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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, 2020
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
https://cdn.kscope.io/dcbc078dd7b051b1debfdab82e4f7a5c-vaila07.jpg
Vail Resorts, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
 
51-0291762
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
390 Interlocken Crescent
 
 
Broomfield,
Colorado
 
80021
(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 class
Trading Symbol
Name of each exchange on which registered
Common Stock, $0.01 par value
MTN
New 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, 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 7, 2020, 40,251,595 shares of the registrant’s common stock were outstanding.




Table of Contents
 
 
 
 
PART I
FINANCIAL INFORMATION
Page
 
 
 
Item 1.
Financial Statements (unaudited).
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
 
PART II
OTHER 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, 2020
 
July 31, 2020
 
October 31, 2019
Assets
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 
$
462,212

 
$
390,980

 
$
136,326

Restricted cash
 
10,163

 
11,106

 
14,027

Trade receivables, net
 
208,540

 
106,664

 
87,301

Inventories, net
 
100,879

 
101,856

 
127,859

Other current assets
 
59,821

 
54,482

 
62,821

Total current assets
 
841,615

 
665,088

 
428,334

Property, plant and equipment, net (Note 7)
 
2,166,604

 
2,192,679

 
2,280,089

Real estate held for sale and investment
 
96,668

 
96,844

 
96,938

Goodwill, net (Note 7)
 
1,711,870

 
1,709,020

 
1,757,463

Intangible assets, net
 
313,445

 
314,776

 
324,178

Operating right-of-use assets
 
218,902

 
225,744

 
229,709

Other assets
 
41,420

 
40,081

 
41,036

Total assets
 
$
5,390,524

 
$
5,244,232

 
$
5,157,747

Liabilities and Stockholders’ Equity
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
Accounts payable and accrued liabilities (Note 7)
 
$
846,614

 
$
499,108

 
$
856,934

Income taxes payable
 
39,909

 
40,680

 
50,759

Long-term debt due within one year (Note 5)
 
63,707

 
63,677

 
63,807

Total current liabilities
 
950,230

 
603,465

 
971,500

Long-term debt, net (Note 5)
 
2,387,861

 
2,387,122

 
2,005,057

Operating lease liabilities
 
213,073

 
217,542

 
231,182

Other long-term liabilities (Note 7)
 
253,108

 
270,245

 
238,964

Deferred income taxes, net
 
210,525

 
234,191

 
188,608

Total liabilities
 
4,014,797

 
3,712,565

 
3,635,311

Commitments and contingencies (Note 9)
 


 


 


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, 46,412, 46,350 and 46,257 shares issued, respectively
 
464

 
464

 
462

Exchangeable shares, $0.01 par value, 35, 36 and 55 shares issued and outstanding, respectively (Note 4)
 

 

 
1

Additional paid-in capital
 
1,130,318

 
1,131,624

 
1,126,492

Accumulated other comprehensive loss
 
(52,387
)
 
(56,837
)
 
(27,269
)
Retained earnings
 
492,136

 
645,902

 
582,235

Treasury stock, at cost, 6,161, 6,161, and 6,000 shares, respectively (Note 11)
 
(404,411
)
 
(404,411
)
 
(379,433
)
Total Vail Resorts, Inc. stockholders’ equity
 
1,166,120

 
1,316,742

 
1,302,488

Noncontrolling interests
 
209,607

 
214,925

 
219,948

Total stockholders’ equity
 
1,375,727

 
1,531,667

 
1,522,436

Total liabilities and stockholders’ equity
 
$
5,390,524

 
$
5,244,232

 
$
5,157,747

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,
 
2020
 
2019
Net revenue:
 
 
 
Mountain and Lodging services and other
$
104,274

 
$
180,031

Mountain and Lodging retail and dining
27,258

 
83,559

Resort net revenue
131,532

 
263,590

Real Estate
254

 
4,180

Total net revenue
131,786

 
267,770

Operating expense (exclusive of depreciation and amortization shown separately below):
 
 
 
