OMB APPROVAL |
OMB Number: 3235-0070 |
Expires: March 31, 2006 |
Estimated average burden |
UNITED STATES |
FORM 10-Q |
[X] |
Quarterly Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 |
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For the quarterly period ended |
January 31, 2004 |
[ ] |
Transition Report Pursuant To Section 13 Or 15(d) Of The Securities Exchange Act Of 1934 |
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For the transition period from |
to |
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Commission File Number: |
1-9614 |
Vail Resorts, Inc. |
(Exact name of registrant as specified in its charter) |
Delaware |
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51-0291762 |
(State or other jurisdiction of |
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(I.R.S. Employer |
incorporation or organization) |
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Identification No.) |
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Post Office Box 7 Vail, Colorado |
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81658 |
(Address of principal executive offices) |
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(Zip Code) |
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(970) 845-2500 |
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(Registrant's telephone number, including area code) |
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. |
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[ X] |
Yes |
[ ] |
No |
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). |
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[ X] |
Yes |
[ ] |
No |
As of March 1, 2004, 7,439,834 shares of Class A Common Stock and 27,859,651 shares of Common Stock were issued and outstanding. |
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Table of Contents |
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PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements |
F-2 |
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
1 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
11 |
Item 4. |
Controls and Procedures |
11 |
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PART II |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
13 |
Item 2. |
Changes in Securities and Use of Proceeds |
13 |
Item 3. |
Defaults Upon Senior Securities |
13 |
Item 4. |
Submission of Matters to a Vote of Security Holders |
13 |
Item 5. |
Other Information |
14 |
Item 6. |
Exhibits and Reports on Form 8-K |
14 |
PART I |
FINANCIAL INFORMATION |
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Item 1. |
Financial Statements-Unaudited |
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Consolidated Condensed Balance Sheets as of January 31, 2004, July 31, 2003 and January 31, 2003 |
F-2 |
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Consolidated Condensed Statements of Operations for the Three Months Ended January 31, 2004 and 2003 |
F-3 |
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Consolidated Condensed Statements of Operations for the Six Months Ended January 31, 2004 and 2003 |
F-4 |
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Consolidated Condensed Statements of Cash Flows for the Six Months Ended January 31, 2004 and 2003 |
F-5 |
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Notes to Consolidated Condensed Financial Statements |
F-6 |
Vail Resorts, Inc.
Consolidated Condensed Balance Sheets
(In thousands, except share and per share amounts)
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January 31, |
July 31, |
January 31, |
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2004 |
2003 |
2003 |
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(as restated) |
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(unaudited) |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ 42,569 |
$ 18,940 |
$ 24,690 |
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Receivables, net |
46,195 |
49,748 |
41,657 |
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Inventories, net |
34,946 |
31,756 |
36,022 |
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Other current assets |
30,648 |
16,551 |
26,696 |
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Total current assets |
154,358 |
116,995 |
129,065 |
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Property, plant and equipment, net (Note 6) |
988,424 |
932,251 |
943,555 |
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Real estate held for sale and investment |
111,587 |
123,223 |
136,983 |
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Goodwill, net |
145,090 |
145,049 |
141,596 |
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Other intangibles, net |
87,054 |
88,412 |
81,333 |
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Other assets |
49,188 |
49,512 |
39,399 |
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Total assets |
$ 1,535,701 |
$ 1,455,442 |
$ 1,471,931 |
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Liabilities and Stockholders' Equity |
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Current liabilities: |
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Accounts payable and accrued expenses (Note 6) |
$ 227,032 |
$ 152,039 |
$ 212,480 |
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Income taxes payable |
-- |
-- |
2,731 |
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Long-term debt due within one year (Note 5) |
14,941 |
27,931 |
26,577 |
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Total current liabilities |
241,973 |
179,970 |
241,788 |
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Long-term debt (Note 5) |
628,086 |
556,220 |
546,196 |
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Other long-term liabilities |
107,439 |
113,217 |
97,075 |
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Deferred income taxes |
59,745 |
78,808 |
66,492 |
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Commitments and contingencies (Note 12) |
-- |
-- |
-- |
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Put options (Note 9) |
3,088 |
1,822 |
198 |
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Minority interest in net assets of consolidated subsidiaries |
30,908 |
29,159 |
23,727 |
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Stockholders' equity: |
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Preferred stock, $0.01 par value, 25,000,000 shares authorized, zero shares issued and outstanding |
-- |
-- |
-- |
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Common stock: |
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Class A common stock, convertible to common stock, $0.01 par value, 20,000,000 shares authorized, 7,439,834 shares issued and outstanding |
74 |
74 |
74 |
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Common stock, $0.01 par value, 80,000,000 shares authorized, 27,859,651, 27,835,042, and 27,748,792 shares issued and outstanding as of January 31, 2004, July 31, 2003, and January 31, 2003, respectively |
279 |
278 |
277 |
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Additional paid-in capital |
416,312 |
415,306 |
416,080 |
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Deferred compensation |
(848) |
(198) |
(900) |
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Retained earnings |
48,645 |
80,786 |
80,924 |
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Total stockholders' equity |
464,462 |
496,246 |
496,455 |
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Total liabilities and stockholders' equity |
$ 1,535,701 |
$ 1,455,442 |
$ 1,471,931 |
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended |
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January 31, |
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2004 |
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2003 |
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(as restated) |
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Net revenue: |
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Mountain |
$ 201,368 |
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$ 188,385 |
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Lodging |
38,372 |
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35,612 |
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Real estate |
7,496 |
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24,192 |
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Total net revenue |
247,236 |
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248,189 |
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Operating expense: |
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Mountain |
126,860 |
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123,505 |
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Lodging |
38,367 |
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37,982 |
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Real estate |
6,065 |
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22,294 |
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Gain on transfer of property (Note 15) |
(233) |
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-- |
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Depreciation and amortization |
22,568 |
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21,138 |
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Asset impairment charge (Note 3) |
933 |
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-- |
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Mold remediation charge (Note 13) |
5,500 |
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-- |
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Loss on disposal of fixed assets, net |
545 |
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3 |
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Total operating expense |
200,605 |
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204,922 |
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Income from operations |
46,631 |
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43,267 |
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Other income (expense): |
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Mountain equity investment income, net |
586 |
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452 |
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Lodging equity investment loss, net |
(1,214) |
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(1,975) |
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Real estate equity investment income, net |
3 |
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771 |
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Investment income |
328 |
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404 |
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Interest expense, net |
(12,857) |
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(12,935) |
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Loss on extinguishment of debt (Note 5) |
(36,195) |
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-- |
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Gain (loss) on put options, net (Note 9) |
(696) |
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1,371 |
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Other expense, net |
(10) |
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(10) |
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Minority interest in income of consolidated subsidiaries, net |
(4,094) |
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(2,343) |
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Income (loss) before provision for income taxes |
(7,518) |
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29,002 |
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Benefit (provision) for income taxes |
781 |
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(12,277) |
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Net income (loss) |
$ (6,737) |
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$ 16,725 |
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Per share amounts (Note 4): |
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Basic net income (loss) per share |
$ (0.19) |
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$ 0.48 |
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Diluted net income (loss) per share |
$ (0.19) |
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$ 0.47 |
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
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Six Months Ended |
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January 31, |
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2004 |
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2003 |
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(as restated) |
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Net revenue: |
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Mountain |
$ 235,447 |
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$ 222,014 |
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Lodging |
81,024 |
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76,213 |
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Real estate |
34,388 |
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63,546 |
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Total net revenue |
350,859 |
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361,773 |
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Operating expense: |
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Mountain |
188,775 |
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188,161 |
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Lodging |
78,885 |
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77,275 |
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Real estate |
18,189 |
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49,839 |
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Gain on transfer of property (Note 15) |
(2,147) |
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-- |
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Depreciation and amortization |
42,933 |
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39,764 |
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Asset impairment charge (Note 3) |
933 |
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-- |
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Mold remediation charge (Note 13) |
5,500 |
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-- |
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Loss on disposal of fixed assets, net |
1,556 |
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19 |
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Total operating expense |
334,624 |
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355,058 |
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Income from operations |
16,235 |
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6,715 |
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Other income (expense): |
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Mountain equity investment income, net |
568 |
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1,541 |
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Lodging equity investment loss, net |
(2,954) |
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(3,281) |
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Real estate equity investment income, net |
206 |
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3,841 |
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Investment income |
893 |
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610 |
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Interest expense, net |
(26,266) |
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(24,714) |
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Loss on extinguishment of debt (Note 5) |
(36,195) |
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-- |
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Gain (loss) on put options, net (Note 9) |
(1,306) |
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1,371 |
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Other income (expense), net |
(10) |
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19 |
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Minority interest in income of consolidated subsidiaries, net |
(2,003) |
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(319) |
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Loss before benefit from income taxes |
(50,832) |
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(14,217) |
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Benefit from income taxes |
18,691 |
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5,827 |
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Net loss |
$ (32,141) |
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$ (8,390) |
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Per share amounts (Note 4): |
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Basic net loss per share |
$ (0.91) |
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$ (0.24) |
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Diluted net loss per share |
$ (0.91) |
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$ (0.24) |
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
Vail Resorts, Inc.
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
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Six Months Ended |
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January 31, |
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2004 |
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2003 |
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Net cash provided by operating activities: |
$ 110,025 |
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$ 126,102 |
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Cash flows from investing activities: |
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Capital expenditures |
(43,704) |
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(66,373) |
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Investments in real estate |
(4,051) |
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(27,961) |
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Other investing activities, net |
1,279 |
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(1,934) |
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Net cash used in investing activities |
(46,476) |
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(96,268) |
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Cash flows from financing activities: |
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Proceeds from borrowings under long-term debt |
560,402 |
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151,100 |
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Payments of long-term debt |
(574,946) |
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(182,013) |
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Payment of tender premium |
(22,690) |
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-- |
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Other financing activities, net |
(7,002) |
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(196) |
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Net cash used in financing activities |
(44,236) |
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(31,109) |
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Net increase (decrease) in cash and cash equivalents |
19,313 |
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(1,275) |
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Net increase in cash due to adoption of FIN No. 46R |
4,316 |
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-- |
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Cash and cash equivalents: |
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Beginning of period |
18,940 |
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25,965 |
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End of period |
$ 42,569 |
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$ 24,690 |
The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
Vail Resorts, Inc.
Notes to Consolidated Condensed Financial Statements
(Unaudited)
Vail Resorts, Inc. ("Vail Resorts") is organized as a holding company and operates through various subsidiaries. Vail Resorts and its subsidiaries (collectively, the "Company") currently operate in three business segments: Mountain, Lodging and Real Estate. The Vail Corporation (d/b/a Vail Associates, Inc.), an indirect wholly-owned subsidiary of Vail Resorts, and its subsidiaries (collectively, "Vail Associates") owns and operates four world-class ski resorts and related amenities at Vail, Breckenridge, Keystone and Beaver Creek mountains in Colorado. The Company, through a subsidiary, also owns and operates Heavenly Ski Resort ("Heavenly") in the Lake Tahoe area of California and Nevada. In addition to the ski resorts, Vail Associates owns Grand Teton Lodge Company ("GTLC"), which operates three resorts within Grand Teton National Park (under a National Park Service concessionaire contract), and the Jackson Hole Golf & Tennis Club in Wyoming. Vail Associates also owns a 51% interest in Snake River Lodge & Spa ("SRL&S") located near Jackson, Wyoming and owns 100% of the Lodge at Rancho Mirage ("Rancho Mirage") near Palm Springs, California. The Company holds a majority interest in RockResorts International LLC ("RockResorts"), a luxury hotel management company. The Company also holds a 51.9% interest in SSI Venture LLC ("SSV"), a retail/rental company. Vail Resorts Development Company ("VRDC"), a wholly-owned subsidiary of Vail Associates, conducts the operations of the Company's Real Estate segment. The Company's mountain and lodging businesses are seasonal in nature with operating seasons from mid-November through mid-April. The Company's operations at GTLC generally run from mid-May through mid-October.
In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to present 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 year. 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, 2003. The year end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.
2. Restatements
As disclosed in the Company's Form 10-K for the year ended July 31, 2003, the Company restated its previously filed financial statements for certain corrections to the accounting for employee housing joint ventures, executive deferred compensation, interest income from a certain joint venture, capitalized interest, depreciation expense and other related matters. For more information regarding these changes, refer to the Company's Form 10-K for the year ended July 31, 2003.
The total impact of the restatement and prior period adjustments (in thousands) included in this filing as compared to the financial statements previously reported in the Company's Form 10-Q for the three and six months ended January 31, 2003 is summarized below (only line items that were impacted are presented):
Balance Sheet: |
As of January 31, 2003 |
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Previously |
As |
Percent |
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Reported |
Restated |
Change |
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|
Other current assets |
$ 26,753 |
$ 26,696 |
(0.2)% |
Total current assets |
129,121 |
129,065 |
(0.0)% |
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Property, plant and equipment, net |
946,501 |
943,555 |
(0.3)% |
Other assets |
38,832 |
39,399 |
1.5 % |
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Total assets |
$ 1,474,366 |
$ 1,471,931 |
(0.2)% |
|
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Accounts payable and accrued expenses |
$ 210,191 |
$ 212,480 |
1.1 % |
Total current liabilities |
239,499 |
241,788 |
1.0 % |
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|
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Other long-term liabilities |
96,658 |
97,075 |
0.4 % |
Deferred income taxes |
67,987 |
66,492 |
(2.2)% |
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|
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Retained earnings |
84,570 |
80,924 |
(4.3)% |
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|
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Total stockholders' equity |
500,101 |
496,455 |
(0.7)% |
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|
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Total liabilities and stockholders' equity |
$ 1,474,366 |
$1,471,931 |
(0.2)% |
Statement of Operations: |
Three Months Ended |
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Six Months Ended |
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January 31, 2003 |
|
January 31, 2003 |
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Previously |
As |
Percent |
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Previously |
As |
Percent |
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Reported |
Restated |
Change |
|
Reported |
Restated |
Change |
Mountain revenue, net |
$ 189,163 |
$ 188,385 |
(0.4)% |
|
$ 223,603 |
$222,014 |
(0.7)% |
Lodging revenue, net |
34,981 |
35,612 |
1.8 % |
|
75,039 |
76,213 |
1.6 % |
Real estate revenue, net |
22,623 |
24,192 |
6.9 % |
|
61,978 |
63,546 |
2.5 % |
Total net revenue |
246,767 |
248,189 |
0.6 % |
|
360,620 |
361,773 |
0.3 % |
|
|
|
|
|
|
|
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Mountain operating expense |
123,825 |
123,505 |
(0.3)% |
|
189,287 |
188,161 |
(0.6)% |
Lodging operating expense |
37,188 |
37,982 |
2.1 % |
|
75,935 |
77,275 |
1.8 % |
Real estate operating expense |
22,274 |
22,294 |
0.1 % |
49,805 |
49,839 |
0.1 % |
|
Depreciation and amortization |
19,885 |
21,138 |
6.3 % |
|
37,870 |
39,764 |
5.0 % |
Total operating expense |
203,172 |
204,922 |
0.9 % |
|
352,897 |
355,058 |
0.6 % |
|
|
|
|
|
|
|
|
Income from operations |
43,595 |
43,267 |
(0.8)% |
7,723 |
6,715 |
(13.1)% |
|
Mountain equity investment income, net |
162 |
452 |
179.0 % |
|
1,223 |
1,541 |
26.0 % |
Lodging equity investment loss, net |
(2,021) |
(1,975) |
(2.3)% |
|
(3,332) |
(3,281) |
(1.5)% |
Investment income |
146 |
404 |
176.7 % |
|
405 |
610 |
50.6 % |
Interest expense, net |
(12,782) |
(12,935) |
1.2 % |
|
(24,746) |
(24,714) |
(0.1)% |
Minority interest in income of consolidated subsidiaries, net |
(2,062) |
(2,343) |
13.6 % |
|
(39) |
(319) |
717.9 % |
|
|
|
|
|
|
|
|
Income/(loss) before provision for income taxes |
29,168 |
29,002 |
(0.6)% |
|
(13,552) |
(14,217) |
4.9 % |
|
|
|
|
|
|
|
|
Benefit/(provision) for income taxes |
(12,356) |
(12,277) |
(0.6)% |
|
5,544 |
5,827 |
5.1 % |
|
|
|
|
|
|
|
|
Net income/(loss) |
$ 16,812 |
$ 16,725 |
(0.5)% |
$ (8,008) |
$ (8,390) |
4.8 % |
3. Summary of Significant Accounting Policies
Use of Estimates--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications--Certain reclassifications have been made to the accompanying Consolidated Financial Statements as of and for the three and six months ended January 31, 2003 and as of July 31, 2003 to conform to the current period presentation.
Long-lived Assets--The Company evaluates potential impairment of long-lived assets and long-lived assets to be disposed of in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 establishes procedures for the review of recoverability and measurement of impairment, if necessary, of long-lived assets held and used by an entity. SFAS No. 144 requires that those assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. SFAS No. 144 requires that long-lived assets to be disposed of be reported at the lower of carrying amount or fair value less estimated selling costs. As of January 31, 2004, the Company abandoned development of certain projects related to a proposed gondola and a maintenance facility. As a result, the Company recognized an impairment loss related to these projects of $933,000 for the three and six months ended January 31, 2004.
Stock Compensation-- At January 31, 2004, the Company had four stock-based compensation plans. The Company applies Accounting Principles Board ("APB") Opinion No. 25 and related interpretations in accounting for stock-based compensation to employees. Accordingly, no compensation cost has been recognized for its fixed stock option plans. Had compensation cost for the Company's four stock-based compensation plans been determined consistent with SFAS No. 123, "Accounting for Stock Based Compensation", the Company's net income (loss) and income (loss) per share would have been reduced to the pro forma amounts indicated below (in thousands, except per share amounts):
|
Three months ended January 31, |
|
Six months ended January 31, |
||||||||
|
2004 |
2003 |
|
2004 |
2003 |
||||||
Net income (loss) |
|
|
|
|
|
||||||
|
As reported |
$ (6,737) |
$ 16,725 |
|
$ (32,141) |
$ (8,390) |
|||||
|
Deduct: total stock based employee compensation expense determined under fair value-based method for all awards, net of related tax effects |
(126) |
(603) |
|
(168) |
(996) |
|||||
|
Pro forma |
$ (6,863) |
$ 16,122 |
|
$ (32,309) |
$ (9,386) |
|||||
|
|
|
|
|
|
|
|||||
Basic net income (loss) per common share |
|||||||||||
|
As reported |
$ (0.19) |
$ 0.48 |
|
$ (0.91) |
$ (0.24) |
|||||
|
Deduct: total stock based employee compensation expense determined under fair value-based method for all awards, net of related tax effects |
-- |
(0.02) |
|
-- |
(0.03) |
|||||
|
Pro forma |
$ (0.19) |
$ 0.46 |
|
$ (0.91) |
$ (0.27) |
|||||
|
|
|
|
|
|
|
|||||
Diluted net income (loss) per common share |
|||||||||||
|
As reported |
$ (0.19) |
$ 0.47 |
|
$ (0.91) |
$ (0.24) |
|||||
|
Deduct: total stock based employee compensation expense determined under fair value-based method for all awards, net of related tax effects |
-- |
(0.02) |
|
-- |
(0.03) |
|||||
|
Pro forma |
$ (0.19) |
$ 0.45 |
|
$ (0.91) |
$ (0.27) |
New Accounting Pronouncements
-- In January 2003, the Financial Accounting Standard Board ("FASB") issued FASB Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB 51". This interpretation addresses consolidation by business enterprises of variable interest entities ("VIEs"). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. The interpretation applies immediately to VIEs created after February 1, 2003, and to VIEs in which the Company obtains an interest after that date. The interpretation was to apply in the first fiscal year or interim period beginning after June 15, 2003. In October 2003, the FASB deferred the implementation date for FIN No. 46 to financial statements iss ued for the first period ending after December 15, 2003. This deferral only applies to VIEs that existed prior to February 1, 2003.In December 2003, the FASB published a revision to FIN No. 46, FIN No. 46R, to clarify some of the provisions of FIN No. 46 and to exempt certain entities from its requirements. Under FIN No. 46R, application is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of VIEs is required in financial statements no later than for periods ending after March 15, 2004. As of November 1, 2003, the Company has consolidated certain entities that it previously had accounted for under the equity method. The Company is currently evaluating any additional impact that the implementation of this interpretation will have on its financial position or results of operations (see Note 8, Variable Interest Entities).
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and requires that financial instruments within its scope, many of which currently are classified as equity, be classified as liabilities or, in some circumstances, assets. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the first interim period beginning after June 15, 2003. The FASB issued FASB Staff Position ("FSP") 150-3 on November 7, 2003 to defer, indefinitely, the effective date for applying the measurement and classification provisions of SFAS No. 150 for certain mandatorily redeemable non-controlling interests. Implementation of the currently effective provisions of SFAS No. 150 did not have a significant impact on the Co mpany's financial position or results of operations.
4. Net Income (Loss) Per Common Share
SFAS No. 128, "Earnings Per Share" ("EPS"), establishes standards for computing and presenting EPS. SFAS No. 128 requires the dual presentation of basic and diluted EPS on the face of the income statement and requires a reconciliation of numerators (net income/loss) and denominators (weighted-average shares outstanding) for both basic and diluted EPS in the footnotes. Basic EPS excludes dilution and is computed by dividing net income (loss) available to common shareholders by the weighted-average shares outstanding. 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 common shares that would then share in the earnings of the Company. Presented below is basic and diluted EPS for the three and six months ended January 31, 2004 and 2003.
|
Three Months Ended January 31, |
||||||
|
2004 |
|
2003 |
||||
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
|
|
|
|
|
(as restated) |
||
|
(In thousands, except per share amounts) |
||||||
Net income (loss) per common share: |
|
|
|
|
|
|
|
Net income (loss) |
$ (6,737) |
|
$ (6,737) |
|
$ 16,725 |
|
$ 16,725 |
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
35,286 |
|
35,286 |
|
35,187 |
|
35,187 |
Effect of dilutive securities |
-- |
|
-- |
|
-- |
|
40 |
Total shares |
35,286 |
|
35,286 |
|
35,187 |
|
35,227 |
|
|
|
|
|
|
|
|
Net income (loss) per common share |
$ (0.19) |
|
$ (0.19) |
|
$ 0.48 |
|
$ 0.47 |
The number of shares issuable on the exercise of common stock options that were excluded from the calculation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive totaled 2.6 million and 2.3 million for the three months ended January 31, 2004 and 2003, respectively. For the three months ended January 31, 2004, the shares were anti-dilutive due to the Company's net loss position. For the three months ended January 31, 2003, the shares were anti-dilutive because their exercise prices were greater than the average share price during the respective period.
|
Six Months Ended January 31, |
||||||
|
2004 |
|
2003 |
||||
|
Basic |
|
Diluted |
|
Basic |
|
Diluted |
|
|
|
|
|
(as restated) |
||
|
(In thousands, except per share amounts) |
||||||
Net loss per common share: |
|
|
|
|
|
|
|
Net loss |
$ (32,141) |
|
$ (32,141) |
|
$ (8,390) |
|
$ (8,390) |
|
|
|
|
|
|
|
|
Weighted-average shares outstanding |
35,280 |
|
35,280 |
|
35,176 |
|
35,176 |
Effect of dilutive securities |
-- |
|
-- |
|
-- |
|
-- |
Total shares |
35,280 |
|
35,280 |
|
35,176 |
|
35,176 |
|
|
|
|
|
|
|
|
Net loss per common share |
$ (0.91) |
|
$ (0.91) |
|
$ (0.24) |
|
$ (0.24) |
The number of shares issuable on the exercise of common stock options that were excluded from the calculation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive totaled 2.6 million and 2.5 million for the six months ended January 31, 2004 and 2003, respectively. The shares were anti-dilutive because the Company recorded net losses for the periods presented.
