UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE MONTH OF SEPTEMBER 2006
Commission File Number _______________
INTRAWEST CORPORATION
(Registrant's name)
SUITE 800, 200 BURRARD STREET
VANCOUVER, BRITISH COLUMBIA, CANADA V6C 3L6
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [ ] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): _______
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a
Form 6-K if submitted solely to provide an attached annual report to security
holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101 (b)(7): _______
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a
Form 6-K if submitted to furnish a report or other document that the registrant
foreign private issuer must furnish and make public under the laws of the
jurisdiction in which the registrant is incorporated, domiciled or legally
organized (the registrant's "home country"), or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press release, is not required to be and has
not been distributed to the registrant's security holders, and, if discussing a
material event, has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this
Form, the registrant is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_______________
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant, has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: September 20, 2006
INTRAWEST CORPORATION
By: /s/ ROSS MEACHER
-----------------------------------------------------
Name: Ross Meacher
Title: Corporate Secretary and Chief Privacy Officer
INTRAWEST LOGO
INTRAWEST CORPORATION
2006 ANNUAL REPORT
CONTENTS
PAGE
----
Message to our Shareholders................................. 1
Management's Discussion and Analysis........................ 2
Management's Responsibility................................. 23
Auditors' Report............................................ 23
Financial Statements........................................ 24
Notes to Consolidated Financial Statements.................. 27
Corporate Information....................................... 52
Corporate Governance........................................ 52
Executive Management........................................ 53
Principal Offices........................................... 54
MESSAGE TO OUR SHAREHOLDERS
Fiscal 2006 was a landmark year for Intrawest. Once again, we demonstrated
our ability to create exceptional value for our shareholders by taking advantage
of opportunities in the destination resort and adventure-travel industries. More
importantly, we initiated a strategic review process to maximize shareholder
value while setting the stage for a new era of growth.
Our 2006 performance was highlighted by the sale of our majority interest
in both our real estate and mountain operations at Mammoth Mountain, California.
We realized significant value, generating a total pre-tax gain of $156 million
and will participate in the future growth of this world-class destination resort
through the 15 per cent interest we retained in both the real estate development
and mountain operations. In December 2005, our real estate division completed
its most successful month of real estate launches in the history of Intrawest.
We launched four projects at four different resorts achieving a 93 per cent
presales rate and generating $534 million in presales revenue.
Our success was not limited to North America. During the year, we expanded
significantly our influence and reputation in the destination resort and
adventure-travel industries, most notably through the continued growth of
award-winning Abercrombie & Kent, the world's leading luxury tour operator.
Furthermore, our success at the village development of Les Arcs, France inspired
us to extend our business reach further into Europe by adding two more
village-development locations in France at Arc 1800 and the Village at Gardegan
in Bordeaux, plus an additional location at Verbier, Switzerland.
In February 2006, we initiated a strategic review process to deliver
maximum value to our shareholders and support our future growth plans. In an
effort to reach the broadest possible audience, we publicly announced a full
strategic review of all of our options. Our Board of Directors retained Goldman,
Sachs & Co. to assist in this initiative and created a special committee of the
Board to oversee the process.
Through this very public process approximately 100 parties, representing an
extensive and diverse range of potential strategic and financial partners,
expressed interest in pursuing varying types of transactions or ventures with
Intrawest. With the assistance of Goldman Sachs, we prepared a confidential
information memorandum and entered into confidentiality agreements with 65
serious parties to which the memorandum was then distributed. Our management
team and Goldman Sachs met and communicated with this group of interested
parties in order to ultimately determine the best course of action for Intrawest
and for our shareholders.
After thoroughly analyzing the broad spectrum of strategies, including
internally generated options, the Board of Directors unanimously approved an
agreement by which private equity funds managed by an affiliate of Fortress
Investment Group LLC of New York will acquire all of Intrawest's outstanding
common shares for US$35.00 per share payable in cash. Intrawest's Board of
Directors has recommended that shareholders vote in favour of the proposed
transaction at a special meeting of shareholders to be held on October 17, 2006.
The efforts of our Board of Directors and employees over the past six
months have been substantial, leading to yet another chapter in the exciting and
ever changing Intrawest story. We are very pleased that the proposed transaction
with Fortress represents the best possible outcome for our shareholders.
Sincerely,
-s- Joe S. Houssian -s- Gordon H. MacDougall
Joe S. Houssian Gordon H. MacDougall
Chairman and Chief Executive Officer Lead Director
1
INTRAWEST CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
(ALL DOLLAR AMOUNTS ARE IN UNITED STATES CURRENCY, UNLESS OTHERWISE INDICATED)
The following management's discussion and analysis ("MD&A") should be read
in conjunction with our audited consolidated financial statements for the year
ended June 30, 2006 and accompanying notes included in this annual report. The
discussion of our business may include forward-looking statements about our
future operations, financial results and objectives. These statements are
necessarily based on estimates and assumptions that are subject to risks and
uncertainties. Our actual results could differ materially from those expressed
or implied by such forward-looking information. Factors that could cause or
contribute to differences include, but are not limited to, our ability to
implement our business strategies, seasonality, weather conditions, competition,
general economic conditions, currency fluctuations, world events and other risks
detailed in our filings with Canadian securities regulatory authorities and the
U.S. Securities and Exchange Commission.
Our consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles ("GAAP"). A summary of the
major differences between Canadian GAAP and U.S. GAAP is contained in Note 22 of
our consolidated financial statements.
We use several non-GAAP measures to assess our financial performance, such
as EBITDA(1) and free cash flow. Such measures do not have a standardized
meaning prescribed by GAAP and they may not be comparable to similarly titled
measures presented by other companies. We have provided reconciliations between
any non-GAAP measures mentioned in this MD&A and our GAAP financial statements.
These non-GAAP measures are referred to in this document because we believe they
are indicative measures of a company's performance and are generally used by
investors to evaluate companies in the resort and travel operations and resort
development industries.
Additional information relating to our company, including our annual
information form, is filed on SEDAR at www.sedar.com. The date of this MD&A is
September 1, 2006.
COMPANY OVERVIEW
Intrawest is one of the world's leading destination resort and
adventure-travel companies. Over the past 30 years we have built a diverse
portfolio of resort and travel operations businesses that offer a wide array of
experiences to over seven million customers. We are the largest mountain resort
real estate developer in North America, with approximately 21,000 units of
future development under our control. Our principal strength is our ability to
combine expertise in resort and travel operations and real estate development.
We have a network of nine mountain resorts, geographically diversified
across North America's major ski regions. Our resorts include Whistler Blackcomb
(77% interest) and Panorama in British Columbia, Blue Mountain (50% interest) in
Ontario, Tremblant in Quebec, Stratton in Vermont, Snowshoe in West Virginia,
Copper and Winter Park in Colorado and Mountain Creek in New Jersey. Whistler
Blackcomb is a host venue for the 2010 Winter Olympic and Paralympic Games. We
operate Winter Park under a long-term lease arrangement from the City and County
of Denver and since the lease gives us control over the resort, Winter Park is
treated the same as any of our directly owned resorts from an operating and
financial reporting perspective. Our resorts hosted 7.0 million skier visits
(defined as the number of people who obtain a lift ticket or pass and use a ski
area for all or any part of one day) in fiscal 2006, 9% of the Canadian and U.S.
market, which gives us a greater market share than any other owner in the North
American mountain resort industry. In addition, we have a 15% interest in
Mammoth Mountain Ski Area in California. Effective in October 2005 we sold the
majority of our interest in Mammoth resulting in a decrease in our ownership
interest from 59.5% to our current 15% interest.
In addition to our mountain resorts we own Alpine Helicopters, the parent
company of Canadian Mountain Holidays which is the largest heli-skiing operation
in the world. This diverse portfolio of mountain-based assets allows us to offer
a wide variety of vacation experiences and attract a broad range of customers.
Canadian Mountain Holidays is part of our adventure and active travel division
which also includes Abercrombie & Kent ("A&K"), a worldwide group of related
travel companies offering luxury tour and travel services in more than 100
countries. We acquired a 67% interest in A&K in July 2004 and we have an option
to purchase the remaining 33%.
---------------
(1) EBITDA is defined as operating revenues less operating expenses and
therefore reflects earnings before interest, income taxes, depreciation and
amortization, non-controlling interest and any non-recurring items.
2
We own and operate a warm-weather resort, Sandestin Golf and Beach Resort,
one of the largest resort and residential communities in northwestern Florida.
We have demonstrated at Sandestin that the village-centered model that we
developed in the mountains can be applied to warm-weather locations. Sandestin
is our largest lodging operation with close to 250,000 room nights booked
annually. Our lodging business is primarily focused on the management of resort
residences on behalf of third-party owners. We currently manage approximately
7,800 lodging units spread across our resorts as well as several third-party
owned resorts, including Squaw Valley in California, Lake Las Vegas in Nevada
and Les Arcs in France.
Our revenue comes from three primary sources: resort and travel operations,
management services and real estate development. Resort and travel operations
comprise all the leisure businesses that we own at our resorts as well as active
and adventure travel tours at A&K and Alpine Helicopters. Resort and travel
operations generated 59% of our total revenue in 2006, mainly from sales of lift
tickets, adventure-travel tours, retail and rental merchandise, food and
beverage, ski school services and golf. Management services comprise fees from
assets we manage on behalf of third-party owners and from sales, development and
supervisory services we provide to other entities. Management services provided
11% of our total revenue in 2006. We develop real estate for sale at our resorts
and at several other locations in North America and Europe. Real estate
development provided 30% of our total revenue in 2006.
MAJOR CORPORATE DEVELOPMENT
On August 11, 2006, we announced that we had entered into a definitive
agreement under which a company that owns a number of funds managed by Fortress
Investment Group LLC ("Fortress") will acquire all of our outstanding common
shares at a price of $35.00 per share payable in cash. The total value of the
transaction, including debt, is approximately $2.8 billion. The transaction will
be carried out by way of a statutory plan of arrangement and, accordingly, must
be approved by the applicable court and by 66 2/3% of the votes cast by holders
of our shares at a special meeting of shareholders. Our Board of Directors has
unanimously resolved to recommend to our shareholders that they vote in favor of
the transaction. The proposed transaction is expected to close in October 2006,
shortly after receipt of shareholder and court approvals.
The Fortress announcement was the culmination of an initiative that started
in February 2006 when we announced that we were reviewing our strategic options
for enhancing shareholder value, including a capital structure review, strategic
partnerships or business combinations. A special committee of our Board of
Directors oversaw the review process and the board and our financial advisors
considered many different proposals before deciding to recommend the one from
Fortress.
SUMMARY OF FISCAL 2006 OPERATIONS
Fiscal 2006 was a pivotal year for Intrawest as we undertook several
important growth initiatives (including the previously mentioned review of
strategic options) and we completed several major transactions. We believe that
we are well positioned to realize growth in earnings and cash flow in the
future.
Income from continuing operations increased from $24.1 million ($0.50 per
diluted share) in 2005 to $55.3 million ($1.12 per diluted share) in 2006. Total
Company EBITDA was $267.5 million in 2006, up from $225.1 million in 2005
reflecting increased EBITDA from real estate that was partially offset by lower
EBITDA from resort and travel operations and management services and higher
corporate general and administrative expenses. Higher depreciation and
amortization expenses, income taxes and non-controlling interest in 2006 were
largely offset by a write-down of our stand-alone golf courses and costs to
redeem senior notes in 2005.
We sold the majority of our interest in Mammoth Mountain Ski Area in 2006
and recognized an after-tax gain of $61.3 million on the transaction. This gain,
as well as Mammoth's resort and travel operations results to the sale date
(including the 2005 comparatives), have been classified as discontinued
operations.
Net income increased from $32.8 million ($0.68 per diluted share) in 2005
to $115.2 million ($2.33 per diluted share) in 2006.
FISCAL 2006 REVIEW OF RESORT AND TRAVEL OPERATIONS
For financial reporting purposes we fully consolidate all of our resort and
travel operations businesses except for Blue Mountain, which we proportionately
consolidate at our 50% interest and Mammoth, which we account for on a cost
basis.
3
Our resort and travel operations are segregated into two reportable
segments: mountain resort and travel operations and non-mountain resort and
travel operations. The mountain segment comprises all the resort operations at
our nine mountain resorts, Alpine Helicopters (including Canadian Mountain
Holidays) and a number of smaller mountain-oriented businesses, including the
Intrawest Retail Group. The non-mountain segment mainly comprises A&K, resort
operations at Sandestin and our stand-alone golf courses.
The key drivers of the mountain resort and travel operations business are
skier visits, revenue per visit and margins. Skier visits are impacted by many
factors including the quality of the on-mountain and base area facilities,
weather conditions, the amount of snowfall, the accessibility of the resort and
the cost to the visitor. Our strategy to increase skier visits has primarily
focused on upgrading the on-mountain facilities and building base area villages
that provide accommodation and add amenities to attract a broader range of
guests. The village also helps to extend the length of stay and spread visits
more evenly during the week and during the season. The key drivers of the non-
mountain segment are similar; i.e., the number of tours, revenue per tour and
margins for A&K, and golf rounds, revenue per round and margins for the
warm-weather resort operations.
The following table highlights the results of our resort and travel
operations business.
2006 2005 Change (%)
---------- ---------- ----------
Skier visits(1)............................................. 6,688,000 6,322,000 6
Revenue (millions).......................................... $ 936.1 $ 806.6 16
EBITDA (millions)........................................... $ 88.7 $ 99.6 (11)
Margin(%)................................................... 9.5 12.3
---------------
(1) Skier visits for all of our nine resorts are at 100%, except for Blue
Mountain at 50%.
Revenue from resort and travel operations increased from $806.6 million in
2005 compared with $936.1 million in 2006. Revenue from the mountain segment
increased from $489.4 million to $569.8 million while revenue from the
non-mountain segment increased from $317.2 million to $366.3 million.
Mountain Resort and Travel Operations Revenue
In December 2004 we increased our ownership of Alpine Helicopters from 45%
to 100% and the incremental revenue in 2006 from our increased ownership
interest was $13.5 million. In addition, in August 2005 we entered into a lease
to operate Parque de Nieve, an indoor snowdome in Spain, and revenue in 2006
included $6.9 million from this new business. The rise in the value of the
Canadian dollar, from an average rate of US$0.80 in 2005 to US$0.86 in 2006,
increased reported mountain segment revenue by $22.8 million. On a
same-business, constant exchange rate basis mountain resort and travel
operations revenue increased by $37.2 million in 2006 due to:
(millions)
----------
Increase in skier visits.................................... $21.3
Decrease in revenue per skier visit......................... (2.3)
Increase in non-skier visit revenue......................... 18.2
-----
$37.2
=====
Skier visits increased 6% from 6,322,000 in 2005 to 6,688,000 in 2006
resulting in a $21.3 million increase in mountain segment revenue. Skier visits
increased by 11% at our western resorts, however this was partially offset by a
decrease of 3% at our eastern resorts.
Whistler Blackcomb saw a 15% increase in skier visits compared with 2005
when all our British Columbia operations experienced very challenging weather
conditions, with heavy rainfall in mid-January followed by warm, dry conditions
through mid-March. We continued, however, to see some spill-over effect from the
sub-standard ski season last year, evidenced by the fact that notwithstanding
near record snowfall, Whistler Blackcomb's skier visits in 2006 were 2% lower
than 2004. In Colorado, Copper and Winter Park benefited from the best snow
conditions in many years, enabling the resorts to increase skier visits by 8% on
a combined basis in 2006.
Skier visits at Tremblant were impacted by a strike by 1,500 unionized
workers that began on December 17 and was settled on January 3 (however the
resort did not regain full operations until a week later). Although the resort
was able to remain open during the important Christmas holiday season using 200
management personnel, it operated at significantly reduced capacity. The strike
had a lingering impact on the remainder of Tremblant's season. This factor
4
combined with seven weekends of either rain or extremely low temperatures
between January and March reduced Tremblant's skier visits by 11% in 2006. The
poor weather also impacted Stratton and to a lesser extent Snowshoe, where skier
visits declined by 3% and 1%, respectively. Our other eastern resorts, Blue
Mountain and Mountain Creek, were not as impacted by the weather, realizing
skier visit increases of 1% and 7%, respectively.
Mountain segment revenue decreased by $2.3 million due to a 1% decrease in
revenue per skier visit from $58.13 in 2005 to $57.78 in 2006 (on a constant
exchange rate basis). Revenue per skier visit is a function of ticket prices and
ticket yields, and revenue from non-ticket sources such as retail and rental
stores, ski school, and food and beverage services. Ticket yields reflect the
mix of ticket types (e.g., adult, child, season pass and group), the proportion
of day versus destination visitors (destination visitors tend to be less price
sensitive), and the amount of discounting of full-price tickets in regional
markets. Revenue per visit from non-ticket sources is also influenced by the mix
of day versus destination visitors, the affluence of the visitor base, and the
quantity and type of amenities and services offered at the resort.
Revenue per skier visit from ticket sales (our effective ticket price)
increased moderately from $29.38 to $29.72. A 4% aggregate increase at six of
our resorts was partly offset by a 1% aggregate decrease at Whistler Blackcomb,
Tremblant and Stratton. Revenue per visit from non-ticket sources decreased 2%
from $28.74 to $28.07.
A shift in the mix of visits from higher-yielding destination visitors to
lower-yielding regional visitors reduced our effective ticket price and revenue
per visit from non-ticket sources at Whistler Blackcomb. A lack of bookings from
long-haul U.S. markets, which decreased by 32% compared with 2005, was the main
reason for the decline in destination visits. The high Canadian dollar, the cost
of flights into Vancouver and generally excellent conditions at resorts in the
western U.S. contributed to the reduced bookings. It is also likely that the
lack of snow and generally poor weather at Whistler Blackcomb in November and
December during the prime booking window for the peak January to March period
caused potential visitors to book elsewhere. For the 2005/2006 season, 42% of
Whistler Blackcomb's room nights were booked by regional visitors compared with
an average of 36% over the previous six seasons. At Tremblant our effective
ticket price decreased by 7% as we discounted many of our prices during the
period when the workers' strike limited our operations and then afterwards to
stimulate demand. Reduced visits due to the poor weather during the
peak-yielding January to March period also impacted our revenue per visit at
Tremblant.
For the purposes of this MD&A, non-skier visit revenue for our mountain
segment comprises revenue from sources that are not driven by skier visits
(i.e., golf and other summer activities at our mountain resorts and revenue from
businesses such as Alpine Helicopters and the Intrawest Retail Group). Overall,
on a same-business basis, non-skier visit revenue increased by $18.2 million in
2006. Revenue from golf and other summer activities at our mountain resorts
increased by $5.9 million, due primarily to growth in revenue from mountain
biking and sightseeing at Whistler Blackcomb. Revenue at Alpine Helicopters
(excluding the impact of our increased ownership interest) increased by $2.7
million in 2006 due mainly to achieving higher revenue at Canadian Mountain
Holidays as a result of having superior snow conditions. Strong skier visit
growth in the western U.S. and the opening of nine new stores enabled the
Intrawest Retail Group to increase its revenue by $5.9 million in 2006. We
recorded rental revenue of $2.8 million in 2006 from our commercial property at
Squaw Valley. Net rental income was capitalized in 2005 since this property was
in the lease up stage.
Non-mountain Resort and Travel Operations Revenue
Non-mountain resort and travel operations revenue increased by $49.1
million in 2006 to $366.3 million. A&K travel tour revenue increased by $44.4
million (18%) as the adventure-travel tour business continued its strong
rebound. A&K saw significant growth in tour revenues from all its major
destinations, particularly East Africa, the Orient and Egypt which increased by
32%, 26% and 23%, respectively. In addition to revenue from travel tours, A&K
realized $1.5 million of licensing fees in 2006, down from $6.5 million in 2005.
These fees were earned from an operator of destination clubs, who was given the
right to use A&K's brand name for marketing the clubs. The licensing agreement
was terminated by A&K in August 2005.
Non-mountain revenue in 2006 included $1.9 million of rental revenue from
our commercial property at Lake Las Vegas. Net rental income was capitalized in
2005 since this property was in the lease up stage. Revenue at Sandestin
increased by $7.1 million (15%) due mainly to strong growth in its food and
beverage and banquet business and increased activities revenue. Sandestin also
collected a $2.7 million business interruption insurance claim related to the
hurricanes last summer.
5
Golf rounds in 2006 were 21% lower than 2005 at Sandestin (due in part to
the closure for most of the year of the Baytowne course for renovations) and 1%
higher at our stand-alone golf courses. Demand for golf has not grown over the
past few years and the markets in which our warm-weather golf courses operate
are highly competitive. The shortfall in rounds at Sandestin was counterbalanced
by higher revenue per round, resulting in a 4% decline in golf revenue at
Sandestin and a 4% increase in golf revenue at our stand-alone courses. In line
with the decision that we announced last year to exit the stand-alone golf
business, we sold two golf courses in June 2006 -- South Mountain and Big Island
Country Club. We have leased back Big Island Country Club up to December 31,
2006.