Mountain and Lodging operating expense
154,137

 
228,710

Mountain and Lodging retail and dining cost of products sold
17,132

 
37,735

General and administrative
59,029

 
75,055

Resort operating expense
230,298

 
341,500

Real Estate operating expense
1,450

 
5,293

Total segment operating expense
231,748

 
346,793

Other operating (expense) income:
 
 
 
Depreciation and amortization
(62,628
)
 
(57,845
)
Gain on sale of real property

 
207

Change in estimated fair value of contingent consideration (Note 8)
(802
)
 
(1,136
)
(Loss) gain on disposal of fixed assets and other, net
(569
)
 
2,267

Loss from operations
(163,961
)
 
(135,530
)
Mountain equity investment income, net
3,986

 
1,191

Investment income and other, net
343

 
277

Foreign currency gain on intercompany loans (Note 5)
540

 
360

Interest expense, net
(35,407
)
 
(22,690
)
Loss before benefit from income taxes
(194,499
)
 
(156,392
)
Benefit from income taxes
37,478

 
46,563

Net loss
(157,021
)
 
(109,829
)
Net loss attributable to noncontrolling interests
3,255

 
3,354

Net loss attributable to Vail Resorts, Inc.
$
(153,766
)
 
$
(106,475
)
Per share amounts (Note 4):
 
 
 
Basic net loss per share attributable to Vail Resorts, Inc.
$
(3.82
)
 
$
(2.64
)
Diluted net loss per share attributable to Vail Resorts, Inc.
$
(3.82
)
 
$
(2.64
)
Cash dividends declared per share
$

 
$
1.76

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,
 
 
2020
 
2019
Net loss
 
$
(157,021
)
 
$
(109,829
)
Foreign currency translation adjustments, net of tax
 
1,773

 
5,323

Change in estimated fair value of hedging instruments
 
4,655

 

Comprehensive loss
 
(150,593
)

(104,506
)
Comprehensive loss attributable to noncontrolling interests
 
1,277

 
2,492

Comprehensive loss attributable to Vail Resorts, Inc.
 
$
(149,316
)
 
$
(102,014
)
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 Stock
Additional Paid in Capital
Accumulated Other Comprehensive Loss
Retained Earnings
Treasury Stock
Total Vail Resorts, Inc. Stockholders’ Equity
Noncontrolling Interests
Total Stockholders’ Equity
 
Vail Resorts
Exchangeable
 
 
 
 
 
 
 
Balance, July 31, 2019
$
461

$
1

$
1,130,083

$
(31,730
)
$
759,801

$
(357,989
)
$
1,500,627

$
226,213

$
1,726,840

Comprehensive loss:
 
 
 
 
 
 
 
 
 
Net loss




(106,475
)

(106,475
)
(3,354
)
(109,829
)
Foreign currency translation adjustments and other, net of tax



4,461



4,461

862

5,323

Total comprehensive loss
 
 
 
 
 
 
(102,014
)
(2,492
)
(104,506
)
Stock-based compensation expense


5,251




5,251


5,251

Issuance of shares under share award plans, net of shares withheld for employee taxes
1


(8,842
)



(8,841
)

(8,841
)
Repurchase of common stock (Note 11)





(21,444
)
(21,444
)

(21,444
)
Dividends (Note 4)




(71,091
)

(71,091
)

(71,091
)
Distributions to noncontrolling interests, net







(3,773
)
(3,773
)
Balance, October 31, 2019
$
462

$
1

$
1,126,492

$
(27,269
)
$
582,235

$
(379,433
)
$
1,302,488

$
219,948

$
1,522,436

 
 
 
 
 
 
 
 
 
 
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, net of tax



(205
)


(205
)
1,978

1,773

Change in estimated fair value of hedging instruments



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

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,
 
 
2020
 
2019
Cash flows from operating activities:
 
 
 
 
Net loss
 
$
(157,021
)
 
$
(109,829
)
Adjustments to reconcile net loss to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
62,628

 
57,845

Stock-based compensation expense
 
5,754

 
5,251

Deferred income taxes, net
 
(36,199
)
 
(43,979
)
Other non-cash income, net
 
(3,237
)
 
(797
)
Changes in assets and liabilities:
 