Long-term debt as of January 31, 2004, July 31, 2003 and January 31, 2003 is summarized as follows (in thousands):
|
|
January 31, |
July 31, |
January 31, |
|
Maturity (e) |
2004 |
2003 |
2003 |
|
|
|
|
|
Industrial Development Bonds |
2004-2020 |
$ 61,700 |
$ 61,700 |
$ 61,700 |
Credit Facilities (c) |
2006-2011 |
116,776 |
133,860 |
126,100 |
Senior Subordinated Notes (b) |
2009-2014 |
401,247 |
360,000 |
360,000 |
Discount on Senior Subordinated Notes (b) |
|
(180) |
(6,142) |
(6,526) |
Employee Housing Bonds (d) |
2027-2039 |
52,575 |
-- |
-- |
Olympus Note (a) |
2004 |
-- |
25,000 |
25,000 |
Discount on Olympus Note (a) |
|
-- |
(656) |
(1,607) |
Other |
2004-2029 |
10,909 |
10,389 |
8,106 |
|
|
643,027 |
584,151 |
572,773 |
Less: Current Maturities (f) |
|
14,941 |
27,931 |
26,577 |
|
|
$ 628,086 |
$ 556,220 |
$ 546,196 |
(a) |
In connection with the Company's acquisition of Rancho Mirage in November 2001, the Company entered into a note payable to Olympus Real Estate Partners (the "Olympus Note"). The Olympus Note had a principal amount of $25 million and was scheduled to mature November 15, 2003. The terms did not provide for interest; therefore, the Company imputed an interest rate of 8% per annum, which was recorded as a discount on the Olympus Note and was amortized as interest expense over the life of the Olympus Note. The Company repaid the Olympus Note in full in August 2003. |
|
|
(b) |
In January 2004, the Company completed an offering for $390 million of Senior Subordinated Notes (the "6.75% Notes"), the proceeds of which were used to purchase the outstanding $360 million principal amounts of Senior Subordinated Notes due 2009 (collectively, the "8.75% Notes") and pay related premiums, fees and expenses. The 6.75% Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act"), as amended, and to persons outside the United States under Regulation S of the Securities Act. The 6.75% Notes have a fixed annual interest rate of 6.75% with interest due semi-annually on February 15 and August 15, beginning August 15, 2004. The 6.75% Notes will mature February 2014 and no principal payments are due to be paid until maturity. The Company has certain early redemption options under the terms of the 6.75% Notes. The Notes are subordinated to certain of the Company's debts, including the Credit Facility, and will be sub ordinated to certain of the Company's future debts. The Company's payment obligations under the Notes are jointly and severally guaranteed by substantially all of the Company's current and future domestic subsidiaries (See Note 16, Guarantor and Non-Guarantor Subsidiaries). The indenture governing the 6.75% Notes contains restrictive covenants which, among other things, limit the ability of Vail Resorts, Inc. and its Restricted Subsidiaries (as defined in the Indenture) to a) borrow money or sell preferred stock, b) create liens, c) pay dividends on or redeem or repurchase stock, d) make certain types of investments, e) sell stock in the Restricted Subsidiaries, f) create restrictions on the ability of the Restricted Subsidiaries to pay dividends or make other payments to the Company, g) enter into transactions with affiliates, h) issue guarantees of debt and i) sell assets or merge with other companies. The Company is required to exchange the 6.75% Notes and the guarantees for a new issue of substantially i dentical debt securities and guarantees registered under the Securities Act within 330 days after the closing of the 6.75% Notes. |
|
|
|
In January 2004, the Company offered to purchase the 8.75% Notes for total consideration of $1,065.06 per $1,000 principal amount of 8.75% Notes. Of the outstanding 8.75% Notes, $348.8 million, or approximately 96.9%, were tendered. The Indentures for the 8.75% Notes remaining outstanding subsequent to the tender were amended to eliminate substantially all of the restrictive covenants . In addition, the Company is required to call the remaining outstanding 8.75% Notes on May 15, 2004 for a call price of 104.375% of the principal balance outstanding. The Company has transferred $11.2 million into a blocked account to fund the call of the 8.75% Notes remaining outstanding. A loss on extinguishment of debt in the amount of $36.2 million was recorded in connection with the tender transaction. |
|
|
(c) |
In January 2004, the Company amended its existing $100 million term loan under its bank credit facility. The amendment extended the maturity date from December 2008 to December 2010 and reduced the applicable interest rate margin. In addition, the amendment provides that the term loan may be increased on a one-time basis by up to $60 million. |
|
|
(d) |
As of November 1, 2003, the Company began consolidating four entities, Breckenridge Terrace, LLC ("Breckenridge Terrace"), The Tarnes at BC, LLC ("Tarnes"), BC Housing, LLC ("BC Housing") and Tenderfoot Seasonal Housing, LLC ("Tenderfoot") which had previously been accounted for under the equity method (see Note 8, Variable Interest Entities). As a result, the outstanding indebtedness of the entities (collectively, the "Employee Housing Bonds") has been recorded on the Company's Consolidated Condensed Balance Sheet as of January 31, 2004. The Employee Housing Bonds consist of interest-only bonds with interest rates tied to LIBOR plus a margin, the proceeds of which were used to construct employee housing facilities owned by each entity. Interest on the Employee Housing Bonds is paid monthly in arrears, and the interest rate is adjusted weekly. No principal payments are due on the Employee Housing Bonds until maturity. Each entity's bonds were issued in two tranches. The Tranche B bonds are cr edit-enhanced by letters of credit issued by an unrelated third party banking institution which was granted a security interest in the assets of the entities in respect of the letters of credit. The chart below presents the principal amounts outstanding for the Employee Housing Bonds by entity as of January 31, 2004 (in thousands): |
|
Maturity |
Tranche A |
Tranche B |
Total |
Breckenridge Terrace |
2039 |
$ 15,065 |
$ 4,915 |
$ 19,980 |
Tarnes |
2039 |
8,000 |
2,410 |
10,410 |
BC Housing |
2027 |
9,100 |
1,500 |
10,600 |
Tenderfoot |
2035 |
5,700 |
5,885 |
11,585 |
Total |
|
$ 37,865 |
$ 14,710 |
$ 52,575 |
|
|
(e) |
Maturities are based on the Company's July 31 fiscal year end. |
|
|
(f) |
Current maturities represent principal payments due in the next 12 months. |
Aggregate maturities for debt outstanding as of January 31, 2004 are as follows (in thousands):
Fiscal 2004 |
|
$ 12,890 |
Fiscal 2005 |
|
3,992 |
Fiscal 2006 |
|
17,673 |
Fiscal 2007 |
|
5,467 |
Fiscal 2008 |
|
1,366 |
Thereafter |
|
601,639 |
Total debt |
|
$643,027 |
6. Supplementary Balance Sheet Information (in thousands)
The composition of property, plant and equipment follows:
|
January 31, |
|
July 31, |
|
January 31, |
|
|
2004 |
|
2003 |
|
2003 |
|
|
|
|
|
|
(as restated) |
|
Land and land improvements |
$ 242,939 |
|
$ 239,185 |
|
$ 233,863 |
|
Buildings and terminals |
612,469 |
|
545,927 |
|
482,123 |
|
Machinery and equipment |
384,484 |
|
355,287 |
|
268,256 |
|
Automobiles and trucks |
22,043 |
|
21,550 |
|
18,459 |
|
Furniture and fixtures |
114,764 |
|
105,687 |
|
152,848 |
|
Construction in progress |
7,425 |
|
15,597 |
|
103,267 |
|
|
1,384,124 |
|
1,283,233 |
|
1,258,816 |
|
Accumulated depreciation |
(395,700) |
|
(350,982) |
|
(315,261) |
|
Property, plant and equipment, net |
$ 988,424 |
$ 932,251 |
$ 943,555 |
The composition of accounts payable and accrued expenses follows:
|
January 31, |
|
July 31, |
|
January 31, |
|
|
2004 |
|
2003 |
|
2003 |
|
|
|
|
|
|
(as restated) |
|
Trade payables |
$ 71,851 |
|
$ 53,921 |
|
$ 77,304 |
|
Deferred revenue |
49,468 |
|
18,036 |
|
46,270 |
|
Deposits |
20,353 |
|
13,292 |
|
19,936 |
|
Accrued salaries, wages and deferred compensation |
20,998 |
|
19,526 |
|
22,670 |
|
Accrued benefits |
24,657 |
|
19,592 |
|
17,740 |
|
Accrued interest |
1,996 |
|
7,798 |
|
7,449 |
|
Accrued property taxes |
12,419 |
|
7,314 |
|
11,223 |
|
Accrued mold remediation costs |
7,000 |
|
-- |
|
-- |
|
Other accruals |
18,290 |
|
12,560 |
|
9,888 |
|
Total accounts payable and accrued expenses |
$ 227,032 |
$ 152,039 |
$ 212,480 |
The Company has ownership interests in four entities (BC Housing, Tarnes, Tenderfoot and Breckenridge Terrace, collectively, the "Employee Housing Entities") that were formerly accounted for under the equity method. In connection with the Company's implementation of FIN No. 46R, the Company determined it is the primary beneficiary of the Employee Housing Entities, which are VIEs, and therefore has consolidated these entities in its Consolidated Condensed Financial Statements as of November 1, 2003. The Company is still evaluating its other equity method investees under FIN No. 46R, which evaluation is required to be completed no later than the end of the Company's third fiscal quarter (see Note 8, Variable Interest Entities).
In December 2003, Keystone/Intrawest LLC ("KRED") distributed a majority of its assets to its members. The Company received a non-cash distribution of $25.6 million (net of assumed liabilities of $14.0 million) under the plan. The Company received primarily various parcels of developable land and approximately 91,000 square feet of commercial space from the distribution. There was no material gain or loss upon distribution. The Company's investment in KRED as recorded in the accompanying balance sheets was $7.2 million, $35.8 million and $32.7 million as of January 31, 2004 and 2003 and July 31, 2003, respectively. Condensed financial data for KRED is presented below for the three and six months ended December 31, 2003 and 2002 (in thousands).
|
For the three months ended December 31, |
|
For the six months ended December 31, |
||
|
2003 |
2002 |
|
2003 |
2002 |
Net revenue |
$ 4,208 |
$ 2,260 |
|
$ 10,650 |
$ 3,818 |
Operating income |
(1,146) |
37 |
|
(355) |
6,654 |
Net income (loss) |
(1,239) |
(494) |
|
(516) |
6,477 |
8. Variable Interest Entities
The Company has determined that it is the primary beneficiary of the Employee Housing Entities, which are VIEs, and has consolidated them in its Consolidated Condensed Financial Statements as of November 1, 2003. As a group, as of January 31, 2004, the Employee Housing Entities had total assets of $49.6 million and total debt of $52.6 million. All of the Employee Housing Entities' assets serve as collateral for their Tranche B obligations. The Company's exposure to loss as a result of its involvement with the Employee Housing Entities is limited to the Company's initial equity investments of $2,000 and $38.3 million letters of credit related to the Tranche A interest-only taxable bonds. The Company also guarantees debt service of $13.3 million of Tranche B Housing Bonds; $7.4 million of these guarantees expire May 1, 2004 and $5.9 million expire June 1, 2005. The letters of credit would be triggered in the event that one of the entities defaults on required Tranche A payments. The guar antees on the Tranche B bonds would be triggered in the event that one of the entities defaults on required Tranche B debt service payments. Neither the letters of credit or guarantees have default provisions. There was no impact to net income (loss) of the Company as a result of the consolidation of the Employee Housing Entities.
The Company is currently evaluating its remaining equity investments to determine whether those investments meet the definition of VIEs under FIN No. 46R. Presented below are additional details related to certain of the Company's equity investments.
One entity is a joint venture involved in the construction and operations of The Ritz-Carlton, Bachelor Gulch. The entity had total assets of approximately $95 million and total liabilities of approximately $77 million as of December 31, 2003. The Company's maximum exposure to loss as a result of its involvement with the entity is limited to its initial equity investment of $6.7 million and $4.5 million in long-term loans extended to the entity.
One entity is a joint venture that owns commercial space. The Company currently leases substantially all of that space for its corporate headquarters. The entity had total assets of $4.5 million and no debt as of January 31, 2004. The Company's maximum exposure to loss as a result of its involvement with the entity is limited to its initial equity investment of $2.5 million.
One entity owns a private residence in Eagle County, Colorado. The entity had total assets of $5.5 million and no debt as of January 31, 2004. The Company's maximum exposure to loss as a result of its involvement with the entity is limited to its initial equity investment of $2.5 million.
9. Put Options
The Company recorded a loss on put options of $696,000 and $1.3 million for the three and six months ended January 31, 2004, respectively. The Company recorded a gain on put options of $1.4 million for the three and six months ended January 31, 2003. The gain or loss on put options consists of changes in the fair market values of the put liabilities associated with RockResorts, RTP LLC ("RTP") and SSV, as discussed in more detail below.
The Company recorded a gain of $675,000 representing a decrease in fair value of the RockResorts put option during the three months ended January 31, 2004; there was no net change in fair value of the option during the six months ended January 31, 2004. The Company recorded a gain of $1.4 million for the three and six months ended January 31, 2003, representing a decrease in the fair value of the RockResorts put option for those periods.
In January 2004, the minority shareholder in RTP exercised a portion of its put option for approximately 2.2% of the minority shareholder's total 49% ownership interest, for a put price of approximately $126,000. As a result, the Company now holds a 52.1% ownership interest in RTP. For the three and six months ended January 31, 2004, the Company recorded a gain of $136,000 representing a decrease in fair value of the remaining put option during that period. The Company did not record any gain or loss related to the option during the three and six months ended January 31, 2003.
In November 2003, the Company and GSSI LLC, the minority shareholder in SSV, agreed to extend the option that had been eligible to be exercised during the period between November 1, 2003 and November 10, 2003 to the same period in 2004. The Company recorded a loss of $1.5 million and $1.4 million for the three and six months ended January 31, 2004, respectively, representing the increase in fair value of the option during those periods. The Company did not record any gain or loss related to the option during the three and six months ended January 31, 2003.
The Company records its quarterly income tax provision by reviewing its quarterly interim results as an integral part of the results for the entire fiscal year, rather than as a discrete period. Consequently, the Company calculates its interim income tax provision by projecting pre-tax book income (loss) for the full fiscal year, computing the income tax thereon, and applying the effective tax rate thus derived to its interim results. To the extent the Company makes revisions to its expected annual results and the tax effects thereon, the Company adjusts its income tax provision on a cumulative basis. As a result of the loss on extinguishment of debt and the mold remediation charge recorded in the current fiscal quarter resulting in a revision to the Company's previously expected annual results, the Company has recorded a tax benefit for the quarter of $781,000 (an effective tax rate for the quarter of 10.0%). Assuming no further revisions to the expected annual results for the remaind er of the fiscal year, the Company expects that its income tax provision for the full year will result in an effective tax rate of approximately 37%.
11. Related Party Transactions
In connection with the employment of Jeffrey W. Jones as Senior Vice President and Chief Financial Officer of VRDC, a wholly-owned subsidiary of the Company, VRDC agreed to invest up to $650,000, but not to exceed 50% of the purchase price, for the purchase of a residence for Mr. Jones and his family in Eagle County, Colorado. In September 2003, VRDC contributed $650,000 toward the purchase price of the residence and thereby obtained a 46.1% undivided ownership interest in such residence. Upon the resale of the residence, or within approximately 18 months of the termination of Mr. Jones' employment with VRDC, whichever is earlier, VRDC is entitled to receive its proportionate share of the resale price of the residence, less certain deductions. Mr. Jones was also appointed Senior Vice President and Chief Financial Officer of the Company in November 2003.
The Beaver Creek Resort Company of Colorado ("BCRC"), a non-profit entity formed for the benefit of property owners and certain others in Beaver Creek Village in which Vail Associates has the right to appoint 4 of 9 directors, has agreed to pay $4 million towards a portion of the capital construction costs of two new chairlifts at Beaver Creek. The chairlifts will serve BCRC property and will provide transportation services to the general public including, but not limited to, BCRC residents; however, BCRC will not receive any ownership in the chairlifts in exchange for its contribution.
12. Commitments and Contingencies
Metropolitan Districts
The Bachelor Gulch and Red Sky Ranch developments created by VRDC utilize a "dual-district" structure to finance and provide municipal services to the property owners within each development. For Bachelor Gulch, Smith Creek Metropolitan District ("SCMD") is the service district and Bachelor Gulch Metropolitan District ("BGMD") is the financing district; similarly, for Red Sky Ranch, Holland Creek Metropolitan District ("HCMD") is the service district and Red Sky Ranch Metropolitan District ("RSRMD") is the financing district.
Each of the districts is a quasi-municipal corporation and political subdivision of the State of Colorado. The operations of the districts are governed by intergovernmental agreements sanctioned by the state that were entered into at the time the districts were formed. Day-to-day operations are overseen by a board of directors for each district. Board members are public officials of the state and are elected through a state-mandated election process. The property owners within each district comprise the electorate. The Company and its designated employees are the sole property owners within both SCMD and HCMD. BGMD and RSRMD consist of the general home and property owners within the Bachelor Gulch and Red Sky Ranch developments.
The SCMD and HCMD service districts own, operate and maintain the municipal facilities and the BGMD and RSRMD financing districts are responsible for the payment of the costs related to the construction, operation and maintenance of the facilities. SCMD and HCMD have little or no assessed valuation within their boundaries from which general obligation ("GO") bonds could be paid, whereas virtually all of the assessed valuation of property to be developed is within the boundaries of BGMD and RSRMD. SCMD and HCMD have outstanding variable rate revenue bonds in the amount of $26.9 million and $12 million, respectively, the funds of which were used to finance the construction of facilities. The bonds have been credit-enhanced by letters of credit issued against the Company's bank credit facility in the amount of $28.5 million for the SCMD bonds and $12.1 million for the HCMD bonds. The debt service requirements of the bonds are to be paid by BGMD and RSRMD through the assessment of ad valorem property taxes to property owners within the districts. In addition, as the assessed value of the property within the financing district grows, BGMD and RSRMD have the ability to issue GO or revenue bonds to capture the tax value of increases in the tax base within the financing district, the proceeds of which are to be used to retire the revenue bonds issued by the service district.
However, it may take a number of years for the assessed values on property within BGMD and RSRMD to generate the revenues and tax base necessary to fund the debt service requirements of SCMD and HCMD or to issue bonds to retire the service districts bonds. As a result, VRDC has agreed to pay "capital improvement fees" to BGMD and RSRMD, which are passed through to SCMD and HCMD for purposes of fulfilling the debt service obligations on the bonds. Capital improvement fees are required to be paid only to the extent that funds are necessary to make debt service payments; therefore as BGMD and RSRMD issue bonds to retire the SCMD and HCMD bonds, VRDC's obligation to pay capital improvement fees will diminish. It is anticipated that, in less than 25 to 30 years, the assessed values within BGMD and RSRMD will ultimately be sufficient to fully retire the SCMD and HCMD bonds, and BGMD has issued GO bonds that were used to reduce a portion of the original outstanding principal of the SCMD bonds. The Company believ es that BGMD and RSRMD currently have the financial capability to issue incremental GO bonds which could be used to replace some or all of the SCMD and HCMD bonds outstanding, which would eliminate the Company's related obligations thereon. BGMD has notified the Company of its intent to issue GO bonds and use the proceeds to replace the existing SCMD bonds outstanding. In connection with BGMD's proposed bond issuance, SCMD has agreed to transfer certain of its assets, contingent upon consummation of the transaction as currently contemplated, to BGMD (see Note 17, Subsequent Events).
The Company has recorded a liability, primarily within "Other long-term liabilities", for the present value of the estimated future capital improvement fees it will be required to make under its agreements with BGMD and RSRMD. The Company recorded liabilities of $15.1 million at January 31, 2004 and July 31, 2003 and $14.8 million at January 31, 2003 with respect to the estimated present value of future BGMD capital improvement fees, and $1.9 million at January 31, 2004 and 2003 and July 31, 2003 with respect to the estimated present value of future RSRMD capital improvement fees. The Company has not recorded a liability in the accompanying Consolidated Condensed Balance Sheets with respect to the letters of credit issued against the Company's bank credit facility with respect to the SCMD and HCMD bonds.
Guarantees
As of January 31, 2004, the Company had various other letters of credit outstanding, primarily related to construction guarantees and a $4.2 million letter of credit issued in support of SSV's credit facility, in the aggregate amount of $13.8 million.
In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business which include certain indemnifications within the scope of FIN No. 45 under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events. These indemnities include indemnities to licensees in connection with the licensees' use of the Company's trademarks and logos, indemnities for liabilities associated with the infringement of other parties' technology based upon the Company's software products, indemnities related to liabilities associated with the use of easements, indemnities related to employment of contract workers and indemnities related to the Company's use of public lands. The duration of these indemnities generally is indefinite. In addition, the Company indemnifies Bachelor Gulch Resort LLC's ("BG Resort") lenders, partners and hotel operator against losses, damages, expenses or claims that may arise under any hazardous materials law related to the land contributed by the Company to BG Resort; this indemnification does not limit the future payments the Company could be obligated to make. The Company guarantees the revenue streams associated with selected routes flown by certain airlines into Eagle County Regional Airport; these guarantees are generally capped at certain levels. As of January 31, 2004, the Company has recorded a liability related to the airline guarantees of $2.4 million. Other than the airline guarantees, the Company has not recorded a liability for the letters of credit, indemnities and other guarantees noted above in the accompanying financial statements, either because the guarantee or indemnification existed prior to January 1, 2003 and is therefore not subject to the measurement requirements of FIN No. 45, or because the Company has calculated the fair value of the indemnification or guarantee to be de minimus based upon the current facts and circumstances that would trigger a payment under the indemn ification clause.
As noted above, the Company makes certain indemnifications to licensees in connection with their use of the Company's trademarks and logos. The Company does not record any product warranty liability with respect to these indemnifications.
As permitted under Delaware law, the Company indemnifies its directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was serving, the Company in such a capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that limits exposure and should enable the Company to recover a portion of any future amounts paid. All of these indemnification agreements were in effect prior to January 1, 2003 and therefore the Company does not have a liability recorded for these agreements as of January 31, 2004.
Commitments
In the ordinary course of obtaining necessary zoning and other approvals for the Company's potential real estate development projects, the Company may contingently commit to the completion of certain infrastructure, improvements and other costs related to the projects. Fulfillment of such commitments is required only if the Company moves forward with the development project. The determination of whether the Company ultimately completes a development project is entirely at the Company's discretion, and is generally contingent upon, among other considerations, receipt of satisfactory zoning and other approvals and the current status of the Company's analysis of the economic viability of the project, including the costs associated with the contingent commitments. The Company currently has obligations, recorded as liabilities in the accompanying balance sheets, to complete or fund certain improvements with respect to its Red Sky Ranch, Arrowhead and Beaver Creek Village developments; the Company has estim ated such costs to be less than $5 million, and anticipates completion within the next five years.
The Company has agreed to purchase, at completion, approximately 10,500 square feet of commercial space in Avon, Colorado. The project is expected to be completed during fiscal 2004. The Company has agreed to build a skier access bridge for the 2004/05 ski season in relation to a proposed real estate development at Vail's Lionshead Village. The Company has agreed to install two new chairlifts and related infrastructure at Beaver Creek for the 04/05 ski season and one chairlift by the 05/06 ski season. The Bachelor Gulch Village Association ("BGVA") and BCRC have collectively agreed to contribute $5 million and $4 million, respectively, for the completion of the Beaver Creek lift projects. In addition, the Company is required to complete certain other improvements to assets owned by the Company, which are expected to be completed within the next 12 to 18 months. The estimated net total cost to the Company to complete these projects is approximately $11.3 million. The Company has not recorded a liability fo r these items, as certain triggering events must occur before the Company's performance is contractually required (see Note 17, Subsequent Events).
Self Insurance
The Company is self-insured for medical and workers' compensation under a stop loss arrangement. The self-insurance liability related to workers' compensation is determined actuarially based on claims filed. The self-insurance liability related to medical claims includes an estimate for claims incurred but not yet reported based on the time lag between when a claim is incurred and when the claim is paid by the Company. The amounts related to these claims are included as a component of accounts payable and accrued expenses (see Note 6, Supplementary Balance Sheet Information). While the ultimate amount of claims incurred is dependent on future developments, current reserves are adequate in management's opinion to cover the future payment of claims.
Legal
The Company is a party to various lawsuits arising in the ordinary course of business. Management believes the Company has adequate insurance coverage or has accrued for loss contingencies for all known matters that are deemed to be probable losses and that, although the ultimate outcome of such claims cannot be ascertained, current pending and threatened claims are not expected to have a material adverse impact on the Company's financial position, results of operations or cash flows.
In October 2003, the Company and the United States of America, on behalf of the Environmental Protection Agency Region VIII ("EPA"), entered into a Consent Decree to settle the alleged violation of the Clean Water Act in 1999 by the Company in connection with the road construction undertaken by the Company as part of the Blue Sky Basin expansion at the Vail ski area.
The Consent Decree (along with the Amended and Restated Restoration Plan, which is part of the Consent Decree) was lodged on October 17, 2003, with the U.S. District Court for the District of Colorado in Denver. The Consent Decree constitutes a full and final settlement of the United States' claims under the Clean Water Act regarding the matter. After receiving public comment, the EPA filed a motion with the Court for the Court to approve the Consent Decree as lodged. There is no statutory deadline for the Court to act in entering the Consent Decree. Under the terms of the proposed Consent Decree, upon entry by the Court of the Consent Decree, the Company would pay a civil fine of $80,100 for the alleged wetland violation and would agree to certain stipulated monetary penalties for any future violations of the Clean Water Act at the Vail ski area or other non-compliance with the Consent Decree.
The Company cannot guarantee whether or when the Court will enter the proposed Consent Decree. However, based on the facts and circumstances of the matter, the Company does not anticipate that the ultimate outcome will have a material adverse impact on its financial position or results of operation.
As previously disclosed, four of the Company's subsidiaries (JHL&S, LLC d/b/a/ Snake River Lodge & Spa ("SRL&S"), Teton Hospitality Services, Inc., GTLC and VRDC) were named as defendants in two related lawsuits filed in the United States District Court for the District of Wyoming (Case No. 02-CV-17J, 02-CV-16J) in July 2002.
The case arose out of an August 2, 2001 carbon monoxide accident in a hotel room at SRL&S in Teton Village, Wyoming, resulting in the death of a doctor from North Carolina and injuries to his wife. One lawsuit was a wrongful death action on behalf of the estate of the deceased; the other was a personal injury action on the part of his wife, including alleged brain damage.
The complaints alleged negligence on the part of each defendant and sought damages, including punitive damages. The two cases were consolidated and tried from mid-November to mid-December 2003. On December 16, 2003, the jury rendered a total verdict of $17.5 million in compensatory damages in both cases. No punitive damages were awarded in either case against any defendants. SRL&S (formally known as JHL&S LLC), a 51% subsidiary of the Company, was found by the jury to be 47.5% responsible for the damages, for a total of approximately $8.3 million. Two local Jackson Hole area contractors not party to the trial were found to be collectively 52.5% responsible. The jury rendered a verdict in favor of all of the Company's other subsidiaries who were defendants in the case. On March 9, 2004, the court ruled in favor of the Company's motion that JHL&S LLC is not, as a matter of law, vicariously liable for the 52.5%. The ruling, if appealed by plaintiffs, would take considerable time to resolve. All a mounts awarded by the jury are fully insured under the Company's insurance policies; accordingly, the Company has not recorded any loss reserves for the jury's verdict.
SEC Investigation
In October 2002, after voluntary consultation with the SEC staff on the appropriate accounting, the Company restated and reissued its historical financial statements for fiscal 1999-2001, reflecting a revision in the accounting treatment for recognizing revenue on initiation fees related to the sale of memberships in private clubs. As previously announced, the Company engaged its new auditors to do a re-audit of the years 1999-2001 and filed an amended 10-K for fiscal year 2001 reflecting all adjustments made as a result of the re-audit, in addition to the revision in accounting for the club fees. In February 2003, the SEC informed the Company that it had issued a formal order of investigation with respect to the Company. At that time, the inquiry related to the Company's previous accounting treatment for the private club initiation fees.
In October 2003, the SEC issued a subpoena to the Company to produce documents related to several matters, including the sale of memberships in private clubs. In November 2003, the SEC issued an additional subpoena to the Company to produce documents related primarily to the restated items included in the Company's Form 10-K for the year ended July 31, 2003. The Company is fully cooperating with the SEC in its investigation.
13. Mold Remediation
The Company is aware of water intrusion and condensation problems causing mold damage in the employee housing facility owned by Breckenridge Terrace. As a result, the facility is not available for occupancy this ski season. Forensic analysis of the mold situation has been completed on a preliminary basis and Breckenridge Terrace is evaluating the appropriate repair, remediation and other actions that may be necessary in the future. Breckenridge Terrace has accrued $7.0 million, in current liabilities, for estimated costs associated with this mold remediation obligation as such costs are deemed probable and reasonably estimable. $5.5 million of the total $7.0 million estimated costs was recorded as a charge to operating income and the remaining $1.5 million has been recorded as construction in progress as the recorded liability includes costs associated with the improvement to the design and safety of the facilities as compared with the condition of the facilities when originally constructed. Recoverie s, if any, of any portion of the mold remediation liability from potentially responsible parties, including recovery from insurance claims, will be recognized as an asset if and when their receipt is deemed probable. As the remediation progresses, it is possible that these estimates may change significantly.
14. Workforce Reduction
In October 2002, the Company's president, Andy Daly, ceased to be an employee of the Company. The Company recorded $1.3 million of compensation expense in its first fiscal quarter of 2003 in relation to Mr. Daly's severance agreement. As of January 31, 2004, accrued severance charges of $427,000 related to this agreement remain on the Company's Consolidated Condensed Balance Sheet.
In July 2003, the Company announced the restructuring of its sales and marketing focus and organization. The workforce reduction included the termination of three employees effective July 31, 2003 resulting in severance expense of approximately $505,000 including an incremental amount of associated benefits burden. As of January 31, 2004, approximately $447,000 of the severance had been paid, leaving approximately $58,000 on the Company's Consolidated Condensed Balance Sheet. The Company will pay the full amount of the severance during fiscal 2004.
15. Non-Cash Deferred Compensation
Pursuant to agreements with Adam Aron, the Company's Chief Executive Officer and Chairman of the Company's board of directors, and James Thompson, President of VRDC, the following transactions were consummated in the three and six months ended January 31, 2004.
In the first quarter of fiscal 2004, Mr. Aron took title to the Red Sky Ranch and Bachelor Gulch properties and related memberships and Mr. Thompson took title to the Red Sky Ranch homesite and related club membership. The Company recognized a net gain of $1.9 million related to the transfer of these properties on the line item entitled "Gain on transfer of property".
In the second quarter of fiscal 2004, Mr. Aron took title to the Beaver Creek residence and related membership. The Company recognized a net gain of approximately $233,000 related to the transfer of that property on the line item entitled "Gain on transfer of property".
16. Guarantor Subsidiaries and Non-Guarantor Subsidiaries
The Company's payment obligations under the 8.75% Notes due 2009 and the 6.75 % Notes due 2014 (see Note 5, Long-Term Debt) are fully and unconditionally guaranteed on a joint and several, senior subordinated basis by substantially all of the Company's consolidated subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined below), the "Guarantor Subsidiaries") except for Boulder/Beaver LLC, Colter Bay Corporation, Eagle Park Reservoir Company, Forest Ridge Holdings, Inc., Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake Lodge, Inc., Mountain Thunder, Inc., Timber Trail, Inc., RTP, RT Partners, Inc., SSV, Vail Associates Investments, Inc., and VR Holdings, Inc. (together, the "Non-Guarantor Subsidiaries"). Under the 6.75% Notes, Larkspur Restaurant & Bar, LLC ("Larkspur") is also a Non-Guarantor Subsidiary.
Presented below is the consolidated condensed financial information of Vail Resorts, Inc. (the "Parent Company"), the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Financial information for Larkspur, RockResorts and JHL&S, LLC ("JHL&S") are presented separately as the Company owns less than 100% of these Guarantor Subsidiaries. Financial information for the Non-Guarantor subsidiaries is presented in the column titled "Other Subsidiaries". Balance sheet data is presented as of January 31, 2004, July 31, 2003 and January 31, 2003. Statement of operations and statement of cash flows data are presented for the six months ended January 31, 2004 and 2003.
