VAIL RESORTS INC - Annual Report: 2008 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended July 31, 2008
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the
transition period from to
Commission
File Number: 001-09614
Vail
Resorts, Inc.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
|
51-0291762
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(I.R.S.
Employer Identification No.)
|
|
390
Interlocken Crescent, Suite 1000
Broomfield,
Colorado
|
80021
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
(303)
404-1800
|
||||
(Registrant’s
Telephone Number, Including Area Code)
|
||||
Securities
registered pursuant to Section 12(b) of the Act:
|
||||
Title
of each class:
|
Name
of each exchange on which registered:
|
|||
Common
Stock, $0.01 par value
|
New
York Stock Exchange
|
|||
Securities
registered pursuant to Section 12(g) of the Act:
|
||||
None.
|
||||
(Title
of Class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. x Yes No
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes x No
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
x Yes No
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer x Accelerated
filer ¨
Non-accelerated
filer ¨ (Do not
check if a smaller reporting company) Smaller reporting
company ¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes x No
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the Registrant, based on the closing price of $47.12 per share
as reported on the New York Stock Exchange Composite Tape on January 31, 2008
(the last business day of the Registrant's most recently completed second
quarter) was $1,465,211,620.
As of
September 22, 2008, 36,921,791 shares of Common Stock were
outstanding.
DOCUMENTS
INCORPORATED BY REFERENCE
The Proxy
Statement for the Annual Meeting of Shareholders is incorporated by reference
herein into Part III, Items 10 through 14.
Table
of Contents
|
||
PART
I
|
||
Item
1.
|
3
|
|
Item
1A.
|
17
|
|
Item
1B.
|
25
|
|
Item
2.
|
25
|
|
Item
3.
|
27
|
|
Item
4.
|
27
|
|
PART
II
|
||
Item
5.
|
||
28
|
||
Item
6.
|
30
|
|
Item
7.
|
32
|
|
Item
7A.
|
49
|
|
Item
8.
|
F-1
|
|
Item
9.
|
50
|
|
Item
9A.
|
50
|
|
Item
9B.
|
50
|
|
Item
10.
|
51
|
|
Item
11.
|
51
|
|
Item
12.
|
||
51
|
||
Item
13.
|
51
|
|
Item
14.
|
51
|
|
Item
15.
|
51
|
FORWARD-LOOKING
STATEMENTS
Except
for any historical information contained herein, the matters discussed in this
Annual Report on Form 10-K (this “Form 10-K”) contain certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. These statements relate to analyses and other information,
which are based on forecasts of future results and estimates of amounts not yet
determinable. These statements also relate to our future prospects,
developments and business strategies.
These
forward-looking statements are identified by their use of terms and phrases such
as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“plan,” “predict,” “project,” “will” and similar terms and phrases, including
references to assumptions. Although we believe that our plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, we cannot assure you that such plans, intentions or
expectations will be achieved. Important factors that could cause
actual results to differ materially from our forward-looking statements include,
but are not limited to:
·
|
downturn
in general economic conditions, including adverse affects on the overall
travel and leisure
related industries;
|
·
|
terrorist
acts upon the United States;
|
·
|
threat
of or actual war;
|
·
|
unfavorable
weather conditions;
|
·
|
our
ability to obtain financing on terms acceptable to us to finance our real
estate investments, capital expenditures and growth
strategy;
|
·
|
our
ability to continue to grow our resort and real estate
operations;
|
·
|
competition
in our mountain and lodging
businesses;
|
·
|
our
ability to hire and retain a sufficient seasonal
workforce;
|
·
|
our
ability to successfully initiate and/or complete real estate development
projects and achieve the anticipated financial benefits from such
projects;
|
·
|
adverse
changes in real estate markets;
|
·
|
implications
arising from new Financial Accounting Standards Board
(“FASB”)/governmental legislation, rulings or
interpretations;
|
·
|
our
reliance on government permits or approvals for our use of Federal land or
to make operational improvements;
|
·
|
our
ability to integrate and successfully operate future acquisitions;
and
|
·
|
adverse
consequences of current or future legal
claims.
|
All
forward-looking statements attributable to us or any persons acting on our
behalf are expressly qualified in their entirety by these cautionary
statements.
If one or
more of these risks or uncertainties materialize, or if underlying assumptions
prove incorrect, our actual results may vary materially from those expected,
estimated or projected. Given these uncertainties, users of the
information included in this Form 10-K, including investors and prospective
investors, are cautioned not to place undue reliance on such forward-looking
statements. Actual results may differ materially from those suggested
by the forward-looking statements that the Company makes for a number of reasons
including those described in Part I, Item 1A, “Risk Factors” of this Form
10-K. All forward-looking statements are made only as of the date
hereof. Except as may be required by law, the Company does not intend to update
these forward-looking statements, even if new information, future events or
other circumstances have made them incorrect or misleading.
![Graphic](https://www.sec.gov/Archives/edgar/data/0000812011/000081201108000026/graphic.jpg)
Vail
Resorts, Inc.
Consolidated
Financial Statements for the Years Ended July 31, 2008, 2007 and
2006
F-2
|
|
F-3
|
|
Consolidated
Financial Statements
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8
|
|
F-9
|
|
Financial
Statement Schedule:
|
|
The
following consolidated financial statement schedule of the Company is
filed as part of this Report on Form 10-K and should be read in
conjunction with the Company's Consolidated Financial
Statements:
|
|
59
|
To the
Shareholders and Board of Directors
of Vail
Resorts, Inc.:
In our
opinion, the consolidated financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Vail
Resorts, Inc. and its subsidiaries at July 31, 2008 and 2007, and the results of
their operations and their cash flows for each of the three years in the period
ended July 31, 2008 in conformity with accounting principles generally accepted
in the United States of America. In addition, in our opinion, the
financial statement schedule listed in the accompanying index presents fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also
in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of July 31, 2008, based on criteria
established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements and financial statement
schedule, for maintaining effective internal control over financial reporting
and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management's Report on Internal Control
over Financial Reporting. Our responsibility is to express opinions
on these financial statements, on the financial statement schedule, and on the
Company's internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was
maintained in all material respects. Our audits of the financial
statements included examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the
circumstances. We believe that our audits provide a reasonable basis for our
opinions.
A
company’s internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of
the company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and
(iii) provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of the company’s assets that
could have a material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/
PricewaterhouseCoopers LLP
Denver,
Colorado
September
24, 2008
Consolidated
Balance Sheets
(In
thousands, except share and per share amounts)
July
31,
|
|||||||
2008
|
2007
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
162,345
|
$
|
230,819
|
|||
Restricted
cash
|
58,437
|
54,749
|
|||||
Trade
receivables, net of allowances of $1,666 and $2,118,
respectively
|
50,185
|
43,557
|
|||||
Inventories,
net of reserves of $1,211 and $826, respectively
|
49,708
|
48,064
|
|||||
Deferred
income taxes (Note 11)
|
15,142
|
15,056
|
|||||
Other
current assets
|
23,078
|
19,392
|
|||||
Total
current assets
|
358,895
|
411,637
|
|||||
Property,
plant and equipment, net (Note 5)
|
1,056,837
|
885,926
|
|||||
Real
estate held for sale and investment
|
249,305
|
357,586
|
|||||
Deferred
charges and other assets
|
38,054
|
30,129
|
|||||
Notes
receivable
|
8,051
|
8,639
|
|||||
Goodwill,
net (Note 5)
|
142,282
|
141,699
|
|||||
Intangible
assets, net (Note 5)
|
72,530
|
73,507
|
|||||
Total
assets
|
$
|
1,925,954
|
$
|
1,909,123
|
|||
Liabilities
and Stockholders' Equity
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses (Note 5)
|
$
|
294,182
|
$
|
281,779
|
|||
Income
taxes payable
|
57,474
|
37,441
|
|||||
Long-term
debt due within one year (Note 4)
|
15,355
|
377
|
|||||
Total
current liabilities
|
367,011
|
319,597
|
|||||
Long-term
debt (Note 4)
|
541,350
|
593,733
|
|||||
Other
long-term liabilities (Note 5)
|
183,643
|
181,830
|
|||||
Deferred
income taxes (Note 11)
|
75,279
|
72,213
|
|||||
Commitments
and contingencies (Note 13)
|
|||||||
Minority
interest in net assets of consolidated subsidiaries
|
29,915
|
27,711
|
|||||
Stockholders’
equity:
|
|||||||
Preferred
stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and
outstanding
|
--
|
--
|
|||||
Common
stock, $0.01 par value, 100,000,000 shares authorized, and 39,926,496 and
39,747,976 shares issued, respectively
|
399
|
397
|
|||||
Additional
paid-in capital
|
545,773
|
534,370
|
|||||
Retained
earnings
|
308,045
|
205,118
|
|||||
Treasury
stock, at cost; 3,004,108 and 673,500 shares, respectively (Note
16)
|
(125,461
|
)
|
(25,846
|
)
|
|||
Total
stockholders’ equity
|
728,756
|
714,039
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
1,925,954
|
$
|
1,909,123
|
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands, except per share amounts)
Year
Ended July 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
revenue:
|
||||||||||||
Mountain
|
$
|
685,533
|
$
|
665,377
|
$
|
620,441
|
||||||
Lodging
|
170,057
|
162,451
|
155,807
|
|||||||||
Real
estate
|
296,566
|
112,708
|
62,604
|
|||||||||
Total
net revenue
|
1,152,156
|
940,536
|
838,852
|
|||||||||
Segment
operating expense:
|
||||||||||||
Mountain
|
470,362
|
462,708
|
443,116
|
|||||||||
Lodging
|
159,832
|
144,252
|
142,693
|
|||||||||
Real
estate
|
251,338
|
115,190
|
56,676
|
|||||||||
Total
segment operating expense
|
881,532
|
722,150
|
642,485
|
|||||||||
Other
operating (expense) income:
|
||||||||||||
Gain
on sale of real property
|
709
|
--
|
--
|
|||||||||
Depreciation
and amortization
|
(93,794
|
)
|
(87,664
|
)
|
(86,098
|
)
|
||||||
Relocation
and separation charges (Note 8)
|
--
|
(1,433
|
)
|
(5,096
|
)
|
|||||||
Asset
impairment charges
|
--
|
--
|
(210
|
)
|
||||||||
Mold
remediation credit (Note 13)
|
--
|
--
|
1,411
|
|||||||||
Loss
on disposal of fixed assets, net
|
(1,534
|
)
|
(1,083
|
)
|
(1,035
|
)
|
||||||
Income
from operations
|
176,005
|
128,206
|
105,339
|
|||||||||
Mountain
equity investment income, net
|
5,390
|
5,059
|
3,876
|
|||||||||
Real
estate equity investment income
|
--
|
--
|
791
|
|||||||||
Investment
income, net
|
8,285
|
12,403
|
7,995
|
|||||||||
Interest
expense, net
|
(30,667
|
)
|
(32,625
|
)
|
(36,478
|
)
|
||||||
(Loss)
gain on sale of businesses, net (Note 9)
|
--
|
(639
|
)
|
4,625
|
||||||||
Contract
dispute credit (charges), net (Note 13)
|
11,920
|
(4,642
|
)
|
(3,282
|
)
|
|||||||
Gain
(loss) on put options, net (Note 10)
|
--
|
690
|
(1,212
|
)
|
||||||||
Other
income, net
|
--
|
--
|
50
|
|||||||||
Minority
interest in income of consolidated subsidiaries, net
|
(4,920
|
)
|
(7,801
|
)
|
(6,694
|
)
|
||||||
Income
before provision for income taxes
|
166,013
|
100,651
|
75,010
|
|||||||||
Provision
for income taxes (Note 11)
|
(63,086
|
)
|
(39,254
|
)
|
(29,254
|
)
|
||||||
Net
income
|
$
|
102,927
|
$
|
61,397
|
$
|
45,756
|
||||||
Per
share amounts (Note 3):
|
||||||||||||
Basic
net income per share
|
$
|
2.67
|
$
|
1.58
|
$
|
1.21
|
||||||
Diluted
net income per share
|
$
|
2.64
|
$
|
1.56
|
$
|
1.19
|
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands, except share amounts)
Additional
|
Total
|
|||||||||||||||||||||||||||
Common
Stock
|
Paid-in
|
Deferred
|
Retained
|
Treasury
|
Stockholders’
|
|||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Earnings
|
Stock
|
Equity
|
||||||||||||||||||||||
Balance,
July 31, 2005
|
36,596,193
|
$
|
366
|
$
|
442,527
|
$
|
(329
|
)
|
$
|
97,965
|
$
|
--
|
$
|
540,529
|
||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
45,756
|
--
|
45,756
|
|||||||||||||||||||||
Stock-based
compensation
|
||||||||||||||||||||||||||||
(Note
17)
|
--
|
--
|
6,476
|
--
|
--
|
--
|
6,476
|
|||||||||||||||||||||
Reversal
of deferred
|
||||||||||||||||||||||||||||
compensation
due to adoption
|
||||||||||||||||||||||||||||
of
SFAS 123R
|
--
|
--
|
(329
|
)
|
329
|
--
|
--
|
--
|
||||||||||||||||||||
Issuance
of shares
|
||||||||||||||||||||||||||||
under
share
|
||||||||||||||||||||||||||||
award
plans (Note 17)
|
2,440,089
|
24
|
46,508
|
--
|
--
|
--
|
46,532
|
|||||||||||||||||||||
Tax
benefit from share
|
||||||||||||||||||||||||||||
award
plans
|
--
|
--
|
14,323
|
--
|
--
|
--
|
14,323
|
|||||||||||||||||||||
Repurchase
of common stock
|
||||||||||||||||||||||||||||
(Note
16)
|
--
|
--
|
--
|
--
|
--
|
(10,839
|
)
|
(10,839
|
)
|
|||||||||||||||||||
Balance,
July 31, 2006
|
39,036,282
|
390
|
509,505
|
--
|
143,721
|
(10,839
|
)
|
642,777
|
||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
61,397
|
--
|
61,397
|
|||||||||||||||||||||
Stock-based
compensation
|
||||||||||||||||||||||||||||
(Note
17)
|
--
|
--
|
6,965
|
--
|
--
|
--
|
6,965
|
|||||||||||||||||||||
Issuance
of shares
|
||||||||||||||||||||||||||||
under
share
|
||||||||||||||||||||||||||||
award
plans (Note 17)
|
711,694
|
7
|
10,975
|
--
|
--
|
--
|
10,982
|
|||||||||||||||||||||
Tax
benefit from share
|
||||||||||||||||||||||||||||
award
plans
|
--
|
--
|
6,925
|
--
|
--
|
--
|
6,925
|
|||||||||||||||||||||
Repurchase
of common stock
|
||||||||||||||||||||||||||||
(Note
16)
|
--
|
--
|
--
|
--
|
--
|
(15,007
|
)
|
(15,007
|
)
|
|||||||||||||||||||
Balance,
July 31, 2007
|
39,747,976
|
397
|
534,370
|
--
|
205,118
|
(25,846
|
)
|
714,039
|
||||||||||||||||||||
Net
income
|
--
|
--
|
--
|
--
|
102,927
|
--
|
102,927
|
|||||||||||||||||||||
Stock-based
compensation
|
||||||||||||||||||||||||||||
(Note
17)
|
--
|
--
|
8,414
|
--
|
--
|
--
|
8,414
|
|||||||||||||||||||||
Issuance
of shares
|
||||||||||||||||||||||||||||
under
share
|
||||||||||||||||||||||||||||
award
plans (Note 17)
|
178,520
|
2
|
1,122
|
--
|
--
|
--
|
1,124
|
|||||||||||||||||||||
Tax
benefit from share
|
||||||||||||||||||||||||||||
award
plans
|
--
|
--
|
1,867
|
--
|
--
|
--
|
1,867
|
|||||||||||||||||||||
Repurchase
of common stock
|
||||||||||||||||||||||||||||
(Note
16)
|
--
|
--
|
--
|
--
|
--
|
(99,615
|
)
|
(99,615
|
)
|
|||||||||||||||||||
Balance,
July 31, 2008
|
39,926,496
|
$
|
399
|
$
|
545,773
|
$
|
--
|
$
|
308,045
|
$
|
(125,461
|
)
|
$
|
728,756
|
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands)
Year
Ended July 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income
|
$
|
102,927
|
$
|
61,397
|
$
|
45,756
|
||||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
93,794
|
87,664
|
86,098
|
|||||||||
Real
estate cost of sales
|
208,820
|
81,176
|
35,121
|
|||||||||
Stock-based
compensation expense
|
8,414
|
6,998
|
6,523
|
|||||||||
Asset
impairment charges
|
--
|
--
|
210
|
|||||||||
Mold
remediation credit
|
--
|
--
|
(559
|
)
|
||||||||
Loss
(gain) on sale of businesses, net
|
--
|
639
|
(4,625
|
)
|
||||||||
Deferred
income taxes, net
|
2,980
|
(3,968
|
)
|
1,322
|
||||||||
Minority
interest in net income of consolidated subsidiaries
|
4,920
|
7,801
|
6,694
|
|||||||||
Other
non-cash expense (income), net
|
(7,268
|
)
|
720
|
(6,291
|
)
|
|||||||
Changes
in assets and liabilities:
|
||||||||||||
Restricted
cash
|
(3,688
|
)
|
(34,427
|
)
|
(2,069
|
)
|
||||||
Accounts
receivable, net
|
(12,173
|
)
|
(4,496
|
)
|
(2,644
|
)
|
||||||
Inventories,
net
|
(1,643
|
)
|
(5,171
|
)
|
(4,811
|
)
|
||||||
Investments
in real estate
|
(217,482
|
)
|
(179,234
|
)
|
(129,728
|
)
|
||||||
Notes
receivable
|
4,429
|
(2,590
|
)
|
(1,925
|
)
|
|||||||
Accounts
payable and accrued expenses
|
5,946
|
30,691
|
26,213
|
|||||||||
Income
taxes receivable/payable
|
20,033
|
19,924
|
4,538
|
|||||||||
Deferred
real estate deposits
|
(2,308
|
)
|
25,330
|
14,539
|
||||||||
Private
club deferred initiation fees and deposits
|
15,867
|
21,438
|
7,126
|
|||||||||
Other
assets and liabilities, net
|
(6,572
|
)
|
4,550
|
(17,812
|
)
|
|||||||
Net
cash provided by operating activities
|
216,996
|
118,442
|
63,676
|
|||||||||
Cash
flows from investing activities:
|
||||||||||||
Capital
expenditures
|
(150,892
|
)
|
(119,232
|
)
|
(88,901
|
)
|
||||||
Cash
received from sale of businesses
|
--
|
3,544
|
30,712
|
|||||||||
Purchase
of minority interests
|
--
|
(8,387
|
)
|
--
|
||||||||
Other
investing
|
2,757
|
(8,071
|
)
|
(3,804
|
)
|
|||||||
Net
cash used in investing activities
|
(148,135
|
)
|
(132,146
|
)
|
(61,993
|
)
|
||||||
Cash
flows from financing activities:
|
||||||||||||
Repurchases
of common stock
|
(99,615
|
)
|
(15,007
|
)
|
(10,839
|
)
|
||||||
Payment
of financing costs
|
(695
|
)
|
(1,294
|
)
|
(1,584
|
)
|
||||||
Proceeds
from borrowings under Non-Recourse Real Estate Financings
|
136,519
|
75,019
|
25,548
|
|||||||||
Payments
of Non-Recourse Real Estate Financings
|
(174,008
|
)
|
(1,493
|
)
|
(12,191
|
)
|
||||||
Proceeds
from borrowings under other long-term debt
|
77,641
|
64,612
|
38,112
|
|||||||||
Payments
of other long-term debt
|
(78,121
|
)
|
(75,284
|
)
|
(42,248
|
)
|
||||||
Distributions
from joint ventures to minority shareholders
|
(2,939
|
)
|
(10,005
|
)
|
(4,239
|
)
|
||||||
Proceeds
from exercise of stock options
|
1,994
|
11,496
|
46,649
|
|||||||||
Tax
benefit from share award plans
|
1,867
|
6,925
|
14,323
|
|||||||||
Other
financing
|
22
|
(2,240
|
)
|
--
|
||||||||
Net
cash (used in) provided by financing activities
|
(137,335
|
)
|
52,729
|
53,531
|
||||||||
Net
(decrease) increase in cash and cash equivalents
|
(68,474
|
)
|
39,025
|
55,214
|
||||||||
Cash
and cash equivalents:
|
||||||||||||
Beginning
of period
|
230,819
|
191,794
|
136,580
|
|||||||||
End
of period
|
$
|
162,345
|
$
|
230,819
|
$
|
191,794
|
||||||
Cash
paid for interest, net of amounts capitalized
|
$
|
34,298
|
$
|
23,573
|
$
|
33,550
|
||||||
Taxes
paid, net
|
$
|
35,483
|
$
|
16,357
|
$
|
8,617
|
The
accompanying Notes are an integral part of these consolidated financial
statements.