 
 
 
Trade receivables, net
 
(102,387
)
 
184,821

Inventories, net
 
745

 
(27,967
)
Accounts payable and accrued liabilities
 
43,638

 
(26,505
)
Deferred revenue
 
303,308

 
194,597

Income taxes payable - excess tax benefit from share award exercises
 
(1,279
)
 
(2,535
)
Income taxes payable - other
 
(359
)
 
(9,405
)
Other assets and liabilities, net
 
(3,598
)
 
(12,158
)
Net cash provided by operating activities
 
111,993

 
209,339

Cash flows from investing activities:
 

 
 
Capital expenditures
 
(30,168
)
 
(52,621
)
Acquisition of businesses, net of cash acquired
 

 
(327,581
)
Other investing activities, net
 
894

 
3,448

Net cash used in investing activities
 
(29,274
)
 
(376,754
)
Cash flows from financing activities:
 

 
 
Proceeds from borrowings under Vail Holdings Credit Agreement
 

 
492,625

Proceeds from borrowings under Whistler Credit Agreement
 
18,021

 

Repayments of borrowings under Vail Holdings Credit Agreement
 
(15,625
)
 
(175,000
)
Repayments of borrowings under Whistler Credit Agreement
 
(3,834
)
 
(7,529
)
Employee taxes paid for share award exercises
 
(7,060
)
 
(8,842
)
Dividends paid
 

 
(71,091
)
Repurchases of common stock
 

 
(21,444
)
Other financing activities, net
 
(4,186
)
 
(10,279
)
Net cash (used in) provided by financing activities
 
(12,684
)
 
198,440

Effect of exchange rate changes on cash, cash equivalents and restricted cash
 
254

 
939

Net increase in cash, cash equivalents and restricted cash
 
70,289

 
31,964

Cash, cash equivalents and restricted cash:
 
 
 
 
Beginning of period
 
402,086

 
118,389

End of period
 
$
472,375

 
$
150,353

Non-cash investing activities:
 
 
 
 
Accrued capital expenditures
 
$
18,132

 
$
32,038

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 thirty-seven destination mountain resorts and regional ski areas:

https://cdn.kscope.io/dcbc078dd7b051b1debfdab82e4f7a5c-vrmapfy20.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 (“VRDC”), a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate segment, which owns, develops and sells real estate in and around the Company’s resort communities.


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, 2020. 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, 2020 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, receivables, other current assets and accounts payable and accrued liabilities approximate fair value due to their short-term nature. The fair value of amounts outstanding under the Company’s credit agreements and the Employee Housing Bonds (as defined in Note 5, Long-Term Debt) approximate book value due to the variable nature of the interest rate associated with the debt. The estimated fair value of the 6.25% Notes (as defined in Note 5, Long-Term Debt) is based on quoted market prices (a Level 2 input). The estimated fair value of the EPR Secured Notes and EB-5 Development Notes (each as defined in Note 5, Long-Term Debt), have been estimated using analyses based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input). The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, EPR Secured Notes and EB-5 Development Notes as of October 31, 2020 are presented below (in thousands):
 
October 31, 2020
 
Carrying Value
Estimated Fair Value
6.25% Notes
$
600,000

$
633,750

EPR Secured Notes
$
136,913

$
159,713

EB-5 Development Notes
$
48,480

$
48,660


Recently Issued Accounting Standards
Standards Being Evaluated
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” The ASU provides optional transition guidance, for a limited time, to companies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform. 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.


