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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2021
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-09614
mtn-20211031_g1.jpg
Vail Resorts, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware51-0291762
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
390 Interlocken Crescent
Broomfield,Colorado80021
(Address of Principal Executive Offices)(Zip Code)
(303) 404-1800
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueMTNNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes      No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer   Accelerated filer 
Non-accelerated filer   Smaller reporting company 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes     No
As of December 6, 2021, 40,451,209 shares of the registrant’s common stock were outstanding.



Table of Contents
 
PART IFINANCIAL INFORMATIONPage
Item 1.Financial Statements (unaudited).
Item 2.
Item 3.
Item 4.
PART IIOTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.




Vail Resorts, Inc.
Consolidated Condensed Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
October 31, 2021July 31, 2021October 31, 2020
Assets
Current assets:
Cash and cash equivalents$1,468,380 $1,243,962 $462,212 
Restricted cash14,482 14,612 10,163 
Trade receivables, net108,988 345,408 208,540 
Inventories, net103,697 80,316 100,879 
Other current assets82,307 61,288 59,821 
Total current assets1,777,854 1,745,586 841,615 
Property, plant and equipment, net (Note 6)
2,062,322 2,067,876 2,166,604 
Real estate held for sale or investment98,833 95,615 96,668 
Goodwill, net (Note 6)
1,790,531 1,781,047 1,711,870 
Intangible assets, net319,250 319,110 313,445 
Operating right-of-use assets204,476 204,716 218,902 
Other assets37,285 37,106 41,420 
Total assets$6,290,551 $6,251,056 $5,390,524 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 6)
$1,109,652 $815,472 $846,614 
Income taxes payable43,377 48,812 39,909 
Long-term debt due within one year (Note 5)
114,795 114,117 63,707 
Total current liabilities1,267,824 978,401 950,230 
Long-term debt, net (Note 5)
2,704,583 2,736,175 2,387,861 
Operating lease liabilities192,328 190,561 213,073 
Other long-term liabilities (Note 6)
243,307 264,034 253,108 
Deferred income taxes, net216,049 252,817 210,525 
Total liabilities4,624,091 4,421,988 4,014,797 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000 shares authorized, no shares issued and outstanding
   
Common stock, $0.01 par value, 100,000 shares authorized, 46,610, 46,552 and 46,412 shares issued, respectively
466 466 464 
Exchangeable shares, $0.01 par value, 34, 34 and 35 shares issued and outstanding, respectively (Note 4)
   
Additional paid-in capital1,192,901 1,196,993 1,130,318 
Accumulated other comprehensive income (loss)44,689 27,799 (52,387)
Retained earnings598,826 773,752 492,136 
Treasury stock, at cost, 6,161 shares (Note 10)
(404,411)(404,411)(404,411)
Total Vail Resorts, Inc. stockholders’ equity1,432,471 1,594,599 1,166,120 
Noncontrolling interests233,989 234,469 209,607 
Total stockholders’ equity 1,666,460 1,829,068 1,375,727 
Total liabilities and stockholders’ equity$6,290,551 $6,251,056 $5,390,524 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
2


Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
 
Three Months Ended October 31,
 20212020
Net revenue:
Mountain and Lodging services and other$121,860 $104,274 
Mountain and Lodging retail and dining 53,401 27,258 
Resort net revenue175,261 131,532 
Real Estate315 254 
Total net revenue175,576 131,786 
Operating expense (exclusive of depreciation and amortization shown separately below):
Mountain and Lodging operating expense183,725 154,137 
Mountain and Lodging retail and dining cost of products sold24,229 17,132 
General and administrative77,234 59,029 
Resort operating expense285,188 230,298 
Real Estate operating expense1,470 1,450 
Total segment operating expense286,658 231,748 
Other operating (expense) income:
Depreciation and amortization(61,489)(62,628)
Gain on sale of real property31  
Change in estimated fair value of contingent consideration (Note 7)
(2,000)(802)
Gain (loss) on disposal of fixed assets and other, net8,867 (569)
Loss from operations(165,673)(163,961)
Mountain equity investment income, net1,514 3,986 
Investment income and other, net499 343 
Foreign currency gain on intercompany loans (Note 5)
831 540 
Interest expense, net(39,545)(35,407)
Loss before benefit from income taxes(202,374)(194,499)
Benefit from income taxes59,853 37,478 
Net loss(142,521)(157,021)
Net loss attributable to noncontrolling interests3,189 3,255 
Net loss attributable to Vail Resorts, Inc.$(139,332)$(153,766)
Per share amounts (Note 4):
Basic net loss per share attributable to Vail Resorts, Inc.$(3.44)$(3.82)
Diluted net loss per share attributable to Vail Resorts, Inc.$(3.44)$(3.82)
Cash dividends declared per share$0.88 $ 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
3