Resort and Travel Operations Revenue Breakdown
Resort and travel operations revenue for the mountain and non-mountain
segments combined (as reported and on a same-business, constant exchange rate
basis) was broken down by major business component as follows:
2006 2006 2005
REVENUE Note(1) ADJUSTED Revenue Increase Change (%)
------- ------- -------- ------- -------- ----------
(millions)
Mountain operations........................ $299.6 $(30.4) $269.2 $252.2 $17.0 7
Adventure-travel tours..................... 294.9 -- 294.9 250.5 44.4 18
Retail and rental shops.................... 111.2 (5.7) 105.5 100.9 4.6 5
Food and beverage.......................... 96.0 (2.5) 93.5 86.1 7.4 9
Ski school................................. 42.5 (2.6) 39.9 39.2 0.7 2
Golf....................................... 30.7 (0.4) 30.3 27.5 2.8 10
Other...................................... 61.2 (1.5) 59.7 50.2 9.5 19
------ ------ ------ ------ -----
$936.1 $(43.1) $893.0 $806.6 $86.4 11
====== ====== ====== ====== =====
---------------
Note
(1) Removes the impact of the increase in the value of the Canadian dollar, the
acquisition of 55% of Alpine Helicopters and lease of Parque de Nieve.
Resort and Travel Operations Expenses and EBITDA
Resort and travel operations expenses increased from $707.0 million in 2005
to $847.4 million in 2006. The mountain segment increased by $88.7 million to
$494.4 million, while the non-mountain segment increased by $51.7 million to
$353.0 million.
Our acquisition of the remaining 55% of Alpine Helicopters and the lease of
Parque de Nieve increased mountain resort and travel expenses by $12.7 million
and $7.9 million, respectively, and the translation effect of the stronger
Canadian dollar increased it by a further $18.7 million. The recognition of
rental operations at Squaw Valley increased expenses by $2.9 million. Excluding
these factors, expenses in the mountain segment increased by $46.5 million to
$452.2 million mainly due to:
- Higher business volumes at our British Columbia operations (Whistler
Blackcomb, Panorama and Alpine Helicopters) and our Colorado resorts,
which increased mountain segment expenses by $22.9 million.
- The opening of nine new stores by the Intrawest Retail Group in fiscal
2006 resulting in $6.1 million of incremental expenses.
- A new initiative (referred to internally as operational excellence and
modeled off Six Sigma) designed to change our work processes in order to
create future cost savings and efficiencies, which added $4.6 million of
costs.
- Increases of $3.5 million in fuel and utility costs and $2.0 million in
rent expenses, partly as a result of selling our commercial properties in
2005 and becoming a tenant of a third-party landlord.
- The workers' strike at Tremblant, which added $1.4 million of direct
expenses related to security, marketing and extra costs of the employees
who substituted for the striking workers.
- An increase of $6.4 million in divisional operations group overhead,
mainly related to sales and marketing and information technology.
Increased business volumes at A&K and the recognition of rental operations
at Lake Las Vegas added $37.7 million and $2.5 million, respectively, of
non-mountain resort and travel operations expenses in 2006. We
6
incurred severance and other costs of $0.7 million in 2006 related to our
decision to exit the stand-alone golf business. Expenses at Sandestin increased
by $9.7 million (19%) due mainly to increased business in the food and beverage
division and higher payroll, transportation and maintenance costs.
EBITDA from resort and travel operations decreased from $99.6 million in
2005 to $88.7 million in 2006. The acquisition of 55% of Alpine Helicopters
increased EBITDA by $0.8 million while the lease of Parque de Nieve incurred a
loss of $1.1 million in its first year under our management. The translation
effect of the higher Canadian dollar increased EBITDA by $4.1 million. On a
same-business, constant exchange rate basis, EBITDA from the mountain segment
decreased from $83.7 million to $71.6 million while EBITDA from the non-mountain
segment declined from $15.8 million to $13.3 million.
Superior weather and snow conditions in 2006 compared with 2005 at our
British Columbia operations increased EBITDA by $3.4 million, however this was
significantly below our expectations due to the shortfall in higher-margin
destination visitors at Whistler Blackcomb discussed above. In Colorado,
excellent conditions and record skier visits increased EBITDA in 2006 by $3.6
million. These positive factors were offset by a number of negative factors,
including the direct and lingering impact of the workers' strike at Tremblant
and the challenging weather in Quebec and Vermont in January and February, which
reduced EBITDA at Tremblant and Stratton by $7.9 million and $2.3 million,
respectively. The balance of the decrease in mountain segment EBITDA was due
mainly to the expense increases described above.
In the non-mountain segment, EBITDA from A&K's travel tour business
increased by $6.7 million (49%) due mainly to sales growth and improved tour
yields. The improvement in yields was primarily achieved by driving more sales
through A&K's owned sales and marketing companies (rather than third-party
travel agents) to its owned destination management companies as well as
maximizing the number of guests per tour. The increase in travel tour EBITDA was
partially offset by a decrease of $5.0 million in EBITDA from A&K licensing fees
due to the termination of the licensing agreement. EBITDA from Sandestin
decreased by $2.6 million in 2006 as expense increases were not counterbalanced
by increased traffic to the resort in the aftermath of the hurricanes.
The decline in EBITDA reduced our resort and travel operations margin from
12.3% in 2005 to a disappointing 9.5% in 2006. Our goal is to increase our
margin to the mid-teen percentages primarily by increasing the destination
visitors to Whistler Blackcomb, returning to more normal operations at Tremblant
compared with the strike-affected current winter season and realizing the
benefit of various cost saving initiatives, including those related to our
operational excellence project.
FISCAL 2006 REVIEW OF MANAGEMENT SERVICES
Management services revenue and EBITDA in 2006 and 2005 were broken down as
follows:
2006 2005
---------------- ----------------
Revenue EBITDA Revenue EBITDA
------- ------ ------- ------
(millions)
Services related to resort and travel operations
Lodging and property management........................... $ 95.4 $13.4 $ 87.9 $16.7
Other resort and travel fees.............................. 9.6 1.2 14.7 --
------ ----- ------ -----
105.0 14.6 102.6 16.7
------ ----- ------ -----
Services related to real estate development
Real estate services fees................................. 22.4 11.0 24.3 13.2
Playground sales fees..................................... 45.1 11.4 49.8 13.1
------ ----- ------ -----
67.5 22.4 74.1 26.3
------ ----- ------ -----
$172.5 $37.0 $176.7 $43.0
====== ===== ====== =====
The increase in revenue from lodging and property management was due mainly
to opening new lodging operations at Les Arcs and Westin Trillium House at Blue
Mountain and the acquisition of a lodging business at Seaside near Sandestin,
which in aggregate added $6.6 million of revenue. In addition, Intrawest
Hospitality Management, with operations at Mammoth, Squaw and Lake Las Vegas,
experienced strong revenue growth on a 24% increase in occupied room nights.
These positive factors were partly offset by a decline in revenue at Tremblant,
which saw a decrease of 17% in occupied room nights due to the impact of the
workers' strike and difficult weather
7
conditions. Despite the increase in revenue, EBITDA from lodging and property
management decreased by $3.3 million in 2006. The new operations at Les Arcs,
Blue Mountain and Seaside increased EBITDA by $1.4 million, however this was
offset by reductions in EBITDA of $1.9 million at Tremblant and $2.2 million at
Sandestin. The decline at Sandestin was mainly due to a $1.6 million increase in
housekeeping labor. We had hired more employees in expectation of increased room
bookings at Sandestin, however occupied room nights declined 4% in 2006.
Other resort and travel fees, which comprise reservation fees earned by our
central call center, golf course management fees and club management fees earned
by Intrawest Resort Club, decreased by $5.1 million in 2006. We sold our
reservations company in Colorado in August 2005 and we continued to focus on
booking reservations to our own resorts while reducing our third-party
reservations business. As a result, reservations fees declined by $4.3 million
in 2006. The decision we made at the end of fiscal 2005 to exit the non-resort
golf business reduced golf course management fees by $1.2 million in 2006 as we
surrendered many of our management contracts. Our third-party reservations
business was not profitable and winding it down increased EBITDA from other
resort and travel fees by $2.0 million in 2006. This was partially offset by
reduced EBITDA from golf course management.
The decreases in real estate services fees revenue and EBITDA of $1.9
million and $2.2 million, respectively, in 2006 were due to reduced development
and marketing fees from managing partnership projects. These fees declined as we
completed construction of several projects that had been sold to partnerships in
prior years and we did not sell any new projects to partnerships in 2006. The
larger decrease in EBITDA relative to the decrease in revenue in 2006 reflects a
lower weighting of marketing fees, which have a higher margin than development
fees. Marketing fees constituted 25% of real estate services fees in 2006
compared with 37% in 2005.
The decreases in revenue and EBITDA from Playground (our real estate
marketing and sales company) sales fees were mainly due to a slower resales
market in Florida, which has been an important source of business for
Playground, in the aftermath of hurricane Katrina. In addition, revenue and
EBITDA was influenced by the timing of completion of certain projects.
Playground recognizes revenue either when the purchaser signs a firm contract,
or on closing, depending upon the terms of the listing agreement with the
developer.
FISCAL 2006 REVIEW OF REAL ESTATE DEVELOPMENT
We have two real estate businesses -- Intrawest Placemaking and the
Intrawest Resort Club. Intrawest Placemaking develops and sells three main
products: condo-hotel units (typically, small village-based units that owners
occupy periodically and put into a rental pool at other times), townhome units
(typically, larger units outside the main village core that owners primarily
retain for their own use) and single-family lots (serviced land on which owners
or other developers build homes). The condo-hotel units are usually built over
ground-floor commercial space that we rent out to third-party tenants and
partially occupy for our operations. This commercial space is also developed for
the purpose of sale. In order to broaden market appeal, condo-hotel and townhome
units are sold on the basis of both whole ownership and fractional ownership.
Intrawest Resort Club's business is a flexible form of timeshare where owners
purchase points that entitle them to use accommodation at different resorts.
Since Intrawest Resort Club currently generates only about 10% of our total real
estate revenue it is not reported as a separate business segment in our
financial statements.
Our business strategy for real estate has two major elements: to maximize
profits from the sale of real estate units and to create accommodation ("warm
beds") for destination visitors to stay at the resort. Many of our real estate
buyers enter into rental management agreements with us from which we earn
lodging and property management fees. Furthermore, the visitors also buy lift
tickets or golf tee times, food and beverage, and retail merchandise, which
provide an annuity for our resort and travel operations.
The real estate development business is highly capital intensive. In order
to reduce our capital requirements for real estate development we have entered
into various partnership and joint venture arrangements. Our equity interests in
these partnerships range from 15% to 40%.
We generally recognize real estate sales revenue at the time of "closing,"
which is when title to a completed unit is conveyed to the purchaser and the
purchaser becomes entitled to occupancy. Since our standard practice is to
pre-sell our real estate units, any proceeds received from purchasers prior to
closing are recorded as deferred revenue on our balance sheet. Some of our real
estate development partnerships recognize real estate sales on a percentage-of-
completion basis and we record our share of income from the partnerships on the
same basis.
8
The following table highlights the results of our real estate business in
2006 compared with 2005.
2006 2005 Change (%)
------ ------ ----------
Units closed(1)............................................. 445 557 (20)
Revenue (millions).......................................... $488.6 $627.5 (22)
Operating profit (millions)................................. $147.6 $ 67.6 118
Margin...................................................... 30.2% 10.8%
---------------
(1) Units closed excludes units in projects sold to partnerships. In 2006 and
2005 the partnerships closed an additional 578 and 467 units, respectively.
Two major real estate transactions occurred in 2006. We sold the majority
of our developable lands at Mammoth for proceeds of $114.7 million to an entity
in which Starwood Capital Group Global L.L.C. ("Starwood") has an 85% interest
and we have a 15% interest. This transaction followed the earlier sale during
2006 of the majority of our interest in Mammoth Mountain Ski Area to an
affiliate of Starwood. The real estate sold comprises land for the future
development of over 1,100 residential units and 40,000 square feet of commercial
space in the town of Mammoth Lakes. The other major transaction in 2006 was the
sale of a 26-acre beachfront property in Maui for proceeds of $73.3 million. The
vendor of the property was a partnership in which we had a 40% interest, however
the partnership was a variable interest entity ("VIE") that we were required to
fully consolidate because we were its primary beneficiary. Hence real estate
development revenue includes 100% of the sales proceeds to the partnership and
real estate development expenses includes 100% of the partnership's cost of
sales, being $29.4 million. The partner's share of the profit from this
transaction of $18.5 million is included in non-controlling interest. Subsequent
to closing this transaction, the partnership was restructured and we ceased to
be its primary beneficiary (see Critical Accounting Policies -- Consolidation of
VIEs).
Revenue for 2005 included $170.7 million for sales of seven projects and
one land parcel to partnerships in which we hold a 35% equity interest. These
sales proceeds comprise the fair market value of the land for the projects as
well as accumulated development costs. There were no such project sales to
partnerships in 2006. In addition, in 2005, we sold three projects for $29.8
million to cost accounted partnerships. We also sold commercial properties at
seven of our resorts for proceeds of $109.5 million to a partnership in which
CNL Income Properties, Inc., a real estate investment trust, is an 80% partner
and we are a 20% partner.
Excluding the transactions described above, revenue from real estate
development decreased from $316.9 million in 2005 to $300.6 million in 2006.
Revenue generated by Intrawest Placemaking decreased from $272.1 million to
$240.7 million while revenue generated by Intrawest Resort Club increased from
$44.8 million to $59.9 million.
Intrawest Placemaking Revenue
We closed a total of 445 units in 2006, down from 557 in 2005. Closings of
units in projects sold to partnerships are excluded from our reported closings.
In 2006 the partnerships closed 578 units compared with 467 units in 2005.
The translation effect of the higher Canadian dollar increased reported
real estate development revenue by $2.6 million in 2006. The average price per
closed unit increased from $488,000 in 2005 to $543,000 (on a constant exchange
rate basis) in 2006. During 2005 in order to sell long-standing inventory at
Solitude and Copper we discounted prices and closed 62 units at an average price
of $286,000 per unit. Excluding these units, the average price per closed unit
in 2005 was $514,000.
Intrawest Resort Club Revenue
The 34% increase in resort club group revenue in 2006 was due mainly to the
sale of a 29-acre land parcel adjacent to the club location in Palm Desert for
$14.4 million. This land was surplus to our requirements to build units for the
resort club. In addition, we sold $6.6 million of titled fractional interests in
units at the club location in Mexico. Both of these transactions were designed
to accelerate the monetization of the resort club group's properties. Resort
club points sales declined by 13% to $38.9 million in 2006 mainly due to the
lack of destination visitors to Whistler and the workers' strike at Tremblant,
which reduced our tour flow of potential buyers.
Sales to Partnerships
In 2004 we implemented a partnering strategy for real estate development in
order to reduce our cash requirements for new projects, increase the return on
capital of our real estate assets and limit our exposure to the risks of the
real
9
estate business. In 2004 and 2005 we sold a total of 21 projects for proceeds of
$363.7 million to partnerships in which we hold 30% or 35% equity interests. We
did not complete any project sales to such partnerships in 2006.
Under Canadian GAAP, profits on real estate sales to partnerships that we
account for using the equity method are required to be deferred and are then
recognized on the same basis as the partnership recognizes its real estate
revenue. The deferred land profit is initially included in real estate
development expenses in our statement of operations and in deferred revenue on
our balance sheet. Subsequently, when the partnership recognizes its real estate
revenue, we record a portion of the deferred land profit as a credit to real
estate development expenses in our statement of operations. When properties are
sold to an equity accounted partnership for a loss, that loss is recognized in
the statement of operations at the closing date. Below is a continuity schedule
of deferred land profits on sales to equity accounted partnerships.
2004 2005 2006
------ ------ ------
(millions)
Sales proceeds.............................................. $193.0 $170.7 $ --
Cost of sales............................................... 154.7 97.7 --
------ ------ ------
Land profit (initially deferred)............................ 38.3 73.0 --
------ ------ ------
Opening deferred land profit................................ -- 30.8 80.3
Land profit (initially deferred)............................ 38.3 73.0 --
Deferred land profit recognized in year..................... (7.5) (23.5) (30.4)
------ ------ ------
Closing deferred land profit................................ $ 30.8 $ 80.3 $ 49.9
====== ====== ======
Profits on sales to partnerships that we account for using the cost method,
such as the sale in 2006 of lands at Mammoth to the partnership with Starwood,
are recognized in full on the closing date. In 2005 we sold three projects for
$29.8 million to cost accounted partnerships. The determinants of whether an
investment is accounted for by the equity method or by the cost method is based
on our percentage ownership and the degree of our influence in the partnership's
key operating, investing and strategic decisions.
Real Estate EBITDA
Real estate EBITDA increased from $103.0 million in 2005 to $175.2 million
in 2006. Real estate EBITDA comprises operating profit from real estate plus
interest included in real estate development expenses. During the development
process, interest is capitalized to properties and the interest is expensed when
the properties are closed. Interest included in real estate development expenses
decreased by 22% to $27.6 million in 2006, in line with the 20% decrease in the
number of units closed. Operating profit from real estate, rather than real
estate EBITDA, is included in the computation of net income.
Operating profit from real estate development increased from $67.6 million
in 2005 to $147.6 million in 2006 mainly due to recognizing profit of $56.8
million on the Mammoth land sale to the Starwood partnership and $43.9 million
on the Maui land sale. In 2005 operating profit included $11.5 million for
project sales to cost accounted partnerships and a loss of $3.4 million on the
sale of commercial properties to the CNL partnership. Excluding these
transactions, operating profit from real estate development was $46.9 million in
2006 compared with $59.5 million in 2005. A number of factors impacted operating
profit in each year, including:
- The 20% decrease in the number of units closed in 2006.
- The mix of product types (i.e., condo-hotel, townhome and single-family
lot), which was weighted more towards condo-hotels in 2006. Condo-hotels
generally have lower margins than the other product types because common
areas reduce building efficiency (the ratio of saleable area to buildable
area). In total, 61% of the closings in 2006 were condo-hotel units, 24%
were townhomes and 15% were lots, compared with 47% condo-hotel units,
31% townhomes and 22% lots in 2005.
- Progress on the construction of projects owned by equity accounted
partnerships in 2006. Equity income and land profit, which are recognized
on a percentage-of-completion basis, increased from $25.5 million in 2005
to $34.9 million in 2006.
- The provision of various reserves and write downs. In 2006 we expensed
$3.8 million of costs in connection with the remediation of deficiencies
at a project that we completed several years ago at Sandestin. We expect
to
10
recover most of these costs from insurance carriers and consultants,
however GAAP restricts these recoveries from being recorded until they
are certain. We also wrote down the book value of our Appalachian project
at Mountain Creek by $5.2 million as significant construction delays and
disputes with the general contractor (resulting in the termination of the
contractor's contract) increased costs and caused the project to be
unprofitable. Similarly in 2005, we wrote down the carrying value of our
Lake Las Vegas commercial properties by $4.2 million.
Real Estate Pre-sales
At August 31, 2006, real estate presales amounted to $165.7 million for
delivery in fiscal 2007 and a further $185.2 million for delivery in fiscal
2008. In addition, the real estate partnerships had presales of $211.2 million
and $263.3 million, respectively, to close in fiscal 2007 and fiscal 2008 and a
further $425.5 million to close in fiscal 2009.
FISCAL 2006 REVIEW OF CORPORATE OPERATIONS
Interest Income, Other Income and Other Expenses
Interest, other income and other expense increased from $5.6 million in
2005 to $8.6 million in 2006. The breakdown was as follows:
2006 2005 Change
----- ---- ------
(millions)
Interest income............................................. $10.4 $6.8 $3.6
Loss on asset disposals..................................... (1.9) (0.6) (1.3)
Legal and other costs related to the Fortress transaction... (1.6) -- (1.6)
Miscellaneous income (expenses)............................. 1.7 (0.6) 2.3
----- ---- ----
$ 8.6 $5.6 $3.0
===== ==== ====
The increase in interest income in 2006 was mainly due to $1.2 million more
interest on notes receivable from real estate partnerships and $1.1 million more
interest at A&K. In 2006 we sold two of our stand-alone golf courses -- South
Mountain and Big Island Country Club for an aggregate loss of $1.1 million.
Miscellaneous income in 2006 mainly comprises foreign exchange gains.
Interest Costs
Note 16 of our consolidated financial statements provides a reconciliation
of total interest incurred to the amount of interest expense (including interest
in real estate expenses) in the statement of operations.
We incurred interest costs of $79.1 million in 2006, down from $80.9
million in 2005 due mainly to the refinancing of senior notes during 2005. In
the second and third quarters of 2005 we redeemed $394.4 million of 10.5% senior
notes by issuing $329.9 million of 7.5% and 6.875% senior notes and drawing on
our senior credit facility.
We capitalized $31.7 million of interest incurred in 2006 compared with
$36.0 million in 2005. The decrease was due mainly to the completion of various
properties, including our commercial properties at Squaw and Lake Las Vegas that
resulted in expensing $5.8 million of interest in 2006 that was capitalized in
2005. The net impact of the reductions in interest incurred and interest
capitalized was to increase interest expense from $44.2 million in 2005 to $47.6
million in 2006.
In addition to interest expense, during 2005 we expensed call premiums and
unamortized deferred financing costs of $30.2 million when we redeemed the
senior notes.