8



3.     Revenues
2020/2021 North American Credit Offer and Epic Coverage
As a result of the COVID-19 pandemic, the Company closed its North American destination mountain resorts, regional ski areas and retail stores early during the 2019/2020 North American ski season, beginning on March 15, 2020. Subsequently, the Company announced a credit offer for all existing 2019/2020 North American ski season pass product holders to purchase 2020/2021 North American ski season pass products at a discount (the “Credit Offer”). The Credit Offer discounts ranged from a minimum of 20% to a maximum of 80% for season pass holders, depending on the number of days the pass holder used their pass product during the 2019/2020 season and a credit, with no minimum, but up to 80% for multi-day pass products, such as the Epic Day Pass, based on total unused days. The Credit Offer was considered a contract modification which constituted a material right to 2019/2020 North American ski season guests and, as such, represents a separate performance obligation to which the Company allocated a transaction price of approximately $120.9 million. As a result, the Company deferred $120.9 million of pass product revenue, which would have otherwise been recognized as lift revenue during the year ended July 31, 2020. The Credit Offer expired on September 17, 2020 and the Company estimates the amount of Credit Offer discounts redeemed will be approximately $15.4 million less than the $120.9 million of deferred pass product revenue. As a result, the Company recognized $15.4 million as lift revenue during the three months ended October 31, 2020. The remaining deferred revenue associated with the Credit Offer will be recognized as lift revenue as the performance obligations are satisfied, which the Company expects will be primarily in the second and third quarters of the fiscal year ending July 31, 2021. In the event that a pass product holder obtains a refund under Epic Coverage (as discussed below) for the 2020/2021 North American ski season and is eligible to utilize their credit toward the purchase of a pass product purchase for the 2021/2022 North American ski season, a portion of this remaining deferred revenue will be recognized in the year ending July 31, 2022.
In April 2020, the Company announced Epic Coverage, which is included with the purchase of all 2020/2021 North American pass products for no additional charge. Epic Coverage offers refunds to 2020/2021 North American pass product holders if certain qualifying personal or resort closure events occur before or during the 2020/2021 North American ski season, as well as in the event that the pass product holder cannot reserve their preferred days between December 8, 2020 and April 4, 2021, and the amount of expected refunds will reduce the amount of pass product revenue recognized during the year ending July 31, 2021. To estimate the amount of refunds under Epic Coverage, the Company considered historical claims data for personal events, current travel restrictions (primarily associated with travel into Canada from the United States and other countries), state, county and local regulations (e.g. quarantines and stay-at-home orders), the ability for the Company’s pass holders to make reservations on their preferred days, and the Company’s current operating plans for its resorts. The Company believes the estimates of refunds are reasonable; however, actual results could vary materially from such estimates, and such estimates will be remeasured at each reporting date.
Additionally, for the 2020/2021 North American ski season, the Company introduced Epic Mountain Rewards, a program which provides pass product holders a discount of 20% off on-mountain food and beverage, lodging, group ski and ride school lessons, equipment rentals and more at the Company's North American owned and operated Resorts. Epic Mountain Rewards constitutes a material right to pass product holders and as a result, the Company will allocate a portion of the transaction price based on the standalone selling price of the customer option to acquire additional goods or services at a discount and the expected redemption rate.

9




Disaggregation of Revenues
The following table presents net revenues disaggregated by segment and major revenue type for the three months ended October 31, 2020 and 2019 (in thousands):
 
 
Three Months Ended October 31,
 
 
2020
 
2019
Mountain net revenue:
 
 
 
 
Lift
 
$
33,091

 
$
41,829

Ski School
 
2,044

 
8,534

Dining
 
3,068

 
21,629

Retail/Rental
 
22,306

 
47,915

Other
 
34,205

 
60,925

Total Mountain net revenue
 
$
94,714

 
$
180,832

Lodging net revenue:
 
 
 
 
     Owned hotel rooms
 
$
7,365

 
$
19,946

Managed condominium rooms
 
9,329

 
14,740

Dining
 
1,093

 
18,143

Transportation
 

 
2,351

Golf
 
8,454

 
10,221

Other
 
9,374

 
14,166

 
 
35,615

 
79,567

Payroll cost reimbursements
 
1,203

 
3,191

Total Lodging net revenue
 
$
36,818

 
$
82,758

Total Resort net revenue
 
$
131,532

 
$
263,590

Total Real Estate net revenue
 
254

 
4,180

Total net revenue
 
$
131,786

 
$
267,770


Contract Balances
Deferred revenue balances of a short-term nature were $559.3 million and $256.4 million as of October 31, 2020 and July 31, 2020, respectively. Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, were $120.7 million and $121.9 million as of October 31, 2020 and July 31, 2020, respectively. For the three months ended October 31, 2020, the Company recognized approximately $35.8 million of revenue that was included in the deferred revenue balance as of July 31, 2020. As of October 31, 2020, the weighted average remaining period over which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 16 years. Trade receivable balances were $208.5 million and $106.7 million as of October 31, 2020 and July 31, 2020, respectively.

