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Vail Resorts 10-Q 2008

Documents found in this filing:

  1. 10-Q
  2. Ex-10.1
  3. Ex-31.1
  4. Ex-31.2
  5. Ex-32
  6. Ex-32
form10q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2008

¨ 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


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, Suite 1000
Broomfield, Colorado
 
80021
(Address of Principal Executive Offices)
 
(Zip Code)

(303) 404-1800
(Registrant’s Telephone Number, Including Area Code)


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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x                                                                                            Accelerated filer ¨
Non-accelerated filer ¨ (Do not check if a smaller reporting company)             Smaller reporting company ¨

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

As of June 2, 2008, 38,402,203 shares of the registrant’s common stock were outstanding.
 
 
 

 





 
 

 









 
 

 

Consolidated Condensed Balance Sheets
(In thousands, except share and per share amounts)

     
April 30,
     
July 31,
     
April 30,
 
     
2008
     
2007
     
2007
 
     
(Unaudited)
             
(Unaudited)
 
Assets
                       
Current assets:
                       
Cash and cash equivalents
 
$
304,133
   
$
230,819
   
$
316,439
 
Restricted cash
   
60,562
     
54,749
     
40,408
 
Trade receivables, net
   
39,054
     
43,557
     
35,258
 
Inventories, net
   
45,084
     
48,064
     
42,627
 
Other current assets
   
41,846
     
34,448
     
32,833
 
Total current assets
   
490,679
     
411,637
     
467,565
 
Property, plant and equipment, net (Note 5)
   
979,511
     
885,926
     
868,723
 
Real estate held for sale and investment
   
394,008
     
357,586
     
305,085
 
Goodwill, net
   
142,011
     
141,699
     
135,939
 
Intangible assets, net
   
72,597
     
73,507
     
73,199
 
Other assets
   
42,620
     
38,768
     
44,607
 
Total assets
 
$
2,121,426
   
$
1,909,123
   
$
1,895,118
 
                         
Liabilities and Stockholders’ Equity
                       
Current liabilities:
                       
Accounts payable and accrued expenses (Note 5)
 
$
315,373
   
$
281,779
   
$
237,981
 
Income taxes payable
   
25,418
     
37,441
     
11,739
 
Long-term debt due within one year (Note 4)
   
74,192
     
377
     
401
 
Total current liabilities
   
414,983
     
319,597
     
250,121
 
Long-term debt (Note 4)
   
575,275
     
593,733
     
575,162
 
Other long-term liabilities (Note 5)
   
172,380
     
181,830
     
166,382
 
Deferred income taxes
   
129,487
     
72,213
     
130,212
 
Commitments and contingencies (Note 10)
                       
Minority interest in net assets of consolidated subsidiaries
   
33,133
     
27,711
     
30,052
 
Stockholders’ equity:
                       
Preferred stock, $0.01 par value, 25,000,000 shares authorized, zero shares issued and outstanding
   
--
     
--
     
--
 
Common stock, $0.01 par value, 100,000,000 shares authorized, 39,914,385 (unaudited), 39,747,976 and 39,630,543 (unaudited) shares issued as of April 30, 2008, July 31, 2007 and April 30, 2007, respectively
   
399
     
397
     
396
 
Additional paid-in capital
   
543,318
     
534,370
     
529,199
 
Retained earnings
   
319,165
     
205,118
     
239,440
 
Treasury stock (Note 12)
   
(66,714
)
   
(25,846
)
   
(25,846
)
Total stockholders’ equity
   
796,168
     
714,039
     
743,189
 
Total liabilities and stockholders’ equity
 
$
2,121,426
   
$
1,909,123
   
$
1,895,118
 

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
 

Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

   
Three Months Ended
 
   
April 30,
 
     
2008
     
2007
 
Net revenue:
               
Mountain
 
$
325,726
   
$
308,712
 
Lodging
   
43,590
     
43,643
 
Real estate
   
54,474
     
17,134
 
Total net revenue
   
423,790
     
369,489
 
Segment operating expense:
               
Mountain
   
157,807
     
152,997
 
Lodging
   
35,513
     
31,126
 
Real estate
   
53,562
     
25,261
 
Total segment operating expense
   
246,882
     
209,384
 
Other operating (expense) income:
               
Depreciation and amortization
   
(25,471
)
   
(23,513
)
Relocation and separation charges (Note 7)
   
--
     
(166
)
Gain (loss) on disposal of fixed assets, net
   
24
     
(242
)
Income from operations
   
151,461
     
136,184
 
Mountain equity investment income, net
   
698
     
1,660
 
Investment income
   
2,459
     
4,334
 
Interest expense, net
   
(8,441
)
   
(8,039
)
Loss on sale of business (Note 8)
   
--
     
(601
)
Contract dispute charges (Note 10)
   
--
     
(184
)
Gain on put options, net (Note 9)
   
--
     
690
 
Minority interest in income of consolidated subsidiaries, net
   
(4,621
)
   
(5,343
)
Income before provision for income taxes
   
141,556
     
128,701
 
Provision for income taxes
   
(54,215
)
   
(50,193
)
Net income
 
$
87,341
   
$
78,508
 
                 
Per share amounts (Note 3):
               
Basic net income per share
 
$
2.26
   
$
2.02
 
Diluted net income per share
 
$
2.24
   
$
1.99
 

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.

