SEC Comment Letter for VAIL RESORTS INC (MTN) (CIK 0000812011) (MTN) — Jun 5, 2009
VAIL RESORTS INC (MTN) (CIK 0000812011)
Date: June 5, 2009 · CIK: 0000812011 · Accession: 0000000000-09-030166
AI Filing Summary & Sentiment
File numbers found in text: 001-09614
Referenced dates: May 11, 2009
Letter
Mail Stop 3561 June 5, 2009 Jeffrey W. Jones Chief Financial Officer Vail Resorts, Inc. 390 Interlocken Crescent, Suite 1000 Broomfield, CO 80021
Re: Vail Resorts, Inc. File No. 001-09614 Form 10-K: For the Fiscal Year Ended July 31, 2008 Definitive Proxy Statement on Schedule 14A
Dear Mr. Jones:
We have reviewed your response letter dated May 11, 2009 and have the following comments. Unless otherwise indicated, we believe you should revise future filings in response to these comments. If you disagree, we will consider your explanation as to why a revision is unnecessary. Please be as detailed as necessary in your explanation. In some of our comments, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this information, we may raise additional comments.
The purpose of our review process is to assist you in your compliance with the applicable disclosure requirements and to enhance the overall disclosure in your filings. We look forward to working with you in these respects and welcome any questions. Feel free to call us at the telephone numbers listed at the end of this letter.
Please file your response to our comments via EDGAR, under the label “corresp,” within ten business days from the date of this letter.
Form 10-K: For the fiscal year ended July 31, 2008
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of Operations
Results of Operations General
1. We note your response to our prior comme nt 2. While we acknowledge that your proposed expanded disclosure provides additional information regarding the
Vail Resorts, Inc. June 5, 2009 Page 2 of 6 period-to-period changes in operating expenses incurred by your mountain segment, we believe that you should expa nd your disclosure to (a) also quantify the absolute amount of expe nse recognized for each material cost component and (b) discuss in further detail the underlying drivers of the period-to-period changes in each individually material component of operating expenses. In this regard, please reconsider (i) utilizing tables to identify, quantify and present the material cost components which have been included in each segment’s total operating expense (i.e., the absolute amount of co st incurred and changes in the amounts incurred) and (ii) refocusing the narrative text portion of your disclosure on an analysis of the underlying business reasons and/or industry and operating trends driving the changes in the amounts presented in your tables. Furthermore, please ensure that your narr ative disclosure discusses change s in the costs recognized in the context of the actual drivers. For ex ample, fluctuations in labor and labor related benefit costs would appear to be driven by factors such as changes in staffing levels and wages, rather than sk i school revenue. Please provide us with your proposed disclosure as part of your response.
2. Refer to your response to our prior comme nt number 2. While we acknowledge your statement that your Lodging segment is a relatively small contributor to your Resort EBITDA, we believe that the lodging segment is quantitatively and qualitatively material to your overall operating results due to the seasonality of your overall business operations. In this regard, we note that your mountain segment recognizes significant losses duri ng the quarterly periods ended July 31 and October 31, while the operating resu lts of your lodging segment are more stable. As such, fluctuations in th e lodging segment’s revenues and expenses during those reporting periods can impact the extent to which the lodging segment can help offset the losses generated by your mountain segment. In addition, we acknowledge your statement that operating expenses associated with the Lodging segment are generally more variable and therefore move in correlation with revenue. However, without the quantification of expenses related to infrequent and unusual items, new or disposed propert ies, increased serv ice fees at GTLC, and ordinary operating costs (e.g., labor co sts), it is not clear whether operating expenses have changed due to their vari ability in relation to revenue or other factors. For the reasons mentioned a bove, we believe you should expand your disclosure to (i) specifica lly identify the material components of the operating expenses incurred by your lodging segmen t and (ii) quantif y and analyze the changes in those material cost components . Please provide us with your proposed disclosure as part of your response.
