form8k.htm

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): September 27, 2007

Vail Resorts, Inc.
(Exact Name of Registrant as Specified in Charter)

Delaware
 
001-09614
 
51-0291762
(State or Other Jurisdiction of Incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)
         
390 Interlocken Crescent, Suite 1000
Broomfield, Colorado
 
80021
   
(Address of Principal Executive Offices)
 
(Zip Code)
   
         
Registrant's telephone number, including area code:
 
 (303) 404-1800
   

 
(Former Name or Former Address, if Changed Since Last Report)
 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ] Soliciting materials pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 



Item 2.02.  Results of Operations and Financial Condition.

On September 27, 2007, Vail Resorts, Inc. issued a press release announcing its results for the three months and year ended July 31, 2007.  A copy of the press release is being furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.  

A list of exhibits furnished herewith is contained on the Exhibit Index which immediately precedes such exhibits and is incorporated herein by reference.
 
 
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
Vail Resorts, Inc.
 Date: September 27, 2007
By:
 /s/ Jeffrey W. Jones
 
 
Jeffrey W. Jones
 
 
Senior Executive Vice President and
Chief Financial Officer
 
 



EXHIBIT INDEX

Exhibit No.
Description
99.1
Press Release, dated September 27, 2007, announcing fiscal fourth quarter and fiscal 2007 year-end results.


 
exhibit99_1.htm

Exhibit 99.1
Vail Resorts, Inc.
For Immediate Release
News Release
 
Vail Resorts Contacts:
Media:  Kelly Ladyga, (303) 404-1862, kladyga@vailresorts.com
Investor Relations:  Jeff Jones, CFO, (303) 404-1802, jwjones@vailresorts.com
 
Vail Resorts Announces Strong Fiscal 2007 Year-End Results

Net income of $61.4 million for fiscal 2007, 34.2% higher than last fiscal year.
Resort Reported EBITDA of $225.9 million for fiscal 2007, 16.3% higher than last fiscal year.
Resort Revenue of $827.8 million for fiscal 2007, 6.6% higher than last fiscal year.

BROOMFIELD, Colo. - September 27, 2007 - Vail Resorts, Inc. (NYSE: MTN) announced today financial results for the fiscal year ended July 31, 2007, including financial results for the fiscal fourth quarter.
The Company uses the term “Reported EBITDA” and “Reported EBITDA excluding stock-based compensation” when reporting financial results in accordance with Securities and Exchange Commission rules regarding the use of non-GAAP financial measures.  The Company defines Reported EBITDA as segment net revenue less segment operating expense plus segment equity investment income or loss.

FISCAL YEAR 2007 PERFORMANCE
Mountain Segment
Mountain revenue grew $44.9 million, or 7.2%, for the twelve months ended July 31, 2007, to $665.4 million from $620.4 million for the 2006 fiscal year.  Mountain expense increased $19.6 million, or 4.4%, to $462.7 million.  Mountain Reported EBITDA in the 2007 fiscal year grew $26.5 million, or 14.6%, to $207.7 million compared to $181.2 million for the 2006 fiscal year.
 
Lodging Segment
Lodging revenue increased $6.6 million, or 4.3%, for the twelve months ended July 31, 2007, to $162.5 million from $155.8 million for the 2006 fiscal year.  Lodging expense increased $1.6 million, or 1.1%, to $144.3 million.  For fiscal year 2006, the Lodging segment included revenue of $5.2 million and operating expenses of $4.5 million related to Snake River Lodge & Spa (“SRL&S”), which was sold in January 2006.  Additionally, revenue for the twelve months ended July 31, 2007, included $5.4 million of fees primarily associated with the termination of the management agreements at The Equinox as a result of the sale of the hotel by the hotel owner and at The Lodge at Rancho Mirage in conjunction with the closing of the hotel as part of a redevelopment plan by the current hotel owner (both pursuant to the terms of the management agreements).  Lodging Reported EBITDA in the 2007 fiscal year grew $5.1 million, or 38.8%, to $18.2 million compared to $13.1 million for the 2006 fiscal year.

Resort – Combination of Mountain and Lodging Segments
Resort revenue, the combination of Mountain and Lodging revenue, increased $51.6 million, or 6.6%, for the twelve months ended July 31, 2007, to $827.8 million from $776.2 million for the 2006 fiscal year.  Resort expense increased $21.2 million, or 3.6%, to $607.0 million.  Resort Reported EBITDA in the 2007 fiscal year increased $31.6 million to $225.9 million, a 16.3% increase over the 2006 fiscal year.  Resort Reported EBITDA excluding stock-based compensation increased $31.5 million, or 15.8%, to $230.8 million.

Real Estate Segment
Real Estate revenue increased $50.1 million, or 80.0%, for the twelve months ended July 31, 2007, to $112.7 million from $62.6 million for the 2006 fiscal year.  Real Estate expense increased 103.2% to $115.2 million.  Real Estate Reported EBITDA in the 2007 fiscal year decreased $9.2 million, or 136.9%, to a loss of $2.5 million compared to a profit of $6.7 million in the 2006 fiscal year.