General and Administrative Costs
All general and administrative ("G&A") costs incurred by our resorts and
other operations group businesses are included in resort and travel operations
and management services expenses. Similarly, G&A costs incurred in the
development of real estate are initially capitalized to properties, and then
expensed as part of real estate costs in the period when the properties are
closed. Corporate G&A expenses, which mainly comprise executive employee costs,
public company costs, audit and legal fees, corporate information technology
costs and head office occupancy costs are disclosed as a separate line in the
statement of operations.
11
Corporate G&A expenses increased significantly from $20.6 million in 2005
to $33.4 million in 2006 due mainly to $7.8 million increased expenses related
to stock-based compensation plans and $3.5 million related to a new
branding/business strategy initiative. Our stock-based compensation plans are
described in note 12 of our consolidated financial statements. We introduced
four new plans during 2006 (one of which replaced the key executive employee
benefit plan, which was fully vested in 2005) and the incremental cost of these
plans was $3.4 million. All of our stock-based compensation plans are
marked-to-market and the 20% rise in our share price during 2006 increased the
plan liabilities at the end of last year and therefore compensation expense in
2006, by $3.8 million. We have entered into a share swap transaction with a
major financial institution that partially mitigates the effect of these
mark-to-market adjustments. The goal of the new branding/business strategy
initiative is to increase our share of the resort and travel market by changing
how and what we communicate to prospective customers. The costs in 2006 were
primarily incurred in connection with research and concept testing. In addition
to the above, the higher Canadian dollar increased reported corporate G&A by
$1.4 million in 2006.
Depreciation and Amortization
Depreciation and amortization expense increased from $71.8 million in 2005
to $104.4 million in 2006. Early in fiscal 2006 we commenced a review of the
useful lives and depreciation methods of our ski and resort operations assets.
As a result of this review we increased depreciation and amortization expense in
2006 by $21.5 million. This adjustment includes both a prospective change from
the current period in our depreciation method from declining balance to
straight-line and a change in the useful lives of the assets to better reflect
our historical operating experience and the remaining service and earning
potential of the assets. We estimate that this change in the method of
recognizing the carrying value of these assets against their remaining useful
lives will increase depreciation and amortization expense on an ongoing annual
basis by approximately $9 million.
We depreciated our Squaw and Lake Las Vegas commercial assets for the first
year in 2006 adding $2.9 million to depreciation expense and the translation
effect of the higher Canadian dollar added a further $3.9 million. The balance
of the increase was due to depreciation of our increased fixed asset base due to
capital expenditures during 2005 and 2006.
Write-down of Stand-alone Golf Course Assets in 2005
During 2005 we decided that our stand-alone golf courses (Swaneset in
British Columbia, Three Peaks in Colorado, South Mountain in Arizona and Big
Island Country Club in Hawaii) no longer served our financial or strategic
objectives and we implemented a plan to sell them. In preparation for sale, we
engaged independent appraisers to value the operations and as a result we wrote
down the golf assets by $17.6 million in 2005. During 2006 we sold the South
Mountain and Big Island Country Club courses.
Income Taxes
Income tax expense was $8.1 million in 2006 compared with a recovery of
$2.0 million in 2005 mainly due to earning approximately three times more
pre-tax income in 2006. Note 13 of our consolidated financial statements
provides a reconciliation between the income tax charge at the statutory rate
(34.1%) and our actual income tax charge.
Non-Controlling Interest
Non-controlling interest increased from $9.4 million in 2005 to $33.1
million in 2006 due mainly to the inclusion of $18.5 million for our partner's
profits on the sale of the property in Maui, as described in Review of Real
Estate Development above. The balance of the increase was due to improved
results of A&K and Whistler Blackcomb in 2006.
2006 FOURTH QUARTER RESULTS
Total Company EBITDA was $35.6 million in the fourth quarter of 2006 (the
"2006 quarter"), down from $47.5 million in the fourth quarter of 2005 (the
"2005 quarter") mainly due to incurring higher corporate G&A expenses and
somewhat lower EBITDA from resort and travel operations and real estate
development. Significantly increased depreciation and amortization expense in
the 2006 quarter was offset by the $17.6 million write-down of our stand-alone
golf assets in the 2005 quarter resulting in a loss from continuing operations
of $24.3 million ($0.49 per diluted share) in the 2006 quarter compared with a
loss of $19.9 million ($0.41 per diluted share) in the 2005 quarter.
12
Resort and travel operations revenue increased by $48.5 million to $203.1
million in the 2006 quarter, of which $7.5 million was due to the translation
effect of the higher Canadian dollar. Revenue from our mountain resorts
increased by $17.1 million due mainly to a 28% increase in skier visits. The
timing of Easter in April in 2006 and in March in 2005 increased skier visits
and revenue in the 2006 quarter but did not have a similar positive impact on
the 2005 quarter. The largest increase was at Whistler Blackcomb where skier
visits increased by 39% and revenue increased 33% due to strong growth in the
regional market in response to significantly improved conditions. A&K continued
its strong performance, achieving a 29%, or $14.1 million, increase in
adventure-travel tour revenue. Sandestin also experienced significant revenue
growth due in part to increased traffic to the resort and in part to receipt of
a $2.7 million business interruption insurance claim related to the hurricanes
in the first quarter of the fiscal year. Resort and travel operations incurred
an EBITDA loss of $17.0 million in the 2006 quarter compared with a $15.4
million loss in the 2005 quarter. We incurred aggregate losses of $1.5 million
in the 2006 quarter from Parque de Nieve and our commercial operations at Squaw
Valley and Lake Las Vegas (these operations were capitalized in the 2005
quarter) and the termination of A&K's licensing agreement reduced EBITDA by $1.4
million.
Management services revenue and EBITDA in the 2006 and 2005 quarters were
broken down as follows:
2006 QUARTER 2005 Quarter
---------------- ----------------
Revenue EBITDA Revenue EBITDA
------- ------ ------- ------
(millions)
Services related to resort and travel operations
Lodging and property management........................... $25.5 $0.4 $17.6 $(0.9)
Other resort and travel fees.............................. 1.0 (0.8) 1.3 (1.2)
----- ---- ----- -----
26.5 (0.4) 18.9 (2.1)
----- ---- ----- -----
Services related to real estate development
Real estate services fees................................. 4.1 2.4 10.6 7.6
Playground sales fees..................................... 13.3 4.5 19.6 1.4
----- ---- ----- -----
17.4 6.9 30.2 9.0
----- ---- ----- -----
$43.9 $6.5 $49.1 $ 6.9
===== ==== ===== =====
The increases in revenue and EBITDA from lodging and property management
were due mainly to opening new lodging operations at Les Arcs and Westin
Trillium House at Blue Mountain and the acquisition in March 2006 of a lodging
business at Seaside near Sandestin. The decrease in revenue and increase in
EBITDA from other resort and travel fees was mainly due to curtailing our
third-party reservations business which was incurring losses. We did not sell
any new projects to partnerships during fiscal 2006 and the completion of
construction of several projects that had been sold to partnerships in prior
years reduced revenue and EBITDA from real estate services fees in the 2006
quarter. A slower resales market in Florida and the timing of project
completions reduced Playground sales fee revenue in the 2006 quarter.
Playground's EBITDA increased, however, because the full annual allocation of
Playground G&A costs to the management services segment was made in the 2005
quarter whereas during fiscal 2006 we made allocations each quarter.
Revenue from real estate development decreased, as expected, from $338.3
million in the 2005 quarter to $203.1 million in the 2006 quarter. We sold nine
properties to partnerships for $180.7 million in the 2005 quarter and closed on
the second phase of the sale of Mammoth lands to the partnership with Starwood
for $42.6 million in the 2006 quarter. In addition to these transactions, we
closed 254 units in the 2006 quarter at an average price per unit of $514,000
compared with 243 units in the 2005 quarter at an average price per unit of
$592,000. The lower average price per unit reflects a much greater weighting of
condo-hotel closings and much lower weighting of townhome closings in the 2006
quarter versus the 2005 quarter. Operating profit from real estate development
was $39.9 million in the 2006 quarter, including $13.9 million from the Mammoth
lands sale compared with $42.9 million in the 2005 quarter, including $11.5
million for project sales to cost accounted partnerships.
Interest income, other income and other expenses increased from a loss of
$0.3 million in the 2005 quarter to income of $0.8 million in the 2006 quarter.
Increases in interest income and foreign exchange gains in the 2006 quarter were
partially offset by $1.6 million of legal and other costs related to the sale of
the company to Fortress and losses totaling $1.1 million on the sale of the
South Mountain and Big Island Country Club golf courses. In the 2005 quarter we
recorded a loss of $0.7 million on the sale of our Colorado-based reservations
company.
13
Interest expense increased from $12.5 million to $14.0 million as we
capitalized less interest to real estate properties. Several properties,
including our commercial assets at Squaw Valley and Lake Las Vegas, were
completed at the beginning of the fiscal year and interest related to them was
expensed in the 2006 quarter and capitalized in the 2005 quarter.
Corporate G&A expenses increased from $5.2 million to $11.0 million due
mainly to an increase of $3.8 million in compensation expenses, including
stock-based compensation and $1.1 million of costs related to our new
branding/corporate strategy initiative.
Depreciation and amortization expense increased from $16.3 million to $30.2
million, including $4.0 million in connection with the change in the
depreciation method and useful lives of our resort and travel operations assets.
The majority of the adjustment related to this change was recorded in our third
quarter. We began depreciating our Squaw and Lake Las Vegas commercial assets
for the first time in the 2006 quarter adding $2.9 million to depreciation
expense and the translation effect of the higher Canadian dollar added a further
$1.7 million. The balance of the increase was due to depreciation of our
increased fixed asset base due to capital expenditures during 2005 and 2006.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flows in 2006 compared with 2005
The following table summarizes our major sources and uses of cash in 2006
and 2005. This table should be read in conjunction with the Consolidated
Statements of Cash Flows.
2006 2005 Change
------ ------ -------
(millions)
Funds from continuing operations............................ $162.9 $101.5 $ 61.4
Cash for real estate including partnership investments...... (159.8) (12.2) (147.6)
Cash for resort capex and other assets...................... (128.9) (101.6) (27.3)
Cash flow from long-term receivables and working capital.... (22.9) 59.5 (82.4)
Funds from discontinued operations.......................... (10.5) 14.9 (25.4)
------ ------ -------
Free cash flow.............................................. (159.2) 62.1 (221.3)
Cash from (for) business acquisitions and disposals......... 163.7 (20.3) 184.0
------ ------ -------
Net cash flow from operating and investing activities....... 4.5 41.8 (37.3)
Net financing outflows...................................... (25.0) (10.7) (14.3)
------ ------ -------
Increase (decrease) in cash................................. $(20.5) $ 31.1 $ (51.6)
====== ====== =======
Funds from continuing operations increased from $101.5 million in 2005 to
$162.9 million in 2006. An increase of $77.4 million in funds from real estate
development and a decrease of $14.7 million in funds required for interest,
costs to redeem senior notes and income taxes were partially offset by a
decrease of $30.7 million in funds from resort and travel operations and
management services, net of corporate G&A costs. For more details on the reasons
for these changes see the Review of Operations sections earlier in this MD&A.
Real estate development used $159.8 million of cash in 2006, significantly
more than the $12.2 million in 2005. These amounts include cash requirements for
real estate that we develop on our own as well as our net investment in real
estate partnerships. The year-over-year shift was due mainly to selling eight
projects to equity accounted partnerships in 2005 compared with none in 2006.
Real estate cash flow in 2005 was also improved by $100.4 million as a result of
selling our commercial properties. In addition to the cash requirements for the
properties we owned in 2005, we spent $39.6 million in 2006 to acquire new land
holdings at Hilton Head, South Carolina, Napa, California and St. Emilion,
France for the future development of 1,800 units. We did not acquire any new
land holdings during 2005.
Expenditures on resort and travel operations assets ("capex") and other
assets used $128.9 million of cash in 2006, up from $101.6 million in 2005.
Capex comprised $99.4 million and $79.4 million, respectively, in 2006 and 2005
of these amounts. Each year we spend about $40 million on maintenance capex at
our resorts and in our other resort and travel operations businesses.
Maintenance capex is considered non-discretionary (since it is required to
maintain the existing level of service) and comprises such things as snow
grooming machine or golf cart replacement, snowmaking equipment upgrades and
building refurbishments. Expansion capex (e.g., new lifts or new restaurants) is
considered discretionary and the annual amount varies year by year. In 2006 our
major expansion capex projects
14
comprised $22.7 million for buildings, including the Stratton Mountain Inn and
employee housing building in Winter Park, $14.4 million for lifts at Whistler,
Snowshoe and Winter Park and $4.2 million to renovate the Baytowne golf course
at Sandestin.
We spent $29.5 million on other assets in 2006, up from $22.2 million that
we spent in 2005. These expenditures mainly comprise furniture, fixtures and
equipment outside of our resorts, information technology systems, long-term
financing costs and miscellaneous investments. Expenditures in 2006 included an
investment of $5.4 million for a lodging operation in Seaside near Sandestin.
Long-term receivables and working capital used $22.9 million of cash in
2006 whereas these items generated $59.5 million of cash in 2005. This
represents the cash flow from changes in receivables, other assets, payables and
deferred revenue. Cash from real estate presales was $37.7 million lower at June
30, 2006 than the end of last year. The balance of the change was mainly due to
decreasing payables in 2006.
Funds from discontinued operations, being cash flow from Mammoth Mountain
Ski Area prior to its sale, used $10.5 million of cash in 2006. The effective
sale date was October 31, 2005 so cash flow from Mammoth's prime winter season
was excluded. In 2005 funds from discontinued operations generated $14.9 million
of cash since 12 months of operations were included. We continue to own 15% of
Mammoth and subsequent to June 30, 2006 we received a dividend of $1.5 million
in connection with our interest.
Our businesses generated negative free cash flow of $159.2 million in 2006
compared with positive free cash flow of $62.1 million in 2005 due mainly to the
additional cash requirements for real estate development.
Business acquisitions and disposals generated $163.7 million of cash in
2006, including $149.1 million from the sale of the majority of our interest in
Mammoth. In addition, we collected $14.4 million from the sale of our South
Mountain golf course in June 2006. This sale was in line with the decision we
made last year to exit the stand-alone golf business. We also sold our Big
Island Country Club golf course in Hawaii, however no cash was collected on this
sale in 2006. In 2005 we spent $20.3 million on business acquisitions and
disposals, being $36.9 million to acquire the 55% of Alpine Helicopters that we
did not already own, net of $15.2 million cash acquired on the acquisition of
67% of A&K and $1.5 million cash from miscellaneous asset sales. We have
identified other non-core assets, including our golf operations at Swaneset and
our commercial properties at Squaw Valley and Lake Las Vegas that we plan to
sell in 2007.
In total, our operating and investing activities generated $4.5 million of
cash in 2006, down from $41.8 million of cash in 2005. Our financing activities
used $25.0 million of cash in 2006, including $10.1 million, $22.3 million and
$31.8 million, respectively, to pay dividends, distributions to our
non-controlling interests in Whistler Blackcomb and A&K and repay bank and other
borrowings. We also spent $2.4 million to acquire 86,900 of our common shares
through a normal course issuer bid. The share buy back program was suspended
after we initiated our review of strategic options that culminated in the
agreement with Fortress. These outflows were partially funded by a $19.9 million
dividend received from Mammoth before its sale and $21.7 million from employees
exercising stock options. In 2005 our financing activities used $10.7 million of
cash, with outflows of $23.9 million for dividends and distributions to
non-controlling interests and inflows of $13.2 million from bank and other
borrowings and stock option exercises.
Contractual Obligations
In our normal operations, we enter into arrangements that obligate us to
make future payments under contracts such as debt and lease agreements. The
following table summarizes our contractual obligations as at June 30, 2006:
Payments Due by Period
---------------------------------------
Less Than 1-3 4-5 More Than
Total 1 Year Years Years 5 Years
-------- --------- ------ ------ ---------
(millions)
Long-term debt................................... $ 915.6 $ 41.6 $151.0 $125.9 $597.1
Capital leases................................... 36.9 3.5 3.0 3.3 27.1
Interest payments on debt........................ 373.0 69.3 114.4 97.1 92.2
Operating leases................................. 257.6 23.4 43.0 38.9 152.3
Purchase obligations(1).......................... 355.4 276.3 79.1 -- --
-------- ------ ------ ------ ------
Total contractual obligations.................... $1,938.5 $414.1 $390.5 $265.2 $868.7
======== ====== ====== ====== ======
---------------
(1) Purchase obligations comprise construction and other contracts related
primarily to our real estate business.
15
Our primary contractual obligations are payments under long-term debt
agreements. The amount due in less than one year includes $28.9 million of
construction financing that we expect to repay from the proceeds of real estate
closings. We expect to fund the remainder of the debt as well as the other
contractual obligations in the ordinary course of business through our operating
cash flows and our credit facilities.
We have a number of revolving credit facilities to meet our contractual
obligations and other capital requirements. Our main source of liquidity, our
senior credit facility, was renewed during 2005 for a term of three years and
its capacity was increased to $425 million. At June 30, 2006, we had drawn
$145.7 million under this facility and we had also issued letters of credit for
$76.6 million, leaving $202.7 million available to cover our future liquidity
requirements. Several of our resorts and businesses also have lines of credit to
fund seasonal cash requirements. Financing for real estate construction is
generally provided through one-off project-specific loans. We believe that these
credit facilities, combined with cash on hand and internally generated cash
flow, are adequate to finance all of our normal operating needs.
Off-Balance Sheet Arrangements
We have no commitments that are not reflected in our balance sheets except
for operating leases, which are included in the table of contractual obligations
above, and commitments primarily under various servicing agreements that are
secured by letters of credit. As disclosed in Note 15 of our consolidated
financial statements, we have issued letters of credit for these purposes
amounting to $88.1 million at June 30, 2006. We have no off-balance sheet
arrangements that are expected to have a material effect on our results of
operations, financial condition, liquidity or capital resources.
Transactions with Related Parties
In order to reduce our capital requirements for real estate development and
to limit our exposure to the risks of the real estate business, we sell real
estate properties to partnerships in which we hold an investment. Generally, at
the time of sale, the properties have been designed into an individual project
that has been pre-sold and is ready to commence construction. The partnerships
construct the project, sell the remaining units and, on completion, transfer
title to the end purchasers. In certain cases, we sell the properties to the
partnership at the land acquisition phase and the partnership undertakes the
land servicing and infrastructure work, project design, marketing and sales,
construction and unit closings. Our equity interests in these partnerships range
from 15% to 40%.
In 2005 we also sold commercial properties at seven of our resorts to a
partnership in which we hold a 20% interest. We lease approximately 30% of the
space in these commercial properties for our resort and travel operations
business and we head-lease certain vacant premises.
Periodically we make advances to the partnerships, on which we earn
interest, and we also earn fees by providing management services to the
partnerships. Our exposure to losses is limited to our investment in and
advances to the partnerships. Details of transactions with these partnerships
are contained in Note 20 of our consolidated financial statements.
BUSINESS RISKS
We are exposed to various risks and uncertainties in the normal course of
our business that can cause variation in our results of operations and affect
our financial condition. Some of these risks and uncertainties, as well as the
factors or strategies that we employ to mitigate them, are discussed below.
Additional risks and uncertainties not described below or not currently known to
us could affect our businesses. It is impossible to predict whether any risk
will occur, or if it does, what its ultimate consequences might be, hence the
impact on our business could be materially different than we currently expect.
Economic Downturn
Skiing, golf and touring are discretionary recreational activities with
relatively high participation costs. A severe economic downturn could reduce
spending on recreational activities and result in declines in visits and
revenue. In addition, a deterioration of economic conditions could weaken sales
of resort real estate and reduce the value of our real estate assets.
16
Mitigating factors and strategies:
- The profile of our customer base, with incomes well above the national
average, makes them less likely to have their leisure plans impacted by
a recession.
- The geographic diversity of our resort and travel operations reduces the
impact of an economic downturn in any particular region.
- Our practice of securing land through options or joint ventures and
pre-selling real estate before the start of construction reduces the
cost of land holdings and unsold real estate units in the event of a
market downturn.
Competition
The industries in which we operate are highly competitive. There can be no
assurance that our principal competitors will not be successful in capturing a
share of our present or potential customer base.
Mitigating factors and strategies:
- The mountain resort industry has significant barriers to entry (e.g.,
very high start-up costs, significant environmental hurdles) so very few
new resorts are being created.
- Our resorts have natural competitive advantages (e.g., in terms of
location, vertical drop and quality of terrain) and we have enhanced
those advantages by upgrading the facilities on the mountain and
building resort villages at the base.
- We have a loyal customer base that is strongly committed to our resorts,
products and services.
- We control substantially all of the supply of developable land at our
resorts.
- We have expertise in all aspects of the development process, including
resort master-planning, project design, construction, sales and
marketing, and property management.
Growth Initiatives
We intend to increase revenue and EBITDA by acquiring new businesses,
establishing strategic partnerships and securing management contracts. New
acquisition opportunities may not exist on favorable terms and newly managed or
acquired businesses may not be successfully integrated into our existing
operations.
Mitigating factors and strategies:
- We operate exclusively in the leisure and resort real estate industries
and we will not make any investments in businesses outside these
industries.