Vail Resorts, Inc.
Consolidated Condensed Statements of Comprehensive Loss
(In thousands)
(Unaudited)

Three Months Ended October 31,
 20212020
Net loss$(142,521)$(157,021)
Foreign currency translation adjustments15,137 1,773 
Change in estimated fair value of hedging instruments, net of tax4,345 4,655 
Comprehensive loss(123,039)(150,593)
Comprehensive loss attributable to noncontrolling interests597 1,277 
Comprehensive loss attributable to Vail Resorts, Inc.$(122,442)$(149,316)
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
4


Vail Resorts, Inc.
Consolidated Condensed Statements of Stockholders’ Equity
(In thousands)
(Unaudited)

Common StockAdditional Paid in CapitalAccumulated Other Comprehensive (Loss) IncomeRetained EarningsTreasury StockTotal Vail Resorts, Inc. Stockholders’ EquityNoncontrolling InterestsTotal Stockholders’ Equity
Vail ResortsExchangeable
Balance, July 31, 2020$464 $ $1,131,624 $(56,837)$645,902 $(404,411)$1,316,742 $214,925 $1,531,667 
Comprehensive loss:
Net loss— — — — (153,766)— (153,766)(3,255)(157,021)
Foreign currency translation adjustments— — — (205)— — (205)1,978 1,773 
Change in estimated fair value of hedging instruments, net of tax— — — 4,655 — — 4,655 — 4,655 
Total comprehensive loss(149,316)(1,277)(150,593)
Stock-based compensation expense— — 5,754 — — — 5,754 — 5,754 
Issuance of shares under share award plans, net of shares withheld for employee taxes — (7,060)— — — (7,060)— (7,060)
Distributions to noncontrolling interests, net— — — — — — — (4,041)(4,041)
Balance, October 31, 2020$464 $ $1,130,318 $(52,387)$492,136 $(404,411)$1,166,120 $209,607 $1,375,727 
Balance, July 31, 2021$466 $ $1,196,993 $27,799 $773,752 $(404,411)$1,594,599 $234,469 $1,829,068 
Comprehensive loss:
Net loss— — — — (139,332)— (139,332)(3,189)(142,521)
Foreign currency translation adjustments— — — 12,545 — — 12,545 2,592 15,137 
Change in estimated fair value of hedging instruments, net of tax— — — 4,345 — — 4,345 — 4,345 
Total comprehensive loss(122,442)(597)(123,039)
Stock-based compensation expense— — 6,425 — — — 6,425 — 6,425 
Issuance of shares under share award plans, net of shares withheld for employee taxes — (10,517)— — — (10,517)— (10,517)
Dividends (Note 4)
— — — — (35,594)— (35,594)— (35,594)
Contributions from noncontrolling interests— — — — — — — 117 117 
Balance, October 31, 2021$466 $ $1,192,901 $44,689 $598,826 $(404,411)$1,432,471 $233,989 $1,666,460 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
5


