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Unaudited Pro Forma Condensed Consolidated Financial Information

The following unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of Intrawest Resorts Holdings, Inc. (the “Company”). The unaudited pro forma condensed consolidated financial information has been prepared to illustrate the effect of the sale (the “IRCG Transaction”) by the Company and its wholly owned subsidiaries, Intrawest U.S. Holdings, Inc. and Intrawest ULC, of their respective interests in Intrawest Resorts Club Group (“IRCG”), comprising IRCG’s business of developing, selling interests in, and managing (a) Club Intrawest, a points-based timeshare vacation club at certain locations in the United States, Canada and Mexico, (b) a fractional timeshare program with properties located in Zihuatanejo, Mexico, and (c) an internal exchange program for members of the vacation club operated through Extraordinary Escapes Corporation, pursuant to a Purchase Agreement dated as of November 24, 2015, by and among the Company and Intrawest U.S. Holdings, Inc. and Intrawest ULC, as sellers, and Diamond Resorts Corporation and Diamond Resorts International, Inc. (collectively, “Diamond”), as purchasers. For a more complete description of the IRCG Transaction please see Note 1 of the accompanying unaudited pro forma condensed consolidated financial information.
 
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 has been prepared by including the unaudited historical condensed consolidated balance sheet of the Company as of December 31, 2015, adjusted to reflect the pro forma effect as if the IRCG Transaction had been consummated on that date. The interim unaudited pro forma condensed consolidated statement of operations for the six months ended December 31, 2015 and the unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2015 have been prepared by including the Company’s historical condensed consolidated statements of operations, adjusted to reflect the pro forma effect as if the IRCG Transaction had been consummated on July 1, 2014.
 
The historical consolidated financial statements referred to above for the Company were included in its Quarterly Report on Form 10-Q for the three months ended December 31, 2015 (unaudited) to which this Unaudited Pro Forma Condensed Consolidated Financial Information is filed as and its Annual Report on Form 10-K for the year ended June 30, 2015, each as filed with the Securities and Exchange Commission on September 9, 2015. The accompanying unaudited pro forma condensed consolidated financial information and the historical consolidated financial information presented herein should be read in conjunction with the historical consolidated financial statements and notes thereto of the Company.
 
The unaudited pro forma condensed consolidated balance sheet and statements of operations include pro forma adjustments which reflect transactions and events that (a) are directly attributable to the IRCG Transaction, (b) are factually supportable, and (c) with respect to the statements of operations, have a continuing impact on consolidated results of operations. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial information.
 
The unaudited pro forma condensed consolidated financial information was prepared for information purposes only and is not necessarily indicative of the financial position or results of operations that would have occurred if the IRCG Transaction had been completed on the dates indicated, nor is it indicative of the future financial position or results of operations of the Company.  Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed consolidated financial information. The accounting for the IRCG Transaction is dependent upon final balances related to the assets and liabilities at the close date that have yet to progress to a stage where there is sufficient information for a definitive measurement. Due to the fact that the unaudited pro forma condensed consolidated financial information has been prepared based upon preliminary estimates, and account balances other than those on the actual IRCG Transaction date, the final amounts recorded for the IRCG Transaction may differ materially from the pro forma condensed consolidated financial information presented. The unaudited pro forma condensed consolidated financial information does not reflect future events that may occur after the IRCG Transaction, including potential restructuring and related general and administrative cost savings.



INTRAWEST RESORTS HOLDINGS, INC.
Pro Forma Condensed Consolidated Balance Sheet
As of December 31, 2015
(In thousands, except per share data)
(Unaudited)
 
Historical
 
Pro Forma Adjustments
 
 
 
Pro Forma
Assets
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
Cash and cash equivalents
$
94,973

 
$
78,242

 
A
 
$
173,215

Restricted cash
14,223

 
(218
)
 
B
 
14,005

Receivables, net
37,895

 
(5,130
)
 
B
 
32,765

Other current assets
70,857

 
(17,184
)
 
B
 
53,673

Total current assets
217,948

 
55,710

 
 
 
273,658

Property, plant and equipment, net
514,175

 
(1,901
)
 
B
 
512,274

Real estate held for development
139,055

 
(2,999
)
 
B
 
136,056

Intangible assets, net
51,162

 
—

 
 
 
51,162

Goodwill
105,298

 
—

 
 
 
105,298

Other long-term assets, net
47,761

 
(20,731
)
 
B
 
27,030

Total assets
$
1,075,399

 
$
30,079

 
 
 
$
1,105,478

Liabilities and Equity
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
Accounts payable and accrued liabilities
$
84,093

 
$
(3,749
)
 
