What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-09-23 compared with 2020-09-24 · 476 added, 313 removed, 993 unchanged (44% of the section changed)

20 unchanged sentences

Based on this assessment, management concluded that, as of July 31, 2021, the Company’s internal control over financial reporting was effective.

Management’s evaluation and conclusion on the effectiveness of internal control over financial reporting as of July 31, 2020 excluded certain elements of internal controls of Peak Resorts (acquired in September 2019) due to the timing of this acquisition.

Those elements of the acquired resorts’ internal controls over financial reporting that have been excluded represent less than 1% of total consolidated assets and approximately 8% of total consolidated net revenues of the Company as of and for the year ended July 31, 2020.

The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an attestation report on the effectiveness of the Company’s internal control over financial reporting as of July 31, 2021, as stated in the Report of Independent Registered Public Accounting Firm on the following page.

23 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded certain elements of the internal control over financial reporting of Peak Resorts from its assessment of internal control over financial reporting as of July 31, 2020 because it was acquired by the Company in a purchase business combination during September 2019.

Subsequent to the acquisition, certain elements of Peak Resorts’ internal control over financial reporting and related processes were integrated into the Company’s existing systems and internal control over financial reporting.

Those controls that were not integrated have been excluded from management’s assessment of the effectiveness of internal control over financial reporting as of July 31, 2020.

We have also excluded these elements of internal control over financial reporting of Peak Resorts from our audit of the Company’s internal control over financial reporting.

The excluded elements represent controls of less than 1% of consolidated assets and approximately 8% of consolidated net revenues.

Definition and Limitations of Internal Control over Financial Reporting

1 unchanged sentence

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.

2 unchanged sentences

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair Value Measurement of the Contingent Consideration

1 unchanged sentence

The Company remeasures the Contingent Consideration to fair value at each reporting date until the contingency is resolved.

The estimated fair value of Contingent Consideration includes the future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated performance for the years ending July 31, 2021 and July 31, 2022, escalated by an assumed long-term growth factor and discounted to net present value.

The estimated fair value of Contingent Consideration includes the future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated subsequent year performance, escalated by an assumed long-term growth factor and discounted to net present value.

Fair value is estimated using an option pricing valuation model.

As described by management, key assumptions in determining the fair value under this model included Park City EBITDA for the year ending July 31, 2022, an assumed long- term growth rate, discount rate and volatility.

The principal considerations for our determination that performing procedures relating to the fair value measurement of the Contingent Consideration is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions for the Park City EBITDA for the year ending July 31, 2022, assumed long-term growth rate, discount rate, and volatility;

As described by management, key assumptions in determining the fair value under this model included future period Park City EBITDA, discount rate and volatility.

The principal considerations for our determination that performing procedures relating to the fair value measurement of the Contingent Consideration is a critical audit matter are (i) the significant judgment by management when developing the fair value measurement, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s significant assumptions for the future period Park City EBITDA, discount rate, and volatility;

and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

1 unchanged sentence

These procedures included testing the effectiveness of controls relating to management’s fair value measurement of the Contingent Consideration including controls over the Company’s significant assumptions.

The procedures also included, among others, testing management’s process for developing the fair value measurement and evaluating the significant assumptions used by management, related to the Park City EBITDA for the year ending July 31, 2022, assumed long-term growth rate, discount rate, and volatility.

Evaluating management’s assumptions related to the Park City EBITDA for the year ending July 31, 2022, assumed long-term growth rate, discount rate, and volatility involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past EBITDA performance of Park City;

(ii) the impact of the COVID-19 pandemic on the future EBITDA performance of Park City;

(iii) the consistency with external market data;

and (iv) whether these assumptions were consistent with evidence obtained in other areas of the audit.

The procedures also included, among others, testing management’s process for developing the fair value measurement and evaluating the significant assumptions used by management, related to the future period Park City EBITDA, discount rate, and volatility.

Evaluating management’s assumptions related to the future period Park City EBITDA, discount rate, and volatility involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past period EBITDA performance of Park City;

(ii) the consistency with external market data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discount rate and volatility assumptions.

Acquisition of Peak Resorts - Valuation of Acquired Depreciable Property, Plant, and Equipment

As described in Note 7 to the consolidated financial statements, the Company completed the acquisition of Peak Resorts, Inc.

during the year ended July 31, 2020 resulting in the recognition of an aggregate amount of approximately $427.8 million related to property, plant, and equipment.

A substantial portion of the property, plant, and equipment acquired related to depreciable property, plant, and equipment (“Acquired Depreciable PPE”).

The process of estimating the fair value of the Acquired Depreciable PPE includes the use of certain estimates and assumptions related to the determination of replacement cost.

The principal considerations for our determination that performing procedures relating to the valuation of the Acquired Depreciable PPE from the Peak Resorts acquisition is a critical audit matter are (i) the high degree of auditor subjectivity and effort in performing procedures over management’s valuation of the Acquired Depreciable PPE including the significant assumptions related to the replacement cost;

and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s significant assumptions and data used in the valuation of the Acquired Depreciable PPE.

These procedures also included, among others, (i) testing management’s process for estimating the fair value of Acquired Depreciable PPE;

(ii) testing the completeness and accuracy of the underlying data used to estimate the fair value of the Acquired Depreciable PPE;

and (iii) evaluating management’s replacement cost assumptions used to estimate the fair value of the Acquired Depreciable PPE.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s valuation method and the Company’s replacement cost assumptions, including evaluating whether the assumptions used by management were reasonable considering consistency with external market and industry data.

/s/ PricewaterhouseCoopers LLP

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Accounts receivable, net of allowances of $ 7,621 and $ 2,484 , respectively

345,408 106,664

Inventories, net of reserves of $ 2,601 and $ 4,447 , respectively

80,316 101,856

Other current assets 61,288 54,482

1 unchanged sentence

Property, plant and equipment, net (Note 8)

Real estate held for sale and investment

2,067,876 2,192,679

Real estate held for sale or investment 95,615 96,844

Goodwill, net (Note 8)

1,781,047 1,709,020

Intangible assets, net (Note 8)

319,110 314,776

Operating right-of-use assets (Note 4)

204,716 225,744

Deferred charges and other assets 37,106 40,081

Total assets $ 6,251,056 $ 5,244,232

Liabilities and Stockholders’ Equity

1 unchanged sentence

Accounts payable and accrued liabilities (Note 8)

$ 815,472 $ 499,108

Income taxes payable 48,812 40,680

Long-term debt due within one year (Note 6)

114,117 63,677

Total current liabilities 978,401 603,465

Long-term debt, net (Note 6)

2,736,175 2,387,122

Operating lease liabilities (Note 4)

Other long-term liabilities (Note 8)

190,561 217,542

Other long-term liabilities 264,034 270,245

Deferred income taxes, net (Note 11)

252,817 234,191

Total liabilities 4,421,988 3,712,565

5 unchanged sentences

Additional paid-in capital 1,196,993 1,131,624

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) 27,799 ( 56,837 )

Retained earnings 773,752 645,902

1 unchanged sentence

6,161 and 6,161 shares, respectively (Note 16)

( 404,411 ) ( 404,411 )

Total Vail Resorts, Inc.

8 unchanged sentences

Year Ended July 31,

2021 2020 2019

Mountain and Lodging services and other $ 1,650,055 $ 1,578,463 $ 1,807,930

1 unchanged sentence

Resort net revenue 1,907,940 1,958,857 2,270,863

Real Estate 1,770 4,847 712

Total net revenue 1,909,710 1,963,704 2,271,575

4 unchanged sentences

Resort operating expense 1,369,982 1,457,198 1,566,129

Real Estate, net

Real Estate 6,676 9,182 5,609

Total segment operating expense 1,376,658 1,466,380 1,571,738

3 unchanged sentences

Asset impairments (Notes 2 & 8)

— ( 28,372 ) —

Change in fair value of contingent consideration (Note 10)

Gain (loss) on disposal of fixed assets and other, net

( 14,402 ) 2,964 ( 5,367 )

(Loss) gain on disposal of fixed assets and other, net ( 5,373 ) 838 ( 664 )

Income from operations 261,016 223,389 476,269

2 unchanged sentences

Investment income and other, net 586 1,305 3,086

Foreign currency loss on intercompany loans (Note 6)

Income before (provision) benefit from income taxes

(Provision) benefit from income taxes (Note 11)

Net income attributable to noncontrolling interests

Foreign currency gain (loss) on intercompany loans (Note 6)

8,282 ( 3,230 ) ( 2,854 )

Income before provision for income taxes 125,183 116,433 398,965

Provision for income taxes (Note 11)

( 726 ) ( 7,378 ) ( 75,472 )

Net income 124,457 109,055 323,493

Net loss (income) attributable to noncontrolling interests 3,393 ( 10,222 ) ( 22,330 )

Net income attributable to Vail Resorts, Inc.

$ 127,850 $ 98,833 $ 301,163

Per share amounts (Note 5):

Basic net income per share attributable to Vail Resorts, Inc.

$ 3.17 $ 2.45 $ 7.46

Diluted net income per share attributable to Vail Resorts, Inc.

$ 3.13 $ 2.42 $ 7.32

Cash dividends declared per share $ — $ 5.28 $ 6.46

4 unchanged sentences

Year Ended July 31,

Foreign currency translation adjustments (net of tax of $0, $0 and $1,981, respectively)

Change in estimated fair value of hedging instruments

2021 2020 2019

Net income $ 124,457 $ 109,055 $ 323,493

Foreign currency translation adjustments 100,019 ( 9,075 ) ( 34,287 )

Change in estimated fair value of hedging instruments, net of tax 12,817 ( 22,510 ) —

Comprehensive income 237,293 77,470 289,206

1 unchanged sentence

Comprehensive income attributable to Vail Resorts, Inc.

$ 212,486 $ 73,726 $ 271,660

The accompanying Notes are an integral part of these Consolidated Financial Statements.

2 unchanged sentences

(In thousands, except share amounts)

Accumulated Other Comprehensive Income (Loss)

Total Vail Resorts, Inc.

Stockholders’ Equity

Noncontrolling

Common Stock Additional

Capital Accumulated Other Comprehensive (Loss) Income Retained

Earnings Treasury

Stock Total Vail Resorts, Inc.

Stockholders’ Equity Noncontrolling

Interests Total

Stockholders’

Vail Resorts Exchangeable

Balance, July 31, 2018 $ 460 $ 1 $ 1,137,467 $ ( 2,227 ) $ 726,722 $ ( 272,989 ) $ 1,589,434 $ 222,229 $ 1,811,663

Comprehensive income:

Foreign currency translation adjustments, net of tax

Net income — — — — 301,163 — 301,163 22,330 323,493

Foreign currency translation adjustments — — — ( 29,503 ) — — ( 29,503 ) ( 4,784 ) ( 34,287 )

Total comprehensive income 271,660 17,546 289,206

Stock-based compensation (Note 17)

Measurement period adjustment

Stock-based compensation expense (Note 17)

— — 19,856 — — — 19,856 — 19,856

Cumulative effect for adoption of revenue standard — — — — ( 7,517 ) — ( 7,517 ) — ( 7,517 )

Issuance of shares under share award plan, net of shares withheld for employee taxes (Note 17)

1 — ( 27,240 ) — — — ( 27,239 ) — ( 27,239 )

Repurchases of common stock (Note 16)

— — — — — ( 85,000 ) ( 85,000 ) — ( 85,000 )

Dividends (Note 5)

— — — — ( 260,567 ) — ( 260,567 ) — ( 260,567 )

Distributions to noncontrolling interests, net — — — — — — — ( 13,562 ) ( 13,562 )

1 unchanged sentence

Comprehensive income:

Foreign currency translation adjustments, net of tax

Net income — — — — 98,833 — 98,833 10,222 109,055

Foreign currency translation adjustments — — — ( 2,597 ) — — ( 2,597 ) ( 6,478 ) ( 9,075 )

Change in estimated fair value of hedging instruments, net of tax — — — ( 22,510 ) — — ( 22,510 ) — ( 22,510 )

Total comprehensive income 73,726 3,744 77,470

Stock-based compensation (Note 17)

Cumulative effect for adoption of revenue standard

Stock-based compensation expense (Note 17)

— — 21,021 — — — 21,021 — 21,021

Issuance of shares under share award plan, net of shares withheld for employee taxes (Note 17)

2 — ( 19,480 ) — — — ( 19,478 ) — ( 19,478 )

Exchangeable share transfers 1 ( 1 ) — — — — — — —

Repurchases of common stock (Note 16)

— — — — — ( 46,422 ) ( 46,422 ) — ( 46,422 )

Dividends (Note 5)

— — — — ( 212,732 ) — ( 212,732 ) — ( 212,732 )

Distributions to noncontrolling interests, net — — — — — — — ( 15,032 ) ( 15,032 )

1 unchanged sentence

Comprehensive income:

Foreign currency translation adjustments, net of tax

Change in estimated fair value of hedging instruments

Net income (loss) — — — — 127,850 — 127,850 ( 3,393 ) 124,457

Foreign currency translation adjustments — — — 71,819 — — 71,819 28,200 100,019

Change in estimated fair value of hedging instruments, net of tax — — — 12,817 — — 12,817 — 12,817

Total comprehensive income 212,486 24,807 237,293

Stock-based compensation (Note 17)

Equity component of 0.0% Convertible Notes, net (Note 6)

— — 80,066 — — — 80,066 — 80,066

Stock-based compensation expense (Note 17)

— — 24,395 — — — 24,395 — 24,395

Issuance of shares under share award plan, net of shares withheld for employee taxes (Note 17)

Exchangeable share transfers

Repurchases of common stock (Note 16)

Dividends (Note 5)

2 — ( 39,092 ) — — — ( 39,090 ) — ( 39,090 )

Distributions to noncontrolling interests, net — — — — — — — ( 5,263 ) ( 5,263 )

5 unchanged sentences

Year Ended July 31,

2021 2020 2019

Cash flows from operating activities:

Net income $ 124,457 $ 109,055 $ 323,493

Adjustments to reconcile net income to net cash provided by operating activities:

4 unchanged sentences

Deferred income taxes, net ( 16,136 ) 17,435 22,419

Canyons obligation accreted interest expense

Change in fair value of contingent consideration

Foreign currency loss on intercompany loans

Gain on sale of real property

Other non-cash income, net

Other non-cash expense (income), net 12,544 ( 10,842 ) ( 482 )

Changes in assets and liabilities, net of effects of acquisitions:

15 unchanged sentences

Proceeds from borrowings under Whistler Credit Agreement 27,775 209,634 26,518

Proceeds from borrowings under 0.0% Convertible Notes 575,000 — —

Proceeds from borrowings under 6.25% Notes — 600,000 —

7 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 95 ) 5,253 ( 5,290 )

Net increase (decrease) in cash, cash equivalents and restricted cash

Net increase (decrease) in cash and cash equivalents 856,488 283,697 ( 66,651 )

Cash, cash equivalents and restricted cash:

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Restricted Cash — The Company considers cash to be restricted when withdrawal or general use is legally restricted.