Vail Resorts, Inc. June 5, 2009 Page 3 of 6 Lodging Segment
3. We note your response to our prior comment 4. In this regard, we acknowledge your statement that 50% of the revenue generated by the lodging segment is derived from room rentals, which represents only 7% of your company’s total revenue for the year ended July 31, 2 008. We further acknowledge that the segment’s largest ancillary service genera ted revenue of less than 20% of total lodging revenue and only 3% of total comp any revenue. However, given that the revenue generated by your lodging segment is significantly less seasonal than the revenue generated by your mountain segment, lodging segment revenue comprises a significantly larger percentage of your company’s total revenue during the reporting periods ended on Ju ly 31 and October 31. As such, we believe that a complete understanding of the revenue gene rated by your lodging segment is material to your investors’ understanding of your company’s results of operations – particularly during th e aforementioned reporting periods. Furthermore, we believe that the disc ussion of Lodging revenue generated from sources other than room rentals is mate rial to an understa nding of the overall operating performance of the lodging segment. In this regard, we note that while the revenue from a single ancillary servic e may not be material to total company revenue, it may be material to the total re venue generated by the lodging segment.
Additionally, you state in your response that the lodgi ng segment’s performance is evaluated based upon ADR, occupancy ra te, and RevPAR metrics, not revenue by service type. However, based upon your responses to our prior comment numbers 7 and 8, it is not clear whethe r ancillary revenues generated by the lodging segment are included in the comput ation of such metrics, and as such, whether such metrics reflect the performa nce of your lodging segment in totality. Furthermore, it is unclear how such metr ics provide useful information regarding the lodging revenue generated from sources other than room rentals.
For the reasons noted above, we reissue our prior comment and request that you expand your MD&A disclosure to separa tely discuss the revenue generated by each material product or service offering of your lodging segment – to the extent known. At a minimum, it would appear th at you could separately discuss revenue from owned hotels, managed hotels, managed condominium rooms, and your most significant ancillary services. In addition, please consider whether the revenue generated by each of the Lodging segment’s material product and service offerings should be separately disclose d in the footnotes to your financial statements pursuant to paragraph 37 of SFAS No. 131. Please provide your proposed disclosure as part of your response.
4. We note your response to our prior comme nts 7 and 8. You state that you exclude managed hotel properties from the com putation of ADR and RevPAR because including managed hotel properties woul d skew these financial performance metrics. However, we do not understand how including managed condominium
Vail Resorts, Inc. June 5, 2009 Page 4 of 6 rooms does not skew your metrics, gi ven that the inclusion of managed condominium rooms within the ADR calculation increases your ADR by approximately $46.00 (i.e., 20%). In additi on, we note that it is unclear whether your calculations of ADR and RevPAR incl ude the gross room revenue generated by the managed condominium rooms, or only your proportionate share of such revenue. In this regard, we believe that including th e total revenue generated by managed properties in your calcula tion of ADR and RevPAR would not accurately depict your company’s financia l performance. Furthermore, based upon your response to our prior comment nu mber 8, it appears that excluding the financial data related to managed condominiums from the computation of ADR and RevPAR may provide your investors wi th more useful information regarding the performance of your owned hotels. Given the observations noted above, please explain in further detail why ope rating information related to your owned hotels and managed condominium rooms should be aggregated for purposes of computing ADR and RevPAR and discussi ng the changes in revenue recognized by your lodging segment. In this regar d, please consider provi ding an illustrative example of how your metric s are computed along w ith your explanation. Alternatively, revise your disclosure in future filings to (a) discuss revenue generated from owned properties and mana ged properties on a separate basis and (b) provide financial metrics that you believe appropriately supplement your revised disclosure. Please provide your proposed disclosure as part of your response. Real Estate Segment
5. We note your response to our prior co mment 9, and we acknowledge that your proposed expanded disclosure provides additional information regarding the revenue generated by your different real esta te projects. However, we continue to believe that your expanded disclosure should also analyze and discuss the significant fluctuations in the operating marg ins realized on your real estate sales for fiscal years 2006, 2007, and 2008, as well as the underlying reasons for such fluctuations. For example, please discuss the extent that the operating margins realized by your real estate segment have been impacted by factors including, but not limited to the following, as applicable:
• differences in the types of real estate properties sold during the respective reporting periods (e .g., condos, townhomes, etc.), • differences in the quality of real estate properties sold during the respective reporting periods (e.g., luxury units versus non-luxury units), • differences in the average revenue generated per square foot for the respective reporting periods, and the reasons for such differences (e.g. location, market conditio ns, quality of units),
Vail Resorts, Inc. June 5, 2009 Page 5 of 6 • differences in the overall costs incu rred for your real estate projects, and the reasons for such differences, • the impact of market conditions.