B
 
$
80,344

Deferred revenue and deposits
140,746

 
(4,820
)
 
B
 
135,926

Capital lease obligations due within one year
21,192

 
—

 
 
 
21,192

Long-term debt due within one year
9,655

 
—

 
 
 
9,655

Total current liabilities
255,686

 
(8,569
)
 
 
 
247,117

Long-term capital lease obligations
17,979

 
—

 
 
 
17,979

Long-term debt
562,590

 
—

 
 
 
562,590

Other long-term liabilities
63,468

 
—

 
 
 
63,468

Total liabilities
899,723

 
(8,569
)
 
 
 
891,154

Stockholders' equity:
 
 
 
 
 
 
 
Preferred stock, $0.01 par value; 300,000 shares authorized; 0 issued and outstanding at each of December 31, 2015 and June 30, 2015
—

 
—

 
 
 
—

Common stock, $0.01 par value; 2,000,000 shares authorized; 45,230 shares issued and outstanding at each of December 31, 2015 and June 30, 2015
452

 
—

 
 
 
 
Additional paid-in capital
2,899,090

 
—

 
 
 
 
Accumulated deficit
(2,841,295
)
 
38,648

 
C
 
(2,802,647
)
Accumulated other comprehensive income
115,223

 
—

 
 
 
115,223

Total Intrawest Resorts Holdings, Inc. stockholders' equity
173,470

 
38,648

 
 
 
212,118

Noncontrolling interest
2,206

 
—

 
 
 
2,206

Total stockholders' equity
175,676

 
38,648

 
 
 
214,324

Total liabilities and stockholders' equity
$
1,075,399

 
$
30,079

 
 
 
$
1,105,478




INTRAWEST RESORTS HOLDINGS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the year ended June 30, 2015
(In thousands, except per share data)
(Unaudited)
 
Historical
 
Pro Forma Adjustments
 
 
 
Pro Forma
Revenue
$
587,589

 
$
(27,104
)
 
D
 
$
560,485

Operating expenses
492,917

 
(23,903
)
 
D
 
469,014

Depreciation and amortization
59,076

 
(370
)
 
D
 
58,706

(Gain) on disposal of assets
(2,280
)
 
—

 
 
 
(2,280
)
Loss on remeasurement of equity method investment
1,454

 
—

 
 
 
1,454

Loss from operations
36,422

 
(2,831
)
 
 
 
33,591

Interest expense, net
(39,706
)
 
(3,911
)
 
D
 
(43,617
)
Loss from equity method investments
(3,810
)
 
—

 
 
 
(3,810
)
Loss on extinguishment of debt
(676
)
 
—

 
 
 
(676
)
Other income (expense), net
(1,231
)
 
59

 
D
 
(1,172
)
Loss before income taxes
(9,001
)
 
(6,683
)
 
 
 
(15,684
)
Income tax expense (benefit)
(3,902
)
 
(80
)
 
D
 
(3,982
)
Net loss
(5,099
)
 
(6,603
)
 
 
 
(11,702
)
Income attributable to noncontrolling interest
1,821

 
—

 
 
 
1,821

Net loss attributable to Intrawest Resorts Holdings, Inc.
$
(6,920
)
 
$
(6,603
)
 
 
 
$
(13,523
)
Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic and diluted
45,099

 
45,099

 
 
 
45,099

Net loss attributable to Intrawest Resorts Holdings, Inc. per share:
 
 
 
 
 
 
 
Basic and diluted
$
(0.15
)
 
$
(0.15
)
 
 
 
$
(0.30
)




INTRAWEST RESORTS HOLDINGS, INC.
Pro Forma Condensed Consolidated Statement of Operations
For the six months ended December 31, 2015
(In thousands, except per share data)
(Unaudited)
 
Historical
 
Pro Forma Adjustments
 
 
 
Pro Forma
Revenue
$
190,155

 
$
(8,502
)
 
D
 
$
181,653

Operating expenses
220,322

 
(8,587
)
 
D
 
211,735

Depreciation and amortization
29,538

 
(190
)
 
D
 
29,348

(Gain) on disposal of assets
(2,327
)
 
—

 
 
 
(2,327
)
Loss from operations
(57,378
)
 
274

 
 
 
(57,104
)
Interest expense, net
(18,618
)
 
(1,678
)
 
D
 
(20,296
)
Earnings (loss) from equity method investments
(1,382
)
 
—

 
 
 
(1,382
)
Other income (expense), net
5,210

 
1,153

 
E
 
6,363

Loss before income taxes
(72,168
)
 
(250
)
 
 
 
(72,418
)
Income tax expense (benefit)
1,268

 
(43
)
 