Vail
Resorts, Inc.
(In
thousands)
Year
Ended July 31,
|
|||||||||
2008
|
2007
|
2006
|
|||||||
Land
exchange with the United States Forest Service
|
$
|
--
|
$
|
--
|
$
|
5,407
|
The
accompanying Notes are an integral part of these consolidated financial
statements.
1. Organization
and Business
Vail
Resorts, Inc. (“Vail Resorts” or the “Parent Company”) is organized as a holding
company and operates through various subsidiaries. Vail Resorts and
its subsidiaries (collectively, the “Company”) currently operate in three
business segments: Mountain, Lodging and Real Estate. In the Mountain
segment, the Company owns and operates five world-class ski resort properties at
the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado
and the Heavenly Mountain Resort (“Heavenly”) in the Lake Tahoe area of
California and Nevada, as well as ancillary businesses, primarily including ski
school, dining and retail/rental operations. These resorts operate
primarily on Federal land under the terms of Special Use Permits granted by the
USDA Forest Service (the “Forest Service”). The Company holds a 69.3%
interest in SSI Venture, LLC (“SSV”), a retail/rental company. In the
Lodging segment, the Company owns and/or manages a collection of luxury hotels
under its RockResorts International, LLC (“RockResorts”) brand, as well as other
strategic lodging properties and a large number of condominiums located in
proximity to the Company’s ski resorts, the Grand Teton Lodge Company (“GTLC”),
which operates three destination resorts at Grand Teton National Park (under a
National Park Service concessionaire contract), and golf
courses. Vail Resorts Development Company (“VRDC”), a wholly-owned
subsidiary, conducts the operations of the Company’s Real Estate segment, which
owns and develops real estate in and around the Company’s resort
communities. The Company’s mountain business and its lodging
properties at or around the Company’s ski resorts are seasonal in nature with
peak operating seasons from mid-November through mid-April. The
Company’s operations at GTLC and its golf courses generally operate from mid-May
through mid-October. The Company also has non-majority owned
investments in various other entities, some of which are consolidated (see Note
6, Investments in Affiliates and Note 7, Variable Interest
Entities).
2. Summary
of Significant Accounting Policies
Principles of Consolidation--
The accompanying Consolidated Financial Statements include the accounts of the
Company, its majority-owned subsidiaries and all variable interest entities for
which the Company is the primary beneficiary. Investments in which
the Company does not have a controlling interest or is not the primary
beneficiary are accounted for under the equity method. All
significant intercompany transactions have been eliminated in
consolidation.
Cash and Cash Equivalents--
The Company considers all highly liquid investments with maturities of
three months or less at the date of purchase to be cash
equivalents.
Restricted Cash-- Restricted
cash represents certain deposits received from real estate development related
transactions, amounts held as state-regulated reserves for self-insured workers'
compensation claims and owner and guest advance deposits held in escrow for
lodging reservations.
Trade Receivables-- The
Company records trade accounts receivable in the normal course of business
related to the sale of products or services. The Company charges
interest on past due accounts at a rate of 18% per annum. The
allowance for doubtful accounts is based on a specific reserve analysis and on a
percentage of accounts receivable, and takes into consideration such factors as
historical write-offs, the economic climate and other factors that could affect
collectibility. Write-offs are evaluated on a case by case
basis.
Inventories-- The Company's
inventories consist primarily of purchased retail goods, food and beverage items
and spare parts. Inventories are stated at the lower of cost or fair
value, determined using primarily an average weighted cost
method. The Company records a reserve for estimated shrinkage and
obsolete or unusable inventory.
Property, Plant and Equipment--
Property, plant and equipment is carried at cost net of accumulated
depreciation. Repairs and maintenance are expensed as
incurred. Expenditures that improve the functionality of the related
asset or extend the useful life are capitalized. When property, plant
and equipment is retired or otherwise disposed of, the related gain or loss is
included in operating income. Depreciation is calculated on the
straight-line method generally based on the following useful lives:
Estimated
Life
|
|
in
Years
|
|
Land
improvements
|
10-35
|
Buildings
and building improvements
|
7-30
|
Machinery
and equipment
|
2-30
|
Furniture
and fixtures
|
3-10
|
Software
|
3
|
Vehicles
|
3
|
The
Company capitalizes interest on non-real estate construction projects expected
to take longer than one year to complete and cost more than $1.0
million. The Company records capitalized interest once construction
activities commence and capitalized $1.6 million, $1.1 million and $0.1 million
of interest on non-real estate projects during the years ended July 31, 2008,
2007 and 2006, respectively.
The
Company has certain assets being used in resort operations that were constructed
as amenities in conjunction with real estate development and included in project
costs and expensed as the real estate was sold. Accordingly, there is
no carrying value and no depreciation expense related to these assets in the
Company's Consolidated Financial Statements. These assets were
primarily placed in service from 1995 to 1997 with an original cost of
approximately $33.0 million and an average estimated useful life of 15
years.
Real Estate Held for Sale and
Investment-- The Company capitalizes as real estate held for sale and
investment the original land acquisition cost, direct construction and
development costs, property taxes, interest incurred on costs related to real
estate under development and other related costs, including costs that will be
capitalized as resort depreciable assets associated with mixed-use real estate
development projects for which the Company cannot specifically identify the
components at the time of incurring such cash outflows until the property
reaches its intended use. The cost of sales for individual parcels of
real estate within a project is determined using either specific identification
or the relative sales value method, as applicable. Sales and
marketing expenses are charged against income in the period
incurred. Sales commission expenses are charged against income in the
period that the related revenue is recorded. The Company records
capitalized interest once construction activities commence and real estate
deposits have been utilized in construction. Interest capitalized on
real estate development projects during the years ended July 31, 2008, 2007 and
2006 was $11.8 million, $8.2 million and $2.2 million,
respectively.
The
Company is a member in Keystone/Intrawest, LLC (“KRED”), which is a joint
venture with Intrawest Resorts, Inc. formed to develop land at the base of
Keystone Mountain. The Company's investment in KRED, including the
Company's equity earnings from the inception of KRED, is reported as “real
estate held for sale and investment” in the accompanying Consolidated Balance
Sheets. The Company recorded equity investment income of zero for the
years ended July 31, 2008 and 2007, and $0.8 million for the year ended July 31,
2006, related to KRED. During the year ended July 31, 2006, KRED made
distributions of $2.2 million related to the sale of final inventory of
developed real estate. It is the intent of the members to dissolve
KRED.
Deferred Financing Costs--
Costs incurred with the issuance of debt securities are included in
deferred charges and other assets, net of accumulated
amortization. Amortization is charged to interest expense over the
respective term of the applicable debt issues.
Goodwill and Intangible
Assets-- The Company has classified as goodwill the cost in excess of
fair value of the net assets of companies acquired in purchase
transactions. The Company's major intangible asset classes are
trademarks, water rights, customer lists, property management contracts, Forest
Service permits and excess reorganization value. As prescribed in
Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and
Intangible Assets” (“SFAS 142”), goodwill and certain indefinite lived
intangible assets, including excess reorganization value, water rights and
certain trademarks, are no longer amortized, but are subject to at least annual
impairment testing. The Company tests annually (or more often, if
necessary) for impairment under SFAS 142 as of May 1. The Company
determined that there was no impairment to goodwill or intangible assets during
the years ended July 31, 2008, 2007 and 2006.
Long-lived Assets-- The
Company evaluates potential impairment of long-lived assets and long-lived
assets to be disposed of in accordance with SFAS No. 144, “Accounting for the
Impairment or Disposal of Long-Lived Assets” (“SFAS 144”). SFAS 144
establishes procedures for the review of recoverability and measurement of
impairment, if necessary, of long-lived assets held and used by an
entity. SFAS 144 requires that those assets be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be fully recoverable. SFAS 144
requires that long-lived assets to be disposed of be reported at the lower of
carrying amount or fair value less estimated selling costs.
Revenue Recognition--
Mountain and Lodging revenue is derived from a wide variety of sources,
including, among other things, sales of lift tickets (including season passes),
ski school operations, dining operations, retail sales, equipment rentals, hotel
operations, property management services, private club dues and golf course
greens fees, and are recognized as products are delivered or services are
performed. Revenue from private club initiation fees is recognized
over the estimated life of the club facilities. Revenue from
arrangements with multiple deliverables is bifurcated into units of accounting
based on relative fair values and revenue is separately recognized for each unit
of accounting. If fair market value cannot be established for an
arrangement, revenue is deferred until all deliverables have been
performed.
Revenue
from real estate primarily involves the sale of condominiums/townhomes and land
parcels (including related improvements). Revenue is not recognized
until a sale is fully consummated as evidenced by (i) a binding contract, (ii)
receipt of adequate consideration and (iii) transfer to the buyer the usual
risks and rewards of ownership. Contingent future profits, if any,
are recognized only when received. The Company generally applies the
“full accrual” method of revenue recognition thereby recognizing revenue and the
related profit upon transfer of title to the buyer. However, if the
Company has an obligation to complete improvements to parcels or to construct
amenities or other facilities as contractually required by sales that have been
consummated, the Company utilizes the “percentage-of-completion” method of
revenue recognition. The Company recorded revenue under the
percentage-of-completion method of approximately $1.4 million, $7.1 million and
$6.4 million for the years ended July 31, 2008, 2007 and 2006,
respectively. Additionally, the Company uses the “deposit” method for
sales that have not been completed for which payments have been received from
buyers (reflected as deferred real estate deposits in the Company’s Consolidated
Balance Sheets), and as such no profit is recognized until the sale is
consummated.
Real Estate Cost of Sales--
Costs of real estate transactions include direct project costs, common cost
allocations (primarily determined on relative sales value) and may include
accrued commitment liabilities for costs to be incurred subsequent to the sales
transaction. The Company utilized the relative sales value method to
determine cost of sales for individual parcels of real estate or condominium
units sold within a project, when specific identification of costs cannot be
reasonably determined. Estimates of project costs and cost
allocations are reviewed at the end of each financial reporting period until a
project is substantially completed and available for sale. Costs are
revised and reallocated as necessary for material changes on the basis of
current estimates and are reported as a change in estimate in the current
period. The Company recorded changes in estimates that increased
(decreased) real estate cost of sales by approximately $0.1 million, $(0.6)
million and $(0.2) million for the years ended July 31, 2008, 2007 and 2006,
respectively. Additionally, for the years ended July 31, 2007 and
2006, the Company recorded $7.6 million and $1.8 million, respectively, of
incremental remediation costs to complete the Jackson Hole Golf & Tennis
Club (“JHG&TC”) cabins that had design and construction issues.
Deferred Revenue-- In
addition to deferring certain revenue related to private club initiation fees
and the real estate sales as noted above, the Company records deferred revenue
related to the sale of season ski passes and certain other lift ticket
products. The number of season pass holder visits is estimated based
on historical data and the deferred revenue is recognized throughout the season
based on this estimate.
Reserve Estimates-- The
Company uses estimates to record reserves for certain liabilities, including
medical claims, workers' compensation, third-party loss contingencies,
liabilities for the completion of real estate sold by the Company, allowance for
doubtful accounts, property taxes and loyalty reward programs among other
items. The Company estimates the potential costs related to these
liabilities that will be incurred and records that amount as a liability in its
financial statements. These estimates are reviewed and appropriately
adjusted as the facts and circumstances related to the liabilities
change. The Company records legal costs related to defending its
claims as incurred.
Advertising Costs--
Advertising costs are expensed at the time such advertising
commences. Advertising expense for the years ended July 31, 2008,
2007 and 2006 was $17.6 million, $17.5 million and $17.2 million,
respectively. At July 31, 2008 and 2007, prepaid advertising costs of
$0.4 million and $0.3 million, respectively, are reported as “other current
assets” in the Company's Consolidated Balance Sheets.
Income Taxes-- The Company
uses the liability method of accounting for income taxes as prescribed by SFAS
No. 109, “Accounting for Income Taxes” (“SFAS 109”). Under SFAS 109,
deferred tax assets and liabilities are recorded for the estimated future tax
effects of temporary differences between the tax bases of assets and liabilities
and amounts reported in the accompanying Consolidated Balance Sheets and for
operating loss and tax credit carryforwards. The change in deferred
tax assets and liabilities for the period measures the deferred tax provision or
benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustments to the tax
provision or benefit in the period of enactment. The Company's
deferred tax assets have been reduced by a valuation allowance to the extent it
is deemed to be more likely than not that some or all of the deferred tax assets
will not be realized (see Note 11, Income Taxes, for more information related to
deferred tax assets and liabilities).
On August
1, 2007, the Company adopted the Financial Accounting Standards Board’s (“FASB”)
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
Interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements. FIN 48 prescribes a two-step
process to determine the amount of tax benefit to be
recognized. However, the tax position must be evaluated to determine
the likelihood that it will be sustained upon examination. If the tax
position is deemed “more-likely-than-not” to be sustained, the tax position is
then valued to determine the amount of benefit to be recognized in the financial
statements (see Note 11, Income Taxes, for more information related to the
adoption of FIN 48).
Net Income Per Share-- In
accordance with SFAS No. 128, “Earnings Per Share” (“EPS”) (“SFAS 128”), the
Company computes net income per share on both the basic and diluted basis (see
Note 3, Net Income Per Common Share).
Fair Value of Financial
Instruments-- The recorded amounts for cash and cash equivalents,
receivables, other current assets, and accounts payable and accrued expenses
approximate fair value due to the short-term nature of these financial
instruments. The fair value of amounts outstanding under the
Company's credit facilities, Employee Housing Bonds and Non-Recourse Real Estate
Financings (as defined in Note 4, Long-Term Debt) approximate book value due to
the variable nature of the interest rate associated with that
debt. The fair value of the 6.75% Notes (as defined in Note 4,
Long-Term Debt) is based on quoted market price. The fair value of
the Company's Industrial Development Bonds (as defined in Note 4, Long-Term
Debt) and other long-term debt have been estimated using discounted cash flow
analyses based on current borrowing rates for debt with similar remaining
maturities and ratings. The estimated fair value of the 6.75% Notes,
Industrial Development Bonds and other long-term debt as of July 31, 2008 and
2007 is presented below (in thousands):
July
31, 2008
|
July
31, 2007
|
|||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||
Value
|
Value
|
Value
|
Value
|
|||||||||
6.75%
Notes
|
$
|
390,000
|
$
|
362,700
|
$
|
390,000
|
$
|
377,325
|
||||
Industrial
Development Bonds
|
$
|
57,700
|
$
|
57,556
|
$
|
57,700
|
$
|
59,206
|
||||
Other
long-term debt
|
$
|
7,036
|
$
|
6,590
|
$
|
6,953
|
$
|
6,863
|
Stock Compensation-- At July
31, 2008, the Company had four stock-based compensation plans, which are
described more fully in Note 17, Stock Compensation Plans. The
Company uses the fair value recognition provisions of SFAS No. 123R,
“Share-Based Payment” (“SFAS 123R”). The following table shows total
stock-based compensation expense for the years ended July 31, 2008, 2007 and
2006 included in the Consolidated Statements of Operations (in
thousands):
Year
Ended July 31,
|
|||||||||||
2008
|
2007
|
2006
|
|||||||||
Mountain
operating expense
|
$
|
3,834
|
$
|
3,824
|
$
|
3,685
|
|||||
Lodging
operating expense
|
1,294
|
1,091
|
1,334
|
||||||||
Real
estate operating expense
|
3,136
|
2,083
|
1,504
|
||||||||
Pre-tax
stock-based compensation expense
|
8,264
|
6,998
|
6,523
|
||||||||
Less:
benefit for income taxes
|
3,134
|
2,628
|
2,450
|
||||||||
Net
stock-based compensation expense
|
$
|
5,130
|
$
|
4,370
|
$
|
4,073
|
Concentration of Credit Risk--
The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash and cash equivalents and restricted
cash. The Company places its cash and temporary cash investments in
high quality credit institutions, but these investments may be in excess of FDIC
insurance limits. The Company does not enter into financial
instruments for trading or speculative purposes. Concentration of
credit risk with respect to trade and notes receivables is limited due to the
wide variety of customers and markets in which the Company transacts business,
as well as their dispersion across many geographical areas. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral, but does require advance deposits on certain
transactions.
Use of Estimates-- The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the balance
sheet date and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those
estimates.
New Accounting
Pronouncements-- In September 2006, the FASB issued SFAS No. 157,
“Fair Value Measurements” (“SFAS 157”), which defines fair value,
establishes a framework for measuring fair value, and expands disclosures about
fair value measurements. SFAS 157 does not require any new fair
value measurements, but provides guidance on how to measure fair value by
providing a fair value hierarchy which prioritizes the inputs to valuation
techniques used to measure fair value. The requirements of
SFAS 157 are effective for the Company beginning August 1, 2008 (the
Company’s fiscal year ending July 31, 2009). In February 2008, the
FASB issued Staff Position (“FSP”) 157-2, “Effective Date of FASB Statement No.
157.” This FSP delays the effective date of SFAS 157 for all
nonfinancial assets and nonfinancial liabilities, except those that are
recognized or disclosed at fair value on a recurring basis (at least annually),
to fiscal years beginning after November 15, 2008 (the Company's fiscal year
ending July 31, 2010) and interim periods within the fiscal year of
adoption. The adoption of SFAS 157 for financial assets and
liabilities will not have a material impact on the Company’s financial position
or results of operations. The Company is currently evaluating the
impacts, if any, the adoption of the provisions of SFAS 157 for nonfinancial
assets and liabilities will have on the Company’s financial position or results
of operations.
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities”
(“SFAS 159”). SFAS 159 gives the Company the irrevocable
option to carry many financial assets and liabilities at fair value, with
changes in fair value recognized in earnings. The requirements of
SFAS 159 are effective for the Company beginning August 1, 2008 (the
Company’s fiscal year ending July 31, 2009). The Company does not
expect the adoption of SFAS 159 to have a material effect on the Company’s
financial position or results of operations upon adoption.
In
December 2007, the FASB issued SFAS No. 141R, “Business Combinations”
(“SFAS 141R”), which establishes principles and requirements for how an
acquirer recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any noncontrolling interest in an
acquiree, including the recognition and measurement of goodwill acquired in a
business combination. SFAS 141R also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination. SFAS 141R
will be applicable prospectively to business combinations consummated after July
31, 2009 (the Company’s fiscal year ending July 31, 2010).
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in
Consolidated Financial Statements, an amendment of ARB No. 51”
(“SFAS 160”), which will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity within the balance
sheet. Currently, noncontrolling interests (minority interests) are
reported as a liability in the Company’s consolidated balance sheet and the
related income (loss) attributable to minority interests is reflected as an
expense (credit) in arriving at net income. Upon adoption of SFAS
160, the Company will be required to report its minority interests as a separate
component of stockholders’ equity and present net income allocable to the
minority interests along with net income attributable to the stockholders of the
Company separately in its consolidated statement of operations. SFAS
160 requires retroactive adoption of the presentation and disclosure
requirements for existing minority interests. All other requirements
of SFAS 160 shall be applied prospectively. The requirements of
SFAS 160 are effective for the Company beginning August 1, 2009 (the
Company’s fiscal year ending July 31, 2010).