Investments in subsidiaries are accounted for by the Parent Company and Guarantor Subsidiaries using the equity method of accounting. Net income of Guarantor and Non-Guarantor Subsidiaries is, therefore, reflected in the Parent Company's and Guarantor Subsidiaries' investments in and advances to (from) subsidiaries. Net income of the Guarantor and Non-Guarantor Subsidiaries is reflected in Guarantor Subsidiaries and Parent Company as equity in consolidated subsidiaries. The elimination entries eliminate investments in Other Subsidiaries and intercompany balances and transactions for consolidated reporting purposes.
The following information is presented based on the Guarantor Subsidiaries and Non-Guarantor Subsidiaries under the 8.75% Notes. The Guarantor Subsidiaries and Non-Guarantor Subsidiaries of the 6.75% Notes are identical to those of the 8.75% Notes, except that Larkspur is a Non-Guarantor Subsidiary and should be included in the "Other Subsidiaries" column for purposes of evaluating the following information under the 6.75% Notes.
Supplemental Condensed Consolidating Balance Sheet |
|||||||||||||||
As of January 31, 2004 |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
100% Owned Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Current assets: |
|||||||||||||||
Cash and cash equivalents |
- |
35,766 |
476 |
11 |
216 |
6,100 |
- |
42,569 |
|||||||
Receivables, net |
- |
41,611 |
321 |
(934) |
165 |
5,032 |
- |
46,195 |
|||||||
Inventories, net |
- |
7,863 |
108 |
- |
168 |
26,807 |
- |
34,946 |
|||||||
Deferred income taxes |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Other current assets |
13,719 |
14,916 |
243 |
41 |
46 |
1,683 |
- |
30,648 |
|||||||
Total current assets |
13,719 |
100,156 |
1,148 |
(882) |
595 |
39,622 |
- |
154,358 |
|||||||
Property, plant and equipment, net |
- |
893,423 |
28,344 |
86 |
638 |
65,933 |
- |
988,424 |
|||||||
Real estate held for sale and investment |
- |
110,687 |
- |
900 |
- |
- |
- |
111,587 |
|||||||
Other assets |
7,166 |
31,674 |
14 |
- |
- |
10,334 |
- |
49,188 |
|||||||
Notes receivable |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Goodwill, net |
- |
67,815 |
1,960 |
531 |
- |
16,748 |
- |
87,054 |
|||||||
Other intangibles, net |
- |
115,863 |
- |
11,357 |
- |
17,870 |
- |
145,090 |
|||||||
Investments in subsidiaries and advances to (from) parent |
846,610 |
(30,239) |
(19,326) |
(266) |
(312) |
189 |
(796,656) |
- |
|||||||
Total assets |
867,495 |
1,289,379 |
12,140 |
11,726 |
921 |
150,696 |
(796,656) |
1,535,701 |
|||||||
Current liabilities: |
|||||||||||||||
Accounts payable and accrued expenses |
1,540 |
189,494 |
2,283 |
1,185 |
363 |
32,167 |
- |
227,032 |
|||||||
Long-term debt due within one year |
11,067 |
2,404 |
- |
- |
- |
1,470 |
- |
14,941 |
|||||||
Total current liabilities |
12,607 |
191,898 |
2,283 |
1,185 |
363 |
33,637 |
- |
241,973 |
|||||||
Long-term debt |
390,000 |
161,151 |
- |
- |
- |
76,935 |
- |
628,086 |
|||||||
Other long-term liabilities |
426 |
106,602 |
- |
92 |
- |
320 |
- |
107,439 |
|||||||
Deferred income taxes |
- |
57,949 |
- |
1,125 |
- |
671 |
- |
59,745 |
|||||||
Put options |
- |
3,088 |
- |
- |
- |
- |
- |
3,088 |
|||||||
Minority interest in net assets of consolidated subsidiaries |
- |
- |
4,830 |
3,231 |
100 |
22,747 |
- |
30,908 |
|||||||
Total stockholders' equity |
464,462 |
768,692 |
5,027 |
6,093 |
458 |
16,386 |
(796,656) |
464,462 |
|||||||
Total liabilities and stockholders' equity |
867,495 |
1,289,379 |
12,140 |
11,726 |
921 |
150,696 |
(796,656) |
1,535,701 |
Supplemental Condensed Consolidating Balance Sheet |
|||||||||||||||
As of July 31, 2003 |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
100% Owned Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Current assets: |
|||||||||||||||
Cash and cash equivalents |
-- |
16,566 |
399 |
-- |
117 |
1,858 |
-- |
18,940 |
|||||||
Receivables, net |
-- |
45,110 |
542 |
352 |
56 |
3,688 |
-- |
49,748 |
|||||||
Inventories, net |
-- |
8,077 |
77 |
-- |
145 |
23,457 |
-- |
31,756 |
|||||||
Other current assets |
10,442 |
4,777 |
91 |
-- |
3 |
1,238 |
-- |
16,551 |
|||||||
Total current assets |
10,442 |
74,530 |
1,109 |
352 |
321 |
30,241 |
-- |
116,995 |
|||||||
Property, plant and equipment, net |
-- |
882,412 |
29,012 |
99 |
697 |
20,031 |
-- |
932,251 |
|||||||
Real estate held for sale and investment |
-- |
111,663 |
-- |
900 |
-- |
10,660 |
-- |
123,223 |
|||||||
Other assets |
8,186 |
33,132 |
9 |
-- |
-- |
8,185 |
-- |
49,512 |
|||||||
Goodwill, net |
-- |
125,810 |
1,960 |
531 |
-- |
16,748 |
-- |
145,049 |
|||||||
Other intangibles, net |
-- |
61,077 |
-- |
9,148 |
-- |
18,187 |
-- |
88,412 |
|||||||
Investments in subsidiaries and advances to (from) parent |
844,564 |
(5,915) |
(19,189) |
(609) |
(137) |
(16,271) |
(802,443) |
-- |
|||||||
Total assets |
863,192 |
1,282,709 |
12,901 |
10,421 |
881 |
87,781 |
(802,443) |
1,455,442 |
|||||||
Current liabilities: |
|||||||||||||||
Accounts payable and accrued expenses |
12,459 |
121,866 |
1,491 |
31 |
184 |
16,008 |
-- |
152,039 |
|||||||
Long-term debt due within one year |
-- |
26,659 |
-- |
-- |
-- |
1,272 |
-- |
27,931 |
|||||||
Total current liabilities |
12,459 |
148,525 |
1,491 |
31 |
184 |
17,280 |
-- |
179,970 |
|||||||
Long-term debt |
353,858 |
174,484 |
-- |
-- |
-- |
27,878 |
-- |
556,220 |
|||||||
Other long-term liabilities |
629 |
112,161 |
-- |
107 |
-- |
320 |
-- |
113,217 |
|||||||
Deferred income taxes |
-- |
78,055 |
-- |
-- |
-- |
753 |
-- |
78,808 |
|||||||
Put options |
-- |
1,822 |
-- |
-- |
-- |
-- |
-- |
1,822 |
|||||||
Minority interest in net assets of consolidated subsidiaries |
-- |
386 |
5,591 |
3,191 |
100 |
19,891 |
-- |
29,159 |
|||||||
Total stockholders' equity |
496,246 |
767,276 |
5,819 |
7,092 |
597 |
21,659 |
(802,443) |
496,246 |
|||||||
Total liabilities and stockholders' equity |
863,192 |
1,282,709 |
12,901 |
10,421 |
881 |
87,781 |
(802,443) |
1,455,442 |
Supplemental Condensed Consolidating Balance Sheet |
|||||||||||||||
As of January 31, 2003 |
|||||||||||||||
(as restated) |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
100% Owned Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Current assets: |
|||||||||||||||
Cash and cash equivalents |
- |
21,789 |
875 |
- |
78 |
1,948 |
- |
24,690 |
|||||||
Receivables, net |
1 |
37,040 |
640 |
172 |
102 |
3,702 |
- |
41,657 |
|||||||
Taxes receivable |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Inventories, net |
- |
11,161 |
72 |
- |
176 |
24,613 |
- |
36,022 |
|||||||
Deferred income taxes |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Other current assets |
1,138 |
24,105 |
173 |
- |
18 |
1,262 |
- |
26,696 |
|||||||
Total current assets |
1,139 |
94,095 |
1,760 |
172 |
374 |
31,525 |
- |
129,065 |
|||||||
Property, plant and equipment, net |
- |
894,811 |
29,579 |
120 |
775 |
18,270 |
- |
943,555 |
|||||||
Real estate held for sale and investment |
- |
118,044 |
- |
900 |
- |
18,039 |
- |
136,983 |
|||||||
Other assets |
8,755 |
29,824 |
9 |
- |
- |
811 |
- |
39,399 |
|||||||
Notes receivable |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Goodwill, net |
- |
121,522 |
1,936 |
1,655 |
- |
16,483 |
- |
141,596 |
|||||||
Other intangibles, net |
- |
68,523 |
- |
10,085 |
- |
2,725 |
- |
81,333 |
|||||||
Investments in subsidiaries and advances to (from) parent |
849,253 |
(38,352) |
(17,638) |
(4) |
(330) |
(17,969) |
(774,960) |
- |
|||||||
Total assets |
859,147 |
1,288,467 |
15,646 |
12,928 |
819 |
69,884 |
(774,960) |
1,471,931 |
|||||||
Current liabilities: |
|||||||||||||||
Accounts payable and accrued expenses |
8,404 |
180,677 |
2,134 |
1,703 |
309 |
19,253 |
- |
212,480 |
|||||||
Income taxes payable |
- |
2,731 |
- |
- |
- |
- |
- |
2,731 |
|||||||
Long-term debt due within one year |
- |
24,577 |
1,000 |
- |
- |
1,000 |
- |
26,577 |
|||||||
Total current liabilities |
8,404 |
207,985 |
3,134 |
1,703 |
309 |
20,253 |
- |
241,788 |
|||||||
Long-term debt |
353,474 |
178,622 |
- |
- |
- |
14,100 |
- |
546,196 |
|||||||
Other long-term liabilities |
814 |
96,261 |
- |
- |
- |
- |
- |
97,075 |
|||||||
Deferred income taxes |
- |
64,849 |
- |
- |
- |
1,643 |
- |
66,492 |
|||||||
Put option |
- |
198 |
- |
- |
- |
- |
- |
198 |
|||||||
Minority interest in net assets of consolidated subsidiaries |
- |
- |
6,131 |
3,231 |
100 |
14,265 |
- |
23,727 |
|||||||
Total stockholders' equity |
496,455 |
740,552 |
6,381 |
7,994 |
410 |
19,623 |
(774,960) |
496,455 |
|||||||
Total liabilities and stockholders' equity |
859,147 |
1,288,467 |
15,646 |
12,928 |
819 |
69,884 |
(774,960) |
1,471,931 |
Supplemental Condensed Consolidating Statement of Operations |
|||||||||||||||
For the six months ended January 31, 2004 |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Total net revenues |
50 |
241,698 |
4,078 |
2,974 |
1,281 |
95,315 |
5,463 |
350,859 |
|||||||
Total operating expenses |
3,894 |
241,995 |
5,255 |
3,886 |
1,408 |
72,723 |
5,463 |
334,624 |
|||||||
Income (loss) from operations |
(3,844) |
(297) |
(1,177) |
(912) |
(127) |
22,592 |
- |
16,235 |
|||||||
Other expense |
(53,161) |
(7,116) |
(376) |
- |
(12) |
(913) |
- |
(61,578) |
|||||||
Equity investment loss, net |
- |
(2,180) |
- |
- |
- |
- |
- |
(2,180) |
|||||||
Loss on put options, net |
- |
(1,306) |
- |
- |
- |
- |
- |
(1,306) |
|||||||
Minority interest in net income of consolidated subsidiaries, net |
- |
- |
762 |
- |
- |
(2,765) |
- |
(2,003) |
|||||||
Income (loss) before income taxes |
(57,005) |
(10,899) |
(791) |
(912) |
(139) |
18,914 |
- |
(50,832) |
|||||||
Benefit (provision) for income taxes |
21,092 |
4,100 |
- |
- |
- |
(6,501) |
- |
18,691 |
|||||||
Net income (loss) before equity in income of consolidated subsidiaries |
(35,913) |
(6,799) |
(791) |
(912) |
(139) |
12,413 |
- |
(32,141) |
|||||||
Equity in income of consolidated subsidiaries |
3,772 |
10,573 |
- |
- |
- |
- |
(14,345) |
- |
|||||||
Net income (loss) |
(32,141) |
3,774 |
(791 ) |
(912) |
(139) |
12,413 |
(14,345) |
(32,141) |
Supplemental Condensed Consolidating Statement of Operations |
|||||||||||||||
For the six months ended January 31, 2003 |
|||||||||||||||
(as restated) |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Total net revenues |
11 |
257,585 |
3,555 |
2,725 |
1,218 |
89,692 |
6,987 |
361,773 |
|||||||
Total operating expenses |
4,508 |
251,471 |
5,360 |
3,334 |
1,569 |
81,829 |
6,987 |
355,058 |
|||||||
Income (loss) from operations |
(4,497) |
6,114 |
(1,805) |
(609) |
(351) |
7,863 |
- |
6,715 |
|||||||
Other expense, net |
(8,408) |
(14,803) |
(480) |
- |
(12) |
(382) |
- |
(24,085) |
|||||||
Equity investment income, net |
- |
2,101 |
- |
- |
- |
- |
- |
2,101 |
|||||||
Gain on put option |
- |
1,371 |
- |
- |
- |
- |
- |
1,371 |
|||||||
Minority interest in net income of consolidated subsidiaries, net |
- |
- |
1,120 |
- |
- |
(1,439) |
- |
(319) |
|||||||
Income (loss) before income taxes |
(12,905) |
(5,217) |
(1,165) |
(609) |
(363) |
6,042 |
- |
(14,217) |
|||||||
Benefit from income taxes |
5,420 |
407 |
- |
- |
- |
- |
- |
5,827 |
|||||||
Net loss before equity in income of consolidated subsidiaries, net |
(7,485) |
(4,810) |
(1,165) |
(609) |
(363) |
6,042 |
- |
(8,390) |
|||||||
Cumulative effect of change in accounting principle |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Equity in income of consolidated subsidiaries |
(905) |
3,905 |
- |
- |
- |
- |
(3,000) |
- |
|||||||
Net income (loss) |
(8,390) |
(905) |
(1,165) |
(609) |
(363) |
6,042 |
(3,000) |
(8,390) |
Supplemental Condensed Consolidating Statement of Cash Flows |
|||||||||||||||
For the six months ended January 31, 2004 |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
100% Owned Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Net cash flows provided by operating activities |
973 |
92,871 |
73 |
5,300 |
(62) |
10,870 |
- |
110,025 |
|||||||
Cash flows from investing activities: |
|||||||||||||||
Capital expenditures |
- |
(35,484) |
(131) |
(1,194) |
(13) |
(6,882) |
- |
(43,704) |
|||||||
Investments in real estate |
- |
(10,027) |
- |
- |
- |
5,976 |
- |
(4,051) |
|||||||
Other investing activities, net |
- |
1,279 |
- |
- |
- |
- |
- |
1,279 |
|||||||
Other investing activities |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Net cash used in investing activities |
- |
(44,232) |
(131) |
(1,194) |
(13) |
(906) |
- |
(46,476) |
|||||||
Cash flows from financing activities: |
|||||||||||||||
Proceeds from borrowings under long-term debt |
390,000 |
170,402 |
- |
- |
- |
- |
- |
560,402 |
|||||||
Payments of long-term debt |
(348,753) |
(221,610) |
- |
- |
- |
(4,583) |
- |
(574,946) |
|||||||
Payments of tender premium |
(22,690) |
- |
- |
- |
- |
- |
- |
(22,690) |
|||||||
Advances to (from) affiliates |
(12,553) |
22,093 |
135 |
(4,095) |
174 |
(5,754) |
- |
- |
|||||||
Other financing activities, net |
(6,977) |
(336) |
- |
- |
- |
311 |
- |
(7,002) |
|||||||
Distributions to minority shareholders |
- |
|
22,091 |
|
- |
|
- |
|
- |
|
- |
|
- |
|
22,091 |
Advances to (from) affiliates |
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
Net cash provided by (used in) financing activities |
(973) |
(29,451) |
135 |
(4,095) |
174 |
(10,026) |
- |
(44,236) |
|||||||
Net increase (decrease) in cash and cash equivalents |
- |
19,188 |
77 |
11 |
99 |
(62) |
- |
19,313 |
|||||||
Net increase in cash due to the adoption of FIN No. 46R |
- |
4,316 |
- |
- |
- |
- |
- |
4,316 |
|||||||
Cash and cash equivalents: |
|||||||||||||||
Beginning of period |
- |
12,262 |
399 |
- |
117 |
6,162 |
- |
18,940 |
|||||||
End of period |
- |
35,766 |
476 |
11 |
216 |
6,100 |
- |
42,569 |
Supplemental Condensed Consolidating Statement of Cash Flows |
|||||||||||||||
For the six months ended January 31, 2003 |
|||||||||||||||
(in thousands of dollars) |
|||||||||||||||
Parent Company |
100% Owned Guarantor Subsidiaries |
JHL&S |
RockResorts |
Larkspur |
Other Subsidiaries |
Eliminating Entries |
Consolidated |
||||||||
Net cash flows provided by operating activities |
(4,036) |
127,028 |
(536) |
- |
(161) |
3,807 |
- |
126,102 |
|||||||
Cash flows from investing activities: |
|||||||||||||||
Capital expenditures |
- |
(59,946) |
(646) |
- |
(20) |
(5,761) |
- |
(66,373) |
|||||||
Investments in real estate |
- |
(27,961) |
- |
- |
- |
- |
- |
(27,961) |
|||||||
Other investing activities, net |
- |
(1,934) |
- |
- |
- |
- |
- |
(1,934) |
|||||||
Net cash used in investing activities |
- |
(89,841) |
(646) |
- |
(20) |
(5,761) |
- |
(96,268) |
|||||||
Cash flows from financing activities: |
|||||||||||||||
Proceeds from borrowings under long-term debt |
366 |
149,034 |
- |
- |
- |
1,700 |
- |
151,100 |
|||||||
Payments of long-term debt |
- |
(181,513) |
- |
- |
- |
(500) |
- |
(182,013) |
|||||||
Advances to (from) affiliates |
3,649 |
(6,030) |
1,933 |
- |
208 |
240 |
- |
- |
|||||||
Other financing activities, net |
21 |
- |
- |
- |
- |
(217) |
- |
(196) |
|||||||
Net cash provided by (used in) financing activities |
4,036 |
(38,509) |
1,933 |
- |
208 |
1,223 |
- |
(31,109) |
|||||||
Net increase (decrease) in cash and cash equivalents |
- |
(1,322) |
751 |
- |
27 |
(731) |
- |
(1,275) |
|||||||
Cash and cash equivalents: |
|||||||||||||||
Beginning of period |
- |
23,111 |
124 |
- |
51 |
2,679 |
- |
25,965 |
|||||||
End of period |
- |
21,789 |
875 |
- |
78 |
1,948 |
- |
24,690 |
17. Subsequent Events
In February 2004, the Company filed a universal shelf registration statement with the Securities and Exchange Commission in connection with the potential offer and sale, from time to time, of up to $100 million of its common stock, preferred stock and debt securities. These securities, which may be offered in one or more offerings and in any combination, will in each case be offered pursuant to a separate prospectus supplement that will describe the specific types, amounts, price and other terms of the offered securities.
In February 2004, the Company also filed a separate shelf registration statement covering the sale by Apollo Ski Partners, L.P. ("Apollo"). Apollo owns substantially all of the Class A common stock of the Company and, consequently, has the ability to elect all of the Company's Class 1 Board of Directors. From time to time, Apollo may sell up to 1.5 million shares of the Company's common stock. Apollo currently holds 7,439,542 shares of Class A common stock of the Company or 21.1% of the Company's outstanding common stock.
In February 2004, the Company executed the required notices to BGVA and BCRC pursuant to the agreements between the Company and BGVA and BCRC related to the construction of new chairlifts at Beaver Creek. Within 30 days of BGVA and BCRC's receipt of such notice, BGVA is required to deposit $5 million, BCRC is required to deposit $4 million, and the Company is required to deposit $1 million into an escrow account to be used by the Company to fund the construction of the chairlifts. In connection with the notices, the Company is required to execute a third-party contract for the purchase and installation of the chairlifts within 30 days, and must commence construction of the chairlifts within six months.
On March 11, 2004, BGMD informed the Company that it had successfully completed its GO bond offering. The proceeds of the bond offering, along with contributions from BGVA and SCMD, have been placed with a trustee and will be used to retire the $26.9 million outstanding SCMD bonds. As a result of this transaction, the $28.5 million letters of credit supporting the SCMD bonds issued against the Company's bank credit facility will be released. In addition, the Company no longer has an obligation to pay capital improvement fees to BGMD as a result of the defeasance of the SCMD bonds. As of January 31, 2004, the Company had recorded a $15.1 million liability with respect to the capital improvement fees.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the Company's July 31, 2003 Annual Report on Form 10-K and the Consolidated Condensed Financial Statements as of January 31, 2004 and 2003 and for the three and six months then ended, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding the financial position, results of operations and cash flows of the Company. To the extent that the following Management's Discussion and Analysis contains statements which are not of a historical nature, such statements are forward-looking statements, which involve risks and uncertainties. These risks include, but are not limited to, changes in the competitive environment of the mountain and lodging industries, general business and economic conditions, the weather, war, terrorism and other factors discussed elsewhere herein and in the Company's filings with the SEC.
As disclosed in the Company's Form 10-K for the year ended July 31, 2003, the Company restated its fiscal 2003 interim financial statements and its historical financial statements in that filing. The reader should refer to the disclosures made in that filing for more information.
Overview
While the Company recorded a net loss for both the three and six months ended January 31, 2004, largely as a result of charges that are not indicative of continuing operations, the Company's operating results for those periods were favorable compared to management's expectations. Mountain segment financial performance improved for the three and six months ended January 31, 2004 compared to the same periods last year, despite last year's substantial early-season snowfall and earlier resort openings. The favorable current-year performance is driven by increased season pass sales as well as a favorable shift in ticket mix and increased pricing, resulting in a 6.2% increase in effective ticket price, while overall skier visits remained relatively flat. Retail/rental operations also performed better than anticipated. Lodging segment results for the three and six months ended January 31, 2004 also improved as compared to the same periods in the prior year. The increase is primarily due to improved performan ce at several of the Company's properties located in proximity to its ski resorts, including the Vail Marriott Mountain Resort ("Vail Marriott"), which was open for the full period in fiscal 2004, whereas it was closed for a portion of the period in fiscal 2003 for renovations. Real estate performed as expected for the second fiscal quarter. In addition, the Company's previously announced cost reduction plan is expected to achieve its $25 million in year-over-year cost savings for the full fiscal year. Mountain and Lodging segment results were also favorably impacted by the consolidation of the Employee Housing Entities as of November 1, 2003, as the entities' depreciation and interest expense which was previously included on the Company's equity income (loss) line items is now recorded on the corresponding depreciation and interest expense line items in the Company's Consolidated Condensed Statement of Operations. Depreciation and interest expense are not included in segment operating results.
While the Company's operating segments have performed favorably in the current year as compared to last year, the following charges contributed to the Company's quarterly and year to date net loss:
Looking forward to the remainder of the fiscal year and beyond, the Company's management has identified the following important factors (as well as risks and uncertainties associated with such factors) that could impact the Company's future financial performance:
The data provided in this section should be read in conjunction with the risk factors identified elsewhere in this document.
Presented below is more detailed comparative data regarding the Company's results of operations for the three and six months ended January 31, 2004 versus the three and six months ended January 31, 2003.
Results of Operations
Mountain operating revenue. Mountain operating revenue for the three months ended January 31, 2004 and 2003 is presented by category as follows:
|
Three Months Ended |
|
|
|
|
||
|
January 31, |
|
|
|
Percentage |
||
|
2004 |
|
2003 |
|
Increase |
|
Increase |
|
|
|
(as restated) |
|
|
|
|
|
(unaudited) |
|
|
|
|
||
|
|
|
|
|
|
|
|
Lift tickets |
$ 97,147 |
|
$ 91,028 |
|
$ 6,119 |
|
6.7% |
Ski school |
25,022 |
|
23,894 |
|
1,128 |
|
4.7% |
Dining |
18,411 |
|
18,249 |
|
162 |
|
0.9% |
Retail/rental |
45,035 |
|
41,297 |
|
3,738 |
|
9.1% |
Other |
15,753 |
|
13,917 |
|
1,836 |
|
13.2% |
Total mountain operating revenue |
$ 201,368 |
|
$ 188,385 |
|
$ 12,983 |
|
6.9% |
|
|
|
|
|
|
|
|
Skier visits |
2,620 |
|
2,607 |
|
13 |
|
0.5% |
|
|
|
|
|
|
|
|
ETP |
$ 37.07 |
|
$ 34.92 |
|
$ 2.15 |
|
6.2% |
Mountain operating revenue for the three months ended January 31, 2004 increased $13.0 million, or 6.9%, as compared to the three months ended January 31, 2003. Of this increase, $6.1 million is due to increased lift ticket revenue, primarily driven by increased season pass sales, a favorable shift in the guest demographic to a heavier mix of destination visitors and increased ticket pricing. Destination guests (out of state and international guests) have historically purchased higher margin ticket products and used more of the Company's ancillary products and services, such as food & beverage and ski school, driving the year over year increases in those categories. The $3.7 million increase in retail/rental revenue is driven by increased accessory sales (attributable to the cold weather), expanded operations and improved performance at Heavenly's retail outlets. The consolidation of the employee housing entities as of November 1, 2003 caused a $692,000 increase in other mountain operatin g revenue for the three months ended January 31, 2004.
Mountain operating expense. Mountain operating expense for the three months ended January 31, 2004 was $126.9 million, an increase of $3.4 million, or 2.7%, compared to the three months ended January 31, 2003. This increase reflects an increase in operating expenses commensurate with the increase in operating revenues partially offset by the successful implementation of the Company's cost cutting program. Allocated corporate administrative expenses ("SG&A") in fiscal 2003 included deferred compensation costs that were not incurred in fiscal 2004, offset partially by Sarbanes-Oxley compliance costs which were included in the fiscal 2004 allocation but were not incurred in fiscal 2003. In addition, the consolidation of the employee housing entities as of November 1, 2003 increased mountain operating expense by $630,000 for the three months ended January 31, 2004.
Mountain equity investment income. Mountain equity income primarily consists of the Company's share of operations of a brokerage firm and a property management firm. In prior periods, mountain equity investment income also included the proportionate share of the Company's employee housing entities. Beginning November 1, 2003, the employee housing entities were consolidated in the Company's financial statements. Mountain equity income for the three months ended January 31, 2004 was $586,000, an increase of $134,000, or 29.6%, compared to three months ended January 31, 2003. The increase primarily reflects increased sales generated by the brokerage firm and the consolidation of the employee housing entities.
Lodging revenue. Lodging revenue for the three months ended January 31, 2004 was $38.4 million, an increase of $2.8 million, or 7.8%, compared to the three months ended January 31, 2003. The Company's average daily rate ("ADR") for the three months ended January 31, 2004 for its owned hotels and condominium management operations was $216.23, an increase of $8.04 as compared to the three months ended January 31, 2003. The Vail Marriott experienced an increase in both room nights and ADR, as last year reservations were soft due to renovation activity. Snake River Lodge & Spa, Mountain Thunder and the Company's Vail and Beaver Creek property management operations also saw improved room nights and ADRs.
Lodging operating expense. Lodging operating expense for the three months ended January 31, 2004 was $38.4 million, an increase of $385,000, or 1.0%, compared to the three months ended January 31, 2003. This increase is primarily due to variable expense increases associated with the increase in revenue. Lodging operating expense also includes an allocation of corporate SG&A.
Lodging equity investment loss. Lodging equity investment loss was $1.2 million for the quarter ended January 31, 2004, and primarily includes the Company's proportionate share of losses from the hotel operations of The Ritz-Carlton, Bachelor Gulch. The Company's investment share of profits associated with the sale of condominiums developed as part of the joint venture operations is recorded in Real estate equity investment income. The equity loss for the quarter includes the Company's share of depreciation expense of $559,000 and interest expense of $644,000 for the three months ended January 31, 2004.
