What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-09-28 compared with 2021-09-23 · 241 added, 321 removed, 1148 unchanged (33% of the section changed)

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Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Consolidated Financial Statements

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Based on this assessment, management concluded that, as of July 31, 2022, 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, 2022 excluded certain elements of internal controls of Seven Springs Mountain Resort, Hidden Valley Resort and Laurel Mountain Ski Area (collectively, the “Seven Springs Resorts,” acquired December 31, 2021) 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 2% of total consolidated net revenues of the Company as of and for the year ended July 31, 2022.

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, 2022, as stated in the Report of Independent Registered Public Accounting Firm on the following page.

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases as of August 1, 2019.

Basis for Opinions

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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 Seven Springs Mountain Resort, Hidden Valley Resort and Laurel Mountain Ski Area (collectively, the “Seven Springs Resorts”) from its assessment of the Company’s internal control over financial reporting as of July 31, 2022 because it was acquired by the Company in a purchase business combination during 2022.

Subsequent to the acquisition, certain elements of the Seven Springs 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, 2022.

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

The excluded elements represent controls over less than 1% of consolidated assets and approximately 2% of the consolidated net revenues.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the

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.

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Additional paid-in capital 1,184,577 1,196,993

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

Accumulated other comprehensive income 10,923 27,799

Retained earnings 895,889 773,752

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Gain on sale of real property 1,276 324 207

Asset impairments (Notes 2 & 8)

Asset impairments (Note 2)

— — ( 28,372 )

Change in fair value of contingent consideration (Note 10)

Change in estimated fair value of contingent consideration (Note 9)

( 20,280 ) ( 14,402 ) 2,964

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

Gain (loss) on disposal of fixed assets and other, net 43,992 ( 5,373 ) 838

Income from operations 601,728 261,016 223,389

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Investment income and other, net 3,718 586 1,305

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

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

( 2,682 ) 8,282 ( 3,230 )

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Net income 368,337 124,457 109,055

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

Net (income) loss attributable to noncontrolling interests ( 20,414 ) 3,393 ( 10,222 )

Net income attributable to Vail Resorts, Inc.

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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

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— — 21,021 — — — 21,021 — 21,021

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 14)

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

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

Repurchases of common stock (Note 13)

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Comprehensive income:

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

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

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

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

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

— — 80,066 — — — 80,066 — 80,066

Stock-based compensation expense (Note 14)

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

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 — — — — — — — ( 5,263 ) ( 5,263 )

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Comprehensive income:

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

Net income — — — — 347,923 — 347,923 20,414 368,337

Foreign currency translation adjustments — — — ( 35,782 ) — — ( 35,782 ) ( 10,711 ) ( 46,493 )

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Total comprehensive income 331,047 9,703 340,750

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

— — 80,066 — — — 80,066 — 80,066

Stock-based compensation expense (Note 14)

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1 — ( 37,301 ) — — — ( 37,300 ) — ( 37,300 )

Repurchases of common stock (Note 13)

— — — — — ( 75,006 ) ( 75,006 ) — ( 75,006 )

Dividends (Note 5)

— — — — ( 225,786 ) — ( 225,786 ) — ( 225,786 )

Distributions to noncontrolling interests, net — — — — — — — ( 9,127 ) ( 9,127 )

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Asset impairments — — 28,372

Cost of real estate sales — 3,684 —

Stock-based compensation expense 24,885 24,395 21,021

Deferred income taxes, net ( 9,390 ) ( 16,136 ) 17,435

(Gain) loss on disposal of fixed assets and other, net ( 43,992 ) 5,373 ( 838 )

Change in estimated fair value of contingent consideration 20,280 14,402 ( 2,964 )

Other non-cash expense (income), net 3,510 ( 7,231 ) ( 3,356 )

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Acquisition of businesses, net of cash acquired ( 116,337 ) — ( 327,555 )

Deposit for future acquisition of business ( 114,414 ) — —

Cash received from disposal of fixed assets 66,264 9,705 6,630

Other investing activities, net 9,387 2,063 520

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Repayments of borrowings under Whistler Credit Agreement ( 32,633 ) ( 45,657 ) ( 204,032 )

Repayment of EB-5 Development Notes ( 51,500 ) — —

Employee taxes paid for share award exercises ( 37,300 ) ( 39,090 ) ( 19,478 )

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Other financing activities, net ( 8,411 ) ( 20,866 ) ( 31,487 )

Net cash provided by (used in) financing activities 434,662 376,233 ( 99,558 )

Net cash (used in) provided by financing activities ( 493,136 ) 434,662 376,233

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 1,913 ) ( 95 ) 5,253

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

Net (decrease) increase in cash and cash equivalents ( 132,467 ) 856,488 283,697

Cash, cash equivalents and restricted cash:

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The Company refers to “Resort” as the combination of the Mountain and Lodging segments.

In the Mountain segment, the Company operates the following 37 destination mountain resorts and regional ski areas:

In the Mountain segment, the Company operates the following 41 destination mountain resorts and regional ski areas as of September 28, 2022:

*Denotes a destination mountain resort, which generally receives a meaningful portion of skier visits from long-distance travelers, as opposed to the Company’s regional ski areas, which tend to generate skier visits predominantly from their respective local markets.

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other strategic lodging properties and a large number of condominiums located in proximity to the Company’s North American mountain resorts;

National Park Service (“NPS”) concessionaire properties including the Grand Teton Lodge Company (“GTLC”), which operates destination resorts in Grand Teton National Park;

National Park Service (“NPS”) concessioner properties including the Grand Teton Lodge Company (“GTLC”), which operates destination resorts in Grand Teton National Park;

a Colorado resort ground transportation company and mountain resort golf courses.

Vail Resorts Development Company (“VRDC”), a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate segment, which owns, develops and sells real estate in and around the Company’s resort communities.