3. Net
Income Per Common Share
SFAS 128
establishes standards for computing and presenting EPS. SFAS 128
requires the dual presentation of basic and diluted EPS on the face of the
Consolidated Statements of Operations and requires a reconciliation of
numerators (net income) and denominators (weighted-average shares outstanding)
for both basic and diluted EPS in the footnotes. Basic EPS excludes
dilution and is computed by dividing net income available to holders of common
stock by the weighted-average shares outstanding. Diluted EPS
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised, resulting in the issuance of
shares of common stock that would then share in the earnings of the
Company. Presented below is basic and diluted EPS for the years ended
July 31, 2008, 2007 and 2006 (in thousands, except per share
amounts):
Year
Ended July 31,
|
||||||||||||||||||||||||
2008
|
2007
|
2006
|
||||||||||||||||||||||
Basic
|
Diluted
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||||||||
Net
income per share:
|
||||||||||||||||||||||||
Net
income
|
$
|
102,927
|
$
|
102,927
|
$
|
61,397
|
$
|
61,397
|
$
|
45,756
|
$
|
45,756
|
||||||||||||
Weighted-average
shares outstanding
|
38,616
|
38,616
|
38,849
|
38,849
|
37,866
|
37,866
|
||||||||||||||||||
Effect
of dilutive securities
|
--
|
318
|
--
|
525
|
--
|
701
|
||||||||||||||||||
Total
shares
|
38,616
|
38,934
|
38,849
|
39,374
|
37,866
|
38,567
|
||||||||||||||||||
Net
income per share
|
$
|
2.67
|
$
|
2.64
|
$
|
1.58
|
$
|
1.56
|
$
|
1.21
|
$
|
1.19
|
The
number of shares issuable on the exercise of share based awards that were
excluded from the calculation of diluted net income per share because the effect
of their inclusion would have been anti-dilutive totaled 63,000, 18,000 and
334,000 for the years ended July 31, 2008, 2007 and 2006,
respectively.
4. Long-Term
Debt
Long-term
debt as of July 31, 2008 and 2007 is summarized as follows (in
thousands):
Fiscal
Year
|
July
31,
|
July
31,
|
|||||
Maturity
(i)
|
2008
|
2007
|
|||||
Credit
Facility Revolver (a)
|
2012
|
$
|
--
|
$
|
--
|
||
SSV
Facility (b)
|
2011
|
--
|
--
|
||||
Industrial
Development Bonds (c)
|
2009-2020
|
57,700
|
57,700
|
||||
Employee
Housing Bonds (d)
|
2027-2039
|
52,575
|
52,575
|
||||
Non-Recourse
Real Estate Financings (e)
|
2010
|
49,394
|
86,882
|
||||
6.75%
Senior Subordinated Notes (f)
|
2014
|
390,000
|
390,000
|
||||
Other
(g)
|
2009-2029
|
7,036
|
6,953
|
||||
Total
debt
|
556,705
|
594,110
|
|||||
Less: Current
maturities (h)
|
15,355
|
377
|
|||||
Long-term
debt
|
$
|
541,350
|
$
|
593,733
|
(a)
|
On
March 20, 2008, The Vail Corporation (“Vail Corp.”), a wholly-owned
subsidiary of the Company, exercised the accordion feature under the
revolver component of its senior credit facility (the “Credit Facility”)
as provided in the existing Fourth Amended and Restated Credit Agreement,
dated as of January 28, 2005, as amended, between The Vail Corp., Bank of
America, N.A. as administrative agent and the Lenders party thereto (the
“Credit Agreement”), which expanded the borrowing capacity from $300.0
million to $400.0 million at the same terms existing in the Credit
Agreement.
|
Vail
Corp. obligations under the Credit Agreement are guaranteed by the Company and
certain of its subsidiaries and are collateralized by a pledge of all of the
capital stock of Vail Corp., substantially all of its subsidiaries and the
Company's interest in SSV. The proceeds of loans made under the
Credit Agreement may be used to fund the Company's working capital needs,
capital expenditures, acquisitions and other general corporate purposes,
including the issuance of letters of credit. Borrowings under the
Credit Agreement bear interest annually at the Company's option currently at the
rate of (i) LIBOR plus 0.5% (2.96% at July 31, 2008) or (ii) the Agent's prime
lending rate plus, in certain circumstances, a margin (5.00% at July 31,
2008). Interest rate margins fluctuate based upon the ratio of the
Company's Net Funded Debt to Adjusted EBITDA (as defined in the Credit
Agreement) on a trailing twelve-month basis. The Credit Agreement
also includes a quarterly unused commitment fee, which is equal to a percentage
determined by the Net Funded Debt to Adjusted EBITDA ratio, as defined in the
Credit Agreement, times the daily amount by which the Credit Agreement
commitment exceeds the total of outstanding loans and outstanding letters of
credit. The unused amounts are accessible to the extent that the Net
Funded Debt to Adjusted EBITDA ratio does not exceed the maximum ratio allowed
at quarter-end. The unused amount available for borrowing under the
Credit Agreement was $306.2 million as of July 31, 2008, net of certain letters
of credit of $93.8 million outstanding under the Credit
Agreement. The Credit Agreement provides for affirmative and negative
covenants that restrict, among other things, the Company's ability to incur
indebtedness, dispose of assets, make capital expenditures, make distributions
and make investments. In addition, the Credit Agreement includes the
following restrictive financial covenants: Net Funded Debt to Adjusted EBITDA
ratio, Minimum Net Worth and the Minimum Interest Coverage ratio (each as
defined in the Credit Agreement).
(b)
|
In
September 2005, SSV entered into a new credit facility (“SSV Facility”)
with U.S. Bank as lender to refinance its existing credit facility and to
provide additional financing for future acquisitions. The new
facility provides for financing up to an aggregate $33.0 million
consisting of (i) an $18.0 million working capital revolver, (ii) a $10.0
million reducing revolver and (iii) a $5.0 million acquisition
revolver. Obligations under the SSV Facility are collateralized
by a first priority security interest in all the assets of SSV ($94.3
million at July 31, 2008). Availability under the SSV Facility
is based on the book values of accounts receivable, inventories and rental
equipment of SSV. The SSV Facility matures September
2010. Borrowings bear interest annually at SSV's option of (i)
LIBOR plus 0.875% (3.34% at July 31, 2008) or (ii) U.S. Bank's prime rate
minus 1.75% (3.25% at July 31, 2008). Proceeds under the
working capital revolver are for SSV's seasonal working capital
needs. No principal payments are due until maturity, and
principal may be drawn and repaid at any time. Proceeds under
the reducing revolver were used to pay off SSV's existing credit
facility. Principal under the reducing revolver may be drawn
and repaid at any time. The reducing revolver commitments
decrease by $0.3 million on January 31, April 30, July 31 and October 31
of each year beginning January 31, 2006 ($6.6 million available at July
31, 2008). Any outstanding balance in excess of the reduced
commitment amount is due on the day of each commitment
reduction. The acquisition revolver is to be utilized to make
acquisitions subject to U.S. Bank's approval. Principal under
the acquisition revolver may be drawn and repaid at any
time. The acquisition revolver commitments decrease by $0.2
million on January 31, April 30, July 31 and October 31 of each year
beginning January 31, 2007 ($3.9 million available at July 31,
2008). Any outstanding balance in excess of the reduced
commitment amount is due on the day of each commitment
reduction. The SSV Facility contains certain restrictive
financial covenants, including the Consolidated Leverage Ratio and Minimum
Fixed Charge Coverage Ratio (each as defined in the underlying credit
agreement).
|
(c)
|
The
Company has outstanding $57.7 million of industrial development bonds
(collectively, the “Industrial Development Bonds”), of which $41.2 million
were issued by Eagle County, Colorado (the “Eagle County Bonds”) and
mature, subject to prior redemption, on August 1, 2019. These
bonds accrue interest at 6.95% per annum, with interest being payable
semi-annually on February 1 and August 1. The promissory note
with respect to the Eagle County Bonds between Eagle County and the
Company is collateralized by the Forest Service permits for Vail and
Beaver Creek. In addition, the Company has outstanding two
series of refunding bonds (collectively, the “Summit County
Bonds”). At July 31, 2008, the Series 1990 Sports Facilities
Refunding Revenue Bonds, issued by Summit County, Colorado, have an
aggregate outstanding principal amount of $15.0 million and bear interest
at 7.875%. On August 29, 2008 the borrowings under the Series
1990 Sports Facilities Refunding Revenue Bond was paid in
full. The Series 1991 Sports Facilities Refunding Revenue
Bonds, issued by Summit County, Colorado, have an aggregate outstanding
principal amount of $1.5 million maturing in the year ending July 31, 2011
and bear interest at 7.375%. The promissory note with respect
to the Summit County Bonds between Summit County and the Company is
pledged and endorsed to the Bank of New York as Trustee under the
Indenture of Trust underlying the Summit County Bonds. The
promissory note is also collateralized in accordance with a guaranty from
Ralston Purina Company (subsequently assumed by Vail Corp. to the Trustee
for the benefit of the registered owners of the
bonds).
|
(d)
|
The
Company has recorded for financial reporting purposes the outstanding debt
of four Employee Housing Entities (each an “Employee Housing Entity” and
collectively the “Employee Housing Entities”): Breckenridge Terrace,
Tarnes, BC Housing and Tenderfoot. The proceeds of the Employee
Housing Bonds were used to develop apartment complexes designated
primarily for use by the Company's seasonal employees at its mountain
resorts. The Employee Housing Bonds are variable rate,
interest-only instruments with interest rates tied to LIBOR plus 0% to
0.05% (2.46% to 2.51% at July 31, 2008). Interest on the
Employee Housing Bonds is paid monthly in arrears and the interest rate is
adjusted weekly. No principal payments are due on the Employee
Housing Bonds until maturity. Each Employee Housing Entity’s
bonds were issued in two series. The Series A bonds for each
Employee Housing Entity and the Series B bonds for Breckenridge Terrace,
BC Housing and Tenderfoot are backed by letters of credit issued under the
Credit Facility. The Series B bonds for Tarnes are backed by a
letter of credit issued by a bank, for which the assets of Tarnes serve as
collateral ($7.9 million at July 31, 2008). The table below
presents the principal amounts outstanding for the Employee Housing Bonds
as of July 31, 2008 and 2007 (in
thousands):
|
Maturity
(i)
|
Tranche
A
|
Tranche
B
|
Total
|
|||||||
Breckenridge
Terrace
|
2039
|
$
|
14,980
|
$
|
5,000
|
$
|
19,980
|
|||
Tarnes
|
2039
|
8,000
|
2,410
|
10,410
|
||||||
BC
Housing
|
2027
|
9,100
|
1,500
|
10,600
|
||||||
Tenderfoot
|
2035
|
5,700
|
5,885
|
11,585
|
||||||
Total
|
$
|
37,780
|
$
|
14,795
|
$
|
52,575
|
(e)
|
In
March 2007, The Chalets at The Lodge at Vail, LLC (“Chalets”), a
wholly-owned subsidiary of the Company, entered into a construction loan
agreement (“Chalets Facility”) in the amount of up to $123.0 million with
Wells Fargo, as administrative agent, book manager, and joint lead
arranger, U.S. Bank as joint lead arranger and syndication agent, and the
lenders party thereto. Borrowings under the Chalets Facility
are non-revolving and must be used for the payment of certain costs
associated with the construction and development of The Lodge at Vail
Chalets, a residential development consisting of 13 luxury condominium
units, as well as a private mountain club, a spa, skier services building
and parking structure. Borrowings under the Chalets Facility
are due upon the earlier of either the closing of the condominium units
(of which the amount due is determined by the amount of proceeds received
upon closing) or the stated maturity date of September 1,
2009. Borrowings under the Chalets Facility are required to be
paid in full by Chalets prior to any distribution of funds from the
closings of the luxury condominium units to the
Company. Chalets has the option to extend the term of the
Chalets Facility for six months, subject to certain
requirements. Borrowings under the Chalets Facility bear
interest annually at the Chalets’ option, at the rate of (i)
LIBOR plus a margin of 1.35% (3.81% at July 31, 2008) or (ii) the greater
of (x) the administrative agent’s prime commercial lending rate (5.00% at
July 31, 2008) or (y) the Federal Funds Rate in effect on that day as
announced by the Federal Reserve Bank of New York, plus 0.5% (2.59% at
July 31, 2008). The Chalets Facility provides for affirmative
and negative covenants that restrict, among other things, Chalets’ ability
to dispose of assets, transfer or pledge its equity interest, incur
indebtedness and make investments or distributions. The Chalets
Facility contains non-recourse provisions to the Company with respect to
repayment, whereby under event of default, the lenders have recourse only
against Chalets’ assets ($191.4 million at July 31, 2008) and as provided
for below the lenders do not have recourse against assets held by the
Company or Vail Corp. All assets of Chalets are provided as
collateral under the Chalets Facility. At July 31, 2008,
borrowings under the Chalets Facility were $49.4 million. The
investment in the Chalet’s real estate development is recorded in real
estate held for sale and investment. Subsequent to July 31,
2008, the Company had net repayments under the Chalets Facility of $6.1
million.
|
In
connection with the Chalets Facility, the Company and/or certain subsidiaries
guarantee the completion of the construction of the project (but not the
repayment of any amounts drawn under the Chalet Facility). However,
Vail Corp. could be responsible to pay damages to the lenders under very limited
circumstances. If either the Company or Vail Corp. is required to
perform Chalets’ obligation to complete the project, the lenders will make
available to the Company or Vail Corp. any undisbursed commitments under the
Chalets Facility for the completion of construction and development of the
project.
In
January 2006, Arrabelle at Vail Square, LLC (“Arrabelle”), a wholly-owned
subsidiary of the Company, entered into a construction loan agreement
(“Arrabelle Facility”) in the amount of up to $175.0 million with U.S. Bank, as
administrative agent, and U.S. Bank and Wells Fargo, as joint lead
arrangers. Borrowings under the Arrabelle Facility were non-revolving
and must be used for the payment of certain costs associated with the
construction and development of The Arrabelle at Vail Square, a mixed-use
development consisting of 66 luxury residential condominium units, a 36-room
RockResorts hotel, approximately 33,000 square feet of retail and restaurant
space, a spa, private mountain club, skating rink and skier services
facilities. The Arrabelle Facility had a scheduled maturity of August
1, 2008, and principal payments were due at maturity, with certain pre-payment
requirements, including upon the closing of the condominium
units. During the year ended July 31, 2008 the borrowings under the
Arrabelle Facility were paid in full.
(f)
|
The
Company has outstanding $390.0 million of Senior Subordinated Notes due
2014 (“6.75% Notes”) issued in January 2004. The 6.75% Notes
have a fixed annual interest rate of 6.75% with interest due semi-annually
on February 15 and August 15. The 6.75% Notes will mature
February 2014 and no principal payments are due to be paid until
maturity. The Company has certain early redemption options
under the terms of the 6.75% Notes. The premium for early
redemption of the 6.75% Notes ranges from 0% to 3.375%, depending on the
date of redemption beginning in February 2009. The 6.75% Notes
are subordinated to certain of the Company's debts, including the Credit
Facility. The Company's payment obligations under the 6.75%
Notes are jointly and severally guaranteed by substantially all of the
Company's current and future domestic subsidiaries (see Note 19, Guarantor
Subsidiaries and Non-Guarantor Subsidiaries). The Indenture,
dated as of January 29, 2004 among the Company, the guarantors therein and
The Bank of New York Mellon Trust Company N.A., as Trustee (the
“Indenture”) governing the 6.75% Notes contains restrictive covenants
which, among other things, limit the ability of the Company and its
Restricted Subsidiaries (as defined in the Indenture) to (i) borrow money
or sell preferred stock, (ii) create liens, (iii) pay dividends on or
redeem or repurchase stock, (iv) make certain types of investments, (v)
sell stock in the Restricted Subsidiaries, (vi) create restrictions on the
ability of the Restricted Subsidiaries to pay dividends or make other
payments to the Company, (vii) enter into transactions with affiliates,
(viii) issue guarantees of debt and (ix) sell assets or merge with other
companies.
|
(g)
|
Other
obligations primarily consist of a $6.3 million note outstanding to the
Colorado Water Conservation Board, which matures in the year ending July
31, 2029, and capital leases totaling $0.7 million. Other
obligations, including the Colorado Water Conservation Board note and the
capital leases, bear interest at rates ranging from 3.5% to 6.0% and have
maturities ranging from the year ending July 31, 2009 to the year ending
July 31, 2029.
|
(h)
|
Current
maturities represent principal payments due in the next 12
months.
|
(i)
|
Maturities
are based on the Company's July 31 fiscal year
end.
|
Aggregate
maturities for debt outstanding as of July 31, 2008 reflected by fiscal year are
as follows (in thousands):
Non-Recourse
Real
Estate
Financings
|
All
Other
|
Total
|
||||
2009
|
$
|
--
|
$
|
15,355
|
$
|
15,355
|
2010
|
49,394
|
344
|
49,738
|
|||
2011
|
--
|
1,831
|
1,831
|
|||
2012
|
--
|
305
|
305
|
|||
2013
|
--
|
318
|
318
|
|||
Thereafter
|
--
|
489,158
|
489,158
|
|||
Total
debt
|
$
|
49,394
|
$
|
507,311
|
$
|
556,705
|
The
Company recorded gross interest expense of $44.1 million, $41.9 million and
$38.7 million for the years ended July 31, 2008, 2007 and 2006, respectively, of
which $2.5 million, $1.9 million and $1.8 million was amortization of deferred
financing costs. The Company capitalized $13.4 million, $9.3 million
and $2.2 million of interest during the years ended July 31, 2008, 2007 and
2006, respectively. The Company was in compliance with all of its
financial and operating covenants required to be maintained under its debt
instruments for all periods presented.
5. Supplementary
Balance Sheet Information
The
composition of property, plant and equipment follows (in
thousands):
July
31,
|
||||||||
2008
|
2007
|
|||||||
Land
and land improvements
|
$
|
265,123
|
$
|
249,291
|
||||
Buildings
and building improvements
|
685,393
|
553,958
|
||||||
Machinery
and equipment
|
457,825
|
420,514
|
||||||
Furniture
and fixtures
|
149,251
|
114,615
|
||||||
Software
|
39,605
|
27,756
|
||||||
Vehicles
|
28,829
|
27,179
|
||||||
Construction
in progress
|
80,601
|
71,666
|
||||||
Gross
property, plant and equipment
|
1,706,627
|
1,464,979
|
||||||
Accumulated
depreciation
|
(649,790
|
)
|
(579,053
|
)
|
||||
Property,
plant and equipment, net
|
$
|
1,056,837
|
$
|
885,926
|
Depreciation
expense for the years ended July 31, 2008, 2007 and 2006 totaled $93.3 million,
$84.0 million and $81.7 million, respectively.
The
composition of intangible assets follows (in thousands):
July
31,
|
||||||||
2008
|
2007
|
|||||||
Indefinite
lived intangible assets
|
||||||||
Trademarks
|
$
|
61,714
|
$
|
61,714
|
||||
Water
rights
|
10,684
|
11,180
|
||||||
Excess
reorganization value
|
14,145
|
14,145
|
||||||
Other
intangible assets
|
6,200
|
6,175
|
||||||
Gross
indefinite lived intangible assets
|
92,743
|
93,214
|
||||||
Accumulated
amortization
|
(24,713
|
)
|
(24,713
|
)
|
||||
Indefinite
lived intangible assets, net
|
68,030
|
68,501
|
||||||
Goodwill
|
||||||||
Goodwill
|
159,636
|
159,053
|
||||||
Accumulated
amortization
|
(17,354
|
)
|
(17,354
|
)
|
||||
Goodwill,
net
|
142,282
|
141,699
|
||||||
Amortizable
intangible assets
|
||||||||
Customer
lists
|
17,814
|
17,814
|
||||||
Property
management contracts
|
4,412
|
4,412
|
||||||
Forest
Service permits
|
5,905
|
5,905
|
||||||
Other
intangible assets
|
15,159
|
15,308
|
||||||
Gross
amortizable intangible assets
|
43,290
|
43,439
|
||||||
Accumulated
amortization
|
||||||||
Customer
lists
|
(17,814
|
)
|
(17,814
|
)
|
||||
Property
management contracts
|
(3,726
|
)
|
(3,643
|
)
|
||||
Forest
Service permits
|
(2,174
|
)
|
(2,000
|
)
|
||||
Other
intangible assets
|
(15,076
|
)
|
(14,976
|
)
|
||||
Accumulated
amortization
|
(38,790
|
)
|
(38,433
|
)
|
||||
Amortizable
intangible assets, net
|
4,500
|
5,006
|
||||||
Total
gross intangible assets
|
295,669
|
295,706
|
||||||
Total
accumulated amortization
|
(80,854
|
)
|
(80,500
|
)
|
||||
Total
intangible assets, net
|
$
|
214,812
|
$
|
215,206
|
Amortization
expense for intangible assets subject to amortization for the years ended July
31, 2008, 2007 and 2006 totaled $0.5 million, $3.7 million and $4.3 million,
respectively, and is estimated to be approximately $0.3 million annually, on
average, for the next five fiscal years.