- We have scalable organizational structures that allow us to add new
businesses without significantly impacting our systems and human
resources.
Capital Expenditures
Our competitive position depends, in part, on our ability to maintain and
improve the quality of our resort and travel operations facilities, which
requires significant capital expenditures. In addition, we require significant
capital expenditures to expand our real estate holdings and carry out our
development activities. Adequate funds may not be available to make all planned
or required capital expenditures and, if they are available, there is no
assurance that they will lead to improved results.
Mitigating factors and strategies:
- Our strategy of teaming with financial partners reduces the amount that
we have to fund for capital expenditures.
- Our senior managers are focused on return on capital measures and their
bonus entitlements are tied in part to achieving return on capital
targets.
Currency Fluctuations
A significant shift in the value of the Canadian dollar, particularly
against the U.S. dollar, could impact visits and therefore earnings at our
Canadian resorts. In addition, since we report earnings in U.S. dollars but our
income is derived from Canadian, U.S. and international sources, we are exposed
to foreign currency exchange risk in our
17
reported earnings. Revenues and expenses of our Canadian or international
operations will be impacted by changes in exchange rates when they are reported
in U.S. dollars.
Mitigating factors and strategies:
- We have a natural hedge since, to the extent increases in the value of
the Canadian dollar reduce visits to our Canadian resorts they also
increase our earnings when reported in U.S. dollars.
World Events
World events, such as international conflicts, terrorism or contagious
illness outbreaks, may disrupt domestic or international travel patterns, which
could reduce revenue in our resort operations and luxury-travel businesses. In
addition, many of A&K's operations are located in countries that are more
susceptible to political or social incidents that could impact demand for
adventure-travel tours.
Mitigating factors and strategies:
- Our customers have a high degree of commitment (e.g., as season pass
holders or property owners).
- A significant proportion of our visitors drive to our resorts
(approximately 85% of all resort visits) and are not reliant on air
travel.
- Our investment in customer relationship management tools and personnel
allows us to readily communicate with our database of customers and
market products to them.
Unfavorable Weather Conditions
Our ability to attract visitors to our mountain resorts is influenced by
weather conditions and the amount of snowfall during the ski season. In
addition, Sandestin is located in an area of Florida that frequently suffers
adverse weather caused by hurricanes and other tropical storms. Prolonged
periods of adverse weather conditions, or the occurrence of such conditions
during peak visitation periods, could have a material adverse effect on our
operating results.
Mitigating factors and strategies:
- The geographic diversity of our resort and travel operations reduces the
risk associated with a particular region's weather patterns.
- Our investment in snowmaking compensates for poor natural snow
conditions. Snowmaking is particularly important in the East due to the
number of competing resorts and less reliable snowfall. We have an
average of more than 90% snowmaking coverage across our five eastern
resorts.
- Our villages attract destination visitors who book in advance, stay
several days and are less likely than day visitors to change their
vacation plans at short notice.
Seasonality of Operations
Resort and travel operations are highly seasonal. In fiscal 2006,
approximately 56% of our resort and travel operations revenue was generated
during the period from December to March, the prime ski season. Furthermore,
during this period a significant portion of revenue is generated on certain
holidays, particularly Christmas/New Year, Presidents' Day and school spring
breaks, and on weekends. Our real estate operations tend to be somewhat seasonal
as well, with construction primarily taking place during the summer and the
majority of sales closing in the December to June period. This seasonality of
operations impacts reported quarterly earnings. The operating results for any
particular quarter are not necessarily indicative of the operating results for a
subsequent quarter or for the full fiscal year.
Mitigating factors and strategies:
- We have taken steps at our mountain resorts to balance our revenue and
earnings throughout the year by investing in four-season amenities and
growing summer and shoulder-season businesses.
- Sandestin and A&K help to counterbalance the seasonality of our mountain
resort operations since the non-winter months are their prime season.
18
Risks Specific to Real Estate Development
As a real estate developer we are exposed to several industry-specific
risks, including: an inability to obtain zoning approvals or building permits;
construction and other development costs could exceed our budgets; project
completion could be delayed; and purchasers could rescind their purchase
contracts. In addition there is no assurance that market conditions will support
our planned real estate development activities.
Mitigating factors and strategies:
- Our experience in resort master planning equips us to deal with
municipal approval agencies and our approach of consulting with all
community stakeholders during the planning process helps to ensure that
we face less resistance at public hearings.
- We are not in the construction business -- we engage general contractors
under fixed-price contracts with completion penalties.
- Our presales contracts generally require purchasers to put down 20%
deposits, i.e., generally in the range of $50,000 to $150,000, which
they forfeit if they do not close.
- For the projects that are sold to partnerships the risks of cost
overruns, construction completion and purchaser contract rescissions are
borne by the partnership rather than Intrawest.
CRITICAL ACCOUNTING POLICIES
Our significant policies are described in Note 2 of our consolidated
financial statements. The preparation of these financial statements requires us
to make estimates and judgments that affect the reported amounts of assets,
liabilities, revenues and expenses and disclosure of contingencies. These
estimates and judgments are based on factors that are inherently uncertain. On
an ongoing basis, we evaluate our estimates based on historical experience and
on various other assumptions that we believe are reasonable under the
circumstances. Actual amounts could differ from those based on such estimates
and assumptions.
We believe the following critical accounting policies call for management
to make significant judgments and estimates that are complex and subjective.
FUTURE NET CASH FLOWS FROM PROPERTIES. Resort properties, which totaled
$746.8 million at June, 30, 2006, are recorded at the lower of cost and net
realizable value. In determining net realizable value it is necessary, on a non-
discounted basis, to estimate the future cash flows from each individual project
for the period from the start of land servicing to the sell-out of the last
unit. This involves making assumptions about project demand and sales prices,
construction and other development costs, and project financing. Changes in our
assumptions could affect future cash flows from properties leading to reduced
real estate profits or potentially property write-downs.
REVENUE RECOGNITION. Resort and travel operations and management services
revenue is recognized as products are delivered and services are performed. Some
of this revenue is deferred (e.g., sales of season ski passes and club
memberships) and recognized later based on our estimate of usage. Real estate
revenue is generally recognized when we have fulfilled all major conditions,
title has been conveyed to the purchaser and we have received a payment that is
appropriate in the circumstances. Judgment is required in the determination of
which major conditions may be important and also the timing of when they have
been satisfied. We must also make assumptions that affect real estate expenses,
including the remaining costs to be incurred on units sold and, since costs are
allocated to units sold using the relative sales value method, future revenue
from unsold units.
USEFUL LIVES FOR DEPRECIABLE ASSETS. Resort and travel operations assets
and administrative furniture, computer equipment, software and leasehold
improvements are depreciated using the straight-line method over the estimated
useful life of the asset. Due to the relatively large proportion of these assets
relative to total assets (41% at June 30, 2006), the selections of the method of
depreciation and length of depreciation period could have a material impact on
depreciation expense and the net book value of assets. Assets may become
obsolete or require replacement before the end of their estimated useful life in
which case any remaining unamortized costs would be written off.
During 2006 we reviewed the useful lives and depreciation method of our
resort and travel operations assets. As a result of this review we changed our
depreciation method from declining balance to straight-line and we also changed
the useful lives of many assets. Depreciation and amortization expense increased
by $21.5 million in 2006 due to these changes.
19
VALUE OF FUTURE INCOME TAX ASSETS AND LIABILITIES. In determining our
income tax provision, we are required to interpret tax legislation in a variety
of jurisdictions and make assumptions about the expected timing of the reversal
of future tax assets and liabilities. In the event that our interpretations
differed from those of the taxing authorities or that the timing of reversals is
not as anticipated, the tax provision could increase or decrease in future
periods.
At June 30, 2006, we had accumulated $112.5 million of non-capital loss
carryforwards, which expire at various times through 2026. We have determined
that it is more likely than not that the benefit of these losses will be
realized in the future and we have recorded future tax assets of $40.8 million
related to them. If it is determined in the future that it is more likely than
not that all or a part of these future tax assets will not be realized, we will
make a charge to earnings at that time.
CONSOLIDATION OF VARIABLE INTEREST ENTITIES ("VIES"). The VIE rules
provide guidance on the identification and reporting of entities over which
control is achieved through means other than voting rights. We are required to
identify VIEs in which we have an interest, determine whether we are the primary
beneficiary of the VIE (the party that will absorb the majority of the VIE's
expected losses, or receive a majority of its expected returns) and, if so,
consolidate the VIE. The accounting rules are complex and judgment is required
to interpret them. We must make estimates about future cash flows, asset hold
periods and probabilities of various scenarios occurring. If we made different
estimates, it could result in differing conclusions as to whether or not an
entity is a VIE and whether or not the entity would need to be consolidated.
At January 1, 2005, when Canadian GAAP required us to adopt the VIE
standard we determined that we were the primary beneficiary of three
VIEs -- Maui Beach Resort Limited Partnership, Orlando Village Development
Limited Partnership and Tower Ranch Development Partnership. In June 2006 Maui
Beach Resort Limited Partnership and Orlando Village Development Limited
Partnership were restructured and we ceased to be their primary beneficiary. As
a result, these entities were accounted for on an equity basis as at June 30,
2006. In August 2005 Maui Beach Resort Limited Partnership sold a property for
proceeds of $73.3 million and a profit of $43.9 million. Since we were the
primary beneficiary of the partnership at that time we recognized 100% of the
revenue and profit and recorded the partner's share of the profit of $18.5
million in non-controlling interest. This accounting result was not changed as a
result of the subsequent restructuring of the partnership. If we had not been
the primary beneficiary when the sale closed we would have accounted for the
transaction on an equity basis and recorded only our share of the profit of
$25.4 million in the statement of operations.
DISCLOSURE CONTROLS AND PROCEDURES
Our senior management, which includes the Chief Executive Officer and the
Chief Financial Officer, has evaluated the effectiveness of our disclosure
controls and procedures (as defined in the rules of the Securities and Exchange
Commission and the policies of the Canadian Securities Administrators) and has
concluded that such disclosure controls and procedures are effective.
ADDITIONAL INFORMATION
Total Company EBITDA
2006 2005
------ ------
(millions)
Cash flow provided by (used in) continuing operating
activities................................................ $(47.3) $208.7
Add (deduct):
Changes in non-cash operating assets & liabilities........ 210.2 (107.2)
Current income tax expense................................ 38.3 27.2
Interest expense.......................................... 47.6 44.2
Interest in real estate costs............................. 27.6 35.4
Call premium and unamortized costs on senior notes
redeemed............................................... -- 30.2
------ ------
276.4 238.5
Interest and other income net of non-cash items............. (8.9) (13.4)
------ ------
TOTAL COMPANY EBITDA........................................ $267.5 $225.1
====== ======
20
Resort and Travel Operations EBITDA
2006 2005
------ ------
(millions)
Resort operations revenue................................... $936.1 $806.6
Resort operations expenses.................................. 847.4 707.0
------ ------
RESORT OPERATIONS EBITDA.................................... $ 88.7 $ 99.6
====== ======
Management Services EBITDA
2006 2005
------ ------
(millions)
Management services revenue................................. $172.5 $176.7
Management services expenses................................ 135.5 133.7
------ ------
MANAGEMENT SERVICES EBITDA.................................. $ 37.0 $ 43.0
====== ======
Real Estate Development EBITDA
2006 2005
------ ------
(millions)
Real estate development contribution........................ $147.6 $ 67.6
Interest in real estate expenses............................ 27.6 35.4
------ ------
REAL ESTATE DEVELOPMENT EBITDA.............................. $175.2 $103.0
====== ======
Selected Annual Information
2006 2005 2004
-------- -------- --------
(in millions of dollars,
except per share amounts)
Total revenue............................................... $1,610.4 $1,618.4 $1,491.4
Income from continuing operations........................... 55.3 24.1 52.1
Results of discontinued operations.......................... 59.9 8.7 7.8
Net income.................................................. 115.2 32.8 59.9
Total assets................................................ 2,667.1 2,679.8 2,258.9
Total liabilities per common share.......................... 1,666.6 1,833.3 1,475.2
Income from continuing operations
Basic..................................................... 1.14 0.50 1.10
Diluted................................................... 1.12 0.50 1.09
Net income
Basic..................................................... 2.37 0.69 1.26
Diluted................................................... 2.33 0.68 1.25
Cash dividends declared per common share (Canadian
dollars).................................................. 0.24 0.16 0.16
21
QUARTERLY FINANCIAL SUMMARY
Q4-06 Q3-06 Q2-06 Q1-06 Q4-05 Q3-05 Q2-05 Q1-05
------ ------ ------ ------ ------ ------ ------ ------
(in millions, except per share amounts)
Total revenue........................ $445.2 $550.0 $317.5 $297.6 $532.3 $465.0 $419.1 $202.0
Income (loss) from continuing
operations......................... (24.3) 61.0 11.3 7.3 (19.9) 62.7 (10.5) (8.2)
Results of discontinued operations... -- -- 57.9 1.9 0.7 3.5 3.4 1.1
Net income (loss).................... (24.3) 61.0 69.3 9.2 (19.2) 66.2 (7.1) (7.1)
Per Common Share:
Income (loss) from continuing
operations
Basic.............................. (0.49) 1.25 0.23 0.15 (0.42) 1.31 (0.22) (0.17)
Diluted............................ (0.49) 1.23 0.23 0.15 (0.41) 1.31 (0.22) (0.17)
Net income (loss)
Basic.............................. (0.49) 1.25 1.43 0.19 (0.40) 1.39 (0.15) (0.15)
Diluted............................ (0.49) 1.23 1.41 0.19 (0.40) 1.38 (0.15) (0.15)
Several factors impact comparability between quarters:
- The timing of acquisitions. In the first quarter of 2005 we acquired 67%
of A&K and in the second quarter of 2005 we acquired the 55% of Alpine
Helicopters that we did not already own.
- The seasonality of our resort and travel operations. Revenue and EBITDA
from this business are weighted disproportionately to our third quarter.
- The timing of project completions and real estate closings. Generally we
close more units in the fourth quarter.
- The timing of refinancings. In the second quarter of 2005 we redeemed
senior notes and expensed call premium and unamortized financing costs.
- The timing of recording reserves and valuation adjustments. In the
fourth quarter of 2005 we wrote down the value of our stand-alone golf
courses.
OUTSTANDING SHARE DATA
As at September 1, 2006, we have issued and there are outstanding
49,063,126 common shares and stock options exercisable for 2,827,400 common
shares.
22
MANAGEMENT'S RESPONSIBILITY
The accompanying consolidated financial statements of Intrawest Corporation
have been prepared by management and approved by the Board of Directors of the
Company. Management is responsible for the information and representations
contained in these financial statements and other sections of this annual
report. The consolidated financial statements have been prepared in accordance
with Canadian generally accepted accounting principles.
To assist management in discharging these responsibilities, the Company
maintains a system of internal controls that is designed to provide management
with reasonable assurance regarding the reliability of financial reporting. The
system of internal controls is monitored by internal audit. The Board of
Directors ensures that management fulfills its responsibilities for financial
reporting and internal control through an Audit Committee composed entirely of
independent directors. The Committee meets with the independent auditors and
internal auditor (who both have direct access to the Audit Committee,
independent of management) and with management to satisfy itself that each group
is properly discharging its responsibilities and to review the consolidated
financial statements and management's discussion and analysis. The Audit
Committee reports its findings to the Board for consideration in approving the
consolidated financial statements for issuance to the shareholders.
The Company's independent auditors, KPMG LLP, have been appointed by the
shareholders to express their professional opinion on the fairness of the
consolidated financial statements. Their report follows.
LOGO LOGO
Joe S. Houssian
Chairman, President and Chief Executive Officer John E. Currie
September 1, 2006 Chief Financial Officer
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheets of Intrawest Corporation as
at June 30, 2006 and 2005 and the consolidated statements of operations,
retained earnings, and cash flows for the years then ended. 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 Canadian generally accepted
auditing standards. Those standards require that we plan and perform an audit to
obtain reasonable assurance 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.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as at June 30, 2006
and 2005 and the results of its operations and its cash flows for the years then
ended in accordance with Canadian generally accepted accounting principles.
-s- KPMG LLP
Chartered Accountants
Vancouver, Canada
September 1, 2006
23
INTRAWEST CORPORATION
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2006 AND 2005
2006 2005
---------- -----------
(RESTATED)
(NOTE 2(W))
(IN THOUSANDS OF
UNITED STATES DOLLARS)
ASSETS
Current assets:
Cash and cash equivalents................................. $ 120,374 $ 140,878
Amounts receivable (note 4)............................... 200,648 194,258
Other assets (note 5(a)).................................. 179,135 166,029
Resort properties (note 6)................................ 348,515 388,510
Future income taxes (note 13)............................. 33,528 29,927
---------- ----------
882,200 919,602
Amounts receivable (note 4)................................. 46,788 78,877
Resort and travel operations (note 7)....................... 1,046,397 1,034,187
Resort properties (note 6).................................. 398,241 403,252
Other assets (note 5(b)).................................... 133,783 107,363
Investment in and advances to real estate partnerships (note
20)....................................................... 138,200 109,037
Goodwill.................................................... 21,473 27,483
---------- ----------
$2,667,082 $2,679,801
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Amounts payable........................................... $ 295,579 $ 275,176
Deferred revenue and deposits (note 8).................... 193,428 233,469
Bank and other indebtedness (note 9)...................... 45,072 82,144
---------- ----------
534,079 590,789
Deferred revenue and deposits (note 8)...................... 104,290 132,866
Bank and other indebtedness (note 9)........................ 907,433 941,279
Future income taxes (note 13)............................... 70,774 92,010
Non-controlling interest.................................... 50,014 76,339
---------- ----------
1,666,590 1,833,283
Shareholders' equity:
Capital stock (note 11)................................... 491,095 469,162
Retained earnings......................................... 445,864 342,013
Foreign currency translation adjustment................... 63,533 35,343
---------- ----------
1,000,492 846,518
---------- ----------
$2,667,082 $2,679,801
========== ==========
Contingencies and commitments (note 15)
Subsequent event (note 23)
Approved on behalf of the Board:
(signed) JOE S. HOUSSIAN (signed) PAUL M. MANHEIM
Director Director
See accompanying notes to consolidated financial statements.
24
INTRAWEST CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
2006 2005
---------- ------------
(RESTATED)
(NOTE 2(W))
(IN THOUSANDS OF
UNITED STATES DOLLARS,
EXCEPT PER SHARE AMOUNTS)
Resort and travel operations:
Revenue................................................... $ 936,116 $806,553
Expenses.................................................. 847,428 707,002
--------- --------
Resort and travel operations contribution................. 88,688 99,551
--------- --------
Management services:
Revenue................................................... 172,540 176,687
Expenses.................................................. 135,536 133,658
--------- --------
Management services contribution.......................... 37,004 43,029
--------- --------
Real estate development:
Revenue................................................... 488,610 627,515
Expenses.................................................. 345,563 561,915
--------- --------
143,047 65,600
Income from equity accounted investments.................. 4,542 2,039
--------- --------
Real estate development contribution...................... 147,589 67,639
--------- --------
Income before undernoted items.............................. 273,281 210,219
Interest income, other income and other expenses............ 8,625 5,620
Interest expense (note 16).................................. (47,562) (44,165)
Corporate general and administrative expenses............... (33,405) (20,571)
Depreciation and amortization............................... (104,409) (71,837)
Call premium and unamortized costs of senior notes
redeemed.................................................. -- (30,173)
Write-down of stand-alone golf course assets................ -- (17,568)
--------- --------
Income from continuing operations before income taxes and
non-controlling interest.................................. 96,530 31,525
Recovery of (provision for) income taxes (note 13).......... (8,120) 1,990
Non-controlling interest.................................... (33,079) (9,448)
--------- --------
Income from continuing operations........................... 55,331 24,067
Results of discontinued operations (note 3)................. 59,879 8,748
--------- --------
Net income for the year..................................... 115,210 32,815
--------- --------
Retained earnings, beginning of year, as previously
stated.................................................... 345,348 318,883
Change in accounting policy (note 2(w))..................... (3,335) (3,536)
--------- --------
Retained earnings, beginning of year, as restated........... 342,013 315,347
Share repurchase adjustment................................. (1,245) --
Dividends................................................... (10,114) (6,149)
--------- --------
Retained earnings, end of year.............................. $ 445,864 $342,013
========= ========
Income from continuing operations per common share:
Basic..................................................... $ 1.14 $ 0.50
Diluted................................................... 1.12 0.50
Net income per common share
Basic..................................................... $ 2.37 $ 0.69
Diluted................................................... 2.33 0.68
========= ========
Weighted average number of common shares outstanding (in
thousands)
Basic..................................................... 48,686 47,814
Diluted................................................... 49,407 47,924
========= ========
See accompanying notes to consolidated financial statements.