The Company’s mountain business and its lodging properties at or around the Company’s mountain resorts are seasonal in nature with peak operating seasons primarily from mid-November through mid-April in North America.

The peak operating season at the Company’s Australian resorts, NPS concessionaire properties and golf courses generally occurs from June to early October.

The Company’s mountain business and its lodging properties at or around the Company’s mountain resorts are seasonal in nature, and typically experience their peak operating seasons primarily from mid-December through mid-April in North America.

The peak operating season at the Company’s Australian resorts, NPS concessioner properties and golf courses generally occurs from June to early October.

Acquisition of Andermatt-Sedrun Sport AG

On August 3, 2022, through a wholly-owned subsidiary, the Company acquired a 55 % controlling interest in Andermatt-Sedrun Sport AG (“Andermatt-Sedrun”) from Andermatt Swiss Alps AG (“ASA”).

Andermatt-Sedrun operates mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation at the ski area.

Ski operations are conducted on land owned by ASA as freehold or leasehold properties, land owned by Usern Corporation, land owned by the municipality of Tujetsch and land owned by private property owners.

See Note 16, Subsequent Events, for additional information.

Summary of Significant Accounting Policies

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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.

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

If the net carrying amount of the assets exceed their respective estimated fair values, an impairment loss would 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 their respective estimated fair values, no impairment loss is recognized.

The Company determined that there were no impairments of goodwill or definite and indefinite-lived assets for the years ended July 31, 2022 and 2021.

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.

As a result, 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 other impairments of goodwill or definite and indefinite-lived assets for the year ended July 31, 2020 .

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The Company utilizes the relative sales value method to determine cost of sales for condominium units sold within a project when specific identification of costs cannot be reasonably determined.

Foreign Currency Translation — The functional currency of the Company’s entities operating outside of the United States is the principal currency of the economic environment in which the entity primarily generates and expends cash, which is generally the local currency.

generally the local currency.

The assets and liabilities of these foreign operations are translated at the exchange rate in effect as of the balance sheet dates.

Income and expense items are translated using the weighted average exchange rate for the period.

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 gain (loss) on intercompany loans on the Company’s Consolidated Statements of Operations.

Translation adjustments from currency exchange, including intercompany transactions of a long-term nature, are recorded in accumulated other comprehensive (loss) income 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) gain 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.

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See Note 10, Income Taxes, for more information.

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.

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 associated with the debt.

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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 14, Stock Compensation Plan, for more information), less the amount of forfeited awards which are recorded as they occur.

The following table shows total net stock-based compensation expense for the years ended July 31, 2021, 2020 and 2019 included in the Consolidated Statements of Operations (in thousands):

The following table shows total net stock-based compensation expense for the years ended July 31, 2022, 2021 and 2020 included in the accompanying Consolidated Statements of Operations (in thousands):

Year Ended July 31,

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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 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.

Changes in estimated fair value of the Interest Rate Swaps are recorded within change in estimated fair value of hedging instruments, net of tax, on the Company’s Consolidated Statements of Comprehensive Income, and such change was recorded as a gain (loss) of $ 18.9 million, $ 12.8 million and ($ 22.5 ) million during the years ended July 31, 2022, 2021 and 2020, respectively.

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

During the years ended July 31, 2022 and 2021, $ 4.3 million and $ 5.4 million, respectively, was reclassified into interest expense, net from other comprehensive income.

As of July 31, 2022, the estimated fair value of the Interest Rate Swaps was an asset of approximately $ 12.3 million and was recorded within deferred charges and other assets 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.

See Note 9, Fair Value Measurements, for more information.

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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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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, but does not expect it will have a material effect.

The Company will complete its assessment of the effect that the adoption of this standard will have on its Consolidated Financial Statements in the first quarter of the fiscal year ending July 31, 2023, 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.

The Company will adopt ASU 2020-06 on August 1, 2022 using 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 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 non-cash 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.

The Company also includes other sources of revenue, primarily related to commercial leasing and employee housing leasing arrangements, within other mountain revenue.

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

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

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.

When sufficient historical data to determine usage patterns is not available, such as in the case of new product offerings, deferred revenue is recognized on a straight-line basis throughout the ski season until sufficient historical usage patterns are available.

The Company also includes other sources of revenue, primarily related to commercial leasing and employee housing leasing arrangements, within other mountain revenue.

In accordance with Topic 606, the Company estimates progress towards satisfaction of its performance obligations using an output method that best depicts the transfer of control of the service to its customers.

Historically, the output method utilized by the Company measured progress toward satisfaction of the Company’s performance obligations based on the estimated number of pass product holder visits relative to total expected visits, based on historical data, which the Company believed to provide a faithful depiction of its customers’ pass product usage.

When sufficient historical data to determine usage patterns was not available, such as in the case of new product offerings, progress was measured on a straight-line basis throughout the ski season until sufficient historical usage patterns were available.

Beginning August 1, 2021, progress towards satisfaction of the Company’s performance obligations for all passes is measured using an output method based on the skiable days of the season, which effectively results in revenue being recorded on a straight-line basis throughout the ski season.

Total estimated skiable days is based on actual resort opening and estimated closing dates.

The Company believes this method best estimates the value transferred to the customer relative to the remaining services promised under the contract.

Due to the strong correlation between historical pass product usage and skiable days, the change in the Company’s method of estimating progress toward satisfaction of the performance obligation alone does not have a material effect on the recognition pattern of pass product revenue.

Epic Coverage is included with the purchase of all pass products for no additional charge, and offers refunds if certain 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, and is remeasured at each reporting date.

Epic Mountain Rewards provides pass product holders a discount on ancillary purchases at the Company’s North American owned and operated Resorts.

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

• Lodging revenue is derived from a wide variety of sources, including, among other things:

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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 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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Total net revenue $ 2,525,912 $ 1,909,710 $ 1,963,704

(1) Segment results for the years ended July 31, 2021 and 2020 have been retrospectively adjusted to reflect current period presentation.