The
weighted-average amortization period (in years) for intangible assets subject to
amortization is as follows:
July
31,
|
|||
2008
|
2007
|
||
Customer
lists
|
8
|
8
|
|
Property
management contracts
|
8
|
8
|
|
Forest
Service permits
|
35
|
35
|
|
Other
intangible assets
|
8
|
8
|
The
changes in the net carrying amount of goodwill for the years ended July 31,
2008, 2007 and 2006 are as follows (in thousands):
Balance
at July 31, 2005
|
$
|
135,507
|
||
Acquisition
|
304
|
|||
Balance
at July 31, 2006
|
$
|
135,811
|
||
Purchase
of minority interest
|
2,955
|
|||
Sale
of RTP
|
(3,049
|
)
|
||
Acquisitions
|
5,982
|
|||
Balance
at July 31, 2007
|
141,699
|
|||
Acquisition
|
583
|
|||
Balance
at July 31, 2008
|
$
|
142,282
|
In
December 2007, the Company acquired a retail/rental business, resulting in $0.6
million of goodwill. In March 2007, the Company acquired 20% of the
minority interest in SSV, resulting in $3.0 million of goodwill. In
April 2007, the Company sold its interest in RTP, LLC (“RTP”), resulting in a
$3.0 million decrease of associated goodwill. In June 2007, the
Company acquired retail/rental and dining businesses, resulting in $6.0 million
of goodwill. In the year ended July 31, 2006, the Company acquired a
retail/rental business, resulting in $0.3 million of goodwill.
The
composition of accounts payable and accrued expenses follows (in
thousands):
July
31,
|
||||||
2008
|
2007
|
|||||
Trade
payables
|
$
|
53,187
|
$
|
67,517
|
||
Real
estate development payables
|
52,574
|
30,582
|
||||
Deferred
revenue
|
45,805
|
36,179
|
||||
Deferred
real estate and other deposits
|
58,421
|
51,351
|
||||
Accrued
salaries, wages and deferred compensation
|
22,397
|
30,721
|
||||
Accrued
benefits
|
22,777
|
23,810
|
||||
Accrued
interest
|
14,552
|
14,710
|
||||
Liability
to complete real estate projects, short term
|
4,199
|
8,500
|
||||
Other
accruals
|
20,270
|
18,409
|
||||
Total
accounts payable and accrued expenses
|
$
|
294,182
|
$
|
281,779
|
The
composition of other long-term liabilities follows (in thousands):
July
31,
|
||||||
2008
|
2007
|
|||||
Private
club deferred initiation fee revenue
|
$
|
92,066
|
$
|
94,205
|
||
Deferred
real estate deposits
|
45,775
|
54,363
|
||||
Private
club initiation deposits
|
29,881
|
17,767
|
||||
Other
long-term liabilities
|
15,921
|
15,495
|
||||
Total
other long-term liabilities
|
$
|
183,643
|
$
|
181,830
|
6. Investments
in Affiliates
The
Company held the following investments in equity method affiliates as of July
31, 2008:
Equity
Method Affiliates
|
Ownership
Interest
|
||
Slifer,
Smith, and Frampton/Vail Associates Real Estate, LLC
(“SSF/VARE”)
|
50
|
%
|
|
KRED
|
50
|
%
|
|
Clinton
Ditch and Reservoir Company
|
43
|
%
|
The
Company had total net investments in equity method affiliates of $8.6 million
and $5.4 million as of July 31, 2008 and 2007, respectively, classified as
“deferred charges and other assets” in the accompanying Consolidated Balance
Sheets. The amount of retained earnings that represent undistributed
earnings of 50-percent-or-less-owned entities accounted for by the equity method
was $5.5 million and $2.4 million as of July 31, 2008 and 2007,
respectively. During the years ended July 31, 2008, 2007 and 2006,
distributions in the amounts of $2.3 million, $5.8 million and $5.2 million,
respectively, were received from equity method affiliates.
7. Variable
Interest Entities
The
Company is the primary beneficiary of the Employee Housing Entities, which are
Variable Interest Entities (“VIEs”), and has consolidated them in its
Consolidated Financial Statements. As a group, as of July 31, 2008,
the Employee Housing Entities had total assets of $38.3 million (primarily
recorded in property, plant and equipment, net) and total liabilities of $68.8
million (primarily recorded in long-term debt as “Employee Housing
Bonds”). All of the assets ($7.9 million as of July 31, 2008) of
Tarnes serve as collateral for Tarnes' Tranche B Employee Housing
Bonds. The Company has issued under its Credit Facility $38.3 million
letters of credit related to the Tranche A Employee Housing Bonds and $12.6
million letters of credit related to the Tranche B Employee Housing
Bonds. The letters of credit would be triggered in the event that one
of the entities defaults on required payments. The letters of credit
have no default provisions.
The
Company is the primary beneficiary of Avon Partners II, LLC (“APII”), which is a
VIE. APII owns commercial space and the Company currently leases
substantially all of that space. APII had total assets of $5.6
million (primarily recorded in property, plant and equipment) and no debt as of
July 31, 2008.
The
Company was the primary beneficiary of FFT Investment Partners (“FFT”), which
was a VIE. FFT’s sole asset was a private residence in Eagle County,
Colorado. In March 2007, the private residence owned by FFT was sold
for $6.7 million, and thereafter FFT was dissolved.
The
Company, through various lodging subsidiaries, manages hotels in which the
Company has no ownership interest in the entities that own such
hotels. The Company has extended a $2.0 million note receivable to
one of these entities. These entities were formed to acquire, own,
operate and realize the value in resort hotel properties. The Company
managed the day-to-day operations of six hotel properties as of July 31,
2008. The Company has determined that the entities that own the hotel
properties are VIEs, and the management contracts are significant variable
interests in these VIEs. The Company has also determined that it is
not the primary beneficiary of these entities and, accordingly, is not required
to consolidate any of these entities. These VIEs had estimated total
assets of approximately $246.1 million (unaudited) and total liabilities of
approximately $147.2 million (unaudited). The Company's maximum
exposure to loss as a result of its involvement with these VIEs is limited to
the note receivable and accrued interest of approximately $2.2 million and the
net book value of the intangible asset associated with a management agreement in
the amount of $0.7 million as of July 31, 2008.
8. Relocation
and Separation Charges
In
February 2006, the Company announced a plan to relocate its corporate
headquarters; the plan was formally approved by the Company’s Board of Directors
in April 2006. The relocation process (which also included the
consolidation of certain other operations of the Company) was completed by July
31, 2007. The total charge associated with the relocation was $1.4
million and $2.4 million for the years ended July 31, 2007 and 2006,
respectively. These amounts exclude any of the benefits realized from
the relocation and consolidation of offices.
In
addition, in February 2006, Adam Aron, the former Chairman and Chief Executive
Officer of the Company, resigned. In connection with Mr. Aron's
resignation, the Company entered into a separation agreement with Mr. Aron,
whereby the Company recorded $2.7 million of separation related expenses,
which is included in “relocation and separation charges” in the accompanying
Consolidated Statement of Operations for the year ended July 31,
2006.
9. Sale
of Businesses
On April
30, 2007, the Company sold its 54.5% interest in RTP to RTP’s minority
shareholder for approximately $3.5 million. As part of this
transaction the Company retained source code rights to its internal use software
and internet solutions. The net impact to income before provision for
income taxes in the accompanying Consolidated Statement of Operations for the
year ended July 31, 2007 from this transaction was a gain of $0.1 million
comprised of (i) a net loss of $0.6 million on the sale of its investment in
RTP, which was recorded in “(loss) gain on sale of businesses, net” and (ii) a
net gain of $0.7 million related to the elimination of the put option liability
to RTP’s minority shareholder and the write-off of the associated put option
intangible asset which was recorded in “gain (loss) on put options, net” (see
Note 10, Put and Call Options, for more information on this
transaction).
On
January 19, 2006, JHL&S LLC, a limited liability company owned by
wholly-owned subsidiaries of the Company, sold the assets constituting Snake
River Lodge & Spa (“SRL&S”) to Lodging Capital Partners, a private,
Chicago-based hospitality investment firm (“LCP”), for $32.5 million, the
proceeds of which were adjusted for normal working capital
pro-rations. The carrying value of the assets sold (net of
liabilities assumed) was $26.9 million, which were recorded as “assets held for
sale” prior to the sale. The Company recorded a $4.7 million gain
after consideration of all costs involved, which is included in “(loss) gain on
sale of businesses, net” in the accompanying Consolidated Statement of
Operations for the year ended July 31, 2006. The Company continues to
manage SRL&S pursuant to a 15-year management agreement with
LCP.
On
December 8, 2004, the Company sold its 49% minority equity interest in BG
Resort, the entity that owns The Ritz-Carlton Bachelor Gulch, for $13.0 million,
with net cash proceeds to the Company of $12.7 million. In
conjunction with the sale, the Company had guaranteed payment of certain
contingencies of BG Resort upon settlement. At the time of sale, the
Company recorded a liability related to these contingencies in the amount of
$0.1 million. In February 2006, the Company reached a settlement of
these contingencies and recorded an additional liability in the amount of $0.1
million, which has been recorded as a loss within “(loss) gain on sale of
businesses, net” in the accompanying Consolidated Statement of Operations for
the year ended July 31, 2006. The Company's interest was acquired by
GHR, LLC, a new joint venture between Gencom BG, LLC and Lehman BG,
LLC.
10. Put
and Call Options
On March
31, 2007, the Company acquired 20% of GSSI LLC’s (“GSSI”), the minority
shareholder in SSV, ownership interest in SSV for $8.4 million. As a
result of this transaction, the Company holds an approximate 69.3% ownership
interest in SSV. In addition, the put and call rights for GSSI’s
remaining interest in SSV were extended to begin August 1, 2010, as discussed
below, and the existing management agreement was extended to coincide with the
exercise of the remaining put and call rights.
The
Company’s and GSSI’s remaining put and call rights are as follows: (i) beginning
August 1, 2010 and each year thereafter, each of the Company and GSSI have the
right to call or put, respectively, 100% of GSSI's ownership interest in SSV to
the Company during certain periods each year and (ii) GSSI has the right to put
to the Company 100% of its ownership interest in SSV at any time after GSSI has
been removed as manager of SSV or after an involuntary transfer of the Company's
ownership interest in SSV has occurred. The put and call pricing is
generally based on the trailing twelve month EBITDA (as defined in the operating
agreement) of SSV for the fiscal period ended prior to the commencement of the
put or call period, as applicable. As of July 31, 2008, the estimated
price at which the put/call option for the remaining interest could be expected
to be settled was $33.2 million.
In March
2001, in connection with the Company's acquisition of a 51% ownership interest
in RTP, the Company and RTP's minority shareholder entered into a put agreement
whereby the minority shareholder could put up to an aggregate one-third of its
original 49% interest in RTP to the Company during the period from August 1
through October 31 annually. The put price was determined primarily
by the trailing twelve month EBITDA (as defined in the underlying agreement) for
the period ending prior to the beginning of each put period. The
Company had determined that this put option should be marked to fair value
through earnings. The put period was extended in October 2006, and
again in February 2007. In connection with the Company’s sale of its
54.5% interest in RTP (see Note 9, Sale of Businesses, for more information on
this transaction) the put agreement with RTP’s minority shareholder was
terminated resulting in the Company recording a net gain of $0.7 million for the
year ended July 31, 2007 related to the elimination of its put option liability
net of the write-off of the associated put option intangible
asset. For the year ended July 31, 2006, the Company recorded a loss
of $1.2 million representing an increase in the estimated fair value of the put
option liability during the period.
11. Income
Taxes
As of
July 31, 2008, the Company has utilized all available Federal net operating loss
(“NOL”) carryforwards. These NOL carryforwards expired in the year
ended July 31, 2008 and were limited in deductibility each year under Section
382 of the Internal Revenue Code. The Company had only been able to
use these NOL carryforwards to the extent of approximately $8.0 million per year
through December 31, 2007 (the “Section 382 Amount”). However, during
the year ended July 31, 2005, the Company amended previously filed tax returns
(for tax years 1997-2002) in an effort to remove the restrictions under Section
382 of the Internal Revenue Code on approximately $73.8 million of NOL
carryforwards to reduce future taxable income. These NOL
carryforwards relate to fresh start accounting from the Company's reorganization
in 1992. During the year ended July 31, 2006, the Internal Revenue
Service (“IRS”) completed its examination of the Company’s filing position in
these amended returns and disallowed the Company’s position to remove the
restrictions under Section 382 of the Internal Revenue
Code. Consequently, the accompanying financial statements and table
of deferred items and components of the tax provision have only recognized
benefits related to the NOL carryforwards to the extent of the Section 382
Amount reported in its tax returns prior to its amendments. The
Company has appealed the examiner's disallowance of these NOL carryforwards to
the Office of Appeals. To the extent that the Company is successful
in its appeal and able to reduce taxable income from the utilization of these
NOL carryforwards, it will result in a corresponding reduction in intangible
assets existing at the date of fresh start. If the Company is
unsuccessful in its appeals process, it will not negatively impact the Company's
financial position or results of operations. The Company has state
NOL carryforwards (primarily California) totaling $25.1 million. The
state NOL carryforwards primarily expire by the year ending July 31,
2015. At July 31, 2008, the Company has recorded a valuation
allowance of $1.6 million, primarily due to California NOL carryforwards
generated in prior years. The Company has determined that it is more
likely than not that a portion of its deferred tax assets, those primarily
generated from California NOL carryforwards, will not be realized.
Deferred
income taxes reflect the net tax effects of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
income tax purposes. Significant components of the Company's deferred
tax liabilities and assets are as follows (in thousands):
July
31,
|
||||||||
2008
|
2007
|
|||||||
Deferred
income tax liabilities:
|
||||||||
Fixed
assets
|
$
|
89,343
|
$
|
90,984
|
||||
Intangible
assets
|
26,542
|
22,330
|
||||||
Other,
net
|
2,455
|
4,705
|
||||||
Total
|
118,340
|
118,019
|
||||||
Deferred
income tax assets:
|
||||||||
Deferred
membership revenue
|
30,807
|
30,942
|
||||||
Real
estate and other investments
|
11,007
|
11,407
|
||||||
Deferred
compensation and other accrued expenses
|
14,083
|
15,965
|
||||||
Net
operating loss carryforwards and minimum and
|
||||||||
other
tax credits
|
2,775
|
2,775
|
||||||
Other,
net
|
1,119
|
1,361
|
||||||
Total
|
59,791
|
62,450
|
||||||
Valuation
allowance for deferred income taxes
|
(1,588
|
)
|
(1,588
|
)
|
||||
Deferred
income tax assets, net of valuation allowance
|
58,203
|
60,862
|
||||||
Net
deferred income tax liability
|
$
|
60,137
|
$
|
57,157
|
The net
current and non-current components of deferred income taxes recognized in the
Consolidated Balance Sheets are as follows (in thousands):
July
31,
|
|||||||
2008
|
2007
|
||||||
Net
current deferred income tax asset
|
$
|
15,142
|
$
|
15,056
|
|||
Net
non-current deferred income tax liability
|
75,279
|
72,213
|
|||||
Net
deferred income tax liability
|
$
|
60,137
|
$
|
57,157
|
Significant
components of the provision for income taxes are as follows (in
thousands):
Year
Ended July 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Current:
|
||||||||||||
Federal
|
$
|
50,169
|
$
|
37,962
|
$
|
22,757
|
||||||
State
|
6,710
|
5,566
|
4,196
|
|||||||||
Total
current
|
56,879
|
43,528
|
26,953
|
|||||||||
Deferred:
|
||||||||||||
Federal
|
5,533
|
(4,125
|
)
|
3,383
|
||||||||
State
|
674
|
(149
|
)
|
(1,082
|
)
|
|||||||
Total
deferred
|
6,207
|
(4,274
|
)
|
2,301
|
||||||||
Provision
for income taxes
|
$
|
63,086
|
$
|
39,254
|
$
|
29,254
|
The
Company recorded a tax benefit upon the exercise of stock options and issuance
of restricted stock of $1.9 million, $6.9 million and $14.3 million for the
years ended July 31, 2008, 2007 and 2006, respectively.
A
reconciliation of the income tax provision from continuing operations and the
amount computed by applying the United States Federal statutory income tax rate
to income before income taxes is as follows:
Year
Ended July 31,
|
|||||||||||
2008
|
2007
|
2006
|
|||||||||
At
U.S. Federal income tax rate
|
35.0
|
%
|
35.0
|
%
|
35.0
|
%
|
|||||
State
income tax, net of Federal benefit
|
2.9
|
%
|
3.5
|
%
|
2.7
|
%
|
|||||
Nondeductible
compensation
|
--
|
%
|
0.4
|
%
|
1.4
|
%
|
|||||
Nondeductible
meals or entertainment
|
0.1
|
%
|
0.2
|
%
|
0.2
|
%
|
|||||
General
business credits
|
(0.4
|
)
|
%
|
(0.6
|
)
|
%
|
(1.0
|
)
|
%
|
||
Tax
exempt interest
|
(0.2
|
)
|
%
|
--
|
%
|
--
|
%
|
||||
Other
|
0.6
|
%
|
0.5
|
%
|
0.7
|
%
|
|||||
38.0
|
%
|
39.0
|
%
|
39.0
|
%
|
The
Company adopted the provisions of FIN 48 on August 1, 2007. As
of the date of adoption, the accrual for uncertain tax positions was $13.1
million. The adoption of FIN 48 did not impact the amount of the
Company’s unrecognized tax benefits. However, the adoption did result
in a reclassification of $2.8 million of liabilities for unrecognized tax
benefits from deferred income tax liabilities to other long-term liabilities to
conform to the balance sheet presentation requirements of FIN 48. A
reconciliation of the beginning and ending amount of unrecognized tax benefits
is as follows (in thousands):
Unrecognized
Tax Benefits
|
|||
Balance
as of August 1, 2007
|
$
|
12,257
|
|
Additions
based on tax positions related to the current year
|
--
|
||
Additions
for tax positions of prior years
|
6,331
|
||
Reductions
for tax positions of prior years
|
(237
|
)
|
|
Settlements
|
(555
|
)
|
|
Balance
as of July 31, 2008
|
$
|
17,796
|
As of
July 31, 2008, the amount of unrecognized tax benefits was $17.8 million, of
which $1.2 million would, if recognized, decrease the Company’s effective tax
rate. As allowed under FIN 48, the Company is continuing its policy
of accruing income tax related interest and penalties, if applicable, within
income tax expense. As of July 31, 2008, accrued interest and
penalties, net of tax, is $2.3 million and for the years ended July 31, 2008 and
2007, the Company recognized $1.5 million and $0.8 million of interest expense
and penalties, net of tax, respectively.
The
Company files income tax returns in the U.S. federal jurisdiction and various
state jurisdictions. The IRS has completed its examination of the Company’s tax
returns for tax years 2001 through 2003 and has issued a report of its
findings. As discussed above, the examiner’s primary finding is the
disallowance of the Company’s position to remove the restrictions under Section
382 of the Internal Revenue Code of approximately $73.8 million of NOL
carryforwards; however, the Company has appealed the examiner’s disallowance of
these NOL carryforwards to the Office of Appeals. Upon ultimate
resolution, the unrecognized tax benefit related to this matter will be resolved
as it will result in either payment by the Company, recognition of the tax
benefits through the utilization of NOL carryforwards, or a combination of
both. The Company anticipates that this matter will be resolved in
the next twelve months. Upon final resolution, the unrecognized tax
benefits of $17.8 million shown above would decrease by approximately $16.6
million.