Vail Resorts, Inc.
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended October 31,
 20212020
Cash flows from operating activities:
Net loss$(142,521)$(157,021)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization61,489 62,628 
Stock-based compensation expense6,425 5,754 
Deferred income taxes, net(56,603)(36,199)
Other non-cash income, net(2,825)(3,237)
Changes in assets and liabilities:
Trade receivables, net236,748 (102,387)
Inventories, net(23,105)745 
Accounts payable and accrued liabilities12,164 43,638 
Deferred revenue286,369 303,308 
Income taxes payable - excess tax benefit from share award exercises(3,250)(1,279)
Income taxes payable - other(2,198)(359)
Other assets and liabilities, net(23,672)(3,598)
Net cash provided by operating activities349,021 111,993 
Cash flows from investing activities:
Capital expenditures(50,130)(30,168)
Other investing activities, net10,273 894 
Net cash used in investing activities(39,857)(29,274)
Cash flows from financing activities:
Proceeds from borrowings under Whistler Credit Agreement 18,021 
Repayments of borrowings under Vail Holdings Credit Agreement(15,625)(15,625)
Repayments of borrowings under Whistler Credit Agreement(23,145)(3,834)
Employee taxes paid for share award exercises(10,517)(7,060)
Dividends paid(35,594) 
Other financing activities, net147 (4,186)
Net cash used in financing activities(84,734)(12,684)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(142)254 
Net increase in cash, cash equivalents and restricted cash224,288 70,289 
Cash, cash equivalents and restricted cash:
Beginning of period1,258,574 402,086 
End of period$1,482,862 $472,375 
Non-cash investing activities:
Accrued capital expenditures$8,582 $18,132 
The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.
6


Vail Resorts, Inc.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

1.Organization and Business
Vail Resorts, Inc. (“Vail Resorts”) is organized as a holding company and operates through various subsidiaries. Vail Resorts and its subsidiaries (collectively, the “Company”) operate in three business segments: Mountain, Lodging and Real Estate.

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:

mtn-20211031_g2.jpg

*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.

Additionally, the Mountain segment includes ancillary services, primarily including ski school, dining and retail/rental operations, and for the Company’s Australian ski areas, including lodging and transportation operations.

In the Lodging segment, the Company owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand; 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; a Colorado resort ground transportation company and mountain resort golf courses.

Vail Resorts Development Company, 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.

7


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.

2.     Summary of Significant Accounting Policies
Basis of Presentation
Consolidated Condensed Financial Statements — In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to state fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. Results for interim periods are not indicative of the results for the entire fiscal year, particularly given the significant seasonality to the Company’s operating cycle. The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Certain information and footnote disclosures, including significant accounting policies, normally included in fiscal year financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted. The Consolidated Condensed Balance Sheet as of July 31, 2021 was derived from audited financial statements.
Use of Estimates — The preparation of financial statements in conformity with 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 periods. Actual results could differ from those estimates.
Fair Value of Financial Instruments — The recorded amounts for cash and cash equivalents, restricted cash, trade receivables, other current assets, accounts payable and accrued liabilities and the EB-5 Development Notes (as defined in Note 5, Long-Term Debt) 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 5, Long-Term Debt) approximate book value due to the variable nature of the interest rate associated with the debt. The estimated fair values of the 6.25% Notes and the 0.0% Convertible Notes (each as defined in Note 5, Long-Term Debt) are based on quoted market prices (a Level 2 input). The estimated fair value of the EPR Secured Notes (as defined in Note 5, Long-Term Debt) has been estimated using analyses based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input). The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, 0.0% Convertible Notes and EPR Secured Notes as of October 31, 2021 are presented below (in thousands):
October 31, 2021
Carrying ValueEstimated Fair Value
6.25% Notes$600,000 $633,516 
0.0% Convertible Notes$482,754 $630,453 
EPR Secured Notes$135,310 $208,284 
Recently Issued Accounting Standards
Standards Being Evaluated
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional transition guidance, for a limited time, to companies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform. The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. The amendments in this update may be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. 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 Condensed Financial Statements, but does not expect it will have a material effect.
8



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 5, Long-Term Debt) to long-term debt, net and it will no longer record interest expense related to the amortization of the debt discount.