Total Performance – Fiscal Year
Total revenue increased $101.7 million, or 12.1%, for the twelve months ended July 31, 2007, to $940.5 million from $838.9 million for the 2006 fiscal year.  Income from operations for the year increased $22.9 million, or 21.7%, to $128.2 million.  The Company recorded total pre-tax stock-based compensation expense of $7.0 million in the twelve months ended July 31, 2007, compared to $6.5 million for the twelve months ended July 31, 2006.
The Company reported net income of $61.4 million, or $1.56 per diluted share, for the 2007 fiscal year compared to net income of $45.8 million, or $1.19 per diluted share, for the 2006 fiscal year.  Excluding stock-based compensation expense, the Company’s net income for the 2007 fiscal year would have been $65.8 million, or $1.67 per diluted share, compared to net income of $49.8 million excluding stock-based compensation, or $1.29 per diluted share, for the 2006 fiscal year.

FOURTH QUARTER PERFORMANCE
Mountain Segment
Mountain revenue decreased $0.7 million, or 1.8%, in the fourth quarter of fiscal 2007 to $38.5 million from $39.2 million for the comparable quarter last fiscal year.  Mountain expense decreased $0.4 million, or 0.5%, to $70.4 million.  Mountain Reported EBITDA was flat at a loss of $30.8 million compared to the comparable quarter last fiscal year.

Lodging Segment
Lodging revenue increased $3.1 million, or 7.3%, in the fourth quarter of fiscal 2007 to $45.6 million from $42.5 million for the comparable quarter last fiscal year.  Lodging expense increased $4.4 million, or 10.5%, to $46.0 million.  Lodging Reported EBITDA decreased $1.3 million, or 149.3%, to a loss of $0.4 million compared to a profit of $0.8 million for the comparable quarter last fiscal year.

Resort – Combination of Mountain and Lodging Segments
Resort revenue, the combination of Mountain and Lodging revenue, increased $2.4 million, or 3.0%, in the fourth quarter of fiscal 2007 to $84.1 million from $81.6 million for the comparable quarter last fiscal year.  Resort expense increased $4.0 million, or 3.6%, to $116.4 million.  Fourth fiscal quarter Resort Reported EBITDA decreased $1.3 million to a loss of $31.2 million, a 4.3% decrease over the comparable quarter last fiscal year.  Resort Reported EBITDA excluding stock-based compensation decreased $1.7 million, or 5.9%, to $30.2 million.

Real Estate Segment
Real Estate revenue decreased $29.9 million, or 70.7%, in the fourth quarter of fiscal 2007 to $12.4 million from $42.4 million for the comparable quarter last fiscal year.  Real Estate expense decreased 59.2% to $13.4 million.  Real Estate Reported EBITDA for the fourth quarter of fiscal 2007, decreased $11.2 million, or 109.6%, to a loss of $1.0 million compared to a profit of $10.2 million in the comparable quarter last fiscal year.

Total Performance – Fourth Quarter
Total revenue decreased $27.5 million, or 22.2%, in the fourth quarter of fiscal 2007 to $96.5 million from $124.0 million for the comparable quarter last fiscal year.  Loss from operations for the quarter increased $9.8 million, or 21.8%, to $54.9 million.  The Company recorded total pre-tax stock-based compensation expense of $1.5 million in the three months ended July 31, 2007, compared to $1.8 million for the three months ended July 31, 2006.
The Company reported fourth quarter fiscal 2007 net loss of $34.3 million, or $0.88 per diluted share, compared to net loss of $31.3 million, or $0.80 per diluted share, for the same quarter last fiscal year.  Excluding stock-based compensation expense, the Company’s net loss for the fourth quarter of fiscal 2007 would have been $33.4 million, or $0.85 per diluted share, compared to net loss of $30.1 million excluding stock-based compensation, or $0.78 per diluted share, for the same quarter last fiscal year.