During peak operations of the North American ski season, the Company’s restricted cash balance is primarily associated with customer reservations deposits that are required to be held in a trust pursuant to statutory requirements until such reservations are fulfilled.

Accounts receivable — The Company records trade accounts receivable in the normal course of business related to the sale of products or services.

9 unchanged sentences

Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease term or estimated useful life of the asset.

Depreciation is calculated on the straight-line method, including property, plant and equipment under capital leases, generally based on the following useful lives:

Depreciation is calculated on the straight-line method, including property, plant and equipment under finance leases, generally based on the following useful lives:

Estimated Life

3 unchanged sentences

Furniture and fixtures 3 - 10

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 recorded on costs related to real estate under development and other related costs.

Vehicles 3 - 10

Real Estate Held for Sale or Investment — The Company capitalizes as real estate held for sale or investment the original land acquisition cost, direct construction and development costs, property taxes, interest recorded on costs related to real estate under development and other related costs.

Sales and marketing expenses are charged against income in the period incurred.

Additionally, sales commission expenses are charged against income in the period that the related revenue from real estate sales is recorded.

Deferred Financing Costs — Certain costs incurred with the issuance of debt and debt securities are capitalized and included as a reduction in the net carrying value of long-term debt, net of accumulated amortization, with the exception of costs incurred related to line-of-credit arrangements, which are included in deferred charges and other assets, net of accumulated amortization.

6 unchanged sentences

Amortizable intangible assets are amortized over the shorter of their contractual terms or estimated useful lives.

The testing for impairment consists of a comparison of the estimated fair value of the assets with their net carrying values.

For the testing of goodwill and other indefinite-lived intangible assets for impairment, the Company may perform a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset exceeds the carrying amount, which includes an evaluation as to whether there have been significant changes to macro-economic factors related to the reporting unit or intangible asset that could materially impact fair value.

If it is determined, based on qualitative factors, that the fair value of the reporting unit or indefinite-lived intangible asset is more likely than not less than carrying amount, or if significant changes to macro-economic factors related to the reporting unit or intangible asset have occurred that could materially impact estimated fair values since the previous quantitative analysis was performed, a quantitative impairment test would be required, in which the Company would determine the estimated fair value of its reporting units using discounted cash flow analyses and determine the estimated fair value of its indefinite-lived intangible assets using an income approach.

The quantitative test for impairment consists of a comparison of the estimated fair value of the assets with their net carrying values.

If the net carrying amount of the assets exceed its estimated fair value, an impairment will be recognized for indefinite-lived intangibles, including goodwill, in an amount equal to that excess.

If the net carrying amount of the assets does not exceed the estimated fair value, no impairment loss is recognized.

For the testing of goodwill and other indefinite-lived intangible assets for impairment, the Company performs a qualitative analysis to determine whether it is more likely than not that the fair value of a reporting unit or indefinite-lived intangible asset exceeds the carrying amount, which includes an evaluation as to whether there have been significant changes to macro-economic factors related to the reporting unit or intangible asset that could materially impact fair value.

If it is determined, based on qualitative factors, that the fair value of the reporting unit or indefinite-lived intangible asset is more likely than not less than carrying amount, a quantitative impairment test would be required, in which the Company would determine the estimated fair value of its reporting units using discounted cash flow analyses and determine the estimated fair value of its indefinite-lived intangible assets using an income approach.

As a result of the coronavirus (COVID-19) pandemic and the impact it has had on the Company’s operations during the year ended July 31, 2020, and the expected continuing impact of the pandemic on future operations, the Company determined that the estimated fair value of its Colorado resort ground transportation company reporting unit within its Lodging segment no longer exceeded its carrying value.

As further discussed in Note 8, the Company recognized an impairment of approximately $ 28.4 million related to its Colorado resort ground transportation company during the year ended July 31, 2020, which was recorded within asset impairments on the Company’s Consolidated Statement of Operations, with a corresponding reduction to goodwill, net of $ 25.7 million and to intangible assets, net and property, plant and equipment, net of $ 2.7 million .

The Company determined that there were no impairments of goodwill or definite and indefinite-lived assets for the years ended July 31, 2021 and 2019.

As a result of COVID-19 and the impact it has had on the Company’s operations during the year ended July 31, 2020, the Company determined that the estimated fair value of its Colorado resort ground transportation company reporting unit within its Lodging segment no longer exceeded its carrying value.

As further discussed in Note 8, Supplementary Balance Sheet Information, the Company recognized an impairment of approximately $ 28.4 million related to its Colorado resort ground transportation company during the year ended July 31, 2020, which was recorded within asset impairments on the Company’s Consolidated Statement of Operations, with a corresponding reduction to goodwill, net of $ 25.7 million and to intangible assets, net and property, plant and equipment, net of $ 2.7 million.

See Note 8, Supplementary Balance Sheet Information, for additional information.

The Company determined that there were no other impairments of goodwill, definite and indefinite-lived assets for the years ended July 31, 2020, and that there was no impairment to goodwill and no material impairment to definite or indefinite-lived intangible assets for the years ended July 31, 2019 and 2018 .

The Company determined that there were no other impairments of goodwill or definite and indefinite-lived assets for the year ended July 31, 2020 .

Long-lived Assets — The Company evaluates potential impairment of long-lived assets and long-lived assets to be disposed of whenever events or changes in circumstances indicate that the net carrying amount of an asset may not be fully recoverable.

If the sum of the expected cash flows, on an undiscounted basis, is less than the net carrying amount of the asset, an impairment loss is recognized in the amount by which the net carrying amount of the asset exceeds its estimated fair value.

The Company determined that there were no impairments of long-lived assets for the years ended July 31, 2021 and 2019.

As discussed above, the Company recorded an impairment to long-lived assets related to its Colorado resort ground transportation company during the year ended July 31, 2020.

The Company determined that there were no other impairments of long-lived assets for the year ended July 31, 2020, and determined there was no impairment of the net carrying amount of a long-lived asset occurred during the years ended July 31, 2019 and 2018 .

The Company determined that there were no other impairments of long-lived assets for the year ended July 31, 2020.

Revenue Recognition — The Company’s significant accounting policies with regard to revenue recognition are discussed in Note 3, Revenues.

5 unchanged sentences

Translation adjustments from currency exchange, including intercompany transactions of a long-term nature, are recorded in accumulated other comprehensive loss as a separate component of stockholders’ equity.

Intercompany transactions that are not of a long-term nature are reported as gains and losses within “segment operating expense” and for intercompany loans within foreign currency loss on intercompany loans on the Company’s Consolidated Statements of Operations.

Intercompany transactions that are not of a long-term nature are reported as gains and losses within “segment operating expense” and for intercompany loans within foreign currency gain (loss) on intercompany loans on the Company’s Consolidated Statements of Operations.

Reserve Estimates — The Company uses estimates to record reserves for certain liabilities, including medical claims, workers’ compensation claims, third-party loss contingencies and property taxes, among other items.

17 unchanged sentences

See Note 11, Income Taxes, for more information.

Fair Value of Financial Instruments — The recorded amounts for cash and cash equivalents, restricted cash, receivables, other current assets and accounts payable and accrued liabilities approximate fair value due to their short-term nature.

The fair value of amounts outstanding under the Company’s credit agreements and the Employee Housing Bonds (as defined in Note 6, Long-Term Debt) approximate book value due to the variable nature of the interest rate, which is a market rate, associated with the debt.

The estimated fair value of the 6.25% Notes (as defined in Note 6, Long-Term Debt) is based on quoted market prices (a Level 2 input).

The estimated fair value of the EPR Secured Notes and EB-5 Development Notes (each as defined in Note 6, Long-Term Debt), have been estimated using analyses based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input).

The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, EPR Secured Notes and EB-5 Development Notes as of July 31, 2020 are presented below (in thousands):

Fair Value of Financial Instruments — The recorded amounts for cash and cash equivalents, restricted cash, receivables, other current assets, accounts payable and accrued liabilities and the EB-5 Development Notes (as defined in Note 6, Long-Term Debt) approximate fair value due to their short-term nature.

The estimated fair values of the 6.25% Notes and the 0.0% Convertible Notes (each as defined in Note 6, Long-Term Debt) are based on quoted market prices (a Level 2 input).

The estimated fair value of the EPR Secured Notes (as defined in Note 6, Long-Term Debt) has been estimated using an analysis based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input).

The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, 0.0% Convertible Notes and EPR Secured Notes as of July 31, 2021 are presented below (in thousands):

July 31, 2021

Carrying Value

Estimated Fair Value

Carrying Value Estimated Fair Value

6.25% Notes $ 600,000 $ 638,730

0.0% Convertible Notes $ 477,755 $ 580,583

EPR Secured Notes $ 135,711 $ 206,025

EB-5 Development Notes

Stock-Based Compensation — Stock-based compensation expense is measured at the grant date based upon the estimated fair value of the award and is recognized as expense over the applicable vesting period of the award generally using the straight-line method (see Note 17, Stock Compensation Plan, for more information), less the amount of forfeited awards which are recorded as they occur.

1 unchanged sentence

Year Ended July 31,

2021 2020 2019

Mountain stock-based compensation expense $ 20,311 $ 17,410 $ 16,474

5 unchanged sentences

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.

The Company places its cash and temporary cash investments in low risk accounts with high-quality credit institutions.

The Company does not enter into financial instruments for trading or speculative purposes.

1 unchanged sentence

The Company performs ongoing credit evaluations of its customers and generally does not require collateral, but does require advance deposits on certain transactions.

Accounting for Hedging Instruments — From time to time, the Company enters into interest rate swaps (the “Interest Rate Swaps”) to hedge the variability in cash flows associated with variable-rate borrowings by converting the floating interest rate to a fixed interest rate.

Accounting for Hedging Instruments — From time to time, the Company enters into interest rate swaps to hedge the variability in cash flows associated with variable-rate borrowings by converting the floating interest rate to a fixed interest rate (the “Interest Rate Swaps”).

As of July 31, 2021, the Company hedged the future cash flows associated with $ 400.0 million of the principal amount outstanding of its Vail Holdings Credit Agreement (as defined in Note 6, Long-Term Debt), which were designated as cash flow hedges.

1 unchanged sentence

In order to qualify for hedge accounting, the underlying hedged item must expose the Company to risks associated with market fluctuations and the financial instrument used must reduce the Company’s exposure to market fluctuation throughout the hedge period.

Changes in estimated fair value of the Interest Rate Swaps are recorded within change in estimated fair value of hedging instruments on the Company’s Consolidated Statements of Comprehensive Income, and such change was recorded as a loss of $ 22.5 million during the year ended July 31, 2020.

Changes in estimated fair value of the Interest Rate Swaps are recorded within change in estimated fair value of hedging instruments on the Company’s Consolidated Statements of Comprehensive Income, and such change was recorded as a gain (loss) of $ 12.8 million and ($ 22.5 ) million during the years ended July 31, 2021 and 2020, respectively.

Such amounts are reclassified into interest expense, net from other comprehensive income during the period in which the hedged item affects earnings.

During the year ended July 31, 2021 $ 5.4 million was reclassified into interest expense, net from other comprehensive income.

As of July 31, 2021, the estimated fair value of the Interest Rate Swaps was a liability of approximately $ 12.9 million and was recorded within other long-term liabilities on the Company’s Consolidated Balance Sheet, and the impact of the underlying cash flows associated with the Interest Rate Swaps are recorded within interest expense, net on the Company’s Consolidated Statements of Operations.

13 unchanged sentences

See Note 4, Leases, for more information.

The Company adopted Accounting Standards Update (“ASU”) No.

2016-02 on August 1, 2019, which required lessees to recognize the assets and liabilities arising from all leases on the balance sheet, using the modified retrospective transition method as provided by the standard.

Accordingly, reporting periods beginning on August 1, 2019 are

presented under the new standard, while prior periods were not adjusted and continue to be reported in accordance with the previously applicable accounting guidance.

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.

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Recently Issued Accounting Standards

Adopted Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “Leases (Topic 842),” which supersedes “Leases (Topic 840).” The standard requires lessees to recognize the assets and liabilities arising from all leases on the balance sheet, including those classified as operating leases under previous accounting guidance, and to disclose key information about leasing arrangements.

The standard also allows for an accounting policy election not to recognize on the balance sheet lease assets and liabilities for leases with a term of twelve months or less.

Under the new guidance, lessees are required to recognize a lease liability and an ROU asset on their balance sheets, while lessor accounting is largely unchanged.

In July 2018, the FASB released ASU No.

2018-11, “Leases (Topic 842):

Targeted Improvements” which, among other items, provided an additional and optional transition method.

Under this method, an entity initially applies the standard at the adoption date, including the election of certain transition reliefs, and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company adopted ASU No.

2016-02 on August 1, 2019 using the modified retrospective transition method as provided by the standard.

In accordance with this transition method, results for reporting periods beginning on August 1, 2019 are presented under the new standard, while prior periods were not adjusted and continue to be reported in accordance with the previously

applicable accounting guidance.

The Company has elected the package of practical expedients permitted under the transition guidance which allowed the Company to not reassess:

(i) whether any existing or expired contracts are or contain leases;

(ii) lease classification of any expired or existing leases;

or (iii) initial direct costs for any existing leases.