Real estate revenue. The Real estate segment's revenue varies from year to year depending on the mix of available inventory, based upon the completion of development projects. Revenue from real estate operations for the three months ended January 31, 2004 was $7.5 million, a decrease of $16.7 million, or 69.0%, compared to the three months ended January 31, 2003. During the three months ended January 31, 2004, the Company primarily sold a development parcel and three condominiums, as opposed to sales of 20 condominiums and 8 single family lots during the three months ended January 31, 2003.
Real estate operating expense. Real estate operating expense for the three months ended January 31, 2004 was $6.1 million, a decrease of $16.2 million, or 72.8%, compared to the three months ended January 31, 2003, primarily due to the change in sales mix and is commensurate with the decreased revenues. Real estate operating expense consists primarily of the cost of sales and related real estate commissions associated with sales of real estate. Real estate operating expense also includes the selling, general and administrative expenses associated with the Company's real estate operations and an allocation of corporate SG&A.
Real estate equity investment income. Real estate equity investment income includes both the Company's equity investment in Keystone/Intrawest LLC ("KRED"), the joint venture developing the River Run development at Keystone, and the portion of the Company's equity investment in BG Resort associated with the development and sale of the Ritz-Carlton, Bachelor Gulch condominiums. Real estate equity investment income was $3,000 and $771,000 for the quarters ended January 31, 2004 and 2003, respectively. Real estate equity investment income decreased as the condominium sales associated with BG Resort occurred primarily in the first and second quarters of fiscal 2003.
Depreciation and amortization. Depreciation and amortization expense was $22.6 million, an increase of $1.4 million, or 6.8%, for the three months ended January 31, 2004 as compared to the three months ended January 31, 2003. The increase was primarily attributable to an increased fixed asset base resulting from normal capital expenditures. Consolidation of the Employee Housing Entities also increased depreciation expense by approximately $543,000 for the three months ended January 31, 2004.
Mold remediation charge. During the three months ended January 31, 2004, the Company expensed $5.5 million related to the estimated cost of remediation of water intrusion and condensation problems at its Breckenridge Terrace employee housing facility based on management's best estimate using a preliminary estimate from the mold remediation facilitators. See Note 13, Mold Remediation, of the Notes to Consolidated Condensed Financial Statements, for more information regarding this charge.
Loss on extinguishment of debt. The Company recorded a $36.2 million debt extinguishment charge in the second quarter of fiscal 2004 in connection with the tender for the 8.75% Notes. $348.8 million of the total $360 million outstanding notes were tendered. The charge included a tender premium of $65.06 per $1,000 principal amount of 8.75% Notes, which accounts for $22.7 million of the total charge. Other costs included in the charge include transaction fees, the write off of unamortized issuance costs and unamortized original issue discount on the 8.75% Notes, and other costs such as legal and printing fees. In connection with the tender for the 8.75% Notes, in January 2004 the Company issued the 6.75% Notes. The proceeds from the 6.75% Notes were used to re-purchase the 8.75% Notes, along with associated premiums, fees and expenses.
Interest expense. During the three months ended January 31, 2004 and 2003 the Company recorded interest expense of $12.9 million in both periods, relating primarily to the 8.75% Notes, Credit Facility and Industrial Development Bonds. During the second quarter of fiscal 2004 as compared to the second quarter of fiscal 2003, interest expense decreased due to the August payoff of the Olympus note and the $111 million decrease in the credit facility balance from the credit facility balance at the same period last year, offset by increases in interest expense due to the consolidation of the Employee Housing Entities and changes in the present value of the capital improvement fee liability related to BGMD and RSRMD. Average total borrowings for the three months ended January 31, 2004 were $587.7 million versus $634.2 million as of January 31, 2003.
Income tax. The effective tax rate for the quarter was 10% versus a 42% effective rate for the first quarter of fiscal 2004 and same quarter last year. The change is primarily a result of the Company reviewing its anticipated annual results including the costs associated with the debt extinguishment and mold remediation. Assuming no further revisions to the Company's anticipated annual results, the Company expects its effective tax rate for the remainder of the year will be approximately 37%.
Six Months Ended January 31, 2004 versus Six Months Ended January 31, 2003 (in thousands of dollars, except ETP)
Mountain operating revenue. Mountain operating revenue for the six months ended January 31, 2004 and 2003 is presented by category as follows:
|
Six Months Ended |
|
|
|
|
||
|
January 31, |
|
|
|
Percentage |
||
|
2004 |
|
2003 |
|
Increase |
|
Increase |
|
|
|
(as restated) |
|
|
|
|
|
(unaudited) |
|
|
|
|
||
|
|
|
|
|
|
|
|
Lift tickets |
$ 97,173 |
|
$ 90,915 |
|
$ 6,258 |
|
6.9% |
Ski school |
25,046 |
|
23,965 |
|
1,081 |
|
4.5% |
Dining |
22,325 |
|
22,067 |
|
258 |
|
1.2% |
Retail/rental |
62,075 |
|
57,627 |
|
4,448 |
|
7.7% |
Other |
28,828 |
|
27,440 |
|
1,388 |
|
5.1% |
Total mountain operating revenue |
$ 235,447 |
|
$ 222,014 |
|
$ 13,433 |
|
6.1% |
|
|
|
|
|
|
|
|
Skier visits |
2,620 |
|
2,607 |
|
13 |
|
0.5% |
|
|
|
|
|
|
|
|
ETP |
$ 37.08 |
|
$ 34.92 |
|
$ 2.16 |
|
6.2% |
Mountain operating revenue for the six months ended January 31, 2004 increased $13.4 million, or 6.1%, as compared to the six months ended January 31, 2003. As the Company's ski resorts did not open until mid-November, mountain operating revenue for the six months ended January 31, 2004 was driven by substantially the same trends and factors as for the three months ended January 31, 2004.
Mountain operating expense. Mountain operating expense for the six months ended January 31, 2004 was $188.8 million, an increase of $614,000, or 0.3%, compared to the six months ended January 31, 2003. As the Company's ski resorts did not open until mid-November, mountain operating expense for the six months ended January 31, 2004 was driven by substantially the same trends and factors as for the three months ended January 31, 2004.
Mountain equity investment income. Mountain equity income for the six months ended January 31, 2004 was $568,000, a decrease of $973,000, or 63.1%, compared to six months ended January 31, 2003. The decrease primarily reflects first quarter losses from the employee housing entities (during which period the equity method was still applied to the entities) and reduced sales commissions generated by the brokerage firm. Equity method losses from the employee housing entities were $744,000 during the six months ended January 31, 2004 as opposed to $32,000 during the six months ended January 31, 2003.
Lodging revenue. Lodging revenue for the six months ended January 31, 2004 was $81.0 million, an increase of $4.8 million, or 6.3%, compared to the six months ended January 31, 2003. The Company's average daily rate ("ADR") for the six months ended January 31, 2004 for its owned hotels and condominium management operations was $183.42, an increase of $6.77 as compared to the six months ended January 31, 2003. The increase in revenue and ADR is primarily the result of the Vail Marriott being open for the full first quarter in fiscal 2004 as it was closed for a portion of the prior year first quarter for renovations, stronger summer business at GTLC and increased room rates at the Lodge at Rancho Mirage.
Lodging operating expense. Lodging operating expense for the six months ended January 31, 2004 was $78.9 million, an increase of $1.6 million, or 2.1%, compared to the six months ended January 31, 2003. This increase is primarily due to variable expense increases associated with the increase in revenue, partially offset by the successful implementation of the Company's cost savings plan. Lodging operating expense also includes an allocation of corporate SG&A.
Lodging equity investment loss. Lodging equity investment loss for the six months ended January 31, 2004 was $3.0 million, a decrease of $327,000, or 10.0%, as compared to the loss recorded for the six months ended January 31, 2003. The equity loss for the six months includes the Company's share of depreciation expense of $1.1 million and interest expense of $1.3 million for the six months ended January 31, 2004. The improved performance is driven by results of The Ritz-Carlton, Bachelor Gulch, as in first quarter last year the hotel incurred start-up costs.
Real estate revenue. The Real estate segment's revenue varies from year to year depending on the mix of available inventory, based upon the completion of development projects. Revenue from real estate operations for the six months ended January 31, 2004 was $34.4 million, a decrease of $29.2 million, or 45.9%, compared to the six months ended January 31, 2003. During the six months ended January 31, 2004, the Company primarily sold a development parcel, seven condominiums and four single family lots, as opposed to sales of two development parcels, 72 condominiums and 17 single family lots during the six months ended January 31, 2003.
Real estate operating expense. Real estate operating expense for the six months ended January 31, 2004 was $18.2 million, a decrease of $31.6 million, or 63.5%, compared to the six months ended January 31, 2003, primarily due to the change in sales mix and is commensurate with the decreased revenues.
Real estate equity investment income. Real estate equity investment income was $0.2 million and $3.8 million during the six months ended January 31, 2004 and 2003, respectively. Real estate equity investment income decreased as the condominium sales associated with BG Resort occurred primarily in the first and second quarters of fiscal 2003.
Depreciation and amortization. Depreciation and amortization expense was $42.9 million, an increase of $3.2 million, or 8.0%, for the six months ended January 31, 2004 as compared to the six months ended January 31, 2003. The increase was primarily attributable to an increased fixed asset base from normal capital expenditures and the consolidation of the Employee Housing Entities.
Mold remediation charge. The mold remediation charge for the six months ended January 31, 2004 is the same as was recorded for the three months ended January 31, 2004.
Loss on extinguishment of debt. The loss on extinguishment of debt for the six months ended January 31, 2004 is the same as was recorded for the three months ended January 31, 2004.
Interest expense. During the six months ended January 31, 2004 and 2003 the Company recorded interest expense of $26.3 million and $24.7 million, respectively, relating primarily to the Notes, Credit Facility and Industrial Development Bonds. The $1.6 million increase is primarily attributable to decreased capitalized interest (zero in the six months ended January 31, 2004 versus $645,000 in the six months ended January 31, 2003), letter of credit fees and capital improvement fees associated with the metropolitan districts and the final recognition of the interest swap termination gain in fiscal 2003. Average total borrowings for the six months ended January 31, 2004 were $598.0 million versus $629.7 million as of January 31, 2003.
Income tax. The effective tax rate for the six months ended January 31, 2004 was 37% compared to 41% for the same period last year. The change is primarily a result of the amount of items which are not deductible for tax as a percentage of the anticipated pre-tax book income (loss) for the fiscal year.
Liquidity and Capital Resources
The Company has historically provided for operating expenditures, debt service, capital expenditures and acquisitions through a combination of cash flow from operations, short-term and long-term borrowings and sales of real estate.
Cash flows from the Company's operating activities were $110.0 million for the six months ended January 31, 2004. Non-cash charges reflected in the $32.1 million net loss for the period included non-cash costs related to real estate sold of $9.5 million, depreciation and amortization expense of $42.9 million, a decrease in the net deferred tax liability of $19.1 million and non-cash debt extinguishment charges of $12.9 million. In addition, working capital changes included a decrease in deferred income taxes receivable of $8.8 million and an increase accounts payable and accrued expenses of $64.4 million primarily due to a $31.4 increase in deferred revenue related to private club initiation fees and increased season pass sales, a $17.9 increase in trade payables and a $7.0 accrual for total estimated mold remediation costs. This was offset by a $7.7 million increase in accounts receivable, a $4.8 million increase in notes receivable and a $3.2 million increase in inventories. These changes are largely du e to the seasonality of the Company's operations.
Cash flows used in investing activities have historically consisted of payments for acquisitions, capital expenditures, and investments in real estate. Capital expenditures for the six months ended January 31, 2004 were $43.7 million and investments in real estate for the period were $4.1 million. The primary projects included in capital expenditures were (i) a new high-speed chairlift at Beaver Creek, (ii) Keystone and Heavenly snowmaking upgrades, (iii) installation of two new high-speed chairlifts at Heavenly, (iv) an electrical distribution network at Keystone and (v) renovations at the Lodge at Rancho Mirage. The primary projects included in investments in real estate were (i) planning activities related to the Vail "New Dawn" redevelopment, (ii) completion of the Red Sky Ranch golf courses and (iii) investments in developable land and the planning and development of projects in and around each of the Company's resorts.
Investing activities for the six months ended January 31, 2004 also consisted of cash distributions from joint ventures of $1.4 million and cash received from the disposal of fixed assets of $371,000.
The Company estimates that it will make aggregate capital expenditures in the mountain and lodging segments of approximately $20 million to $30 million during the remainder of fiscal 2004, and approximately $60 to $65 million for calendar 2004. In addition to normal, annual capital expenditures appropriate to maintaining the Company's reputation for high quality, the primary projects are anticipated to include (i) two new high-speed lifts and a parking lot related to providing additional skier access to the main part of Beaver Creek Mountain, (ii) continued renovations at the Lodge at Rancho Mirage, (iii) a new six passenger high-speed lift at Heavenly, (iv) new snowcats to increase the grooming capabilities of Vail and Beaver Creek and (v) restaurant upgrades at Heavenly's mid-mountain East Peak area. Investments in real estate during the remainder of fiscal 2004 are expected to total approximately $30 million to $40 million, and approximately $70 to $75 million for calendar 2004. Primary projects are an ticipated to include (i) continued work on the multi-year Vail "New Dawn" redevelopment project, (ii) creation of a new golf course community in the Jackson Hole area and (iii) other planning and development projects in and around each of the Company's resorts. The Company plans to fund these capital expenditures and investments in real estate with cash flows from operations, borrowings under the Credit Facility or alternative financing arrangements, as necessary.
During the six months ended January 31, 2004, the Company used $44.2 million in its financing activities consisting primarily of $14.5 million in net long-term debt borrowings (including a $348.8 million principal payment on the 8.75% Notes related to the tender offer, payment of the $25 million Olympus Note, the payment of $14.0 million of debt assumed in the KRED distribution and proceeds from the issuance of the 6.75% Notes), payment of $22.7 million tender premium and payment of $7.0 million of debt issuance costs.
In January 2004, the Company completed the offering for 6.75% Notes, the proceeds of which were used to purchase substantially all of the 8.75% Notes, and to pay related premiums, transaction fees and expenses. The 6.75% Notes were offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 (the "Securities Act"), as amended, and to persons outside the United States under Regulation S of the Securities Act. The 6.75% Notes have a fixed annual interest rate of 6.75% with interest due semi-annually on February 15 and August 15, beginning August 15, 2004. The 6.75% Notes will mature February 2014 and no principal payments are due to be paid until maturity. The Company has certain early redemption options under the terms of the 6.75% Notes. The Notes are subordinated to certain of the Company's debts, including the Credit Facility, and will be subordinated to certain of the Company's future debts. The Company's payment obligations under the Notes are jointly and severally guaranteed by substantially all of the Company's current and future domestic subsidiaries (See Note 16, Guarantor and Non-Guarantor Subsidiaries, of the Notes to Consolidated Condensed Financial Statements). The indenture governing the 6.75% Notes contains restrictive covenants which, among other things, limit the ability of Vail Resorts, Inc. and its Restricted Subsidiaries (as defined in the Indenture) to a) borrow money or sell preferred stock, b) create liens, c) pay dividends on or redeem or repurchase stock, d) make certain types of investments, e) sell stock in the Restricted Subsidiaries, f) create restrictions on the ability of the Restricted Subsidiaries to pay dividends or make other payments to the Company, g) enter into transactions with affiliates, h) issue guarantees of debt and i) sell assets or merge with other companies. The Company is required to exchange the 6.75% Notes and the guarantees for a new issue of substantially identical debt securities and guarantees registered under the Securi ties Act within 330 days after the closing of the 6.75% Notes.
In January 2004, the Company offered to purchase its outstanding 8.75% Notes for total consideration of $1,065.06 per $1,000 principal amount of 8.75% Notes. Of the outstanding 8.75% Notes, $348.8 million, or approximately 96.9%, were tendered. The 8.75% Notes remaining outstanding subsequent to the tender were amended to eliminate substantially all of the restrictive covenants. In addition, the Company is required to call the remaining outstanding 8.75% Notes on May 15, 2004 for a call price of 104.375% of the principal balance outstanding. The Company has transferred $11.2 million into a blocked account to fund the call of the 8.75% Notes remaining outstanding.
In January 2004, the Company amended its existing term loan under its bank credit facility. The amendment extended the maturity date from December 2008 to December 2010 and reduced the applicable interest rate margin by 50 basis points. In addition, the amendment provides that the term loan may be increased on a one-time basis by up to $60 million.
In February, the Company filed a universal shelf registration statement with the SEC in connection with the potential offer and sale, from time to time, of up to $100 million of its common stock, preferred stock and debt securities. The Company filed the registration statement so that it has the flexibility to raise capital if and when favorable economic or business conditions dictate.
For the six months ended January 31, 2003, cash flows provided by operating activities were $126.1 million. Cash flows used in investing activities for the same period were $96.3 million, primarily including capital expenditures of $66.4 million and investments in real estate of $28.0 million. During the six months ended January 31, 2003, the Company used $31.1 million of cash in its financing activities consisting primarily of $30.9 million in net long-term debt repayments.
Based on current levels of operations and cash availability, management believes the Company is in a position to satisfy its current working capital, debt service and capital expenditure requirements for at least the next twelve months.
Covenants and Limitations
The Company must abide by certain restrictive financial covenants in relation to its bank credit facilities and Senior Subordinated Notes. The most restrictive of those covenants include the Funded Debt to Adjusted EBITDA ratio, Senior Debt to Adjusted EBITDA ratio, Minimum Fixed Charge Coverage ratio, Minimum Net Worth and the Interest Coverage ratio (as defined in the underlying credit facilities). In addition, the Company's financing arrangements limit its ability to incur certain indebtedness, make certain restricted payments, make certain investments, make certain affiliate transfers and may limit its ability to enter into certain mergers, consolidations or sales of assets.
The Company expects it will meet all applicable quarterly financial tests in its debt instruments, including the Funded Debt to Adjusted EBITDA ratio, in fiscal 2004. However, there can be no assurance that the Company will meet its financial covenants in the future. If such covenants are not met, the Company would be required to seek a waiver or amendment from the banks participating in the bank credit facilities. While the Company anticipates that it would obtain such waiver or amendment, if any were necessary, there can be no assurance that such waiver or amendment would be granted, which could have a material adverse impact on the liquidity of the Company.
Contractual Obligations
As part of its ongoing operations, the Company enters into arrangements that obligate the Company to make future payments under contracts such as lease agreements and debt agreements. Debt obligations, which total $643.0 million, are currently recognized as liabilities in the Company's Consolidated Condensed Balance Sheet. Operating lease and service agreement obligations, which total $54.2 million, are not recognized as liabilities in the Company's Consolidated Condensed Balance Sheet, which is in accordance with generally accepted accounting principles. A summary of the Company's contractual obligations as of January 31, 2004 is as follows:
|
Payments Due by Fiscal Period (in thousands) |
|||||
Contractual Obligations |
Total |
Current Fiscal Year |
1-3 years |
3 - 5 years |
After 5 Years |
|
Long-Term Debt |
$ 643,027 |
$ 12,890 |
$ 21,665 |
$ 6,833 |
$ 601,639 |
|
Operating Leases and Service Agreements |
54,227 |
5,587 |
17,289 |
12,663 |
18,688 |
|
Purchase Obligations(2) |
197,335 |
166,565 |
21,578 |
475 |
8,400 |
|
Other Long-Term Obligations (1) |
17,000 |
|
|
|
|
|
Total Contractual Cash Obligations |
$ 911,589 |
$185,042 |
$ 60,532 |
$ 19,971 |
$ 628,727 |
|
|
|
|
|
|
|
|
(1) |
Other long-term obligations include amounts which become due based on deficits in underlying cash flows of the various metropolitan districts as described in Note 12, Commitments and Contingencies, of the Notes to Consolidated Condensed Financial Statements. This amount has been recorded as a liability of the Company; however, the specific time period of performance, if ever required, is currently unknown. |
|||||
|
|
|||||
(2) |
Purchase obligations include amounts which are classified as trade payables, accrued payroll and benefits, accrued fees and assessments, accrued interest, and liabilities (including advances) to complete lots sold on the Company's Consolidated Condensed Balance Sheet as of January 31, 2004 and other obligations for goods and services not yet recorded. |
Off Balance Sheet Arrangements
The Company has ownership interests in employee housing entities which were formed to construct, own and operate employee housing facilities in exchange for rent payments from tenants in and around Beaver Creek, Keystone and Breckenridge. The Employee Housing Entities were formerly off balance sheet arrangements, accounted for under the equity method. In connection with the Company's implementation of certain provisions of FIN No. 46R, the Company determined it is the primary beneficiary of the Employee Housing Entities and consolidated them in its Consolidated Condensed Financial Statements as of November 1, 2003. The Company must implement the remaining provisions of FIN No. 46R no later than the end of its third fiscal quarter.
The Company has issued letters of credit in support of the debt of the metropolitan districts (as more fully discussed in Note 12, Commitments and Contingencies, of the Notes to Consolidated Condensed Financial Statements). These entities constructed, own and operate municipal facilities supporting real estate developments created by the Company. The initial construction of the facilities was financed by the issuance of tax-exempt variable rate revenue bonds. The Company issued the letters of credit in support of these bonds as credit enhancements. Had the metropolitan districts not been formed, it is reasonably possible that the Company would have been required to construct these facilities itself. The Company does not believe that it is reasonably likely that the letters of credit backing the metropolitan districts debt will be called upon, and they historically have not been drawn upon, and therefore the letters of credit are not expected to have an effect on the Company's financial condition.
New Accounting Pronouncements
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB 51". This interpretation addresses consolidation by business enterprises of variable interest entities ("VIEs"). This new model for consolidation applies to an entity in which either (1) the equity investors (if any) do not have a controlling financial interest or (2) the equity investment at risk is insufficient to finance that entity's activities without receiving additional subordinated financial support from other parties. The interpretation applies immediately to VIEs created after February 1, 2003, and to VIEs in which the Company obtains an interest after that date. The interpretation was to apply in the first fiscal year or interim period beginning after June 15, 2003. In October 2003, the FASB deferred the implementation date for FIN No. 46 to financial statements issued for the first period ending after December 15, 2003. This deferral only applies to VIEs that existed prior to February 1, 2003.
In December 2003, the FASB published a revision to FIN No. 46, FIN No. 46R, to clarify some of the provisions of FIN No. 46 and to exempt certain entities from its requirements. Under FIN No. 46R, application is required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities for periods ending after December 15, 2003. Application by public entities for all other types of VIEs is required in financial statements no later than for periods ending after March 15, 2004. As of November 1, 2003, the Company has consolidated certain entities that it previously had accounted for under the equity method. The Company is currently evaluating any additional impact that the implementation of this interpretation will have on its financial position or results of operations (see Note 8, Variable Interest Entities, of the Notes to Consolidated Condensed Financial Statements).
In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, and requires that financial instruments within its scope, many of which currently are classified as equity, be classified as liabilities or, in some circumstances, assets. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the first interim period beginning after June 15, 2003. The FASB issued FASB Staff Position ("FSP") 150-3 on November 7, 2003 to defer, indefinitely, the effective date for applying the measurement and classification provisions of SFAS No. 150 for certain mandatorily redeemable non-controlling interests. Implementation of the currently effective provisions of SFAS No. 150 did not have a significant impact on the Co mpany's financial position or results of operations.
Cautionary Statement
Statements in this Form 10-Q, other than statements of historical information, are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as "may", "will", "expect", "plan", "intend", "anticipate", "believe", "estimate", and "continue" or similar words. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Such risks and uncertainties include, but are not limited to:
Readers are also referred to the uncertainties and risks identified in the Company's Annual Report on Form 10-K for the year ended July 31, 2003.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk. The Company's exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. At January 31, 2004, the Company had $169.4 million of variable rate indebtedness, representing 26.3% of total debt outstanding, at an average interest rate during the six months ended January 31, 2004 of 5.9%. Based on the average floating rate borrowings outstanding during the six months ended January 31, 2004, a 100 basis-point change in LIBOR would have caused the Company's monthly interest expense to change by approximately $139,000.
Item 4. Controls and Procedures
Evaluation of disclosure controls and procedures. Financial management of the Company, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), have evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this report. The term "disclosure controls and procedures" means controls and other procedures established by the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (the "Act") is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company's management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
The Company, including its CEO and CFO, does not expect that the Company's internal controls over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Changes in internal control over financial reporting. As disclosed in the Company's Form 10-K for the year ended July 31, 2003, a material weakness and certain significant deficiencies in the Company's internal control over financial reporting have been identified. The Company has developed and begun implementation of a specific action plan to address this weakness and these deficiencies and to enhance the reliability and effectiveness of the Company's control procedures. These actions include appointing a new CFO in November 2003 and adding and reallocating finance and accounting staff and support personnel who are dedicated to the objectives of timely and accurate disclosure of required information.
Based upon the foregoing, the Company's CEO and CFO have concluded that the Company's disclosure controls and procedures will be effective in meeting the above-stated objectives after giving effect to the aforementioned actions.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
As previously disclosed in the Company's Form 10-K for the year ended July 31, 2003, four of the Company's subsidiaries (JHL&S, LLC d/b/a/ Snake River Lodge & Spa, Teton Hospitality Services, Inc., Grand Teton Lodge Company and Vail Resorts Development Company) were named as defendants in two related lawsuits filed in the United States District Court for the District of Wyoming (Case No. 02-CV-17J, 02-CV-16J) in July 2002. The case arose out of an August 2, 2001 carbon monoxide accident in a hotel room at the Snake River Lodge & Spa in Wyoming.