 
 

 

Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

   
Nine Months Ended
 
   
April  30,
 
     
2008
     
2007
 
Net revenue:
               
Mountain
 
$
647,984
   
$
626,902
 
Lodging
   
121,734
     
116,848
 
Real estate
   
111,978
     
100,272
 
Total net revenue
   
881,696
     
844,022
 
Segment operating expense:
               
Mountain
   
401,942
     
392,355
 
Lodging
   
113,530
     
98,233
 
Real estate
   
104,885
     
101,770
 
Total segment operating expense
   
620,357
     
592,358
 
Other operating income (expense):
               
Gain on sale of real property
   
709
     
--
 
Depreciation and amortization
   
(69,854
)
   
(66,857
)
Relocation and separation charges (Note 7)
   
--
     
(1,401
)
Loss on disposal of fixed assets, net
   
(367
)
   
(332
)
Income from operations
   
191,827
     
183,074
 
Mountain equity investment income, net
   
3,592
     
3,990
 
Investment income
   
7,697
     
8,815
 
Interest expense, net
   
(23,620
)
   
(24,885
)
Loss on sale of business (Note 8)
   
--
     
(601
)
Contract dispute credit (charges), net (Note 10)
   
11,920
     
(4,460
)
Gain on put options, net (Note 9)
   
--
     
690
 
Minority interest in income of consolidated subsidiaries, net
   
(7,468
)
   
(9,707
)
Income before provision for income taxes
   
183,948
     
156,916
 
Provision for income taxes
   
(69,901
)
   
(61,197
)
Net income
 
$
114,047
   
$
95,719
 
                 
Per share amounts (Note 3):
               
Basic net income per share
 
$
2.94
   
$
2.47
 
Diluted net income per share
 
$
2.91
   
$
2.44
 

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.

 
 

 

Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)

   
Nine Months Ended
   
April 30,
   
2008
 
2007
Cash flows from operating activities:
               
Net income
 
$
114,047
   
$
95,719
 
Adjustments to reconcile net income to net cash provided by operating activities:
               
Depreciation and amortization
   
69,854
     
66,857
 
Non-cash cost of real estate sales
   
79,244
     
74,683
 
Non-cash stock-based compensation expense
   
6,194
     
5,448
 
Loss on sale of business
   
--
     
601
 
Deferred income taxes, net
   
54,935
     
55,094
 
Minority interest in income of consolidated subsidiaries, net
   
7,468
     
9,707
 
Other non-cash income, net
   
(5,913
)
   
(633
)
Changes in assets and liabilities:
               
Restricted cash
   
(5,813
)
   
(20,086
)
Accounts receivable, net
   
(1,222
)
   
(391
)
Inventories, net
   
2,980
     
(382
)
Investments in real estate
   
(168,964
)
   
(121,114
)
Accounts payable and accrued expenses
   
(26,503
)
   
(24,255
)
Deferred real estate deposits
   
18,869
     
3,737
 
Other assets and liabilities, net
   
1,902
     
19,326
 
Net cash provided by operating activities
   
147,078
     
164,311
 
Cash flows from investing activities:
               
Capital expenditures
   
(112,602
)
   
(82,012
)
Proceeds from sale of business
   
--
     
3,544
 
Purchase of minority interest
   
--
     
(8,387
)
Other investing activities, net
   
2,943
     
453
 
Net cash used in investing activities
   
(109,659
)
   
(86,402
)
Cash flows from financing activities:
               
Repurchases of common stock
   
(40,868
)
   
(15,007
)
Proceeds from borrowings under Non-Recourse Real Estate Financings
   
125,418
     
56,413
 
Payments of Non-Recourse Real Estate Financings
   
(70,226
)
   
(1,493
)
Proceeds from borrowings under other long-term debt
   
70,837
     
56,587
 
Payments of other long-term debt
   
(71,236
)
   
(67,171
)
Proceeds from exercise of stock options
   
1,771
     
9,594
 
Change in overdraft balances
   
21,066
     
13,422
 
Other financing activities, net
   
(867
)
   
(5,609
)
Net cash provided by financing activities
   
35,895
     
46,736
 
Net increase in cash and cash equivalents
   
73,314
     
124,645
 
Cash and cash equivalents:
               
Beginning of period
   
230,819
     
191,794
 
End of period
 
$
304,133
   
$
316,439
 
                 
Cash paid for interest, net of amounts capitalized
 
$
21,205
   
$
26,713
 
Taxes paid, net
 
$
23,503
   
$
6,730
 

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.

 
 

 

Notes to Consolidated Condensed Financial Statements
(Unaudited)

1.           Organization and Business
 
Vail Resorts, Inc. (“Vail Resorts” or the “Parent Company”) is organized as a holding company and operates through various subsidiaries.  Vail Resorts and its subsidiaries (collectively, the “Company”) currently operate in three business segments: Mountain, Lodging and Real Estate.  In the Mountain segment, the Company owns and operates five world-class ski resort properties at the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado and the Heavenly Ski Resort (“Heavenly”) in the Lake Tahoe area of California and Nevada, as well as ancillary businesses, primarily including ski school, dining and retail/rental operations.  These resorts operate primarily on Federal land under the terms of Special Use Permits granted by the USDA Forest Service (the “Forest Service”).  The Company holds a 69.3% interest in SSI Venture, LLC (“SSV”), a retail/rental company.  In the Lodging segment, the Company owns and/or manages a collection of luxury hotels under its RockResorts International, LLC (“RockResorts”) brand, as well as other strategic lodging properties and a large number of condominiums located in proximity to the Company’s ski resorts, the Grand Teton Lodge Company (“GTLC”), which operates three destination resorts at Grand Teton National Park (under a National Park Service concessionaire contract), and golf courses.  Vail Resorts Development Company (“VRDC”), a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate segment, which holds and develops 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 ski resorts are seasonal in nature with peak operating seasons from mid-November through mid-April.  The Company’s operations at GTLC and its golf courses generally operate from mid-May through mid-October.  The Company also has non-majority owned investments in various other entities, some of which are consolidated (see Note 6, Variable Interest Entities).

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 year.  The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended July 31, 2007.  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 United States of America (“GAAP”) have been condensed or omitted.  The July 31, 2007 Consolidated Condensed Balance Sheet was derived from audited financial statements.