The Company has made an accounting policy election to not record leases on the balance sheet with an initial term of twelve months or less.

The Company will recognize those lease payments in the Consolidated Statements of Operations on a straight-line basis over the lease term.

Additionally, the Company has elected the practical expedient to not evaluate existing or expired land easements that were not previously accounted for as leases.

At adoption, the Company was not able to determine the interest rate implicit in its leases;

therefore, for existing operating leases, the lease liability was measured using the Company’s estimated incremental borrowing rate.

For existing leases, the incremental borrowing rate used was based on the remaining lease term at the adoption date.

For leases with minimum lease payments adjusted periodically for inflation, the lease liability was measured using the minimum lease payments adjusted by the inflation index at the adoption date.

On August 1, 2019, as a result of adopting the standard, the Company recorded $ 221.8 million of operating ROU assets and $ 254.2 million of related total operating lease liabilities in the Consolidated Balance Sheet (of which $ 219.3 million was included in operating lease liabilities and $ 34.9 million was included in accounts payable and accrued liabilities).

As a result of the adoption, the Company reclassified $ 32.4 million of unfavorable lease obligations, deferred rent credits and other related amounts to the operating ROU assets balance, primarily from other long-term liabilities, which reduced the amount recognized as operating ROU assets to $ 221.8 million .

The adoption of the new lease standard did not result in a cumulative effect adjustment to beginning retained earnings, and did not materially affect the Company’s Consolidated Statement of Operations or Consolidated Statement of Cash Flows for the year ended July 31, 2020.

The Company’s Canyons finance lease was not affected by the implementation of this standard as the arrangement is classified and recorded as a finance lease arrangement under both the previous and new accounting guidance.

In April 2020, the FASB issued clarifying guidance on accounting for certain lease concessions related to the effects of the COVID-19 pandemic under ASC Topic 842, allowing companies to make an election to either account for such lease concessions (i) in the period that they occur as though enforceable rights and obligations for those concessions existed (regardless of whether those enforceable rights and obligations for the concessions explicitly exist in the contract) or (ii) ratably over the remainder of the lease term as modifications to the contract.

The Company made a policy election to account for such lease concessions as though enforceable rights and obligations to make those concessions existed in the contracts and as a result, will account for concessions in the period in which they occur.

This election did not have a material impact on the Company’s Consolidated Financial Statements for the year ended July 31, 2020.

Standards Being Evaluated

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848):

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, “Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional transition guidance, for a limited time, to companies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform.

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All other amendments should be applied on a prospective basis.

The Company is in the process of evaluating the effect that the adoption of this standard will have on its Consolidated Financial Statements.

The Company is in the process of evaluating the effect that the adoption of this standard will have on its Consolidated Financial Statements, but does not expect it will have a material effect.

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” which simplifies the guidance in Accounting Standards Codifications (“ASC”) 470-20, “Debt – Debt with Conversion and Other Options” by reducing the number of accounting separation models for convertible instruments, amending the guidance in ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” for certain contracts in an entity’s own equity that are currently accounted for as derivatives, and requiring entities to use the if-converted method for all convertible instruments in the diluted earnings per share (“EPS”) calculation.

This standard will be effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years (the Company’s first quarter of the fiscal year ending July 31, 2023).

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years (the Company’s first quarter of the fiscal year ending July 31, 2022).

This standard allows for a modified retrospective or fully retrospective method of transition.

The Company will adopt ASU 2020-06 on August 1, 2022 and expects to use the modified retrospective method, and therefore financial information for periods before August 1, 2022 will remain unchanged.

As a result of the adoption of ASU 2020-06, the Company expects that it will reclassify the equity component of its 0.0% Convertible Notes (as defined in Note 6, Long-Term Debt) to long-term debt, net, and it will no longer record interest expense related to the amortization of the debt discount.

Revenue Recognition

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and other on-mountain revenue, which includes private ski club revenue (which includes both club dues and amortization of initiation fees), marketing and internet advertising revenue, municipal services and lodging and transportation operations at the Company’s Australian ski areas.

Revenue is recognized over time as performance obligations are satisfied

as control of the good or service (e.g.

Revenue is recognized over time as performance obligations are satisfied as control of the good or service (e.g.

access to ski areas, provision of ski school services, etc.) is transferred to the customer, except for the Company’s retail sales and dining operations revenues which are recognized at a point in time when performance obligations are satisfied by transferring control of the underlying goods to the customer.

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access to ski areas throughout the ski season) is transferred to the customer.

Transfer of control is based on an estimated number of pass product holder visits relative to total expected visits.

control is based on an estimated number of pass product holder visits relative to total expected visits.

Total expected visits are estimated based on historical data, and the Company believes this estimate provides a faithful depiction of its customers’ pass product usage.

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The Company presents revenues in the accompanying Consolidated Statements of Operations, net of taxes, when collected from its customers that are remitted or payable to government taxing authorities, except when products are inclusive of taxes where applicable.

As a result of the COVID-19 pandemic, the Company closed its North American destination mountain resorts, regional ski areas and retail stores beginning on March 15, 2020.

To encourage the Company’s pass product holders to renew their pass purchases for next season following the closures this past spring, the Company announced a credit offer on April 27, 2020 for existing 2019/2020 North American ski season pass product holders to purchase 2020/2021 North American ski season pass products at a discount (the “Credit Offer”).

The Credit Offer discounts range from a minimum of 20% to a maximum of 80% for 2019/2020 season pass holders, depending on the number of days the pass holder used their pass product during the 2019/2020 North American ski season and a credit, with no minimum, but up to 80% for multi-day pass products, such as the Epic Day Pass, based on total unused days.

For accounting purposes, the Credit Offer constituted a material right to existing 2019/2020 pass product holders to which the Company allocated a transaction price of approximately $ 120.9 million .

As a result, the Company deferred $ 120.9 million of pass product revenue, which would have been recognized as lift revenue during the year ended July 31, 2020.

The Company expects to recognize the revenue associated with the Credit Offer in the second and third fiscal quarters of the fiscal year ending July 31, 2021 or the second and third fiscal quarters of the fiscal year ending July 31, 2022.

While the Company expects most of this revenue to be recognized during Fiscal 2021, in the event that a pass holder obtains a refund under Epic Coverage for the 2020/2021 ski season and is eligible to utilize their credit toward the purchase of a pass product for the 2021/2022 ski season, a portion of this deferred revenue and related deferred cost will be recognized in Fiscal 2022.

In addition, as a result of the pass product revenue deferral, the Company also deferred approximately $ 2.9 million of the associated costs of obtaining a contract (primarily credit card processing fees), which will be recognized commensurate with the associated deferred revenue.

The Company estimated the standalone selling price of the Credit Offer by utilizing historical pass holder renewal data to estimate the total amount of credits that are expected to be redeemed.

Estimates and assumptions made regarding expected renewal rates impacted the estimate of the transaction price allocated to the Credit Offer and could vary materially from the amount of revenue deferred depending upon actual customer redemptions.

As a result of the COVID-19 pandemic, the Company closed its North American destination mountain resorts, regional ski areas and retail stores early during the 2019/2020 North American ski season, beginning on March 15, 2020.

Subsequently, the Company announced a credit offer for all existing 2019/2020 North American ski season pass product holders to purchase 2020/2021 North American ski season pass products at a discount (the “Credit Offer”).

The Credit Offer discounts ranged from a minimum of 20% to a maximum of 80% for season pass holders, depending on the number of days the pass holder used their pass product during the 2019/2020 season and a credit, with no minimum, but up to 80% for multi-day pass products, such as the Epic Day Pass, based on total unused days.

The Credit Offer was considered a contract modification which constituted an option to purchase an additional pass product for 2019/2020 North American ski season guests and, as such, represented a separate performance obligation to which the Company allocated a transaction price of approximately $ 120.9 million.

As a result, the Company deferred $ 120.9 million of pass product revenue, which would have otherwise been recognized as lift revenue during the year ended July 31, 2020.

The Credit Offer expired on September 17, 2020 and the Company recorded $ 15.4 million as lift revenue during the three months ended October 31, 2020, which was the amount of Credit Offer discounts which were not redeemed.

The remaining deferred revenue associated with the Credit Offer was recognized as lift revenue primarily during the 2020/2021 North American ski season, as the performance obligations were satisfied.

In April 2020, the Company announced Epic Coverage, which is included with the purchase of all pass products for no additional charge.

Epic Coverage offers refunds to pass product holders if certain qualifying personal or resort closure events occur before or during the ski season.

The estimated amount of refunds reduce the amount of pass product revenue recognized by the Company.

To estimate the amount of refunds under Epic Coverage, the Company considers (i) historical claims data for personal events, (ii) provincial, state, county and local COVID-19 regulations and public health orders, (iii) the ability for the Company’s pass holders to make reservations on their preferred days (for only the 2020/2021 North American ski season, during which the Company utilized a reservation system) and (iv) the Company’s operating plans for its resorts.

The Company believes the estimates of refunds are reasonable;

however, actual results could vary materially from such estimates, and such estimates will be remeasured at each reporting date.

Additionally, for the 2020/2021 North American ski season, the Company introduced Epic Mountain Rewards, a program which provides pass product holders a discount of 20% off on-mountain food and beverage, lodging, group ski school lessons, equipment rentals and more at the Company’s North American owned and operated Resorts.

Epic Mountain Rewards constitutes an option to our guests to purchase additional products and services from us at a discount and as a result, the Company allocates a portion of the pass product transaction price to these other lines of business.

Disaggregation of Revenues

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Year ended July 31,

2021 2020 2019

Mountain net revenue:

Lift $ 1,076,578 $ 913,091 $ 1,033,234

Ski School 144,227 189,131 215,060

Dining 90,329 160,763 181,837

Retail/Rental 227,993 270,299 320,267

Other 150,751 177,159 205,803

Total Mountain net revenue $ 1,689,878 $ 1,710,443 $ 1,956,201

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Managed condominium rooms 72,217 76,480 86,236

Dining 19,068 38,252 53,730

Transportation 9,271 15,796 21,275

Golf 20,437 17,412 19,648

Other 43,007 44,933 54,617

211,509 237,865 300,332

Payroll cost reimbursements 6,553 10,549 14,330

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The deferred revenue balance is primarily related to accounts receivable or cash payments recorded in advance of satisfying the Company’s performance obligations related to sales of pass products prior to the start of the ski season, private club initiation fees and other related advance purchase products, including advance purchase lift tickets, multiple-day lift tickets, ski school lessons, equipment rentals and lodging advance deposits.

Due to the seasonality of the Company’s operations, its largest deferred revenue balances occur during the North American pass product selling window, which generally begins in the fourth quarter of its fiscal year.

Deferred revenue balances of a short-term nature were $ 256.4 million and $ 335.7 million as of July 31, 2020 and 2019, respectively.

Deferred revenue balances of a short-term nature were $ 456.5 million and $ 256.4 million as of July 31, 2021 and 2020, respectively, and the increase was primarily due to an increase in pass product sales for the 2021/2022 North American ski season as compared to the prior year from the beginning of the selling season through each respective fiscal year-end, due largely to the lack of any spring sales deadlines in fiscal year 2020 as a result of COVID-19.

Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, were $ 121.0 million and $ 121.9 million as of July 31, 2021 and 2020, respectively.

For the year ended July 31, 2021, the Company recognized approximately $ 232.8 million of revenue that was included in the deferred revenue balance as of July 31, 2020.

As of July 31, 2020, the weighted average remaining period over which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 16 years.

As of July 31, 2021, the weighted average remaining period over

which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 16 years.

Contract assets are recorded as trade receivables when the right to consideration is unconditional.

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For certain products or services and customer types, contracts require payment before the products are delivered or services are provided to the customer.

Impairment losses related

to contract assets are recognized through the Company’s allowance for doubtful accounts analysis.

Impairment losses related to contract assets are recognized through the Company’s allowance for doubtful accounts analysis.

Contract asset write-offs are evaluated on an individual basis.

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or (iii) lease payments adjusted for changes in an index or market value.

These variable lease payments are typically recognized when the underlying event occurs and are included in operating expenses in the Company’s Consolidated Statements of Operations in the same line item as the expense arising from fixed lease payments.

The Company’s lease agreements may also include non-lease components, such as common area maintenance and insurance, which are accounted for separately.

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The Company monitors for events or changes in circumstances that require a reassessment.

The components of lease expense for the year ended July 31, 2020 , were as follows (in thousands):

July 31, 2020

The components of lease expense for the years ended July 31, 2021 and 2020 were as follows (in thousands):

Year ended July 31,

Finance leases:

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Short-term lease expense (1)

$ 13,638 $ 13,943

Variable lease expense $ 1,660 $ 1,583

(1) Short-term lease expense is attributable to leases with terms of 12 months or less which are not included within the Company’s Consolidated Balance Sheet.

The following table presents the supplemental cash flow information associated with the Company’s leasing activities for the year ended July 31, 2020 (in thousands):

July 31, 2020

(1) Short-term lease expense is attributable to leases with terms of 12 months or less which are not included within the Company’s Consolidated Balance Sheets.

The following table presents the supplemental cash flow information associated with the Company’s leasing activities for the years ended July 31, 2021 and 2020 (in thousands):

Year ended July 31,

Cash flow supplemental information:

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Weighted-average remaining lease terms and discount rates are as follows:

As of July 31, 2020

July 31, 2021 July 31, 2020

Weighted-average remaining lease term (in years)

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Finance leases 10.0 % 10.0 %

Future lease payments for operating and finance leases as of July 31, 2020 reflected by fiscal year (August 1 through July 31) are as follows (in thousands):

Operating Leases

Finance Leases

Future fixed lease payments for operating and finance leases as of July 31, 2021 reflected by fiscal year (August 1 through July 31) are as follows (in thousands):

Operating Leases Finance Leases

2022 $ 47,036 $ 29,394

2023 40,994 29,982

2024 36,452 30,582

2025 33,924 31,193

2026 30,362 31,817

Thereafter 109,063 1,742,038

Total future minimum lease payments 297,831 1,895,006

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Total lease liabilities $ 225,582 $ 351,820

The current portion of operating lease liabilities of approximately $ 36.6 million as of July 31, 2020 is recorded within accounts payables and accrued liabilities in the Consolidated Balance Sheet.