Business Commentary and Outlook
Robert Katz, Chief Executive Officer, commented, “I am very pleased with our fiscal 2007 results.  Our seasonally low fourth quarter results were clearly in-line with our expectations and most importantly our full fiscal year 2007 results produced a 34.2% improvement in net income.  This was primarily achieved due to extremely strong Resort results with Resort Reported EBITDA up 16.3% for the year.  The favorable Resort results were driven by a 7.0% increase in destination visitation at our Colorado mountain resorts, a 10.3% increase in effective ticket price (“ETP”) for all of our resorts, a 17.7% increase in season pass revenue, corresponding strong revenue increases in our ancillary businesses including ski school, dining and retail/rental and an 8.5% and 9.5% increase in average daily rates and revenue per available room, respectively, at our lodging properties on a same store basis and despite some challenging weather conditions, especially at our Heavenly resort.  Specifically in our Mountain segment, these metrics helped produce a 7.2% increase in revenue and very strong flow through leading to a 14.6% increase in EBITDA compared to the prior fiscal year.  For the 2006/2007 ski season, Breckenridge, Vail and Keystone were the three most visited ski resorts in the United States, and Heavenly and Beaver Creek also were in the top ten.  All five resorts also again finished in the top 20 Ski Magazine rankings.  Our Company’s mission is Extraordinary Resorts – Exceptional Experiences.  The quality rankings are a testament to our passionate employee base creating the top-notch service levels our guests enjoy, together with the iconic nature of our resorts themselves.  The resorts are further enhanced by our continuous capital investments, including our significant base area improvements driven by our real estate development.  The continuous growth in ETP is certainly a strong indication that our guests see value in everything we put into the experience and the investments we make at our resorts.  The guest experience is also greatly enhanced by our Lodging segment.  The Lodging results for fiscal 2007, with Reported EBITDA up 38.8% were a reflection of the strong performance from our owned or managed hotels and condominiums at the base of our Colorado resorts, which leveraged the positive destination visitation trends in our Mountain segment.  Our Lodging results also included revenue associated with termination fees, reflective of the transition of replacing a few previously managed lodging properties outside of our mountain resorts with several recently announced new RockResorts luxury resorts in truly iconic locations.”
Katz added, “While fiscal 2007 was certainly a success for Vail Resorts, we are currently busy looking to make fiscal 2008 and beyond even more successful.  With our marketing activities in full force, we are well underway on our sales of season passes, which in fiscal 2007 comprised approximately 25% of our total lift revenue.  Our season pass sales to date for the 2007/2008 season have increased 4% in units and 16% in sales dollars, over the same period last year.  We believe that the increase in season pass sales at this point in our selling process is in large part due to a higher number of earlier renewals, combined with an 11% increase in effective pass price to date.  In addition, bookings through our central reservations systems for our five mountain resorts are up 3% in room nights and 13% in sales dollars over the same time last year.  Both of these metrics are early performance indicators as we continue to build momentum for the approaching winter season.”
Commenting on what is new for the upcoming 2007/2008 ski season, Katz said, “We have also been focused this summer on making significant capital investments in our Resorts.  This season, we open Beaver Creek’s Buckaroo Express Gondola, the new children’s gondola, that will further enhance what is arguably the premier children’s ski and snowboard school in North America; unveil Vail’s two new high-speed quad chairlifts replacing chairs 10 and 14, which will allow more convenient and faster access to its Back Bowls, Blue Sky Basin and Two Elk Restaurant; and open Heavenly’s new high-speed Olympic Express chairlift, which will provide access to hundreds of acres of tree and glades skiing in the North Bowl area and their new Heavenly Sky Flyer, which will take people on a 50-mile-an-hour zip line ride right into a spectacular view of Lake Tahoe.  With these and many other capital investment projects, we lead the way in offering our guests a truly unique experience.”
Turning to real estate, Katz said, “Our real estate development projects provide us with an opportunity to reshape the landscape at the base of our mountain resorts and drive our guest experience.  Fiscal 2008 will mark an exciting time for our Company as we begin to transition from construction of our vertical real estate development projects to closing on these projects.  Not only do these developments expand the destination bed base for our mountain resorts, they often include a number of amenities, which also benefit our resorts.  We have 100% of the units at both The Arrabelle and The Lodge at Vail Chalets projects under contract; and in fiscal 2008, we expect that we will close on all of The Arrabelle units and a portion of The Lodge at Vail Chalets, with the remainder of The Chalets closing in early fiscal 2009.  January 2008 will mark the grand opening of The Arrabelle’s hotel and commercial components.  In addition to world class skiing and snowboarding accessed via the gondola just steps away, lodging guests at The Arrabelle will experience the highest level of amenities and services.  The marketing of The Ritz-Carlton Residences, Vail continues with 71 whole ownership two- to six-bedroom condominium units and 45 fractional ownership units.  We currently have a total of 46 whole ownership units and all 45 fractional units under contract, representing 66% of total expected revenue.  At our Crystal Peak Lodge development on Peak 7 in Breckenridge, we have 45 of the 46 units under contract and construction is underway.  This winter, we plan to begin marketing the first building of One Ski Hill Place at Breckenridge Peak 8, the first in a phased five to six building multi-use development, with the first building including 90 ski-in/ski-out residences ranging from studio to four-bedroom with approximately 102,000 saleable residential square feet.”
As an update on the Vail Mountain Club, Katz added, “The marketing of the Vail Mountain Club, an exclusive private club steps from the Vista Bahn Express lift, is on-going with activity expected to intensify in the winter months.  To date, we have sold 110 full memberships, which include parking privileges, and an additional 123 social memberships, which exclude parking representing total sales commitments of $39.9 million of total proceeds when paid in full.”
On the Company’s lodging business, Katz commented, “We are excited with the recent announced expansions of our RockResorts luxury hotel portfolio including the addition of The Landings St. Lucia, located on Rodney Bay, St. Lucia, in the West Indies.  RockResorts will manage the resort operations including 231 luxury suites ranging from 900 to 2,300 square feet, spa facilities and restaurants as well as the resort's private yacht harbor and beach club.  The Landings St. Lucia will open in four phases, with phase one scheduled to open in December 2007.  We continue to seek select opportunities to manage properties of distinction outside of our mountain resorts not only in the United States, but also into the Caribbean and other warm weather destinations, as we further diversify the incredible landscapes and experiences available within our collection of world-class resorts.”
Katz said, “We would like to take this opportunity to announce our guidance for fiscal 2008.  We expect to continue to drive year-over-year performance and are very optimistic for the upcoming season as we conclude another record fiscal year.  Based on our current estimates, we expect full year Resort Reported EBITDA, the combination of our Mountain and Lodging segments, to range from $239 million to $249 million and Resort Reported EBITDA excluding stock-based compensation expense to range from $245 million to $255 million.  The Resort guidance includes a range for Mountain Reported EBITDA of $228 million to $238 million and Mountain Reported EBITDA excluding stock-based compensation expense of $233 million to $243 million, while we expect Lodging Reported EBITDA to range from $8 million to $14 million and Lodging Reported EBITDA excluding stock-based compensation expense expected to range from $9 million to $15 million.  Real Estate Reported EBITDA is expected to range from $54 million to $60 million and Real Estate Reported EBITDA excluding stock-based compensation expense is expected to range from $57 million to $63 million.  Based on our current estimates, we expect net income to range from $112 million to $122 million and net income excluding stock-based compensation expense to range from $117 million to $127 million.  This includes an assumption that we will receive payment of the arbitration award in fiscal 2008 relating to the termination of RockResorts’ Cheeca Lodge & Spa management agreement. Katz concluded, “In August 2007, we continued our previously announced share repurchase program, resulting in the repurchase of 232,504 shares at an average price of $50.31 for a total amount of $11.7 million.  Since inception of this program in fiscal 2006, the Company has repurchased 906,004 shares at an average price of $41.44 for a total amount of approximately $37.5 million, with 2,093,996 shares remaining available under the existing repurchase authorization.  Our purchases under this program are reviewed with our Board quarterly and are based on a number of factors as we evaluate the appropriate uses of our excess cash, including but not limited to the share repurchase program.”