25
INTRAWEST CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
2006 2005
--------- -----------
(RESTATED)
(NOTE 2(W))
(IN THOUSANDS OF
UNITED STATES DOLLARS)
Cash Provided By (Used In):
Operations:
Net income................................................ $ 115,210 $ 32,815
Items not affecting cash:
Results of discontinued operations..................... (59,879) (8,748)
Depreciation and amortization.......................... 104,409 71,837
Future income taxes.................................... (30,204) (29,160)
Income from equity accounted investments............... (4,542) (2,039)
Amortization of deferred financing costs............... 2,608 2,484
Stock-based compensation............................... 1,056 883
Non-controlling interest............................... 33,079 9,448
Loss on asset disposals................................ 1,179 372
Non-cash costs of senior notes redeemed................ -- 4,842
Amortization of benefit plan........................... -- 1,159
Write-down of stand-alone golf assets.................. -- 17,568
--------- ---------
Funds from continuing operations.......................... 162,916 101,461
Recovery of costs through real estate sales............... 339,067 534,315
Acquisition and development of properties held for sale... (526,292) (486,629)
Changes in long-term amounts receivable, net.............. 20,846 2,703
Changes in non-cash operating working capital (note 21)... (43,793) 56,824
--------- ---------
(47,256) 208,674
Funds from discontinued operations (note 3)............... (10,541) 14,947
--------- ---------
(57,797) 223,621
Financing:
Proceeds from bank and other borrowings................... 115,973 486,175
Repayment of bank and other borrowings.................... (147,735) (476,646)
Issue of common shares for cash........................... 21,745 3,635
Purchase of common shares................................. (2,423) --
Dividends received........................................ 19,862 --
Dividends paid............................................ (10,114) (6,149)
Distributions to non-controlling interest................. (22,290) (17,734)
--------- ---------
(24,982) (10,719)
Investments:
Proceeds from (expenditures on):
Resort and travel operations assets.................... (99,449) (79,375)
Other assets........................................... (29,465) (22,227)
Investment in real estate partnerships................. 27,452 (59,912)
Business acquisitions, net of cash acquired............ -- (21,788)
Proceeds on sale of business, net of cash disposed of
(note 3).............................................. 149,087 --
Asset disposals........................................ 14,650 1,462
--------- ---------
62,275 (181,840)
--------- ---------
Increase (decrease) in cash and cash equivalents............ (20,504) 31,062
Cash and cash equivalents, beginning of year................ 140,878 109,816
--------- ---------
Cash and cash equivalents, end of year...................... $ 120,374 $ 140,878
========= =========
Supplementary information (note 21)
See accompanying notes to consolidated financial statements.
26
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
1. OPERATIONS:
Intrawest Corporation was formed under the Company Act (British Columbia)
and was continued under the Canada Business Corporations Act. Through its
subsidiaries, the Company is engaged in the development and operation of
mountain and golf resorts principally throughout North America and the
provision of tour and travel services to destinations around the world.
2. SIGNIFICANT ACCOUNTING POLICIES:
(a) Basis of presentation:
The consolidated financial statements are prepared in accordance with
generally accepted accounting principles ("GAAP") in Canada as prescribed
by The Canadian Institute of Chartered Accountants. Information regarding
United States GAAP as it affects the Company's consolidated financial
statements is presented in note 22.
(b) Principles of consolidation:
The consolidated financial statements include:
(i) the accounts of the Company and its subsidiaries;
(ii) the accounts of all incorporated and unincorporated joint ventures,
including non-controlled partnerships, to the extent of the
Company's interest in their respective assets, liabilities,
revenues and expenses; and
(iii) the accounts of all variable interest entities in which the
Company is determined to be the primary beneficiary.
The Company's principal subsidiaries and joint ventures are as follows:
Percentage interest
held by
Subsidiaries the Company (%)
------------ -------------------
Blackcomb Skiing Enterprises Limited Partnership............ 77
Whistler Mountain Resort Limited Partnership................ 77
IW Resorts Limited Partnership.............................. 100
Mont Tremblant Resorts and Company, Limited Partnership..... 100
Abercrombie & Kent Group of Companies, S.A. ("A&K")......... 67
Alpine Helicopters Ltd. ("Alpine").......................... 100
Copper Mountain, Inc. ...................................... 100
Intrawest California Holdings, Inc. ........................ 100
Intrawest Golf Holdings, Inc. .............................. 100
Intrawest Resorts, Inc. .................................... 100
Intrawest Retail Group, Inc. ("Retail Group")............... 100
Intrawest Sandestin Company, L.L.C. ("Sandestin")........... 100
Intrawest/Winter Park Holdings Corporation.................. 100
Mountain Creek Resort, Inc. ................................ 100
Playground Destination Properties Inc. ..................... 100
Snowshoe Mountain, Inc. .................................... 100
The Stratton Corporation.................................... 100
Percentage interest
held by
Joint Ventures and Non-controlled Partnerships (note 14) the Company (%)
-------------------------------------------------------- -------------------
Blue Mountain Resorts Limited... 50
Blue River Land Company, LLC... 50
Chateau M.T. Inc. .......... 50
Intrawest/Brush Creek Development Company LLC... 50
Intrawest/Lodestar Golf Limited Partnership... 35
All significant intercompany balances and transactions have been
eliminated.
(c) Accounting for investments:
Effective January 1, 2005, the Company adopted CICA Accounting Guideline
15 "Consolidation of Variable Interest Entities" ("VIEs") on a
prospective basis. The guideline provides guidance on the identification
and reporting of entities over which control is achieved through means
other than voting rights. The guideline requires companies to identify
VIEs in which they have an interest, determine
27
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
whether they are the primary beneficiary of the VIE and, if so,
consolidate the VIE. The primary beneficiary is the party, if any, that
will receive a majority of the VIE's expected residual returns, or absorb
the majority of its expected losses, or both.
At the effective date the Company determined that it was the primary
beneficiary of three VIEs -- Maui Beach Resort Limited Partnership,
Orlando Village Development Limited Partnership and Tower Ranch
Development Partnership.
In June 2006 Maui Beach Resort Limited Partnership and Orlando Village
Development Limited Partnership were restructured and the Company ceased
to be their primary beneficiary. As a result, these entities were
accounted for on an equity basis as at June 30, 2006. The Company's
future exposure to loss regarding its involvement with these partnerships
is represented by the carrying value of its investment in these entities,
which at June 30, 2006 was $32,500,000.
The Company accounts for investments in which it is able to exercise
significant influence in accordance with the equity method. Under the
equity method, the original cost of the investment is adjusted for the
Company's share of post-acquisition earnings or losses, less dividends.
Investments in which the Company does not have significant influence are
accounted for by the cost method. Under the cost method, investments are
carried at cost and income is reflected only to the extent of dividends
received or receivable.
(d) 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 reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The significant areas requiring management estimates include the
estimates of future net cash flows from properties, useful lives for
depreciation, the timing of revenue recognition, the determination of the
primary beneficiary of a VIE and the value of future income tax assets
and liabilities.
During the year ended June 30, 2006, the Company reviewed the useful
lives and depreciation methods of its resort and travel operations assets
(note 2(g)) and administrative furniture (note 2(h)). As a result of this
review the Company increased depreciation and amortization expense by
$21,512,000 in the current year. This adjustment includes both a
prospective change in the current period in the depreciation method from
declining balance to straight-line and a change in the estimated useful
lives of the assets to better reflect the remaining service and earning
potential of the assets and the Company's historical operating
experience.
(e) Cash equivalents:
The Company considers all highly liquid investments with terms to
maturity of three months or less when acquired to be cash equivalents.
(f) Resort properties:
(i) Properties under development and held for sale:
Properties under development and held for sale are recorded at the
lower of cost and net realizable value. Cost includes all expenditures
incurred in connection with the acquisition, development and
construction of these properties. These expenditures consist of all
direct costs, interest on specific debt, interest on that portion of
total costs financed by the Company's pooled debt, and an allocation
of indirect overhead. Net results of operations prior to the earlier
of attaining break-even cash flow after debt servicing or the
expiration of a reasonable period of time following substantial
completion or incidental operations related specifically to properties
under development and held for sale are treated as an increase in or a
reduction of costs.
Costs associated with the development of sales locations of the
vacation ownership business, including operating and general and
administrative costs incurred until a location is fully operational,
are capitalized. The results of incidental operations related
specifically to a location are treated as an increase in or a
reduction of costs during the start-up period. These net costs are
amortized on a straight-line basis over seven years.
The Company defers costs directly relating to the acquisition of new
properties and resort businesses that, in management's judgment, have
a high probability of closing. If the acquisition is abandoned, any
deferred costs are expensed immediately.
The Company provides for write-downs where the carrying value of a
particular property exceeds its net realizable value.
(ii) Classification:
Properties that are currently under construction and properties
available for sale are classified as current assets. Related bank and
other indebtedness is classified as a current liability.
(g) Resort and travel operations:
Resort and travel operations assets are stated at cost less accumulated
depreciation. Costs of ski lifts, area improvements and buildings are
capitalized. During the year ended June 30, 2006, the Company changed its
estimate of the useful lives and depreciation methods of these
28
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
assets (note 2 (d)). Depreciation is provided using the straight-line
method over the estimated useful lives of each asset category, which are
as follows:
YEARS
--------
Buildings and building improvements......................... 15 to 40
Ski lifts................................................... 30
Golf courses................................................ 30
Area improvements........................................... 25 to 30
Automotive, helicopters and other equipment................. 2 to 20
Certain buildings, area improvements and equipment are located on leased
or licensed land and are depreciated over the lesser of the lease or
license term or useful life.
(h) Administrative furniture, computer equipment, software and leasehold
improvements:
Administrative furniture, computer equipment and software are stated at
cost less accumulated depreciation. Included in software costs are any
direct costs incurred developing internal-use software. During the year
ended June 30, 2006, the Company changed its estimate of the useful lives
and depreciation methods of its administrative furniture (note 2(d)).
Depreciation of administrative furniture, computer equipment and software
is provided using the straight-line method over useful lives ranging from
three to 15 years.
Leasehold improvements are stated at cost less accumulated amortization.
Amortization is provided using the straight-line method over the lease
term.
(i) Other assets:
(i) Inventories are recorded at the lower of cost and net realizable
value, and consist primarily of retail goods, food and beverage
products, and operating supplies.
(ii) Restricted cash deposits mainly comprise purchaser down payments
for real estate units under construction and guest lodging or tour
deposits located in jurisdictions that require such down payments
or deposits to be retained in a trust account. Such restricted cash
deposits are released to the Company at the time title to a
completed real estate unit is transferred to the purchaser or when
the guest occupies the lodging facilities or embarks on the tour.
(iii) Deferred financing costs consist of legal and other fees directly
related to the debt financing of the Company's businesses. These
costs are amortized on a straight-line basis to interest expense
over the term of the related financing.
(iv) Intangible assets with finite useful lives are costs that have been
allocated to contracts and customer lists and are amortized on a
straight-line basis over their estimated useful lives.
(j) Asset retirement obligations:
An asset retirement obligation is a legal obligation associated with the
retirement of tangible long-lived assets that the Company is required to
settle. The Company recognizes the fair value of a liability for an asset
retirement obligation in the year in which it is incurred when a
reasonable estimate of fair value can be made. The carrying value of the
related long-lived asset is increased by the same amount as the
liability. The Company has reviewed its long-lived assets and determined
that its asset retirement obligations are limited to certain of the land
lease arrangements related to the Company's resort operations that
require remediation steps to be taken on termination of the lease
arrangement. As the Company has the intention to operate its resorts
indefinitely, it is unable to make a reasonable estimate of the fair
values of the ultimate asset retirement obligations.
(k) Impairment of long-lived assets:
Long-lived assets subject to amortization, including resort and travel
operations assets, equipment and purchased intangibles, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Impairment losses are
recognized when the carrying amount of long-lived assets exceed the sum
of the undiscounted cash flows expected to result from their use and
their eventual disposition. The impairment loss is determined as the
amount by which the long-lived asset's carrying amount exceeds its fair
value less costs to sell.
(l) Goodwill:
Goodwill represents the excess of purchase price over the fair value of
identifiable assets acquired in a purchase business combination. The
Company does not amortize goodwill but it is subject to an impairment
test on an annual basis and whenever events and changes in circumstances
indicate that the carrying amount may not be recoverable.
(m) Deferred revenue and deposits:
Deferred revenue mainly comprises real estate deposits, deferred gains on
residential and commercial property sales to partnerships (note 20),
lodging and tour deposits, club initiation deposits, season pass revenue,
commission revenue and government assistance.
29
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Deferred gains on residential sales are recognized when the land is
developed into projects and revenue from the sale of the projects is
realized by the partnerships. Deferred gains on commercial property sales
are recognized over the useful lives of the properties. Deferred revenue
relating to club initiation deposits is recognized on a straight-line
basis over the estimated membership terms. Deferred revenue relating to
the sale of season passes is recognized throughout the season based on
the number of skier visits. Deferred revenue relating to government
assistance for resort and travel operations assets is recognized on the
same basis as the related assets are amortized. Deferred revenue relating
to government assistance for properties under development is recognized
as the properties are sold.
(n) Government assistance:
The Company periodically applies for financial assistance under available
government incentive programs. Non-repayable government assistance
relating to capital expenditures is reflected as a reduction of the cost
of such assets.
(o) Bank and other indebtedness:
Under the terms of certain of its debt agreements, the Company has agreed
to indemnify its lenders against changes in withholding taxes. These
indemnifications extend for the term of the indebtedness and do not have
a limit on the maximum potential liability. As the possibility for
payment under these indemnifications is fully dependent on potential
changes in income tax laws by government authorities, the occurrence of
which is not determinable in advance of specific legislative action, the
Company is unable to make an estimate of its maximum potential liability.
Should such amounts become payable, the Company and its subsidiaries
would have the option of repaying those debts. No amount has been accrued
in the consolidated financial statements with respect to these
indemnifications.
(p) Self-insured liabilities:
The Company has a policy of self-insurance when the foreseeable losses
from self-insurance are low relative to the cost of purchasing
third-party insurance. The self-insurance program includes workers'
compensation, property, automobile and general liability coverage. The
accrual for self-insured liabilities is based on management's best
estimate of the ultimate cost to settle claims considering historical
claims experience, claims filed and the advice of actuaries and plan
administrators.
(q) Revenue recognition:
(i) Resort and travel operations revenue is recognized as the service
is provided.
(ii) Revenue from the sale of properties is recorded generally when
title to the completed unit is conveyed to the purchaser, the
purchaser becomes entitled to occupancy and the purchaser has made
a payment that is appropriate in the circumstances.
(iii) Points revenue associated with membership in the vacation
ownership business of Club Intrawest (which revenue is included in
real estate sales) is recognized when the purchaser has paid the
amount due on closing, all contract documentation has been
executed and all other significant conditions of sale are met.
(iv) Management services revenue is recognized as the service is
provided. Reservation fee revenue is recorded at the net of the
amount charged to the customer and the amount paid to the supplier.
(v) Commission revenue from real estate brokerage operations is
recognized at the time an offer of sale is closed by the purchaser
or all other contractual obligations have been satisfied.
(r) Future income taxes:
The Company follows the asset and liability method of accounting for
income taxes. Under such method, future tax assets and liabilities are
recognized for future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax bases.
Future tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on future tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes
the substantive enactment date. To the extent that it is not considered
to be more likely than not that a future income tax asset will be
realized, a valuation allowance is provided.
(s) Foreign currency translation:
These consolidated financial statements are presented in U.S. dollars.
The majority of the Company's operations are located in the United States
and are conducted in U.S. dollars. The Company's Canadian and European
operations use the Canadian dollar and the Euro, respectively, as their
functional currencies. In addition, the Company's subsidiary Abercrombie
& Kent Group of Companies, S.A. operates in many countries and each
branch operates in its own country's functional currency. The Canadian,
European and international entities' financial statements have been
translated into U.S. dollars using the exchange rate in effect at the
balance sheet date for asset and liability amounts and at the average
rate for the period for amounts included in the determination of income.
30
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Cumulative unrealized gains or losses arising from the translation of the
assets and liabilities of these operations into U.S. dollars are recorded
as foreign currency translation adjustment, a separate component of
shareholders' equity.
Exchange gains or losses arising on the translation of long-term monetary
items that are denominated in foreign currencies to the applicable
currency of measurement are included in the determination of net income.
Long-term obligations denominated in foreign currencies are designated as
hedges of investments in self sustaining foreign operations. Accordingly,
cumulative unrealized gains or losses arising from the translation of
these obligations are recorded as foreign currency translation
adjustment.
The Canadian dollar to U.S. dollar exchange rates used for translation
purposes were as follows:
2006 2005
------ ------
At June 30.................................................. 1.1162 1.2254
Average during year......................................... 1.1628 1.2495
(t) Per share calculations:
Income per common share has been calculated using the weighted average
number of common shares outstanding during the year. The dilutive effect
of stock options is determined using the treasury stock method.
(u) Stock options and stock-based compensation:
The Company has various stock-based compensation plans as described in
note 12. The fair value of stock options is determined using a fair value
pricing model and is charged to income as compensation expense over the
vesting period with an offsetting adjustment to contributed surplus. Any
consideration paid on the exercise of options or purchase of shares is
credited to capital stock.
The Company has three restricted share unit ("RSU") plans which are
described in note 12. A RSU is equal in value to one common share of the
Company. RSUs are settled in cash and are recorded as liabilities. The
measurement of the liability and compensation expense for these awards is
based on the intrinsic value of the award and is recorded as a charge to
income over the vesting period of the award. The payment amount is
established as at the vesting date of the award. Changes in the Company's
payment obligation subsequent to grant of the award and prior to the
settlement date, due to changes in the market value of the underlying
common shares of the Company, are recorded as a charge to income.
(v) Employee future benefits:
The Company accrues its obligations under employee benefit plans and the
related costs as the underlying services are provided.
(w) Changes in accounting policy:
Effective July 1, 2005, the Company adopted real-estate time sharing
accounting principles set out in the recently issued Statement of
Position 04-2, "Accounting for Real-Estate Time Sharing Transactions",
("SOP 04-02") and Statement of Financial Accounting Standards No. 152,
"Accounting for Real-Estate Time-Sharing Transactions: an amendment of
FASB Statements No. 66 and 67" ("FAS 152") in the United States. As there
is no specific accounting guidance that deals with such operations in
Canada, the Company has applied provisions of Canadian GAAP that require
consideration of relevant United States GAAP standards.
SOP 04-2, in conjunction with the amendments provided for in FAS 152,
sets out specific guidelines for assessing whether the buyers' initial
and continuing investments are adequate to demonstrate a commitment to
pay for the property. Such a demonstration is required for the seller of
a time-sharing arrangement to recognize profit by the full accrual
method. SOP 04-2 generally requires a seller follow other United States
GAAP principles for recognition of real estate sales transactions.
Previously, the Company had applied Canadian GAAP, which differs in
certain respects from United States GAAP in its application to sales of
real estate properties to time-sharing transactions. As a result of the
required adoption of the SOP 04-2, the Company has deferred profit on
time-sharing transactions until all criteria related to United States
GAAP for real estate sales are met. In addition, pursuant to the
amendments in the standards described above, the Company is prohibited
from the continuation of its previously applied policy of deferring
marketing costs.
31
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
These changes in accounting policies have been applied retroactively with
restatement of prior years' balances, which has resulted in the following
increases (decreases):
2006 2005
CONSOLIDATED BALANCE SHEETS ------- -------
Assets:
Current other assets........................................ $ 2,830 $ 3,351
======= =======
Liabilities and shareholders' equity:
Current deferred revenue.................................... $ 7,141 $ 6,946
Retained earnings........................................... (3,792) (3,335)
Foreign currency translation adjustment..................... (519) (260)
------- -------
$ 2,830 $ 3,351
======= =======
2006 2005
CONSOLIDATED STATEMENTS OF OPERATIONS ------- -------
Real estate development:
Revenue..................................................... $ 154 $ 155
Expenses.................................................... 611 (46)
------- -------
Real estate development contribution........................ $ (457) $ 201
======= =======
Net income per common share
Basic..................................................... $ (0.01) $ --
CONSOLIDATED STATEMENTS OF CASH FLOW 2006 2005
------- -------
Cash Flow from Operations................................... $ (457) $ 201
======= =======
(x) Comparative figures:
Certain comparative figures for 2005 have been reclassified to conform
with the financial statement presentation adopted in the current year.
3. DISCONTINUED OPERATIONS:
Effective October 31, 2005, the Company sold a majority of its 59.5%
interest in Mammoth Mountain Ski Area ("Mammoth Mountain"). The Company's
retained interest is 15%. Pre-tax net proceeds to the Company after
transaction costs in Mammoth Mountain were $149,087,000, net of Mammoth
Mountain's cash balances sold of $1,423,000.
For reporting purposes, the results of operations of Mammoth Mountain have
been disclosed separately from those of continuing operations for the
periods presented.
32
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Earnings from discontinued operations and the results of the gain relating
to discontinued operations are as follows:
2006 2005
-------- -------
Revenue..................................................... $ 6,086 $65,196
======== =======
Income (loss) from discontinued operations, net of income
tax recovery (expense) of $1,309 and ($2,096),
respectively.............................................. $ (1,393) $ 8,748
Gain on sale of discontinued operations, net of income tax
expense of $37,747........................................ 61,272 --
-------- -------
Results of discontinued operations.......................... $ 59,879 $ 8,748
======== =======
Results of discontinued operations per share:
Basic..................................................... $ 1.23 $ 0.18
Diluted................................................... $ 1.21 $ 0.18
======== =======
Cash from discontinued operations:
Income from discontinued operations....................... $ 59,879 $ 8,748
Adjustments for:
Amortization............................................ 365 6,486
Future income taxes..................................... (9,513) (287)
Gain on sale............................................ (61,272) --
-------- -------
$(10,541) $14,947
======== =======
4. AMOUNTS RECEIVABLE:
2006 2005
-------- --------
Receivables from sales of real estate....................... $ 80,433 $103,957
Resort and travel operations trade receivables.............. 52,818 45,653
Loans, mortgages and notes receivable....................... 66,782 92,825
Funded senior employee share purchase plans (note 11(c)).... 2,987 4,177
Other accounts receivable................................... 44,416 26,523
-------- --------
247,436 273,135
Current portion............................................. 200,648 194,258
-------- --------
$ 46,788 $ 78,877
======== ========
Receivables from sales of real estate primarily comprise sales proceeds held
in trust that are generally paid out to the Company or to construction
lenders within 60 days.
