SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                              ____________________


                                   FORM 11-K
                                 ANNUAL REPORT

                              ____________________


                        Pursuant to Section 15(d) of the

                        Securities Exchange Act of 1934


                              ____________________


                  For the Fiscal Year Ended December 31, 1998


                             _____________________


                      VAIL RESORTS 401(k) RETIREMENT PLAN

                        Commission File No.    001-09614

                             ______________________


                               Vail Resorts, Inc.
                                   P.O. Box 7
                                Vail, CO  81658

   (Name of issuer of securities held pursuant to the plan and address of its
                          principal executive office)


                                  VAIL RESORTS
                                  ------------

                             401(k) RETIREMENT PLAN
                             ----------------------


                INDEX TO THE FINANCIAL STATEMENTS AND SCHEDULES
                -----------------------------------------------

                           DECEMBER 31, 1998 AND 1997
                           --------------------------

Page (s) -------- REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1 FINANCIAL STATEMENTS: Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1998 2 Statement of Net Assets Available for Plan Benefits with Fund Information as of December 31, 1997 3 Statement of Changes in Net Assets Available for Plan Benefits with Fund Information for the Year Ended December 31, 1998 4-5 NOTES TO FINANCIAL STATEMENTS AND SCHEDULES 6-13 SCHEDULES SUPPORTING FINANCIAL STATEMENTS: Schedule I: Item 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998 14-15 Schedule II: Item 27d - Schedule of Reportable Transactions for the Year Ended December 31, 1998 16-17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Participants and the Administrative Committee of the Vail Resorts 401(k) Retirement Plan: We have audited the accompanying statements of net assets available for plan benefits of the VAIL RESORTS 401(k) RETIREMENT PLAN (the "Plan") as of December 31, 1998 and 1997, and the related statement of changes in net assets available for plan benefits for the year ended December 31, 1998. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for plan benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes and reportable transactions are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The Fund Information in the statements of net assets available for plan benefits and the statement of changes in net assets available for plan benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for plan benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Denver, Colorado, June 28, 1999. -1- VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ----------------------- STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION ------------------------------------------------------------------------- AS OF DECEMBER 31, 1998 -----------------------
Summit Davis Vanguard Templeton High Putnam New New York Corus Corus Corus Corus 500 Index Foreign Yield Opportunities Venture Moderate Money Equity Conservative Fund Fund Fund Fund Fund Strategy Market Strategy Strategy ---------- --------- -------- ------------- --------- ---------- ---------- ---------- ------------ INVESTMENTS, at fair value: Mutual funds $4,206,856 $747,383 $273,502 $3,929,824 $2,267,207 $1,144,194 $5,044,612 $4,426,469 $562,387 Employer stock - - - - - - - - - Participant loans - - - - - - - - - ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- -------- Total investments 4,206,856 747,383 273,502 3,929,824 2,267,207 1,144,194 5,044,612 4,426,469 562,387 RECEIVABLES: Employee receivable - - - - - - - - - Employer receivable - - - - - - - - - ---------- -------- -------- ---------- ---------- ---------- ---------- ---------- --------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $4,206,856 $747,383 $273,502 $3,929,824 $2,267,207 $1,144,194 $5,044,612 $4,426,469 $ 562,387 ========== ======== ======== ========== ========== ========== ========== ========== ========= Vail Corus Corus Resorts Balanced Aggressive Common Participant Strategy Strategy Stock Loans Other Total ---------- ----------- -------- ----------- -------- ----------- INVESTMENTS, at fair value: Mutual funds $5,575,234 $10,233,654 $ 48,811 $ - $ - $38,460,133 Employer stock - - 687,500 - - 687,500 Participant loans - - - 808,837 - 808,837 ---------- ----------- -------- -------- -------- ----------- Total investments 5,575,234 10,233,654 736,311 808,837 - 39,956,470 RECEIVABLES: Employee receivable - - - - 181,715 181,715 Employer receivable - - - - 378,653 378,653 ---------- ----------- -------- -------- -------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $5,575,234 $10,233,654 $736,311 $808,837 $560,368 $40,516,838 ========== =========== ======== ======== ======== ===========
