Multimedia advertising. The Company's marketing efforts include print,
broadcast, outdoor, Internet and direct mail advertising, with the particular
method tailored for each resort and existing market opportunities. The Company
is also very active in a variety of promotional programs designed to attract
guests from population centers in and around the Los Angeles, San Diego, San
Francisco, Sacramento, Seattle and Boston metropolitan areas and states with
large skier populations such as Texas, Illinois, Florida and New York. For
example, the Company's Northstar and Sierra resorts have participated in
extensive cooperative marketing with other Lake Tahoe resorts to promote the
region as a premier vacation destination. Market research has shown that the
typical Booth Creek guest utilizes the Internet extensively as a source of
information and additional Company resources have been concentrated towards this
communication vehicle. For the 2001/02 ski season, Booth Creek will continue to
feature e-commerce "virtual stores" on each resort's website offering products
such as season passes, loyalty program memberships, gift certificates and
lodging/lift packages as well as private lessons, child care and lift tickets.
Data-base marketing programs. Through the information obtained from its
customer loyalty and season pass programs, extensive market surveys and other
market research, the Company maintains a data-base containing detailed
information on its existing customers. Management believes that data-base
marketing is an effective and efficient method to identify, target and maintain
an on-going relationship with the Company's best customers. For example, the
Company has been successful in the use of targeted direct mailings and e-mail
broadcasts, which are designed to match customer preferences with special offers
to build volume and penetration.
Snowsport development programs. The Company's resorts operate a variety of
snowsport development programs designed to improve the skills of children and
beginners, as well as more advanced skiers and snowboarders. The Company's
resorts operate ski schools that are consistently rated among the best in their
respective regions. In addition, several of the Company's resorts have
introduced a development program, geared toward intermediate and advanced
skiers, which offers free specialized instruction and daily training. This
program has increased guest loyalty and repeat visitation. In addition, Booth
Creek is expanding the definition of ski and snowboard areas to winter
recreation centers. Resorts are offering a multitude of unique options for
sliding on snow. "Booth Creek Hill Thrill Centers" include snow tubing,
snowbikes, snowfoxes and snowscoots. Many of these are low-skill, high-sensation
activities that even those who have never skied or snowboarded can enjoy. There
are also transferable learning skills from these sliding devices to learning to
ski or snowboard. Other efforts have been instituted at all resorts to embrace
and welcome new participants to the sport of skiing or snowboarding.
Strategic marketing alliances. The Company is a national ski resort
operator with approximately 2.5 million skier days recorded during the 2000/01
ski season. At least one of the Company's resorts is within driving distance of
four of the five largest ski markets in the United States. Sponsorship
opportunities include potential relationships with automobile manufacturers,
soft drink companies, and ski and snowboard equipment manufacturers. For
example, Northstar and Sierra have relationships with major automobile
manufacturers that involve over $2 million worth of television exposure, free
use of vehicles for Company purposes and a vehicle give-away promotion for
resort guests. This provides exposure of Booth Creek's largest resort to a
targeted audience of skiers in key markets.
School, group and business affiliations. The Company is dedicated to
developing special programs designed to attract school, business and other
groups. By introducing skiing, snowboarding and other methods of sliding on snow
to a wider audience, these programs broaden the Company's customer base and have
proven to be a particularly effective way to build name recognition and brand
loyalty. Sales personnel at each resort provide year-round assistance to group
leaders in organizing and developing events. Business affiliations are developed
and maintained through corporate ticket programs, whereby participating
businesses are given an opportunity to provide their employees with
incentive-based pricing.
Seasonality
The business of the Company is highly seasonal, with the vast majority of
its annual revenues expected to be generated between November and April of each
fiscal year. Management considers it essential to achieve optimal operating
results during key holidays and weekends during this period. The Company's
results of operations are, in turn, significantly dependent on favorable weather
conditions and other factors beyond the Company's control. In prior years, the
Company sought to partially mitigate the downside risk of its seasonal business
by purchasing paid skier visit insurance policies. However, the Company did not
obtain paid skier visit insurance coverage for its resorts for the 2001/02 ski
season as effective policies were not available on commercially viable terms.
During the off-season months of May through October, the Company's resorts
typically experience a substantial reduction in labor and utility expense due to
the absence of ski operations, but make significant expenditures for
maintenance, expansion and capital improvements in preparation for the ensuing
ski season.
Competition
The general unavailability of new developable ski mountains, regulatory
requirements and the high costs and expertise required to build and operate
resorts present significant barriers to entry in the ski industry. The last
major new ski resort to open in the United States was in 1989, and in the past
15 years, management believes at least 85 proposed resorts have been stalled or
abandoned due to environmental issues and the high costs of entering into the
capital intensive ski industry. The domestic ski industry is currently comprised
of approximately 490 resorts and is highly competitive. The Company's
competitive position in the markets in which it competes is dependent upon many
diverse factors, including proximity to population centers, pricing, snowmaking
capabilities, type and quality of skiing offered, prevailing weather conditions,
quality and price of complementary services.
The Company's Lake Tahoe resorts, Northstar and Sierra, face strong
competition from Lake Tahoe's five other major ski resorts. Northstar's primary
competition in the North Lake Tahoe area is from Squaw Valley, Alpine Meadows
and Sugar Bowl. Northstar also competes with major ski and non-ski destination
resorts throughout North America. Sierra primarily competes in the South Lake
Tahoe area with Heavenly and Kirkwood. The Company's other California resort,
Bear Mountain, competes primarily with Snow Summit, Mountain High and Mammoth
Mountain.
The Company's New England resorts, Waterville Valley, Mt. Cranmore and Loon
Mountain, compete in the highly competitive Northeast ski market, which consists
of Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut and
New York. Within the Northeast region, skiers can choose from over 50 major
resorts and ski areas, most of which are located in the mountainous areas of New
England and eastern New York. Waterville Valley's primary regional competitors
include Bretton Woods, Mount Sunapee, Attitash/Bear Peak and Gunstock. Mt.
Cranmore's primary regional competitors are Attitash/Bear Peak, Wildcat, Bretton
Woods and Gunstock. Loon Mountain's primary regional competitors are Okemo,
Bretton Woods, Cannon Mountain, Mount Sunapee and Sunday River.
The Summit competes primarily with eleven other ski resorts in Washington,
including Crystal Mountain, Stevens Pass, White Pass, Mission Ridge and Mt.
Baker. Additional competition comes from the regional destination resorts at Mt.
Bachelor, Mt. Hood Meadows, Sun Valley and Whistler/Blackcomb, as well as other
day and weekend ski facilities in Oregon and British Columbia.
On a regional basis, at least one of the Company's resorts is readily
accessible to four of the five largest ski markets in the United States.
Management estimates that more than 70% of the skiers visiting the Company's
Lake Tahoe resorts are from the San Francisco/San Jose, Sacramento, Central
California Valley and Lake Tahoe regions, while more than 90% of Bear Mountain's
skiers are from the Los Angeles, Orange County and San Diego metropolitan areas.
Waterville Valley, Mt. Cranmore and Loon Mountain are estimated to attract more
than 75% of their guests from Massachusetts and New Hampshire, with a large
percentage of such visitors coming from the Boston metropolitan area. The Summit
attracts more than 90% of its guests from the Seattle/Tacoma metropolitan
region.
Regulation and Legislation
The Company's operations are dependent upon its ownership or control over
the real property used in its ski operations at each resort. The real property
presently used at the Northstar and Mt. Cranmore resorts is owned by the Company
or controlled by easements. The Company has the right to use a substantial
portion of the real property associated with the Bear Mountain, Sierra, Summit
and Waterville Valley resorts under the terms of Term Special Use Permits issued
by the United States Forest Service. The Bear Mountain permit expires in 2020,
the Sierra permit expires in 2039, the Waterville Valley permit expires in 2034
and the Summit permit expires in 2032.
A substantial portion of the real property associated with the Loon
Mountain resort is likewise used under United States Forest Service permits. In
1993, the United States Forest Service authorized various lift, trail and
snowmaking improvements on Loon Mountain and an expansion onto South Mountain.
In 1996, the United States Court of Appeals for the First Circuit (the "First
Circuit") overturned this authorization on the ground that the United States
Forest Service had failed to properly address certain environmental issues under
the National Environmental Policy Act ("NEPA"). Certain improvements, including
a snowmaking pipeline and part of the expansion, had been constructed before the
First Circuit ruled. On May 5, 1997, the United States District Court for the
District of New Hampshire (the "District Court") entered a stipulated order
which authorized existing improvements to remain in place and existing
operations to continue but generally prohibited future construction, restricted
use of a major snowmaking water source, and required certain water discharge
permits to be pursued, pending United States Forest Service reconsideration of
the projects under NEPA. These authorizations and limitations were incorporated
into the final order issued by the District Court on December 11, 1998, and will
remain in effect until the United States Forest Service completes its NEPA
review and issues a new decision. On February 12, 1999, the District Court
agreed that the United States Forest Service may combine this NEPA review with
its evaluation and analysis of the existing snowmaking pipeline. The United
States Forest Service issued a draft Environmental Impact Statement in January
2001. Based on discussions with the United States Forest Service, the Company
expects final NEPA documentation to be issued in the first half of 2002.
In August 1997, the United States Forest Service authorized the Loon
Mountain resort to construct a new snowmaking pipeline across permitted land.
The United States Forest Service found that such construction was consistent
with the District Court order and enabled the resort to modify its snowmaking
operations to better protect water resources and replace snowmaking capacity
lost under the order. Although the pipeline was completed, its use was
challenged by private parties who asserted that the United States Forest Service
violated NEPA. On January 20, 1998, the District Court issued a decision finding
that the United States Forest Service violated NEPA in failing to address the
potential for the new pipeline to increase the amount of snow made and any
associated environmental effects. On March 10, 1998, the District Court issued a
series of further orders which, among other things, directed the United States
Forest Service to re-evaluate the pipeline and enjoined Loon Mountain from using
the pipeline pending further action by the court. On July 2, 1998, the United
States Forest Service issued a new decision approving the pipeline, which was
challenged by several private parties, who again asserted that it violated NEPA.
The United States Forest Service subsequently withdrew its decision authorizing
the pipeline to conduct further review and the District Court consolidated the
lawsuits concerning the pipeline. On November 19, 1998, the District Court
modified the injunction, allowing Loon Mountain to use the pipeline to withdraw
and convert 159.7 million gallons of water per ski season into snow while the
United States Forest Service further reviewed the pipeline under NEPA. On
February 12, 1999, the District Court issued a final order, which dismissed the
consolidated lawsuit concerning the pipeline in light of the United States
Forest Service's decision to conduct further review of the pipeline, and
specified that the limitation on pipeline usage will continue until that review
is completed and a new decision is issued. Such order remains in effect until
the additional NEPA documentation is completed and the United States Forest
Service issues a new decision on the pipeline, which is currently anticipated to
occur in the first half of 2002.
Existing use of Loon Mountain is authorized under a Term Special Use
Permit, which covers facilities and expires in 2006; existing non-skiing use of
Loon Mountain's South Mountain area is authorized under an annual permit issued
by the United States Forest Service that is subject to reissuance each year.
After the United States Forest Service reconsiders the pipeline improvements and
expansion under NEPA, it will need to render a new decision and, if appropriate,
issue a new Term Special Use Permit. At that time, the conditions imposed by the
two District Court orders will terminate. Based upon the existing administrative
record, and certain proposed modifications to the resort's snowmaking operations
which are intended to better protect water resources, the Company expects that
the pipeline improvements and expansion will be approved by the United States
Forest Service. However, no assurance can be given regarding the timing or
outcome of this process.
The United States Forest Service has the right to approve the location,
design and construction of improvements in permit areas and many operational
matters at resorts with permits. Under the Term Special Use Permits, the Company
is required to pay fees to the United States Forest Service. The fees range from
1.5% to approximately 4.0% of certain revenues, with the rate generally rising
with increased revenues. The calculation of gross revenues includes, among other
things, revenue from lift ticket, ski school lesson, food and beverage, rental
equipment and retail merchandise sales. Total fees paid to the United States
Forest Service by the Company during the year ended November 2, 2001 were
$1,215,000.
The Company believes that its relations with the United States Forest
Service are good, and, to the best of its knowledge, no Term Special Use Permit
for any major ski resort has ever been terminated by the United States Forest
Service. The United States Secretary of Agriculture has the right to terminate
any Term Special Use Permit upon 180-days notice if, in planning for the uses of
the national forest, the public interest requires termination. Term Special Use
Permits may also be terminated or suspended because of non-compliance by the
permitee; however, the United States Forest Service would be required to notify
the Company of the grounds for such action and to provide it with reasonable
time to correct any curable non-compliance.
The Company's resorts are subject to a wide variety of federal, state and
local laws and regulations relating to land use, water resources, discharge,
storage, treatment and disposal of various materials and other environmental
matters. Except as described in this section, management believes that the
Company's resorts are presently in compliance with all land use and
environmental laws, except where non-compliance is not expected to result in a
material adverse effect on its financial condition. The Company also believes
that the cost of complying with known requirements, as well as anticipated
investigation and remediation activities, will not have a material adverse
effect on its financial condition or future results of operations. However,
failure to comply with such laws could result in the imposition of severe
penalties and other costs or restrictions on operations by government agencies
or courts that could materially adversely affect operations.
The operations at the resorts require numerous permits and approvals from
federal, state and local authorities including permits relating to land use, ski
lifts and the sale of alcoholic beverages. In addition, the Company's operations
are heavily dependent on its continued ability, under applicable laws,
regulations, policies, permits, licenses or contractual arrangements, to have
access to adequate supplies of water with which to make snow and service the
other needs of its facilities, and otherwise to conduct its operations. There
can be no assurance that new applications of existing laws, regulations and
policies, or changes in such laws, regulations and policies will not occur in a
manner that could have a detrimental effect on the Company, or that material
permits, licenses or agreements will not be canceled, not renewed, or renewed on
terms materially less favorable to the Company. Major expansions of any one or
more of the Company's resorts could require, among other things, the filing of
an environmental impact statement or other documentation with the United States
Forest Service and state or local governments under NEPA and certain state or
local NEPA counterparts if it is determined that the expansion may have a
significant impact upon the environment. Although the Company has no reason to
believe that it will not be successful in implementing its operations and
development plans, no assurance can be given that necessary permits and
approvals will be obtained or renewed.
Bear Mountain operates in an area subject to an air emissions reduction
program and regulated by the South Coast Air Quality Management District
("SCAQMD") in California. Prior to mid 2000, the Company anticipated that Bear
Mountain would eventually be required to participate in an emission credit
program whereby Bear Mountain would be permitted to operate its diesel-fueled
snowmaking compressor engines if it acquired "banked" emission credits from
SCAQMD-regulated facilities which had already implemented nitrogen oxide
emission reduction programs. However, in August 2000 the Company was notified
that SCAQMD will not allow Bear Mountain to participate in the emission credits
program and, further, that Bear Mountain's applications to operate the engines
were denied because they were not equipped with the "Best Available Control
Technology," thus violating SCAQMD rules. Recognizing the importance of the
current compressor engines to Bear Mountain's operations, SCAQMD and Bear
Mountain agreed to a Stipulated Order of Abatement whereby Bear Mountain is
subject to certain requirements including investigating and implementing a
remedial alternative according to a particular timeline through 2002, record
keeping and reporting to SCAQMD, payment of certain usage fees, and particular
interim operational dictates concerning the engines. Pursuant to the Stipulated
Order of Abatement, Bear Mountain is required to implement a remedial
alternative by October 15, 2002. Depending on the alternative selected and the
manner in which it is implemented, the resolution of this matter may require
capital expenditures of approximately $1 million for new equipment. However, no
assurance can be made regarding the outcome or timing of resolution of this
matter.
Pursuant to the previously described decision of the First Circuit and the
order of the District Court, Loon Mountain applied for and was issued, by the
Environmental Protection Agency ("EPA"), a Clean Water Act (the "CWA") discharge
permit covering discharges associated with its snowmaking operations. Certain
ongoing discharges are authorized by the District Court order pending final
action on the permit and subject to the District Court's reserved power to
modify such approval to address any resulting environmental issues.
Certain regulatory approvals associated with the new snowmaking pipeline at
Loon Mountain, as well as certain contractual obligations, impose minimum stream
flow requirements on Loon Mountain. These requirements will compel Loon Mountain
to construct water storage facilities within approximately five years, and such
construction will require further regulatory approvals and environmental
documentation under NEPA. No assurances can be given that such regulatory
approvals will be obtained or that the Company will have the financial resources
to complete such construction.
In addition, Loon Mountain was notified in September 1997 that it had
allegedly filled certain wetlands at the resort in violation of the CWA. In
response, Loon Mountain worked with the EPA to remove the alleged fill and
implement certain erosion control measures. On January 15, 1998, an individual
notified the EPA, Loon Mountain, and certain other persons that he intended to
initiate a lawsuit under the CWA regarding the alleged wetland violation. On
February 2, 1998, the EPA wrote to such individual stating that the alleged fill
had been removed and that the EPA does not believe there is a continuing
violation at the site. On January 18, 2000, in papers filed in connection with
the District Court's modification of the final order in the pipeline litigation,
the same individual again alleged that Loon Mountain had previously filled
wetlands in violation of the CWA. The same individual has orally advised the
Company that he still intends to initiate a lawsuit under the CWA regarding the
alleged wetland fill.
Except for certain permitting and environmental compliance matters relating
to the Loon Mountain and Bear Mountain resorts described above and in Part I,
Item 3. "Legal Proceedings," the Company has not received any notice of material
non-compliance with permits, licenses or approvals necessary for the operation
of its properties or of any material liability under any environmental law or
regulation.
Employees
As of December 31, 2001, the Company employed a full-time corporate staff
of 36 persons. In addition, the Company's resorts employ an aggregate of
approximately 500 full-time and approximately 5,500 seasonal employees. None of
the employees of the Company or its resorts is represented by a labor union, and
the Company considers its employee relations to be good.
Item 2. Properties
Northstar consists of approximately 8,000 acres of land privately owned by
the Company. Sierra owns 20 acres of its 1,689 gross acreage and leases the
remainder under a Term Special Use Permit with the United States Forest Service.
Bear Mountain owns 116 of its 819 gross acreage, leases 698 acres of mountain
terrain under a Forest Service Term Special Use Permit and leases five acres
from third parties. Waterville Valley owns 35 acres on Snow Mountain and two
acres at the Conference Center, and leases 790 acres of land on Mt. Tecumseh
from the federal government under a Term Special Use Permit issued by the Forest
Service. Mt. Cranmore owns 754 acres and holds deeded easements enabling it to
develop an additional 500 acres of ski terrain. The Summit owns 686 acres of its
4,152 gross acreage, leases over 1,400 acres under a private permit and utilizes
1,864 acres of mountain terrain under a Forest Service Term Special Use Permit.
Loon Mountain owns 565 acres and leases 778 acres of land in the White Mountain
National Forest under a Term Special Use Permit issued by the United States
Forest Service permitting year-round recreational use. Adjacent to such land, an
additional 581 acres are leased on "South Mountain" under a separate Special Use
Permit permitting certain limited activities, including mountain biking, cross
country skiing and horseback riding. In addition, each of the Company's resorts
have ski lodges and other facilities that management believes are suitable for
the Company's current operations. For further information regarding the
Company's properties, see Part I, Item 1. "Business - Resort Operations" and "-
Regulation and Legislation."
Item 3. Legal Proceedings
Each of the Company's resorts has pending and is regularly subject to
litigation, and the threat thereof, with respect to personal injury claims
relating principally to skiing activities at its resorts as well as to premises
and vehicular operations and worker's compensation matters. The Company
maintains liability insurance that the Company considers adequate to insure
claims related to such usual and customary risks associated with the operation
of four-season recreation resorts.
In connection with the merger with Loon Mountain Recreation Corporation
("LMRC"), certain shareholders of LMRC (the "LMRC Shareholder Plaintiffs") filed
a lawsuit against LMRC and its former directors alleging breach of fiduciary
duty and against the Company alleging that the Company aided and abetted the
former directors' breach of fiduciary duty and failed to comply with the New
Hampshire Security Takeover Disclosure Act (the "Takeover Statute") in
connection with the transaction. The two lawsuits were consolidated in the
Superior Court of Grafton County, New Hampshire. The Company answered the LMRC
Shareholder Plaintiffs' petition and filed a motion to dismiss the LMRC
Shareholder Plaintiffs' action against the Company asserting that the Takeover
Statute did not apply to the transaction as a matter of law. The court initially
denied the Company's motion to dismiss but granted the motion to dismiss upon
reconsideration. The LMRC Shareholder Plaintiffs appealed the dismissal to the
New Hampshire Supreme Court. The New Hampshire Supreme Court upheld the Superior
Court's dismissal of the plaintiffs' claim under the Takeover Statute in a
ruling issued on November 20, 2001.
The LMRC Shareholder Plaintiffs have amended their breach of fiduciary duty
claims to seek money damages against the Company, LMRC and its former directors.
The trial for the LMRC Shareholder Plaintiffs' breach of fiduciary duty claims,
which was consolidated with the Corporation Act case described below, concluded
on January 16, 2002. A decision is anticipated by the end of February 2002. If
the LMRC Shareholder Plaintiffs are successful in obtaining a judgment against
the former LMRC directors, the Company may have certain obligations to indemnify
the former directors pursuant to the former LMRC by-laws. While the Company does
not believe that the LMRC Shareholder Plaintiffs will prevail in this lawsuit,
no assurances can be made regarding the outcome of this litigation.
On February 22, 2001, certain additional former shareholders of LMRC who
are family members of one of the LMRC Shareholder Plaintiffs commenced an action
which is currently pending in the Superior Court of Hillsborough County, New
Hampshire seeking damages for breach of fiduciary duty against the former LMRC
directors, breach of contract against the former LMRC directors and the Company
and violations of the New Hampshire Consumer Protection Statute. The plaintiffs
formerly held 4,375 shares of LMRC common stock. The Company and the former LMRC
directors have filed a motion which remains pending to dismiss the claims on the
grounds that they fail to state a valid cause of action and are barred by the
statute of limitations. The Company believes it has meritorious defenses to
these claims and intends to vigorously defend them.
Also in connection with the merger with LMRC, the LMRC Shareholder
Plaintiffs exercised dissenters' rights under the New Hampshire Business
Corporation Act (the "Corporation Act"). Under the statutory procedure for
settling the LMRC Shareholder Plaintiffs' dissenters' rights, LMRC paid the
plaintiffs an aggregate of $34,436, or $30.61 per share, as its estimate of the
fair value of their 1,125 shares. The LMRC Shareholder Plaintiffs demanded
additional payments necessary to compensate them for the $71.38 per share price,
plus interest, which they asserted as the fair value of their shares. By
disclosure dated March 17, 2000 the LMRC Shareholder Plaintiffs' expert has
revised his opinion of fair value to $91.90 per share. Pursuant to the
Corporation Act, LMRC commenced a proceeding in the Superior Court of Grafton
County, New Hampshire seeking a judicial appraisal of the value of the LMRC
Shareholder Plaintiffs' shares in LMRC. The matter was consolidated for trial
with the fiduciary duty case described above. The trial for these matters
concluded on January 16, 2002, and a ruling is anticipated by the end of
February 2002. While the Company believes that the amount paid to the LMRC
Shareholder Plaintiffs prior to the commencement of the appraisal proceeding
represents the fair value of their shares, there can be no assurance as to the
value which the appraisal proceeding will assign to the LMRC Shareholder
Plaintiffs' 1,125 shares.
In 1995, an individual sued the United States Forest Service (the "Forest
Service") in the United States District Court for the District of New Hampshire
(the "District Court") alleging that the Forest Service had violated the
National Environmental Policy Act ("NEPA"), the Clean Water Act ("CWA"), and an
executive order in approving improvements to facilities on Loon Mountain and an
expansion of the Loon Mountain resort on to South Mountain. LMRC and an
environmental group intervened in the lawsuit. The District Court entered
summary judgment for the Forest Service on all claims and the original
plaintiff, along with the intervening environmental group (collectively or
individually, the "Environmental Plaintiffs"), appealed. In December 1996, the
United States Court of Appeals for the First Circuit (the "First Circuit")
reversed the District Court decision and ruled that the Forest Service must
reconsider certain environmental issues under NEPA and that LMRC must obtain a
discharge permit under the CWA for certain discharges from its snowmaking
system. The District Court then entered a stipulated order that: enjoins LMRC
from any further construction implementing the project with certain limited
exceptions; imposes various restrictions on LMRC's existing snowmaking
operations and requires LMRC to apply for a CWA discharge permit for discharges
of water and any pollutants associated with its snowmaking; allows existing
construction to remain in place and existing uses to continue; requires LMRC to
undertake certain erosion control and monitoring measures; requires the Forest
Service to prepare supplemental NEPA documentation on the improvements and
expansion; and reserves the right to require restoration of areas developed
under the original Forest Service approval to their preexisting condition if not
ultimately re-approved by the Forest Service. This order remains in effect until
the supplemental NEPA process is completed. Based on discussions with the Forest
Service, the Company expects final NEPA documentation to be issued during the
first half of 2002. However, the Company can give no assurance regarding the
timing or outcome of such process.