2.           Summary of Significant Accounting Policies

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 revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Income Taxes--Effective August 1, 2007, the Company adopted Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  Although the implementation of FIN 48 did not impact the amount of the Company’s liabilities for unrecognized tax benefits, the adoption did result in a reclassification of $2.8 million of liabilities for unrecognized tax benefits from deferred income tax liabilities to other long-term liabilities to conform with the balance sheet presentation requirements of FIN 48.  As of August 1, 2007, the amount of unrecognized tax benefits was $13.0 million, of which $2.8 million would, if recognized, decrease the Company’s effective tax rate.  As allowed under FIN 48, the Company is continuing its policy of accruing income tax related interest and penalties, if applicable, within income tax expense.  As of August 1, 2007, accrued interest, net of tax, was $0.8 million.

During the year ended July 31, 2005, the Company amended previously filed tax returns (for tax years 1997-2002) in an effort to remove restrictions under Section 382 of the Internal Revenue Code on approximately $73.8 million of Federal net operating loss (“NOL”) carryforwards relating to fresh start accounting from the Company’s reorganization in 1992.  During the year ended July 31, 2006, the Internal Revenue Service completed its examination of the Company’s filing position in these amended returns and disallowed the Company’s position to remove the restrictions.  The Company has appealed the examiner’s disallowance of these NOLs to the Office of Appeals. Upon ultimate resolution, the unrecognized tax benefit related to this matter will be resolved as it will result in either payment by the Company, recognition of tax benefits through the utilization of the NOLs, or a combination of both; however, the resolution of this matter is not anticipated to materially impact the Company’s effective tax rate.  The Company anticipates that this matter will be resolved in the next twelve months.

New Accounting Pronouncements--In September 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements.  SFAS 157 does not require any new fair value measurements, but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of the information.  The requirements of SFAS 157 are effective for the Company beginning August 1, 2008 (the Company’s fiscal year ending July 31, 2009).  In February 2008, the FASB issued Staff Position (“FSP”) 157-2, "Effective Date of FASB Statement No. 157".  This FSP delays the effective date of FAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008 (the Company's fiscal year ending July 31, 2010) and interim periods within the fiscal year of adoption.  The Company is in the process of evaluating this guidance and therefore has not yet determined the impact that SFAS 157 will have on the Company’s financial position or results of operations upon adoption.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS 159”).  SFAS 159 gives the Company the irrevocable option to carry many financial assets and liabilities at fair values, with changes in fair value recognized in earnings.  The requirements of SFAS 159 are effective for the Company beginning August 1, 2008 (the Company’s fiscal year ending July 31, 2009), although early adoption is permitted.  The Company is in the process of evaluating this guidance and therefore has not yet determined the impact that SFAS 159 will have on the Company’s financial position or results of operations upon adoption.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination.  SFAS 141R also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination.  SFAS 141R will be applicable prospectively to business combinations consummated after July 31, 2009 (the Company’s fiscal year ending July 31, 2010).

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the balance sheet.  Currently, noncontrolling interests (minority interests) are reported as a liability in the Company’s consolidated balance sheet and the related income (loss) attributable to minority interests is reflected as an expense (credit) in arriving at net income.  Upon adoption of SFAS 160, the Company will be required to report its minority interests as a separate component of stockholders’ equity and present net income allocable to the minority interests along with net income attributable to the stockholders of the Company separately in its consolidated statement of operations.  SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests.  All other requirements of SFAS 160 shall be applied prospectively.  The requirements of SFAS 160 are effective for the Company beginning August 1, 2009 (the Company’s fiscal year ending July 31, 2010).

3.           Net Income Per Common Share

SFAS No. 128, “Earnings Per Share” (“SFAS 128”), establishes standards for computing and presenting earnings per share (“EPS”).  SFAS 128 requires the dual presentation of basic and diluted EPS on the face of the Consolidated Condensed Statements of Operations and requires a reconciliation of numerators (net income (loss)) and denominators (weighted-average shares outstanding) for both basic and diluted EPS in the footnotes.  Basic EPS excludes dilution and is computed by dividing net income (loss) available to holders of common stock by the weighted-average shares outstanding.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of the Company.  Presented below is basic and diluted EPS for the three months ended April 30, 2008 and 2007 (in thousands, except per share amounts):

   
Three Months Ended April 30,
   
2008
 
2007
   
Basic
 
Diluted
 
Basic
 
Diluted
Net income per share:
                               
Net income
 
$
87,341
   
$
87,341
   
$
78,508
   
$
78,508
 
                                 
Weighted-average shares outstanding
   
38,655
     
38,655
     
38,897
     
38,897
 
Effect of dilutive securities
   
--
     
274
     
--
     
532
 
Total shares
   
38,655
     
38,929
     
38,897
     
39,429
 
                                 
Net income per share
 
$
2.26
   
$
2.24
   
$
2.02
   
$
1.99
 

The number of shares issuable on the exercise of share based awards that were excluded from the calculation of diluted net income per share because the effect of their inclusion would have been anti-dilutive totaled 78,000 and zero for the three months ended April 30, 2008 and 2007, respectively.

Presented below is basic and diluted EPS for the nine months ended April 30, 2008 and 2007 (in thousands, except per share amounts):

   
Nine months Ended April 30,
   
2008
 
2007
   
Basic
 
Diluted
 
Basic
Diluted
Net income per share:
                             
Net income
 
$
114,047
   
$
114,047
   
$
95,719
 
$
95,719
 
                               
Weighted-average shares outstanding
   
38,809
     
38,809
     
38,787
   
38,787
 
Effect of dilutive securities
   
--
     
327
     
--
   
502
 
Total shares
   
38,809
     
39,136
     
38,787
   
39,289
 
                               
Net income per share
 
$
2.94
   
$
2.91
   
$
2.47
 
$
2.44
 

The number of shares issuable on the exercise of share based awards that were excluded from the calculation of diluted net income per share because the effect of their inclusion would have been anti-dilutive totaled 81,000 and 33,000 for the nine months ended April 30, 2008 and 2007, respectively.

