Section 1: 10-K (10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
FORM 10-K
☒☒☒☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2015.
OR
☐☐☐☐ 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 001-35363
Peak Resorts, Inc.
(Exact name of registrant as specified in its charter)
Missouri
(State or other jurisdiction of
incorporation or organization)
17409 Hidden Valley Drive
Wildwood, Missouri
(Address of principal executive offices)
43-1793922
(I.R.S. Employer
Identification No.)
63025
(Zip Code)
(636) 938-7474
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.01 par value NASDAQ Stock Exchange
Securities registered pursuant to section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No ☒☒☒☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒☒☒☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ☒☒☒☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ☒☒☒☒ No ☐
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K
☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.Large accelerated filer ☐
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 ☐ No ☒☒☒☒
As of October 31, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, there was no
established public market for the registrant’s common stock. The registrant’s common stock began trading on The NASDAQ Global
Market on November 21, 2014.
As of June 30, 2015, 13,982,400 shares of the registrant’s common stock were outstanding.
Documents incorporated by reference:
Portions of the registrant’s Definitive Proxy Statement for its 2015 Annual Meeting of Stockholders are incorporated by reference
into Part III of this Annual Report on Form 10-K, to be filed within 120 days of the registrant’s fiscal year ended April 30, 2015.
Table of Contents
PART I
Business.
Risk Factors.
Unresolved Staff Comments.
Properties.
Legal Proceedings.
Mine Safety Disclosures.
PART II
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities.
Selected Financial Data.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.
PART III
Directors, Executive Officers and Corporate Governance.
Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters.
Certain Relationships and Related Transactions, and Director Independence.
Principal Accountant Fees and Services.
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
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43
F - 1
44
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46
Item 15.
Exhibits, Financial Statement Schedules.
46
PART IV
3
Forward-Looking Statements
Except for any historical information contained herein, the matters discussed in this Form 10-K contain certain “forward-looking
statements'' within the meaning of the federal securities laws. This includes statements regarding our future financial position,
economic performance, results of operations, business strategy, budgets, projected costs, plans and objectives of management for
future operations, and the information referred to under “Management's Discussion and Analysis of Financial Condition and Results
of Operations''.
These forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,'' “will,''
“expect,'' “intend,'' “estimate,'' “anticipate,'' “believe,'' “continue'' or similar terminology, although not all forward-looking statements
contain these words, These forward-looking statements are not historical facts, and are based on current expectations, estimates and
projections about our industry, management's beliefs and certain assumptions made by management, many of which, by their nature,
are inherently uncertain and beyond our control, Accordingly, you are cautioned that any such forward-looking statements are not
guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict,
Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date made,
expectations may prove to have been materially different from the results expressed or implied by such forward-looking statements,
Unless otherwise required by law, we also disclaim any obligation to update our view of any such risks or uncertainties or to
announce publicly the result of any revisions to the forward-looking statements made in this Form 10-K, Important factors that could
cause actual results to differ materially from our expectations include, among others:
· weather, including climate change;
· seasonality;
· competition with other indoor and outdoor winter leisure activities and ski resorts;
· the leases and permits for property underlying certain of our ski resorts;
· ability to integrate new acquisitions;
· environmental laws and regulations;
· our dependence on key personnel;
· funds for capital expenditures, including funds raised under the EB-5 program;
· the effect of declining revenues on margins;
· the future development and continued success of our Mount Snow ski resort;
· our reliance on information technology;
· our current dependence on a single lender and the lender's option to purchase certain of our ski resorts;
· our dependence on a seasonal workforce; and
· the securities markets,
You should also refer to Part I, Item 1A, “Risk Factors”, of this Form 10-K for a discussion of factors that may cause our actual
results to differ materially from those expressed or implied by our forward-looking statements, As a result of these factors, we
cannot assure you that the forward-looking statements in this Form 10-K will prove to be accurate, Furthermore, if our forward-
looking statements prove to be inaccurate, the inaccuracy may prove to be material, In light of the significant uncertainties in these
forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that
we will achieve our objectives and plans in any specified time-frame, or at all.
4
Item 1. Business.
General
PART I
Peak Resorts, Inc. was incorporated in Missouri on September 24, 1997 as a holding company to own or lease and operate
day ski and overnight drive ski resorts through its wholly owned subsidiaries. Throughout the history of the Company, including
the development of the Hidden Valley and Snow Creek ski resorts before the incorporation of Peak Resorts, Inc., the Company has
acquired or developed a total of 13 ski resorts. In this annual report, Peak Resorts, Inc., together with its subsidiaries, is referred to as
“we,” “us,” “our” or the “Company.”
On November 20, 2014, we completed our initial public offering of our common stock, selling 10 million shares at $9.00 per
share. After deducting $6.3 million of underwriting discounts and commissions and $1.4 million of offering expenses payable by us,
we received net proceeds of $82.3 million. Our common stock is traded on the NASDAQ Global Market under the symbol “SKIS”.
We are a leading owner and operator of high-quality, individually branded ski resorts in the U.S. We currently operate 13
ski resorts primarily located in the Northeast and Midwest, 12 of which we own. The majority of our resorts are located within 100
miles of major metropolitan markets, including New York City, Boston, Philadelphia, Cleveland and St. Louis, enabling day and
overnight drive accessibility. Our resorts are comprised of nearly 1,650 acres of skiable terrain that appeal to a wide range of ages
and abilities. We offer a breadth of activities, services and amenities, including skiing, snowboarding, terrain parks, tubing, dining,
lodging, equipment rentals and sales, ski and snowboard instruction and mountain biking and other summer activities. We believe
that both the day and overnight drive segments of the ski industry are appealing given their stable revenue base, high margins and
attractive risk-adjusted returns. We have successfully acquired and integrated ten ski resorts since our incorporation in 1997, and we
expect to continue executing this strategy.
We have built an award-winning portfolio of individually branded entertainment properties, most of which are recognized as
leading ski resorts in their respective markets. Our devotion to maintaining high quality standards across our portfolio through
strategic investments and upgrades has created a loyal customer base that contributes to a significant number of repeat visits at
each of our resorts. In particular, our investment over the last decade in the latest high-efficiency snowmaking equipment has earned
us the reputation as an industry leader in snowmaking efficiency, capacity and quality, allowing us to consistently increase skier
visits and revenue per skier. Since 2008, we have invested $57.6 million in capital expenditures and growth initiatives. Our strong
branding reinforces customer loyalty and serves to attract new visitors through focused marketing campaigns and word of mouth.
Combined, our ski resorts generated approximately 1.6 million visits in the 2014/2015 ski season. Revenue for fiscal 2015
was just 0.3 percent below the record level achieved in fiscal 2014, despite weather events that impacted two of the three major
holiday periods of the 2014/2015 ski season and adversely affected the ski industry in general. As the U.S. economy continues to
improve, our resorts are well-positioned to benefit from increased consumer spending on leisure activities, and we expect to continue
to increase our lift ticket prices and drive more skier visits to our resorts. We believe we are better positioned to handle downturns in
the economy than larger, overnight fly ski resorts because of our greater accessibility and lower overall costs to consumers.
The U.S. ski industry is highly fragmented, with less than 13% of the 470 ski resorts being owned by companies with four or
more ski resorts. We believe that our proven ability to efficiently operate multiple resorts as well as our track record of successful
acquisitions has created our reputation in the marketplace as a preferred buyer. We believe that our extensive experience in acquiring
ski resorts and investing in snowmaking, lifts and other skier services, as well as the synergies we create by operating multiple
resorts, drives increased revenues and profitability. Our capabilities serve as a competitive advantage in sourcing and executing
investment opportunities as sellers will often provide us a "first look" at opportunities outside of a broader marketing process,
allowing us to expand both within our existing markets and into new markets.
We and our subsidiaries operate in a single business segment—resort operations. We are not dependent on any single
customer, the loss of which would have a material impact on our financial statements, and we derive no revenue from foreign
sources.
5
Our Resorts
Our 13 ski resorts consist of five overnight drive ski resorts and eight day ski resorts located across six states, ranging from
Missouri to New Hampshire, and appeal to a wide range of visitors. All of our ski resorts employ high-capacity snowmaking
capabilities on over 90% of their terrain as well as food and beverage, equipment rental and retail outlets. All of our properties offer
alternative snow activities, such as terrain parks and tubing, in addition to skiing and snowboarding. The diversity of our services
and amenities allows us to capture a larger proportion of customer spending as well as ensure product and service quality at our
resorts.
The following table summarizes key statistics relating to each of our resorts as of April 30, 2015:
Property
State
Developed/
Acquired
Nearest Metro MSA
Population
Base
(millions)
Skiable
Acres
Total Lifts Vertical Drop
(ft.)
Hidden Valley
Snow Creek
Paoli Peaks
Mad River*
Boston Mills
Brandywine
Crotched Mountain
Jack Frost
Big Boulder
Attitash
Mount Snow
Wildcat Mountain
Alpine Valley
MO
MO
IN
OH
OH
OH
NH
PA
PA
NH
VT
NH
OH
* Leased property
** Marketed with Boston Mills
*** Marketed with Jack Frost
1982
St Louis
Kansas City
Louisville, Nashville
Columbus, Dayton
1985
1997
2001
2002 Cleveland, Akron, Canton
2002
2003
2005 Philadelphia, New York City
2005
2007
***
Boston
New York City, Boston,
Albany
Boston
**
Boston
2010
2012 Cleveland, Akron, Canton
2007
3.9
2.9
3.0
2.8
7.1
**
13.9
27.3
***
13.9
27.4
13.9
7.1
60
40
65
60
40
48
105
80
65
307
490
225
54
9
6
8
12
8
10
5
12
11
11
20
5
7
310
300
300
300
264
264
1,000
600
475
1,750
1,700
2,112
260
We operate some or all of certain of our resorts pursuant to lease agreements with third parties or pursuant to Forest
Service Special Use Permits with the federal government. We own the remaining land underlying our resorts. For a description of our
ownership and use of the land underlying our resorts, see Item 2, “Properties” of this annual report.
Effective October 2010, we acquired Wildcat Mountain ski area through the purchase of the assets of Wildcat Mountain Ski
Area, Inc., Meadow Green-Wildcat Skilift Corp. and Meadow Green-Wildcat Corp. for a total of approximately $5 million. Wildcat
Mountain is located in northern New Hampshire and serves the New Hampshire, Boston, Massachusetts and Rhode Island markets.
Wildcat Mountain is located within 10 miles of the Attitash ski area and gives our skiers the opportunity to use the same lift tickets
and season passes for both Wildcat Mountain and Attitash, thus providing our visitors with more ski choices and opportunities.
In December 2011, we acquired the Jack Frost ski resort through the purchase of the assets of Blue Ridge Real Estate
Company for $5.65 million. Also in December 2011, we purchased the assets of Big Boulder Corporation to acquire the Big Boulder
ski resort, for total consideration of $3.35 million. Prior to that time, we had operated these resorts pursuant to leases since 2005.
In October 2012, we purchased the outstanding common stock of Sycamore Lake, Inc. (doing business as Alpine Valley Ski
Area in Cleveland, Ohio) for $2.6 million. This acquisition enables us to employ pricing strategies and cost synergies with Boston
Mills and Brandywine, our other two Cleveland resorts.
Debt Restructure
On November 10, 2014, in connection with our initial public offering, we entered into a Restructure Agreement (the
“Restructure Agreement”) with certain affiliates of EPR Properties (“EPR”), our primary lender, providing for the (i) prepayment of
approximately $75.8 million of formerly non-prepayable debt secured by the Crotched Mountain, Attitash, Paoli Peaks, Hidden Valley
and Snow Creek resorts and (ii) retirement of one of the notes associated with the future development of Mount Snow (the “Debt
Restructure”). On December 1, 2014, we entered into various agreements in order to effectuate the Debt Restructure, as more fully
described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on
December 5, 2014. Pursuant to the Debt Restructure, we paid a defeasance fee of $5 million to EPR in addition to the consideration
described below.
6
In exchange for the prepayment right, we granted EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big
Boulder and Alpine Valley properties, subject to certain conditions. If EPR exercises a purchase option, EPR will enter into an
agreement with the Company for the lease of each such acquired property for an initial term of 20 years, plus options to extend the
lease for two additional periods of ten years each. All previously existing option agreements between the Company and EPR were
terminated.
Additionally, we agreed to extend the maturity dates on all non-prepayable notes and mortgages secured by the Mount
Snow, Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties remaining after the Debt Restructure by
seven years to December 1, 2034, and to extend the lease for the Mad River property, previously terminating in 2026, until December
31, 2034.
We also granted EPR a right of first refusal to provide all or a portion of the financing associated with any purchase, ground
lease, sale/leaseback, management or financing transaction contemplated by the Company with respect to any new or existing ski
resort property for a period of seven years or until financing provided by EPR for such transactions equals or exceeds $250 million in
the aggregate. Proposed financings from certain types of institutional lenders providing a loan to value ratio of less than 60% (as
relates to the applicable property being financed) are excluded from the right of first refusal. We granted EPR a separate right of first
refusal in the event that the Company wishes to sell, transfer, convey or otherwise dispose of any or all of the Attitash ski resort for
seven years. The Attitash right excludes the financing or mortgaging of Attitash.
In connection with the Debt Restructure, we entered into a Master Credit and Security Agreement with EPR containing
additional terms and conditions governing our restructure debt with EPR, including restrictions on certain transactions and the
payment of dividends and required financial covenants.
Ski Industry
The U.S. ski industry was estimated to total approximately 53.6 million skier visits in the 2014/2015 ski season. The National Ski
Areas Association Kottke National End of Season Survey (Preliminary Report) reported that there were 470 ski resorts operating
during the 2014/2015 ski season in the U.S. Given the consistency and strength of annual skier visits over the last 30 years as well as
the state of the recovering economy, we believe that skier participation will remain strong in the coming years.
The ski industry divides ski resorts into three distinct categories: overnight fly, overnight drive and day ski resorts. Overnight
fly ski resorts are defined as ski resorts which primarily serve skiers who fly or drive considerable distances and stay for multiple
nights. These resorts depend, in large part, on long-distance travel by their visitors and on the development of adjacent real estate
for housing, hospitality and retail uses. Overnight drive ski resorts are ski resorts which primarily serve skiers from the regional drive
market who stay overnight. Day ski resorts are typically located within 50 miles of a major metropolitan statistical area (“MSA”) and
do not generally offer dedicated lodging.
Day and overnight drive ski resorts tend to be smaller in size and are usually located near metropolitan areas. As an owner and
operator of primarily day and overnight drive ski resorts, we focus on selling lift tickets, renting ski equipment, selling ski lessons,
offering food and beverage services and catering to the targeted local market. We target skiers of all levels from beginners who are
skiing for the first time to intermediate and advanced skiers who are honing their skills.
An important statistic used to gauge the performance of companies operating within the ski industry is revenue per skier visit.
The revenue per skier visit of our resorts for the 2007/2008 ski season (the first season subsequent to the Mount Snow and Attitash
acquisitions) to the 2013/2014 ski season increased at a compounded annual growth rate of 3.9% compared to an increase of 2.6% for
the U.S. ski industry for the same period. Revenue per skier visit is calculated as total resort revenue divided by skier visits.
The ski industry statistics stated in the foregoing sections have been derived from data published by the Kottke National End of
Season Survey 2013/2014 and other industry publications, including those of the National Ski Areas Association.
7
Revenue Components
We, like other day ski resorts and overnight drive ski resorts operators, earn our revenues in six principal categories. In
order of their contribution, they are: (i) lift tickets; (ii) food and beverage sales; (iii) equipment rentals; (iv) hotel/lodging; (v) ski
instruction; and (vi) retail. Each revenue center is discussed in more detail below:
Revenues
Lift and tubing tickets
Food and beverage
Equipment rental
Ski instruction
Hotel/lodging
Retail
Other
Year ended April 30,
2014
2015
2013
$
$
50,821 $
18,927
8,017
7,242
7,623
5,261
6,967
104,858 $
51,672 $
18,638
8,584
7,130
7,479
4,811
6,891
105,205 $
50,085
17,339
7,601
6,775
7,156
4,536
6,196
99,688
· Lift tickets— Lift tickets are our most important source of operating revenues. We place heavy emphasis on sales of season
passes and advance group ticket sales to schools, religious organizations and other social groups at a discount. We market
our season passes and advance group ticket sales to our ski visitors and the communities we serve. The cost of lift tickets
at each of our resorts varies according to geographic region, session time and day of the week.
· Food and Beverage Sales—Our facilities generally employ cafeteria-style and self-service options to provide a limited
menu of simple foods, liquor, beer and wine. We try to maximize revenues and simplify operations by focusing on a limited
menu that requires minimal special preparation and related personnel costs.
· Equipment Rentals— Day ski resorts generally attain a higher percentage of rental revenue than overnight fly destination
ski resorts and overnight drive ski resorts because a large majority of day ski resort skiers are novices, who typically do not
own ski equipment. Equipment rental rates generally range between $29 and $39 per person per session. We have focused
on improving our equipment rental facilities to provide quick access to new and high quality equipment, self-service
options with expert advice and fitting available, and immediate access to the lifts and ski instruction areas from the rental
facility. By eliminating the equipment rental bottleneck, we believe that we have significantly enhanced the skiers' resort
experience, which corresponds to increased rental revenues.
· Hotel/Lodging— Because we primarily operate day ski resorts, not all of our resorts offer hotel or other lodging services.
Our hotel/lodging revenue is comprised of the revenue generated by the lodging facilities at our Attitash and Mount Snow
ski resorts. Attitash and Mount Snow each have a Grand Summit Hotel on their properties, in which individuals have
purchased 100% of all available quartershare interval interests, while we retain ownership of common areas of the hotel and
commercial properties. We derive a revenue stream from operating the Grand Summit Hotels' retail, restaurant and
conference facilities, fees for spa and health club services at the Grand Summit Hotels and fees for housekeeping and other
related services, and from renting quartershare interval interests when not in use by their owners. We also manage certain
condominiums located near the Mount Snow ski resort and receive a portion of the rental fees and property management
fees relating to these condominiums. Finally, we own 100% of the Snow Lake Lodge at Mount Snow, which we operate as a
traditional hotel.
· Ski Instruction— Ski instruction is considered important to operations because of the large numbers of novice or early
intermediate skiers who typically visit day ski resorts. We offer low group lesson prices to encourage participation, which
range from $15 and $48 per person per lesson. Individual instructions and private lessons may range from $45 to $105 or
more per lesson.
8
· Retail— Like ski instruction services, retail also represents a relatively small percentage of our total revenues. Some of our
resorts offer a selection of more substantial ski-related equipment, such as boots, skis and snowsuits, while others maintain
only a minimal selection of smaller items, such as gloves and goggles. Merchandise selection and pricing decisions must be
made in light of the local demographic conditions. To facilitate this level of detailed management, local ski resort employees
oversee their merchandise operations as they see fit for their markets. We also lease merchandise operations to third-party
merchants at Boston Mills, Brandywine and Paoli Peaks.
Seasonality
The Company's revenues are highly seasonal in nature. The vast majority of reported revenues are generated during the ski
season, which occurs during the third and fourth fiscal quarters. In an effort to partially counterbalance the concentration of
revenue during the winter months, some of our properties offer non-ski attractions, such as golf, roller coasters, swimming and zip
rides, but these activities do not comprise a substantial portion of our annual revenues. Our resorts typically experience operating
losses and negative cash flows during the first and second quarters of each fiscal year, as a result of the seasonality of our business.
Additionally, operations on certain holidays contribute significantly to the Company's revenues, most notably Christmas,
Dr. Martin Luther King, Jr. Day and Presidents Day. The seasonality of the Company's revenues amplifies the effect on the
Company's revenues, operating earnings and cash flows of events that are outside the Company's control. While the Company's
geographically diverse operating locations help mitigate its effects, adverse weather conditions could limit customer access to the
Company's resorts, render snowmaking wholly or partially ineffective in maintaining ski conditions, cause increased energy use and
other operating costs related to snowmaking efforts and, in general, can result in decreased skier visits regardless of ski conditions.
The opening and closing dates of our ski resorts are dependent upon weather conditions, but our peak ski season generally
runs from early December to mid-April. The following tables illustrate the opening and closing dates for the 2010/2011 through
2014/2015 ski seasons for our 13 ski resorts:
Ski Resort
Attitash
Alpine Valley(1)
Big Boulder
Boston Mills
Brandywine
Crotched Mountain
Hidden Valley
Jack Frost
Mad River
Mount Snow
Paoli Peaks
Snow Creek
Wildcat Mountain
2010/2011 Open Dates
2011/2012 Open Dates
2012/2013 Open Dates
2013/2014 Open Dates
2014/2015 Open Dates
Dec 11 - Apr 3
Nov 25 - Mar 25
Dec 7 - Apr 11
Dec 7 - Apr 6
Dec 6 - Apr 5
—
—
Dec 30 - Mar 3
Dec 28 - Mar 16
Dec 30 - Mar 22
Nov 29 - Apr 10
Dec 11 - Mar 24
Nov 28 - Apr 20
Nov 14 - Apr 6
Nov 20 - Apr 19
Dec 10 - Mar 14
Dec 17 - Mar 10
Dec 28 - Mar 10
Nov 29 - Mar 16
Jan 1 - Mar 22
Dec 11 - Mar 13
Dec 30 - Mar 4
Dec 29 - Mar 30
Dec 14 - Mar 16
Jan 2 - Apr 1
Dec 4 - Apr 3
Dec 17 - Mar 18
Dec 1 - Apr 7
Nov 30 - Mar 30
Nov 28 – Apr 5
Dec 18 - Feb 27
Jan 4 - Feb 26
Dec 23 - Mar 17
Dec 14 - Mar 15
Jan 2 - Mar 8
Dec 11 - Mar 13
Dec 17 - Mar 11
Dec 22 - Mar 31
Dec 7 - Mar 23
Dec 12 - Mar 29
Dec 10 - Mar 6
Dec 17 - Mar 11
Dec 23 - Mar 17
Nov 30 - Mar 16
Dec 20 - Mar 22
Nov 25 - Apr 16
Dec 10 - Mar 25
Nov 22 - Apr 21
Nov 15 - Apr 13
Nov 21 - Apr 19
Dec 17 - Feb 27
Jan 3 - Mar 4
Dec 23 - Mar 10
Dec 14 - Mar 9
Dec 11 - Mar 6
Dec 17 - Mar 4
Dec 22 - Mar 17
Dec 14 - Mar 9
Dec 31 - Mar 8
Dec 31 - Mar 8
Dec 11 - Apr 24
Dec 18 - Apr 15
Nov 22 - Apr 21
Nov 28 - Apr 27
Nov 9 - Apr 30
(1)
Data for Alpine Valley is included for the 2012/2013, 2013/2014 and 2014/2015 ski seasons only, as we acquired the ski resort in November 2012.
Marketing
We promote our resorts through both on-site marketing and external marketing. We encourage visitors to return to our
resorts by offering complimentary skier orientations at our resorts. We also have marketing programs in place directed at attracting
groups, such as religious organizations, social clubs, corporate entities, schools and civic organizations, and we offer discounts to
active military personnel. We believe that these group discounts encourage new participants to try snow
9
sports. Student passes are also sold through schools, and season passes are promoted through targeted direct mail marketing, the
internet and local sporting goods stores.
Each of our resorts also maximizes community awareness through radio, special events and promotions and “free media”
advertising, when possible. We host charity events and tournaments, issue media passes and encourage live radio and television
broadcasts for segments such as weather or sports. For example, events we have hosted include the following: Dew Tour, X-Games,
Tough Mudder, SAM Cutters Camp, Transworld Trans-am Snowboard Event, Mountain Dew Vertical Challenge, NCAA National
Downhill Championships, Special Olympics Games, Military Salutes, and U.S. National Mountain Biking Championships.
Competition
We believe that there are high barriers to entry for new ski resorts due to the limited private lands on which ski resorts can be
developed, the difficulty in getting the necessary government approvals and permits to build on public land and the substantial
capital resources needed to construct the required ski infrastructure. As such, we believe that the risk that our market will become
saturated with new industry participants is relatively low. We believe that our resorts do not directly compete with overnight fly
destination ski resorts, such as the larger ski resorts in Colorado, California, Nevada, Utah and other destination ski resorts
worldwide. Rather, we believe that we compete primarily with other existing day ski resorts, overnight drive ski resorts and non-ski
related day vacations.
Our competition varies by geographical area. While we believe that our Midwestern ski resorts face only limited competition
within their relative metropolitan markets, we are not the only day ski resorts or overnight drive ski resorts in our Northeastern and
Southeastern markets (as defined by the NSAA). We compete with approximately 135 resorts in the Northeastern market and
47 resorts in the Southeastern market.
Competitive Strengths
We believe our strengths are as follows:
•We own a high-quality branded portfolio. We own 12 and operate 13 high-quality ski resorts, each of which is
individually branded and recognized to be a leading ski resort in its respective regional market. Our devotion to maintaining
high quality standards through strategic investments and upgrades has created a loyal customer base at each of our
resorts. Our strong branding reinforces customer loyalty and serves to attract new guests through focused marketing
campaigns and word of mouth.
•We have a history of investing in targeted capital projects to increase profitability. We are continuously evaluating our
property-level performance and are committed to increasing our profitability. Many ski resort operators are unwilling to
invest in improvements due to capital constraints and the perceived risk of such investments. Since 2008, we have invested
$57.6 million throughout our portfolio in an effort to improve the profitability of our ski resorts through energy-efficient
snowmaking machinery, high-speed/high-capacity lifts and additional features such as terrain parks and various other
infrastructure investments. The costs of these improvements are significantly outweighed by the benefits realized, which
include higher quality and less costly snow, shorter lift lines, terrain expansion and customer appreciation. We have found
that the ability to transport customers up the mountain on high-speed chairlifts and to reduce lift lines not only attracts
skiers and promotes a better skiing experience but also leads to higher restaurant and retail sales and increased customer
satisfaction.
