SEC Filing | Vail Resorts, Inc.

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mtn-20230430

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 April 30, 2023


☐			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/aaccdb7228b3c50aedfa2d770dcf1668-vaila07.jpg

Vail Resorts, Inc.

(Exact Name of Registrant as Specified in Its Charter)


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

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


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

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


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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 June 5, 2023, 38,553,666 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 April 30 , 2023, July 31, 2022 and April 30 , 2022	2
	Consolidated Condensed Statements of Operations for the Three and Nine Months Ended April 3 0 , 2023 and 2022	3
	Consolidated Condensed Statements of Comprehensive Income for the Three and Nine Months Ended April 30 , 2023 and 2022	4
	Consolidated Condensed Statements of Stockholders’ Equity for the Three and Nin e Months Ended April 30 , 2023 and 2022	5
	Consolidated Condensed Statements of Cash Flows for the Nin e Months Ended April 30 , 2023 and 2022	7
	Notes to Consolidated Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42

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)


	April 30, 2023		July 31, 2022		April 30, 2022
Assets
Current assets:
Cash and cash equivalents	$	896,089	$	1,107,427	$	1,401,168
Restricted cash	22,544		18,680		20,795
Trade receivables, net	351,597		383,425		267,111
Inventories, net	103,606		108,723		92,608
Other current assets	108,592		173,277		63,719
Total current assets	1,482,428		1,791,532		1,845,401
Property, plant and equipment, net (Note 7)	2,370,273		2,118,052		2,143,285
Real estate held for sale or investment	90,078		95,983		95,519
Goodwill, net (Note 7)	1,694,033		1,754,928		1,752,533
Intangible assets, net	306,519		314,058		315,025
Operating right-of-use assets	199,990		192,070		196,919
Other assets	56,130		51,405		48,612
Total assets	$	6,199,451	$	6,318,028	$	6,397,294
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 7)	$	868,369	$	942,830	$	742,245
Income taxes payable	49,022		104,275		23,891
Long-term debt due within one year (Note 5)	68,970		63,749		63,736
Total current liabilities	986,361		1,110,854		829,872
Long-term debt, net (Note 5)	2,773,747		2,670,300		2,687,488
Operating lease liabilities	174,363		174,567		176,970
Other long-term liabilities	264,243		246,359		233,689
Deferred income taxes, net	401,240		268,464		404,095
Total liabilities	4,599,954		4,470,544		4,332,114
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, 46,797, 46,744 and 46,715 shares issued, respectively	468		467		467
Exchangeable shares, $0.01 par value, 0, 3 and 31 shares issued and outstanding, respectively (Note 4)	—		—		—
Additional paid-in capital	1,118,221		1,184,577		1,178,495
Accumulated other comprehensive (loss) income	(42,434)		10,923		10,759
Retained earnings	1,080,972		895,889		1,081,510
Treasury stock, at cost, 8,243, 6,466 and 6,306 shares, respectively (Note 11)	(883,309)		(479,417)		(441,914)
Total Vail Resorts, Inc. stockholders’ equity	1,273,918		1,612,439		1,829,317
Noncontrolling interests	325,579		235,045		235,863
Total stockholders’ equity	1,599,497		1,847,484		2,065,180
Total liabilities and stockholders’ equity	$	6,199,451	$	6,318,028	$	6,397,294