The accompanying notes are an integral part of this statement. -2- VAIL RESORTS 401(k) RETIREMENT PLAN ----------------------------------- STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION ------------------------------------------------------------------------- AS OF DECEMBER 31, 1997 -----------------------
Principal Mutual Life Insurance Company The American Funds Group INVESCO ---------- AIM Family of Funds ----------------------------- ------------ Guaranteed ------------------------------ Bond Fund Stable Value Interest Value Fund- Constellation of Fundamental Cash Fund Accounts Class A Fund America Investors Fund ---- ------------ ---------- ------------- ------------- --------- -------------- CASH $396 $ - $ - $ - $ - $ - $ - INVESTMENTS, at fair value: Common/collective trusts - 1,300,777 - - - - - Mutual funds - - - 1,357,030 3,339,640 492,669 1,430,205 Guaranteed interest accounts - - 274,317 - - - - Participant loans - - - - - - - Employer stock - - - - - - - ---- ---------- -------- ---------- ---------- -------- ---------- Total investments 396 1,300,777 274,317 1,357,030 3,339,640 492,669 1,430,205 RECEIVABLES: Matching contributions receivable - 45,882 - 34,942 110,103 17,706 34,638 ---- ---------- -------- ---------- ---------- -------- ---------- Total assets 396 1,346,659 274,317 1,391,972 3,449,743 510,375 1,464,843 LIABILITIES: Excess contributions payable - (2,086) (9,231) - (1,610) - (2,721) ---- ---------- -------- ---------- ---------- -------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $396 $1,344,573 $265,086 $1,391,972 $3,448,133 $510,375 $1,462,122 ==== ========== ======== ========== ========== ======== ========== Putnam Investments ------------- The Franklin Templeton Group Vail New ------------------------------- Resorts Opportunities Foreign Real Estate World Common Participant Fund Fund Fund Fund Stock Loans Other Total ------------- ------- ----------- --------- ------- ----------- -------- ------------ CASH $ - $ - $ - $ - $ - $ - $ - $ 396 INVESTMENTS, at fair value: Common/collective trusts - - - - - - - 1,300,777 Mutual funds 7,174,611 897,112 1,231,374 2,929,036 - - - 18,851,677 Guaranteed interest accounts - - - - - - - 274,317 Participant loans - - - - - 356,997 - 356,997 Employer stock - - - - 827,390 - - 827,390 ---------- -------- ---------- --------- -------- -------- -------- ----------- Total investments 7,174,611 897,112 1,231,374 2,929,036 827,390 356,997 - 21,611,554 RECEIVABLES: Matching contributions receivable 218,034 36,035 45,526 89,059 - - 152,977 784,902 ---------- -------- ---------- ---------- -------- -------- -------- ----------- Total assets 7,392,645 933,147 1,276,900 3,018,095 827,390 356,997 152,977 22,396,456 LIABILITIES: Excess contributions payable (27,584) (3,493) (2,052) - - - - (48,777) ---------- -------- ---------- ---------- -------- -------- -------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS $7,365,061 $929,654 $1,274,848 $3,018,095 $827,390 $356,997 $152,977 $22,347,679 ========== ======== ========== ========== ======== ======== ======== ===========
The accompanying notes are an integral part of this statement. -3- VAIL RESORTS 401(k) RETIREMENT PLAN ----------------------------------- STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND ------------------------------------------------------------------------ INFORMATION ----------- FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------
Summit Davis Vanguard Templeton High Putnam New New York Corus Corus 500 Index Foreign Yield Opportunities Venture Moderate Money Fund Fund Fund Fund Fund Strategy Market ----------- --------- ------ ------------- -------- --------- ------ ADDITIONS TO NET ASSETS: Contributions- Employee $ 245,574 $ 60,230 $ 19,579 $ 195,270 $ 140,892 $ 60,290 $ 122,464 Employer 75,493 18,174 5,968 65,295 43,064 22,977 47,762 Loan repayments 16,012 3,342 2,477 16,292 11,734 10,702 10,565 Rollovers and other 29,627 3,434 3,154 13,932 14,335 1,089 14,859 ---------- --------- -------- ---------- ---------- ---------- ---------- Total contributions 366,706 85,180 31,178 290,789 210,025 95,058 195,650 Investment income- Interest and dividends 41,822 81,335 22,325 126,666 53,221 2,475 2,290 Net realized and unrealized gain (loss) on investments 290,496 (138,966) (51,832) 6,943 21,287 32,875 162,009 ---------- --------- -------- ---------- ---------- ---------- ---------- Total investment income 332,318 (57,631) (29,507) 133,609 74,508 35,350 164,299 ---------- --------- -------- ---------- ---------- ---------- ---------- Total additions 699,024 27,549 1,671 424,398 284,533 130,408 359,949 DEDUCTIONS FROM NET ASSETS: Benefits paid to participants (72,531) (19,205) (881) (27,284) (12,951) (72,824) (693,350) Administrative expenses and other (2,897) (77) (41) (168) - (137) (9,490) Loans issued (15,494) - - (2,943) (6,020) (15,695) (33,744) ---------- --------- -------- ---------- ---------- ---------- ---------- Total deductions (90,922) (19,282) (922) (30,395) (18,971) (88,656) (736,584) TRANSFERS: Interfund transfers, net 257,464 8,131 10,813 (160,795) (33,666) 44,159 9,325 Transfers from other trustees, net (See Note 1) 3,341,290 730,985 261,940 3,696,616 2,035,311 1,058,283 5,411,922 ---------- --------- -------- ---------- ---------- ---------- ---------- Net increase (decrease) 4,206,856 747,383 273,502 3,929,824 2,267,207 1,144,194 5,044,612 ---------- --------- -------- ---------- ---------- ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of the period - - - - - - - ---------- --------- -------- ---------- ---------- ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of the period $4,206,856 $ 747,383 $273,502 $3,929,824 $2,267,207 $1,144,194 $5,044,612 ========== ========= ======== ========== ========== ========== ========== Corus Corus Corus Corus Equity Conservative Balanced Aggressive Strategy Strategy Strategy Strategy ---------- ----------- ---------- ------------ ADDITIONS TO NET ASSETS: Contributions- Employee $ 394,261 $ 14,809 $ 300,525 $ 797,729 Employer 128,682 6,269 109,623 271,455 Loan repayments 29,059 2,174 43,373 41,358 Rollovers and other 47,160 2,318 29,750 69,975 ---------- -------- ---------- ----------- Total contributions 599,162 25,570 483,271 1,180,517 Investment income- Interest and dividends - - - - Net realized and unrealized gain (loss) on investments 52,079 20,202 60,752 74,616 ---------- -------- ---------- ----------- Total investment income 52,079 20,202 60,752 74,616 ---------- -------- ---------- ----------- Total additions 651,241 45,772 544,023 1,255,133 DEDUCTIONS FROM NET ASSETS: Benefits paid to participants (138,360) (14,547) (38,059) (77,303) Administrative expenses and other (455) (97) (753) (1,197) Loans issued (42,980) (10,346) (31,891) (44,027) ---------- -------- ---------- ----------- Total deductions (181,795) (24,990) (70,703) (122,527) TRANSFERS: Interfund transfers, net 47,930 202,245 (430,674) (5,999) Transfers from other trustees, net (See Note 1) 3,909,093 339,360 5,532,588 9,107,047 ---------- -------- ---------- ----------- Net increase (decrease) 4,426,469 562,387 5,575,234 10,233,654 ---------- -------- ---------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of the period - - - - ---------- -------- ---------- ----------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of the period $4,426,469 $562,387 $5,575,234 $10,233,654 ========== ======== ========== ===========
The accompanying notes are an integral part of this statement. -4- VAIL RESORTS 401(k) RETIREMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS WITH FUND INFORMATION FOR THE YEAR ENDED DECEMBER 31, 1998
Principal Mutual Life Insurance Putnam INVESCO Company AIM Family of Funds The American Funds Group Investments --------- ---------- ---------------------- ----------------------- ----------- Stable Guaranteed Value Bond Fund Fundamental New Value Interest Fund- Constellation of Investors Opportunities Cash Fund Accounts Class A Fund America Fund Fund ----------- ---------- ---------- ---------- ------------ --------- ----------- ------------ ADDITIONS TO NET ASSETS: Contributions- Employee $ 96,634 $ 64,992 $ - $ 53,417 $ 153,436 $ 23,938 $ 54,249 $ 323,742 Employer - - - - - - - - Loan repayments 4,952 3,919 - 3,105 8,914 1,398 3,186 18,969 Rollovers and other - 4,904 - 3,643 10,029 1,956 3,708 24,087 ---------- --------- --------- -------- ---------- --------- ---------- ---------- Total contributions 101,586 73,815 - 60,165 172,379 27,292 61,143 366,798 Investment income- Interest and dividends (217) 31,971 7,208 - - 19,501 16,827 - Net realized and unrealized gain (loss) on investments - - - 172,648 302,955 (1,148) 141,748 797,039 ---------- --------- --------- -------- ---------- --------- ---------- ---------- Total investment income (217) 31,971 7,208 172,648 302,955 18,353 158,575 797,039 ---------- --------- --------- -------- ---------- --------- ---------- ---------- Total additions 101,369 105,786 7,208 232,813 475,334 45,645 219,718 1,163,837 DEDUCTIONS FROM NET ASSETS: Benefits paid to participants 1,325 (82,228) (21,843) (137,366) (192,556) (53,778) (29,745) (296,950) Administrative expenses and other - (1,084) - (742) (2,170) (372) (755) (4,309) Loans issued - (5,880) - (6,550) (12,562) (200) (1,337) (23,297) ---------- --------- --------- -------- ---------- --------- ---------- ---------- Total deductions 1,325 (89,192) (21,843) (144,658) (207,288) (54,350) (31,837) (324,556) TRANSFERS: Interfund transfers, net (102,911) 52,299 3,639 37,053 (12,100) 62,311 (5,052) 1,279 Transfers from other trustees, Net (See Note 1) (179) (1,413,466) (254,090) (1,517,180) (3,704,079) (563,981) (1,644,951) (8,205,621) ---------- --------- --------- -------- ---------- --------- ---------- ---------- Net increase (decrease) (396) (1,344,573) (265,086) (1,391,972) (3,448,133) (510,375) (1,462,122) (7,365,061) ---------- --------- --------- -------- ---------- --------- ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of the period 396 1,344,573 265,086 1,391,972 3,448,133 510,375 1,462,122 7,365,061 ---------- --------- --------- -------- ---------- --------- ---------- ---------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of the period $ - $ - $ - $ - $ - $ - $ - $ - ========== ========= ========= ======== ========== ========= ========== ========== The Franklin Templeton Group ------------------------------------ Vail Real Resorts Foreign Estate World Common Participant Fund Fund Fund Stock Loans Other Total ----------- ----------- -------- -------- ----------- --------- -------- ADDITIONS TO NET ASSETS: Contributions- Employee $ 42,668 $ 62,622 $ 120,173 $ 65,608 $ - $181,715 $ 3,594,817 Employer - - - 21,476 - 225,676 1,041,914 Loan repayments 2,543 3,737 7,130 5,705 (250,646) - - Rollovers and other 3,162 4,605 8,719 7,662 - - 302,108 ---------- ----------- --------- -------- --------- ---------- -------------- Total contributions 48,373 70,964 136,022 100,451 (250,646) 407,391 4,938,839 Investment income- Interest and dividends - - - 1,131 12,363 - 418,918 Net realized and unrealized gain (loss) on investments 65,047 7,185 267,124 (48,921) - - 2,234,138 ---------- ----------- --------- -------- --------- ---------- -------------- Total investment income 65,047 7,185 267,124 (47,790) 12,363 - 2,653,056 ---------- ----------- --------- -------- --------- ---------- -------------- Total additions 113,420 78,149 403,146 52,661 (238,283) 407,391 7,591,895 DEDUCTIONS FROM NET ASSETS: Benefits paid to participants (40,401) (86,096) (261,785) (96,490) (37,627) - (2,502,835) Administrative expenses and other (578) (893) (1,756) (40) - - (28,011) Loans issued (928) (1,650) (7,341) (6,390) 269,275 - - ---------- ----------- --------- -------- --------- ---------- -------------- Total deductions (41,907) (88,639) (270,882) (102,920) 231,648 - (2,530,846) TRANSFERS: Interfund transfers, net 2,431 (15,653) (11,976) 39,747 - - - Transfers from other trustees, Net (See Note 1) (1,003,598) (1,248,705) (3,138,383) (80,567) 458,475 - 13,108,110 ---------- ----------- --------- -------- --------- ---------- -------------- Net increase (decrease) (929,654) (1,274,848) (3,018,095) (91,079) 451,840 407,391 18,169,159 ---------- ----------- --------- -------- --------- ---------- -------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of the period 929,654 1,274,848 3,018,095 827,390 356,997 152,977 22,347,679 ---------- ----------- --------- -------- --------- ---------- -------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of the period $ - $ - $ - $736,311 $ 808,837 $ 560,368 $ 40,516,838 ========== =========== ========= ======== ========= ========== ==============
The accompanying notes are an integral part of this statement. -5- VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ---------------------- NOTES TO FINANCIAL STATEMENTS AND SCHEDULES ------------------------------------------- DECEMBER 31, 1998 AND 1997 -------------------------- (1) DESCRIPTION OF THE PLAN ----------------------- Effective May 1, 1978, Vail Associates, Inc. (the "Company") established The Profit Sharing Thrift Plan of Vail Associates, Inc. The plan was amended and restated October 1, 1994 and renamed the Vail Associates, Inc. 401(k) Retirement Plan ("Vail Plan"). The Company concurrently established a trust (the "Trust") with a trustee as part of the Vail Plan. Effective October 1, 1995, Ralston Resorts, Inc. ("Ralston Resorts") established the Ralston Resort, Inc. Savings Investment Plan (the "Ralston Plan"). On June 1, 1998, the Vail Plan was amended and restated in its entirety, and the Ralston Plan was merged into the Vail Plan. In connection therewith, the Vail Plan was renamed the Vail Resorts 401(k) Retirement Plan (the "Plan"). Approximately $13.1 million of assets were transferred into the Plan from the Ralston Plan as a result of this merger. The following description of the Plan provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. General ------- The Plan is a defined contribution plan administered by a committee appointed by the Board of Directors of the Company. The Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). Benefits under the Plan are not guaranteed by the Pension Benefit Guaranty Corporation. Eligibility and Contributions ----------------------------- Employees are eligible to participate in the Plan upon attaining the age of 21 and completing one year of employment including a minimum of 1,000 hours of service. Effective June 1, 1998, an additional provision was added whereby employees completing 1,500 cumulative hours of service became eligible to participate in the Plan. Each participant may elect to contribute from 2% to 22% (2% to 15% prior to June 1, 1998) of their compensation, as defined in the Plan document. However, deferred contributions shall not exceed $10,000 in the calendar year ending December 31, 1998, as set forth by the Internal Revenue Code ("IRC"). -6- The Company makes matching contributions up to 50% of each participant's contribution, per pay period, not to exceed 6% of the participant's compensation for that pay period. Prior to June 1, 1998, these matching contributions were discretionary. In addition to