As
reflected in the table above, the Company recorded a decrease to unrecognized
tax benefits during the fiscal year of $0.6 million as a result of the Company
entering into an agreement with the Colorado Department of Revenue covering
calendar year tax returns from 2001 through 2005. Additionally, the
IRS commenced an examination of the Company's U.S. income tax return for 2006
during the year ended July 31, 2008 that is anticipated to be completed in
the year ending July 31, 2009. The Company’s Federal calendar year
tax returns for 2000 and beyond remain subject to examination.
12. Related
Party Transactions
The
Company has the right to appoint 4 of 9 directors of the Beaver Creek Resort
Company of Colorado (“BCRC”), a non-profit entity formed for the benefit of
property owners and certain others in Beaver Creek. The Company has a
management agreement with the BCRC, renewable for one-year periods, to provide
management services on a fixed fee basis. Management fees and
reimbursement of operating expenses paid to the Company under its agreement with
the BCRC during the years ended July 31, 2008, 2007 and 2006 totaled $7.5
million, $7.1 million and $6.7 million, respectively.
For the
year ended July 31, 2006, KRED, an entity in which the Company has a 50%
ownership interest, made distributions to the Company in the amount of $2.2
million related to the sale of inventory of developed real estate. In
connection with this distribution, the Company recorded a $0.7 million gain
during the year ended July 31, 2006 for distributions in excess of the Company’s
basis in the KRED investment.
SSF/VARE
is a real estate brokerage with multiple locations in Eagle and Summit Counties,
Colorado in which the Company has a 50% ownership interest. SSF/VARE
is the broker for several of the Company's developments. The Company
recorded net real estate commissions expense of approximately $14.7 million,
$3.4 million and $1.0 million for payments made to SSF/VARE during the years
ended July 31, 2008, 2007 and 2006, respectively. SSF/VARE leases
several spaces for real estate offices from the Company. The Company
recognized approximately $0.4 million in revenue related to these leases during
each of the years ended July 31, 2008, 2007 and 2006.
In
January 2007, Robert A. Katz, Chief Executive Officer of the Company, executed a
purchase and sale agreement for the purchase of a unit at The Lodge at Vail
Chalets project located near the Vista Bahn at the base of Vail Mountain for a
total purchase price of $12.5 million. Mr. Katz has provided an
earnest money deposit of $1.9 million, a framing deposit of $1.2 million and
upgrade deposits totaling $1.4 million. The earnest money deposit
will be used to fund the construction of The Lodge at Vail Chalets
project. The sale of the unit by the Company to Mr. Katz was approved
by the Board of Directors of the Company in accordance with the Company's
related party transactions policy.
In
September 2003, the Company invested in the purchase of a residence in Eagle
County, Colorado for Jeffrey W. Jones, the Company's Senior Executive Vice
President and Chief Financial Officer, and his family. The Company
contributed $0.7 million toward the purchase price of the residence and thereby
obtained a 46.1% undivided ownership interest in such residence. In
May 2006, Mr. Jones’ former residence was sold, in connection with the Company’s
relocation of its corporate headquarters to Broomfield, Colorado, for $2.0
million. The net proceeds to the Company for its 46.1% ownership
interest were approximately $0.9 million, $0.2 million in excess of the
Company’s investment. In June 2006, the Company invested in the
purchase of a residence in the Denver/Boulder, Colorado area, for Mr. Jones and
his family in connection with his relocation to the Company’s new headquarters
in Broomfield, Colorado. The Company contributed $0.7 million towards
the purchase price of the residence and thereby obtained a 31.0% undivided
ownership interest in such residence. In January 2007, Mr. Jones
purchased the Company’s ownership interest for an appraised value of $0.7
million. The sale of the Company’s ownership interest was approved by
the Board of Directors of the Company in accordance with the Company's related
party transactions policy.
In July
2002, RockResorts entered into an agreement with Edward E. Mace, former
President of RockResorts and of Vail Resorts Lodging Company, whereby
RockResorts invested in the purchase of a residence for Mr. Mace and his family
in Eagle County, Colorado. RockResorts contributed $0.9 million
towards the purchase price of the residence and thereby obtained an approximate
47% undivided ownership in such residence. In April 2006, Mr. Mace
ceased to be an employee of the Company. In October 2006, RockResorts
sold its proportionate share of the residence to Mr. Mace. The net
proceeds to the Company for its 47% ownership interest after certain deductions
was $0.9 million.
In
November 2002, Heavenly Valley Limited Partnership (“Heavenly LP”), a wholly
owned subsidiary of the Company, invested in the purchase of a residence in the
greater Lake Tahoe area for Blaise Carrig, Chief Operating Officer for
Heavenly. Heavenly LP contributed $0.4 million toward the purchase
price of the residence and thereby obtained a 50% undivided ownership interest
in such residence. Heavenly LP shall be entitled to receive its
proportionate share of the fair value of the residence, less certain deductions,
upon the earlier of the resale of the residence or within approximately 18
months after Mr. Carrig's termination of employment from Heavenly
LP.
In
February 2001, the Company invested in the purchase of a primary residence in
Breckenridge, Colorado for Roger McCarthy, former Co-President of the Mountain
Division and Chief Operating Officer for Breckenridge. The Company
contributed $0.4 million towards the purchase price of the residence and thereby
obtained an approximate 40% undivided ownership interest in such
residence. In May 2007, Mr. McCarthy ceased to be an employee of the
Company. The Company shall be entitled to receive its proportionate
share of the fair value of the residence, less certain deductions, upon the
earlier of the resale of the residence or within approximately 18 months from
Mr. McCarthy's termination of employment from the Company.
In 1999,
the Company entered into an agreement with William A. Jensen, former President
of the Mountain Division and Chief Operating Officer for Vail Mountain, whereby
the Company invested in the purchase of a primary residence for Mr. and Mrs.
Jensen in Vail, Colorado. The Company contributed $1.0 million
towards the purchase price of the residence and thereby obtained an approximate
49% undivided ownership interest in such residence. In July 2007, Mr.
Jensen purchased the Company’s ownership interest for an appraised value of
$1.5 million. The net proceeds to the Company for its ownership
interest were approximately $1.4 million, $0.4 million in excess of the
Company’s investment. The sale of the Company’s ownership interest
was approved by the Board of Directors of the Company in accordance with the
Company's related party transactions policy.
In
December 2004, Adam Aron, the former Chairman of the Board of Directors and
Chief Executive Officer of the Company, and Ronald Baron, an affiliate of a
significant shareholder in the Company, reserved the purchase of condominium
units at The Arrabelle at Vail Square project. In April 2005, Mr.
Aron executed a purchase and sale agreement for the purchase of a condominium
unit for a total purchase price of $4.6 million. In July 2008, Mr.
Aron purchased the completed condominium unit for $4.6 million. In
May 2005, Mr. Baron and his wife executed a purchase and sale agreement for the
purchase of a condominium unit for a total purchase price of $14.0
million. In July 2008, Mr. Baron and his wife purchased the completed
condominium unit for $15.6 million, including purchase upgrades. The
sale of the condominiums was approved by the Board of Directors of the Company
in accordance with the Company's related party transactions policy.
13. Commitments
and Contingencies
Metropolitan
Districts
The
Company credit-enhances $8.5 million of bonds issued by Holland Creek
Metropolitan District (“HCMD”) through an $8.6 million letter of credit issued
against the Company's Credit Facility. HCMD's bonds were issued and
used to build infrastructure associated with the Company's Red Sky Ranch
residential development. The Company has agreed to pay capital
improvement fees to Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD's
revenue streams from property taxes are sufficient to meet debt service
requirements under HCMD's bonds, and the Company has recorded a liability of
$1.6 million and $1.1 million, primarily within “other long-term liabilities” in
the accompanying Consolidated Balance Sheets as of July 31, 2008 and 2007,
respectively, with respect to the estimated present value of future RSRMD
capital improvement fees. The Company estimates that it will make
capital improvement fee payments under this arrangement through the year ending
July 31, 2016.
Guarantees
As of
July 31, 2008, the Company had various other guarantees, primarily in the form
of letters of credit in the amount of $94.3 million, consisting primarily of
$51.0 million in support of the Employee Housing Bonds, $34.5 million of
construction and development related guarantees and $7.6 million for workers’
compensation and general liability deductibles related to construction and
development activities.
In
addition to the guarantees noted above, the Company has entered into contracts
in the normal course of business which include certain indemnifications within
the scope of FASB Financial Interpretation No. 45, “Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others” (“FIN 45”) under which it could be required to make
payments to third parties upon the occurrence or non-occurrence of certain
future events. These indemnities include indemnities to licensees in
connection with the licensees’ use of the Company’s trademarks and logos,
indemnities for liabilities associated with the infringement of other parties’
technology and software products, indemnities related to liabilities associated
with the use of easements, indemnities related to employment of contract
workers, the Company’s use of trustees, indemnities related to the Company’s use
of public lands and environmental indemnifications. The duration of
these indemnities generally is indefinite and generally do not limit the future
payments the Company could be obligated to make.
As
permitted under applicable law, the Company and certain of its subsidiaries
indemnify their directors and officers over their lifetimes for certain events
or occurrences while the officer or director is, or was, serving the Company or
its subsidiaries in such a capacity. The maximum potential amount of
future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company has a director and
officer insurance policy that should enable the Company to recover a portion of
any future amounts paid.
Unless
otherwise noted, the Company has not recorded any significant liabilities for
the letters of credit, indemnities and other guarantees noted above in the
accompanying Consolidated Financial Statements, either because the Company has
recorded on its Consolidated Balance Sheets the underlying liability associated
with the guarantee, the guarantee or indemnification existed prior to January 1,
2003, the guarantee is with respect to the Company’s own performance and is
therefore not subject to the measurement requirements of FIN 45, or because the
Company has calculated the fair value of the indemnification or guarantee to be
immaterial based upon the current facts and circumstances that would trigger a
payment under the indemnification clause. In addition, with respect
to certain indemnifications it is not possible to determine the maximum
potential amount of liability under these guarantees due to the unique set of
facts and circumstances that are likely to be involved in each particular claim
and indemnification provision. Historically, payments made by the
Company under these obligations have not been material.
As noted
above, the Company makes certain indemnifications to licensees in connection
with their use of the Company’s trademarks and logos. The Company
does not record any product warranty liability with respect to these
indemnifications.
Commitments
In the
ordinary course of obtaining necessary zoning and other approvals for the
Company's potential real estate development projects, the Company may
contingently commit to the completion of certain infrastructure, improvements
and other costs related to the projects. Fulfillment of such
commitments is required only if the Company moves forward with the development
project. The determination whether to complete a development project
is entirely at the Company's discretion, and is generally contingent upon, among
other considerations, receipt of satisfactory zoning and other approvals and the
current status of the Company's analysis of the economic viability of the
project, including the costs associated with the contingent
commitments. The Company currently has obligations, recorded as
liabilities in the accompanying Consolidated Balance Sheet, to complete or fund
certain improvements with respect to real estate developments; the Company has
estimated such costs to be approximately $4.8 million as of July 31, 2008, and
anticipates completion of the majority of these commitments within the next two
years.
The
Company has executed as lessee operating leases for the rental of office and
commercial space, employee residential units and office equipment through fiscal
2019. Certain of these leases have renewal terms at the Company's
option, escalation clauses, rent holidays and leasehold improvement
incentives. Rent holidays and rent escalation clauses are recognized
on a straight-line basis over the lease term. Leasehold improvement
incentives are recorded as leasehold improvements and amortized over the shorter
of their economic lives or the term of the lease. For the years ended
July 31, 2008, 2007 and 2006, the Company recorded lease expense related to
these agreements of $24.8 million, $22.3 million and $17.4 million,
respectively, which is included in the accompanying Consolidated Statements of
Operations.
Future
minimum lease payments under these leases as of July 31, 2008 are as follows (in
thousands):
2009
|
$
|
13,214
|
2010
|
11,715
|
|
2011
|
9,739
|
|
2012
|
7,660
|
|
2013
|
7,301
|
|
Thereafter
|
19,110
|
|
Total
|
$
|
68,739
|
Self
Insurance
The
Company is self-insured for claims under its health benefit plans and for
workers’ compensation claims, subject to a stop loss policy. The
self-insurance liability related to workers' compensation is determined
actuarially based on claims filed. The self-insurance liability
related to claims under the Company’s health benefit plans is determined based
on analysis of actual claims. The amounts related to these claims are
included as a component of accrued benefits in accounts payable and accrued
expenses (see Note 5, Supplementary Balance Sheet Information).
Legal
The
Company is a party to various lawsuits arising in the ordinary course of
business, including Resort (Mountain and Lodging) related cases and contractual
and commercial litigation that arises from time to time in connection with the
Company’s real estate operations. Management believes the Company has
adequate insurance coverage or has accrued for loss contingencies for all known
matters that are deemed to be probable losses and estimable. As of
July 31, 2008 and 2007, the accrual for the above loss contingencies was not
material individually and in the aggregate.
Cheeca Lodge & Spa
Contract Dispute
In March
2006, RockResorts was notified by the ownership of Cheeca Lodge & Spa,
formerly a RockResorts managed property, that its management agreement was being
terminated effective immediately. RockResorts believed that the
termination was in violation of the management agreement and sought monetary
damages, and recovery of attorney’s fees and costs. Pursuant to the
dispute resolution provisions of the management agreement, the disputed matter
went before a single judge arbitrator at the JAMS Arbitration Tribunal in
Chicago, Illinois. On February 28, 2007, the arbitrator rendered a
decision, awarding $8.5 million in damages in favor of RockResorts and against
Cheeca Holdings, LLC (“Cheeca Holdings”) and recovery of costs and attorney’s
fees to be determined in the last stage of the proceedings. Prior to
the ruling by the arbitrator in the last stage of the proceeding, the Company
reached a comprehensive settlement with Cheeca Holdings which included damages,
attorney’s fees and expenses. On October 19, 2007, RockResorts
received payment of the final settlement from Cheeca Holdings in the amount of
$13.5 million, of which $11.9 million (net of final attorney’s fees) is recorded
in “contract dispute credit (charges), net” in the Consolidated Statement of
Operations for the year ended July 31, 2008. The Company incurred
$4.6 million and $3.3 million of legal related costs related to this matter in
the years ended July 31, 2007 and 2006, respectively.
Breckenridge Terrace
Employee Housing Construction Defect/Water Intrusion Claims
During
the year ended July 31, 2004, the Company became aware of water intrusion and
condensation problems causing mold damage in the 17 building employee housing
facility owned by Breckenridge Terrace, an Employee Housing Entity in which the
Company is a member and manager. Breckenridge Terrace recorded a $7.0
million liability in the year ended July 31, 2004 for the estimated cost of
remediation and reconstruction efforts which were substantially completed by
July 31, 2006.
Forensic
construction experts retained by Breckenridge Terrace determined that the water
intrusion and condensation problems were the result of construction and design
defects. In accordance with Colorado law, Breckenridge Terrace served
separate notices of claims on the general contractor, architect and developer
and initiated arbitration proceedings. During the year ended July 31,
2006, the Company recorded a $1.4 million mold remediation credit due to
Breckenridge Terrace receiving reimbursement from third parties for costs
incurred in conjunction with its mold remediation efforts and a true-up
adjustment as the remediation project is complete. This credit was
recognized by the Company as reduction of the remediation expense that was
originally recognized in the year ended July 31, 2004.
14. Segment
Information
The
Company has three reportable segments: Mountain, Lodging and Real
Estate. The Mountain segment includes the operations of the Company’s
ski resorts and related ancillary activities. The Lodging segment
includes the operations of all of the Company’s owned hotels, RockResorts, GTLC,
condominium management and golf operations. The Resort segment is the
combination of the Mountain and Lodging segments. The Real Estate
segment owns and develops real estate in and around the Company’s resort
communities. The Company’s reportable segments, although integral to
the success of the others, offer distinctly different products and services and
require different types of management focus. As such, these segments
are managed separately.
The
Company reports its segment results using Reported EBITDA (defined as segment
net revenue less segment operating expenses, plus or minus segment equity
investment income or loss, and for the Real Estate segment, plus gain on sale of
real property) which is a non-GAAP financial measure. SFAS No. 131,
“Disclosures about Segments of an Enterprise and Related Information” requires
the Company to report segment results in a manner consistent with management’s
internal reporting of operating results to the chief operating decision maker
(Chief Executive Officer) for purposes of evaluating segment
performance. Therefore, since the Company uses Reported EBITDA to
measure performance of segments for internal reporting purposes, the Company
will continue to use Reported EBITDA to report segment results.
Reported
EBITDA is not a measure of financial performance under GAAP. Items
excluded from Reported EBITDA are significant components in understanding and
assessing financial performance. Reported EBITDA should not be
considered in isolation or as an alternative to, or substitute for, net income,
net change in cash and cash equivalents or other financial statement data
presented in the consolidated financial statements as indicators of financial
performance or liquidity. Because Reported EBITDA is not a
measurement determined in accordance with GAAP and thus is susceptible to
varying calculations, Reported EBITDA as presented may not be comparable to
other similarly titled measures of other companies.
The
Company utilizes Reported EBITDA in evaluating performance of the Company and in
allocating resources to its segments. Mountain Reported EBITDA
consists of Mountain net revenue less Mountain operating expense plus Mountain
equity investment income. Lodging Reported EBITDA consists of Lodging
net revenue less Lodging operating expense. Real Estate Reported
EBITDA consists of Real Estate net revenue less Real Estate operating expense
plus Real Estate equity investment income plus gain on sale of real
property. All segment expenses include an allocation of corporate
administrative expense. Assets are not allocated between segments, or
used to evaluate performance, except as shown in the table below. The
accounting policies specific to each segment are the same as those described in
Note 2, Summary of Significant Accounting Policies.