•We are an experienced and successful acquirer and integrator. We have grown our Company significantly since
inception by acquiring strategically located ski resorts with the potential for increased revenue growth and margin
expansion. We have successfully acquired and integrated ten ski resorts since 1997. We adhere to a disciplined acquisition
strategy by pursuing opportunities at attractive acquisition prices that can create additional value through operational
improvements and efficiencies. After acquiring a ski resort, we implement a strategic repositioning program designed during
the underwriting process and integrate the resort into our portfolio. We believe that our track record for acquiring and
integrating ski resorts makes us an industry leader and gives us a competitive advantage over other buyers. Our ski resorts
have, on average, achieved compound annual Reported EBITDA growth of 34.4% within two years of our ownership or
operation (EBITDA is defined as net income before interest, income taxes, depreciation and amortization, gain on
sale/leaseback, investment income, other income or expense and other non-recurring items - see Item 7, Management’s
Discussion and Analysis of Financial Condition and
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Results of Operations – Non GAAP Financial Measures” for a definition of Reported EBITDA and reconciliation to net
income (loss)).
•Our experienced senior management team is dedicated to providing a reliable and enjoyable ski experience. Our three
senior executives have almost 60 years of combined experience owning, operating and acquiring ski resorts in the U.S. Since
1982, it has been our vision to offer a reliable and enjoyable skiing experience to our customers. As a result of this vision,
our management team constantly strives to enhance and improve our snowmaking capabilities to ensure our ski resorts
maintain high-quality snow throughout the season. In addition, our management team strives to provide our ski resorts with
a full range of amenities to augment our customers' overall skiing experience.
•Overnight drive and day ski resorts experience lower sensitivity to the economy. We believe our portfolio provides more
attractive risk-adjusted returns than overnight fly resorts due to the stability in our visits. Furthermore, we believe that
customers are more likely to visit overnight drive and day ski resorts during an economic downturn as compared to other
higher cost overnight fly ski resorts, resulting in less sensitivity to downturns in the economy. The revenue per skier visit
of our resorts from the 2007/2008 ski season (the first season subsequent to the Mount Snow and Attitash acquisitions) to
the 2013/2014 ski season increased at a compounded annual growth rate of 3.9% compared to an increase of 2.6% for the
U.S. ski industry for the same period.
•The ski industry possesses high barriers to entry. A limited number of ski resorts have been developed in the past
30 years. Skiable land is scarce and demanding to develop due to the difficulty in aggregating suitable terrain, obtaining
government permitting, resolving accessibility issues and addressing heightened environmental concerns. Operating a ski
resort requires a high level of expertise and strict regulatory and environmental compliance. Additionally, many resorts have
built significant customer loyalty and brand awareness over multiple generations, which can be difficult for a new entrant to
overcome. These factors have contributed to the number of ski resorts decreasing 36%, from 735 in 1984 to 470 in 2015 as
smaller, poorly capitalized resorts have been unable to compete effectively. With our large existing portfolio, proven capital
investment strategy and strong customer loyalty, we believe our Company is competitively well-positioned.
•Our ski resort portfolio is diverse. Our portfolio of 13 ski resorts consists of five overnight drive ski resorts and eight day
ski resorts located across six states ranging from Missouri to New Hampshire. We believe that our portfolio mix enables us
to reach a large customer base seeking high-quality ski resorts within driving distance of major metropolitan areas. Each of
our ski resorts is located within reasonable drive times from major metropolitan areas such as New York City, Boston,
Philadelphia, Cleveland and St. Louis, which we believe provides us with a consistent repeat customer base and increases
our new customer outreach potential. We believe that the size and geographic diversity of our portfolio helps insulate the
Company's financial performance against adverse economic and weather conditions.
•We are a proven operator of ski resorts. We have operated numerous ski resorts since our incorporation in 1997. Due to
our extensive operating expertise, we believe we have a profitable and efficient platform that positions us to take advantage
of growth initiatives and cost controls.
•Alignment of interests between management and new stockholders. Our management team owns approximately 16.1% of
our outstanding shares. We believe that this substantial ownership position aligns the interest of our operating team with
that of our new stockholders.
Intellectual Property
We understand the importance to the sales and marketing of our resorts that a strong brand can maintain. Wildcat Mountain
Ski Area , Mount Snow®, Boston Mills Ski Resort
, Hidden Valley , Crotched Mountain Ski Area and Alpine Valley are
trademarks, service marks and trade names owned by certain subsidiaries of Peak Resorts, Inc.
SM
SM
SM
SM
Regulation and Legislation
The 1986 Ski Area Permit Act and Master Development Plans
The 1986 Ski Area Permit Act (the "1986 Act") allows the Forest Service to grant Term Special Use Permits for the operation of
ski resorts and construction of related facilities on National Forest lands. In addition, the permits granted to our
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ski resorts under the 1986 Act require a Master Development Plan for each ski resort that is granted a Special Use Permit. Of our 13
resorts, only portions of Attitash and Mount Snow and all of Wildcat Mountain operate under Special Use Permits. The ski-able
terrain at our other resorts is located on land that we own or lease from non-government third parties.
Each area of National Forest land is required by the National Forest Management Plan to develop and maintain a Land and
Resource Management Plan, which establishes standards and guidelines for the Forest Service to follow and consider in reviewing
and approving our proposed actions. Under the 1986 Act, the Forest Service has the right to review and approve the locations,
design and construction of improvements in the permit area and many operational matters.
The Special Use Permits expire as follows: Attitash ski resort—April 4, 2047; Mount Snow ski resort—April 4, 2047; and Wildcat
Mountain ski resort—November 18, 2050. We intend to request a new Special Use Permit for each resort as provided by the Forest
Service regulations and terms of each existing Special Use Permit. To our knowledge, the Forest Service has never refused to issue a
new Special Use Permit to replace an existing Special Use Permit for a ski resort in operation at the time of expiration.
Each Special Use Permit contains requirements and obligations on our part, including that we indemnify the Forest Service from
third-party claims arising out of our operation under the Special Use Permit and that we comply with all applicable laws. We pay a fee
to the Forest Service for the Special Use Permit which, pursuant to the terms of each Special Use Permit, could range from 1.5% to
4.0% of sales for services on Forest Service land. Historically we have paid fees ranging from 1.5% to 2.5% of sales for services on
Forest Service land and do not expect that this will change in the near future. Included in the calculation are sales from lift tickets,
season passes, ski instructions, food and beverages, equipment rental, merchandise, and other ancillary services.
The Special Use Permits may be amended by mutual agreement between us and the Forest Service to change the applicable ski
resort or permitted uses. The Forest Service may also modify the Special Use Permit to accommodate changes in plans or operations.
Permit amendments must be consistent with the Forest Plan and are subject to the provisions of the National Environmental Policy
Act ("NEPA").
The Forest Service may also terminate a Special Use Permit if it determines that termination is required for specific compelling
reasons. However, to our knowledge, no Special Use Permit has ever been terminated by the Forest Service without the consent of
the operator.
We must propose a Master Development Plan for all improvements that we intend to make on National Forest lands and submit
such plans to the Forest Service for review and acceptance. Once the Forest Service accepts a Master Development Plan, individual
projects contemplated by the Master Development Plan will only be approved by the Forest Service upon separate applications that
meet the requirements set forth by the Forest Service, including the requirements contained in the Special Use Permit.
National Environmental Policy Act
Under NEPA, our major proposed actions on all National Forest land, such as the expansion of a ski resort or installation of new
snowmaking equipment, must be assessed to determine the environmental impacts of such actions. Upon our application to the
Forest Service to undertake major projects, the Forest Service must conduct an environmental study, which can impact the time it
takes to complete a project. During these studies, the Forest Service is required to consider alternatives to proposed actions and the
impacts that may be unavoidable. We may not get the Forest Service's approval to undertake a project or may be required to take
alternative action, depending on the results of the environmental studies.
Underground Storage Tank Regulations
We have underground storage tanks ("USTs") on our ski resort properties in Ohio, New Hampshire, Pennsylvania and Vermont
for the purpose of storing gasoline, fuel oil and propane that we use in the operation of our resorts, lodges and skier service
buildings. The federal Solid Waste Disposal Act gives the Environmental Protection Agency ("EPA") the authority to regulate
USTs. State UST programs that are at least as strict as the federal regulations and that have been approved by the EPA govern the
USTs in lieu of the federal regulations. The objectives of the state UST programs are to ensure that:
•USTs are properly constructed and designed in accordance with recognized industry standards;
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•installations, repairs and removals are conducted and inspected by qualified and trained individuals;
•active USTs are properly operated and monitored for the release of substances; and
•upon closure, USTs are properly decommissioned and sites are assessed for contamination.
We believe that the USTs at our facilities meet all state and federal construction and operation standards. Compliance with these
UST regulations has not had a material impact on our capital expenditures, earnings or competitive position, and we do not expect it
to have a material impact in the future.
Employees
We, together with our operating subsidiaries, currently employ approximately 450 year-round employees. During the height of
our ski season, we employ approximately 7,200 seasonal employees.
Availability of Information
Our principal executive offices are located at 17409 Hidden Valley Drive, Wildwood, Missouri 63025, telephone (636) 938-
7474. We maintain a website at www.peakresorts.com. We make available on our website, free of charge, the Company's annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K as soon as practicable after we file these
reports with the SEC. Reports filed with the SEC can be read or copied at the SEC’s Public Reference Room at 100 F Street, NE.,
Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-
800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC (http://www.sec.gov).
Item 1A. RISK FACTORS.
You should carefully read and consider the risks described below, together with all of the other information set forth in
this annual report on Form 10-K. Our business, results of operations, financial condition, cash flows and the trading price of our
common stock could be materially and adversely harmed by any of the following risks. Additional risks not presently known to us
or that we currently believe are immaterial may also significantly impair our business operations.
Risks Related to the Company
Our industry is sensitive to weakness in the economy, and we are subject to risks associated with the overall leisure industry.
Weak economic conditions in the U.S. could have a material adverse effect on our industry. An economic downturn could
reduce consumer spending on recreational activities such as those our resorts offer, resulting in decreased skier visits and consumer
spending at our ski resorts. Such events could have a material adverse effect on our business, prospects, financial condition, results
of operations and cash flows. In addition, we may be unable to increase the price of our lift tickets, season passes or other offerings
during an economic downturn despite our history of being successful in raising such prices under a variety of economic conditions.
Our business is vulnerable to the risk of unseasonably warm weather conditions and skier perceptions of weather
conditions.
The ability to attract visitors to our resorts is influenced by weather conditions and by the number of cold weather days during
the ski season. Unseasonably warm weather can adversely affect skier visits and our revenue and profits. For example, warm weather
may result in inadequate natural snowfall and render snowmaking wholly or partially ineffective in maintaining quality skiing
conditions. Also, the early season snow conditions and skier perceptions of early season snow conditions influence the momentum
and success of the overall season. There is no way for us to predict future weather patterns or the impact that weather patterns may
have on our results of operations or visitation.
Our business is highly seasonal and the occurrence of certain events during our peak times could have a negative effect on
our revenues.
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Our resort operations are highly seasonal. Although the air temperatures and timing and amount of snowfall can influence the
number and type of skier visits, the majority of the skier visits are from mid-December to early April. Accordingly, during the past
two fiscal years, we generated, on average, 89.0% of our revenues during the third and fourth fiscal quarters. In addition, throughout
our peak quarters, we generate the highest revenues on weekends and during three major holiday periods: Christmas, Dr. Martin
Luther King, Jr. Day and Presidents Day. During the 2014/2015 ski season, we generated 37.6% of our revenues on weekends and
18.4% of our revenues during these three major holiday periods. Our resorts typically experience operating losses and negative cash
flows during the first and second quarters of each fiscal year, as a result of the seasonality of our business. Operating results for any
three-month period are not indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year.
A high degree of seasonality in our revenues and our dependence on weekends and the three major ski holidays increases the
impact of certain events on our operating results. Adverse weather conditions, equipment failures, and other developments of even
moderate or limited duration occurring during these peak business periods could significantly reduce our revenues.
We may not be able to fully utilize our net operating loss carryforwards.
We believe that uncertainty exists with respect to the future realization of the loss carryforwards as well as with respect to the
amount of the loss carryforwards that will be available in future periods. To the extent available, we intend to use these net operating
loss carryforwards to offset future taxable income associated with our operations. There can be no assurance that we will generate
sufficient taxable income in the carryforward period to utilize any remaining loss carryforwards before they expire.
In addition, Section 382 and related provisions of the Internal Revenue Code of 1986, as amended (the "Code"), contains rules
that limit for U.S. federal income tax purposes the ability of a company that undergoes an "ownership change" to utilize its net
operating losses and certain other tax attributes existing as of the date of such ownership change. Under these rules, such an
ownership change is generally an increase in ownership by one or more "five percent shareholders," within the meaning of
Section 382 of the Code, of more than 50% of a company's stock, directly or indirectly, within a rolling three-year period. In
connection with our initial public offering in November 2014, a change of ownership in the Company occurred pursuant to the
provisions of the Tax Reform Act of 1986. As a result, usage of our net operating loss carryforwards will be limited each year;
however, we believe the full benefit of those carryforwards will be realized prior to their respective expiration dates.
Variations in the timing of peak periods, holidays and weekends may affect the comparability of our results of operations.
Depending on how peak periods, holidays and weekends fall on the calendar, in any given year we may have more or fewer peak
periods, holidays and weekends in our third fiscal quarter compared to prior years, with a corresponding difference in our fourth
fiscal quarter. These differences can result in material differences in our quarterly results of operations and affect the comparability
of our results of operations.
We compete with other leisure activities and ski resorts, which makes maintaining our customer base difficult.
The skiing industry is highly competitive and capital intensive. Our ski resorts located in the Northeastern U.S., such as Mount
Snow, Attitash and Wildcat Mountain, and those located in the Southeastern U.S. (which includes Pennsylvania for purposes of ski
industry statistics), such as Jack Frost and Big Boulder, compete against other ski resorts in their markets for both day and overnight
drive skiers. Our competitive position depends on a number of factors, such as the quality and coverage of snowmaking operations,
resort size, the attractiveness of terrain, lift ticket prices, prevailing weather conditions, the appeal of related services and resort
reputation. Some of our competitors have stronger competitive positions in respect of one or more of these factors, which may
adversely affect our ability to maintain or grow our customer base.
We believe that while our Midwestern U.S. ski resorts face only limited competition from other ski resorts in the area, our
competitors in the Midwest primarily include other recreation resorts, including warm weather resorts and various alternative leisure
activities. Our resorts in the Northeastern and Southeastern U.S. face similar competition, in addition to the competition outlined
above. Our ability to maintain our levels of skier visits depends on, among other things, weather conditions, costs of lift tickets and
related skier services relative to the costs of other leisure activities and our ability to attract people interested in recreational sports.
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Changes in consumer tastes and preferences may affect skier visits at our ski resorts.
Our success depends on our ability to attract visitors to our ski resorts. Changes in consumer tastes and preferences,
particularly those affecting the popularity of skiing, snowboarding and tubing, and other social and demographic trends could
adversely affect the number of skier visits during a ski season. Furthermore, a reduction in average household income in some of the
areas near our resorts, compared to historic levels, combined with the increasing cost of skiing, snowboarding and tubing, may make
these activities unaffordable for a large percentage of that population. A significant decline in skier visits compared to historical
levels would have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
We may not be able to pay dividends on our common stock.
We intend to pay quarterly cash dividends on our common stock at an initial quarterly rate of $0.1375 per share. We cannot
assure you that this initial dividend rate will be sustained or that we will continue to pay dividends in the future. The declaration and
payment of future dividends to holders of our common stock will be at the sole discretion of our board of directors and will depend
on many factors, including our actual results of operations, financial condition, capital requirements, contractual restrictions,
restrictions in our debt agreements, economic conditions and other factors that could differ materially from our current expectations.
For example, the Master Credit Agreement includes financial covenants consisting of a maximum Leverage Ratio (as defined in the
Master Credit Agreement) of 65%, above which the Company and certain of its subsidiaries are prohibited from incurring additional
indebtedness, and a Consolidated Fixed Charge Coverage Ratio (as defined in the Master Credit Agreement) covenant, which
(a) requires the Company to increase the balance of its debt service reserve account if the Company's Consolidated Fixed Charge
Coverage Ratio falls below 1.50:1.00, and (b) prohibits the Company from paying dividends if the ratio is below 1.25:1.00. The
payment of dividends is also prohibited during default situations under the terms of the Master Credit Agreement. Furthermore, our
results of operations and financial condition could be materially and adversely affected by the factors described in this "Risk
Factors" section, which could limit our ability to pay dividends in the future.
Our ability to declare and pay dividends is dependent on cash flow generated by our subsidiaries because we are a holding
company.
We are a holding company with no operations. Our subsidiaries own most of the assets that will generate income. Therefore, our
ability to declare and pay dividends is dependent on the generation of cash flow by our subsidiaries and their ability to make such
cash available to us, by dividend, distribution or otherwise. Our subsidiaries may not be able or permitted to make distributions to
enable us to make dividend payments in respect of our common stock. Each of our subsidiaries is a distinct legal entity, and, under
certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from them. In addition, any future
financing or other arrangements that our subsidiaries enter into could limit their ability to make distributions to us. In addition, the
Master Credit Agreement limits certain of our subsidiaries' ability to make distributions to us in the event of a default, or if the
Company's Consolidated Fixed Charge Coverage Ratio falls below 1.25:1.00. In the event that we do not receive distributions from
our subsidiaries, we may be unable to make dividend payments on our common stock.
We may engage in acquisitions that could harm our business, operating results or financial condition.
A key component of our business strategy is to identify and acquire properties that are complementary to our core business.
We frequently evaluate potential acquisitions and intend to actively pursue acquisition opportunities, some of which could be
significant. For example, our acquisition of Mount Snow in 2007 involved the addition of property and operations that made up 26%
of our revenues during the 2007 ski season. Our failure to merge the Mount Snow operations with our existing operations and
effectively manage the additional large-scale property would have had a material negative effect on our results of operations.
We cannot make assurances that we will be able to successfully integrate and manage acquired properties and businesses and
increase our profits from these operations. The integration of acquired businesses may not be successful and could result in
disruption to other parts of our business. In addition, the integration may require that we incur significant restructuring charges. To
integrate acquired businesses, we must implement our management information systems, operating systems and internal controls,
and assimilate and manage the personnel of the acquired operations. The difficulties of the integrations may be further complicated
by such factors as geographic distances, lack of experience operating in the geographic market or industry sector of the acquired
business, delays and challenges associated with integrating the business with our existing
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businesses, diversion of management's attention from daily operations of the business, potential loss of key employees and
customers of the acquired business, the potential for deficiencies in internal controls at the acquired business, performance problems
with the acquired business' technology, exposure to unanticipated liabilities of the acquired business, insufficient revenues to offset
increased expenses associated with the acquisition, and our ability to achieve the growth prospects and synergies expected from
any such acquisition. Even when an acquired business has already developed and marketed products and services, there can be no
assurance that product or service enhancements will be made in a timely fashion or that all pre-acquisition due diligence will have
identified all possible issues that might arise with respect to such acquired assets.
Future acquisitions may also cause us to assume liabilities, record goodwill and intangible assets that will be subject to
impairment testing and potential impairment charges, incur amortization expense related to certain intangible assets and increase our
expenses and working capital requirements, which would reduce our return on invested capital. Failure to manage and successfully
integrate the acquisitions we make could materially harm our business and operating results.
We may be unsuccessful in identifying suitable acquisition candidates which may negatively impact our growth strategy.
There can be no assurance given that we will be able to identify additional suitable acquisition candidates or consummate future
acquisitions or strategic transactions on acceptable terms. Our failure to successfully identify additional suitable acquisition
candidates or consummate future acquisitions or strategic transactions on acceptable terms could have an adverse effect on our
prospects, business activities, cash flow, financial condition, results of operations and stock price.
We are subject to extensive environmental laws and regulations in the ordinary course of business.
Our operations are subject to a variety of federal, state and local environmental laws and regulations, including those relating to
emissions to the air; discharges to water; storage, treatment and disposal of wastes; land use; remediation of contaminated sites;
and protection of natural resources such as wetlands. For example, future expansions of certain of our ski facilities must comply with
applicable forest plans approved under the National Forest Management Act or local zoning requirements. In addition, most projects
to improve, upgrade or expand our ski resorts are subject to environmental review under the National Environmental Policy Act. Both
acts require that the U.S. Forest Service study any proposal for potential environmental impacts and include in its analysis various
alternatives. Our ski resort improvement proposals may not be approved or may be approved with modifications that substantially
increase the cost or decrease the desirability of implementing the project.
Our facilities are subject to risks associated with mold and other indoor building contaminants. From time to time our operations
are subject to inspections by environmental regulators or other regulatory agencies. We are also subject to worker health and safety
requirements.
We believe our operations are in substantial compliance with applicable material environmental, health and safety requirements.
However, our efforts to comply do not eliminate the risk that we may be held liable, incur fines or be subject to claims for damages,
and that the amount of any liability, fines, damages or remediation costs may be material for, among other things, the presence or
release of regulated materials at, on or emanating from properties we now own or lease and operate, or formerly owned, leased or
operated, newly discovered environmental impacts or contamination at or from any of our properties, or changes in environmental
laws and regulations or their enforcement.
The loss of our key executive officers could harm our business.
Our success depends to a significant extent upon the performance and continued service of our key management team which
includes Timothy Boyd, our President and principal executive officer, Stephen Mueller, our Vice President and principal financial and
accounting officer, and Richard Deutsch, our Vice President in charge of business and real estate development. The loss of the
services of this management team and the failure to develop and maintain an adequate succession plan could have a material adverse
effect on our business and operations because of Messrs. Boyd's, Mueller's and Deutsch's specific and unique knowledge of
acquiring and operating multiple ski resorts, including day ski resorts and overnight drive ski resorts.
Failure to maintain the integrity of guest data could result in damage to our reputation and/or subject us to costs, fines or
lawsuits.
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We collect personally identifiable information relating to our guests for various business purposes, including marketing and
promotional purposes. The integrity and privacy of our guests’ information is important to us, and our guests have a high
expectation that we will adequately protect their personal information. The regulatory environment governing privacy laws is
increasingly demanding, and privacy laws continue to evolve and, on occasion, may be inconsistent from one jurisdiction to
another. Maintaining compliance with applicable privacy regulations may increase our operating costs and/or adversely impact our
ability to market our products, properties and services to our guests. Furthermore, non-compliance with applicable privacy
regulations by us (or in some circumstances non-compliance by third parties engaged by us), a breach of security on systems
storing our guest data, a loss of guest data or fraudulent use of guest data could adversely impact our reputation or result in fines or
other damages and litigation.
We are subject to risks related to certain payment methods.
We accept payments using a variety of methods, including credit cards, debit cards and gift cards. As we offer new payment
options to consumers, we may be subject to additional regulations, compliance requirements and fraud. For certain payment
methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating
costs and lower profitability. We are also subject to payment card association operating rules and certification requirements,
including the Payment Card Industry Data Security Standard and rules governing electronic funds transfers, which could change or
be reinterpreted to make it difficult for us to comply. As our business changes, we may also be subject to different rules under
existing standards, which may require new assessments that involve costs above what we currently pay for compliance. While we
are currently in compliance with all applicable rules and certification requirements, we may be subject to fines, higher transaction fees
or loss of or restrictions on our ability to accept credit and debit card payments from customers if we are not in compliance with new
rules and regulations or if the volume of fraud in our transactions rises to certain levels. If any of these events were to occur, our
business, financial condition and operating results could be materially adversely affected.
Our business requires significant capital expenditures to both maintain and improve our ski resorts and expand our
business through acquisitions. The lack of available funds for these capital expenditures could have a material adverse effect on
our operating strategy.
Sustaining our successful financial performance depends, in part, on our ability to maintain and improve the quality of our
facilities, products, and management resources (either directly or through third parties), which requires significant capital
expenditures. Capital expenditures for fiscal 2015 were approximately $14.1 million. To the extent that we are unable to obtain the
funds necessary to maintain and grow our business with cash generated from operating activities, or from borrowed funds or
additional equity investments, our financial condition and results of operations could be affected. Although we believe that capital
expenditures above maintenance levels can be deferred to address cash flow or other constraints, these expenditures cannot be
deferred for extended periods without adversely affecting our competitive position and financial performance.
Historically, a key element of our strategy has been attracting additional skiers through investment in on-mountain capital
improvements. These improvements are capital intensive, and a lack of available funds for capital expenditures could have a material
adverse effect on our ability to implement our operating strategy. We intend to finance resort capital improvements through
internally generated funds and proceeds from the offering of debt and equity. There can be no assurance that sufficient funds will be
available to fund these capital improvements or that these capital improvements will sustain our customer base, attract additional
skiers or generate additional revenues.
Future acquisitions may require additional debt or equity financing, which in the case of debt financing, will increase our
leverage and, in the case of equity financing, would be dilutive to our existing stockholders. Any decline in our perceived credit-
worthiness associated with an acquisition could adversely affect our ability to borrow and result in more restrictive borrowing terms.
As a result of the foregoing, we also may not be able to complete acquisitions or strategic transactions in the future to the same
extent as in the past, or at all. These and other factors could harm our ability to achieve anticipated levels of profitability at acquired
operations or realize other anticipated benefits of an acquisition, and could adversely affect our business, financial condition and
results of operations.
