Vail Resorts
Annual Report 2015

Plain-text annual report

13OCT201019001526 NOTICE OF THE 2015 ANNUAL MEETING OF STOCKHOLDERS PROXY STATEMENT 2015 ANNUAL REPORT ON FORM 10-K 9OCT201418192555 390 Interlocken Crescent Broomfield, Colorado 80021 NOTICE OF THE 2015 ANNUAL MEETING OF STOCKHOLDERS To be held on December 4, 2015 October 22, 2015 To our Stockholders: The 2015 Annual Meeting of Stockholders of Vail Resorts, Inc., a Delaware corporation (the ‘‘Company’’), will be held on Friday, December 4, 2015 at 9:00 a.m., Mountain Standard Time, at the St. Julien Hotel, 900 Walnut Street, Boulder, Colorado 80302 to: (1) elect the eight directors named in the attached proxy statement to serve for the ensuing year and until their successors are elected and qualified; (2) hold an advisory vote to approve executive compensation; (3) approve the Vail Resorts, Inc. 2015 Omnibus Incentive Plan; (4) ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending July 31, 2016; and (5) transact such other business as may properly come before the annual meeting or any adjournments or postponements of the annual meeting. These items of business are more fully described in the proxy statement accompanying this notice. Only holders of record of shares of our common stock at the close of business on October 12, 2015, which we refer to as the record date, are entitled to receive notice of, and to vote at, the annual meeting or at any postponement or adjournment thereof. A list of stockholders entitled to vote at the annual meeting will be available for examination by any stockholder at the annual meeting and for ten days prior to the annual meeting at our principal executive offices located at 390 Interlocken Crescent, Broomfield, Colorado 80021. Pursuant to the rules of the Securities and Exchange Commission, or the SEC, we have elected to provide access to our proxy materials over the Internet. Accordingly, we will mail, on or about October 22, 2015, a Notice of Internet Availability of Proxy Materials to our stockholders of record and beneficial owners as of the close of business on October 12, 2015. On the date of mailing of the Notice of Internet Availability of Proxy Materials, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to and at the URL address included in the Notice of Internet Availability of Proxy Materials. The Notice of Internet Availability of Proxy Materials will also identify the date, the time and location of the annual meeting; the matters to be acted upon at the annual meeting and the Board of Directors’ recommendation with regard to each matter; a toll-free telephone number, an e-mail address, and a website where stockholders can request a paper or e-mail copy of the proxy statement, our annual report and a form of proxy relating to the annual meeting; information on how to access and vote the form of proxy; and information on how to attend the annual meeting and vote in person. These proxy materials will be available free of charge. Stockholders are cordially invited to attend the annual meeting. If you wish to vote shares held in your name at the annual meeting, please bring your Notice of Internet Availability of Proxy Materials or proxy card (if you previously requested one be mailed to you) and picture identification. If you hold shares through an intermediary, such as a broker, bank or other nominee, you must present proof of ownership to attend the annual meeting. Proof of ownership could include a proxy from your broker, bank or other nominee or a copy of your account statement. Shares held through a broker, bank or other nominee may be voted by you in person at the annual meeting only if you obtain a valid proxy from the broker, bank or other nominee giving you the right to vote the shares and bring such proxy to the annual meeting. Attendance at our annual meeting will be limited to persons presenting a Notice of Internet Availability of Proxy Materials or proxy card (if you requested one) or voting instruction card, account statement or similar evidence of ownership, and picture identification. Attendance at the annual meeting alone will not automatically revoke your previously submitted proxy. Your vote is extremely important. We appreciate your taking the time to vote promptly. After reading the proxy statement, please vote, at your earliest convenience by telephone or Internet, or request a proxy card to complete, sign and return by mail. If you vote at the annual meeting, your previously submitted proxy will be revoked automatically and only your vote at the annual meeting will be counted. Your shares cannot be voted unless you vote by: (i) telephone, (ii) Internet, (iii) requesting a paper proxy card, to complete, sign and return by mail, or (iv) attending the annual meeting and voting in person. Please note that all votes cast via telephone or the Internet must be cast prior to 11:59 p.m., Eastern Standard Time, on Thursday, December 3, 2015. By Order of the Board of Directors, 14OCT201521542843 David T. Shapiro Executive Vice President, General Counsel and Secretary Broomfield, Colorado October 22, 2015 TABLE OF CONTENTS Page Page Proxy Summary . . . . . . . . . . . . . . . . . . . . . Proposal 1. Election of Directors . . . . . . . . . . Information with Respect to Nominees . . . . Management . . . . . . . . . . . . . . . . . . . . . . . . Security Ownership of Directors and Executive Officers . . . . . . . . . . . . . . . . . . . . . . . . . . Information as to Certain Stockholders . . . . . Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . Corporate Governance Guidelines Board Leadership and Lead Independent Director . . . . . . . . . . . . . . . . . . . . . . . . Meetings of the Board . . . . . . . . . . . . . . . Executive Sessions . . . . . . . . . . . . . . . . . . Director Nominations . . . . . . . . . . . . . . . . Determinations Regarding Independence . . . Communications with the Board . . . . . . . . . Code of Ethics and Business Conduct . . . . . . . . . . . . . . . . . . . . . . . Risk Management Compensation Risk Assessment . . . . . . . . . Committees of the Board . . . . . . . . . . . . . The Audit Committee . . . . . . . . . . . . . . Audit Committee Report . . . . . . . . . . . The Compensation Committee . . . . . . . . Compensation Committee Report . . . . . The Executive Committee . . . . . . . . . . . . The Nominating & Governance Committee . . . . . . . . . . . . . . . . . . . . Director Compensation . . . . . . . . . . . . . . . . Director Compensation for Fiscal 2015 . . . . Director Cash Compensation . . . . . . . . . . . Director Equity Compensation . . . . . . . . . . Limited Director Perquisites and Personal Benefits . . . . . . . . . . . . . . . . . . . . . . . . Stock Ownership Guidelines for Non-Employee Directors . . . . . . . . . . . . Section 16(a) Beneficial Ownership Reporting Compliance . . . . . . . . . . . . . . . . . . . . . . . Transactions with Related Persons . . . . . . . . . Related Party Transactions Policy and Procedures . . . . . . . . . . . . . . . . . . . . . . Executive Compensation . . . . . . . . . . . . . . . . Compensation Discussion and Analysis . . . . Executive Summary . . . . . . . . . . . . . . . . Key Objectives of Our Executive Compensation Program . . . . . . . . . . . . Compensation-Setting Process . . . . . . . . . Elements of Compensation . . . . . . . . . . . 2015 Compensation Decisions . . . . . . . . . Other Executive Compensation Policies and Practices . . . . . . . . . . . . . . . . . . . Summary Compensation Table for Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . Grants of Plan-Based Awards in Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . Employment Agreements . . . . . . . . . . . . . . Outstanding Equity Awards at Fiscal 2015 Year-End . . . . . . . . . . . . . . . . . . . . . . . Option Exercises and Stock Vested in Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . Pension Benefits . . . . . . . . . . . . . . . . . . . . Nonqualified Deferred Compensation for Fiscal 2015 . . . . . . . . . . . . . . . . . . . . . . Potential Payments Upon Termination or Change-In-Control . . . . . . . . . . . . . . . . . Securities Authorized for Issuance Under Equity Compensation Plans Proposal 2. Advisory Vote to Approve . . . . . . . . . . Executive Compensation . . . . . . . . . . . . . . Proposal 3. Approval of Vail Resorts, Inc. 2015 Omnibus Incentive Plan . . . . . . . . . . . . . . Background . . . . . . . . . . . . . . . . . . . . . . . Key Features of the 2015 Plan . . . . . . . . . . Background for Requested Share Authorization . . . . . . . . . . . . . . . . . . . . Description of the 2015 Plan . . . . . . . . . . . Purpose . . . . . . . . . . . . . . . . . . . . . . . . Eligible and Term . . . . . . . . . . . . . . . . . Administration . . . . . . . . . . . . . . . . . . . Shares Available for Issuance . . . . . . . . . Types of Awards . . . . . . . . . . . . . . . . . . Transferability . . . . . . . . . . . . . . . . . . . . Amendments . . . . . . . . . . . . . . . . . . . . Federal Income Tax Consequences . . . . . . . New Plan Benefits . . . . . . . . . . . . . . . . . . Proposal 4. Ratification of the Selection of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . Selection of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . Fees Billed to Vail Resorts by PricewaterhouseCoopers LLP during Fiscal 2015 and Fiscal 2014 . . . . . . . . . . . The Annual Meeting and Voting – Questions and Answers . . . . . . . . . . . . . . . . . . . . . . Stockholder Proposals for 2016 Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . Householding of Proxy Materials . . . . . . . . . . Other Matters . . . . . . . . . . . . . . . . . . . . . . . Appendix A – Vail Resorts, Inc. 2015 Omnibus Incentive Plan . . . . . . . . . . . . . . . . . . . . . 47 49 50 52 55 55 55 57 60 61 62 62 63 63 64 64 64 64 65 66 72 72 72 75 76 76 76 77 81 81 82 A-1 1 6 7 16 17 18 18 18 18 19 19 20 20 20 20 21 21 21 22 22 23 26 26 26 27 27 28 29 29 29 29 30 30 31 31 31 35 36 38 40 45 i PROXY SUMMARY This summary contains highlights about our Company and the 2015 Annual Meeting of Stockholders. This summary does not contain all of the information that you should consider in advance of the annual meeting, and we encourage you to read the entire proxy statement and our 2015 Annual Report on Form 10-K carefully before voting. Page references (‘‘XX’’) are provided to help you find further information in this proxy statement. For information concerning the annual meeting and voting on the proposals discussed in more detail in this proxy statement, please see ‘‘The Annual Meeting and Voting – Questions and Answers’’ beginning on page 77. Corporate Governance Highlights (page 18) We believe good governance is integral to achieving long-term stockholder value. We are committed to governance policies and practices that serve the interests of the Company and its stockholders. The Board of Directors monitors developments in governance best practices to assure that it continues to meet its commitment to thoughtful and independent representation of stockholder interests. Highlights of our corporate governance include: (cid:127) All of our director nominees are independent, except our CEO; (cid:127) All of our Audit, Compensation and Nominating & Governance Committee members are independent; (cid:127) An independent non-executive lead director; (cid:127) Annual election of all directors; (cid:127) Majority voting standard and a director resignation policy in uncontested director elections; (cid:127) Executive sessions of independent directors held at regularly scheduled Board meetings; (cid:127) Meaningful stock ownership guidelines; (cid:127) Excellent track record of attendance of all directors at Board and committee meetings in fiscal 2015; (cid:127) Anti-hedging policy for all directors and executive officers; and (cid:127) Implemented a clawback policy applicable to executive officers for both cash and equity-based awards. 1 Director Nominees (page 7) The following table provides summary information about each director nominee. Each director stands for election annually. Detailed information about each director nominee’s background, skill set and areas of experience can be found beginning on page 8. Director Nominee Susan L. Decker Director Since 2015 Roland A. Hernandez(cid:1) 2002 Robert A. Katz John T. Redmond Hilary A. Schneider D. Bruce Sewell John F. Sorte Peter A. Vaughn Fiscal 2015 Meetings 1996 2008 2010 2013 1993 2013 Primary Occupation and Experience Independent Audit Comp N&G Exec Committee Memberships Principal of Deck3 Ventures LLC Founding Principal & CEO of Hernandez Media Ventures; former CEO of Telemundo Chairman and CEO of Vail Resorts, Inc. Former Managing Director & CEO of Echo Entertainment Group Limited President of Lifelock, Inc. SVP, General Counsel & Secretary of Apple Inc. Executive Chairman of Morgan Joseph TriArtisan LLC Founder and Managing Director of Vaughn Advisory Group, LLC Yes Yes No Yes Yes Yes Yes Yes F F Chair X X X X X Chair F F Chair X X 4 4 1 0 Audit – Audit Committee Comp – Compensation Committee N&G – Nominating & Governance Committee Exec – Executive Committee F – Audit Committee Financial Expert (cid:1) – Lead Independent Director The Board of Directors held six meetings during fiscal 2015. Each of the directors attended at least 75% of the meetings held by the Board and Board committees on which he or she served during the fiscal year. 2 Executive Compensation Highlights (see page 31) Under our executive compensation program, a significant portion (approximately 85% and 70%, respectively) of the CEO’s and other Named Executive Officers’ annual target total direct compensation is variable based upon our operating performance and/or our stock price, as shown below: CEO Fiscal 2015 Target Direct Compensation Other NEO Fiscal 2015 Target Direct Compensation(1) 14.6% Base Salary 14.6% Target Annual Incentive Long-Term Equity Incentive 70.8% 30.1% Base Salary 53.8% 16.1% Target Annual Incentive Long-Term Equity Incentive 16OCT201516262094 (1) The percentages in the chart exclude information for Mr. Mehrberg, who left the Company on April 17, 2015, and Mr. Shapiro, who joined the Company on July 13, 2015. For fiscal 2015, our named executive officer executive compensation highlights included: (cid:127) We generally increased base salaries for our named executive officers by 3% from fiscal 2014 amounts; (cid:127) We increased equity grant values for our named executive officers over fiscal 2014 levels to recognize outstanding performance and changes in scope of responsibility; and (cid:127) Our CEO’s target total direct compensation continued to be largely based upon variable or ‘‘at risk’’ elements (85% for fiscal 2015), which further aligns our CEO’s compensation interests with the investment interests of our stockholders. In addition, for fiscal 2015, we engaged in (or refrained from) certain pay practices with respect to our named executive officer compensation program that we believe align with market best practices: What We Do: (cid:1) Annual Advisory Vote to Approve Executive Compensation (cid:1) Independent Compensation Committee (cid:1) Significant Portion of Executive Compensation Tied to Performance (cid:1) Significant Portion of Executive Compensation Delivered in the Form of Long-Term Equity-Based Incentives (cid:1) Market Alignment of Compensation But With Greater Emphasis on At- Risk Compensation (cid:1) Independent Compensation Consultant (cid:1) Clawback Policy (cid:1) Stock Ownership Guidelines (cid:1) Use of Tally Sheets (cid:1) Annual Risk Assessment 3 What We Don’t Do: (cid:1) No Excessive Perquisites (cid:1) No Tax Gross-Ups on Perquisites, Except for Standard Relocation Benefits (cid:1) No Excise Tax Gross-Ups (cid:1) No Automatic Salary Increases or Guaranteed Bonuses (cid:1) No ‘‘Single Trigger’’ Automatic Payments or Benefits Upon a Change in Control (cid:1) No Hedging (cid:1) No Equity Repricing (cid:1) No Pension Plans or SERPs VOTING MATTERS AND BOARD RECOMMENDATION The following table summarizes the proposals to be considered at the annual meeting and the Board’s voting recommendation with respect to each proposal. Management Proposals Board Vote Recommendation Page Reference Election of eight Directors, each for a one-year term expiring in 2016 FOR EACH NOMINEE Advisory vote to approve executive compensation Approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan Ratification of PricewaterhouseCoopers LLP as independent auditor for fiscal 2016 FOR FOR FOR 7 61 62 76 Election of Directors (Proposal No. 1) We are asking stockholders to elect each of our nominees for the Board of Directors. Our nominees include: Susan L. Decker, Roland A. Hernandez, Robert A. Katz, John T. Redmond, Hilary A. Schneider, D. Bruce Sewell, John F. Sorte and Peter A. Vaughn. If elected, each director nominee will serve as a director for a one-year term that expires in 2016. Advisory Vote to Approve Executive Compensation (Proposal No. 2) We are asking stockholders to cast an advisory, non-binding vote to approve compensation awarded to our named executive officers. The primary objective of our executive compensation program is to emphasize pay-for-performance by incentivizing our executive officers and senior management to drive superior results and generate stockholder value. Additional information regarding our executive compensation may be found elsewhere in this proxy statement. 