Following
is key financial information by reportable segment which is used by management
in evaluating performance and allocating resources (in thousands):
Year
Ended July 31,
|
||||||||||||
2008
|
2007
|
2006
|
||||||||||
Net
revenue:
|
||||||||||||
Lift
tickets
|
$
|
301,914
|
$
|
286,997
|
$
|
263,036
|
||||||
Ski
school
|
81,384
|
78,848
|
72,628
|
|||||||||
Dining
|
62,506
|
59,653
|
56,657
|
|||||||||
Retail/rental
|
168,765
|
160,542
|
149,350
|
|||||||||
Other
|
70,964
|
79,337
|
78,770
|
|||||||||
Total
Mountain net revenue
|
685,533
|
665,377
|
620,441
|
|||||||||
Lodging
|
170,057
|
162,451
|
155,807
|
|||||||||
Resort
|
855,590
|
827,828
|
776,248
|
|||||||||
Real
estate
|
296,566
|
112,708
|
62,604
|
|||||||||
Total
net revenue
|
$
|
1,152,156
|
$
|
940,536
|
$
|
838,852
|
||||||
Segment
operating expense:
|
||||||||||||
Mountain
|
$
|
470,362
|
$
|
462,708
|
$
|
443,116
|
||||||
Lodging
|
159,832
|
144,252
|
142,693
|
|||||||||
Resort
|
630,194
|
606,960
|
585,809
|
|||||||||
Real
estate
|
251,338
|
115,190
|
56,676
|
|||||||||
Total
segment operating expense
|
$
|
881,532
|
$
|
722,150
|
$
|
642,485
|
||||||
Gain
on sale of real property
|
$
|
709
|
$
|
--
|
$
|
--
|
||||||
Mountain
equity investment income, net
|
$
|
5,390
|
$
|
5,059
|
$
|
3,876
|
||||||
Real
estate equity investment income
|
$
|
--
|
$
|
--
|
$
|
791
|
||||||
Reported
EBITDA:
|
||||||||||||
Mountain
|
$
|
220,561
|
$
|
207,728
|
$
|
181,201
|
||||||
Lodging
|
10,225
|
18,199
|
13,114
|
|||||||||
Resort
|
230,786
|
225,927
|
194,315
|
|||||||||
Real
estate
|
45,937
|
(2,482
|
)
|
6,719
|
||||||||
Total
Reported EBITDA
|
$
|
276,723
|
$
|
223,445
|
$
|
201,034
|
||||||
Reconciliation
to net income:
|
||||||||||||
Total
Reported EBITDA
|
$
|
276,723
|
$
|
223,445
|
$
|
201,034
|
||||||
Depreciation
and amortization
|
(93,794
|
)
|
(87,664
|
)
|
(86,098
|
)
|
||||||
Relocation
and separation charges
|
--
|
(1,433
|
)
|
(5,096
|
)
|
|||||||
Asset
impairment charges
|
--
|
--
|
(210
|
)
|
||||||||
Mold
remediation credit
|
--
|
--
|
1,411
|
|||||||||
Loss
on disposal of fixed assets, net
|
(1,534
|
)
|
(1,083
|
)
|
(1,035
|
)
|
||||||
Investment
income, net
|
8,285
|
12,403
|
7,995
|
|||||||||
Interest
expense, net
|
(30,667
|
)
|
(32,625
|
)
|
(36,478
|
)
|
||||||
(Loss)
gain from sale of businesses, net
|
--
|
(639
|
)
|
4,625
|
||||||||
Contact
dispute credit (charges), net
|
11,920
|
(4,642
|
)
|
(3,282
|
)
|
|||||||
Gain
(loss) on put options, net
|
--
|
690
|
(1,212
|
)
|
||||||||
Other
income, net
|
--
|
--
|
50
|
|||||||||
Minority
interest in income of consolidated subsidiaries, net
|
(4,920
|
)
|
(7,801
|
)
|
(6,694
|
)
|
||||||
Income
before provision for income taxes
|
166,013
|
100,651
|
75,010
|
|||||||||
Provision
for income taxes
|
(63,086
|
)
|
(39,254
|
)
|
(29,254
|
)
|
||||||
Net
income
|
$
|
102,927
|
$
|
61,397
|
$
|
45,756
|
||||||
Real
estate held for sale and investment
|
$
|
249,305
|
$
|
357,586
|
$
|
259,384
|
15. Selected
Quarterly Financial Data (Unaudited--in thousands, except per share
amounts)
2008
|
||||||||||||||||||||
Year
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||||||
July
31,
|
July
31,
|
April
30,
|
January
31,
|
October
31,
|
||||||||||||||||
2008
|
2008
|
2008
|
2008
|
2007
|
||||||||||||||||
Mountain
revenue
|
$
|
685,533
|
$
|
37,549
|
$
|
325,726
|
$
|
279,722
|
$
|
42,536
|
||||||||||
Lodging
revenue
|
170,057
|
48,323
|
43,590
|
34,827
|
43,317
|
|||||||||||||||
Real
estate revenue
|
296,566
|
184,587
|
54,474
|
45,471
|
12,034
|
|||||||||||||||
Total
net revenue
|
1,152,156
|
270,459
|
423,790
|
360,020
|
97,887
|
|||||||||||||||
Income
(loss) from operations
|
176,005
|
(15,824
|
)
|
151,461
|
92,572
|
(52,204
|
)
|
|||||||||||||
Contract
dispute credit, net
|
11,920
|
--
|
--
|
--
|
11,920
|
|||||||||||||||
Net
income (loss)
|
102,927
|
(11,123
|
)
|
87,341
|
51,319
|
(24,610
|
)
|
|||||||||||||
Basic
net income (loss) per common share
|
2.67
|
(0.29
|
)
|
2.26
|
1.32
|
(0.63
|
)
|
|||||||||||||
Diluted
net income (loss) per common share
|
$
|
2.64
|
$
|
(0.29
|
)
|
$
|
2.24
|
$
|
1.31
|
$
|
(0.63
|
)
|
||||||||
2007
|
||||||||||||||||||||
Year
|
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||||||
Ended
|
Ended
|
Ended
|
Ended
|
Ended
|
||||||||||||||||
July
31,
|
July
31,
|
April
30,
|
January
31,
|
October
31,
|
||||||||||||||||
2007
|
2007
|
2007
|
2007
|
2006
|
||||||||||||||||
Mountain
revenue
|
$
|
665,377
|
$
|
38,475
|
$
|
308,712
|
$
|
272,026
|
$
|
46,164
|
||||||||||
Lodging
revenue
|
162,451
|
45,604
|
43,643
|
32,796
|
40,408
|
|||||||||||||||
Real
estate revenue
|
112,708
|
12,436
|
17,134
|
56,216
|
26,922
|
|||||||||||||||
Total
net revenue
|
940,536
|
96,515
|
369,489
|
361,038
|
113,494
|
|||||||||||||||
Income
(loss) from operations
|
128,206
|
(54,867
|
)
|
136,184
|
97,750
|
(50,861
|
)
|
|||||||||||||
Gain
on sale of businesses, net
|
(639
|
)
|
(38
|
)
|
(601
|
)
|
--
|
--
|
||||||||||||
Contract
dispute charges
|
(4,642
|
)
|
(181
|
)
|
(184
|
)
|
(672
|
)
|
(3,605
|
)
|
||||||||||
Net
income (loss)
|
61,397
|
(34,322
|
)
|
78,508
|
53,026
|
(35,815
|
)
|
|||||||||||||
Basic
net income (loss) per common share
|
1.58
|
(0.88
|
)
|
2.02
|
1.37
|
(0.93
|
)
|
|||||||||||||
Diluted
net income (loss) per common share
|
$
|
1.56
|
$
|
(0.88
|
)
|
$
|
1.99
|
$
|
1.35
|
$
|
(0.93
|
)
|
16. Stock
Repurchase Plan
On March
9, 2006, the Company’s Board of Directors approved the repurchase of up to
3,000,000 shares of common stock and on July 16, 2008 approved an increase of
the Company’s common stock repurchase authorization by an additional 3,000,000
shares. During the year ended July 31, 2008, the Company repurchased
2,330,608 shares of common stock at a cost of $99.6 million. Since
inception of this stock repurchase plan through July 31, 2008, the Company has
repurchased 3,004,108 shares at a cost of approximately $125.5
million. As of July 31, 2008, 2,995,892 shares remained available to
repurchase under the existing repurchase authorization. Shares of
common stock purchased pursuant to the repurchase program will be held as
treasury shares and may be used for the issuance of shares under the Company's
employee share award plans.
17. Stock
Compensation Plans
The
Company has four share award plans which have been approved by the Company's
shareholders: the 1993 Stock Option Plan (“1993 Plan”), the 1996 Long Term
Incentive and Share Award Plan (“1996 Plan”), the 1999 Long Term Incentive and
Share Award Plan (“1999 Plan”) and the 2002 Long Term Incentive and Share Award
Plan (“2002 Plan”). On January 4, 2007, the Company’s shareholders
approved to amend the Company’s 2002 Plan to, among other things, (i) rollover
to the 2002 Plan an amount equal to the number of shares of common stock
remaining for issuance under the 1999 Plan as of November 6, 2006 and a number
of shares of common stock that is equal to any shares of common stock that are
forfeited pursuant to the terms of the 1999 Plan after November 6, 2006; and
(ii) increase the number of shares of common stock authorized for issuance under
the 2002 Plan from 2,500,000 to 5,000,000 shares (“Amended 2002
Plan”). Under the Amended 2002 Plan, 5,000,000 shares of common stock
could be issued in the form of options, stock appreciation rights, restricted
shares, restricted share units, performance shares, performance share units,
dividend equivalents or other share-based awards to employees, directors or
consultants of the Company or its subsidiaries or affiliates. The
terms of awards granted under the Amended 2002 Plan, including exercise price,
vesting period and life, are set by the Compensation Committee of the Board of
Directors. All share-based awards (except for restricted shares and
restricted share units) granted under these plans have a life of ten
years. Most awards vest ratably over three years; however some have
been granted with different vesting schedules. To date, no awards
have been granted to non-employees (except those granted to non-employee members
of the Board of Directors of the Company and of a consolidated subsidiary) under
any of the four plans. At July 31, 2008, approximately 2.7 million
share-based awards were available to be granted under the Amended 2002
Plan. Under the 1993 Plan, 1996 Plan and 1999 Plan no share-based
awards are available for grant.
With the
adoption of SFAS 123R, the Company decided that a lattice-based option valuation
model will be used for equity award grants if sufficient historical data is
available by type of equity award to estimate the fair value of the equity
awards granted. A lattice-based model considers factors such as
exercise behavior, and assumes employees will exercise equity awards at
different times over the contractual life of the equity awards. As a
lattice-based model considers these factors, and is more flexible, the Company
considers it to be a better method of valuing equity awards than a closed-form
Black-Scholes model.
The fair
value of most option awards and stock-settled stock appreciation rights (“SARs”)
granted in the years ended July 31, 2008, 2007 and 2006 were estimated on the
date of grant using a lattice-based option valuation model that applies the
assumptions noted in the table below. In the year ended July 31, 2006
the fair value of equity awards with cliff vesting was estimated on the date of
grant using a Black-Scholes option-pricing model due to the lack of historical
employee exercise behavior, which applies assumptions within the ranges as noted
in the table below. Because lattice-based option valuation models
incorporate ranges of assumptions for inputs, those ranges are
disclosed. Expected volatility is based on historical volatility of
the Company's stock. The Company uses historical data to estimate
equity award exercises and employee terminations within the valuation model;
separate groups of employees that have similar historical exercise behavior are
considered separately for valuation purposes. The expected term of
equity awards granted is derived from the output of the option valuation model
and represents the period of time that equity awards granted are expected to be
outstanding; the range given below results from certain groups of employees
exhibiting different behavior. The risk-free rate for periods within
the contractual life of the equity award is based on the United States Treasury
yield curve in effect at the time of grant.
Year
Ended July 31,
|
||||||||
2008
|
2007
|
2006
|
||||||
Expected
volatility
|
36.6
|
%
|
37.4
|
%
|
38.9
|
%
|
||
Expected
dividends
|
--
|
%
|
--
|
%
|
--
|
%
|
||
Expected
term (in years)
|
5.4
|
5.3
|
5.8-7.0
|
|||||
Risk-free
rate
|
4.0-5.1
|
%
|
4.3-4.8
|
%
|
4.0-4.6
|
%
|
The
Company has estimated forfeiture rates that range from 11.2% to 11.4% in its
calculation of stock-based compensation expense for the year ended July 31,
2008. These estimates are based on historical forfeiture behavior
exhibited by employees of the Company.
A summary
of aggregate option and SARs award activity under the share-based compensation
plans as of July 31, 2006, 2007 and 2008, and changes during the years then
ended is presented below (in thousands, except exercise price and contractual
term):
Weighted-Average
|
Weighted-Average
|
Aggregate
|
|||||||||||
Exercise
|
Remaining
|
Intrinsic
|
|||||||||||
Awards
|
Price
|
Contractual
Term
|
Value
|
||||||||||
Outstanding
at July 31, 2005
|
3,880
|
$
|
18.64
|
||||||||||
Granted
|
805
|
29.86
|
|||||||||||
Exercised
|
(2,433
|
)
|
19.27
|
||||||||||
Forfeited
or expired
|
(469
|
)
|
21.18
|
||||||||||
Outstanding
at July 31, 2006
|
1,783
|
$
|
22.18
|
||||||||||
Granted
|
227
|
42.37
|
|||||||||||
Exercised
|
(649
|
)
|
17.71
|
||||||||||
Forfeited
or expired
|
(165
|
)
|
28.63
|
||||||||||
Outstanding
at July 31, 2007
|
1,196
|
$
|
27.55
|
||||||||||
Granted
|
221
|
59.56
|
|||||||||||
Exercised
|
(117
|
)
|
20.40
|
||||||||||
Forfeited
or expired
|
(81
|
)
|
45.71
|
||||||||||
Outstanding
at July 31, 2008
|
1,219
|
$
|
32.83
|
7.3
years
|
$
|
13,358
|
|||||||
Exercisable
at July 31, 2008
|
722
|
$
|
25.21
|
6.6
years
|
$
|
11,026
|
The
weighted-average grant-date fair value of options and SARs granted during the
years ended July 31, 2008, 2007 and 2006 was $21.64, $16.18 and $12.71,
respectively. The total intrinsic value of options exercised during
the years ended July 31, 2008, 2007 and 2006 was $4.1 million, $19.8 million and
$37.6 million, respectively. The Company granted 97,000 restricted
share awards/units during the year ended July 31, 2008 with a weighted-average
grant-date fair value of $57.72. The Company granted 102,000
restricted share awards/units during the year ended July 31, 2007 with a
weighted-average grant-date fair value of $41.76. The Company granted
208,000 restricted share awards/units during the year ended July 31, 2006 with a
weighted-average grant-date fair value of $29.08. The Company had
79,000, 75,000 and 19,000 restricted share awards/units that vested during the
years ended July 31, 2008, 2007 and 2006, respectively. These
awards/units had a total fair value of $4.8 million, $3.0 million and $0.7
million at the date of vesting for the years ended July 31, 2008, 2007 and 2006,
respectively.
A summary
of the status of the Company's nonvested options and SARs as of July 31, 2008,
and changes during the year then ended, is presented below (in thousands, except
fair value amounts):
Weighted-Average
|
||||||
Grant-Date
|
||||||
Awards
|
Fair
Value
|
|||||
Outstanding
at August 1, 2007
|
664
|
$
|
12.87
|
|||
Granted
|
221
|
59.56
|
||||
Vested
|
(308
|
)
|
38.37
|
|||
Forfeited
|
(80
|
)
|
17.95
|
|||
Nonvested
at July 31, 2008
|
497
|
$
|
16.98
|
A summary
of the status of the Company's nonvested restricted share awards/units as of
July 31, 2008, and changes during the year then ended, is presented below (in
thousands, except fair value amounts):
Weighted-Average
|
||||||
Grant-Date
|
||||||
Awards
|
Fair
Value
|
|||||
Outstanding
at August 1, 2007
|
195
|
$
|
34.94
|
|||
Granted
|
97
|
57.72
|
||||
Vested
|
(79
|
)
|
38.32
|
|||
Forfeited
|
(27
|
)
|
48.91
|
|||
Nonvested
at July 31, 2008
|
186
|
$
|
43.32
|
As of
July 31, 2008, there was $8.4 million of total unrecognized compensation expense
related to nonvested share-based compensation arrangements granted under the
share-based compensation plans, of which $5.3 million, $2.9 million and $0.3
million of expense is expected to be recognized in the years ending July 31,
2009, 2010 and 2011, respectively, assuming no future share-based awards are
granted.
Cash
received from option exercises under all share-based payment arrangements was
$2.0 million, $11.5 million and $46.6 million for the years ended July 31, 2008,
2007 and 2006, respectively. The tax benefit realized or to be
realized for the tax deductions from options/SARs exercised and restricted stock
awards/units vested was $1.9 million, $6.9 million and $14.3 million for the
years ended July 31, 2008, 2007 and 2006, respectively.
The
Company has a policy of using either authorized and unissued shares or treasury
shares (if any), including shares acquired by purchase in the open market or in
private transactions, to satisfy equity award exercises.
18. Retirement
and Profit Sharing Plans
The
Company maintains a defined contribution retirement plan (the “Retirement
Plan”), qualified under Section 401(k) of the Internal Revenue Code, for its
employees. Under this Retirement Plan, employees are eligible to make
before-tax contributions on the first day of the calendar month following the
later of: (i) their employment commencement date or (ii) the date they turn
21. Participants may contribute up to 100% of their
qualifying annual compensation up to the annual maximum specified by the
Internal Revenue Code. The Company matches an amount equal to 50% of
each participant's contribution up to 6% of a participant's
bi-weekly qualifying compensation upon obtaining the later of: (i) 12
consecutive months of employment and 1,000 service hours or (ii) 1,500 service
hours since the employment commencement date. The Company's matching
contribution is entirely discretionary and may be reduced or eliminated at any
time.
Total
Retirement Plan expense recognized by the Company for the years ended July 31,
2008, 2007 and 2006 was $2.9 million, $2.8 million and $2.8 million,
respectively.
19. Guarantor
Subsidiaries and Non-Guarantor Subsidiaries
The
Company’s payment obligations under the 6.75% Notes (see Note 4, Long-Term Debt)
are fully and unconditionally guaranteed on a joint and several, senior
subordinated basis by substantially all of the Company’s consolidated
subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined
below), the “Guarantor Subsidiaries”) except for Eagle Park Reservoir Company,
Gros Ventre Utility Company, Mountain Thunder, Inc., SSV, Larkspur Restaurant
& Bar, LLC, Arrabelle, Gore Creek Place, LLC, Chalets and certain other
insignificant entities (together, the “Non-Guarantor
Subsidiaries”). APII and the Employee Housing Entities are included
with the Non-Guarantor Subsidiaries for purposes of the consolidated financial
information, but are not considered subsidiaries under the Indenture governing
the 6.75% Notes.
Presented
below is the consolidated financial information of the Parent Company, the
Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Financial
information for the Non-Guarantor subsidiaries is presented in the column titled
“Other Subsidiaries.” Balance sheet data is presented as of July 31,
2008 and 2007. Statement of operations and statement of cash flows
data are presented for the years ended July 31, 2008, 2007 and
2006.
Investments
in subsidiaries are accounted for by the Parent Company and Guarantor
Subsidiaries using the equity method of accounting. Net income (loss)
of Guarantor and Non-Guarantor Subsidiaries is, therefore, reflected in the
Parent Company's and Guarantor Subsidiaries' investments in and advances to
(from) subsidiaries. Net income (loss) of the Guarantor and
Non-Guarantor Subsidiaries is reflected in Guarantor Subsidiaries and Parent
Company as equity in consolidated subsidiaries. The elimination
entries eliminate investments in Other Subsidiaries and intercompany balances
and transactions for consolidated reporting purposes.