Costs to Obtain Contracts with Customers
As of October 31, 2020, $8.8 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 2021, 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 earnings per share (“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.


10



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, 2020 and 2019 (in thousands, except per share amounts):
 
 
Three Months Ended October 31,
 
 
2020
 
2019
 
 
Basic
 
Diluted
 
Basic
 
Diluted
Net loss per share:
 
 
 
 
 
 
 
 
Net loss attributable to Vail Resorts
 
$
(153,766
)
 
$
(153,766
)
 
$
(106,475
)
 
$
(106,475
)
Weighted-average Vail Shares outstanding
 
40,213

 
40,213

 
40,286

 
40,286

Weighted-average Exchangeco Shares outstanding
 
35

 
35

 
56

 
56

Total Weighted-average shares outstanding
 
40,248

 
40,248

 
40,342

 
40,342

Effect of dilutive securities
 

 

 

 

Total shares
 
40,248

 
40,248

 
40,342

 
40,342

Net loss per share attributable to Vail Resorts
 
$
(3.82
)
 
$
(3.82
)
 
$
(2.64
)
 
$
(2.64
)

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 0.6 million and 0.7 million for the three months ended October 31, 2020 and 2019, respectively.

Dividends
The Company did not pay cash dividends during the three months ended October 31, 2020. The Company paid cash dividends of $1.76 per share ($71.1 million in the aggregate) during the three months ended October 31, 2019.

5.    Long-Term Debt
Long-term debt, net as of October 31, 2020July 31, 2020 and October 31, 2019 is summarized as follows (in thousands):
 
 
Maturity
 
October 31, 2020
 
July 31, 2020
 
October 31, 2019
Vail Holdings Credit Agreement term loan (a)
 
2024
 
$
1,187,500

 
$
1,203,125

 
$
1,250,000

Vail Holdings Credit Agreement revolver (a)
 
2024
 

 

 
190,000

6.25% Notes
 
2025
 
600,000

 
600,000

 

Whistler Credit Agreement revolver (b)
 
2024
 
72,778

 
58,236

 
37,962

EPR Secured Notes (c)
 
2034-2036
 
114,162

 
114,162

 
114,162

EB-5 Development Notes
 
2021
 
51,500

 
51,500

 
52,000

Employee housing bonds
 
2027-2039
 
52,575

 
52,575

 
52,575

Canyons obligation
 
2063
 
347,481

 
346,034

 
341,704

Other
 
2020-2033
 
18,115

 
18,616

 
19,583

Total debt
 
 
 
2,444,111

 
2,444,248

 
2,057,986

Less: Unamortized premiums, discounts and debt issuance costs
 
 
 
(7,457
)
 
(6,551
)
 
(10,878
)
Less: Current maturities (d)
 
 
 
63,707

 
63,677

 
63,807

Long-term debt, net
 
 
 
$
2,387,861

 
$
2,387,122

 
$
2,005,057




11



(a)
On April 28, 2020, Vail Holdings, Inc. (“VHI”), certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent, and certain Lenders entered into a Third Amendment to the Vail Holdings Credit Agreement (the “Third Amendment”). Pursuant to the Third Amendment, among other terms, VHI is exempt from complying with the Vail Holdings Credit Agreement’s maximum leverage ratio and minimum interest coverage ratio financial maintenance covenants for each of the fiscal quarters ending July 31, 2020 through January 31, 2022 (unless VHI makes a one-time irrevocable election to terminate such exemption period prior to such date) (such period, the “Financial Covenants Temporary Waiver Period”), after which VHI will again be required to comply with such covenants starting with the fiscal quarter ending April 30, 2022 (or such earlier fiscal quarter as elected by VHI).