See Note 12, Segment and Geographic Area Information, for additional information.

Arrangements with Multiple Performance Obligations

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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 third quarter of its fiscal year.

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 short-term nature were $ 511.3 million and $ 456.5 million as of July 31, 2022 and 2021, respectively, and the increase was primarily due to an increase in pass product sales for the 2022/2023 North American ski season as compared to the prior year from the beginning of the selling season through each respective fiscal year-end.

Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, were $ 117.2 million and $ 121.0 million as of July 31, 2022 and 2021, 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, 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.

For the year ended July 31, 2022, the Company recognized approximately $ 429.0 million of net revenue that was included in the deferred revenue balance as of July 31, 2021.

As of July 31, 2022, the weighted average remaining period over which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 15 years.

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

Trade receivable balances were $ 383.4 million and $ 345.4 million as of July 31, 2022 and 2021, respectively.

Payments from customers are based on billing terms established in the contracts with customers, which vary by the type of customer, the location and the products or services offered.

Payments from customers are based on

billing terms established in the contracts with customers, which vary by the type of customer, the location and the products or services offered.

The term between invoicing and when payment is due is not significant.

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As of July 31, 2022, $ 3.8 million of costs to obtain contracts with customers were recorded within other current assets on the Company’s Consolidated Balance Sheet.

Deferred credit card fees and sales commissions are amortized commensurate with the recognition of season ski pass revenue.

The Company recorded amortization of $ 17.8 million, $ 11.0 million and $ 10.6 million for these costs during the years ended July 31, 2021, 2020 and 2019, respectively, which were recorded within Mountain and Lodging operating expenses on the Company’s Consolidated Statement of Operations.

Deferred credit card fees and sales commissions are amortized commensurate with the recognition of ski pass product revenue.

The Company recorded amortization of $ 22.1 million, $ 17.8 million and $ 11.0 million for these costs during the years ended July 31, 2022, 2021 and 2020, respectively, which were recorded within Mountain and Lodging operating expenses on the Consolidated Statement of Operations.

Utilizing the practical expedient provided for under Topic 606, the Company has elected to expense credit card fees and sales commissions related to non-season ski pass products and services as incurred, as the amortization period is generally one year or less for the time between customer purchase and utilization.

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

Future lease payments that are contingent and non-lease components are not included in the measurement of the operating lease liability.

Future lease payments that are contingent or represent non-lease components are not included in the measurement of the operating lease liability.

The Company’s lease agreements do not contain any material residual value guarantees or restrictive covenants.

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Year ended July 31,

2022 2021 2020

Finance leases:

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Variable lease expense $ 2,309 $ 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 Sheets.

(1) Short-term lease expense is attributable to leases with terms of 12 months or less which are not included within the 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, 2022 and 2021 (in thousands):

Year ended July 31,

2022 2021 2020

Cash flow supplemental information:

Operating cash outflows for operating leases $ 56,942 $ 55,344

Operating cash outflows for finance leases $ 31,429 $ 29,311

Financing cash outflows for finance leases $ — $ 5,387

Operating cash outflows for operating and short-term leases $ 59,818 $ 56,942 $ 55,344

Operating cash outflows for lease- and non-lease components of finance leases $ 37,573 $ 31,429 $ 29,311

Financing cash outflows for non-lease components of finance leases $ — $ — $ 5,387

Non-cash supplemental information:

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Total lease liabilities $ 208,785 $ 357,607

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.

The current portion of operating lease liabilities of approximately $ 34.2 million and $ 34.7 million as of July 31, 2022 and 2021, respectively, are recorded within accounts payables and accrued liabilities in the accompanying Consolidated Balance Sheets.

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

The Canyons finance lease obligation represents the only material finance lease entered into by the Company and was $ 357.6 million and $ 351.8 million as of July 31, 2022 and 2021, 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.

As of July 31, 2022 and 2021, respectively, the Company has recorded $ 99.0 million and $ 108.0 million of finance lease ROU assets in connection with the Canyons lease, net of $ 84.6 million and $ 75.5 million of accumulated amortization, which is included within property, plant and equipment, net in the Company’s Consolidated Balance Sheets.

Net Income Per Common Share

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Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of Vail Resorts.

In connection with the Company’s acquisition of Whistler Blackcomb in October 2016 (see Note 7, Acquisitions), the Company issued consideration in the form of shares of Vail Resorts common stock (the “Vail Shares”) and shares of the Company’s wholly-owned Canadian subsidiary (“Exchangeco”).

In connection with the Company’s acquisition of Whistler Blackcomb in October 2016, the Company issued consideration in the form of shares of Vail Resorts common stock (the “Vail Shares”), redeemable preferred shares of the Company’s wholly-owned Canadian subsidiary Whistler Blackcomb Holdings Inc.

(“Exchangeco”) or cash (or a combination thereof).

Whistler Blackcomb shareholders elected to receive 3,327,719 Vail Shares and 418,095 shares of Exchangeco (the “Exchangeco Shares”).

Both Vail Shares and Exchangeco Shares have a par value of $ 0.01 per share, and Exchangeco Shares, while outstanding, are substantially the economic equivalent of the Vail Shares and are exchangeable, at any time prior to the seventh anniversary of the closing of the acquisition, into Vail Shares.

The Exchangeco Shares could be redeemed for Vail Shares at any time until October 2023 or until the Company elects to convert any remaining Exchangeco Shares to Vail Shares, which the Company has the ability to do once total Exchangeco Shares outstanding fall below 20,904 shares (or 5% of the total Exchangeco Shares originally issued).

In July 2022, the number of outstanding Exchangeco Shares fell below such threshold and on August 25, 2022, the Company elected to redeem all outstanding Exchangeco Shares, effective September 26, 2022.

As of September 28, 2022, all Exchangeco Shares have been exchanged for Vail Shares.