4 Approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan (Proposal No. 3) We are asking stockholders to approve our 2015 Omnibus Incentive Plan, referred to in this proxy statement as the 2015 Plan. If approved by stockholders, the 2015 Plan will replace our 2002 Amended and Restated Long-Term Incentive and Share Award Plan as our vehicle for equity compensation awards if approved by stockholders at our annual meeting. Ratification of PricewaterhouseCoopers LLP as Independent Auditor (Proposal No. 4) We are asking stockholders to ratify the appointment of PricewaterhouseCoopers LLP as independent auditor for fiscal 2016. The Audit Committee has selected, and the Board of Directors has ratified the selection of, PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for fiscal 2016. Set forth below is information about its fees in fiscal 2015 and fiscal 2014. Type of fees Audit fees Audit-related fees Tax fees Other fees Total 2015 2014 $2,157,000 $1,831,788 — 40,986 3,600 — — 3,704 $2,201,586 $1,835,492 MEETING INFORMATION Date and time: December 4, 2015, 9:00 a.m. Mountain Standard Time Place: St. Julien Hotel 900 Walnut Street Boulder, Colorado 80302 Record date: October 12, 2015 Voting: Stockholders at the close of business on the record date may vote at the Annual Meeting of Stockholders. Each share is entitled to one vote on each matter to be voted upon. 5 9OCT201418192555 390 Interlocken Crescent Broomfield, Colorado 80021 PROXY STATEMENT FOR THE 2015 ANNUAL MEETING OF STOCKHOLDERS We are providing these proxy materials in connection with the solicitation of proxies by the Board of Directors (the ‘‘Board’’) of Vail Resorts, Inc. (the ‘‘Company’’) to be voted at our annual meeting, which will take place on Friday, December 4, 2015 at 9:00 a.m., Mountain Standard Time, at the St. Julien Hotel, 900 Walnut Street, Boulder, Colorado 80302, and at any adjournment or postponement thereof. As a stockholder, you are invited to attend the annual meeting and are requested to vote on the items of business described in this proxy statement. In accordance with the rules and regulations of the SEC, instead of mailing a printed copy of our proxy materials to each stockholder of record or beneficial owner, we are furnishing proxy materials, which include our proxy statement and annual report, to our stockholders over the Internet. Because you received a Notice of Internet Availability of Proxy Materials by mail, you will not receive a printed copy of the proxy materials, unless you have previously made a permanent election to receive these materials in hard copy or unless you request a printed copy as described below. Instead, the Notice of Internet Availability of Proxy Materials will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Notice of Internet Availability of Proxy Materials also instructs you as to how you may submit your proxy. If you received a Notice of Internet Availability of Proxy Materials by mail and would like to receive a printed copy of our proxy materials you should follow the instructions for requesting such materials included in the Notice of Internet Availability of Proxy Materials. It is anticipated that the Notice of Internet Availability of Proxy Materials will be mailed, and this proxy statement will be made available, to stockholders on or about October 22, 2015. PROPOSAL 1. ELECTION OF DIRECTORS At the annual meeting, eight directors will be nominated for election to the Board to serve for the next year and until their respective successors are elected and qualified. The nominees are Mmes. Decker and Schneider and Messrs. Hernandez, Katz, Redmond, Sewell, Sorte and Vaughn. Each of the nominees is currently a director of the Company and all nominees, except Ms. Decker, were previously elected by stockholders. On September 25, 2015, the Board appointed Ms. Decker to fill the vacancy that resulted from Richard Kincaid’s resignation in April 2015. Ms. Decker was identified as a potential Board member upon the recommendation of two non-management directors. Ms. Decker was interviewed and evaluated by members of the Nominating & Governance Committee and other Board members, who determined that she met the qualifications for Board service. Her appointment was recommended by the Nominating & Governance Committee to the full Board for its review and approval. 6 The persons named as proxies in the accompanying proxy, who have been designated by the Board, intend to vote, unless otherwise instructed in such proxy, ‘‘FOR’’ the election of Mmes. Decker and Schneider and Messrs. Hernandez, Katz, Redmond, Sewell, Sorte and Vaughn as directors. If any nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee, if any, proposed by the Board. Each person nominated for election has agreed to serve if elected. Our Board has no reason to believe that any nominee will be unable to serve. The proxies solicited by this proxy statement may not be voted for more than eight nominees. INFORMATION WITH RESPECT TO NOMINEES The Nominating & Governance Committee monitors the mix of skills, knowledge, perspective, leadership, age, experience and diversity among directors in order to assure that the Board has the ability to perform its oversight function effectively. The Nominating & Governance Committee has determined that the Board will be comprised of individuals who meet the highest possible personal and professional standards. Our director nominees should have broad experience in management, policymaking and/or finance, relevant industry knowledge, business creativity and vision. They should also be committed to enhancing stockholder value and should be able to dedicate sufficient time to effectively carry out their duties. The Nominating & Governance Committee considers many factors when determining the eligibility of candidates for nomination as director. The Nominating & Governance Committee does not have a formal diversity policy; however, in connection with the annual nomination process, the Nominating & Governance Committee considers the diversity of candidates to ensure that the Board is comprised of individuals with a broad range of experiences and backgrounds who can contribute to the Board’s overall effectiveness in carrying out its responsibilities. The Nominating & Governance Committee assesses the effectiveness of its efforts at achieving a diverse Board when it annually evaluates the Board’s composition. The Nominating & Governance Committee considers the following specific characteristics in making its nominations for our Board: independence, wisdom, integrity, understanding and general acceptance of the Company’s corporate philosophy, business or professional knowledge and experience that can bear on the Company’s and the Board’s challenges and deliberations, proven record of accomplishment with excellent organizations, inquiring mind, willingness to speak one’s mind, ability to challenge and stimulate management, future orientation, willingness to commit time and energy, diversity, and international/global experience. The following sets forth the name and age of each nominee, identifies whether the nominee is currently a member of the Board, lists all other positions and offices, if any, now held by him or her with the Company, and specifies his or her principal occupation during at least the last five years. Name Age Position Susan L. Decker . . . . . . . . . . . . . . . Roland A. Hernandez . . . . . . . . . . . Robert A. Katz . . . . . . . . . . . . . . . . John T. Redmond . . . . . . . . . . . . . . . Hilary A. Schneider . . . . . . . . . . . . . D. Bruce Sewell . . . . . . . . . . . . . . . . John F. Sorte . . . . . . . . . . . . . . . . . . Peter A. Vaughn . . . . . . . . . . . . . . . 53 Director 58 Director 48 Chairman and Chief Executive Officer 57 Director 54 Director 57 Director 68 Director 51 Director 7 Director Nominee Business Experience, Other Directorships and Qualifications SUSAN L. DECKER Age – 53 Principal Deck3 Ventures LLC Director Since September 25, 2015 Independent Current Public Directorships: Berkshire Hathaway, Inc., Intel Corporation and Costco Wholesale Corporation Ms. Decker is the principal of Deck3 Ventures LLC, a privately held consulting and advisory firm. She has served in this capacity since 2009. During the 2009-2010 academic year, Ms. Decker was an Entrepreneur-in-Residence at Harvard Business School. From June 2000 to April 2009, she held various executive management positions at Yahoo!. From June 2007 to April 2009, she was president of Yahoo! Inc. From December 2006 to June 2007, Ms. Decker served as the head of one of Yahoo!’s two major business units (the Advertiser and Publisher Group) and was executive vice president and chief financial officer of Yahoo! from June 2000 to June 2007. Prior to joining Yahoo!, she held a number of positions with Donaldson, Lufkin & Jenrette (DLJ), including serving as the global director of equity research. She also serves as an advisor for several venture-backed Internet start-ups and is a trustee of the global nonprofit organization, Save the Children. Skills and Qualifications: (cid:127) Leadership and Finance experience—lead director of an international manufacturer of microprocessors and chipsets (Intel); current principal of corporate advisory firm (Deck3); former president and CFO of large public global technology former entrepreneur-in-residence leading business school for (Harvard); former global director of equity research for an investment bank (DLJ) (Yahoo!); company (cid:127) Technology and International experience—director of a large, diverse multinational conglomerate (Berkshire); director of a leading global retailer (Costco); director of an international manufacturer of microprocessors and chipsets company (Intel); leadership positions at large public global technology company (Yahoo!); former director of global equity research for an investment bank (DLJ) 8 Director Nominee Business Experience, Other Directorships and Qualifications ROLAND A. HERNANDEZ Age – 58 Founding Principal & CEO Hernandez Media Ventures Director Since December 2002 Lead Director Since March 2009 Independent Committees: Audit, Nominating & Governance Chair, Executive Current Public Directorships: MGM Resorts International, Belmond Ltd. (formerly known as Orient Express Hotels Ltd.) and U.S. Bancorp Mr. Hernandez is the founding principal and Chief Executive Officer of Hernandez Media Ventures, a privately held company engaged in the acquisition and management of media assets. He has served in this capacity since 2001. Mr. Hernandez served as Chairman of Telemundo Group, Inc., a Spanish-language television and entertainment company, from 1998 to 2000, and as President and Chief Executive Officer from 1995 to 2000. From 1986 to 1994, Mr. Hernandez was President of the corporate general partner of Interspan Communications. Mr. Hernandez previously served on the board of directors of The Ryland Group, Inc., Sony Corporation and Wal-Mart Stores, Inc. He also serves on the advisory board of Harvard Law School and the President’s Council on International Activities at Yale University. Skills and Qualifications: (cid:127) Leadership and Finance experience—current CEO of privately-held media asset company (Hernandez Media Ventures); former CEO and Chairman of multinational (Telemundo); television and entertainment company director of large commercial bank (U.S. Bancorp); advisory board of leading law school (Harvard) (cid:127) Industry and International experience—Chairman of luxury hotel company and sophisticated adventure travel operator (Belmond); director of global hospitality company (MGM); former CEO and Chairman of multinational television and entertainment company (Telemundo) 9 Director Nominee Business Experience, Other Directorships and Qualifications ROBERT A. KATZ Age – 48 Chairman of the Board & CEO Vail Resorts, Inc. Director Since June 1996 Chairman of the Board Since March 2009 Committees: Executive Mr. Katz served as Lead Director from June 2003 until his appointment as Chief Executive Officer of the Company in February 2006. Prior to becoming the Chief Executive Officer, Mr. Katz was associated with Apollo Management L.P., a private equity investment firm, since its founding in 1990. Mr. Katz serves on the Wharton Leadership Advisory Board at the University of Pennsylvania. Mr. Katz has previously served on numerous private, public and non-profit boards. Skills and Qualifications: (cid:127) Leadership, Industry and Marketing experience— professional association with Vail Resorts began in 1992 and has been involved with all major strategic decisions for over two decades; CEO since 2006 with unique insight and information regarding the Company’s strategy, operations and business and experience with global branding, development and strategy, as well a unique historical perspective into the operations and vision for the Company (Vail Resorts) (cid:127) Finance experience—current CEO of large public company (Vail Resorts); former senior partner at large private equity investment firm (Apollo) 10 Director Nominee Business Experience, Other Directorships and Qualifications JOHN T. REDMOND Age – 57 Former Managing Director & CEO Echo Entertainment Group Limited Director Since March 2008 Independent Committees: Audit Current Public Directorships: Allegiant Travel Company Mr. Redmond was the Managing Director and Chief Executive Officer of Echo Entertainment Group Limited, a leading Australian entertainment and gaming company, from January 2013 to April 2014, and previously served as a non-executive director from March 2012 to January 2013. Mr. Redmond was President and Chief Executive Officer of MGM Grand Resorts, LLC, a collection of resort-casino, residential living and retail developments, and a director of its parent company, MGM Resorts International, from March 2001 to August 2007. He served as Co-Chief Executive Officer and a director of MGM Grand, Inc. from December 1999 to March 2001. Mr. Redmond was President and Chief Operating Officer of Primm Valley Resorts