The Environmental Plaintiffs also filed a motion asking the District Court
to impose against LMRC a CWA civil penalty of $5,550,125 and attorney's fees and
costs in connection with LMRC's discharges into Loon Pond during its snowmaking
operations for the 1996/97 ski season and prior years. The District Court
dismissed the claim for civil penalties and attorney's fees under the CWA, and
one of the Environmental Plaintiffs appealed to the First Circuit. The appeal
was stayed to permit settlement negotiations, and these negotiations concluded
with the execution of a settlement agreement between the appellant, LMRC and
Loon Realty Corp. effective as of February 22, 2001. In accordance with the
terms of the agreement, the appellant's claims against LMRC were dismissed on
March 14, 2001.
In 1997, the Environmental Plaintiffs filed a second lawsuit against the
Forest Service in the District Court alleging that the Forest Service violated
NEPA in authorizing LMRC to construct and operate a snowmaking pipeline across
permitted land. LMRC intervened in the lawsuit. The District Court held that the
Forest Service had violated NEPA by failing to consider the potential effects of
an increase in snowmaking capacity. The District Court then enjoined Loon
Mountain from using the pipeline but later modified the injunction to permit
LMRC to use the pipeline provided that, among other things, it does not make
snow in excess of the historic production level utilizing 159.7 million gallons
per ski season. On February 12, 1999, the District Court dismissed the pipeline
litigation and allowed the Forest Service to combine its NEPA analysis of the
pipeline with the pending NEPA analysis of the South Mountain expansion. The
injunction authorizing LMRC to use the pipeline to supply water for making
historical levels of snow remains in place until the additional NEPA
documentation is completed and the Forest Service issues a new decision on the
pipeline, which is currently expected to occur in the first half of 2002.
Effective February 22, 2001, both Environmental Plaintiffs entered into
settlement agreements with LMRC, which resolve all issues among them relating to
LMRC's prior operations and current proposal for near term expansion and
upgrading of the Loon Mountain resort. Among other things, these agreements
impose certain restrictions on the operation of the resort and the future
development of certain private land at the resort.
Killington West, Ltd., formerly known as Bear Mountain, Ltd., ("Killington
West "), filed a breach of contract lawsuit in the Superior Court of the State
of California, San Bernardino County, against Fibreboard Corporation
("Fibreboard") and Bear Mountain, Inc., a wholly-owned subsidiary of the
Company, alleging that Fibreboard and Bear Mountain, Inc. breached the asset
purchase agreement dated October 6, 1995 (the "Original Bear Mountain
Agreement") among Killington West, Fibreboard and Bear Mountain, Inc. pursuant
to which Bear Mountain, Inc. acquired the Bear Mountain ski resort from
Killington West. Killington West's lawsuit concerned an alleged breach by
Fibreboard and Bear Mountain, Inc. of a change of control provision in the
Original Bear Mountain Agreement. In connection with the Company's acquisition
of Bear Mountain, Inc. in December 1996, the Company obtained from Fibreboard
indemnification for any claim that might be made by Killington West, and
further, required that $1 million of the purchase price be held in escrow
pending the outcome of any potential disputes with Killington West. Fibreboard
acknowledged its obligation to indemnify Bear Mountain, Inc. with respect to the
Killington West lawsuit and is defending such lawsuit on behalf of Fibreboard
and Bear Mountain, Inc.
On November 13, 2001, the Company filed a lawsuit against ASU International
LLC, Essex Insurance Company and Certain Underwriters, Lloyd's London
(collectively, the "Insurers") in Superior Court in Massachusetts. The Company
had placed with the Insurers weather/income stabilization coverage for the
2000/01 ski season for certain of its resorts. During the applicable period of
the policies, the Company incurred losses at two of its resorts which the
Company believes were covered under the terms of such policies. The Company
believes that it has complied with its obligations under the policies and has
properly reported and made claims in accordance with the policies for losses
aggregating in excess of $1.5 million. In response to the Insurers' failure to
properly process the Company's claims, the Company seeks recovery for breach of
contract, breach of covenant of good faith and unfair and deceptive business
acts. The Company's complaint seeks recovery for the full amount of its claims
as well as multiple damages and attorneys' fees based on its assertion of unfair
and deceptive business acts by the Insurers. An informal settlement conference
has been scheduled by the parties. Pre-trial discovery has not yet commenced.
While the Company believes that it will prevail in this lawsuit, no assurances
can be made regarding the outcome or timing of resolution of this litigation.
Item 4. Submission Of Matters To A Vote Of Security Holders
No matters were submitted to a vote of security holders during the fourth
quarter of fiscal 2001.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
There is no established trading market for any class of equity securities
of the Company. All of the Company's equity securities are owned by Parent.
The Company's principal debt agreements contain restrictions that restrict
its ability to pay dividends. See Note 5 to the accompanying consolidated
financial statements.
Item 6. Selected Financial Data
The following selected financial data should be read in conjunction with
the consolidated financial statements of the Company and related notes thereto
included elsewhere in this Report and Part II, Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations." The selected
consolidated financial data of the Company as of and for the years ended October
31, 1997, October 30, 1998, October 29, 1999, October 27, 2000 and November 2,
2001, have been derived from the audited consolidated financial statements of
the Company, which have been audited by Ernst & Young LLP, independent auditors.
The Company was formed in October 1996 and had no operations until its
acquisition of seven ski resort complexes during the first six months of fiscal
1997.
The other financial and operating data presented below includes information
on "EBITDA" and "Resort EBITDA margin." "EBITDA" represents income from
operations before depreciation, depletion and amortization expense and the
noncash cost of real estate sales. "Resort EBITDA margin" is Resort EBITDA
divided by resort operations revenue. Although EBITDA is not a measure of
performance under United States generally accepted accounting principles
("GAAP"), the term is presented because management believes it provides useful
information regarding a company's ability to incur and service debt. EBITDA
should not be considered in isolation or as a substitute for net income, cash
flows from operating activities and other income or cash flow statement data
prepared in accordance with GAAP, or as a measure of profitability or liquidity.
In addition, "EBITDA" and "Resort EBITDA margin" as determined by the Company
may not be comparable to related or similar measures as reported by other
companies and do not represent funds available for discretionary use.
Year Year Year Year Year
Ended Ended Ended Ended Ended
October October October October November
31, 1997(a) 30, 1998(b) 29, 1999 27, 2000(c) 2, 2001
----------- ----------- ----------- ----------- -----------
(Dollars in Thousands, except Revenue per Skier Day)
Statement of Operations Data:
Revenue:
Resort Operations............................. $ 68,136 $ 97,248 $ 112,980 $ 119,685 $ 121,629
Real Estate and Other......................... 3,671 7,608 12,744 19,670 276
----------- ----------- ----------- ----------- -----------
71,807 104,856 125,724 139,355 121,905
Operating Expenses:
Cost of Sales - Resort Operations............. 44,624 61,325 74,404 70,394 70,982
Cost of Sales - Real Estate and Other......... 2,799 4,671 5,244 4,507 211
Depreciation, Depletion and Amortization...... 11,681 17,752 21,750 22,572 25,121
Selling, General and Administrative........... 13,719 19,645 22,571 22,985 23,412
Unusual Items, Net............................ - - 487 - -
----------- ----------- ----------- ----------- -----------
Operating Income (Loss).......................... (1,016) 1,463 1,268 18,897 2,179
Interest Expense and Other, Net.................. (14,912) (18,733) (19,843) (19,075) (17,569)
----------- ----------- ----------- ----------- -----------
Pre-tax Loss..................................... (15,928) (17,270) (18,575) (178) (15,390)
Income Tax Benefit............................... 1,728 - - - -
----------- ----------- ----------- ----------- -----------
Loss Before Minority Interest and Extraordinary
Item.......................................... (14,200) (17,270) (18,575) (178) (15,390)
Minority Interest................................ (229) (260) (218) (179) (127)
----------- ----------- ----------- ----------- -----------
Loss Before Extraordinary Item................... (14,429) (17,530) (18,793) (357) (15,517)
Extraordinary Gain (Loss) on Early Retirement
of Debt....................................... (2,664) - - - 1,723
----------- ----------- ----------- ----------- -----------
Net Loss......................................... $ (17,093) $ (17,530) $ (18,793) $ (357) $ (13,794)
=========== =========== =========== =========== ===========
Other Financial and Operating Data:
Total Skier Days................................. 1,565,917 2,113,562 2,432,845 2,287,128 2,500,484
Revenue (Excluding Paid Skier Visit Insurance
Policy Revenue) per Skier Day (d)............. $ 43.51 $ 46.01 $ 46.44 $ 49.45 $ 47.94
Noncash Cost of Real Estate Sales (e)............ $ 2,237 $ 3,721 $ 4,743 $ 2,460 $ -
Capital Expenditures Excluding Acquisitions and
Real Estate and Other......................... $ 9,459 $ 15,500 $ 14,342 $ 21,909 $ 12,944
Net Cash Provided by (Used in):
Operating Activities.......................... $ 1,552 $ 7,559 $ 15,393 $ 29,737 $ 13,366
Investing Activities.......................... (152,685) (47,718) (18,504) (9,124) (15,280)
Financing Activities.......................... 151,595 40,322 2,947 (20,378) 1,676
EBITDA Before Unusual Items...................... $ 12,902 $ 22,936 $ 28,248 $ 43,929 $ 27,300
EBITDA from Resort Operations.................... $ 9,793 $ 16,278 $ 16,005 $ 26,396 $ 28,064
Resort EBITDA Margin............................. 14.4% 16.7% 14.2% 22.1% 23.1%
EBITDA from Real Estate and Other................ $ 3,109 $ 6,658 $ 12,243 $ 17,533 $ (764)
As of As of As of As of As of
October 31, October 30, October 29, October 27, November 2,
1997(a) 1998(b) 1999 2000 2001
----------- ----------- ----------- ----------- -----------
(Dollars in Thousands)
Balance Sheet Data:
Working Capital (Deficit), Including Senior
Credit Facility Borrowings.................... $ (26,634) $ (33,093) $ (45,309) $ (31,628) $ (46,221)
Total Assets..................................... 186,416 218,546 210,346 199,063 189,218
Total Debt....................................... 136,327 156,280 160,986 144,498 148,040
Preferred Stock of Subsidiary (f)................ 3,354 2,634 2,133 1,638 1,136
Common Shareholder's Equity...................... 29,407 37,377 18,584 18,227 4,433
- --------------------------------------------------------------------------------------------------------------------------------
(see accompanying footnotes)
Notes to Selected Financial Data
(a) Reflects the financial results of Waterville Valley and Mt. Cranmore from
November 27, 1996, Northstar, Sierra and Bear Mountain from December 3,
1996, the Summit from January 15, 1997, and Grand Targhee from March 18,
1997, the respective dates of acquisition of each resort by the Company.
(b) Reflects the financial results of Waterville Valley, Mt. Cranmore,
Northstar, Sierra, Bear Mountain, the Summit and Grand Targhee for the
entire period, and Loon Mountain for the period beginning February 26,
1998, the date on which it was acquired by the Company.
(c) Reflects the divestiture of the Grand Targhee resort on June 20, 2000.
(d) Reflects revenue from resort operations divided by total skier days. For
the years ended October 27, 2000 and November 2, 2001, the amount presented
for revenue per skier day excludes the effect of paid skier visit insurance
policy revenue of $6,600,000 and $1,754,000, respectively.
(e) Noncash cost of real estate sales represents the allocated portion of real
estate development expenditures previously capitalized (including
acquisition costs allocated to real estate development) which relate to
current year real estate sales.
(f) Represents preferred stock of a subsidiary of the Company which is subject
to mandatory redemption requirements.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the
consolidated financial statements and related notes thereto included elsewhere
in this Report. The following discussion contains certain forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein. Factors that could cause or
contribute to the differences are discussed in "- Forward-Looking Statements"
and elsewhere in this Report.
General
The Company's ski operations are highly sensitive to weather conditions and
the overall strength of the regional economies in the areas in which the Company
operates. The Company believes that the geographic diversity of the Company's
resorts and the use of extensive snowmaking technology coupled with advanced
trail grooming equipment, which together can provide consistent skiing
conditions, can partially mitigate the risk of both economic downturns and
adverse weather conditions in any given region. However, the Company remains
vulnerable to warm weather, heavy rains, high winds, drought and other types of
severe or unusual weather conditions, which can have a significant effect on the
operating revenues and profitability at any one of the Company's resorts.
The Company's four most weather-sensitive resorts, Bear Mountain,
Waterville Valley, Loon Mountain and Mt. Cranmore, have invested heavily in
snowmaking capabilities to provide coverage on virtually all of their trails and
have been open for skiing at least 143, 138, 142 and 101 days, respectively,
during each of the last five ski seasons, including the 2000/01 ski season.
However, the efficiency and effectiveness of snowmaking operations can be
negatively impacted by numerous factors, including temperature variability,
reliability of water sources, availability and cost of adequate energy supplies
and unfavorable weather events such as heavy rains.
Sierra and the Summit generally experience higher natural snowfall levels,
averaging approximately 476 and 482 inches of snowfall, respectively, per year
for the past five ski seasons. As a result of their historic natural snowfall,
their snowmaking capabilities in terms of trail coverage are considerably less
extensive than at Bear Mountain, Waterville Valley, Loon Mountain or Mt.
Cranmore. However, such resorts are dependent upon early season snowfall to
provide necessary terrain for the important Christmas holiday period, and
therefore, the timing and extent of natural snowfall can significantly impact
operating conditions.
Northstar has averaged approximately 304 inches of snowfall per year for
the past five ski seasons. The resort has snowmaking capabilities to provide
coverage on approximately 50% of its trails. Although the resort's operations
depend significantly on natural snowfall, particularly in the early part of the
season, in recent years the Company has invested in additional snowmaking
facilities to improve Northstar's snowmaking production capacity.
The Company's results of operations are also highly dependent on the
Company's ability to compete in each of the large regional ski markets in which
it operates. Management estimates that at Northstar and Sierra approximately 70%
of the 2000/01 ski season total skier days were attributable to residents of the
San Francisco/San Jose, Sacramento, Central California Valley and Lake Tahoe
regions. At Bear Mountain, roughly 90% of the 2000/01 ski season total skier
days were attributable to residents of the Los Angeles, Orange County and San
Diego metropolitan regions. At Waterville Valley, Loon Mountain and Mt.
Cranmore, more than 75% of the 2000/01 ski season total skier days were
attributable to residents of Massachusetts and New Hampshire, with a large
percentage of such visitors coming from the Boston metropolitan area. At the
Summit, the Company estimates that more than 90% of the 2000/01 ski season total
skier days were attributable to residents of the Seattle/Tacoma metropolitan
region.
The Company seeks to maximize revenues and operating income by managing the
mix of skier days and revenue per skier day. These strategies are also designed
to maximize resort cash flow. The strategy for each resort is based on the
demographic profile of its market and the physical capacity of its mountain and
facilities. The Company seeks to increase skier days by developing effective
ticket pricing and season pass strategies and sales and marketing programs to
improve peak and off-peak volume. The Company seeks to improve revenue per skier
day by effectively managing the price, quality and value of each of its
ski-related services, including retail shops, equipment rentals, lessons and
food and beverage facilities.
The Company seeks to increase skier days by offering a quality guest
experience and developing effective target marketing programs. See Part I, Item
1. "Business - Marketing and Sales." The Company's resorts have invested
approximately $55.8 million (including $6.6 million of equipment acquired
through capital leases and other debt) in capital expenditures during the last
three fiscal years to upgrade chairlift capacity, expand terrain, improve skier
service, retail and food and beverage facilities, increase snowmaking
capabilities and to meet sustaining capital requirements, all of which
management believes are important in providing a quality guest experience.
The following table summarizes the sources of the Company's revenues from
resort operations for the years ended November 2, 2001, October 27, 2000 and
October 29, 1999. The information for the years ended October 27, 2000 and
October 29, 1999 includes the operating results of the Grand Targhee resort,
which was sold in June 2000.
Year Ended
---------------------------------------------
November 2, October 27, October 29,
2001 2000 1999
------------ ------------ ------------
(In thousands)
Lift Tickets.......... $ 49,363 $ 45,037 $ 50,741
Season Passes......... 12,853 11,691 4,201
Snow School........... 8,987 7,990 7,771
Equipment Rental...... 10,163 8,768 8,806
Retail................ 5,725 5,805 8,124
Food and Beverage..... 18,332 17,675 18,626
Other................. 14,452 16,119 14,711
------------ ------------ ------------
Revenues from Resort Operations
before Paid Skier Visit
Insurance....................... 119,875 113,085 112,980
Paid Skier Visit Insurance........ 1,754 6,600 -
------------ ------------- ------------
Total Resort Operations Revenues..$ 121,629 $ 119,685 $ 112,980
============ ============= ============
A meaningful portion of total operating costs at the Company's resorts are
variable, consisting primarily of retail and food service cost of sales,
utilities and labor expense. These variable costs can fluctuate significantly
based upon skier days and seasonal factors. The Company's resorts utilize
significant energy resources in their respective operations, including power for
operating lifts and snowmaking equipment. Volatility in the availability and
cost of energy resources at the Company's resorts could have a material adverse
effect on the Company's results of operations in future periods. In this regard,
Bear Mountain has recently been informed by its local electrical utility of new
proposed electrical rates that could result in an increase of approximately $1.1
million to $1.2 million in annual electricity costs from the level incurred in
2001. The Company is currently evaluating potential alternatives to mitigate the
effect of these cost increases, including (1) opposition of the proposed
electrical rates, (2) conservation efforts, (3) changes in snowmaking production
and other current business practices to reduce electricity consumption during
periods of peak rates, (4) investment in more energy efficient snowmaking
equipment, and (5) product pricing strategies. However, no assurance can be made
regarding the outcome of this matter.
Each of the Company's resorts is subjest to the threat of personal injury
claims relating principally to skiing activities as well as premises and
vehicular operations and worker's compensation matters. The Company maintains
various forms of insurance that the Company considers adequate to insure its
properties and against claims related to usual and customary risks associated
with the operation of four - season recreation resorts. As a result of the
terrorist attacks on September 11th, the insurance industry has experienced
significant losses and a substantial reduction in underwriting capacity, which
has generally resulted in higher renewal premiums for companies seeking
insurance. In connection with its annual renewal of insurance coverage for 2002,
the Company experienced an increase in insurance premium costs of $650,000 over
the level of such costs in 2001.
With the exception of certain management, administrative and maintenance
personnel, all of the Company's employees are compensated on an hourly basis.
Management believes a key element to maximizing profitability during the winter
season is to closely monitor staffing requirements and to adjust staffing levels
when skier volumes or seasonal needs dictate.
Results of Operations of the Company
Overview
The Company's results of operations are significantly impacted by weather
conditions. Snow conditions were generally favorable for Northstar and Sierra
during the 1998/99 ski season. For the 1999/00 ski season, Northstar and Sierra
experienced unseasonably dry weather and a lack of natural snowfall during
November, December and the first part of January, which significantly impacted
terrain availability at these resorts during such period. However, snowfall for
these resorts returned to more normal levels during the later half of January
and February of 2000. Although total snowfall levels during the 2000/01 ski
season in the Lake Tahoe area were significantly less than historical averages,
as compared to the 1999/00 ski season, both Northstar and Sierra benefited from
generally improved trail coverage and conditions during the 2000 Christmas
holiday period and early January 2001. In addition, Sierra opened early on
November 3, 2000, as compared to November 24, 1999 for the 1999/00 ski season.
Bear Mountain suffered from a lack of natural snowfall during both the 1998/99
and 1999/00 ski seasons. For the 2000/01 ski season, snowfall levels at Bear
Mountain were more consistent with historical levels, and early season
snowmaking conditions were generally more favorable than during the prior ski
season. For the 1998/99 season, the Company's New Hampshire resorts experienced
mild temperatures through most of December 1998 and rain on most weekends in
January 1999. The New Hampshire resorts experienced variable temperatures and a
lack of significant natural snowfall through the middle of January of the
1999/00 ski season. For the 2000/01 ski season, temperatures in the Northeast
were generally colder, which enabled more efficient snowmaking production at the
Company's New Hampshire resorts. In addition, natural snowfall for the 2000/01
season at each of the New Hampshire resorts was higher than the two previous ski
seasons, which resulted in significantly improved conditions, particularly
during the early and later parts of the season. For the 1998/99 ski season, the
Summit experienced a prolonged period of snowfall, which resulted in increased
snow removal and other operating costs. Operating conditions were generally
favorable during the 1999/00 ski season, whereas conditions at the Summit for
the 2000/01 ski season were relatively poor due to lower than average snowfall
and periods of rain for parts of January through April 2001.
The Company's fiscal year ended November 2, 2001 was a 53 week period,
whereas the years ended October 27, 2000 and October 29, 1999 were both 52 week
periods. As the additional week in 2001 occurred during the non-peak period
prior to the start of the 2001/02 ski season, the inclusion of the 53rd week in
2001 did not have a significant impact on the comparability of resort operations
revenues between periods. Cost of operations for the Company's resort business
and selling, general and administrative expense in 2001 included approximately
$400,000 in incremental labor costs due to payroll associated with the 53rd
week.
The Company sold the assets associated with the Grand Targhee resort on
June 20, 2000. Grand Targhee contributed resort operations revenues of
$7,367,000 and income from operations before depreciation, depletion and
amortization expense and the noncash cost of real estate sales ("EBITDA") of
$2,229,000 during the year ended October 27, 2000.
Year Ended November 2, 2001 Compared to the Year Ended October 27, 2000
Total revenue for the year ended November 2, 2001 was $121,905,000, a
decrease of $17,450,000, or 12.5%, from the Company's revenues for the year
ended October 27, 2000. Revenues from resort operations for the 2001 period were
$121,629,000, an increase of $1,944,000, or 1.6%, as compared to the 2000
period. Revenues from real estate and other operations for the year ended
November 2, 2001 were $276,000, a decrease of $19,394,000 from the 2000 period.
Due primarily to the generally improved weather and terrain conditions
experienced by the Company's California and New Hampshire resorts during the
2000/01 ski season as compared to the 1999/00 season as well as increased season
pass visits due to a greater number of passes sold and higher estimated pass
visits per passholder, total skier visits for the Company's current resorts
(excluding Grand Targhee) increased by 350,000, or 16.3%, to 2,500,000 visits
for the 2000/01 ski season.
In the accompanying consolidated financial statements as of and for the
year ended November 2, 2001, the Company has recorded a receivable and resort
operations revenues of $1,500,000 for expected proceeds from claims attributable
to lower than agreed-upon paid skier visits and snowfall levels under paid skier
visit insurance policies in place for the 2000/01 season for the Summit and
Waterville Valley. The underwriters are currently disputing the Company's
insurance claims. In November 2001, the Company commenced litigation against the
underwriters and their representatives. While the Company intends to vigorously
pursue collection of its claims and believes such claims are valid, no assurance
can be made regarding the outcome or timing of resolution of this matter. See
Part I, Item 3. "Legal Proceedings."
For the 1999/00 ski season, the Company arranged for four separate paid
skier visit insurance policies covering its Lake Tahoe resorts (Northstar and
Sierra), its New Hampshire resorts (Waterville Valley, Mt. Cranmore and Loon
Mountain), Bear Mountain and the Summit. Resort operations revenues for the year
ended October 27, 2000 included estimated claims revenues of $6,600,000 under
such policies. For the year ended November 2, 2001, resort operations revenues
included $254,000 for additional claim recoveries which were received upon the
final settlement of the 1999/00 paid skier visit insurance policies in excess of
the amounts recognized in fiscal 2000 of $6,600,000.
Resort operations revenues, excluding the effect of paid skier visit
insurance, were $119,875,000 for the year ended November 2, 2001, an increase of
$6,790,000, or 6.0%, from the comparable revenues for the 2000 period. Revenues
for Northstar and Sierra increased by $2,919,000 and $3,772,000, respectively,
primarily due to higher skier visits. Revenues for Bear Mountain increased by
$4,404,000 due to higher skier visits, additional season pass sales and improved
per skier revenue yields. Revenues for Waterville Valley, Mt. Cranmore and Loon
Mountain increased by $830,000, $1,077,000 and $912,000, respectively, due
principally to higher skier visits, partially offset by reduced yields due to
changes in the mix of skier visits. Revenues at the Summit increased by $243,000
due to higher season pass sales and a slight increase in skier visits.