Total payments due on amounts receivable are approximately as follows:
Year ending June 30, 2007................................... $200,648
2008...................................... 11,420
2009...................................... 3,432
2010...................................... 6,558
2011...................................... 2,675
Subsequent to 2011.................................... 22,703
--------
$247,436
========
The loans, mortgages and notes receivable bear interest at both fixed and
floating rates, at a weighted average of 5.80% per annum as at June 30, 2006
(2005 -- 6.84%). Certain of these amounts have been pledged as security for
the Company's bank and other indebtedness (note 9).
33
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
5. OTHER ASSETS:
(a) Current:
2006 2005
-------- -----------
(restated)
(Note 2(w))
-----------
Resort and travel operations inventories.................... $ 55,306 $ 50,112
Restricted cash deposits.................................... 55,912 50,403
Prepaid expenses and other.................................. 59,212 59,636
Money market securities..................................... 8,705 5,878
-------- --------
$179,135 $166,029
======== ========
(b) Long-term:
2006 2005
-------- --------
Deferred financing and other costs.......................... $ 38,375 $ 29,635
Administrative furniture, computer equipment, software and
leasehold improvements, net of accumulated depreciation of
$54,939,000 (2005 -- $40,085,000)......................... 43,585 36,880
Money market securities..................................... 21,448 22,182
Intangibles and other assets................................ 30,375 18,666
-------- --------
$133,783 $107,363
======== ========
The long-term money market securities mature as follows: $18,791,000
(2005 -- $22,182,000) within five years and $2,657,000 (2005 -- nil) in more
than five years.
6. RESORT PROPERTIES:
Resort properties are classified for balance sheet purposes as follows:
2006 2005
-------- --------
Current assets.............................................. $348,515 $388,510
Long-term assets............................................ 398,241 403,252
-------- --------
$746,756 $791,762
======== ========
Cumulative costs capitalized to the carrying value of properties under
development and held for sale are as follows:
2006 2005
-------- --------
Land and land development costs............................. $124,945 $197,995
Building development costs.................................. 458,050 437,361
Interest.................................................... 91,727 87,639
Administrative.............................................. 72,034 68,767
-------- --------
$746,756 $791,762
======== ========
During the year ended June 30, 2006, the Company capitalized interest of
$31,703,000 (2005 -- $36,039,000) (note 16).
Resort properties have been pledged as security for certain of the Company's
bank and other indebtedness (note 9).
34
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
7. RESORT AND TRAVEL OPERATIONS:
2006
----------------------------------------
Accumulated Net
Cost depreciation book value
---------- ------------ ----------
Ski assets:
Land...................................................... $ 44,577 $ -- $ 44,577
Buildings................................................. 328,840 93,115 235,725
Ski lifts and area improvements........................... 495,188 193,330 301,858
Automotive, helicopters and other equipment............... 243,406 126,113 117,293
Leased vehicles........................................... 13,734 4,245 9,489
---------- -------- ----------
1,125,745 416,803 708,942
---------- -------- ----------
Other resort and travel assets:
Land...................................................... 38,816 -- 38,816
Buildings................................................. 146,599 21,196 125,403
Golf courses.............................................. 103,976 24,962 79,014
Area improvements and equipment........................... 162,855 68,633 94,222
---------- -------- ----------
452,246 114,791 337,455
---------- -------- ----------
$1,577,991 $531,594 $1,046,397
========== ======== ==========
2005
----------------------------------------
Accumulated Net
Cost depreciation book value
---------- ------------ ----------
Ski assets:
Land...................................................... $ 52,291 $ -- $ 52,291
Buildings................................................. 355,852 85,311 270,541
Ski lifts and area improvements........................... 519,039 181,560 337,479
Automotive, helicopters and other equipment............... 207,300 123,323 83,977
Leased vehicles........................................... 5,679 2,845 2,834
---------- -------- ----------
1,140,161 393,039 747,122
---------- -------- ----------
Other resort and travel assets:
Land...................................................... 28,603 -- 28,603
Buildings................................................. 95,686 15,423 80,263
Golf courses.............................................. 116,715 28,096 88,619
Area improvements and equipment........................... 149,397 59,817 89,580
---------- -------- ----------
390,401 103,336 287,065
---------- -------- ----------
$1,530,562 $496,375 $1,034,187
========== ======== ==========
Resort and travel operations assets have been pledged as security for
certain of the Company's bank and other indebtedness (note 9).
35
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
8. DEFERRED REVENUE AND DEPOSITS:
2006 2005
-------- --------
Deposits on real estate sales............................... $ 79,228 $116,934
Deferred gain on land sales to real estate partnerships
(note 20(a)).............................................. 49,900 80,278
Deferred gain on commercial property sales (note 20(b))..... 7,240 7,483
Lodging and tour deposits................................... 75,558 65,459
Club initiation deposits.................................... 27,509 25,374
Season pass revenue......................................... 21,370 29,436
Commission revenue on real estate sales..................... 10,284 13,034
Government assistance....................................... 12,826 11,595
Other....................................................... 13,803 16,742
-------- --------
297,718 366,335
Current portion............................................. 193,428 233,469
-------- --------
$104,290 $132,866
======== ========
9. BANK AND OTHER INDEBTEDNESS:
The Company has obtained financing for its resort and travel operations and
resort properties from various financial institutions by pledging individual
assets as security for such financing. Security for other general corporate
debt is provided by general security which includes a floating charge on all
of the Company's assets and undertakings, fixed charges on real estate
properties, and assignment of mortgages and notes receivable. The following
table summarizes the primary security provided by the Company, where
appropriate, and indicates the applicable type of financing, maturity dates
and the weighted average interest rate at June 30, 2006:
Weighted
average
interest
Maturity dates rate(%) 2006 2005
-------------- -------- -------- ----------
Resort and travel operations:
Mortgages and bank loans.................................. Demand - 2017 5.18 $ 44,345 $ 41,159
Obligations under capital leases.......................... 2006 - 2052 9.97 36,908 24,535
Resort properties:
Interim financing on properties under
development and held for sale........................... Demand - 2011 7.33 32,799 79,974
General corporate debt:
Unsecured debentures...................................... 2009 - 2013 7.41 691,793 682,303
Other general corporate debt.............................. Demand - 2007 6.66 146,660 195,452
-------- ----------
7.28 952,505 1,023,423
Current portion............................................. 45,072 82,144
-------- ----------
$907,433 $ 941,279
======== ==========
Principal repayments and the components related to either floating or fixed
interest rate indebtedness are as follows:
Interest rates
-------------------- Total
Floating Fixed repayments
-------- -------- ----------
Year ending June 30, 2007................................... $ 38,625 $ 6,447 $ 45,072
2008...................................... 106,756 2,825 109,581
2009...................................... 41,532 2,866 44,398
2010...................................... 10,293 114,936 125,229
2011...................................... 887 3,096 3,983
Subsequent to 2011.................................... 6,098 618,144 624,242
-------- -------- --------
$204,191 $748,314 $952,505
======== ======== ========
36
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Bank and other indebtedness includes indebtedness in the amount of
$254,408,000 (2005 -- $264,419,000) that is repayable in Canadian dollars of
$283,970,000 (2005 -- $324,019,000), as well as indebtedness in the amount
of $2,096,000 (2005 -- $4,254,000) that is repayable in other currencies.
The Company is subject to certain covenants in respect of some of the bank
and other indebtedness that require the Company to maintain certain
financial ratios. The Company is in compliance with these covenants at June
30, 2006.
10. GOVERNMENT ASSISTANCE:
The federal government of Canada and the provincial government of Quebec
have granted financial assistance to the Company in the form of
interest-free loans and forgivable grants for the construction of specified
four-season tourist facilities at Mont Tremblant. Loans totaling $8,479,000
(2005 -- $8,242,000) have been advanced and are repayable over 14 years
starting in 2001. The grants, which will total $51,973,000
(2005 -- $47,342,000) when they are fully advanced, amounted to $42,547,000
at June 30, 2006 (2005 -- $37,516,000). During the year ended June 30, 2006,
grants received of $1,362,000 were credited as follows: $1,169,000 to resort
and travel operations assets, $96,000 to resort properties and $97,000 to
deferred government assistance. During the year ended June 30, 2005, grants
received of $800,000 and draws of $1,099,000 from deferred government
assistance were credited as follows: $1,378,000 to resort and travel
operations assets and $521,000 to resort properties.
The federal government of Canada and the provincial government of Ontario
have granted financial assistance to the Company in the form of grants for
the construction of infrastructure at Blue Mountain. During the year ended
June 30, 2006, grants received of $2,662,000 (2005 -- $1,150,000) were
credited to resort properties.
11. CAPITAL STOCK:
(a) Capital stock:
The Company's capital stock comprises the following:
2006 2005
-------- --------
Common shares............................................... $486,208 $465,328
Contributed surplus......................................... 4,887 3,834
-------- --------
$491,095 $469,162
======== ========
Contributed surplus was increased by $1,056,000 (2005 -- $883,000)
representing amortization of the fair value of stock options (note
12(a(ii)) and reduced by $3,000 related to shares repurchased under the
normal course issuer bid (note 11(e)).
(i) Common shares:
Authorized: an unlimited number without par value
Issued:
2006 2005
----------------------- -----------------------
Number of Number of
common common
shares Amount shares Amount
----------- -------- ----------- --------
Balance, beginning of year................................. 47,957,110 $465,328 47,604,562 $460,534
Issued for cash under stock option plan.................... 1,030,100 21,745 223,182 3,635
Repurchase of common shares................................ (86,900) (865) -- --
Amortization of benefit plan, net(d)....................... 162,816 -- 129,366 1,159
---------- -------- ---------- --------
Balance, end of year....................................... 49,063,126 $486,208 47,957,110 $465,328
========== ======== ========== ========
(ii) NRP shares:
Authorized: 50,000,000 without par value
Issued: nil
(iii) Preferred shares:
Authorized: an unlimited number without par value
Issued: nil
37
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(b) Employee share purchase plan:
The employee share purchase plan permits certain full-time employees of
the Company and its subsidiaries to purchase common shares through
payroll deductions. The Company contributes $1 for every $3 contributed
by an employee. To June 30, 2006, a total of 65,809 (2005 -- 65,809)
common shares have been issued from treasury under this plan. A further
100,000 common shares have been authorized and reserved for issuance
under this plan.
(c) Funded senior employee share purchase plan:
The Company has a funded senior employee share purchase plan that
provides for loans to be made to designated eligible employees to be used
for the purchase of common shares. At June 30, 2006, loans to employees
under the plan amounted to $2,987,000 with respect to 140,800 common
shares (2005 -- $4,177,000 with respect to 214,808 common shares). The
loans, which are included in amounts receivable, are non-interest
bearing, secured by a promissory note and a pledge of the shares
($4,450,000 market value at June 30, 2006) and mature by 2012.
(d) Key executive employee benefit plan:
The Company has a key executive employee benefit plan that permits the
Company to grant awards of common shares purchased in the open market to
executive officers. To June 30, 2006, a total of 292,182
(2005 -- 292,182) common shares were purchased under this plan. The
common shares vest to the employees in part over time and the balance on
the attainment of certain future earnings and debt level targets. The
value of the shares in the plan was fully amortized by June 30, 2005.
During the year ended June 30, 2006, the remaining 162,816 shares vested
(being all of the unvested shares) and were issued to the executive
officers (2005 -- 129,366).
(e) Normal course issuer bid:
The Company received regulatory approval under Canadian securities laws
to purchase common shares under a normal course issuer bid that commenced
on November 18, 2005 and continues up to November 17, 2006. The Company
is entitled to purchase, for cancellation, up to a maximum of 4,600,000
common shares under the current bid. During the year ended June 30, 2006,
the Company purchased 86,900 common shares under the bid for total
consideration of $2,423,000. The amount paid was charged $865,000 to
share capital, $3,000 to contributed surplus, $1,245,000 to retained
earnings and the balance to foreign currency translation adjustment.
(f) Earnings per share information:
Basic earnings per common share ("EPS") is calculated by dividing net
income attributable to common shareholders ("numerator") by the weighted
average number of common shares outstanding ("denominator"). Diluted EPS
reflects the potential dilution that could occur if outstanding dilutive
stock options were exercised and the cash received was used to repurchase
common shares at the average market price for the period.
The numerator for basic and diluted EPS was the same for each of the
periods presented. The reconciliation of the denominators used is as
follows:
2006 2005
------ ------
(In thousands
of shares)
Denominator:
Weighted average number of common shares
outstanding -- basic...................................... 48,686 47,814
Effect of dilutive options.................................. 721 110
------ ------
Weighted average number of common shares
outstanding -- diluted.................................... 49,407 47,924
====== ======
For the year ended June 30, 2006, there are no anti-dilutive options
(2005 -- 3,033,050).
12. STOCK OPTIONS AND STOCK-BASED COMPENSATION PLANS:
(a) (i) Stock options:
The Company has a stock option plan that provides for grants to officers
and employees of the Company and its subsidiaries of options to purchase
common shares of the Company. Options granted under the stock option plan
may not be exercised except in accordance with such limitations as the
Human Resources Committee of the Board of Directors of the Company may
determine.
38
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
The following table summarizes the status of options outstanding under
this plan:
2006 2005
------------------------------ ------------------------------
Share options Weighted Share options Weighted
outstanding average price outstanding average price
------------- ------------- ------------- -------------
Outstanding, beginning of year...................... 4,004,200 $20.13 3,861,650 $18.51
Granted............................................. -- -- 416,500 16.85
Exercised........................................... (1,030,100) 21.11 (223,182) 16.31
Forfeited........................................... (146,700) 19.59 (50,768) 20.13
---------- ------ --------- ------
Outstanding, end of year............................ 2,827,400 $22.13 4,004,200 $20.13
---------- ------ --------- ------
Exercisable, end of year............................ 2,098,340 $22.85 2,616,813 $20.79
========== ====== ========= ======
The following table provides details of options outstanding at June 30,
2006:
Weighted
Number average life Weighted Number Weighted
outstanding remaining average exercisable average
Range of exercise prices June 30, 2006 (years) price June 30, 2006 price
------------------------ ---------------- ------------ -------- ---------------- --------
$14.09 -- $14.67.......................... 16,750 6.0 $14.61 6,750 $14.52
$16.89 -- $18.05.......................... 374,400 4.7 17.32 200,400 17.70
$19.17 -- $26.03.......................... 2,436,250 4.6 22.92 1,891,190 23.43
--------- --- ------ --------- ------
2,827,400 4.6 $22.13 2,098,340 $22.85
========= === ====== ========= ======
(ii) Stock compensation:
Effective July 1, 2003, the Company adopted, on a prospective basis, the
fair value measurement of stock-based compensation. Under the fair value
method, compensation cost for options is measured at fair value at the
date of grant and is expensed over the vesting period. No options were
issued in the year ended June 30, 2006 (2005 -- fair value of
$2,702,000). The total stock compensation expense for the year ended June
30, 2006 was $1,056,000 (2005 -- $883,000).
Had compensation expense for stock options granted between July 1, 2001
and June 30, 2003 been determined by a fair value method, the Company's
net income would have been reduced to the pro forma amount indicated
below:
2006 2005
-------- --------------
(restated)
(Note 2(w))
Net income, as reported..................................... $115,210 $32,815
Estimated fair value of option grants....................... (2,477) (2,561)
-------- -------
Net income, pro forma....................................... $112,733 $30,254
======== =======
PRO FORMA INCOME PER COMMON SHARE:
Basic..................................................... $ 2.32 $ 0.63
Diluted................................................... 2.28 0.63
======== =======
The estimated fair value of option grants excludes the effect of those
granted before July 1, 2001.
(b) Other stock-based compensation plans:
The Company has various stock-based compensation plans that permit the
Company to grant awards of notional common shares or share units
(collectively "notional common share units") to its executive officers,
senior employees and non-executive directors. Upon vesting, these
notional common share units are valued based on the Company's common
share price on either the Toronto Stock Exchange or the New York Stock
Exchange (dependent on the specific plan) and are marked to market at the
end of each fiscal quarter. Changes in the value of notional common share
units as a result of fluctuations in the Company's share price and new
awards as they vest are recognized in corporate general and
administrative expense in the consolidated statement of operations with
the corresponding liability recorded in accounts payable in the
consolidated balance sheet.
39
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(i) Executive Long-Term Incentive Plan ("LTIP")
The LTIP provides for cash payments to participating key executive
officers based on a notional number of common shares of the Company
earned over four calculation periods. The calculation periods generally
comprise five years. The number of notional common shares earned for each
calculation period is based on a percentage of cumulative consolidated
net income divided by the market price of the common shares of the
Company on the first day of the calculation period. Subject to certain
claw-back provisions, the notional common shares earned in respect of a
calculation period vest over that calculation period. As at June 30,
2006, 752,728 notional common shares were earned under the LTIP
(2005 -- 652,686).
Details of the executive long-term incentive plan are as follows:
NOTIONAL COMMON SHARE UNITS 2006 2005
--------------------------- ------- -------
Balance, beginning of year.................................. 652,686 573,813
Additions during year....................................... 149,422 78,873
Paid out/cancelled during year.............................. (49,380) --
------- -------
Balance, end of year........................................ 752,728 652,686
======= =======
LIABILITY 2006 2005
--------- -------- -------
Balance, beginning of year.................................. $ 15,751 $10,647
Expensed during year........................................ 9,331 5,104
Paid out/cancelled during year.............................. (1,254) --
-------- -------
Balance, end of year........................................ $ 23,828 $15,751
======== =======
(ii) Deferred Share Unit ("DSU") Plans
The Company has a DSU plan that allows key executive officers to elect to
receive all or any portion of their annual incentive award as deferred
share units. In addition, the Company has a DSU plan for non-executive
directors that awards each director 500 deferred share units per year for
serving as a director and allows each director to elect to receive all or
a portion of his or her annual director's fees as deferred share units. A
DSU is equal to one common share of the Company. The DSUs fully vest upon
issuance. The number of DSUs is determined by dividing the dollar amount
elected by the average market price of the Company's common shares during
a certain number of days preceding the date that the annual incentive
award or the director fees become payable. The units also accrue dividend
equivalents payable in additional units in an amount equal to dividends
paid on the Company's common shares.
As at June 30, 2006, 181,196 key executive and director DSUs were
outstanding (2005 -- 142,871 units).
Details of the deferred share unit plans are as follows:
DSU -- Executives DSU -- Directors Total
-------------------- ----------------- --------------------
DEFERRED SHARE UNITS 2006 2005 2006 2005 2006 2005
-------------------- -------- -------- ------- ------ -------- --------
Balance, beginning of year..................... 135,001 91,728 7,870 -- 142,871 91,728
Additions during year.......................... 27,705 43,273 10,620 7,870 38,325 51,143
-------- -------- ------- ------ -------- --------
Balance, end of year........................... 162,706 135,001 18,490 7,870 181,196 142,871
======== ======== ======= ====== ======== ========
LIABILITY 2006 2005 2006 2005 2006 2005
--------- -------- -------- ------- ------ -------- --------
Balance, beginning of year..................... $ 3,238 $ 1,461 $ 187 $ -- $ 3,425 $ 1,461
Expensed during year........................... 1,801 1,777 402 187 2,203 1,964
-------- -------- ------- ------ -------- --------
Balance, end of year........................... $ 5,039 $ 3,238 $ 589 $ 187 $ 5,628 $ 3,425
======== ======== ======= ====== ======== ========
(iii) Key Executive Long-Term Incentive Plan:
Effective July 1, 2005, the Company introduced a key executive long-term
incentive plan that allocates target notional common shares to key
executives. The target allocation is adjusted by a percentage based on
the Company's annual rate of return on capital as defined in the plan
documents. The notional common shares vest over the period July 1, 2005
to June 30, 2008. As at June 30, 2006, the target allocation of notional
shares was 337,950. Compensation expense for the year ended June 30, 2006
amounted to $3,195,000, on the assumption that one-third of the target
allocation was vested.
40
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(iv) Restricted Share Unit ("RSU") Plans:
Effective July 1, 2005, the Company introduced three senior employee RSU
plans that allocate target RSUs to senior employees. A RSU is equal to
one common share of the Company. The target allocation is adjusted by a
percentage based on the Company's annual rate of return on capital as
defined in the plan documents. The RSUs vest over the period July 1, 2005
to June 30, 2008. As at June 30, 2006, the target allocation of RSUs was
174,709. Compensation expense for the year ended June 30, 2006 amounted
to $1,321,000, based on the assumption that one-third of the target
allocation was vested.