from March 1999 to December 1999 and Senior Vice President of MGM Grand Development, Inc. from August 1996 to February 1999. Prior to 1996, Mr. Redmond was Senior Vice President and Chief Financial Officer of Caesars Palace and Sheraton Desert Inn, having served in various other senior operational and development positions with Caesars World, Inc. Mr. Redmond previously served on the board of directors of Tropicana Las Vegas Hotel and Casino, Inc. Skills and Qualifications: (cid:127) Leadership and Finance experience—former CEO of large public entertainment and gaming company (Echo); former senior officer and director of large public entertainment and gaming company (MGM); director of low-cost, high-efficiency, all-jet passenger airline (Allegiant) (cid:127) Industry and International experience—former CEO of large public entertainment and gaming company (Echo); former senior officer and director of large public entertainment and gaming company (MGM) 11 Director Nominee Business Experience, Other Directorships and Qualifications HILARY A. SCHNEIDER Age – 54 President Lifelock, Inc. Director Since March 2010 Independent Committees: Compensation Ms. Schneider is the President of Lifelock, Inc., a leading provider of identity theft protection, identity risk assessment and fraud protection services, a position she has held since September 2012. From March 2010 to November 2010, Ms. Schneider served as Executive Vice President at Yahoo! Americas. She joined Yahoo! in September 2006 when she led the company’s U.S. region, Global Partner Solutions and Local Markets and Commerce divisions. Prior to joining Yahoo!, Ms. Schneider held senior leadership roles at Knight Ridder, Inc., from April 2002 to January 2005, including Chief Executive Officer of Knight Ridder Digital before moving to co-manage the company’s overall newspaper and online business. From 2000 to 2002, Ms. Schneider served as President and Chief Executive Officer of Red Herring Communications. She also held numerous roles at Times Mirror from 1990 through 2000, including President and Chief Executive Officer of Times Mirror Interactive and General Manager of the Baltimore Sun. Ms. Schneider serves as a senior advisor for TPG Capital. She also serves on the board of directors of several private companies and non-profit organizations, including RentPath, Inc. and Water.org. Skills and Qualifications: (cid:127) Leadership experience—president of large public identity leadership large public global technology company and fraud protection company (Lifelock); positions at (Yahoo!) (cid:127) Industry and Marketing experience—president of large public identity and fraud protection company (Lifelock); leadership positions at large public global technology company (Yahoo!); senior advisor to large private equity investment firm (TPG) 12 Director Nominee Business Experience, Other Directorships and Qualifications D. BRUCE SEWELL Age – 57 Senior Vice President, General Counsel & Secretary Apple Inc. Director Since January 2013 Independent Committees: Audit Chair, Nominating & Governance Mr. Sewell is Senior Vice President, General Counsel and Secretary of Apple Inc., overseeing all legal matters for Apple, including corporate governance, intellectual property, litigation and securities compliance, as well as government affairs. He joined Apple in September 2009. Prior to joining Apple, Mr. Sewell served as Senior Vice President, General Counsel of Intel Corporation from 2005 to 2009. He also served as Intel’s Vice President, General Counsel from 2004 to 2005 and Vice President of Legal and Government Affairs, Deputy General Counsel from 2001 to 2004. Prior to joining Intel in 1995 as a senior attorney, Mr. Sewell was a partner in the law firm of Brown and Bain PC. Skills and Qualifications: (cid:127) Leadership and Finance experience—general counsel of a large international public company (Apple); leadership positions at international manufacturer of microprocessors and chipsets (Intel) (cid:127) Technology and International experience—general counsel of international public mobile communication, personal computer, software and media devices company (Apple); leadership positions at international manufacturer of microprocessors and chipsets (Intel) 13 Director Nominee Business Experience, Other Directorships and Qualifications JOHN F. SORTE Age – 68 Executive Chairman Morgan Joseph TriArtisan LLC Director Since January 1993 Independent Committees: Audit, Compensation Chair, Nominating & Governance, Executive Mr. Sorte is Executive Chairman of Morgan Joseph TriArtisan LLC, an investment and merchant bank engaged in providing financial advice, capital raising and private equity investing. Mr. Sorte is also a director of Morgan Joseph TriArtisan Group Inc., the parent company of Morgan Joseph TriArtisan LLC. Prior to co-founding Morgan Joseph in 2001, he was President of New Street Advisors L.P. He previously held various positions at Drexel Burnham Lambert, including Head of the Energy Group, Co-head of Investment Banking and Chief Executive Officer and member of the board of directors. Mr. Sorte started his career as an investment banker at Shearson Hammill. Mr. Sorte also serves on the board of directors of Shorts International Ltd. and previously served on the board of directors of Autotote Corp. and Westpoint Stevens Inc., as well as several private companies and non-profit organizations. Skills and Qualifications: (cid:127) Leadership and Finance experience—executive chairman of investment and merchant bank (Morgan Joseph); former president of private equity firm (New Street); prior leadership positions at global investment bank (Drexel) (cid:127) International experience—executive of investment and merchant bank with international operations (Morgan Joseph); prior leadership positions at global investment bank (Drexel) chairman 14 Director Nominee Business Experience, Other Directorships and Qualifications PETER A. VAUGHN Age – 51 Founder and Managing Director Vaughn Advisory Group, LLC Director Since June 2013 Independent Committees: Compensation Mr. Vaughn is the founder and Managing Director of the Vaughn Advisory Group, LLC, a privately-held company providing consulting services on global brand strategy and marketing. From January 2013 through November 2014, he was the Senior Vice President of International Consumer Products and Marketing of the American Express Company, providing strategic marketing leadership for the company’s consumer card-issuing and network businesses in over 160 countries worldwide, with a focus on product line strategy, benefit sourcing and management, product innovation, brand management, communications and advertising. Previously, he held several senior marketing roles within American Express, including serving as Chief Marketing Officer of Global Network Services from 2011 to January 2013, Senior Vice President of Global Brand Management from 2005 to 2011, Vice President of Marketing for the Travelers Cheque and Prepaid Services Group from 2002 to 2004, Vice President and General Manager of Lending for the Small Business Division in 2001 and Vice President of Acquisition and Advertising for Small Business Services from 1999 to 2001. From 1994 to 1999, he held several positions overseas in the Consumer Services Group of American Express, including Vice President of International Product Development, European Head of Revolving Credit and Lending and Senior Director of European Product Development. Mr. Vaughn joined American Express in 1992, acting as Director of Marketing for the Consumer Financial Services Group. Skills and Qualifications: (cid:127) Leadership and International experience—former senior global marketing positions and senior business leader in multiple business lines at a global, public financial services company (American Express) (cid:127) Marketing and Finance experience—principal of privately-held global brand strategy and marketing company (Vaughn Advisory Group); former senior global marketing positions and senior business leader in multiple business and profit/loss lines with operational marketing responsibility at a global, public financial services company (American Express) THE BOARD RECOMMENDS THAT YOU VOTE ‘‘FOR’’ THE ELECTION OF EACH OF THE NOMINEES NAMED ABOVE. 15 MANAGEMENT The Company’s executive officers, as well as additional information with respect to such persons, are set forth in the table below: Name Age Position Robert A. Katz . . . . . . . . . . . . . . . . . 48 Chairman and Chief Executive Officer Patricia A. Campbell . . . . . . . . . . . . . 52 President–Mountain Division Michael Z. Barkin . . . . . . . . . . . . . . 37 Executive Vice President and Chief Financial Officer Kirsten A. Lynch . . . . . . . . . . . . . . . 47 Executive Vice President and Chief Marketing Officer David T. Shapiro . . . . . . . . . . . . . . . . 45 Executive Vice President, General Counsel and Secretary For biographical information about Mr. Katz, see ‘‘Director Nominees’’ above. Patricia A. Campbell has served as President—Mountain Division since August 2015. Ms. Campbell previously served as Executive Vice President since October 2013 and served as the Chief Operating Officer of Breckenridge Ski Resort since October 2009. Prior to that, Ms. Campbell was Chief Operating Officer of Keystone Resort from November 2006 to September 2009. Ms. Campbell joined the Company in July 1999 as the Director of Ski School at Breckenridge and she has more than 25 years of expertise in the ski industry and senior management, holding various roles from her start as a Ski School Instructor at Jackson Hole Mountain Resort in 1985. Ms. Campbell serves as a member of the board of the National Ski Areas Association and of the Breckenridge Outdoor Education Center. Michael Z. Barkin has served as Executive Vice President and Chief Financial Officer since April 2013. Mr. Barkin previously served as Vice President of Strategy and Development since July 2012. Prior to joining the Company, he was a principal at KRG Capital Partners, a private equity investment firm, where he was a member of the investment team since 2006. At KRG, Mr. Barkin was responsible for managing new acquisitions and had portfolio company oversight across multiple sectors. Prior to KRG, he worked at Bain Capital Partners, a private equity investment firm, and Bain & Company, a strategy and consulting firm. Mr. Barkin serves on the Board of Trustees of STRIVE Preparatory Charter School. Kirsten A. Lynch has served as Executive Vice President and Chief Marketing Officer since July 2011. Prior to joining the Company, Ms. Lynch was with PepsiCo, Inc., where she was Chief Marketing Officer of the Quaker Foods and Snacks Division from 2009 to 2011, leading the brand marketing, consumer insights and shopper marketing organization. From 2007 to 2009, she was Vice President of Marketing for Kraft Foods Group, Inc.’s Cheese and Dairy Business Unit. Ms. Lynch had worked for Kraft Foods since 1996, holding various marketing positions for the company’s product divisions, including Senior Marketing Director of Kraft Mac & Cheese and Family Dinners, and Senior Brand Manager and Brand Manager for product lines such as salad dressings, barbecue, DiGiorno Pasta & Sauce and Miracle Whip. Ms. Lynch started her career with Ford Motor Company in marketing and sales. David T. Shapiro has served as Executive Vice President, General Counsel and Secretary since July 2015. Prior to joining the Company, Mr. Shapiro served as General Counsel and Senior Vice President for DaVita Kidney Care, a division of DaVita HealthCare Partners Inc., since 2013, overseeing all aspects of the division’s legal work. Mr. Shapiro joined DaVita Kidney Care in 2008, serving as Senior Vice President and Chief Special Counsel from 2012 to 2013 and as Senior Vice President and Chief Compliance Officer from 2008 to 2012. From 2003 to 2007, he served as a trial attorney for the U.S. Department of Justice’s Civil Frauds Section in Washington, D.C. and, prior to that, in private practice at law firms in Connecticut, Philadelphia and Washington, D.C. Mr. Shapiro currently serves on the Board of Directors for the Children’s Hospital of Colorado. 16 SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS Set forth in the following table is the beneficial ownership of common stock at the close of business on October 5, 2015 for all directors, nominees, the named executive officers listed in the Summary Compensation Table, and, as a group, all directors, nominees and all executive officers as of such date. Common Stock Beneficially Owned Name of Beneficial Owner Susan L. Decker . . . . . . . . . . . . . . . . . . . . . . . . . . . . Roland A. Hernandez . . . . . . . . . . . . . . . . . . . . . . . . John T. Redmond . . . . . . . . . . . . . . . . . . . . . . . . . . . Hilary A. Schneider . . . . . . . . . . . . . . . . . . . . . . . . . . D. Bruce Sewell . . . . . . . . . . . . . . . . . . . . . . . . . . . . John F. Sorte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Peter A. Vaughn . . . . . . . . . . . . . . . . . . . . . . . . . . . . Robert A. Katz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Z. Barkin . . . . . . . . . . . . . . . . . . . . . . . . . . . Blaise T. Carrig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . David T. Shapiro . . . . . . . . . . . . . . . . . . . . . . . . . . . . Randall E. Mehrberg . . . . . . . . . . . . . . . . . . . . . . . . . Directors, nominees and executive officers as a group Shares — 17,443 20,851(2) 14,197 11,676 61,659 5,357 1,227,795(3) 14,110(4) 55,066(5) 33,021(6) — — (12 persons) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,472,253(7) Percent of Class(1) * * * * * * * 3.3% * * * * * 3.9% * Less than 1.0%. (1) Applicable percentages are based on 36,591,911 shares outstanding on October 5, 2015, adjusted as required by rules promulgated by the SEC. Unless indicated by footnote, the address for each listed director and executive officer is c/o Vail Resorts, Inc., 390 Interlocken Crescent, Broomfield, Colorado 80021. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, the person named in the table has sole voting and investment power with respect to all shares of common stock beneficially owned by them. The number of shares of common stock outstanding used in calculating the percentage for each listed person includes the restricted share units, or RSUs, and common stock underlying share appreciation rights, or SARs, held by that person that are currently exercisable or are exercisable within 60 days of October 5, 2015, but excludes RSUs and our common stock underlying SARs held by any other person. Includes 249 shares of common stock underlying 296 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). Includes 962,987 shares of common stock underlying 1,557,391 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). Includes 9,857 shares of common stock underlying 26,339 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). Includes 27,097 shares of common stock underlying 51,785 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). Includes 24,323 shares of common stock underlying 50,011 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). Includes 1,052,693 shares of common stock underlying 1,729,776 SARs (assuming a fair market value of $105.87, the closing price of our common stock on October 5, 2015). (2) (3) (4) (5) (6) (7) 17 INFORMATION AS TO CERTAIN STOCKHOLDERS Set forth below is certain information with respect to the only persons known to the Company to be the beneficial owners of more than five percent of the Company’s voting securities at the close of business on October 5, 2015. Name of Beneficial Owner Ronald Baron/Baron Capital Group, Inc. . . . . . . . . . . T. Rowe Price Associates, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Vanguard Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . BlackRock, Inc. Common Stock Beneficially Owned Shares 5,376,563(2) 2,853,870(3) 2,191,865(4) 1,964,687(5) Percent of Class(1) 14.7% 7.8% 6.0% 5.4% (1) Applicable percentages are based on 36,591,911 shares outstanding on October 5, 2015. (2) As reported by Baron Capital Group, Inc. (‘‘BCG’’), BAMCO, Inc. (‘‘BAMCO’’), Baron Capital Management, Inc. (‘‘BCM’’), Baron Growth Fund (‘‘BGF’’) and Ronald Baron on a joint Schedule 13G/A filed with the SEC on February 17, 2015. BAMCO and BCM are subsidiaries of BCG. BGF is an advisory client of BAMCO. Ronald Baron owns a controlling interest in BCG. The address for the holders is 767 Fifth Avenue, 49th Floor, New York, NY 10153. (3) As reported by T. Rowe Price Associates, Inc. and T. Rowe Price New Horizons Fund, Inc. on a joint Schedule 13G/A filed with the SEC on February 10, 2015. T. Rowe Price Associates, Inc. disclaims beneficial ownership of these shares. The address for the holders is 100 E. Pratt Street, Baltimore, MD 21202. (4) As reported by The Vanguard Group on a Schedule 13G/A filed with the SEC on February 11, 2015. The address for the holder is 100 Vanguard Blvd., Malvern, PA 19355. (5) As reported by BlackRock, Inc. on a Schedule 13G/A filed with the SEC on February 9, 2015. The address for the holder is 55 East 52nd Street, New York, NY 10022. CORPORATE GOVERNANCE CORPORATE GOVERNANCE GUIDELINES The Board acts as the ultimate decision-making body of the Company, except for those matters reserved to or shared with the Company’s stockholders. The Board selects, advises and oversees our management, who are responsible for the day-to-day operations and administration of the Company. The Board has adopted Corporate Governance Guidelines which, along with the charters of each of the committees of the Board and the Company’s Code of Ethics and Business Conduct, which we refer to as the Code of Ethics, provide the framework for the governance of the Company. A complete copy of the Company’s Corporate Governance Guidelines, the charters of the Board committees and the Code of Ethics for directors, officers and employees may be found in the ‘‘Investor Relations’’ section of the Company’s website under ‘‘Corporate Governance’’ at www.vailresorts.com. Copies of these materials are also available in print, without charge upon written request to: Secretary, Vail Resorts, Inc., 390 Interlocken Crescent, Broomfield, Colorado 80021. BOARD LEADERSHIP AND LEAD INDEPENDENT DIRECTOR Currently, the positions of Chairman of the Board and Chief Executive Officer of the Company are held by the same person, Mr. Katz. When the Chairman of the Board is a non-independent director, the 18 independent directors elect an independent director to serve in a lead capacity. Mr. Katz serves as Chairman of the Board and Mr. Hernandez serves as our Lead Independent Director, or Lead Director. The Board has adopted a Charter of the Lead Independent Director (attached as Appendix A to the Corporate Governance Guidelines), which is available in the ‘‘Investor Relations’’ section of the Company’s website under ‘‘Corporate Governance’’ at www.vailresorts.com. The Lead Director coordinates the activities of the other non-management directors and performs such other duties and responsibilities as the Board may determine. The specific duties of the Lead Director include: (cid:127) presiding over meetings of the Board at which the Chairman is not present, including executive sessions of independent directors; (cid:127) having the authority to call meetings of the independent directors; (cid:127) serving as the presiding director for purposes of all rights and duties assigned to the presiding director under the Company’s Bylaws, including the right to call special meetings of the Board; (cid:127) serving as principal liaison on Board-wide issues between the independent directors and the Chairman; (cid:127) reviewing information sent to the Board and communicating with management if there needs to be additional materials or analyses provided to directors; (cid:127) approving meeting agendas and meeting schedules for the Board, to assure that there is sufficient time for discussion of all agenda items; (cid:127) serving as the point of contact for communications from stockholders or other interested parties directed to the Lead Director or the non-management directors or Board as a group; (cid:127) ensuring that he is available for consultation and direct communication, if requested by major stockholders; and (cid:127) serving on the Executive Committee of the Board. The Board believes that a single leader serving as Chairman and Chief Executive Officer, together with an experienced and engaged Lead Director, is the most appropriate leadership structure for the Board at this time. The Board believes that this approach is best because the Chief Executive Officer is the individual with primary responsibility for implementing the Company’s strategy as approved by the Board and directing the work of other executive officers. This structure results in a single leader being directly accountable to the Board and, through the Board, to stockholders, and enables the Chief Executive Officer to act as the key link between the Board and other members of management. MEETINGS OF THE BOARD The Board held a total of six meetings during fiscal 2015. Each director attended at least 75% of the aggregate of all meetings of the Board and the standing committees of the Board on which he or she served. In accordance with our Corporate Governance Guidelines, directors are invited and encouraged to attend our annual meeting of stockholders. All of our then serving directors attended our 2014 annual meeting of stockholders. EXECUTIVE SESSIONS The non-management directors’ practice is to meet in executive session following the conclusion of each regularly scheduled quarterly Board meeting to discuss such matters as they deem appropriate and, at least once a year, to review the Compensation Committee’s annual review of the Chief Executive Officer. These executive sessions are chaired by the Lead Director. Interested parties, including our stockholders, may communicate with the Lead Director and the non-management directors by following the procedures under the heading ‘‘Communications with the Board’’ below. 19 DIRECTOR NOMINATIONS The Nominating & Governance Committee considers and recommends candidates for election to the Board. The Nominating & Governance Committee also considers candidates for election to the Board, if any, that are submitted by stockholders. Each member of the Nominating & Governance Committee participates in the review and discussion of director candidates. In addition, members of the Board who are not on the Nominating & Governance Committee may meet with and evaluate the suitability of candidates. In making its selections of candidates to recommend for election, the Nominating & Governance Committee seeks persons who have achieved prominence in their field and who possess significant experience in areas of importance to the Company. The minimum qualifications that the Nominating & Governance Committee believes must be met for a candidate to be nominated include independence, wisdom, integrity, understanding and general acceptance of the Company’s corporate philosophy, business or professional knowledge and experience that can bear on the Company’s and the Board’s challenges and deliberations, proven record of accomplishment with excellent organizations, inquiring mind, willingness to speak one’s mind, ability to challenge and stimulate management, future orientation, willingness to commit time and energy, diversity, and international/global experience. Stockholders who wish to submit candidates for consideration by the Nominating & Governance Committee for election at an annual or special meeting of stockholders should follow the procedure described in our Bylaws. The Nominating & Governance Committee applies the same standards in considering candidates submitted by stockholders as it does in evaluating candidates submitted by members of the Board. The Nominating & Governance Committee recommended the nominees for election at this year’s annual meeting, all of whom are currently serving as directors. DETERMINATIONS REGARDING INDEPENDENCE Under the Company’s Corporate Governance Guidelines, a majority of the Board must be comprised of directors who are independent, as determined based on the independence standards of the NYSE’s Listed Company Manual. In accordance with our Corporate Governance Guidelines and the NYSE’s listing standards, the Board has adopted categorical standards of director independence to assist it in making determinations of independence of Board members. These categorical standards of director independence are available in the ‘‘Investor Relations’’ section of the Company’s website under ‘‘Corporate Governance’’ at www.vailresorts.com. The Board has affirmatively determined that each of the nominees, other than Mr. Katz, is ‘‘independent’’ under the NYSE’s listing standards and the categorical standards of director independence adopted by the Board. COMMUNICATIONS WITH THE BOARD The Board has adopted a formal process by which interested parties, including our stockholders, may communicate with the Board or the non-management directors. This information is available in the ‘‘Investor Relations’’ section of ‘‘Corporate Governance’’ at www.vailresorts.com. the Company’s website under CODE OF ETHICS AND BUSINESS CONDUCT The Company has adopted a Code of Ethics that applies to all directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer and controller, or persons performing similar functions. We make the Code of Ethics available to all directors, officers and employees and convey our expectation that every director, officer and employee read and understand the Code of Ethics and its application to the performance of each such person’s business responsibilities. To assist in identifying such proposed transactions as they may arise, our Code of Ethics uses a principles-based guideline to alert directors, officers and employees to potential conflicts of interest. Under the Code of Ethics, a conflict of interest occurs when an individual’s personal, social, financial or 20 political interests conflict with his or her loyalty to the Company. Our policy under the Code of Ethics provides that even the appearance of a conflict of interest where none actually exists can be damaging and should be avoided. If any person believes a conflict of interest is present in a personal activity, financial transaction or business dealing involving the Company, then that person is instructed under the Code of Ethics to report such belief to an appropriate individual or department as identified in the Code of Ethics. The Code of Ethics is available in the ‘‘Investor Relations’’ section of the Company’s website under ‘‘Corporate Governance’’ at www.vailresorts.com, or in print, without charge, to any stockholder who sends a request to: Secretary, Vail Resorts, Inc., 390 Interlocken Crescent, Broomfield, Colorado 80021. The Company will also post on its website any amendment to the Code of Ethics and any waiver granted to any of its directors or executive officers. RISK MANAGEMENT The Board believes that oversight of the Company’s overall risk management program is the responsibility of the entire Board. We view risk management as an important part of the Company’s overall strategic planning process. The Board has delegated the regular oversight of the elements of the risk management program to the Audit Committee and the Board receives updates on individual areas of risk from the Audit Committee. The Board schedules a risk management review agenda item for regular Board meetings on a periodic basis and additionally as needed, during which the Audit Committee reports to and informs the Board of its risk management oversight activities. Senior management reports directly to the Audit Committee at each scheduled Audit Committee meeting and additionally as needed on the status of the Company’s day-to-day risk management program. The Audit Committee has established an internal audit function to provide management and the Board with ongoing assessments of the Company’s risk management processes and systems of internal control. In addition, as part of its responsibilities, the Audit Committee inquires of management and our independent auditors about the Company’s processes for identifying and assessing such risks and exposures and the steps management has taken to minimize such risks and exposures to the Company. The Audit Committee also reviews the Company’s guidelines and policies that govern the processes for identifying and assessing significant risks or exposures and for formulating and implementing steps to minimize such risks and exposures to the Company. COMPENSATION RISK ASSESSMENT The Compensation Committee, with the assistance of our independent compensation consultant, reviewed the material compensation policies and practices for all employees, including executive officers. The Compensation Committee considered whether the compensation program encouraged excessive risk taking by employees at the expense of long-term Company value. Based upon its assessment, the Compensation Committee believes that the Company’s compensation program, which includes a mix of annual and long-term incentives, cash and equity awards and retention incentives, does not present risks that are reasonably likely to have a material adverse effect on the Company. COMMITTEES OF THE BOARD The Board has a standing Audit Committee, Compensation Committee, Executive Committee and Nominating & Governance Committee. The charters for each of these committees, which have been approved by the Board, are available in the ‘‘Investor Relations’’ section of the Company’s website under ‘‘Corporate Governance’’ at www.vailresorts.com, or in print, without charge, to any stockholder who sends a request to: Secretary, Vail Resorts, Inc., 390 Interlocken Crescent, Broomfield, Colorado 80021. Below is a description of each committee of the Board. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. 