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Fair Value Measurements | 12 Months Ended
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Jul. 31, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements | Fair Value Measurements The Company utilizes FASB issued fair value guidance that establishes how reporting entities should measure fair value for measurement and disclosure purposes. The guidance establishes a common definition of fair value applicable to all assets and liabilities measured at fair value and prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, the Company uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows: Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities; Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and Level 3: Unobservable inputs which are supported by little or no market activity. The table below summarizes the Company’s cash equivalents, other current assets, Interest Rate Swaps and Contingent Consideration (defined below) measured at estimated fair value (all other assets and liabilities measured at fair value are immaterial) (in thousands).
| Estimated Fair Value Measurement as of July 31, 2022
Description | Total | Level 1 | Level 2 | Level 3
Assets: |  |  |  |
Money Market | $ | 505,901 |  | $ | 505,901 |  | $ | — |  | $ | — |
Commercial Paper | $ | 2,401 |  | $ | — |  | $ | 2,401 |  | $ | — |
Certificates of Deposit | $ | 9,473 |  | $ | — |  | $ | 9,473 |  | $ | — |
Interest Rate Swaps | $ | 12,301 |  | $ | — |  | $ | 12,301 |  | $ | — |
Liabilities: |  |  |  |
Contingent Consideration | $ | 42,400 |  | $ | — |  | $ | — |  | $ | 42,400 |
| Estimated Fair Value Measurement as of July 31, 2021
Description | Total | Level 1 | Level 2 | Level 3
Assets: |  |  |  |
Money Market | $ | 253,782 |  | $ | 253,782 |  | $ | — |  | $ | — |
Commercial Paper | $ | 2,401 |  | $ | — |  | $ | 2,401 |  | $ | — |
Certificates of Deposit | $ | 259,945 |  | $ | — |  | $ | 259,945 |  | $ | — |
Liabilities: |  |  |  |
Interest Rate Swaps | $ | 12,942 |  | $ | — |  | $ | 12,942 |  | $ | — |
Contingent Consideration | $ | 29,600 |  | $ | — |  | $ | — |  | $ | 29,600 |
The Company’s cash equivalents, other current assets and Interest Rate Swaps are measured utilizing quoted market prices or pricing models whereby all significant inputs are either observable or corroborated by observable market data. The Company entered into the Interest Rate Swaps to hedge the LIBOR-based variable interest rate component of $400.0 million in principal amount of its Vail Holdings Credit Agreement. Changes in the estimated fair value are recognized in change in estimated fair value of hedging instruments on the Company’s Consolidated Statements of Comprehensive Income. The estimated fair value of the Interest Rate Swaps was included as an asset within deferred charges and other assets as of July 31, 2022, and as a liability within other long-term liabilities as of July 31, 2021, in the Company’s Consolidated Balance Sheets. The changes in Contingent Consideration during the years ended July 31, 2022 and 2021 were as follows (in thousands):
| Contingent Consideration
Balance as of July 31, 2020 | $ | 17,800 |
Payment | (2,602) |
Change in estimated fair value | 14,402 |
Balance as of July 31,2021 | 29,600 |
Payment | (7,480) |
Change in estimated fair value | 20,280 |
Balance as of July 31, 2022 | $ | 42,400 |
The Park City Lease provides for participating contingent payments (the “Contingent Consideration”) to the landlord of 42% of the amount by which EBITDA for the Park City resort operations, as calculated under the Park City Lease, exceeds approximately $35 million, as established at the transaction date, with such threshold amount subsequently increased annually by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the Park City Lease by the Company. The estimated fair value of Contingent Consideration includes the future period resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, which is determined on the basis of estimated subsequent performance, escalated by an assumed long-term growth factor and discounted to net present value. The Company estimated the fair value of the Contingent Consideration payments using an option pricing valuation model. Key assumptions included a discount rate of 11.1%, volatility of 17.0% and future period Park City EBITDA, which are unobservable inputs and thus are considered Level 3 inputs. The Company evaluated the long-term growth assumptions related to future results at Park City as of July 31, 2022. Operating results for the year ended July 31, 2022 were significantly higher than the historical trend for Park City, in part driven by dynamics caused by COVID-19. There is inherent variability in the performance of the Company’s individual resorts, including Park City, and while results for the year ended July 31, 2022 were strong for the resort, the long-term historical average of results continues to support a more normalized growth rate in the valuation. The Company will continue to monitor actual performance compared to its expectations and will update assumptions as appropriate. The Company prepared a sensitivity analysis to evaluate the effect that changes on certain key assumptions would have on the estimated fair value of the Contingent Consideration. A change in the discount rate of 100 basis points or a 5% change in estimated subsequent year performance would result in a change in the estimated fair value within the range of approximately $3.0 million to $6.1 million. Contingent Consideration is classified as a liability and is remeasured to an estimated fair value at each reporting date until the contingency is resolved. During the year ended July 31, 2022, the Company made a payment to the landlord for Contingent Consideration of approximately $7.5 million and recorded an increase in the estimated fair value of approximately $20.3 million which was primarily associated with the estimated Contingent Consideration payment for the fiscal year ended July 31, 2022. These changes resulted in an estimated fair value of the Contingent Consideration of $42.4 million as of July 31, 2022, which is reflected in accounts payable and accrued liabilities and other long-term liabilities in the accompanying Consolidated Balance Sheet.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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