We are dependent on significant infrastructure and equipment.
Our infrastructure and equipment, including snowmaking equipment and ski lifts, are costly to maintain, repair and replace and
are susceptible to unscheduled maintenance. Much of our infrastructure and equipment will eventually need to be
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replaced or significantly repaired or modernized, which could result in interruptions to our business, particularly during our peak
periods. In certain cases, the cost of infrastructure or equipment repair or replacement may not be justified by the revenues at the
applicable resort.
The high fixed cost structure of ski resort operations can result in significantly lower margins if revenues decline.
The cost structure of ski resort operations has a significant fixed component with variable expenses including, but not limited to,
resort related fees, credit card fees, retail/rental cost of sales and labor, ski school labor and dining operations. Any material declines
in the economy, elevated geopolitical uncertainties and/or significant changes in historical snowfall patterns, as well as other risk
factors discussed herein, could adversely affect revenue. As such, our margins, profits and cash flows may be materially reduced
due to declines in revenue given our relatively high fixed cost structure. In addition, increases in wages and other labor costs,
energy, healthcare, insurance, transportation, fuel, and other expenses included in our fixed cost structure may also reduce our
margins, profits and cash flows.
We generate a significant portion of our annual revenues from Mount Snow. Conditions or events that could negatively
impact Mount Snow could have a material adverse effect on our financial condition and results of operations.
Revenue generated from Mount Snow in fiscal 2015 represented approximately 42.5% of our total fiscal 2015 revenues. Mount
Snow, like our other resorts, is subject to various risks such as those described in this “Risk Factors” section, including natural
disasters, changes in consumer leisure tastes, competition from other area ski resorts, decreased water supply and regional weather.
The occurrence of such events or conditions that negatively impact Mount Snow would have a material adverse effect on our
financial condition and results of operations.
Cancellation of the Immigrant Investor Program or our failure to successfully raise capital under the program's guidelines
could adversely affect our ability to execute our growth strategy and improve our resorts.
Developing our resort at Mount Snow and continuing to improve our resorts overall are significant elements of our growth
strategy. In addition, we have been advised by the State of Vermont that we must relocate our water reservoir to help sustain the
natural habitat of certain species of fish. We intend to finance these developments—the Carinthia Ski Lodge Project and the West
Lake Project—with funds raised under the U.S. government's Immigrant Investor Program, commonly known as the "EB-5 program."
The EB-5 program was first enacted in 1990 to stimulate the U.S. economy through the creation of jobs and capital investments in
U.S. companies by foreign investors. In turn, these foreign investors are, pending petition approval, granted visas for lawful
residence in the U.S. Under the EB-5 program, a limited number of visas are reserved for such foreign investors each year.
The Carinthia Ski Lodge Project includes the construction of Carinthia Ski Lodge, and the West Lake Project includes the
construction of a new water storage reservoir for snowmaking with capacity of up to 120 million gallons. We are currently
conducting an offering to raise $52.0 million to fund the Carinthia Ski Lodge Project and the West Lake Project, $36.5 million of which
has been committed as of June 30, 2015. To the extent that the offering is not fully-subscribed and less than the $52.0 million is
raised, we will allocate up to the first $30.0 million to the development of the West Lake Project.
The current EB-5 program as it relates to the Regional Center Pilot Program term expires on September 30, 2015. Though the
program has been regularly reinstated since its inception in 1990, there is no guarantee that it will be reauthorized upon the expiration
in 2015. Furthermore, we cannot guarantee that we will successfully raise sufficient funds under the EB-5 program in order to
complete the Carinthia Ski Lodge Project or West Lake Project, or implement future plans to improve our resorts. In either of those
cases, conventional financing options, such as loans, may prove too costly or may not be available, which could result in
cancellation of our development and improvement plans and have a material adverse effect on our business. Please see Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—
Significant Uses of Cash" for further details about the EB-5 program and Mount Snow development projects.
We lease all or some of the land underlying certain of our resorts from third parties.
We lease some or all of our property at Paoli Peaks and Mad River from third parties. Our lease at Paoli Peaks terminates in 2078
and our lease at Mad River terminates in 2034. Combined, these resorts contributed 9.3% of our total
18
revenues for the year ended April 30, 2015. A termination of any of these leases could negatively impact our results of operations.
A substantial portion of the skiable terrain at certain of our resorts is used under the terms of Forest Service permits.
A substantial portion of the skiable terrain at our Attitash and Mount Snow resorts and all of the land underlying the Wildcat
Mountain resort is federal land that is used under the terms of permits with the U.S. Forest Service. The permits give the U.S. Forest
Service the right to review and comment on the location, design, and construction of improvements in the permit area and on certain
other operational matters. The permits can also be terminated or modified by the U.S. Forest Service for specific compelling reasons
or in the event we fail to perform any of our obligations under the permits. Otherwise, the permits may be renewed. A termination or
modification of any of our permits could have a material adverse effect on our results of operations. Currently, our permits expire as
follows:
Ski Resort
Attitash
Mount Snow
Wildcat Mountain
Special Use Permit Expiration Date
April 4, 2047
April 4, 2047
November 18, 2050
We rely on information technology to operate our businesses and maintain our competitiveness, and any failure to adapt to
technological developments or industry trends could harm our business.
We depend on the use of information technology and systems, including technology and systems used for central reservations,
point of sale, procurement and administration. We must continuously improve and upgrade our systems and infrastructure to offer
enhanced products, services, features and functionality, while maintaining the reliability and integrity of our systems and
infrastructure. Our future success also depends on our ability to adapt our infrastructure to meet rapidly evolving consumer trends
and demands and to respond to competitive service and product offerings.
In addition, we may not be able to maintain our existing systems or replace or introduce new technologies and systems as
quickly as we would like or in a cost-effective manner. Delays or difficulties in implementing new or enhanced systems may keep us
from achieving the desired results in a timely manner, to the extent anticipated, or at all. Any interruptions, outages or delays in our
systems, or deterioration in their performance, could impair our ability to process transactions and could decrease our quality of
service that we offer to our guests. Also, we may be unable to devote financial resources to new technologies and systems in the
future. If any of these events occur, our business and financial performance could suffer.
We currently rely on one lender and its affiliates as a source for financing and credit.
We have historically relied on one lender and its affiliates, EPR, for substantially all of our financing and credit needs, including
financing relating to our resort acquisitions. EPR is an entertainment, entertainment-related, recreation and specialty real estate
company with its common stock listed on the New York Stock Exchange under the symbol "EPR". In the event EPR is not available
to extend us credit, we may not be able to obtain financing on terms as favorable to us as those under our arrangements with EPR.
As a result, we may be subject to more stringent financial covenants and higher interest rates.
We depend on a seasonal workforce.
Our mountain and lodging operations are highly dependent on a large seasonal workforce. We recruit year-round to fill
thousands of seasonal staffing needs each season and work to manage seasonal wages and the timing of the hiring process to
ensure the appropriate workforce is in place. We cannot guarantee that material increases in the cost of securing our seasonal
workforce will not be necessary in the future. Furthermore, we cannot guarantee that we will be able to recruit and hire adequate
seasonal personnel as the business requires. Increased seasonal wages or an inadequate workforce could have an adverse impact on
our results of operations.
We are subject to litigation in the ordinary course of business because of the nature of our business.
19
The safety of guests and employees is a major concern and focus for all managers and employees of the Company. By the
nature of our activities, we are exposed to the risk that guests or employees may be involved in accidents during the use, operation
or maintenance of ski lifts, rides and other resort facilities. As a result, we are, from time to time, subject to various asserted or
unasserted legal proceedings and claims. Any such claims, regardless of merit, could be time-consuming and expensive to defend
and could divert management's attention and resources. While we believe we have adequate insurance coverage and/or accrue for
loss contingencies for all known matters that are probable and can be reasonably estimated, we cannot assure that the outcome of all
current or future litigation will not have a material adverse effect on us and our results of operations.
If we fail to manage future growth effectively, our business could be harmed.
We have experienced, and expect to continue to experience, rapid growth. This growth has placed significant demands on our
management, operational and financial infrastructure. To manage growth effectively, we must continue to improve and enhance our
managerial, operational and financial controls, train and manage our employees, and expand our employee base. We must also
manage new and existing relationships with vendors, business partners and other third parties. These activities will require
significant expenditures and allocation of valuable management resources. If we fail to maintain the efficiency of our organization as
we grow, our profit margins may decrease, and we may be unable to achieve our business objectives.
A disruption in our water supply would impact our snowmaking capabilities and impact our operations.
Our operations are heavily dependent upon our access to adequate supplies of water with which to make snow and otherwise
conduct our operations. Our resorts in New Hampshire and Vermont are subject to state laws and regulations regarding our use of
water. There can be no assurance that applicable laws and regulations will not change in a manner that could have an adverse effect
on our operations, or that important permits, licenses, or agreements will not be canceled or will be renewed on terms as favorable as
the current terms. Any failure to have access to adequate water supplies to support our current operations and anticipated
expansion would have a material adverse effect on our financial condition and results of operations.
Our lender has an option to purchase, or assume our leases relating to, certain of our ski resorts. If our lender exercises this
option, we would incur significant tax obligations.
On December 1, 2014, in connection with the Debt Restructure, we entered into an Option Agreement with EPT Ski Properties,
Inc. providing EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley ski resorts. The
Option Agreement provides that the purchase option will be exercisable as to any one or more of such properties on the maturity
date of the applicable promissory notes for such properties upon (i) proper notice by EPR and (ii) payment of a purchase price for
each such property calculated in accordance with the Option Agreement. Upon the closing of any sale under the option, EPR will
enter into an agreement with the Company or one of its subsidiaries for the lease of each such acquired property for an initial term of
20 years, plus options to extend the lease for two additional periods of 10 years each.
Over the years, we have depreciated the value of these properties pursuant to applicable accounting rules, and as such, we
have a low adjusted tax basis in the properties. As a result, we will realize significant taxable gains on the sale of the properties to
EPT Ski Properties, Inc. if the option is exercised. We may be required to pay income taxes on the taxable gains from such sale, which
we expect to be a substantial cost.
Under certain circumstances, our insurance coverage may not cover all possible losses, and we may not be able to renew
our insurance policies on favorable terms, or at all.
Although we maintain various property and casualty insurance policies, our insurance policies do not cover all types of losses
and liabilities and in some cases may not be sufficient to cover the ultimate cost of claims which exceed policy limits. If we are held
liable for amounts exceeding the limits of our insurance coverage or for claims outside the scope of our coverage, our business,
prospects, financial condition, results of operations and cash flows could be materially adversely affected.
20
In addition, we may not be able to renew our current insurance policies on favorable terms, or at all. Our ability to obtain future
insurance coverage at commercially reasonable rates could be materially adversely affected if we or other companies within or
outside our industry sustain significant losses or make significant insurance claims.
We are subject to risks associated with our workforce.
We are subject to various federal and state laws governing matters such as minimum wage requirements, overtime compensation
and other working conditions, discrimination and family and medical leave. In addition, we are continuing to assess the impact of
U.S. federal healthcare reform law and regulations on our healthcare benefit costs, which will likely increase the amount of healthcare
expenses paid by us. Immigration law reform could also impact our workforce because we recruit and hire foreign nationals as part of
our seasonal workforce. If our labor-related expenses increase, our operating expenses could increase and our business, financial
condition and results of operations could be harmed.
We are structured as a holding company and have no assets other than the common stock of our subsidiaries.
We are a holding company and we do not currently have any material assets other than the common stock we own in our direct
and indirect subsidiaries. Our working capital needs are dependent, in part, upon the receipt of dividends and other distributions
from our subsidiaries. Certain laws may restrict or limit such payments to us by our subsidiaries, in which case we may need to seek
other sources of funding.
A natural disaster could damage our property and reduce the number of guests who visit our resorts.
A severe natural disaster, such as a forest fire, flood or landslide, may interrupt our operations, damage our properties and
reduce the number of guests who visit our resorts in affected areas. Damage to our properties could take a long time to repair and
there is no guarantee that we would have adequate insurance to cover the costs of repair or the expense of the interruption to our
business. Furthermore, such a disaster may interrupt or impede access to our affected properties or require evacuations and may
cause visits to our affected properties to decrease for an indefinite period. The ability to attract visitors to our resorts is also
influenced by the aesthetics and natural beauty of the outdoor environment where our resorts are located. A severe forest fire or
other severe impacts from naturally occurring events could negatively impact the natural beauty of our resorts and have a long-term
negative impact on our overall guest visitation as it would take several years for the environment to recover.
We will not be required by Section 404 of the Sarbanes-Oxley Act to evaluate the effectiveness of our internal controls until
the year following our first annual report, which will be fiscal 2016, and our independent registered public accounting firm is
not required to formally attest to the effectiveness of our internal controls while we qualify as an "emerging growth company." If
we are unable to establish and maintain effective internal controls, our financial condition and operating results could be
adversely affected.
We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes-Oxley Act, and are
therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that
purpose. Though we will be required to disclose changes made in our internal control and procedures on a quarterly basis, we will
not be required to make our first annual assessment of our internal control over financial reporting pursuant to Section 404 until the
year following our first annual report required to be filed with the SEC, which will be fiscal 2016. Additionally, our independent
registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting
until we are no longer an "emerging growth company" as defined in the Jumpstart Our Business Startup Act of 2012 (the “JOBS
Act”). At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not
satisfied with the level at which our controls are documented, designed or operating. Further, we may take advantage of other
accounting and disclosure related exemptions afforded to "emerging growth companies" from time to time. If we are unable to
establish and maintain effective internal controls, our financial condition and operating results could be adversely affected.
Climate change and greenhouse effects may adversely impact our results of operations.
There is a growing political and scientific consensus that emissions of greenhouse gases continue to alter the composition of
the global atmosphere in ways that are affecting and are expected to continue affecting the global climate.
21
The effects of climate change, including any impact of global warming, could have a material adverse effect on our results of
operations.
Warmer overall temperatures would likely adversely affect skier visits and our revenue and profits. As noted above, warm
weather may result in inadequate natural snowfall and render snowmaking wholly or partially ineffective in maintaining quality skiing
conditions. In addition, a steady increase in global temperatures could shorten the ski season in the future.
Physical risks from climate change may also include an increase in changes to precipitation and extreme weather events in ways
we cannot currently predict. Such changes to the amount of natural snowfall and extreme differences in weather patterns may
increase our snowmaking expense, inhibit our snowmaking capabilities and negatively impact skier perceptions of the ski season.
Risks Related to Ownership of Our Common Stock
The market price of our common stock has been and will likely continue to be volatile, and you could lose all or part of
your investment.
Prior to our initial public offering, there had been no public market for shares of our common stock. The market price of our
common stock has been and may continue to be subject to wide fluctuations in response to various factors, some of which are
beyond our control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this annual report on Form
10-K, factors that could cause fluctuations in the market price of our common stock include the following:
• quarterly variations in our results of operations;
• results of operations that vary from those of our competitors;
• changes in expectations as to our future financial performance, including financial estimates by securities analysts and
investors;
• announcements by us, our competitors or our vendors of significant contracts, acquisitions, joint marketing relationships,
joint ventures or capital commitments;
• announcements by third parties of significant claims or proceedings against us;
• future sales of our common stock; and
• changes in investor sentiment toward the stock of ski resort and recreational services companies in general.
Furthermore, the stock market has experienced extreme volatility that in some cases has been unrelated or disproportionate to
the operating performance of particular companies. These broad market and industry fluctuations may adversely affect the market
price of our common stock, regardless of our actual operating performance.
In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were
involved in securities litigation, it could be a substantial cost and divert resources and the attention of executive management from
our business regardless of the outcome of such litigation.
Requirements associated with being a public company will increase our costs, as well as divert Company resources and
management's attention, particularly after we are no longer an "emerging growth company," and may affect our ability to
attract and retain qualified board members and executive officers.
As a public company, we are required to comply with the SEC's rules implementing Section 302 of the Sarbanes-Oxley Act of
2002, which requires our management to certify financial and other information in our quarterly and annual reports and provide an
annual management report on the effectiveness of our internal control over financial reporting. We will not be required to make our
first assessment of our internal control over financial reporting until the year following our first annual report required to be filed with
the SEC, which will be fiscal 2016. Our independent registered public accounting firm will
22
not be required to formally attest to the effectiveness of our internal control over financial reporting so long as we qualify as an
emerging growth company.
We are working with our legal, independent accounting, and financial advisors to identify those areas in which changes or
enhancements should be made to our financial and management control systems to manage our growth and obligations as a public
company. Some such areas include corporate governance, corporate control, internal audit, disclosure controls and procedures, and
financial reporting and accounting systems. We have made, and will continue to make, changes in these and other areas. However,
the expenses that will be required in order to function adequately as a public company could be material.
Compliance with the various reporting and other requirements applicable to public companies will also require considerable time
and attention of management. We cannot predict or estimate the amount of the additional costs we may incur, the timing of such
costs or the impact that our management's attention to these matters will have on our business. In addition, the changes we make
may not be sufficient to satisfy our obligations as a public company on a timely basis or at all.
In addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance,
including directors' and officers' liability insurance, and we may be forced to accept reduced policy limits and coverage or incur
substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us
to attract and retain qualified persons to serve on our board of directors, our board committees and our executive team.
Our principal stockholders may exert substantial influence over us and may exercise their control in a manner adverse to
your interests.
Timothy D. Boyd, Stephen J. Mueller and Richard K. Deutsch, our three named executive officers, own approximately 16.1% of
our outstanding common stock. As a result, these stockholders will be able to exercise a significant level of control over all matters
requiring stockholder approval, including the election of directors, amendment of our amended and restated articles of incorporation
and approval of significant corporate transactions. This ability could have the effect of delaying or preventing a change of control of
the Company or changes in management and will make the approval of certain transactions difficult or impossible without the
support of these stockholders. It is possible that these persons will exercise control over us in a manner adverse to your interests.
We are an "emerging growth company" with reduced reporting requirements that may make our common stock less
attractive to investors.
We are an "emerging growth company," as defined in the JOBS Act, and may take advantage of certain exemptions from various
reporting requirements that are applicable to public companies generally. As discussed above, for so long as we remain an emerging
growth company, we may elect not to have our independent registered public accounting firm provide an attestation report on the
effectiveness of our internal control over financial reporting, as would otherwise be required by Section 404(b) of the Sarbanes-Oxley
Act. This may increase the risk that we fail to detect and remedy any weaknesses or deficiencies in our internal control over financial
reporting.
In general, these reduced reporting requirements may allow us to refrain from disclosing information that you may find
important. It is also possible that investors may generally find our common stock less attractive because of our status as an
emerging growth company and our more limited disclosure. Any of the foregoing could adversely affect the price and liquidity of our
common stock.
We may take advantage of these disclosure exemptions until we are no longer an "emerging growth company." We could be an
emerging growth company until the last day of the first fiscal year following the fifth anniversary of our first common equity offering,
although circumstances could cause us to lose that status earlier if our annual revenues exceed $1.0 billion, if we issue more than
$1.0 billion in non-convertible debt in any three-year period or if we become a "large accelerated filer" as defined in Rule 12b-2 under
the Exchange Act.
Future sales of our common stock may cause our stock price to decline.
23
If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market,
the market price of our common stock could decline. These sales might also make it more difficult for us to sell additional equity
securities at a time and price that we deem appropriate. All of the shares of our common stock sold in our initial public offering are
freely tradable in the public market, except for any shares held by our affiliates as defined in Rule 144 of the Securities Act.
We also registered all 559,296 shares of common stock that we may issue under the Peak Resorts, Inc. 2014 Equity Incentive
Plan that has been adopted by the board of directors and stockholders. These shares can be freely sold in the public market upon
issuance, subject to vesting conditions.
If securities or industry analysts do not publish research or reports about our business, if they adversely change their
recommendations regarding our common stock, or if our operating results do not meet their expectations, our stock price and
trading volume could decline.
The trading market for our common stock may be influenced by the research and reports that securities or industry analysts
publish about us or our business. Securities analysts may elect not to provide research coverage of our common stock. This lack of
research coverage could adversely affect the price of our common stock. We do not have any control over these reports or analysts.
If any of the analysts who cover our Company downgrades our stock, or if our operating results do not meet the analysts'
expectations, our stock price could decline. Moreover, if any of these analysts ceases coverage of our Company or fails to publish
regular reports on our business, we could lose visibility in the financial markets, which in turn could cause our stock price and
trading volume to decline.
We have anti-takeover provisions in our organizational documents that may discourage a change of control.
Certain provisions of our amended and restated articles of incorporation and amended and restated by-laws may have an anti-
takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a stockholder might consider in its best
interest, including those attempts that might result in a premium over the market price for the shares held by our stockholders.
These provisions provide for, among other things:
• advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at
our annual meetings;
• certain limitations on convening special stockholder meetings;
• the removal of directors only for cause by our board of directors or upon the affirmative vote of holders of at least 66 /3%
of the shares of common stock entitled to vote generally in the election of directors; and
2
• that the amended and restated by-laws may only be amended by our board of directors.
These anti-takeover provisions could make it more difficult for a third party to acquire our Company, even if the third party's
offer may be considered beneficial by many of our stockholders. As a result, our stockholders may be limited in their ability to obtain
a premium for their shares.
Item 1B. Unresolved Staff Comments.
None
Item 2. Properties.
The following table sets forth the principal properties that we own or lease for use in our operations at fiscal year end:
24
Ski Resort/Location
Hidden Valley (250 total acres; 60
skiable acres)
Wildwood, MO
Snow Creek (460 total acres; 40
skiable acres)
Weston, MO
Paoli Peaks (65 total and skiable
acres)
Paoli, IN
Mad River (324 total acres; 60
skiable acres)
Zanesfield, OH
Boston Mills (100 total acres; 40
skiable acres)
Sagamore Hills, OH
Brandywine (102 total acres; 48
skiable acres)
Sagamore Hills, OH
Crotched Mountain (251 total acres;
105 skiable acres)
Bennington, NH
Jack Frost (201 total acres; 80
skiable acres)
Blakeslee, PA
Big Boulder (107 total acres; 65
skiable acres)
Blakeslee, PA
Attitash (1,134 total acres; 307
skiable acres)
Bartlett, NH
Ownership
Owned
Owned
Partially leased/partially
owned
(1)
Leased
(2)
Owned
Owned
Owned
Owned
Owned
Partially owned/partially
used per terms of a Special
Use Permit
(3)
Mount Snow (588 total acres; 490
skiable acres)
West Dover, VT
Partially owned/partially
used per terms of a Special
Use Permit
(3)
Wildcat Mountain (225 total and
skiable acres)
Jackson, NH
Alpine Valley (135 total acres; 54
skiable acres)
Chesterland, OH
Used per terms of a Special
Use Permit
(4)
Owned
(1) The Paoli Peaks lease terminates in 2078.
Usage
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities; headquarters offices
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, rental/retail facilities and food/beverage facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, rental/retail facilities and food/beverage facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities, food/beverage
facilities, hotel/lodging facilities and conference/meeting
rooms
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities, food/beverage
facilities, hotel/lodging facilities, conference/meeting
rooms and developable land
Ski resort operations, including ski lifts, ski trails, terrain
park, rental/retail facilities and food/beverage facilities
Ski resort operations, including ski lifts, ski trails, terrain
park, tubing, rental/retail facilities and food/beverage
facilities
(2) The Mad River lease terminates in 2034. The Company has the right of first refusal should the Mad River lessor put the property
up for sale. In addition, the Company has the right to acquire the Mad River property at specified prices in December 2019 and
December 2026.
(3) A substantial portion of the skiable terrain at Attitash and Mount Snow is federal land that we use pursuant to the terms of
renewable permits with the U.S. Forest Service. The Attitash and Mount Snow Special Use Permits expire on April 4, 2047.
(4) All of the land underlying Wildcat Mountain is federal land that we use pursuant to the terms of a renewable permit with the U.S.
Forest Service. The Wildcat Mountain Special Use Permit expires on November 18, 2050.
25
Item 3. Legal Proceedings
On March 14, 2014, current Company stockholders and former employees Robin and Kent Graham, the sister and brother-in-
law of Mr. Boyd, instituted litigation against the Company in the Circuit Court of the County of St. Louis, alleging breach of an oral
contract relating to certain severance benefits, breach of the covenant of good faith and fair dealing relating to the Company's offer
to purchase shares of common stock owned or controlled by the plaintiffs, and requesting access to certain corporate records in
order to determine the fair value of such shares of common stock. We do not believe that these claims have merit and have
responded accordingly. The amount of severance benefits at issue is less than $200,000 and no claim has been made by the plaintiffs
that the Company has an obligation to purchase the common stock owned by the plaintiffs. After consultation with legal counsel, we
do not anticipate that liabilities arising out of these claims would, if plaintiffs are successful, have a material adverse effect on our
business, operating results or financial condition.
We are not aware of any pending or threatened legal proceedings against us that could have a material adverse effect on our
business, operating results or financial conditions. The ski industry is characterized by periodic litigation and as a result, we may be
involved in various additional legal proceedings from time to time.
Item 4. Mine Safety Disclosures
None.
26
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock has been listed on the NASDAQ Global Market under the symbol “SKIS” since November 21, 2014
following the completion of our initial public offering. Prior to that time, there was no public market for our common stock. As of June
30, 2015, 13,982,400 shares of our common stock were outstanding, held by approximately 18 holders of record.