The current portion of operating lease liabilities of approximately $ 34.7 million and $ 36.6 million as of July 31, 2021 and 2020, respectively, are recorded within accounts payables and accrued liabilities in the Consolidated Balance Sheet.

Finance lease liabilities are recorded within long-term debt, net in the Consolidated Balance Sheets.

Future minimum lease payments in accordance with Topic 840 as of July 31, 2019, reflected by fiscal year (August 1 through July 31), were as follows (in thousands):

Operating Leases

Capital Leases

Total future minimum lease payments

Less amount representing interest

Net future minimum lease payments

The Canyons finance lease obligation represents the only material finance lease entered into by the Company and was $ 346.0 million as of July 31, 2020 , which represents the estimated annual lease payments for the remaining initial 50 year term of the lease assuming annual increases at the floor of 2% and discounted using an interest rate of 10% .

As of July 31, 2020 , the Company has recorded $ 117.8 million of finance lease ROU assets in connection with the Canyons lease, net of $ 65.8 million of accumulated amortization, which is included within property, plant and equipment, net in the Company’s Consolidated Balance Sheet.

The Canyons finance lease obligation represents the only material finance lease entered into by the Company and was $ 351.8 million and $ 346.0 million as of July 31, 2021 and 2020, respectively, which represents the estimated annual fixed lease payments for the remaining initial 50 year term of the lease assuming annual increases at the floor of 2% and discounted using an interest rate of 10%.

As of July 31, 2021 and 2020, respectively, the Company has recorded $ 108.0 million and $ 117.8 million of finance lease ROU assets in connection with the Canyons lease, net of $ 75.5 million and $ 65.8 million of accumulated amortization, which is included within property, plant and equipment, net in the Company’s Consolidated Balance Sheet.

Net Income Per Common Share

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Year Ended July 31,

2021 2020 2019

Basic Diluted Basic Diluted Basic Diluted

Net income per share:

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Effect of dilutive securities — 527 — 565 — 809

Total shares 40,301 40,828 40,273 40,838 40,349 41,158

Net income per share attributable to Vail Resorts, Inc.

$ 3.17 $ 3.13 $ 2.45 $ 2.42 $ 7.46 $ 7.32

The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period.

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 approximately 2,000 , 2,000 and 4,000 for the years ended July 31, 2021, 2020 and 2019, respectively.

For the year ended July 31, 2020 , the Company paid cash dividends of $ 5.28 per share ( $ 212.7 million in the aggregate).

The Company announced on April 1, 2020 that it would be suspending its quarterly dividend for at least the next two quarters, and will be subject to a dividend limitation under the Financial Covenants Temporary Waiver Period of the Vail Holdings Credit Agreement (as defined in Note 6, Long-Term Debt).

On December 18, 2020, the Company completed an offering of $ 575.0 million in aggregate principal amount of 0.0 % Convertible Notes (as defined in Note 6, Long-Term Debt).

The Company is required to settle the principal amount of the 0.0 % Convertible Notes in cash and has the option to settle the conversion spread in cash or shares.

The Company uses the treasury method to calculate diluted EPS, and if the conversion value of the 0.0 % Convertible Notes exceeds their conversion price of $ 407.17 per share of common stock, then the Company will calculate its diluted EPS as if all the notes were converted and the Company issued shares of its common stock to settle the excess value over the conversion price.

The par value of the 0.0 % Convertible Notes is required to be settled in cash and therefore would not impact diluted EPS.

However, if reflecting the 0.0 % Convertible Notes in diluted EPS in this manner is anti-dilutive, or if the conversion value of the notes does not exceed their initial conversion amount for a reporting period, then the shares underlying the notes will not be reflected in the Company’s calculation of diluted EPS.

For the year ended July 31, 2021, the average price of Vail Shares did not exceed the conversion price and therefore there was no impact to diluted EPS during those periods.

The Company did not pay cash dividends during the year ended July 31, 2021.

During the years ended July 31, 2020 and 2019, the Company paid cash dividends of $ 5.28 per share ($ 212.7 million in the aggregate) and $ 6.46 per share ($ 260.6 million in the aggregate), respectively.

On September 22, 2021 the Company’s Board of Directors approved a cash dividend of $ 0.88 per share payable on October 22, 2021 to stockholders of record as of October 5, 2021 .

Additionally, a Canadian dollar equivalent dividend on the Exchangeco Shares will be payable on October 22, 2021 to the shareholders of record on October 5, 2021 .

Long-Term Debt

Long-term debt as of July 31, 2021 and 2020 is summarized as follows (in thousands):

Maturity July 31,

2021 July 31,

Vail Holdings Credit Agreement revolver (a)

Vail Holdings Credit Agreement term loan (a)

2024 1,140,625 1,203,125

6.25% Notes (b)

Whistler Credit Agreement revolver (c)

EPR Secured Notes (d)

EB-5 Development Notes (e)

Employee housing bonds (f)

Canyons obligation (g)

Unamortized premiums, discounts and debt issuance costs (i)

Current maturities (j)

2025 600,000 600,000

0.0% Convertible Notes (c)

2026 575,000 —

Whistler Credit Agreement revolver (d)

2024 44,891 58,236

EPR Secured Notes (e)

114,162 114,162

EB-5 Development Notes (f)

2021 51,500 51,500

Employee housing bonds (g)

52,575 52,575

Canyons obligation (h)

2063 351,820 346,034

17,941 18,616

Total debt 2,948,514 2,444,248

Unamortized premiums, discounts and debt issuance costs (j)

98,222 ( 6,551 )

Current maturities (k)

114,117 63,677

Long-term debt, net $ 2,736,175 $ 2,387,122

(a) On September 23, 2019, in order to fund the acquisition of Peak Resorts, Inc.

(“Peak Resorts”), which included the prepayment of certain portions of the outstanding debt and lease obligations of Peak Resorts contemporaneous with the closing of the transaction (see Note 7, Acquisitions), the Company’s wholly-owned subsidiary, Vail Holdings, Inc.

(“VHI”), entered into the Second Amendment to the Eighth Amended and Restated Credit Agreement (the “Vail Holdings Credit Agreement”), with Bank of America, N.A., as administrative agent, and other lenders named therein, through which those lenders agreed to provide an additional $ 335.6 million in incremental term loans and agreed, on behalf of all lenders, to extend the maturity date for the outstanding term loans and revolver facility under the Vail Holdings Credit Agreement to September 23, 2024.

No other material terms of the Vail Holdings Credit Agreement were altered under the amendment.

On April 28, 2020, VHI, certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent, and certain Lenders entered into a Third Amendment to the Vail Holdings Credit Agreement (the “Third Amendment”).

Pursuant to the Third Amendment, among other terms, VHI is exempt from complying with the Vail Holdings Credit Agreement’s maximum leverage ratio and minimum interest coverage ratio financial maintenance covenants for each of the fiscal quarters ending July 31, 2020 through January 31, 2022 (unless VHI makes a one-time irrevocable election to terminate such exemption period prior to such date) (such period, the “Financial Covenants Temporary Waiver Period”), after which VHI will again be required to comply with such covenants starting with the fiscal quarter ending April 30, 2022 (or such earlier fiscal quarter as elected by VHI).

(a) On December 18, 2020, Vail Holdings, Inc.

(“VHI”), certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent, and certain Lenders entered into a Fourth Amendment to the Vail Holdings Credit Agreement (the “Fourth Amendment”).

Pursuant to the Fourth Amendment, among other terms, VHI is exempt from complying with the Vail Holdings Credit Agreement’s maximum leverage ratio, senior secured leverage ratio and minimum interest coverage ratio financial maintenance covenants for each of the fiscal quarters ending through January 31, 2022 (unless VHI makes a one-time irrevocable election to terminate such exemption period prior to such date) (such period, the “Financial Covenants Temporary Waiver Period”), after which VHI will again be required to comply with such covenants starting with the fiscal quarter ending April 30, 2022 (or such earlier fiscal quarter as elected by VHI).

After the expiration of the Financial Covenants Temporary Waiver Period:

the maximum leverage ratio permitted under the maximum leverage ratio financial maintenance covenant reduces each quarter as follows:

(A) first full fiscal quarter:

6.25 to 1.00;

(B) second full fiscal quarter:

5.75 to 1.00;

5.25 to 1.00;

(D) fourth full fiscal quarter and for each fiscal quarter thereafter:

5.00 to 1.00.

the minimum interest coverage ratio permitted under the minimum interest coverage ratio financial maintenance covenant will be 2.00 to 1.00.

In addition, VHI is required to comply with a monthly minimum liquidity test (liquidity is defined as unrestricted cash and temporary cash investments of VRI and its restricted subsidiaries and available commitments under the Vail Holdings Credit Agreement revolver) of not less than $ 150.0 million , during the period that began on July 31, 2020 and ending on the date VHI delivers a compliance certificate for the Company and its subsidiaries’ first fiscal quarter following the end of the Financial Covenants Temporary Waiver Period.

• the maximum ratio permitted under the maximum leverage ratio financial maintenance covenant shall be 6.25 to 1.00;

• the maximum ratio permitted under the senior secured leverage ratio financial maintenance covenant shall be 4.00 to 1.00;

• the minimum ratio permitted under the minimum interest coverage ratio financial maintenance covenant will be 2.00 to 1.00.

The Company is prohibited from the following activities during the Financial Covenants Temporary Waiver Period (unless approval is obtained by a majority of the Lenders):

paying any dividends or making share repurchases, unless (x) no default or potential default exists under the Vail Holdings Credit Agreement and (y) the Company has liquidity (as defined above) of at least $ 400.0 million , and the aggregate amount of dividends paid and share repurchases made by the Company during the Financial Covenants Temporary Waiver Period may not exceed $ 38.2 million in any fiscal quarter;

making capital expenditures in excess of $ 200.0 million per 12-month period ending January 31, other than non-recurring extraordinary capital expenditures incurred in connection with emergency repairs, life safety repairs or ordinary course maintenance repairs;

incurring any indebtedness secured by the collateral under the Vail Holdings Credit Agreement other than pursuant to the existing revolving commitments under the Credit Agreement;

making non-ordinary course investments in unrestricted subsidiaries unless the Company has liquidity (as defined above) of at least $ 300.0 million ;

making investments in non-subsidiaries in excess of $ 50.0 million in the aggregate;

acquiring all or a majority of the capital stock or all or any substantial portion of the assets of any entity or merging or consolidating with another entity.

During the Financial Covenants Temporary Waiver Period, borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50% and, for amounts in excess of $400.0 million, LIBOR is subject to a floor of 0.75%.

In addition, pursuant to the Third Amendment, the amount by which we are able to increase availability (under the revolver or in the form of term loans) was increased to an aggregate principal amount not to exceed the greater of (i) $ 2.25 billion and (ii) the product of 3.25 and the trailing four-quarter Adjusted EBITDA (as defined in the Credit Agreement).

• paying any dividends or making share repurchases, unless (x) no default or potential default exists under the Vail Holdings Credit Agreement and (y) the Company has liquidity (as defined below) of at least $ 300.0 million, and the aggregate amount of dividends paid and share repurchases made by the Company during the Financial Covenants Temporary Waiver Period may not exceed $ 38.2 million in any fiscal quarter;

• incurring indebtedness secured by the collateral under the Vail Holdings Credit Agreement in an amount in excess of $1.75 billion;

• making certain non-ordinary course investments in similar businesses, joint ventures and unrestricted subsidiaries unless the Company has liquidity (as defined below) of at least $ 300.0 million;

The Fourth Amendment also removed certain restrictions under the Financial Covenants Temporary Waiver Period, including (i) removing the restriction on acquisitions so long as the Company has liquidity (as defined below) of at least $300.0 million and (ii) removing the $200.0 million annual limit on capital expenditures.

In addition, VHI is required to comply with a monthly minimum liquidity test (liquidity is defined as unrestricted cash and temporary cash investments of VHI and its restricted subsidiaries and available commitments under the Vail Holdings

Credit Agreement revolver) of not less than $ 150.0 million until the date which VHI delivers a compliance certificate for the Company and its subsidiaries’ first fiscal quarter following the end of the Financial Covenants Temporary Waiver Period.

As of July 31, 2021, the Vail Holdings Credit Agreement consists of a $ 500.0 million revolving credit facility and a $ 1.1 billion outstanding term loan facility.

The term loan facility is subject to quarterly amortization of principal of approximately $ 15.6 million (which began in January 2020), in equal installments, for a total of 5% of principal payable in each year and the final payment of all amounts outstanding, plus accrued and unpaid interest due in September 2024.

The proceeds of the loans made under the Vail Holdings Credit Agreement may be used to fund the Company’s working capital needs, capital expenditures, acquisitions, investments and other general corporate purposes, including the issuance of letters of credit, subject to the Financial Covenants Temporary Waiver Period limitations, as discussed above.

Borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50% as of July 31, 2020 ( 2.66 % as of July 31, 2020 for $400.0 million of borrowings, and for amounts in excess of $400.0 million in which LIBOR is subject to a floor of 0.75% during the Financial Covenants Temporary Waiver Period, 3.25 % as of July 31, 2020 ).

Borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50 % as of July 31, 2021 ( 2.59 % for the first $400.0 million of borrowings, and for amounts in excess of $400.0 million for which LIBOR is subject to a floor of 0.25% during the Financial Covenants Temporary Waiver Period, 2.75 %).

Other than as impacted by the provisions in place during the Financial Covenants Temporary Waiver Period, interest rate margins may fluctuate based upon the ratio of the Company’s Net Funded Debt to Adjusted EBITDA on a trailing four- quarter basis.

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(b) On May 4, 2020, the Company completed its offering of $ 600 million aggregate principal amount of 6.25 % senior notes due 2025 at par (the “6.25% Notes”), and a portion of the net proceeds were utilized to pay down the outstanding balance of the revolver component of its Vail Holdings Credit Agreement in its entirety (which will continue to be available to the Company to borrow including throughout the Financial Covenants Temporary Waiver Period) and to pay the fees and expenses associated with the offering, with the remaining net proceeds intended to be used for general corporate purposes.