21 The Audit Committee The Audit Committee is primarily concerned with the effectiveness of the Company’s independent registered public accounting firm, accounting policies and practices, financial reporting and internal controls. The Audit Committee acts pursuant to its charter, and is authorized and directed, among other things, to: (1) appoint, retain, compensate, evaluate and terminate, as appropriate, the Company’s independent registered public accounting firm; (2) approve all audit engagement fees and terms, as well as all permissible non-audit service engagements with the independent registered public accounting firm; (3) discuss with management and the independent registered public accounting firm and meet to review the Company’s annual audited financial statements and quarterly financial statements, including reviewing the Company’s disclosures under ‘‘Management’s Discussion and Analysis of Financial Condition and Results of Operations’’ in the Company’s annual and quarterly reports filed with the SEC; (4) review reports by the independent registered public accounting firm describing its internal quality control procedures and all relationships between the Company, or individuals in financial reporting oversight roles at the Company, and the independent registered public accounting firm; (5) establish procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; (6) monitor the rotation of partners of the independent auditors on the Company’s audit engagement team as required by law; (7) review and approve or reject transactions between the Company and any related persons in accordance with the Company’s Related Party Transactions Policy; (8) confer with management and the independent auditors regarding the effectiveness of internal control over financial reporting; (9) oversee management’s efforts to monitor compliance with the Company’s programs and policies designed to ensure adherence to applicable laws and regulations and the Company’s Code of Ethics; (10) annually prepare a report as required by the SEC to be included in the Company’s annual proxy statement; and (11) discuss policies with respect to risk assessment and risk management. The members of the Audit Committee are Mr. Sewell, Chairman, and Messrs. Hernandez, Redmond and Sorte. The Board has determined that Messrs. Sewell, Hernandez, Redmond and Sorte are each an ‘‘audit committee financial expert’’ as defined in the SEC’s rules and regulations adopted pursuant to the Securities Exchange Act of 1934, as amended, (the ‘‘Exchange Act’’), and that all of the members of the Audit Committee are ‘‘independent’’ as defined by the NYSE’s listing standards and the rules of the SEC applicable to audit committee members. The Audit Committee held four meetings during fiscal 2015. AUDIT COMMITTEE REPORT Management is responsible for the Company’s accounting practices, internal control over financial reporting, the financial reporting process and preparation of the consolidated financial statements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board, or the PCAOB. The Audit Committee’s responsibility is to monitor and oversee these processes. In this context, the Audit Committee has met and held discussions with management and the Company’s independent registered public accounting firm. Management represented to the Audit Committee that the Company’s consolidated financial statements for the fiscal year ended July 31, 2015 were prepared in accordance with generally accepted accounting principles. The Audit Committee reviewed and discussed the consolidated financial statements with management and the Company’s independent registered public accounting firm, including a discussion of the quality of the accounting principles, the reasonableness of significant judgments, the clarity of disclosures in the financial statements and management’s assessment of the effectiveness of the Company’s internal control over financial reporting. The Audit Committee further discussed with the Company’s independent registered public accounting firm the matters required to be discussed under the rules adopted by the PCAOB, as well as the 22 Company’s independent registered public accounting firm’s opinion on the effectiveness of the Company’s internal control over financial reporting. The Company’s independent registered public accounting firm also provided to the Audit Committee the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and the Audit Committee discussed with the Company’s independent registered public accounting firm, and were satisfied with, that firm’s independence from the Company and its management. The Audit Committee has also considered whether the Company’s independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditors’ independence. The Audit Committee discussed with the Company’s internal auditor and independent registered public accounting firm the overall scope and plans for their respective audits. The Audit Committee meets with the Company’s independent registered public accounting firm, with and without management present, to discuss the results of their examination, their evaluation of the Company’s internal control over financial reporting and the overall quality of the Company’s financial reporting. In addition, the Audit Committee meets with the internal auditor, with and without management present, to discuss the results of their examination and evaluation of the Company’s internal control over financial reporting. The Audit Committee has also reviewed and discussed Company policies with respect to risk assessment and risk management. Based upon the Audit Committee’s discussion with management and the Company’s independent registered public accounting firm referred to above, the Audit Committee recommended to the Board that the Company’s audited financial statements as of and for the fiscal year ended July 31, 2015 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015 for filing with the SEC. Audit Committee D. Bruce Sewell, Chairman Roland A. Hernandez John T. Redmond John F. Sorte The Compensation Committee The Compensation Committee acts pursuant to its charter and is authorized and directed, among other things, to: (1) review and approve corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluate the Chief Executive Officer’s performance in light of those goals and objectives (including the Chief Executive Officer’s performance in fostering a culture of ethics and integrity), and, either as a committee or together with the other independent directors (as directed by the Board), determine and approve the Chief Executive Officer’s compensation level based on this evaluation; (2) review the performance of and the individual elements of total compensation for the executive officers of the Company, including any amendments to such executive’s employment agreement, any proposed severance arrangements or change in control and similar agreements/provisions, and any amendments, supplements or waivers to the foregoing agreements; (3) oversee the Company’s overall compensation structure, policies and programs for executive officers and employees, including assessing the incentives and risks arising from or related to the Company’s compensation programs and plans, and assessing whether the incentives and risks are appropriate; (4) review and approve the Company’s incentive compensation and equity-based plans and approve changes to such plans, in each case subject, where appropriate, to stockholder or Board approval, and review and approve issuances of equity securities to employees of the Company; (5) review and recommend to the Board annual retainer and meeting fees for non-employee members of the Board and committees of the Board, fix the terms and awards of stock compensation for such members of the Board and determine the terms, if any, upon which such fees may be deferred; (6) produce a compensation committee report on executive officer compensation as required 23 by the SEC, after the committee reviews and discusses with management the Company’s Compensation Discussion and Analysis, or CD&A, and consider whether to recommend that it be included in the Company’s proxy statement or Annual Report on Form 10-K filed with the SEC; and (7) consider and recommend to the Board the frequency of the Company’s advisory vote on executive compensation. The members of the Compensation Committee are Mr. Sorte, Chairman, Ms. Schneider and Mr. Vaughn. The Board has determined that all members of the Compensation Committee are ‘‘independent’’ as defined by the NYSE’s listing standards. In addition, the Compensation Committee consists of ‘‘non-employee directors,’’ within the meaning of Rule 16b-3 promulgated under the Exchange Act and ‘‘outside directors,’’ within the meaning of regulations promulgated under Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code. The Compensation Committee held four meetings during fiscal 2015. Compensation Committee Processes and Procedures The Compensation Committee meets as often as necessary to carry out its responsibilities. The agenda for each meeting is usually developed by the Chairman of the Compensation Committee, in consultation with the Chief Executive Officer. The Chief Executive Officer does not participate in and is not present during any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee sole authority, at the expense of the Company, to retain or to obtain advice from a compensation consultant, legal counsel or other adviser to assist in the execution of the Compensation Committee’s responsibilities. The Compensation Committee is directly responsible for the appointment, compensation and oversight of the work of any consultant or adviser retained and has authority to approve the fees and other retention terms. The Compensation Committee expects that it will seek advice from independent compensation consultants as it deems necessary on a periodic basis, but not necessarily annually, in order to determine that the Company’s compensation programs remain appropriate and consistent with industry practices. Prior to the retention of any compensation consultant, legal counsel or any other external adviser, the Compensation Committee will assess the independence of such adviser from management, taking into consideration all factors relevant to such adviser’s independence, including factors specified in the NYSE listing standards. During fiscal 2015, the Compensation Committee engaged Hewitt Associates LLC, which we refer to as AON Hewitt, which is a wholly-owned subsidiary of AON plc, as its independent compensation consultant for certain executive compensation matters. AON Hewitt was retained by the Compensation Committee to review the Company’s executive compensation programs, including an analysis of both the competitive market and the design of the programs. As part of its reports to the Compensation Committee, AON Hewitt evaluated our compensation programs and provided an analysis relating to the compensation of our Chief Executive Officer and the Company’s performance and a risk assessment of our compensation programs. In fiscal 2015, AON Hewitt was paid $77,296 for these executive compensation consulting services provided to the Compensation Committee. As noted above, AON Hewitt is an indirect wholly-owned subsidiary of AON plc. AON plc is a multinational, multi-services insurance and consulting firm. During fiscal 2015, AON Hewitt and its affiliates provided general health and benefits consulting, actuarial consulting services and other human resource related services to the Company. The decision to engage AON Hewitt and its affiliates for these additional services was made by management as part of the Company’s existing relationship with AON Hewitt concerning these services, and was not approved, or required to be approved, by the Compensation Committee. Fees for the foregoing additional services in fiscal 2015 were $602,393. The individuals at AON Hewitt that advise the Compensation Committee on executive compensation matters have no involvement in the other services provided to the Company by AON Hewitt and its affiliates, and the individuals at AON Hewitt advising the Compensation Committee report directly to, and are overseen by, the Compensation Committee. These individuals have no other 24 relationship with the Company or management. The Compensation Committee has evaluated the independence of AON Hewitt and concluded that the work of AON Hewitt and its affiliates presents no conflict of interest. Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate, and the Chief Executive Officer has been granted authority to grant certain equity based awards for hiring incentive grants, correction grants or to promoted non-executive employees. The purpose of this delegation of authority is to enhance the flexibility of equity administration within the Company and to facilitate the timely grant of equity awards to new or recently promoted non-executive employees within specified limits approved by the Compensation Committee. The Chief Executive Officer’s authority to make new hire incentive grants is limited by the restrictions established by the Compensation Committee. Historically, the Compensation Committee has made adjustments to annual compensation, determined annual cash and equity awards, and established new performance objectives at one or more meetings held during the first quarter of the fiscal year. However, the Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, at various times as needed throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the fiscal year. For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted to the committee by the Chief Executive Officer. The Compensation Committee makes all final determinations regarding these awards, and none of our executive officers, including the Chief Executive Officer, are involved in the determination of their own compensation. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to his compensation as well as awards to be granted. The non-management directors’ practice is to meet in executive session following the Board meeting in September of each year to review and ratify the Compensation Committee’s annual review of the Chief Executive Officer. For all executives and directors, as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels, and recommendations of the Compensation Committee’s compensation consultant, including analyses of executive and director compensation paid at other companies identified by the consultant. The specific determinations of the Compensation Committee with respect to executive compensation for fiscal 2015 are described in greater detail in the CD&A section of this proxy statement, as well as the narrative disclosure that accompanies the Summary Compensation Table and related tables in the Executive Compensation section of this proxy statement. Compensation Committee Interlocks and Insider Participation During fiscal 2015, no Compensation Committee interlocks existed between the Company and any other entity, meaning none of our executive officers currently serves, or has served during the last completed fiscal year, on the compensation committee or board of directors of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee. No member of our Compensation Committee has ever been an executive officer or employee of the Company. 25 COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based upon this review and discussion, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into our Annual Report on Form 10-K for the fiscal year ended July 31, 2015. Compensation Committee John F. Sorte, Chairman Hilary A. Schneider Peter A. Vaughn The Executive Committee The Executive Committee has all powers and rights necessary to exercise the full authority of the Board during the intervals between meetings of the Board in the management of the business and affairs of the Company, subject to certain limitations set forth in the charter of the Executive Committee. The members of the Executive Committee are Messrs. Katz, Hernandez and Sorte. The Executive Committee held numerous discussions, but no meetings during fiscal 2015. The Nominating & Governance Committee The Nominating & Governance Committee acts pursuant to its charter and is authorized and directed to: (1) review the overall composition of the Board; (2) actively seek individuals qualified to become Board members for recommendation to the Board; (3) identify and recommend to the Board director nominees for the next annual meeting of stockholders and members of the Board to serve on the various committees of the Board; (4) oversee the evaluation of the performance of the Board and oversee the annual self-evaluation process of the Board and each committee; (5) review and reassess the adequacy of the Corporate Governance Guidelines of the Company and recommend any proposed changes to the Board for approval; (6) review and present to the Board individual director candidates recommended for the committee’s consideration by stockholders and stockholder nominations for director that are made in writing to the Secretary of the Company in compliance with the Company’s Bylaws; and (7) review and present to the Board stockholder proposals. The Nominating & Governance Committee also has the authority to retain and terminate any search firm to be used to identify candidates and to approve the search firm’s fees and other retention terms. The members of the Nominating & Governance Committee are Mr. Hernandez, Chairman, and Messrs. Sewell and Sorte. The Board has determined that all members of the Nominating & Governance Committee are ‘‘independent’’ as defined by the NYSE’s listing standards. The Nominating & Governance Committee held one meeting during fiscal 2015. 