3.     Revenues
Disaggregation of Revenues
The following table presents net revenues disaggregated by segment and major revenue type for the three months ended October 31, 2021 and 2020 (in thousands):
Three Months Ended October 31,
 2021
2020 (1)
Mountain net revenue:
Lift (2)
$14,329 $33,091 
Ski School1,473 2,044 
Dining12,520 3,068 
Retail/Rental28,376 22,306 
Other52,602 38,970 
Total Mountain net revenue$109,300 $99,479 
Lodging net revenue:
     Owned hotel rooms$21,483 $7,365 
Managed condominium rooms13,084 9,329 
Dining 10,275 1,093 
Golf5,109 3,689 
Other14,269 9,374 
64,220 30,850 
Payroll cost reimbursements1,741 1,203 
Total Lodging net revenue $65,961 $32,053 
Total Resort net revenue$175,261 $131,532 
Total Real Estate net revenue315 254 
Total net revenue$175,576 $131,786 
(1) Segment results for the three months ended October 31, 2020 have been retrospectively adjusted to reflect current period presentation. See Note 9 for additional information.
(2) As a result of the COVID-19 pandemic, the Company closed its North American destination mountain resorts, regional ski areas and retail stores early for the 2019/2020 North American ski season in March 2020 and subsequently 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 represented a separate performance obligation to which the Company allocated a transaction price of approximately $120.9 million, $15.4 million of which was recognized during the three months ended October 31, 2020 for Credit Offer discounts which were not redeemed prior to their expiration.
9



Contract Balances
Deferred revenue balances of a short-term nature were $743.8 million and $456.5 million as of October 31, 2021 and July 31, 2021, respectively. Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, was $121.0 million as of October 31, 2021 and July 31, 2021. For the three months ended October 31, 2021, the Company recognized approximately $45.4 million of revenue that was included in the deferred revenue balance as of July 31, 2021. As of October 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. Trade receivable balances were $109.0 million and $345.4 million as of October 31, 2021 and July 31, 2021, respectively.

Costs to Obtain Contracts with Customers
As of October 31, 2021, $18.0 million of costs to obtain contracts with customers were recorded within other current assets on the Company’s Consolidated Condensed Balance Sheet. The amounts capitalized are subject to amortization generally beginning in the second quarter of fiscal 2022, commensurate with the revenue recognized for skier visits, and will be recorded within Mountain and Lodging operating expenses on the Company’s Consolidated Condensed Statement of Operations.

4.    Net Loss per Share
Earnings per Share
Basic EPS excludes dilution and is computed by dividing net loss attributable to Vail Resorts stockholders by the weighted-average shares outstanding during the period. 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, 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”). 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 Vail Shares and are exchangeable, at any time prior to the seventh anniversary of the closing of the acquisition, into Vail Shares. The Company’s calculation of weighted-average shares outstanding includes the Exchangeco Shares.

Presented below is basic and diluted EPS for the three months ended October 31, 2021 and 2020 (in thousands, except per share amounts):
 Three Months Ended October 31,
 20212020
 BasicDilutedBasicDiluted
Net loss per share:
Net loss attributable to Vail Resorts$(139,332)$(139,332)$(153,766)$(153,766)
Weighted-average Vail Shares outstanding40,414 40,414 40,213 40,213 
Weighted-average Exchangeco Shares outstanding34 34 35 35 
Total Weighted-average shares outstanding40,448 40,448 40,248 40,248 
Effect of dilutive securities—  —  
Total shares40,448 40,448 40,248 40,248 
Net loss per share attributable to Vail Resorts$(3.44)$(3.44)$(3.82)$(3.82)

The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period. The number of shares issuable upon the exercise of share-based awards excluded from the calculation of diluted EPS because the effect of their inclusion would have been anti-dilutive totaled approximately 0.5 million and 0.6 million for the three months ended October 31, 2021 and 2020, respectively.

