SEC Filing | Vail Resorts, Inc.

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mtn-20220131

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-09614

https://cdn.kscope.io/38868afa70f1787e776459ee27c45271-mtn-20220131_g1.jpg

Vail Resorts, Inc.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		51-0291762
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

390 Interlocken Crescent
Broomfield,	Colorado	80021
(Address of Principal Executive Offices)		(Zip Code)


(303)			404-1800
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	MTN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of March 10, 2022, 40,553,539 shares of the registrant’s common stock were outstanding.

Table of Contents



PART I	FINANCIAL INFORMATION	Page

Item 1.	Financial Statements (unaudited).
	Consolidated Condensed Balance Sheets as of January 31, 2022, July 31, 2021 and January 31, 2021	2
	Consolidated Condensed Statements of Operations for the Three and Six Months Ended January 31, 2022 and 2021	3
	Consolidated Condensed Statements of Comprehensive Income for the Three and Six Months Ended January 31, 2022 and 2021	4
	Consolidated Condensed Statements of Stockholders’ Equity for the Three and Six Months Ended January 31, 2022 and 2021	5
	Consolidated Condensed Statements of Cash Flows for the Six Months Ended January 31, 2022 and 2021	7
	Notes to Consolidated Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	41

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 3.	Defaults Upon Senior Securities	43
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44

Vail Resorts, Inc.

Consolidated Condensed Balance Sheets

(In thousands, except per share amounts)

(Unaudited)


	January 31, 2022		July 31, 2021		January 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	1,407,019	$	1,243,962	$	1,301,003
Restricted cash	15,643		14,612		11,001
Trade receivables, net	167,088		345,408		117,012
Inventories, net	104,573		80,316		86,876
Other current assets	73,104		61,288		57,559
Total current assets	1,767,427		1,745,586		1,573,451
Property, plant and equipment, net (Note 7)	2,190,332		2,067,876		2,158,863
Real estate held for sale or investment	95,331		95,615		96,801
Goodwill, net (Note 7)	1,764,106		1,781,047		1,760,908
Intangible assets, net	318,078		319,110		318,983
Operating right-of-use assets	198,672		204,716		215,377
Other assets	35,796		37,106		41,450
Total assets	$	6,369,742	$	6,251,056	$	6,165,833
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 7)	$	1,067,137	$	815,472	$	831,794
Income taxes payable	24,153		48,812		37,862
Long-term debt due within one year (Note 5)	63,746		114,117		112,796
Total current liabilities	1,155,036		978,401		982,452
Long-term debt, net (Note 5)	2,695,589		2,736,175		2,768,015
Operating lease liabilities	188,797		190,561		210,855
Other long-term liabilities (Note 7)	254,209		264,034		251,913
Deferred income taxes, net	282,427		252,817		266,152
Total liabilities	4,576,058		4,421,988		4,479,387
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.01 par value, 25,000 shares authorized, no shares issued and outstanding	—		—		—
Common stock, $0.01 par value, 100,000 shares authorized, 46,713, 46,552 and 46,416 shares issued, respectively	467		466		465
Exchangeable shares, $0.01 par value, 33, 34 and 35 shares issued and outstanding, respectively (Note 4)	—		—		—
Additional paid-in capital	1,172,595		1,196,993		1,216,489
Accumulated other comprehensive income	10,418		27,799		8,226
Retained earnings	786,473		773,752		639,934
Treasury stock, at cost, 6,161 shares (Note 11)	(404,411)		(404,411)		(404,411)
Total Vail Resorts, Inc. stockholders’ equity	1,565,542		1,594,599		1,460,703
Noncontrolling interests	228,142		234,469		225,743
Total stockholders’ equity	1,793,684		1,829,068		1,686,446
Total liabilities and stockholders’ equity	$	6,369,742	$	6,251,056	$	6,165,833

The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.

Vail Resorts, Inc.