The following table sets forth information on the high and low sales prices of our common stock on the NASDAQ Global Market and
the quarterly cash dividends declared per share of common stock for each quarterly period since our initial public offering:
Quarter ended
High
Low
Market price per share
Cash
dividends
declared
per share
April 30, 2015
January 31,2015
$
$
7.82
9.19
$
$
5.76 $
6.89 $
0.1375
0.1091
*
*The first cash dividend declared was pro rated for a 73-day period from the effective date of the Company’s
initial public offering through the end of the Company’s third fiscal quarter.
In fiscal 2015, the Company’s board of directors approved the commencement of a regular quarterly cash dividend
on our common stock at an annual rate of $0.55 per share, subject to quarterly declarations. This dividend is anticipated to be
funded through cash flow from operations and available cash on hand. Subject to the discretion of our board of directors,
applicable law and contractual restrictions, we anticipate paying regular quarterly dividends on our common stock for the
foreseeable future.
We cannot assure you that this initial dividend rate will be sustained or that we will continue to pay dividends in the future.
The declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our board of
directors and will depend on many factors, including our actual results of operations, financial condition, capital requirements,
contractual restrictions, restrictions in our debt agreements, economic conditions and other factors that could differ materially from
our current expectations. For example, the Master Credit Agreement includes financial covenants consisting of a maximum Leverage
Ratio (as defined in the Master Credit Agreement) of 65%, above which the Company and certain of its subsidiaries are prohibited
from incurring additional indebtedness, and a Consolidated Fixed Charge Coverage Ratio (as defined in the Master Credit
Agreement) covenant, which (i) requires the Company to increase the balance of its debt service reserve account if the Company's
Consolidated Fixed Charge Coverage Ratio falls below 1.50:1.00, and (ii) prohibits the Company from paying dividends if the ratio is
below 1.25:1.00. The payment of dividends is also prohibited during default situations under the terms of the Master Credit
Agreement. For a more complete description of the Master Credit Agreement and applicable restrictions, see Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Significant Sources
of Cash” and Note 4, “Long-term Debt” to our consolidated financial statements.
Use of Proceeds
On November 26, 2014 we completed our initial public offering of 10,000,000 shares of our common stock at $9.00 per
share. The shares sold in the offering were registered under the Securities Act pursuant to the Company’s Registration Statement
on Form S-1, as amended, which was declared effective by the SEC on November 20, 2014 (File No. 333-199488). The common stock
is listed on the NASDAQ Global Market under the symbol “SKIS”. We generated net proceeds of approximately $82.3 million, after
deducting underwriting discounts and commissions of approximately $6.3 million and offering expenses of approximately $1.4
million. We deposited the offering proceeds into a demand deposit account with a U.S. financial institution. There was no material
change in the planned use of proceeds as discussed in our final prospectus filed with the SEC pursuant to Rule 424(b) under the
Securities Act, dated November 20, 2014.
27
With the proceeds from the offering, we (i) repaid approximately $75.8 million of our outstanding debt; (ii) paid
approximately $0.4 million to acquire the portion of the land underlying Crotched Mountain that we previously leased; and (iii) paid a
defeasance fee to our lender of $5.0 million in connection with the prepayment of a portion of our debt. We intend to use the
remaining proceeds for working capital and general corporate purposes, including future acquisitions.
FBR Capital Markets & Co. and Stifel, Nicolaus & Company, Incorporated served as active joint book-runners for the
offering. Robert W. Baird & Co. Incorporated also served as a book-runner. Janney Montgomery Scott LLC and Oppenheimer & Co.
Inc. acted as co-managers for the offering.
Stock Performance Graph
Set forth below is a line graph comparing the percentage change in the cumulative total shareholder return on our
common stock with the cumulative total return of the Russell 200 Index and the S&P Small Cap 600 Consumer Discretionary
Index from November 21, 2014, the first day of trading following the commencement of our initial public offering, through
April 30, 2015, our fiscal year end. The following is based on an investment of $100 in our common stock, the Russell 2000
Index and the S&P Small Cap 600 Consumer Discretionary Index, with dividends reinvested where applicable.
Source: Bloomberg
Period Ending
Index
Peak Resorts
Russell 2000 Index
S&P Small Cap 600 Consumer Discretionary
Index
11/21/2014
100.00
100.00
100.00
4/30/2015
77.00
104.66
106.45
$
$
$
$
$
$
28
Item 6. Selected Financial Data.
The table below summarizes our selected consolidated financial information as of and for the periods
indicated. You should read the following selected consolidated financial data together with our consolidated financial
statements and related notes filed as part of this annual report. Our historical results for any prior period are not
necessarily indicative of results to be expected in any future period. The data presented in the table and footnotes
below are in thousands, except for diluted net income (loss) per share attributed to Peak Resorts, Inc. and the
revenue per skier visit amounts.
2015
2014
Year ended April 30,
2013
2012
2011
Income Statement Information
Revenues
(1)
Operating expense
Depreciation and Amortization
Land and building rent
Settlement of lawsuits
Interest expense, net
Defeasance fee paid with debt restructure
Gain on sale/leaseback
Gain on acquisition
Write off of incremental stock issuance cost
Investment income
Income (loss) before income tax
Net income (loss)
Basic and diluted earnings (loss) per share
(2)
(2)
Pro Forma Tax Adjustment
Net income
Basic and diluted earnings per share
Other Financial Information (unaudited)
(3)
Reported EBITDA
Capital expenditures
Other Data (unaudited)
Operations:
Skier visits
(4)
Revenue per skier visit
(5)
(6)
Revenue per visit
Tube visits
Total visits
Other Balance Sheet Data
Cash and cash equivalents
Restricted cash
Total assets
(7)
Long-term debt and capitalized lease obligations
(including current portions)
(8)
(9)
Net debt
Dividends declared
Total stockholders' equity
________________________
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
104,858 $
78,586
9,450
1,440
(2,100)
15,458
5,000
333
-
-
11
(2,632)
(1,854) $
(0.22) $
105,205 $
78,833
9,155
1,464
700
17,359
-
333
-
-
11
(1,962)
(1,501) $
(0.38) $
- $
- $
- $
- $
99,688 $
72,437
8,850
1,428
-
12,785
-
333
-
-
9
4,530
2,707 $
0.68 $
- $
- $
82,044 $
67,285
9,510
1,679
-
11,516
-
333
-
1,168
23
(8,757)
(5,295) $
(1.33) $
- $
- $
25,400 $
14,144 $
25,365 $
10,028 $
25,939 $
14,900 $
13,031 $
21,817 $
1,554
67.45 $
61.34 $
155
1,709
16,849 $
37,519 $
241,540 $
100,062 $
83,213 $
3,449 $
80,438 $
1,570
67.02 $
60.06 $
182
1,752
13,186 $
13,063 $
206,537 $
175,148 $
161,962 $
- $
3,488 $
1,520
65.53 $
59.14 $
166
1,686
11,971 $
12,141 $
201,749 $
171,525 $
159,554 $
- $
4,990 $
1,221
67.22 $
60.94 $
125
1,346
6,179 $
11,036 $
185,043 $
160,729 $
154,550 $
- $
2,282 $
97,586
70,815
8,003
1,948
-
11,389
-
333
400
-
241
6,404
(4,006)
(1.02)
3,858
0.97
24,822
19,116
1,572
62.06
55.69
180
1,752
16,463
11,271
179,701
143,238
126,775
-
7,578
(1)
Operating expenses before depreciation and amortization and land and building rent.
29
(2)
(3)
(4)
(5)
(6)
(7)
The Company was an S-corporation for federal and state income tax purposes until April 30, 2011 when
it terminated its S-corporation election. As a result, we did not have a provision for income taxes for
fiscal 2011. The Company revoked its S-corporation election effective April 30, 2011. In connection with
the revocation, deferred income taxes were reinstated for the tax effect of temporary differences. Net
income and basic and diluted earnings per share assuming a pro forma tax adjustment for the year ended
April 30, 2011 were $3.9 million and $0.97, respectively, after giving effect to the 100 for 1 common stock
split.
See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Non-GAAP Financial Measures” for a definition of Reported EBITDA and reconciliation
to net income (loss).
A skier visit represents a person utilizing a ticket or pass to access a mountain resort for any part of one
day and includes both paid and complimentary access and excludes tube visits.
Revenue per skier visit is calculated by dividing total revenue by total skier visits during the respective
periods.
Revenue per visit is calculated by dividing total revenue by total visits (ski and tube) during the
respective periods.
As of April 30 of each year, the end of our fiscal year, we are required to include in restricted cash
interest due on our outstanding debt with EPR, our primary lender, and rent under the lease for the Mad
River resort for the 10 months following April 30. In addition, the Company is holding funds in escrow
in connection with its efforts to raise funds under the EB-5 investor program for the development of
Mount Snow. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results
of Operations—Liquidity and Capital Resources—Significant Uses of Cash” for a discussion of the EB-
5 program.
(8) The Financial Accounting Standards Board issued Accounting Standards Update No. 2015-03, “Interest—Imputation of
Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs,” which requires debt issuance costs
related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of
that debt liability, and no longer permits recording these costs as assets. The new guidance is effective for annual periods
beginning after December 15, 2015. As early adoption is permitted, we have elected to incorporate the early adoption of this
guidance into our financial statement presented herein, including applying the guidance retrospectively to all prior periods
presented.
(9)
Net debt is defined as long-term debt and capital lease obligations plus long-term debt and capital lease
obligations due within one year, less cash and cash equivalents.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion of our financial condition and results of operations should be read in conjunction with the
consolidated financial statements and the notes thereto included elsewhere in this annual report on Form 10-K. In addition to
historical condensed consolidated financial information, the following discussion contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. See “Cautionary Note About Forward-Looking Statements”
included elsewhere in this annual report on Form 10-K.
Overview
We own or lease and operate 13 ski resorts throughout the Midwestern, Northeastern and Southeastern U.S. Our ski
resorts, which include both day ski resorts and overnight drive ski resorts, offer snow skiing, snowboarding and other snow sports.
During the last two ski seasons, we had an average of 1.6 million skier visits each year.
We and our subsidiaries operate in a single business segment—resort operations. The consolidated financial data for our
fiscal years ended April 30, 2015, 2014 and 2013 presented in this annual report is comprised of the data of our 13 ski resorts. Also
included in the financial information presented are ancillary services, primarily consisting of food and beverage services, equipment
rental, ski instruction, hotel/lodging and retail.
The opening and closing dates of our ski resorts are dependent upon weather conditions, but our peak ski season generally
runs from early December to mid-April. See Item 1, “Business—Seasonality” for an illustration of the opening and closing dates for
the 2010/2011 through 2014/2015 ski seasons for our 13 ski resorts.
We, like other day ski resort and overnight drive ski resort operators, earn our revenues in six principal categories. In order
of their contribution, they are: lift tickets, food and beverage sales, equipment rentals, ski instruction, hotel/lodging, and retail. For
more detailed information about each revenue category, see "Business—Revenue Components."
Our single largest source of revenue is the sale of lift tickets (including season passes) which represented approximately
48.5%, 49.1% and 50.2% of net revenue for fiscal 2015, 2014 and 2013, respectively. Lift ticket revenue is driven by the volume of lift
tickets and season passes sold and the pricing of these items. Most of our season pass products are sold before the start of the ski
season. Season pass revenue, although collected prior to the ski season, is recognized in the
30
consolidated statement of earnings (loss) over the ski season based upon the estimated length of the season. For the 2014/2015,
2013/2014 and 2012/2013 ski seasons, approximately 29.9%, 28.2% and 26.4%, respectively, of total lift revenue recognized was
comprised of season pass revenue. There can be no assurance that future season pass sales will be similar to historical trends.
The cost structure of our operations has a significant fixed component with variable expenses including, but not limited to,
retail and food and beverage cost of sales, labor, power and utilities. As such, profit margins can fluctuate based on the level of
revenues.
Seasonality and Quarterly Results
Our resort operations are seasonal in nature. In particular, revenue and profits for our operations are substantially lower and
historically result in losses from late spring to late fall, which occur during our first and second fiscal quarters. Revenue and profits
generated by our summer operations are not sufficient to fully offset our off-season expenses from our operations. During each of
fiscal 2015 and 2014, approximately 89.0% of resort revenues were recognized in the third and fourth fiscal quarters. Therefore, the
operating results for any interim period are not necessarily indicative of the results that may be achieved for any subsequent quarter
or for a full year.
Recent Trends
The timing and duration of favorable weather conditions impact our revenues in regard to the timing and number of skier
visits. Though the amount of snowfall early in the ski season does encourage skier visits, all of our ski resorts have snowmaking
capabilities in the event that the natural snowfall is insufficient. Cold weather, however, is essential to a successful ski season. There
is no way to predict favorable weather conditions in the future. We sell season passes prior to the start of the ski season to help
mitigate any negative effects that unfavorable weather may have on our revenues.
In contrast to the 2013/2014 ski season, we faced weather challenges during the 2014/2015 ski season due to unseasonably
warm weather in the Midwest early season, including during the Christmas holidays, and extremely cold weather during Presidents
Day weekend at all of our resorts. We typically generate a significant amount of revenue during these holiday periods. Despite the
adverse weather, fiscal 2015 Reported EBITDA was $25.4 million, level with the prior year, and revenue for fiscal 2015 was down just
0.3 percent below the record level achieved in fiscal 2014. These results were driven by relatively stable skier visits and lift ticket
increases implemented during fiscal 2015. Though we have increased the prices of most of our lift tickets, passes and other products
and services in each of the last two ski seasons, there can be no assurance that we will be able to increase prices in the future or
predict the impact that pricing increases may have on visitation or revenue.
Our skier visits of 1.6 million in fiscal 2015 were down just 1.0 percent from fiscal 2014, which was a record-breaking year.
This compares to a 5.0% decrease in total U.S. skier visits reported by the NSAA’s Kottke National End Season Survey 2014/2015
Preliminary Report. Our total resort visits, which include tube visits, were down 2.5% from fiscal 2014. Total visits to our Northeast
resorts, however, were up from 1.04 million in fiscal 2014 to 1.07 million in fiscal 2015. Total visits to our Midwest resorts decreased
from 0.72 million in fiscal 2014 to 0.64 million in fiscal 2015 primarily because our Midwest resorts were closed during most of the
Christmas holidays as a result of the warm weather leading into the holidays. Total visits during the holiday period were down from
1.14 million in fiscal 2014 to 1.01 million in fiscal 2015, due to the adverse weather impacting the Christmas holiday period at our
Midwest resorts and Presidents Day weekend experienced at all of our resorts. Total visits other than during the holiday were up
from 0.62 million in fiscal 2014 to 0.70 million in fiscal 2015. In addition, season pass holder visits increased from 0.59 million in fiscal
2014 to 0.60 in fiscal 2015, while pay-per-visit total visits decreased from 0.98 million in 2014 to 0.95 million in fiscal 2015. Early
season visits (before Christmas) were up 19.6% at our Northeast resorts because of good snow conditions. Late season (after
Presidents Day weekend) were up at our Northeast resorts because of good snow conditions that allowed us to extend the ski
season. In fiscal 2015, higher sales of food, beverages and retail products helped drive the growth in revenue per skier visit, which in
turn helped offset the slight decline in the number of skier visits.
Recent Events
During fiscal 2015, we completed the initial public offering of our common stock, selling 10,000,000 shares at $9.00 per share.
After deducting $6.3 million of underwriting discounts and commissions and $1.4 million of offering expenses payable by us, we
received net proceeds of $82.3 million. With the proceeds from the offering, we (i) repaid approximately $75.8 million of our
outstanding debt; (ii) paid approximately $0.4 million to acquire the portion of the land underlying Crotched Mountain that we
previously leased; and (iii) paid a defeasance fee to our lender of $5.0 million in connection with the prepayment of a portion of our
debt. We intend to use the remaining proceeds for working capital and general corporate purposes, including future acquisitions.
31
On November 10, 2014, in connection with our initial public offering, we entered into a Restructure Agreement EPR, our
primary lender, providing for the Debt Restructure as follows: (i) prepayment of approximately $75.8 million of formerly non-
prepayable debt secured by the Crotched Mountain, Attitash, Paoli Peaks, Hidden Valley and Snow Creek resorts with proceeds
from our in initial public offering; and (ii) retirement of one of the notes associated with the future development of Mount Snow. On
December 1, 2014, we entered into various agreements in order to effectuate the Debt Restructure. See “—Liquidity and Capital
Resources—Significant Sources of Cash” for a more detailed description of the Debt Restructure and related documents.
In exchange for the prepayment right, we granted EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big
Boulder and Alpine Valley properties, subject to certain conditions. If EPR exercises a purchase option, EPR will enter into an
agreement with the Company for the lease of each such acquired property for an initial term of 20 years, plus options to extend the
lease for two additional periods of ten years each. All previously existing option agreements between the Company and EPR were
terminated.
Additionally, we agreed to extend the maturity dates on all non-prepayable notes and mortgages secured by the Mount
Snow, Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties remaining after the Debt Restructure by
seven years to December 1, 2034, and to extend the lease for the Mad River property, previously terminating in 2026, until December
31, 2034.
We also granted EPR a right of first refusal to provide all or a portion of the financing associated with any purchase, ground
lease, sale/leaseback, management or financing transaction contemplated by the Company with respect to any new or existing ski
resort property for a period of seven years or until financing provided by EPR for such transactions equals or exceeds $250 million in
the aggregate. Proposed financings from certain types of institutional lenders providing a loan to value ratio of less than 60% (as
relates to the applicable property being financed) are excluded from the right of first refusal. We granted EPR a separate right of first
refusal in the event that the Company wishes to sell, transfer, convey or otherwise dispose of any or all of the Attitash ski resort for
seven years. The Attitash right excludes the financing or mortgaging of Attitash.
In connection with the Debt Restructure, we entered into a Master Credit and Security Agreement with EPR containing
additional terms and conditions governing our restructure debt with EPR, including restrictions on certain transactions and the
payment of dividends and required financial covenants.
We had one major capital project in fiscal 2014. At Alpine Valley in Ohio, we replaced the pump house and maintenance
buildings, significantly improved our snowmaking capacity and improved our uphill capacity with the addition of two ski lifts.
We had three major capital projects in fiscal 2013. At Crotched Mountain in New Hampshire, we replaced a fixed grip quad
with a high speed detachable lift. In conjunction with the new lift, we added 25% more skiable terrain. At Brandywine in Ohio, we
replaced the three-skier services buildings with a new 48,000 square foot lodge. At Hidden Valley in Missouri, we opened
approximately 40% more skiable terrain, added a fixed grip quad chair lift and remodeled the interior of the main ski lodge.
32
Results of Operations
The following table sets forth, for the periods indicated, our results of operations (dollars in thousands):
Year ended April 30,
2015
2014
2013
Percent
increase
(decrease)
2015/2014
Percent
increase
(decrease)
2014/2013
Revenues
Lift and tubing tickets
Food and beverage
Equipment rental
Ski instruction
Hotel/lodging
Retail
Other
Costs and Expenses
Resort operating expenses
Labor and labor related expenses
Retail and food and beverage cost of sales
Power and utilities
Other
Depreciation and amortization
General and administrative expenses
Land and building rent
Real estate and other taxes
Settlement of lawsuit
Other operating income-gain on settlement of lawsuit
Income from Operations
Other Income (expense)
Interest, net of interest capitalized of $488 and $344 in
2015 and 2014, respectively
Defeasance fee paid with debt restructure
Gain on sale/leaseback
Investment income
$
50,821 $
18,927
8,017
7,242
7,623
5,261
6,967
104,858
51,672 $
18,638
8,584
7,130
7,479
4,811
6,891
105,205
38,744
9,571
6,950
17,405
72,670
9,450
4,088
1,440
1,828
-
89,476
2,100
17,482
(15,458)
(5,000)
333
11
(20,114)
38,950
9,122
8,500
17,370
73,942
9,155
3,240
1,464
1,651
700
90,152
-
15,053
(17,359)
-
333
11
(17,015)
Loss before income tax benefit
Income tax benefit
Net Loss
Total reported EBITDA
(2,632)
(778)
(1,854) $
25,400 $
(1,962)
(461)
(1,501) $
25,365 $
$
$
50,085
17,339
7,601
6,775
7,156
4,536
6,196
99,688
36,029
8,638
7,593
15,831
68,091
8,850
2,529
1,428
1,817
-
82,715
-
16,973
(12,785)
-
333
9
(12,443)
4,530
1,823
2,707
25,939
-1.6%
1.6%
-6.6%
1.6%
1.9%
9.4%
1.1%
-0.3%
-0.5%
4.9%
-18.2%
0.2%
-1.7%
3.2%
26.2%
-1.6%
10.7%
-100.0%
-0.7%
100.0%
16.1%
-11.0%
100.0%
0.0%
0.0%
18.2%
34.1%
68.8%
23.5%
0.1%
3.2%
7.5%
12.9%
5.2%
4.5%
6.1%
11.2%
5.5%
8.1%
5.6%
11.9%
9.7%
8.6%
3.4%
28.1%
2.5%
-9.1%
100.0%
9.0%
0.0%
-11.3%
35.8%
0.0%
0.0%
22.2%
36.7%
-143.3%
-125.3%
-155.4%
-2.2%
33
Non-GAAP Financial Measures
Reported EBITDA is not a measure of financial performance under U.S. GAAP. The following table includes a reconciliation of
Reported EBITDA to net income (loss) (in thousands):
Net income (loss)
Income tax benefit
Interest expense, net
Defeasance fee paid with debt restructure
Depreciation and amortization
Investment income
Gain on sale/leaseback
Non-routine legal and settlement of lawsuit, net
Year ended April 30
2015
2014
2013
$
$
(1,854) $
(778)
15,458
5,000
9,450
(11)
(333)
(1,532)
25,400 $
(1,501) $
(461)
17,359
-
9,155
(11)
(333)
1,157
25,365 $
2,707
1,823
12,733
-
8,902
(10)
(333)
117
25,939
We have chosen to specifically include Reported EBITDA (defined as net income before interest, income taxes, depreciation and
amortization, gain on sale leaseback, investment income, other income or expense and other non-recurring items) as a measurement
of our results of operations because we consider this measurement to be a significant indication of our financial performance and
available capital resources. Because of large depreciation and other charges relating to our ski resorts, it is difficult for management
to fully and accurately evaluate our financial results and available capital resources using net income. Management believes that by
providing investors with Reported EBITDA, investors will have a clearer understanding of our financial performance and cash flow
because Reported EBITDA: (i) is widely used in the ski industry to measure a company’s operating performance without regard to
items excluded from the calculation of such measure, which can vary by company primarily based upon the structure or existence of
their financing; (ii) helps investors to more meaningfully evaluate and compare the results of our operations from period to period by
removing the effect of our capital structure and asset base from our operating structure; and (iii) is used by our management for
various purposes, including as a measure of performance of our operating entities and as a basis for planning.
Items excluded from Reported EBITDA are significant components in understanding and assessing financial performance or
liquidity. Reported EBITDA should not be considered in isolation or as 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 is
susceptible to varying calculations, Reported EBITDA as presented may not be comparable to other similarly titled measures of
other companies.
Comparison of Operating Results for the Years ended April 30, 2015 and 2014
Lift and tubing revenue decreased $0.9 million, or 1.6%, for fiscal 2015 compared to fiscal 2014. Season pass sales and seasonal
program sales increased $0.8 million, or 4.5%, from fiscal 2014 to fiscal 2015. The increase in revenue from season pass and seasonal
program sales was offset by a decrease of $0.2 million in yield per skier visit and decreased revenue because of reduced visits of $1.5
million. Yield is determined by dividing lift revenue by skier visits.
Food and beverage revenue increased $0.3 million, or 1.6%, for fiscal 2015 compared to fiscal 2014, which is attributable to an
increase in yield per skier visit of $0.5 million, offset by decreased skier visits of $0.1 million.
Rental revenue decreased $0.6 million, or 6.6%, for fiscal 2015 compared to fiscal 2014, which is attributable to the decrease in
Midwest resort skier visits versus the increase in visits to our Northeast resorts. A higher percent of visitors to our Midwest resorts
rent ski equipment compared to guests at our Northeast resorts.
Ski instruction revenue increased $0.1 million, or 1.6%, for fiscal 2015 compared to fiscal 2014, which is attributable to an increase in
yield per skier visit of $0.2 million.
34
Hotel and lodging revenue increased $0.1 million, or 1.9%, for fiscal 2015 compared to fiscal 2014, which is attributable to increased
skier visits in the Northeast resorts and increased summer occupancy.
Retail revenue increased $0.5 million, or 9.4%, for fiscal 2015 compared to fiscal 2014, which is attributable to an increase in yield per
skier visit of $0.5 million.
Labor and labor related expenses decreased $0.2 million, or 0.5%, for fiscal 2015 versus fiscal 2014. Labor efficiencies contributed $0.1
million in labor and labor related expense savings. Benefits and taxes contributed another $0.4 million in savings offset by $0.3 million
in workman’s compensation expense as a result of increased rates.
Retail and food and beverage cost of sales increased $0.4 million, or 4.9%, for fiscal 2015 versus fiscal 2014 as a result of increased
retail and food and beverage revenue.
Power and utility expense decreased $1.6 million, or 18.2%, for fiscal 2015 versus fiscal 2014 primarily as a result of a reduction in
kilowatt hours used at our Attitash, Wildcat and Mount Snow resorts. This reduction in kilowatt hour usage is a result of the
installation of energy saving snow gun technology in the current fiscal year. In addition, we were able to control peak energy usage
resulting in lower per kilowatt hour rates.
Depreciation and amortization increased $0.3 million, or 3.2%, for fiscal 2015 versus fiscal 2014 as a result of assets put in service in
the current fiscal year.
General and administrative expenses increased $0.8 million, or 26.2%, for fiscal 2015 versus fiscal 2014 primarily due to an increase in
professional fees of $0.4 million primarily related to incremental public company expenses, $0.2 million related to an increase in
salaries and related benefits and $0.2 million increase in advertising and other corporate expenses.