On December 16, 2003, the jury rendered a total verdict of $17.5 million in compensatory damages in both cases. No punitive damages were awarded in either case against any defendants. The jury found the Snake River Lodge & Spa (formally known as JHL&S LLC), a 51% subsidiary of the Company, to be 47.5% responsible for the damages and two local Jackson Hole area contractors not party to the trial were found to be collectively 52.5% responsible. The jury rendered a defense verdict in favor of all of the Company's other subsidiaries who were defendants in the case. On March 9, 2004, the court ruled in favor of the Company's motion that JHL&S LLC is not vicariously liable, as a matter of law, for the 52.5%. The ruling, if appealed by plaintiffs, would take considerable time to resolve. All amounts awarded by the jury are fully insured under the Company's insurance policies; accordingly, the Company has not recorded any loss reserves for the jury's verdict.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of shareholders on January 8, 2004 in New York, New York. 35,274,876 shares of Class A Common Stock and Common Stock, 96% of outstanding shares, were represented at the meeting.
a) |
The following persons were elected to serve as Class 1 Directors of the Company until the next annual meeting of the shareholders. Class 1 Directors are elected by the Class A Common Stock holders. The voting results for each Class 1 Director follows: |
|
Director |
For |
Withheld |
|
John J. Hannan |
7,439,542 |
-- |
|
John R. Hauge |
7,439,542 |
-- |
|
Roland A. Hernandez |
7,439,542 |
-- |
|
Robert A. Katz |
7,439,542 |
-- |
|
William L. Mack |
7,439,542 |
-- |
b) |
The following persons were elected to serve as Class 2 Directors of the Company until the next annual meeting of the shareholders. Class 2 Directors are elected by the Common Stock holders. The voting results for each Class 2 Director follows: |
|
Director |
For |
Withheld |
|
Adam M. Aron |
16,845,376 |
9,735,538 |
|
Frank J. Biondi |
18,588,007 |
7,992,907 |
|
Thomas H. Lee |
18,581,175 |
7,999,739 |
|
Joe R. Micheletto |
18,475,458 |
8,105,456 |
|
John F. Sorte |
18,733,001 |
7,847,913 |
|
William P. Stiritz |
18,394,003 |
8,186,911 |
|
James S. Tisch |
18,587,745 |
7,993,169 |
c) |
Ratification of PricewaterhouseCoopers LLP as independent public accountants. |
For |
Against |
Abstain |
Broker Non-Vote |
|
33,859,221 |
156,631 |
4,604 |
-- |
d) |
Approval of other matters at the discretion of the Board of Directors as they properly come before the meeting. No other matters actually were presented at the meeting. |
For |
Against |
Abstain |
Broker Non-Vote |
|
15,770,583 |
18,005,482 |
-- |
-- |
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
a) |
The following exhibits are either filed herewith or, if so indicated, incorporated by reference to the documents indicated in parentheses, which have previously been filed with the Securities and Exchange Commission. |
Exhibit Number |
Description |
Sequentially Numbered Page |
3.1 |
Amended and Restated Certificate of Incorporation filed with the Secretary of State of the State of Delaware on the Effective Date. (Incorporated by reference to Exhibit 3.1 of the Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No 333-05341) including all amendments thereto.) |
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3.2(a) |
Amended and Restated By-Laws adopted on the Effective Date. (Incorporated by reference to Exhibit 3.2 on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2002, including all amendments thereto.) |
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3.2(b) |
Amendment to Restated By-Laws adopted on the Effective Date. (Incorporated by reference to Exhibit 3.2(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) |
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4.2(a) |
Purchase Agreement, dated as of May 6, 1999 among Vail Resorts, Inc., the guarantors named on Schedule I thereto, Bear Sterns & Co. Inc., NationsBanc Montgomery Securities LLC, BT Alex. Brown Incorporated, Lehman Brothers Inc. and Salomon Smith Barney Inc. (Incorporated by reference to Exhibit 4.2 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-80621) including all amendments thereto.) |
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4.2(b) |
Purchase Agreement, dated as of November 16, 2001 among Vail Resorts, Inc., the guarantors named on Schedule I thereto, Deutsche Banc Alex. Brown Inc., Banc of America Securities LLC, Bear, Stearns & Co. Inc., CIBC World Markets Corp. and Fleet Securities, Inc. (Incorporated by reference to Exhibit 4.1 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-76956-01) including all amendments thereto.) |
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4.2 (c) |
Purchase Agreement, dated as of January 15, 2004 among Vail Resorts, Inc., the guarantors named on Schedule I thereto, Banc of America Securities LLC, Deutsche Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc., Piper Jaffray & Co. and Wells Fargo Securities LLC. |
23 |
4.2 (d) |
Supplemental Purchase Agreement, dated as of January 22, 2004 among Vail Resorts, Inc., the guarantors named thereto, Banc of America Securities LLC, Deutsche Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc., Piper Jaffray & Co. and Wells Fargo Securities LLC. |
67 |
4.3(a) |
Indenture, dated as of May 11, 1999, among Vail Resorts, Inc., the guarantors named therein and the United States Trust Company of New York, as trustee. (Incorporated by reference to Exhibit 4.3 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-80621) including all amendments thereto.) |
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4.3(b) |
Indenture, dated as of November 21, 2001, among Vail Resorts, Inc., the guarantors named therein and The Bank of New York, as trustee. (Incorporated by reference to Exhibit 4.2 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-76956-01) including all amendments thereto.) |
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4.3(c) |
Indenture, dated as of January 29, 2004, among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. dated as of February 2, 4004.) |
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4.4(a) |
Form of Global Note (Included in Exhibit 4.4(a) incorporated by reference to Exhibit 4.3 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-80621) including all amendments thereto.) |
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4.4(b) |
Form of Global Note (Included in Exhibit 4.4(b) by reference to Exhibit 4.2 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-76956-01) including all amendments thereto.) |
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4.4(c) |
Form of Global Note (Included in Exhibit 4.4(c) by reference to Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. dated as of February 2, 4004.) |
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4.5(a) |
Registration Rights Agreement, dated as of May 11, 1999 among Vail Resorts, Inc., the guarantors signatory thereto, Bear Stearns & Co. Inc., NationsBanc Montgomery Securities LLC, BT Alex. Brown Incorporated, Lehman Brothers Inc. and Salomon Smith Barney Inc. (Incorporated by reference to Exhibit 4.5 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-80621) including all amendments thereto.) |
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4.5(b) |
Registration Rights Agreement dated as of November 21, 2001 among Vail Resorts, Inc., the guarantors signatory thereto, Deutsche Banc Alex. Brown Inc., Banc of America Securities LLC, Bear Stearns & Co. Inc., CIBC World Markets Corp. and Fleet Securities, Inc. (Incorporated by reference to Exhibit 4.5 of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-76956-01) including all amendments thereto.) |
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4.5(c) |
Registration Rights Agreement dated as of January 29, 2004 among Vail Resorts, Inc., the guarantors signatory thereto, Banc of America Securities LLC, Deutsche Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc., Piper Jaffray & Co. and Wells Fargo Securities LLC. |
75 |
4.6(a) |
First Supplemental Indenture, dated as of August 22, 1999, among the Company, the guarantors named therein and the United States Trust Company of New York, as trustee. (Incorporated by reference to Exhibit 4.6(a) of the Registration Statement on Form S-4 of Vail Resorts, Inc. (Registration No. 333-80621) including all amendments thereto.) |
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4.6(b) |
Second Supplemental Indenture, dated as of November 16, 2001 to the Indenture dated May 11, 1999, among Vail Resorts, Inc., the guarantors therein and The Bank of New York, as successor trustee to United States Trust Company of New York. (Incorporated by reference to Exhibit 4.6(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2002, including all amendments thereto.) |
|
4.6(c) |
Third Supplemental Indenture, dated as of January 16, 2001, to the Indenture dated May 11, 1999, among Vail Resorts, Inc., the guarantors therein and the Bank of New York, as successor trustee to the United States Trust Company of New York. (Incorporated by reference to Exhibit 4.6(c) on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2002, including all amendments thereto.) |
|
4.6(d) |
First Supplemental Indenture, dated as of January 16, 2001, to the Indenture dated November 21, 2001, among Vail Resorts Inc., the guarantors therein and The Bank of New York, as trustee. (Incorporated by reference to Exhibit 4.3 of the registration statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments thereto.) |
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4.6(e) |
Fourth Supplemental Indenture, dated as of October 18, 2002, to the Indenture dated May 11, 1999, among Vail Resorts, Inc., the guarantors therein and the Bank of New York, as successor trustee to the United States Trust Company of New York. (Incorporated by reference to Exhibit 4.6(e) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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4.6(f) |
Second Supplemental Indenture, dated as of October 18, 2002, to the Indenture dated November 21, 2001, among Vail Resorts Inc., the guarantors therein and the Bank of New York, as trustee. (Incorporated by reference to Exhibit 4.6(f) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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4.6(g) |
Fifth Supplemental Indenture, dated as of May 20, 2003, to the Indenture dated May 11, 1999, among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee. (Incorporated by reference to Exhibit 4.6(g) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2003.) |
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4.6(h) |
Third Supplemental Indenture, dated as of May 20, 2003, to the Indenture dated November 21, 2001, among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee. (Incorporated by reference to Exhibit 4.6(h) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2003.) |
|
4.6(i) |
Sixth Supplemental Indenture, dated as of January 26, 2004 to the Indenture dated May 11, 1999 among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee. |
101 |
4.6(j) |
Fourth Supplemental Indenture, dated as of January 26, 2004, to the Indenture dated November 21, 2001, among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee. |
111 |
10.1 |
Management Agreement by and between Beaver Creek Resort Company of Colorado and Vail Associates, Inc. (Incorporated by reference to Exhibit 10.1 of the Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments thereto.) |
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10.2 |
Forest Service Term Special Use Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.2 of the Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments thereto.) |
|
10.3 |
Forest Service Special Use Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.3 of the Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments thereto.) |
|
10.4 |
Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 10.4 of the Registration Statement on Form S-4 of Gillett Holdings, Inc. (Registration No. 33-52854) including all amendments thereto.) |
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10.11 |
1993 Stock Option Plan of Gillett Holdings, Inc. (Incorporated by reference to Exhibit 10.20 of the report on Form 10-K of Gillett Holdings, Inc. for the period from October 9, 1992 through September 30, 1993.) |
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10.12(a) |
Employment Agreement dated October 30, 2001 by and between RockResorts International, LLC and Edward Mace. (Incorporated by reference to Exhibit 10.21 of the report on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2002.) |
|
10.12(b) |
Addendum to the Employment Agreement dated October 30, 2001 by and between RockResorts International, LLC and Edward Mace. (Incorporated by reference to Exhibit 10.21 of the report on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2002.) |
|
10.13(a) |
Employment Agreement dated October 1, 2000 by and between Vail Resorts, Inc., Vail Associates, Inc. and Andrew P. Daly. (Incorporated by reference to Exhibit 10.13 of the report on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2001.) |
|
10.13(b) |
Separation Agreement dated October 31, 2002 by and between Vail Resorts, Inc., Vail Associates, Inc. and Andrew P. Daly. (Incorporated by reference to Exhibit 10.13(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
|
10.14(a) |
Employment Agreement dated July 29, 1996 between Vail Resorts, Inc. and Adam M. Aron. (Incorporated by reference to Exhibit 10.21 of the report on Form S-2/A of Vail Resorts, Inc. (Registration # 333-5341) including all amendments thereto.) |
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10.14(b) |
Amendment to the Employment Agreement dated May 1, 2001 between Vail Resorts, Inc. and Adam M. Aron. (Incorporated by reference to Exhibit 10.14(b) of the report on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2001.) |
|
10.14(c) |
Second Amendment to Employment Agreement of Adam M. Aron, as Chairman of the Board and Chief Executive Officer of Vail Resorts, Inc. dated July 29, 2003. (Incorporated by reference to Exhibit 10.14(c) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2003.) |
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10.15(a) |
Shareholder Agreement among Vail Resorts, Inc., Ralston Foods, Inc., and Apollo Ski Partners, L.P. dated January 3, 1997. (Incorporated by reference to Exhibit 2.4 of the report on Form 8-K of Vail Resorts, Inc. dated January 8, 1997.) |
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10.15(b) |
First Amendment to the Shareholder Agreement dated as of November 1, 1999, among Vail Resorts, Inc., Ralcorp Holdings, Inc. (f/k/a Ralston Foods, Inc.) and Apollo Ski Partners, L.P. (Incorporated by reference to Exhibit 10.17(b) of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2000.) |
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10.16 |
1996 Stock Option Plan (Incorporated by reference from the Company's Registration Statement on Form S-3, File No. 333-5341). |
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10.17 |
2002 Long Term Incentive and Share Award Plan. (Incorporated by reference to Exhibit 10.17 on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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10.18(a) |
Sports and Housing Facilities Financing Agreement between the Vail Corporation (d/b/a "Vail Associates, Inc.") and Eagle County, Colorado, dated April 1, 1998. (Incorporated by reference to Exhibit 10 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 1998.) |
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10.18(b) |
Trust Indenture dated as of April 1, 1998 securing Sports and Housing Facilities Revenue Refunding Bonds by and between Eagle County, Colorado and U.S. Bank, N.A., as Trustee. (Incorporated by reference to Exhibit 10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 1998.) |
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10.19(a) |
Third Amended and Restated Revolving Credit and Term Loan Agreement among The Vail Corporation (d/b/a "Vail Associates, Inc."), Borrower, Bank of America, N.A., Agent, and the other lenders party thereto dated as of June 10, 2003. (Incorporated by reference to Exhibit 10.19 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2003.) |
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10.19(b) |
First Amendment to the Third Amended and Restated Revolving Credit and Term Loan Agreement among The Vail Corporation (d/b/a "Vail Associates, Inc."), Borrower, Bank of America, N.A., Agent, and the other lenders party thereto dated as of October 2, 2003. |
121 |
10.19(c) |
Second Amendment to the Third Amended and Restated Revolving Credit and Term Loan Agreement among The Vail Corporation (d/b/a "Vail Associates, Inc."), Borrower, Bank of America, N.A., Agent, and the other lenders party thereto dated as of January 21, 2004. |
140 |
10.19(d) |
Agreement and Consent to the Third Amended and Restated Revolving Credit and Term Loan Agreement among The Vail Corporation (d/b/a "Vail Associates, Inc."), Borrower, Bank of America, N.A., Agent, and the other lenders party thereto dated as of January 28, 2004. |
162 |
10.20 |
Vail Resorts, Inc. 1999 Long Term Incentive and Share Award Plan. (Incorporated by reference to the Company's registration statement on Form S-8, File No. 333-32320.) |
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10.21 |
Vail Resorts Deferred Compensation Plan effective as of October 1, 2000. (Incorporated by reference to Exhibit 10.23 of the report on Form 10-K of Vail Resorts, Inc. for the fiscal year ended July 31, 2000.) |
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31 |
Certifications of Adam M. Aron and Jeffrey W. Jones Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
20 |
32 |
Certifications of Adam M. Aron and Jeffrey W. Jones Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
22 |
99.1 |
Forest Service Unified Permit for Heavenly ski area. (Incorporated by reference to Exhibit 99.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2002.) |
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99.2(a) |
Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 99.2(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.2(b) |
Amendment to Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 99.2(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.3(a) |
Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 99.3(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.3(b) |
Amendment to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 99.3(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.4(a) |
Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 99.4(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.4(b) |
Exhibits to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 99.4(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.5(a) |
Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 99.5(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.5(b) |
Exhibits to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 99.5(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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99.5(c) |
Amendment to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 99.5(c) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002.) |
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b) |
Reports on Form 8-K |
The Company filed a Current Report on Form 8-K, dated November 13, 2003, regarding the Company's press release announcing the restatement of its historical financial statements. |
The Company furnished a Current Report on Form 8-K, dated November 13, 2003, regarding the Company's press release announcing the Company's fiscal fourth quarter and fiscal year 2003 results. |
The Company furnished a Current Report on Form 8-K, dated December 11, 2003, regarding the Company's press release announcing the Company's results for the first quarter of fiscal 2004. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on March 15, 2004.
Vail Resorts, Inc. |
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By: |
/s/ Jeffrey W. Jones |
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Jeffrey W. Jones |
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Senior Vice President and |
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Chief Financial Officer |
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Dated: |
March 15, 2004 |
EXHIBIT 4.2 (c)
EXECUTION COPY
VAIL RESORTS, INC.
GUARANTORS (named in Schedule I hereto)
$390,000,000
6 3/4% Senior Subordinated Notes due 2014
PURCHASE AGREEMENT
January 15, 2004
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
VAIL RESORTS, INC.
$390,000,000
6 3/4% Senior Subordinated Notes due 2014
PURCHASE AGREEMENT
January 15, 2004
New York, New York
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Ladies & Gentlemen:
Vail Resorts, Inc., a Delaware corporation (the "Company"), proposes to issue and sell to Banc of America Securities LLC, Deutsche Bank Securities Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc., Piper Jaffray & Co., and Wells Fargo Securities, L.L.C. (each, an "Initial Purchaser" and, collectively, the "Initial Purchasers") $390,000,000 in aggregate principal amount of 6 3/4% Senior Subordinated Notes due 2014 (the "Restricted Notes"), subject to the terms and conditions set forth herein. The Restricted Notes will be issued pursuant to an indenture (the "Indenture"), to be dated the Closing Date (as defined), among the Company, the Guarantors (as defined) and The Bank of New York, as trustee (the "Trustee"). The Notes (as defined) will be fully and unconditionally guaranteed (the "Guarantees") as to payment of principal, interest, premium and liquidated damages, if any, on an unsecured senior subordinated basis, jointly and severally by each entity listed on Schedule I hereto (collectively, the "Guarantors"). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Indenture.
Upon original issuance thereof, and until such time as the same is no longer required under the applicable requirements of the Securities Act of 1933, as amended (the "Act"), the Restricted Notes (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (a) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (b) IT IS NOT A U.S. PERSON AND IS ACQUIRING THE NOTE EVIDENCED HEREBY IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT, WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (a) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (b) INSIDE THE UNITED STATES TO A QIB IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (d) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (e) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
The Initial Purchasers have advised the Company that the Initial Purchasers will make offers (the "Exempt Resales") of the Restricted Notes on the terms set forth in the Offering Memorandum, as amended or supplemented, solely to (i) persons whom the Initial Purchasers reasonably believe to be "qualified institutional buyers," as defined in Rule 144A under the Act ("QIBs") and (ii) non-U.S. persons outside the United States in reliance upon Regulation S ("Regulation S") under the Act (each, a "Reg S Investor"). The QIBs and the Reg S Investors are collectively referred to herein as the "Eligible Purchasers." The Initial Purchaser will offer the Restricted Notes to such Eligible Purchasers initially at a price equal to that set forth on the cover of the Offering Memorandum. Such price may be changed by the Initial Purchasers at any time without notice.
Holders (including subsequent transferees) of the Restricted Notes will have the registration rights set forth in the registration rights agreement relating thereto (the "Registration Rights Agreement"), to be dated the Closing Date (as defined), for so long as such Restricted Notes constitute "Transfer Restricted Securities" (as defined in the Registration Rights Agreement). Pursuant to the Registration Rights Agreement, the Company and the Guarantors will agree to file with the Securities and Exchange Commission (the "Commission"), under the circumstances set forth therein, (i) a registration statement under the Act (the "Exchange Offer Registration Statement") relating to the Company's 6 3/4% Senior Subordinated Notes due 2014 (the "Exchange Notes") and Guarantees thereof to be offered in exchange for the Restricted Notes and Guarantees thereof (the "Exchange Offer") and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the "Shelf Registration Statement" and, together with the Exchange Offer Registration Statement, the "Registration Statements") relating to the resale by certain holders of the Restricted Notes, and to use their commercially reasonable best efforts to cause such Registration Statements to be declared effective and to consummate the Exchange Offer. This Agreement, the Notes, the Guarantees, the Indenture and the Registration Rights Agreement are hereinafter referred to collectively as the "Operative Documents."
"The Restricted Notes covered hereby have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered and sold within the United States or to, or for the account or benefit of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offering and the Closing Date, except in either case in accordance with Regulation S under the Securities Act (or Rule 144A in transactions that are exempt from the registration requirements of the Securities Act), and in connection with any subsequent sale by you of the Restricted Notes covered hereby in reliance on Regulation S during the period referred to above to any distributor, dealer or person receiving a selling concession, fee or other remuneration, you must deliver a notice to substantially the foregoing effect. Terms used above have the meanings assigned to them in Regulation S."
The Initial Purchasers acknowledge that the Company and the Guarantors and, for purposes of the opinions to be delivered to the Initial Purchasers pursuant to Section 8 hereof, counsel for the Company and the Guarantors and counsel for the Initial Purchasers will rely upon the accuracy and truth of the foregoing representations and hereby consent to such reliance.
Notwithstanding the provisions of this Section 7, (i) in no case shall the Initial Purchasers be required to contribute any amount in excess of the amount by which the discounts and commissions applicable to the Restricted Notes purchased by the Initial Purchasers pursuant to this Agreement exceeds the amount of any damages which the Initial Purchasers has otherwise been required to pay by reason of any untrue or alleged untrue statement or omission or alleged omission and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, (A) each person, if any, who controls the Initial Purchasers within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of the Initial Purchasers or any controlling person sha ll have the same rights to contribution as the Initial Purchasers, and (A) each person, if any, who controls the Company or any Guarantor within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B) the respective officers, directors, partners, employees, representatives and agents of the Company and the Guarantors shall have the same rights to contribution as the Company and the Guarantors, subject in each case to clauses (i) and (ii) of this Section 7. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this Section 7, notify such party or parties from whom contribution may be sought, but the failure to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this Section 7 or otherwise. No party shall be liable for contribution with respect to any action or claim settled without its prior written consent, provided that such written consent was not unreasonably withheld. The Initial Purchasers' obligations to contribute pursuant to this Section 7 are several in proportion to the respective principal amounts of Restricted Notes purchased by each of the Initial Purchasers hereunder and not joint.
If the foregoing correctly sets forth the understanding among the Initial Purchasers, the Company and the Guarantors please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us.
VAIL RESORTS, INC.
By:
Name:
Title:
BEAVER CREEK ASSOCIATES, INC.
BEAVER CREEK CONSULTANTS, INC.
BEAVER CREEK FOOD SERVICES, INC.
BRECKENRIDGE RESORT PROPERTIES, INC.
COMPLETE TELECOMMUNICATIONS, INC.
GILLETT BROADCASTING, INC.
GRAND TETON LODGE COMPANY
HEAVENLY VALLEY, LIMITED PARTNERSHIP
JACKSON HOLE GOLF AND TENNIS CLUB, INC.
JHL&S LLC
KEYSTONE CONFERENCE SERVICES, INC.
KEYSTONE DEVELOPMENT SALES, INC.
KEYSTONE FOOD AND BEVERAGE COMPANY
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
LODGE PROPERTIES, INC.
LODGE REALTY, INC.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
ROCKRESORTS CASA MADRONA, LLC
ROCKRESORTS CHEECA, LLC
ROCKRESORTS EQUINOX, INC.
ROCKRESORTS INTERNATIONAL, LLC
ROCKRESORTS, LLC
ROCKRESORTS LA POSADO, LLC
ROCKRESORTS ROSARIO, LLC
ROCKRESORTS WYOMING, LLC
TETON HOSPITALITY SERVICES, INC.
THE VAIL CORPORATION
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
VAIL ASSOCIATES HOLDINGS, LTD.
VAIL ASSOCIATES REAL ESTATE, INC.
VAIL FOOD SERVICES, INC.
VAIL HOLDINGS, INC.
VAIL RESORTS DEVELOPMENT COMPANY
VAIL SUMMIT RESORTS, INC.
VAIL TRADEMARKS, INC.
VAIL/ARROWHEAD, INC.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
VAMHC, INC.
VAIL RR, INC.
VA RANCHO MIRAGE I, INC.
VA RANCHO MIRAGE II, INC.
VA RANCHO MIRAGE RESORT, L.P.
VR HEAVENLY I, INC.
VR HEAVENLY II, INC.
Each by its authorized officer or signatory
By:
Name:
Title:
Accepted and agreed to as of
the date first above written:
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
Acting on behalf of themselves and the
several Initial Purchasers
By: BANC OF AMERICA SECURITIES LLC
By:
Name:
Title:
SCHEDULE I
Guarantors
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Beaver Creek Food Services, Inc.
Breckenridge Resort Properties, Inc.
Complete Telecommunications, Inc.
Gillett Broadcasting, Inc.
Grand Teton Lodge Company
Heavenly Valley, Limited Partnership
Jackson Hole Golf and Tennis Club, Inc.
JHL&S LLC
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food and Beverage Company
Keystone Resort Property Management Company
Lodge Properties, Inc.
Lodge Realty, Inc.
Property Management Acquisition Corp., Inc.
Rockresorts Casa Madrona, LLC
Rockresorts Cheeca, LLC
Rockresorts Equinox, INC.
Rockresorts International, LLC
Rockresorts, LLC
Rockresorts La Posado, LLC
Rockresorts Rosario, LLC
Rockresorts Wyoming, LLC
Teton Hospitality Services, Inc.
The Vail Corporation
The Village at Breckenridge Acquisition Corp., Inc.
Vail Associates Holdings, Ltd.
Vail Associates Real Estate, Inc.
Vail Food Services, Inc.
Vail Holdings, Inc.
Vail Resorts Development Company
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
Vail/Arrowhead, Inc.
Vail/Beaver Creek Resort Properties, Inc.
VAMHC, Inc.
Vail RR, Inc.
VA Rancho Mirage I, Inc.
VA Rancho Mirage II, Inc.
VA Rancho Mirage Resort, L.P.
VR Heavenly I, Inc.
VR Heavenly II, Inc.
SCHEDULE II
Initial Purchasers
Initial Purchasers |
Principal Amount |
Banc of America Securities LLC |
156,000,000 |
Deutsche Bank Securities Inc. |
156,000,000 |
Bear, Stearns & Co. Inc. |
19,500,000 |
Lehman Brothers Inc. |
19,500,000 |
Piper Jaffray & Co.. |
19,500,000 |
Wells Fargo Securities L.L.C. |
19,500,000 |
Total |
$390,000,000 |
SCHEDULE III
Material Domestic Subsidiaries of the Company
Owned Directly by Vail Resorts, Inc.
Gillett Broadcasting, Inc.
Vail Holdings, Inc.
Owned Directly by Vail Holdings, Inc.
The Vail Corporation
VR Heavenly I, Inc.
VR Heavenly II, Inc.
Owned Directly by The Vail Corporation
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Lodge Properties, Inc.
SSI Venture, LLC
Vail Associates Investments, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
Vail/Arrowhead, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Complete Telecommunications, Inc.
Forest Ridge Holdings, Inc.
Grand Teton Lodge Company
Larkspur Restaurant & Bar, LLC
RTP, LLC
Teton Hospitality Services, Inc.
VAMHC, Inc.
VA Rancho Mirage I, Inc.
VA Rancho Mirage II, Inc.
Avon Partners II, LLC
Eagle Park Reservoir Company
Vail RR, Inc.
Owned Directly by VR Heavenly I, Inc. and VR Heavenly II, Inc.
Heavenly Valley, Limited Partnership
Owned Directly by Beaver Creek Associates, Inc.
Beaver Creek Food Services, Inc.
Owned Directly by Beaver Creek Food Services, Inc.
Boulder/Beaver, LLC
Owned Directly by Grand Teton Lodge Company
Colter Bay Corporation
Gros Ventre Utility Company
Jackson Hole Golf and Tennis Club, Inc.
Jackson Lake Lodge Corporation
Jenny Lake Lodge, Inc.
Owned Directly by Lodge Properties, Inc.
Lodge Realty, Inc.
Owned Directly by RTP, LLC
RT Partners, Inc.
Owned Directly by Teton Hospitality Services, Inc.
JHL&S LLC
Owned Directly by Vail/Arrowhead, Inc. and Vail Summit Resorts, Inc.
VR Holdings, Inc.
Owned Directly by VR Holdings, Inc.
Mountain Thunder, Inc.
Timber Trail, Inc.
Owned Directly by Vail Resorts Development Company
Breckenridge Resort Properties, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Real Estate, Inc.
Owned Directly by Vail Associates Real Estate, Inc.
Slifer Smith & Frampton/Vail Associates Real Estate, LLC
Owned Directly by Vail Summit Resorts, Inc.
Breckenridge Terrace, LLC
Tenderfoot Seasonal Housing, LLC
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food and Beverage Company
Keystone/Intrawest, LLC
Keystone Resort Property Management Company
Property Management Acquisition Corp., Inc.
The Village at Breckenridge Acquisition Corp., Inc.
Owned Directly by Vail RR, Inc.
Rockresorts International, LLC
Owned Directly by Rockresorts International, LLC
Rockresorts LLC
Rockresorts Cheeca, LLC
Rockresorts Equinox, Inc.
Rockresorts LaPosada, LLC
Rockresorts Casa Madrona, LLC
Rockresorts Rosario, LLC
Rockresorts Wyoming, LLC
Owned Directly by VA Rancho Mirage I, Inc. and by VA Rancho Mirage II, Inc.
VA Rancho Mirage Resort L.P.