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 April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
Net revenue:
Mountain and Lodging services and other	$	1,054,134	$	1,020,544	$	2,166,357	$	1,912,704
Mountain and Lodging retail and dining	184,142		155,992		445,272		345,448
Resort net revenue	1,238,276		1,176,536		2,611,629		2,258,152
Real Estate	155		129		7,967		624
Total net revenue	1,238,431		1,176,665		2,619,596		2,258,776
Operating expense (exclusive of depreciation and amortization shown separately below):
Mountain and Lodging operating expense	462,613		417,422		1,212,115		965,483
Mountain and Lodging retail and dining cost of products sold	63,575		57,174		174,091		135,118
General and administrative	88,860		91,764		304,275		260,259
Resort operating expense	615,048		566,360		1,690,481		1,360,860
Real Estate operating expense	1,679		1,609		9,371		4,590
Total segment operating expense	616,727		567,969		1,699,852		1,365,450
Other operating (expense) income:
Depreciation and amortization	(69,097)		(65,655)		(199,700)		(189,214)
Gain on sale of real property	88		189		845		1,151
Change in estimated fair value of contingent consideration (Note 8)	(45,900)		(2,800)		(47,636)		(21,580)
(Loss) gain on disposal of fixed assets and other, net	(6,269)		(51)		(8,055)		16,163
Income from operations	500,526		540,379		665,198		699,846
Mountain equity investment income, net	94		363		482		2,695
Investment income and other, net	7,740		224		17,734		980
Foreign currency loss on intercompany loans (Note 5)	(1,766)		(1,040)		(5,563)		(3,079)
Interest expense, net	(39,139)		(35,132)		(112,811)		(112,043)
Income before provision for income taxes	467,455		504,794		565,040		588,399
Provision for income taxes	(124,289)		(118,211)		(145,315)		(110,407)
Net income	343,166		386,583		419,725		477,992
Net income attributable to noncontrolling interests	(18,160)		(14,033)		(23,011)		(21,383)
Net income attributable to Vail Resorts, Inc.	$	325,006	$	372,550	$	396,714	$	456,609
Per share amounts (Note 4):
Basic net income per share attributable to Vail Resorts, Inc.	$	8.20	$	9.18	$	9.90	$	11.27
Diluted net income per share attributable to Vail Resorts, Inc.	$	8.18	$	9.16	$	9.87	$	11.20
Cash dividends declared per share	$	2.06	$	1.91	$	5.88	$	3.67

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 April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
Net income	$	343,166	$	386,583	$	419,725	$	477,992
Foreign currency translation adjustments	(36,633)		(15,199)		(71,973)		(48,919)
Change in estimated fair value of hedging instruments, net of tax	(1,920)		10,764		3,300		19,592
Comprehensive income	304,613		382,148		351,052		448,665
Comprehensive income attributable to noncontrolling interests	(13,476)		(9,257)		(7,695)		(9,096)
Comprehensive income attributable to Vail Resorts, Inc.	$	291,137	$	372,891	$	343,357	$	439,569

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 Income (Loss)		Retained Earnings		Treasury Stock		Total Vail Resorts, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Vail Resorts		Exchangeable
Balance, January 31, 2022	$	467	$	—	$	1,172,595	$	10,418	$	786,473	$	(404,411)	$	1,565,542	$	228,142	$	1,793,684
Comprehensive income:
Net income	—		—		—		—		372,550		—		372,550		14,033		386,583
Foreign currency translation adjustments	—		—		—		(10,423)		—		—		(10,423)		(4,776)		(15,199)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		10,764		—		—		10,764		—		10,764
Total comprehensive income													372,891		9,257		382,148
Stock-based compensation expense	—		—		6,029		—		—		—		6,029		—		6,029
Issuance of shares under share award plans, net of shares withheld for employee taxes	—		—		(129)		—		—		—		(129)		—		(129)
Repurchases of common stock (Note 11)	—		—		—		—		—		(37,503)		(37,503)		—		(37,503)
Dividends (Note 4)	—		—		—		—		(77,513)		—		(77,513)		—		(77,513)
Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(1,536)		(1,536)
Balance, April 30, 2022	$	467	$	—	$	1,178,495	$	10,759	$	1,081,510	$	(441,914)	$	1,829,317	$	235,863	$	2,065,180

Balance, January 31, 2023	$	468	$	—	$	1,112,519	$	(8,565)	$	837,573	$	(479,417)	$	1,462,578	$	314,773	$	1,777,351
Comprehensive income:
Net income	—		—		—		—		325,006		—		325,006		18,160		343,166
Foreign currency translation adjustments	—		—		—		(31,949)		—		—		(31,949)		(4,684)		(36,633)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		(1,920)		—		—		(1,920)		—		(1,920)
Total comprehensive income													291,137		13,476		304,613