The Company settled a lawsuit during fiscal 2015 which resulted in $2.1 million of income.
The decrease in interest expense net, of $1.9 million, was a result of reduced interest resulting from the pay down of debt for fiscal
2015 versus fiscal 2014, offset by an increase in interest rates. In addition, the Company paid $0.8 million in disputed interest related
to the Attitash/Mount Snow Debt discussed herein.
In connection with the Debt Restructure, the Company paid a $5.0 million defeasance fee to EPR in fiscal 2015.
Income tax benefit increased $0.3 million as a result of an increase in the loss before income tax expense of $0.7 million for fiscal 2015
versus fiscal 2014.
Comparison of Operating Results for the Years ended April 30, 2014 and 2013
Lift and tubing revenue increased $1.6 million, or 3.2%, for fiscal 2014 compared to fiscal 2013. Total visits for fiscal 2014 increased
3.9% compared to fiscal 2013, which was primarily due to favorable weather conditions. Season pass sales increased $1.3 million, or
10.1%, from fiscal 2013 to fiscal 2014. The increase in revenue from increased skier visits and the increase in season pass sales was
offset by a decrease of $0.6 million in yield per skier visit. Yield is determined by dividing lift revenue by skier visits.
Food and beverage revenue increased $1.3 million, or 7.5%, for fiscal 2014 compared to fiscal 2013, which is attributable to increased
skier visits and an increase in yield per skier visit of $0.6 million.
Rental revenue increased $1.0 million, or 12.9%, for fiscal 2014 compared to fiscal 2013, which is attributable to increased skier visits
and an increase in yield per skier visit of $0.7 million.
Ski instruction revenue increased $0.4 million, or 5.2%, for fiscal 2014 compared to fiscal 2013, which is attributable to increased skier
visits and an increase in yield per skier visit of $0.1 million.
35
Hotel and lodging revenue increased $0.3 million, or 4.5%, for fiscal 2014 compared to fiscal 2013, which is attributable to increased
skier visits and increased summer occupancy.
Retail revenue increased $0.3 million, or 6.1%, for fiscal 2014 compared to fiscal 2013, which is attributable to increased skier visits
and by an increase in yield per skier visit of $0.1 million.
Labor and related benefit expense increased by $2.9 million, or 8.1%, for fiscal 2014 compared to fiscal 2013. Fiscal 2014 was a good
weather year, and several of our resorts opened earlier than normal. On average, our resorts were open 106.2 days in fiscal 2014 as
compared to 98.5 days in fiscal 2013.
Retail and food and beverage cost of sales increased by $0.5 million, or 5.6%, for fiscal 2014 as compared to fiscal 2013, as a result of
increased skier visits, which was offset by a decrease in cost of sales as related to related revenues of 0.6%.
Power and utility expense for fiscal 2014 increased by $0.9 million, or 11.9%, as compared to fiscal 2013 due to a longer season at our
ski resorts in fiscal 2014 and increased power rates.
Other expense increased by $1.5 million, or 9.7%, for fiscal 2014 compared to fiscal 2013, of which $0.2 million is attributable to an
increase in advertising spending, $0.2 million is due to an increase in professional fees, $0.4 million is attributable to an increase in
repairs and maintenance, $0.1 million is attributable to an increase in general liability insurance related to the increase in revenue,
$0.4 million is attributable to increased spending for supplies and $0.2 million is attributable to an increase in uniform costs.
Depreciation and amortization increased $0.3 million in fiscal 2014 as compared to fiscal 2013, $0.2 million of which was due to an
entire year of depreciation of the Alpine Valley resort and $0.1 million of which was due to assets acquired in the other resorts.
General and administrative expense for fiscal 2014 increased by $0.7 million, or 28.1%, as compared to fiscal 2013, primarily because of
increased legal and professional fees of $0.5 million.
Real estate and other taxes decreased by $0.2 million, or 9.1%, for fiscal 2014 compared to fiscal 2013. The decrease is due to
favorable adjustments.
Interest expense increased by $4.6 million in fiscal 2014 as compared to fiscal 2013, of which $3.3 million is a result of a decrease in
capitalized interest, $0.8 million is due to increased borrowings and $0.2 million is due to interest rate increases.
The Income tax provision for fiscal 2014 and 2013 was based on income (loss) before income tax. The change is a result of the change
from net income in fiscal 2013 to net loss in fiscal 2014 and the impact of permanent items.
Year ended April 30
2015
2014
2013
$
$
(1,854) $
(778)
15,458
5,000
9,450
(11)
(333)
(1,532)
25,400 $
(1,501) $
(461)
17,359
-
9,155
(11)
(333)
1,157
25,365 $
2,707
1,823
12,733
-
8,902
(10)
(333)
117
25,939
Net income (loss)
Income tax benefit
Interest expense, net
Defeasance fee paid with debt restructure
Depreciation and amortization
Investment income
Gain on sale/leaseback
Non-routine legal and settlement of lawsuit, net
Liquidity and Capital Resources
36
Significant Sources of Cash
Our available cash is the highest in our third and fourth quarters primarily due to the seasonality of our resort business. We
had $16.9 million of cash and cash equivalents at April 30, 2015 compared to $13.2 million at April 30, 2014. We generated $6.9 million
of cash from operating activities during fiscal 2015 compared to $9.8 million of cash generated in fiscal 2014. We generate the
majority of our cash from operations during the ski season, which occurs in our third and fourth quarters. We currently anticipate
that Reported EBITDA will continue to provide a significant source of our future operating cash flows. We expect that our liquidity
needs for the near term and the next fiscal year will be met by continued use of operating cash flows (primarily those generated in our
third and fourth fiscal quarters) and additional borrowings under our loan arrangements, as needed.
Long-term debt at April 30, 2015 and April 30, 2014 consisted of borrowings pursuant to the loans and other credit facilities
with EPR, our primary lender. As discussed in “-Recent Events”, in November 2014, we entered into a Restructure Agreement with
EPR providing for the prepayment of a portion of our outstanding debt. We have presented in the table below the borrowings at
April 30, 2015 and 2014 (dollars in thousands):
April 30, 2015 April 30, 2014
Attitash/Mount Snow Debt; payable in monthly interest only payments at an increasing interest
rate (10.93% at April 30, 2015 and 2014); remaining principal and interest due on December 1, 2034 $
51,050 $
63,500
Credit Facility Debt; payable in monthly interest only payments at an increasing interest rate
(10.13% at April 30, 2015 and 9.98% at April 30, 2014); remaining principal and interest due on
December 1, 2034
37,562
47,029
Mount Snow Development Debt (interest at 10.00% at April 30, 2014). Paid in full in December
2014.
Crotched Mountain Debt (interest at 10.27% at April 30, 2014). Paid in full December 2014.
-
-
42,907
10,972
Sycamore Lake (Alpine Valley) Debt; payable in monthly interest only payments at an increasing
interest rate (10.40% at April 30, 2015 and 10.20% at April 30, 2014); remaining principal and
interest due on December 1, 2034
4,550
4,550
Wildcat Mountain Debt; payable in monthly installments of $27, including interest at a rate of
4.00%, with remaining principal and interest due on December 22, 2020
3,790
3,962
Other debt
Less unamortized debt issuance costs
Less: current maturities
1,931
2,311
(811)
(754)
98,072
503
174,477
504
$
97,569 $
173,973
Pursuant to the terms of the Debt Restructure, we used a portion of the proceeds from our initial public offering to eliminate
the Mount Snow Development Debt and Crotched Mountain Debt entirely. As of December 1, 2014, all prior debt
37
arrangements and promissory notes between the Company and EPR were terminated and replaced by the agreements described
below (collectively, the “Debt Restructure Agreements”) to complete the Debt Restructure and govern the terms of our remaining
debt with EPR.
In connection with the Debt Restructure, the Company entered into a Master Credit Agreement with EPR governing the
restructured debt with EPR. Pursuant to the Master Credit Agreement, EPR agreed to maintain the following loans to the Company
following the prepayment of certain outstanding debt with proceeds from the Company’s initial public offering: (i) a term loan in the
amount of approximately $51.1 million to the Company and its subsidiary Mount Snow, Ltd., (included in the table above as the
“Attitash/Mount Snow Debt”); (ii) a term loan in the amount of approximately $23.3 million to the Company and its subsidiaries
Brandywine Ski Resort, Inc. and Boston Mills Ski Resort, Inc. (the “Boston Mills/Brandywine Debt”); (iii) a term loan in the amount
of approximately $14.3 million to the Company and its subsidiary JFBB Ski Areas, Inc. (the “JFBB Debt” and together with the
Boston Mills/Brandywine Debt, included in the table above as the “Credit Facility Debt”); and (iv) a term loan in the amount of
approximately $4.6 million to the Company and its subsidiary Sycamore Lake, Inc. (included in the table above as the “Sycamore Lake
(Alpine Valley) Debt”).
Interest will be charged at a rate of (i) 10.13% per annum as to each of the Boston Mills/Brandywine Debt and JFBB Debt;
(ii) 10.35% per annum as to the Sycamore Lake (Alpine Valley) Debt; and (iii) 10.93% per annum pursuant to the Attitash/Mount
Snow Debt. Each of the notes governing the restructured debt provides that interest will increase each year by the lesser of the
following: (x) three times the percentage increase in the Consumer Price Index as defined in the notes (“CPI”) from the CPI in effect
on the applicable adjustment date over the CPI in effect on the immediately preceding adjustment date or (y) 1.5% (the “Capped CPI
Index”). Past due amounts will be charged a higher interest rate and be subject to late charges.
The Master Credit Agreement further provides that in addition to interest payments, the Company must pay the following
with respect to all restructured debt other than the Attitash/Mount Snow Debt: an additional annual payment equal to 10% of the
gross receipts attributable to the properties serving as collateral of the restructured debt (other than Mount Snow) for such year in
excess of an amount equal to the quotient obtained by dividing (i) the annual interest payments payable pursuant to the notes
governing the restructured debt (other than with respect to the Attitash/Mount Snow Debt) for the immediately preceding year by
(ii) 10%. The Company must pay the following with respect to the Attitash/Mount Snow Debt: an additional annual payment equal
to 12% of the gross receipts generated at Mount Snow for such year in excess of an amount equal to the quotient obtained by
dividing (i) the annual interest payments payable under the note governing the Attitash/Mount Snow Debt for the immediately
preceding year by (ii) 12%. No additional interest payments were due for the fiscal years ended April 30, 2015 and April 30,
2014. Management does not expect that any additional interest payments will be triggered for the remainder of the current fiscal
year.
The Master Credit Agreement includes restrictions on certain transactions, including mergers, acquisitions, leases, asset
sales, loans to third parties, and the incurrence of certain additional debt and liens. Financial covenants set forth in the Master Credit
Agreement consist of a maximum leverage ratio (as defined in the Master Credit Agreement) of 65%, above which the Company and
certain of its subsidiaries are prohibited from incurring additional indebtedness, and a consolidated fixed charge coverage ratio (as
defined in the Master Credit Agreement) covenant, which (i) requires the Company to increase the balance of its debt service reserve
account if the Company’s consolidated fixed charge coverage ratio falls below 1.50:1.00 and (ii) prohibits the Company from paying
dividends if the ratio is below 1.25:1.00. The payment of dividends is also prohibited during default situations.
Under the terms of the Master Credit Agreement, the occurrence of a change of control is an event of default. A change of
control will be deemed to occur if (i) within two years after the effective date of the Master Credit Agreement, the Company’s named
executive officers (Messrs. Timothy Boyd, Stephen Mueller and Richard Deutsch) cease to beneficially own and control less than
50% of the amount of the Company’s outstanding voting stock that they own as of the effective date of the Master Credit
Agreement, or (ii) the Company ceases to beneficially own and control less than all of the outstanding shares of voting stock of
those subsidiaries which are borrowers under the Master Credit Agreement. Other events of default include, but are not limited to, a
default on other indebtedness of the Company or its subsidiaries. None of the restructured debt may be prepaid without the consent
of EPR. Upon an event of default, as defined in the Debt Restructure Agreements, EPR may, among other things, declare all unpaid
principal and interest due and payable. Each of the notes governing the restructured debt matures on December 1, 2034.
As a condition to the Debt Restructure, the Company entered into the Master Cross Default Agreement with EPR (the
“Master Cross Default Agreement”). The Master Cross Default Agreement provides that any event of default under existing or
future loan or lien agreements between the Company or its affiliates and EPR, and any event of default under the Lease Amendment,
shall automatically constitute an event of default under each of such loan and lien agreements and Lease
38
Amendment, upon which EPR will be entitled to all of the remedies provided under such agreements and Lease Amendment in the
case of an event of default.
Also in connection with the Debt Restructure, the Company and EPR entered into the Guaranty Agreement (the “Guaranty
Agreement”). The Guaranty Agreement obligates the Company and its subsidiaries as guarantors of all debt evidenced by the Debt
Restructure Agreements.
The Wildcat Mountain Debt due December 22, 2020 represents amounts owed pursuant to a promissory note in the
principal amount of $4.5 million made by WC Acquisition Corp. in favor of Wildcat Mountain Ski Area, Inc., Meadow Green-Wildcat
Skilift Corp. and Meadow Green-Wildcat Corp. (the “Wildcat Note”). The Wildcat Note, dated November 22, 2010, was made in
connection with the acquisition of Wildcat Mountain, which was effective as of October 20, 2010. The interest rate as set forth in the
Wildcat Note is fixed at 4.00%.
A substantial portion of the Company’s assets serve as collateral for the Company’s long-term debt.
Fiscal 2015 compared to Fiscal 2014
We generated $6.9 million of cash in operating activities in fiscal 2015, a decrease of $2.9 million when compared to the
$9.8 million generated fiscal 2014. The decrease in operating cash flows was a result of an increase in the loss from operations and
an increase in accounts receivable as a result of financing season pass purchases. In addition, unearned revenue increased as a
result of increased sales.
Cash used in investing activities was $36.7 million compared to $7.3 million for fiscal 2015 compared to fiscal 2014.
The increase of $29.4 million from fiscal 2015 compared to fiscal 2014 was a result of increased additions to property and equipment
and an increase in restricted cash. The increase in restricted cash is a result of the EB-5 investor funds, as discussed below, held in
escrow, offset by a decrease in the funds held in the interest reserve.
Cash provided by financing activities increased by $34.7 million in fiscal 2015 compared to fiscal 2014 because of the EB-5
funds held in escrow and the net proceeds of our initial public offering. This was offset by our debt repayment and initial
stockholder dividend.
Significant Uses of Cash
Our cash uses currently include operating expenditures and capital expenditures for assets to be used in operations. We
have historically invested significant cash in capital expenditures for our resort operations and expect to continue to invest in the
future. Resort capital expenditures for fiscal 2015 were approximately $12.2 million. We currently anticipate we will spend
approximately $5.0 million to $6.0 million on resort capital expenditures for fiscal 2016. There are no major capital expenditure
projects for fiscal 2016 anticipated. We currently plan to use cash on hand, borrowings and/or cash flow generated from future
operations to provide the cash necessary to execute our capital plans and believe that these sources of cash will be adequate to meet
our needs.
In October 2014, we entered into a capital lease to finance the construction of the Zip Rider at Attitash. The lease is
payable in 60 monthly installments of $37,000, commencing November 2014. The Company has a $1.00 purchase option at the end of
the lease term. Messrs. Boyd, Mueller and Deutsch have personally guaranteed the lease.
In addition, in June 2015, the Company entered into capital leases to finance the installation of Low-E snow guns at Mount
Snow, Attitash and Wildcat, as well as to fund the purchase of groomers for Mount Snow and Attitash. The Low-E snow guns lease
is payable in 48 monthly payments of $61,770 and the groomers lease is payable in 60 monthly payments of $23,489, both
commencing July 2015. The Company has a $1.00 purchase option at the end of each lease term. Messrs. Boyd, Mueller and
Deutsch have personally guaranteed the leases. The Company originally funded these purchases during fiscal year 2015 with
operating cash.
Although we have no significant third party commitments currently outstanding, we may incur substantial costs for our
ongoing Mount Snow development, subject to obtaining required permits and approvals. We plan to finance any future
development activity through operating cash reserves, initial condominium deposits and bridge loans, which would be paid upon
project completion mostly through the receipt of remaining committed condominium unit sales. We intend to fund our Mount Snow
development by raising funds under the Immigrant Investor Program administered by the U.S. Citizenship and
39
Immigration Services (‘‘USCIS’’) pursuant to the Immigration and Nationality Act. This program was created to stimulate the U.S.
economy through the creation of jobs and capital investments in U.S. companies by foreign investors. The program allocates 10,000
immigrant visas (‘‘EB-5 Visas’’) per year to qualified individuals seeking lawful permanent resident status on the basis of their
investment in a U.S. commercial enterprise. Under the regional center pilot immigration program first enacted in 1990, certain EB-5
Visas also are set aside for investors in regional centers designated by the USCIS based on proposals for promoting economic
growth. Regional centers are organizations, either publicly owned by cities, states or regional development agencies or privately
owned, which facilitate investment in job-creating economic development projects by pooling capital raised under the EB-5
Immigrant Investor Program. Areas within regional centers that are rural areas or areas experiencing unemployment numbers higher
than the national unemployment average rates are designated as Targeted Employment Areas (‘‘TEA’’). The regional center pilot
program expires in September 2015, but given that it has been regularly reauthorized since its enactment in 1990, we expect the pilot
program to continue. We refer to the Immigrant Investor Program and the regional center pilot program herein as the ‘‘EB-5
program.’’
We have established two wholly-owned subsidiary limited partnerships (collectively, the ‘‘Partnership’’) of Mount Snow to
operate within a TEA within the State of Vermont Regional Center. Through the Partnership, we are seeking to raise $52.0 million by
offering units in the Partnership to qualified accredited EB-5 investors for a subscription price of $500,000 per unit, which is the
minimum investment that an investor in a TEA project is required to make pursuant to EB-5 program rules. The proceeds of the
offering will be used to fund loans that will be advanced to newly-created wholly-owned subsidiaries of Mount Snow to finance the
development of two capital projects at Mount Snow—the West Lake Project and the Carinthia Ski Lodge Project (together, the
‘‘Projects’’). The terms of these loans are expected to be 1.0% fixed for five years with up to a two year extension at 7.0% in year six
and 10.0% in year seven. Upon funding of the loans, the Company will receive a development fee equal to 15.0% of the loans as well
as costs incurred in developing the program. The Mount Snow EB-5 program must be approved by both the State of Vermont
Regional Business Center and the USCIS. We have received approval from the State of Vermont’s Regional Business Center and
expect to receive approval from the USCIS due to the operation of the Partnership in a TEA and the large number of jobs to be
created in connection with the Projects.
The West Lake Project includes the construction of a new water storage reservoir for snowmaking with capacity of up to
120 million gallons, three new pump houses and the installation of snowmaking pipelines, trail upgrades and expansion, new ski lift
and ancillary equipment. The Carinthia Ski Lodge Project includes the construction of Carinthia Ski Lodge, a new three-story,
approximately 36,000-square foot skier service building located at the base of the Carinthia slopes. Carinthia Ski Lodge will include a
restaurant, cafeteria and bars with seating for over 600 people, a retail store, convenience store and sales center for lift tickets and
rentals. The anticipated overall cost of the Projects is $66.0 million, of which $52.0 million is intended to be funded with the proceeds
from the EB-5 offering. We expect the remaining $14.0 million to be provided by Mount Snow with an additional investment in cash,
land or value.
The Partnership intends to offer the units to investors primarily located in China, Taiwan, Vietnam and certain countries in
the Middle East either directly or through relationships with agents qualified in their respective countries, in which case the
Partnership typically pays a sales commission. Once an investor’s subscription and funds are accepted by the Partnership, the
investor must file a petition (‘‘I-526 Petition’’) with the USCIS seeking, among other things, approval of the investment’s suitability
under the EB-5 program requirements and the investor’s suitability and source of funds. All investments will be held in a non-
interest bearing escrow account and will not be released until the USCIS approves the first I-526 Petition filed by an investor in the
Partnership, which typically occurs between 12 and 18 months from the initial I-526 Petition filing date.
As of April 30, 2015, we have commitments for $33.5 million in Partnership investments, $29.0 million of which has been
funded and is being held in escrow. The first investor’s I-526 Petition was filed in May 2014 and is pending approval by the USCIS,
which we expect will occur by the end of calendar 2015 in line with the typical approval timeline. As such, we intend to release funds
from escrow and commence the Projects in the second half of calendar year 2015. If the Projects commence in the second half of
calendar year 2015 and plans occur as scheduled, we estimate that the Projects will be completed by the end of calendar year 2016.
The EB-5 offering has no expiration, and the Company intends to continue the offering until it raises the full $52.0 million.
To the extent that the offering is not fully-subscribed and less than the $52.0 million is raised, the Partnership will allocate up to the
first $30.0 million to the development of the West Lake Project. If the Partnership is unable to raise sufficient funds to complete the
Projects, we intend to seek alternative arrangements to finance the balance of the needed amounts.
40
We plan to finance any future development activity through operating cash reserves and bridge loans, which would be paid
upon project completion mostly through the receipt of remaining committed condominium unit sales.
On March 6, 2015, the Company’s board of directors declared a cash dividend of $0.1375 per share of common stock
payable on May 20, 2015 to shareholders of record on April 7, 2015, and on June 12, 2015, the board declared a cash dividend of
$0.1375 cents per share of common stock payable on August 21, 2015 to stockholders of record on July 10, 2015. The current
indicated annualized dividend would be 55 cents per share.
We intend to pay quarterly cash dividends on our common stock on a quarterly basis. However, we cannot assure you that
this initial dividend rate will be sustained or that we will continue to pay dividends in the future. The declaration and payment of
future dividends will be at the sole discretion of our board of directors and will depend on many factors, including our actual results
of operations, financial condition, capital requirements, contractual restrictions, restrictions in our debt agreements, including the
Master Credit Agreement, economic conditions and other factors that could differ materially from our current expectations.
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with GAAP requires us to select appropriate accounting
policies and to make judgments and estimates affecting the application of those accounting policies. In applying our accounting
policies, different business conditions or the use of different assumptions may result in materially different amounts reported in the
consolidated financial statements.
We have identified the most critical accounting policies which were determined by considering accounting policies that involve
the most complex or subjective decisions or assessments. We also have other policies considered key accounting policies; however,
these policies do not meet the definition of critical accounting policies because they do not generally require us to make estimates or
judgments that are complex or subjective. We have reviewed these critical accounting policies and related disclosures with our board
of directors. Our significant accounting policies are more fully described in Note 1 to our consolidated financial statements.
As an “emerging growth company,” we have elected to delay the adoption of new or revised accounting standards until those
standards would otherwise apply to private companies. As a result, our financial statements may not be comparable to those of other
public companies.
Income Taxes
Description
We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These
estimates and judgments occur in the calculation of tax credits and deductions and in the calculation of certain tax assets and
liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes,
as well as the interest and penalties relating to uncertain tax positions. The calculation of our tax liabilities involves dealing with
uncertainties in the application of complex tax regulations. We recognize liabilities for uncertain tax positions based on a two-step
process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that
it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if
any. The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely of being
realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine
the probability of various possible outcomes. This evaluation is based on factors including, but not limited to, changes in facts or
circumstances, changes in tax law, effectively settled issues under audit and new audit activity.
A significant amount of time may pass before a particular matter, for which we may have established a reserve, is audited
and fully resolved.
Judgments and Uncertainties
41
The estimates of our tax contingencies reserve, if any, contain uncertainty because management must use judgment to estimate
the potential exposure associated with our various filing positions.
Effect if Actual Results Differ From Assumptions
Although we believe the estimates and judgments discussed herein are reasonable and we have adequate reserves for our tax
contingencies, actual results could differ, and we may be exposed to increases or decreases in those reserves and tax provisions that
could be material.
An unfavorable tax settlement could require the use of cash and could possibly result in an increased tax expense and effective
tax rate in the year of resolution. A favorable tax settlement could possibly result in a reduction in our tax expense, effective tax rate,
income taxes payable, other long-term liabilities and/or adjustments to our deferred tax assets, deferred tax liabilities or intangible
assets in the year of settlement or in future years.
Management has made the assumption that the deferred tax assets will generally be recovered through the reversal of the
deferred tax liabilities. Changes in the timing of the reversal pattern of these deferred tax liabilities, such as due to changes in asset
lives, could necessitate a further evaluation of whether a valuation allowance is required. While management does not expect a need
will arise to evaluate the valuation allowance, this would require management to estimate future taxable income, which would be
subjective.
Depreciable Lives of Assets
Description
Mountain and lodging operational assets, furniture and fixtures, computer equipment, software, vehicles and leasehold
improvements are primarily depreciated using the straight-line method over the estimated useful life of the asset. Assets may become
obsolete or require replacement before the end of their useful life in which case the remaining book value would be written-off or we
could incur costs to remove or dispose of such assets no longer in use.
Judgments and Uncertainties
The estimate of our useful lives of the assets contain uncertainty because management must use judgment to estimate the
useful life of the asset.
Effect if Actual Results Differ From Assumptions
Although we believe the estimates and judgments discussed herein are reasonable, actual results could differ, and we may be
exposed to increased expense related to depreciable assets disposed of, removed or taken out of service prior to its originally
estimated useful life, which may be material. A 10% decrease in the estimated total useful lives of depreciable assets would have
increased depreciation expense by approximately $1.0 million for fiscal 2014.