SCHEDULE IV
Subsidiaries and Other Equity Interests of the Company
Owned Directly by Vail Resorts, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Gillett Broadcasting, Inc. |
100% |
Delaware |
- |
Vail Holdings, Inc. |
100% |
Colorado |
- |
Owned Directly by Vail Holdings, Inc.
|
% Owned |
State of |
Qualified to do Business in |
The Vail Corporation |
100% |
Colorado |
- |
VR Heavenly I, Inc. |
100% |
Colorado |
California/ |
VR Heavenly II, Inc. |
100% |
Colorado |
- |
Owned Directly by The Vail Corporation
|
% Owned |
State of |
Qualified to do Business in |
Avon Partners II, LLC |
50% |
Colorado |
- |
Beaver Creek Associates, Inc. |
100% |
Colorado |
- |
Beaver Creek Consultants, Inc. |
100% |
Colorado |
- |
BC Housing, LLC |
26% |
Colorado |
- |
Complete Telecommunications, Inc. |
100% |
Colorado |
- |
Eagle Park Reservoir Company |
55% |
Colorado |
- |
Eclipse Television and Sports Marketing, LLC |
25% |
Colorado |
- |
Forest Ridge Holdings, Inc. |
100% |
Colorado |
- |
Grand Teton Lodge Company |
100% |
Wyoming |
- |
Larkspur Restaurant & Bar, LLC |
83% |
Colorado |
- |
Lodge Properties, Inc. |
100% |
Colorado |
- |
RTP, LLC |
51% |
Colorado |
- |
SSI Venture, LLC |
52% |
Colorado |
- |
The Tarnes at BC, LLC |
31% |
Colorado |
- |
Teton Hospitality Services, Inc. |
100% |
Wyoming |
- |
Vail Associates Investments, Inc. |
100% |
Colorado |
- |
Vail Food Services, Inc. |
100% |
Colorado |
- |
Vail Resorts Development Company |
100% |
Colorado |
Wyoming |
Vail Summit Resorts, Inc. |
100% |
Colorado |
- |
Vail Trademarks, Inc. |
100% |
Colorado |
- |
Vail/Arrowhead, Inc. |
100% |
Colorado |
- |
Vail/Beaver Creek Resort Properties, Inc. |
100% |
Colorado |
- |
VAMHC, Inc. |
100% |
Colorado |
- |
Vail RR, Inc. |
100% |
Colorado |
- |
VA Rancho Mirage I, Inc. |
100% |
Colorado |
California |
VA Rancho Mirage II, Inc. |
100% |
Colorado |
- |
Owned Directly by Beaver Creek Associates, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Beaver Creek Food Services, Inc. |
100% |
Colorado |
- |
Owned Directly by Beaver Creek Food Services, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Boulder/Beaver, LLC |
97% |
Colorado |
- |
Owned Directly by Grand Teton Lodge Company
Subsidiary |
% Owned |
State of |
Qualified to do Business in |
Colter Bay Corporation |
100% |
Wyoming |
- |
Gros Ventre Utility Company |
100% |
Wyoming |
- |
Jackson Hole Golf and Tennis Club, Inc. |
100% |
Wyoming |
- |
Jackson Lake Lodge Corporation |
100% |
Wyoming |
- |
Jenny Lake Lodge, Inc. |
100% |
Wyoming |
- |
Owned Directly by Lodge Properties, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Lodge Realty, Inc. |
100% |
Colorado |
- |
Owned Directly by Resort Technology Partners, LLC
|
% Owned |
State of |
Qualified to do Business in |
RT Partners, Inc. |
100% |
Delaware |
Colorado |
Owned Directly by Teton Hospitality Services, Inc.
|
% Owned |
State of |
Qualified to do Business in |
JHL&S LLC |
51% |
Wyoming |
- |
Owned Directly by Vail/Arrowhead, Inc. and Vail Summit Resorts, Inc.
|
% Owned |
State of |
Qualified to do Business in |
VR Holdings, Inc. |
100% |
Colorado |
- |
Owned Directly by VR Holdings, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Bachelor Gulch Resort LLC |
49% |
Colorado |
- |
Mountain Thunder, Inc. |
100% |
Colorado |
California |
Timber Trail, Inc. |
100% |
Colorado |
- |
Owned Directly by Vail Resorts Development Company
|
% Owned |
State of |
Qualified to do Business in |
Breckenridge Resort Properties, Inc. |
100% |
Colorado |
- |
Vail Associates Holdings, Ltd. |
100% |
Colorado |
- |
Vail Associates Real Estate, Inc. |
100% |
Colorado |
- |
Owned Directly by Vail Associates Real Estate, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Slifer, Smith & Frampton/Vail Associates Real Estate, LLC |
50% |
Colorado |
- |
Owned Directly by Vail Summit Resorts, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Breckenridge Terrace, LLC |
50% |
Colorado |
- |
Clinton Ditch and Reservoir Company |
43% |
Colorado |
- |
Keystone Conference Services, Inc. |
100% |
Colorado |
- |
Keystone Development Sales, Inc. |
100% |
Colorado |
- |
Keystone Food and Beverage Company |
100% |
Colorado |
- |
Keystone/Intrawest, LLC |
50% |
Delaware |
Colorado |
Keystone Resort Property Management Company |
100% |
Colorado |
- |
Tenderfoot Seasonal Housing, LLC |
50% |
Colorado |
- |
Property Management Acquisition Corp., Inc. |
100% |
Tennessee |
Colorado |
The Village at Breckenridge Acquisition Corp., Inc. |
100% |
Tennessee |
Colorado |
Owned Directly by Vail RR, Inc.
|
% Owned |
State of |
Qualified to do Business in |
Rockresorts International, LLC |
100% (Class A) |
Delaware |
California, Colorado, Florida, New Mexico, Vermont, Washington |
Owned Directly by Rockresorts International, LLC
|
% Owned |
State of |
Qualified to do Business in |
Rockresorts LLC |
100% |
Delaware |
- |
Rockresorts Cheeca, LLC |
100% |
Delaware |
Florida |
Rockresorts Equinox, Inc. |
100% |
Vermont |
- |
Rockresorts LaPosada, LLC |
100% |
Delaware |
New Mexico |
Rockresorts Casa Madrona, LLC |
100% |
Delaware |
California |
Rockresorts Rosario, LLC |
100% |
Delaware |
Washington |
Rockresorts Wyoming, LLC |
100% |
Wyoming |
- |
Owned Directly by VA Rancho Mirage I, Inc. and VA Rancho Mirage II, Inc.
|
% Owned |
State of |
Qualified to do Business in |
VA Rancho Mirage Resort, L.P. |
100% |
Delaware |
California |
Exhibit 10.19(c)
SPECIAL NOTICE REGARDING MATERIAL NON-PUBLIC INFORMATION
THE ATTACHED DOCUMENT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY OR ITS SECURITIES. BY ACCEPTING THIS DOCUMENT, THE RECIPIENT AGREES TO USE ANY SUCH INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE POLICIES, CONTRACTUAL OBLIGATIONS AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
SECOND AMENDMENT AND CONSENT
THIS SECOND AMENDMENT AND CONSENT (this "Amendment and Consent") is entered into as of January 21, 2004, among THE VAIL CORPORATION, a Colorado corporation doing business as "Vail Associates, Inc." ("Borrower"), Required Lenders (as defined in the Credit Agreement referenced below) party hereto, and BANK OF AMERICA, N.A., as Administrative Agent (hereinafter defined).
R E C I T A L S
A. Borrower has entered into that certain Third Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 10, 2003 (as amended to date, the "Credit Agreement"), with Bank of America, N.A., as Administrative Agent (in such capacity, the "Administrative Agent"), and certain other agents and lenders party thereto, providing for revolving credit loans and term loans in the aggregate principal amount of up to $425,000,000. Unless otherwise indicated herein, all capitalized terms used herein shall have the meanings set forth in the Credit Agreement, and all Section references herein are to sections in the Credit Agreement.
B. Vail Resorts, Inc., the indirect parent of Borrower ("VRI"), proposes (i) to tender for, repurchase (including, without limitation, in open market transactions or private negotiated transactions), redeem, discharge, or defease all or a portion of the 8.750% Senior Subordinated Notes due 2009 issued pursuant to the Senior Subordinated Debt Indentures in one or a series of transactions (collectively, the "Subject Redemptions," and each, a "Subject Redemption"), and (ii) to the extent any portion of the Subordinated Debt issued pursuant to the Senior Subordinated Debt Indentures remains outstanding after the Initial Subject Redemption (as hereafter defined), to amend the Senior Subordinated Debt Indentures by deleting substantially all restrictive covenants from such Indentures (the "Subject Indenture Amendments"). Pursuant to Section 9.2, Borrower has requested that Required Lenders consent to the Subject Redemp tions and the Subject Indenture Amendments.
C. Borrower has also requested that Required Lenders amend the Credit Agreement (i) to provide for an optional commitment increase under the Term Loan Facility, pursuant to which Borrower may request an increase thereunder of up to $60,000,000, (ii) to permit Borrower, at its option, to request that the Term Loan Principal Debt be refinanced, (iii) to permit, in addition to the Subject Redemptions, the redemption of up to an aggregate of $90,000,000 of Subordinated Debt, and (iv) to clarify that in calculating the "Minimum Fixed Charge Coverage Ratio" and the "Interest Coverage Ratio," the amortization of deferred financing charges and original issue discounts should be excluded.
D. Subject to and upon the terms and conditions set forth herein, Required Lenders have agreed to consent to the Subject Redemptions and the Subject Indenture Amendments and to amend the Credit Agreement as set forth herein.
In consideration of the foregoing and the mutual covenants contained herein, Borrower, Required Lenders, and Administrative Agent agree as follows:
1. Consent to Subject Redemptions and Subject Indenture Amendments. Pursuant to Section 9.2 of the Credit Agreement, Required Lenders hereby consent to the Subject Redemptions and the Subject Indenture Amendments, so long as (a) on and as of the dates of each Subject Redemption and the Subject Indenture Amendments, no Default or Potential Default then exists or arises; (b) prior to or concurrently with the consummation of the first Subject Redemption (the "Initial Subject Redemption"), VRI shall issue not less than $300,000,000 of Subordinated Debt (the "Replacement Subordinated Debt") and shall use not less than $300,000,000 of the proceeds of such Replacement Subordinated Debt solely to pay the sum of (i) the redemption or purchase price of, and related costs and expenses associated with, the Initial Subject Redemption (including, without limitation, redemption premiums, tender premiums, and consent fees), and (ii) costs and expenses associated with the issuance of the Replacement Subordinated Debt; and (c) the remaining Subordinated Debt outstanding under the Senior Subordinated Indentures (as amended by the Indenture Amendment) and the Replacement Subordinated Debt shall satisfy the requirements for permitted Subordinated Debt as set forth in the Loan Papers, including, without limitation, the requirements imposed by the definition of "Subordinated Debt" in Section 1.1 and by Section 9.16, and shall otherwise be in form and substance satisfactory to Administrative Agent (it being understood that if the Replacement Subordinated Debt is issued in accordance with the requirements of this Amendment and Consent and under substantially the same or less restrictive terms as are set forth in the Senior Subordinated Debt Indentures immediately prior to giving effect to the Subject Indenture Amendment, then such Replacement Subordinated Debt will be acceptable to Administrative Agent) . To the extent any proceeds from the issuance of the Replacement Subordinated Debt are not immediately used to consummate the Subject Redemptions and are deposited in a blocked account with Administrative Agent pursuant to terms, conditions, and documents reasonably satisfactory to Administrative Agent (the "Blocked Account"), then, for purposes of calculating the "Funded Debt to Adjusted EBITDA Ratio" pursuant to Section 10.1(a) for fiscal quarters ending after the date a deposit is made into the Blocked Account but not after the fiscal quarter ending April 30, 2004, the amount of Subordinated Debt included in the calculation of "Funded Debt" shall be reduced by the amount of the funds on deposit in the Blocked Account on the last day of each such fiscal quarter.
2. Amendments.
(a) The following provision regarding an optional Term Loan Commitment increase is hereby added as Section 2.4:
"2.4 Optional Increase in Term Loan Commitment.
(a) So long as no Default or Potential Default then exists or arises, upon notice to Administrative Agent, Borrower may on a one-time basis request an increase in the Term Loan Commitment by an amount not exceeding $60,000,000 (the "Increased Term Loan Commitment"). Administrative Agent (in consultation with Borrower and upon terms regarding arranging such Increased Term Loan Commitment mutually acceptable to Borrower and Administrative Agent) shall use its best efforts to coordinate commitments from existing Term Loan Lenders and Eligible Assignees in order to effect the Increased Term Loan Commitment, which shall be consummated pursuant to a Joinder Agreement (herein so called) in form and substance satisfactory to Administrative Agent and Borrower and their respective counsel. (Such Eligible Assignees, together with each Term Loan Lender agreeing to increase its Committed Sum under the Term Loan Facility, being herein referred to collectively as the "Increasing Term Loan Lenders," and individually as an "Increasing Term Loan Lender"). In no event shall the interest rate payable on any Term Loan advanced with respect to the Increased Term Loan Commitment exceed the interest rate applicable to the other Term Loans under the Loan Papers.
(b) If the Term Loan Commitment is increased in accordance with this Section, Administrative Agent and Borrower shall determine the effective date (the "Increase Effective Date") and the final allocation of such Term Loan Commitment increase. Administrative Agent shall promptly notify Borrower and Term Loan Lenders of the final allocation of such increase and the Increase Effective Date. As a condition precedent to such increase, Administrative Agent shall receive the following:
(i) with respect to any Lender requesting a Note, such Note executed by Borrower;
(ii) Joinder Agreements executed by Borrower and each Increasing Term Loan Lender; and
(iii) a certificate of each Company dated as of the Increase Effective Date signed by a Responsible Officer of each Company (A) certifying and attaching the resolutions adopted by such Company approving or consenting to such Term Loan Commitment increase, and (B) in the case of Borrower, certifying that, before and after giving effect to such increase, (1) the representations and warranties contained in Section 7 of the Agreement and the other Loan Papers are true and correct, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (2) no Default or Potential Default exists or would result therefrom.
(c) On the Increase Effective Date, (i) Borrower shall borrow, and each Increasing Term Loan Lender shall lend such Increasing Term Loan Lender's Commitment Percentage of, the Increased Term Loan Commitment, in a single advance; (ii) the amortization of the Term Loan Principal Debt shall be proportionately adjusted to reflect the Increased Term Loan Commitment; and (iii) each Joinder Agreement shall constitute a Loan Paper.
(b) The following provision regarding the refinancing of the Term Loan Principal Debt is hereby added as Section 2.5, and is in addition to the rights set forth in Section 2.4 above:
"2.5 Modification to or Refinancing of Term Loan Principal Debt.
(a) So long as no Default or Potential Default then exists or arises, Borrower, Guarantors, Administrative Agent, and all Term Loan Lenders may enter into a consent agreement in form and substance satisfactory to Borrower and Administrative Agent (the "Consent"), providing for (i) a reduction in the Applicable Margin with respect to the Term Loans and (ii) an extension of the Termination Date under the Term Loan Facility, so long as the Termination Date for the Term Loan Facility is not extended to a date later than one year prior to the earliest scheduled maturity of the Subordinated Debt then-issued. On the date that each of the conditions precedent to effectiveness under the Consent are satisfied (the "Consent Effective Date"): (x) the "Applicable Margin" set forth in the Consent shall be the Applicable Margin for the Term Loans under the Loan Papers; (y) the "Termination Date" set forth in the Consent shall be the Termination Date fo r the Term Loans under the Loan Papers; and (z) the Consent shall constitute a Loan Paper. This Amendment and Consent shall evidence Required Lenders' consent to the modifications effected by the Consent.
(b) Notwithstanding anything to the contrary set forth in Section 3.2, and in addition to the foregoing set forth in clause (a) above, so long as no Default or Potential Default then exists or arises, upon notice to Administrative Agent, Borrower may request on a one-time basis that the Term Loan Principal Debt be refinanced in full (the "Refinancing"), so long as, after giving effect to the Refinancing, (i) the principal amount and the amortization of the Term Loan Principal Debt remains unchanged (except as contemplated in Section 2.4), (ii) the interest rate payable on the Term Loan Principal Debt has not been increased, and (iii) the Termination Date for the Term Loan Facility is not extended to a date later than one year prior to the earliest scheduled maturity of the Subordinated Debt then-issued. The Refinancing shall be consummated in accordance with a Refinancing and Joinder Agreement which satisfies the re quirements of Section 2.5(c) (the "Refinancing Agreement"). To the extent the Refinancing Agreement modifies the Termination Date under the Term Loan Facility to a later date as contemplated in item (iii) above, or decreases the interest rate on the Term Loan Facility, this Amendment and Consent shall evidence Required Lenders' consent to such modifications.
(c) Administrative Agent (in consultation with Borrower and upon terms regarding arranging such Refinancing mutually acceptable to Borrower and Administrative Agent) shall use its best efforts to coordinate commitments from existing Lenders and Eligible Assignees in order to effect the Refinancing, which shall be consummated in accordance with the Refinancing Agreement and shall be executed by Borrower, Guarantors, Administrative Agent, and each financial institution funding the Refinancing (each, a "Refinancing Lender"). The Refinancing Agreement shall: (i) be in form and terms satisfactory to Administrative Agent and Borrower and their respective counsel; (ii) establish the amount of the allocated "Term Loan Commitment" of each Refinancing Lender; (iii) establish the "Applicable Margin" to be used in determining the interest rate applicable to the Term Loan Principal Debt on and after the Refinancing Effective Date (hereafter defined); (iv) establish the " Termination Date" applicable on and after the Refinancing Effective Date (hereafter defined) to the Term Loan Principal Debt; and (iv) require on or prior to the Refinancing Effective Date (hereinafter defined) (A) all Term Loan Principal Debt owed to the Term Loan Lenders immediately prior to giving effect to the Refinancing to be paid in full, together with all accrued interest and unpaid fees with respect thereto, (B) Borrower to borrow, and Refinancing Lenders to advance in a single advance, an amount equal to the Term Loan Commitment in effect immediately prior to the Refinancing (including any increase effected by Section 2.4), and (C) satisfaction of certain conditions precedent, including, without limitation, delivery of certain certificates, notes, and legal opinions, as Refinancing Lenders and Administrative Agent shall reasonably require.
(d) On the date that each of the conditions to effectiveness under the Refinancing Agreement are satisfied (the "Refinancing Effective Date"): (i) each advance made by a Refinancing Lender on the Refinancing Effective Date shall constitute a Term Loan under the Loan Papers; (ii) the commitment allocation for each Refinancing Lender set forth in the Refinancing Agreement shall constitute the Committed Sum of such Refinancing Lender under the Loan Papers; (iii) the "Applicable Margin" set forth in the Refinancing Agreement shall be the Applicable Margin on and after the Refinancing Effective Date for the Term Loans under the Loan Papers; (iv) the "Termination Date" set forth in the Refinancing Agreement shall be the Termination Date for the Term Loans under the Loan Papers; (v) each Refinancing Lender shall be a Term Loan Lender under the Loan Papers; (vi) references in the Credit Agreement to the Term Loan Facility shall be to the Term Loans made by the Refin ancing Lenders in accordance with the Refinancing Agreement; and (vii) the Refinancing Agreement shall constitute a Loan Paper.
(e) To the extent that the Refinancing is consummated, the entering into and performance of the respective obligations of the Term Loan Lenders and the Refinancing Lenders, and the transactions evidenced by the Refinancing, are not intended to, and shall not be deemed to constitute, a novation, nor shall they be deemed to have terminated, extinguished, or discharged, the Term Loan Principal Debt under the Loan Papers, all of which Term Loan Principal Debt, and related Obligation and Collateral, shall continue under and be governed by the Loan Papers."
(c) The second sentence of Section 9.2 is hereby amended by replacing the period at the end thereof with a semicolon, and adding the following proviso:
"provided, that, in addition to the Subject Redemptions permitted under the terms of that certain Second Amendment and Consent dated as of January 21, 2004, among Borrower, Administrative Agent, and Required Lenders, and consented to by Guarantors, any Company may, without the approval of Required Lenders, tender for, repurchase (including, without limitation, in open market transactions or private negotiated transactions), redeem, or discharge (each, an "Additional Redemption") up to an aggregate of $90,000,000 of Subordinated Debt, so long as (a) on and as of the date of each such Additional Redemption, no Default or Potential Default then exists or arises, and (b) not less than $300,000,000 of Subordinated Debt remains outstanding after giving effect to each such Additional Redemption."
(d) The interest calculation with respect to the "Minimum Fixed Charge Coverage Ratio" in Section 10.2 and the "Interest Coverage Ratio" in Section 10.4 are clarified by adding the following parenthetical after the term "Funded Debt" in clause (b) of each Section:
"(excluding amortization of deferred financing costs and original issue discounts)".
3. Representations and Warranties. As a material inducement to Required Lenders and Administrative Agent to execute and deliver this Amendment and Consent, Borrower represents and warrants to Required Lenders and Administrative Agent (with the knowledge and intent that Required Lenders are relying upon the same in entering into this Amendment and Consent) that (a) Borrower has all requisite corporate authority and power to execute, deliver, and perform its obligations under this Amendment and Consent, which execution, delivery, and performance have been duly authorized by all necessary corporate action, require no Governmental Approvals, and do not violate its certificate of incorporation or its bylaws, (b) upon execution and delivery by Borrower, Administrative Agent, and Required Lenders, this Amendment and Consent will constitute the legal and binding obligation of Borrower, enforceable against it in accordance with this Amendment and Consent's terms, except< /I> as that enforceability may be limited by general principles of equity or by bankruptcy or insolvency laws or similar laws affecting creditors' rights generally, and (c) the representations and warranties contained in Section 7 of the Agreement and the other Loan Papers are true and correct on and as of the Effective Date (hereinafter defined), except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date.
4. Ratifications. Borrower and each Guarantor (by executing the Guarantors' Consent and Acknowledgment attached hereto) (a) ratifies and confirms all provisions of the Loan Papers as amended by this Amendment and Consent, (b) ratifies and confirms that all Guaranties, assurances, and Liens granted, conveyed, or assigned to Administrative Agent, for the benefit of the Lenders, under the Loan Papers are not released, reduced, or otherwise adversely affected by this Amendment and Consent and continue to guarantee, assure, and secure full payment and performance of Borrower's present and future obligations to Administrative Agent and the Lenders, and (c) agrees to perform such acts and duly authorize, execute, acknowledge, deliver, file, and record such additional documents, and certificates as Administrative Agent may reasonably request in order to create, perfect, preserve, and protect those guaranties, assurances, and liens.
5. Conditions Precedent to Effectiveness. This Amendment and Consent shall be effective on the date (the "Effective Date") upon which Administrative Agent receives (a) counterparts of this Amendment and Consent executed by Borrower, Administrative Agent, and Required Lenders, and (b) the Guarantors' Consent and Agreement executed by each Guarantor.
6. Expenses. Borrower shall pay all reasonable fees and expenses of Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of this Amendment and Consent and any related documents.
7. Miscellaneous. Unless stated otherwise herein, (a) the singular number includes the plural and vice versa and words of any gender include each other gender, in each case, as appropriate, (b) headings and captions shall not be construed in interpreting provisions of this Amendment and Consent, (c) this Amendment and Consent shall be governed by and construed in accordance with the laws of the State of New York, (d) if any part of this Amendment and Consent is for any reason found to be unenforceable, all other portions of it shall nevertheless remain enforceable, (e) this Amendment and Consent may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts shall be construed together to constitute the same document, (f) this Amendment and Consent is a "Loan Paper" referred to in the Credit Agreement, and the provisions relating to Loan Papers in Section 14 of the Credit Agreement are incorporated herein by reference, (g) this Amendment and Consent, the Credit Agreement, and the other Loan Papers constitute the entire agreement and understanding among the parties hereto and supercede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof, and (h) except as provided in this Amendment and Consent, the Credit Agreement and the other Loan Papers are unchanged and are ratified and confirmed.
8. Parties. This Amendment and Consent binds and inures to the benefit of Borrower, Administrative Agent, the Lenders, and their respective successors and assigns.
The parties hereto have executed this Amendment and Consent in multiple counterparts as of the date first above written.
Remainder of Page Intentionally Blank.
Signature Pages to Follow.
|
THE VAIL CORPORATION (D/B/A "VAIL ASSOCIATES, INC.") , as Borrower
By: Name: Title:
|
BANK OF AMERICA, N.A.
By:
Name:
Title:
FLEET NATIONAL BANK, as Syndication Agent, L/C Issuer, and a Revolver Lender
By:
Name:
Title:
US BANK NATIONAL ASSOCIATION,
as Co-Documentation Agent, a Revolver Lender and a Term Loan Lender
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent and a Revolver Lender
By:
Name:
Title:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
as a Revolver Lender and a Term Loan Lender
By:
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION,
as a Revolver Lender
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
as a Revolver Lender
By:
Name:
Title:
COMPASS BANK,
as a Revolver Lender
By:
Name:
Title:
WASHINGTON MUTUAL BANK,
as a Revolver Lender
By:
Name:
Title:
KZH SOLEIL-2 LLC,
as a Term Loan Lender
By:
Name:
Title:
,
as Term Loan Lender
By:
Name:
Title:
GUARANTORS' CONSENT AND AGREEMENT
As an inducement to Administrative Agent and Required Lenders to execute, and in consideration of Administrative Agent's and Required Lenders' execution of the foregoing, the undersigned hereby consent thereto and agree that the same shall in no way release, diminish, impair, reduce or otherwise adversely affect the respective obligations and liabilities of each of the undersigned under each Guaranty described in the Credit Agreement, or any agreements, documents or instruments executed by any of the undersigned to create liens, security interests or charges to secure any of the indebtedness under the Loan Papers, all of which obligations and liabilities are, and shall continue to be, in full force and effect. This consent and agreement shall be binding upon the undersigned, and the respective successors and assigns of each, and shall inure to the benefit of Administrative Agent and Lenders, and the respective successors and assigns of each.
Vail Resorts, Inc.
Vail Holdings, Inc.
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Beaver Creek Food Services, Inc.
Breckenridge Resort Properties, Inc.
Complete Telecommunications, Inc.
Gillett Broadcasting, Inc.
Grand Teton Lodge Company
Heavenly Valley, Limited Partnership
Jackson Hole Golf and Tennis Club, Inc.
JHL&S LLC
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food & Beverage Company
Keystone Resort Property Management Company
Larkspur Restaurant & Bar, LLC
Lodge Properties, Inc.
Lodge Realty, Inc.
Mountain Thunder, Inc.
Property Management Acquisition Corp., Inc.
Rockresorts International, LLC
Rockresorts LLC
Rockresorts Cheeca, LLC
Rockresorts Equinox, Inc.
Rockresorts LaPosada, LLC
Rockresorts Wyoming, LLC
Rockresorts Casa Madrona, LLC
Rockresorts Rosario, LLC
Teton Hospitality Services, Inc.
The Village at Breckenridge Acquisition Corp., Inc.
Timber Trail, Inc.
VA Rancho Mirage I, Inc.
VA Rancho Mirage II, Inc.
VA Rancho Mirage Resort, L.P.
Vail/Arrowhead, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Investments, Inc.
Vail Associates Real Estate, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail RR, Inc.
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
VAMHC, Inc.
VR Heavenly I, Inc.
VR Heavenly II, Inc.
VR Holdings, Inc.
By:
Name:________________________________________
Title:_________________________________________
Exhibit 10.19(d)
AGREEMENT AND CONSENT
THIS AGREEMENT AND CONSENT (this "Agreement") is entered into as of January 28, 2004, among THE VAIL CORPORATION, a Colorado corporation doing business as "Vail Associates, Inc." ("Borrower"), each Guarantor (as defined in the Credit Agreement referenced below), each of the financial institutions party hereto (each, a "Term Loan Lender," and collectively, the "Term Loan Lenders"), and BANK OF AMERICA, N.A., as Administrative Agent (herein so called) under that certain Third Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 10, 2003 (as amended to date, the "Credit Agreement"), among Borrower, Administrative Agent, and certain other agents and lenders party thereto. Unless otherwise indicated herein, all capitalized terms used herein shall have the meanings set forth in the Credit Agreement. Banc of America Se curities LLC will serve as Sole Lead Arranger and Sole Book Manager for the Term Loan Facility.
1. Subject Modifications. Pursuant to Section 2.5 of the Credit Agreement, Borrower has requested the following modifications to the Credit Agreement (collectively, the "Subject Modifications"): (a) the reduction of the "Applicable Margin" with respect to Term Loans to a percentage per annum equal to 2.25% commencing on January 28, 2004; and (b) the extension of the "Termination Date" for the Term Loan Facility to the earlier of (i) December 10, 2010, and (ii) the effective date of any other termination, cancellation or acceleration of the Term Loan Facility.
2. Consent of Administrative Agent and Term Loan Lenders. By execution below, Administrative Agent and each Term Loan Lender hereby consent to the Subject Modifications.
3. Conditions Precedent to Effectiveness. This Agreement shall be effective on the date (the "Effective Date") upon which Administrative Agent receives (a) counterparts of this Agreement executed by Borrower, Guarantors, Administrative Agent, and Term Loan Lenders, and such other certificates, opinions, and other documents as Administrative Agent may request, and (b) a certificate from a Responsible Officer certifying that (i) the representations and warranties set forth in Section 7 of the Credit Agreement and the other Loan Papers are true and correct as of the Effective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they are true and correct as of such earlier date, and (ii) no Default or Potential default then exists or will arise after giving effect to this Agreement and the transactions contemplated hereby.
4. Miscellaneous. Unless stated otherwise herein, (a) this Agreement may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts shall be construed together to constitute the same document, (b) this Agreement is a "Loan Paper" referred to in the Credit Agreement, and the provisions relating to Loan Papers in Section 14 of the Credit Agreement are incorporated herein by reference, (c) this Agreement, the Credit Agreement, and the other Loan Papers constitute the entire agreement and understanding among the parties hereto and supercede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof, and (d) except as provided in this Agreement, the Credit Agreement and the other Loan Papers are unchanged and are ratified and confirmed.