Stock-based compensation expense	—		—		5,873		—		—		—		5,873		—		5,873
Issuance of shares under share award plans, net of shares withheld for employee taxes	—		—		(171)		—		—		—		(171)		—		(171)
Repurchases of common stock (Note 11)	—		—		—		—		—		(403,892)		(403,892)		—		(403,892)
Dividends (Note 4)	—		—		—		—		(81,607)		—		(81,607)		—		(81,607)


Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(2,670)		(2,670)
Balance, April 30, 2023	$	468	$	—	$	1,118,221	$	(42,434)	$	1,080,972	$	(883,309)	$	1,273,918	$	325,579	$	1,599,497


	Common Stock				Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Treasury Stock		Total Vail Resorts, Inc. Stockholders’ Equity		Noncontrolling Interests		Total Stockholders’ Equity
	Vail Resorts		Exchangeable
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	—		—		—		—		456,609		—		456,609		21,383		477,992
Foreign currency translation adjustments	—		—		—		(36,632)		—		—		(36,632)		(12,287)		(48,919)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		19,592		—		—		19,592		—		19,592
Total comprehensive income													439,569		9,096		448,665

Stock-based compensation expense	—		—		18,933		—		—		—		18,933		—		18,933
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(37,431)		—		—		—		(37,430)		—		(37,430)
Repurchases of common stock (Note 11)	—		—		—		—		—		(37,503)		(37,503)		—		(37,503)
Dividends (Note 4)	—		—		—		—		(148,851)		—		(148,851)		—		(148,851)
Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(7,702)		(7,702)
Balance, April 30, 2022	$	467	$	—	$	1,178,495	$	10,759	$	1,081,510	$	(441,914)	$	1,829,317	$	235,863	$	2,065,180

Balance, July 31, 2022	$	467	$	—	$	1,184,577	$	10,923	$	895,889	$	(479,417)	$	1,612,439	$	235,045	$	1,847,484
Comprehensive income:
Net income	—		—		—		—		396,714		—		396,714		23,011		419,725
Foreign currency translation adjustments	—		—		—		(56,657)		—		—		(56,657)		(15,316)		(71,973)
Change in estimated fair value of hedging instruments, net of tax	—		—		—		3,300		—		—		3,300		—		3,300
Total comprehensive income													343,357		7,695		351,052
Stock-based compensation expense	—		—		19,062		—		—		—		19,062		—		19,062
Issuance of shares under share award plans, net of shares withheld for employee taxes	1		—		(5,352)		—		—		—		(5,351)		—		(5,351)
Repurchases of common stock (Note 11)	—		—		—		—		—		(403,892)		(403,892)		—		(403,892)
Dividends (Note 4)	—		—		—		—		(235,654)		—		(235,654)		—		(235,654)
Cumulative effect of adoption of ASU 2020-06 (Notes 2 & 5)	—		—		(80,066)		—		24,023		—		(56,043)		—		(56,043)
Estimated acquisition date fair value of noncontrolling interests (Note 6)	—		—		—		—		—		—		—		91,524		91,524
Distributions to noncontrolling interests, net	—		—		—		—		—		—		—		(8,685)		(8,685)
Balance, April 30, 2023	$	468	$	—	$	1,118,221	$	(42,434)	$	1,080,972	$	(883,309)	$	1,273,918	$	325,579	$	1,599,497

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)


	Nine Months Ended April 30,
	2023		2022
Cash flows from operating activities:
Net income	$	419,725	$	477,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	199,700		189,214

Stock-based compensation expense	19,062		18,933
Deferred income taxes, net	143,748		127,449
Change in estimated fair value of contingent consideration	47,636		21,580

Other non-cash income, net	(4,703)		(9,368)
Changes in assets and liabilities:
Trade receivables, net	32,665		77,226
Inventories, net	4,850		(11,883)
Accounts payable and accrued liabilities	(2,183)		46,046
Deferred revenue	(62,017)		(137,355)