Both Vail Shares and Exchangeco Shares have a par value of $ 0.01 per share, and Exchangeco Shares, while they were outstanding, were substantially the economic equivalent of the Vail Shares.

The Company’s calculation of weighted-average shares outstanding includes the Exchangeco Shares.

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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.

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, 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.

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.

For the years ended July 31, 2022 and 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.

During the years ended July 31, 2022 and 2020, the Company paid cash dividends of $ 5.58 per share and $ 5.28 per share, respectively ($ 225.8 million and $ 212.7 million in the aggregate, respectively, including cash dividends paid to Exchangeco

shareholders).

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, 2022, the Company’s Board of Directors approved a cash dividend of $ 1.91 per share payable on October 24, 2022 to stockholders of record as of October 5, 2022 .

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

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(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 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 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.

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 0.25% (which decreased from the floor of 0.75% that was in effect prior to the Fourth Amendment).

(“VHI”), which is a wholly-owned subsidiary of the Company, along with other 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 was exempted from complying with certain financial maintenance covenants for fiscal quarters ending through January 31, 2022 (unless VHI made a one-time irrevocable election to terminate such exemption period prior to such date) (such period, the “Financial Covenants Temporary Waiver Period”), and the Company was prohibited from undertaking certain activities during such period.

On October 31, 2021, VHI exited the Financial Covenants Temporary Waiver Period.

As a result, the Company was required to comply with the financial maintenance covenants in the Vail Holdings Credit Agreement starting with the fiscal quarter ended October 31, 2021, and the Company is no longer subject to the covenant modifications that were applicable during the Financial Covenants Temporary Waiver Period.

On August 31, 2022, the Company entered into an additional amendment to the Vail Holdings Credit Agreement (the “Fifth Amendment”), which extended the maturity date to September 23, 2026.

Additionally, the Fifth Amendment contains customary LIBOR replacement language, including, but not limited to, the use of rates based on the secured overnight financing rate (“SOFR”).

SOFR is a broad measure of the cost of borrowing cash in the overnight U.S.

Treasury repo market and is administered by the Federal Reserve Bank of New York.

The Fifth Amendment modified the calculation of interest under the Vail Holdings Credit Agreement from being calculated based on LIBOR to being calculated based on SOFR.

No other material terms of the Vail Holdings Credit Agreement were amended.

As of July 31, 2022, 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.

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.

Borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 1.25 % as of July 31, 2022 ( 3.62 % as of July 31, 2022).

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.

The Vail Holdings Credit Agreement also includes a quarterly unused commitment fee, which is equal to a percentage determined by the Net Funded Debt to Adjusted EBITDA ratio, as each such term is defined in the Vail Holdings Credit Agreement, multiplied by the daily amount by which the Vail Holdings Credit Agreement commitment exceeds the total of outstanding loans and outstanding letters of credit ( 0.25 % as of July 31, 2022).

During the year ended July 31, 2020, the Company entered into various interest rate swap agreements to hedge the LIBOR-based variable interest rate component of underlying cash flows of $ 400.0 million in principal amount of its Vail Holdings Credit Agreement for the remaining term of the agreement at an effective rate of 1.46 %.

(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 is party to various interest rate swap agreements which hedge the LIBOR-based variable interest rate component of underlying cash flows of $ 400.0 million in principal amount of its Vail Holdings Credit Agreement for the remaining term of the agreement at an effective rate of 1.46 %.

Subsequent to July 31, 2022 and in association with the Fifth Amendment, the interest rate swaps were also amended to transition from a hedge of LIBOR to a hedge of SOFR.

(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”).

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

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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.

In addition, prior to May 15, 2022, the Company may redeem up to 35% of the aggregate principal amount of the 6.25% Notes with an amount not to exceed the net cash proceeds from certain equity offerings at the redemption price of 106.25% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 6.25% Notes are senior unsecured obligations of the Company, are guaranteed by certain of the Company’s domestic subsidiaries, and rank equally in right of payment with existing and future senior indebtedness of the Company and the guarantors (as defined 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 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.

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.

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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 initial conversion rate was 2.4560 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $ 407.17 per share, and is subject to adjustment upon the occurrence of certain specified events as

described in the Convertible Indenture, including the payment of cash dividends.

As of July 31, 2022, the conversion rate of the 0.0% Convertible Notes, adjusted for cash dividends paid since the issuance date, was 2.5083 shares per $1,000 principal amount of notes (the “Conversion Rate”), which represents a conversion price of $ 398.67 per share (the “Conversion Price”).

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.

The Company will settle the in the money component of 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:

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

The balance of the unamortized debt discount was $ 76.7 million as of July 31, 2022.

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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.

As of July 31, 2022, the equity component is recorded within additional paid-in capital on the Company’s Consolidated Balance Sheets and is not remeasured as long as it continues to meet the conditions

for equity classification.

The Company will adopt ASU 2020-06 on August 1, 2022 using the modified retrospective method.

As a result of the adoption of ASU 2020-06, the Company will reclassify the equity component of its 0.0% Convertible Notes to long-term debt, net, and it will no longer record non-cash interest expense related to the amortization of the debt discount (see Note 2, Summary of Significant Accounting Policies, for additional information).

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.

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As of July 31, 2022, interest on this note accrued at a rate of 8.88 %.

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 (“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.

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The EPR Secured Notes were recorded at their estimated fair value in conjunction with the acquisition of Peak Resorts on September 24, 2019.