Supplemental
Condensed Consolidating Balance Sheet
As
of July 31, 2008
(in
thousands)
100%
Owned
|
|||||||||||||||||||||
Parent
|
Guarantor
|
Other
|
Eliminating
|
||||||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
|||||||||||||||||
Current
assets:
|
|||||||||||||||||||||
Cash
and cash equivalents
|
$
|
--
|
$
|
156,782
|
$
|
5,563
|
$
|
--
|
$
|
162,345
|
|||||||||||
Restricted
cash
|
--
|
10,526
|
47,911
|
--
|
58,437
|
||||||||||||||||
Trade
receivables, net
|
--
|
47,953
|
2,232
|
--
|
50,185
|
||||||||||||||||
Inventories,
net
|
--
|
11,786
|
37,922
|
--
|
49,708
|
||||||||||||||||
Other
current assets
|
15,142
|
19,205
|
3,873
|
--
|
38,220
|
||||||||||||||||
Total
current assets
|
15,142
|
246,252
|
97,501
|
--
|
358,895
|
||||||||||||||||
Property,
plant and equipment, net
|
--
|
806,696
|
250,141
|
--
|
1,056,837
|
||||||||||||||||
Real
estate held for sale and investment
|
--
|
204,260
|
45,045
|
--
|
249,305
|
||||||||||||||||
Goodwill,
net
|
--
|
123,034
|
19,248
|
--
|
142,282
|
||||||||||||||||
Intangible
assets, net
|
--
|
56,650
|
15,880
|
--
|
72,530
|
||||||||||||||||
Other
assets
|
3,936
|
34,922
|
7,247
|
--
|
46,105
|
||||||||||||||||
Investments
in subsidiaries and advances to (from) parent
|
1,248,019
|
599,199
|
(61,968
|
)
|
(1,785,250
|
)
|
--
|
||||||||||||||
Total
assets
|
$
|
1,267,097
|
$
|
2,071,013
|
$
|
373,094
|
$
|
(1,785,250
|
)
|
$
|
1,925,954
|
||||||||||
Current
liabilities:
|
|||||||||||||||||||||
Accounts
payable and accrued expenses
|
$
|
12,446
|
$
|
196,360
|
$
|
85,376
|
$
|
--
|
$
|
294,182
|
|||||||||||
Income
taxes payable
|
57,474
|
--
|
--
|
--
|
57,474
|
||||||||||||||||
Long-term
debt due within one year
|
--
|
15,022
|
333
|
--
|
15,355
|
||||||||||||||||
Total
current liabilities
|
69,920
|
211,382
|
85,709
|
--
|
367,011
|
||||||||||||||||
Long-term
debt
|
390,000
|
42,722
|
108,628
|
--
|
541,350
|
||||||||||||||||
Other
long-term liabilities
|
3,142
|
149,557
|
30,944
|
--
|
183,643
|
||||||||||||||||
Deferred
income taxes
|
75,279
|
--
|
--
|
--
|
75,279
|
||||||||||||||||
Minority
interest in net assets of consolidated subsidiaries
|
--
|
--
|
--
|
29,915
|
29,915
|
||||||||||||||||
Total
stockholders’ equity
|
728,756
|
1,667,352
|
147,813
|
(1,815,165
|
)
|
728,756
|
|||||||||||||||
Total
liabilities and stockholders’ equity
|
$
|
1,267,097
|
$
|
2,071,013
|
$
|
373,094
|
$
|
(1,785,250
|
)
|
$
|
1,925,954
|
Supplemental
Condensed Consolidating Balance Sheet
As
of July 31, 2007
(in
thousands)
100%
Owned
|
|||||||||||||||||||||
Parent
|
Guarantor
|
Other
|
Eliminating
|
||||||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
|||||||||||||||||
Current
assets:
|
|||||||||||||||||||||
Cash
and cash equivalents
|
$
|
--
|
$
|
225,952
|
$
|
4,867
|
$
|
--
|
$
|
230,819
|
|||||||||||
Restricted
cash
|
--
|
11,437
|
43,312
|
--
|
54,749
|
||||||||||||||||
Trade
receivables, net
|
--
|
41,804
|
1,753
|
--
|
43,557
|
||||||||||||||||
Inventories,
net
|
--
|
9,805
|
38,259
|
--
|
48,064
|
||||||||||||||||
Other
current assets
|
15,056
|
13,545
|
5,847
|
--
|
34,448
|
||||||||||||||||
Total
current assets
|
15,056
|
302,543
|
94,038
|
--
|
411,637
|
||||||||||||||||
Property,
plant and equipment, net
|
--
|
784,458
|
101,468
|
--
|
885,926
|
||||||||||||||||
Real
estate held for sale and investment
|
--
|
86,837
|
270,749
|
--
|
357,586
|
||||||||||||||||
Goodwill,
net
|
--
|
123,033
|
18,666
|
--
|
141,699
|
||||||||||||||||
Intangible
assets, net
|
--
|
57,087
|
16,420
|
--
|
73,507
|
||||||||||||||||
Other
assets
|
4,646
|
24,225
|
9,897
|
--
|
38,768
|
||||||||||||||||
Investments
in subsidiaries and advances to (from) parent
|
1,206,709
|
337,716
|
(82,219
|
)
|
(1,462,206
|
)
|
--
|
||||||||||||||
Total
assets
|
$
|
1,226,411
|
$
|
1,715,899
|
$
|
429,019
|
$
|
(1,462,206
|
)
|
$
|
1,909,123
|
||||||||||
Current
liabilities:
|
|||||||||||||||||||||
Accounts
payable and accrued expenses
|
$
|
12,718
|
$
|
161,456
|
$
|
107,605
|
$
|
--
|
$
|
281,779
|
|||||||||||
Income
taxes payable
|
37,441
|
--
|
--
|
--
|
37,441
|
||||||||||||||||
Long-term
debt due within one year
|
--
|
49
|
328
|
--
|
377
|
||||||||||||||||
Total
current liabilities
|
50,159
|
161,505
|
107,933
|
--
|
319,597
|
||||||||||||||||
Long-term
debt
|
390,000
|
57,724
|
146,009
|
--
|
593,733
|
||||||||||||||||
Other
long-term liabilities
|
--
|
108,582
|
73,248
|
--
|
181,830
|
||||||||||||||||
Deferred
income taxes
|
72,213
|
--
|
--
|
--
|
72,213
|
||||||||||||||||
Minority
interest in net assets of consolidated subsidiaries
|
--
|
--
|
--
|
27,711
|
27,711
|
||||||||||||||||
Total
stockholders’ equity
|
714,039
|
1,388,088
|
101,829
|
(1,489,917
|
)
|
714,039
|
|||||||||||||||
Total
liabilities and stockholders’ equity
|
$
|
1,226,411
|
$
|
1,715,899
|
$
|
429,019
|
$
|
(1,462,206
|
)
|
$
|
1,909,123
|
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2008
(in
thousands)
100%
Owned
|
||||||||||||||||||||
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
Total
net revenue
|
$
|
--
|
$
|
709,572
|
$
|
453,741
|
$
|
(11,157
|
)
|
$
|
1,152,156
|
|||||||||
Total
operating expense
|
127
|
599,954
|
387,075
|
(11,005
|
)
|
976,151
|
||||||||||||||
(Loss)
income from operations
|
(127
|
)
|
109,618
|
66,666
|
(152
|
)
|
176,005
|
|||||||||||||
Other
(expense) income, net
|
(27,015
|
)
|
20,740
|
(4,339
|
)
|
152
|
(10,462
|
)
|
||||||||||||
Equity
investment income, net
|
--
|
5,390
|
--
|
--
|
5,390
|
|||||||||||||||
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
--
|
(4,920
|
)
|
(4,920
|
)
|
|||||||||||||
(Loss)
income before income taxes
|
(27,142
|
)
|
135,748
|
62,327
|
(4,920
|
)
|
166,013
|
|||||||||||||
Benefit
(provision) for income taxes
|
10,341
|
(73,401
|
)
|
(26
|
)
|
--
|
(63,086
|
)
|
||||||||||||
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(16,801
|
)
|
62,347
|
62,301
|
(4,920
|
)
|
102,927
|
|||||||||||||
Equity
in income of consolidated subsidiaries
|
119,728
|
46,449
|
--
|
(166,177
|
)
|
--
|
||||||||||||||
Net
income
|
$
|
102,927
|
$
|
108,796
|
$
|
62,301
|
$
|
(171,097
|
)
|
$
|
102,927
|
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2007
(in
thousands)
100%
Owned
|
||||||||||||||||||||
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
Total
net revenue
|
$
|
--
|
$
|
719,258
|
$
|
234,780
|
$
|
(13,502
|
)
|
$
|
940,536
|
|||||||||
Total
operating expense
|
510
|
612,972
|
210,301
|
(11,453
|
)
|
812,330
|
||||||||||||||
(Loss)
income from operations
|
(510
|
)
|
106,286
|
24,479
|
(2,049
|
)
|
128,206
|
|||||||||||||
Other
(expense) income, net
|
(27,037
|
)
|
5,950
|
(3,929
|
)
|
152
|
(24,864
|
)
|
||||||||||||
Equity
investment income, net
|
--
|
5,059
|
--
|
--
|
5,059
|
|||||||||||||||
Loss
on sale of businesses, net
|
--
|
(639
|
)
|
--
|
--
|
(639
|
)
|
|||||||||||||
Gain
on put options, net
|
--
|
690
|
--
|
--
|
690
|
|||||||||||||||
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
--
|
(7,801
|
)
|
(7,801
|
)
|
|||||||||||||
(Loss)
income before income taxes
|
(27,547
|
)
|
117,346
|
20,550
|
(9,698
|
)
|
100,651
|
|||||||||||||
Benefit
(provision) for income taxes
|
10,743
|
(50,124
|
)
|
127
|
--
|
(39,254
|
)
|
|||||||||||||
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(16,804
|
)
|
67,222
|
20,677
|
(9,698
|
)
|
61,397
|
|||||||||||||
Equity
in income of consolidated subsidiaries
|
78,201
|
--
|
--
|
(78,201
|
)
|
--
|
||||||||||||||
Net
income
|
$
|
61,397
|
$
|
67,222
|
$
|
20,677
|
$
|
(87,899
|
)
|
$
|
61,397
|
Supplemental
Condensed Consolidating Statement of Operations
For
the year ended July 31, 2006
(in
thousands)
100%
Owned
|
||||||||||||||||||||
Parent
|
Guarantor
|
Other
|
Eliminating
|
|||||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Entries
|
Consolidated
|
||||||||||||||||
Total
net revenue
|
$
|
--
|
$
|
649,743
|
$
|
197,656
|
$
|
(8,547
|
)
|
$
|
838,852
|
|||||||||
Total
operating expense
|
18,204
|
551,923
|
171,933
|
(8,547
|
)
|
733,513
|
||||||||||||||
(Loss)
income from operations
|
(18,204
|
)
|
97,820
|
25,723
|
--
|
105,339
|
||||||||||||||
Other
expense, net
|
(27,149
|
)
|
(1,857
|
)
|
(2,709
|
)
|
--
|
(31,715
|
)
|
|||||||||||
Equity
investment income, net
|
--
|
4,667
|
--
|
--
|
4,667
|
|||||||||||||||
Gain
on sale of businesses, net
|
--
|
4,625
|
--
|
--
|
4,625
|
|||||||||||||||
Loss
on put options, net
|
--
|
(1,212
|
)
|
--
|
--
|
(1,212
|
)
|
|||||||||||||
Minority
interest in income of consolidated subsidiaries, net
|
--
|
--
|
(6,694
|
)
|
--
|
(6,694
|
)
|
|||||||||||||
(Loss)
income before income taxes
|
(45,353
|
)
|
104,043
|
16,320
|
--
|
75,010
|
||||||||||||||
Benefit
(provision) for income taxes
|
17,688
|
(47,172
|
)
|
230
|
--
|
(29,254
|
)
|
|||||||||||||
Net
(loss) income before equity in income of consolidated
subsidiaries
|
(27,665
|
)
|
56,871
|
16,550
|
--
|
45,756
|
||||||||||||||
Equity
in income of consolidated subsidiaries
|
73,421
|
--
|
--
|
(73,421
|
)
|
--
|
||||||||||||||
Net
income
|
$
|
45,756
|
$
|
56,871
|
$
|
16,550
|
$
|
(73,421
|
)
|
$
|
45,756
|
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2008
(in
thousands)
100%
Owned
|
||||||||||||||||
Parent
|
Guarantor
|
Other
|
||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
|||||||||||||
Net
cash provided by operating activities
|
$
|
9,792
|
$
|
103,610
|
$
|
103,594
|
$
|
216,996
|
||||||||
Cash
flows from investing activities:
|
||||||||||||||||
Capital
expenditures
|
--
|
(95,291
|
)
|
(55,601
|
)
|
(150,892
|
)
|
|||||||||
Other
investing activities, net
|
--
|
2,956
|
(199
|
)
|
2,757
|
|||||||||||
Net
cash used in investing activities
|
--
|
(92,335
|
)
|
(55,800
|
)
|
(148,135
|
)
|
|||||||||
Cash
flows from financing activities:
|
||||||||||||||||
Repurchase
of common stock
|
(99,615
|
)
|
--
|
--
|
(99,615
|
)
|
||||||||||
Proceeds
from exercise of stock options
|
1,994
|
--
|
--
|
1,994
|
||||||||||||
Proceeds
from borrowings under Non-Recourse Real Estate
Financings
|
--
|
--
|
136,519
|
136,519
|
||||||||||||
Payments
of Non-Recourse Real Estate Financings
|
--
|
--
|
(174,008
|
)
|
(174,008
|
)
|
||||||||||
Proceeds
from borrowings under other long-term debt
|
--
|
--
|
77,641
|
77,641
|
||||||||||||
Payments
of other long-term debt
|
--
|
(65
|
)
|
(78,056
|
)
|
(78,121
|
)
|
|||||||||
Tax
benefit from exercise of stock options
|
1,867
|
--
|
--
|
1,867
|
||||||||||||
Distributions
from joint ventures from (to) minority shareholders
|
--
|
5,638
|
(8,577
|
)
|
(2,939
|
)
|
||||||||||
Advances
from (to) affiliates
|
85,962
|
(85,048
|
)
|
(914
|
)
|
--
|
||||||||||
Other
financing activities, net
|
--
|
(970
|
)
|
297
|
(673
|
)
|
||||||||||
Net
cash used in financing activities
|
(9,792
|
)
|
(80,445
|
)
|
(47,098
|
)
|
(137,335
|
)
|
||||||||
Net
(decrease) increase in cash and cash equivalents
|
--
|
(69,170
|
)
|
696
|
(68,474
|
)
|
||||||||||
Cash
and cash equivalents
|
||||||||||||||||
Beginning
of period
|
--
|
225,952
|
4,867
|
230,819
|
||||||||||||
End
of period
|
$
|
--
|
$
|
156,782
|
$
|
5,563
|
$
|
162,345
|
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2007
(in
thousands)
100%
Owned
|
|||||||||||||||||
Parent
|
Guarantor
|
Other
|
|||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
||||||||||||||
Net
cash (used in) provided by operating activities
|
$
|
(41,046
|
)
|
$
|
191,441
|
$
|
(31,953
|
)
|
$
|
118,442
|
|||||||
Cash
flows from investing activities:
|
|||||||||||||||||
Capital
expenditures
|
--
|
(76,563
|
)
|
(42,669
|
)
|
(119,232
|
)
|
||||||||||
Cash
received from sale of businesses
|
--
|
3,544
|
--
|
3,544
|
|||||||||||||
Purchase
of minority interest
|
--
|
(8,387
|
)
|
--
|
(8,387
|
)
|
|||||||||||
Other
investing activities, net
|
--
|
(2,561
|
)
|
(5,510
|
)
|
(8,071
|
)
|
||||||||||
Net
cash used in investing activities
|
--
|
(83,967
|
)
|
(48,179
|
)
|
(132,146
|
)
|
||||||||||
Cash
flows from financing activities:
|
|||||||||||||||||
Repurchase
of common stock
|
(15,007
|
)
|
--
|
--
|
(15,007
|
)
|
|||||||||||
Net
proceeds (payments) from borrowings under long-term
debt
|
--
|
(9,898
|
)
|
72,752
|
62,854
|
||||||||||||
Proceeds
from exercise of stock options
|
11,496
|
--
|
--
|
11,496
|
|||||||||||||
Tax
benefit from exercise of stock options
|
6,925
|
--
|
--
|
6,925
|
|||||||||||||
Distributions
from joint ventures from (to) minority shareholders
|
--
|
3,986
|
(13,991
|
)
|
(10,005
|
)
|
|||||||||||
Advances
from (to) affiliates
|
38,926
|
(53,384
|
)
|
14,458
|
--
|
||||||||||||
Other
financing activities, net
|
(1,294
|
)
|
(2,224
|
)
|
(16
|
)
|
(3,534
|
)
|
|||||||||
Net
cash provided by (used in) financing activities
|
41,046
|
(61,520
|
)
|
73,203
|
52,729
|
||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
--
|
45,954
|
(6,929
|
)
|
39,025
|
||||||||||||
Cash
and cash equivalents
|
|||||||||||||||||
Beginning
of period
|
--
|
179,998
|
11,796
|
191,794
|
|||||||||||||
End
of period
|
$
|
--
|
$
|
225,952
|
$
|
4,867
|
$
|
230,819
|
Supplemental
Condensed Consolidating Statement of Cash Flows
For
the year ended July 31, 2006
(in
thousands)
100%
Owned
|
|||||||||||||||||
Parent
|
Guarantor
|
Other
|
|||||||||||||||
Company
|
Subsidiaries
|
Subsidiaries
|
Consolidated
|
||||||||||||||
Net
cash (used in) provided by operating activities
|
$
|
(13,000
|
)
|
$
|
92,568
|
$
|
(15,892
|
)
|
$
|
63,676
|
|||||||
Cash
flows from investing activities:
|
|||||||||||||||||
Capital
expenditures
|
--
|
(78,380
|
)
|
(10,521
|
)
|
(88,901
|
)
|
||||||||||
Cash
received from sale of businesses
|
--
|
30,712
|
--
|
30,712
|
|||||||||||||
Other
investing activities, net
|
--
|
277
|
(4,081
|
)
|
(3,804
|
)
|
|||||||||||
Net
cash used in investing activities
|
--
|
(47,391
|
)
|
(14,602
|
)
|
(61,993
|
)
|
||||||||||
Cash
flows from financing activities:
|
|||||||||||||||||
Repurchase
of common stock
|
--
|
(10,839
|
)
|
--
|
(10,839
|
)
|
|||||||||||
Net
proceeds from borrowings under long-term debt
|
--
|
5,769
|
3,452
|
9,221
|
|||||||||||||
Proceeds
from exercise of stock options
|
46,649
|
--
|
--
|
46,649
|
|||||||||||||
Tax
benefit from exercise of stock options
|
14,323
|
--
|
--
|
14,323
|
|||||||||||||
Advances
(to) from affiliates
|
(47,972
|
)
|
49,590
|
(1,618
|
)
|
--
|
|||||||||||
Other
financing activities, net
|
--
|
(2,578
|
)
|
(3,245
|
)
|
(5,823
|
)
|
||||||||||
Net
cash provided by (used in) financing activities
|
13,000
|
41,942
|
(1,411
|
)
|
53,531
|
||||||||||||
Net
increase (decrease) in cash and cash equivalents
|
--
|
87,119
|
(31,905
|
)
|
55,214
|
||||||||||||
Cash
and cash equivalents
|
|||||||||||||||||
Beginning
of period
|
--
|
92,879
|
43,701
|
136,580
|
|||||||||||||
End
of period
|
$
|
--
|
$
|
179,998
|
$
|
11,796
|
$
|
191,794
|
None.
Disclosure
Controls and Procedures
Management
of the Company, including the Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”), have evaluated the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by this
Form 10-K. The term “disclosure controls and procedures” means
controls and other procedures established by the Company that are designed to
ensure that information required to be disclosed by the Company in the reports
that it files or submits under the Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and
forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Act is accumulated and communicated to the Company's management, including its
CEO and CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Based
upon their evaluation of the Company's disclosure controls and procedures, the
CEO and the CFO concluded that the disclosure controls are effective to provide
reasonable assurance that information required to be disclosed by the Company in
the reports that it files or submits under the Act is accumulated and
communicated to management, including the CEO and CFO, as appropriate, to allow
timely decisions regarding required disclosure and are effective to provide
reasonable assurance that such information is recorded, processed, summarized
and reported within the time periods specified by the SEC's rules and
forms.
The
Company, including its CEO and CFO, does not expect that the Company's internal
controls and procedures will prevent or detect all error and all
fraud. A control system, no matter how well conceived or operated,
can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.
Management's
Annual Report on Internal Control Over Financial Reporting
The
report of management required under this Item 9A is contained in Item 8 of this
Form 10-K under the caption “Management's Report on Internal Control over
Financial Reporting.”
Attestation
Report of Registered Public Accounting Firm
The
attestation report required under this Item 9A is contained in Item 8 of this
Form 10-K under the caption “Report of Independent Registered Public Accounting
Firm.”
Changes in Internal Control Over
Financial Reporting
There
were no changes in the Company's internal control over financial reporting
during the quarter ended July 31, 2008 that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over
financial reporting.
On
September 23, 2008, the Board of Directors of the Company approved the Amended
and Restated Bylaws (“Amended Bylaws”) filed as Exhibit 3.2 in this Annual
Report on Form 10-K. The director election provisions in the Amended
Bylaws supplement and clarify the requirement that the Company’s directors be
elected by majority vote. The Amended Bylaws also contemplate, consistent
with recent amendments to Delaware law, that directors may tender advance,
irrevocable resignations conditioned upon the failure to receive a specified
vote. In addition, the Amended Bylaws provide that, to bring appropriate
business before an annual meeting or nominate a person for election as a
director, a stockholder must provide advance notice in a window of time
determined based on the prior year’s annual meeting date, which provides for
better predictability and clarity in planning for both stockholders and the
Company.
PART
III
Code of Ethics and Business
Conduct. The Company has adopted a code of ethics that applies
to its principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions. The code of ethics and business conduct is posted in the
corporate governance section of the Company's website at
www.vailresorts.com. The Company will post any waiver to the code of
ethics and business conduct granted to any of its officers on its
website.
The New
York Stock Exchange requires chief executive officers of listed corporations to
certify that they are not aware of any violations by their company of the
exchange’s corporate governance listing standards. Following the 2007
annual meeting of stockholders, the Company submitted the annual certification
by the Chief Executive Officer to the New York Stock Exchange.
The
Company has filed with the Securities and Exchange Commission, as an exhibit to
this Form 10-K for the year ended July 31, 2008, the Sarbanes-Oxley Act Section
302 certification regarding the quality of the Company’s public
disclosure.