matching contributions, the Company can, in its sole discretion, make discretionary contributions in an amount determined by the Board of Directors. Discretionary Company contributions are allocated to participants who are eligible to share in the allocation of matching Company contributions according to the participant's compensation earned during the Plan year. There were no discretionary Company contributions made for the Plan year. Due to limitations imposed by the IRC, the sum of Company contributions and participant deferred contributions may not, in general, exceed the lesser of 25% of a participant's compensation for the year or $30,000. Subject to the Administrative Committee's (the "Committee") approval, participants may elect rollovers of amounts from other qualified plans in accordance with the IRC. Participant Accounts -------------------- Each participant's account is credited with his or her contribution, the Company matching contribution, discretionary Company contributions, if any, and an allocation of Plan earnings and expenses. Allocations are determined by the Plan document. The benefit to which a participant is entitled is the vested portion of the benefit that can be provided from the participant's account. Vesting ------- Participants' contributions are immediately 100% vested. Prior to June 1, 1998, vesting in the Company's contributions is according to the following schedule: Years of Service Vested Percentage ---------------- ----------------- Fewer than 1 0% 1 33-1/3% 2 66-2/3% 3 100% Effective June 1, 1998, vesting in the Company's contributions is according to the following schedule: Years of Service Vested Percentage ---------------- ----------------- Fewer than 1 0% 1 25% 2 50% 3 75% 4 100% -7- Participants of the Vail Plan or the Ralston Plan on May 31, 1998 would follow the vesting schedule provided by those plans if that vesting percentage was greater than the above percentage for the respective period. Participants forfeit unvested Company contributions upon termination of service. All amounts forfeited are used to reduce Company matching contributions otherwise required. Forfeitures during the year ended December 31, 1998, were immaterial to the Plan. Termination Provisions ---------------------- Although the Company has not expressed any intent to do so, it has the right, under the Plan document, to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their accounts. Payments of Benefits -------------------- A participant's entire interest in the Plan is payable upon death of the participant, upon attaining normal retirement age (65), or upon being considered disabled as determined by the Committee. Upon other terminations of service, a participant may elect to receive a lump-sum distribution equal to his or her vested account balance. In addition, hardship distributions are permitted if certain criteria are met. Loans to Participants --------------------- A participant may borrow the lesser of $50,000 or 50% of his or her vested account balance with a minimum loan amount of $1,000. Loans are secured by the participant's account and bear a reasonable rate of interest as determined by the Committee. The loans are subject to certain restrictions, as defined by the Plan document and applicable restrictions under the IRC. Prior to June 1, 1998, loans bore an interest rate based on U.S. Treasury rates for notes of equivalent maturities on the date the interest rate was established, plus 4%. Effective June 1, 1998, the interest rate is based on a reasonable rate of interest as determined by the Plan Committee. (2) SUMMARY OF ACCOUNTING POLICIES ------------------------------ Basis of Accounting ------------------- The accompanying financial statements are presented on the accrual basis of accounting. The preparation of the financial statements in conformity with generally accepted accounting principles requires the Plan's management to use estimates and assumptions that affect the accompanying financial statements and disclosures. Actual results could differ from these estimates. Investment Valuation and Income Recognition ------------------------------------------- Plan investments are stated at fair value based primarily on quoted market prices. Company common stock is traded on a national securities exchange and is valued at the last reported sales price on the last business day of the year. Guaranteed interest accounts were valued at fair market -8- value, as determined by Principal Mutual Life Insurance Company, as these contracts were not fully benefit-responsive. Loans are valued at cost which approximates fair market value. Net realized and unrealized gain (loss) on investments is determined as the difference between market value at the beginning of the year (or date purchased during the year) and selling price or year end market value. For purposes of Schedule I and II, cost is determined based on the original cost to acquire the asset. Administrative Expenses ----------------------- Expenses of administering the Plan are paid by the Company. All other costs and expenses are deducted