The EPR Agreements grant EPR certain other rights including (i) the option to purchase the Boston Mills, Brandywine, Jack Frost, Big Boulder or Alpine Valley resorts, which is exercisable no sooner than two years and no later than one year prior to the maturity dates of the applicable EPR Secured Note for such properties, with any closings to be held on the applicable maturity dates;

The EPR Agreements grant EPR certain other rights including the option to purchase the Boston Mills, Brandywine, Jack Frost, Big Boulder or Alpine Valley resorts, which is exercisable no sooner than two years and no later than one year prior to the maturity dates of the applicable EPR Secured Note for such properties, with any closings to be held on the applicable maturity dates;

and, if EPR exercises the purchase option, EPR will enter into an agreement with the Company for the lease of each acquired property for an initial term of 20 years, plus options to extend the lease for two additional periods of ten years each.

(ii) a right of first refusal through 2021, subject to certain conditions, to provide all or a portion of the financing associated with any purchase, ground lease, sale/leaseback, management or financing transaction contemplated by Peak Resorts with respect to any new or existing ski resort properties;

and (iii) a right of first refusal through 2021 to purchase the Company’s Attitash ski resort in the event the Company were to desire to sell the Attitash ski resort.

To date, EPR has not exercised any such purchase options.

In addition, Peak Resorts is required to maintain a debt service reserve account which amounts are applied to fund interest payments and other amounts due and payable to EPR.

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.

(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.

As of July 31, 2022, the Company had funded the EPR debt service reserve account in an amount equal to approximately $ 5.3 million, which was included in other current assets in the Consolidated Balance Sheet.

(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 funds 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”).

The EB-5 Program was created to stimulate the U.S.

economy through the creation of jobs and capital investments in U.S.

companies by foreign investors.

The program allocates immigrant visas to qualified individuals (“EB-5 Investors”) seeking lawful permanent resident status based on their investment in a U.S commercial enterprise.

On December 27, 2016, Peak Resorts borrowed $ 52.0 million from the Carinthia Partnerships to fund two capital projects at Mount Snow.

The amounts were borrowed through two loan agreements, which provided $ 30.0 million and $ 22.0 million (together, the “EB-5 Development Notes”).

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.

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.

In addition, Peak Resorts is prohibited from prepaying outstanding amounts owed if such prepayment would jeopardize any of the EB-5 Investors from being admitted to the U.S.

via the EB-5 Program.

On December 27, 2021, Peak Resorts repaid all remaining principal owed to the Carinthia Partnerships.

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

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The table below presents the principal amounts outstanding for the Employee Housing Bonds as of July 31, 2022 (in thousands):

Maturity (a) Tranche A Tranche B Total

Maturity Tranche A Tranche B Total

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

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(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.

The Lease between VR CPC and Talisker has an initial term of 50 years with six 50-year renewal options .

The Lease provides for $ 25 million in annual payments, which increase each year by an inflation-linked index of CPI less 1% per annum, with a floor of 2% .

Vail Resorts has guaranteed the payments under the Lease.

(“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 “Park City 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 Park City Lease between VR CPC and Talisker has an initial term of 50 years with six 50-year renewal options .

The Park City Lease provides for $ 25 million in annual payments, which increase each year by an inflation-linked index of CPI less 1% per annum, with a floor of 2% .

Vail Resorts has guaranteed the payments under the Park City Lease.

The obligation at July 31, 2022 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 $ 52.3 million.

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(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.

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 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.

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, 2023 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, 2022 reflected by fiscal year are as follows (in thousands):

2025 1,598,774

Thereafter 521,290

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(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, 2023 as a result of the anticipated resolution of continuing involvement, with no associated cash outflow.

The Company recorded interest expense of $ 151.4 million, $ 106.7 million and $ 79.5 million for the years ended July 31, 2021, 2020 and 2019, respectively, of which $ 4.9 million, $ 1.9 million and $ 1.3 million, respectively, was amortization of deferred financing costs.

(2) Subsequent to July 31, 2022, the Company entered into the Fifth Amendment to the Vail Holdings Credit Agreement, which extended the maturity date by two years and is now due in the fiscal year ending July 31, 2027.

See Note 16, Subsequent Events, for additional information.

The Company recorded interest expense of $ 148.2 million, $ 151.4 million and $ 106.7 million for the years ended July 31, 2022, 2021 and 2020, respectively, of which $ 5.9 million, $ 4.9 million and $ 1.9 million, respectively, was amortization of

deferred financing costs.

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 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.

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.

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

The Company recognized approximately $( 2.7 ) million, $ 8.3 million and $( 3.2 ) million of non-cash foreign currency (loss) gain on the intercompany loan to Whistler Blackcomb during the years ended July 31, 2022, 2021 and 2020, respectively, on the Consolidated Statements of Operations.

As of July 31, 2022, the remaining balance of the intercompany loan was $ 97.2 million.

Seven Springs Mountain Resort, Hidden Valley Resort & Laurel Mountain Ski Area

On December 31, 2021, the Company, through a wholly-owned subsidiary, acquired Seven Springs Mountain Resort, Hidden Valley Resort and Laurel Mountain Ski Area in Pennsylvania from Seven Springs Mountain Resort, Inc.

and its affiliates for a cash purchase price of approximately $ 116.5 million, after adjustments for certain agreed-upon terms, which the Company funded with cash on hand.

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 a hotel, conference center and other related operations.

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):

Acquisition Date Estimated Fair Value

Current assets $ 2,932

Property, plant and equipment 118,415

Goodwill 4,991

Identifiable intangible assets and other assets 5,335

Liabilities ( 15,172 )

Net assets acquired $ 116,501

Identifiable intangible assets acquired in the transaction were primarily related to advanced lodging bookings 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 the 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 not 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, 2022.

The operating results of the acquired 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 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.

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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In addition, contemporaneous with the closing of the transaction, Peak Resorts was required to pay approximately $ 70.2 million of certain outstanding debt instruments and lease obligations in order to complete the transaction.

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.

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 acquired resorts include:

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

Falls Creek and Hotham Resorts

On April 4, 2019, the Company, through a wholly-owned subsidiary, acquired ski field leases and related infrastructure used to operate two resorts in Victoria, Australia.

The Company acquired Australian Alpine Enterprises Holdings Pty.