Consolidated Condensed Statements of Operations

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended January 31,				Six Months Ended January 31,
	2022		2021		2022		2021
Net revenue:
Mountain and Lodging services and other	$	770,300	$	597,110	$	892,160	$	701,384
Mountain and Lodging retail and dining	136,055		87,219		189,456		114,477
Resort net revenue	906,355		684,329		1,081,616		815,861
Real Estate	180		315		495		569
Total net revenue	906,535		684,644		1,082,111		816,430
Operating expense (exclusive of depreciation and amortization shown separately below):
Mountain and Lodging operating expense	364,336		293,971		548,061		448,108
Mountain and Lodging retail and dining cost of products sold	53,715		37,366		77,944		54,498
General and administrative	91,261		78,121		168,495		137,150
Resort operating expense	509,312		409,458		794,500		639,756
Real Estate operating expense	1,511		1,615		2,981		3,065
Total segment operating expense	510,823		411,073		797,481		642,821
Other operating (expense) income:
Depreciation and amortization	(62,070)		(62,663)		(123,559)		(125,291)
Gain on sale of real property	931		—		962		—
Change in estimated fair value of contingent consideration (Note 8)	(16,780)		(1,000)		(18,780)		(1,802)
Gain (loss) on disposal of fixed assets and other, net	7,347		(2,192)		16,214		(2,761)
Income from operations	325,140		207,716		159,467		43,755
Mountain equity investment income, net	818		1,180		2,332		5,166
Investment income and other, net	257		167		756		510
Foreign currency (loss) gain on intercompany loans (Note 5)	(2,870)		5,135		(2,039)		5,675
Interest expense, net	(37,366)		(37,847)		(76,911)		(73,254)
Income (loss) before (provision for) benefit from income taxes	285,979		176,351		83,605		(18,148)
(Provision for) benefit from income taxes	(52,049)		(27,221)		7,804		10,257
Net income (loss)	233,930		149,130		91,409		(7,891)
Net (income) loss attributable to noncontrolling interests	(10,539)		(1,332)		(7,350)		1,923
Net income (loss) attributable to Vail Resorts, Inc.	$	223,391	$	147,798	$	84,059	$	(5,968)
Per share amounts (Note 4):
Basic net income (loss) per share attributable to Vail Resorts, Inc.	$	5.51	$	3.67	$	2.08	$	(0.15)
Diluted net income (loss) per share attributable to Vail Resorts, Inc.	$	5.47	$	3.62	$	2.06	$	(0.15)
Cash dividends declared per share	$	0.88	$	—	$	1.76	$	—

The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.

Vail Resorts, Inc.

Consolidated Condensed Statements of Comprehensive Income

(In thousands)

(Unaudited)


	Three Months Ended January 31,				Six Months Ended January 31,
	2022		2021		2022		2021
Net income (loss)	$	233,930	$	149,130	$	91,409	$	(7,891)
Foreign currency translation adjustments	(48,857)		75,484		(33,720)		77,257
Change in estimated fair value of hedging instruments, net of tax	4,483		1,307		8,828		5,962
Comprehensive income	189,556		225,921		66,517		75,328
Comprehensive (income) loss attributable to noncontrolling interests	(436)		(17,510)		161		(16,233)
Comprehensive income attributable to Vail Resorts, Inc.	$	189,120	$	208,411	$	66,678	$	59,095

The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.

Vail Resorts, Inc.

Consolidated Condensed Statements of Stockholders’ Equity

(In thousands)

(Unaudited)


	Common Stock				Additional Paid in Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Treasury Stock		Total Vail Resorts, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Vail Resorts		Exchangeable
Balance, October 31, 2020	$	464	$	—	$	1,130,318	$	(52,387)	$	492,136	$	(404,411)	$	1,166,120	$	209,607	$	1,375,727
Comprehensive income:
Net income	—		—		—		—		147,798		—		147,798		1,332		149,130
Foreign currency translation adjustments	—		—		—		59,306		—		—		59,306		16,178		75,484
Change in estimated fair value of hedging instruments, net of tax	—		—		—		1,307		—		—		1,307		—		1,307
Total comprehensive income													208,411		17,510		225,921
Equity component of 0.0% Convertible Notes, net (Note 5)	—		—		80,066		—		—		—		80,066		—		80,066
Stock-based compensation expense	—		—		6,579		—		—		—		6,579		—		6,579
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(474)		—		—		—		(473)		—		(473)


Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(1,374)		(1,374)
Balance, January 31, 2021	$	465	$	—	$	1,216,489	$	8,226	$	639,934	$	(404,411)	$	1,460,703	$	225,743	$	1,686,446