In addition, please expand your disclosure to discuss any known trends that are expected to have a future impact on th e costs incurred for your company’s real estate projects or the operating margins realized on your company’s real estate projects. Please provide us with your proposed disclosure as part of your response. Item 8. Financial Statements and Supplemental Data
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Revenue Recognition
6. We note your response to our prior comment 14. In future filings, please expand your footnote disclosure to include a more detailed discussion of how and when you recognize revenue related to the sale of individual condominium units – similar to that which was provided in your response letter to us dated May 11, 2009.
7. We note from your website that you are offering an incentive, consisting of a social membership to The Arrabelle Club, to new buyers of residence units at the Ritz-Carlton Residences. In this rega rd, please tell us your planned revenue recognition policy for such sales. Additionally, tell us what consideration was given to ETIF 00-21 Revenue Arrangements with Multiple Deliverables in determining your revenue recognition policy for such sales.
Item 15. Exhibits, Financial Statements Schedules
8. We note that you have incorporated by re ference several exhibits, such as the Fourth Amended and Restated Credit Agreement dated January 28, 2005 (Exhibit 10.8(a)) and the Limited Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit Agreement dated March 13, 2007 (Exhibit 10.8(d)). These exhibits do not appear to contain all of the ex hibits and schedules either listed in the table of contents or referred to in the agreement. All exhibits must be filed in full and in clude all attachments, schedul es and exhibits. In your next periodic filing, please refile each e xhibit to include the omitted schedules and exhibits. Further, please confirm that you will file all exhibits in full and include all attachments, schedules and exhibits in future filings.
Definitive Proxy Statement on Schedule 14A
Vail Resorts, Inc. June 5, 2009 Page 6 of 6
Annual Cash Bonus, page 27
9. We note your response to prior comment 20 and the supplemental materials provided to the staff in connection with your response. To the extent that you omit, due to competitive harm, certain targ ets related to VRDC (other than its EBITDA target), please confirm that you will provide in future filings an expanded discussion regarding the level of difficulty you anticipate in achieving the undisclosed targets.
********
We urge all persons who are responsible for the accuracy and adequacy of the disclosure in your filings to be certain that the filings include all information required under the Securities Exchange Act of 1934 and that they have provided all information investors require for an informed investment decision. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy and adequacy of the disclosures they have made. In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in its filings;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement has access to all information you provide to the staff of the Division of Corporation Finance in our review of your filing or in response to our comments on your filing.
You may contact Jeffrey Sears at 202-551-3302 or Aamira Chaudhry at 202-551- 3389 for questions regarding the financial statements and related matters or Chanda DeLong at 202-551-3490 for questions regarding Schedule 14A. You may also call me at 202-551-3380.
Sincerely,
Lyn Shenk
Branch Chief
Show Raw Text
Mail Stop 3561
June 5, 2009
Jeffrey W. Jones
Chief Financial Officer
Vail Resorts, Inc. 390 Interlocken Crescent, Suite 1000
Broomfield, CO 80021
Re: Vail Resorts, Inc.