13. INCOME TAXES:
(a) The provision for income taxes from continuing operations is as
follows:
2006 2005
-------- --------
Current..................................................... $ 38,324 $ 27,170
Future...................................................... (30,204) (29,160)
-------- --------
$ 8,120 $ (1,990)
======== ========
The reconciliation of income taxes calculated at the statutory rate to
the actual income tax provision is as follows:
2006 2005
-------- --------
Statutory rate (%).......................................... 34.1 36.0
-------- --------
Income tax charge at statutory rate......................... $ 32,917 $ 11,093
Non-deductible expenses and amortization.................... 11 283
Large corporations tax...................................... 488 1,430
Reduction for enacted changes in tax laws and rates......... (504) --
Foreign taxes less than statutory rate...................... (16,299) (17,113)
Change in valuation allowance............................... (6,374) 2,658
Other....................................................... (2,119) (341)
-------- --------
Provision for income taxes.................................. $ 8,120 $ (1,990)
======== ========
(b) The tax effects of temporary differences that give rise to significant
portions of the future tax assets and future tax liabilities are
presented below:
2006 2005
-------- --------
Future tax assets:
Non-capital loss carryforwards............................ $ 40,814 $ 16,566
Differences in working capital deductions for tax and
accounting purposes..................................... 28,342 24,676
Other..................................................... -- 2,359
-------- --------
Total gross future tax assets............................... 69,156 43,601
Valuation allowance......................................... (15,877) (22,251)
-------- --------
Net future tax assets....................................... 53,279 21,350
-------- --------
Future tax liabilities:
Resort assets and resort properties....................... 64,971 73,397
Bank and other indebtedness............................... 20,566 10,036
Other..................................................... 4,988 --
-------- --------
Total gross future tax liabilities.......................... 90,525 83,433
-------- --------
Net future tax liabilities.................................. $ 37,246 $ 62,083
======== ========
41
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Net future tax liabilities are classified for balance sheet purposes as
follows:
2006 2005
------- -------
Current assets:
Future income taxes....................................... $33,528 $29,927
Long-term liabilities:
Future income taxes....................................... 70,774 92,010
------- -------
$37,246 $62,083
======= =======
(c) At June 30, 2006, the Company has non-capital loss carryforwards for
income tax purposes of approximately $112,457,000 (2005 -- $35,500,000)
that are available to offset future taxable income. At June 30, 2006,
approximately $30,518,000 will expire in varying amounts over the next
five years, $45,026,000 over the next five to 10 years, $1,300,000 over
the next 11 to 15 years and $35,613,000 over the next 16 to 20 years.
14. JOINT VENTURES AND NON-CONTROLLED PARTNERSHIPS:
The following amounts represent the Company's proportionate interest in
joint ventures and non-controlled partnerships (note 2(b)):
2006 2005
-------- --------
Resort properties, current.................................. $ 40,158 $ 14,589
Other current assets........................................ 14,375 13,532
-------- --------
54,533 28,121
Current liabilities......................................... (33,606) (44,490)
-------- --------
Working capital surplus (deficiency)........................ 20,927 (16,369)
Resort and travel operations................................ 61,157 137,548
Resort properties, non-current.............................. 24,368 44,594
Bank and other indebtedness, non-current.................... (17,704) (7,582)
Other, net.................................................. (4,062) (9,175)
-------- --------
$ 84,686 $149,016
======== ========
2006 2005
------- --------
Revenue..................................................... $50,111 $113,677
Expenses.................................................... 48,556 104,542
------- --------
$ 1,555 $ 9,135
======= ========
2006 2005
-------- --------
Cash provided by (used in):
Operations................................................ $(21,147) $ 22,901
Financing................................................. 27,271 (11,978)
Investments............................................... (2,727) (9,933)
-------- --------
Increase in cash and cash equivalents....................... $ 3,397 $ 990
======== ========
15. CONTINGENCIES AND COMMITMENTS:
(a) The Company holds licenses and land leases with respect to certain of
its resort operations. These leases expire at various times between
2032 and 2051 and provide for annual payments generally in the range of
2% of defined gross revenues.
(b) The Company has estimated costs to complete resort and travel
operations assets and resort properties currently under construction
and held for sale amounting to $355,439,000 at June 30, 2006 (2005 --
$182,354,000).
42
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(c) In addition to the leases described in (a) above, the Company has
entered into other operating lease commitments, payable as follows:
Year ending June 30, 2007................................... $ 23,374
2008...................................... 23,069
2009...................................... 19,898
2010...................................... 20,221
2011...................................... 18,671
Subsequent to 2011.................................... 152,346
--------
$257,579
========
(d) The Company is contingently liable for the obligations of certain joint
ventures and partnerships. The assets of these joint ventures and
partnerships, which in all cases exceed the obligations, are available
to satisfy such obligations.
(e) The Company has issued letters of credit amounting to $88,147,000 (2005
-- $59,367,000) mainly to secure its commitments under various
infrastructure servicing agreements.
(f) The Company and its subsidiaries are involved in various lawsuits
arising from the ordinary course of business. Although the outcome of
such matters cannot be predicted with certainty, management does not
consider the Company's exposure to lawsuits to be material to these
consolidated financial statements.
16. INTEREST EXPENSE:
2006 2005
------- -------
Total interest incurred..................................... $79,090 $80,884
Less:
Interest capitalized to resort and travel operations
assets.................................................. -- 240
Interest capitalized to resort properties, net of
capitalized interest included in real estate cost of
sales of $8,325,000 (2005 -- $17,637,000)............... 23,378 18,402
------- -------
$55,712 $62,242
======= =======
Interest was charged to income as follows:
2006 2005
------- -------
Real estate costs........................................... $ 8,325 $17,637
Interest expense............................................ 47,562 44,165
Results of discontinued operations.......................... (175) 440
------- -------
$55,712 $62,242
======= =======
Real estate cost of sales also includes $19,290,000 (2005 -- $17,805,000) of
interest incurred in prior years. Interest incurred and interest expense
include commitment and other financing fees and amortization of deferred
financing costs.
17. FINANCIAL INSTRUMENTS:
(a) Fair value:
The Company has various financial instruments, including cash and cash
equivalents, amounts receivable, certain amounts payable and accrued
liabilities. Due to their short-term maturity or, in the case of amounts
receivable, their market comparable interest rates, the instruments' book
value approximates their fair value. Debt agreements are also financial
instruments. The total fair value of the Company's long-term debt is
estimated to be $967,000,000 (2005 -- $1,046,000,000). The fair value of
floating rate long-term debt is assumed to approximate its carrying
value. The fair value of other long-term debt has been estimated by
discounting future cash flows at current rates offered to the Company for
debt of similar maturities and credit quality.
(b) Interest rate risk:
As described in note 9, $204,191,000 of the Company's bank and other
indebtedness bears interest at floating rates. Fluctuations in these
rates will impact the cost of financing incurred in the future.
43
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(c) Credit risk:
The Company's products and services are purchased by a wide range of
customers in different regions of North America and elsewhere. Due to the
nature of its operations, the Company has no concentrations of credit
risk.
18. PENSION PLANS:
The Company has two non-contributory defined benefit pension plans, one
registered and the other non-registered, covering certain of its senior
executives. At June 30, 2006, the estimated market value of the plans'
assets was $10,686,000 (2005 -- $9,073,000) and the estimated present value
of the unfunded benefit obligation was $16,309,000 (2005 -- $15,662,000). A
substantial portion of the unfunded benefit obligation has been secured by a
letter of credit. This obligation is being expensed over a period of 10 to
12 years.
In addition to the plans mentioned above, one of the Company's subsidiaries
has two defined benefit pension plans covering certain employees. At June
30, 2006, the estimated market value of the plans' assets was $5,690,000
(2005 -- $4,988,000) and the estimated present value of the unfunded benefit
obligation was $3,168,000 (2005 -- $6,275,000). The obligation is being
expensed over a period of 13 years. During the year ended June 30, 2006,
benefits totaling $1,422,000 (2005 -- $673,000) were paid to plan
participants.
For the year ended June 30, 2006, the Company expensed pension costs of
$4,597,000 (2005 -- $3,181,000).
19. SEGMENTED INFORMATION:
The Company has four reportable segments: mountain resort operations,
non-mountain resort operations, real estate operations, and corporate and
all other. The mountain resort segment includes all of the Company's
mountain resorts and associated activities, Alpine and Retail Group. The
non-mountain segment includes A&K, Sandestin and all of the Company's
stand-alone golf courses. The real estate segment includes all of the
Company's real estate activities.
The Company evaluates performance based on profit or loss from operations
before interest, depreciation and amortization, and income taxes.
Intersegment sales and transfers are accounted for as if the sales or
transfers were to third parties.
The Company's reportable segments are strategic business units that offer
distinct products and services, and that have their own identifiable
marketing strategies. Each of the reportable segments has senior executives
responsible for the performance of the segment.
The following table presents the Company's results by reportable segment:
Mountain Non- Real
2006 resort mountain estate Corporate Total
---- --------- --------- -------- --------- ----------
Segment revenue:
Resort and travel operations.............................. $569,766 $366,350 $ -- $ -- $ 936,116
Management services....................................... 78,466 26,568 67,506 -- 172,540
Real estate development................................... -- -- 493,152 -- 493,152
Corporate and all other................................... -- -- -- 8,625 8,625
-------- -------- -------- ------ ----------
$648,232 $392,918 $560,658 $8,625 $1,610,433
======== ======== ======== ====== ==========
Mountain Non- Real
2006 resort mountain estate Corporate Total
---- --------- -------- -------- --------- ---------
Segment operating profit:
Resort and travel operations.............................. $75,394 $13,294 $ -- $ -- $ 88,688
Management services....................................... 5,434 9,176 22,394 -- 37,004
Real estate development................................... -- -- 147,589 -- 147,589
Corporate and all other................................... -- -- -- 8,625 8,625
------- ------- -------- ------ ---------
$80,828 $22,470 $169,983 $8,625 $ 281,906
======= ======= ======== ======
Less:
Interest expense.......................................... (47,562)
Corporate general and administrative expenses............. (33,405)
Depreciation and amortization............................. (104,409)
---------
Income from continuing operations before income taxes and
non-controlling interest.................................. $ 96,530
=========
44
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
Mountain Non- Real
2005 resort mountain estate Corporate Total
---- --------- -------- -------- --------- -----------
(restated)
(note 2(w))
Segment revenue:
Resort and travel operations.............................. $489,407 $317,146 $ -- $ -- $ 806,553
Management services....................................... 82,196 24,437 70,054 -- 176,687
Real estate development................................... -- -- 629,554 -- 629,554
Corporate and all other................................... -- -- -- 5,620 5,620
-------- -------- -------- ------ ----------
$571,603 $341,583 $699,608 $5,620 $1,618,414
======== ======== ======== ====== ==========
Mountain Non- Real
2005 resort mountain estate Corporate Total
---- --------- -------- ------- --------- --------
Segment operating profit:
Resort and travel operations.............................. $83,702 $15,849 $ -- $ -- $ 99,551
Management services....................................... 8,673 8,231 26,125 -- 43,029
Real estate development................................... -- -- 67,639 -- 67,639
Corporate and all other................................... -- -- -- 5,620 5,620
------- ------- ------- ------ --------
$92,375 $24,080 $93,764 $5,620 $215,839
======= ======= ======= ======
Less:
Interest expense.......................................... (44,165)
Corporate general and administrative expenses............. (20,571)
Depreciation and amortization............................. (71,837)
Call premium and unamortized costs of senior notes
redeemed................................................ (30,173)
Write-down of stand-alone golf course assets.............. (17,568)
--------
Income from continuing operations before income taxes and
non-controlling interest.................................. $ 31,525
========
Mountain Non-
2006 resort mountain Real estate Corporate Total
---- ---------- --------- ----------- --------- ----------
Segment assets............................................ $1,087,404 $268,799 $1,044,454 $266,425 $2,667,082
Segment capital expenditures.............................. 76,312 23,137 -- 19,154 118,603
Mountain Non-
2005 resort mountain Real estate Corporate Total
---- ---------- --------- ----------- --------- -----------
(restated)
(note 2(w))
Segment assets............................................ $1,025,742 $271,211 $1,126,413 $256,435 $2,679,801
Segment capital expenditures.............................. 67,051 12,324 -- 21,203 100,578
Geographic information:
Geographic information is presented based on the location of the resort and
travel destination.
United
2006 Canada States International Total
---- ---------- ---------- ------------- ----------
Revenue..................................................... $ 424,269 $ 756,244 $429,920 $1,610,433
Operating profit............................................ 47,744 172,787 61,375 281,906
Total assets................................................ 1,144,624 1,263,483 258,975 2,667,082
45
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
United
2005 Canada States International Total
---- ---------- ---------- ------------- -----------
(restated)
(note 2(w))
Revenue..................................................... $ 465,285 $ 822,361 $330,768 $1,618,414
Operating profit............................................ 41,301 138,053 36,485 215,839
Total assets................................................ 1,047,118 1,380,661 252,022 2,679,801
20. RELATED PARTY TRANSACTIONS:
Investment in and advances to real estate partnerships:
2006 2005
-------- --------
Residential partnerships.................................... $130,221 $ 99,904
Commercial partnership...................................... 7,979 9,133
-------- --------
$138,200 $109,037
======== ========
(a) Investment in Residential Partnerships
The Company sells certain real estate properties to partnerships in which
it holds an investment. During the year ended June 30, 2006, the Company
sold five real estate properties to partnerships for proceeds of
$114,711,000 (2005 -- 11 properties for proceeds of $200,545,000) and a
gain of $56,776,000 (2005 -- $84,998,000). Total proceeds on the sales
during 2006 consisted of cash and an interest in the partnership. The
Company also extended bridge financing of $10,295,000 to one of the
partnerships.
Development and sales management fees earned from partnerships during the
year ended June 30, 2006 totaled $22,377,000 (2005 -- $24,345,000) and
are included in management services revenue. Interest income related to
notes receivable and working capital loans to the partnerships of
$2,674,000 is included in interest and other income for the year ended
June 30, 2006 (2005 -- $1,245,000).
Investment in and advances to residential partnerships:
2006 2005
-------- -------
Equity contributions........................................ $107,899 $82,847
Formation costs............................................. 3,780 3,869
Advances.................................................... 10,295 9,483
Equity income, net of amortization of formation costs....... 8,247 3,705
-------- -------
$130,221 $99,904
======== =======
At June 30, 2006, deferred revenue includes $49,900,000 (2005 --
$80,278,000) relating to the sale of properties to the partnerships and
amounts receivable includes $39,071,000 (2005 -- $45,901,000) due from
the partnerships.
(b) Commercial Partnership
During the year ended June 30, 2005, the Company sold commercial
properties at seven of its resorts to partnerships (the "Commercial
Partnerships") for cash proceeds of $109,504,000. The Company has an
effective 20% interest in the Commercial Partnerships for an original
equity contribution of $9,133,000. During the year ended June 30, 2006,
the Company received distributions that reduced its equity contribution,
net of its share of equity income, to $7,979,000. The Company has leased
approximately 30% of the space within the properties for its resort and
travel operations for terms up to 20 years with aggregate rental payments
approximating $87,766,000. In addition, the Company has committed to
head-lease premises that were vacant at the time of closing for up to
four years. The gross amount payable under these commitments is estimated
at $4,170,000 from 2007 to 2009. These commitments will be reduced by any
revenue earned by the Company from subleasing the vacant space. The net
present value of this estimated net liability is $1,591,000 (2005 --
$2,816,000).
At June 30, 2006, deferred revenue includes $7,240,000 (2005 --
$7,483,000) relating to the deferred gain on sale of properties to the
Commercial Partnerships and amounts receivable includes $2,220,000 (2005
-- $2,220,000) relating to financing provided to one of the partnerships.
Management fees earned during the year ended June 30, 2006 totaled
$647,000 (2005 -- $383,000) and are included in management services
revenue.
46
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
21. CASH FLOW INFORMATION:
The changes in non-cash operating working capital balance consist of the
following:
2006 2005
--------- --------
Cash provided by (used in):
Amounts receivable........................................ $ (21,275) $ 9,181
Other assets.............................................. (101,940) (88,462)
Amounts payable........................................... 14,489 28,385
Deferred revenue and deposits............................. 64,933 107,720
--------- --------
$ (43,793) $ 56,824
--------- --------
Supplemental information:
Interest paid............................................. $ 80,873 $ 99,430
Income, franchise and withholding taxes paid.............. 77,071 13,669
Non-cash investing activities:
Notes received on sale of properties to partnerships...... -- 28,018
Bank and other indebtedness incurred on acquisition....... -- 20,680
22. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES:
The consolidated financial statements have been prepared in accordance with
Canadian GAAP. The measurement principles adopted in these consolidated
financial statements conform in all material respects to those generally
accepted in the United States and the rules and regulations promulgated by
the Securities and Exchange Commission ("SEC"), except as summarized below:
2006 2005
---------- ----------
Income from continuing operations in accordance with
Canadian GAAP............................................. $ 55,331 $ 24,067
Effects of differences in accounting for:
Depreciation and amortization (c)......................... (648) (1,489)
Stock-based compensation (e).............................. (2,477) --
Real estate revenue recognition (g)....................... (34,631) 28,513
Start-up costs (i)........................................ (2,716) (3,321)
Equity income (g(iv))..................................... 3,244 --
Tax effect of differences................................. 13,792 (8,533)
---------- ----------
Income from continuing operations in accordance with United
States GAAP............................................... 31,895 39,237
---------- ----------
Income from discontinued operations in accordance with
Canadian GAAP............................................. 59,879 8,748
Effects of differences in accounting for:
Depreciation and amortization (c)......................... (7,977) --
Gain on sale of Mammoth Mountain (h)...................... (16,086) --
Tax effect of differences................................. 8,181 --
---------- ----------
Income from discontinued operations in accordance with
United States GAAP........................................ 43,997 8,748
---------- ----------
Income before cumulative effect of change in accounting
policy.................................................... 75,892 47,985
Cumulative effect of change in accounting principle (j)..... (3,335) (201)
---------- ----------
Net income in accordance with United States GAAP............ $ 72,557 $ 47,784
---------- ----------
Opening retained earnings in accordance with United States
GAAP...................................................... 401,352 359,717
Share repurchase adjustment................................. (1,245) --
Common share dividends...................................... (10,114) (6,149)
---------- ----------
Closing retained earnings in accordance with United States
GAAP...................................................... $ 462,550 $ 401,352
========== ==========
Income from continuing operations per common share (in
dollars):
Basic..................................................... $ 0.66 $ 0.82
Diluted................................................... 0.65 0.81
Income before cumulative effect of change in accounting
policy
Basic..................................................... $ 1.56 $ 1.00
Diluted................................................... 1.54 1.00
47
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
2006 2005
---------- ----------
Net income per common share (in dollars):
Basic..................................................... $ 1.49 $ 1.00
Diluted................................................... 1.47 1.00
========== ==========
Weighted average number of common shares outstanding (in
thousands):
Basic..................................................... 48,686 47,814
Diluted................................................... 49,407 47,924
========== ==========
2006 2005
-------- --------
Comprehensive income:
Net income in accordance with United States GAAP.......... $ 72,557 $ 47,784
Other comprehensive income, net of tax (f)
Foreign currency translation adjustments (net of tax of
$14,729 (2005 -- $13,664))............................. 28,592 18,333
Minimum pension liability (net of tax of $(559)
(2005 -- $1,513))...................................... 2,794 (6,119)
Change in accounting policy (j)......................... (260) --
-------- --------
$103,683 $ 59,998
======== ========
2006 2005
---------- ----------
Total assets in accordance with Canadian GAAP............... $2,667,082 $2,679,801
Effects of differences in accounting for:
Shareholder loans (b)..................................... (2,987) (4,177)
Resort and travel operations assets (c)................... 112 675
Goodwill (c).............................................. 34,662 39,956
Change in accounting policy (j)........................... -- (3,351)
Revenue recognition (g(ii))............................... (8,676) --
Sale-leaseback (g(i))..................................... 14,448 13,935
Start-up costs (i)........................................ (7,872) (5,169)
Equity income (g(iv))..................................... 3,244 --
Future income taxes on differences........................ (2,027) (22,346)
---------- ----------
Total assets in accordance with United States GAAP.......... $2,697,986 $2,699,324
========== ==========
2006 2005
---------- ----------
Total liabilities in accordance with Canadian GAAP.......... $1,666,590 $1,833,283
Effects of differences in accounting for:
Minimum pension liability (f(ii))......................... 4,353 7,715
Change in accounting policy (j)........................... -- (6,946)
Revenue recognition (g)................................... 6,961 (20,800)
Gain on sale of Mammoth Mountain (h)...................... 16,086 --
---------- ----------
Total liabilities in accordance with United States GAAP..... $1,693,990 $1,813,252
========== ==========
2006 2005
---------- ----------
Capital stock in accordance with Canadian GAAP.............. $ 491,095 $ 469,162
Effects of differences in accounting for:
Extinguishment of options and warrants (a)................ 1,563 1,563
Shareholder loans (b)..................................... (2,987) (4,177)
Stock-based compensation (e).............................. 2,477 --
---------- ----------
Capital stock in accordance with United States GAAP......... 492,148 466,548
Closing retained earnings in accordance with United States
GAAP as restated.......................................... 462,550 401,352
Accumulated other comprehensive income (f).................. 49,298 18,172
---------- ----------
Shareholders' equity in accordance with United States
GAAP...................................................... $1,003,996 $ 886,072
========== ==========
48
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(a) Extinguishment of options and warrants:
Payments made in prior years to extinguish options and warrants could be
treated as capital items under Canadian GAAP. These payments would have
been treated as income items under United States GAAP. As a result, the
cumulative impact of payments made to extinguish options in prior years
impacts capital stock and retained earnings. No such payments were made
during the years ended June 30, 2006 and 2005.