10


On December 18, 2020, the Company completed an offering of $575.0 million in aggregate principal amount of 0.0% Convertible Notes (as defined in Note 5, Long-Term Debt). The Company is required to settle the principal amount of the 0.0% Convertible Notes in cash and has the option to settle the conversion spread in cash or shares. The Company uses the treasury method to calculate diluted EPS, and if the conversion value of the 0.0% Convertible Notes exceeds their conversion price of $407.17 per share of common stock, then the Company will calculate its diluted EPS as if all the notes were converted and the Company issued shares of its common stock to settle the excess value over the conversion price. 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 three months ended October 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.

Dividends
The Company paid cash dividends of $0.88 per share ($35.6 million in the aggregate) during the three months ended October 31, 2021. The Company did not pay cash dividends during the three months ended October 31, 2020. On December 8, 2021, the Company’s Board of Directors approved a cash dividend of $0.88 per share payable on January 11, 2022 to stockholders of record as of December 28, 2021. Additionally, a Canadian dollar equivalent dividend on the Exchangeco Shares will be payable on January 11, 2022 to shareholders of record on December 28, 2021.

5.    Long-Term Debt
Long-term debt, net as of October 31, 2021, July 31, 2021 and October 31, 2020 is summarized as follows (in thousands):
MaturityOctober 31, 2021July 31, 2021October 31, 2020
Vail Holdings Credit Agreement term loan (a)2024$1,125,000 $1,140,625 $1,187,500 
Vail Holdings Credit Agreement revolver (a)2024   
6.25% Notes2025600,000 600,000 600,000 
0.0% Convertible Notes (b)2026575,000 575,000  
Whistler Credit Agreement revolver (c)202421,794 44,891 72,778 
EPR Secured Notes (d)
2034-2036
114,162 114,162 114,162 
EB-5 Development Notes202151,500 51,500 51,500 
Employee housing bonds
2027-2039
52,575 52,575 52,575 
Canyons obligation2063353,266 351,820 347,481 
Other
2021-2033
17,772 17,941 18,115 
Total debt2,911,069 2,948,514 2,444,111 
Less: Unamortized premiums, discounts and debt issuance costs91,691 98,222 (7,457)
Less: Current maturities (e)114,795 114,117 63,707 
Long-term debt, net$2,704,583 $2,736,175 $2,387,861 

(a)On December 18, 2020, Vail Holdings, Inc. (“VHI”), certain subsidiaries of the Company, as guarantors, Bank of America, N.A. (“Bank of America”), 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 29, 2021, VHI notified Bank of America of its intent to exit the Financial Covenants Temporary Waiver Period effective October 31, 2021. As a result, the Company is required to comply with the financial maintenance covenants in the Vail Holdings Credit Agreement starting with the fiscal quarter ended October 31, 2021 and, upon delivery of a certificate demonstrating compliance with the financial maintenance covenants for such quarter, will no longer be subject to the covenant modifications that were applicable during the temporary waiver period.

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As of October 31, 2021, the Vail Holdings Credit Agreement consists of a $500.0 million revolving credit facility and a term loan facility with $1.1 billion outstanding. The term loan facility is subject to quarterly amortization of principal of approximately $15.6 million, 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. Borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50% as of October 31, 2021 (2.59% as of October 31, 2021). 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 (0.4% as of October 31, 2021).

(b)The Company separately accounts for the liability and equity components of the 0.0% Convertible Notes. The liability component at issuance was recognized at estimated fair value based on the fair value of a similar debt instrument that does not have an embedded convertible feature. As of the issuance date, the estimated liability was determined to be $465.3 million and was recorded within long-term debt, net on the Company’s Consolidated Condensed Balance Sheet. 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 as of the issuance date and is being amortized to interest expense, net over the term. The balance of the unamortized debt discount was $92.2 million as of October 31, 2021.