The Company will pay interest on the Notes on May 15 and November 15 of each year commencing on November 15, 2020.

The Company pays interest on the 6.25% Notes on May 15 and November 15 of each year, which commenced on November 15, 2020.

The 6.25% Notes will mature on May 15, 2025.

The Notes are redeemable, in whole or in part, at any time on or after May 15, 2022

at the redemption prices specified in an Indenture dated as of May 4, 2020 (the “Indenture”) plus accrued and unpaid interest.

The 6.25% Notes are redeemable, in whole or in part, at any time on or after May 15, 2022 at the redemption prices specified in an indenture dated as of May 4, 2020 (the “6.25% Indenture”) plus accrued and unpaid interest.

Prior to May 15, 2022, the Company may redeem some or all of the 6.25% Notes at a redemption price of 100% of the principal amount, plus accrued and unpaid interest, plus a “make-whole” premium as specified in the 6.25% Indenture.

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The 6.25% Indenture does not contain any financial maintenance covenants.

Certain of the covenants will not apply to the Notes so long as the Notes have investment grade ratings from two specified rating agencies and no event of default has occurred and is continuing under the Indenture.

Certain of the covenants will not apply to the 6.25% Notes so long as the 6.25% Notes have investment grade ratings from two specified rating

agencies and no event of default has occurred and is continuing under the 6.25% Indenture.

The 6.25% Indenture includes customary events of default, including failure to make payment, failure to comply with the obligations set forth in the 6.25% Indenture, certain defaults on certain other indebtedness, certain events of bankruptcy, insolvency or reorganization, and invalidity of the guarantees of the 6.25% Notes issued pursuant to the 6.25% Indenture.

(c) Whistler Mountain Resort Limited Partnership (“Whistler LP”) and Blackcomb Skiing Enterprises Limited Partnership (“Blackcomb LP”), together “The WB Partnerships,” are party to a credit agreement, dated as of November 12, 2013 (as amended, the “Whistler Credit Agreement”), by and among Whistler LP, Blackcomb LP, certain subsidiaries of Whistler LP and Blackcomb LP party thereto as guarantors (the “Whistler Subsidiary Guarantors”), the financial institutions party thereto as lenders and The Toronto-Dominion Bank, as administrative agent.

(c) On December 18, 2020, the Company completed an offering of $ 575.0 million in aggregate principal amount of 0.0% Convertible Notes due 2026 in a private placement conducted pursuant to Rule 144A of the Securities Act of 1933, as amended (the “0.0% Convertible Notes”).

The 0.0% Convertible Notes were issued under an indenture dated December 18, 2020 (the “Convertible Indenture”) between the Company and U.S.

Bank National Association, as Trustee.

The 0.0% Convertible Notes do not bear regular interest and the principal amount does not accrete.

The 0.0% Convertible Notes mature on January 1, 2026, unless earlier repurchased, redeemed or converted.

The 0.0% Convertible Notes are general senior unsecured obligations of the Company.

The 0.0% Convertible Notes rank senior in right of payment to any future debt that is expressly subordinated, equal in right of payment with the Company’s existing and future liabilities that are not so subordinated, and are subordinated to all of the Company’s existing and future secured debt to the extent of the value of the assets securing such debt.

The 0.0% Convertible Notes will also be structurally subordinated to all of the existing and future liabilities and obligations of the Company’s subsidiaries, including such subsidiaries’ guarantees of the 6.25% Notes.

The initial conversion rate was 2.4560 shares per $1,000 principal amount of notes (the “Conversion Rate”), which represents an initial conversion price of approximately $ 407.17 per share (the “Conversion Price”), and is subject to adjustment upon the occurrence of certain specified events as described in the Convertible Indenture.

The principal amount of the 0.0% Convertible Notes is required to be settled in cash.

The Company will settle conversions by paying cash, delivering shares of its common stock, or a combination of the two, at its option.

Holders may convert their notes, at their option, only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 if the last reported sale price per share of our common stock exceeds 130 % of the Conversion Price for each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter;

• during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day of the Measurement Period was less than 98 % of the product of the last reported sale price per share of our common stock on such trading day and the Conversion Rate on such trading day;

• upon the occurrence of certain corporate events or distributions on our common stock, as described in the Convertible Indenture;

• if the Company calls the 0.0% Convertible Notes for redemption;

• at any time from, and including, July 1, 2025 until the close of business on the scheduled trading day immediately before the maturity date.

The 0.0% Convertible Notes will be redeemable, in whole or in part, at the Company’s option at any time, and from time to time, on or after January 1, 2024 and on or before the 25th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the Conversion Price for a specified period of time.

If the Company elects to redeem less than all of the 0.0% Convertible Notes, at least $ 50.0 million aggregate principal amount of notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

Calling any 0.0% Convertible Notes for redemption will constitute a make-whole fundamental change with respect to such notes, in which case the Conversion Rate applicable to the conversion of such notes will be increased in certain circumstances if such notes are converted after they are called for redemption.

In addition, upon the occurrence of a fundamental change (as defined in the Convertible Indenture), holders of the 0.0% Convertible Notes may require the Company to repurchase all or a portion of their notes at a cash repurchase price equal to the principal amount of the notes to be repurchased, plus any accrued and unpaid special and additional interest, if any, to, but excluding, the applicable repurchase date.

If certain fundamental changes referred to as make-whole fundamental changes (as defined in the Convertible Indenture) occur, the Conversion Rate for the 0.0% Convertible Notes may be increased for a specified period of time.

The Convertible Indenture includes customary events of default, including failure to make payment, failure to comply with the obligations set forth in the Convertible Indenture, certain defaults on certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization.

The Company may elect, at its option, that the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants in the Convertible Indenture will consist exclusively of the right of the holders of the 0.0% Convertible Notes to receive additional interest on the notes for up to 360 days following such failure.

The Company separately accounts for the liability and equity components of the 0.0% Convertible Notes.

The liability component at issuance was recognized at estimated fair value based on the fair value of a similar debt instrument that does not have an embedded convertible feature, and was determined to be $ 465.3 million and was recorded within long-term debt, net on the Company’s Consolidated Balance Sheet.

The excess of the principal amount of the 0.0% Convertible Notes over the initial fair value of the liability component represents a debt discount of $ 109.7 million and will be amortized to interest expense, net over the term.

The balance of the unamortized debt discount was $ 97.2 million as of July 31, 2021.

The carrying amount of the equity component representing the conversion option was approximately $ 109.7 million and was determined by deducting the initial fair value of the liability component from the total proceeds of the 0.0% Convertible Notes of $ 575.0 million.

Additionally, the Company recorded deferred tax liabilities of approximately $ 27.5 million related to the equity component of the 0.0% Convertible Notes on the date of issuance, which decreased the recorded value of the equity component.

The equity component is recorded within additional paid-in capital on the Company’s Consolidated Balance Sheet and is not remeasured as long as it continues to meet the conditions for equity classification.

Deferred financing costs related to the 0.0% Convertible Notes of approximately $ 14.9 million were allocated between the liability and equity components of the 0.0% Convertible Notes based on the proportion of the total proceeds allocated to the debt and equity components.

(d) Whistler Mountain Resort Limited Partnership (“Whistler LP”) and Blackcomb Skiing Enterprises Limited Partnership (“Blackcomb LP”), together “The WB Partnerships,” are party to a credit agreement, dated as of November 12, 2013 (as amended, the “Whistler Credit Agreement”), by and among Whistler LP, Blackcomb LP, certain subsidiaries of Whistler LP and Blackcomb LP party thereto as guarantors (the “Whistler Subsidiary Guarantors”), the financial institutions party thereto as lenders and The Toronto-Dominion Bank, as administrative agent.

The Whistler Credit Agreement consists of a C$ 300.0 million revolving credit facility, and during the year ended July 31, 2020, the Company entered into an amendment of the Whistler Credit Agreement which extended the maturity date of the revolving credit facility to December 15, 2024.

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In addition, the Whistler Credit Agreement includes the restrictive financial covenants (leverage ratios and interest coverage ratios) customary for facilities of this type.

(d) On September 24, 2019, in conjunction with the acquisition of Peak Resorts (see Note 7, Acquisitions), the Company assumed various secured borrowings (the “EPR Secured Notes”) under the master credit and security agreements and other related agreements, as amended, (collectively, the “EPR Agreements”) with EPT Ski Properties, Inc.

(e) On September 24, 2019, in conjunction with the acquisition of Peak Resorts (see Note 7, Acquisitions), the Company assumed various secured borrowings (the “EPR Secured Notes”) under the master credit and security agreements and other related agreements, as amended, (collectively, the “EPR Agreements”) with EPT Ski Properties, Inc.

and its affiliates (“EPR”).

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The EPR Secured Notes are secured by all or substantially all of the assets of Peak Resorts and its subsidiaries, including mortgages on the Alpine Valley, Boston Mills, Brandywine, Jack Frost, Big Boulder, Mount Snow and Hunter Mountain ski resorts.

The EPR Secured Notes bear interest at specified interest rates, as discussed above, which are subject to increase each year by the lesser of (i) three times the percentage increase in the Consumer Price Index or (ii) a capped index (the “Capped CPI Index”), which is 1.75 % for the Hunter Mountain Secured Note and 1.50 % for all other notes.

The EPR Secured Notes bear interest at specified interest rates, as discussed above, which are subject to increase each year by the lesser of (i) three times the percentage increase in the Consumer Price Index (“CPI”) or (ii) a capped index (the “Capped CPI Index”), which is 1.75 % for the Hunter Mountain Secured Note and 1.50 % for all other notes.

The EPR Agreements provide for affirmative and negative covenants that restrict, among other things, the ability of Peak Resorts and its subsidiaries to incur indebtedness, dispose of assets, make distributions and make investments.

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As of July 31, 2021, the Company had funded the EPR debt service reserve account in an amount equal to approximately $ 5.2 million, which was included in other current assets in the Company’s Consolidated Balance Sheet.

(e) Peak Resorts serves as the general partner for two limited partnerships, Carinthia Group 1, LP and Carinthia Group 2, LP (together, the “Carinthia Partnerships”), which were formed to raise $ 52.0 million through the Immigrant Investor Program administered by the U.S.

(f) Peak Resorts serves as the general partner for two limited partnerships, Carinthia Group 1, LP and Carinthia Group 2, LP (together, the “Carinthia Partnerships”), which were formed to raise $ 52.0 million through the Immigrant Investor Program administered by the U.S.

Citizenship and Immigration Services (“USCIS”), pursuant to the Immigration and Nationality Act (the “EB-5 Program”).

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Amounts outstanding under the EB-5 Development Notes accrue simple interest at a fixed rate of 1.0 % per annum until the maturity date, which is December 27, 2021, subject to an extension of up to two additional years at the option of the borrowers, with lender consent.

If the maturity date is extended, amounts outstanding under the EB-5 Development Notes will accrue simple interest at a fixed rate of 7.0 % per annum during the first year of extension and a fixed rate of 10.0 % per annum during the second year of extension.

Upon an event of default (as defined), amounts outstanding

under the EB-5 Development Notes shall bear interest at the rate of 5.0 % per annum, subject to the extension increases.

If the maturity date is extended,

amounts outstanding under the EB-5 Development Notes will accrue simple interest at a fixed rate of 7.0 % per annum during the first year of extension and a fixed rate of 10.0 % per annum during the second year of extension.

Upon an event of default (as defined), amounts outstanding under the EB-5 Development Notes shall bear interest at the rate of 5.0 % per annum, subject to the extension increases.

While the EB-5 Development Notes are outstanding, Peak Resorts is restricted from taking certain actions without the consent of the lenders, including, but not limited to, transferring or disposing of the properties or assets financed with loan proceeds.

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via the EB-5 Program.

(f) The Company has recorded the outstanding debt of four Employee Housing Entities (each an “Employee Housing Entity” and collectively the “Employee Housing Entities”):

(g) The Company has recorded 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.

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The table below presents the principal amounts outstanding for the Employee Housing Bonds as of July 31, 2021 (in thousands):

Maturity (a) Tranche A Tranche B Total

Breckenridge Terrace 2039 $ 14,980 $ 5,000 $ 19,980

(g) On May 24, 2013 , VR CPC Holdings, Inc.

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

$ 37,780 $ 14,795 $ 52,575

(h) On May 24, 2013 , VR CPC Holdings, Inc.

(“VR CPC”), a wholly-owned subsidiary of the Company, entered into a transaction agreement with affiliate companies of Talisker Corporation (“Talisker”) pursuant to which the parties entered into a master lease agreement (the “Lease”) and certain ancillary transaction documents on May 29, 2013 related to the former stand-alone Canyons Resort (“Canyons”), pursuant to which the Company assumed the resort operations of the Canyons.

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The obligation at July 31, 2021 represents future lease payments for the remaining initial lease term of 50 years (including annual increases at the floor of 2%) discounted using an interest rate of 10 %, and includes accumulated accreted interest expense of approximately $ 46.5 million.

(h) During the year ended July 31, 2019, the Company completed two real estate sales transactions that were accounted for as financing arrangements as a result of the Company’s continuing involvement with the underlying assets that were sold, including but not limited to, the obligation to repurchase finished commercial space from the development projects upon completion.

The Company received approximately $ 11.2 million of proceeds for these sales transactions during the year ended July 31, 2019, which are reflected within long-term debt, net.

(i) During the year ended July 31, 2019, the Company completed two real estate sales transactions that were accounted for as financing arrangements as a result of the Company’s continuing involvement with the underlying assets that were sold, including but not limited to, the obligation to repurchase finished commercial space from the development projects upon completion.

The Company received approximately $ 11.7 million of proceeds for these sales transactions through the year ended July 31, 2021, which are reflected within long-term debt, net.

Other obligations also consist of a $ 3.3 million note outstanding to the Colorado Water Conservation Board, which matures on September 16, 2028 , and other financing arrangements.

Other obligations, including the Colorado Water Conservation Board note, bear interest at rates ranging from 5.1 % to 5.5 %.