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

During the Financial Covenants Temporary Waiver Period, borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50% and, for amounts in excess of $400.0 million, LIBOR is subject to a floor of 0.75%. In addition, pursuant to the Third Amendment, the amount by which the Company is able to increase availability (under the revolver or in the form of term loans) was increased to an aggregate principal amount not to exceed the greater of (i) $2.25 billion and (ii) the product of 3.25 and the trailing four-quarter Adjusted EBITDA (as defined in the Credit Agreement).

As of October 31, 2020, the Vail Holdings Credit Agreement consists of a $500.0 million revolving credit facility and a $1.2 billion outstanding term loan facility. The term loan facility is subject to quarterly amortization of principal of approximately $15.6 million (which began in January 2020), in equal installments, for a total of 5% of principal payable in each year and the final payment of all amounts outstanding, plus accrued and unpaid interest due in September 2024. The proceeds of the loans made under the Vail Holdings Credit Agreement may be used to fund the Company’s working capital needs, capital expenditures, acquisitions, investments and other general corporate purposes, including the issuance of letters of credit, subject to the Financial Covenants Temporary Waiver Period limitations. Borrowings under the Vail Holdings Credit Agreement, including the term loan facility, bear interest annually at LIBOR plus 2.50% as of October 31, 2020 (2.65% for the first $400.0 million of borrowings, and for amounts in excess of $400.0 million for which LIBOR is subject to a floor of 0.75% during the Financial Covenants Temporary Waiver Period, 3.25%). Other than as impacted by the provisions in place during the Financial Covenants Temporary Waiver Period, interest rate margins may fluctuate based upon the ratio of the Company’s Net Funded Debt to Adjusted EBITDA on a trailing four-quarter basis. 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, 2020).
(b)
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, 2020, all borrowings under the Whistler Credit Agreement were made in Canadian dollars and by way of the issuance of bankers’ acceptances plus 2.25% (approximately 2.77% as of October 31, 2020). The Whistler Credit Agreement also includes a quarterly unused commitment fee based on the Consolidated Total Leverage Ratio, which as of October 31, 2020 is equal to 0.5063% per annum. 
(c)
On September 24, 2019, in conjunction with the acquisition of Peak Resorts (see Note 6, Acquisitions), the Company assumed various secured borrowings (the “EPR Secured Notes”) under the master credit and security agreements and other related agreements, as amended, (collectively, the “EPR Agreements”) with EPT Ski Properties, Inc. and its affiliates (“EPR”). 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, 2020, interest on this note accrued at a rate of 11.21%.
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, 2020, interest on this note accrued at a rate of 10.91%.

12



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, 2020, interest on this note accrued at a rate of 10.91%.
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, 2020, interest on this note accrued at a rate of 11.78%.
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, 2020, interest on this note accrued at a rate of 8.57%.
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, 2020 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 Balance Sheet.
(d)
Current maturities represent principal payments due in the next 12 months.
Aggregate maturities of debt outstanding as of October 31, 2020 reflected by fiscal year (August 1 through July 31) are as follows (in thousands):
 
Total
2021 (November 2020 through July 2021)
$
53,699

2022
115,195

2023
63,740

2024
63,796

2025
1,626,662

Thereafter
521,019

Total debt
$
2,444,111


The Company recorded gross interest expense of $35.4 million and $22.7 million for the three months ended October 31, 2020 and 2019, respectively, of which $0.7 million and $0.4 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 $0.5 million and $0.4 million, respectively, of non-cash foreign currency gains on the intercompany loan to Whistler Blackcomb for the three months ended October 31, 2020 and 2019 on the Company’s Consolidated Condensed Statements of Operations.