(b) Shareholder loans:
For Canadian GAAP purposes, the Company accounts for loans provided to
senior employees for the purchase of shares as amounts receivable. Under
United States GAAP, these loans, totaling $2,987,000 and $4,177,000 as at
June 30, 2006 and 2005, respectively, would be deducted from
shareholders' equity.
(c) Income taxes:
As described in note 2(r), the Company follows the asset and liability
method of accounting for income taxes. This policy was adopted for
Canadian GAAP purposes on a retroactive basis without restatement
effective July 1, 1999. Prior to July 1, 1999, the Company had adopted
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"), for the financial statement amounts presented
under United States GAAP. SFAS 109 was effective from the Company's year
ended September 30, 1994. The transitional effect of adopting SFAS 109
prior to January 1, 1999 increases the carrying values of certain balance
sheet amounts at June 30, 2006 and 2005 as follows:
2006 2005
---------- ----------
Resort and travel operations assets......................... $ 112 $ 675
Goodwill.................................................... 34,662 39,956
(d) Joint ventures:
Under Canadian GAAP, joint ventures are required to be proportionately
consolidated regardless of the legal form of the entity. Under United
States GAAP, incorporated joint ventures are required to be accounted for
by the equity method. However, in accordance with the rules and
regulations of the SEC, the Company has elected not to reconcile for
joint ventures that are accounted for by the proportionate consolidation
method under Canadian GAAP (note 14). This does not result in a change to
net income or shareholders' equity compared with accounting by the equity
method.
(e) Stock compensation:
For United States GAAP purposes, effective July 1, 2005, the Company
adopted Statement of Financial Accounting Standards No. 123(R), "Share
Based Payment", ("FAS 123(R)") for its stock-based compensation awards.
FAS 123(R) replaced FAS No. 123, "Accounting for Stock-Based
Compensation" ("FAS 123") and superceded the ability under that standard
to apply the intrinsic value method under APB 25, "Accounting for Stock
Issued to Employees" ("APB 25") and not recognize stock-based
compensation for certain employee equity awards. FAS 123(R) requires
recognition by the fair value method of accounting for stock-based
compensation awards for all awards granted, modified, repurchased or
cancelled after the adoption date and for unvested portions of previously
issued and outstanding awards as at the adoption date.
Prior to July 1, 2005, for United States GAAP purposes the Company
applied the fair-value method under FAS 123 for grants made on or after
July 1, 2003 and the intrinsic value method under APB 25 for grants made
prior to that date. As during the year ended June 30, 2006 the Company
granted no stock options, the effect of the adoption of FAS 123(R) is
solely to require the recognition of stock based compensation expense for
the unvested portion of awards previously accounted for under APB 25 that
existed at July 1, 2005. For 2006, this amount is consistent with the pro
forma amounts disclosed for Canadian GAAP purposes in note 12(a)(ii). Pro
forma disclosure is required under United States GAAP for the the earned
portion of the fair value of grants made subsequent to December 15, 1995
but prior
49
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
to July 1, 2003 in years prior to the adoption of FAS 123(R). For the
year ended June 30, 2005, and using the fair value method, the Company's
net income under United States GAAP would have been reduced to the pro
forma amount indicated below:
2005
-------
Net income in accordance with United States GAAP:
As reported............................................... $47,784
Estimated fair value of option grants..................... (2,561)
-------
Pro forma................................................. $45,223
=======
Pro forma income per common share:
Basic..................................................... $ 0.95
Diluted................................................... 0.94
=======
(f) Other comprehensive income:
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130"), requires that a company classify
items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive
income separately from retained earnings and capital stock in the equity
section of the balance sheet.
(i) Foreign Currency Translation Adjustment:
The foreign currency translation adjustment presented in shareholders'
equity under Canadian GAAP, together with other changes attributable
to US GAAP reconciling items disclosed herein, would be considered in
the calculation of other comprehensive income and accumulated other
comprehensive income under United States GAAP.
(ii) Minimum Pension Liability:
Under United States GAAP, if the accumulated benefit obligation
exceeds the market value of plan assets, an additional minimum
liability is recognized to the extent that the liability recorded in
the balance sheet is less than the unfunded accumulated benefit
obligation. The portion of this additional minimum liability, up to
the unrecognized prior service cost, is recognized as an intangible
asset, with the remainder charged, net of income taxes, to
comprehensive income. Canadian GAAP has no such requirement to record
a minimum liability and does not have the concept of comprehensive
income.
(g) Real estate revenue recognition:
(i) For Canadian GAAP purposes, the Company recognizes profit arising
on the sale of a property, a portion of which is leased back by the
Company, to the extent the gain exceeds the net present value of
the minimum lease payments. The deferred gain is recognized over
the lease term. Under United States GAAP, where the Company has
continuing involvement in the property, the sale-leaseback
transaction is precluded from sale-leaseback accounting. As a
result, the profit on the transaction is not recognized but rather
the sales proceeds are treated as a liability and the property
continues to be shown as an asset of the Company until the
conditions for sales recognition are met.
(ii) Under United States GAAP revenue from certain property sales is
deferred due to specified aspects of the Company's continuing
involvement being deemed to exist and adjustments are made to the
timing of revenue recognized on sales to equity and cost-
accounted-for investments.
(iii) For Canadian GAAP purposes, the Company recognizes revenue from
the sale of properties when title is transferred to the purchaser
as described in note 2(q(ii)). Under United States GAAP as
prescribed by FAS 66, if certain conditions are met, revenue from
the sale of individual units in condominium projects is recognized
by the percentage-of-completion method.
(iv) For Canadian GAAP purposes, the Company accounts for certain of its
investments in which it holds a 15% interest on a cost basis. Under
United States GAAP, the equity method is used since the Company's
interest is not so minor that the Company has virtually no
influence over the investment's operating and financial policies.
(h) Discontinued operations revenue recognition:
For Canadian GAAP purposes, the Company recognized 100% of the gain on
sale of its majority interest in Mammoth Mountain Ski Area to a
cost-accounted-for investment. Under United States GAAP, the Company can
only recognize the part of the gain proportionate to the outside
interests in the buyer at the date of sale.
50
INTRAWEST CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2006 AND 2005
(Tabular amounts in thousands of United States dollars, unless otherwise
indicated)
(i) Start-up costs:
As described in note 2(f(i)), the Company capitalizes for Canadian GAAP
purposes certain costs incurred in the start-up period of specific
operations. For United States GAAP purposes, such costs would be expensed
as incurred.
(j) Recently announced accounting pronouncements:
(i) Accounting Changes and Error Corrections
In May 2005, FAS No. 154, "Accounting Changes and Error Corrections",
a replacement of APB 20, "Accounting Changes" and FAS No. 3 "Reporting
Accounting Changes in Interim Financial Statements", was issued. The
Company has adopted the guidance in FAS 154 effective July 1, 2005.
This Statement changes the requirements for the accounting for and
reporting a change in accounting principle and applies to all
voluntary changes in accounting principle. It also applies to changes
required by an accounting pronouncement in the instance that the
pronouncement does not include specific transition provisions. The
adoption of FAS 154 had no impact on the Company's 2006 United States
GAAP reported amounts.
As described in note 2(w), the Company adopted SOP 04-2 and FAS 152
effective July 1, 2005. The adoption of new accounting principles are
recorded retroactively under Canadian GAAP. However the transition
provisions under SOP 04-2 and FAS No. 152 do not allow the Company to
apply this change in accounting principle retroactively for United
States GAAP purposes.
As described in note 22(e), for purposes of United States GAAP the
Company has adopted FAS 123(R) in the year ended June 30, 2006.
(ii) Accounting For Uncertain Tax Positions
In July 2006, the FASB issued FASB Interpretation No. 48 on Accounting
for Uncertain Tax Positions -- an interpretation of FASB Statement No.
109, "Accounting for Income Taxes" ("FIN 48").
Under FIN 48, an entity should presume that a taxing authority will
examine a tax position when evaluating the position for recognition
and measurement; therefore, assessment of the probability of the risk
of examination is not appropriate. In applying the provisions of FIN
48, there will be distinct recognition and measurement evaluations.
The first step is to evaluate the tax position for recognition by
determining if the weight of available evidence indicates it is more
likely than not, based solely on the technical merits, that the
position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure
the appropriate amount of the benefit to recognize. The amount of
benefit to recognize will be measured as the maximum amount which is
more likely than not, to be realized. The tax position should be
derecognized when it is no longer more likely than not of being
sustained. On subsequent recognition and measurement the maximum
amount which is more likely than not to be recognized at each
reporting date will represent management's best estimate, given the
information available at the reporting date, even though the outcome
of the tax position is not absolute or final. Subsequent recognition,
derecognition, and measurement should be based on new information. A
liability for interest or penalties or both will be recognized as
deemed to be incurred based on the provisions of the tax law, that is,
the period for which the taxing authority will begin assessing the
interest or penalties or both. The amount of interest expense
recognized will be based on the difference between the amount
recognized in the financial statements and the benefit recognized in
the tax return. On transition, the change in net assets due to
applying the provisions of the final interpretation will be considered
as a change in accounting principle with the cumulative effect of the
change treated as an offsetting adjustment to the opening balance of
retained earnings in the period of transition.
FIN 48 will be effective as of the beginning of the first annual
period beginning after December 15, 2006 and will be adopted by the
Company for the year ended June 30, 2008. The Company is currently
assessing the impact of FIN 48 on its financial statements.
23. SUBSEQUENT EVENT
On August 11, 2006, the Company announced that it had entered into a
definitive agreement under which a company that owns funds managed by
Fortress Investment Group LLC will acquire all of the Company's outstanding
common shares at a price of $35.00 per share. The transaction will be
carried out by way of a statutory plan of arrangement and, accordingly, must
be approved by the applicable court and by 66 2/3 percent of the votes cast
by holders of the Company's shares at a special meeting of shareholders. The
Board of Directors has unanimously resolved to recommend to the shareholders
that they vote in favor of the transaction. The proposed transaction is
expected to close in October 2006, subject to receipt of shareholder and
court approvals.
51
CORPORATE INFORMATION
EXECUTIVE OFFICE STOCK EXCHANGE LISTINGS AND SYMBOLS
Suite 800, 200 Burrard Street New York Stock Exchange: IDR
Vancouver, BC V6C 3L6 Toronto Stock Exchange: ITW
T: 604.669.9777
F: 604.669.0605 SPECIAL MEETING
The Special Meeting of
SHAREHOLDER INFORMATION Securityholders will be held on
Ross J. Meacher, Tuesday, October 17, 2006
Corporate Secretary and at 10:00 a.m. in the
Chief Privacy Officer the Ballroom of
T: 604.669.9777 The Fairmont Waterfront Hotel,
900 Canada Place Way,
AUDITORS Vancouver, BC.
KPMG LLP
Vancouver, BC
TRANSFER AGENT AND REGISTRAR
CIBC Mellon Trust Company
at its principal offices in
Vancouver, Calgary, Toronto and Montreal
Vous pouvez obtenir la version francaise de ce rapport en ecrivant au
Secretaire, Corporation Intrawest, 200, rue Burrard, Bureau 800, Vancouver
(Colombie-Britannique) V6C 3L6.
CORPORATE GOVERNANCE
Intrawest Corporation's Board of Directors and management believe that good
corporate governance practices help to create and maintain shareholder value.
The Board of Directors and each of its committees have continued to refine
Intrawest's governance policies and practices in light of regulatory initiatives
in North America that have been adopted to improve corporate governance. The
Board will continue to review its corporate governance practices on an ongoing
basis in response to the evolving standards. The Company's corporate governance
does not differ significantly from that followed by U.S. domestic corporations
under the New York Stock Exchange Corporate Governance Standards.
DIRECTORS
JOE S. HOUSSIAN PAUL M. MANHEIM(1), (2) BERNARD A. ROY(3)
Chairman and Chairman and Senior Partner,
Chief Executive Officer, Managing Director, Ogilvy Renault
Intrawest Corporation HAL Investments Asia B.V.
KHALED C. SIFRI(2)
DAVID A. KING(1), (2) MARTI MORFITT(3) Managing Director --
President, President and Investment Banking,
David King Corporation Chief Executive Officer, SHUAA Capital PSC
CNS, Inc.
GORDON H. MACDOUGALL(1), (3) NICHOLAS C.H. VILLIERS
Partner, PAUL A. NOVELLY(2), (3) Consultant
Connor, Clark & Lunn Chairman and Chief Executive
Investment Management Officer, ALEX WASILOV
Partnership Apex Oil Company, Inc. President and
Chief Operating Officer,
Intrawest Corporation
---------------
(1) Audit Committee
(2) Corporate Governance and Nominating Committee
(3) Human Resources Committee
52
EXECUTIVE MANAGEMENT
CORPORATE
JOE S. HOUSSIAN ALEX WASILOV JOHN E. CURRIE
Chairman and President and Chief Financial Officer
Chief Executive Officer Chief Operating Officer
SALLY DENNIS
DAVID C. BLAIKLOCK DANIEL O. JARVIS General Counsel
Vice President and Chief Corporate
Corporate Controller Development Officer ROSS J. MEACHER
Corporate Secretary and
MICHAEL F. COYLE Chief Privacy Officer
Chief Strategy Officer
OPERATIONS
HUGH R. SMYTHE JAMES J. GIBBONS KEVIN R. SMITH
President, President, Senior Vice President,
Intrawest Mountain Resorts Intrawest Resort Club Group Finance, Resort Operations
DAVID BARRY MICHAEL M. HANNAN ANDREW VOYSEY
Chief Operating Officer, President, Executive Vice President,
Intrawest Mountain Resorts, Abercrombie & Kent Acquisitions and Joint Ventures
US/Eastern Canada/
Helicopter Operations CATHARINE JOHNSTON DAVID YELLOWLEES
Executive Vice President, Executive Vice President,
DAVID B. BROWNLIE Business and Organizational Marketing and Sales
Chief Operating Officer, Excellence
Intrawest Mountain Resorts,
Whistler Blackcomb/ STEPHEN K. RICE
Panorama/ Executive Vice President and
Operational Excellence Chief Operating Officer,
Eastern Region
PLACEMAKING
DREW STOTESBURY LORNE D. BASSEL STEVE LAVER
President, Executive Vice President, President,
Intrawest Placemaking Atlantic Storied Places
GREG L. ASHLEY DAVID S. GREENFIELD MICHAEL R. WATERS
President, Executive Vice President, Chief Financial Officer,
Playground Pacific Intrawest Placemaking
53
PRINCIPAL OFFICES
VANCOUVER
(EXECUTIVE OFFICE)
Intrawest Corporation
Suite 800, 200 Burrard
Street
Vancouver, BC V6C 3L6
T: 604.669.9777
F: 604.669.0605
www.intrawest.com
ABERCROMBIE & KENT
Dorland House
20 Lower Regent Street
London, England SW1Y 4PH
T: 44.207.190.7710
F: 44.207.190.7731
Reservations: 1.800.554.7016
www.abercrombiekent.com
BLUE MOUNTAIN
R.R. #3
Collingwood, ON L9Y 3Z2
T: 705.445.0231
F: 705.444.1751
Reservations: 1.877.445.0231
www.bluemountain.ca
CANADIAN MOUNTAIN
HOLIDAYS
217 Bear Street
PO Box 1660
Banff, AB T1L 1J6
T: 403.762.7100
F: 403.762.5879
Reservations: 1.800.661.0252
www.canadianmountainholidays.com
CLUB INTRAWEST
The Landing
Suite 326, 375 Water Street
Vancouver, BC V6B 5C6
T: 604.689.8816
F: 604.682.7842
www.clubintrawest.com
COLORADO PLACEMAKING
1050 17th Street, Suite 1000
Denver, CO 80265
T: 303.623.3392
F: 303.893.1487
www.copperliving.com
www.skiwinterpark.com
COPPER MOUNTAIN
209 Ten Mile Circle
P.O. Box 3001
Copper Mountain, CO 80443
T: 970.968.2882
F: 970.968.3155
Reservations: 1.888.263.5302
www.coppercolorado.com
EUROPE PLACEMAKING
Rue du Port-Franc 17
1003 Lausanne -- Suisse
T: 41 21 310 27 27
F: 41 21 310 27 28
www.intrawest-europe.com
INTRAWEST CENTRAL
RESERVATIONS
(NORTH VANCOUVER)
Suite 100, 788 Harbourside
Dr.
North Vancouver, BC V7P 3R7
T: 604.904.9300
F: 604.904.7135
www.intrawest.com
INTRAWEST CENTRAL
RESERVATIONS (MONTREAL)
Suite 1300,
740 Notre-Dame Ouest
Montreal, QC H3C 3X6
T: 514.876.4541
F: 514.876.1404
www.intrawest.com
INTRAWEST GOLF
14646 North Kierland
Boulevard
Suite 210
Scottsdale, AZ 85254
T: 480.874.2200
F: 480.874.2610
www.intrawestgolf.com
www.ravengolf.com
INTRAWEST
MARKETING AND SALES
The Landing
Suite 710, 375 Water Street
Vancouver, BC V6B 5C6
T: 604-639-4330
F: 604-693-4399
www.intrawest.com
INTRAWEST PLACEMAKING
Suite 1400,
999 West Hastings Street
Vancouver, BC V6C 2W2
T: 604.697.6355
F: 604.697.6385
www.intrawest.com
INTRAWEST SHARED
SERVICES
221 Corporate Circle, Suite
Q
Golden, CO 80401-5637
T: 303.454.4500
F: 303.454.4586
MOUNTAIN CREEK
200 Route 94
Vernon, NJ 07462-0391
T: 973.827.2000
F: 973.864.8208
Reservations: 973.827.2000
www.mountaincreek.com
NORTHEAST PLACEMAKING
1407 de la Montagne
Montreal, QC H3G 1Z3
T: 514.798.3000
F: 514.788.6304
www.mountaincreekrealty.com
www.snowshoemountainhomes.com
www.strattonrealestate.com
www.livetremblant.ca
NORTHWEST PLACEMAKING
Suite 900,
999 West Hastings Street
Vancouver, BC V6C 2W2
T: 604.697.6300
F: 604.697.6301
www.villageatblue.com
www.honuakai.com
www.panoramamountainhomes.com
www.whistlerblackcomb.com
PANORAMA MOUNTAIN
VILLAGE
Bag Service 7000,
2030 Summit Drive
Panorama, BC V0A 1T0
T: 250.342.6941
F: 250.341.3019
Reservations: 1.800.663.2929
www.panoramaresort.com
PLAYGROUND
Suite 800, 570 Granville
Street
Vancouver, BC V6C 3P1
T: 604.675.7529
F: 604.675.7568
www.playground.com
SANDESTIN GOLF AND
BEACH RESORT
9300 Emerald Coast
Parkway West
Destin, FL 32550-7268
T: 850.267.8000
F: 850.267.8222
Reservations: 1.800.622.1922
www.sandestin.com
SNOWSHOE MOUNTAIN
10 Snowshoe Drive
Snowshoe, WV 26209
T: 304.572.1000
F: 304.572.5616
Reservations: 1.877.441.4386
www.snowshoemtn.com
SOUTHEAST PLACEMAKING
301 East Pine Street, Suite
400
Orlando, FL 32801
T: 407.472.6500
F: 407.472.6499
www.mysandestinhome.com
www.villageofimagine.com
SOUTHWEST PLACEMAKING
6900 South McCarran,
Suite 3000
Reno, NV 89509
T: 775.332.1200
F: 775.332.1199
www.mammothmountain.com
www.montelagovillage.com
www.thevillageatsquaw.com
STRATTON MOUNTAIN
R.R. #1, Box 145
Stratton Mountain, VT
05155-9406
T: 802.297.2200
F: 802.297.4395
Reservations: 1.800.STRATTON
www.stratton.com
TREMBLANT
1000, chemin des Voyageurs
Mont-Tremblant, QC
J8E 1T1
T: 819.681.2000
F: 819.681.5999
Reservations: 1.800.461.8711
www.tremblant.ca
WHISTLER BLACKCOMB
4545 Blackcomb Way
Whistler, BC V0N 1B4
T: 604.932.3141
F: 604.938.7527
Reservations: 1.888.284.9999
www.whistlerblackcomb.com
WINTER PARK RESORT
P.O. Box 36
85 Parsenn Road
Winter Park, CO 80482
T: 970.726.5514
F: 303.892.5823
Reservations: 1.800.979.0332
www.winterparkresort.com
54
INTRAWEST CORPORATION
Suite 800, 200 Burrard Street
Vancouver, BC V6C 3L6
T 604.669.9777
F 604.669.0605
WWW.INTRAWEST.COM
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