4.           Long-Term Debt

Long-term debt as of April 30, 2008, July 31, 2007 and April 30, 2007 is summarized as follows (in thousands):

   
April 30,
July 31,
April 30,
 
Maturity (a)
2008
2007
2007
Credit Facility Revolver (b)
2012
$
--
$
--
$
--
SSV Facility
2011
 
--
 
--
 
--
Industrial Development Bonds
2009-2020
 
57,700
 
57,700
 
57,700
Employee Housing Bonds
2027-2039
 
52,575
 
52,575
 
52,575
Non-Recourse Real Estate Financings (c)
2009-2010
 
142,075
 
86,882
 
68,276
6.75% Senior Subordinated Notes (“6.75% Notes”)
2014
 
390,000
 
390,000
 
390,000
Other
2008-2029
 
7,117
 
6,953
 
7,012
Total debt
   
649,467
 
594,110
 
575,563
Less:  Current maturities (d)
   
74,192
 
377
 
401
Long-term debt
 
$
575,275
$
593,733
$
575,162

   
(a)
Maturities are based on the Company’s July 31 fiscal year end.
   
(b)
On March 20, 2008, the Company exercised the accordion feature as provided in the existing Fourth Amended and Restated Credit Agreement, dated as of January 28, 2005, as amended, between The Vail Corporation (a wholly-owned subsidiary of the Company), Bank of America, N.A. as administrative agent and the Lenders party thereto (the “Credit Agreement”), which expanded the borrowing capacity from $300 million to $400 million at the same terms existing in the Credit Agreement.
   
(c)
As of April 30, 2008, Non-Recourse Real Estate Financings consisted of borrowings under the original $175 million construction agreement for Arrabelle at Vail Square, LLC (“Arrabelle”) of $58.8 million and under the original $123 million construction agreement for The Chalets at The Lodge at Vail, LLC (“Chalets”) of $83.3 million.  As of July 31, 2007, Non-Recourse Real Estate Financings consisted of borrowings of $60.5 million under the construction agreement for Arrabelle and $26.4 million under the construction agreement for the Chalets.  As of April 30, 2007, Non-Recourse Real Estate Financings consisted of borrowings of $59.5 million under the construction agreement for Arrabelle and $8.8 million under the construction agreement for the Chalets.  Borrowings under the Non-Recourse Real Estate Financings are due upon the earlier of either the closing of the applicable Arrabelle and Chalets real estate units (of which the amount due is determined by the amount of proceeds received upon closing) or the stated maturity date. The investments in the Arrabelle and Chalets real estate developments, a portion of which will be converted to proceeds upon closing of units, are recorded in Real Estate Held for Sale and Investment.
   
(d)
Current maturities represent principal payments due in the next 12 months.

Aggregate maturities for debt outstanding as of April 30, 2008 reflected by fiscal year are as follows (in thousands):

 
Non-Recourse
Real Estate
Financings
All Other
 
Total
2008
$
--
$
80
$
80
2009
 
58,820
 
15,351
 
74,171
2010
 
83,255
 
349
 
83,604
2011
 
--
 
1,831
 
1,831
2012
 
--
 
305
 
305
Thereafter
 
--
 
489,476
 
489,476
Total debt
$
142,075
$
507,392
$
649,467

The Company incurred gross interest expense of $11.1 million and $10.6 million for the three months ended April 30, 2008 and 2007, respectively, of which $0.6 million and $0.6 million was amortization of deferred financing costs.  The Company capitalized $2.7 million and $2.6 million of interest during the three months ended April 30, 2008 and 2007, respectively.  The Company incurred gross interest expense of $33.9 million and $31.1 million for the nine months ended April 30, 2008 and 2007, respectively, of which $1.8 million and $1.5 million was amortization of deferred financing costs.  The Company capitalized $10.3 million and $6.2 million of interest during the nine months ended April 30, 2008 and 2007, respectively.

5.           Supplementary Balance Sheet Information

The composition of property, plant and equipment, net follows (in thousands):

     
April 30,
 
July 31,
 
April 30,
     
2008
 
2007
 
2007
Land and land improvements
 
$
254,475
   
$
249,291
   
$
248,275
 
Buildings and building improvements
   
653,964
     
553,958
     
538,530
 
Machinery and equipment
   
462,966
     
420,514
     
422,077
 
Furniture and fixtures
   
131,021
     
114,615
     
125,781
 
Software
   
35,811
     
27,756
     
33,123
 
Vehicles
   
28,260
     
27,179
     
27,051
 
Construction in progress
   
54,799
     
71,666
     
59,220
 
 
Gross property, plant and equipment
   
1,621,296
     
1,464,979
     
1,454,057
 
Accumulated depreciation
   
(641,785
)
   
(579,053
)
   
(585,334
)
 
Property, plant and equipment, net
 
$
979,511
   
$
885,926
   
$
868,723
 

The composition of accounts payable and accrued expenses follows (in thousands):

     
April 30,
 
July 31,
 
April 30,
     
2008
 
2007
 
2007
Trade payables
 
$
65,269
   
$
    67,517
   
$
55,606
 
Real estate development payables
   
52,131
     
30,582
     
33,332
 
Deferred revenue
   
29,924
     
36,179
     
21,984
 
Deferred real estate and other deposits
   
89,740
     
51,351
     
46,348
 
Accrued salaries, wages and deferred compensation
   
23,467
     
30,721
     
25,987
 
Accrued benefits
   
27,058
     
23,810
     
29,239
 
Accrued interest
   
6,844
     
14,710
     
6,965
 
Liabilities to complete real estate projects, short term
   
7,327
     
8,500
     
5,436
 
Other accruals
   
13,613
     
18,409
     
13,084
 
 
Total accounts payable and accrued expenses
 
$
315,373
   
$
281,779
   
$
237,981
 

The composition of other long-term liabilities follows (in thousands):