13



6.    Acquisitions
Peak Resorts
On September 24, 2019, the Company, through a wholly-owned subsidiary, acquired 100 percent of the outstanding stock of Peak Resorts, Inc. (“Peak Resorts”) at a purchase price of $11.00 per share or approximately $264.5 million. In addition, contemporaneous with the closing of the transaction, Peak Resorts was required to pay approximately $70.2 million of certain outstanding debt instruments and lease obligations in order to complete the transaction. Accordingly, the total purchase price, including the repayment of certain outstanding debt instruments and lease obligations, was approximately $334.7 million, for which the Company borrowed approximately $335.6 million under the Vail Holdings Credit Agreement (see Note 5, Long-Term Debt) to fund the acquisition, repayment of debt instruments and lease obligations, and associated acquisition related expenses. The newly acquired resorts include: Mount Snow in Vermont; Hunter Mountain in New York; Attitash Mountain Resort, Wildcat Mountain and Crotched Mountain in New Hampshire; Liberty Mountain Resort, Roundtop Mountain Resort, Whitetail Resort, Jack Frost and Big Boulder in Pennsylvania; Alpine Valley, Boston Mills, Brandywine and Mad River Mountain in Ohio; Hidden Valley and Snow Creek in Missouri; and Paoli Peaks in Indiana. The Company assumed the Special Use Permits from the U.S. Forest Service for Attitash, Mount Snow and Wildcat Mountain, and assumed the land leases for Mad River and Paoli Peaks. The acquisition included the mountain operations of the resorts, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski and snowboard school facilities), as well as lodging operations at certain resorts.
The following summarizes the purchase consideration and the purchase price allocation to estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands):
 
Acquisition Date Estimated Fair Value
Current assets
$
19,578

Property, plant and equipment
427,793

Goodwill
135,879

Identifiable intangible assets
19,221

Other assets
16,203

Assumed long-term debt
(184,668
)
Other liabilities
(99,275
)
Net assets acquired
$
334,731


Identifiable intangible assets acquired in the transaction were primarily related to trade names and property management contracts, which had acquisition date estimated fair values of approximately $15.8 million and $3.1 million, respectively. The process of estimating the fair value of the property, plant, and equipment includes the use of certain estimates and assumptions related to replacement cost and physical condition at the time of acquisition. The excess of the purchase price over the aggregate estimated fair values of the assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of the resorts and other factors, and is not expected to be deductible for income tax purposes. The Company assumed various debt obligations of Peak Resorts, which were recorded at their respective estimated fair values as of the acquisition date (see Note 5, Long-Term Debt). The Company recognized $3.2 million of acquisition related expenses associated with the transaction within Mountain and Lodging operating expense in its Consolidated Condensed Statement of Operations for the three months ended October 31, 2019. The operating results of Peak Resorts are reported within the Mountain and Lodging segments prospectively from the date of acquisition.

Pro Forma Financial Information
The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisition of Peak Resorts was completed on August 1, 2019. The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment; (ii) amortization of intangible assets recorded at the date of the transaction; (iii) transaction and business integration related costs; and (iv) interest expense associated with financing the transaction. This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2019 (in thousands, except per share amounts).


14



 
Three Months Ended October 31,
 
2019
Pro forma net revenue
$
274,429

Pro forma net loss attributable to Vail Resorts, Inc.
$
(111,843
)
Pro forma basic net loss per share attributable to Vail Resorts, Inc.
$
(2.77
)
Pro forma diluted net loss per share attributable to Vail Resorts, Inc.
$
(2.77
)


7.    Supplementary Balance Sheet Information
The composition of property, plant and equipment follows (in thousands):
 
 
October 31, 2020
 
July 31, 2020
 
October 31, 2019
Land and land improvements
 
$
752,259

 
$
750,714

 
$
745,846

Buildings and building improvements
 
1,475,857

 
1,475,661

 
1,458,465

Machinery and equipment
 
1,363,279

 
1,361,178

 
1,189,951

Furniture and fixtures
 
313,815

 
308,267

 
435,663

Software
 
99,077

 
104,223

 
118,961

Vehicles
 
80,552

 
80,510

 
68,662

Construction in progress
 
105,866

 
81,967

 
113,570

Gross property, plant and equipment
 
4,190,705

 
4,162,520

 
4,131,118

Accumulated depreciation
 
(2,024,101
)
 
(1,969,841
)
 
(1,851,029
)
Property, plant and equipment, net
 
$
2,166,604

 
$
2,192,679

 
$
2,280,089



The composition of accounts payable and accrued liabilities follows (in thousands): 
 