CONFERENCE CALL
For further discussion of the contents of this press release, please listen to our live webcast today at 11:00 am EDT, available at www.vailresorts.com in the Investor Relations section.  In order to access the non-GAAP financial information that will be referenced on the call, click on www.vailresorts.com/investors.
 
ANNUAL REPORT ON FORM 10-K
The Company today will file its Annual Report on Form 10-K for the fiscal year ended July 31, 2007, with the Securities and Exchange Commission, which report will be made available on the Company’s website in the SEC Filings section in the Investor Relations section of our website at www.vailresorts.com.  Additionally, stockholders may receive a hard copy of the Annual Report on Form 10-K, which includes the Company’s audited financial statements, free of charge upon request. Written requests should be sent to the attention of the Corporate Secretary at Vail Resorts Inc., 390 Interlocken Crescent, Suite 1000, Broomfield, Colorado 80021.

Vail Resorts, Inc. is the leading mountain resort operator in the United States.  The Company's subsidiaries operate the mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado, Heavenly in California and Nevada and the Grand Teton Lodge Company in Jackson Hole, Wyoming.  The Company's subsidiary, RockResorts, a luxury resort hotel company, manages casually elegant properties across the United States and the Caribbean.  Vail Resorts Development Company is the real estate planning, development and construction subsidiary of Vail Resorts, Inc.  Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN).  The Vail Resorts company website is www.vailresorts.com and consumer website is www.snow.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: economic downturns; terrorist acts upon the United States; threat of or actual war; unfavorable weather conditions; our ability to obtain financing on terms acceptable to us to finance our real estate investments, capital expenditures and growth strategy; our ability to continue to grow our resort and real estate operations; competition in our mountain and lodging businesses; our ability to hire and retain a sufficient seasonal workforce; our ability to successfully initiate and/or complete real estate development projects and achieve the anticipated financial benefits from such projects; implications arising from new Financial Accounting Standards Board (“FASB”)/governmental legislation, rulings or interpretations; our reliance on government permits or approvals for our use of federal land or to make operational improvements; our ability to integrate and successfully operate future acquisitions; and adverse consequences of current or future legal claims.  All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.  All guidance and forward-looking statements in this press release are made as of the date hereof and we do not undertake any obligation to update any forecast or forward-looking statements, except as may be required by law.  Investors are also directed to other risks discussed in documents filed by the Company with the Securities and Exchange Commission.



Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
                   
       
Three Months Ended
       
July 31,
       
2007
2006
Net revenue:
           
 
Mountain
$
38,475
 
$
39,163
 
 
Lodging
 
45,604
   
42,486
 
 
Real estate
 
12,436
   
42,378
 
   
Total net revenue
 
96,515
   
124,027
 
Operating expense:
           
 
Mountain
 
70,353
   
70,729
 
 
Lodging
 
46,019
   
41,644
 
 
Real estate
 
13,420
   
32,853
 
   
Total segment operating expense
 
129,792
   
145,226
 
Other operating (expense) income:
           
 
Depreciation and amortization
 
(20,807
)
 
(22,802
)
 
Relocation and separation charges
 
(32
)
 
(1,317
)
 
Asset impairment charge
 
--
   
(75
)
 
Mold remediation credit
 
--
   
559
 
 
Loss on disposal of fixed assets, net
 
(751
)
 
(200
)
Loss from operations
 
(54,867
)
 
(45,034
)
 
Mountain equity investment income, net
 
1,068
   
792
 
 
Real estate equity investment loss
 
--
   
711
 
 
Investment income
 
3,588
   
2,605
 
 
Interest expense, net
 
(7,739
)
 
(8,690
)
 
Loss on sale of business
 
(38
)
 
--
 
 
Contract dispute charges
 
(181
)
 
(2,466
)
 
Loss on put option, net
 
--
   
(1,133
)
 
Minority interest in loss of consolidated subsidiaries, net
 
1,903
   
1,965
 
Loss before benefit for income taxes
 
(56,266
)
 
(51,250
)
 
Benefit for income taxes
 
21,944
   
19,987
 
Net loss
$
(34,322
)
$
(31,263
)
                   
Per share amounts:
           
 
Basic net loss per share
$
(0.88
)
$
(0.80
)
 
Diluted net loss per share
$
(0.88
)
$
(0.80
)
                   
Other Data:
           
Mountain Reported EBITDA
$
(30,810
)
$
(30,774
)
Mountain Reported EBITDA excluding stock-based compensation
$
(30,051
)
$
(29,742
)
Lodging Reported EBITDA
$
(415
)
$
842
 
Lodging Reported EBITDA excluding stock-based compensation
$
(183
)
$
1,193
 
Resort Reported EBITDA
$
(31,225
)
$
(29,932
)
Resort Reported EBITDA excluding stock-based compensation
$
(30,234
)
$
(28,549
)
Real Estate Reported EBITDA
$
(984
)
$
10,236
 
Real Estate Reported EBITDA excluding stock-based compensation
$
(451
)
$
10,677
 




Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
       
       
Twelve Months Ended
       
July 31,
       
2007
2006
Net revenue:
           
 
Mountain
$
665,377
 
$
620,441
 
 
Lodging
 
162,451
   
155,807
 
 
Real estate
 
112,708
   
62,604
 
   
Total net revenue
 
940,536
   
838,852
 
Operating expense:
           
 
Mountain
 
462,708
   
443,116
 
 
Lodging
 
144,252
   
142,693
 
 
Real estate
 
115,190
   
56,676
 
   
Total segment operating expense
 
722,150
   
642,485
 
Other operating (expense) income:
           
 
Depreciation and amortization
 
(87,664
)
 
(86,098
)
 
Relocation and separation charges
 
(1,433
)
 
(5,096
)
 
Asset impairment charges
 
--
   
(210
)
 
Mold remediation credit
 
--
   
1,411
 
 
Loss on disposal of fixed assets, net
 
(1,083
)
 
(1,035
)
Income from operations
 
128,206
   
105,339
 
 
Mountain equity investment income, net
 
5,059
   
3,876
 
 
Real estate equity investment income
 
--
   
791
 
 
Investment income
 
12,403
   
7,995
 
 
Interest expense, net
 
(32,625
)
 
(36,478
)
 
(Loss) gain on sale of businesses, net
 
(639
)
 
4,625
 
 
Contract dispute charges
 
(4,642
)
 
(3,282
)
 
Gain (loss) on put options, net
 
690
   
(1,212
)
 
Other income, net
 
--
   
50
 
 
Minority interest in income of consolidated subsidiaries, net
 
(7,801
)
 
(6,694
)
Income before provision for income taxes
 
100,651
   
75,010
 
 
Provision for income taxes
 
(39,254
)
 
(29,254
)
Net income
$
61,397
 
$
45,756
 
             
Per share amounts:
           
 
Basic net income per share
$
1.58
 
$
1.21
 
 
Diluted net income per share
$
1.56
 
$
1.19
 
             
Other Data:
           
Mountain Reported EBITDA
$
207,728
 
$
181,201
 
Mountain Reported EBITDA excluding stock-based compensation
$
211,552
 
$
184,886
 
Lodging Reported EBITDA
$
18,199
 
$
13,114
 
Lodging Reported EBITDA excluding stock-based compensation
$
19,290
 
$
14,448
 
Resort Reported EBITDA
$
225,927
 
$
194,315
 
Resort Reported EBITDA excluding stock-based compensation
$
230,842
 
$
199,334
 
Real Estate Reported EBITDA
$
(2,482
)
$
6,719
 
Real Estate Reported EBITDA excluding stock-based compensation
$
(399
)
$
8,223
 



Vail Resorts, Inc.
 