(c)Whistler Mountain Resort Limited Partnership (“Whistler LP”) and Blackcomb Skiing Enterprises Limited Partnership (“Blackcomb LP”), together “The WB Partnerships,” are party to a credit agreement, dated as of November 12, 2013 (as amended, the “Whistler Credit Agreement”), by and among Whistler LP, Blackcomb LP, certain subsidiaries of Whistler LP and Blackcomb LP party thereto as guarantors (the “Whistler Subsidiary Guarantors”), the financial institutions party thereto as lenders and The Toronto-Dominion Bank, as administrative agent. The Whistler Credit Agreement consists of a C$300.0 million revolving credit facility. As of October 31, 2021, all borrowings under the Whistler Credit Agreement were made in Canadian dollars and by way of the issuance of bankers’ acceptances plus 2.00% (approximately 2.48% as of October 31, 2021). The Whistler Credit Agreement also includes a quarterly unused commitment fee based on the Consolidated Total Leverage Ratio, which as of October 31, 2021 is equal to 0.45% per annum.

(d)On September 24, 2019, in conjunction with the acquisition of Peak Resorts, Inc., the Company assumed various secured borrowings (the “EPR Secured Notes”) under the master credit and security agreements and other related agreements, as amended, (collectively, the “EPR Agreements”) with EPT Ski Properties, Inc. and its affiliates (“EPR”). The EPR Secured Notes include the following:
i.The Alpine Valley Secured Note. The $4.6 million Alpine Valley Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2021, interest on this note accrued at a rate of 11.38%.
ii.The Boston Mills/Brandywine Secured Note. The $23.3 million Boston Mills/Brandywine Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2021, interest on this note accrued at a rate of 11.07%.
iii.The Jack Frost/Big Boulder Secured Note. The $14.3 million Jack Frost/Big Boulder Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2021, interest on this note accrued at a rate of 11.07%.
iv.The Mount Snow Secured Note. The $51.1 million Mount Snow Secured Note provides for interest payments through its maturity on December 1, 2034. As of October 31, 2021, interest on this note accrued at a rate of 11.96%.
v.The Hunter Mountain Secured Note. The $21.0 million Hunter Mountain Secured Note provides for interest payments through its maturity on January 5, 2036. As of October 31, 2021, interest on this note accrued at a rate of 8.72%.
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 October 31, 2021, the Company had funded the EPR debt service reserve account in an amount equal to approximately $2.1 million, which was included in other current assets in the Company’s Consolidated Condensed Balance Sheet.
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(e)Current maturities represent principal payments due in the next 12 months.

Aggregate maturities of debt outstanding as of October 31, 2021 reflected by fiscal year (August 1 through July 31) are as follows (in thousands):
Total
2022 (November 2021 through July 2022)$105,187 
202363,740 
202463,798 
20251,575,677 
2026575,415 
Thereafter527,252 
Total debt
$2,911,069 

The Company recorded gross interest expense of $39.5 million and $35.4 million for the three months ended October 31, 2021 and 2020, respectively, of which $1.4 million and $0.7 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 Company’s acquisition of Whistler Blackcomb in October 2016, VHI funded a portion of the purchase price through an intercompany loan to Whistler Blackcomb of $210.0 million, which was effective as of November 1, 2016, and requires foreign currency remeasurement to Canadian dollars, the functional currency for Whistler Blackcomb. As a result, foreign currency fluctuations associated with the loan are recorded within the Company’s results of operations. The Company recognized approximately $0.8 million and $0.5 million, respectively, of non-cash foreign currency gains on the intercompany loan to Whistler Blackcomb for the three months ended October 31, 2021 and 2020 on the Company’s Consolidated Condensed Statements of Operations.