 
October 31, 2020
 
July 31, 2020
 
October 31, 2019
Trade payables
 
$
74,609

 
$
59,692

 
$
141,714

Deferred revenue
 
559,323

 
256,402

 
549,144

Accrued salaries, wages and deferred compensation
 
33,131

 
25,588

 
22,798

Accrued benefits
 
39,625

 
43,704

 
38,695

Deposits
 
20,644

 
20,070

 
34,202

Operating lease liability
 
36,185

 
36,604

 
35,136

Other liabilities
 
83,097

 
57,048

 
35,245

Total accounts payable and accrued liabilities
 
$
846,614

 
$
499,108

 
$
856,934



The composition of other long-term liabilities follows (in thousands):
 
 
October 31, 2020
 
July 31, 2020
 
October 31, 2019
Private club deferred initiation fee revenue
 
$
103,714

 
$
105,108

 
$
109,011

Other long-term liabilities
 
149,394

 
165,137

 
129,953

Total other long-term liabilities
 
$
253,108

 
$
270,245

 
$
238,964



The changes in the net carrying amount of goodwill allocated between the Company’s segments for the three months ended October 31, 2020 are as follows (in thousands):
 
Mountain
Lodging
Goodwill, net
Balance at July 31, 2020
$
1,666,809

$
42,211

$
1,709,020

Effects of changes in foreign currency exchange rates
2,850


2,850

Balance at October 31, 2020
$
1,669,659

$
42,211

$
1,711,870




15



8.    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.

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, 2020
Description
 
Total
 
Level 1
 
Level 2
 
Level 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

 
 
 
 
 
 
 
 
 
 
 
Estimated Fair Value Measurement as of July 31, 2020
Description
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Money Market
 
$
203,158

 
$
203,158

 
$

 
$

Commercial Paper
 
$
2,401

 
$

 
$
2,401

 
$

Certificates of Deposit
 
$
8,208

 
$

 
$
8,208

 
$

Liabilities:
 
 
 
 
 
 
 
 
Interest Rate Swaps
 
$
22,510

 
$

 
$
22,510

 
 
Contingent Consideration
 
$
17,800

 
$

 
$

 
$
17,800

 
 
 
 
 
Estimated Fair Value Measurement as of October 31, 2019
Description
 
Total
 
Level 1
 
Level 2
 
Level 3
Assets:
 
 
 
 
 
 
 
 
Money Market
 
$
3,047

 
$
3,047

 
$

 
$

Commercial Paper
 
$
2,401

 
$

 
$
2,401

 
$

Certificates of Deposit
 
$
7,932

 
$

 
$
7,932

 
$

Liabilities:
 
 
 
 
 
 
 
 
Contingent Consideration
 
$
21,900

 
$

 
$

 
$
21,900



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, 2020.


16



The changes in Contingent Consideration during the three months ended October 31, 2020 and 2019 were as follows (in thousands):
 
 
 
 
 
Balance as of July 31, 2020 and 2019, respectively
 
$
17,800

 
$
27,200

Payments
 
(2,602
)
 
(6,436
)
Change in estimated fair value
 
802

 
1,136

Balance as of October 31, 2020 and 2019, respectively
 
$
16,000

 
$
21,900



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 10.49%, 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 $3.1 million to $4.1 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, 2020, the Company made a payment to the landlord for Contingent Consideration of approximately $2.6 million and recorded an increase of approximately $0.8 million. These changes resulted in an estimated fair value of the Contingent Consideration of approximately $16.0 million, which is reflected in other long-term liabilities in the Company’s Consolidated Condensed Balance Sheet.

9.    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 $2.1 million, $2.1 million and $2.0 million primarily within other long-term liabilities in the accompanying Consolidated Condensed Balance Sheets, as of October 31, 2020July 31, 2020 and October 31, 2019, 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, 2020, the Company had various letters of credit outstanding totaling $75.6 million, consisting of $53.4 million to support the Employee Housing Bonds and $22.2 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, 2020, primarily to provide collateral for its U.S. workers compensation self-insurance programs.