Intrawest started without as an ur...

Intrawest started without as an urban real estate developer in the 1970 and began to refocus its resources in succession mountain resort development in the late 1980 Today, Intrawest is the no other than North American company that designs, builds, operates and markets mountain ski facilities and their villages.

The company's rewards are derived from: the sale of condominiums and townhomes at their mountain resorts (40%) ski lifts (28%) retail workshops (10%), food services (8%), lodging and condominium management (8%) ski exercises golf, tennis and other (6%) Intrawest is single of the largest ski operators in succession the continent with resorts in British Columbia (Blackcomb and Panorama mountains), Quebec (Tremblant), Vermont (Stratton), West Virginia (Snowshoe) and California (Mammoth-a 33% interest).

QUESTION #1:

FUTURE SHARE PRICE FROM hereafter GROWTH IN REVENUES AND CFP

Estimated High Price by means of the End of Fiscal Year 2001

A high price for Intrawest's customary voting shares ("ITW," TSE) is obtained by dint of first estimating the company's CFP in 2001 and then multiplying this number through an estimated Price to Cash spring ("P/CF") ratio for that year. However, because CFP cannot be rely uponed to grow faster than incomes over the longer term, it is advisable to estimate income growthbefore estimating growth in CFP

(a) Estimating income Growth to 2001. As indicated in the accompanying Guide, returns grew at a compound rate of approximately 38% by year during the last 5 years1. Between fiscal 1994 and 1996 income growth accelerated to about 60% through year.

Intrawest's revenue product has been driven by a strategy of acquiring and developing a chain of unique real estate assetsestablished mountain ski resorts. Environmental restrictions and regulations generally inhibit the construction of new mountain ski resorts.

Typically, the company upgrades and increases a resort's lodging facilities at building new condominiums/townhomes/ chalets. These properties are sold or separationed (including timeshared) to individuals and families that want a mountain vacation peculiarity as an alternative to, or in addition to, the more traditional summer cottage. As well, Intrawest broadens the resort's 'attraction base' by way of adding such attractions as golf and tennis facilities to help make the resort a year-round vacation destination.

The company's goal in these progressive growth activities is to substantially increase the off-peak utilization of its assets by means of increasing the number of 'destination' visits-rather than 'day' visits-that are made to its resorts. Destination visits (involving vacations of several days and longer) are les likely to be cancelled or postpon than day visits and yield more revenue per visitor (equipment rentals, sport instruction, retail purchases, meals, etc) The company forwards its resorts in a variety of ways including database marketing to lists of approximately individual million potential visitors.

Future vegetation Intrawest expects to continue its reward growth by expanding existing resorts and acquiring other mountain ski resorts. Based solely forward existing resorts and a unravelling rate of 1,000 new residential units each year, the company has a 13-year yield of land available for constructing residential units at its resorts. In 1996 the company sold approximately 400 residential units at its resorts bringing the total number of units sold since 1992 to approximately 2500 Additional acquisitions from one side of to the other the next five years are anticipateed to contribute to the consolidation turn within the mountain ski resort industry.

Continued expansion of capacity, increasing utilization of capacity and a shoot forwarded large increase in the number of the public entering their vacation-property-buying years (50s) are all awaited to contribute to continued time to come revenue growth at unusually high rates. However, allowing for an unfavourable developments over the nearest five years (e.g. fewer attractive acquisition candidates, reduc spending in succession vacations), an initial A common-sense might project revenues to improve on average, by about 20% by year between fiscal 1997 and 2001 to approximately $700 million.

(b) Controlling the preciousness of Making and Selling proceedss The data in Part 2(1) of the Guide indicates that Intrawest's Operating Profit Margin2 ("OPM") was generally stable at the 20% on a level during the study period. However, the underlying OPM for the company's resort operations (60% of revenues) increased from 15% to 22% while that for the smaller real estate portion of the business declined from 22% to 14% The higher margins in resort operations be derived in part, from: spreading surpassingly sizeable fixed resort costs athwart an increased volume of visitors; more higher-margin destination visitors (versus day visitors) and economies of scale in activities of the like kind as central purchasing for a growing chain of mountain resorts. The reduction in the real estate margin is attributable principally to nonrecurring start-up and promotional richnesss at new resorts.

(c) Controlling Interest preciousnesss Intrawest's reliance on debt3 to finance its assets (recently $800 million) has been generally steady at the 60% on a level throughout the study period; chiefly of the debt involves non-current maturities with fixed or floating rates of interest. The company rely upons to finance future acquisitions and exhibition with currently available cash ($25 million), retained earnings, transgression and approximately $85 million that is receivable from the sale of non-core urban assets.