Offsetting these increases was the effect of the divestiture of the Grand
Targhee resort, which contributed revenues of $7,367,000 during the year ended
October 27, 2000.
Due to the timing of the close of escrow on lot sales within the Unit 7
development at Northstar, there were no sales of single family lots during the
year ended November 2, 2001. In December 2001, seven lots within Unit 7 were
sold for net proceeds of approximately $3,300,000, which will be recognized in
the Company's operating results for the first quarter of fiscal 2002. Revenues
from real estate and other operations for the year ended October 27, 2000 were
$19,670,000, consisting primarily of (1) revenues of $17,850,000 from the sale
of certain developmental property at Northstar, (2) revenues from the close of
escrow on the final four lots in Phases 4 and 4A of the Big Springs Development
at Northstar, and (3) timber sales of $669,000. Timber operations contributed
revenues of $276,000 in the 2001 period. The reduction in timber harvesting and
related revenues in the 2001 period was principally due to harvesting
restrictions as a result of adverse fire conditions in the Lake Tahoe region.
Cost of sales for resort operations for the year ended November 2, 2001
were $70,982,000, an increase of $588,000, or 0.8%, as compared to the 2000
period. Excluding cost of sales incurred by the Grand Targhee resort of
$4,419,000 during the 2000 period, cost of sales for resort operations increased
by $5,007,000 in 2001, or 7.6%, over the 2000 period. The increase was primarily
the result of increased payroll and operating expenses as a result of the more
normalized operations, increases in business volumes and extended seasons at the
California and New Hampshire resorts due to improved snowfall and terrain
conditions. In addition, the following items also contributed to the increase:
(1) the impact of the 53rd week of operations in 2001, (2) wage pressures due to
the competitive labor markets in the areas of the Company's resorts and
statutory changes affecting wage rates and overtime regulations in California,
(3) higher utility and fuel prices, (4) additional operating costs associated
with the launch of the new Lookout Mountain terrain expansion at Northstar, (5)
increased snowmaking costs due to higher snowmaking production, and (6) normal
inflationary factors.
Selling, general and administrative expenses for the year ended November 2,
2001 were $23,412,000, an increase of $427,000, or 1.9%, as compared to the 2000
period. Excluding selling, general and administrative expenses incurred by the
Grand Targhee resort of $719,000 during the 2000 period, selling, general and
administrative expenses increased by $1,146,000 in 2001, or 5.1%, over the 2000
period. The increase was primarily the result of (1) general and administrative
expenses of $829,000 associated with real estate development activities at
Northstar and Loon Mountain, (2) the impact of the 53rd week of operations in
2001, (3) normal inflationary factors, (4) sales and marketing initiatives at
the Company's resorts, and (5) marketing and promotional activities associated
with the launch of the Lookout Mountain terrain expansion at Northstar.
Cost of sales for real estate and other operations for the year ended
October 27, 2000 of $4,507,000, including noncash cost of real estate sales of
$2,460,000, consisted of land basis, development and transaction costs
associated with the sale of real estate at Northstar, and cost of sales for
timber operations of $486,000. Cost of sales for real estate and other
operations for the year ended November 2, 2001 was $211,000 and consisted solely
of timber harvesting costs.
Operating income for the year ended November 2, 2001 was $2,179,000, a
decrease of $16,718,000, or 88.5%, from the operating income generated for the
2000 period, as a result of the factors discussed above.
Interest expense for the year ended November 2, 2001 totaled $16,883,000, a
decrease of $1,332,000, or 7.3%, from the Company's interest expense for the
year ended October 27, 2000. The decrease was primarily the result of the
repurchase of $8,000,000 aggregate principal amount of its senior debt
securities (the "Senior Notes") during the year ended November 2, 2001, as well
as the effect of lower average borrowing levels and interest rates on the
Company's Senior Credit Facility in the 2001 period.
As of November 2, 2001, the Company had estimated net operating loss
carryforwards of approximately $84.7 million for federal income tax reporting
purposes, which expire between 2012 and 2021. The tax benefits of such net
operating losses are fully offset by a valuation reserve. Accordingly, during
the year ended November 2, 2001, no income tax benefit has been provided.
The Company recognized an extraordinary gain on the early retirement of
debt of $1,723,000 for the year ended November 2, 2001 as a result of the
repurchase of $8,000,000 aggregate principal amount of Senior Notes.
The Company's net loss for the year ended November 2, 2001 was $13,794,000,
as compared to a net loss of $357,000 generated for the year ended October 27,
2000, as a result of the factors discussed above.
Total EBITDA for the year ended November 2, 2001 was $27,300,000, a
decrease of $16,629,000, or 37.9%, from the EBITDA of $43,929,000 for the year
ended October 27, 2000. Resort operations contributed EBITDA of $28,064,000 for
the 2001 period as compared to $26,396,000 for the 2000 period, an increase of
$1,668,000 or 6.3%. Excluding the effect of the Grand Targhee resort on the 2000
period, resort operations EBITDA for the 2001 period increased by $3,897,000, or
16.1%, over the 2000 period. Real estate and other operations incurred an EBITDA
loss of $764,000 for the 2001 period as compared to EBITDA generated from real
estate and other operations of $17,533,000 for the 2000 period.
Year Ended October 27, 2000 Compared to the Year Ended October 29, 1999
Total revenue for the year ended October 27, 2000 was $139,355,000, an
increase of $13,631,000, or 10.8%, over the Company's revenues for the year
ended October 29, 1999. Revenues from resort operations for the year ended
October 27, 2000 were $119,685,000, an increase of $6,705,000, or 5.9%, as
compared to the 1999 period. Revenues from real estate and other operations for
the year ended October 27, 2000 were $19,670,000, an increase of $6,926,000, or
54.3%, as compared to the 1999 period.
For the 1999/00 ski season, the Company introduced new attractively priced
season pass products at Sierra, Bear Mountain, Waterville Valley, Mt. Cranmore,
Loon Mountain, the Summit and Grand Targhee, which were designed to stimulate
demand, attract greater market share and take advantage of off-peak capacity.
This initiative resulted in an increase of approximately $7,500,000 in the total
amount of season pass products sold for the 1999/00 season when compared to the
1998/99 season.
Due to the unfavorable weather and terrain conditions experienced by most
of the Company's resorts during the first half of the 1999/00 ski season, the
Company experienced significant declines in total skier visits for the 1999/00
season as compared to the 1998/99 season. Total skier visits for the 1999/00
season were 2,287,000, a decrease of 146,000 skier visits from the 1998/99
season.
For the 1999/00 ski season, the Company arranged for four separate paid
skier visit insurance policies covering its Lake Tahoe resorts (Northstar and
Sierra), its New Hampshire resorts (Waterville Valley, Mt. Cranmore and Loon
Mountain), Bear Mountain and the Summit. For the year ended October 27, 2000,
the Company recognized resort operating revenues of $6,600,000 for estimated
claims proceeds attributable to the decline from targeted paid skier visits for
the 1999/00 season.
Resort operating revenues, excluding the effect of paid skier visit
insurance, were $113,085,000 for the year ended October 27, 2000, an increase of
$105,000 from the 1999 period. Revenues for Northstar increased by $225,000 due
to higher per skier revenue yields and improved summer business, partially
offset by lower skier visits. Revenues for Sierra and Bear Mountain declined by
$1,519,000 and $883,000, respectively, due to a decline in skier visits,
partially offset by improvements in per skier revenue yields and higher season
pass revenues. Waterville Valley's revenues declined by $1,548,000 due to the
conversion of its retail operations to a concessionaire arrangement for the
1999/00 season and lower skier visits, partially offset by improved yields and
higher season pass revenues. Revenues for Mt. Cranmore were consistent with the
prior period, as improved yields offset the impact of reduced skier visits. Loon
Mountain generated increased revenues of $1,325,000 due primarily to improved
yields and higher season pass revenues. Revenues for the Summit increased by
$2,876,000 due to increases in season pass revenues and improved yields. Grand
Targhee generated slightly increased revenues during the winter season due to
higher skier visits, which was offset by the effect of the sale of the resort on
June 20, 2000. The improvement in per skier revenue yields at the Company's
resorts was primarily due to price increases, and to a lesser extent, sales of
additional services and products to the Company's guests.
Revenues from real estate and other operations for the year ended October
27, 2000 were $19,670,000, consisting primarily of (1) revenues of $17,850,000
from the sale of certain developmental property at Northstar, (2) revenues from
the close of escrow on the final four lots in Phases 4 and 4A of the Big Springs
development at Northstar, and (3) timber sales of $669,000. For the 1999 period,
revenues from real estate and other operations consisted of $12,004,000 in
revenues from the sale of 43 lots in Phases 4 and 4A of the Big Springs
development and timber sales of $740,000. For additional information on the
Company's real estate activities, see Part I, Item 1. "Business - Real Estate
Development."
Cost of sales for resort operations for the year ended October 27, 2000 was
$70,394,000, a decrease of $4,010,000, or 5.4%, as compared to the 1999 period.
The decline was primarily due to the combined effects of the following: (1)
elimination of certain nonrecurring maintenance, operations, snow removal and
other costs incurred at the Summit in the 1999 period, (2) lower business
volumes and aggressive variable cost management at most of the resorts during
the first quarter of 2000, (3) elimination of $1,200,000 in retail costs of
sales at Waterville Valley due to the conversion of the resort's retail
operations to a concessionaire arrangement for the 1999/00 ski season, and (4)
the divestiture of the Grand Targhee resort on June 20, 2000. Selling, general
and administrative expense for the year ended October 27, 2000 was $22,985,000,
which was generally consistent with the 1999 period.
Cost of sales for real estate and other operations for the year ended
October 27, 2000 of $4,507,000 consisted of land basis, development and
transaction costs associated with the sale of real estate at Northstar, and cost
of sales for timber operations of $486,000. Cost of sales for real estate and
other operations for the year ended October 29, 1999 was $5,244,000, consisting
of land basis, development and other costs associated with the sale of real
estate at Northstar, and cost of sales for timber operations of $502,000.
Noncash cost of real estate sales were $2,460,000 and $4,743,000 for the 2000
and 1999 periods, respectively.
Operating income for the year ended October 27, 2000 totaled $18,897,000,
an increase of $17,629,000 over the operating income generated for the 1999
period, as a result of the factors discussed above.
Interest expense for the year ended October 27, 2000 totaled $18,215,000, a
decrease of $492,000 from the Company's interest expense for the year ended
October 29, 1999. The decrease in interest expense was the result of lower
borrowing levels under the Company's Senior Credit Facility, offset by slightly
higher borrowing rates.
Due to the Company's lack of profitable history, the tax benefits of
operating losses are fully offset by a valuation reserve. Accordingly, no income
tax provision was recorded for the years ended October 27, 2000 and October 29,
1999.
The Company's net loss for the year ended October 27, 2000 was $357,000, an
improvement of $18,436,000 from the net loss of $18,793,000 incurred for the
year ended October 29, 1999, as a result of the factors discussed above.
EBITDA for the year ended October 27, 2000 was $43,929,000, an increase of
$15,681,000, or 55.5%, over EBITDA before unusual items of $28,248,000 for the
year ended October 29, 1999. Resort operations contributed EBITDA of $26,396,000
for the 2000 period as compared to $16,005,000 for the 1999 period, an increase
of $10,391,000 or 64.9%. EBITDA from real estate and other operations was
$17,533,000 for the 2000 period, an increase of $5,290,000, or 43.2%, from the
EBITDA of $12,243,000 for the 1999 period.
Liquidity and Capital Resources
The Company's primary liquidity needs are to fund capital expenditures,
service indebtedness and support seasonal working capital requirements. The
Company's primary sources of liquidity are cash flow from operations and
borrowings under the Senior Credit Facility. Virtually all of the Company's
operating income is generated by its subsidiaries. As a result, the Company is
dependent on the earnings and cash flow of, and dividends and distributions or
advances from, its subsidiaries to provide the funds necessary to meet its debt
service obligations. The Senior Credit Facility currently provides for borrowing
availability of up to $25 million during the term of such facility. The Senior
Credit Facility requires that the Company not have borrowings thereunder in
excess of $8 million, in addition to amounts maintained by the Company in
certain depository accounts with the Agent, for a period of 60 consecutive days
each year commencing sometime between February 1 and February 28. The Senior
Credit Facility matures on March 31, 2002. The Company is in discussions with
potential lenders regarding the extension or refinancing of the Senior Credit
Facility. While the Company anticipates that the Senior Credit Facility will be
renewed or refinanced, the Company has not received a binding commitment from
any lender to provide such financing, and no assurances can be given regarding
the availability of such financing or the terms thereof.
The Company intends to use borrowings under the Senior Credit Facility (or
any replacement facility) to meet seasonal fluctuations in working capital
requirements, primarily related to off-season operations and maintenance
activities during the months of May through November, to fund capital
expenditures and to build retail and other inventories prior to the start of the
ski season and for other cash requirements. As of November 2, 2001, outstanding
borrowings under the Senior Credit Facility totaled approximately $17.6 million.
As of January 25, 2002, borrowings outstanding under the Senior Credit Facility
were approximately $1.0 million.
The Company had a working capital deficit of $28.6 million (including $17.6
million in outstanding borrowings under the Senior Credit Facility, and
excluding $17.6 million of unearned revenue from resort and real estate
operations which will not require cash spending to settle such liabilities) as
of November 2, 2001, which will negatively affect liquidity during 2002. The
Company's working capital deficit at October 27, 2000, determined in a
consistent manner as described above, was $16.0 million.
The Company generated cash from operating activities of $13.4 million for
the year ended November 2, 2001 as compared to $29.7 million for the year ended
October 27, 2000. The decrease in cash generated from operating activities was
primarily due to the absence of real estate sales in the 2001 period.
Cash used in investing activities totaled $15.3 million and $9.1 million
for the years ended November 2, 2001 and October 27, 2000, respectively. The
results for the 2001 and 2000 periods primarily reflect capital expenditures for
property and equipment and real estate held for development and sale. In
addition, investing cash flows for the 2000 period reflects $11.4 million in
proceeds from the sale of the Grand Targhee resort on June 20, 2000.
Cash provided by financing activities for the year ended November 2, 2001
was $1.7 million, and primarily reflects net borrowings under the Senior Credit
Facility of $11.3 million, principal payments on long-term debt of $9.0 million
and payments on preferred stock of $629,000. Cash used in financing activities
for the year ended October 27, 2000 was $20.4 million, and principally consisted
of Senior Credit Facility net repayments of $16.7 million, principal payments on
long-term debt of $2.7 million and payments on preferred stock of $674,000.
During the year ended November 2, 2001, the Company repurchased $8,000,000
aggregate principal amount of Senior Notes for $5,990,000. After giving effect
to the write-off of related deferred financing costs of $287,000, the Company
recognized an extraordinary gain of $1,723,000. The Company may consider
repurchasing additional Senior Notes in the future if it could do so on
favorable terms, subject to financing and other liquidity constraints.
On November 17, 1999, Trimont Land Company ("TLC"), the owner and operator
of Northstar and a wholly-owned subsidiary of the Company, consummated the sale
to Trimont Land Holdings, Inc. ("TLH"), a wholly-owned subsidiary of Parent and
an affiliate of the Company, of certain single family development property
underlying a portion of the Unit 7 and 7A developments at Northstar for an
aggregate sales price of $7,050,000, subject to adjustment as described below.
The consideration paid to TLC consisted of $6,000,000 in cash and a promissory
note (the "TLH Note") for $1,050,000, subject to adjustment. The Company
obtained a fairness opinion for the transaction from an independent firm
qualified in the subject matter of the transaction. In connection with the sale
of development real estate on September 22, 2000 as described below, TLH's
interests in the Unit 7A lots were transferred back to TLC on September 22,
2000.
Under the terms of the TLH Note, TLC will receive the greater of (a)
$1,050,000 plus accrued interest at 7% per annum, or (b) the Net Cash Proceeds
(as defined) of the resale of TLH's lots within Unit 7. The TLH Note is
prepayable at any time, and is due on the earlier to occur of January 30, 2003
or the date on which the last of the lots owned by TLH has been sold. The
Company will recognize revenue and related costs of sales for this real estate
transaction upon the close of escrow for lot sales between TLH and third party
buyers, and has reflected the cash received as a deposit liability as of
November 2, 2001 and October 27, 2000.
During December 2001, TLH consummated the sale of seven Unit 7 lots for net
proceeds of approximately $3,300,000. As the net proceeds of the seven lot sales
were less than the $6,000,000 in cash initially paid by TLH for the underlying
real estate, no additional cash proceeds were distributed to TLC. However, TLC
will relieve the related deposit liability and recognize revenues for such lot
sales during the first quarter of fiscal 2002. TLH intends to market and sell
the remaining 19 unsold Unit 7 lots during 2002.
On September 22, 2000, TLC and TLH entered into an Agreement for Purchase
and Sale of Real Property (the "Northstar Real Estate Agreement") pursuant to
which TLC agreed to sell to TLH certain development real estate consisting of
approximately 550 acres of land located at Northstar (the "Development Real
Estate") for a total purchase price of $27,600,000, of which 85% is payable in
cash and 15% is payable in the form of convertible secured subordinated
promissory notes. The purchase price was based on an appraisal obtained from an
independent third party appraiser. Concurrently therewith, TLC and TLH
consummated the sale of the initial land parcels contemplated by the Northstar
Real Estate Agreement, and TLC transferred the bulk of the Development Real
Estate to TLH for a total purchase price of $21,000,000, of which $17,850,000,
or 85%, was paid in cash and $3,150,000, or 15%, was paid in the form of a
convertible secured subordinated promissory note. The sale of the remaining
Development Real Estate under the Northstar Real Estate Agreement is subject to
certain subdivision requirements to effect the transfer of such property and
other normal and customary closing conditions, and is expected to be consummated
in 2002. See Part III, Item 13. "Certain Relationships and Related Transactions
- - Sale of Real Estate to Trimont Land Holdings, Inc." and Note 9 to the
accompanying consolidated financial statements.
The Company's capital expenditures for property and equipment for the year
ended November 2, 2001 were approximately $16.2 million (including $3.2 million
of equipment acquired through capital leases and other debt). Commitments for
future capital expenditures at November 2, 2001 were approximately $2.1 million.
Management anticipates that maintenance capital expenditures for its fiscal
2002 and 2003 capital programs will range from $5.0 million to $6.0 million per
year. Remaining capital expenditures for the Company's fiscal 2001 capital
program which will be incurred in fiscal 2002 are approximately $3.1 million. In
addition, acquisitions of grooming equipment, which are typically financed under
capital leases, are expected to range from $1.2 million to $2.0 million
annually. Depending upon the timing of construction of the Unit 7A single family
development at Northstar, expenditures for real estate held for development and
sale are anticipated to range from $2.0 million to $3.5 million in fiscal 2002.
The scope of fiscal 2002 expansion capital plans and project planning and
approvals has not yet been determined. The Company plans to fund these capital
expenditures from available cash flow, vendor financing to the extent permitted
under the Senior Credit Facility and the Indenture and borrowings under the
Senior Credit Facility (or a replacement facility).
Management believes that there is a considerable degree of flexibility in
the timing (and, to a lesser degree, the scope) of its capital expenditure
program, and even greater flexibility as to its real estate development
objectives. While the capital expenditure program described above is regarded by
management as important, both as to timing and scope, discretionary capital
spending above maintenance levels can be deferred, in some instances for
substantial periods of time, in order to address cash flow or other constraints.
With respect to the Company's potential real estate development
opportunities, management believes that such efforts would enhance ski-related
revenues and contribute independently to earnings. In addition, with respect to
significant development projects, the Company expects to continue to pursue
arrangements that would reduce infrastructure and other development costs.
Nonetheless, existing lodging facilities in the vicinity of each resort are
believed to be adequate to support current skier volumes and a deferral or
curtailment of development efforts is not regarded by management as likely to
adversely affect skier days and ski-related revenues or profitability. The
Company also believes that its current infrastructure is sufficient, and that
development of real estate opportunities is not presently necessary to support
its existing operations.
The Company's liquidity has been and will continue to be significantly
affected by its high leverage. As a result of its leveraged position, the
Company will have significant cash requirements to service debt and funds
available for working capital, capital expenditures, acquisitions and general
corporate purposes are limited. In addition, the Company's high level of debt
may increase its vulnerability to competitive pressures and the seasonality of
the skiing and recreational industries. Any decline in the Company's expected
operating performance could have a material adverse effect on the Company's
liquidity and on its ability to service its debt and make required capital
expenditures.
In addition, the Senior Credit Facility and the Indenture governing the
Company's Senior Notes each contain covenants that, among other things,
significantly limit the Company's ability to obtain additional sources of
capital and may affect the Company's liquidity. These covenants restrict the
ability of the Company and its Restricted Subsidiaries to, among other things,
incur additional indebtedness, create liens, make investments, consummate
certain asset sales, create subsidiaries, issue subsidiary stock, consolidate or
merge with any other person, or transfer all or substantially all of the assets
of the Company. Further, upon the occurrence of a Change of Control (as defined
in the Indenture), the Company may be required to repurchase the Notes at 101%
of the principal amount thereof, plus accrued and unpaid interest. The
occurrence of a Change of Control may also constitute a default under the Senior
Credit Facility. No assurance can be given that the Company would be able to
finance a Change of Control repurchase offer.
The Senior Credit Facility also requires the Company to maintain specified
consolidated financial ratios and satisfy certain consolidated financial tests.
The Company's ability to meet these financial covenants may be affected by
events beyond its control, and there can be no assurance that the Company will
satisfy those covenants. In addition, the Senior Credit Facility matures on
March 31, 2002. No assurances can be given that the agreements governing any
replacement financing, if such financing is available, will not have more
restrictive operating covenants or other less favorable terms than the existing
Senior Credit Facility.
The Company currently has $125.5 million aggregate principal amount of
Senior Notes outstanding, which will result in annual cash interest requirements
of approximately $15.7 million. The Company expects that cash generated from
operations, cash proceeds of planned real estate sales at Northstar, together
with borrowing availability (to the extent the Company is able to extend or
refinance the Senior Credit Facility), will be adequate to fund the interest
requirements on the Senior Notes and the Company's other cash operating and debt
service requirements over the next twelve months. In order to focus the
Company's resources on attractive investment opportunities at certain of its
resorts and to satisfy short-term and long-term liquidity requirements, the
Company may in the future consider divestitures of non-strategic assets,
including resorts and certain real estate assets, if such transactions can be
completed on favorable terms.
For the year ended November 2, 2001, the Company's earnings would have been
inadequate to cover fixed charges by $15.5 million. Any decline in the Company's
expected operating performance or the inability of management to successfully
implement the Company's business strategy, could have a material adverse effect
on the Company's financial position and liquidity. In such case, the Company
could be required to attempt to refinance all or a portion of its existing debt,
sell other assets or obtain additional financing. No assurance can be given of
the Company's ability to do so or the terms of any such transaction. In
addition, the Company would require additional financing for expansion of its
existing properties or for future acquisitions, if any. No assurances can be
given that any such financing would be available on commercially reasonable
terms. See "Forward-Looking Statements" herein.
The Company believes that inflation has had little effect on its results of
operations and any impact on costs has been largely offset by increased pricing.
Recent Trends and Outlook
The full impact of the September 11th terrorist attacks and the weakening
U.S. economy on the Company's business is not presently determinable. Currently,
there are a number of both negative trends and mitigating factors that will
likely influence the ultimate effect of these events on the Company's future
results of operations, including the following:
o The Company's resorts are located within 200 miles of four of the five
largest regional ski markets in the United States. Depending on the
particular resort, management estimates that 70-95% of its customers
travel to the Company's resorts by car.
o The eventual impact on the travel choices of the Company's customers
who travel by air due to (1) concerns about the safety of air travel,
(2) reductions in the number of flight options, and (3) increases in
the time commitment necessary to travel by air due to heightened
security measures, is not determinable.
o A meaningful portion of the Company's customer base is comprised of
committed season pass holders. Through mid January 2002, the
Company's 2001/02 season pass sales were significantly higher than at
the same time in 2001, although a portion of the increase is
attributable to the introduction of new pass products which may
cannibalize sales of other lift ticket products.
o Based on U.S. Department of Labor statistics through December 2001,
over the prior year the number of unemployed persons nationally
increased by 2.6 million and the unemployment rate grew by 1.8% to
5.8%.
o Due to impacts on the insurance industry of the September 11th
terrorist attacks, the Company's insurance premiums for 2002 increased
by approximately $650,000 over the level of such costs in 2001.
Due to the concerns surrounding the travel and recreational industries as a
result of recent terrorism and the weakening U.S. economy, the Company is
continuing to closely monitor its operational and capital spending levels to
help offset the impacts on the Company's business of potential reductions in
business volumes.