5. Parties. This Agreement binds and inures to the benefit of Borrower, Guarantors, Administrative Agent, Term Loan Lenders, and their respective successors and assigns.
The parties hereto have executed this Agreement in multiple counterparts as of the date first above written.
Remainder of Page Intentionally Blank. Signature Pages to Follow.
|
THE VAIL CORPORATION (D/B/A "VAIL ASSOCIATES, INC.") , as Borrower
By: Name: Title:
|
BANK OF AMERICA, N.A.
By:
Name:
Title:
______________________________,
as a Term Loan Lender
By:
Name:
Title:
GUARANTORS' CONSENT AND AGREEMENT
As an inducement to Administrative Agent and Term Loan Lenders to execute, and in consideration of Administrative Agent's and Term Loan Lenders' execution of the foregoing, the undersigned hereby consent thereto and agree that the same shall in no way release, diminish, impair, reduce or otherwise adversely affect the respective obligations and liabilities of each of the undersigned under each Guaranty described in the Credit Agreement, or any agreements, documents or instruments executed by any of the undersigned to create liens, security interests or charges to secure any of the indebtedness under the Loan Papers, all of which obligations and liabilities are, and shall continue to be, in full force and effect. This consent and agreement shall be binding upon the undersigned, and the respective successors and assigns of each, and shall inure to the benefit of Administrative Agent and Lenders, and the respective successors and assigns of each.
Vail Resorts, Inc.
Vail Holdings, Inc.
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Beaver Creek Food Services, Inc.
Breckenridge Resort Properties, Inc.
Complete Telecommunications, Inc.
Gillett Broadcasting, Inc.
Grand Teton Lodge Company
Heavenly Valley, Limited Partnership
Jackson Hole Golf and Tennis Club, Inc.
JHL&S LLC
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food & Beverage Company
Keystone Resort Property Management Company
Larkspur Restaurant & Bar, LLC
Lodge Properties, Inc.
Lodge Realty, Inc.
Mountain Thunder, Inc.
Property Management Acquisition Corp., Inc.
Rockresorts International, LLC
Rockresorts LLC
Rockresorts Cheeca, LLC
Rockresorts Equinox, Inc.
Rockresorts LaPosada, LLC
Rockresorts Wyoming, LLC
Rockresorts Casa Madrona, LLC
Rockresorts Rosario, LLC
Teton Hospitality Services, Inc.
The Village at Breckenridge Acquisition Corp., Inc.
Timber Trail, Inc.
VA Rancho Mirage I, Inc.
VA Rancho Mirage II, Inc.
VA Rancho Mirage Resort, L.P.
Vail/Arrowhead, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Investments, Inc.
Vail Associates Real Estate, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail RR, Inc.
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
VAMHC, Inc.
VR Heavenly I, Inc.
VR Heavenly II, Inc.
VR Holdings, Inc.
By:
Name:
Title:
Exhibit 10.19(b)
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
Dated as of October 2, 2003, but effective as of July 31, 2003
among
THE VAIL CORPORATION
(d/b/a "Vail Associates, Inc.),
as Borrower
BANK OF AMERICA, N.A.,
as Administrative Agent
and
The Agents and Required Lenders Party Hereto
SPECIAL NOTICE REGARDING MATERIAL NON-PUBLIC INFORMATION
THIS DOCUMENT MAY CONTAIN MATERIAL NON-PUBLIC INFORMATION CONCERNING THE COMPANY OR ITS SECURITIES. BY ACCEPTING THIS DOCUMENT, THE RECIPIENT AGREES TO USE ANY SUCH INFORMATION IN ACCORDANCE WITH ITS COMPLIANCE POLICIES, CONTRACTUAL OBLIGATIONS AND APPLICABLE LAW, INCLUDING FEDERAL AND STATE SECURITIES LAWS.
FIRST AMENDMENT TO THIRD AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
THIS FIRST AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT (this "Amendment") is entered into as of October 2, 2003, but effective as of July 31, 2003, among THE VAIL CORPORATION, a Colorado corporation doing business as "Vail Associates, Inc." (the "Company"), the Required Lenders (as defined in the Credit Agreement referenced below) party hereto, and BANK OF AMERICA, N.A., as Administrative Agent (hereinafter defined).
R E C I T A L S
A. The Company has entered into that certain Third Amended and Restated Revolving Credit and Term Loan Agreement dated as of June 10, 2003 (the "Credit Agreement"), with Bank of America, N.A., as Administrative Agent (in such capacity, the "Administrative Agent"), and certain other agents and lenders party thereto, providing for revolving credit loans and term loans in the aggregate principal amount of up to $425,000,000. Unless otherwise indicated herein, all capitalized terms used herein shall have the meanings set forth in the Credit Agreement, and all Section references herein are to sections in the Credit Agreement.
B. The Company has requested amendments to the "Management Fees and Distributions" covenant set forth in Section 9.9 of the Credit Agreement, and the "Funded Debt to Adjusted EBITDA" covenant set forth in Section 10.1(a) of the Credit Agreement. Required Lenders have agreed to such modifications and to otherwise amend the Credit Agreement as set forth herein.
In consideration of the foregoing and the mutual covenants contained herein, the Company, the Required Lenders, and the Administrative Agent agree as follows:
1. Amendments.
(a) Section 9.9 is hereby amended as follows:
(i) Clause (d) is hereby amended by deleting "and" from the end thereof.
(ii) Clause (e) is hereby amended by (i) replacing the parenthetical in the second line thereof with "(in addition to those described in clauses (c), (d), and (f) herein)", (ii) replacing the parenthetical beginning in the third line thereof with "(including any Distributions which exceed the amounts permitted under clauses (d) and (f) herein)", and (iii) substituting "; and" for the period at the end of clause (e).
(iii) The following is hereby added after clause (e):
(f) if no Default or Potential Default exists (or would result therefrom), VRI may make Distributions payable solely in the form of common stock or other common equity interests of VRI, so long as the aggregate amount of such Distributions made pursuant to this clause (f) on and after the Closing Date, in each case as calculated based on the market value of such common stock or other equity interests of VRI at the time of such Distributions, does not exceed $10,000,000.
(b) Section10.1(a) is amended to read in its entirety as follows:
(a) Funded Debt to Adjusted EBITDA. As calculated as of the last day of each fiscal quarter of the Restricted Companies, the Restricted Companies shall not permit the ratio of (i) the unpaid principal amount of Funded Debt existing as of such last day to (ii) Adjusted EBITDA for the four fiscal quarters ending on such last day to exceed the following:
As of the last day of each fiscal quarter ending January 31, April 30, and July 31 (other than July 31, 2003): |
4.50 to 1.00 |
As of the last day of the fiscal quarter ending July 31, 2003, and as of the last day of each fiscal quarter ending October 31 (other than October 31, 2003): |
5.00 to 1.00 |
As of the last day of the fiscal quarter ending October 31, 2003: |
5.15 to 1.00 |
2. Amendment Fees. On the Effective Date (hereinafter defined), the Company shall pay (a) to Administrative Agent (for the ratable benefit of the Revolver Lenders consenting to this Amendment by the Consent Deadline), an amendment fee in an amount equal to 0.05% of the Committed Sum under the Revolver Facility of each such Revolver Lender as of the Effective Date, and (b) to Administrative Agent (for the ratable benefit of the Term Loan Lenders consenting to this Amendment on or prior to the Consent Deadline and for the ratable benefit of the Public Term Loan Lenders), an amendment fee in an amount equal to 0.05% of the portion of the Term Loan Principal Debt owed to each such Term Loan Lender as of the Effective Date. As used herein, "Consent Deadline" means on or prior to 12:00 p.m. CST on Thursday, October 2, 2003, and "Public Term Loan Lenders" means Terms Loan Lenders that are prohibited from reviewing the Amendment and relate d materials as a result of compliance with confidentiality obligations or applicable Laws. The failure of Borrower to comply with the provisions of this Paragraph 2 shall constitute a payment Default entitling Lenders to exercise their respective Rights under the Loan Papers.
3. Representations and Warranties. As a material inducement to the Required Lenders and the Administrative Agent to execute and deliver this Amendment, the Company represents and warrants to the Required Lenders and the Administrative Agent (with the knowledge and intent that Required Lenders are relying upon the same in entering into this Amendment) that (a) the Company has
all requisite corporate authority and power to execute, deliver, and perform its obligations under this Amendment, which execution, delivery, and performance have been duly authorized by all necessary corporate action, require no Governmental Approvals, and do not violate its certificate of incorporation or its bylaws, (b) upon execution and delivery by the Company, the Administrative Agent, and the Required Lenders, this Amendment will constitute the legal and binding obligation of the Company, enforceable against it in accordance with this Amendment's terms, except as that enforceability may be limited by general principles of equity or by bankruptcy or insolvency laws or similar laws affecting creditors' rights generally, (c) all representations and warranties in the Loan Papers are true and correct in all material respects as though made on the date hereof, except to the extent that any of them speak to a specific date or the facts on which any of them are based have been changed by transactions contemplated or permitted by the Credit Agreement, and (d) no Default or Potential Default has occurred and is continuing.4. Conditions Precedent to Effectiveness. This Amendment shall be effective on the date (the "Effective Date") upon which (a) Administrative Agent receives (i) counterparts of this Amendment executed by Borrower, Administrative Agent, and Required Lenders, and (ii) the Guarantors' Consent and Agreement executed by each Guarantor; and (b) Administrative Agent has received payment from Borrower of the amendment fees required to be paid to Consenting Revolver Lenders, Consenting Term Loan Lenders, and Public Term Loan Lenders on the Effective Date pursuant to Paragraph 2 hereof.
5. Expenses. The Company shall pay all reasonable costs, fees, and expenses paid or incurred by the Administrative Agent incident to this Amendment, including, without limitation, the reasonable fees and expenses of the Administrative Agent's counsel in connection with the negotiation, preparation, delivery, and execution of this Amendment and any related documents.
6. Miscellaneous. Unless stated otherwise herein, (a) the singular number includes the plural and vice versa and words of any gender include each other gender, in each case, as appropriate, (b) headings and captions shall not be construed in interpreting provisions of this Amendment, (c) this Amendment shall be governed by and construed in accordance with the laws of the State of New York, (d) if any part of this Amendment is for any reason found to be unenforceable, all other portions of it shall nevertheless remain enforceable, (e) this Amendment may be executed in any number of counterparts with the same effect as if all signatories had signed the same document, and all of those counterparts shall be construed together to constitute the same document, (f) this Amendment is a "Loan Paper" referred to in the Credit Agreement, and the provisions relating to Loan Papers in Section 14 of the Credit Agreement are incorporated herein by refe rence, (g) this Amendment, the Credit Agreement, as amended by this Amendment, and the other Loan Papers constitute the entire agreement and understanding among the parties hereto and supercede any and all prior agreements and understandings, oral or written, relating to the subject matter hereof, and (h) except as provided in this Amendment, the Credit Agreement, the Notes, and the other Loan Papers are unchanged and are ratified and confirmed.
7. Parties. This Amendment binds and inures to the benefit of the Company, the Administrative Agent, the Lenders, and their respective successors and assigns.
The parties hereto have executed this Amendment in multiple counterparts as of the date first above written.
Remainder of Page Intentionally Blank.
Signature Pages to Follow.
|
THE VAIL CORPORATION (D/B/A "VAIL ASSOCIATES, INC.") , as the Company
By: Name: Title:
|
BANK OF AMERICA, N.A.
By:
Name:
Title:
FLEET NATIONAL BANK, as Syndication Agent, L/C Issuer, and a Revolver Lender
By:
Name:
Title:
US BANK NATIONAL ASSOCIATION,
as Co-Documentation Agent, a Revolver Lender and a Term Loan Lender
By:
Name:
Title:
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Co-Documentation Agent and a Revolver Lender
By:
Name:
Title:
DEUTSCHE BANK TRUST COMPANY AMERICAS
By:
Name:
Title:
CREDIT LYONNAIS NEW YORK BRANCH,
as a Revolver Lender and a Term Loan Lender
By:
Name:
Title:
LASALLE BANK NATIONAL ASSOCIATION,
as a Revolver Lender
By:
Name:
Title:
HARRIS TRUST AND SAVINGS BANK,
as a Revolver Lender
By:
Name:
Title:
COMPASS BANK,
as a Revolver Lender
By:
Name:
Title:
WASHINGTON MUTUAL BANK,
as a Revolver Lender
By:
Name:
Title:
KZH SOLEIL-2 LLC,
as a Term Loan Lender
By:
Name:
Title:
,
as Term Loan Lender
By:
Name:
Title:
GUARANTORS' CONSENT AND AGREEMENT
As an inducement to Administrative Agent and Required Lenders to execute, and in consideration of Administrative Agent's and Required Lenders' execution of the foregoing, the undersigned hereby consent thereto and agree that the same shall in no way release, diminish, impair, reduce or otherwise adversely affect the respective obligations and liabilities of each of the undersigned under each Guaranty described in the Credit Agreement, or any agreements, documents or instruments executed by any of the undersigned to create liens, security interests or charges to secure any of the indebtedness under the Loan Papers, all of which obligations and liabilities are, and shall continue to be, in full force and effect. This consent and agreement shall be binding upon the undersigned, and the respective successors and assigns of each, and shall inure to the benefit of Administrative Agent and Lenders, and the respective successors and assigns of each.
Vail Resorts, Inc.
Vail Holdings, Inc.
Beaver Creek Associates, Inc.
Beaver Creek Consultants, Inc.
Beaver Creek Food Services, Inc.
Breckenridge Resort Properties, Inc.
Complete Telecommunications, Inc.
GHTV, Inc.
Gillett Broadcasting, Inc.
Grand Teton Lodge Company
Heavenly Valley, Limited Partnership
Jackson Hole Golf and Tennis Club, Inc.
JHL&S LLC
Keystone Conference Services, Inc.
Keystone Development Sales, Inc.
Keystone Food & Beverage Company
Keystone Resort Property Management Company
Larkspur Restaurant & Bar, LLC
Lodge Properties, Inc.
Lodge Realty, Inc.
Mountain Thunder, Inc.
Property Management Acquisition Corp., Inc.
Rockresorts International, LLC
Rockresorts LLC
Rockresorts Cheeca, LLC
Rockresorts Equinox, Inc.
Rockresorts LaPosada, LLC
Rockresorts Wyoming, LLC
Rockresorts Casa Madrona, LLC
Rockresorts Rosario, LLC
Teton Hospitality Services, Inc.
The Village at Breckenridge Acquisition Corp., Inc.
Timber Trail, Inc.
VA Rancho Mirage I, Inc.
VA Rancho Mirage II, Inc.
VA Rancho Mirage Resort, L.P.
Vail/Arrowhead, Inc.
Vail Associates Holdings, Ltd.
Vail Associates Investments, Inc.
Vail Associates Real Estate, Inc.
Vail/Beaver Creek Resort Properties, Inc.
Vail Food Services, Inc.
Vail Resorts Development Company
Vail RR, Inc.
Vail Summit Resorts, Inc.
Vail Trademarks, Inc.
VAMHC, Inc.
VR Heavenly I, Inc.
VR Heavenly II, Inc.
VR Holdings, Inc.
By:
Name:________________________________________
Title:_________________________________________
EXHIBIT 4.2 (d)
EXECUTION COPY
VAIL RESORTS, INC.
GUARANTORS (named on signature pages hereto)
$390,000,000
63/4% Senior Subordinated Notes due 2014
SUPPLEMENTAL PURCHASE AGREEMENT
January 22, 2004
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
VAIL RESORTS, INC.
$390,000,000
63/4% Senior Subordinated Notes due 2014
SUPPLEMENTAL PURCHASE AGREEMENT
January 22, 2004
New York, New York
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Ladies & Gentlemen:
This Supplemental Purchase Agreement is among Vail Resorts, Inc., a Delaware corporation (the "Company"), the Guarantors named on the signature pages hereto (the "Guarantors"), and Banc of America Securities LLC, Deutsche Bank Securities Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc., Piper Jaffray & Co. and Wells Fargo Securities, L.L.C. (each, an "Initial Purchaser" and, collectively, the "Initial Purchasers"). Unless otherwise indicated, capitalized terms used in this Supplemental Purchase Agreement and not defined shall have the respective meanings assigned to them in the Purchase Agreement (as defined below).
WHEREAS, the Company, the Guarantors and the Initial Purchasers have heretofore executed and delivered to each other a Purchase Agreement dated January 15, 2004 (the "Purchase Agreement") providing for the issuance and sale of $390,000,000 in aggregate principal amount of 63/4% Senior Subordinated Notes due 2014 of the Company.
WHEREAS, the Company, the Guarantors and the Initial Purchasers desire to amend and supplement the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, and for other good and valuable consideration the receipt of which is hereby acknowledged, and for the equal and proportionate benefit of the Company, the Guarantors and the Initial Purchasers hereby agree as follows:
Amendment of Certain Provisions. Section 4(r) of the Purchase Agreement is hereby deleted in its entirety and replaced as follows:
(r) The Company shall use the proceeds from the sale of the Restricted Notes to (i) purchase, in accordance with the Commission's rules relating to tender offers, all of the Company's 83/4% Senior Subordinated Notes due 2009 (the "2009 Notes") tendered and accepted for purchase by the Company pursuant to the Offer to Purchase and Consent Solicitation Statement (the "Offer") dated January 12, 2004 (the "Statement") and (ii)(A) if Consents (as defined in the Statement) of the holders of less than a majority in aggregate principal amount of each class of outstanding 2009 Notes are obtained pursuant to the Offer by 10:00 a.m. on the Closing Date, to discharge all of the outstanding 2009 Notes simultaneously with the closing of the offering of the Restricted Notes or (B) if Consents (as defined in the Statement) of the holders of greater than a majority in aggregate principal amount of each class of the 2009 Notes are obtained pursuant to the Offer by 10:00 a.m. on the Closing Date, to redeem the remaining outstanding 2009 Notes on May 15, 2004. The discharge and redemption described in clauses (ii)(A) and (ii)(B), respectively, of this Section 4(r), shall be made in accordance with and pursuant to the terms of (x) the indenture dated as of May 11, 1999 between the Company and The Bank of New York, as trustee, under which $200 million aggregate principal amount of the 2009 Notes were issued and (y) the indenture dated as of November 21, 2001 between the Company and The Bank of New York, as trustee, under which $160 million of the 2009 Notes were issued, as the case may be.
2. Effect on the Purchase Agreement. Except as amended by this Supplemental Purchase Agreement, the Purchase Agreement shall remain in full force and effect and is hereby ratified and confirmed.
3. Construction. This Supplemental Purchase Agreement shall be construed in accordance with the internal laws of the State of New York.
4. Captions. The captions included in this Supplemental Purchase Agreement are included solely for convenience of reference and are not to be considered a part of this Supplemental Purchase Agreement.
5. Counterparts. This Supplemental Purchase Agreement may be executed in various counterparts which together shall constitute one and the same instrument.
If the foregoing correctly sets forth the understanding among the Initial Purchasers, the Company and the Guarantors please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement among us.
VAIL RESORTS, INC.
By:
Name:
Title:
BEAVER CREEK ASSOCIATES, INC.
BEAVER CREEK CONSULTANTS, INC.
BEAVER CREEK FOOD SERVICES, INC.
BRECKENRIDGE RESORT PROPERTIES, INC.
COMPLETE TELECOMMUNICATIONS, INC.
GILLETT BROADCASTING, INC.
GRAND TETON LODGE COMPANY
HEAVENLY VALLEY, LIMITED PARTNERSHIP
JACKSON HOLE GOLF AND TENNIS CLUB, INC.
JHL&S LLC
KEYSTONE CONFERENCE SERVICES, INC.
KEYSTONE DEVELOPMENT SALES, INC.
KEYSTONE FOOD AND BEVERAGE COMPANY
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
LODGE PROPERTIES, INC.
LODGE REALTY, INC.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
ROCKRESORTS CASA MADRONA, LLC
ROCKRESORTS CHEECA, LLC
ROCKRESORTS EQUINOX, INC.
ROCKRESORTS INTERNATIONAL, LLC
ROCKRESORTS, LLC
ROCKRESORTS LA POSADO, LLC
ROCKRESORTS ROSARIO, LLC
ROCKRESORTS WYOMING, LLC
TETON HOSPITALITY SERVICES, INC.
THE VAIL CORPORATION
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
VAIL ASSOCIATES HOLDINGS, LTD.
VAIL ASSOCIATES REAL ESTATE, INC.
VAIL FOOD SERVICES, INC.
VAIL HOLDINGS, INC.
VAIL RESORTS DEVELOPMENT COMPANY
VAIL SUMMIT RESORTS, INC.
VAIL TRADEMARKS, INC.
VAIL/ARROWHEAD, INC.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
VAMHC, INC.
VAIL RR, INC.
VA RANCHO MIRAGE I, INC.
VA RANCHO MIRAGE II, INC.
VA RANCHO MIRAGE RESORT, L.P.
VR HEAVENLY I, INC.
VR HEAVENLY II, INC.
Each by its authorized officer or signatory
By:
Name:
Title:
Accepted and agreed to as of
the date first above written:
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
Acting on behalf of themselves and the
several Initial Purchasers
By: BANC OF AMERICA SECURITIES LLC
By:
Name:
Title:
EXHIBIT 4.5 (c)
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
by and among
Vail Resorts, Inc.,
The Guarantors Named on the
Signature Pages Hereto
and
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Bear, Stearns & Co. Inc.
Lehman Brothers Inc.
Piper Jaffray & Co.
Wells Fargo Securities, L.L.C.
Dated as of January 29, 2004
This Registration Rights Agreement (this "Agreement") is made and entered into as of January 29, 2004, by and among Vail Resorts, Inc., a Delaware corporation (the "Issuer"), and the Guarantors named on the Signature Pages hereto (each a "Guarantor" and collectively, the "Guarantors"), on the one hand, and the initial purchasers named on the Signature Pages hereto (each, an "Initial Purchaser" and collectively, the "Initial Purchasers"), on the other hand, who have each agreed to purchase a specified number of the Issuer's 63/4% Senior Subordinated Notes due 2014 (the "Restricted Notes") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated as of January 15, 2004 (the "Purchase Agreement"), by and among the Issuer, the Guarantors and the Initial Purchasers (i) for the benefit of the Issuer, the Guarantors and the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Notes (including the Initial Purchasers). In order to induce the Initial Purchasers to purchase the Restricted Notes, the Issuer and the Guarantors have agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 8 of the Purchase Agreement. Capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture, dated January 29, 2004, between the Company, the Guarantors and The Bank of New York, as Trustee, relating to the Restricted Notes and the Exchange Notes (the "Indenture").
The parties hereby agree as follows:
As used in this Agreement, the following capitalized terms shall have the following meanings:
Advice: As defined in Section 6 hereof.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Broker-Dealer Transfer Restricted Securities: Exchange Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for Restricted Notes that such Broker-Dealer acquired for its own account as a result of market making activities or other trading activities (other than Restricted Notes acquired directly from the Issuer or any of its affiliates).
Closing Date: The date of this Agreement.
Commission: The Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Issuer to the Registrar under the Indenture of Exchange Notes in the same aggregate principal amount at maturity as the aggregate principal amount at maturity of Restricted Notes that were tendered by Holders thereof pursuant to the Exchange Offer.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Notes: The 63/4% Senior Subordinated Notes due 2014, of the same class under the Indenture as the Restricted Notes, to be issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.
Exchange Offer: The registration by the Issuer under the Securities Act of the Exchange Notes pursuant to a Registration Statement pursuant to which the Issuer offers the Holders of all outstanding Transfer Restricted Securities the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Notes in an aggregate principal amount at maturity equal to the aggregate principal amount at maturity of the Transfer Restricted Securities tendered in such exchange offer by such Holders.
Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which an Initial Purchaser proposes to sell the Restricted Notes to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Securities Act and to certain non-U.S. persons outside the United States within the meaning of Regulation S under the Securities Act.
Guarantor: As defined in the preamble hereto.
Holder: As defined in Section 2(b) hereof.
Indemnified Holder: As defined in Section 8(a) hereof.
Indenture: As defined in the preamble hereto.
Initial Placement: The issuance and sale by the Issuer of the Restricted Notes to the Initial Purchasers pursuant to the Purchase Agreement.
Initial Purchaser(s): As defined in the preamble hereto.
Inspectors: As defined in Section 6(c)(vi).
Interest Payment Date: As defined in the Notes.
Issuer: As defined in the preamble hereto.
Liquidated Damages: As defined in Section 5(a) hereof.
NASD: National Association of Securities Dealers, Inc.
Notes: The Restricted Notes and the Exchange Notes.
Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.
Prospectus: The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.
Purchase Agreement: As defined in the preamble hereto.
Registration Default: As defined in Section 5(a) hereof.
Registration Statement: Any registration statement of the Issuer and the Guarantors relating to (a) an offering of Exchange Notes pursuant to the Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to the Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer Transfer Restricted Securities.
Restricted Notes: The 63/4% Senior Subordinated Notes due 2014 of the same class under the Indenture as the Exchange Notes, for so long as such securities constitute Transfer Restricted Securities.
Securities Act: The Securities Act of 1933, as amended.
Shelf Filing Deadline: As defined in Section 4(a) hereof.
Shelf Registration Statement: As defined in Section 4(a) hereof.
Suspension Notice: As defined in Section 6 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note until (i) the date on which such Note has been exchanged by a person other than a broker-dealer for an Exchange Note in the Exchange Offer, (ii) following the exchange by a broker-dealer in the Exchange Offer of a Note for an Exchange Note, the date on which such Exchange Note is sold to a purchaser who receives from such broker-dealer on or prior to the date of such sale a copy of the prospectus contained in the Exchange Offer Registration Statement, (iii) the date on which such Note has been effectively registered under the Securities Act and disposed of in accordance with the Shelf Registration Statement or (iv) the date on which such Note may be freely transferred without registration under the Securities Act or is distributed to the public pursuant to Rule 144 under the Securities Act.
Underwritten Registration or Underwritten Offering: A registration in which securities of the Issuer are sold to an underwriter for reoffering to the public.
The Issuer and the Guarantors shall use their respective commercially reasonable best efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Notes by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least two years following the effective date of such Shelf Registration Statement (or shorter period that will terminate when all the Notes covered by such Shelf Registration Statement have been sold pursuant to such Shelf Registration Statement or are otherwise no longer Transfer Restricted Securities).
Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Issuer of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof (a "Suspension Notice"), such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvii) hereof, or until it is advised in writing (the "Advice") by the Issuer that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Issuer, each Holder hereby agrees it will deliver to the Issuer (at the Issuer's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of rec eipt of such notice. In the event the Issuer shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such Suspension Notice to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xvii) hereof or shall have received the Advice; however, no such extension shall be taken into account in determining whether Liquidated Damages are due pursuant to Section 5 hereof or the amount of such Liquidated Damages, it being agreed that the Issuer's option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 5.
The Issuer and the Guarantors will, in any event, bear their respective internal expenses (including, without limitation, all salaries and expenses of their respective officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Issuer and the Guarantors.
Each Holder shall pay all commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Notes.
In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Issuer and the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Issuer in writing (provided, that the failure to give such notice shall not relieve the Issuer and the Guarantors of their respective obligations pursuant to this Agreement). Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Issuer and the Guarantors. The Issuer and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for th e reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Issuer and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Issuer's prior written consent, which consent shall not be withheld unreasonably, and the Issuer and the Guarantors agree to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the written consent of the Issuer. The Issuer and the Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding.
The Issuer and the Guarantors and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which t he total discount received by such Holder with respect to the Restricted Notes exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount at maturity of Restricted Notes held by each of the Holders hereunder and not joint.
The Issuer and the Guarantors hereby agree with each Holder, for so long as any Transfer Restricted Securities remain outstanding and during any period in which the Issuer or such Guarantor (i) is not subject to Section 13 or 15(d) of the Exchange Act, to make available, upon request of any Holder, to such Holder or beneficial owner of Transfer Restricted Securities in connection with any sale thereof and any prospective purchaser of such Transfer Restricted Securities designated by such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15(d) of the Exchange Act, to make all filings required thereby in a timely manner in order to permit resales of such Transfer Restricted Securities pursuant to Rule 144.
No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.