Balance, October 31, 2021	$	466	$	—	$	1,192,901	$	44,689	$	598,796	$	(404,411)	$	1,432,441	$	233,989	$	1,666,430
Comprehensive income:
Net income	—		—		—		—		223,391		—		223,391		10,539		233,930
Foreign currency translation adjustments	—		—		—		(38,754)		—		—		(38,754)		(10,103)		(48,857)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		4,483		—		—		4,483		—		4,483
Total comprehensive income													189,120		436		189,556

Stock-based compensation expense	—		—		6,479		—		—		—		6,479		—		6,479
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(26,785)		—		—		—		(26,784)		—		(26,784)

Dividends (Note 4)	—		—		—		—		(35,714)		—		(35,714)		—		(35,714)
Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(6,283)		(6,283)
Balance, January 31, 2022	$	467	$	—	$	1,172,595	$	10,418	$	786,473	$	(404,411)	$	1,565,542	$	228,142	$	1,793,684


	Common Stock				Additional Paid in Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Treasury Stock		Total Vail Resorts, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Vail Resorts		Exchangeable
Balance, July 31, 2020	$	464	$	—	$	1,131,624	$	(56,837)	$	645,902	$	(404,411)	$	1,316,742	$	214,925	$	1,531,667
Comprehensive income:
Net loss	—		—		—		—		(5,968)		—		(5,968)		(1,923)		(7,891)
Foreign currency translation adjustments	—		—		—		59,101		—		—		59,101		18,156		77,257
Change in estimated fair value of hedging instruments, net of tax	—		—		—		5,962		—		—		5,962		—		5,962
Total comprehensive income													59,095		16,233		75,328
Equity component of 0.0% Convertible Notes, net (Note 5)	—		—		80,066		—		—		—		80,066		—		80,066
Stock-based compensation expense	—		—		12,333		—		—		—		12,333		—		12,333
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(7,534)		—		—		—		(7,533)		—		(7,533)


Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(5,415)		(5,415)
Balance, January 31, 2021	$	465	$	—	$	1,216,489	$	8,226	$	639,934	$	(404,411)	$	1,460,703	$	225,743	$	1,686,446

Balance, July 31, 2021	$	466	$	—	$	1,196,993	$	27,799	$	773,752	$	(404,411)	$	1,594,599	$	234,469	$	1,829,068
Comprehensive income:
Net income	—		—		—		—		84,059		—		84,059		7,350		91,409
Foreign currency translation adjustments	—		—		—		(26,209)		—		—		(26,209)		(7,511)		(33,720)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		8,828		—		—		8,828		—		8,828
Total comprehensive income													66,678		(161)		66,517

Stock-based compensation expense	—		—		12,904		—		—		—		12,904		—		12,904
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(37,302)		—		—		—		(37,301)		—		(37,301)

Dividends (Note 4)	—		—		—		—		(71,338)		—		(71,338)		—		(71,338)
Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(6,166)		(6,166)
Balance, January 31, 2022	$	467	$	—	$	1,172,595	$	10,418	$	786,473	$	(404,411)	$	1,565,542	$	228,142	$	1,793,684

The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.

Vail Resorts, Inc.

Consolidated Condensed Statements of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended January 31,
	2022		2021
Cash flows from operating activities:
Net income (loss)	$	91,409	$	(7,891)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	123,559		125,291

Stock-based compensation expense	12,904		12,333
Deferred income taxes, net	9,214		(8,779)
Change in estimated fair value of contingent consideration	18,780		1,802

Other non-cash income, net	(602)		(1,698)
Changes in assets and liabilities:
Trade receivables, net	178,252		(9,014)
Inventories, net	(23,627)		16,151
Accounts payable and accrued liabilities	89,502		111,481
Deferred revenue	147,614		220,846
Income taxes payable - excess tax benefit from share award exercises	(17,018)		(1,478)
Income taxes payable - other	(7,581)		(2,454)
Other assets and liabilities, net	(11,077)		2,479
Net cash provided by operating activities	611,329		459,069
Cash flows from investing activities:
Capital expenditures	(128,854)		(67,338)
Acquisition of business, net of cash acquired	(118,099)		—
Other investing activities, net	21,421		1,608
Net cash used in investing activities	(225,532)		(65,730)
Cash flows from financing activities:

Proceeds from borrowings under Whistler Credit Agreement	—		21,144
Proceeds from borrowings under 0.0% Convertible Notes	—		575,000
Repayments of borrowings under Vail Holdings Credit Agreement	(31,250)		(31,250)
Repayments of borrowings under Whistler Credit Agreement	(23,145)		(22,380)
Repayment of EB-5 Development Notes	(51,500)		—
Employee taxes paid for share award exercises	(37,302)		(7,534)
Dividends paid	(71,338)		—

Other financing activities, net	(6,158)		(21,693)
Net cash (used in) provided by financing activities	(220,693)		513,287
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,016)		3,292
Net increase in cash, cash equivalents and restricted cash	164,088		909,918
Cash, cash equivalents and restricted cash:
Beginning of period	1,258,574		402,086
End of period	$	1,422,662	$	1,312,004

Non-cash investing activities:
Accrued capital expenditures	$	17,388	$	12,877

The accompanying Notes are an integral part of these unaudited consolidated condensed financial statements.

Vail Resorts, Inc.

Notes to Consolidated Condensed Financial Statements

(Unaudited)

1.Organization and Business

Vail Resorts, Inc. (“Vail Resorts”) is organized as a holding company and operates through various subsidiaries. Vail Resorts and its subsidiaries (collectively, the “Company”) operate in three business segments: Mountain, Lodging and Real Estate.

The Company refers to “Resort” as the combination of the Mountain and Lodging segments. In the Mountain segment, the Company operates the following 40 destination mountain resorts and regional ski areas:

https://cdn.kscope.io/38868afa70f1787e776459ee27c45271-mtn-20220131_g2.jpg

*Denotes a destination mountain resort, which generally receives a meaningful portion of skier visits from long-distance travelers, as opposed to the Company’s regional ski areas, which tend to generate skier visits predominantly from their respective local markets.

Additionally, the Mountain segment includes ancillary services, primarily including ski school, dining and retail/rental operations, and for the Company’s Australian ski areas, including lodging and transportation operations.

In the Lodging segment, the Company owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand; other strategic lodging properties and a large number of condominiums located in proximity to the Company’s North American mountain resorts; National Park Service (“NPS”) concessionaire properties including the Grand Teton Lodge Company, which operates destination resorts in Grand Teton National Park; a Colorado resort ground transportation company and mountain resort golf courses.

Vail Resorts Development Company, a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate segment, which owns, develops and sells real estate in and around the Company’s resort communities.

The Company’s mountain business and its lodging properties at or around the Company’s mountain resorts are seasonal in nature with peak operating seasons primarily from mid-November through mid-April in North America. The peak operating season at the Company’s Australian resorts, NPS concessionaire properties and golf courses generally occurs from June to early October.

2. Summary of Significant Accounting Policies

Basis of Presentation

Consolidated Condensed Financial Statements — In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to state fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. Results for interim periods are not indicative of the results for the entire fiscal year, particularly given the significant seasonality to the Company’s operating cycle. The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2021. Certain information and footnote disclosures, including significant accounting policies, normally included in fiscal year financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted. The Consolidated Condensed Balance Sheet as of July 31, 2021 was derived from audited financial statements.

Use of Estimates — The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Fair Value of Financial Instruments — The recorded amounts for cash and cash equivalents, restricted cash, trade receivables, other current assets, accounts payable and accrued liabilities approximate fair value due to their short-term nature. The fair value of amounts outstanding under the Company’s credit agreements and the Employee Housing Bonds (as defined in Note 5, Long-Term Debt) approximate book value due to the variable nature of the interest rate associated with the debt. The estimated fair values of the 6.25% Notes and the 0.0% Convertible Notes (each as defined in Note 5, Long-Term Debt) are based on quoted market prices (a Level 2 input). The estimated fair value of the EPR Secured Notes (as defined in Note 5, Long-Term Debt) has been estimated using analyses based on current borrowing rates for debt with similar remaining maturities and ratings (a Level 2 input). The carrying values, including any unamortized premium or discount, and estimated fair values of the 6.25% Notes, 0.0% Convertible Notes and EPR Secured Notes as of January 31, 2022 are presented below (in thousands):


	January 31, 2022
	Carrying Value		Estimated Fair Value
6.25% Notes	$	600,000	$	623,124
0.0% Convertible Notes	$	487,824	$	576,466
EPR Secured Notes	$	134,909	$	203,120