Resort Revenue by Business Line and Skier Visits
 
(In thousands, except effective ticket price (“ETP”))
 
(Unaudited)
 
                                           
   
Three Months Ended
Percentage
 
Twelve Months Ended
 
   
July 31,
Increase
 
July 31,
     Percentage
   
2007
2006
 (Decrease) 
2007
2006
Increase
 
Business Line
                                         
Lift tickets
 
$
--
 
$
--
 
na
     
$
286,997
 
$
263,036
 
9.1
 
%
 
Ski school
   
--
   
--
 
na
       
78,848
   
72,628
 
8.6
 
%
 
Dining
   
4,675
   
3,912
 
19.5
 
%
   
59,653
   
56,657
 
5.3
 
%
 
Retail/rental
   
19,332
   
17,641
 
9.6
 
%
   
160,542
   
149,350
 
7.5
 
%
 
Other
   
14,468
   
17,610
 
(17.8
)
%
   
79,337
   
78,770
 
0.7
 
%
 
Total Mountain Revenue
 
$
38,475
 
$
39,163
 
(1.8
)
%
 
$
665,377
 
$
620,441
 
7.2
 
%
 
                                           
Total Lodging Revenue
 
$
45,604
 
$
42,486
 
7.3
 
%
 
$
162,451
 
$
155,807
 
4.3
 
%
 
                                           
Total Resort Revenue
 
$
84,079
 
$
81,649
 
3.0
 
%
 
$
827,828
 
$
776,248
 
6.6
 
%
 

   
Twelve Months Ended
Percentage
   
July 31,
Increase
   
2007
2006
 (Decrease)
 
Skier Visits
                     
Breckenridge
   
1,650
   
1,620
 
1.9
 
%
 
Vail
   
1,608
   
1,676
 
(4.1
)
%
 
Keystone
   
1,171
   
1,094
 
7.0
 
%
 
Heavenly
   
900
   
1,023
 
(12.0
)
%
 
Beaver Creek
   
890
   
875
 
1.7
 
%
 
Total Skier Visits
   
6,219
   
6,288
 
(1.1
)
%
 
                       
ETP
 
$
46.15
 
$
41.83
 
10.3
 
%
 

Key Balance Sheet Data
(In thousands)
(Unaudited)
       
     
As of July 31,
     
2007
 
2006
Real estate held for sale and investment
 
$
357,586
 
$
259,384
Total stockholders' equity
   
714,039
   
642,777
             
Long-term debt
   
593,733
   
525,313
Long-term debt due within one year
   
377
   
5,915
Total debt
   
594,110
   
531,228
Less: cash and cash equivalents
   
230,819
   
191,794
 
Net debt
 
$
363,291
 
$
339,434

Reconciliation of Non-GAAP Financial Measures

Resort, Mountain, Lodging and Real Estate Reported EBITDA and Resort, Mountain, Lodging and Real Estate Reported EBITDA excluding stock-based compensation have been presented herein as measures of the Company's financial operating performance.  Reported EBITDA, Reported EBITDA excluding stock-based compensation and Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents) are not measures of financial performance or liquidity under accounting principles generally accepted in the United States of America ("GAAP"), and they might not be comparable to similarly titled measures of other companies.  Reported EBITDA, Reported EBITDA excluding stock-based compensation and Net Debt do not purport to represent cash flows generated by operating, investing or financing activities or other financial statement data and should not be considered in isolation or as a substitute for measures of financial performance or liquidity prepared in accordance with GAAP.  The Company believes that Reported EBITDA and Reported EBITDA excluding stock-based compensation are indicative measures of the Company's operating performance, and each similar to performance metrics generally used by investors to evaluate companies in the resort and lodging industries.  The Company primarily uses Reported EBITDA excluding stock-based compensation targets in determining management bonuses.
 

 
Presented below is a reconciliation of Reported EBITDA and Reported EBITDA excluding stock-based compensation to net income (loss) for the Company calculated in accordance with GAAP for the three and twelve months ended July 31, 2007 and 2006.
 