File No. 001-09614
Form 10-K: For the Fiscal Year Ended July 31, 2008
Definitive Proxy Statement on Schedule 14A
Dear Mr. Jones:
We have reviewed your response letter dated May 11, 2009 and have the following
comments. Unless otherwise indicated, we believe you should revise future filings in response to these comments. If you disagree, we will consider your explanation as to why a
revision is unnecessary. Please be as detailed as necessary in your explanation. In some of
our comments, we may ask you to provide us with information so we may better understand your disclosure. After reviewing this information, we may raise additional comments.
The purpose of our review process is to assist you in your compliance with the
applicable disclosure requirements and to enhance the overall disclosure in your filings. We
look forward to working with you in these respects and welcome any questions. Feel free to call us at the telephone numbers listed at the end of this letter.
Please file your response to our comments via EDGAR, under the label “corresp,”
within ten business days from the date of this letter.
Form 10-K: For the fiscal year ended July 31, 2008
Item 7. Management’s Discussion and Analys is of Financial Condition and Results of
Operations
Results of Operations
General
1. We note your response to our prior comme nt 2. While we acknowledge that your
proposed expanded disclosure provides additional information regarding the
Vail Resorts, Inc.
June 5, 2009
Page 2 of 6
period-to-period changes in operating expenses incurred by your mountain
segment, we believe that you should expa nd your disclosure to (a) also quantify
the absolute amount of expe nse recognized for each material cost component and
(b) discuss in further detail the underlying drivers of the period-to-period changes
in each individually material component of operating expenses. In this regard, please reconsider (i) utilizing tables to identify, quantify and present the material
cost components which have been included in each segment’s total operating expense (i.e., the absolute amount of co st incurred and changes in the amounts
incurred) and (ii) refocusing the narrative text portion of your disclosure on an
analysis of the underlying business reasons and/or industry and operating trends
driving the changes in the amounts presented in your tables. Furthermore, please
ensure that your narr ative disclosure discusses change s in the costs recognized in
the context of the actual drivers. For ex ample, fluctuations in labor and labor
related benefit costs would appear to be driven by factors such as changes in
staffing levels and wages, rather than sk i school revenue. Please provide us with
your proposed disclosure as part of your response.
2. Refer to your response to our prior comme nt number 2. While we acknowledge
your statement that your Lodging segment is a relatively small contributor to your
Resort EBITDA, we believe that the lodging segment is quantitatively and
qualitatively material to your overall operating results due to the seasonality of
your overall business operations. In this regard, we note that your mountain
segment recognizes significant losses duri ng the quarterly periods ended July 31
and October 31, while the operating resu lts of your lodging segment are more
stable. As such, fluctuations in th e lodging segment’s revenues and expenses
during those reporting periods can impact the extent to which the lodging segment
can help offset the losses generated by your mountain segment. In addition, we
acknowledge your statement that operating expenses associated with the Lodging
segment are generally more variable and therefore move in correlation with revenue. However, without the quantification
of expenses related to infrequent
and unusual items, new or disposed propert ies, increased serv ice fees at GTLC,
and ordinary operating costs (e.g., labor co sts), it is not clear whether operating
expenses have changed due to their vari ability in relation to revenue or other
factors. For the reasons mentioned a bove, we believe you should expand your
disclosure to (i) specifica lly identify the material components of the operating
expenses incurred by your lodging segmen t and (ii) quantif y and analyze the
changes in those material cost components . Please provide us with your proposed
disclosure as part of your response.
Vail Resorts, Inc.