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 school facilities, retail and rental, reservation and property management operations).

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

Current assets $ 6,986

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

Identifiable intangible assets acquired in the transaction were primarily related to 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 Falls Creek and Hotham and other factors.

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.

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).

Acquisition Date Estimated Fair Value

Current assets $ 5,197

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 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 operating results of Triple Peaks are reported within the Mountain and Lodging segments 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 school facilities).

Acquisition Date Estimated Fair Value

Current assets $ 752

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

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 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 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, Triple Peaks and Stevens Pass were completed at the beginning of the fiscal year preceding the respective fiscal year in which each acquisition occurred.

Peak Resorts Pro Forma Financial Information

The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisition of Peak Resorts was completed on August 1, 2018 (the beginning of the fiscal year preceding the fiscal year in which the acquisition occurred).

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

(ii) amortization of intangible assets recorded at the date of the transactions;

(iii) lease expenses incurred by the prior owners which the Company will not be subject to;

(iv) transaction and business integration related costs;

and (v) interest expense associated with financing the transactions.

This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place at the beginning of the fiscal year preceding the fiscal year in which each acquisition occurred (in thousands, except per share amounts).

(ii) amortization of intangible assets recorded at the date of the transaction;

(iii) transaction and business integration related costs;

and (iv) interest expense associated with financing the transaction.

This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2018 (in thousands, except per share amounts).

Year Ended July 31, 2020

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

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

Asset impairments

— ( 25,688 ) ( 25,688 )

Effects of changes in foreign currency exchange rates

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

Acquisition (including measurement period adjustments) 2,196 2,795 4,991

Effects of changes in foreign currency exchange rates

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Balance at July 31, 2022 $ 1,709,922 $ 45,006 $ 1,754,928

Asset Impairments

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 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.

As a result, the Company recognized impairments of goodwill of approximately $ 25.7 million and intangible assets and long-lived assets of $ 2.7 million, which were recorded within asset impairments on the Company’s Consolidated Statement of Operations during the year ended July 31, 2020.

The Company estimated the fair value of its Colorado resort ground transportation company reporting unit based on an analysis of the present value of future cash flows (an income approach).

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 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.

The composition of accounts payable and accrued liabilities follows (in thousands):

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Total accounts payable and accrued liabilities $ 942,830 $ 815,472

Investments in Affiliates

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

Equity Method Affiliates Ownership

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

Clinton Ditch and Reservoir Company 43 %

The Company had total net investments in equity method affiliates of $ 10.6 million and $ 10.2 million as of July 31, 2021 and 2020, respectively, included within deferred charges and other assets in the accompanying Consolidated Balance Sheets.

The amount of retained earnings that represent undistributed earnings of 50% or less owned entities accounted for by the equity method was $ 6.8 million and $ 6.5 million as of July 31, 2021 and 2020, respectively.

During the years ended July 31, 2021, 2020 and 2019, distributions in the amounts of $ 6.4 million, $ 0.7 million and $ 1.0 million, respectively, were received from equity method affiliates.

Fair Value Measurements

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Unobservable inputs which are supported by little or no market activity.

The table below summarizes the Company’s cash equivalents, other current assets, Interest Rate Swaps and Contingent Consideration measured at their estimated fair values (all other assets and liabilities measured at fair value are immaterial) (in thousands):

The table below summarizes the Company’s cash equivalents, other current assets, Interest Rate Swaps and Contingent Consideration (defined below) measured at estimated fair value (all other assets and liabilities measured at fair value are immaterial) (in thousands).

Estimated Fair Value Measurement as of July 31, 2022

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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.

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 estimated fair value of the Interest Rate Swaps was included as an asset within deferred charges and other assets as of July 31, 2022, and as a liability within other long-term liabilities as of July 31, 2021, in the Company’s Consolidated Balance Sheets.

The changes in Contingent Consideration during the years ended July 31, 2022 and 2021 were as follows (in thousands):

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Balance as of July 31, 2022 $ 42,400

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 Park City Lease 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 Park City 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 Park City Lease by the Company.

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 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 a discount rate of 11.1%, volatility of 17.0% and future period Park City EBITDA, which are unobservable inputs and thus are considered Level 3 inputs.

The Company evaluated the long-term growth assumptions related to future results at Park City as of July 31, 2022.

Operating results for the year ended July 31, 2022 were significantly higher than the historical trend for Park City, in part driven by dynamics caused by COVID-19.

There is inherent variability in the performance of the Company’s individual resorts, including Park City, and while results for the year ended July 31, 2022 were strong for the resort, the long-term historical average of results continues to support a more normalized growth rate in the valuation.

The Company will continue to monitor actual performance compared to its expectations and will update assumptions as appropriate.

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 subsequent year performance would result in a change in the estimated fair value within the range of approximately $3.0 million to $6.1 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, 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.

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

During the year ended July 31, 2022, the Company made a payment to the landlord for Contingent Consideration of approximately $ 7.5 million and recorded an increase in the estimated fair value of approximately $ 20.3 million which was primarily associated with the estimated Contingent Consideration payment for the fiscal year ended July 31, 2022.

These changes resulted in an estimated fair value of the Contingent Consideration of $ 42.4 million as of July 31, 2022, which is reflected in accounts payable and accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheet.

The Company is subject to taxation in U.S.

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• 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.

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

As a result, during the year ended July 31, 2020, the Company recorded a benefit of approximately $ 9.6 million, which primarily offset Mountain and Lodging operating expense as a result of wages paid to employees who were not providing services.

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 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.