Pending Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"). Under the new rules, goodwill will no
longer be amortized but will be subject to annual impairment tests in accordance
with the pronouncement. The Company will apply the new rules on accounting for
goodwill commencing on November 3, 2001. Application of the nonamortization
provisions of SFAS No. 142 is expected to result in an increase in net income of
approximately $2,300,000 in fiscal 2002. In connection with the adoption of SFAS
No. 142, the Company will be required to perform a transitional impairment test
for recorded goodwill as of November 3, 2001. The Company does not expect that
the transitional impairment test will result in any significant impairment
losses.
In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"), which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and associated asset retirement costs.
The new rules apply to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) normal operation of a long-lived asset. SFAS No. 143 is effective for
the Company at the beginning of fiscal 2003. The Company believes the adoption
of SFAS No. 143 will not have a material impact on its consolidated financial
position or results of operations.
Seasonality
The business of the Company is highly seasonal, with the vast majority of
its annual revenues expected to be generated between November and April of each
fiscal year. Management considers it essential to achieve optimal operating
results during key holidays and weekends during this period. The Company's
results of operations are, in turn, significantly dependent on favorable weather
conditions and other factors beyond the Company's control. In prior years, the
Company sought to partially mitigate the downside risk of its seasonal business
by purchasing paid skier visit insurance policies. The Company did not obtain
paid skier visit insurance coverage for its resorts for the 2001/02 ski season
as effective policies were not available on commercially viable terms.
During the off-season months of May through October, the Company's resorts
typically experience a substantial reduction in labor and utility expense due to
the absence of ski operations, but make significant expenditures for
maintenance, expansion and capital improvements in preparation for the ensuing
ski season.
Forward-Looking Statements
Except for historical matters, the matters discussed in Part II, Item 7.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and elsewhere in this Report are forward-looking statements that
involve risks and uncertainties. The forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. The reader can identify these statements by forward-looking
words such as "may", "will", "expect", "plan", "intend", "anticipate",
"believe", "estimate", and "continue" or similar words. Forward-looking
statements are based on management's current views and assumptions and involve
risks and uncertainties that could significantly affect the Company's business
and expected operating results. The Company wishes to caution the reader that
certain factors, including those described below, could significantly and
materially affect the Company's actual results, causing results to differ
materially from those in any forward-looking statement. These factors include,
but are not limited to:
o Uncertainty as to future financial results,
o The substantial leverage and liquidity constraints of the Company,
o The potential inability of the Company to refinance or extend its Senior
Credit Facility as well as the terms thereof,
o Significant operating restrictions under the Company's debt agreements,
o The capital intensive nature of development of the Company's ski
resorts,
o Uncertainties associated with obtaining financing for future real
estate projects and to undertake future capital improvements,
o Uncertainties regarding the timing and success of our real estate
development projects and their ultimate impact on our operating results,
o Demand for and costs associated with real estate development,
o The discretionary nature of consumers' spending for skiing and
resort real estate,
o Regional and national economic conditions,
o Weather conditions,
o Negative impact on demand for our services and products resulting from
recent and potential terrorism threats (including the effect of the
September 11th attacks),
o Availability of commercial air service,
o Natural disasters (such as earthquakes and floods),
o Availability and terms of paid skier visit insurance coverage,
o Competition and pricing pressures
o Governmental regulation and litigation and other risks associated
with expansion and development,
o The adequacy of the water supplies at each of the Company's resorts,
o Availability of adequate energy supplies for the operation of the
Company's resorts, including snowmaking operations, and volatility in
the prices charged for energy and fuel, and
o The occupancy of leased property and property used pursuant to the
United States Forest Service permits.
Item 7a. Quantitative and Qualitative Disclosures about Market Risk
The Company's market risk sensitive instruments do not subject the Company
to material market risk exposures, except for such risks related to interest
rate fluctuations. As of November 2, 2001, the Company had debt outstanding
(including the Senior Credit Facility) with a carrying value of $148.0 million
and an estimated fair value of $118.5 million.
Fixed interest rate debt outstanding as of November 2, 2001, which excludes
the Senior Credit Facility, was $130.4 million, carried an average interest rate
of approximately 12%, and matures as follows (in thousands):
2002 2003 2004 2005 2006 Thereafter Total
---- ---- ---- ---- ---- ---------- -----
Senior Notes $ - $ - $ - $ - $ - $ 125,500 $ 125,500
Other Debt 1,748 1,116 1,624 209 125 90 4,912
-----------------------------------------------------------------
$1,748 $1,116 $1,624 $209 $125 $ 125,590 $ 130,412
=================================================================
The amount of borrowings under the Senior Credit Facility as of November 2,
2001 was approximately $17.6 million. For purposes of calculating interest,
borrowings under the Senior Credit Facility can be, at the election of the
Company, Base Rate Loans or LIBOR Rate Loans or a combination thereof. Base Rate
Loans bear interest at the sum of (a) a margin of between 0% and .5%, depending
on the level of consolidated EBITDA of the Company and its subsidiaries (as
determined pursuant to the Senior Credit Facility), plus (b) the higher of (i)
the Agent's base rate or (ii) the federal funds rate plus .5%. LIBOR Rate Loans
bear interest at the LIBOR rate plus a margin of between 2% and 3%, depending on
the level of consolidated EBITDA. As of November 2, 2001, the borrowings
outstanding under the Senior Credit Facility bore interest at an annual rate of
5.5%, pursuant to the Base Rate Loan option. A 10% increase or decrease in
interest rates would have an immaterial effect on the Company's future pretax
earnings and cash flows.
Item 8. Financial Statements and Supplementary Data
The financial statements and supplementary financial information that are
required to be included pursuant to this Item 8 are listed in Item 14 of this
Report under the caption "(a)1." and follow Item 14. The financial statements
and supplementary financial information specifically referenced in such list are
incorporated in this Item 8 by reference.
Item 9. Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Directors, Executive Officers and Key Employees
The following table sets forth information with respect to the directors,
executive officers and other key employees of the Company and Booth Creek Ski
Group, Inc., a Delaware corporation ("Parent"), of which the Company is a
wholly-owned subsidiary.
Name Age Position
George N. Gillett, Jr....... 63 Chairman of the Board of Directors; Chief
Executive Officer, Assistant Secretary, and
Director of the Company and Parent
Christopher P. Ryman........ 50 President, Chief Operating Officer and
Assistant Secretary of the Company, and
President and Assistant Secretary of Parent
Elizabeth J. Cole........... 41 Executive Vice President, Chief Financial
Officer, Treasurer and Assistant Secretary
of the Company and Parent
Timothy H. Beck............. 51 Executive Vice President, Planning of the
Company
Brian J. Pope............... 39 Vice President of Accounting and Finance,
Assistant Treasurer and Assistant Secretary
of the Company, and Vice President and
Assistant Secretary of Parent
David G. Corbin............. 49 Vice President of Resort Development of
the Company
Ross D. Agre................ 33 Vice President and General Counsel and
Secretary of the Company and Parent
Julianne Maurer............. 45 Vice President of Marketing and Sales of
the Company
Mark St. J. Petrozzi........ 42 Vice President of Risk Management of the
Company
Laura B. Moriarty........... 46 Vice President of Human Resources of the
Company
Gary M. Pelletier........... 40 Director of the Company and Parent
Dean C. Kehler.............. 45 Director of the Company and Parent
Edward Levy................. 38 Director of the Company and Parent
Timothy Silva............... 50 General Manager - Northstar
John A. Rice................ 46 General Manager - Sierra
Brent G. Tregaskis.......... 41 General Manager - Bear Mountain
Thomas H. Day............... 47 General Manager - Waterville Valley
Ted M. Austin............... 41 General Manager - Mt. Cranmore
Rick F. Kelley.............. 46 General Manager - Loon Mountain
Dan Brewster................ 41 General Manager - Summit
- -------------------------------------------------------------------------------
George N. Gillett, Jr. Mr. Gillett has been the Chairman of the Board of
Directors of the Company since its formation in October 1996 and Chief Executive
Officer since February 1997. From August 1994 to July 2001, he served as
Chairman of Packerland Packing Company, Inc., a meatpacking company based in
Green Bay, Wisconsin. From January 1997 to February 2000, Mr. Gillett served as
Chairman of Corporate Brand Foods America, Inc., a processor and marketer of
meat and poultry products based in Houston, Texas, which was acquired by IBP in
February 2000.
Christopher P. Ryman. Mr. Ryman became President, Chief Operating Officer
and Assistant Secretary of the Company in May 1998. Mr. Ryman was Chief
Operating Officer and Senior Vice President of Vail Associates, Inc. from 1995
to May 1998. Prior to that time, from 1992 to 1995, he was Senior Vice President
of Mountain Operations at Vail Associates, Inc.
Elizabeth J. Cole. Ms. Cole has held the positions of Executive Vice
President, Chief Financial Officer and Treasurer of the Company since May 1998.
Ms. Cole also held the position of Secretary of the Company until October 2001,
at which time she was appointed Assistant Secretary. From May 1995 until May
1998, Ms. Cole worked at Vail Resorts, with her most recent position there being
that of Vice President, Business Development. Prior to this time Ms. Cole was
affiliated with Aurora Capital Partners, a private equity fund. During her
employment with Aurora Capital Partners, she served as the Chief Financial
Officer of Petrowax PA, Inc., a manufacturer of petroleum waxes.
Timothy H. Beck. Mr. Beck has held the position of Executive Vice
President, Planning of the Company since July 1997. Prior to this time he served
as President of Sno-engineering, Inc., a leading ski resort and real estate
consulting and appraisal firm, since January 1991.
Brian J. Pope. Mr. Pope has held the position of Vice President of
Accounting and Finance of the Company since August 1998. In December 1998, Mr.
Pope was also named to the positions of Assistant Treasurer and Assistant
Secretary of the Company. Prior to August 1998, he served as Senior Manager in
the Assurance and Advisory Business Services unit of Ernst & Young LLP.
David G. Corbin. Mr. Corbin became the Vice President of Resort Development
of the Company in August 2000. Prior to this time, he served as Vice President
with Vail Resorts Development Company since 1993.
Ross D. Agre. Mr. Agre has held the position of Vice President and General
Counsel of the Company since September 2001. In October 2001, Mr. Agre was also
named Secretary of the Company. From October 1994 to August 2001, Mr. Agre
served with the law firm of Milbank, Tweed, Hadley & McCloy LLP, and was
principally involved in a corporate transactional practice.
Julianne Maurer. Ms. Maurer has held the position of Vice President of
Marketing and Sales of the Company since December 1996. Prior to this time she
served as Director of Marketing of the Fibreboard Resort Group as well as
Director of Marketing for Northstar.
Mark St. J. Petrozzi. Mr. Petrozzi has held the position of Vice President
of Risk Management of the Company since January 1998. Between July 1988 and
January 1998, Mr. Petrozzi held various management positions with Willis
Corroon, a national insurance brokerage and consulting firm.
Laura B. Moriarty. Ms. Moriarty has held the position of Vice President of
Human Resources of the Company since September 1997. Prior to this time, Ms.
Moriarty was the Training Development Director at Harvey's Resort Casino since
October 1994.
Gary M. Pelletier. Mr. Pelletier has been with John Hancock Life Insurance
Company ("John Hancock") since June 2001 and currently serves as a Managing
Director with the Bond and Corporate Finance Group. Mr. Pelletier is responsible
for a portfolio of investments specializing in media, entertainment and
recreational related businesses, and has investment responsibilities with
respect to Hancock Mezzanine Partners L.P. Prior to June 2001, Mr. Pelletier was
employed with State Street Corporation since 1987, and most recently was in
charge of Global Fixed Income Credit Research for State Street Advisors, the
asset management arm of State Street Corporation.
Dean C. Kehler. Mr. Kehler is a vice-chairman of CIBC World Markets Corp.
(an affiliate of CIBC WG Argosy Merchant Fund 2, L.L.C. - the "CIBC Merchant
Fund"), co-head of CIBC World Markets High Yield Merchant Banking Funds, and a
member of CIBC World Markets Corp.'s Executive Board, U.S. Management Committee
and Investment Committee, and has investment responsibilities with respect to
the CIBC Merchant Fund and the Co-Investment Merchant Fund, LLC (the
"Co-Investment Fund"). Mr. Kehler is also a founder of Trimaran Capital
Partners, a private asset management firm which manages private equity funds and
a portfolio of structured investment funds. Prior to joining CIBC World Markets
Corp., Mr. Kehler was a Managing Director of Argosy Group L.P., an investment
banking firm, from February 1990 to August 1995. Mr. Kehler serves as a director
of Heating Oil Partners, L.P., First Knowledge Partners, inviva, inc. and
CityNet Telecommunications, Inc.
Edward Levy. Mr. Levy has been a Managing Director of CIBC World Markets
Corp., an affiliate of CIBC Merchant Fund, since August 1995, and has investment
responsibilities with respect to the CIBC Merchant Fund and the Co-Investment
Fund. From February 1990 to August 1995, Mr. Levy was a Managing Director of
Argosy Group, L.P., an investment banking firm. Mr. Levy is also a director of
Heating Oil Partners, L.P., High Voltage Engineering Corporation and Norcross
Safety Products.
Timothy Silva. Mr. Silva has been the General Manager of Northstar since
January 1995. Prior to this time, he served as Director of Operations of
Northstar, since February 1992.
John A. Rice. Mr. Rice has been the General Manager of Sierra since July
1993. Prior to this time he served as Vice President of Administration of Bear
Mountain, Ltd. (the predecessor of Bear Mountain, Inc.) since July 1988.
Brent G. Tregaskis. Mr. Tregaskis became the General Manager of Bear
Mountain in February 1998. Prior to this time, he served as Food and Beverage
and Facilities Director of Jackson Hole Mountain Resort since July 1996. From
1985 until July 1996, he served in a variety of positions at Snow Summit
Mountain Resort, including Profit Centers Manager and General Manager of the
Food and Beverage Department.
Thomas H. Day. Mr. Day has been the General Manager of Waterville Valley
since May 1997. Prior to this time, he served as Mountain Manager of Waterville
Valley since 1986.
Ted M. Austin. Mr. Austin became the General Manager of Mt. Cranmore in
September 1997. Prior to this time, he served as Director of Marketing at Sierra
since August 1993.
Rick F. Kelley. Mr. Kelley became the General Manager of Loon Mountain in
March 1998. Prior to this time, he served as Manager of Operations, Director of
Mountain Operations, Director of Skiing Operations, Director of Technical
Operations and Director of Maintenance Operations as well as serving in a
variety of other positions at Loon Mountain since 1978.
Dan Brewster. Mr. Brewster became the General Manager of the Summit in
September 2000. Prior to this time, he served in a variety of other positions at
the Summit since 1979, including Director of Operations, Director of Planning
and Development, Vice President of Ski Lifts, Inc. (the owner and operator of
the Summit) and Director of Human Resources.
Directors
All directors of Booth Creek and Parent hold office until the respective
annual meeting of stockholders next following their election, or until their
successors are elected and qualified. On October 5, 2001, George N. Gillett,
Jr., Dean C. Kehler and Edward Levy were re-elected to serve as members of the
Board of Directors of Parent and the Company, and George N. Gillett, Jr. was
re-appointed as Chairman of the Board of Directors of the Company. Additionally,
on such date, Gary M. Pelletier was elected to the Board of Directors of Parent
and the Company to replace a former director. See Part III, Item 13. "Certain
Relationships and Related Transactions - Stockholders Agreements." No director
of Booth Creek or Parent receives compensation for acting in such capacity.
Item 11. Executive Compensation
Compensation of Executive Officers
The following table sets forth the compensation paid by Booth Creek to (i)
its Chairman of the Board and Chief Executive Officer and (ii) each of the four
most highly compensated executive officers of the Company in fiscal 2001
(collectively, the "Named Executives"), for services rendered in all capacities
to the Company during the periods indicated.
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
----------------------------- ------------
Other Restricted All
Annual Stock Other
Salary Bonus Compen- Awards Compen-
Name and Principal Position Year ($) ($) sation($) ($)(1) sation($)
- --------------------------- --- ------ ------ --------- -------- ---------
George N. Gillett, Jr.... 2001 - - - - -
Chairman of the Board, 2000 - - - - -
Chief Executive Officer 1999 - - - - -
and Director (2)
Christopher P. Ryman..... 2001 335,000 167,500 - 11,536 11,026 (3)
President, Chief 2000 315,000 315,000 - - 11,032 (4)
Operating Officer and 1999 240,000 50,000 - - 3,738 (5)
Assistant Secretary
Elizabeth J. Cole........ 2001 275,000 165,000 - 11,536 10,447 (6)
Executive Vice President, 2000 250,000 250,000 - - 7,720 (7)
Chief Financial Officer, 1999 175,000 100,000 - - 4,821 (8)
Treasurer and Secretary
Timothy H. Beck.......... 2001 195,000 78,000 - 1,960 8,668 (9)
Executive Vice 2000 185,000 110,000 - - 6,568(10)
President, Planning 1999 175,000 35,000 - - 7,520(11)
Brian J. Pope............ 2001 185,000 95,000 - 2,800 7,995 (5)
Vice President of 2000 165,000 110,000 - - 5,997 (5)
Accounting and 1999 125,000 45,000 - - -
Finance, Assistant
Treasurer,
Assistant Secretary
- --------------------------
(1) The amounts disclosed in this column reflect the dollar values of
restricted shares granted pursuant to Parent's 2001 Incentive Stock Plan.
The total number of restricted shares held by the Named Executives and
their aggregate market value as of November 2, 2001 were as follows:
Christopher P. Ryman, 824 shares valued at $11,536; Elizabeth J. Cole, 824
shares valued at $11,536; Timothy H. Beck, 140 shares valued at $1,960;
and Brian J. Pope, 200 shares valued at $2,800.
(2) Mr. Gillett is the sole shareholder, sole director and Chief
Executive Officer of Booth Creek Management Corporation which, pursuant to
the Management Agreement (as defined), provides the Company with management
services. See Part III, Item 13. "Certain Relationships and Related
Transactions - Management Agreement with Booth Creek Management
Corporation."
(3) Consists of a 401(k) matching contribution of $8,838 and term life
insurance premiums of $2,188.
(4) Consists of a 401(k) matching contribution of $7,087 and term life
insurance premiums of $3,945.
(5) Consists of a 401(k) matching contribution.
(6) Consists of a 401(k) matching contribution of $8,352 and term life
insurance premiums of $2,095.
(7) Consists of a 401(k) matching contribution of $5,625 and term life
insurance premiums of $2,095.
(8) Consists of a 401(k) matching contribution of $2,726 and term life
insurance premiums of $2,095.
(9) Consists of a 401(k) matching contribution of $6,903 and term life
insurance premiums of $1,765.
(10) Consists of a 401(k) matching contribution of $4,803 and term life
insurance premiums of $1,765.
(11) Consists of a 401(k) matching contribution of $5,755 and term life
insurance premiums of $1,765.
Parent 2001 Stock Incentive Plan
Parent has established the Booth Creek Ski Group, Inc. 2001 Stock Incentive
Plan (the "Parent 2001 Stock Incentive Plan"), pursuant to which various forms
of stock awards with respect to a maximum of 2,473 shares of Parent's Class B
Common Stock may be granted. In connection with the adoption of the Parent 2001
Stock Incentive Plan, Parent's 1997 stock option plan was terminated. Stock
awards may be granted under the Parent 2001 Stock Incentive Plan to employees
and independent contractors of Parent and Parent-controlled businesses,
including the Company, at the discretion of the Board of Directors of Parent.
Under the Parent 2001 Stock Incentive Plan, Parent has entered into
restricted stock arrangements with Christopher P. Ryman, Elizabeth J. Cole,
Timothy H. Beck and Brian J. Pope (each a "Holder") providing for the issuance
of 824, 824, 140 and 200 restricted shares, respectively. Each Holder's
restricted stock vested with respect to 60% of the shares on November 1, 2001,
and will vest with respect to an additional 20% of the related shares on each of
November 1, 2002 and November 1, 2003. Holders are entitled to receive dividends
on restricted shares to the same extent as holders of unrestricted shares. After
vesting of the restricted stock, Holders are also entitled to deferred
compensation from Parent pursuant to a specified formula, which is paid upon
sale of their shares or under certain other circumstances.
Employment and Other Agreements
Christopher P. Ryman
The Company and Parent are parties to an employment agreement, as amended
and restated, with Christopher P. Ryman, President and Chief Operating Officer
of the Company and Parent. Mr. Ryman's employment under such agreement commenced
on May 1, 2000, and the agreement is scheduled to expire on October 31, 2003,
unless sooner terminated. For the year ended November 2, 2001, Mr. Ryman
received a base salary of $335,000 from the Company, which is subject to annual
review and increase as Mr. Ryman and the Company may agree. The agreement
provides that the Company's Board of Directors will establish reasonable
performance incentive goals for Mr. Ryman for each fiscal year, with a bonus
target of 50% of base salary if such goals are obtained. Mr. Ryman is also
eligible for separate incentive compensation from Parent. Under the terms of his
employment agreement, Mr. Ryman is eligible to participate in the health,
disability and retirement plans offered to executives of the Company, at
participation levels and with benefits not less favorable than those provided to
the plans' respective highest ranking participants. In addition, Mr. Ryman is
entitled to certain supplemental disability and life insurance benefits. Mr.
Ryman and a designee of his choice are eligible for certain membership benefits
in clubs owned or controlled by the Company or its affiliates, or clubs in which
the Company or its affiliates may have an interest, as further described in the
employment agreement. The employment agreement also provides that the Company
shall convey to Mr. Ryman a single family lot from two alternative sites at the
Northstar resort. Further, the Company and Parent are required to reimburse Mr.
Ryman for all reasonable and necessary expenses incurred by him in the discharge
of his duties and have agreed to indemnify him to the maximum extent permitted
by Delaware law. In the event that the Company requires Mr. Ryman to relocate
his residence, the employment agreement provides that the Company and Mr. Ryman
shall agree upon a reasonable relocation package.
In accordance with Mr. Ryman's employment agreement, Parent has issued to
Mr. Ryman 824 shares of its Class B Common Stock in the form of restricted
stock. The employment agreement further provides that portions of the restricted
stock will be forfeitable under certain circumstances. The restricted stock is
subject to a stockholders agreement. See Part III, Item 13. "Certain
Relationships and Related Transactions - Stockholders Agreements."
Under the terms of his employment agreement, Mr. Ryman's employment may be
terminated prior to October 31, 2003 upon:
o His death or disability,
o Notice from the Company or Parent for cause (as described in his
agreement),
o Notice from the Company or Parent of termination other than for cause,
o 60 days' prior notice from Mr. Ryman given within six months from the
date that the CIBC Merchant Fund and John Hancock and their respective
affiliates together own beneficially capital stock of Parent entitling
them to cast less than a majority of the votes entitled to be cast on
any matter upon which a holder of a share of stock of a Delaware
corporation of which only one class of stock is outstanding would be
entitled to vote, treating any Parent outstanding nonvoting stock that
is convertible into Parent voting stock as if it had been so converted,
or
o 30 days' prior notice from Mr. Ryman given within two months of the
date on which his duties and authority having been materially reduced
from those existing on May 1, 2000, unless such duties and authority
are restored within a 30 day period.
In the event Mr. Ryman's employment shall be terminated pursuant to the
last three items described above, the Company will provide Mr. Ryman with a
payment equal to one and one-half times his base salary, and provide
continuation of insurance benefits until the earlier of (a) 18 months, or (b)
the date on which Mr. Ryman becomes eligible for comparable health, disability
and life insurance benefits from new employment. During the term of his
employment and for certain specified periods thereafter, Mr. Ryman will be
subject to provisions prohibiting (1) his competition with the Company and
Parent, (2) solicitation of certain of Parent or Company management personnel,
(3) diversion of Parent or Company vendors, customers or others doing business
with Parent or the Company, and (4) disparaging Parent, the Company or any of
their personnel or revealing any information that might impair the reputation or
goodwill of Parent, the Company or their personnel. Mr. Ryman's employment
agreement also contains provisions relating to non-disclosure of certain
confidential information of Parent and the Company (as described in the
agreement).
Elizabeth J. Cole
The Company and Parent are parties to an employment agreement, as amended
and restated, with Elizabeth J. Cole, Executive Vice President and Chief
Financial Officer of the Company and Parent. Ms. Cole's employment under such
agreement commenced on May 1, 2000, and the agreement is scheduled to expire on
October 31, 2003, unless sooner terminated. For the year ended November 2, 2001,
Ms. Cole received a base salary of $275,000 from the Company, which is subject
to annual review and increase as Ms. Cole and the Company may agree. The
agreement provides that the Company's Board of Directors will establish
reasonable performance incentive goals for Ms. Cole for each fiscal year, with a
bonus target of 50% of base salary if such goals are obtained. Ms. Cole is also
eligible for separate incentive compensation from Parent. Under the terms of her
employment agreement, Ms. Cole is eligible to participate in the health,
disability and retirement plans offered to executives of the Company, at
participation levels and with benefits not less favorable than those provided to
the plans' respective highest ranking participants. In addition, Ms. Cole is
entitled to certain supplemental disability and life insurance benefits. Ms.