Income taxes payable	(63,551)		(7,799)
Other assets and liabilities, net	(8,049)		(19,051)
Net cash provided by operating activities	726,883		772,984
Cash flows from investing activities:
Capital expenditures	(261,259)		(161,842)
Return of deposit for acquisition of business	114,506		—
Acquisition of businesses, net of cash acquired	(38,567)		(116,337)
Investments in short-term deposits	(86,756)		—
Maturity of short-term deposits	37,978		—
Other investing activities, net	12,838		22,614
Net cash used in investing activities	(221,260)		(255,565)
Cash flows from financing activities:



Repayments of borrowings under Vail Holdings Credit Agreement	(46,875)		(46,875)
Repayments of borrowings under Whistler Credit Agreement	—		(23,145)
Repayment of EB-5 Development Notes	—		(51,500)
Employee taxes paid for share award exercises	(5,352)		(37,431)
Dividends paid	(235,654)		(148,851)
Repurchases of common stock	(400,000)		(37,503)
Other financing activities, net	(15,295)		(7,348)
Net cash used in financing activities	(703,176)		(352,653)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(9,921)		(1,377)
Net (decrease) increase in cash, cash equivalents and restricted cash	(207,474)		163,389
Cash, cash equivalents and restricted cash:
Beginning of period	1,126,107		1,258,574
End of period	$	918,633	$	1,421,963

Non-cash investing activities:
Accrued capital expenditures	$	20,099	$	13,090

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 41 destination mountain resorts and regional ski areas:

https://cdn.kscope.io/aaccdb7228b3c50aedfa2d770dcf1668-Screenshot 2022-09-09 134820.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”) concessioner 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, and typically experience their peak operating seasons primarily from mid-December through mid-April in North America and Europe. The peak operating season at the Company’s Australian resorts, NPS concessioner 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, 2022. 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, 2022 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 recorded amount of the Company’s NRP Loan (as defined in Note 5, Long-Term Debt), which was assumed by the Company during the nine months ended April 30, 2023 approximates fair value as the debt obligation was recorded at estimated fair value in conjunction with the preliminary purchase accounting for the Andermatt-Sedrun acquisition (see Note 6, Acquisitions). 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 April 30, 2023 are presented below (in thousands):


	April 30, 2023
	Carrying Value		Estimated Fair Value
6.25% Notes	$	600,000	$	605,520
0.0% Convertible Notes	$	575,000	$	519,536
EPR Secured Notes	$	132,904	$	171,442

Recently Issued Accounting Standards

Adopted Standards

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 of ASU 2020-04 were effective as of March 12, 2020. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extended the effective date of the provisions of ASU 2020-04 to December 31, 2024. 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 party to various interest rate swap agreements that hedge the variable interest rate component of underlying cash flows of $400.0 million in principal amount of its Vail Holdings Credit Agreement (as defined in Note 5, Long-Term Debt), which are designated as cash flow hedges. During the nine months ended April 30, 2023, the Company entered into an amendment to its Vail Holdings Credit Agreement (the “Fifth Amendment”) to modify the calculation of interest under the Vail Holdings Credit Agreement from being calculated based on LIBOR to being calculated based on SOFR (see Note 5, Long-Term Debt, for additional information). Subsequent to the Fifth Amendment, the interest rate swaps were also amended to transition from a hedge of LIBOR-based cash flows to a hedge of SOFR-based cash flows. The Company elected certain optional expedients provided by Topic 848, which allowed the Company to not apply certain modification accounting requirements or reassess the previous accounting designation of the interest rate swap agreements as cash flow hedges.

In August 2020, the FASB issued ASU 2020-06, “Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” which simplifies the accounting related to certain convertible debt instruments. The guidance removes certain rules which required separation of the embedded conversion features from the host contract for convertible instruments. The updated guidance requires bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815, “Derivatives and Hedging”, or for convertible debt issued at a substantial premium. The guidance also amends 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. This standard is 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). This standard allows for a modified retrospective or fully retrospective method of transition. The Company adopted ASU 2020-06 on August 1, 2022 using the modified retrospective method, and therefore prior period financial information has not been retrospectively adjusted and continues to be reported under the accounting standards in effect for those periods.