     
April 30,
 
July 31,
 
April 30,
     
2008
 
2007
 
2007
Private club deferred initiation fee revenue
 
$
93,373
   
$
94,205
   
$
94,262
 
Deferred real estate deposits
   
34,997
     
54,363
     
37,120
 
Private club initiation deposits
   
29,579
     
17,767
     
16,302
 
Other long-term liabilities
   
14,431
     
15,495
     
18,698
 
 
Total other long-term liabilities
 
$
172,380
   
$
181,830
   
$
166,382
 

6.           Variable Interest Entities

The Company is the primary beneficiary of four employee housing entities (collectively, the “Employee Housing Entities”), Breckenridge Terrace, LLC, The Tarnes at BC, LLC (“Tarnes”), BC Housing LLC and Tenderfoot Seasonal Housing, LLC, which are Variable Interest Entities (“VIEs”), and has consolidated them in its Consolidated Condensed Financial Statements.  As a group, as of April 30, 2008, the Employee Housing Entities had total assets of $39.1 million (primarily recorded in property, plant and equipment, net) and total liabilities of $68.4 million (primarily recorded in long-term debt as “Employee Housing Bonds”).  All of the assets ($8.1 million as of April 30, 2008) of Tarnes serve as collateral for Tarnes’ Tranche B Employee Housing Bonds.  The Company has issued under its senior credit facility (the “Credit Facility”) $38.3 million letters of credit related to the Tranche A Employee Housing Bonds and $12.6 million letters of credit related to the Tranche B Employee Housing Bonds.  The letters of credit would be triggered in the event that one of the entities defaults on required payments.  The letters of credit have no default provisions.

The Company is the primary beneficiary of Avon Partners II, LLC (“APII”), which is a VIE.  APII owns commercial space and the Company currently leases substantially all of that space.  APII had total assets of $5.5 million (primarily recorded in property, plant and equipment, net) and no debt as of April 30, 2008.

The Company, through various lodging subsidiaries, manages hotels in which the Company has no ownership interest in the entities that own such hotels.  The Company has extended a $2.0 million note receivable to one of these entities.  These entities were formed to acquire, own, operate and realize the value in resort hotel properties.  The Company managed the day-to-day operations of seven hotel properties as of April 30, 2008.  The Company has determined that the entities that own the hotel properties are VIEs, and the management contracts are significant variable interests in these VIEs.  The Company has also determined that it is not the primary beneficiary of these entities and, accordingly, is not required to consolidate any of these entities.  These VIEs had estimated total assets of approximately $246.1 million and total liabilities of approximately $147.2 million.  The Company’s maximum exposure to loss as a result of its involvement with these VIEs is limited to the note receivable and accrued interest of approximately $2.1 million and the net book value of the intangible asset associated with a management agreement in the amount of $0.7 million as of April 30, 2008.

7.           Relocation and Separation Charges

In February 2006, the Company announced a plan to relocate its corporate headquarters; the plan was formally approved by the Company’s Board of Directors in April 2006.  The relocation process (which also included the consolidation of certain other operations of the Company) was completed by July 31, 2007.  The total charges associated with the relocation was $3.8 million of which $0.2 million and $1.4 million was recorded in the three and nine months ended April 30, 2007, respectively.  The above amounts do not reflect any of the anticipated benefits expected to be realized from the relocation and consolidation of offices.

8.           Sale of Business

On April 30, 2007, the Company sold its 54.5% interest in RTP, LLC (“RTP”) to RTP’s minority shareholder for approximately $3.5 million.  As part of this transaction the Company retained source code rights to its internal use software and internet solutions.  The Company recorded a net loss of $0.6 million on the sale of its investment in RTP, which was included in “loss on sale of business” in the accompanying Consolidated Condensed Statements of Operations for the three and nine months ended April 30, 2007.  Additionally, as a result of this transaction the Company recorded a net gain of $0.7 million related to the elimination of the put option liability to RTP’s minority shareholder and the write-off of the associated put option intangible asset (see Note 9, Put and Call Options, for more information on this transaction).

9.           Put and Call Options

The Company holds an approximate 69.3% ownership interest in SSV.  The Company and GSSI LLC (“GSSI”), the minority shareholder in SSV, have remaining put and call rights with respect to SSV: (i) beginning August 1, 2010 and each year thereafter, each of the Company and GSSI have the right to call or put, respectively, 100% of GSSI’s ownership interest in SSV to the Company during certain periods each year and (ii) GSSI has the right to put to the Company 100% of its ownership interest in SSV at any time after GSSI has been removed as manager of SSV or after an involuntary transfer of the Company’s ownership interest in SSV has occurred.  As of April 30, 2008, the estimated price at which the put/call option for the remaining interest could be expected to be settled was $36.9 million.

In March 2001, in connection with the Company’s acquisition of a 51% ownership interest in RTP, the Company and RTP’s minority shareholder entered into a put agreement whereby the minority shareholder could put up to an aggregate one-third of its original 49% interest in RTP to the Company during the period from August 1 through October 31 annually.  The put price was determined primarily by the trailing twelve month EBITDA (as defined in the underlying agreement) for the period ending prior to the beginning of each put period.  The Company had determined that this put option should be marked to fair value through earnings.  The put period was extended in October 2006, and again in February 2007.  In connection with the Company’s sale of its 54.5% interest in RTP (see Note 8, Sale of Business, for more information on this transaction) the put agreement with RTP’s minority shareholder was terminated resulting in the Company recording a net gain of $0.7 million for the three and nine months ended April 30, 2007 related to the elimination of its put option liability net of the write-off of the associated put option intangible asset.

10.           Commitments and Contingencies

Metropolitan Districts

The Company credit-enhances $8.5 million of bonds issued by Holland Creek Metropolitan District (“HCMD”) through an $8.6 million letter of credit issued against the Company’s Credit Facility.  HCMD’s bonds were issued and used to build infrastructure associated with the Company’s Red Sky Ranch residential development.  The Company has agreed to pay capital improvement fees to Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD’s revenue streams from property taxes are sufficient to meet debt service requirements under HCMD’s bonds, and the Company has recorded a liability of $1.7 million, $1.1 million and $1.0 million, primarily within “other long-term liabilities” in the accompanying Consolidated Condensed Balance Sheets, as of April 30, 2008, July 31, 2007 and April 30, 2007, respectively, with respect to the estimated present value of future RSRMD capital improvement fees.  The Company estimates that it will make capital improvement fee payments under this arrangement through the year ending July 31, 2016.