Recently Issued Accounting Standards

Standards Being Evaluated

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU provides optional transition guidance, for a limited time, to companies that have contracts, hedging relationships or other transactions that reference the London Inter-bank Offered Rate (“LIBOR”) or another reference rate which is expected to be discontinued because of reference rate reform. The amendments provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions if certain criteria are met. The amendments in this update are effective as of March 12, 2020 through December 31, 2022. The amendments in this update may be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued. All other amendments should be applied on a prospective basis. The Company is in the process of evaluating the effect that the adoption of this standard will have on its Consolidated Condensed Financial Statements, but does not expect it will have a material effect.

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” which simplifies the guidance in Accounting Standards Codifications (“ASC”) 470-20, “Debt – Debt with Conversion and Other Options” by reducing the number of accounting separation models for convertible instruments, amending the guidance in ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s Own Equity” for certain contracts in an entity’s own equity that are currently accounted for as derivatives, and requiring entities to use the if-converted method for all convertible instruments in the diluted earnings per share (“EPS”) calculation. This standard will be effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years (the Company’s first quarter of the fiscal year ending July 31, 2023). Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years (the Company’s first quarter of the fiscal year ending July 31, 2022). This standard allows for a modified retrospective or fully retrospective method of transition. The Company will adopt ASU 2020-06 on August 1, 2022 and expects to use the modified retrospective method, and therefore financial information for periods before August 1, 2022 will remain unchanged. As a result of the adoption of ASU 2020-06, the Company expects that it will reclassify the equity component of its 0.0% Convertible Notes (as defined in Note 5, Long-Term Debt) to long-term debt, net and it will no longer record interest expense related to the amortization of the debt discount.

3. Revenues

Revenue Recognition

Revenue from the sale of pass products is recognized as lift revenue throughout the ski season, as the Company's performance obligations are satisfied as control of the service (e.g., access to ski areas throughout the ski season) is transferred to customers. In accordance with Topic 606, the Company estimates progress towards satisfaction of its performance obligations using an output method that best depicts the transfer of control of the service to its customers.

Historically, the output method measured progress toward satisfaction of the Company’s performance obligations based on the estimated number of pass product holder visits relative to total expected visits, based on historical data, which the Company believed to provide a faithful depiction of its customers’ pass product usage. When sufficient historical data to determine usage patterns was not available, such as in the case of new product offerings, progress was measured on a straight-line basis throughout the ski season until sufficient historical usage patterns were available. Beginning August 1, 2021, progress towards satisfaction of the Company’s performance obligations for all passes is measured using an output method based on the skiable days of the season to date relative to the total estimated skiable days of the season, which effectively results in revenue being recorded on a straight-line basis throughout the ski season. Total estimated skiable days is based on actual resort opening and estimated closing dates. The Company believes this method best estimates the value transferred to the customer to date relative to the remaining services promised under the contract. Due to the strong correlation between historical pass product usage and skiable days, the change in the Company’s method of estimating progress toward satisfaction of the performance obligation alone does not have a material effect on the recognition pattern of pass product revenue.

Disaggregation of Revenues

The following table presents net revenues disaggregated by segment and major revenue type for the three and six months ended January 31, 2022 and 2021 (in thousands):


	Three Months Ended January 31,				Six Months Ended January 31,
	2022		2021(1)		2022		2021(1)
Mountain net revenue:
Lift	$	521,582	$	430,775	$	535,911	$	463,866
Ski School	92,072		56,390		93,545		58,434
Dining	54,049		32,227		66,569		35,295
Retail/Rental	126,831		90,126		155,207		112,432
Other	39,841		32,460		92,443		71,430
Total Mountain net revenue	$	834,375	$	641,978	$	943,675	$	741,457
Lodging net revenue:
Owned hotel rooms	$	13,584	$	6,708	$	35,067	$	14,073
Managed condominium rooms	33,125		20,336		46,209		29,665
Dining	8,375		2,448		18,650		3,541
Transportation	5,766		2,947		7,559		2,947
Golf	—		—		5,118		3,691
Other	9,269		7,894		21,736		17,266
	70,119		40,333		134,339		71,183
Payroll cost reimbursements	1,861		2,018		3,602		3,221
Total Lodging net revenue	$	71,980	$	42,351	$	137,941	$	74,404
Total Resort net revenue	$	906,355	$	684,329	$	1,081,616	$	815,861
Total Real Estate net revenue	180		315		495		569
Total net revenue	$	906,535	$	684,644	$	1,082,111	$	816,430

(1) Segment results for the three and six months ended January 31, 2021 have been retrospectively adjusted to reflect current period presentation. See Note 10 for additional information.