from the participants' accounts on a pro-rata basis. Payment of Benefits ------------------- Benefits are recorded when paid. (3) INCOME TAXES ------------ The Company received a favorable determination letter from the IRS dated January 31, 1997, that the Vail Plan meets the requirements of Section 401(a) of the IRC and is exempt from federal income taxes under Section 501(a) of the IRC. The Company has not applied for a determination letter for the restated Plan. However, the Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. Therefore, they believe that the Plan was qualified and the related Trust was tax exempt as of December 31, 1998 and 1997. (4) INVESTMENTS ----------- Various investment advisors manage the Plan's assets. Prior to June 1, 1998, participants could have directed their investments in the following options: Principal Mutual Life Insurance Company: -- Guaranteed Interest Accounts -- This fund was part of Principal Mutual Life Insurance Company's General Account. The underlying assets in the General Account were invested mostly in private placement bonds, commercial mortgages and residential mortgages. INVESCO: -- Stable Value Fund -- This fund invested in a diversified portfolio of investment contracts with insurance companies, banks, or other financial institutions. A portion of the fund was also invested in money market accounts. -9- AIM Family of Funds: -- Value Fund - Class A -- This fund invested primarily in stocks of large, financially healthy companies whose stock prices are low compared to the fund management's expectations for future growth in earnings and dividends. -- Constellation Fund -- This fund emphasized investing in small-to-medium-sized emerging-growth companies and trading in securities for the short-term. The American Funds Group: -- Bond Fund of America -- This fund invested in a diversified portfolio consisting mostly of marketable corporate bonds, government bonds, and money market securities. -- Fundamental Investors Fund -- This fund invested primarily in a diversified portfolio of stocks or investments that are convertible into stocks. Assets could also have been held in bonds or cash or cash equivalents and U.S. governmental securities. Putnam Investments: -- New Opportunities Fund -- Assets were invested in a growth oriented stock fund investing in small to medium sized companies. The fund's primary goal was attaining long-term capital appreciation. The Franklin Templeton Group: -- World Fund -- This fund invested in stocks of companies whose prices are low compared to management's expectations for future growth in earnings and dividends, but it may also have invested in bonds, rated or unrated. -- Real Estate Fund -- This fund invested primarily in securities of issuers throughout the world which are significantly engaged in or related to the real estate industry. -- Foreign Fund -- Assets were invested in an international fund investing in stocks and debt obligations of non-U.S. companies. The fund's investment strategy was to identify companies selling the greatest discount to future intrinsic value, emphasizing international diversification and a disciplined investment approach. Vail Resorts Common Stock: -- Sought to provide investment returns linked to the long-term earnings of the Company. -10- As of June 1, 1998, participants may direct their investments in the following options: The Vanguard Group: -- Vanguard 500 Index Fund -- This fund invests in companies that make up the S&P 500 Index. The fund is intended for investors who wish to match the performance of the S&P 500 Index, and who are interested in long-term capital appreciation. The Franklin Templeton Group: -- Templeton Foreign Fund -- Assets are invested in an international fund investing in stocks and debt obligations of non-U.S. companies. The fund's investment strategy is to identify companies selling at the greatest discount to future intrinsic value, emphasizing international diversification and a disciplined investment approach. Summit Investment Trust: -- Summit High Yield Fund -- Assets are invested in a diversified portfolio of high yield corporate bonds. The fund invests primarily in U.S. corporate bonds, but may invest in international bonds as well. The fund's primary objective is attaining a high level of current income. Putnam Investments: -- Putnam New Opportunities Fund -- Assets are invested in a growth oriented stock fund investing in small to medium sized companies. The fund's primary goal is attaining long-term capital appreciation. Davis Funds: -- Davis New York Venture Fund -- Assets are invested in a growth oriented stock fund investing primarily in large U.S. companies purchased at value prices and held long-term. The fund's investment strategy is to identify specific, long-term trends that should provide consistent growth over time. Corus Asset Management: -- Corus Money Market -- This fund invests in a portfolio of money market funds with an average maturity of less than 90 days. The portfolio is designed for investors who want their money to earn near- inflation rates of