(i) In connection with the acquisition of Peak Resorts, the Company estimated the acquisition date fair values of the debt instruments assumed, including the EPR Secured Notes and the EB-5 Development Notes, and recorded any difference between such estimated fair values and the par value of debt instruments as unamortized premiums and discounts, which is amortized and recorded to interest expense, net on the Company’s Consolidated Statements of Operations over the respective term of the applicable debt instruments.

(j) In connection with the issuance of the 0.0% Convertible Notes, the Company recorded a debt discount, which represents the excess of the principal amount of the 0.0% Convertible Notes over the fair value of the liability component, as discussed above.

In connection with the acquisition of Peak Resorts, the Company estimated the acquisition date fair values of the debt instruments assumed, including the EPR Secured Notes and the EB-5 Development Notes, and recorded any difference between such estimated fair values and the par value of debt instruments as unamortized premiums and discounts, which is amortized and recorded to interest expense, net on the Company’s Consolidated Statements of Operations over the respective term of the applicable debt instruments.

Additionally, certain costs incurred with regard to the issuance of debt instruments are capitalized and included as a reduction in the net carrying value of long-term debt, net of accumulated amortization, with the exception of costs incurred related to line-of-credit arrangements, which are included in deferred charges and other assets, net of accumulated amortization.

Amortization of such deferred financing costs are recorded to interest expense, net on the Company’s Consolidated Statements of Operations over the respective term of the applicable debt instruments

(j) Current maturities represent principal payments due in the next 12 months , and exclude approximately $ 6.2 million of proceeds resulting from a real estate transaction accounted for as a financing arrangement, as discussed above, which are expected to be recognized on the Company’s Statement of Operations during the year ending July 31, 2021 as a result of the anticipated resolution of continuing involvement, with no associated cash outflow.

Aggregate maturities for debt outstanding, including capital lease obligations, as of July 31, 2020 reflected by fiscal year are as follows (in thousands):

Amortization of such deferred financing costs are

recorded to interest expense, net on the Company’s Consolidated Statements of Operations over the respective term of the applicable debt instruments.

(k) Current maturities represent principal payments due in the next 12 months, and exclude approximately $ 6.2 million of proceeds resulting from a real estate transaction accounted for as a financing arrangement, as discussed above, which are expected to be recognized on the Company’s Statement of Operations during the year ending July 31, 2022 as a result of the anticipated resolution of continuing involvement, with no associated cash outflow.

Aggregate maturities for debt outstanding, including finance lease obligations, as of July 31, 2021 reflected by fiscal year are as follows (in thousands):

2025 1,598,774

Thereafter 525,442

Total debt $ 2,948,514

(1) Includes approximately $ 6.2 million of proceeds resulting from a real estate transaction accounted for as a financing arrangement, as discussed above, which are expected to be recognized on the Company’s Statement of Operations during the year ending July 31, 2022 as a result of the anticipated resolution of continuing involvement, with no associated cash outflow.

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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.

In connection with the acquisition of Whistler Blackcomb, VHI funded a portion of the purchase price through an intercompany loan to Whistler Blackcomb of $ 210.0 million , which was effective as of November 1, 2016 and requires foreign currency remeasurement to Canadian dollars, the functional currency for Whistler Blackcomb.

In connection with the acquisition of Whistler Blackcomb in October 2016, VHI funded a portion of the purchase price through an intercompany loan to Whistler Blackcomb of $ 210.0 million, which was effective as of November 1, 2016 and requires foreign currency remeasurement to Canadian dollars, the functional currency for Whistler Blackcomb.

As a result, foreign currency fluctuations associated with the loan are recorded within the Company’s results of operations.

The Company recognized approximately $ 3.2 million , $ 2.9 million and $ 9.0 million of non-cash foreign currency loss on the intercompany loan to Whistler Blackcomb during the years ended July 31, 2020, 2019 and 2018, respectively, on the Company’s Consolidated Statements of Operations.

The Company recognized approximately $ 8.3 million, $( 3.2 ) million and $( 2.9 ) million of non-cash foreign currency gain (loss) on the intercompany loan to Whistler Blackcomb during the years ended July 31, 2021, 2020 and 2019, respectively, on the Company’s Consolidated Statements of Operations.

On September 24, 2019, the Company, through a wholly-owned subsidiary, acquired 100% of the outstanding stock of Peak Resorts, Inc.

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Accordingly, the total purchase price, including the repayment of certain outstanding debt instruments and lease obligations, was approximately $ 334.7 million, for which the Company borrowed approximately $ 335.6 million under the Vail Holdings Credit Agreement (see Note 6, Long-Term Debt) to fund the acquisition, repayment of debt instruments and lease obligations, and associated acquisition related expenses.

The newly acquired resorts include:

The acquired resorts include:

Mount Snow in Vermont;

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Forest Service for Attitash, Mount Snow and Wildcat Mountain, and assumed the land leases for Mad River and Paoli Peaks.

The acquisition included the mountain operations of the resorts, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski and snowboard school facilities), as well as lodging operations at certain resorts.

The following summarizes the purchase consideration and the preliminary purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands):

The acquisition included the mountain operations of the resorts, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski school facilities), as well as lodging operations at certain resorts.

The following summarizes the purchase consideration and the purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands):

Acquisition Date Estimated Fair Value

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Property, plant and equipment 427,793

Goodwill 135,879

Identifiable intangible assets 19,221

Other assets 16,203

Assumed long-term debt ( 184,668 )

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Net assets acquired $ 334,731

During the three months ended July 31, 2020, the Company recorded measurement period adjustments of approximately $ 8.6 million primarily related to the finalization of pre-acquisition period tax returns for Peak Resorts, which decreased deferred income taxes, net (included in other liabilities in the table above) with a corresponding decrease to goodwill, net.

Identifiable intangible assets acquired in the transaction were primarily related to trade names and property management contracts, which had acquisition date estimated fair values of approximately $ 15.8 million and $ 3.1 million, respectively.

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The operating results of Peak Resorts are reported within the Mountain and Lodging segments prospectively from the date of acquisition.

The estimated fair values of assets acquired and liabilities assumed in the acquisition of Peak Resorts are preliminary and are based on the information that was available as of the acquisition date.

The Company believes that this information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed;

however, the Company is obtaining additional information necessary to finalize those estimated fair values.

Therefore, the preliminary measurements of estimated fair values reflected are subject to change.

The Company expects to finalize the valuation and complete the purchase consideration allocation no later than one year from the acquisition date.

Falls Creek and Hotham Resorts

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Ltd and all related corporate entities that operate the Falls Creek and Hotham resorts from Living and Leisure Australia Group, a subsidiary of Merlin Entertainments, for a cash purchase price of approximately AU$ 178.9 million ($ 127.4 million), after adjustments for certain agreed-upon terms, including an increase in the purchase price for operating losses incurred for the period from December 29, 2018 through closing.

The acquisition included the mountain operations of both resorts, including base area skier services (ski and snowboard school facilities, retail and rental, reservation and property management operations).

The acquisition included the mountain operations of both resorts, including base area skier services (ski school facilities, retail and rental, reservation and property management operations).

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Property, plant and equipment 54,889

Goodwill 71,538

Identifiable intangible assets and other assets 5,833

Liabilities ( 11,894 )

Net assets acquired $ 127,352

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The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Falls Creek and Hotham and other factors.

None of the goodwill is expected to be deductible for income tax purposes under Australian tax law.

None of the goodwill is expected to

be deductible for income tax purposes under Australian tax law.

The Company recognized $ 4.6 million of acquisition related expenses associated with the transaction, including stamp duty expense of $ 2.9 million, within Mountain and Lodging operating expense in its Consolidated Statement of Operations for the year ended July 31, 2019.

The operating results of Falls Creek and Hotham are reported within the Mountain segment prospectively from the date of acquisition.

Stevens Pass Resort

On August 15, 2018, the Company, through a wholly-owned subsidiary, acquired Stevens Pass Resort in the State of Washington from Ski Resort Holdings, LLC, an affiliate of Oz Real Estate (“Ski Resort Holdings”), for total cash consideration of $ 64.0 million , after adjustments for certain agreed-upon terms.

The Company borrowed $ 70.0 million on August 15, 2018 under its Vail Holdings Credit Agreement term loan (see Note 6, Long-Term Debt) to fund the transaction and associated acquisition related expenses.

The acquisition included the mountain operations of the resort, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski and snowboard school facilities).

On September 27, 2018, the Company, through a wholly-owned subsidiary, acquired Triple Peaks, LLC (“Triple Peaks”), the parent company of Okemo Mountain Resort in Vermont, Crested Butte Mountain Resort in Colorado, and Mount Sunapee Resort in New Hampshire, for a cash purchase price of approximately $ 74.1 million, after adjustments for certain agreed-upon terms.

In addition, contemporaneous with the closing of the transaction, Triple Peaks paid $ 155.0 million to pay the remaining obligations of the leases that all three resorts had with Ski Resort Holdings, with funds provided by the Company.

Accordingly, the total purchase price, including the repayment of lease obligations, was $ 229.1 million, for which the Company utilized cash on hand and borrowed $ 195.6 million under the Vail Holdings Credit Agreement term loan (see Note 6, Long-Term Debt) to fund the transaction and associated acquisition related expenses.

The Company obtained a new Special Use Permit from the U.S.

Forest Service for Crested Butte, and assumed the state land leases for Okemo and Mount Sunapee.

The acquisition included the mountain operations of the resorts, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski school facilities).

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Property, plant and equipment 159,799

Goodwill 51,742

Identifiable intangible assets 27,360

Deferred income taxes, net 3,093

Liabilities ( 18,098 )

Net assets acquired $ 229,093

Identifiable intangible assets acquired in the transaction were primarily related to property management contracts and trade names.

The process of estimating the fair value of the property, plant, and equipment includes the use of certain estimates and assumptions related to replacement cost and physical condition at the time of acquisition.

The excess of the purchase price over the aggregate estimated fair values of assets acquired and liabilities assumed was recorded as goodwill.

The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Stevens Pass and other factors, and is expected to be deductible for income tax purposes.

The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of the resorts and other factors, and is expected to be deductible for income tax purposes.

The Company recognized $ 2.8 million of acquisition related expenses associated with the transaction within Mountain and Lodging operating expense in its Consolidated Statement of Operations for the year ended July 31, 2019.

The operating results of Stevens Pass are reported within the Mountain segment prospectively from the date of acquisition.

Accordingly, the total purchase price, including the repayment of lease obligations, was $ 229.1 million , for which the Company utilized cash on hand and borrowed $ 195.6 million under the Vail Holdings Credit Agreement term loan (see Note 6, Long-Term Debt) to fund the transaction and associated acquisition related expenses.

The Company obtained a new Special Use Permit from the U.S.

Forest Service for Crested Butte, and assumed the state land leases for Okemo and Mount Sunapee.

The operating results of Triple Peaks are reported within the Mountain and Lodging segments prospectively from the date of acquisition.

Stevens Pass Resort

The acquisition included the mountain operations of the resort, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski school facilities).

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Property, plant and equipment 34,865

Goodwill 28,878

Identifiable intangible assets 2,680

Deferred income taxes, net 886

Liabilities ( 4,029 )

Net assets acquired $ 64,032

Identifiable intangible assets acquired in the transaction were primarily related to property management contracts and trade names.

The excess of the purchase price over the aggregate estimated fair values of assets acquired and liabilities assumed was recorded as goodwill.

The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of the resorts and other factors, and is expected to be deductible for income tax purposes.

The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Stevens Pass and other factors, and is expected to be deductible for income tax purposes.

The Company recognized $ 1.2 million of acquisition related expenses associated with the transaction within Mountain and Lodging operating expense in its Consolidated Statement of Operations for the year ended July 31, 2019.

The operating results of Triple Peaks are reported within the Mountain and Lodging segments prospectively from the date of acquisition.

The operating results of Stevens Pass are reported within the Mountain segment prospectively from the date of acquisition.

Pro Forma Financial Information

The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisitions of Peak Resorts, Falls Creek and Hotham, Stevens Pass and Triple Peaks were completed at the beginning of the fiscal year preceding the respective fiscal year in which each acquisition occurred.

The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisitions of Peak Resorts, Falls Creek and Hotham, Triple Peaks and Stevens Pass were completed at the beginning of the fiscal year preceding the respective fiscal year in which each acquisition occurred.

The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment;

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Supplementary Balance Sheet Information

The composition of property, plant and equipment, including capital lease assets, follows (in thousands):

The composition of property, plant and equipment, including finance lease assets, follows (in thousands):

Land and land improvements $ 756,517 $ 750,714

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Furniture and fixtures 308,432 308,267

Software 122,778 104,223

Vehicles 80,328 80,510

Construction in progress 67,710 81,967

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Property, plant and equipment, net $ 2,067,876 $ 2,192,679

Depreciation expense, which included depreciation of assets recorded under capital leases, for the years ended July 31, 2020 , 2019 and 2018 totaled $ 243.1 million , $ 210.7 million and $ 199.2 million , respectively.

Depreciation expense, which included depreciation of assets recorded under finance leases, for the years ended July 31, 2021, 2020 and 2019 totaled $ 247.2 million, $ 243.1 million, and $ 210.7 million, respectively.

The following table summarizes the composition of property, plant and equipment recorded under finance leases as of July 31, 2021 and 2020 (in thousands):

Land $ 31,818 $ 31,818

Land improvements 49,228 49,228

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Gross property, plant and equipment

183,590 183,590

Accumulated depreciation ( 75,545 ) ( 65,792 )

Property, plant and equipment, net

$ 108,045 $ 117,798

The composition of goodwill and intangible assets follows (in thousands):

Goodwill $ 1,824,089 $ 1,752,062

Accumulated impairments ( 25,688 ) ( 25,688 )

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Indefinite-lived intangible assets

Trademarks $ 239,786 $ 230,000

Other 41,561 41,667

Total gross indefinite-lived intangible assets 281,347 271,667

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Amortizable intangible assets

Trademarks $ 38,008 $ 38,208

Other 69,397 70,772

Total gross amortizable intangible assets 107,405 108,980

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Amortizable intangible assets, net

62,476 67,822

Total gross intangible assets 388,752 380,647

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Total intangible assets, net

$ 319,110 $ 314,776

Amortization expense for intangible assets subject to amortization for the years ended July 31, 2021, 2020 and 2019 totaled $ 5.4 million, $ 6.5 million and $ 7.4 million, respectively, and is estimated to be approximately $ 4.1 million annually, on average, for the next five fiscal years.