Long-lived Asset Impairment Evaluation
Description
We evaluate our long-lived assets, including property, equipment and land held for development, for impairment whenever
events or changes in circumstances indicate the carrying value of an asset may not be recoverable. If circumstances require a long-
lived asset to be tested for possible impairment, we compare undiscounted cash flows expected to be generated by the asset to its
carrying value. If the carrying value exceeds the expected undiscounted cash flow, an impairment adjustment would be made to
reduce the carrying value of the asset to its fair value. Fair value is determined by application of valuation techniques, including
discounted cash flow models, and independent appraisals, if considered necessary.
Judgments and Uncertainties
42
The determination of whether the carrying value is recoverable requires management to determine if events have occurred which
could indicate such carrying values could be impaired. Any evaluation of impairment would require management to use its judgment
regarding the estimated future cash flows generated by such assets.
Effects if Actual Results Differ From Assumptions
We believe there have been no events warranting evaluation of long-lived assets for impairment. If these assumptions are not
correct, this could impact the carrying value of our long-lived assets if the undiscounted cash flows are less than the carrying value.
If the undiscounted cash flows are less than the carrying value, an impairment would be recorded to the extent the fair value of such
assets is less than their carrying value. The estimate of fair value would be a judgment made by management regarding future cash
flows that could differ, possibly materially, from actual results
.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Fluctuations
On December 1, 2014, the Company completed its Debt Restructure as discussed more fully in Item 7, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” providing for the prepayment of certain of its debt
owed to EPR and the restructuring of all existing loan terms. Debt owed to EPR as of April 30, 2015, was $93.2 million. The interest
rate on this debt is subject to fluctuation, but the interest rate can be only increased by a maximum factor of 1.015 annually. At the
factor of 1.015, the additional annual interest expense on the variable rate outstanding debt is approximately $0.15 million. If interest
rates increased 1%, the additional interest cost to the Company would be approximately $0.9 million for one year. We do not perform
any interest rate hedging activities related to this debt.
43
Item 8. Financial Statement and Supplementary Data.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Income (Loss) for the years ended April 30, 2015, 2014 and 2013
Consolidated Balance Sheets as of April 30, 2015 and 2014
Consolidated Statements of Cash Flows for the years ended April 30, 2015, 2014 and 2013
Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2015, 2014
and 2013
Notes to the Consolidated Financial Statements
Page #
F -2
F - 3
F - 4
F - 5
F - 6
F - 7
F - 1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Peak Resorts, Inc. and Subsidiaries
Wildwood, Missouri
We have audited the accompanying consolidated balance sheets of Peak Resorts, Inc. and Subsidiaries as of April 30, 2015 and 2014,
and the related consolidated statements of income (loss), stockholders' equity, and cash flows for each of the three years in the
period ended April 30, 2015. These consolidated financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
Peak Resorts, Inc. and Subsidiaries as of April 30, 2015 and 2014, and the results of their operations and their cash flows for each of
the three years in the period ended April 30, 2015, in conformity with U.S. generally accepted accounting principles.
/s/ McGladrey LLP
St. Louis, Missouri
July 27, 2015
F - 2
Peak Resorts, Inc. and Subsidiaries
Consolidated Statements of Income (Loss)
(In thousands, except per share data)
Years ended April 30,
2015
2014
2013
$
104,858 $
105,205 $
99,688
Revenues
Costs and Expenses
Resort operating expenses
Depreciation and amortization
General and administrative expenses
Land and building rent
Real estate and other taxes
Settlement of lawsuit
Other Operating Income-gain on settlement of lawsuit
Income from Operations
Other Income (expense)
Interest, net of interest capitalized of $488, $344 and $3,680 in 2015,
2014 and 2013, respectively
Defeasance fee paid with debt restructure
Gain on sale/leaseback
Investment income
Income (Loss) before income tax expense (benefit)
Income tax expense (benefit)
Net Income (Loss)
Basic and diluted earnings (loss) per share
Cash dividends declared per common share
$
$
$
72,670
9,450
4,088
1,440
1,828
-
89,476
2,100
17,482
(15,458)
(5,000)
333
11
(20,114)
(2,632)
(778)
(1,854) $
73,942
9,155
3,240
1,464
1,651
700
90,152
68,091
8,850
2,529
1,428
1,817
-
82,715
-
-
15,053
16,973
(17,359)
(12,785)
-
333
11
-
333
9
(17,015)
(12,443)
(1,962)
(461)
(1,501) $
4,530
1,823
2,707
0.68
-
(0.22) $
(0.38) $
0.2466 $
- $
See Notes to Consolidated Financial Statements.
F - 3
Peak Resorts Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share and per share data)
April 30,
2015
April 30,
2014
Assets
Current assets
Cash and cash equivalents
Restricted cash balances
Accounts receivable
Inventory
Deferred income taxes
Prepaid expenses and deposits
Property and equipment-net
Land held for development
Other assets
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses
Accrued salaries, wages and related taxes and benefits
Unearned revenue
EB-5 investor funds in escrow
Current portion of deferred gain on sale/leaseback
Current portion of long-term debt and capitalized lease obligation
Long-term debt
Capitalized lease obligation
Deferred gain on sale/leaseback
Deferred income taxes
Other liabilities
Commitments and contingencies
Stockholders' Equity
Common stock, $.01 par value, 20,000,000 shares authorized, 13,982,400 and
3,982,400 shares issued in 2015 and 2014, respectively
Additional paid-in capital
Retained earnings (deficit)
$
$
$
$
$
$
$
16,849
37,519
1,639
1,583
970
1,930
60,490
143,944
35,780
1,326
241,540
8,218
927
8,606
30,002
333
999
49,085
97,569
1,494
3,511
8,831
612
140
82,538
(2,240)
80,438
241,540
$
13,186
13,063
396
1,541
875
1,433
30,494
136,696
36,877
2,470
206,537
5,050
886
7,458
-
333
984
14,711
173,973
191
3,844
9,682
648
40
385
3,063
3,488
206,537
See Notes to Consolidated Financial Statements.
F - 4
Peak Resorts, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(In thousands)
Cash Flows from Operating Activities
Net income (loss)
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Deferred income tax
Depreciation and amortization of property and equipment
Amortization and write-off of deferred financing costs
Amortization of other liabilities
Gain on sale/leaseback
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable
Inventory
Prepaid expenses and deposits
Other assets
Accounts payable and accrued expenses
Accrued salaries, wages and related taxes and benefits
Unearned revenue
Net cash provided by operating activities
Cash Flows from Investing Activities
Additions to property and equipment
Additions to land held for development
Change in restricted cash
Net cash used in by investing activities
Cash Flows from Financing Activities
Payments on long-term debt and capitalized lease obligation
Additions to EB-5 investor funds held in escrow
Net proceeds from issuance of common stock
Payment of deferred financing costs
Distributions to stockholders
Net cash provided by (used in) financing activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, beginning of year
Cash and Cash Equivalents, end of year
Supplemental Schedule of Cash Flow Information
Cash paid for interest, including $488, $344 and $3,680 capitalized in 2015,
2014 and 2013, respectively
Supplemental Disclosure of Noncash Investing
and Financing Activities
Capital lease agreements to acquire equipment
Acquisition of equipment with long-term borrowings
Land held for development financed with long-term borrowings
Acquisition of Sycamore Lake, Inc. (Alpine Valley Ski Area) financed
with long-term borrowings
Years ended April 30,
2015
2014
2013
$
(1,854) $
(1,501) $
2,707
(946)
9,450
141
(36)
(333)
(1,243)
(42)
(497)
(202)
1,245
41
1,148
6,872
(12,116)
(109)
(24,456)
(36,681)
(77,058)
30,002
82,253
(198)
(1,527)
33,472
3,663
13,186
(511)
9,155
52
(36)
(333)
(30)
(85)
(550)
(76)
1,331
(188)
2,534
9,762
(6,281)
(97)
(923)
(7,301)
(1,167)
-
-
-
(79)
(1,246)
1,215
11,971
16,849 $
13,186 $
1,743
8,850
52
(36)
(333)
981
607
(609)
(285)
308
(33)
173
14,125
(2,154)
(3,850)
(1,105)
(7,109)
(1,128)
-
-
-
(96)
(1,224)
5,792
6,179
11,971
15,810 $
16,952 $
12,733
2,028 $
$
-
$
-
144 $
3,603 $
1,000 $
-
$
- $
795
9,402
-
2,550
$
$
$
$
$
$
See Notes to Consolidated Financial Statements.
F - 5
Peak Resorts Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
(In thousands except share data)
Common Stock
Shares
Dollars
Additional
Paid-in
Capital
Retained
Earnings (deficit)
Total
Balances, April 30, 2012
3,982,400 $
40
$
385 $
1,857 $
2,282
Net income
-
-
-
2,707
2,707
Balances, April 30, 2013
3,982,400 $
40 $
385 $
4,564 $
4,989
Net loss
Balances, April 30, 2014
Issuance of common stock, net
of issuance cost
Net loss
Dividends declared
-
3,982,400
10,000,000
-
-
-
40
100
-
-
-
385
82,153
-
-
(1,501)
(1,501)
3,063
3,488
-
(1,854)
(3,449)
82,253
(1,854)
(3,449)
80,438
Balances, April 30, 2015
13,982,400 $
140 $
82,538 $
(2,240) $
See Notes to Consolidated Financial Statements.
F - 6
PEAK RESORTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended April 30, 2015, 2014 and 2013
(In thousands, except share and per share data)
Note 1. Nature of Business and Significant Accounting Policies
Description of business: Peak Resorts, Inc. (the “Company”) and its subsidiaries operate in a single business segment—ski resort
operations. The Company’s ski resort operations consist of snow skiing, snowboarding and snow sports areas in Wildwood and
Weston, Missouri; Bellefontaine and Cleveland, Ohio; Paoli, Indiana; Blakeslee and Lake Harmony, Pennsylvania; Bartlett,
Bennington and Pinkham Notch, New Hampshire; and West Dover, Vermont and an 18 hole golf course in West Dover, Vermont.
The Company also manages hotels in Bartlett, New Hampshire and West Dover, Vermont and operates a restaurant in Lake
Harmony, Pennsylvania.
The Company's revenues are highly seasonal in nature. The vast majority of revenues are generated during the ski season, which
occurs during the third and fourth fiscal quarters. Operations occurring outside of the ski season typically result in losses and
negative cash flows. Additionally, operations on certain holidays contribute significantly to the Company's revenues, most notably
Christmas, Dr. Martin Luther King, Jr. Day and Presidents Day.
The seasonality of the Company's revenues amplifies the effect on the Company's revenues, operating earnings and cash flows of
events that are outside the Company's control. While the Company's geographically diverse operating locations help mitigate its
effects, adverse weather conditions could limit customer access to the Company's resorts, render snowmaking wholly or partially
ineffective in maintaining ski conditions, cause increased energy use and other operating costs related to snowmaking efforts and, in
general, can result in decreased skier visits regardless of ski conditions.
The Company’s operating segments are aggregated into a single reportable segment. Management has determined a single
reportable segment is appropriate based on the uniformity of services and similar operating characteristics.
Principles of consolidation: The consolidated financial statements include the accounts of Peak Resorts, Inc., the parent company,
and all of its wholly owned subsidiaries, hereinafter collectively referred to as the "Company": Boulder View Tavern, Inc., Deltrecs,
Inc. (Deltrecs, Inc. has two wholly owned subsidiaries: Boston Mills Ski Resort, Inc. and Brandywine Ski Resort, Inc.), Hidden Valley
Golf Course, Inc., JFBB Ski Areas, Inc. (doing business as "Jack Frost" and "Big Boulder"), L.B.O. Holding, Inc. (doing business as
"Attitash Mountain"), Mad River Mountain, Inc., Mount Snow Ltd. (and its wholly owned subsidiaries) Carinthia Group I, LP, a
limited partnership in which Mount Snow LTD is the sole general partner, Paoli Peaks, Inc., S N H Development, Inc. (doing business
as "Crotched Mountain"), Snow Creek, Inc., Sycamore Lake, Inc. (doing business as "Alpine Valley"), and WC Acquisition Corp.
(doing business as "Wildcat Mountain Ski Area"). All material intercompany transactions and balances have been eliminated.
Use of estimates: The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the amounts and disclosures reported in the
consolidated financial statements and accompanying notes. Significant items subject to estimates and assumptions include the
carrying value of property and equipment, and land held for development. As future events and their effects cannot be determined
with certainty, actual results could differ significantly from those estimates.
Statements of cash flows: For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash equivalents.
Additionally, all credit card and debit card transactions that process in less than seven days are classified as cash and cash
equivalents. The majority of payments due from banks for third-party credit card and debit card transactions process within 24 to 48
hours, except for transactions occurring on a Friday, which are generally processed the following Monday. The amounts due from
banks for these transactions classified as cash and cash equivalents totaled $1,368 and $1,651 at April 30, 2015 and 2014,
respectively.
F - 7
Restricted cash: The provisions of certain of the Company's debt instruments generally require that the Company make and maintain
a deposit, to be held in escrow for the benefit of the lender, in an amount equal to the estimated minimum interest payment through
December 31 of each fiscal year. In the absence of an event of default under the Company's promissory notes, the requirement to
maintain such a deposit is eliminated when the Mount Snow Development Debt discussed in Note 4 is repaid in full. Restricted cash
at April 30, 2015 and 2014 is comprised of the interest related escrow balances and EB-5 investors funds held in escrow.
In addition, the Company has funds it is holding in escrow in connection with its efforts to raise funds under the U.S. government's
Immigrant Investor Program, commonly known as the EB-5 program (the “EB-5 Program”). The EB-5 Program was first enacted in
1992 to stimulate the U.S. economy through the creation of jobs and capital investments in U.S. companies by foreign investors. In
turn, these foreign investors are, pending petition approval, granted visas for lawful residence in the U.S. Under the EB-5 Program, a
limited number of visas are reserved for such foreign investors each year.
Reserve for uncollectible accounts receivable: The Company performs ongoing reviews of the collectability of accounts receivable
and, if considered necessary, establishes a reserve for estimated credit losses. In assessing the need for and in determining the
amount of any reserve for credit losses, the Company considers the level of historical bad debts, the credit worthiness of significant
debtors based on periodic credit evaluations and significant economic developments that could adversely impact upon a customer's
ability to pay amounts owed the Company.
Inventory: Inventory is stated at the lower of cost (first-in, first-out method) or market and consists primarily of retail goods, food
and beverage products.
Property and equipment: Property and equipment is carried at cost net of accumulated depreciation, amortization and impairment
charges, if any. Costs to construct significant assets include capitalized interest during the construction and development period.
Expenditures for replacements and major betterments or improvements are capitalized; maintenance and repair expenditures are
charged to expense as incurred. Depreciation and amortization are determined using both straight-line and accelerated methods over
estimated useful lives ranging from 3 to 25 years for land improvements, 5 to 40 years for building and improvements and 3 to 25
years for equipment, furniture and fixtures.
Land held for development: The land held for development is carried in the accompanying consolidated balance sheets at
acquisition cost plus costs attributable to its development, including capitalized interest as part of this ongoing development.
Deferred development costs: Costs related to major development projects at the Company's ski resorts, including planning,
engineering and permitting, are capitalized. When acquiring, developing and constructing real estate assets, the Company capitalizes
costs. Capitalization begins when the activities related to development have begun and ceases when activities are substantially
complete and the asset is available for use. Costs capitalized include permits, licenses, fees, legal costs, interest, development, and
construction costs.
Deferred financing costs: Debt issuance expenses, included in long-term debt in the accompanying consolidated balance sheets,
incurred in connection with certain mortgage indebtedness are being amortized under the straight-line basis which approximates the
interest method over the term of the related debt.
Long-lived Assets: The Company evaluates potential impairment of long-lived assets and long-lived assets to be disposed of
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If the sum
of the expected cash flows, on an undiscounted basis, is less than the carrying amount of the asset, an impairment loss is recognized
in the amount by which the carrying amount of the asset exceeds its fair value. The Company does not believe any events or
changes in circumstances indicating an impairment of the carrying amount of a long-lived asset occurred during the years ended
April 30, 2015, 2014 and 2013.
Business combinations: Historical acquisitions were accounted for as purchase transactions. Accordingly, the assets and liabilities
of acquired entities were recorded at their estimated fair values at the dates of the acquisitions.
Revenue recognition: Revenues from operations are generated from a wide variety of sources including snow pass sales, snow
sports lessons, equipment rentals, retail product sales, food and beverage operations, and golf course operations. Revenues are
recognized as services are provided or products are sold. Sales of season passes are initially deferred in unearned revenue and
recognized ratably over the expected ski season which typically runs from early December to mid-April.
F - 8
Advertising costs: Advertising costs are expensed at the time such advertising commences. Advertising expense for the years
ended April 30, 2015, 2014 and 2013 was $2,155, $2,206 and $2,008, respectively.
Taxes collected from customers: Taxes collected from customers and remitted to tax authorities are local and state sales taxes on
snow pass sales as well as food service and retail transactions at the Company's resorts. Sales taxes collected from customers are
recognized as a liability, with such liability being reduced when collected amounts are remitted to the taxing authority.
Income taxes: Deferred income tax assets and liabilities are measured at enacted tax rates in the respective jurisdictions where the
Company operates. In assessing the ability to realize deferred tax assets, the Company considers whether it is more likely than not
that some portion or all deferred tax assets will not be realized and a valuation allowance would be provided if necessary.
The Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 740, “Income Taxes”, also provides
guidance with respect to the accounting for uncertainty in income taxes recognized in a Company’s consolidated financial
statements, and it prescribes a recognition threshold and measurement attribute criteria for the consolidated financial statement
recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not have any material
uncertain tax positions.
With few exceptions, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for
years before 2009.
The Company’s policy is to accrue income tax related interest and penalties, if applicable, within income tax expense.
Recent accounting pronouncements: In July 2013, the FASB issued Accounting Standards Update (“ASU”) 2013-11, “Income Taxes
(Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax
Credit Carryforward Exists” (“ASU 2013-11”). ASU 2013-11, requires an unrecognized tax benefit, or a portion of an unrecognized tax
benefit, be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar
tax loss, or a tax credit carryforward. If a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available
at the reporting date, the unrecognized tax benefit should be presented in the financial statements as a liability and not combined
with deferred tax assets. ASU 2013-11 is effective for fiscal years, and interim periods within those years, beginning after
December 15, 2013. Pursuant to the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), the Company is permitted to
adopt the standard for fiscal years, and interim periods within those years, beginning after December 15, 2014. Early adoption and
retrospective application is permitted. The Company is currently evaluating the impact of the adoption of ASU 2013-11 on the
consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”), requiring an
entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to
customers. ASU 2014-09 will replace most existing revenue recognition guidance under U.S. generally accepted accounting
principles when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect
transition method. Early adoption is not permitted. The updated standard becomes effective for annual reporting periods beginning
after December 15, 2016, including interim periods within that reporting period. Pursuant to the JOBS Act, the Company is permitted
to adopt the standard for annual reporting periods beginning after December 15, 2017 and interim periods within annual periods
beginning after December 15, 2018. The Company has not yet selected a transition method and is currently evaluating the effect that
the updated standard will have on the consolidated financial statements.
The FASB issued guidance through ASU 2015-03, “Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of
Debt Issuance Costs” (“ASU 2015-03”) which requires debt issuance costs related to a recognized debt liability to be presented in
the balance sheet as a direct deduction from the carrying amount of that debt liability, and no longer recording these costs as assets.
ASU 2015-03 is effective for annual periods beginning after December 15, 2015. As early adoption is permitted, the Company has
elected to incorporate the early adoption of this guidance into the financial statements filed as part of this annual report on Form 10-
K, including applying the guidance retrospectively to all prior periods presented. The adoption of ASU 2015-03 is a change in
accounting principle. The nature and reason for this change is a direct result of guidance issued by the FASB resulting in a
transition and effective date for financial statements issued for fiscal years beginning after December 15, 2015. The Company elected
to apply ASU 2015-03 early for comparability of future results, as this is the Company’s first annual report on Form 10-K.The
transition method used involved reclassification of the Company’s balance sheet of the unamortized debt issuance costs. The prior
period unamortized debt issuance costs
F - 9
were retrospectively adjusted from an asset to a liability in the financial statements. The financial statement line item reclassification
involved $811 and $754 of unamortized debt issuance costs in 2015 and 2014, respectively.
Note 2. Property and Equipment
Property and equipment consists of the following at April 30, 2015 and 2014 (dollars in thousands):
Land and improvements
Buildings and improvements
Equipment, furniture and fixtures
Less: accumulated depreciation and amortization
$
$
2015
2014
28,197 $
72,351
126,853
227,401
83,457
143,944 $
26,330
71,614
113,078
211,022
74,326
136,696
At April 30, 2015 and 2014, equipment with a cost of $2,804 and $4,207, respectively, and accumulated depreciation of $425 and
$2,593, respectively, was subject to the capital leases discussed in Note 10.
Depreciation expense for the years ended April 30, 2015 2014 and 2013 totaled $9,450, $9,155 and $8,850, respectively.
Note 3. Other Assets
The components of other assets at April 30, 2015 and 2014 are as follows (dollars in thousands):
Goodwill
Deferred development costs
Other
Note 4. Long-term Debt
2015
2014
627 $
364
335
1,326 $
627
1,707
136
2,470
$
$
Long-term debt consisted of borrowings pursuant to the loans and other credit facilities discussed below, as follows (dollars in
thousands):
April 30, 2015
April 30, 2014
Attitash/Mount Snow Debt; payable in monthly interest only payments at an increasing interest
rate (10.93% at April 30, 2015 and 2014); remaining principal and interest due on December 1, 2034 $
51,050 $
63,500
Credit Facility Debt; payable in monthly interest only payments at an increasing interest rate
(10.13% at April 30, 2015 and 9.98% at April 30, 2014); remaining principal and interest due on
December 1, 2034
37,562
47,029
Mount Snow Development Debt (interest at 10.00% at April 30, 2014). Paid in full in December
2014.
-
42,907
F - 10
Crotched Mountain Debt (interest at 10.27% at April 30, 2014). Paid in full December 2014.
-
10,972
Sycamore Lake (Alpine Valley) Debt; payable in monthly interest only payments at an increasing
interest rate (10.40% at April 30, 2015 and 10.20% at April 30, 2014); remaining principal and
interest due on December 1, 2034
4,550
4,550
Wildcat Mountain Debt; payable in monthly installments of $27, including interest at a rate of
4.00%, with remaining principal and interest due on December 22, 2020
3,790
3,962
Other debt
Less unamortized debt issuance costs
Less: current maturities
1,931
2,311
(811)
98,072
503
(754)
174,477
504
$
97,569 $
173,973
On November 10, 2014, in connection with the Company’s initial public offering, the Company entered into a Restructure Agreement
(the “Restructure Agreement”) with certain affiliates of EPR Properties (“EPR”), the Company’s primary lender, providing for the (i)
prepayment of approximately $75.8 million of formerly non-prepayable debt secured by the Crotched Mountain, Attitash, Paoli Peaks,
Hidden Valley and Snow Creek resorts and (ii) retirement of one of the notes associated with the future development of Mount Snow
(the “Debt Restructure”). On December 1, 2014, the Company entered into various agreements in order to effectuate the Debt
Restructure, as more fully described in the Company’s Current Report on Form 8-K filed with the SEC on December 5, 2014. Pursuant
to the Debt Restructure, the Company paid a defeasance fee of $5.0 million to EPR in addition to the consideration described below.
In exchange for the prepayment right, the Company granted EPR a purchase option on the Boston Mills, Brandywine, Jack Frost, Big
Boulder and Alpine Valley properties, subject to certain conditions. If EPR exercises a purchase option, EPR will enter into an
agreement with the Company for the lease of each such acquired property for an initial term of 20 years, plus options to extend the
lease for two additional periods of ten years each. All previously existing option agreements between the Company and EPR were
terminated.
Over the years, the Company has depreciated the book value of these properties pursuant to applicable accounting rules, and as
such, it has a low basis in the properties. As a result, the Company will realize significant gains on the sale of the properties to EPR if
the option is exercised. The Company will be required to pay capital gains tax on the difference between the purchase price of the
properties and the tax basis in the properties, which is expected to be a substantial cost. To date, EPR has not exercised the option.
Additionally, the Company agreed to extend the maturity dates on all non-prepayable notes and mortgages secured by the Mount
Snow, Boston Mills, Brandywine, Jack Frost, Big Boulder and Alpine Valley properties remaining after the Debt Restructure by
seven years to December 1, 2034, and to extend the lease for the Mad River property, previously terminating in 2026, until December
31, 2034.
The Company also granted EPR a right of first refusal to provide all or a portion of the financing associated with any purchase,
ground lease, sale/leaseback, management or financing transaction contemplated by the Company with respect to any new or
existing ski resort property for a period of seven years or until financing provided by EPR for such transactions equals or exceeds
$250 million in the aggregate. Proposed financings from certain types of institutional lenders providing a loan to value ratio of less
than 60% (as relates to the applicable property being financed) are excluded from the right of first refusal. The Company granted EPR
a separate right of first refusal in the event that the Company wishes to sell, transfer, convey or otherwise dispose of any or all of the
Attitash ski resort for seven years. The Attitash right excludes the financing or mortgaging of Attitash.
