By: Patrick Markey (Reuters)
(01-06-2001)

NEW YORK, May 30 (Reuters) - American Skiing Co. (NYSE:SKI - news), a leading U.S. alpine ski and golf resort operator, said on Wednesday it had cut its work force and plans to sell one of its resorts as part of a larger restructuring plan aimed at bolstering its long-term financial performance.
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Newry, Maine-based American Skiing said it had eliminated 70 full-time year-round positions and would convert an additional 160 year-round jobs to seasonal status. The changes will affect about 14 percent of its year-round staff, which totaled 1,600 before the job cuts.

The company also said it plans to sell its Steamboat resort in Steamboat Springs, Colorado, by the end of this year, but it provided no estimated sale figure.

Shares of American Skiing fell almost 5 percent, or 6 cents, after the announcement to trade at $1.20 during early afternoon activity on the New York Stock Exchange.

American Skiing expects to take charges related to the reorganization and also the terminated merger with MeriStar Hotels & Resorts (NYSE:MMH - news) totaling $7.6 million during its fiscal third and fourth quarters.

During a conference call, American Skiing executives said they anticipate amendments to its credit facilities to reflect the restructuring and resort sale and expect annual cost savings of about $5 million from its efforts.

American Skiing, which operates nine resorts from Maine to California, had been looking to set up a restructuring for at least a year. In March, the $177 million stock deal proposed with MeriStar fell through after the two companies concluded that slowing economic conditions were not favorable to the merger.

ANALYSTS' REACTIONS MIXED

Industry analysts were cheered by a restructure plan that they said had been a long time surfacing, but expressed unease at the lack of details. Some commented that American Skiing may need deeper changes to tackle its financial situation.

``Today's news is a step in the right direction, but stopping at Steamboat is not, in our view, likely to solve all their problems,'' said Credit Lyonnais Securities senior lodging analyst Bryan Maher.

Executives said the company will continue to focus on strengthening its core ski village resorts by providing guests with not just skiing, but more amenities in retail, hotels and dining.

That partly shifts its business toward the lucrative market for destination skiers who are more likely to travel and spend more time staying at the resorts than local day skiers.

``As part of the strategic plan, we will turn our focus to enhancing the broader resort village experience through the development of core amenities to improve guest service and strengthen the resort destination experience,'' said American Skiing Chief Executive Officer B.J. Fair.

American Skiing also said it expects third-quarter and full-year 2001 earnings before restructuring charges to be lower than expected due to weak revenues in its real estate business during the period and the charges for its business plan and merger-related costs.

It forecast total third-quarter revenues of about $179 million compared with $223.1 million a year earlier. Resort revenues for the quarter are expected to be about $164 million compared with $149.9 million a year earlier. But it expects real estate revenues to fall to about $15 million compared with $73.2 million. For fiscal 2001, American Skiing expects total revenue of between $426 million and $433 million.

Wall Street analysts polled by research firm Thomson Financial/First Call expected it to post a 2001 fiscal year loss of $1.56 per share. American Skiing will report its fiscal third-quarter results in early June when analysts expect earnings of 53 cents per share, according to First Call.

Third-quarter nonrecurring charges related to severance payments, certain asset sale losses, and the MeriStar deal will total about $6.5 million, the company said. A further $1.1 million in restructuring charges is expected in the fourth quarter.