6.    Supplementary Balance Sheet Information
The composition of property, plant and equipment follows (in thousands):
October 31, 2021July 31, 2021October 31, 2020
Land and land improvements$757,625 $756,517 $752,259 
Buildings and building improvements1,492,863 1,496,402 1,475,857 
Machinery and equipment1,422,110 1,417,705 1,363,279 
Furniture and fixtures309,119 308,432 313,815 
Software123,228 122,778 99,077 
Vehicles80,921 80,328 80,552 
Construction in progress113,854 67,710 105,866 
Gross property, plant and equipment4,299,720 4,249,872 4,190,705 
Accumulated depreciation(2,237,398)(2,181,996)(2,024,101)
Property, plant and equipment, net$2,062,322 $2,067,876 $2,166,604 

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The composition of accounts payable and accrued liabilities follows (in thousands):
October 31, 2021July 31, 2021October 31, 2020
Trade payables$116,501 $98,261 $74,609 
Deferred revenue743,809 456,457 559,323 
Accrued salaries, wages and deferred compensation43,773 54,286 33,131 
Accrued benefits45,439 47,368 39,625 
Deposits43,875 35,263 20,644 
Operating lease liabilities36,036 34,668 36,185 
Other liabilities80,219 89,169 83,097 
Total accounts payable and accrued liabilities$1,109,652 $815,472 $846,614 

The changes in the net carrying amount of goodwill allocated between the Company’s segments for the three months ended October 31, 2021 are as follows (in thousands):
MountainLodgingGoodwill, net
Balance at July 31, 2021$1,738,836 $42,211 $1,781,047 
Effects of changes in foreign currency exchange rates9,484  9,484 
Balance at October 31, 2021$1,748,320 $42,211 $1,790,531 

7.    Fair Value Measurements
The FASB issued fair value guidance that establishes how reporting entities should measure fair value for measurement and disclosure purposes. The guidance establishes a common definition of fair value applicable to all assets and liabilities measured at fair value and prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, the Company uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows:

Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities;

Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and

Level 3: Unobservable inputs which are supported by little or no market activity.

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The table below summarizes the Company’s cash equivalents, other current assets, Interest Rate Swaps and Contingent Consideration measured at estimated fair value (all other assets and liabilities measured at fair value are immaterial) (in thousands).
 Estimated Fair Value Measurement as of October 31, 2021
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$504,064 $504,064 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$9,984 $— $9,984 $— 
Liabilities:
Interest Rate Swaps$5,348 $— $5,348 $— 
Contingent Consideration $24,100 $— $— $24,100 
 Estimated Fair Value Measurement as of July 31, 2021
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$253,782 $253,782 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$259,945 $— $259,945 $— 
Liabilities:
Interest Rate Swaps$12,942 $— $12,942 $— 
Contingent Consideration $29,600 $— $— $29,600 
 Estimated Fair Value Measurement as of October 31, 2020
DescriptionTotalLevel 1Level 2Level 3
Assets:
Money Market$204,036 $204,036 $— $— 
Commercial Paper$2,401 $— $2,401 $— 
Certificates of Deposit$8,076 $— $8,076 $— 
Liabilities:
Interest Rate Swaps$17,855 $— $17,855 $— 
Contingent Consideration$16,000 $— $— $16,000 

The Company’s cash equivalents, other current assets and Interest Rate Swaps are measured utilizing quoted market prices or pricing models whereby all significant inputs are either observable or corroborated by observable market data. The estimated fair value of the Interest Rate Swaps are included within other long-term liabilities on the Company’s Consolidated Condensed Balance Sheet as of October 31, 2021 and 2020.

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

Balance as of July 31, 2021 and 2020, respectively$29,600 $17,800 
Payments(7,500)(2,602)
Change in estimated fair value2,000 802 
Balance as of October 31, 2021 and 2020, respectively$24,100 $16,000 

15


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. The estimated fair value of Contingent Consideration includes the future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated subsequent year performance, escalated by an assumed growth factor. The Company estimated the fair value of the Contingent Consideration payments using an option pricing valuation model. Key assumptions included a discount rate of 11.0%, volatility of 17.0% and future period Park City EBITDA, which are unobservable inputs and thus are considered Level 3 inputs. The Company prepared a sensitivity analysis to evaluate the effect that changes on certain key assumptions would have on the estimated fair value of the Contingent Consideration. A change in the discount rate of 100 basis points or a 5% change in estimated subsequent year performance would result in a change in the estimated fair value within the range of approximately $4.0 million to $5.9 million.