return with no price fluctuation. -- Corus Conservative Strategy -- This fund invests in a diversified portfolio of mutual funds holding a much higher component of bonds (78%) than stocks (22%). The portfolio seeks to achieve a moderate total rate of return through low capital appreciation and reinvestment of a high level of current income. -11- -- Corus Moderate Strategy -- This fund invests in a diversified portfolio of mutual funds holding approximately 60% of assets in bonds and 40% in stocks. The portfolio seeks to achieve moderate, long-term capital appreciation with high current income. -- Corus Balanced Strategy -- This fund invests in a higher component of stocks (59%) than bonds (41%). The portfolio seeks to achieve a moderate level of current income, and over time, above-average capital appreciation. -- Corus Aggressive Strategy -- Assets are invested in a diversified portfolio of mutual funds holding a much higher component of stocks (82%) rather than bonds (18%). The portfolio seeks to achieve a high, long- term capital appreciation with low current income. -- Corus Equity Strategy -- Assets are invested in a portfolio of mutual funds holding 100% stock, diversified between the stocks of large and small U.S. companies and large international companies. The portfolio seeks to achieve high, long-term capital appreciation. Vail Resorts Common Stock: -- Seeks to provide investment returns linked to the long-term earnings of the Company. The stated objectives of these funds are not necessarily indicators of actual performance. The fair market value of individual investments that represent 5% or more of the Plan's total investments as of December 31, 1998 and 1997, are separately identified in the accompanying statements of net assets available for plan benefits with fund information. (5) RELATED PARTY TRANSACTIONS -------------------------- In connection with Vail Resorts, Inc.'s (parent company of Vail Associates, Inc.) Initial Public Offering on February 4, 1997, there was a one-time opportunity for Plan participants to purchase, with their Plan assets, Vail Resorts, Inc. common stock at a discount to the offering price. A total of 34,000 shares were purchased at a cost of $699,380. Subsequent to the Initial Public Offering, Vail Resorts, Inc. common stock was not available as an investment alternative for Plan participant contributions until June 1, 1998. Reber/Russell Company ("Reber") is the record keeper of the Plan. As the Plan holds assets in funds managed by the Frank Russell Investment Company (a related party of Reber), these transactions qualify as party-in-interest. -12- (6) RISKS AND UNCERTAINTIES ----------------------- The Plan provides for various investment options in mutual funds and employer stock. Investment securities, in general, are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and such changes could materially affect participants' account balances and amounts reported in the statements of net assets available for plan benefits with fund information. (7) SUBSEQUENT PLAN MERGER ---------------------- On August 12, 1998, the Company acquired all of the outstanding stock of the Village at Breckenridge Acquisition Corp., Inc. ("Village at Breckenridge"), which maintains the Village at Breckenridge 401(k) Plan (the "Village at Breckenridge Plan") for the benefit of its eligible employees. The Village at Breckenridge Plan was merged into the Plan effective January 1, 1999 and approximately $340,000 of assets were transferred into the Plan as a result of this merger. -13- SCHEDULE I Page 1 of 2 VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ---------------------- ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ---------------------------------------------------------- AS OF DECEMBER 31, 1998 -----------------------
Identity of Issue, Borrower, Current Lessor or Similar Party Description of Investment Cost Value - --------------------------------- ---------------------------- --------- ---------- Mutual funds: *Frank Russell Investment Company Russell Emerging Markets $ 998,452 $ 903,234 Russell Equity I 4,536,448 4,571,839 Russell Equity II 2,102,618 1,913,872 Russell Equity Q 4,575,485 4,546,069 Russell Money Market Fund 5,044,612 5,044,612 Russell International Fund 3,863,991 3,732,156 Russell Real Estate Securities 1,218,053 1,088,927 Russell Fixed I 2,771,640 2,698,420 Russell Fixed III 1,792,791 1,788,572 Russell Short-Term Bond Fund 700,002 698,849 The Vanguard Group Vanguard 500 Index Fund 3,911,671 4,206,856
* Represents a party-in-interest (see Note 5). The accompanying notes are an integral part of this schedule. -14- SCHEDULE I Page 2 of 2 VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ---------------------- ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES ---------------------------------------------------------- AS OF DECEMBER 31, 1998 -----------------------