The changes in the net carrying amount of goodwill allocated between the Company’s segments for the years ended July 31, 2021 and 2020 are as follows (in thousands):

Goodwill, net

Mountain Lodging Goodwill, net

Balance at July 31, 2019 $ 1,540,307 $ 67,899 $ 1,608,206

Acquisitions (including measurement period adjustments) 135,987 — 135,987

Asset impairments

— ( 25,688 ) ( 25,688 )

Effects of changes in foreign currency exchange rates

( 9,485 ) — ( 9,485 )

Balance at July 31, 2020 1,666,809 42,211 1,709,020

Acquisitions (including measurement period adjustments)

Asset impairments

Effects of changes in foreign currency exchange rates

72,027 — 72,027

Balance at July 31, 2021 $ 1,738,836 $ 42,211 $ 1,781,047

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The Company recorded asset impairments during the year ended July 31, 2020 of $ 28.4 million, with corresponding reductions to goodwill, net of $ 25.7 million and intangible assets, net and property, plant and equipment, net of $ 2.7 million.

These asset impairments encompass various estimates and assumptions about fair value, which are based predominately on significant unobservable inputs.

As a result of the COVID-19 pandemic and the impact it has had on the Company’s operations during the year ended July 31, 2020, and the expected continuing impact of the pandemic on future operations, the Company determined that the estimated fair value of its Colorado resort ground transportation company reporting unit within its Lodging segment no longer exceeded its carrying value.

These asset impairments encompassed various estimates and assumptions about fair value, which were based predominately on significant unobservable inputs.

As a result of COVID-19 and the impact it had on the Company’s operations during the year ended July 31, 2020, the Company determined that the estimated fair value of its Colorado resort ground transportation company reporting unit within its Lodging

segment no longer exceeded its carrying value.

Additionally, the Company determined that certain long-lived assets of its Colorado resort ground transportation company were not recoverable.

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The significant estimates used in the discounted cash flow model included the Company’s weighted average cost of capital for the reporting unit, projected cash flows and the long-term rate of growth, all of which are significant unobservable (Level 3) inputs.

The Company’s assumptions were based on the actual historical performance of the reporting unit, taking into account the recent weakening of operating results and the expected continuation of operating results for transportation services.

The Company’s assumptions were based on the actual historical performance of the reporting unit, taking into account the weakening of operating results and the expected continuation of operating results for transportation services.

As a result of this impairment, the Company’s Colorado ground transportation company had no remaining goodwill recorded as of July 31, 2020.

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Accrued benefits 47,368 43,704

Deposits 35,263 20,070

Operating lease liabilities 34,668 36,604

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Total accounts payable and accrued liabilities $ 815,472 $ 499,108

The composition of other long-term liabilities follows (in thousands):

Private club deferred initiation fee revenue

Unfavorable lease obligation, net

Other long-term liabilities

Total other long-term liabilities

Investments in Affiliates

The Company held the following investments in equity method affiliates as of July 31, 2021:

Equity Method Affiliates

Equity Method Affiliates Ownership

Slifer, Smith, and Frampton/Vail Associates Real Estate, LLC (“SSF/VARE”) 50 %

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Estimated Fair Value Measurement as of July 31, 2021

Description Total Level 1 Level 2 Level 3

Money Market $ 253,782 $ 253,782 $ — $ —

Commercial Paper $ 2,401 $ — $ 2,401 $ —

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Estimated Fair Value Measurement as of July 31, 2020

Description Total Level 1 Level 2 Level 3

Money Market $ 203,158 $ 203,158 $ — $ —

Commercial Paper $ 2,401 $ — $ 2,401 $ —

Certificates of Deposit $ 8,208 $ — $ 8,208 $ —

Interest Rate Swaps $ 22,510 $ — $ 22,510 $ —

Contingent Consideration $ 17,800 $ — $ — $ 17,800

The Company’s cash equivalents, other current assets and Interest Rate Swaps are measured utilizing quoted market prices or pricing models whereby all significant inputs are either observable or corroborated by observable market data.

During the year ended July 31, 2020, the Company entered into the Interest Rate Swaps to hedge the LIBOR-based variable interest rate component of $400.0 million in principal amount of its Vail Holdings Credit Agreement.

The Company entered into the Interest Rate Swaps to hedge the LIBOR-based variable interest rate component of $400.0 million in principal amount of its Vail Holdings Credit Agreement.

Changes in the estimated fair value are recognized in change in estimated fair value of hedging instruments on the Company’s Consolidated Statements of Comprehensive Income.

Such amounts are reclassified into interest expense, net from other comprehensive income during the period in which the hedged item affects earnings.

The estimated fair value of the Interest Rate Swaps are included within other long-term liabilities on the Company’s Consolidated Balance Sheet as of July 31, 2020.

During the year ended July 31, 2021 $ 5.4 million was reclassified into interest expense, net from other comprehensive income.

The estimated fair value of the Interest Rate Swaps are included within other long-term liabilities on the Company’s Consolidated Balance Sheets as of July 31, 2021 and July 31, 2020.

The changes in Contingent Consideration during the years ended July 31, 2021 and 2020 were as follows (in thousands):

Contingent Consideration

Balance at July 31, 2018

Balance as of July 31, 2019 $ 27,200

Change in estimated fair value

Balance at July 31, 2019

Balance as of July 31,2020 17,800

Change in estimated fair value

Balance at July 31, 2020

The Lease for Park City, as discussed in Note 6, Long-term Debt, provides for participating contingent payments (the “Contingent Consideration”) to the landlord of 42% of the amount by which EBITDA for the Park City resort operations, as calculated under the Lease, exceeds approximately $35 million, as established at the transaction date, with such threshold amount subsequently increased annually by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the Lease by the Company.

Balance as of July 31, 2021 $ 29,600

The Lease for Park City provides for participating contingent payments (the “Contingent Consideration”) to the landlord of 42% of the amount by which EBITDA for the Park City resort operations, as calculated under the Lease, exceeds approximately $35 million, as established at the transaction date, with such threshold amount subsequently increased annually by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the Lease by the Company.

estimated fair value of Contingent Consideration includes the future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated subsequent performance, escalated by an assumed long-term growth factor and discounted to net present value.

The Company estimated the fair value of the Contingent Consideration payments using an option pricing valuation model.

Key assumptions included Park City EBITDA for the year ending July 31, 2022, an assumed long-term growth rate, a discount rate of 10.49% and volatility of 17.0%, which are unobservable inputs and thus are considered Level 3 inputs.

Key assumptions included a discount rate of 11.0%, volatility of 17.0% and future period Park City EBITDA, which are unobservable inputs and thus are considered Level 3 inputs.

The Company prepared a sensitivity analysis to evaluate the effect that changes on certain key assumptions would have on the estimated fair value of the Contingent Consideration.

A change in the discount rate of 100 basis points or a 5% change in estimated future performance would result in a change in the estimated fair value within the range of approximately $2.9 million to $4.1 million.

A change in the discount rate of 100 basis points or a 5% change in estimated subsequent year performance would result in a change in the estimated fair value within the range of approximately $3.8 million to $5.3 million.

Contingent Consideration is classified as a liability in our Consolidated Balance Sheets and is remeasured to an estimated fair value at each reporting date until the contingency is resolved.

During the year ended July 31, 2020, the Company made a payment to the landlord for Contingent Consideration of approximately $ 6.4 million and recorded a decrease in the estimated fair value of approximately $ 3.0 million primarily related to changes in the expected Contingent Consideration payments for the year ended July 31, 2020 and the year ending July 31, 2021, and other key assumptions noted above, resulting in an estimated fair value of the Contingent Consideration of $ 17.8 million as of July 31, 2020 , which is reflected in accounts payable and accrued liabilities and other long-term liabilities in the Consolidated Balance Sheet.

During the year ended July 31, 2021, the Company made a payment to the landlord for Contingent Consideration of approximately $ 2.6 million and recorded an increase in the estimated fair value of approximately $ 14.4 million primarily related to improved performance compared to estimated results for Park City in the year ended July 31, 2021, resulting in an increase in the expected payment for the year, as well as accretion resulting from the passage of time, resulting in an estimated fair value of the Contingent Consideration of $ 29.6 million as of July 31, 2021, which is reflected in accounts payable and accrued liabilities and other long-term liabilities in the Consolidated Balance Sheet.

The Company is subject to taxation in U.S.

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The CARES Act includes various amendments to the U.S.

tax code that impacted the Company’s accounting and reporting for income taxes during the year ended July 31, 2020, and the Company expects these amendments will continue to impact its accounting and reporting for income taxes in the future.

tax code that impacted the Company’s accounting and reporting for income taxes during the years ended July 31, 2021 and 2020, and the Company expects these amendments will continue to impact its accounting and reporting for income taxes in the future.

The primary provisions of the CARES Act that the Company has been impacted by include:

• allowing a carryback of the entire amount of eligible Federal net operating losses (“NOLs”) generated in calendar years 2018, 2019 and 2020 for up to five years prior to when such losses were incurred, representing a change from previous rules under the Tax Cuts & Jobs Act of 2017 (the “TCJA”), in which NOLs could not be carried back to prior years and utilization was limited to 80% of taxable income in future years.

Under the CARES Act, the Company was permitted to carry back its pre-existing NOLs to tax years prior to the enactment of the TCJA and obtain an incremental benefit of $ 3.8 million related to the differential in federal tax rates between years that NOLs were generated and years that the NOLs will be carried back to;

treatment of certain qualified improvement property (“QIP”) as 15-year property and allowing such QIP placed in service after December 31, 2017 to be eligible for bonus depreciation, which could incrementally add to its pre-existing NOLs;

increases in the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income for calendar years 2019 and 2020.

Under the CARES Act, the Company was permitted to carry back its pre-existing NOLs to tax years prior to the enactment of the TCJA and obtain an incremental benefit of $ 3.8 million in the year ended July 31, 2020 related to the differential in federal tax rates between years that NOLs were generated and years that the NOLs were carried back to;

• treatment of certain qualified improvement property (“QIP”) as 15-year property and allowing such QIP placed in service after December 31, 2017 to be eligible for bonus depreciation;

• increases in the allowable business interest deduction from 30% of adjusted taxable income to 50% of adjusted taxable income for calendar years 2020.

The CARES Act also provides refundable employee retention credits and defers the requirement to remit the employer-paid portion of social security payroll taxes.

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Additionally, the Company deferred payment of the employer-paid portion of social security payroll taxes through the end of calendar year 2020 and will remit such amounts in equal installments during calendar years 2021 and 2022.

The Company also recognized a benefit of approximately $ 8.5 million during the year ended July 31, 2020 as a result of the recent Canada Emergency Wage Subsidy and Australian JobKeeper legislation for its Canadian and Australian employees, which primarily offset Mountain and Lodging operating expense.

and foreign components of income before (provision) benefit from income taxes is as follows (in thousands):

The Company also recognized benefits of approximately $ 30.8 million and $ 8.5 million during the years ended July 31, 2021 and 2020, respectively, as a result of the recent Canada Emergency Wage Subsidy and Australian JobKeeper legislation for its Canadian and Australian employees, which primarily offset Mountain and Lodging operating expense.

and foreign components of income (loss) before provision for income taxes is as follows (in thousands):

Year Ended July 31,

2021 2020 2019

$ 148,898 $ 89,838 $ 306,323

Foreign ( 23,715 ) 26,595 92,642

Income before income taxes $ 125,183 $ 116,433 $ 398,965

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Deferred income tax liabilities:

Fixed assets $ 204,714 $ 216,016

Intangible assets 100,751 86,509

Operating lease right of use assets 47,915 53,727

Convertible debt 23,783 —

Other 15,116 13,709

Total 392,279 369,961

Deferred income tax assets:

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Contingent Consideration 7,430 4,468

Unfavorable lease obligation, net

Net operating loss carryforwards and other tax credits 12,182 13,205

Operating lease liabilities 53,755 60,838

Other, net 27,206 21,712

Total 148,460 147,851

Valuation allowance for deferred income taxes ( 5,939 ) ( 5,330 )

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Net deferred income tax liability $ 249,758 $ 227,440

Significant components of the provision (benefit) from income taxes are as follows (in thousands):

Significant components of the provision for income taxes are as follows (in thousands):

Year Ended July 31,

2021 2020 2019

Federal $ 20,387 $ ( 13,467 ) $ 24,309

State 4,935 ( 731 ) 8,539

Foreign ( 8,460 ) 4,141 20,205

Total current 16,862 ( 10,057 ) 53,053

Federal ( 16,289 ) 12,597 16,983

State ( 2,423 ) 4,266 5,282

Foreign 2,576 572 154

Total deferred ( 16,136 ) 17,435 22,419

Provision (benefit) from income taxes

A reconciliation of the income tax provision (benefit) 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:

Provision for income taxes $ 726 $ 7,378 $ 75,472

A reconciliation of the income tax provision for 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,

2021 2020 2019

federal income tax rate 21.0 % 21.0 % 21.0 %

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Change in uncertain tax positions ( 3.5 ) % ( 3.8 ) % ( 1.6 ) %

Change in valuation allowance

Excess tax benefits related to stock-based compensation ( 14.3 ) % ( 7.1 ) % ( 3.0 ) %

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Foreign rate differential ( 5.0 ) % ( 2.4 ) % 0.4 %

Taxes related to prior year filings ( 2.9 ) % — % — %

Other 0.3 % 0.7 % 0.8 %

Effective tax rate 0.6 % 6.3 % 18.9 %

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Year Ended July 31,

2021 2020 2019

Balance, beginning of year $ 70,299 $ 72,222 $ 78,242

Additions for tax positions of prior years

16,754 16,654 11,520

Lapse of statute of limitations

( 19,196 ) ( 18,577 ) ( 17,540 )

Balance, end of year $ 67,857 $ 70,299 $ 72,222

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As of July 31, 2021 and 2020, accrued interest and penalties, net of tax, was $ 6.9 million and $ 6.2 million, respectively.