Guarantees

As of April 30, 2008, the Company had various other guarantees, primarily in the form of letters of credit in the amount of $95.7 million, consisting primarily of $51.0 million in support of the Employee Housing Bonds, $36.0 million of construction and development related guarantees and $7.6 million for workers’ compensation and general liability deductibles related to construction and development activities.

In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business which include certain indemnifications within the scope of Financial Interpretations No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events.  These indemnities include indemnities to licensees in connection with the licensees’ use of the Company’s trademarks and logos, indemnities for liabilities associated with the infringement of other parties’ technology and software products, indemnities related to liabilities associated with the use of easements, indemnities related to employment of contract workers, the Company’s use of trustees, indemnities related to the Company’s use of public lands and environmental indemnifications.  The duration of these indemnities generally is indefinite and generally do not limit the future payments the Company could be obligated to make.

As permitted under applicable law, the Company and certain of its subsidiaries indemnify their directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was, serving the Company or its subsidiaries in such a capacity.  The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that should enable the Company to recover a portion of any future amounts paid.

Unless otherwise noted, the Company has not recorded any significant liabilities for the letters of credit, indemnities and other guarantees noted above in the accompanying Consolidated Condensed Financial Statements, either because the Company has recorded on its Consolidated Condensed Balance Sheets the underlying liability associated with the guarantee, the guarantee or indemnification existed prior to January 1, 2003, the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements of FIN 45, or because the Company has calculated the fair value of the indemnification or guarantee to be immaterial based upon the current facts and circumstances that would trigger a payment under the indemnification clause.  In addition, with respect to certain indemnifications it is not possible to determine the maximum potential amount of liability under these guarantees due to the unique set of facts and circumstances that are likely to be involved in each particular claim and indemnification provision.  Historically, payments made by the Company under these obligations have not been material.

As noted above, the Company makes certain indemnifications to licensees in connection with their use of the Company’s trademarks and logos.  The Company does not record any product warranty liability with respect to these indemnifications.

Commitments

In the ordinary course of obtaining necessary zoning and other approvals for the Company’s potential real estate development projects, the Company may contingently commit to the completion of certain infrastructure improvements and other costs related to the projects.  Fulfillment of such commitments is required only if the Company moves forward with the development project.  The determination whether to complete a development project is entirely at the Company’s discretion, and is generally contingent upon, among other considerations, receipt of satisfactory zoning and other approvals and the current status of the Company’s analysis of the economic viability of the project, including the costs associated with the contingent commitments.  The Company currently has obligations, recorded as liabilities in the accompanying Consolidated Condensed Balance Sheet, to complete or fund certain improvements with respect to real estate developments; the Company has estimated such costs to be approximately $7.6 million as of April 30, 2008 and anticipates completion of the majority of these commitments within the next two years.

Self Insurance

The Company is self-insured for claims under its health benefit plans and for workers’ compensation claims, subject to a stop loss policy.  The self-insurance liability related to workers’ compensation is determined actuarially based on claims filed.  The self-insurance liability related to claims under the Company’s health benefit plans is determined based on internal and external analysis of actual claims.  The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued expenses (see Note 5, Supplementary Balance Sheet Information).

Legal

The Company is a party to various lawsuits arising in the ordinary course of business, including Resort (Mountain and Lodging) related cases and contractual and commercial litigation that arises from time to time in connection with the Company’s real estate operations.  Management believes the Company has adequate insurance coverage or has accrued for loss contingencies for all known matters that are deemed to be probable losses and estimable.  As of April 30, 2008, July 31, 2007 and April 30, 2007, the accrual for the above loss contingencies was not material individually and in the aggregate.

Cheeca Lodge & Spa Contract Dispute

In March 2006, RockResorts was notified by the ownership of Cheeca Lodge & Spa, formerly a RockResorts managed property, that its management agreement was being terminated effective immediately.  RockResorts believed that the termination was in violation of the management agreement and sought monetary damages, and recovery of attorney’s fees and costs.  Pursuant to the dispute resolution provisions of the management agreement, the disputed matter went before a single judge arbitrator at the JAMS Arbitration Tribunal in Chicago, Illinois.  On February 28, 2007, the arbitrator rendered a decision, awarding $8.5 million in damages in favor of RockResorts and against Cheeca Holdings, LLC (“Cheeca Holdings”) and recovery of costs and attorney’s fees to be determined in the last stage of the proceedings.  Prior to the ruling by the arbitrator in the last stage of the proceeding, the Company reached a comprehensive settlement with Cheeca Holdings which included damages, attorney’s fees and expenses.  On October 19, 2007, RockResorts received payment of the final settlement from Cheeca Holdings in the amount of $13.5 million, of which $11.9 million (net of final attorney’s fees) is recorded in “contract dispute credit (charges), net” in the Consolidated Condensed Statement of Operations for the nine months ended April 30, 2008.

The Canyons Ski Resort Litigation

During the fourth quarter of the fiscal year ended July 31, 2007, the Company entered into an agreement with Peninsula Advisors, LLC (“Peninsula”) for the negotiation and mutual acquisition of The Canyons ski resort (“The Canyons”) and the land underlying The Canyons.  On July 15, 2007, American Skiing Company (“ASC”) entered into an agreement to sell The Canyons to Talisker Corporation and Talisker Canyons Finance Company, LLC (together “Talisker”).  On July 27, 2007, the Company filed a complaint in the District Court in Colorado against Peninsula and Talisker claiming, among other things, breach of contract by Peninsula and intentional interference with contractual relations and prospective business relations by Talisker and seeking damages, specific performance and injunctive relief.  On October 19, 2007, the Company’s request for a preliminary injunction to prevent the closing of the acquisition by Talisker of The Canyons from ASC was denied.  On November 8, 2007, Talisker filed an answer to the Company’s complaint along with three counterclaims.  On November 12, 2007, Peninsula filed a motion to dismiss and for partial summary judgment.  The Company believes that these counter claims and motions are without merit.  These motions have been set for hearing on June 20, 2008.  The Company is unable to predict the ultimate outcome of the above described actions.