       
(In thousands)
       
Three Months Ended
       
July 31,
       
(Unaudited)
       
2007
 
2006
Mountain revenue, net
$
38,475
   
$
39,163
 
Mountain operating expense excluding stock-based compensation
 
(69,594
)
   
(69,697
)
Mountain equity investment income, net
 
1,068
     
792
 
 
Mountain Reported EBITDA excluding stock-based compensation
 
(30,051
)
   
(29,742
)
Mountain stock-based compensation
 
(759
)
   
(1,032
)
 
Mountain Reported EBITDA
 
(30,810
)
   
(30,774
)
               
Lodging revenue, net
 
45,604
     
42,486
 
Lodging operating expense excluding stock-based compensation
 
(45,787
)
   
(41,293
)
 
Lodging Reported EBITDA excluding stock-based compensation
 
(183
)
   
1,193
 
Lodging stock-based compensation
 
(232
)
   
(351
)
 
Lodging Reported EBITDA
 
(415
)
   
842
 
                 
Resort Reported EBITDA excluding stock-based compensation*
 
(30,234
)
   
(28,549
)
Resort Reported EBITDA*
 
(31,225
)
   
(29,932
)
               
Real Estate revenue, net
 
12,436
     
42,378
 
Real Estate operating expense excluding stock-based compensation
 
(12,887
)
   
(32,412
)
Real Estate equity investment loss
 
--
     
711
 
 
Real Estate Reported EBITDA excluding stock-based compensation
 
(451
)
   
10,677
 
Real Estate stock-based compensation
 
(533
)
   
(441
)
 
Real Estate Reported EBITDA
 
(984
)
   
10,236
 
Total Reported EBITDA
 
(32,209
)
   
(19,696
)
Depreciation and amortization
 
(20,807
)
   
(22,802
)
Relocation and separation charges
 
(32
)
   
(1,317
)
Asset impairment charge
 
--
     
(75
)
Mold remediation credit
 
--
     
559
 
Loss on disposal of fixed assets, net
 
(751
)
   
(200
)
Investment income
 
3,588
     
2,605
 
Interest expense, net
 
(7,739
)
   
(8,690
)
Loss on sale of business
 
(38
)
   
--
 
Contract dispute charges
 
(181
)
   
(2,466
)
Loss on put option, net
 
--
     
(1,133
)
Minority interest in loss of consolidated subsidiaries, net
 
1,903
     
1,965
 
Loss before benefit for income taxes
 
(56,266
)
   
(51,250
)
 
Benefit for income taxes
 
21,944
     
19,987
 
Net loss
$
(34,322
)
 
$
(31,263
)
* Resort represents the sum of Mountain and Lodging
 

 
       
(In thousands)
       
Twelve Months Ended
       
July 31,
       
(Unaudited)
       
2007
 
2006
Mountain revenue, net
$
665,377
   
$
620,441
 
Mountain operating expense excluding stock-based compensation
 
(458,884
)
   
(439,431
)
Mountain equity investment income, net
 
5,059
     
3,876
 
 
Mountain Reported EBITDA excluding stock-based compensation
 
211,552
     
184,886
 
Mountain stock-based compensation
 
(3,824
)
   
(3,685
)
 
Mountain Reported EBITDA
 
207,728
     
181,201
 
               
Lodging revenue, net
 
162,451
     
155,807
 
Lodging operating expense excluding stock-based compensation
 
(143,161
)
   
(141,359
)
 
Lodging Reported EBITDA excluding stock-based compensation
 
19,290
     
14,448
 
Lodging stock-based compensation
 
(1,091
)
   
(1,334
)
 
Lodging Reported EBITDA
 
18,199
     
13,114
 
                 
Resort Reported EBITDA excluding stock-based compensation*
 
230,842
     
199,334
 
Resort Reported EBITDA*
 
225,927
     
194,315
 
               
Real Estate revenue, net
 
112,708
     
62,604
 
Real Estate operating expense excluding stock-based compensation
 
(113,107
)
   
(55,172
)
Real Estate equity investment income
 
--
     
791
 
 
Real Estate Reported EBITDA excluding stock-based compensation
 
(399
)
   
8,223
 
Real Estate stock-based compensation
 
(2,083
)
   
(1,504
)
 
Real Estate Reported EBITDA
 
(2,482
)
   
6,719
 
Total Reported EBITDA
 
223,445
     
201,034
 
Depreciation and amortization
 
(87,664
)
   
(86,098
)
Relocation and separation charges
 
(1,433
)
   
(5,096
)
Asset impairment charges
 
--
     
(210
)
Mold remediation credit
 
--
     
1,411
 
Loss on disposal of fixed assets, net
 
(1,083
)
   
(1,035
)
Investment income
 
12,403
     
7,995
 
Interest expense, net
 
(32,625
)
   
(36,478
)
(Loss) gain on sale of businesses, net
 
(639
)
   
4,625
 
Contract dispute charges
 
(4,642
)
   
(3,282
)
Gain (loss) on put options, net
 
690
     
(1,212
)
Other income, net
 
--
     
50
 
Minority interest in income of consolidated subsidiaries, net
 
(7,801
)
   
(6,694
)
Income before provision for income taxes
 
100,651
     
75,010
 
 
Provision for income taxes
 
(39,254
)
   
(29,254
)
Net income
$
61,397
   
$
45,756
 
* Resort represents the sum of Mountain and Lodging


Presented below is a reconciliation of net income (loss) excluding stock-based compensation, tax effected, to net income (loss) of the Company calculated in accordance with GAAP for the three and twelve months ended July 31, 2007 and 2006.  Also presented is a reconciliation of net income (loss) per diluted share excluding stock-based compensation, tax effected, to net income (loss) per diluted share of the Company calculated in accordance with GAAP for the three and twelve months ended July 31, 2007 and 2006.  The Company has presented these non-GAAP measures as it believes that this presentation provides a more comparable measure of the Company's historical results from ongoing operations for the three and twelve months ended July 31, 2007 and July 31, 2006 to prior periods.