June 5, 2009
Page 3 of 6 Lodging Segment
3. We note your response to our prior comment 4. In this regard, we acknowledge
your statement that 50% of the revenue generated by the lodging segment is derived from room rentals, which represents only 7% of your company’s total revenue for the year ended July 31, 2 008. We further acknowledge that the
segment’s largest ancillary service genera ted revenue of less than 20% of total
lodging revenue and only 3% of total comp any revenue. However, given that the
revenue generated by your lodging segment is significantly less seasonal than the
revenue generated by your mountain segment, lodging segment revenue comprises a significantly larger percentage of your company’s total revenue during the reporting periods ended on Ju ly 31 and October 31. As such, we
believe that a complete understanding of the revenue gene rated by your lodging
segment is material to your investors’ understanding of your company’s results of operations – particularly during th e aforementioned reporting periods.
Furthermore, we believe that the disc ussion of Lodging revenue generated from
sources other than room rentals is mate rial to an understa nding of the overall
operating performance of the lodging segment. In this regard, we note that while the revenue from a single ancillary servic e may not be material to total company
revenue, it may be material to the total re venue generated by the lodging segment.
Additionally, you state in your response that the lodgi ng segment’s performance
is evaluated based upon ADR, occupancy ra te, and RevPAR metrics, not revenue
by service type. However, based upon your responses to our prior comment numbers 7 and 8, it is not clear whethe r ancillary revenues generated by the
lodging segment are included in the comput ation of such metrics, and as such,
whether such metrics reflect the performa nce of your lodging segment in totality.
Furthermore, it is unclear how such metr ics provide useful information regarding
the lodging revenue generated from sources other than room rentals.
For the reasons noted above, we reissue our prior comment and request that you
expand your MD&A disclosure to separa tely discuss the revenue generated by
each material product or service offering of your lodging segment – to the extent
known. At a minimum, it would appear th at you could separately discuss revenue
from owned hotels, managed hotels, managed condominium rooms, and your
most significant ancillary services. In addition, please consider whether the
revenue generated by each of the Lodging segment’s material product and service offerings should be separately disclose d in the footnotes to your financial
statements pursuant to paragraph 37 of SFAS No. 131. Please provide your
proposed disclosure as part of your response.
4. We note your response to our prior comme nts 7 and 8. You state that you exclude
managed hotel properties from the com putation of ADR and RevPAR because
including managed hotel properties woul d skew these financial performance
metrics. However, we do not understand how including managed condominium
Vail Resorts, Inc.
June 5, 2009
Page 4 of 6
rooms does not skew your metrics, gi ven that the inclusion of managed
condominium rooms within the ADR calculation increases your ADR by
approximately $46.00 (i.e., 20%). In additi on, we note that it is unclear whether
your calculations of ADR and RevPAR incl ude the gross room revenue generated
by the managed condominium rooms, or only your proportionate share of such revenue. In this regard, we believe that including th e total revenue generated by
managed properties in your calcula tion of ADR and RevPAR would not
accurately depict your company’s financia l performance. Furthermore, based
upon your response to our prior comment nu mber 8, it appears that excluding the
financial data related to managed condominiums from the computation of ADR
and RevPAR may provide your investors wi th more useful information regarding
the performance of your owned hotels. Given the observations noted above,
please explain in further detail why ope rating information related to your owned
hotels and managed condominium rooms should be aggregated for purposes of computing ADR and RevPAR and discussi ng the changes in revenue recognized
by your lodging segment. In this regar d, please consider provi ding an illustrative
example of how your metric s are computed along w ith your explanation.
Alternatively, revise your disclosure in future filings to (a) discuss revenue
generated from owned properties and mana ged properties on a separate basis and
(b) provide financial metrics that you believe appropriately supplement your
revised disclosure. Please provide your proposed disclosure as part of your
response.