Cole and a designee of her choice are eligible for certain membership benefits
in clubs owned or controlled by the Company or its affiliates, or clubs in which
the Company or its affiliates may have an interest, as further described in the
employment agreement. The employment agreement also provides that the Company
shall convey to Ms. Cole a single family lot from two alternative sites at the
Northstar resort. Further, the Company and Parent reimburse Ms. Cole for all
reasonable and necessary expenses incurred by her in the discharge of her duties
and have agreed to indemnify her to the maximum extent permitted by Delaware
law. In the event that the Company requires Ms. Cole to relocate her residence,
the employment agreement provides that the Company and Ms. Cole shall agree upon
a reasonable relocation package.
In accordance with Ms. Cole's employment agreement, Parent has issued to
Ms. Cole 824 shares of its Class B Common Stock in the form of restricted stock.
The employment agreement further provides that portions of the restricted stock
will be forfeitable under certain circumstances. The restricted stock is subject
to a stockholders agreement. See Part III, Item 13. "Certain Relationships and
Related Transactions - Stockholders Agreements."
Under the terms of her employment agreement, Ms. Cole's employment may be
terminated prior to October 31, 2003 upon:
o Her death or disability,
o Notice from the Company or Parent for cause (as described in her
agreement),
o Notice from the Company or Parent of termination other than for cause,
o 60 days' prior notice from Ms. Cole given within six months from the
date that the CIBC Merchant Fund and John Hancock and their respective
affiliates together own beneficially capital stock of Parent entitling
them to cast less than a majority of the votes entitled to be cast on
any matter upon which a holder of a share of stock of a Delaware
corporation of which only one class of stock is outstanding would be
entitled to vote, treating any Parent outstanding nonvoting stock that
is convertible into Parent voting stock as if it had been so converted,
or
o 30 days' prior notice from Ms. Cole given within two months of the date
on which her duties and authority having been materially reduced from
those existing on May 1, 2000, unless such duties and authority are
restored within a 30 day period.
In the event Ms. Cole's employment shall be terminated pursuant to the last
three items described above, the Company will provide Ms. Cole with a payment
equal to one and one-half times her base salary, and provide continuation of
insurance benefits until the earlier of (a) 18 months, or (b) Ms. Cole becomes
eligible for comparable health, disability and life insurance benefits from new
employment. During the term of her employment and for certain specified periods
thereafter, Ms. Cole will be subject to provisions prohibiting (1) her
competition with the Company or Parent, (2) solicitation of certain of Parent or
Company management personnel, (3) diversion of Parent or Company vendors,
customers or others doing business with Parent or the Company, and (4)
disparaging Parent, the Company or any of their personnel or revealing any
information that might impair the reputation or goodwill of Parent, the Company
and their personnel. Ms. Cole's employment agreement also contains provisions
relating to non-disclosure of certain confidential information of Parent and the
Company (as described in the agreement).
Timothy H. Beck
The Company is a party to an employment agreement, as amended, with Timothy
H. Beck, Executive Vice President, Planning of the Company. Mr. Beck's
employment under such agreement commenced on July 1, 1997, and the agreement is
scheduled to expire on November 1, 2003, unless sooner terminated. For the year
ended November 2, 2001, Mr. Beck received a base salary of $195,000, which is
subject to annual review and discretionary increase by the Company. Mr. Beck
will also be entitled to receive an annual incentive bonus of up to 50% of his
base salary based upon the Company's attainment of certain targeted financial,
business and personal goals. Under the terms of his employment agreement, Mr.
Beck is entitled to four weeks paid vacation per year and is eligible to
participate in the health, disability, retirement, profit sharing, equity award
and savings plans offered to other executives of the Company. The employment
agreement also provides Mr. Beck with the right to purchase a single family lot
at the Company's basis from two alternative sites at the Northstar resort. In
addition, pursuant to his agreement, the Company provides Mr. Beck with a
$1,000,000 term life insurance policy, reimburses him for all reasonable and
necessary expenses incurred by him in the discharge of his duties and
indemnifies him to the maximum extent permitted by Delaware law. In the event
that the Company requires Mr. Beck to relocate his residence to the community in
which the Company's executive offices are located (as described in his
agreement), the Company shall reimburse Mr. Beck for certain costs related to
such relocation.
Under the terms of his employment agreement, Mr. Beck's employment may be
terminated by the Company at any time, with or without cause, or upon his death,
disability or resignation. In the event Mr. Beck's employment is terminated
"without cause", by Mr. Beck for "good reason" or in the event of a "change in
control" (each as described in his agreement), the Company will provide Mr. Beck
with salary continuation and continuation of health and disability insurance
coverage for a period of 18 months or until such time as Mr. Beck is eligible
for comparable benefits from another entity, whichever date is sooner. During
the term of his employment and for certain specified periods thereafter, Mr.
Beck will be subject to provisions prohibiting (1) his competition with the
Company or Parent, (2) solicitation of certain of Parent or Company management
personnel, (3) diversion of Parent or Company vendors, customers or others doing
business with Parent or the Company, and (4) disparaging Parent, the Company or
any of their personnel or revealing any information that might impair the
reputation or goodwill of Parent, the Company and their personnel. Mr. Beck's
employment agreement also contains provisions relating to non-disclosure of
certain confidential information of Parent and the Company (as described in his
agreement).
Brian J. Pope
Mr. Pope is entitled to severance pay equal to 12 months' salary, if his
employment is terminated without cause before November 1, 2003.
Compensation Committee Interlocks and Insider Participation
The Company's compensation policies are determined and executive officer
compensation decisions are made by the Board of Directors, which currently
consists of George N. Gillett, Jr., Gary M. Pelletier, Dean C. Kehler and Edward
Levy. Mr. Gillett is the Chief Executive Officer of the Company and is the sole
shareholder, sole director and Chief Executive Officer of Booth Creek Management
Corporation, which provides the Company with management services. See Part III,
Item 13. "Certain Relationships and Related Transactions."
Item 12. Security Ownership of Certain Beneficial Owners and Management
The Company is a wholly-owned subsidiary of Parent. The following table
sets forth information concerning the beneficial ownership of Parent's Common
Stock (including Class A Common Stock and Class B Common Stock) as of January
29, 2002 by (i) each person known to the Company to own beneficially more than
5% of the outstanding Common Stock of Parent, (ii) by each director and Named
Executive of the Company and (iii) all directors and executive officers of the
Company as a group. Each share of Parent's Class B Common Stock is non-voting
(except with respect to certain amendments to the certificate of incorporation
and bylaws of Parent and as otherwise required by the General Corporation Law of
the State of Delaware) and is convertible into one share of voting Class A
Common Stock of Parent at any time, subject to applicable regulatory approvals.
All shares are owned with sole voting and investment power, unless otherwise
indicated.
The percentages of beneficial ownership in the accompanying table
represents the relative interests assuming that only such individual holder's
respective Class B Common Stock or Warrants were converted with respect to the
existing number of outstanding Class A or Class B shares.
Parent's Class A Parent's Class B
Common Stock Common Stock
Beneficially Owned Beneficially Owned
---------------------- ----------------------
Beneficial Owner Shares % Shares %
- ------------------------------------- ------------- -------- ------------- --------
Booth Creek Partners Limited II,
L.L.L.P............................... 825.70 (1) 100% 182.90 (2) 2%
6755 Granite Creek Road
Teton Village, Wyoming 83025
John Hancock Life Insurance
Company............................... 9,160.21 (3) 93% 9,160.21 (3) 65%
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
CIBC WG Argosy Merchant Fund 2, L.L.C... 3,147.36 (4) 83% 3,147.36 (4) 26%
425 Lexington Avenue, 3rd Floor
New York, New York 10017
George N. Gillett, Jr................... 825.70 (5) 100% - -
Chairman of the Board of the Company
Rose Gillett............................ 825.70 (5) 100% - -
6755 Granite Creek Road
Teton Village, Wyoming 83025
Jeffrey J. Joyce........................ 96.42 (6) 15% - -
3330 Cumberland Blvd., Suite 500
Atlanta, Georgia 30339
Hancock Mezzanine Partners L.P.......... 529.03 (7) 45% 529.03 (7) 5%
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02117
Co-Investment Merchant Fund, LLC........ 349.70 (8) 35% 349.70 (8) 3%
425 Lexington Ave., 3rd Floor
New York, New York 10017
Gary M. Pelletier....................... 9,689.24 (9) 94% 9,689.24 (9) 68%
Director of the Company and Parent
Dean C. Kehler.......................... 3,497.06 (10) 84% 3,497.06 (10) 29%
Director of the Company and Parent
Edward Levy............................. 3,497.06 (11) 84% 3,497.06 (11) 29%
Director of the Company and Parent
Christopher P. Ryman.................... 824.00 (12) 56% 824.00 (12) 7%
President, Chief Operating Officer
and Assistant Secretary of the
Company; President and Assistant
Secretary of Parent
Elizabeth J. Cole....................... 824.00 (13) 56% 824.00 (13) 7%
Executive Vice President, Chief
Financial Officer, Treasurer and
Assistant Secretary of the Company
and Parent
Timothy H. Beck......................... 140.00 (14) 18% 140.00 (14) 1%
Executive Vice President, Planning
of the Company
Brian J. Pope........................... 200.00 (15) 24% 200.00 (15) 2%
Vice President of Accounting and
Finance, Assistant Treasurer and
Assistant Secretary of the Company;
Vice President and Assistant
Secretary of Parent
Total Executive Officers and
Directors as a Group.................. 16,000.00 (16) 100% - -
- ---------------------
(1) Comprised of 642.80 shares of Class A Common Stock of Parent and Warrants
to purchase 182.90 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(2) Represents Warrants to purchase 182.90 shares of Class B Common Stock of
Parent.
(3) Comprised of 6,268.31 shares of Class B Common Stock of Parent and Warrants
to purchase 2,891.90 shares of Class B Common Stock of Parent. Each share
of Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(4) Comprised of 2,227.92 shares of Class B Common Stock of Parent and Warrants
to purchase 919.44 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(5) Booth Creek Partners Limited II, L.L.L.P. owns directly 642.80 shares of
Class A Common Stock of Parent and Warrants to purchase 182.90 shares of
Class B Common Stock of Parent. Each share of Parent's Class B Common Stock
is convertible into one share of Class A Common Stock of Parent at any
time, subject to applicable regulatory approvals. Each Warrant may be
exercised for one share of Parent's Class B Common Stock at an exercise
price of $.01 per share. George N. Gillett, Jr. is the managing general
partner and Rose Gillett is a co-general partner of Booth Creek Partners
Limited II, L.L.L.P. and each may be deemed to possess shared voting and/or
investment power with respect to the interests held therein. Accordingly,
the beneficial ownership of such interests may be attributed to George N.
Gillett, Jr. and Rose Gillett. Rose Gillett is the wife of George N.
Gillett, Jr.
(6) Represents shares of Class A Common Stock of Parent that Mr. Joyce has an
option to purchase from Booth Creek Partners Limited II, L.L.L.P. (the
"Option") pursuant to that certain Option Letter Agreement dated December
3, 1996, as amended. The Option is exercisable, in whole or in part, at any
time on or prior to December 1, 2006 at an initial exercise price equal to
$2,066.12 per share, which exercise price shall increase by $55.10 on each
December 1. The shares subject to the Option and the per share exercise
price are subject to adjustment under certain circumstances, and the
obligation of Booth Creek Partners Limited II, L.L.L.P. to sell shares of
Class A Common Stock of Parent upon exercise of the Option is subject to
compliance with applicable securities laws.
(7) Comprised of 364.73 shares of Class B Common Stock of Parent and Warrants
to purchase 164.30 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(8) Comprised of 247.54 shares of Class B Common Stock of Parent and Warrants
to purchase 102.16 shares of Class B Common Stock of Parent. Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share.
(9) Represents an aggregate of 6,633.04 shares of Class B Common Stock of
Parent and Warrants to purchase 3,056.20 shares of Class B Common Stock of
Parent held of record by John Hancock Life Insurance Company and Hancock
Mezzanine Partners L.P. (the "Hancock Entities"). Each share of Parent's
Class B Common Stock is convertible into one share of Class A Common Stock
of Parent at any time, subject to applicable regulatory approvals. Each
Warrant may be exercised for one share of Parent's Class B Common Stock at
an exercise price of $.01 per share. Mr. Pelletier disclaims beneficial
ownership of the securities held by the Hancock Entities.
(10) Represents an aggregate of 2,475.46 shares of Class B Common Stock of
Parent and Warrants to purchase 1,021.60 shares of Class B Common Stock of
Parent held of record by CIBC WG Argosy Merchant Fund 2, L.L.C. and
Co-Investment Merchant Fund, L.L.C. (the "CIBC Entities"). Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals. Each Warrant may be exercised for one share of Parent's Class B
Common Stock at an exercise price of $.01 per share. Mr. Kehler disclaims
beneficial ownership of the securities held by the CIBC Entities.
(11) Represents an aggregate of 2,475.46 shares of Class B Common Stock of
Parent and Warrants to purchase 1,021.60 shares of Class B Common Stock of
Parent held of record by the CIBC Entities. Each share of Parent's Class B
Common Stock is convertible into one share of Class A Common Stock of
Parent at any time, subject to applicable regulatory approvals. Each
Warrant may be exercised for one share of Parent's Class B Common Stock at
an exercise price of $.01 per share. Mr. Levy disclaims beneficial
ownership of the securities held by the CIBC Entities.
(12) Represents 824.00 shares of restricted Class B Common Stock of Parent held
by Mr. Ryman pursuant to his employment agreement. See Part III, Item II.
"Executive Compensation - Employment and Other Agreements." Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals.
(13) Represents 824.00 shares of restricted Class B Common Stock of Parent held
by Ms. Cole pursuant to her employment agreement. See Part III, Item II.
"Executive Compensation - Employment and Other Agreements." Each share of
Parent's Class B Common Stock is convertible into one share of Class A
Common Stock of Parent at any time, subject to applicable regulatory
approvals.
(14) Represents 140.00 shares of restricted Class B Common Stock of Parent held
by Mr. Beck pursuant to that certain restricted stock agreement by and
between Parent and Mr. Beck. See Part III, Item 11. "Executive Compensation
- Parent 2001 Stock Incentive Plan."
(15) Represents 200.00 shares of restricted Class B Common Stock of Parent held
by Mr. Pope pursuant to that certain restricted stock agreement by and
between Parent and Mr. Pope. See Part III, Item 11. "Executive Compensation
- Parent 2001 Stock Incentive Plan.
(16) Represents (i) 642.80 shares of Class A Common Stock of Parent and Warrants
to purchase 182.90 shares of Class B Common Stock of Parent owned by Booth
Creek Partners Limited II, L.L.L.P., of which George N. Gillett, Jr. may be
deemed to be the beneficial owner, (ii) 6,633.04 shares of Class B Common
Stock of Parent and Warrants to purchase 3,056.20 shares of Class B Common
Stock of Parent owned by the Hancock Entities, of which Gary M. Pelletier
may be deemed to be the beneficial owner as described in note (9) above,
(iii) 2,475.46 shares of Class B Common Stock of Parent and Warrants to
purchase 1,021.60 shares of Class B Common Stock of Parent owned by the
CIBC Entities, of which each of Dean C. Kehler and Edward Levy may be
deemed to be the beneficial owners as described in notes (10) and (11)
above, (iv) 824.00 shares of Class B Common Stock of Parent held by
Christopher P. Ryman as described in note (12) above, (v) 824.00 shares of
Class B Common Stock of Parent held by Elizabeth J. Cole as described in
note (13) above, (vi) 140.00 shares of Class B Common Stock of Parent held
by Timothy H. Beck as described in note (14) above, and (vii) 200.00 shares
of Class B Common Stock of Parent held by Brian J. Pope as described in
Note (15) above.
Item 13. Certain Relationships and Related Transactions
Securities Purchase Agreements
Since its formation in October 1996, the Company and Parent have each
engaged in a series of transactions with the principal security holders of
Parent for the purpose of raising capital to finance the acquisitions of the
Company's resorts and for general corporate purposes. In connection with these
transactions, the principal security holders of Parent (comprised of Booth Creek
Partners Limited II, L.L.L.P., the Hancock Entities and the CIBC Entities) and
Parent have entered into Securities Purchase Agreements dated November 27, 1996,
as amended and restated on February 26, 1998, September 14, 1998 and May 28,
2000 (the "Securities Purchase Agreements"). Pursuant to the Securities Purchase
Agreements, Parent has issued shares of Class A and Class B Common Stock,
warrants to purchase Class B Common Stock (the "Warrants") and Parent Notes. The
Parent Notes mature on November 27, 2008 and bear interest at 12% per annum, if
paid in cash, or 14% per annum, if paid in kind, payable semi-annually on each
May 27 and November 27. George N. Gillett, Jr., and affiliates own 100% of the
outstanding Class A Common Stock.
The Securities Purchase Agreements, which govern the Parent Notes, contain
restrictive covenants pertaining to the management and operation of Parent and
its subsidiaries, including the Company. The covenants include, among others,
significant limitations on funded debt and current debt, dividends and other
stock payments, redemption, retirement, purchase or acquisition of equity
interests in Parent and its subsidiaries, transactions with affiliates,
investments, liens, issuances of stock, asset sales, acquisitions, mergers,
fundamental corporate changes, tax consolidation, modifications of certain
documents and leases. The Securities Purchase Agreements further required that
all of the issued and outstanding common stock of the Company be pledged to
secure the Parent Notes, and provide that Parent shall cause the Company to pay
cash dividends to Parent in the maximum amount permitted by law, subject to
restrictions contained in the Company's debt agreements, in order to satisfy
Parent's interest payment obligations under the Parent Notes.
The Securities Purchase Agreements provide for events of default customary
in agreements of this type, including: (i) failure to make payments when due;
(ii) breach of covenants; (iii) bankruptcy defaults; (iv) breach of
representations or warranties in any material respect when made; (v) default by
Parent or any of its subsidiaries under any agreement relating to debt for
borrowed money in excess of $1.0 million in the aggregate; (vi) final judgments
for the payment of money against Parent or any of its subsidiaries in excess of
$1.0 million in the aggregate; (vii) ERISA defaults; (viii) any operative
document ceasing to be in full force and effect; (ix) any enforcement of liens
against Parent or any of its subsidiaries; and (x) a change of control of
Parent.
The Warrants are exercisable, subject to certain conditions, at a per share
price of $0.01 (as adjusted by certain anti-dilution provisions) at any time
prior to November 27, 2008, on which date all unexercised Warrants will be
deemed automatically exercised.
The Securities Purchase Agreements provide that the holders of at least 85%
of the Purchased Common Shares (as defined in the Securities Purchase
Agreements) and shares issuable upon exercise of the Warrants will each be
entitled to require Parent to register their shares under the Securities Act for
resale to the public. The holders of Registrable Shares (as defined in the
Securities Purchase Agreements) are also entitled to certain piggyback and other
registration rights, subject in all cases to certain qualifications.
Stockholders Agreements
In connection with the Securities Purchase Agreements described above,
Parent, Booth Creek Partners Limited II, L.L.L.P., John Hancock, Hancock
Mezzanine Partners L.P., the CIBC Merchant Fund and Co-Investment Fund, have
entered into the Stockholders Agreement dated November 27, 1996, as amended and
restated on February 26, 1998, August 5, 1998 and May 28, 2000 (the
"Stockholders Agreement").
Pursuant to the Stockholders Agreement, the Board of Directors of Parent
shall consist of three individuals selected by Booth Creek Partners Limited II,
L.L.L.P. and two individuals designated by John Hancock. The Board of Directors
of Parent and the Company currently consists of George N. Gillett, Jr., Dean C.
Kehler, Edward Levy and Gary M. Pelletier. See Part III, Item 10. "Directors and
Executive Officers of the Registrant - Directors." Without the consent of owners
of 75% or more of Parent's equity securities (the "Required Owners"), neither
Parent nor any subsidiary of Parent, including the Company, may issue any equity
securities except for certain enumerated permitted issuances. With respect to
issuance of equity securities of Parent requiring the approval of the Required
Owners, the Required Owners also are entitled to certain preemptive rights. In
addition, the Stockholders Agreement provides that neither Parent nor any of its
subsidiaries, including the Company, may acquire any assets or business from any
other person (other than inventory and equipment in the ordinary course of
business), or sell or otherwise dispose of all or substantially all of the
assets of any resort or the stock of any subsidiary, without the consent of the
Required Owners.
The Stockholders Agreement requires that, under certain circumstances,
Parent grant to Booth Creek Partners Limited II, L.L.L.P. registration rights
with respect to its equity securities which are in all material respects the
same as those provided to the Institutional Investors (as defined) under the
Securities Purchase Agreements.
In addition to the foregoing, the Stockholders Agreement gives each party
thereto certain co-sale rights and rights of first offer upon the sale or other
transfer of any equity securities of Parent by any other party, and requires
that, as a condition to the issuance or transfer of any equity securities of
Parent to any third party (other than a person who acquires such securities
pursuant to an effective registration statement under the Securities Act) that
such person become a party to the Stockholders Agreement and agree to be bound
by all the terms and conditions thereof.
The Stockholders Agreement shall terminate, and be of no force or effect,
upon the consummation of a Qualified Public Offering (as defined in the
Stockholders Agreement).
In connection with the issuance of restricted stock to Christopher P.
Ryman, Elizabeth J. Cole, Timothy H. Beck and Brian J. Pope, these individuals
entered into a separate stockholders agreement with the Institutional Investors,
which generally provides for certain co-sale and registration rights for the
executives and drag-along rights for the Institutional Investors. See Part III,
Item 11. "Executive Compensation - Parent 2001 Stock Incentive Plan."
Sales of Real Estate to Trimont Land Holdings, Inc.
On September 22, 2000, Trimont Land Company ("TLC"), the owner and operator
of Northstar and a wholly-owned subsidiary of the Company, and Trimont Land
Holdings, Inc. ("TLH"), a wholly-owned subsidiary of Parent and an affiliate of
the Company, entered into an Agreement for Purchase and Sale of Real Property
(the "Northstar Real Estate Agreement") pursuant to which TLC agreed to sell to
TLH certain development real estate consisting of approximately 550 acres of
land located at Northstar (the "Development Real Estate") for a total purchase
price of $27,600,000, of which 85% is payable in cash and 15% is payable in the
form of convertible secured subordinated promissory notes. The purchase price
was based on an appraisal obtained from an independent third party appraiser.
Concurrently therewith, TLC and TLH consummated the sale of the initial land
parcels contemplated by the Northstar Real Estate Agreement, and TLC transferred
the bulk of the Development Real Estate to TLH for a total purchase price of
$21,000,000, of which $17,850,000, or 85%, was paid in cash and $3,150,000, or
15%, was paid in the form of a convertible secured subordinated promissory note
(the "Convertible Secured Note"). The sale of the remaining Development Real
Estate under the Northstar Real Estate Agreement is subject to certain
subdivision requirements to effect the transfer of such property and other
normal and customary closing conditions, and is expected to be consummated in
2002.
The Convertible Secured Note requires quarterly interest payments at the
rate of 10% per annum if paid in cash, or 12% if paid in kind, and is due in
full in September 2005. The Convertible Secured Note is secured by TLH's
membership interest in a real estate joint venture (the "East West Joint
Venture") to which TLH is a party. The Convertible Secured Note is convertible
at TLC's option into 15% of TLH's membership interest in the East West Joint
Venture, which enables TLC to obtain, at TLC's option, a profit participation in
the Development Real Estate. The Company obtained an opinion from an independent
firm qualified and experienced in the subject matter of the transaction that the
terms of the sale of Development Real Estate were fair and reasonable to the
Company and TLC and at least as favorable as the terms which could have been
obtained in a comparable transaction made on an arm's-length basis between
unaffiliated parties.
Management Agreement with Booth Creek Management Corporation
On May 26, 2000, the Company and Parent entered into an Amended and
Restated Management Agreement (the "Management Agreement") with Booth Creek
Management Corporation (the "Management Company") pursuant to which the
Management Company agreed to provide Parent, Booth Creek and its subsidiaries
with management advice with respect to, among other things, (i) formulation and
implementation of financial, marketing and operating strategies, (ii)
development of business plans and policies, (iii) corporate finance matters,
including acquisitions, divestitures, debt and equity financings and capital
expenditures, (iv) administrative and operating matters, including unified
management of the Company's ski resorts, (v) research, marketing and promotion,
and (vi) other general business matters. George N. Gillett, Jr. is the sole
shareholder, sole director and Chief Executive Officer of Booth Creek Management
Corporation.