D
 
1,225

Net loss
(73,436
)
 
(207
)
 
 
 
(73,643
)
(Loss) income attributable to noncontrolling interest
912

 
—

 
 
 
912

Net loss attributable to Intrawest Resorts Holdings, Inc.
$
(74,348
)
 
$
(207
)
 
 
 
$
(74,555
)
Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
Basic and diluted
45,230

 
45,230

 
 
 
45,230

Net loss attributable to Intrawest Resorts Holdings, Inc. per share:
 
 
 
 
 
 
 
Basic and diluted
$
(1.64
)
 
$
(0.01
)
 
 
 
$
(1.65
)




INTRAWEST RESORTS HOLDINGS, INC.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information
(In thousands, except per share data)

1.
Description of Transaction

On November 24, 2015, Intrawest Resorts Holdings, Inc. (the “Company”), through its wholly-owned indirect subsidiaries, Intrawest U.S. Holdings, Inc. and Intrawest ULC, entered into a definitive agreement (the “Purchase Agreement”) to sell Intrawest Resort Club Group (“IRCG”), its vacation club business, to Diamond Resorts Corporation (the “Purchaser”) and Diamond Resorts International, Inc. (together with the Purchaser, “Diamond”) for a purchase price of $80.8 million, which includes estimated purchase price adjustments relating to net working capital (the “IRCG Transaction”).  IRCG is engaged in the business of developing, selling interests in, and managing (a) Club Intrawest, a points-based timeshare vacation club at certain locations in the United States, Canada and Mexico, (b) a fractional timeshare program with properties located in Zihuatanejo, Mexico, and (c) an internal exchange program for members of the vacation club operated through Extraordinary Escapes Corporation.


The purchase price consisted of cash consideration and the assumption of certain liabilities, including certain lease obligations and certain other continuing contract obligations. The Purchase Agreement contains customary representations, warranties, covenants and indemnities of the parties.

Upon closing of the IRCG Transaction on January 29, 2016, Diamond acquired substantially all of the assets used in the operation of the Business, including, but not limited to, certain management contracts, accounts receivable, notes and other amounts receivable, certain real property, the resort points available for sale, and all of the equity interests in certain indirect subsidiaries of the Company.

2.
Basis of Presentation

The unaudited pro forma condensed consolidated balance sheet and statements of operations are based upon the historical consolidated financial statements of the Company, which are included in its Annual Report on Form 10-K for the fiscal year ended June 30, 2015, and its Quarterly Report on Form 10-Q for the three months ended December 31, 2015, each as filed with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2015 has been prepared by including the unaudited historical condensed consolidated balance sheet of the Company as of December 31, 2015, adjusted to reflect the pro forma effect as if the IRCG Transaction had been consummated on that date. The interim unaudited pro forma condensed consolidated statement of operations for the six months ended December 31, 2015 and the unaudited pro forma condensed consolidated statement of operations for the year ended June 30, 2015 have been prepared by including the Company’s historical condensed consolidated statements of operations, adjusted to reflect the pro forma effect as if the IRCG Transaction had been consummated on July 1, 2014.

3.
Pro Forma Adjustments

The pro forma adjustments reflect transactions and events that (a) are directly attributable to the IRCG Transaction, (b) are factually supportable, and (c) with respect to the statements of operations, have a continuing impact on consolidated results of operations. The pro forma adjustments are based on available information and certain assumptions the Company believes are reasonable.
 
The following pro forma adjustments are included in the unaudited pro forma condensed consolidated balance sheet and/or the unaudited pro forma condensed consolidated statements of operations:

A
Reflects cash proceeds of $80.8 million ($85.0 million sale price less purchase price adjustments of $4.2 million relating to net working capital), further reduced by transaction expenses of $2.6 million.
 
B
Reflects the elimination of assets and liabilities included in the IRCG Transaction.

C
Reflects the effect on accumulated deficit related to the estimated gain on sale.
 
D
Reflects the elimination of IRCG historical revenues and expenses.

E
Reflects the elimination of IRCG historical expenses, as well as IRCG Transaction-related costs of $1.1 million which have been incurred by the Company during the six months ended December 31, 2015 and have been removed



from the interim unaudited pro forma condensed consolidated statement of operations as they reflect non-recurring charges directly related to the IRCG Transaction.

4.
Gain on Sale

The gain on the IRCG Transaction, as if the transaction had been completed on December 31, 2015, is estimated at $38.6 million. The gain on sale is not considered in the pro forma condensed consolidated statements of operations as it is a nonrecurring credit. The actual amount of the gain will be based on the balances as of the closing date and may differ materially from the pro forma gain amount.