Upon adoption of the standard, the Company reclassified the previously bifurcated equity component of its 0.0% Convertible Notes (as defined in Note 5, Long-Term Debt) to long-term debt, net, as the convertible option on the 0.0% Convertible Notes does not qualify as a derivatives under ASC 815 nor were the 0.0% Convertible Notes issued at a substantial premium. This reclassification was partially offset by an increase to retained earnings to reverse the previously recognized non-cash interest expense, net of tax that had been recorded as a result of amortization of the previously recorded debt discount. The adoption of this new guidance eliminates the recognition of non-cash interest expense in future periods due to the elimination of the debt discount associated with the 0.0% Convertible Notes.

The impact of adoption of ASU 2020-06 on the Consolidated Condensed Balance Sheet as of the adoption date was as follows (in thousands):


	As of August 1, 2022
Balance Sheet	Balances without the Adoption of ASU 2020-06		Adjustments		Balances with the adoption of ASU 2020-06
Liabilities
Long-term debt, net	$	2,670,300	$	74,822	$	2,745,122
Deferred income taxes, net	$	268,464	$	(18,779)	$	249,685
Stockholders’ equity
Additional paid-in capital	$	1,184,577	$	(80,066)	$	1,104,511
Retained earnings	$	895,889	$	24,023	$	919,912

ASU 2020-06 also prohibits the use of the treasury stock method for convertible instruments for the purposes of calculating diluted earnings per share (“EPS”) and instead requires application of the if-converted method. Under the if-converted method, diluted EPS will generally be calculated assuming that all of the convertible debt instruments were converted solely into shares of common stock at the beginning of the reporting period unless the result would be anti-dilutive. Pursuant to the terms of the 0.0% Convertible Notes, the principal amount of the 0.0% Convertible Notes is required to be paid in cash and only the premium due upon conversion, if any, is permitted to be settled in shares, cash or a combination of shares and cash. Consequently, for the Company the if-converted method would produce a similar result as the treasury stock method, which was utilized for the calculation of diluted EPS prior to the adoption of ASU 2020-06 for the 0.0% Convertible Notes.

3. Revenues

Disaggregation of Revenues

The following table presents net revenues disaggregated by segment and major revenue type for the three and nine months ended April 30, 2023 and 2022 (in thousands):


	Three Months Ended April 30,				Nine Months Ended April 30,
	2023		2022		2023		2022
Mountain net revenue:
Lift	$	710,052	$	714,708	$	1,362,195	$	1,250,619
Ski School	145,134		120,897		277,512		214,442
Dining	101,683		79,826		206,953		146,395
Retail/Rental	135,008		126,497		335,284		281,704
Other	52,853		42,707		177,945		135,150
Total Mountain net revenue	$	1,144,730	$	1,084,635	$	2,359,889	$	2,028,310
Lodging net revenue:
Owned hotel rooms	$	15,091	$	18,295	$	52,135	$	53,362
Managed condominium rooms	38,409		37,494		82,604		83,703
Dining	15,422		14,646		45,435		33,296
Transportation	6,924		6,862		14,272		14,421
Golf	—		—		6,072		5,138
Other	12,380		9,925		37,235		31,641
	88,226		87,222		237,753		221,561
Payroll cost reimbursements	5,320		4,679		13,987		8,281
Total Lodging net revenue	$	93,546	$	91,901	$	251,740	$	229,842
Total Resort net revenue	$	1,238,276	$	1,176,536	$	2,611,629	$	2,258,152
Total Real Estate net revenue	155		129		7,967		624
Total net revenue	$	1,238,431	$	1,176,665	$	2,619,596	$	2,258,776

Contract Balances

Deferred revenue balances of a short-term nature were $