11.           Segment Information

The Company has three reportable segments: Mountain, Lodging and Real Estate.  The Mountain segment includes the operations of the Company’s ski resorts and related ancillary activities.  The Lodging segment includes the operations of all of the Company’s owned hotels, RockResorts, GTLC, condominium management and golf operations.  The Resort segment is the combination of the Mountain and Lodging segments.  The Real Estate segment holds and develops real estate in and around the Company’s resort communities.  The Company’s reportable segments, although integral to the success of the others, offer distinctly different products and services and require different types of management focus.  As such, these segments are managed separately.
 
The Company reports its segment results using Reported EBITDA (defined as segment net revenue less segment operating expenses, plus or minus segment equity investment income or loss, and for the Real Estate segment plus gain on sale of real property) which is a non-GAAP financial measure.  SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” requires the Company to report segment results in a manner consistent with management’s internal reporting of operating results to the chief operating decision maker (Chief Executive Officer) for purposes of evaluating segment performance.  Therefore, since the Company uses Reported EBITDA to measure performance of segments for internal reporting purposes, the Company will continue to use Reported EBITDA to report segment results.

Reported EBITDA is not a measure of financial performance under GAAP.  Items excluded from Reported EBITDA are significant components in understanding and assessing financial performance.  Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity.  Because Reported EBITDA is not a measurement determined in accordance with GAAP and thus is susceptible to varying calculations, Reported EBITDA as presented may not be comparable to other similarly titled measures of other companies.

The Company utilizes Reported EBITDA in evaluating performance of the Company and in allocating resources to its segments.  Mountain Reported EBITDA consists of Mountain net revenue less Mountain operating expense plus Mountain equity investment income.  Lodging Reported EBITDA consists of Lodging net revenue less Lodging operating expense.  Real Estate Reported EBITDA consists of Real Estate net revenue less Real Estate operating expense plus gain on sale of real property.  All segment expenses include an allocation of corporate administrative expense.  Assets are not allocated between segments, or used to evaluate performance, except as shown in the table below.

Following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources (in thousands):

       
Three Months Ended
 
Nine Months Ended
       
April 30,
 
April 30,
       
2008
 
2007
 
2008
 
2007
Net revenue
                             
Lift tickets
$
167,793
   
$
158,380
   
$
301,791
   
$
286,997
 
Ski school
 
46,229
     
44,650
     
81,384
     
78,848
 
Dining
 
30,344
     
28,624
     
58,002
     
54,978
 
Retail/rental
 
59,533
     
53,401
     
149,844
     
141,210
 
Other
 
21,827
     
23,657
     
56,963
     
64,869
 
Total Mountain net revenue
 
325,726
     
308,712
     
647,984
     
626,902
 
Lodging
 
43,590
     
43,643
     
121,734
     
116,848
 
Resort
 
369,316
     
352,355
     
769,718
     
743,750
 
Real Estate
 
54,474
     
17,134
     
111,978
     
100,272
 
Total net revenue
$
423,790
   
$
369,489
   
$
881,696
   
$
844,022
 
Operating expense:
                             
Mountain
$
157,807
   
$
152,997
   
$
401,942
   
$
392,355
 
Lodging
 
35,513
     
31,126
     
113,530
     
98,233
 
Resort
 
193,320
     
184,123
     
515,472
     
490,588
 
Real estate
 
53,562
     
25,261
     
104,885
     
101,770
 
Total segment operating expense
$
246,882
   
$
209,384
   
$
620,357
   
$
592,358
 
Gain on sale of real property
$
--
   
$
--
   
$
709
   
$
--
 
Mountain equity investment income, net
$
698
   
$
1,660
   
$
3,592
   
$
3,990
 
                               
Reported EBITDA:
                             
Mountain
$
168,617
   
$
157,375
   
$
249,634
   
$
238,537
 
Lodging
 
8,077
     
12,517
     
8,204
     
18,615
 
Resort
 
176,694
     
169,892
     
257,838
     
257,152
 
Real Estate
 
912
     
(8,127
)
   
7,802
     
(1,498
)
Total Reported EBITDA
$
177,606
   
$
161,765
   
$
265,640
   
$
255,654
 
                               
Reconciliation to net income:
                             
Total Reported EBITDA
$
177,606
   
$
161,765
   
$
265,640
   
$
255,654
 
Depreciation and amortization
 
(25,471
)
   
(23,513
)
   
(69,854
)
   
(66,857
)
Relocation and separation charges
 
--
     
(166
)
   
--
     
(1,401
)
Gain (loss) on disposal of fixed assets, net
 
24
     
(242
)
   
(367
)
   
(332
)
Investment income
 
2,459
     
4,334
     
7,697
     
8,815
 
Interest expense, net
 
(8,441
)
   
(8,039
)
   
(23,620
)
   
(24,885
)
Loss on sale of business
 
--
     
(601
)
   
--
     
(601
)
Contract dispute (charges) credit, net
 
--
     
(184
)
   
11,920
     
(4,460
)
Gain on put options, net
 
--
     
690
     
--
     
690
 
Minority interest in income of consolidated subsidiaries, net
 
(4,621
)
   
(5,343
)
   
(7,468
)
   
(9,707
)
Income before provision for income taxes
 
141,556
     
128,701
     
183,948
     
156,916
 
 
Provision for income taxes
 
(54,215
)
   
(50,193
)
   
(69,901
)
   
(61,197
)
Net income
$
87,341
   
$
78,508
   
$
114,047
   
$
95,719
 
                               
Real estate held for sale and investment
$
394,008
   
$
305,085
   
$
394,008
   
$
305,085
 

12.           Stock Repurchase Plan

On March 9, 2006, the Company’s Board of Directors approved the repurchase of up to 3,000,000 shares of common stock.  During the three and nine months ended April 30, 2008, the Company repurchased 321,150 and 832,733 shares of common stock at a cost of $15.0 million and $40.9 million, respectively.  Since inception of this stock repurchase plan, the Company has repurchased 1,506,233 shares at a cost of approximately $66.7 million, as of April 30, 2008.  As of April 30, 2008, 1,493,767 shares remained available to repurchase under the existing repurchase authorization.  Shares of common stock purchased pursuant to the repurchase program will be held as treasury shares and may be used for the issuance of shares under the Company’s employee share award plans.