Contract Balances

Deferred revenue balances of a short-term nature were $611.5 million and $456.5 million as of January 31, 2022 and July 31, 2021, respectively. Deferred revenue balances of a long-term nature, comprised primarily of long-term private club initiation fee revenue, was $120.6 million and $121.0 million as of January 31, 2022 and July 31, 2021, respectively. For the three and six months ended January 31, 2022, the Company recognized approximately $177.6 million and $223.0 million, respectively, of revenue that was included in the deferred revenue balance as of July 31, 2021. As of January 31, 2022, the weighted average remaining period over which revenue for unsatisfied performance obligations on long-term private club contracts will be recognized was approximately 16 years. Trade receivables, net were $167.1 million and $345.4 million as of January 31, 2022 and July 31, 2021, respectively.

Costs to Obtain Contracts with Customers

As of January 31, 2022, $11.7 million of costs to obtain contracts with customers were recorded within other current assets on the Company’s Consolidated Condensed Balance Sheet. The amounts capitalized are subject to amortization generally beginning in the second quarter of fiscal 2022, commensurate with the revenue recognized for related pass products. The Company recorded amortization of $10.0 million and $10.1 million, respectively, for these costs during the three and six months ended January 31, 2022, which was recorded within Mountain and Lodging operating expenses on the Company’s Consolidated Condensed Statement of Operations.

4. Net Income (Loss) per Share

Earnings per Share

Basic EPS excludes dilution and is computed by dividing net income (loss) attributable to Vail Resorts stockholders by the weighted-average shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of Vail Resorts.

In connection with the Company’s acquisition of Whistler Blackcomb in October 2016, the Company issued consideration in the form of shares of Vail Resorts common stock (the “Vail Shares”) and shares of the Company’s wholly-owned Canadian subsidiary (“Exchangeco”). Whistler Blackcomb shareholders elected to receive 3,327,719 Vail Shares and 418,095 shares of Exchangeco (the “Exchangeco Shares”). Both Vail Shares and Exchangeco Shares have a par value of $0.01 per share, and Exchangeco Shares, while outstanding, are substantially the economic equivalent of Vail Shares and are exchangeable, at any time prior to the seventh anniversary of the closing of the acquisition, into Vail Shares. The Company’s calculation of weighted-average shares outstanding includes the Exchangeco Shares.

Presented below is basic and diluted EPS for the three months ended January 31, 2022 and 2021 (in thousands, except per share amounts):



	Three Months Ended January 31,
	2022				2021
	Basic		Diluted		Basic		Diluted
Net income per share:
Net income attributable to Vail Resorts	$	223,391	$	223,391	$	147,798	$	147,798
Weighted-average Vail Shares outstanding	40,505		40,505		40,253		40,253
Weighted-average Exchangeco Shares outstanding	33		33		35		35
Total Weighted-average shares outstanding	40,538		40,538		40,288		40,288
Effect of dilutive securities	—		282		—		521
Total shares	40,538		40,820		40,288		40,809
Net income per share attributable to Vail Resorts	$	5.51	$	5.47	$	3.67	$	3.62

The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period. The number of shares issuable upon the exercise of share-based awards excluded from the calculation of diluted EPS because the effect of their inclusion would have been anti-dilutive totaled approximately zero and 5,000 for the three months ended January 31, 2022 and 2021, respectively.

Presented below is basic and diluted EPS for the six months ended January 31, 2022 and 2021 (in thousands, except per share amounts):



	Six Months Ended January 31,
	2022				2021
	Basic		Diluted		Basic		Diluted
Net income (loss) per share:
Net income (loss) attributable to Vail Resorts	$	84,059	$	84,059	$	(5,968)	$	(5,968)
Weighted-average Vail Shares outstanding	40,460		40,460		40,233		40,233
Weighted-average Exchangeco Shares outstanding	33		33		35