Under the terms of the Management Agreement, Parent and the Company provide
customary indemnification, reimburse certain costs and owe the Management
Company an annual management fee of $100,000, plus a discretionary operating
bonus.
To the fullest extent permitted by law, with certain limitations, the
Management Company and any officer, director, employee, agent or attorney of the
Management Company (collectively, the "Indemnities") shall not have any
liability to any of the Parent, Booth Creek or any of their subsidiaries for any
loss, damage, cost or expense (including, without limitation, any court costs,
attorneys' fees and any special, indirect, consequential or punitive damages)
allegedly arising out of the Management Company's management services rendered
to the Parent, Booth Creek or any of their subsidiaries or Indemnities' acts,
conduct or omissions in connection with the Management Company's management
services rendered to Booth Creek or any of their subsidiaries.
In addition, to the fullest extent permitted by law, Parent and Booth Creek
indemnifies the Indemnitees and holds the Indemnitees harmless against, any
loss, damage, cost or expense (including, without limitation, court costs and
reasonable attorneys' fees) which the Indemnitees may sustain or incur by reason
of any threatened, pending or completed investigation, action, claim, demand,
suit, proceeding or recovery by any person (other than the Indemnitees)
allegedly arising out of the Management Company's management services rendered
to the Parent, Booth Creek or any of their subsidiaries or the Indemnitees'
acts, conduct or omissions in connection with the Management Company's
management services rendered to the Parent, Booth Creek or any of their
subsidiaries.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) List of Documents Filed as Part of This Report:
1. Financial Statements:
The financial statements listed on page F-1 are filed as part of
this Report.
2. Financial Statement Schedules:
All schedules are omitted because they are not applicable, not
required or the information is included elsewhere in the
consolidated financial statements or notes thereto.
3. List of Exhibits:
+2.1 Agreement and Plan of Merger dated as of September 18,
1997 by and among Booth Creek Ski Group, Inc., LMRC
Corp. and Loon Mountain Recreation Corporation.
+2.2 First Amendment to Merger Agreement, dated December 22,
1997, by and among Booth Creek Ski Group, Inc., LMRC
Acquisition Corp. and Loon Mountain Recreation
Corporation.
*3.1 Certificate of Incorporation of Booth Creek Ski
Holdings, Inc.
*3.2 Bylaws of Booth Creek Ski Holdings, Inc.
*3.3 Restated Articles of Incorporation of Trimont
Land Company.
*3.4 Bylaws of Trimont Land Company.
*3.5 Certificate of Incorporation of Sierra-at-Tahoe, Inc.
*3.6 Bylaws of Sierra-at-Tahoe, Inc.
*3.7 Certificate of Incorporation of Bear Mountain, Inc.
*3.8 Bylaws of Bear Mountain, Inc.
*3.9 Certificate of Incorporation of Booth Creek Ski
Acquisition Corp.
*3.10 Bylaws of Booth Creek Ski Acquisition Corp.
*3.11 Amended and Restated Certificate of Incorporation of
Waterville Valley Ski Resort, Inc.
*3.12 Bylaws of Waterville Valley Ski Resort, Inc.
*3.13 Amended and Restated Certificate of Incorporation of
Mount Cranmore Ski Resort, Inc.
*3.14 Bylaws of Mount Cranmore Ski Resort, Inc.
*3.15 Amended and Restated Articles of Incorporation of Ski
Lifts, Inc.
*3.16 Bylaws of Ski Lifts, Inc.
**3.17 Articles of Incorporation of LMRC Holding Corp.
**3.18 Amended and Restated Articles of Incorporation of Loon
Mountain Recreation Corporation.
**3.19 Amended and Restated Bylaws of Loon Mountain Recreation
Corporation.
**3.20 Amended and Restated Articles of Incorporation of Loon
Realty Corp.
**3.21 Amended and Restated Bylaws of Loon Realty Corp.
**3.22 Bylaws of LMRC Holding Corp.
*4.1 Indenture dated as of March 18, 1997 by and among Booth
Creek Ski Holdings, Inc., as Issuer, Trimont Land Company,
Sierra-at-Tahoe, Inc., ear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Booth Creek Ski Acquisition Corp. and Ski Lifts, Inc., as
Subsidiary Guarantors, and HSBC Bank USA (formerly Marine
Midland Bank), as trustee (including the form of 12 1/2%
Senior Note due 2007 and the form of Guarantee).
*4.2 Supplemental Indenture No.1 to Indenture dated as of April
25, 1997 by and among Booth Creek Ski Holdings, Inc., as
Issuer, Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Booth Creek Ski Acquisition
Corp. and Ski Lifts, Inc., as Subsidiary Guarantors, HSBC
Bank USA (formerly Marine Midland Bank), as trustee.
+4.3 Supplemental Indenture No. 2 to Indenture dated as of
February 20, 1998 by and among Booth Creek Ski Holdings,
Inc., as Issuer, Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Booth Creek Ski
Acquisition Corp. and Ski Lifts, Inc., as Subsidiary
Guarantors, and HSBC Bank USA (formerly Marine Midland
Bank), as Trustee.
+4.4 Supplemental Indenture No. 3 to Indenture dated as of
February 26, 1998, by and among Booth Creek Ski Holdings,
Inc., as Issuer, LMRC Holding Corp., Loon Mountain
Recreation Corporation and Loon Realty Corp., as
Subsidiary Guarantors, and HSBC Bank USA (formerly Marine
Midland Bank), as Trustee.
+++4.5 Supplemental Indenture No. 4 to Indenture dated as of
October 8, 1998 by and among Booth Creek Ski Holdings,
Inc., as Issuer, Booth Creek Ski Acquisition, Inc., and
HSBC Bank USA (formerly Marine Midland Bank), as Trustee.
##4.6 Second Amended and Restated Securities Purchase Agreement
and certain related agreements dated as of May 28, 2000,
among Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc., the Subsidiary Guarantors as defined
therein and each of John Hancock Life Insurance Company,
CIBC WG Argosy Merchant Fund 2, L.L.C., Hancock Mezzanine
Partners, L.P., Co-Investment Merchant Fund, LLC and
Booth Creek Partners Limited II, L.L.L.P.
#####4.7 Form of Stockholders Agreement dated January 22, 2002
among Christopher P. Ryman, Elizabeth J. Cole, Timothy H.
Beck, Brian J. Pope, John Hancock Life Insurance Company,
Hancock Mezzanine Partners, L.P., CIBC WG Argosy Merchant
Fund 2, L.L.C., Co-Investment Merchant Fund, LLC and Booth
Creek Ski Group, Inc.
+++10.1 Amended and Restated Credit Agreement dated as of October
30, 1998 among Booth Creek Ski Holdings, Inc., Booth Creek
Ski Acquisition Corp., Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Ski Lifts, Inc., Grand Targhee Incorporated, LMRC Holding
Corp., Loon Mountain Recreation Corporation, Loon Mountain
Realty Corp. and Fleet National Bank (formerly BankBoston,
N.A.).
***10.2 Waiver Agreement dated March 12, 1999, to Credit Agreement
dated as of October 30, 1998 among Booth Creek Ski
Holdings, Inc., Booth Creek Ski Acquisition Corp., Trimont
Land Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Ski Lifts, Inc., Grand Targhee Incorporated,
LMRC Holding Corp., Loon Mountain Recreation Corporation,
Loon Realty Corp. and Fleet National Bank (formerly
BankBoston, N.A.).
****10.3 First Amendment dated May 18, 1999, to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated, LMRC Holding Corp., Loon
Mountain Recreation Corporation, Loon Realty Corp.
and Fleet National Bank (formerly BankBoston, N.A.).
****10.4 Waiver Agreement dated June 14, 1999, to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated, LMRC Holding Corp., Loon
Mountain Recreation Corporation, Loon Realty Corp. and
Fleet National Bank (formerly BankBoston, N.A.).
##10.5 Second Amendment dated May 28, 2000 to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated, LMRC Holding Corp., Loon
Mountain Recreation Corporation, Loon Realty Corp. and
Fleet National Bank.
##10.6 Third Amendment dated May 28, 2000 to Amended and Restated
Credit Agreement dated as of October 30, 1998 among Booth
Creek Ski Holdings, Inc., Booth Creek Ski Acquisition
Corp., Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Ski Lifts, Inc., LMRC Holding
Corp., Loon Mountain Recreation Corporation, Loon Realty
Corp. and Fleet National Bank.
####10.7 Fourth Amendment dated September 22, 2000 to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
LMRC Holding Corp., Loon Mountain Recreation Corporation,
Loon Realty Corp. and Fleet National Bank.
*10.8 Purchase and Sale Agreement dated as of August 30, 1996 by
and between Waterville Valley Ski Area, Ltd., Cranmore,
Inc., American Skiing Company and Booth Creek Ski
Acquisition Corp.
*10.9 Subordinated Promissory Note dated November 27, 1996
issued by Booth Creek Ski Acquisition Corp., Waterville
Valley Ski Resort, Inc. and Mount Cranmore Ski Resort,
Inc. to American Skiing Company.
*10.10 Stock Purchase and Indemnification Agreement dated as of
November 26, 1996 among Booth Creek Ski Holdings, Inc.,
Fibreboard Corporation, Trimont Land Company,
Sierra-at-Tahoe, Inc. and Bear Mountain, Inc.
*10.11 Escrow Agreement dated December 3, 1996 by and among
Fibreboard Corporation, Booth Creek Ski Holdings, Inc. and
First Trust of California.
*10.12 Stock Purchase Agreement dated as of February 21, 1997 by
and between Booth Creek Ski Holdings, Inc., William W.
Moffett, Jr., David R. Moffett, Laurie M. Padden,
individually and as custodian for Christina Padden,
Jennifer Padden and Mary M. Padden, Stephen R. Moffett,
Katharine E. Moffett, Frances J. DeBruler, individually
and as representative of the Estate of Jean S. DeBruler,
Jr.,deceased, and Peggy Westerlund, and David R. Moffett,
as representative.
*10.13 Preferred Stock Purchase Agreement dated as of February
21, 1997 by and between DRE, L.L.C., William W. Moffett,
Jr., David R. Moffett, Laurie M. Padden, individually and
as custodian for Christina Padden, Jennifer Padden and
Mary M. Padden, Stephen R. Moffett, Katharine E. Moffett,
Frances J. DeBruler, individually and as representative of
the Estate of Jean S. DeBruler, Jr., deceased, and Peggy
Westerlund and David R. Moffett, as representative.
#10.14 Asset Purchase Agreement dated as of March 21, 2000, as
modified and amended, by and between Booth Creek Ski
Holdings, Inc., a Delaware corporation, as Seller, and GT
Acquisition I, LLC, a Delaware limited liability company,
as Buyer.
###10.15 Agreement for Purchase and Sale of Real Property and
certain related agreements dated September 22, 2000
between Trimont Land Company and Trimont Land Holdings,
Inc.
##10.16 Amended and Restated Management Agreement dated as of May
26, 2000 by and between Booth Creek Ski Holdings, Inc. and
Booth Creek Management Corporation.
*10.17 Ski Area Term Special Use Permit No. 4002/01 issued by the
United States Forest Service to Waterville Valley Ski
Resort, Inc.
*10.18 Ski Area Term Special Use Permit No. 5123/01 issued by the
United States Forest Service to Bear Mountain, Inc.
*10.19 Ski Area Term Special Use Permit No. 4127/09 issued by the
United States Forest Service to Ski Lifts, Inc.
*10.20 Annual Special Use Permit Nos. 4127/19 & 4127/19 issued by
the United States Forest Service to Ski Lifts, Inc.
++10.21 Ski Area Term Special Use Permit No. 4031/01 issued by the
United States Forest Service to Loon Mountain Recreation
Corporation.
++10.22 Amendment Number 2 for Special Use Permit No. 4008/1
issued by the United States Forest Service to Loon
Mountain Recreation Corporation.
++10.23 Amendment Number 5 for Special Use Permit No. 4008/1
issued by the United States Forest Service to Loon
Mountain Recreation Corporation.
++++10.24 Ski Area Term Special Use Permit No. 4186 issued by the
United States Forest Service to Sierra-at-Tahoe, Inc.
**10.25 Employment Agreement dated as of July 1, 1997, by and
between Booth Creek Ski Holdings, Inc. and Timothy H.
Beck.
#####10.26 Amendment No. 1 to the Employment Agreement by and
between Booth Creek Ski Holdings, Inc. and Timothy H.
Beck.
#####10.27 Amended and Restated Employment Agreement by and
between Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc. and Christopher P. Ryman.
#####10.28 Amended and Restated Employment Agreement by and
between Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc. and Elizabeth J. Cole.
#####10.29 Booth Creek Ski Group, Inc. 2001 Stock Incentive Plan.
#####10.30 Restricted Stock Agreement by and between Booth Creek Ski
Group, Inc. and Timothy H. Beck.
#####10.31 Deferred Compensation Agreement by and between Booth
Creek Ski Group, Inc. and Timothy H. Beck.
#####10.32 Restricted Stock Agreement by and between Booth Creek Ski
Group, Inc. and Brian J. Pope.
#####10.33 Deferred Compensation Agreement by and between Booth Creek
Ski Group, Inc., Booth Creek Ski Holdings, Inc. and Brian
J. Pope.
#####10.34 Severance Agreement by and between Booth Creek Ski Group,
Inc., Booth Creek Ski Holdings, Inc. and Brian J. Pope.
####21.1 Subsidiaries of the Registrant.
- ---------------------
* Filed with Registration Statement on Form S-4 (Reg. No. 333-26091)
and incorporated herein byreference.
** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended January 30, 1998 and incorporated herein by
reference.
*** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended January 29, 1999 and incorporated herein by
reference.
**** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended April 30, 1999 and incorporated herein by
reference.
+ Filed with the Company's Current Report on Form 8-K dated February
26, 1998 and incorporated herein by reference.
++ Filed with Registration Statement on Form S-4 (Reg. No. 333-48619)
and incorporated herein by reference.
+++ Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 30, 1998 and incorporated herein by reference.
++++ Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 29, 1999 and incorporated herein by reference.
# Filed with the Company's Current Report on Form 8-K dated March 21,
2000 and incorporated herein by reference.
## Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended July 28, 2000 and incorporated herein by
reference.
### Filed with the Company's Current Report on Form 8-K dated September
22, 2000 and incorporated herein by reference.
#### Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 27, 2000 and incorporated herein by reference.
##### Filed herewith as an Exhibit to this Form 10-K.
(b) Reports on Form 8-K: None.
(c) Exhibits: See (a)3 above for a listing of Exhibits filed as a part of
this Report.
(d) Additional Financial Statement Schedules: None.
Supplemental Information to be Furnished with Reports Filed Pursuant to
Section 15(d) of the Act by Registrants Which Have Not Registered Securities
Pursuant to Section 12 of the Act
Neither an annual report covering the Registrant's last fiscal year nor
proxy materials with respect to any annual or other meeting of security holders
have been sent to security holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Truckee, State of California, as of January 29, 2002.
BOOTH CREEK SKI HOLDINGS, INC.
(Registrant)
By: /s/ CHRISTOPHER P. RYMAN
-------------------------------------------------
Christopher P. Ryman
President and Chief Operating Officer
By: /s/ ELIZABETH J. COLE
-------------------------------------------------
Elizabeth J. Cole
Executive Vice President and Chief
Financial Officer (Principal Financial
Officer)
By: /s/ BRIAN J. POPE
-------------------------------------------------
Brian J. Pope
Vice President of Accounting and Finance
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed by the following persons in the capacities
and as of the dates indicated.
Signature Title Date
--------- ----- ----
/s/ GEORGE N. GILLETT, JR. Chairman of the Board of January 29, 2002
- ---------------------------- Directors and Chief
George N. Gillett, Jr. Executive Officer
(Principal Executive
Officer)
/s/ GARY M. PELLETIER Member of the Board of January 29, 2002
- ---------------------------- Directors
Gary M. Pelletier
/s/ DEAN C. KEHLER Member of the Board of January 29, 2002
- ---------------------------- Directors
Dean C. Kehler
/s/ EDWARD LEVY Member of the Board of January 29, 2002
- ---------------------------- Directors
Edward Levy
/s/ CHRISTOPHER P. RYMAN President and Chief January 29, 2002
- ---------------------------- Operating Officer
Christopher P. Ryman
/s/ ELIZABETH J. COLE Executive Vice President January 29, 2002
- ---------------------------- and Chief Financial
Elizabeth J. Cole Officer (Principal
Financial Officer)
/s/ BRIAN J. POPE Vice President of January 29, 2002
- ---------------------------- Accounting and Finance
Brian J. Pope (Principal Accounting
Officer)
BOOTH CREEK SKI HOLDINGS, INC.
ANNUAL REPORT ON FORM 10-K
INDEX OF FINANCIAL STATEMENTS
Page
Report of Independent Auditors....................................... F-2
Consolidated Balance Sheets.......................................... F-3
Consolidated Statements of Operations................................ F-4
Consolidated Statements of Shareholder's Equity...................... F-5
Consolidated Statements of Cash Flows................................ F-6
Notes to Consolidated Financial Statements........................... F-7
F-1
REPORT OF INDEPENDENT AUDITORS
Booth Creek Ski Holdings, Inc.
We have audited the accompanying consolidated balance sheets of Booth Creek
Ski Holdings, Inc. as of November 2, 2001 and October 27, 2000, and the related
consolidated statements of operations, shareholder's equity, and cash flows for
each of the three years in the period ended November 2, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Booth Creek Ski
Holdings, Inc. at November 2, 2001 and October 27, 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended November 2, 2001 in conformity with accounting principles generally
accepted in the United States.
/s/ Ernst & Young LLP
Sacramento, California
December 18, 2001
F-2
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
November 2, October 27,
2001 2000
--------------- ---------------
ASSETS
Current assets:
Cash.................................... $ 458 $ 696
Accounts receivable, net of allowance
of $39 and
$28, respectively...................... 1,937 1,929
Insurance proceeds receivable........... 1,500 4,070
Inventories............................. 2,486 2,106
Prepaid expenses and other current
assets................................. 1,616 1,194
--------------- ---------------
Total current assets...................... 7,997 9,995
Property and equipment, net............... 139,347 145,746
Real estate held for development and
sale...................................... 8,220 6,566
Deferred financing costs, net of
accumulated amortization
of $5,128 and $4,162, respectively...... 4,087 5,338
Timber rights and other assets............ 6,429 5,937
Goodwill, net of accumulated
amortization of $11,280 and $8,937,
respectively............................ 23,138 25,481
--------------- ---------------
Total assets.............................. $ 189,218 $ 199,063
=============== ===============
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Senior credit facility.................. $ 17,628 $ 6,352
Current portion of long-term debt....... 1,748 1,356
Accounts payable and accrued
liabilities............................ 34,842 33,915
--------------- ---------------
Total current liabilities................. 54,218 41,623
Long-term debt............................ 128,664 136,790
Other long-term liabilities............... 767 785
Commitments and contingencies
Preferred stock of subsidiary; 28,000
shares authorized,
9,000 shares issued and outstanding
at November 2, 2001
(13,000 shares at October 27, 2000);
liquidation preference
and redemption value of $1,136 at
November 2, 2001........................ 1,136 1,638
Shareholder's equity:
Common stock, $.01 par value; 1,000
shares authorized,
issued and outstanding................. - -
Additional paid-in capital.............. 72,000 72,000
Accumulated deficit..................... (67,567) (53,773)
--------------- ---------------
Total shareholder's equity................ 4,433 18,227
--------------- ---------------
Total liabilities and
shareholder's equity.................... $ 189,218 $ 199,063
=============== ===============
See accompanying notes.
F-3
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Year Ended
----------------------------------------------
November 2, October 27, October 29,
2001 2000 1999
-------------- -------------- --------------
Revenue:
Resort operations............ $ 121,629 $ 119,685 $ 112,980
Real estate and other........ 276 19,670 12,744
-------------- -------------- --------------
Total revenue.................. 121,905 139,355 125,724
Operating expenses:
Cost of sales - resort
operations.................. 70,982 70,394 74,404
Cost of sales - real estate
and other................... 211 4,507 5,244
Depreciation and depletion... 22,716 20,172 19,320
Amortization of goodwill and
other intangible
assets...................... 2,405 2,400 2,430
Selling, general and
administrative expense...... 23,412 22,985 22,571
Unusual items, net........... - - 487
-------------- -------------- --------------
Total operating expenses....... 119,726 120,458 124,456
-------------- -------------- --------------
Operating income............... 2,179 18,897 1,268
Other income (expense):
Interest expense............. (16,883) (18,215) (18,707)
Amortization of deferred
financing costs............. (966) (1,084) (1,093)
Gain on sale of Grand
Targhee resort.............. - 369 -
Other income (expense)....... 280 (145) (43)
-------------- -------------- --------------
Other income (expense), net.. (17,569) (19,075) (19,843)
-------------- -------------- --------------
Loss before minority interest
and extraordinary item........ (15,390) (178) (18,575)
Minority interest.............. (127) (179) (218)
-------------- -------------- --------------
Loss before extraordinary
item......................... (15,517) (357) (18,793)
Extraordinary gain on early
retirement of debt............ 1,723 - -
-------------- -------------- --------------
Net loss....................... $ (13,794) $ (357) $ (18,793)
============== ============== ==============
See accompanying notes.
F-4
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
(In thousands, except shares)
Additional
Common Stock Paid-in Accumulated
--------------
Shares Amount Capital Deficit Total
-------- ------- --------- ------------ -------
Balance at October 31, 1998.... 1,000 $ - $ 72,000 $ (34,623) $ 37,377
Net loss....................... - - - (18,793) (18,793)
-------------------------------------------------
Balance at October 29, 1999.... 1,000 - 72,000 (53,416) 18,584
Net loss....................... - - - (357) (357)
-------------------------------------------------
Balance at October 27, 2000.... 1,000 - 72,000 (53,773) 18,227
Net loss....................... - - - (13,794) (13,794)
-------------------------------------------------
Balance at November 2, 2001.... 1,000 $ - $ 72,000 $ (67,567) $ 4,433
======== ======= ========= ============ =======
See accompanying notes.
F-5
BOOTH CREEK SKI HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
----------------------------------------------
November 2, October 27, October 29,
2001 2000 1999
-------------- -------------- --------------
Cash flows from operating
activities:
Net loss.......................... $ (13,794) $ (357) $ (18,793)
Adjustments to reconcile net loss
to net cash
provided by operating
activities:
Depreciation and depletion..... 22,716 20,172 19,320
Amortization of goodwill and
other
intangible assets............. 2,405 2,400 2,430
Noncash cost of real estate
sales......................... - 2,460 4,743
Amortization of deferred
financing costs............... 966 1,084 1,093
Minority interest.............. 127 179 218
Gain on sale of Grand Targhee
resort........................ - (369) -
Extraordinary gain on early
retirement of debt............ (1,723) - -
Changes in operating assets
and liabilities,
net of divestiture:
Accounts receivable......... (8) (366) (136)
Insurance proceeds
receivable................. 2,570 (2,271) (1,799)
Inventories................. (380) 394 1,584
Prepaid expenses and other
current assets............. (422) (264) 345
Accounts payable and
accrued liabilities........ 927 5,940 6,483
Other long-term liabilities. (18) 735 (95)
-------------- -------------- ------------
Net cash provided by operating
activities...................... 13,366 29,737 15,393
Cash flows from investing
activities:
Capital expenditures for property
and equipment................... (12,944) (21,909) (14,342)
Capital expenditures for real
estate held for
development and sale............ (1,654) (175) (3,439)
Acquisition of businesses......... - - (726)
Proceeds on sale of Grand Targhee
resort.......................... - 11,422 -
Proceeds on sale of property and
equipment....................... - 1,060 -
Other assets...................... (682) 478 3
-------------- -------------- ------------
Net cash used in investing
activities...................... (15,280) (9,124) (18,504)
Cash flows from financing
activities:
Net borrowings (repayments) under
senior credit facility.......... 11,276 (16,683) 5,892
Principal payments of long-term
debt............................ (8,969) (2,670) (1,711)
Deferred financing costs.......... (2) (351) (515)
Purchase of preferred stock of
subsidiary and
payment of dividends............ (629) (674) (719)
-------------- -------------- ------------
Net cash provided by (used in)
financing activities............ 1,676 (20,378) 2,947
-------------- -------------- ------------
Increase (decrease) in cash....... (238) 235 (164)
Cash at beginning of year......... 696 461 625
-------------- -------------- ------------
Cash at end of year............... $ 458 $ 696 $ 461
============== ============== ============
See accompanying notes.
