Vail Resorts Files Fiscal 2002 Third Quarter Report; Resolves Amortization Period For Club Revenues
VAIL, Colo. - June 20, 2002 - Vail Resorts, Inc. (NYSE: MTN) filed its Quarterly Report on Form 10-Q for the 2002 fiscal third quarter on June 19, 2002, pursuant to the available five-day extension of its original filing date.
As previously stated in connection with its recent change of auditors, in early May 2002, the Company was advised by PricewaterhouseCoopers LLP that it believed a change in accounting should occur in a small part of the Company's business activity, namely the sale of memberships in private clubs. As previously stated, PwC had advised the Company that in its view such revenue, which historically has represented approximately 1-2 percent of Vail Resorts' reported Resort Revenue, should be amortized over a period of years, and also that historical results should be restated to reflect the amortized effect.
Based upon extensive analysis of numerous data points by the Company and PwC, the Company has determined that the appropriate amortization period to apply is 12 years. This estimate will be reviewed periodically and revised, as necessary, to reflect actual experience with the duration of member lives in the particular clubs.
The Company has made the recommended change in its revenue recognition policy. Accordingly, the financial statements included in the Company's quarterly report for the quarter and nine months ended April 30, 2002, and the restated comparable periods of fiscal 2001, reflect the recognition of the club initiation fees as revenue over the 12-year period. The Company will file an amended form 10-K for Fiscal 2001 reflecting this accounting revision as soon as practicable.
As previously noted, the accounting revision has the effect of reducing historically reported revenue and net income, while increasing revenues and net income to be reported in future periods in a corresponding amount.
The impacts of the change on the current quarter and other periods covered in the current filing are shown in the attachment to this press release.
As background and as noted in its earlier press release, the Company historically (prior to restatement) had recognized 100 percent of the cash proceeds actually received in club membership initiation fees as revenue immediately in the period of sale. The Company had specifically reviewed this accounting treatment at the end of fiscal 2001 with its then current auditing firm. At that time, the Company and its auditor concluded that such treatment reflected the economic substance of the transaction, i.e. the non-refundable memberships were in fact sold and the cash in fact received by the Company, and that such treatment did not materially depart from generally accepted accounting principles. Thus, no change in accounting policy for the then active clubs was considered required at the time.
Vail Resorts, Inc. is the premier mountain resort operator in North America. The Company operates the mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado, Heavenly Ski Resort in California and Nevada, and the Grand Teton Lodge Company in Jackson Hole, Wyo. The Company also holds a majority interest in Rockresorts, a luxury resort hotel company with 11 distinctive properties across the United States. Vail Resorts Development Company is the real estate planning, development, construction, retail leasing and management subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN). The Vail Resorts website is www.vailresorts.com.
Statements in this press release, other than statements of historical information, are forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. Such risks and uncertainties include but are not limited to uncertainties and issues arising, positive or negative, related to the change in accounting of the revenue recognition of club membership fees. Investors are also directed to other risks discussed in documents filed by the Company with the Securities and Exchange Commission.
The impacts of the restated adjustments on the financial statements contained in the Company's current 10-Q filing are summarized below:
For a copy of the chart, please access the pdf version, click here, or contact Cindy Metzler at cmetzler@vailresorts.com.
Vail Resorts Contacts:
Investor Relations:
Leslie Roubos
(970) 845-2958
lroubos@vailresorts.com
Media:
Kelly Ladyga
(970) 845-5720
kladyga@vailresorts.com