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Acquisitions | 12 Months Ended
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Jul. 31, 2015
Business Acquisition [Line Items] |
Acquisitions | Acquisitions Perisher Ski Resort On March 30, 2015, VR Australia Holdings Pty Limited, a wholly-owned subsidiary of the Company, and Murray Publishers Pty Ltd, Consolidated Press Holdings Pty Limited, Transfield Corporate Pty Limited and Transfield Pty Limited (collectively, “Perisher Sellers”) entered into a Purchase and Sale Agreement (the “Perisher Purchase Agreement”) providing for the acquisition of 100% of the stock and units in the entities that operate Perisher Ski Resort ("Perisher") in New South Wales, Australia. On June 30, 2015, the Company closed on the acquisition of Perisher, for total cash consideration of $124.6 million, net of cash acquired. The Company funded the cash purchase price through borrowings under the revolver portion of its Credit Agreement. Perisher holds a long-term lease and license with the New South Wales Government under the National Parks and Wildlife Act, which expires in 2048 with a 20-year renewal option. As provided under the Perisher Purchase Agreement, the Company acquired the entities that hold the assets, conduct operations and includes the long-term lease and license with the New South Wales government for the ski area and related amenities of Perisher, including assumed liabilities, from Perisher Sellers. The following summarizes the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands).
| Estimates of Fair Value at Effective Date of Transaction
Accounts receivable | $ | 1,494 |
Inventory | 4,859 |
Property, plant and equipment | 126,287 |
Intangible assets | 5,458 |
Other assets | 525 |
Goodwill | 31,657 |
Total identifiable assets acquired | $ | 170,280 |
Accounts payable and accrued liabilities | $ | 11,394 |
Deferred revenue | 15,906 |
Deferred income tax liability, net | 18,429 |
Total liabilities assumed | $ | 45,729 |
Total purchase price, net of cash acquired | $ | 124,551 |
The estimated fair values of assets acquired and liabilities assumed in the acquisition of Perisher are preliminary and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is obtaining additional information necessary to finalize those fair values. Therefore, the preliminary measurements of fair value reflected are subject to change. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The excess of the purchase price over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Perisher and other factors. None of the goodwill is expected to be deductible for income tax purposes under Australian tax law. The intangible assets primarily consist of trademarks and customer lists. The definite-lived intangible assets have a weighted-average amortization period of approximately 4 years. The operating results of Perisher, which are recorded in the Mountain segment, contributed $21.8 million of net revenue for the year ended July 31, 2015. The Company has recognized $5.2 million of transaction related expenses, including duties, in Mountain operating expense in the Consolidated Statements of Operations for the year ended July 31, 2015. Park City On September 11, 2014, VR CPC Holdings, Inc. ("VR CPC"), a wholly-owned subsidiary of the Company, and Greater Park City Company, Powdr Corp., Greater Properties, Inc., Park Properties, Inc., and Powdr Development Company (collectively, “Park City Sellers”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”) providing for the acquisition of substantially all of the assets related to Park City in Park City, Utah. The cash purchase price was $182.5 million and was funded through borrowings under the revolver portion of the Company's senior credit facility. As provided under the Purchase Agreement, the Company acquired the property, assets and operations of Park City, which includes the ski area and related amenities, from Park City Sellers and assumed leases of certain realty, acquired certain assets, and assumed certain liabilities of Park City Sellers relating to Park City. In addition to the Purchase Agreement, the parties settled the litigation related to the validity of a lease of certain land owned by Talisker Land Holdings, LLC under the ski terrain of Park City (the "Park City Litigation"). In connection with settling the Park City Litigation, the Company recorded a non-cash gain of $16.4 million in the Mountain segment for the year ended July 31, 2015. The gain on litigation settlement represents the estimated fair value of the rents (including damages and interest) due the Company from the Park City Sellers for their use of land and improvements from the Canyons transaction date of May 29, 2013 to the Park City acquisition date. Additionally, the Company assigned a fair value of $10.1 million to the settlement of the Park City Litigation that applied to the period prior to the Canyons transaction. The combined fair value of the Park City Litigation settlement of $26.5 million was determined by applying market capitalization rates to the estimated fair market value of the land and improvements, plus an estimate of statutory damages and interest. The estimated fair value of the Park City Litigation settlement was not received in cash, but was instead reflected as part of the cash price negotiated for the Park City acquisition. Accordingly, the estimated fair value of the Park City Litigation settlement was included in the total consideration for the acquisition of Park City. Under an agreement entered into in conjunction with the Canyons transaction as discussed below, the Company made a $10.0 million payment to Talisker in the year ended July 31, 2015, resulting from the settlement of the Park City Litigation. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands).