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

The Company also recognized benefits of approximately $ 7.0 million, $ 30.8 million and $ 8.5 million during the years ended July 31, 2022, 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):

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Net deferred income tax liability $ 263,415 $ 249,758

The components of deferred income taxes recognized in the Consolidated Balance Sheets are as follows (in thousands):

The components of deferred income taxes recognized in the accompanying Consolidated Balance Sheets are as follows (in thousands):

Deferred income tax asset $ 5,049 $ 3,059

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During the year ended July 31, 2022, the Company experienced a reduction in the uncertain tax positions due to the lapse of the statute of limitations of $ 16.1 million, which was partially offset with an increase to the uncertain tax position of $ 11.2 million.

Interest and penalties associated with the statute of limitations lapse were approximately $ 3.4 million.

Accrued interest and penalties associated with the statute of limitations lapse were approximately $5.8 million.

The Company is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will change materially in the next twelve months.

Additionally, the Company expects a reduction to its uncertain tax positions for the fiscal year ending July 31, 2023, due to the lapse of the statute of limitations.

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, 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.

federal jurisdiction, various state jurisdictions, Australia and Canada.

The Company is no longer subject to U.S.

federal examinations for tax years prior to 2016.

With few exceptions, the Company is no longer subject to examination by various U.S.

state jurisdictions for tax years prior to 2015.

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

The Company’s U.S.

federal income tax returns are subject to tax examinations for the tax years 2018 through the current period.

state, Australia and Canada income tax returns are generally subject to examination for the tax years 2018 through the current period.

Additionally, to the extent the Company has NOLs that have been carried back or are available for carryforward, the tax years to which the NOL was carried back or in which the NOL was generated may still be adjusted by the taxing authorities to the extent the NOLs are utilized.

The Company has NOL carryforwards totaling $ 18.4 million, primarily comprised of $ 14.8 million of federal and state NOLs as a result of the acquisition of Peak Resorts in September 2019 that will expire beginning July 31, 2031 and non-U.S.

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Additionally, the Company has foreign tax credit carryforwards of $ 4.2 million, which expire by the year ending July 31, 2028.

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.

As of July 31, 2022, 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.

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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It is not practical at this time to determine the income tax liability related to any remaining undistributed earnings.

Related Party Transactions

The Company has the right to appoint four of nine directors of the Beaver Creek Resort Company of Colorado (“BCRC”), a non-profit entity formed for the benefit of property owners and certain others in Beaver Creek.

The Company has a management agreement with the BCRC, renewable for one-year periods, to provide management services on a fixed fee basis.

Management fees and reimbursement of operating expenses paid to the Company under its agreement with the BCRC during the years ended July 31, 2021, 2020 and 2019 were $ 6.5 million, $ 8.3 million and $ 9.6 million, respectively.

Commitments and Contingencies

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HCMD’s bonds were issued and used to build infrastructure associated with the Company’s Red Sky Ranch residential development.

The Company has agreed to pay capital improvement fees to Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD’s revenue streams from property taxes are sufficient to meet debt service requirements under HCMD’s bonds.

The Company has agreed to pay capital improvement fees to the Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD’s revenue streams from property taxes are sufficient to meet debt service requirements under HCMD’s bonds.

The Company recorded a liability of $ 1.8 million and $ 2.0 million, primarily within other long-term liabilities in the accompanying Consolidated Balance Sheets, as of July 31, 2022 and 2021, respectively, with respect to the estimated present value of future RSRMD capital improvement fees.

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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.

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 lease has a term that expires in the year ending July 31, 2035 , and provides for the payment of an initial minimum annual base rent, with annual CPI increases, and percentage rent of certain gross revenue generated at the property.

The operations of Laurel Mountain are conducted on land under a concessioner lease agreement with the Commonwealth of Pennsylvania, acting through the Department of Conservation and Natural Resources (“Department”), which initially commenced in 2018, which the Company assumed in its acquisition of the Seven Springs Resorts in December 2021.

The agreement has a term that expires in the year ending July 31, 2052 , and provides for the payment of an initial minimum annual base rent, with bi-annual CPI increases, and additional rent based on skier visits.

Additionally, the Company has entered into strategic long-term season pass alliance agreements with third-party mountain resorts in which the Company has committed to pay minimum revenue guarantees over the remaining terms of these agreements.

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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).

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.

During the year ended July 31, 2021, 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.

As a result, the Company had recorded an accrual of $ 13.2 million as of July 31, 2022 and 2021 on its Consolidated Balance Sheets.

The parties proposed a settlement agreement to resolve these complaints, which the court approved in August 2022.

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.

As of July 31, 2022 and 2021, the accruals for such loss contingencies (excluding the employment-related litigation) were not material individually or in the aggregate.

Segment and Geographic Area Information

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The Mountain segment includes the operations of the Company’s mountain resorts/ski areas and related ancillary activities.

The Lodging segment includes the operations of the Company’s owned hotels, RockResorts, NPS concessionaire properties, condominium management, Colorado resort ground transportation operations and mountain resort golf operations.

The Lodging segment includes the operations of the Company’s owned hotels, RockResorts, NPS concessioner properties, condominium management, Colorado resort ground transportation operations and mountain resort golf operations.

The Real Estate segment owns, develops and sells real estate in and around the Company’s resort communities.

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As such, these segments are managed separately.

The Company reports its segment results using Reported EBITDA (defined as segment net revenue less segment operating expenses, plus or minus segment equity investment income or loss, and for the Real Estate segment, plus gain or loss on sale of real property).

On August 1, 2021, the Company revised its segment reporting to move certain dining and golf operations from the Lodging segment to the Mountain segment.

Segment reporting results for the prior years have been adjusted retrospectively to conform to the current period presentation.

The Company reports its segment results using Reported EBITDA (defined as segment net revenue less segment operating expenses, plus segment equity investment income or loss, and for the Real Estate segment, plus gain or loss on sale of real property).

The Company reports segment results in a manner consistent with management’s internal reporting of operating results to the chief operating decision maker (Chief Executive Officer) for purposes of evaluating segment performance.

Items excluded from Reported EBITDA are significant components in understanding and assessing financial performance.

Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the Consolidated Financial Statements as indicators of financial performance or liquidity.

Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the accompanying Consolidated Financial Statements as indicators of financial performance or liquidity.

The Company utilizes Reported EBITDA in evaluating the performance of the Company and in allocating resources to its segments.

Mountain Reported EBITDA consists of Mountain net revenue less Mountain operating expense plus or minus Mountain equity investment income or loss.

Mountain Reported EBITDA consists of Mountain net revenue less Mountain operating expense plus Mountain equity investment income or loss.

Lodging Reported EBITDA consists of Lodging net revenue less Lodging operating expense.

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The accounting policies specific to each segment are the same as those described in Note 2, Summary of Significant Accounting Policies.

Following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources (in thousands):

The following table presents key financial information by reportable segment, which is used by management in evaluating performance and allocating resources (in thousands):

Year ended July 31,

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$ 347,923 $ 127,850 $ 98,833

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

Net income (loss) attributable to noncontrolling interests 20,414 ( 3,393 ) 10,222

Net income 368,337 124,457 109,055

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Asset impairments — — 28,372

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

(Gain) loss on disposal of fixed assets and other, net (2)

( 43,992 ) 5,373 ( 838 )

Change in estimated fair value of contingent consideration 20,280 14,402 ( 2,964 )

Investment income and other, net ( 3,718 ) ( 586 ) ( 1,305 )

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

Foreign currency loss (gain) on intercompany loans 2,682 ( 8,282 ) 3,230

Interest expense, net 148,183 151,399 106,721

Total Reported EBITDA $ 832,987 $ 540,074 $ 499,221

(1) Segment results for the years ended July 31, 2021 and 2020 have been retrospectively adjusted to reflect current period presentation.

(2) During the year ended July 31, 2022, the Company recognized a gain of $ 32.2 million from the sale of a hotel property in Breckenridge.

Geographic Information

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(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.

except the U.S.) accounted for more than 10% of the Company’s revenue for the years ended July 31, 2022 and 2021.

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

Canada accounted for $ 223.3 million of revenue for the year ended July 31, 2020.

(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 $ 272.9 million and $ 288.4 million of property, plant and equipment, net as of July 31, 2022 and 2021, respectively.

Selected Quarterly Financial Data (Unaudited)

Year ended July 31, 2021

(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

Income (loss) from operations $ 261,016 $ ( 170,444 ) $ 387,705 $ 207,716 $ ( 163,961 )

Net income (loss) $ 124,457 $ ( 144,942 ) $ 277,290 $ 149,130 $ ( 157,021 )

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) Full Year Fourth

Quarter Third

Quarter Second

Quarter First

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

Income (loss) from operations $ 223,389 $ ( 170,046 ) $ 218,232 $ 310,733 $ ( 135,530 )

Net income (loss) $ 109,055 $ ( 157,965 ) $ 159,831 $ 217,018 $ ( 109,829 )

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

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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 up to 7,500,000 Vail Shares.

During the years ended July 31, 2022 and 2020, the Company repurchased 304,567 and 256,418 Vail Shares, respectively (at a total cost of $ 75.0 million and $ 46.4 million, respectively).

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).

During the year ended July 31, 2019, the Company repurchased 353,007 Vail Shares (at a total cost of $ 85.0 million).

Since inception of this stock repurchase program through July 31, 2022, the Company has repurchased 6,465,708 shares at a cost of approximately $ 479.4 million.

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Expected volatility 31.0 % 30.7 % 29.7 %

Expected dividends 3.0 % 2.8 % 2.1 %

Expected dividend yield 2.1 % 3.0 % 2.8 %

Expected term (average in years) 6.4 - 6.8

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The Company granted 83,000 restricted share units during the year ended July 31, 2020 with a weighted-average grant-date estimated fair value of $ 217.46 .

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.

The Company had 68,000 , 66,000 and 63,000 restricted share units that vested during the years ended July 31, 2022, 2021 and 2020, respectively.

These units had a total estimated fair value of $ 23.7 million, $ 15.0 million and $ 14.8 million at the date of vesting for the years ended July 31, 2022, 2021 and 2020, respectively.

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Total Retirement Plan expense recognized by the Company for the years ended July 31, 2022, 2021 and 2020 was $ 8.5 million, $ 6.5 million and $ 5.8 million, respectively.

Subsequent Events

On August 3, 2022, through a wholly-owned subsidiary, the Company acquired a 55% controlling interest in Andermatt-Sedrun from ASA.

Andermatt-Sedrun operates mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation at the ski area.

The Company invested CHF 149.3 million ($ 155.7 million), comprised of a CHF 110.0 million ($ 114.4 million) investment into Andermatt-Sedrun for use in capital investments to enhance the guest experience on the mountain (which was prepaid to fund the acquisition and is recorded in other current assets on the Company’s Consolidated Balance Sheet as of July 31, 2022) and CHF 39.3 million ($ 41.3 million) paid to ASA (which was paid on August 3, 2022, commensurate with closing).

ASA has retained a 40% ownership stake, with a group of existing shareholders comprising the remaining 5% ownership.

The acquisition was funded with cash on hand.

As of August 3, 2022, the value of the total consideration paid to the seller was $ 155.4 million.

Initial accounting for the acquisition is not yet complete, including the determination of the acquisition-date fair value of assets acquired and liabilities assumed, as the Company is currently in the process of completing the assessment of valuation inputs and assumptions.

On August 31, 2022, the Company entered into the Fifth Amendment of the Vail Holdings Credit Agreement, which extended the maturity date to September 23, 2026.

Additionally, the Fifth Amendment contains customary LIBOR replacement language, including, but not limited to, the use of rates based on SOFR.

The Fifth Amendment modified the calculation of interest under the Vail Holdings Credit Agreement from being calculated based on LIBOR to being calculated based on SOFR.

No other material terms of the Vail Holdings Credit Agreement were amended.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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