13.           Guarantor Subsidiaries and Non-Guarantor Subsidiaries

The Company’s payment obligations under the 6.75% Notes (see Note 4, Long-Term Debt) are fully and unconditionally guaranteed on a joint and several, senior subordinated basis by substantially all of the Company’s consolidated subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined below), the “Guarantor Subsidiaries”) except for Colter Bay Corporation, Eagle Park Reservoir Company, Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake Lodge, Inc., Mountain Thunder, Inc., SSV, Larkspur Restaurant & Bar, LLC, Vail Associates Investments, Inc., Arrabelle, Gore Creek Place, LLC, Chalets, RCR Vail, LLC, Crystal Peak Lodge of Breckenridge, Inc., Timber Trail, Inc., VR Holdings, Inc. and certain other insignificant entities (together, the “Non-Guarantor Subsidiaries”).  APII and the Employee Housing Entities are included with the Non-Guarantor Subsidiaries for purposes of the consolidated financial information, but are not considered subsidiaries under the indentures governing the 6.75% Notes.

Presented below is the consolidated condensed financial information of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries.  Financial information for the Non-Guarantor subsidiaries is presented in the column titled “Other Subsidiaries.”  Balance sheet data is presented as of April 30, 2008, July 31, 2007 and April 30, 2007.  Statements of operations data is presented for the three and nine months ended April 30, 2008 and 2007.  Statements of cash flows data is presented for the nine months ended April 30, 2008 and 2007.

Investments in subsidiaries are accounted for by the Parent Company and Guarantor Subsidiaries using the equity method of accounting.  Net income (loss) of Guarantor and Non-Guarantor Subsidiaries is, therefore, reflected in the Parent Company’s and Guarantor Subsidiaries’ investments in and advances to (from) subsidiaries.  Net income (loss) of the Guarantor and Non-Guarantor Subsidiaries is reflected in Guarantor Subsidiaries and Parent Company as equity in consolidated subsidiaries.  The elimination entries eliminate investments in Other Subsidiaries and intercompany balances and transactions for consolidated reporting purposes.



 
 

 

Supplemental Condensed Consolidating Balance Sheet
As of April 30, 2008
(in thousands)
(Unaudited)
                                 
             
100% Owned
                 
       
Parent
   
Guarantor
   
Other
   
Eliminating
   
       
Company
   
Subsidiaries
   
Subsidiaries
 
Entries
   
Consolidated
Current assets:
                           
 
Cash and cash equivalents
$
--
 
$
288,205
 
$
15,928
 
$
--
 
$
304,133
 
Restricted cash
 
--
   
10,212
   
50,350
   
--
   
60,562
 
Trade receivables, net
 
--
   
36,711
   
2,343
   
--
   
39,054
 
Inventories, net
 
--
   
9,611
   
35,473
   
--
   
45,084
 
Other current assets
 
17,395
   
15,406
   
9,045
   
--
   
41,846
   
Total current assets
 
17,395
   
360,145
   
113,139
   
--
   
490,679
Property, plant and equipment, net
 
--
   
798,732
   
180,779
   
--
   
979,511
Real estate held for sale and investment
 
--
   
98,314
   
295,694
   
--
   
394,008
Goodwill, net
 
--
   
123,034
   
18,977
   
--
   
142,011
Intangible assets, net
 
--
   
56,715
   
15,882
   
--
   
72,597
Other assets
 
4,114
   
27,991
   
10,515
   
--
   
42,620
Investments in subsidiaries and advances to (from) parent
 
1,327,512
   
527,762
   
(104,346
)
 
(1,750,928
)
 
--
 
Total assets
$
1,349,021
 
$
1,992,693
 
$
530,640
 
$
(1,750,928
)
$
2,121,426
                                 
Current liabilities:
                           
 
Accounts payable and accrued expenses
$
5,859
 
$
186,889
 
$
122,625
 
$
--
 
$
315,373
 
Income taxes payable
 
25,418
   
--
   
--
   
--
   
25,418
 
Long-term debt due within one year
 
--
   
15,028
   
59,164
   
--
   
74,192
   
Total current liabilities
 
31,277
   
201,917
   
181,789
   
--
   
414,983
Long-term debt
 
390,000
   
42,728
   
142,547
   
--
   
575,275
Other long-term liabilities
 
2,089
   
104,422
   
65,869
   
--
   
172,380
Deferred income taxes
 
129,487
   
--
   
--
   
--
   
129,487
Minority interest in net assets of consolidated subsidiaries
 
--
   
--
   
--
   
33,133
   
33,133
Total stockholders’ equity
 
796,168
   
1,643,626
   
140,435
   
(1,784,061
)
 
796,168
   
Total liabilities and stockholders’ equity
$
1,349,021
 
$
1,992,693
 
$
530,640
 
$
(1,750,928
)
$
2,121,426




 
 

 




Supplemental Condensed Consolidating Balance Sheet
As of July 31, 2007
(in thousands)
                                   
           
100% Owned
                     
   
Parent
 
Guarantor
 
Other
 
Eliminating
       
   
Company
 
Subsidiaries
 
Subsidiaries
 
Entries
 
Consolidated
Current assets:
                                       
Cash and cash equivalents
 
$
--
   
$
225,952
   
$
4,867
   
$
--
   
$
230,819
 
Restricted cash
   
--
     
11,437
     
43,312
     
--
     
54,749
 
Trade receivables, net
   
--
     
41,804
     
1,753
     
--
     
43,557
 
Inventories, net
   
--