| Acquisition Date Fair Value
Accounts receivable | $ | 930 |
Other assets | 3,075 |
Property, plant and equipment | 76,605 |
Deferred income tax assets, net | 7,428 |
Real estate held for sale and investment | 7,000 |
Intangible assets | 27,650 |
Goodwill | 92,516 |
Total identifiable assets acquired | $ | 215,204 |
Accounts payable and accrued liabilities | $ | 1,935 |
Deferred revenue | 4,319 |
Total liabilities assumed | $ | 6,254 |
Total purchase price | $ | 208,950 |
During the year ended July 31, 2015, the Company recorded an adjustment in the measurement period to its purchase price allocation of $13.0 million, which reduced real estate held for sale and investment with a corresponding increase to goodwill and will reflect this as a retrospective adjustment as of October 31, 2014. The excess of the purchase price over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Park City and other factors. The majority of goodwill is expected to be deductible for income tax purposes. The intangible assets primarily consist of trademarks, water rights, and customer lists. The intangible assets have a weighted-average amortization period of approximately 46 years at the date of acquisition. The operating results of Park City, which are recorded in the Mountain segment, contributed $67.1 million of net revenue (including an allocation of season pass revenue) for the year ended July 31, 2015. The Company has recognized $0.8 million of transaction related expenses in Mountain operating expense in the Consolidated Condensed Statements of Operations for the year ended July 31, 2015. Certain land and improvements in the Park City ski area (excluding the base area) were part of the Talisker leased premises to Park City and was subject to the Park City Litigation as of the Canyons transaction date, and as such, was recorded as a deposit ("Park City Deposit") for the potential future interests in the land and associated improvements at its estimated fair value in conjunction with the Canyons transaction (refer to the Canyons Transaction Agreement below). Upon settlement of the Park City Litigation, the land and improvements associated with the Talisker leased premises became subject to the Canyons lease, and as a result, the Company reclassified the Park City Deposit to the respective assets within property, plant and equipment in the year ended July 31, 2015. The inclusion of the land and certain land improvements that was subject to the Park City Litigation and now included in the Canyons lease requires no additional consideration from the Company to Talisker, but the financial contribution from the operations of Park City will be included as part of the calculation of EBITDA for the resort operations, and as a result, factor into the participating contingent payments (see Note 9, Fair Value Measurements). The majority of the assets acquired under the Park City acquisition, although not under lease, are subject to the terms and conditions of the Canyons lease. Perisher and Park City Pro Forma Financial Information The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisitions of Perisher and Park City were completed on August 1, 2013. The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment; (ii) amortization of intangible assets recorded at the date of the transactions; (iii) related-party land leases; and (iv) transaction and business integration related costs. This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2013 (in thousands, except per share amounts).
|  | Year Ended July 31,
|  | 2015 | 2014
Pro forma net revenue |  | $ | 1,452,542 |  | $ | 1,383,141 |
Pro forma net income attributable to Vail Resorts, Inc. |  | $ | 120,201 |  | $ | 35,367 |
Pro forma basic net income per share attributable to Vail Resorts, Inc. |  | $ | 3.31 |  | $ | 0.98 |
Pro forma diluted net income per share attributable to Vail Resorts, Inc. |  | $ | 3.21 |  | $ | 0.95 |
Canyons In May 2013, VR CPC and Talisker entered into the Transaction Agreement, the Lease and ancillary transaction documents, pursuant to which the Company assumed the resort operations of Canyons mountain resort in Park City, Utah, which includes the ski area, property management and related amenities. Canyons is a year round mountain resort providing a comprehensive offering of recreational activities, including both snow sports and summer activities. The Lease between VR CPC and Talisker has an initial term of 50 years with six 50-year renewal options. The Lease provides for $25 million in annual payments, which increase each year by an inflation linked index of CPI less 1%, with a floor of 2% per annum. In addition, the Lease includes participating contingent payments (described more fully below). The Parent Company has guaranteed the payments under the Lease. Additionally, the transaction documents set forth the rights and obligations of the parties with respect to the acquisition of certain real estate and personal property, future resort development, access, water rights, intellectual property, transition services, and rights with respect to the Park City Litigation. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands).