The
additional information required by this item is incorporated herein by reference
from the Company's proxy statement for the 2008 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2008 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2008 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2008 annual meeting of
stockholders.
The
information required by this item is incorporated herein by reference from the
Company's proxy statement for the 2008 annual meeting of
stockholders.
PART
IV
a) Index
to Financial Statements and Financial Statement Schedules.
|
(1)
|
See
“Item 8. Financial Statements and Supplementary Data” for the
index to the Financial Statements.
|
|
(2)
|
All
other schedules have been omitted because the required information is not
applicable or because the information required has been included in the
financial statements or notes
thereto.
|
(3) Index
to Exhibits.
The
following exhibits are either filed herewith or, if so indicated, incorporated
by reference to the documents indicated in parentheses, which have previously
been filed with the Securities and Exchange Commission.
Posted
Exhibit Number
|
Description
|
Sequentially
Numbered Page
|
3.1
|
Amended
and Restated Certificate of Incorporation of Vail Resorts, Inc., dated
January 5, 2005. (Incorporated by reference to Exhibit 3.1 on
Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2005.)
|
|
3.2
|
Amended
and Restated Bylaws.
|
59
|
4.1(a)
|
Indenture,
dated as of January 29, 2004, among Vail Resorts, Inc., the guarantors
therein and the Bank of New York as Trustee (Including Exhibit A, Form of
Global Note). (Incorporated by reference to Exhibit 4.1 on Form
8-K of Vail Resorts, Inc. filed on February 2, 2004.)
|
|
4.1(b)
|
Supplemental
Indenture, dated as of March 10, 2006 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York, as Trustee. (Incorporated
by reference to Exhibit 10.34 on Form 10-Q of Vail Resorts, Inc. for the
quarter ended January 31, 2006.)
|
|
4.1(c)
|
Form
of Global Note. (Incorporated by reference to Exhibit 4.1 on
Form 8-K of Vail Resorts, Inc. filed February 2, 2004.)
|
|
4.1(d)
|
Supplemental
Indenture, dated as of April 26, 2007 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York, as Trustee.
|
77
|
4.1(e)
|
Supplemental
Indenture, dated as of July 11, 2008 to Indenture dated as of January 29,
2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as
Guarantors, and The Bank of New York Mellon Trust Company, N.A., as
Trustee.
|
84
|
10.1
|
Forest
Service Unified Permit for Heavenly ski area, dated April 29,
2002. (Incorporated by reference to Exhibit 99.13 of the report
on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30,
2002.)
|
|
10.2(a)
|
Forest
Service Unified Permit for Keystone ski area, dated December 30,
1996. (Incorporated by reference to Exhibit 99.2(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.2(b)
|
Amendment
No. 2 to Forest Service Unified Permit for Keystone ski
area. (Incorporated by reference to Exhibit 99.2(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.2(c)
|
Amendment
No. 3 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.2(d)
|
Amendment
No. 4 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.2(e)
|
Amendment
No. 5 to Forest Service Unified Permit for Keystone ski area.
(Incorporated by reference to Exhibit 10.3 (e) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.3(a)
|
Forest
Service Unified Permit for Breckenridge ski area, dated December 30,
1996. (Incorporated by reference to Exhibit 99.3(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.3(b)
|
Amendment
No. 1 to Forest Service Unified Permit for Breckenridge ski
area. (Incorporated by reference to Exhibit 99.3(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.3(c)
|
Amendment
No. 2 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.3(d)
|
Amendment
No. 3 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.3(e)
|
Amendment
No. 4 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4 (e) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.3(f)
|
Amendment
No. 5 to Forest Service Unified Permit for Breckenridge ski area.
(Incorporated by reference to Exhibit 10.4(f) on Form 10-Q of Vail
Resorts, Inc. for the quarter ended January 31, 2006.)
|
|
10.4(a)
|
Forest
Service Unified Permit for Beaver Creek ski area. (Incorporated
by reference to Exhibit 99.4(a) on Form 10-Q of Vail Resorts, Inc. for the
quarter ended October 31, 2002.)
|
|
10.4(b)
|
Exhibits
to Forest Service Unified Permit for Beaver Creek ski
area. (Incorporated by reference to Exhibit 99.4(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.4(c)
|
Amendment
No. 1 to Forest Service Unified Permit for Beaver Creek ski area.
(Incorporated by reference to Exhibit 10.5(c) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.4(d)
|
Amendment
No. 2 to Forest Service Unified Permit for Beaver Creek ski area.
(Incorporated by reference to Exhibit 10.5(d) on Form 10-K of Vail
Resorts, Inc. for the year ended July 31, 2005.)
|
|
10.4(e)
|
Amendment
to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated
by reference to Exhibit 10.5(e) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
10.4(f)
|
Amendment
No. 3 to Forest Service Unified Permit for Beaver Creek ski
area.
|
91
|
10.5(a)
|
Forest
Service Unified Permit for Vail ski area, dated November 23,
1993. (Incorporated by reference to Exhibit 99.5(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.5(b)
|
Exhibits
to Forest Service Unified Permit for Vail ski
area. (Incorporated by reference to Exhibit 99.5(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.5(c)
|
Amendment
No. 2 to Forest Service Unified Permit for Vail ski
area. (Incorporated by reference to Exhibit 99.5(c) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2002.)
|
|
10.5(d)
|
Amendment
No. 3 to Forest Service Unified Permit for Vail ski area. (Incorporated by
reference to Exhibit 10.6 (d) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
10.5(e)
|
Amendment
No. 4 to Forest Service Unified Permit for Vail ski area. (Incorporated by
reference to Exhibit 10.6 (e) on Form 10-K of Vail Resorts, Inc. for the
year ended July 31, 2005.)
|
|
10.6(a)
|
Purchase
and Sale Agreement by and between VAHMC, Inc. and DiamondRock Hospitality
Limited Partnership, dated May 3, 2005. (Incorporated by
reference to Exhibit 10.18(a) on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2005.)
|
|
10.6(b)
|
First
Amendment to Purchase and Sale Agreement by and between VAHMC, Inc. and
DiamondRock Hospitality Limited Partnership, dated May 10,
2005. (Incorporated by reference to Exhibit 10.18(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended April 30,
2005.)
|
|
10.7(a)
|
Sports
and Housing Facilities Financing Agreement between the Vail Corporation
(d/b/a “Vail Associates, Inc.”) and Eagle County, Colorado, dated April 1,
1998. (Incorporated by reference to Exhibit 10 on Form 10-Q of Vail
Resorts, Inc. for the quarter ended April 30, 1998.)
|
|
10.7(b)
|
Trust
Indenture, dated as of April 1, 1998 securing Sports and Housing
Facilities Revenue Refunding Bonds by and between Eagle County, Colorado
and U.S. Bank, N.A., as Trustee. (Incorporated by reference to
Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended
April 30, 1998.)
|
|
10.8(a)
|
Fourth
Amended and Restated Credit Agreement, dated as of January 28, 2005 among
The Vail Corporation (d/b/a Vail Associates, Inc.), as borrower, Bank of
America, N.A., as Administrative Agent, U.S. Bank National Association and
Wells Fargo Bank, National Association as Co-Syndication Agents, Deutsche
Bank Trust Company Americas and LaSalle Bank National Association as
Co-Documentation Agents the Lenders party thereto and Banc of America
Securities LLC, as Sole Lead Arranger and Sole Book
Manager. (Incorporated by reference to Exhibit 10.1 on Form 8-K
of Vail Resorts, Inc. filed on January 31, 2005.)
|
|
10.8(b)
|
First
Amendment to Fourth Amended and Restated Credit Agreement, dated as of
June 29, 2005 among The Vail Corporation (d/b/a Vail Associates, Inc.), as
borrower and Bank of America, N.A., as Administrative
Agent. (Incorporated by reference to Exhibit 10.16(b) on Form
10-K of Vail Resorts, Inc. for the year ended July 31,
2005.)
|
|
10.8(c)
|
Second
Amendment to Fourth Amended and Restated Credit Agreement among The Vail
Corporation, the Required Lenders and Bank of America, as Administrative
Agent. (Incorporated by reference to Exhibit 10.3 of Form 8-K
of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
10.8(d)
|
Limited
Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit
Agreement, dated March 13, 2007. (Incorporated by reference to
Exhibit 10.2 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
10.8(e)
|
Fourth
Amendment to Fourth Amended and Restated Credit Agreement, dated April 30,
2008, among The Vail Corporation (d/b/a Vail Associates, Inc.) as
borrower, the lenders party thereto and Bank of America, N.A., as
Administrative Agent. (Incorporated by reference to Exhibit
10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter
ended April 30, 2008.)
|
|
10.9(a)
|
Construction
Loan Agreement, dated January 31, 2006 among Arrabelle at Vail Square,
LLC, U.S. Bank National Association and Wells Fargo Bank,
N.A.. (Incorporated by reference to Exhibit 10.33(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2006.)
|
|
10.9(b)
|
Completion
Guaranty Agreement by and between The Vail Resorts Corporation and U.S.
Bank National Association, dated January 31,
2006. (Incorporated by reference to Exhibit 10.33(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2006.)
|
|
10.9(c)
|
Completion
Guaranty Agreement by and between Vail Resorts, Inc. and U.S. Bank
National Association dated January 31, 2006. (Incorporated by reference to
Exhibit 10.33(c) on Form 10-Q of Vail Resorts, Inc. for the quarter ended
January 31, 2006.)
|
|
10.10(a)**
|
Construction
Loan Agreement, dated March 19, 2007 among The Chalets at The Lodge at
Vail, LLC, and Wells Fargo Bank, N.A. (Incorporated by
reference to Exhibit 10.3 of the report on Form 10-Q of Vail Resorts, Inc.
for the quarter ended April 30, 2007.)
|
|
10.10(b)
|
Completion
Guaranty Agreement by and between The Vail Corporation and Wells Fargo
Bank, N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.4 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
10.10(c)
|
Completion
Guaranty Agreement by and between Vail Resorts, Inc. and Wells Fargo Bank,
N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.5 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
10.10(d)
|
Development
Agreement Guaranty by and between The Vail Corporation and Wells Fargo
Bank, N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.6 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
10.10(e)
|
Development
Agreement Guaranty by and between Vail Resorts, Inc. and Wells Fargo Bank,
N.A., dated March 19, 2007. (Incorporated by reference to
Exhibit 10.7 of the report on Form 10-Q of Vail Resorts, Inc. for the
quarter ended April 30, 2007.)
|
|
10.11
|
Amended
and Restated Revolving Credit and Security Agreement between SSI Venture,
LLC and U.S. Bank National Association, dated September 23, 2005.
(Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts,
Inc. filed on September 29, 2005.)
|
|
10.12*
|
Vail
Resorts, Inc. 1993 Stock Option Plan (Incorporated by reference to Exhibit
4.A of the registration statement on Form S-8 of Vail Resorts, Inc., dated
October 21, 1997, File No. 333-38321.)
|
|
10.13*
|
Vail
Resorts, Inc. 1996 Long Term Incentive and Share Award Plan (Incorporated
by reference to the Exhibit 4.B of the registration statement on Form S-8
of Vail Resorts, Inc., dated October 21, 1997, File No.
333-38321.)
|
|
10.14*
|
Vail
Resorts, Inc. 1999 Long Term Incentive and Share Award
Plan. (Incorporated by reference to Exhibit 4.1 of the
registration statement on Form S-8 of Vail Resorts, Inc., dated September
7, 2007, File No. 333-145934.)
|
|
10.15*
|
Vail
Resorts, Inc. Amended and Restated 2002 Long Term Incentive and Share
Award Plan. (Incorporated by reference to Exhibit 4.2 of the
registration statement on Form S-8 of Vail Resorts, Inc., dated September
7, 2007, File No. 333-145934.)
|
|
10.16*
|
Form
of Stock Option Agreement. (Incorporated by reference to
Exhibit 10.20 of Form 10-K of Vail Resorts, Inc. for the year ended July
31, 2007.)
|
|
10.17*
|
Form
of Restricted Share [Unit] Agreement.
|
92
|
10.18*
|
Form
of Share Appreciation Rights Agreement.
|
98
|
10.19*
|
Stock
Option Agreement between Vail Resorts, Inc. and Jeffrey W. Jones, dated
September 30, 2005. (Incorporated by reference to Exhibit 10.6
on Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
10.20*
|
Restricted
Share Agreement between Vail Resorts, Inc. and Jeffrey W. Jones, dated
September 30, 2005. (Incorporated by reference to Exhibit 10.7
on Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
10.21*
|
Summary
of Vail Resorts, Inc. Director Compensation, effective October 15,
2007. (Incorporated by reference to Exhibit 10.7 of the report
on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2007.)
|
|
10.22*
|
Vail
Resorts Deferred Compensation Plan, effective as of October 1,
2000. (Incorporated by reference to Exhibit 10.23 on Form 10-K
of Vail Resorts, Inc. for the year ended July 31, 2000.)
|
|
10.23*
|
Vail
Resorts, Inc. Executive Perquisite Fund Program. (Incorporated by
reference to Exhibit 10.27 on Form 10-K of Vail Resorts, Inc. for the year
ended July 31, 2007.)
|
|
10.24*
|
Vail
Resorts, Inc. Management Incentive Plan. (Incorporated by reference to
Schedule 14A of Vail Resorts, Inc. as filed on October 26,
2007.)
|
|
10.25(a)*
|
Employment
Agreement of William A. Jensen as Senior Vice President and Chief
Operating Officer – Breckenridge Ski Resort, dated May 1,
1997. (Incorporated by reference to Exhibit 10.9(a) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2004.)
|
|
10.25(b)*
|
First
Amendment to the Employment Agreement of William A. Jensen as Senior Vice
President and Chief Operating Officer – Vail Ski Resort, dated August 1,
1999. (Incorporated by reference to Exhibit 10.9(b) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2004.)
|
|
10.25(c)*
|
Second
Amendment to the Employment Agreement of William A. Jensen as Senior Vice
President and Chief Operating Officer – Vail Ski Resort, dated July 22,
1999. (Incorporated by reference to Exhibit 10.9(c) on Form
10-Q of Vail Resorts, Inc. for the quarter ended October 31,
2004.)
|
|
10.25(d)*
|
Third
Amendment to the Employment Agreement of William A. Jensen as Senior Vice
President and Chief Operating Officer – Vail Ski Resort, dated July 19,
2007. (Incorporated by reference to Exhibit 10.29(d) of Form
10-K of Vail Resorts, Inc. for the year ended July 31,
2007.)
|
|
10.25(e)*
|
Agreement,
dated January 7, 2008, by and among Vail Associates, Inc., William A.
Jensen and Intrawest ULC. (Incorporated by reference to Exhibit
10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter
ended January 31, 2008.)
|
|
10.26*
|
Separation
Agreement and General Release, dated December 7, 2006 between Martha D.
Rehm and Vail Resorts, Inc. and Amendment No. 1 thereto dated March 9,
2007. (Incorporated by reference to Exhibit 10.2 of the report
on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31,
2007.)
|
|
10.27*
|
Employment
Agreement, dated as of February 28, 2006, between Vail Resorts, Inc. and
Robert A. Katz. (Incorporated by reference to Exhibit 10.1 on
Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)
|
|
10.28(a)*
|
Amended
and Restated Employment Agreement of Jeffrey W. Jones, as Chief Financial
Officer of Vail Resorts, Inc. dated September 29,
2004. (Incorporated by reference to Exhibit 10.9 of Form 10-K
of Vail Resorts, Inc. for the year ended July 31, 2004.)
|
|
10.28(b)*
|
Restated
First Amendment to Amended and Restated Employment Agreement, dated
September 18, 2008, by and between Vail Resorts, Inc. and Jeffrey W.
Jones.
|
105
|
10.29*
|
Employment
Agreement, dated as of May 4, 2006, between Keith Fernandez and Vail
Resorts Development Company. (Incorporated by reference to
Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed on May 9,
2006.)
|
|
10.30*
|
Employment
Agreement, dated May 17, 1999, between John McD. Garnsey and Vail
Associates, Inc.
|
108
|
10.31(a)*
|
Employment
Agreement, dated June 23, 2002, between Blaise Carrig and Heavenly Valley,
Limited Partnership.
|
121
|
10.31(b)*
|
Addendum
to the Employment Agreement, dated September 1, 2002, between Blaise
Carrig and Heavenly Valley, Limited Partnership.
|
129
|
21
|
Subsidiaries
of Vail Resorts, Inc.
|
134
|
22
|
Consent
of Independent Registered Public Accounting Firm.
|
140
|
23
|
Power
of Attorney. Included on signature pages
hereto.
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
141
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
142
|
32
|
Certifications
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
143
|
*Management
contracts and compensatory plans and arrangements.
|
||
**Portions
of this Exhibit have been omitted pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted
portions have been filed separately with the Commission.
|
b) Exhibits
The
exhibits filed herewith as indicated in the exhibit listed above following the
Signatures section of this report.
c) Financial
Statement Schedules
Consolidated
Financial Statement Schedule
|
|||||||||||||
(in
thousands)
|
|||||||||||||
For
the Years Ended July 31,
|
|||||||||||||
Balance
at
|
Charged
to
|
Balance
at
|
|||||||||||
Beginning
of
|
Costs
and
|
End
of
|
|||||||||||
Period
|
Expenses
|
Deductions
|
Period
|
||||||||||
2006
|
|||||||||||||
Inventory
Reserves
|
$
|
719
|
$
|
2,139
|
$
|
(2,103
|
)
|
$
|
755
|
||||
Valuation
Allowance on Income Taxes
|
1,605
|
--
|
--
|
1,605
|
|||||||||
Trade
Receivable Allowances
|
1,335
|
694
|
(641
|
)
|
1,388
|
||||||||
2007
|
|||||||||||||
Inventory
Reserves
|
755
|
2,202
|
(2,131
|
)
|
826
|
||||||||
Valuation
Allowance on Income Taxes
|
1,605
|
--
|
(17
|
)
|
1,588
|
||||||||
Trade
Receivable Allowances
|
1,388
|
1,638
|
(908
|
)
|
2,118
|
||||||||
2008
|
|||||||||||||
Inventory
Reserves
|
826
|
2,729
|
(2,344
|
)
|
1,211
|
||||||||
Valuation
Allowance on Income Taxes
|
1,588
|
--
|
--
|
1,588
|
|||||||||
Trade
Receivable Allowances
|
$
|
2,118
|
$
|
670
|
$
|
(1,122
|
)
|
$
|
1,666
|
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Vail
Resorts, Inc.
|
|
By:
|
/s/
Jeffrey W. Jones
|
Jeffrey
W. Jones
|
|
Senior
Executive Vice President and
|
|
Chief
Financial Officer
(Chief
Accounting Officer and Duly Authorized Officer)
|
|
Date:
|
September
25, 2008
|
POWER
OF ATTORNEY
Each
person whose signature appears below hereby constitutes and appoints Jeffrey W.
Jones or Fiona E. Arnold his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any and all capacities, to sign any or all amendments or
supplements to this Form 10-K and to file the same with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent full power and
authority to do and perform each and every act and thing necessary or
appropriate to be done with this Form 10-K and any amendments or supplements
hereto, as fully to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or
their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities indicated on September 25, 2008.
Signature
|
Title
|
/s/
Robert A. Katz
|
Chief
Executive Officer and Director
|
Robert
A. Katz
|
(Principal
Executive Officer)
|
/s/
Jeffrey W. Jones
|
Senior
Executive Vice President,
|
Jeffrey
W. Jones
|
Chief
Financial Officer and Director
|
(Principal
Financial and Accounting Officer)
|
|
/s/
Joe R. Micheletto
|
|
Joe
R. Micheletto
|
Chairman
of the Board
|
/s/
Roland A. Hernandez
|
|
Roland
A. Hernandez
|
Director
|
/s/
Thomas D. Hyde
|
|
Thomas
D. Hyde
|
Director
|
/s/
Richard D. Kincaid
|
|
Richard
D. Kincaid
|
Director
|
/s/
John T. Redmond
|
|
John
T. Redmond
|
Director
|
/s/
John F. Sorte
|
|
John
F. Sorte
|
Director
|
/s/
William P. Stiritz
|
|
William
P. Stiritz
|
Director
|