Great Wolf 4th quarter takes dive

Friday, 24 February 2006

By BRIAN HORN
brianhorn@sanduskyregister.com

PERKINS TWP. - Great Wolf Lodge posted a net loss of $38 million for its fourth quarter, but adjusted net income only shows an estimated $2 million loss, according to the company's treasurer.

The adjusted numbers are the result of a $43 million write-off of goodwill in connection with the sale of 70 percent interests of the company's Wisconsin Dells and Sandusky Great Wolf Lodge resorts to the CNL Income properties joint venture.

"There's a lot of accounting adjustments that don't relate to the performance of the properties. They relate more to the transaction that occurred with a buyer of two of the hotels," treasurer Alex Lombardo said.

Once the final phase of the sale is complete in the first quarter of 2006, the company will have received about $98 million in cash from the transaction, according to the company's statement.

For 2005, the adjusted net income for Great Wolf showed a $3.4 million gain, while the non-adjusted net income posted a loss of about $36 million.

The lodge at 4600 Milan Road saw its first competition in 2005 with the opening of Kalahari Waterpark and Resort and Cedar Point's Castaway Bay.

Lombardo said they do not have specific numbers for Sandusky, but the Midwest overall has been hurt due to the automotive industry problems.

"Our Michigan and Ohio properties continue to be affected by the regional economic issues in the Midwest," said John Emery, the company's Chief Executive Officer. Emery added in the short term the Michigan and Ohio properties will operate below historic levels, but they should rebound to stronger levels down the line.

Lombardo said the company does take a different approach in how they operate lodges in areas where there is competition.

"The operators definitely have different methods in markets where we don't have competition versus where we do have competition," he said. "There's different marketing strategies and different operating strategies."

Lombardo said the fourth quarter is typically a lower performance quarter, adding the company typically does better in the first and third quarters.

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