Real Estate Segment
5. We note your response to our prior co mment 9, and we acknowledge that your
proposed expanded disclosure provides additional information regarding the
revenue generated by your different real esta te projects. However, we continue to
believe that your expanded disclosure should also analyze and discuss the
significant fluctuations in the operating marg ins realized on your real estate sales
for fiscal years 2006, 2007, and 2008, as well as the underlying reasons for such fluctuations. For example, please discuss the extent that the operating margins realized by your real estate segment have been impacted by factors including, but
not limited to the following, as applicable:
• differences in the types of real estate properties sold during the
respective reporting periods (e .g., condos, townhomes, etc.),
• differences in the quality of real estate properties sold during the
respective reporting periods (e.g., luxury units versus non-luxury
units),
• differences in the average revenue generated per square foot for the
respective reporting periods, and the reasons for such differences (e.g.
location, market conditio ns, quality of units),
Vail Resorts, Inc.
June 5, 2009
Page 5 of 6
• differences in the overall costs incu rred for your real estate projects,
and the reasons for such differences,
• the impact of market conditions.
In addition, please expand your disclosure to discuss any known trends that are expected to have a future impact on th e costs incurred for your company’s real
estate projects or the operating margins realized on your company’s real estate
projects. Please provide us with your proposed disclosure as part of your
response.
Item 8. Financial Statements and Supplemental Data
Notes to Consolidated Financial Statements
2. Summary of Significant Accounting Policies
Revenue Recognition
6. We note your response to our prior comment 14. In future filings, please expand your footnote disclosure to include a more detailed discussion of how and when you recognize revenue related to the sale of individual condominium units –
similar to that which was provided in your response letter to us dated May 11,
2009.
7. We note from your website that you are offering an incentive, consisting of a
social membership to The Arrabelle Club, to new buyers of residence units at the
Ritz-Carlton Residences. In this rega rd, please tell us your planned revenue
recognition policy for such sales. Additionally, tell us what consideration was given to ETIF 00-21 Revenue Arrangements with Multiple Deliverables in
determining your revenue recognition policy for such sales.
Item 15. Exhibits, Financial Statements Schedules
8. We note that you have incorporated by re ference several exhibits, such as the
Fourth Amended and Restated Credit Agreement dated January 28, 2005 (Exhibit
10.8(a)) and the Limited Waiver, Release, and Third Amendment to Fourth Amended and Restated Credit Agreement dated March 13, 2007 (Exhibit 10.8(d)). These exhibits do not appear to contain all of the ex hibits and schedules
either listed in the table of contents or referred to in the agreement. All exhibits
must be filed in full and in clude all attachments, schedul es and exhibits. In your
next periodic filing, please refile each e xhibit to include the omitted schedules and
exhibits. Further, please confirm that you will file all exhibits in full and include
all attachments, schedules and exhibits in future filings.
Definitive Proxy Statement on Schedule 14A
Vail Resorts, Inc.
June 5, 2009 Page 6 of 6
Annual Cash Bonus, page 27
9. We note your response to prior comment 20 and the supplemental materials
provided to the staff in connection with your response. To the extent that you
omit, due to competitive harm, certain targ ets related to VRDC (other than its
EBITDA target), please confirm that you will provide in future filings an expanded discussion regarding the level of difficulty you anticipate in achieving
the undisclosed targets.
********
We urge all persons who are responsible for the accuracy and adequacy of the
disclosure in your filings to be certain that the filings include all information required under
the Securities Exchange Act of 1934 and that they have provided all information investors
require for an informed investment decision. Since the company and its management are in possession of all facts relating to a company’s disclosure, they are responsible for the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please provide, in writing, a
statement from the company acknowledging that:
• the company is responsible for the adequacy and accuracy of the disclosure in its filings;
• staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and
• the company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
In addition, please be advised that the Division of Enforcement has access to all
information you provide to the staff of the Division of Corporation Finance in our review of
your filing or in response to our comments on your filing.
You may contact Jeffrey Sears at 202-551-3302 or Aamira Chaudhry at 202-551-
3389 for questions regarding the financial statements and related matters or Chanda
DeLong at 202-551-3490 for questions regarding Schedule 14A. You may also call me at
202-551-3380.
Sincerely,
Lyn Shenk
Branch Chief