Big Mountain's operating loss linked to Northwest dry winter
Winter Sports Inc.'s annual report reflects a tough year financially for the ski and summer resort on Big Mountain.
Skier visits for the 2004 season were down 17.5 percent, inching over the 213,000 skier-visit mark, as Northwest Montana and much of the Pacific Northwest charted one of the driest and warmest winters on record.
It was the lowest number of visitors to Big Mountain during the past five years. According to the annual report, 2001 visits exceeded 300,000.
"Big Mountain's financial results were anything but stellar this year," Winter Sports Chief Executive Officer Fred Jones wrote in his annual letter to shareholders.
Jones lauded a team of employees who "did an outstanding job providing very good skiing and riding conditions and excellent service for our guests during most of the season."
The resort closed two weeks early this year because of a lack of snow.
Although the staff worked to contain costs, the ski business is a relatively high fixed-cost business, Jones said, which makes it difficult to trim back enough to make up for decreased revenue when skier numbers are down.
The resort had an operating loss of about $1.5 million for fiscal 2005, compared to a loss of $1.9 million the previous year. The net after-tax loss was $838,000 for 2005, which compares to net income of $742,000 a year ago. In 2002, the resort had net income of $1.6 million.
Jones said that Winter Sports changed the end of its fiscal year from May 31 to April 30 this year to better coincide with the ski season. As a result, the 2005 report reflects only 11 months.
Hines, Winter Sports' development partner, bowed out of Big Mountain a year ago, and the board agreed to form Big Mountain Development Corp., a wholly owned subsidiary of Winter Sports, to take the lead in developing the resort.
"We have refined the village master plan, incorporating buildings of a smaller scale and height than what was envisioned in the plan developed by Hines," Jones wrote in the annual report.
The $12.5 million raised through a private placement of common stock will be used to pay down Winter Sports' line of credit with Bank of America. The resort has an $8.8-million loan with Bank of America, along with a $1.3-million loan from Whitefish Credit Union. After subtracting current maturities of $639,683, the resort's long-term debt is $9.5 million.
A bright spot was an increase in summer lift riders. Just over 46,000 guests rode the Glacier Chaser to the summit during the past fiscal year, an increase of about 2,000 guests from a year ago.
Summit Fridays, offering free rides on the chair lift to the Summit House and live music at the restaurant, have been very popular this summer and have helped increase business at the resort.
Winter Sports has a number of improvement projects under way or planned. A new day lodge will be constructed next summer at the Outpost Lodge, and beginner skiing terrain and lifts will be expanded in that area.
The resort eventually will benefit from road reconstruction planned by the state Department of Transportation. The road will be rebuilt from the substation at the lower portion of the road to the Outpost road. Right-of-way is being cleared this summer; utility relocation will be done next year, with road construction planned for summer 2007.
Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com.