The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker or investment bankers and manager or managers that will administer the offering will be selected by the Issuer and the Guarantors.
Vail Resorts, Inc.
137 Benchmark Road
Avon, Colorado 81620
Telecopier No.: (970) 845-2470
Attention: Chief Executive Officer
with a copy to:
Cahill Gordon & Reindel llp
80 Pine Street
New York, New York 10005
Telecopier No.: (212) 269-5420
Attention: James J. Clark, Esq.
All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five business days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next business day, if timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
VAIL RESORTS, INC.
By:
Name: Martha D. Rehm
Title: Senior Vice President
BEAVER CREEK ASSOCIATES, INC.
BEAVER CREEK CONSULTANTS, INC.
BEAVER CREEK FOOD SERVICES, INC.
BRECKENRIDGE RESORT PROPERTIES, INC.
COMPLETE TELECOMMUNICATIONS, INC.
GILLETT BROADCASTING, INC.
GRAND TETON LODGE COMPANY
HEAVENLY VALLEY, LIMITED PARTNERSHIP
JACKSON HOLE GOLF AND TENNIS CLUB, INC.
JHL&S LLC
KEYSTONE CONFERENCE SERVICES, INC.
KEYSTONE DEVELOPMENT SALES, INC.
KEYSTONE FOOD AND BEVERAGE COMPANY
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
LODGE PROPERTIES, INC.
LODGE REALTY, INC.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
ROCKRESORTS CASA MADRONA, LLC
ROCKRESORTS CHEECA, LLC
ROCKRESORTS EQUINOX, INC.
ROCKRESORTS INTERNATIONAL, LLC
ROCKRESORTS, LLC
ROCKRESORTS LA POSADO, LLC
ROCKRESORTS ROSARIO, LLC
ROCKRESORTS WYOMING, LLC
TETON HOSPITALITY SERVICES, INC.
THE VAIL CORPORATION
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
VAIL ASSOCIATES HOLDINGS, LTD.
VAIL ASSOCIATES REAL ESTATE, INC.
VAIL FOOD SERVICES, INC.
VAIL HOLDINGS, INC.
VAIL RESORTS DEVELOPMENT COMPANY
VAIL SUMMIT RESORTS, INC.
VAIL TRADEMARKS, INC.
VAIL/ARROWHEAD, INC.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
VAMHC, INC.
VAIL RR, INC.
VA RANCHO MIRAGE I, INC.
VA RANCHO MIRAGE II, INC.
VA RANCHO MIRAGE RESORT, L.P.
VR HEAVENLY I, INC.
VR HEAVENLY II, INC.
Each by its authorized officer or signatory
By:
Name: Martha D. Rehm
Title: Senior Vice President
The foregoing Registration Rights Agreement is hereby
confirmed and accepted as of the date first above written:
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS INC.
PIPER JAFFRAY & CO.
WELLS FARGO SECURITIES, L.L.C.
Acting on behalf of themselves and the
several Initial Purchasers
By: BANC OF AMERICA SECURITIES LLC
By:
Name:
Title:
Exhibit 31
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Adam M. Aron, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Vail Resorts, Inc.; |
|
2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: |
|
a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|
b) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the report based on such evaluation; and |
|
c) |
disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 15, 2004
/s/ ADAM M. ARON |
Adam M. Aron |
Chairman of the Board and |
Chief Executive Officer |
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Jeffrey W. Jones, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Vail Resorts, Inc.; |
|
2. |
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; |
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; |
|
4. |
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have: |
|
a) |
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|
b) |
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by the report based on such evaluation; and |
|
c) |
disclosed in this quarterly report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
|
5. |
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: March 15, 2004
/s/ Jeffrey W. Jones |
Jeffrey W. Jones |
Senior Vice President and |
Chief Financial Officer |
Exhibit 32
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
AND THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his capacity as an officer of Vail Resorts, Inc. (the "Company") that the quarterly report of the Company on Form 10-Q for the quarter ended January 31, 2004 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in such Report fairly presents, in all material respects, the financial condition and the results of operations of the Company at the end of and for the periods covered by such Report.
Date: March 15, 2004
/s/ ADAM M. ARON |
Adam M. Aron |
Chairman of the Board and |
Chief Executive Officer |
Date: March 15, 2004
/s/ Jeffrey W. Jones |
Jeffrey W. Jones |
Senior Vice President and |
Chief Financial Officer |
This certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is not a part of the Form 10-Q to which it refers, and is, to the extent permitted by law, provided by each of the above signatories to the extent of his respective knowledge.
Exhibit 4.6(i)
____________________
SIXTH SUPPLEMENTAL INDENTURE
Dated as of January 26, 2004
to
INDENTURE
Dated as of May 11, 1999
among
VAIL RESORTS, INC., as Issuer,
the Guarantors named therein, as Guarantors,
and
THE BANK OF NEW YORK, as Successor Trustee to
UNITED STATES TRUST COMPANY OF NEW YORK
____________________
up to $300,000,000
8 3/4 % Senior Subordinated Notes due 2009
SIXTH SUPPLEMENTAL INDENTURE, dated as of January 26, 2004, among Vail Resorts, Inc., a Delaware corporation (the "Issuer"), the Guarantors named on the signature pages hereto (the "Guarantors"), and The Bank of New York, as Successor to United States Trust Company of New York, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer and the Guarantors have heretofore executed and delivered to the Trustee an Indenture dated as of May 11, 1999, as amended and supplemented by the First Supplemental Indenture dated as of August 27, 1999, by the Second Supplemental Indenture dated as of November 16, 2001, by the Third Supplemental Indenture dated as of January 16, 2002, by the Fourth Supplemental Indenture dated as of October 18, 2002 and by the Fifth Supplemental Indenture dated as of May 20, 2003 (together, the "Indenture") providing for the issuance of up to $300,000,000 aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2009 of the Company;
WHEREAS, on May 11, 1999, the Company issued and the Trustee authenticated and delivered $200,000,000 aggregate principal amount of the Company's 8 3/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, Section 9.02 of the Indenture provides that the Company and the Trustee may amend or supplement the Indenture and the Notes with the written consent of the Holders of a majority in principal amount of the outstanding Notes;
WHEREAS, the Company, pursuant to an Offer to Purchase and Consent Solicitation Statement, dated January 13, 2004 (the "Statement" and, together with the related Consent and Letter of Transmittal, the "Offer Documents"), has offered to purchase any and all of the outstanding Notes (the "Offer") and solicited the consents of the Holders to the substance of the amendments to the Indenture contained in this Sixth Supplemental Indenture (the "Consent Solicitation"), upon the terms and conditions set forth in the Offer Documents;
WHEREAS, the Holders of a majority in principal amount of the outstanding Notes have delivered, pursuant to the Consent Solicitation and in accordance with the requirements of Section 9.02 of the Indenture, written consents to the substance of the amendments to the Indenture contained in this Sixth Supplemental Indenture;
WHEREAS, in accordance with Section 9.02 of the Indenture, it is not necessary for the consents of the Holders under Section 9.02 of the Indenture to approve the particular form of the amendments to the Indenture contained in this Sixth Supplemental Indenture, but it is sufficient that such consents approve the substance thereof; and
WHEREAS, all conditions precedent provided for in the Indenture with respect to the execution of this Sixth Supplemental Indenture have been complied with.
NOW THEREFORE, in consideration of the foregoing premises, the Company and the Trustee agree as follows:
Section 1. Definitions
. All capitalized terms used herein and not defined are used herein as defined in the Indenture.
Section 2. Amendments to the Indenture
. Subject to the provisions of Section 3 hereof, the Indenture and the Notes shall be amended as follows:
(a) The following provisions of the Indenture shall be deleted in their entirety and the Company shall be released from any and all of its obligations thereunder: Section 3.10 (Offer to Purchase by Application of Excess Proceeds); Section 4.04 (Reports); Section 4.05 (Compliance Certificate); Section 4.06 (Taxes); Section 4.07 (Stay, Extension and Usury Laws); Section 4.08 (Corporate Existence; Maintenance of Properties and Insurance); Section 4.09 (Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock); Section 4.10 (Limitation on Restricted Payments); Section 4.11 (Limitation on Liens); Section 4.12 (Limitation on Transactions with Affiliates); Section 4.13 (Limitations on Dividend and Other Payment Restrictions Affecting Subsidiaries); Section 4.14 (Limitation on Layering Debt); Section 4.15 (Payments for Consent); Section 4.16 (Asset Sales); Section 4.17 (Offer to Repurchase Upon Change of Control); Section 4.18 (Additional Subsidiary Guarantees); Section 5.01 (Limitation on Merger , Consolidation or Sale of Assets); and Section 5.02 (Successor Person Substituted). Failure to comply with the terms of any of the foregoing sections of the Indenture shall no longer constitute a Default or Event of Default under the Indenture and shall no longer have any other consequences under the Indenture.
(b) Section 8 (Repurchase at Option of Holder) of the Notes shall be deleted in its entirety and the Company shall be released from any and all of its obligations thereunder.
(c) Section 12 (Events of Default and Remedies) of the Notes shall be amended and restated in its entirety to read as follows:
"14. Events of Default and Remedies
Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes (whether or not prohibited by Article 10 of the Indenture); (ii) default in payment when due (whether payable at maturity, upon redemption or repurchase or otherwise) of principal of or premium, if any, on the Notes (whether or not prohibited by Article 10 of the Indenture). If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes and all other Obligations thereunder to be due and payable by notice in writing to the Company and the Trustee. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provi ded in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, interest or Liquidated Damages, if any) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium and Liquidated Damages, if any, or interest on the Notes."
(d) Section 6.01 of the Indenture shall be amended and restated in its entirety to read as follows:
"SECTION 6.01. Events of Default.
Each of the following constitutes an Event of Default:
(1) default for 30 days or more in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes (whether or not prohibited by Article 10 hereof); or
(2) default in payment when due (whether payable at maturity, upon redemption or repurchase or otherwise) of the principal of or premium, if any, on the Notes (whether or not prohibited by Article 10 hereof)."
(e) All references in the Indenture and the Notes to any of the provisions deleted as provided in this Section 2 shall also be deleted. The following definitions set forth in Section 1.01 of the Indenture or elsewhere in the Indenture or the Notes shall be deleted in their entirety:
"Acquired Debt"
"Additional Assets"
"Affiliate Transaction"
"Asset Disposition"
"Asset Sale Offer"
"Average Life"
"Bankruptcy Law"
"Board Resolution"
"Change of Control"
"Change of Control Offer"
"Change of Control Payment"
"Change of Control Payment Date"
"Consolidated Interest Coverage Ratio"
"Consolidated Interest Expense"
"Consolidated Net Income"
"Consolidated Net Worth"
"Consolidated Resort EBITDA"
"EBITDA"
"Excess Proceeds"
"Existing Indebtedness"
"Existing Note Indenture"
"Existing Notes"
"Expiration Date"
"Foreign Restricted Subsidiary"
"Fully Traded Common Stock"
"Investment"
"Net Available Cash"
"Net Cash Proceeds"
"Net Proceeds"
"Notice of Default"
"Offer"
"Offer Amount"
"Offer Period"
"Payment Default"
"Payment Restrictions"
"Permitted Debt"
"Permitted Businesses"
"Permitted Investment"
"Permitted Liens"
"Permitted Refinancing Indebtedness"
"Plans"
"Purchase Date"
"Refinancing Disqualified Stock"
"Refinancing Indebtedness"
"Restricted Investment"
"Restricted Payment"
"Significant Subsidiary"
"Similar Business"
"Successor Company"
"Successor Guarantor"
"Temporary Cash Investment"
Section 3. Effectiveness; Operation
. This Sixth Supplemental Indenture shall be effective upon execution hereof by the parties hereto; however the amendments to the Indenture and the Notes contained in Section 2 hereof shall not become operative until the date and time the Company notifies (if orally, then confirmed in writing) Global Bondholder Services Corporation, as depositary and tabulation agent for the Notes under the Offer (the "Depositary"), that the Company has accepted for purchase the Notes tendered and not withdrawn pursuant to the Offer. In the event the Company notifies (if orally, then confirmed in writing) the Depositary that it has withdrawn or terminated the Offer, this Sixth Supplemental Indenture shall be terminated and of no force or effect and neither the Indenture nor the Notes shall be modified hereby. The Company shall promptly notify the Trustee in writing of any oral or written notice it gives to the Depositary.
Section 4. Ratification
. Except as hereby expressly amended, the Indenture is in all respects ratified and confirmed and all the terms, provisions and conditions thereof shall be and remain in full force and effect.
Section 5. Conflict with Trust Indenture Act
. If and to the extent that any provision of this Sixth Supplemental Indenture limits, qualifies or conflicts with any provision which is required or deemed to be included in this Sixth Supplemental Indenture by any of the provisions of the TIA, such required or deemed provision shall control.
Section 6. Separability Clause
. In case any provision in this Sixth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 7. Effect of Headings
. The section headings herein are for convenience only and shall not affect the construction hereof.
Section 8. Benefits of this Sixth Supplemental Indenture
. Nothing in this Sixth Supplemental Indenture, express or implied, shall give to any person, other than the parties to the Indenture and their respective successors thereunder and the Holders of the Notes, any benefit or any legal or equitable right, remedy or claim under this Sixth Supplemental Indenture.
Section 9. Successors and Assigns
. All covenants and agreements in this Sixth Supplemental Indenture by the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.
Section 10. Governing Law
. This Sixth Supplemental Indenture and the Indenture and the Notes, each as supplemented and amended hereby, shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
Section 11. Multiple Originals
. The parties may sign any number of copies of this Sixth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Sixth Supplemental Indenture.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Sixth Supplemental Indenture to be duly executed, all as of the date first written above.
ISSUER:
VAIL RESORTS, INC.
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
GUARANTORS:
BEAVER CREEK ASSOCIATES, INC.
BEAVER CREEK CONSULTANTS, INC.
BEAVER CREEK FOOD SERVICES, INC.
BRECKENRIDGE RESORT PROPERTIES, INC.
COMPLETE TELECOMMUNICATIONS, INC.
GHTV, INC.
GILLETT BROADCASTING, INC.
GRAND TETON LODGE COMPANY
JACKSON HOLE GOLF AND TENNIS CLUB, INC.
KEYSTONE CONFERENCE SERVICES, INC.
KEYSTONE DEVELOPMENT SALES, INC.
KEYSTONE FOOD AND BEVERAGE COMPANY
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
LARKSPUR RESTAURANT & BAR, LLC
LODGE PROPERTIES, INC.
LODGE REALTY, INC.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
ROCKRESORTS CASA MADRONA, LLC
ROCKRESORTS CHEECA, LLC
ROCKRESORTS EQUINOX, INC.
ROCKRESORTS INTERNATIONAL, LLC
ROCKRESORTS LAPOSADA, LLC
ROCKRESORTS LLC
ROCKRESORTS ROSARIO, LLC
TETON HOSPITALITY SERVICES, INC.
THE VAIL CORPORATION
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
VA RANCHO MIRAGE I, INC.
VA RANCHO MIRAGE II, INC.
VAIL ASSOCIATES HOLDINGS, LTD.
VAIL ASSOCIATES REAL ESTATE, INC.
VAIL FOOD SERVICES, INC.
VAIL HOLDINGS, INC.
VAIL RESORTS DEVELOPMENT COMPANY
VAIL RR, INC.
VAIL SUMMIT RESORTS, INC.
VAIL TRADEMARKS, INC.
VAIL/ARROWHEAD, INC.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
VAMHC, INC.
VR HEAVENLY I, INC.
VR HEAVENLY II, INC.
Each by its authorized officer:
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
JHL&S, LLC
By:
Name: Martha Dugan Rehm
Title: Authorized Signatory
VA RANCHO MIRAGE RESORT, L.P.
By: VA Rancho Mirage I, Inc., its General Partner
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
HEAVENLY VALLEY, LIMITED
PARTNERSHIP
By: VR Heavenly I, Inc., Its General Partner
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
TRUSTEE:
THE BANK OF NEW YORK
as Trustee
By:
Name:
Title:
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Exhibit 4.6(j)
____________________
FOURTH SUPPLEMENTAL INDENTURE
Dated as of January 26, 2004
to
INDENTURE
Dated as of November 21, 2001
among
VAIL RESORTS, INC., as Issuer,
the Guarantors named therein, as Guarantors,
and
THE BANK OF NEW YORK, as Trustee
____________________
up to $300,000,000
8 3/4 % Senior Subordinated Notes due 2009
FOURTH SUPPLEMENTAL INDENTURE, dated as of January 26, 2004, among Vail Resorts, Inc., a Delaware corporation (the "Issuer"), the Guarantors named on the signature pages hereto (the "Guarantors") and The Bank of New York as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, the Issuer and the Guarantors have heretofore executed and delivered to the Trustee an Indenture dated as of November 21, 2001, as amended and supplemented by the First Supplemental Indenture dated as of January 16, 2002, by the Second Supplemental Indenture dated as of October 18, 2002 and by the Third Supplemental Indenture dated as of May 20, 2003 (together, the "Indenture") providing for the issuance of up to $300,000,000 aggregate principal amount of 8 3/4% Senior Subordinated Notes due 2009 of the Company;
WHEREAS, on November 21, 2001, the Company issued and the Trustee authenticated and delivered $160,000,000 aggregate principal amount of the Company's 8 3/4% Senior Subordinated Notes due 2009 (the "Notes");
WHEREAS, Section 9.02 of the Indenture provides that the Company and the Trustee may amend or supplement the Indenture and the Notes with the written consent of the Holders of a majority in principal amount of the outstanding Notes;
WHEREAS, the Company, pursuant to an Offer to Purchase and Consent Solicitation Statement, dated January 13, 2004 (the "Statement" and, together with the related Consent and Letter of Transmittal, the "Offer Documents"), has offered to purchase any and all of the outstanding Notes (the "Offer") and solicited the consents of the Holders to the substance of the amendments to the Indenture contained in this Fourth Supplemental Indenture (the "Consent Solicitation"), upon the terms and conditions set forth in the Offer Documents;
WHEREAS, the Holders of a majority in principal amount of the outstanding Notes have delivered, pursuant to the Consent Solicitation and in accordance with the requirements of Section 9.02 of the Indenture, written consents to the substance of the amendments to the Indenture contained in this Fourth Supplemental Indenture;
WHEREAS, in accordance with Section 9.02 of the Indenture, it is not necessary for the consents of the Holders under Section 9.02 of the Indenture to approve the particular form of the amendments to the Indenture contained in this Fourth Supplemental Indenture, but it is sufficient that such consents approve the substance thereof; and
WHEREAS, all conditions precedent provided for in the Indenture with respect to the execution of this Fourth Supplemental Indenture have been complied with.
NOW THEREFORE, in consideration of the foregoing premises, the Company and the Trustee agree as follows:
Section 1. Definitions
. All capitalized terms used herein and not defined are used herein as defined in the Indenture.
Section 2. Amendments to the Indenture
. Subject to the provisions of Section 3 hereof, the Indenture and the Notes shall be amended as follows:
(a) The following provisions of the Indenture shall be deleted in their entirety and the Company shall be released from any and all of its obligations thereunder: Section 3.10 (Offer to Purchase by Application of Excess Proceeds); Section 4.04 (Reports); Section 4.05 (Compliance Certificate); Section 4.06 (Taxes); Section 4.07 (Stay, Extension and Usury Laws); Section 4.08 (Corporate Existence; Maintenance of Properties and Insurance); Section 4.09 (Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock); Section 4.10 (Limitation on Restricted Payments); Section 4.11 (Limitation on Liens); Section 4.12 (Limitation on Transactions with Affiliates); Section 4.13 (Limitations on Dividend and Other Payment Restrictions Affecting Subsidiaries); Section 4.14 (Limitation on Layering Debt); Section 4.15 (Payments for Consent); Section 4.16 (Asset Sales); Section 4.17 (Offer to Repurchase Upon Change of Control); Section 4.18 (Additional Subsidiary Guarantees); Section 5.01 (Limitation on Merger , Consolidation or Sale of Assets); and Section 5.02 (Successor Person Substituted). Failure to comply with the terms of any of the foregoing sections of the Indenture shall no longer constitute a Default or Event of Default under the Indenture and shall no longer have any other consequences under the Indenture.
(b) Section 8 (Repurchase at Option of Holder) of the Notes shall be deleted in its entirety and the Company shall be released from any and all of its obligations thereunder.
(c) Section 12 (Events of Default and Remedies) of the Notes shall be amended and restated in its entirety to read as follows:
"14. Events of Default and Remedies
Events of Default include: (i) default for 30 days in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes (whether or not prohibited by Article 10 of the Indenture); (ii) default in payment when due (whether payable at maturity, upon redemption or repurchase or otherwise) of principal of or premium, if any, on the Notes (whether or not prohibited by Article 10 of the Indenture). If any Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes and all other Obligations thereunder to be due and payable by notice in writing to the Company and the Trustee. Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Company, all outstanding Notes will become due and payable without further action or notice. Holders may not enforce the Indenture or the Notes except as provi ded in the Indenture. Subject to certain limitations, Holders of a majority in principal amount of the then outstanding Notes may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, interest or Liquidated Damages, if any) if it determines that withholding notice is in their interest. The Holders of a majority in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium and Liquidated Damages, if any, or interest on the Notes."
(d) Section 6.01 of the Indenture shall be amended and restated in its entirety to read as follows:
"SECTION 6.01. Events of Default.
Each of the following constitutes an Event of Default:
(1) default for 30 days or more in the payment when due of interest on, or Liquidated Damages, if any, with respect to, the Notes (whether or not prohibited by Article 10 hereof); or
(2) default in payment when due (whether payable at maturity, upon redemption or repurchase or otherwise) of the principal of or premium, if any, on the Notes (whether or not prohibited by Article 10 hereof)."
(e) All references in the Indenture and the Notes to any of the provisions deleted as provided in this Section 2 shall also be deleted. The following definitions set forth in Section 1.01 of the Indenture or elsewhere in the Indenture or the Notes shall be deleted in their entirety:
"Acquired Debt"
"Additional Assets"
"Affiliate Transaction"
"Asset Disposition"
"Asset Sale Offer"
"Average Life"
"Bankruptcy Law"
"Board Resolution"
"Change of Control"
"Change of Control Offer"
"Change of Control Payment"
"Change of Control Payment Date"
"Consolidated Interest Coverage Ratio"
"Consolidated Interest Expense"
"Consolidated Net Income"
"Consolidated Net Worth"
"Consolidated Resort EBITDA"
"EBITDA"
"Excess Proceeds"
"Existing Indebtedness"
"Existing Note Indenture"
"Existing Notes"
"Expiration Date"
"Foreign Restricted Subsidiary"
"Fully Traded Common Stock"
"Investment"
"Net Available Cash"
"Net Cash Proceeds"
"Net Proceeds"
"Notice of Default"
"Offer"
"Offer Amount"
"Offer Period"
"Payment Default"
"Payment Restrictions"
"Permitted Debt"
"Permitted Businesses"
"Permitted Investment"
"Permitted Liens"
"Permitted Refinancing Indebtedness"
"Plans"
"Purchase Date"
"Refinancing Disqualified Stock"
"Refinancing Indebtedness"
"Restricted Investment"
"Restricted Payment"
"Significant Subsidiary"
"Similar Business"
"Successor Company"
"Successor Guarantor"
"Temporary Cash Investment"
Section 3. Effectiveness; Operation
. This Fourth Supplemental Indenture shall be effective upon execution hereof by the parties hereto; however the amendments to the Indenture and the Notes contained in Section 2 hereof shall not become operative until the date and time the Company notifies (if orally, then confirmed in writing) Global Bondholder Services Corporation, as depositary and tabulation agent for the Notes under the Offer (the "Depositary"), that the Company has accepted for purchase the Notes tendered and not withdrawn pursuant to the Offer. In the event the Company notifies (if orally, then confirmed in writing) the Depositary that it has withdrawn or terminated the Offer, this Fourth Supplemental Indenture shall be terminated and of no force or effect and neither the Indenture nor the Notes shall be modified hereby. The Company shall promptly notify the Trustee in writing of any oral or written notice it gives to the Depositary.
Section 4. Ratification
. Except as hereby expressly amended, the Indenture is in all respects ratified and confirmed and all the terms, provisions and conditions thereof shall be and remain in full force and effect.
Section 5. Conflict with Trust Indenture Act
. If and to the extent that any provision of this Fourth Supplemental Indenture limits, qualifies or conflicts with any provision which is required or deemed to be included in this Fourth Supplemental Indenture by any of the provisions of the TIA, such required or deemed provision shall control.
Section 6. Separability Clause
. In case any provision in this Fourth Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
Section 7. Effect of Headings
. The section headings herein are for convenience only and shall not affect the construction hereof.
Section 8. Benefits of this Fourth Supplemental Indenture
. Nothing in this Fourth Supplemental Indenture, express or implied, shall give to any person, other than the parties to the Indenture and their respective successors thereunder and the Holders of the Notes, any benefit or any legal or equitable right, remedy or claim under this Fourth Supplemental Indenture.
Section 9. Successors and Assigns
. All covenants and agreements in this Fourth Supplemental Indenture by the Company and the Guarantors shall bind their respective successors and assigns, whether so expressed or not.
Section 10. Governing Law
. This Fourth Supplemental Indenture and the Indenture and the Notes, each as supplemented and amended hereby, shall be governed by, and construed in accordance with, the laws of the State of New York but without giving effect to applicable principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby.
Section 11. Multiple Originals
. The parties may sign any number of copies of this Fourth Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Fourth Supplemental Indenture.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Fourth Supplemental Indenture to be duly executed, all as of the date first written above.
ISSUER:
VAIL RESORTS, INC.
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
GUARANTORS:
BEAVER CREEK ASSOCIATES, INC.
BEAVER CREEK CONSULTANTS, INC.
BEAVER CREEK FOOD SERVICES, INC.
BRECKENRIDGE RESORT PROPERTIES, INC.
COMPLETE TELECOMMUNICATIONS, INC.
GHTV, INC.
GILLETT BROADCASTING, INC.
GRAND TETON LODGE COMPANY
JACKSON HOLE GOLF AND TENNIS CLUB, INC.
KEYSTONE CONFERENCE SERVICES, INC.
KEYSTONE DEVELOPMENT SALES, INC.
KEYSTONE FOOD AND BEVERAGE COMPANY
KEYSTONE RESORT PROPERTY MANAGEMENT COMPANY
LARKSPUR RESTAURANT & BAR, LLC
LODGE PROPERTIES, INC.
LODGE REALTY, INC.
PROPERTY MANAGEMENT ACQUISITION CORP., INC.
ROCKRESORTS CASA MADRONA, LLC
ROCKRESORTS CHEECA, LLC
ROCKRESORTS EQUINOX, INC.
ROCKRESORTS INTERNATIONAL, LLC
ROCKRESORTS LAPOSADA, LLC
ROCKRESORTS LLC
ROCKRESORTS ROSARIO, LLC
TETON HOSPITALITY SERVICES, INC.
THE VAIL CORPORATION
THE VILLAGE AT BRECKENRIDGE ACQUISITION CORP., INC.
VA RANCHO MIRAGE I, INC.
VA RANCHO MIRAGE II, INC.
VAIL ASSOCIATES HOLDINGS, LTD.
VAIL ASSOCIATES REAL ESTATE, INC.
VAIL FOOD SERVICES, INC.
VAIL HOLDINGS, INC.
VAIL RESORTS DEVELOPMENT COMPANY
VAIL RR, INC.
VAIL SUMMIT RESORTS, INC.
VAIL TRADEMARKS, INC.
VAIL/ARROWHEAD, INC.
VAIL/BEAVER CREEK RESORT PROPERTIES, INC.
VAMHC, INC.
VR HEAVENLY I, INC.
VR HEAVENLY II, INC.
Each by its authorized officer:
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
JHL&S, LLC
By:
Name: Martha Dugan Rehm
Title: Authorized Signatory
VA RANCHO MIRAGE RESORT, L.P.
By: VA Rancho Mirage I, Inc., its General Partner
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
HEAVENLY VALLEY, LIMITED
PARTNERSHIP
By: VR Heavenly I, Inc., Its General Partner
By:
Name: Martha Dugan Rehm
Title: Senior Vice President
TRUSTEE:
THE BANK OF NEW YORK
as Trustee
By:
Name:
Title:
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