F - 11
In connection with the Debt Restructure, the Company entered into a Master Credit and Security Agreement with EPR (the “Master
Credit Agreement”) governing the restructured debt with EPR. Pursuant to the Master Credit Agreement, EPR agreed to maintain the
following loans to the Company following the prepayment of certain outstanding debt with proceeds from the Company’s initial
public offering: (i) a term loan in the amount of approximately $51.1 million to the Company and its subsidiary Mount Snow, Ltd.,
(included in the table above as the “Attitash/Mount Snow Debt”); (ii) a term loan in the amount of approximately $23.3 million to the
Company and its subsidiaries Brandywine Ski Resort, Inc. and Boston Mills Ski Resort, Inc. (the “Boston Mills/Brandywine Debt”);
(iii) a term loan in the amount of approximately $14.3 million to the Company and its subsidiary JFBB Ski Areas, Inc. (the “JFBB Debt”
and together with the Boston Mills/Brandywine Debt, included in the table above as the “Credit Facility Debt”); and (iv) a term loan
in the amount of approximately $4.6 million to the Company and its subsidiary Sycamore Lake, Inc. (included in the table above as
the “Sycamore Lake (Alpine Valley) Debt”).
Interest will be charged at a rate of (i) 10.13% per annum as to each of the Boston Mills/Brandywine Debt and JFBB Debt; (ii) 10.40%
per annum as to the Sycamore Lake (Alpine Valley) Debt; and (iii) 10.93% per annum pursuant to the Attitash/Mount Snow
Debt. Each of the notes governing the restructured debt provides that interest will increase each year by the lesser of three times the
percentage increase in the Consumer Price Index ("CPI") or a factor of 1.015 (the "Capped CPI Index"). Past due amounts will be
charged a higher interest rate and be subject to late charges.
The Master Credit Agreement further provides that in addition to interest payments, the Company must pay the following with
respect to all restructured debt other than the Attitash/Mount Snow Debt: an additional annual payment equal to 10% of the gross
receipts attributable to the properties serving as collateral of the restructured debt (other than Mount Snow) for such year in excess
of an amount equal to the quotient obtained by dividing (i) the annual interest payments payable pursuant to the notes governing
the restructured debt (other than with respect to the Attitash/Mount Snow Debt) for the immediately preceding year by (ii) 10%. The
Company must pay the following with respect to the Attitash/Mount Snow Debt: an additional annual payment equal to 12% of the
gross receipts generated at Mount Snow for such year in excess of an amount equal to the quotient obtained by dividing (i) the
annual interest payments payable under the note governing the Attitash/Mount Snow Debt for the immediately preceding year by
(ii) 12%. No additional interest payments were due for the years ended April 30, 2015 and 2014.
The Master Credit Agreement includes restrictions on certain transactions, including mergers, acquisitions, leases, asset sales, loans
to third parties, and the incurrence of certain additional debt and liens. Financial covenants set forth in the Master Credit Agreement
consist of a maximum leverage ratio (as defined in the Master Credit Agreement) of 65%, above which the Company and certain of its
subsidiaries are prohibited from incurring additional indebtedness, and a consolidated fixed charge coverage ratio (as defined in the
Master Credit Agreement) covenant, which (i) requires the Company to increase the balance of its debt service reserve account if the
Company’s consolidated fixed charge coverage ratio falls below 1.50:1.00 and (ii) prohibits the Company from paying dividends if the
ratio is below 1.25:1.00. The payment of dividends is also prohibited during default situations.
Under the terms of the Master Credit Agreement, the occurrence of a change of control is an event of default. A change of control
will be deemed to occur if (i) within two years after the effective date of the Master Credit Agreement, the Company’s named
executive officers (Messrs. Timothy Boyd, Stephen Mueller and Richard Deutsch) cease to beneficially own and control less than
50% of the amount of the Company’s outstanding voting stock that they own as of the effective date of the Master Credit
Agreement, or (ii) the Company ceases to beneficially own and control less than all of the outstanding shares of voting stock of
those subsidiaries which are borrowers under the Master Credit Agreement. Other events of default include, but are not limited to, a
default on other indebtedness of the Company or its subsidiaries.
None of the restructured debt may be prepaid without the consent of EPR. Upon an event of default, as defined in the Debt
Restructure Agreements, EPR may, among other things, declare all unpaid principal and interest due and payable. Each of the notes
governing the restructured debt matures on December 1, 2034.
As a condition to the Debt Restructure, the Company entered into the Master Cross Default Agreement with EPR (the “Master Cross
Default Agreement”). The Master Cross Default Agreement provides that any event of default under existing or future loan or lien
agreements between the Company or its affiliates and EPR, and any event of default under the Lease Amendment, shall automatically
constitute an event of default under each of such loan and lien agreements and Lease Amendment, upon which EPR will be entitled
to all of the remedies provided under such agreements and Lease Amendment in the case of an event of default.
Also in connection with the Debt Restructure, the Company and EPR entered into the Guaranty Agreement (the “Guaranty
Agreement”). The Guaranty Agreement obligates the Company and its subsidiaries as guarantors of all debt evidenced by
F - 12
the Debt Restructure Agreements. The table below illustrates the potential interest rates applicable to the Company’s fluctuating
interest rate debt for each of the next five years, assuming an effective rate increase by the Capped CPI Index:
(1)
2015
2016
2017
2018
2019
Attitash/Mount Snow
Debt
Credit Facility Debt
Sycamore Lake/
(Alpine Valley) Debt
10.93%
11.09%
11.26%
11.43%
11.60%
10.28%
10.43%
10.59%
10.75%
10.91%
10.56%
10.71%
10.88%
11.04%
11.20%
(1)
For 2015, the dates of the rates presented are as follows: (i) April 1, 2015 for the Attitash/Mount Snow Debt; (ii) October 1,
2015 for the Credit Facility Debt; and (iii) December 1, 2015 for the Sycamore Lake (Alpine Valley) Debt.
The Capped CPI Index is an embedded derivative, but the Company has concluded that the derivative does not require bifurcation
and separate presentation at fair value because the Capped CPI Index was determined to be clearly and closely related to the debt
instrument.
The Wildcat Mountain Debt due December 22, 2020 represents amounts owed pursuant to a promissory note in the principal amount
of $4.5 million made by WC Acquisition Corp. in favor of Wildcat Mountain Ski Area, Inc., Meadow Green-Wildcat Skilift Corp. and
Meadow Green-Wildcat Corp. (the “Wildcat Note”). The Wildcat Note, dated November 22, 2010, was made in connection with the
acquisition of Wildcat Mountain, which was effective as of October 20, 2010. The interest rate as set forth in the Wildcat Note is
fixed at 4.00%.
A substantial portion of the Company’s assets serve as collateral for the Company’s long-term debt.
Future aggregate annual principal payments under all indebtedness are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
$
$
503
766
522
702
160
95,419
98,072
The Mount Snow Development Debt represented obligations incurred to provide financing for the acquisition of land at Mount
Snow that is in development stages. The Crotched Mountain Debt represented amounts incurred to pay off outstanding debt
secured by the Crotched Mountain ski resort and for general working capital purposes. The Mount Snow Development Debt and
Crotched Mountain Debt were paid in full in connection with the Debt Restructure.
Deferred financing costs are net of accumulated amortization of $191 and $371 at April 30, 2015 and 2014, respectively. Amortization
of deferred financing costs will be $50 for each year of the five-year period ending April 30, 2020. This amortization is included in
interest expense. Amortization for the years ended April 30, 2015, 2014 and 2013 totaled $141, $52 and $52, respectively
F - 13
Note 5. Income Taxes
The provision for income taxes for the years ended April 30, 2015, 2014 and 2013 consists of the following (in thousands):
Current:
Federal
State taxes based on income
Benefit of net operating losses
Deferred:
Federal
State
2015
2014
- $
168
-
168
(895)
(51)
(946)
(778) $
- $
50
-
50
(635)
124
(511)
(461) $
$
$
2013
1,574
226
(1,720)
80
1,694
49
1,743
1,823
Deferred income taxes consist of the following at April 30, 2015 and 2014 (in thousands):
Deferred tax assets:
Deferred gain on sale/leaseback
Accrued compensation
Unearned revenue
Net operating loss carryforwards
Deferred tax liabilities:
Property and equipment
2015
2014
1,307 $
222
748
7,746
10,023
(17,884)
(17,884)
(7,861) $
1,420
248
627
6,884
9,179
(17,986)
(17,986)
(8,807)
$
$
Deferred income taxes are included in the April 30, 2015 and 2014 consolidated balance sheet as follows (in thousands):
Current assets
Noncurrent liabilities
2015
2014
970
(8,831)
(7,861) $
875
(9,682)
(8,807)
$
Realization of deferred tax assets is dependent upon sufficient future income during the period that the deductible temporary
differences and carryforwards are expected to be available to reduce taxable income. Based on management’s projections, the net
deferred tax assets will be recovered with projected taxable income from the three years through April 30, 2018. There was no
valuation allowance deemed necessary.
F - 14
Loss carryforwards for tax purposes as of April 30, 2015, have the following expiration dates (in thousands):
Expiration date
2019
2031
2033
2034
Amount
278
14,872
2,907
2,296
20,353
$
$
The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on
available evidence, are not expected to be realized.
For fiscal years 2015, 2014 and 2013, the expected income tax rate differs from the statutory rate as follows (in thousands):
Computed "expected" tax (benefit)
Increase (decrease) in income tax (benefit) resulting from:
Permanent differences
State income tax
Other
Income tax (benefit)
2015
2014
(895) $
(667) $
41
60
16
(778) $
46
174
(14)
(461) $
$
$
2013
1,540
44
230
9
1,823
In connection with the Company’s initial public offering in November 2014, a change of ownership in the Company occurred
pursuant to the provisions of the Tax Reform Act of 1986. As a result, the Company’s usage of its net operating loss carryforwards
will be limited each year; however, management believes the full benefit of those carryforwards will be realized prior to their
respective expiration dates.
The Company accounts for unrecognized tax benefits also in accordance with ASC 740, Income Taxes, which prescribes a minimum
probability threshold that a tax position must meet before a financial statement benefit is recognized. The minimum threshold is
defined as a tax position that is more likely than not to be sustained upon examination by the applicable taxing authority, including
resolution to any related appeals or litigation, based solely on the technical merits of the position. The Company has no accrual for
interest or penalties related to uncertain tax positions at April 30, 2015 and 2014, and did not recognize interest or penalties in the
Statements of Operations during the years ended April 30, 2015, 2014 and 2013.
The major jurisdictions in which the Company files income tax returns include the federal and state jurisdictions within the United
States. The tax years after 2009 remain open to examination by federal and state taxing jurisdictions. However, the Company has
NOLs beginning in 2001 which would cause the statute of limitations to remain open for the year in which the NOL was incurred.
Management regularly assesses the likelihood that its net deferred tax assets will be recovered from future taxable income. To the
extent management believes that it is more likely than not that a net deferred tax asset will not be realized, a valuation allowance is
established. When a valuation allowance is established or increased, an income tax charge is included in the consolidated financial
statements and net deferred tax assets are adjusted accordingly. Changes in tax law, statutory tax rates, and estimates of the
Company’s future taxable income levels could result in actual realization of the net deferred tax assets
F - 15
being materially different from the amounts provided for in the consolidated financial statements. If the actual recovery amount of
the deferred tax asset is less than anticipated, the Company would be required to write off the remaining deferred tax asset and
increase the tax provision, resulting in a reduction of net income and stockholders’ equity.
The Company does not have any unrecognized tax benefits and has not incurred any interest and penalties for fiscal years 2015,
2014, and 2013.
Note 6. Acquisition
Effective October, 2012, the Company acquired substantially all of the outstanding common stock of Sycamore Lake, Inc. (doing
business as Alpine Valley) in the Cleveland, Ohio metropolitan area for approximately $2.6 million. There were no significant
transactions costs incurred. Of the total purchase price, $2.55 million was financed under a 10% promissory note to EPT Ski
Properties, Inc., subject to annual increases as described in Note 4. The note requires monthly payments of interest until its maturity
in December 2032 when a final principal amount is due. The note was amended in November 2014 as a part of the debt restructuring.
The maturity was extended to December 2034. Alpine Valley's results of operations are included in the accompanying 2013
consolidated financial statements since the date of acquisition. The allocation of purchase price is as follows (in thousands):
Buildings and improvements
Land
Equipment
Goodwill
Total assets acquired
Deferred tax liability
Net assets acquired
$
$
1,306
1,180
116
627
3,229
(627)
2,602
The following presents the unaudited pro forma consolidated financial information as if the acquisition of Sycamore Lake, Inc. was
completed on May 1, 2012, the beginning of the Company's 2013 fiscal year. The following pro forma financial information includes
adjustments for depreciation and interest for the acquisition note and property and equipment recorded at the date of acquisition.
This pro forma financial information is presented for informational purposed only and does not purport to be indicative of the results
of future operations or the results that would have occurred had the acquisition taken place on May 1, 2010 (in thousands except per
share data).
Net revenues
Net earnings
Pro forma basis and diluted earnings per share
Note 7. Sale/Leaseback
2013
(Unaudited)
99,750
2,404
0.60
$
$
$
In November 2005, the Company sold Mad River Mountain and simultaneously leased the property back for a period of 21 years.
The resultant gain was deferred and is being ratably recognized in income over the term of the lease.
Note 8. Employee Benefit Plan
F - 16
The Company maintains a tax-deferred savings plan for all eligible employees. Employees become eligible to participate after
attaining the age of 21 and completing one year of service. Employee contributions to the plan are tax-deferred under Section 401(k)
of the Internal Revenue Code of 1986, as amended. Company matching contributions are made at the discretion of the board of
directors. No contributions were made in 2015 and 2014. A contribution of $250 was made in 2013.
On November 4, 2015, the Company’s board of directors adopted the Peak Resorts, Inc. 2014 Equity Incentive Plan (the “Incentive
Plan”), and on November 5, 2014, the Company’s stockholders approved the Incentive Plan. The stockholders approved a maximum
of 559,296 shares to be available for issuance under the Incentive Plan. The Incentive Plan authorizes the Company to grant stock
options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock based awards, cash awards, or
any combination thereof, as defined in and allowed by the Incentive Plan. No awards have been made under the Incentive Plan.
Note 9. Financial Instruments and Concentrations of Credit Risk
The following methods and assumptions were used to estimate the fair value of each class of financial instruments to which the
Company is a party:
Cash and cash equivalents, restricted cash: Due to the highly liquid nature of the Company’s short-term investments, the carrying
values of cash and cash equivalents and restricted cash approximate their fair values.
Accounts receivable: The carrying value of accounts receivable approximate their fair value because of their short-term nature.
Accounts payable and accrued expenses: The carrying value of accounts payable and accrued liabilities approximates fair value due
to the short- term maturities of these amounts.
Long-term debt: The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt of the same remaining maturities. The interest rates on the
Company’s long-term debt instruments are consistent with those currently available to the Company for borrowings with similar
maturities and terms and, accordingly, their fair values are consistent with their carrying values.
Concentrations of credit risk: The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily
of cash and cash equivalents and restricted cash. The Company’s cash and cash equivalents and restricted cash are on deposit with
financial institutions where such balances will, at times, be in excess of federally insured limits. Excess cash balances are
collateralized by the backing of government securities. The Company has not experienced any loss as a result of those deposits.
Note 10. Commitments and Contingencies
Restricted cash: The provisions of certain of the Company’s debt instruments generally require that the Company make
and maintain a deposit, to be held in escrow for the benefit of the lender, in an amount equal to the estimated minimum
interest payment for the upcoming fiscal year. In addition, the Company has funds it is holding in escrow in connection
with its efforts to raise funds under the EB-5 Program. The Company intends to use the current and future funds for
future development.
Loss contingencies: The Company is periodically involved in various claims and legal proceedings, many of which occur in the
normal course of business. Management routinely assesses the likelihood of adverse judgments or outcomes, including
consideration of its insurable coverage and discloses or records estimated losses in accordance with ASC 450, “Contingencies”.
After consultation with legal counsel, the Company does not anticipate that liabilities arising out of these claims would, if plaintiffs
are successful, have a material adverse effect on its business, operating results or financial condition.
Leases: The Company leases certain land, land improvements, buildings and equipment under non-cancelable operating leases.
Certain of the leases contain escalation provisions based generally on changes in the CPI with maximum annual percentage increases
capped at 1.5% to 4.5%. Additionally, certain leases contain contingent rental provisions which are based on revenue. The amount
of contingent rentals was insignificant in all periods presented. Total rent expense under such
F - 17
operating leases was $1,756, $2,075 and $2,081 for years ended April 30, 2015, 2014 and 2013, respectively. The Company also leases
certain equipment under capital leases.
Future minimum rentals under all non-cancelable leases with remaining lease terms of one year or more for years subsequent to April
30, 2015 are as follows (in thousands):
2016
2017
2018
2019
2020
Thereafter
Less: amount representing interest
Less: current portion
Long-term portion
Capital
Leases
Operating
Leases
$
$
$
$
668
542
495
490
192
—
2,387
397
1,990
496
1,494
1,717
1,630
1,596
1,557
1,539
10,340
18,379
Off-balance sheet arrangement: We do not have any off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to investors.
Note 11. Earnings (Loss) Per Share
The computation of basic and diluted earnings (loss) per share for the years ended April 30, 2015, 2014 and 2013 is as follows (in
thousands except share and per share data):
Net income (loss)
Weighted number of shares:
Common shares outstanding for basic and diluted earnings (loss)
per share
Basic and diluted earnings (loss) per share
$
$
2015
2014
2013
(1,854) $
(1,501) $
2,707
8,420,756
3,982,400
3,982,400
(0.22) $
(0.38) $
0.68
Note 12. Selected Quarterly Financial Data
Selected quarterly financial data for the years ended April 30, 2015 and 2014 is as follows (in thousands, except for per share data):
Revenue
Other Operating Income-gain on settlement of
lawsuit
2015
Year ended April
30, 2015
$
104,858 $
2,100
F - 18
Quarter ended (unaudited)
April 30, 2015
January 31,
2015
October 31,
2014
47,047 $
45,985 $
6,230 $
July 31, 2014
5,596
-
-
2,100
-
Income (loss) from operations
Net income (loss)
Basic and diluted earnings (loss) per share
$
$
18,947
9,780 $
0.70 $
14,498
3,269 $
0.27 $
(6,887)
(6,743) $
(1.69) $
(9,076)
(8,160)
(2.05)
17,482
(1,854) $
(0.22) $
2014
Year ended April
30, 2014
April 30, 2014
January 31,
2014
October 31,
2013
Quarter ended (unaudited)
105,205 $
47,805 $
46,193 $
6,187 $
July 31, 2013
5,020
-
15,053
(1,501) $
(0.38) $
-
18,924
8,538 $
2.14 $
-
13,372
5,582 $
1.40 $
-
(8,568)
(7,740) $
(1.94) $
-
(8,675)
(7,881)
(1.98)
Revenue
Other Operating Income-gain on settlement of
lawsuit
Income (loss) from operations
Net income (loss)
Basic and diluted earnings (loss) per share
$
$
$
Note 13. Related Party Transactions
On October 30, 2007, the Company and certain of its subsidiaries entered into an Amended and Restated Credit and Security
Agreement with EPT Ski Properties, Inc. pursuant to which EPT Ski Properties, Inc. provided the Company with a $31.0 million
operating loan. This amount was later increased to $56.0 million upon the execution of the fifth amended and restated promissory
note, dated July 13, 2012. Messrs. Boyd and Mueller and Richard Deutsch, the Company’s Chief Executive Officer, Chief Financial
Officer and Chief Development and Acquisitions Officer, respectively, executed a Consent and Agreement of Guarantors on October
30, 2007 pursuant to which they each personally guaranteed payment of the amount due by the Company under, and satisfaction of
all other obligations pursuant to, the Amended and Restated Credit and Security Agreement. See Note 4 to the consolidated financial
statements for terms of the agreements. On November 10, 2014, the Company entered into a Restructure Agreement. As a part of the
Agreement, the guaranty by Messrs. Boyd, Mueller and Deutsch terminated, and in its place the Company and certain of its
subsidiaries guaranteed all of the Company’s obligations to EPR under the restructured loans.
Note 14. Subsequent Events
On June 12, 2015, the Company declared a cash dividend of 13.75 cents per share of common stock. The dividend is payable on
August 21, 2015, to stockholders of record on July 10, 2015. The current indicated annualized dividend would be 55 cents per share.
In June 2015, the Company entered into capital leases to finance the installation of Low-E snow guns at Mount Snow, Attitash and
Wildcat, as well as to fund the purchase of groomers for Mount Snow and Attitash. The Low-E snow guns lease is payable in 48
monthly payments of $61.8 and the groomers lease is payable in 60 monthly payments of $23.5, both commencing July 2015. The
Company has a $1.00 purchase option at the end of each lease term. Messrs. Boyd, Mueller and Deutsch have personally
guaranteed the leases.
F - 19
Item 9. Changes and Disagreements With Accountants on Accounting and Financial Disclosure.
Not Applicable.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and
15d-15(e) under the Securities Exchange Act of 1934, as amended the “Exchange Act”), as of the end of the period covered by this
annual report on Form 10-K. Based on that evaluation, management, with the participation of the Chief Executive Officer and Chief
Financial Officer, concluded that the Company’s disclosure controls and procedures, as of the end of the period covered by this
annual report on Form 10-K, are functioning effectively to provide reasonable assurance that the information required to be
disclosed by the Company in reports filed under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the rules and forms of the Securities and Exchange Commission (the “SEC”). A controls system, no
matter how well designed and operated, cannot provide absolute assurance that the objectives of the controls system are met, and
no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company
have been detected.
Management’s Report on Internal Control Over Financial Reporting and Attestation Report of the Registered Public Accounting
Firm
This annual report on Form 10-K does not include a report of management’s assessment regarding internal control over financial
reporting or an attestation report of our independent registered public accounting firm due to a transition period established by the
rules of the SEC for newly public companies.
Changes in Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the period covered by this annual
report on Form 10-K identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) under the Exchange
Act that have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial
reporting.
Item 9B. Other Information.
None.
44
Item 10. Directors, Executive Officers and Corporate Governance.
PART III
The information required by this Item 10 of Form 10-K will be included in our 2015 Proxy Statement to be filed with the SEC in
connection with the solicitation of proxies for our 2015 Annual Meeting of Stockholders ("2015 Proxy Statement") and is
incorporated herein by reference. The 2015 Proxy Statement will be filed with the SEC within 120 days after the end of the
fiscal year to which this report relates.
Item 11. Executive Compensation.
The information required by this Item 11 of Form 10-K will be included in our 2015 Proxy Statement and is incorporated herein by
reference
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item 12 of Form 10-K will be included in our 2015 Proxy Statement and is incorporated herein by
reference.
Equity Compensation Plan Information
On November 4, 2015, the Company’s board of directors adopted the Peak Resorts, Inc. 2014 Equity Incentive Plan (the “Incentive
Plan”), and on November 5, 2014, the Company’s stockholders approved the Incentive Plan. The stockholders approved a maximum
of 559,296 shares to be available for issuance under the Incentive Plan. The Incentive Plan authorizes the Company to grant stock
options, stock appreciation rights, restricted stock, restricted stock units, stock bonuses, other stock-based awards, cash awards, or
any combination thereof, as defined in and allowed by the Incentive Plan. No awards have been made under the Incentive Plan, as
illustrated in the table below:
Plan Category
Equity Compensation Plans
Approved by Security
Holders
Equity Compensation Plans
Not Approved by
Security Holders
Total
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
Weighted-Average Exercise
Price of Outstanding
Options, Warrants and
Rights
Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation Plans
(Excluding Securities
Reflected in Column (a))
(a)
_
_
_
(b)
_
_
_
(c)
559,296
_
559,296
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item 13 of Form 10-K will be included in our 2015 Proxy Statement and is incorporated herein by
reference.
45
Item 14. Principal Accounting Fees and Services.
The information required by this Item 14 of Form 10-K will be included in our 2015 Proxy Statement and is incorporated herein by
reference.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) The following documents are filed as part of this annual report on Form 10-K:
1. Financial Statements.
The consolidated financial statements of Peak Resorts, Inc. and subsidiaries, together with the report thereon of
the Company’s independent registered public accounting firm, are included in Part II, Item 8, “Financial Statements and
Supplementary Data” of this annual report on Form 10-K. See Index to Consolidated Financial Statements therein.
2. Financial Statement Schedules
None.
3. Exhibits
The exhibits required to be filed as part of this annual report on Form 10-K are listed in the attached Exhibit Index.
(b) The exhibits filed with this annual report on Form 10-K are listed in the attached Exhibit Index.
(c) None.
46
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: July 27, 2015
PEAK RESORTS, INC.
By:
/s/ Timothy D. Boyd
Timothy D. Boyd
Chief Executive Officer and President
(Principal Executive Officer)
Date: July 27, 2015
By:
/s/ Stephen J. Mueller
Stephen J. Mueller
Chief Financial Officer and Vice President (Principal Financial and
Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
/s/ Timothy D. Boyd
Timothy D. Boyd
Chief Executive Officer, President and Chairman of
(Principal Executive
the Board of Directors
Officer)
Date
July 27, 2015
/s/ Stephen J. Mueller
Stephen J. Mueller
Chief Financial Officer, Vice President and Director
(Principal Financial and Accounting Officer)
July 27, 2015
/s/ Richard K. Deutsch
Richard K. Deutsch
/s/ Stanley W. Hansen
Stanley W. Hansen
/s/ Carl E. Kraus
Carl E. Kraus
/s/ Christopher S. O’Connor
Christopher S. O’Connor
/s/ Michael H. Staenberg
Michael H. Staenberg
Vice President-Business and Real Estate
Development and Director
Director
Director
Director
Director
47
July 27, 2015
July 27, 2015
July 27, 2015
July 27, 2015
July 27, 2015
Exhibit
Number
EXHIBIT INDEX
Description
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
3.1
3.2
4.1
Agreement of Sale and Purchase between Wildcat Mountain Ski Area, Inc., Meadow Green-Wildcat
Skilift Corp. and Meadow Green-Wildcat Corp., as sellers, and WC Acquisition Corp., as purchaser,
effective as of October 20, 2010 (filed as Exhibit 2.1 to the Registrant’s Registration Statement on
Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Agreement of Sale by and among Blue Ridge Real Estate Company and JFBB Ski Areas, Inc., dated
as of October 31, 2011 (filed as Exhibit 2.3 to the Registrant’s Registration Statement on Form S-1 filed
on October 20, 2014 and incorporated herein by reference).