For the years ended July 31, 2020, 2019 and 2018, the Company recognized income tax (benefit) expense of ( $ 0.1 million ), $ 1.1 million and $ 1.6 million of interest (benefit) expense and penalties, net of tax, respectively.

For the years ended July 31, 2021, 2020 and 2019, the

Company recognized income tax expense (benefit) of $ 0.7 million, $( 0.1 ) million and $ 1.1 million related to interest expense (benefit) and penalties, net of tax, respectively.

The Company’s major tax jurisdictions in which it files income tax returns are the U.S.

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Additionally, the Company is no longer subject to audits for the tax years prior to 2016 for Australia and Canada.

The Company has NOL carryforwards totaling $ 58.6 million , primarily comprised of $ 49.8 million of federal and state NOLs as a result of the acquisition of Peak Resorts in September 2019 that will expire beginning July 31, 2032, $ 4.9 million of historical state NOLs that will expire by July 31, 2032 and non-U.S.

The Company has NOL carryforwards totaling $ 48.2 million, primarily comprised of $ 44.4 million of federal and state NOLs as a result of the acquisition of Peak Resorts in September 2019 that will expire beginning July 31, 2031 and non-U.S.

NOLs of $ 3.9 million that will carry forward indefinitely.

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As of July 31, 2021, the Company has recorded a valuation allowance of $ 4.2 million on foreign tax credit carryforwards, as the Company has determined that it is more likely than not that these foreign tax credit carryforwards will not be realized.

During the year ended July 31, 2021 the Company generated $ 2.7 million of capital losses;

however the Company also recorded a valuation allowance of $ 2.7 million as the Company determined it is more likely than not that the capital loss will not be realized.

The Company may be required to record additional valuation allowances if, among other things, adverse economic conditions, including those caused by the COVID-19 pandemic, negatively impact the Company’s ability to realize its deferred tax assets.

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workers compensation self-insurance programs.

In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business that include certain indemnifications under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events.

occurrence of certain future events.

These indemnities include indemnities related to licensees in connection with third-parties’ use of the Company’s trademarks and logos, liabilities associated with the infringement of other parties’ technology and software products, liabilities associated with the use of easements, liabilities associated with employment of contract workers and the Company’s use of trustees, and liabilities associated with the Company’s use of public lands and environmental matters.

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The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued liabilities (see Note 8, Supplementary Balance Sheet Information).

The Company is a party to various lawsuits arising in the ordinary course of business.

Management believes the Company has adequate insurance coverage and/or has accrued for all loss contingencies for asserted and unasserted matters deemed to be probable losses and estimable.

As of July 31, 2020 and 2019 , the accruals for the above loss contingencies were not material individually or in the aggregate.

Employment-Related Litigation

From October 2020, several named plaintiffs filed respective complaints against the Company on behalf of the same or similar purported classes of current and former employees of the Company.

The complaints generally allege violations of federal and state laws governing employee wage and hours practices, and seek damages in the form of unpaid wages, related penalties and other damages.

The Company has proposed a settlement agreement to resolve these complaints, which is pending finalization and court approval.

As a result, the Company recorded a charge of $ 13.2 million during the year ended July 31, 2021, which is included in general and administrative expense on the Company’s Consolidated Statement of Operations.

The Company is also a party to various lawsuits arising in the ordinary course of business.

Management believes the Company has adequate insurance coverage and/or has accrued for all loss contingencies for asserted and unasserted matters deemed to be probable losses and reasonably estimable.

As of July 31, 2021 and 2020, the accruals for the above loss contingencies (excluding the employment-related litigation) were not material individually or in the aggregate.

Segment and Geographic Area Information

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Year ended July 31,

Retail/rental

Total Mountain net revenue

2021 2020 2019

Mountain $ 1,689,878 $ 1,710,443 $ 1,956,201

Lodging 218,062 248,414 314,662

Total Resort net revenue 1,907,940 1,958,857 2,270,863

Real Estate 1,770 4,847 712

Total net revenue $ 1,909,710 $ 1,963,704 $ 2,271,575

Segment operating expense:

Mountain $ 1,146,187 $ 1,212,053 $ 1,279,567

Lodging 223,795 245,145 286,562

Total Resort operating expense 1,369,982 1,457,198 1,566,129

Real Estate, net

Real Estate 6,676 9,182 5,609

Total segment operating expense $ 1,376,658 $ 1,466,380 $ 1,571,738

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Reported EBITDA:

Mountain $ 550,389 $ 500,080 $ 678,594

Lodging ( 5,733 ) 3,269 28,100

Resort 544,656 503,349 706,694

Real Estate ( 4,582 ) ( 4,128 ) ( 4,317 )

Total Reported EBITDA $ 540,074 $ 499,221 $ 702,377

Real estate held for sale and investment

Real estate held for sale or investment $ 95,615 $ 96,844 $ 101,021

Reconciliation of net income attributable to Vail Resorts, Inc.

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Net income attributable to Vail Resorts, Inc.

Net income attributable to noncontrolling interests

Provision (benefit) from income taxes

Income before provision (benefit) from income taxes

$ 127,850 $ 98,833 $ 301,163

Net (loss) income attributable to noncontrolling interests ( 3,393 ) 10,222 22,330

Net income 124,457 109,055 323,493

Provision for income taxes 726 7,378 75,472

Income before provision for income taxes 125,183 116,433 398,965

Depreciation and amortization 252,585 249,572 218,117

Asset impairments — 28,372 —

(Gain) loss on disposal of fixed assets and other, net

Loss (gain) on disposal of fixed assets and other, net 5,373 ( 838 ) 664

Change in fair value of contingent consideration 14,402 ( 2,964 ) 5,367

Investment income and other, net ( 586 ) ( 1,305 ) ( 3,086 )

Foreign currency loss on intercompany loans

Foreign currency (gain) loss on intercompany loans ( 8,282 ) 3,230 2,854

Interest expense, net 151,399 106,721 79,496

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Year ended July 31,

Net revenue 2021 2020 2019

$ 1,717,270 $ 1,655,961 $ 1,865,062

International (1)

192,440 307,743 406,513

Total net revenue $ 1,909,710 $ 1,963,704 $ 2,271,575

Property, plant and equipment, net 2021 2020

$ 1,646,097 $ 1,759,692

International (2)

421,779 432,987

Total property, plant and equipment, net $ 2,067,876 $ 2,192,679

(1) The only individual international country (i.e.

except the U.S.) to account for more than 10% of the Company’s revenue and property plant and equipment, net was Canada.

Canada accounted for $ 223.3 million , $ 308.1 million , and $ 321.0 million of revenue for the years ended July 31, 2020 , 2019 and 2018 , respectively, and for $ 291.7 million and $ 319.4 million of property, plant and equipment, net as of July 31, 2020 and 2019 , respectively.

(1) No individual international country (i.e.

except the U.S.) accounted for more than 10% of the Company’s revenue for the year ended July 31, 2021.

The only individual international country to account for more than 10% of the Company’s revenue for the years ended July 31, 2020 and 2019 was Canada.

Canada accounted for $ 223.3 million and $ 308.1 million of revenue for the years ended July 31, 2020 and 2019, respectively.

(2) The only individual international country to account for more than 10% of the Company’s property plant and equipment, net was Canada.

Canada accounted for $ 288.4 million and $ 291.7 million of property, plant and equipment, net as of July 31, 2021 and 2020, respectively.

Selected Quarterly Financial Data (Unaudited)

Year ended July 31, 2021

(in thousands, except per share amounts)

(in thousands, except per share amounts) Full Year Fourth

Quarter Third

Quarter Second

Quarter First

Total net revenue $ 1,909,710 $ 204,202 $ 889,078 $ 684,644 $ 131,786

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Net income (loss) attributable to Vail Resorts, Inc.

$ 127,850 $ ( 140,811 ) $ 274,629 $ 147,798 $ ( 153,766 )

Basic net income (loss) per share attributable to Vail Resorts, Inc.

$ 3.17 $ ( 3.49 ) $ 6.82 $ 3.67 $ ( 3.82 )

Diluted net income (loss) per share attributable to Vail Resorts, Inc.

$ 3.13 $ ( 3.49 ) $ 6.72 $ 3.62 $ ( 3.82 )

Year ended July 31, 2020

(in thousands, except per share amounts)

(in thousands, except per share amounts) Full Year Fourth

Quarter Third

Quarter Second

Quarter First

Total net revenue $ 1,963,704 $ 77,209 $ 694,087 $ 924,638 $ 267,770

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Net income (loss) attributable to Vail Resorts, Inc.

$ 98,833 $ ( 153,608 ) $ 152,546 $ 206,370 $ ( 106,475 )

Basic net income (loss) per share attributable to Vail Resorts, Inc.

$ 2.45 $ ( 3.82 ) $ 3.79 $ 5.12 $ ( 2.64 )

Diluted net income (loss) per share attributable to Vail Resorts, Inc.

$ 2.42 $ ( 3.82 ) $ 3.74 $ 5.04 $ ( 2.64 )

Share Repurchase Program

On March 9, 2006, the Company’s Board of Directors approved a share repurchase program, authorizing the Company to repurchase up to 3,000,000 Vail Shares.

On July 16, 2008, the Company’s Board of Directors increased the authorization by an additional 3,000,000 Vail Shares, and on December 4, 2015, the Company’s Board of Directors increased the authorization by an additional 1,500,000 Vail Shares for a total authorization to repurchase shares of up to 7,500,000 Vail Shares.

During the year ended July 31, 2020 , the Company repurchased 256,418 Vail Shares (at a total cost of $ 46.4 million ).

The company did not repurchase any Vail Shares during the year ended July 31, 2021.

During the year ended July 31, 2020, the Company repurchased 256,418 Vail Shares (at a total cost of $ 46.4 million).

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Vail Shares purchased pursuant to the repurchase program will be held as treasury shares and may be used for issuance under the Company’s employee share award plan.

Stoc k Compensation Plan

Stock Compensation Plan

The Company has a share award plan (the “Plan”) which has been approved by the Company’s stockholders.

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Year ended July 31,

2021 2020 2019

Expected volatility 30.7 % 29.7 % 38.6 %

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A summary of aggregate SARs award activity under the Plan as of July 31, 2021, 2020 and 2019, and changes during the years then ended is presented below (in thousands, except exercise price and contractual term):

Weighted-Average

Exercise Price

Weighted-Average

Contractual Term

Awards Weighted-Average

Exercise Price Weighted-Average

Contractual Term Aggregate

Outstanding at August 1, 2018 1,324 $ 91.01

Granted 80 $ 293.82

Exercised ( 219 ) $ 49.09

Forfeited or expired ( 14 ) $ 217.58

Outstanding at July 31, 2019 1,171 $ 111.12

Granted 146 $ 245.26

Exercised ( 247 ) $ 67.19

Forfeited or expired ( 9 ) $ 252.75

Outstanding at July 31, 2020 1,061 $ 138.59

Granted 205 $ 233.01

Exercised ( 370 ) $ 84.20

Forfeited or expired ( 23 ) $ 236.31

Outstanding at July 31, 2020

Vested and expected to vest at July 31, 2020

Exercisable at July 31, 2020

Outstanding at July 31, 2021 873 $ 181.17 5.8 years $ 108,910

Vested and expected to vest at July 31, 2021 852 $ 179.67 5.8 years $ 107,567

Exercisable at July 31, 2021 571 $ 149.21 4.3 years $ 89,531

The weighted-average grant-date estimated fair value of SARs granted during the years ended July 31, 2021, 2020 and 2019 was $ 52.30 , $ 58.25 and $ 98.19 , respectively.

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A summary of the status of the Company’s nonvested SARs as of July 31, 2021 and changes during the year then ended is presented below (in thousands, except fair value amounts):

Weighted-Average

Outstanding at July 31, 2019

Awards Weighted-Average

Nonvested at July 31, 2020 215 $ 69.45

Granted 205 $ 52.30

Vested ( 96 ) $ 73.26

Forfeited ( 22 ) $ 62.93

Nonvested at July 31, 2021 302 $ 57.22

A summary of the status of the Company’s nonvested restricted share units as of July 31, 2021 and changes during the year then ended is presented below (in thousands, except fair value amounts):

Weighted-Average

Awards Weighted-Average

Nonvested at July 31, 2020 130 $ 228.77

Granted 94 $ 222.17

Vested ( 66 ) $ 229.41

Forfeited ( 15 ) $ 224.60

Nonvested at July 31, 2021 143 $ 224.94

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The Company granted 68,000 restricted share units during the year ended July 31, 2019 with a weighted-average grant-date estimated fair value of $ 264.44 .

The Company had 63,000 , 102,000 and 101,000 restricted share units that vested during the years ended July 31, 2020 , 2019 and 2018 , respectively.

The Company had 66,000 , 63,000

and 102,000 restricted share units that vested during the years ended July 31, 2021, 2020 and 2019, respectively.

These units had a total estimated fair value of $ 15.0 million, $ 14.8 million and $ 28.8 million at the date of vesting for the years ended July 31, 2021, 2020 and 2019, respectively.

10 unchanged sentences

(i) 12 months of employment with at least 1,000 service hours from the commencement date or (ii) if 1,000 hours within the first 12 months was not completed, then after the employee completed a cumulative 1,500 service hours.

On April 1, 2020, the Company announced a temporary six month suspension of its 401(k) contribution matching as a result of the impacts of the COVID-19 pandemic and resulting resort closures.

Additionally, the Company’s matching contribution is entirely discretionary and may be reduced or eliminated at any time.

In April 2020, the Company announced a temporary six month suspension of its 401(k) contribution matching as a result of the impacts of COVID-19 and resulting resort closures, which subsequently resumed in October 2020.

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, 2021, 2020 and 2019 was $ 6.5 million, $ 5.8 million and $ 7.9 million, respectively.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data