Identity of Issue, Borrower, Current Lessor or Similar Party Description of Investment Cost Value - ------------------------------ ------------------------------- ----------- ----------- Mutual funds: The Franklin Templeton Group Templeton Foreign Fund $ 881,046 $ 747,383 Summit Investment Trust Summit High Yield Fund 325,671 273,502 Putnam Investments Putnam New Opportunities Fund 3,862,576 3,929,824 Davis Funds Davis New York Venture Fund 2,235,281 2,267,207 * Vail Resorts, Inc. Common stock 726,128 687,500 Charles Schwab and Co., Inc. Mutual fund: Schwab Money Market Fund 48,811 48,811 Participant Loans Loans secured by participant's vested accrued benefits, interest rate range 8.84% - 11.79% 808,837 808,837 ----------- ----------- Total Investments $40,404,113 $39,956,470 =========== ===========
* Represents a party-in-interest (see Note 5). The accompanying notes are an integral part of this schedule. -15- SCHEDULE II Page 1 of 2 VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ---------------------- ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (a) (b) ------------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------
Identity of Party Number of Purchase Selling Cost of Net Involved Description of Investment Transactions Price Price Asset Gain (Loss) - ------------------- ------------------------- ------------- ---------- --------- ---------- ----------- Aim Family of Funds Value Fund Class A 15 $125,060 $ - $ 125,060 $ - 15 - 1,654,738 1,244,902 409,836 AIM Family of Funds Constellation Fund 18 324,235 - 324,235 - 20 - 3,966,830 3,043,730 923,100 INVESCO Stable Value Fund 15 175,480 - 175,480 - 17 - 1,508,228 1,508,228 - Putnam Investments New Opportunities Fund 19 695,955 - 695,955 - 21 - 8,667,605 5,575,590 3,092,015 The Franklin Templeton Group Foreign Fund 14 90,537 - 90,537 - 19 - 1,052,696 925,902 126,794 The Franklin Templeton Group World Fund 15 243,561 - 243,561 - 16 - 3,439,720 3,052,740 386,980 The Franklin Templeton Group Global Real Estate Fund 15 128,422 - 128,422 - 14 - 1,366,983 1,216,200 150,783 The American Funds Group Fundamental Investors Fund 16 112,661 - 112,661 - 15 - 1,701,442 1,340,018 361,424
(a) This schedule is a listing of series of transactions of the same security which exceed 5% of the Plan assets as of January 1, 1998. (b) This schedule is prepared using the alternative way of reporting (iii) series of transactions under DOL Regulation 2520.103-6(d) (2). * Represents a party-in-interest (see Note 5). The accompanying notes are an integral part of this schedule. -16- SCHEDULE II Page 2 of 2 VAIL RESORTS ------------ 401(k) RETIREMENT PLAN ---------------------- ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS (a) (b) ------------------------------------------------------ FOR THE YEAR ENDED DECEMBER 31, 1998 ------------------------------------
Identity of Party Number of Purchase Selling Cost of Net Involved Description of Investment Transactions Price Price Asset Gain (Loss) - ---------------------------------- ------------------------- ------------ ----------- ----------- ----------- ----------- * Frank Russell Investment Company Russell Equity I 35 $ 4,807,321 $ - $ 4,807,321 $ - 43 - 244,212 270,873 (26,661) * Frank Russell Investment Company Russell Equity II 28 2,215,861 - 2,215,861 - 40 - 90,053 113,243 (23,190) * Frank Russell Investment Company Russell Equity Q 34 4,837,780 - 4,837,780 - 36 - 239,503 262,292 (22,789) * Frank Russell Investment Company Russell Fixed I 31 2,184,196 - 2,184,196 - 30 - 390,947 391,404 (457) * Frank Russell Investment Company Russell Fixed III 21 2,996,565 - 2,996,565 - 41 - 222,309 224,925 (2,616) * Frank Russell Investment Company Russell International Fund 35 4,093,988 - 4,093,988 - 41 - 201,187 229,995 (28,808) * Frank Russell Investment Company Russell Real Estate Securities 34 1,300,900 - 1,300,900 - 41 - 71,271 82,845 (11,574) * Frank Russell Investment Company Russell Money Market Fund 45 36,728,057 - 36,728,057 - 151 - 31,647,567 31,647,567 - Davis Funds Davis New York Venture Fund 50 2,468,675 - 2,468,675 - 29 - 217,898 233,394 (15,496) Putnam Investments Putnam New Opportunities Fund 52 4,311,531 - 4,311,531 - 28 - 380,112 448,955 (68,843) The Vanguard Group Vanguard 500 Index Fund 52 4,283,508 - 4,283,508 - 19 - 359,230 371,837 (12,607)
(a) This schedule is a listing of series of transactions of the same security which exceed 5% of the Plan assets as of January 1, 1998. (b) This schedule is prepared using the alternative way of reporting (iii) series of transactions under DOL Regulation 2520.103-6(d) (2). * Represents a party-in-interest (see Note 5). The accompanying notes are an integral part of this schedule. -17- SIGNATURES The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. Vail Resorts 401(k) Retirement Plan June 28, 1999 ----------------------------------- Nanci N. Northway Vice President & Controller


                                                                      Exhibit 23



                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation by
reference of our report on the financial statements of Vail Resorts 401(k)
Retirement Plan dated June 28, 1999 included in this Form 11-K and the
Registration Statement in Form S-8  (No. 333-20523).



Denver, Colorado,
 June 28, 1999.