     
Three Months Ended
     
July 31,
   
(Unaudited)
(In thousands, except per share amounts)
 
2007
 
2006
Net loss excluding stock-based compensation
 
$
(33,370
)
 
$
(30,124
)
 
Stock-based compensation expense, before benefit from income taxes
   
(1,524
)
   
(1,824
)
 
Adjustment for benefit from income taxes
   
572
     
685
 
Net loss
 
$
(34,322
)
 
$
(31,263
)
                   
Diluted net loss per share excluding stock-based compensation
 
$
(0.85
)
 
$
(0.78
)
 
Stock-based compensation expense per diluted common share, before benefit
               
 
from income taxes
   
(0.04
)
   
(0.04
)
 
Adjustment for benefit from income taxes, per diluted common share
   
0.01
     
0.02
 
Diluted net loss per share
 
$
(0.88
)
 
$
(0.80
)
                   
     
Twelve Months Ended
     
July 31,
   
(Unaudited)
(In thousands, except per share amounts)
 
2007
 
2006
Net income excluding stock-based compensation
 
$
65,767
   
$
49,829
 
 
Stock-based compensation expense, before benefit from income taxes
   
(6,998
)
   
(6,523
)
 
Adjustment for benefit from income taxes
   
2,628
     
2,450
 
Net income
 
$
61,397
   
$
45,756
 
                   
Diluted net income per share excluding stock-based compensation
 
$
1.67
   
$
1.29
 
 
Stock-based compensation expense per diluted common share, before benefit
               
 
from income taxes
   
(0.18
)
   
(0.17
)
 
Adjustment for benefit from income taxes, per diluted common share
   
0.07
     
0.07
 
Diluted net income per share
 
$
1.56
   
$
1.19
 


A reconciliation of the low and high ends of the forecasted guidance range given for Reported EBITDA and Reported EBITDA excluding stock-based compensation for the Company's fiscal year ending July 31, 2008 is presented below.
 
(In thousands)
 
For the Year Ending
 
July 31, 2008
 
Low End Range
 
High End Range
Resort Reported EBITDA excluding stock-based compensation(1)
$
245,000
   
$
255,000
 
Resort segment stock-based compensation
 
(6,000
)
   
(6,000
)
Resort Reported EBITDA(1)
 
239,000
     
249,000
 
Real Estate Reported EBITDA excluding stock-based compensation
 
57,000
     
63,000
 
Real Estate segment stock-based compensation
 
(3,000
)
   
(3,000
)
Real Estate Reported EBITDA
 
54,000
     
60,000
 
Total Reported EBITDA
 
293,000
     
309,000
 
Depreciation and amortization
 
(89,000
)
   
(88,000
)
Loss on disposal of fixed assets, net
 
(1,000
)
   
(1,000
)
Investment income
 
13,200
     
13,200
 
Interest expense, net
 
(34,200
)
   
(33,800
)
Contract dispute credit, net(2)
 
8,500
     
8,500
 
Minority interest in income of consolidated subsidiaries, net
 
(6,300
)
   
(7,100
)
Income before provision for income taxes
 
184,200
     
200,800
 
Provision for income taxes
 
(72,200
)
   
(78,800
)
Net income
$
112,000
   
$
122,000
 

(1)  
Resort represents the sum of Mountain and Lodging. The Company provides Reported EBITDA ranges for the Mountain and Lodging segments, as well as for the two combined.  Readers are cautioned to recognize that the low end of the expected ranges provided for the Lodging and Mountain segments, while possible, do not sum to the low end of the Resort Reported EBITDA range provided because we do not necessarily expect or assume that we will actually hit the low end of both ranges, as the actual Resort Reported EBITDA will depend on the actual mix of the Lodging and Mountain components.  Similarly, the high end of the ranges for the Lodging and Mountain segments do not sum to the high end of the Resort range.
 
(2)  
Assumes that the Company will receive payment of the arbitration award relating to the termination of RockResorts’ Cheeca Lodge & Spa management agreement in fiscal 2008.

A reconciliation of the low and high ends of the forecasted guidance range given for net income excluding stock-based compensation for the Company's fiscal year ending July 31, 2008 is presented below.
 
(In thousands)
 
For the Year Ending
 
July 31, 2008
 
Low End Range
 
High End Range
  Net income excluding stock-based compensation
$
117,470
   
$
127,450
 
Stock-based compensation expense, before benefit from income taxes
 
(9,000
)
   
(9,000
)
Adjustment for benefit from income taxes
 
3,530
     
3,550
 
Net income
$
112,000
   
$
122,000