Amendment to Agreement of Sale by and among Blue Ridge Real Estate Company and JFBB Ski
Areas, Inc., dated as of December 6, 2011 (filed as Exhibit 2.4 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Second Amendment to Agreement of Sale by and among Blue Ridge Real Estate Company and JFBB
Ski Areas, Inc., dated as of December 15, 2011 (filed as Exhibit 2.5 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Agreement of Sale by and among Big Boulder Corporation and JFBB Ski Areas, Inc., dated as of
October 31, 2011 (filed as Exhibit 2.6 to the Registrant’s Registration Statement on Form S-1 filed on
October 20, 2014 and incorporated herein by reference).
Amendment to Agreement of Sale by and among Big Boulder Corporation and JFBB Ski Areas, Inc.,
dated as of December 6, 2011 (filed as Exhibit 2.7 to the Registrant’s Registration Statement on Form
S-1 filed on October 20, 2014 and incorporated herein by reference).
Second Amendment to Agreement of Sale by and among Big Boulder Corporation and JFBB Ski
Areas, Inc., dated as of December 15, 2011 (filed as Exhibit 2.8 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Stock Purchase Agreement by and among Peak Resorts, Inc., as buyer, and S. Sandy Satullo, II
Revocable Trust of 3/13/00, S. Sandy Satullo, II, Trustee, S. Sandy Satullo, III, Tia N. Satullo
Revocable Trust, Tia S. Winfield, Trustee, Stuart S. Satullo Revocable Trust of January 20, 2005,
Stuart S. Satullo, Trustee, James B. Stinnett, Raymond C. Stinnett and Linda G. Musfeldt, as sellers,
and S. Sandy Satullo II on its own behalf and on behalf of each seller, dated as of October 17, 2012
(filed as Exhibit 2.8 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014
and incorporated herein by reference).
Amended and Restated Articles of Incorporation (filed as Exhibit 3.1 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Amended and Restated By-laws (filed as Exhibit 3.2 to the Registrant’s Registration Statement on
Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Form of Peak Resorts, Inc. Common Stock Certificate (filed as Exhibit 4.1 to Amendment No. 1 to the
Registrant’s Registration Statement on Form S-1 filed on November 10, 2014 and incorporated herein
by reference).
10.1
Loan Agreement by and between Peak Resorts, Inc. and L.B.O. Holding, Inc., as borrowers, and EPT
Mount Attitash, Inc., as lender, dated April 4, 2007 (filed as Exhibit 10.1 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
48
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
Promissory Note from Peak Resorts, Inc. and L.B.O. Holding, Inc. in favor of EPT Mount
Attitash, Inc. dated April 4, 2007 (filed as Exhibit 10.2 to the Registrant’s Registration Statement on
Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Note Modification Agreement by and between Peak Resorts, Inc. and L.B.O. Holding, Inc., as
borrowers, and EPT Mount Attitash, Inc. as lender, dated October 30, 2007 (filed as Exhibit 10.3 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
Agreement Concerning a Loan for a Holder of a Special Use Permit by and between the U.S.
Department of Agriculture, Forest Service; EPT Mount Attitash, Inc. and L.B.O. Holding, Inc., dated
April 4, 2007 (filed as Exhibit 10.4 to the Registrant’s Registration Statement on Form S-1 filed on
October 20, 2014 and incorporated herein by reference).
Agreement Concerning a Loan for a Holder of a Special Use Permit by and between the U.S.
Department of Agriculture, Forest Service; EPT Mount Snow, Inc. and Mount Snow, Ltd., dated
April 4, 2007 (filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 filed on
October 20, 2014 and incorporated herein by reference).
Promissory Note from Peak Resorts, Inc. and Mount Snow, Ltd. in favor of EPT Mount Snow, Inc.,
dated April 4, 2007 (filed as Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 filed
on October 20, 2014 and incorporated herein by reference).
Modification Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as borrowers,
and EPT Mount Snow, Inc. as lender, dated April 1, 2010 (filed as Exhibit 10.7 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Second Modification Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as
borrowers, and EPT Mount Snow, Inc. as lender, dated July 13, 2012 (filed as Exhibit 10.8 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
Third Modification Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as
borrowers, and EPT Mount Snow, Inc. as lender, dated April 1, 2013 (filed as Exhibit 10.9 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
Loan Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as borrowers, and EPT
Mount Snow, Inc., as lender, dated April 4, 2007 (filed as Exhibit 10.10 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
First Modification Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as
borrowers, and EPT Mount Snow, Inc., as lender, dated June 30, 2009 (filed as Exhibit 10.11 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
49
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
10.20
10.21
Amended and Restated Promissory Note from Peak Resorts, Inc. and Mount Snow, Ltd. in favor of
EPT Mount Snow, Inc., dated June 30, 2009 (filed as Exhibit 10.12 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Letter Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as borrowers, and EPT
Mount Snow, Inc., as lender, dated June 20, 2009 (filed as Exhibit 10.13 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Amended and Restated Credit and Security Agreement among Mad River Mountain, Inc.; SNH
Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; Peak Resorts, Inc.; Hidden Valley Golf
and Ski, Inc.; Snow Creek, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; Boston
Mills Ski Resort, Inc.; and JFBB Ski Areas, Inc., as borrowers, and EPT Ski Properties, Inc., as lender,
dated October 30, 2007 (filed as Exhibit 10.14 to the Registrant’s Registration Statement on Form S-1
filed on October 20, 2014 and incorporated herein by reference).
Option Agreement between Hidden Valley Golf and Ski, Inc.; Snow Creek, Inc.; Paoli Peaks, Inc.;
Brandywine Ski Resort, Inc.; Boston Mills Ski Resort, Inc.; and JFBB Ski Areas, Inc., as sellers, and
EPT Ski Properties, Inc. as purchaser, dated October 30, 2007 (filed as Exhibit 10.15 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Second Amended and Restated Promissory Note from Peak Resorts, Inc.; JFBB Ski Areas, Inc.; Mad
River Mountain, Inc.; SNH Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; Hidden
Valley Golf and Ski, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; and Boston
Mills Ski Resort, Inc. in favor of EPT Ski Properties, Inc., dated August 5, 2008 (filed as Exhibit 10.16
to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated
herein by reference).
Third Amended and Restated Promissory Note from Peak Resorts, Inc.; JFBB Ski Areas, Inc.; Mad
River Mountain, Inc.; SNH Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; Hidden
Valley Golf and Ski, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; and Boston
Mills Ski Resort, Inc. in favor of EPT Ski Properties, Inc., dated December 15, 2011 (filed as Exhibit
10.17 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and
incorporated herein by reference).
Fourth Amended and Restated Promissory Note from Peak Resorts, Inc.; JFBB Ski Areas, Inc.; Mad
River Mountain, Inc.; SNH Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; Hidden
Valley Golf and Ski, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; and Boston
Mills Ski Resort, Inc. in favor of EPT Ski Properties, Inc., dated May 14, 2012 (filed as Exhibit 10.18 to
the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated
herein by reference).
Fifth Amended and Restated Promissory Note from Peak Resorts, Inc.; JFBB Ski Areas, Inc.; Mad
River Mountain, Inc.; SNH Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; Hidden
Valley Golf and Ski, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; and Boston
Mills Ski Resort, Inc. in favor of EPT Ski Properties, Inc., dated July 13, 2012 (filed as Exhibit 10.19 to
the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated
herein by reference).
Blanket Conveyance, Bill of Sale and Assignment between Wildcat Mountain Ski Area, Inc.,
Meadow Green-Wildcat Skilift Corp. and Meadow Green-Wildcat Corp., as assignors, and WC
Acquisition Corp., as assignee, dated November 19, 2010 (filed as Exhibit 10.20 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Agreement Concerning a Loan for a Holder of a Special Use Permit by and between the U.S.
Department of Agriculture, Forest Service; Meadow Green-Wildcat Corp, as lender, and WC
Acquisition Corp., as borrower, dated November 19, 2010 (filed as Exhibit 10.21 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
50
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
10.33
10.34
10.35
Promissory Note from WC Acquisition Corp. in favor of Wildcat Mountain Ski Area, Inc.; Meadow
Green-Wildcat Skilift Corp.; and Meadow Green-Wildcat Corp., dated November 22, 2010 (filed as
Exhibit 10.22 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and
incorporated herein by reference).
Unconditional Guaranty of Peak Resorts, Inc., dated November 12, 2010 (filed as Exhibit 10.23 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
Lease Agreement by and between EPT Mad River, Inc. and Mad River Mountain, Inc., dated
November 17, 2005 (filed as Exhibit 1024 to the Registrant’s Registration Statement on Form S-1 filed
on October 20, 2014 and incorporated herein by reference).
First Amendment to Lease Agreement by and between EPT Mad River, Inc. and Mad River
Mountain, Inc., dated June 30, 2006 (filed as Exhibit 10.25 to the Registrant’s Registration Statement
on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Ground Lease by and between Crotched Mountain Properties, L.L.C. and SNH Development, Inc.,
dated May 27, 2003 (filed as Exhibit 10.26 to the Registrant’s Registration Statement on Form S-1 filed
on October 20, 2014 and incorporated herein by reference).
First Amendment to Ground Lease by and between Crotched Mountain Properties, L.L.C. and SNH
Development, Inc., dated April 3, 2004 (filed as Exhibit 10.27 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Second Amendment to Ground Lease by and between Crotched Mountain Properties, L.L.C. and
SNH Development, Inc., dated January 31, 2008 (filed as Exhibit 10.28 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Lease by and between the Estate of Charles Marvin Weeks and Paoli Peaks, Inc., dated
September 26, 1990 (filed as Exhibit 10.29 to the Registrant’s Registration Statement on Form S-1 filed
on October 20, 2014 and incorporated herein by reference).
U.S. Department of Agriculture Forest Service Special Use Permit for Attitash (filed as Exhibit 10.30 to
the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated
herein by reference).
U.S. Department of Agriculture Forest Service Special Use Permit for Mount Snow (filed as Exhibit
10.31 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and
incorporated herein by reference).
U.S. Department of Agriculture Forest Service Special Use Permit for Wildcat Mountain (filed as
Exhibit 10.32 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and
incorporated herein by reference).
Promissory Note from SNH Development, Inc. in favor of EPT Crotched Mountain Ski Resort, Inc.,
dated March 10, 2006 (filed as Exhibit 10.33 to the Registrant’s Registration Statement on Form S-1
filed on October 20, 2014 and incorporated herein by reference).
Amended and Restated Promissory Note from SNH Development, Inc. in favor of EPT Crotched
Mountain Ski Resort, Inc., dated July 13, 2012 (filed as Exhibit 10.34 to the Registrant’s Registration
Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Guaranty of Payment made by Peak Resorts, Inc. for the benefit EPT Crotched Mountain, Inc., dated
March 10, 2006 (filed as Exhibit 10.35 to the Registrant’s Registration Statement on Form S-1 filed on
October 20, 2014 and incorporated herein by reference).
51
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
10.44
10.45
10.46
10.47
10.48
Loan Agreement by and between Peak Resorts, Inc.; JFBB Ski Areas, Inc.; Mad River
Mountain, Inc.; SNH Development, Inc.; L.B.O. Holding, Inc.; Mount Snow, Ltd.; HiddenValley Golf
and Ski, Inc.; Snow Creek, Inc.; Paoli Peaks, Inc.; Deltrecs, Inc.; Brandywine Ski Resort, Inc.; Boston
Mills Ski Resort, Inc.; and WC Acquisition Corp., as borrowers, and EPT Ski Properties, Inc., dated
July 13, 2012 (filed as Exhibit 10.36 to the Registrant’s Registration Statement on Form S-1 filed on
October 20, 2014 and incorporated herein by reference).
Loan Agreement by and between Sycamore Lake, Inc. and Peak Resorts, Inc., as borrowers, and EPT
Ski Properties, Inc., as lender, dated November 19, 2012 (filed as Exhibit 10.37 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
First Amendment to Loan Agreement by and between Sycamore Lake, Inc. and Peak Resorts, Inc., as
borrowers, and EPT Ski Properties, Inc. as lender, dated July 26, 2013 (filed as Exhibit 10.38 to the
Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by
reference).
Promissory Note from Sycamore Lake, Inc. and Peak Resorts, Inc. in favor of EPT Ski Properties, Inc.,
dated November 19, 2012 (filed as Exhibit 10.39 to the Registrant’s Registration Statement on Form S-
1 filed on October 20, 2014 and incorporated herein by reference).
Option Agreement between Peak Resorts, Inc. and Sycamore Lake, Inc., as sellers, and EPT Ski
Properties, Inc., as purchaser, dated November 19, 2012 (filed as Exhibit 10.40 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Modification and Consent Agreement by and between Peak Resorts, Inc. and Mount Snow, Ltd., as
borrowers, EPT Mount Snow, Inc., as lender, and EPT Ski Properties, Inc., dated July 26, 2013 (filed
as Exhibit 10.41 to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and
incorporated herein by reference).
Letter Agreement regarding the Modification and Consent Agreement by and between Peak Resorts,
Inc. and Mount Snow, Ltd., as borrowers, EPT Mount Snow, Inc., as lender, and EPT Ski Properties,
Inc., dated June 13, 2014 (filed as Exhibit 10.42 to the Registrant’s Registration Statement on Form S-1
filed on October 20, 2014 and incorporated herein by reference).
Purchase and Sale Agreement by and between Piggy and the Three J's, LLC and the Estate of James
L. McGovern, III, as seller, and Mount Snow Ltd., as buyer, dated April 15, 2013 (filed as Exhibit 10.43
to the Registrant’s Registration Statement on Form S-1 filed on October 20, 2014 and incorporated
herein by reference).
Form of Peak Resorts, Inc. Indemnification Agreement (filed as Exhibit 10.44 to the Registrant’s
Registration Statement on Form S-1 filed on October 20, 2014 and incorporated herein by reference).
Agreement by and between Mount Snow, Ltd. and Leitner-Poma of America, dated as of March 24,
2011 (filed as Exhibit 10.45 to the Registrant’s Registration Statement on Form S-1 filed on October 20,
2014 and incorporated herein by reference).
Executive Employment Agreement by and between Peak Resorts, Inc. and Timothy D. Boyd, dated as
of June 1, 2011 (filed as Exhibit 10.46 to Amendment No. 1 to the Registrant’s Registration Statement
on Form S-1 filed on November 10, 2014 and incorporated herein by reference).
Executive Employment Agreement by and between Peak Resorts, Inc. and Stephen J. Mueller, dated
as of June 1, 2011 (filed as Exhibit 10.47 to Amendment No. 1 to the Registrant’s Registration
Statement on Form S-1 filed on November 10, 2014 and incorporated herein by reference).
Executive Employment Agreement by and between Peak Resorts, Inc. and Richard Deutsch, dated as
of June 1, 2011(filed as Exhibit 10.48 to Amendment No. 1 to the Registrant’s Registration Statement
on Form S-1 filed on November 10, 2014 and incorporated herein by reference).
52
10.49
10.50
10.51
10.52
10.53
10.54
10.55
10.56
10.57
10.58
Peak Resorts, Inc. 2014 Equity Incentive Plan (filed as Exhibit 10.1 to the Registrant’s Registration
Statement on Form S-8 filed on January 15, 2015 and incorporated herein by reference).
Restructure Agreement by and between Peak Resorts, Inc., Hidden Valley Golf & Ski, Inc. Boston
Mills Ski Resort, Inc., Brandywine Ski Resort, Inc., Paoli Peaks, Inc., Snow Creek, Inc., JFBB Ski
Areas, Inc., Mad River Mountain, Inc., SNH Development, Inc., L.B.O. Holdings, Inc., Mount Snow,
Ltd., Deltrecs, Inc. and Sycamore Lake, Inc. and EPT Crotched Mountain, Inc., EPT Mount Snow,
Inc., EPT Mount Attitash, Inc., EPT Ski Properties, Inc., Crotched Mountain Properties, LLC, and EPT
Mad River, Inc., dated as of November 10, 2014 (filed as Exhibit 10.50 to Amendment No. 1 to the
Registrant’s Registration Statement on Form S-1 filed on November 10, 2014 and incorporated herein
by reference).
Master Credit and Security Agreement, dated as of December 1, 2014, among Peak Resorts, Inc.,
Mount Snow, Ltd., Sycamore Lake, Inc., Brandywine Ski Resort, Inc., Boston Mills Ski Resort, Inc.,
Deltrecs, Inc., and JFBB Ski Areas, Inc, as borrowers, and EPT Ski Properties, Inc. and EPT Mount
Snow, Inc., as lender (filed as Exhibit 10.1 to the Quarterly Report on Form 10-Q filed on January 6,
2015 and incorporated herein by reference).
Amendment to Master Credit and Security Agreement, effective as of December 1, 2014, by and
among Peak Resorts, Inc., Mount Snow, Ltd., Sycamore Lake, Inc., Brandywine Ski Resort, Inc.,
Boston Mills Ski Resort, Inc., Deltrecs, Inc. and JFBB Ski Areas, Inc., as borrowers, and EPT Ski
Properties, Inc. and EPT Mount Snow, Inc., as lenders (filed as Exhibit 10.1 to the Current Report on
Form 8-K/A filed on January 29, 2015 and incorporated herein by reference).
Amended and Restated Promissory Note from Peak Resorts, Inc., Boston Mills Ski Resort, Inc.
Brandywine Ski Resort, Inc. and Deltrecs, Inc. in favor of EPT Ski Properties, Inc., dated December 1,
2014 (filed as Exhibit 10.2 to the Quarterly Report on Form 10-Q filed on January 6, 2015 and
incorporated herein by reference).
Amended and Restated Promissory Note from Peak Resorts, Inc. and Sycamore Lake, Inc. in favor of
EPT Ski Properties, Inc., dated December 1, 2014 (filed as Exhibit 10.3 to the Quarterly Report on Form
10-Q filed on January 6, 2015 and incorporated herein by reference).
Amended and Restated Promissory Note from Peak Resorts, Inc. and JFBB Ski Areas, Inc. in favor of
EPT Ski Properties, Inc., dated December 1, 2014 (filed as Exhibit 10.4 to the Quarterly Report on Form
10-Q filed on January 6, 2015 and incorporated herein by reference).
Amended and Restated Promissory Note from Peak Resorts, Inc. and Mount Snow, Ltd. in favor of
EPT Ski Properties, Inc., dated December 1, 2014 (filed as Exhibit 10.5 to the Quarterly Report on Form
10-Q filed on January 6, 2015 and incorporated herein by reference).
Master Cross Default Agreement, dated as of December 1, 2014, by and among EPT Ski Properties,
Inc., EPT Mount Snow, Inc. and EPT Mad River, Inc. and Peak Resorts, Inc., Mad River Mountain,
Inc., Mount Snow, Ltd., Sycamore Lake, Inc., Deltrecs, Inc., Brandywine Ski Resort, Inc., Boston
Mills Ski Resort, Inc. and JFBB Ski Areas, Inc., as borrowers, and SNH Development, Inc., L.B.O.
Holding, Inc., Hidden Valley Golf and Ski, Inc., Snow Creek, Inc., Paoli Peaks, Inc. and Crotched
Mountain Properties, LLC, as guarantors (filed as Exhibit 10.6 to the Quarterly Report on Form 10-Q
filed on January 6, 2015 and incorporated herein by reference).
Guaranty Agreement, made as of December 1, 2014, by Peak Resorts, Inc., JFBB Ski Areas, Inc., Mad
River Mountain, Inc., SNH Development, Inc., L.B.O. Holding, Inc., Mount Snow, Ltd., Sycamore
Lake, Inc., Hidden Valley Golf and Ski, Inc., Snow Creek, Inc., Paoli Peaks, Inc., Deltrecs, Inc.,
Brandywine Ski Resort, Inc., Boston Mills Ski Resort, Inc., WC Acquisition Corp., Resort Holdings,
L.L.C. and BLC Operators, Inc., as guarantors, for the benefit of EPT Ski Properties, Inc. and EPT
Mount Snow, Inc. (filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q filed on January 6, 2015
and incorporated herein by reference).
53
10.59
10.60
10.61
10.62
21.1
23.1
31.1
31.2
32.1
Option Agreement between Brandywine Ski Resort, Inc., Boston Mills Ski Resort, Inc., JFBB Ski
Areas, Inc. and Sycamore Lake, Inc., as seller, and EPT Ski Properties, Inc., as purchaser, dated as of
December 1, 2014 (filed as Exhibit 10.8 to the Quarterly Report on Form 10-Q filed on January 6, 2015
and incorporated herein by reference).
Master Right of First Refusal Agreement, made as of December 1, 2014, by and between EPT Ski
Properties, Inc. and Peak Resorts, Inc. (filed as Exhibit 10.9 to the Quarterly Report on Form 10-Q filed
on January 6, 2015 and incorporated herein by reference).
Right of First Refusal Agreement (Mount Attitash), dated as of December 1, 2014, among L.B.O.
Holding, Inc. and EPT Ski Properties, Inc. (filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q
filed on January 6, 2015 and incorporated herein by reference).
Second Amendment to Lease Agreement, made as of December 1, 2014, by and between EPT Mad
River, Inc. and Mad River Mountain, Inc. (filed as Exhibit 10.11 to the Quarterly Report on Form 10-Q
filed on January 6, 2015 and incorporated herein by reference).
List of Subsidiaries.
Consent of McGladrey LLP.
Certification of Principal Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes Oxley Act of 2002.
Certification of Principal Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant
to Section 302 of the Sarbanes Oxley Act of 2002.
Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906
of the Sarbanes Oxley Act of 2002 (18 USC. Section 1350).
54
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Section 2: EX-21.1 (EX-21.1)
SUBSIDIARIES OF PEAK RESORTS, INC.
Name of Subsidiary
Boulder View Tavern, Inc.
Deltrecs, Inc.
Boston Mills Ski Resort, Inc. (subsidiary of Deltrecs, Inc.)
Brandywine Ski Resort, Inc. (subsidiary of Deltrecs, Inc.)
Hidden Valley Golf and Ski, Inc.
JFBB Ski Areas, Inc.
JFBB LQ, Inc. (subsidiary of JFBB Ski Areas, Inc.)
BBJF LQ, Inc. (subsidiary of JFBB Ski Areas, Inc.)
L.B.O. Holding, Inc.
Mad River Mountain, Inc.
Mount Snow, Ltd.
Carinthia Group 1, L.P. (subsidiary of Mount Snow, Ltd.)
Carinthia Ski Lodge LLC (subsidiary of Mount Snow, Ltd.)
Mount Snow Develop and Build LLC (subsidiary of Mount Snow, Ltd.)
Mount Snow GP Services, LLC (subsidiary of Mount Snow, Ltd.)
West Lake Water Project LLC (subsidiary of Mount Snow, Ltd.)
Paoli Peaks, Inc.
Resort Holdings, L.L.C.
S N H Development, Inc.
Snow Creek, Inc.
Sycamore Lake, Inc.
WC Acquisition Corp.
Exhibit 21.1
State of
Incorporation/
Organization
Pennsylvania
Ohio
Ohio
Ohio
Missouri
Missouri
Pennsylvania
Pennsylvania
Maine
Missouri
Vermont
Vermont
Vermont
Vermont
Vermont
Vermont
Missouri
Missouri
Missouri
Missouri
Ohio
New Hampshire
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Section 3: EX-23.1 (EX-23.1)
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 23.1
We consent to the incorporation by reference in Registration Statement (No. 333-201525) on Form S-8 of Peak Resorts, Inc. and
Subsidiaries of our report dated July 27, 2015, relating to our audit of the consolidated financial statements, which appear in this
Annual Report on Form 10-K of Peak Resorts, Inc. and Subsidiaries for the year ended April 30, 2015.
/s/ McGladrey LLP
St. Louis, Missouri
July 27, 2015
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Section 4: EX-31.1 (EX-31.1)
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.1
I, Timothy D. Boyd, certify that:
1. I have reviewed this annual report on Form 10-K of Peak Resorts, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: July 27, 2015
/s/ Timothy D. Boyd
Timothy D. Boyd
Chief Executive Officer and Director
(Principal Executive Officer)
44
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Section 5: EX-31.2 (EX-31.2)
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
EXHIBIT 31.2
I, Stephen J. Mueller, certify that:
1. I have reviewed this annual report on Form 10-K of Peak Resorts, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented
in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation; and
c) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
a)All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: July 27, 2015
/s/ Stephen J. Mueller
Stephen J. Mueller
Chief Financial Officer and Director
(Principal Financial Officer)
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Section 6: EX-32.1 (EX-32.1)
CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND
EXHIBIT 32.1
CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Timothy D. Boyd, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that the Annual Report on Form 10-K of Peak Resorts, Inc. (the “Company”) for the fiscal year ended April 30, 2015 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in
such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: July 27, 2015
By: /s/ Timothy D. Boyd
Name: Timothy D. Boyd
Title: Chief Executive Officer
I, Stephen J. Mueller, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that the Annual Report on Form 10-K of Peak Resorts, Inc. (the “Company”) for the fiscal year ended April 30, 2015 fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in
such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of the
Company.
Date: July 27, 2015
By: /s/ Stephen J. Mueller
Name: Stephen J. Mueller
Title: Chief Financial Officer
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