| Acquisition Date Fair Value
Accounts receivable | $ | 2,211 |
Other current assets | 1,698 |
Property, plant and equipment | 5,475 |
Property, plant and equipment (under capital lease) | 127,885 |
Deferred income tax assets, net | 11,869 |
Intangible assets | 30,700 |
Park City deposit | 57,800 |
Goodwill | 106,414 |
Total identifiable assets acquired | $ | 344,052 |
Accounts payable and accrued liabilities | $ | 6,723 |
Deferred revenue | 1,134 |
Other liabilities | 21,766 |
Canyons obligation | 305,329 |
Contingent consideration | 9,100 |
Total liabilities assumed | $ | 344,052 |
Land and certain improvements under the Park City ski area was subject to the Park City Litigation at the transaction date. As such, the Company recorded the Park City Deposit for the potential future interests (at the Canyons transaction date) in the land and associated improvements at its estimated fair value at the transaction date. Refer to the discussion on the Park City Deposit above. The excess of the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized was attributable primarily to expected synergies, including the potential inclusion of a portion of the ski terrain of Park City in the Lease, the assembled workforce of Canyons and other factors. The Company believes that for income tax purposes the lease payments should primarily be treated as payments of a debt obligation and that the tax basis of the goodwill is deductible. The intangible assets have a weighted-average amortization period of approximately 50 years (at the transaction date). Additionally, the Company recorded $20.3 million at the transaction date in additional consideration associated with certain Talisker obligations, primarily related to resort development. The following table shows the composition of Canyons property, plant and equipment recorded under capital leases as of July 31, 2015 and 2014:
| July 31,
| 2015 | 2014
Land | $ | 31,818 |  | $ | 18,500 |
Land improvements | 49,228 |  | 29,980 |
Buildings and building improvements | 42,910 |  | 32,800 |
Machinery and equipment | 61,175 |  | 46,605 |
Gross property, plant and equipment | 185,131 |  | 127,885 |
Accumulated depreciation | (17,212 | ) | (7,596 | )
Property, plant and equipment, net | $ | 167,919 |  | $ | 120,289 |
As of July 31, 2015, the Canyons obligation was $317.5 million, which represents the estimated annual lease payments for the remaining initial 50 year term of the lease assuming annual increases at the floor of 2% and discounted using an interest rate of 10%. Future minimum lease payments under the Lease as of July 31, 2015 reflected by fiscal year are as follows (in thousands):
2016 | $ | 26,101 |
2017 | 26,623 |
2018 | 27,156 |
2019 | 27,699 |
2020 | 28,253 |
Thereafter | 1,923,824 |
Total future minimum lease payments | 2,059,656 |
Less amount representing interest | (1,742,201 | )
Net future minimum lease payments | $ | 317,455 |
The Lease also provides for participating contingent payments to Talisker of 42% of the amount by which EBITDA for the resort operations, as calculated under the Lease, exceeds approximately $35 million, with such threshold amount increased by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the Lease by the Company (the "Contingent Consideration"). At the date of the transaction the Company estimated the likelihood and timing of achieving the relevant thresholds for the Contingent Consideration payments. The Company determined the estimated fair value of the Contingent Consideration to be $9.1 million as of the transaction date (see Note 9, Fair Value Measurements). The operating results of Canyons which are recorded in the Mountain and Lodging segments contributed $3.9 million of net revenue for the year ended July 31, 2013. Additionally, the Company recognized $4.4 million of transaction related expenses in the Consolidated Statements of Operations for the year ended July 31, 2013. The following presents the unaudited pro forma consolidated financial information of the Company as if the Canyons transaction was completed on August 1, 2012. The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment; (ii) amortization of intangible assets recorded at the date of the transaction; (iii) interest expense relating to the Canyons obligation; and (iv) transaction and business integration related costs. This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2012 (in thousands, except per share amounts).
| Year Ended July 31,
| 2013
Pro forma net revenue | $ | 1,172,159 |
Pro forma net income (loss) attributable to Vail Resorts, Inc. | $ | 20,714 |
Pro forma basic net income (loss) per share attributable to Vail Resorts, Inc. | $ | 0.58 |
Pro forma diluted net income (loss) per share attributable to Vail Resorts, Inc. | $ | 0.56 |
Urban Ski Areas In December 2012, the Company acquired all of the assets of two ski areas in the Midwest, Afton Alps in Minnesota and Mount Brighton in Michigan, for total cash consideration of $20.0 million, net of cash acquired. The purchase price was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The Company completed its purchase price allocation and recorded $17.8 million in property, plant and equipment, $1.0 million in other assets, $2.0 million in goodwill, $1.0 million in other intangible assets (with a weighted-average amortization period of 10 years), and $1.8 million of assumed liabilities on the date of acquisition. The operating results of Afton Alps and Mount Brighton are reported within the Mountain segment.

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