F-6
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
November 2, 2001
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies
Booth Creek Ski Holdings, Inc. ("Booth Creek") was organized on October 8,
1996 in the State of Delaware for the purpose of acquiring and operating various
ski resorts, including Northstar-at-Tahoe ("Northstar"), Sierra-at-Tahoe
("Sierra"), Bear Mountain, Waterville Valley, Mt. Cranmore, Loon Mountain and
the Summit at Snoqualmie (the "Summit"). Booth Creek divested the Grand Targhee
ski resort ("Grand Targhee") on June 20, 2000. Booth Creek also conducts certain
real estate development activities, primarily at Northstar.
The consolidated financial statements include the accounts of Booth Creek
and its subsidiaries (collectively referred to as the "Company"). Booth Creek
owns all of the common stock of its subsidiaries. Ski Lifts, Inc. (the operator
of the Summit) has shares of preferred stock owned by a third party. All
significant intercompany transactions and balances have been eliminated.
Booth Creek is a wholly-owned subsidiary of Booth Creek Ski Group, Inc.
("Parent").
Reporting Periods
The Company's fiscal year ends on the Friday closest to October 31 of each
year. Fiscal 2001 was a 53 week year. Fiscal 2000 and 1999 were 52 week years.
Business and Principal Markets
Northstar is a year-round destination resort including ski and golf
facilities. Sierra is a regional ski area which attracts both day and
destination skiers. Both Northstar and Sierra are located near Lake Tahoe,
California. Bear Mountain is primarily a day ski area located approximately two
hours from Los Angeles, California. Waterville Valley, Mt. Cranmore and Loon
Mountain are regional ski areas attracting both day and destination skiers, and
are located in New Hampshire. The Summit is located in Northwest Washington and
is a day ski area.
Operations are highly seasonal at all locations with the majority of
revenues realized during the ski season from late November through early April.
The length of the ski season and the profitability of operations are
significantly impacted by weather conditions. Although Northstar, Bear Mountain,
Waterville Valley, Loon Mountain and Mt. Cranmore have snowmaking capacity to
mitigate some of the effects of adverse weather conditions, abnormally warm
weather or lack of adequate snowfall can materially affect revenues. Sierra and
the Summit lack significant snowmaking capability but generally experience
higher annual snowfall.
Other operational risks and uncertainties that face the Company include
competitive pressures affecting the number of skier visits and ticket prices;
the success of marketing efforts to maintain and increase skier visits; the
possibility of equipment failure; and continued access to water supplies for
snowmaking.
Cash
Included in cash at November 2, 2001 and October 27, 2000 is restricted
cash of $378,000 and $612,000, respectively, relating to advance deposits and
rental fees due to property owners for lodging and property rentals.
F-7
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies - (Continued)
Inventories
Inventories are valued at the lower of cost (first-in, first-out method)
or market. The components of inventories are as follows:
November 2, October 27,
2001 2000
--------------- ---------------
(In thousands)
Retail products........................ $ 1,604 $ 1,263
Supplies............................... 622 566
Food and beverage...................... 260 277
--------------- ---------------
$ 2,486 $ 2,106
=============== ===============
Property and Equipment
Property and equipment are stated at cost. Depreciation is provided on the
straight-line method based upon the estimated service lives, which are as
follows:
Land improvements................................. 20 years
Buildings and improvements........................ 20 years
Lift equipment.................................... 15 years
Other machinery and equipment..................... 3 to 15 years
Amortization of assets recorded under capital leases is included in
depreciation expense.
Real Estate Activities
The Company capitalizes as real estate held for development and sale the
original acquisition cost, direct construction and development costs, and other
related costs. Property taxes, insurance and interest incurred on costs related
to real estate under development are capitalized during periods in which
activities necessary to prepare the property for its intended use are in
progress. Land costs and other common costs incurred prior to construction are
allocated to each land parcel benefited. Construction-related costs are
allocated to individual units in each development phase using the relative sales
value method. Selling expenses are charged against income in the period
incurred. Interest capitalized on real estate development projects for the years
ended November 2, 2001, October 27, 2000 and October 29, 1999 was $54,000,
$28,000 and $169,000, respectively.
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.
Long-Lived Assets
In August 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS No. 144"), which supersedes
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposal Of,"
and certain provisions of APB Opinion No. 30, "Reporting
F-8
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies - (Continued)
Long-Lived Assets (Continued)
the Results of Operations," relating to a disposal of a segment of a business.
The Company adopted the provisions of SFAS No. 144 as of October 28, 2000.
Similar to SFAS No. 121, SFAS No. 144 establishes procedures for review of
recoverability, and measurement of impairment if necessary, of long-lived assets
held and used by an entity. SFAS No. 144 requires that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. SFAS No. 144 also
requires that long-lived assets to be disposed of other than by sale (for
example, abandonments, exchanges for similar productive assets or in a
distribution to owners in a spinoff) shall continue to be classified as held and
used until disposal. Further, SFAS No. 144 specifies the criteria for
classifying long-lived assets as "held for sale" and requires that long-lived
assets to be disposed of by sale be reported at the lower of carrying amount or
fair value less estimated selling costs. As of November 2, 2001, management
believes that there has not been any impairment of the Company's long-lived
assets.
Fair Value of Financial Instruments
The fair value of amounts outstanding under the Company's Senior Credit
Facility approximates book value, as the interest rate on such debt generally
varies with changes in market interest rates. The fair value of the Company's
Senior Notes was approximately $96,000,000 and $93,000,000 at November 2, 2001
and October 27, 2000, respectively, which is based on the market price of such
debt.
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, and are recognized as
services are provided and products are sold. Sales of season passes are
initially deferred in unearned revenue and recognized ratably over the ski
season.
Amortization
Through November 2, 2001, the excess of the purchase price over the fair
values of the net assets acquired (goodwill) has been amortized using the
straight-line method over a period of 15 years. See "Pending Accounting
Pronouncements" below.
Deferred financing costs are being amortized over the lives of the related
obligations.
Advertising Costs
The production cost of advertisements is expensed when the advertisement is
initially released. The cost of professional services for advertisements, sales
campaigns and promotions is expensed when the services are rendered. The cost of
brochures and other winter marketing collateral is expensed over the ski season.
Advertising expenses for the years ended November 2, 2001, October 27, 2000 and
October 29, 1999 were $3,970,000, $3,611,000 and $3,525,000, respectively.
Income Taxes
Deferred income taxes are provided for temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes.
The Company is included in the federal and state tax returns of Parent. The
provision for federal and state income tax is computed as if the Company filed
separate consolidated tax returns.
F-9
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
1. Organization, Basis of Presentation and Summary of Significant Accounting
Policies - (Continued)
Comprehensive Income
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" requires that comprehensive income and its components, as
defined in the pronouncement, be reported within the consolidated financial
statements of the Company. As of and for the years ended November 2, 2001,
October 27, 2000 and October 29, 1999, the Company does not have any
transactions that would necessitate disclosure of comprehensive income.
Pending Accounting Pronouncements
In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 142, "Goodwill and Other Intangible Assets" ("SFAS No. 142"). Under the new
rules, goodwill will no longer be amortized but will be subject to annual
impairment tests in accordance with the pronouncement. The Company will apply
the new rules on accounting for goodwill commencing on November 3, 2001.
Application of the nonamortization provisions of SFAS No.142 is expected to
result in an increase in net income of approximately $2,300,000 in fiscal 2002.
In connection with the adoption of SFAS No. 142, the Company will be required to
perform a transitional impairment test for recorded goodwill as of November 3,
2001. The Company does not expect that the transitional impairment test will
result in any significant impairment losses.
In June 2001, the FASB issued Statement of Financial Accounting Standards
No. 143, "Accounting for Asset Retirement Obligations" ("SFAS No. 143"), which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and associated asset retirement costs.
The new rules apply to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) normal operation of a long-lived asset. SFAS No. 143 is effective for
the Company at the beginning of fiscal 2003. The Company believes the adoption
of SFAS No. 143 will not have a material impact on its consolidated financial
position or results of operations.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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. Paid Skier Visit Insurance Programs
For the 2000/01 ski season, the Company arranged for four separate paid
skier visit insurance policies covering Bear Mountain, Loon Mountain, Waterville
Valley and the Summit. The policies had a deductible for the initial decline
from targeted paid skier visit and revenue levels and stated maximum coverage
levels. In addition, the policies required the insured to experience monthly
and/or annual snowfall amounts below certain agreed upon levels before a claim
could be filed for the decline in paid skier visits. For the year ended November
2, 2001, the Company has recognized resort operations revenues of $1,500,000 for
claims attributable to lower than agreed upon paid skier visits and snowfall
levels under the Waterville Valley and Summit policies. The underwriters are
currently disputing the Company's insurance claims. In November 2001, the
Company commenced litigation against the underwriters and their representatives.
While the Company intends to vigorously pursue collection of its claims and
believes such claims are valid, no assurance can be made regarding the outcome
or timing of resolution of this matter.
For the 1999/00 ski season, the Company arranged for four separate paid
skier visit insurance policies covering its Lake Tahoe resorts (Northstar and
Sierra), its New Hampshire resorts (Waterville Valley, Mt. Cranmore and Loon
Mountain), Bear Mountain and the Summit. For the year ended October 27, 2000,
the Company recognized
F-10
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
2. Paid Skier Visit Insurance Programs - (Continued)
resort operations revenues of $6,600,000 for estimated claims proceeds under
such policies. For the year ended November 2, 2001, resort operations revenues
included $254,000 for additional claim recoveries which were received upon the
final settlement of the 1999/00 paid skier visit insurance policies in excess of
the amounts recognized in fiscal 2000 of $6,600,000.
3. Property and Equipment
Property and equipment consist of the following:
November 2, October 27,
2001 2000
--------------- ---------------
(In thousands)
Land and improvements.................. $ 39,510 $ 37,901
Buildings and improvements............. 48,946 47,727
Lift equipment......................... 49,921 45,900
Other machinery and equipment.......... 68,680 57,526
Construction in progress............... 11,825 14,062
--------------- ---------------
Less accumulated depreciation and 218,882 203,116
amortization......................... 79,535 57,370
--------------- ---------------
$ 139,347 $ 145,746
=============== ===============
4. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities consist of the following:
November 2, October 27,
2001 2000
--------------- ---------------
(In thousands)
Accounts payable....................... $ 7,836 $ 7,958
Accrued compensation and benefits...... 4,159 4,002
Taxes other than income taxes.......... 1,131 1,157
Unearned revenue and deposits-
resort operations..................... 11,601 9,582
Unearned deposits-
real estate operations................ 6,000 6,000
Interest............................... 2,063 2,234
Other.................................. 2,052 2,982
--------------- ---------------
$ 34,842 $ 33,915
=============== ===============
F-11
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Financing Arrangements
Senior Credit Facility
The following is a summary of certain provisions of the Amended and
Restated Credit Agreement (the "Senior Credit Facility") as currently amended,
among Booth Creek, its subsidiaries, the financial institutions party thereto
and Fleet National Bank, as administrative agent ("Agent").
General - The Senior Credit Facility provides for borrowing
availability of up to $25,000,000. The Senior Credit Facility requires
that the Company not have borrowings thereunder in excess of
$8,000,000, in addition to certain amounts maintained by the Company
in certain depository accounts with the Agent, for a period of 60
consecutive days each year commencing sometime between February 1 and
February 28. Borrowings under the Senior Credit Facility are
collectively referred to herein as "Loans." Total borrowings
outstanding under the Senior Credit Facility at November 2, 2001 were
$17,628,000.
Interest - For purposes of calculating interest, Loans can be, at
the election of the Company, Base Rate Loans or LIBOR Rate Loans or a
combination thereof. Base Rate Loans bear interest at the sum of (a) a
margin of between 0% and .5%, depending on the level of consolidated
EBITDA of the Company and its subsidiaries (as determined pursuant to
the Senior Credit Facility), plus (b) the higher of (i) the Agent's
base rate or (ii) the federal funds rate plus .5%. LIBOR Rate Loans
bear interest at the LIBOR rate plus a margin of between 2% and 3%,
depending on the level of consolidated EBITDA. The Senior Credit
Facility also requires a commitment fee of .375% based on the unused
borrowing base. As of November 2, 2001, the borrowings outstanding
under the Senior Credit Facility bore interest at 5.5%, pursuant to the
Base Rate Loan option.
Repayment - Subject to the provisions of the Senior Credit
Facility, the Company may, from time to time, borrow, repay and
reborrow under the Senior Credit Facility. The entire unpaid balance
under the Senior Credit Facility is due and payable on March 31, 2002.
The Company is in discussions with potential lenders regarding the
extension or refinancing of the Senior Credit Facility. While the
Company anticipates that the Senior Credit Facility will be renewed or
refinanced, the Company has not received a binding commitment from any
lender to provide such financing, and no assurances can be given
regarding the availability of such financing or the terms thereof.
Security - Borrowings under the Senior Credit Facility are secured
by (i) a pledge to the Agent for the ratable benefit of the financial
institutions party to the Senior Credit Facility of all of the capital
stock of Booth Creek's principal subsidiaries and (ii) a grant of a
security interest in substantially all of the consolidated assets of
Booth Creek and its subsidiaries (excluding DRE, L.L.C.).
Covenants - The Senior Credit Facility contains financial
covenants relating to the maintenance of ratios of (a) financing debt
to consolidated cash flow, and (b) adjusted consolidated cash flow to
consolidated fixed charges. The Senior Credit Facility also contains
restrictive covenants pertaining to the management and operation of
Booth Creek and its subsidiaries. The covenants include, among others,
significant limitations on indebtedness, guarantees, mergers,
acquisitions, fundamental corporate changes, capital expenditures,
asset sales, leases, investments, loans and advances, liens, dividends
and other stock payments, transactions with affiliates, optional
payments and modification of debt instruments and issuances of stock.
F-12
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Financing Arrangements - (Continued)
Long-Term Debt
Long-term debt consists of the following instruments, which are described
below:
November 2, October 27,
2001 2000
--------------- ---------------
(In thousands)
Senior Notes........................... $ 125,500 $ 133,500
Other debt............................. 4,912 4,646
--------------- ---------------
130,412 138,146
Less current portion................... 1,748 1,356
--------------- ---------------
$ 128,664 $ 136,790
=============== ===============
Senior Notes
As of November 2, 2001, the Company had outstanding $125,500,000
aggregate principal amount of its senior debt securities (the "Senior Notes").
The Senior Notes mature on March 15, 2007, and bear interest at 12.5% per annum,
payable semi-annually on March 15 and September 15. The Senior Notes are
redeemable at the option of the Company, in whole or in part, at any time after
March 15, 2002, with an initial redemption price of 106.25% declining through
maturity, plus accrued and unpaid interest to the redemption date. The Senior
Notes are general senior unsecured obligations of the Company ranking equally in
right of payment with all other existing and future senior indebtedness of the
Company and senior in right of payment to any subordinated indebtedness of the
Company.
The Senior Notes are unconditionally guaranteed, on an unsecured senior
basis, as to the payment of principal, premium, if any, and interest, jointly
and severally (the "Guarantees"), by all Restricted Subsidiaries of the Company,
as defined in the indenture for the Senior Notes (the "Indenture"), having
either assets or shareholders' equity in excess of $20,000 (the "Guarantors").
All of the Company's direct and indirect subsidiaries are Restricted
Subsidiaries, except DRE, L.L.C.
The Senior Notes are effectively subordinated in right of payment to all
secured indebtedness of the Company and the Guarantors, including indebtedness
under the Senior Credit Facility. In addition, the Senior Notes are structurally
subordinated to any indebtedness of the Company's subsidiaries that are not
Guarantors. The Indenture contains covenants for the benefit of the holders of
the Senior Notes that, among other things, limit the ability of the Company and
any Restricted Subsidiaries to: (i) incur additional indebtedness; (ii) pay
dividends and make other distributions; (iii) issue stock of subsidiaries; (iv)
make certain investments; (v) repurchase stock; (vi) create liens; (vii) enter
into transactions with affiliates, (viii) enter into sale and leaseback
transactions, (ix) create dividend or other payment restrictions affecting
Restricted Subsidiaries; (x) merge or consolidate the Company or any Guarantors;
and (xi) sell assets.
The Guarantors are wholly-owned subsidiaries of Booth Creek and have fully
and unconditionally guaranteed the Senior Notes on a joint and several basis.
Booth Creek is a holding company and has no significant operations, assets or
cash flows separate from its investments in its subsidiaries. In addition, the
assets, equity, revenues, income and cash flow of DRE, L.L.C., Booth Creek's
only non-guarantor subsidiary, are minor and the membership interest in DRE,
L.L.C. is entirely owned by Booth Creek. There are no significant restrictions
on the ability of the Guarantors to pay dividends or otherwise transfer funds to
Booth Creek. Accordingly, Booth Creek has not presented separate financial
statements and other disclosures concerning the Guarantors or its non-guarantor
subsidiary because management has determined that such information is not
material to investors.
F-13
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
5. Financing Arrangements - (Continued)
Long-Term Debt (Continued)
During the year ended November 2, 2001, the Company repurchased $8,000,000
aggregate principal amount of Senior Notes for $5,990,000. After giving effect
to the write-off of related deferred financing costs of $287,000, the Company
recognized an extraordinary gain of $1,723,000.
Other Debt
Other debt of $4,912,000 and $4,646,000 at November 2, 2001 and October 27,
2000, respectively, consists of various capital lease obligations, notes
payable, improvement bond obligations and amounts owed under the American Skiing
Company ("ASC") Seller Note for a portion of the purchase price for the
acquisitions of Waterville Valley and Mt. Cranmore. The ASC Seller Note requires
principal payments of $300,000, $350,000 and $1,150,000 on January 31, 2002,
January 31, 2003 and June 30, 2004, respectively. The ASC Seller Note bears
interest at 12% per annum payable semi-annually on each June 30 and December 31.
For the years ended November 2, 2001, October 27, 2000 and October 29,
1999, the Company entered into long-term debt and capital lease obligations of
$3,245,000, $2,874,000 and $525,000, respectively, for the purchase of
equipment.
During the years ended November 2, 2001, October 27, 2000 and October 29,
1999, the Company paid cash for interest costs of $17,054,000, $18,473,000 and
$18,564,000, respectively, net of amounts capitalized of $59,000, $149,000 and
$332,000, respectively.
6. Commitments and Contingencies
Lease Commitments
The Company leases certain machinery, equipment and facilities under
operating leases. Aggregate future minimum lease payments as of November 2, 2001
were as follows:
Year
Ending
October (In thousands)
--------
2002......................................... $ 1,429
2003......................................... 1,030
2004......................................... 761
2005......................................... 478
2006......................................... 104
Thereafter................................... 2,122
---------------
$ 5,924
===============
Total rent expense for all operating leases amounted to $2,225,000,
$3,279,000 and $3,714,000 for the years ended November 2, 2001, October 27, 2000
and October 29, 1999, respectively.
F-14
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
6. Commitments and Contingencies - (Continued)
Lease Commitments (Continued)
The Company leases certain machinery and equipment under capital leases.
Aggregate future minimum lease payments as of November 2, 2001 for the years
ending October 2002, October 2003, October 2004 and October 2005 were
$1,422,000, $711,000, $397,000 and $113,000, respectively. The cost of equipment
recorded under capital leases at November 2, 2001 and October 27, 2000 was
$4,690,000 and $3,566,000, respectively, and the related accumulated
depreciation at such dates was $1,812,000 and $1,433,000, respectively.
In addition, the Company leases property from the U.S. Forest Service under
Term Special Use Permits for all or certain portions of the operations of
Sierra, Bear Mountain, Waterville Valley, Loon Mountain and the Summit. These
leases are effective through 2039, 2020, 2034, 2006 and 2032, respectively.
Lease payments are based on a percentage of revenues, and were $1,215,000,
$1,166,000 and $1,189,000 for the years ended November 2, 2001, October 27, 2000
and October 29, 1999, respectively.
Other Commitments
Commitments for future capital expenditures totaled approximately
$2,100,000 at November 2, 2001.
Litigation
The nature of the ski industry includes the risk of skier injuries.
Generally, the Company has insurance to cover potential claims; in some cases
the amounts of the claims may be substantial. The Company is also involved in a
number of other claims arising from its operations.
Management, in consultation with legal counsel, believes resolution of
these claims will not have a material adverse impact on the Company's
consolidated financial condition or results of operations.
Pledge of Stock
The stock of the Company is pledged to secure approximately $86,700,000 of
indebtedness of Parent.
7. Income Taxes
The difference between the statutory federal income tax rate and the
effective tax rate is attributable to the following:
Year Ended
-------------------------------------
November 2, October 27, October 29,
2001 2000 1999
----------- ----------- -----------
(In thousands)
Tax benefit computed at
federal statutory
rate of 35% of pre-tax loss.... $ 4,828 $ 62 $ 6,501
Net change in valuation
allowance...................... (4,419) (55) (6,235)
Other, net....................... (409) (7) (266)
----------- ----------- -----------
$ - $ - $ -
=========== =========== ===========
F-15
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
7. Income Taxes - (Continued)
Significant components of the Company's deferred tax assets and liabilities
are as follows:
November 2, October 27,
2001 2000
--------------- ---------------
(In thousands)
Deferred tax assets:
Accruals and reserves................ $ 1,235 $ 1,220
Alternative minimum tax credit
carryforwards....................... 352 546
Net operating loss carryforwards..... 30,925 27,187
--------------- ---------------
Total deferred tax assets.......... 32,512 28,953
Deferred tax liabilities:
Property and equipment............... (14,750) (15,610)
--------------- ---------------
Total deferred tax liabilities..... (14,750) (15,610)
--------------- ---------------
Net deferred tax assets................ 17,762 13,343
Valuation allowance.................... (17,762) (13,343)
Net deferred tax assets reflected --------------- ---------------
in the accompanying consolidated
balance sheets....................... $ - $ -
=============== ===============
At November 2, 2001, the Company has net operating loss carryforwards of
approximately $84,700,000 for federal income tax reporting purposes, which
expire between 2012 and 2021.
8. Preferred Stock of Subsidiary
In connection with the consummation of the Summit acquisition in fiscal
1997, Ski Lifts, Inc. transferred certain owned real estate held for development
purposes and related buildings into a Delaware limited liability company, DRE,
L.L.C. (the "Real Estate LLC"), of which Ski Lifts, Inc. is a member and 99%
equity interest holder and Booth Creek is the other member and 1% equity
interest holder. In addition, Ski Lifts, Inc. granted the Real Estate LLC an
option (the "Real Estate Option") to purchase acreage of developmental real
estate for nominal consideration. Ski Lifts, Inc. also issued 28,000 shares of
non-voting preferred stock (the "Ski Lifts Preferred Stock") to its prior owners
having an aggregate liquidation preference equal to $3,500,000, the aggregate
estimated fair market value of the real estate transferred to the Real Estate
LLC and the real estate subject to the Real Estate Option. Concurrently with
these transactions, the Real Estate LLC entered into an agreement to purchase
(the "Preferred Stock Purchase Agreement") the Ski Lifts Preferred Stock, on a
quarterly basis over the five years following the date of the Summit
acquisition, at a purchase price equal to the liquidation preference thereof
plus accrued dividends at a rate of 9% to the date of purchase. Through November
2, 2001, the Company has paid $2,375,000, excluding dividends, under the
Preferred Stock Purchase Agreement. Real Estate LLC's remaining purchase
requirement under the Preferred Stock Purchase Agreement of $1,125,000,
excluding dividends, was paid on January 16, 2002.
9. Northstar Real Estate Sales
Phases 4 and 4A of the Big Springs Development
On July 28, 1999, Trimont Land Company ("TLC"), the owner and operator of
Northstar and a wholly-owned subsidiary of the Company, consummated the sale of
the property comprising Phases 4 and 4A of the Big Springs development to
Trimont Land Holdings, Inc. ("TLH"), a wholly-owned subsidiary of Parent and an
affiliate of the Company, for an aggregate sales price of $10,000,000, subject
to adjustment as described below. The consideration initially paid to TLC
consisted of $8,500,000 in cash and a promissory note (the "TLH Note") for
$1,500,000, subject to adjustment. Under the terms of the TLH Note, TLC obtained
the right to receive the greater of (a)
F-16
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9. Northstar Real Estate Sales - (Continued)
Phases 4 and 4A of the Big Springs Development (Continued)
$1,500,000 plus accrued interest at 7% per annum, or (b) the Net Cash Proceeds
of the resale of the lots within Phases 4 and 4A. The Company obtained a
fairness opinion for the transaction from an independent firm qualified in the
subject matter of the transaction. "Net Cash Proceeds" is defined as gross
proceeds received by TLH from the subsequent resale of the lots, after deduction
for (1) the proceeds applied to repay any indebtedness incurred by TLH in
connection with its financing of the purchase of the lots, (2) any fees or other
costs incurred by TLH in connection with its financing of the purchase or sales
of the lots, and (3) any corporate overhead costs incurred by TLH attributable
to the purchase, maintenance, marketing or sale of the lots. Pursuant to the
terms of the sale, TLC retained the obligation to complete the scheduled
construction of the development in accordance with the approved site development
plan. The Company recognized revenue and related cost of sales for these real
estate transactions upon the substantial completion of construction and the
close of escrow for lot sales between TLH and third party buyers. Through
October 29, 1999, TLH had closed escrow on 43 of the available 47 lots within
Phases 4 and 4A, and TLC had substantially completed the construction of the
development. The remaining four lots closed escrow during the year ended October
27, 2000. In accordance with the terms of the transaction between TLH and TLC,
the Company received proceeds and recorded real estate sales of $1,055,000 and
$12,004,000 during the years ended October 27, 2000 and October 29, 1999,
respectively.