Contingent Consideration is classified as a liability, which is remeasured to fair value at each reporting date until the contingency is resolved. During the three months ended October 31, 2021, the Company made a payment to the landlord for Contingent Consideration of approximately $7.5 million and recorded an increase of approximately $2.0 million. These changes resulted in an estimated fair value of the Contingent Consideration of approximately $24.1 million, which is reflected in other long-term liabilities in the Company’s Consolidated Condensed Balance Sheet.

8.    Commitments and Contingencies
Metropolitan Districts
The Company credit-enhances $6.3 million of bonds issued by Holland Creek Metropolitan District (“HCMD”) through a $6.4 million letter of credit issued under the Vail Holdings Credit Agreement. 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 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 has recorded a liability of $1.9 million, $2.0 million and $2.1 million primarily within other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets, as of October 31, 2021, July 31, 2021 and October 31, 2020, respectively, with respect to the estimated present value of future RSRMD capital improvement fees. The Company estimates it will make capital improvement fee payments under this arrangement through the fiscal year ending July 31, 2031.

Guarantees/Indemnifications
As of October 31, 2021, the Company had various letters of credit outstanding totaling $77.7 million, consisting of $53.4 million to support the Employee Housing Bonds and $24.3 million primarily for workers’ compensation, a wind energy purchase agreement and insurance-related deductibles. The Company also had surety bonds of $13.2 million as of October 31, 2021, primarily to provide collateral for its U.S. 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. The duration of these indemnities generally is indefinite and generally do not limit the future payments the Company could be obligated to make.

As permitted under applicable law, the Company and certain of its subsidiaries have agreed to indemnify their directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was, serving the Company or its subsidiaries in such a capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that should enable the Company to recover a portion of any amounts paid.

16


Unless otherwise noted, the Company has not recorded any significant liabilities for the letters of credit, indemnities and other guarantees noted above in the accompanying Consolidated Condensed Financial Statements, either because the Company has recorded on its Consolidated Condensed Balance Sheets the underlying liability associated with the guarantee, the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements as prescribed by GAAP, or because the Company has calculated the estimated fair value of the indemnification or guarantee to be immaterial based on the current facts and circumstances that would trigger a payment under the indemnification clause. In addition, with respect to certain indemnifications, it is not possible to determine the maximum potential amount of liability under these potential obligations due to the unique set of facts and circumstances likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material.

As noted above, the Company makes certain indemnifications to licensees for their use of the Company’s trademarks and logos. The Company does not record any liabilities with respect to these indemnifications.

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.

Self-Insurance
The Company is self-insured for claims under its U.S. health benefit plans and for the majority of workers’ compensation claims in the U.S. Workers compensation claims in the U.S. are subject to stop loss policies. The self-insurance liability related to workers’ compensation is determined actuarially based on claims filed. The self-insurance liability related to claims under the Company’s U.S. health benefit plans is determined based on analysis of actual claims. The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued liabilities (see Note 6, Supplementary Balance Sheet Information).

Legal
The Company is a party to various lawsuits arising in the ordinary course of business. Management believes the Company has adequate insurance coverage and/or has accrued for all loss contingencies for asserted and unasserted matters deemed to be probable and estimable losses. As of October 31, 2021, July 31, 2021 and October 31, 2020, the accruals for the above loss contingencies were not material individually or in the aggregate.

9.    Segment Information
The Company has three reportable segments: Mountain, Lodging and Real Estate. The Company refers to “Resort” as the combination of the Mountain and Lodging segments. 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 Real Estate segment owns, develops and sells real estate in and around the Company’s resort communities. The Company’s reportable segments, although integral to the success of the others, offer distinctly different products and services and require different types of management focus. As such, these segments are managed separately.

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 year period 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 loss, net change in cash and cash equivalents or other financial statement data presented in the Consolidated Condensed Financial Statements as indicators of financial performance or liquidity.

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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 Mountain equity investment incom