Unit 7 and 7A Development
On November 17, 1999, TLC consummated the sale to TLH of certain single
family development property underlying a portion of the Unit 7 and 7A
developments at Northstar for an aggregate sales price of $7,050,000, subject to
adjustment as described below. The consideration paid to TLC consisted of
$6,000,000 in cash and a promissory note (the "Second TLH Note") for $1,050,000,
subject to adjustment. The Company obtained a fairness opinion for the
transaction from an independent firm qualified in the subject matter of the
transaction. In connection with the sale by TLC of development real estate on
September 22, 2000, as described below, TLH's interests in the Unit 7A lots were
transferred back to TLC on September 22, 2000.
Under the terms of the Second TLH Note, TLC will receive the greater of (a)
$1,050,000 plus accrued interest at 7% per annum, or (b) the Net Cash Proceeds
(as defined) of the resale of TLH's lots within Unit 7. The Second TLH Note is
prepayable at any time, and is due on the earlier to occur of January 30, 2003
or the date on which the last of the lots owned by TLH has been sold. Pursuant
to the terms of the sale, TLC retained the obligation to complete the scheduled
construction of the Unit 7 development, which was substantially completed in
November 2001. The Company will recognize revenue and related costs of sales for
this real estate transaction upon the close of escrow for lot sales between TLH
and third party buyers, and has reflected the cash received as a deposit
liability as of November 2, 2001 and October 27, 2000.
During December 2001, TLH consummated the sale of seven Unit 7 lots for net
proceeds of approximately $3,300,000. As the net proceeds of the seven lot sales
were less than the $6,000,000 in cash initially paid by TLH for the underlying
real estate, no additional cash proceeds were distributed to TLC. However, TLC
will relieve the related deposit liability and recognize revenues for such lot
sales during the first quarter of fiscal 2002. TLH intends to market and sell
the remaining 19 unsold Unit 7 lots during 2002.
Development Real Estate
On September 22, 2000, TLC and TLH entered into an Agreement for Purchase
and Sale of Real Property (the "Northstar Real Estate Agreement") pursuant to
which TLC agreed to sell to TLH certain development real estate consisting of
approximately 550 acres of land located at Northstar (the "Development Real
Estate") for a total purchase price of $27,600,000, of which 85% is payable in
cash and 15% is payable in the form of convertible secured subordinated
promissory notes. The purchase price was based on an appraisal obtained from an
independent third party appraiser. Concurrently therewith, TLC and TLH
consummated the sale of the initial land parcels
F-17
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
9. Northstar Real Estate Sales - (Continued)
Development Real Estate (Continued)
contemplated by the Northstar Real Estate Agreement, and TLC transferred the
bulk of the Development Real Estate to TLH for a total purchase price of
$21,000,000, of which $17,850,000, or 85%, was paid in cash and $3,150,000, or
15%, was paid in the form of a convertible secured subordinated promissory note
(the "Convertible Secured Note"). The sale of the remaining Development Real
Estate under the Northstar Real Estate Agreement is subject to certain
subdivision requirements to effect the transfer of such property and other
normal and customary closing conditions, and is expected to be consummated in
2002.
In accordance with generally accepted accounting principles for real estate
transactions, the Company has recorded revenues for the sale to the extent of
cash received by TLC. The Company will recognize revenues and profits on the
portion of the sales price represented by the Convertible Secured Note as
collections are made, and accordingly, has reflected $3,150,000 of deferred
revenue as an offset to the Convertible Secured Note in the accompanying
consolidated balance sheets as of November 2, 2001 and October 27, 2000. The
Convertible Secured Note requires quarterly interest payments at the rate of 10%
per annum if paid in cash, or 12% if paid in kind, and is due in full in
September 2005. The Convertible Secured Note is secured by TLH's membership
interest in a real estate joint venture (the "East West Joint Venture") to which
TLH is a party. The Convertible Secured Note is convertible at TLC's option into
15% of TLH's membership interest in the East West Joint Venture, which enables
TLC to obtain, at TLC's option, a profit participation in the Development Real
Estate. The Company obtained an opinion from an independent firm qualified and
experienced in the subject matter of the transaction that the terms of the sale
of Development Real Estate were fair and reasonable to the Company and TLC and
at least as favorable as the terms which could have been obtained in a
comparable transaction made on an arm's-length basis between unaffiliated
parties.
10. Sale of Grand Targhee
On June 20, 2000, the Company sold all of the assets associated with the
Grand Targhee resort for approximately $11,400,000 in cash to GT Acquisition I,
LLC ("GT Acquisition"), an entity formed and controlled by the Chairman and
Chief Executive Officer of the Company. At the closing of the transaction, GT
Acquisition also assumed all liabilities relating to the Grand Targhee resort.
The sale of the Grand Targhee resort resulted in a gain of $369,000 during the
year ended October 27, 2000. The Company obtained a fairness opinion for the
transaction from an independent firm qualified in the subject matter of the
transaction.
11. Unusual Items
During the fourth quarter of fiscal 1999, the Company recorded the
following unusual items:
(In thousands)
Unusual Gains and (Losses):
Gain on involuntary conversion of restaurant
facility......................................... $ 1,300
Impairment charges for technology projects that
will not be pursued.............................. (524)
Severance......................................... (340)
Write-off of business pursuit costs............... (482)
Environmental reserves............................ (216)
Inventory obsolescence upon conversion of retail
operations at Waterville Valley
to a concessionaire arrangement................. (225)
----------------
Unusual items, net................................ $ (487)
================
F-18
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
11. Unusual Items - (Continued)
On February 26, 1999, the Company experienced an electrical fire which
destroyed the restaurant facility located at the peak of Northstar's ski
terrain. Upon the consummation of negotiations with its insurer in the fourth
quarter of fiscal 1999, the Company recorded a gain of $1,300,000 for the
difference between the net book value of the facility and contents and the
amount of insurance proceeds received. The Company's insurance policies also
provided coverage for earnings lost as a result of the fire, as well as
reimbursement of costs incurred in mitigating the operating impacts of the fire.
Operating income for the year ended October 29, 1999 included business
interruption proceeds of $206,000.
12. Management Agreement
On May 26, 2000, the Company and Parent entered into an Amended and
Restated Management Agreement (the "Management Agreement") with Booth Creek
Management Corporation (the "Management Company") pursuant to which the
Management Company agreed to provide Parent, Booth Creek and its subsidiaries
with management advice with respect to, among other things, (i) formulation and
implementation of financial, marketing and operating strategies, (ii)
development of business plans and policies, (iii) corporate finance matters,
including acquisitions, divestitures, debt and equity financings and capital
expenditures, (iv) administrative and operating matters, including unified
management of the Company's ski resorts, (v) research, marketing and promotion,
and (vi) other general business matters.
Under the terms of the amended Management Agreement, Parent and the Company
provide customary indemnification, reimburse certain costs and owe the
Management Company an annual management fee of $100,000, plus a discretionary
operating bonus. Management fees and reimbursable expenses incurred by the
Company during the years ended November 2, 2001, October 27, 2000 and October
29, 1999 were $75,000, $246,000 and $370,000, respectively.
13. Employee Benefit Plan
The Company maintains a defined contribution retirement plan (the "Plan"),
qualified under Section 401(k) of the Internal Revenue Code, for certain
eligible employees. Pursuant to the Plan, eligible employees may contribute a
portion of their compensation, subject to a maximum amount per year as specified
by law. The Company provides a matching contribution based on specified
percentages of amounts contributed by participants. The Company's contribution
expense for the years ended November 2, 2001, October 27, 2000 and October 29,
1999 were $605,000, $615,000 and $538,000, respectively.
F-19
BOOTH CREEK SKI HOLDINGS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
14. Business Segments
The Company currently operates in two business segments, resort operations
and real estate and other. The Company's resort operations segment is currently
comprised of seven ski resort complexes, which provide lift access, snow school
lessons, retail, equipment rental, food and beverage offerings, lodging and
property management services and ancillary products and services. The real
estate and other segment is primarily engaged in the development and sale of
real estate at Northstar and the harvesting of timber rights. Given the
distinctive nature of their respective products, these segments are managed
separately. Data by segment is as follows:
Year Ended
-------------------------------------
November 2, October 27, October 29,
2001 2000 1999
----------- ----------- -----------
(In thousands)
Revenue:
Resort operations............... $ 121,629 $ 119,685 $ 112,980
Real estate and other........... 276 19,670 12,744
----------- ----------- -----------
$ 121,905 $ 139,355 $ 125,724
=========== =========== ===========
Operating income (loss):
Resort operations............... $ 3,071 $ 4,070 $ (5,954)
Real estate and other........... (892) 14,827 7,222
----------- ----------- -----------
$ 2,179 $ 18,897 $ 1,268
=========== =========== ===========
Depreciation, depletion,
amortization and noncash cost
of real estate sales:
Resort operations............... $ 24,993 $ 22,326 $ 21,472
Real estate and other........... 128 2,706 5,021
----------- ----------- -----------
$ 25,121 $ 25,032 $ 26,493
=========== =========== ===========
Capital expenditures:
Resort operations............... $ 12,944 $ 21,909 $ 14,342
Real estate and other........... 1,654 175 3,439
----------- ----------- -----------
$ 14,598 $ 22,084 $ 17,781
=========== =========== ===========
November 2, October 27,
2001 2000
----------- -----------
Segment assets:
Resort operations............... $ 169,919 $ 180,984
Real estate and other........... 12,345 10,819
Corporate and other
nonidentifiable assets......... 6,954 7,260
----------- -----------
$ 189,218 199,063
=========== ===========
F-20
Exhibit Index
EXHIBIT
NUMBER DESCRIPTION
------ -----------
+2.1 Agreement and Plan of Merger dated as of September 18, 1997
by and among Booth Creek Ski Group, Inc., LMRC Acquisition
Corp. and Loon Mountain Recreation Corporation.
+2.2 First Amendment to Merger Agreement, dated December 22,
1997, by and among Booth Creek Ski Group, Inc., LMRC
Acquisition Corp. and Loon Mountain Recreation Corporation.
*3.1 Certificate of Incorporation of Booth Creek Ski Holdings,
Inc.
*3.2 Bylaws of Booth Creek Ski Holdings, Inc.
*3.3 Restated Articles of Incorporation of Trimont Land Company.
*3.4 Bylaws of Trimont Land Company.
*3.5 Certificate of Incorporation of Sierra-at-Tahoe, Inc.
*3.6 Bylaws of Sierra-at-Tahoe, Inc.
*3.7 Certificate of Incorporation of Bear Mountain, Inc.
*3.8 Bylaws of Bear Mountain, Inc.
*3.9 Certificate of Incorporation of Booth Creek Ski Acquisition
Corp.
*3.10 Bylaws of Booth Creek Ski Acquisition Corp.
*3.11 Amended and Restated Certificate of Incorporation of
Waterville Valley Ski Resort, Inc.
*3.12 Bylaws of Waterville Valley Ski Resort, Inc.
*3.13 Amended and Restated Certificate of Incorporation of Mount
Cranmore Ski Resort, Inc.
*3.14 Bylaws of Mount Cranmore Ski Resort, Inc.
*3.15 Amended and Restated Articles of Incorporation of Ski
Lifts, Inc.
*3.16 Bylaws of Ski Lifts, Inc.
**3.17 Articles of Incorporation of LMRC Holding Corp.
**3.18 Amended and Restated Articles of Incorporation of Loon
Mountain Recreation Corporation.
**3.19 Amended and Restated Bylaws of Loon Mountain Recreation
Corporation.
**3.20 Amended and Restated Articles of Incorporation of Loon
Realty Corp.
**3.21 Amended and Restated Bylaws of Loon Realty Corp.
**3.22 Bylaws of LMRC Holding Corp.
*4.1 Indenture dated as of March 18, 1997 by and among Booth
Creek Ski Holdings, Inc., as Issuer, Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Booth Creek Ski Acquisition Corp. and Ski Lifts, Inc., as
Subsidiary Guarantors, and HSBC Bank USA (formerly Marine
Midland Bank), as trustee (including the form of 12 1/2%
Senior Note due 2007 and the form of Guarantee).
*4.2 Supplemental Indenture No. 1 to Indenture dated as of
April 25, 1997 by and among Booth Creek Ski Holdings, Inc.,
as Issuer, Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Booth Creek Ski Acquisition Corp.
and Ski Lifts, Inc., as Subsidiary Guarantors, HSBC Bank USA
(formerly Marine Midland Bank), as trustee.
+4.3 Supplemental Indenture No. 2 to Indenture dated as of
February 20, 1998 by and among Booth Creek Ski Holdings,
Inc., as Issuer, Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Booth Creek Ski
Acquisition Corp. and Ski Lifts, Inc., as Subsidiary
Guarantors, and HSBC Bank USA (formerly Marine Midland
Bank), as Trustee.
+4.4 Supplemental Indenture No. 3 to Indenture dated as of
February 26, 1998, by and among Booth Creek Ski Holdings,
Inc., as Issuer, LMRC Holding Corp., Loon Mountain
Recreation Corporation and Loon Realty Corp., as Subsidiary
Guarantors, and HSBC Bank USA (formerly Marine Midland
Bank), as Trustee.
+++4.5 Supplemental Indenture No. 4 to Indenture dated as of
October 8, 1998 by and among Booth Creek Ski Holdings,
Inc., as Issuer, Booth Creek Ski Acquisition, Inc., and
HSBC Bank USA (formerly Marine Midland Bank), as Trustee.
##4.6 Second Amended and Restated Securities Purchase Agreement
and certain related agreements dated as of May 28, 2000,
among Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc., the Subsidiary Guarantors as defined
therein and each of John Hancock Life Insurance Company,
CIBC WG Argosy Merchant Fund 2, L.L.C., Hancock Mezzanine
Partners, L.P., Co-Investment Merchant Fund, LLC and
Booth Creek Partners Limited II, L.L.L.P.
#####4.7 Form of Stockholders Agreement dated January 22, 2002 among
Christopher P. Ryman, Elizabeth J. Cole, Timothy H. Beck,
Brian J. Pope, John Hancock Life Insurance Company, Hancock
Mezzanine Partners, L.P., CIBC WC Argosy Merchant Fund 2,
L.L.C., Co-Investment Merchant Fund, LLC and Booth Creek
Ski Group, Inc.
+++10.1 Amended and Restated Credit Agreement dated as of October
30, 1998 among Booth Creek Ski Holdings, Inc., Booth Creek
Ski Acquisition Corp., Trimont Land Company,
Sierra-at-Tahoe, Inc., Bear Mountain, Inc., Waterville
Valley Ski Resort, Inc., Mount Cranmore Ski Resort, Inc.,
Ski Lifts, Inc., Grand Targhee Incorporated, LMRC Holding
Corp., Loon Mountain Recreation Corporation, Loon Mountain
Realty Corp. and Fleet National Bank (formerly BankBoston,
N.A.).
***10.2 Waiver Agreement dated March 12, 1999, to Credit Agreement
dated as of October 30, 1998 among Booth Creek Ski
Holdings, Inc., Booth Creek Ski Acquisition Corp., Trimont
Land Company, Sierra-at-Tahoe, Inc., Bear Mountain, Inc.,
Waterville Valley Ski Resort, Inc., Mount Cranmore Ski
Resort, Inc., Ski Lifts, Inc., Grand Targhee Incorporated,
LMRC Holding Corp., Loon Mountain Recreation Corporation,
Loon Realty Corp. and Fleet National Bank (formerly
BankBoston, N.A.).
****10.3 First Amendment dated May 18, 1999, to Amended and Restated
Credit Agreement dated as of October 30, 1998 among Booth
Creek Ski Holdings, Inc., Booth Creek Ski Acquisition
Corp., Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Ski Lifts, Inc., Grand Targhee
Incorporated, LMRC Holding Corp., Loon Mountain Recreation
Corporation, Loon Realty Corp. and Fleet National Bank
(formerly BankBoston, N.A.).
****10.4 Waiver Agreement dated June 14, 1999, to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
Grand Targhee Incorporated, LMRC Holding Corp., Loon
Mountain Recreation Corporation, Loon Realty Corp. and
Fleet National Bank (formerly BankBoston, N.A.).
##10.5 Second Amendment dated May 28, 2000 to Amended and Restated
Credit Agreement dated as of October 30, 1998 among Booth
Creek Ski Holdings, Inc., Booth Creek Ski Acquisition
Corp., Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Ski Lifts, Inc., Grand Targhee
Incorporated, LMRC Holding Corp., Loon Mountain Recreation
Corporation, Loon Realty Corp. and Fleet National Bank.
##10.6 Third Amendment dated May 28, 2000 to Amended and Restated
Credit Agreement dated as of October 30, 1998 among Booth
Creek Ski Holdings, Inc., Booth Creek Ski Acquisition
Corp., Trimont Land Company, Sierra-at-Tahoe, Inc., Bear
Mountain, Inc., Waterville Valley Ski Resort, Inc., Mount
Cranmore Ski Resort, Inc., Ski Lifts, Inc., LMRC Holding
Corp., Loon Mountain Recreation Corporation, Loon Realty
Corp. and Fleet National Bank.
####10.7 Fourth Amendment dated September 22, 2000 to Amended and
Restated Credit Agreement dated as of October 30, 1998
among Booth Creek Ski Holdings, Inc., Booth Creek Ski
Acquisition Corp., Trimont Land Company, Sierra-at-Tahoe,
Inc., Bear Mountain, Inc., Waterville Valley Ski Resort,
Inc., Mount Cranmore Ski Resort, Inc., Ski Lifts, Inc.,
LMRC Holding Corp., Loon Mountain Recreation Corporation,
Loon Realty Corp. and Fleet National Bank.
*10.8 Purchase and Sale Agreement dated as of August 30, 1996 by
and between Waterville Valley Ski Area, Ltd., Cranmore,
Inc., American Skiing Company and Booth Creek Ski
Acquisition Corp.
*10.9 Subordinated Promissory Note dated November 27, 1996 issued
by Booth Creek Ski Acquisition Corp., Waterville Valley Ski
Resort, Inc. and Mount Cranmore Ski Resort, Inc. to
American Skiing Company.
*10.10 Stock Purchase and Indemnification Agreement dated as of
November 26, 1996 among Booth Creek Ski Holdings, Inc.,
Fibreboard Corporation, Trimont Land Company,
Sierra-at-Tahoe, Inc. and Bear Mountain, Inc.
*10.11 Escrow Agreement dated December 3, 1996 by and among
Fibreboard Corporation, Booth Creek Ski Holdings, Inc. and
First Trust of California.
*10.12 Stock Purchase Agreement dated as of February 21, 1997 by
and between Booth Creek Ski Holdings, Inc., William W.
Moffett, Jr., David R. Moffett, Laurie M. Padden,
individually and as custodian for Christina Padden, Jennifer
Padden and Mary M. Padden, Stephen R. Moffett, Katharine E.
Moffett, Frances J. DeBruler, individually and as
representative of the Estate of Jean S. DeBruler, Jr.,
deceased, and Peggy Westerlund, and David R. Moffett, as
representative.
*10.13 Preferred Stock Purchase Agreement dated as of February
21, 1997 by and between DRE, L.L.C., William W. Moffett,
Jr., David R. Moffett, Laurie M. Padden, individually and as
custodian for Christina Padden, Jennifer Padden and Mary M.
Padden, Stephen R. Moffett, Katharine E. Moffett, Frances J.
DeBruler, individually and as representative of the Estate
of Jean S. DeBruler, Jr., deceased, and Peggy Westerlund and
David R. Moffett, as representative.
#10.14 Asset Purchase Agreement dated as of March 21, 2000, as
modified and amended, by and between Booth Creek Ski
Holdings, Inc., a Delaware corporation, as Seller, and GT
Acquisition I, LLC, a Delaware limited liability company, as
Buyer.
###10.15 Agreement for Purchase and Sale of Real Property and
certain related agreements dated September 22, 2000 between
Trimont Land Company and Trimont Land Holdings, Inc.
##10.16 Amended and Restated Management Agreement dated as of May
26, 2000 by and between Booth Creek Ski Holdings, Inc. and
Booth Creek Management Corporation.
*10.17 Ski Area Term Special Use Permit No. 4002/01 issued by the
United States Forest Service to Waterville Valley Ski
Resort, Inc.
*10.18 Ski Area Term Special Use Permit No. 5123/01 issued by the
United States Forest Service to Bear Mountain, Inc.
*10.19 Ski Area Term Special Use Permit No. 4127/09 issued by the
United States Forest Service to Ski Lifts, Inc.
*10.20 Annual Special Use Permit Nos. 4127/19 & 4127/19 issued by
the United States Forest Service to Ski Lifts, Inc.
++10.21 Ski Area Term Special Use Permit No. 4031/01 issued by
the United States Forest Service to Loon Mountain Recreation
Corporation.
++10.22 Amendment Number 2 for Special Use Permit No. 4008/1
issued by the United States Forest Service to Loon Mountain
Recreation Corporation.
++10.23 Amendment Number 5 for Special Use Permit No. 4008/1
issued by the United States Forest Service to Loon Mountain
Recreation Corporation.
++++10.24 Ski Area Term Special Use Permit No. 4186 issued by the
United States Forest Service to Sierra-at-Tahoe, Inc.
**10.25 Employment Agreement dated as of July 1, 1997, by and
between Booth Creek Ski Holdings, Inc. and Timothy H. Beck.
#####10.26 Amendment No. 1 to the Employment Agreement by and
between Booth Creek Ski Holdings, Inc. and Timothy H. Beck.
#####10.27 Amended and Restated Employment Agreement by and
between Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc. and Christopher P. Ryman.
#####10.28 Amended and Restated Employment Agreement by and
between Booth Creek Ski Group, Inc., Booth Creek Ski
Holdings, Inc. and Elizabeth J. Cole.
#####10.29 Booth Creek Ski Group, Inc. 2001 Stock Incentive Plan.
#####10.30 Restricted Stock Agreement by and between Booth Creek
Ski Group, Inc. and Timothy H. Beck.
#####10.31 Deferred Compensation Agreement by and between Booth
Creek Ski Group, Inc. and Timothy H. Beck.
#####10.32 Restricted Stock Agreement by and between Booth Creek
Ski Group, Inc. and Brian J. Pope.
#####10.33 Deferred Compensation Agreement by and between Booth
Creek Ski Group, Inc. and Brian J. Pope.
#####10.34 Severance Agreement by and between Booth Creek Ski Group,
Inc., Booth Creek Ski Holdings, Inc. and Brian J. Pope.
####21.1 Subsidiaries of the Registrant.
- --------------------------
* Filed with Registration Statement on Form S-4 (Reg. No. 333-26091)
and incorporated herein by reference.
** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended January 30, 1998 and incorporated herein by
reference.
*** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended January 29, 1999 and incorporated herein by
reference.
**** Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended April 30, 1999 and incorporated herein by
reference.
+ Filed with the Company's Current Report on Form 8-K dated February
26, 1998 and incorporated herein by reference.
++ Filed with Registration Statement on Form S-4 (Reg. No. 333-48619)
and incorporated herein by reference.
+++ Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 30, 1998 and incorporated herein by reference.
++++ Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 29, 1999 and incorporated herein by reference.
# Filed with the Company's Current Report on Form 8-K dated March 21,
2000 and incorporated herein by reference.
## Filed with the Company's Quarterly Report on Form 10-Q for the
Quarterly Period Ended July 28, 2000 and incorporated herein by
reference.
### Filed with the Company's Current Report on Form 8-K dated September
22, 2000 and incorporated herein by reference.
#### Filed with the Company's Annual Report on Form 10-K for the Fiscal
Year Ended October 27, 2000 and incorporated herein by reference.
##### Filed herewith as an Exhibit to this Form 10-K.