26 DIRECTOR COMPENSATION DIRECTOR COMPENSATION FOR FISCAL 2015 The following table provides information concerning the compensation of our non-employee directors in fiscal 2015: Name(1) Roland A. Hernandez(5) . . . . . . . . . . . . . . . . . . . . . . . . . . Richard D. Kincaid(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . John T. Redmond(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hilary A. Schneider(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . D. Bruce Sewell(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John F. Sorte(10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Peter A. Vaughn(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fees Earned or Paid in Cash ($)(2) 147,500 55,833 84,000 73,500 96,308 129,000 74,500 Stock Awards ($)(3) All Other Compensation ($)(4) Total ($) 181,047 181,047 181,047 181,047 181,047 181,047 181,047 — 328,547 — 236,880 — 265,047 — 254,547 288,516 322,751 277,641 11,161 12,704 22,094 (1) Mr. Katz is also a named executive officer and his compensation as Chief Executive Officer is included in the Summary Compensation Table in the ‘‘Executive Compensation’’ section of this proxy statement. Mr. Katz does not receive any additional compensation for his service on the Board. (2) Consists of non-employee director annual retainers and meeting fees, and, if applicable, lead director fees, committee chair fees, and committee member and meeting fees. Fees paid to each director in fiscal 2015 were as follows: Board of Directors Audit Compensation Committees Nominating & Governance Executive Name Board Meeting Service Attendance ($) ($) Committee Meeting Committee Meeting Committee Meeting Committee Meeting Service ($) Attendance ($) Service ($) Attendance ($) Service ($) Attendance ($) Service ($) Attendance ($) Total ($) Roland A. Hernandez . . Richard D. Kincaid . . . John T. Redmond . . . Hilary A. Schneider . . . . D. Bruce Sewell . . . John F. Sorte . . . . . . Peter A. Vaughn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 23,333 35,000 35,000 35,000 35,000 35,000 25,000 15,000 26,000 25,000 26,000 26,000 26,000 15,000 — 15,000 — 25,000 15,000 — 6,000 — 8,000 — 8,000 8,000 — — 5,000 — 7,500 — 20,000 7,500 — 6,000 — 6,000 — 6,000 6,000 15,000 5,000 — — 2,308 7,500 — 1,500 1,500 — — — 1,500 — 10,000 — — — — 10,000 — — — — — — — — 147,500 55,833 84,000 73,500 96,308 129,000 74,500 (3) The amounts in this column represent the aggregate grant date fair value of RSUs granted during fiscal 2015 computed in accordance with Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards Codification (‘‘ASC’’) Topic 718. 27 (4) All other compensation for fiscal 2015 includes the following: Name Charitable Donations ($)(a) Roland A. Hernandez . . Richard D. Kincaid . . John T. Redmond . . . Hilary A. Schneider . . D. Bruce Sewell . John F. Sorte . . . Peter A. Vaughn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — — — — 3,027 — Company-paid Lodging, Ski School Privileges and Discretionary Spending on Goods and Services ($)(b) — — — — 11,161 9,677 22,094 Total ($) — — — — 11,161 12,704 22,094 (a) (b) Represents the aggregate incremental cost to the Company of a vacation package to one of our resorts donated by the director to a charity pursuant to the Perquisite Fund Program for directors. See below under ‘‘Limited Director Perquisites and Personal Benefits’’ for a description of this program. Represents the amount reported during fiscal 2015 that were used by a director towards lodging, ski school privileges and discretionary spending on services or goods at our properties for personal use. See below under ‘‘Limited Director Perquisites and Personal Benefits’’ for a description of this program. In accordance with SEC rules, the value of these benefits is measured on the basis of the estimated aggregate incremental cost to the Company for providing these benefits, and perquisites and personal benefits are not reported for any director for whom such amounts were less than $10,000 in the aggregate for the fiscal year. (5) As of July 31, 2015, Mr. Hernandez held 2,119 unvested RSUs. (6) Mr. Kincaid left the Company on April 8, 2015. Upon leaving the Company, Mr. Kincaid forfeited the 296 SARs and 2,119 unvested RSUs then held by Mr. Kincaid. (7) (8) (9) As of July 31, 2015, Mr. Redmond held 296 SARs and 2,119 unvested RSUs. As of July 31, 2015, Ms. Schneider held 2,119 unvested RSUs. As of July 31, 2015, Mr. Sewell held 2,119 unvested RSUs. (10) As of July 31, 2015, Mr. Sorte held 2,119 unvested RSUs. (11) As of July 31, 2015, Mr. Vaughn held 2,119 unvested RSUs. DIRECTOR CASH COMPENSATION All of our non-employee directors receive annual cash fees, payable in quarterly installments. For fiscal 2015, the annual cash retainer for each Board member was $35,000 and meeting fees were $5,000 for each Board meeting attended in person and $1,000 for meetings attended telephonically. In addition, the Lead Director of the Board received an additional $40,000 per year and the Chairman of the Audit Committee received an additional $25,000 per year. Each other Audit Committee member received an additional $15,000 per year, the Chairman of the Compensation Committee received an additional $20,000 per year, the Chairman of the Nominating & Governance Committee received an additional $15,000 per year, and each other Compensation Committee member and Nominating & Governance Committee member received an additional $7,500 each per year. Members of the Executive Committee received an additional $10,000 per year. A non-executive Chairman of the Board would have received an additional annual retainer of $50,000, but our Chief Executive Officer is currently our Chairman of the Board and he is not entitled to this retainer. Members of the Audit Committee received $2,000 per committee meeting attended and members of the Compensation Committee and Nominating & Governance Committee received $1,500 per committee meeting attended. All directors received reimbursement of their reasonable travel expenses in connection with their service. 28 DIRECTOR EQUITY COMPENSATION The Company provides its non-employee directors with equity compensation as determined each year by the Compensation Committee, which for fiscal 2015, was approximately $181,125, which consisted of 2,119 RSUs granted on September 23, 2014 that cliff vest one year from the date of grant. The aggregate grant date fair value of these RSUs is set forth under the ‘‘Stock Awards’’ column of the Director Compensation Table and described in footnote 3 above. LIMITED DIRECTOR PERQUISITES AND PERSONAL BENEFITS Non-employee directors receive benefits consisting of lodging, ski school privileges and discretionary spending on services or goods at our resorts for personal use in accordance with the terms of the Company’s Perquisite Fund Program. Each director is entitled to an annual $40,000 allowance to be used at the Company’s resorts in accordance with such program, under which directors may draw against the account to pay for services or goods at the market rate. Unused funds in each director’s account at the end of each fiscal year are forfeited. In accordance with SEC rules, the value of these benefits is measured on the basis of the estimated aggregate incremental cost to the Company. For this purpose, perquisites do not include benefits generally available on a non-discriminatory basis to all of our employees, such as skiing privileges. In addition, each year we allow each director to designate one charity as the recipient of a vacation package with a retail value of no more than $4,000 and to include only the same array of services that are eligible under the Perquisite Fund Program. We also require that the package be given as part of a public event, dinner or auction and that the Company receive appropriate credit and marketing presence. STOCK OWNERSHIP GUIDELINES FOR NON-EMPLOYEE DIRECTORS Each non-employee director must own the greater of five times his or her annual cash retainer for Board service or $250,000 in value within five years of the date such director is elected or appointed to the Board. Directors are not permitted to sell any shares of common stock (except to pay the exercise price of a particular equity grant, if any, or taxes generated as a result of equity grants) until such time as the ownership guidelines have been satisfied and then only to the extent that such sales do not reduce such director’s ownership below the threshold requirement. Shares of common stock, stock owned in a directed retirement plan or IRA and the intrinsic value of vested equity grants count as stock ownership for purposes of these guidelines. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who beneficially own more than 10% of our common stock, to file reports of beneficial ownership and changes in beneficial ownership with the SEC. Our directors, executive officers and greater-than-10% stockholders are required by SEC rules to furnish us with copies of all Section 16(a) reports that they file. We file Section 16(a) reports on behalf of our directors and executive officers to report their initial and subsequent changes in beneficial ownership of our common stock. To our knowledge, based solely on a review of the reports we filed on behalf of our directors and executive officers, written representations from these persons that no other reports were required and all Section 16(a) reports provided to us, we believe that during fiscal 2015 our directors, executive officers and holders of more than 10% of our common stock filed the required reports on a timely basis under Section 16(a). 29 TRANSACTIONS WITH RELATED PERSONS RELATED PARTY TRANSACTIONS POLICY AND PROCEDURES We have adopted a written Related Party Transactions Policy that sets forth the Company’s policies and procedures regarding the identification, review, consideration and approval or ratification of ‘‘related party transactions.’’ For purposes of our policy only, a ‘‘related party transaction’’ is a transaction, contract, agreement, understanding, loan, advance or guarantee (or any series of similar transactions or arrangements) in which the Company and any ‘‘related person’’ are participants involving an amount that exceeds $120,000. Transactions involving compensation for services provided to the Company solely in their capacity as an officer or director by a related person are not covered by this policy. A related person is any executive officer, director, or more than 5% stockholder of the Company, or any immediate family member of an executive officer or director, including any entity in which such persons are an officer or 10% or greater equity holder. Under the policy, where a transaction has been identified as a related party transaction, management must present information regarding the proposed related party transaction to the Chairman of the Audit Committee, the full Audit Committee or the Board for consideration and approval or ratification, depending upon the size of the transaction involved. In considering related party transactions, the Audit Committee takes into account the fairness of the proposed transaction to the Company and whether the terms of such transaction are at least as favorable to the Company as it would receive or be likely to receive from an unrelated third party in a comparable or substantially comparable transaction. To ensure that our existing procedures are successful in identifying related party transactions, the Company distributed questionnaires to its directors and executive officers shortly following the end of the fiscal year which included, among other things, inquiries about any transactions they have entered into with us. During fiscal 2015 and through the date of this proxy statement, there were no related party transactions under the relevant standards described above. 30 EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS This CD&A describes our executive compensation program, the various components of our program and the compensation-related decisions made for fiscal 2015 with respect to our named executive officers (‘‘NEOs’’). For purposes of this CD&A and the compensation tables and narratives that follow, the NEOs for fiscal 2015 were: (cid:127) Robert A. Katz, Chairman and Chief Executive Officer (cid:127) Michael Z. Barkin, Executive Vice President and Chief Financial Officer (cid:127) Blaise T. Carrig, President—Mountain Division (cid:127) Kirsten A. Lynch, Executive Vice President and Chief Marketing Officer (cid:127) David T. Shapiro, Executive Vice President, General Counsel and Secretary Our NEOs for fiscal 2015 also include one former executive officer: (cid:127) Randall E. Mehrberg, former Executive Vice President, General Counsel and Secretary On July 13, 2015, David T. Shapiro joined the Company as our Executive Vice President, General Counsel and Secretary. Mr. Shapiro replaced Randall E. Mehrberg, our former Executive Vice President, General Counsel and Secretary, who left the Company on April 17, 2015. In addition, Blaise T. Carrig announced in November 2014 his intent to resign as President—Mountain Division on August 1, 2015 as part of a planned leadership succession. On August 1, 2015, Mr. Carrig transitioned to the non-executive officer role of senior mountain advisor through October 1, 2017. Patricia A. Campbell, who previously served as Executive Vice President and Chief Operating Officer of Breckenridge Ski Resort, was appointed President—Mountain Division as Mr. Carrig’s successor on August 1, 2015. Executive Summary Our executive compensation program, which is grounded in the principle of pay-for-performance, is intended to reward our executive officers and senior management for sustained, high-level performance over the short- and long-term as demonstrated by measurable, company-wide performance metrics and individual contributions that are consistent with our overall growth strategy and achievement of goals. We compensate our executive officers and senior management with a combination of cash compensation (in the form of base salary and cash incentive compensation) and equity awards. Our compensation program has been structured to enhance our ability to achieve our short-term and long-term strategic goals and to retain and motivate our executive officers and senior management to achieve such goals. Our Executive Compensation Program Emphasizes Pay-for-Performance The primary objective of our executive compensation program is to emphasize pay-for-performance by incentivizing our executive officers and senior management to drive superior results and generate stockholder value. We accomplish this objective in the following ways: (cid:127) Annual Incentive Awards. Our Management Incentive Plan (‘‘MIP’’), which applies to the award of annual cash incentive compensation, referred to in this CD&A as a ‘‘MIP award,’’ is intended to focus our executive officers on the key corporate financial metrics that we believe drive our best results. As explained in more detail below, because Resort EBITDA (earnings before interest, taxes, depreciation and amortization, as reported for our Mountain and Lodging segments) is the primary performance metric associated with the MIP for our NEOs, their annual cash incentive fluctuates with our performance and the achievement of our annual goals as established by the Compensation Committee each fiscal year. 31 (cid:127) Long-Term Equity Awards. A significant portion of our NEOs’ total annual compensation opportunity is in the form of long-term equity incentive compensation, including share appreciation rights (‘‘SARs’’) and restricted share units (‘‘RSUs’’), each of which generally vest over three years. (cid:127) High Percentage of Compensation is Variable or ‘‘At-Risk.’’ A significant percentage of our NEOs’ compensation is tied to incentives or appreciation in our stock price, making the majority of pay for these individuals variable or at-risk. As executive officers attain greater levels of responsibility, the percentage of their total target compensation that is variable or ‘‘at-risk’’ increases and the percentage that is fixed decreases. As such, the NEO whose compensation is most heavily comprised of at-risk elements is our Chief Executive Officer (‘‘CEO’’). Our commitment to emphasizing performance-based compensation is illustrated by the following charts, which show the mix of our program’s three primary direct compensation components (fixed compensation, consisting of base salary; variable or at-risk compensation, consisting of target annual incentive compensation; and actual long-term equity incentive awards granted in the fiscal year) for our CEO and, on average, for our other NEOs for fiscal 2015: CEO Fiscal 2015 Target Direct Compensation Other NEO Fiscal 2015 Target Direct Compensation(1) 14.6% Base Salary 14.6% Target Annual Incentive Long-Term Equity Incentive 70.8% 30.1% Base Salary 53.8% 16.1% Target Annual Incentive Long-Term Equity Incentive 16OCT201516262094 (1) The percentages in the chart exclude information for Mr. Mehrberg, who left the Company on April 17, 2015, and Mr. Shapiro, who joined the Company on July 13, 2015. (cid:127) Performance-Based Stock Awards for CEO. In furtherance of our pay-for-performance philosophy and to further align the interests of our CEO with the interests of our stockholders, the Compensation Committee has determined that approximately 50% of the award value subject to long-term equity incentive awards granted to our CEO each fiscal year (not including RSUs granted in payment of his annual MIP award, which are already tied to the performance metrics set forth under the MIP) will be ‘‘performance-based’’ stock awards. These performance-based stock awards may include (i) awards that do not vest or become exercisable unless specific business performance goals established by the Compensation Committee at the time of grant of the award are satisfied, and/or (ii) SARs subject to time-based vesting criteria, but with an exercise price at least 25% greater than the fair market value of our common stock on the date of grant (‘‘Premium SARs’’). For fiscal 2015, as part of its annual assessment of our compensation approach, including how we balance our pay-for-performance philosophy with the risk profile of our compensation mix, the Compensation Committee determined a new allocation of equity awards would strike a more appropriate balance of performance, risk and retention incentives regarding the long-term equity incentive awards granted to our CEO. For fiscal 2015, the Compensation Committee concluded that instead of providing the long-term equity incentive awards as 50% Premium SARs and 50% SARs with an exercise price equal to the closing price of our common stock on the date of grant (‘‘Market SARs’’) (as was done for fiscal 2014), the Compensation Committee awarded Mr. Katz his long-term equity incentive 32 awards as approximately 50% of the award value in RSUs and approximately 50% of the award value in a combination of Premium SARs and Market SARs. Our Executive Compensation Program is Supported by Our Stockholders At our annual meeting of stockholders on December 5, 2014, approximately 99.9% of the votes cast on the proposal were voted in support of the advisory resolution to approve the compensation of our named executive officers. After considering the results of this vote, the Compensation Committee concluded that there is strong stockholder support of our executive compensation program and its emphasis on pay-for-performance. As a result, the Compensation Committee determined to maintain the current executive compensation program. At our 2011 annual meeting, our stockholders expressed a preference that advisory votes on executive compensation occur every year, as recommended by our Board of Directors. Consistent with this preference, our Board of Directors has determined to implement an advisory vote on executive compensation every year until the next advisory vote on the frequency of stockholder votes on executive compensation, which will occur no later than the Company’s annual meeting of stockholders in 2017. Fiscal 2016 Committee Actions For fiscal 2016, as part of its annual assessment of our compensation approach, including how we balance our pay-for-performance philosophy and the key metrics and focus of the Company, the Compensation Committee determined that for each NEO, 95% of the funding of the MIP will be based upon the achievement of Resort EBITDA and 5% will be based upon achievement of the VRDC Performance Goals (as defined below), including Real Estate EBITDA, because of the reduced overall impact the VRDC Performance Goals, including Real Estate EBITDA, have on the financial and operating results of the Company. As discussed more fully elsewhere in this proxy statement, our Board recently adopted, subject to stockholder approval, the Vail Resorts, Inc. 2015 Omnibus Incentive Plan, referred to in this proxy statement as the 2015 Plan. The 2015 Plan, if approved by stockholders at our annual meeting, will replace our 2002 Plan as our vehicle for equity compensation awards. The terms of the 2015 Plan are discussed in greater detail in ‘‘Proposal 3: Approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan.’’ 33 Effective Corporate Governance Reinforces Our Executive Compensation Program The following features of our executive compensation program are evidence of our commitment to good corporate governance practices generally: WHAT WE DO: WHAT WE DON’T DO: Annual Advisory Vote to Approve Executive Compensation. We provide our stockholders with an with only limited perquisites, which are generally annual opportunity to vote on an advisory resolution to approve the compensation paid to our named executive officers as disclosed in the proxy statement. No Excessive Perquisites. We provide our executives limited to credit at our owned and operated properties and which are designed to incentivize our executives to visit and use our resorts in order to inform decision making regarding our business and provide relevant feedback concerning our properties and services. No Tax Gross-Ups on Perquisites, Except for Standard Relocation Benefits. We do not pay tax gross-ups on the limited perquisites that our executives receive, except in the case of standard relocation benefits available to all similarly situated employees. No Excise Tax Gross-Ups. We are not required to pay excise tax gross-ups in connection with the change in control arrangements provided to our executives. No Automatic Salary Increases or Guaranteed Bonuses. We do not guarantee annual salary increases or bonuses and none of the employment agreements with any NEO contain such provisions. No ‘‘Single Trigger’’ Automatic Payments or Benefits Upon a Change in Control. The change in control arrangements provided to our executives require a termination event (including a termination by the executive for ‘‘good reason’’) following a change in control before any cash-based payments or benefits are triggered. No Hedging. Under our Insider Trading Compliance Program, our executives are prohibited from conducting short sales or using derivatives or other instruments designed to hedge against the risk of ownership of our securities, including put and call No Equity Repricing. We expressly prohibit the repricing of underwater stock options and SARs without stockholder approval. Independent Compensation Committee. Our executive compensation program is reviewed annually by the Compensation Committee, which consists solely of independent directors and makes all final determinations regarding executive compensation. Significant Portion of Executive Compensation Tied to Performance. A significant portion of our NEOs’ compensation is comprised of elements of performance-based, incentive compensation that are tied to defined corporate and individual performance goals or stock price performance. In the last three fiscal years, approximately 83.2% of our CEO’s total compensation and approximately 67.6% of our other NEOs’ total compensation, on average, as reported in the Summary Compensation Table, has been in the form of short and long-term incentive-based compensation (MIP award and equity awards). In addition, approximately 50% of the long-term equity incentives granted to our CEO each fiscal year consist of ‘‘performance-based’’ awards. Significant Portion of Executive Compensation Delivered in the Form of Long-Term Equity-Based Incentives. A significant portion of our NEOs’ compensation is comprised of long-term equity incentive awards, consisting of SARs and RSUs, which generally vest over three years. In the last three fiscal years, approximately 77.5% of our CEO’s total compensation and approximately 58.2% of our other NEOs’ total compensation, on average, as reported in the Summary Compensation Table, has been in the options and collar transactions. form of long-term equity-based incentives. Mr. Katz receives 50% of his annual MIP award in cash and the other 50% in RSUs that vest annually over a three-year period (included in the percentage above), meaning one-half of the MIP award earned on the basis of the Company’s achievement of annual performance goals is subject to further time-based vesting and changes in the value of our common stock over that period. 34 WHAT WE DO: WHAT WE DON’T DO: No Pension Plans or SERPs. We do not provide our executives with tax-qualified defined benefit pension Market Alignment of Compensation But With Greater Emphasis on At-Risk Compensation. To attract and retain talented executives, we seek to align target pay plans or supplemental executive retirement plans. levels for our NEOs between the 50th and 75th percentile of compensation as compared with companies in our peer group. However, as compared with companies in our peer group, we generally make at-risk compensation a more significant component of our NEOs’ compensation in order to emphasize pay-for-performance and we generally make SARs a much larger portion of their at-risk compensation than RSUs. Independent Compensation Consultant. The Compensation Committee periodically retains and receives advice from an independent compensation consultant. Clawback Policy. The Compensation Committee has adopted a clawback policy that, in the event of a financial restatement, allows us to recoup cash- or equity-based incentive compensation from executive officers that was paid based on the misstated financial information. Stock Ownership Guidelines. Our executive officers are subject to stock ownership guidelines, requiring that they hold a meaningful amount of our common stock, which helps to align their interests with those of our stockholders. Use of Tally Sheets. The Compensation Committee uses tally sheets that provide information as to all compensation that is potentially available to our NEOs when evaluating executive compensation. Annual Risk Assessment. The Compensation Committee, with the assistance of our independent compensation consultant, annually conducts a compensation risk assessment to determine whether our compensation policies and practices, or components thereof, create risks that are reasonably likely to have a material adverse effect on the Company. Key Objectives of Our Executive Compensation Program Our executive compensation program focuses on the following three key objectives: (cid:127) Emphasizing Pay-for-Performance. Emphasize pay-for-performance by tying annual and long-term compensation incentives to achievement of specified performance objectives or overall stock performance. (cid:127) Attracting, Retaining and Motivating. Attract, retain and motivate talented executives who will determine our long-term success. We have structured our executive compensation program to be competitive with compensation paid by companies in the same market for executive talent. 35 (cid:127) Rewarding Contributions and Creating Long-Term Value. We have structured our compensation program to recognize and reward contributions of all employees, including executive officers, in achieving strategic goals and business objectives, while aligning the program with stockholder interests. Compensation-Setting Process Participants in Setting Executive Compensation The Compensation Committee is responsible for determining the compensation of our executive officers, including our NEOs. In appropriate circumstances, such as when new market data supports a market adjustment, the Compensation Committee, in its discretion, considers the recommendations of our CEO in setting executive compensation, including the compensation of the other NEOs. The Compensation Committee, however, makes all final determinations regarding these awards and no executive officer is involved in the deliberations or the determination with respect to his or her own compensation. The non-management directors’ practice is to meet in executive session following the Board meeting in September of each year to review and ratify the Compensation Committee’s annual review of the CEO. Comparative Framework To achieve our executive compensation objectives, the Compensation Committee periodically analyzes market data and evaluates individual executive performance with a goal of setting compensation at levels the Compensation Committee believes, based on their general business and industry knowledge and experience, are comparable with executives in other companies operating in the leisure, travel, gaming and hospitality industries, which we refer to as our ‘‘peer group.’’ We face a somewhat unique challenge in establishing a peer group because few publicly-traded companies participate in more than one of our operating segments. Thus, when evaluating executive compensation, the Compensation Committee includes in our peer group a variety of leisure, travel, gaming and hospitality companies with whom we may compete for executive talent and the discretionary travel dollars of our guests. When performing its annual executive compensation review, the Compensation Committee has sole authority to engage an independent compensation consultant to assist in obtaining market data and analyzing the competitive nature of our compensation programs. In fiscal 2014, the Compensation Committee engaged AON Hewitt to conduct a competitive market study of the Company’s executive compensation program and to advise on compensation decisions. The study analyzed our executive compensation relative to AON Hewitt’s proprietary survey data, which consisted of companies with comparable revenues, as well as to publicly-traded peer group companies recommended by AON Hewitt. Our Compensation Committee then confirmed a peer group based upon this data. The peer group used by the Compensation Committee for fiscal 2015 compensation decisions consisted of the following companies: Boyd Gaming Corporation Cedar Fair, L.P. Choice Hotels International Inc. Churchill Downs Inc. Hyatt Hotels Corporation International Speedway Corporation Isle of Capri Casinos, Inc. Life Time Fitness Inc. Marriott International, Inc. Penn National Gaming Inc. Pinnacle Entertainment, Inc. Six Flags Entertainment Corporation Starwood Hotels & Resorts Worldwide Inc. Wyndham Worldwide Corporation The Compensation Committee primarily uses survey data from AON Hewitt to set target pay levels for competitive and retention purposes. The Compensation Committee then uses peer group information generally to confirm target pay levels for our NEOs are between the 50th and 75th percentile of compensation as compared with companies in our peer group. However, as compared with companies in 36 our peer group, we generally make at-risk compensation a more significant component of our NEOs’ compensation in order to emphasize pay-for-performance. We believe that compensating our NEOs with a larger proportion of at-risk compensation elements (such as the MIP award, SARs and RSUs) in relation to more static compensation elements (such as base salary) and a larger proportion of long-term equity incentives (such as SARs and RSUs) in relation to short-term compensation elements (such as base salary and the MIP award) compared with the peer group more closely aligns the interests of our NEOs with those of our stockholders. The Compensation Committee will continue to seek advice from independent compensation consultants as it deems necessary on a periodic basis to help ensure that the Company’s compensation programs remain appropriate and consistent with industry practices. Although the Compensation Committee believes that it is important to periodically review the compensation policies of its peer group and the survey data, the Compensation Committee also believes that our executive compensation program must further our business objectives and be consistent with our culture. Therefore, while the Compensation Committee reviews the peer group and survey data, including the total and type of compensation paid to executive officers at peer group companies to further validate that the compensation paid to the executive officers remains competitive, the Compensation Committee does not necessarily make any particular adjustments to the compensation paid to the executive officers based on the peer group or survey data. Company-Specific Factors In addition to considering market data with respect to executive compensation practices of companies within our peer group, the Compensation Committee takes into account individual performance, our retention needs, our relative performance and our own strategic goals. We also conduct an annual review of the aggregate level of our executive compensation program as part of our annual budget review and annual performance review processes, which include determining the operating metrics and non-financial elements used to measure our performance and to compensate our executive officers. For example, in fiscal 2010, as part of a Company-wide wage reduction plan to control expenses, our executive officers were subject to a 10% salary reduction and our CEO received no salary for a twelve-month period. The Compensation Committee, in conjunction with any data and recommendations provided by our independent compensation consultant in any given year, also annually analyzes tally sheets prepared for each NEO. These tally sheets present the dollar amount of each component of the NEO’s compensation, including current cash compensation (base salary and the MIP award), perquisites and the value of equity awards previously granted to the NEO, as well as the amounts that would have been payable to the NEO if employment had been terminated under a variety of scenarios as of the end of the most recently completed fiscal year. The Compensation Committee uses these tally sheets, which provide substantially the same information as is provided in the tables included in this proxy statement, together with peer group data, primarily for purposes of analyzing our NEOs’ total compensation and determining whether it is appropriate to adjust the compensation mix for our NEOs on a going forward basis. In its most recent review of tally sheets, the Compensation Committee determined that total compensation amounts for our NEOs remained consistent with our executive compensation philosophy and objectives. 37 Elements of Compensation Overview Our executive compensation program consists of the following elements: Compensation Element Base Salary Objective Key Features To attract and retain executives with a proven track record of performance (cid:127) Established based primarily on the scope of their responsibilities, taking into account individual performance and experience, competitive market compensation for similar positions, as well as seniority of the individual, our ability to replace the individual, the impact the individual’s loss would have to the Company, and other factors which may be deemed to be relevant by the Compensation Committee, in their discretion. (cid:127) Reviewed annually by the Compensation Committee and, based on this review, may be adjusted to realign salaries with market levels after taking into account individual responsibilities, the impact upon, and relative level of responsibility for, the Company’s performance, long-term Company and individual performance and expertise. (cid:127) No guaranteed increases to base salary. (cid:127) For each fiscal year, Company and individual performance elements drive two different aspects of the MIP: (1) the aggregate amount of funds available under the MIP (driven by Company performance), and (2) the specific allocation of awards to participants under the MIP (driven by Company performance for Mr. Katz and individual performance for the other NEOs). (cid:127) Mr. Katz receives his annual MIP award 50% in cash and 50% in RSUs that vest annually over a three-year period. Annual MIP Award To incentivize achievement of annual financial, operational and strategic goals and achievement of individual annual performance objectives 38 Compensation Element Equity Incentives Objective Key Features To increase long-term stockholder value by retaining our executive officers in a competitive business environment and aligning the interests of these officers with those of our stockholders by encouraging stock ownership by our executive officers (cid:127) Equity awards are granted under our Amended and Restated 2002 Long Term Incentive and Share Award Plan, referred to in this proxy statement as the 2002 Plan, previously approved by stockholders. (cid:127) For fiscal 2015, we used grants of service- based vesting RSUs and SARs because RSUs and SARs provide both a high perceived value and strong retention value, and in part because executives do not incur out-of-pocket expenses to participate in these equity awards, thus providing additional linkage between the interests of our NEOs and our stockholders. (cid:127) The Compensation Committee has adopted a long-term equity-based incentive grant practice for our CEO, such that approximately 50% of the grants will be performance-based. For fiscal 2015, the Compensation Committee concluded that instead of providing the long-term equity incentive awards as 50% Premium SARs and 50% Market SARs (as was done for fiscal 2014), the Compensation Committee awarded Mr. Katz his long-term equity incentive awards as approximately 50% of the award value in RSUs and approximately 50% of the award value in a combination of Premium SARs and Market SARs. In fiscal 2015, this consisted of 22,642 RSUs, 49,063 Premium SARs and 21,611 Market SARs, which vest annually over three years. (cid:127) The use of RSUs aligns the interests of our executives with that of our stockholders through stock ownership. (cid:127) SARs are granted with an exercise price of no less than the fair market value of our common stock on the date of grant (and in some cases as noted above, with an exercise price that exceeds the fair market value on the date of grant), and as a result, executives realize value only to the extent the price of our common stock appreciates after the grant date. (cid:127) RSUs and SARs typically vest annually over three years. However, in certain instances, the Compensation Committee grants awards with cliff vesting as a retention tool where, for instance, the entire award does not vest until the end of a three-year period. 39 Compensation Element Deferred Compensation Limited Perquisites Objective Key Features To attract and retain executives with a proven track record of performance and to provide a tax-efficient means for executives to save for retirement To incentivize executives to use the Company’s services in order to help them in their performance by allowing them to evaluate our resorts and services based upon firsthand knowledge (cid:127) Executives can elect to defer up to 80% of their base salary and 100% of their annual MIP award. (cid:127) Executives can invest these amounts in pre-tax dollars in designated hypothetical investments for their accounts, and their accounts are credited with gains or losses in accordance with their selections. (cid:127) Includes benefits relating to the use of one or more of our owned and operated private clubs, including skiing and parking privileges, as a part of their responsibilities and employment. (cid:127) Also includes our Perquisite Fund Program, under which certain of our senior management, receive an annual allowance, based on executive level, to be used at the Company’s owned or operated resorts. Executives may draw against the account to pay for services or goods, at the market rate for the applicable resort or services. Amounts of the fund used by executives are taxed as ordinary income, like other compensation. Unused funds in each executive’s account at the end of each fiscal year are forfeited. (cid:127) All Company employees enjoy skiing privileges, not just our executives. 2015 Compensation Decisions Base Salary The Compensation Committee generally reviews and adjusts base salaries annually at its September committee meeting, with new salaries effective in mid-October. The following table sets forth the annual base salaries approved by the Compensation Committee for fiscal 2015 compared to fiscal 2014 and shows the percentage change from the prior year. Fiscal 2015 base salary increases were approved for all NEOs in recognition of achieving their individual performance goals in fiscal 2014 and, except as otherwise set forth below, consistent with 3.0% merit increases for employees generally who achieved their individual performance goals in the prior fiscal year. Mr. Barkin and Ms. Lynch’s percentage change reflects a merit increase, additional adjustments in recognition of their performance and their impact on the overall results of the Company, as well as moving them higher in their pay range because of their contributions. 40 Name Fiscal 2015 Base Salary Fiscal 2014 Base Salary % Change Robert A. Katz . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Z. Barkin . . . . . . . . . . . . . . . . . . . . . . . Blaise T. Carrig . . . . . . . . . . . . . . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . . . . . . . . . . . . . . David T. Shapiro(1) . . . . . . . . . . . . . . . . . . . . . . . Randall E. Mehrberg(2) . . . . . . . . . . . . . . . . . . . . $847,819 $390,000 $428,561 $390,000 $375,000 $350,200 $823,125 $333,267 $416,079 $338,252 — $340,000 3.0% 17.0% 3.0% 15.3% — 3.0% (1) Mr. Shapiro joined the Company on July 13, 2015. Amount shown reflects his base annual salary effective upon his appointment. (2) Mr. Mehrberg left the Company on April 17, 2015. Annual MIP Awards Following the completion of fiscal 2015, all of our NEOs, except for Messrs. Mehrberg and Shapiro, were eligible to receive an annual cash MIP award based upon our performance and each NEO’s individual performance during fiscal 2015. Mr. Mehrberg was not eligible to receive an annual cash MIP award for fiscal 2015 because he was not employed by us on the date the MIP award was paid. Mr. Shapiro, who joined us late in fiscal 2015, was not eligible under the terms of the MIP to receive an annual cash MIP award for fiscal 2015. Pursuant to his employment agreement, Mr. Katz’s MIP award is paid 50% in cash and 50% in RSUs that vest annually over a three-year period. Annual Funding of the MIP. Annual funding of the MIP is based upon our achievement of performance measures selected by the Compensation Committee. The Compensation Committee has established: (1) Resort EBITDA, and (2) performance goals for Vail Resorts Development Company (‘‘VRDC Performance Goals’’), as the performance measures to determine funding of the MIP for our NEOs. The Compensation Committee believes these are the appropriate performance measures because Resort EBITDA is the primary performance metric used by the Company to measure its performance and VRDC Performance Goals promote a long-term focus on performance because the real estate and real estate management portion of our business tends to use different measures of success, including net cash flow generated from sales and other operational targets. For purposes of setting annual funding targets under the MIP, the Compensation Committee bases the Resort EBITDA target on the target set by our Board annually when approving the Company’s budget and bases VRDC Performance Goals on Board approved targets for Real Estate EBITDA and net cash proceeds from real estate sales. In setting the performance measures for any given fiscal year, the Compensation Committee considers our past performance, broader economic trends that may impact us in the upcoming year, and our historical performance in relation to the MIP award targets set in the respective prior periods. Please see pages 37 and 50 of our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on September 28, 2015 for information regarding our use of the non-GAAP financial measures discussed in this CD&A and a reconciliation of the differences between the non-GAAP financial measures and their most directly comparable GAAP financial measures. Resort EBITDA Target. For fiscal 2015, the Resort EBITDA target was set at $351.9 million. Both the Resort EBITDA and Real Estate EBITDA targets (which comprised a portion of the VRDC Performance Goals for the fiscal year as described below) were based upon our approved budget for fiscal 2015. The Compensation Committee established the performance measures at the beginning of the fiscal year with the expectation that the target level of performance of these goals would require significant effort and substantial progress toward our strategic plan goals in light of the business environment at that time. As a result, our attainment of these targets in fiscal 2015 was considered moderately likely. 41 VRDC Performance Goals Target. For fiscal 2015, the VRDC Performance Goals included, among other things, attaining a Real Estate EBITDA target of $(9.2) million and achieving net cash proceeds from real estate sales of $38.5 million, in each case with respect to our real estate segment. For the VRDC Performance Goals, the Compensation Committee sets out several specific goals, each of which has a separate weighting within that portion of the funding calculation for corporate performance. Among these specific goals, we expect that some should be achievable, some will be challenging to achieve and others will be difficult to achieve. Over the past three fiscal years, VRDC completed the number of goals resulting in between approximately 147.0% and 150.0% funding of the VRDC Performance Goals portion of corporate performance, with an average funding over this time of 149.0%. How the MIP Is Funded. For fiscal 2015, for each NEO, 90% of the funding of the MIP was based upon the achievement of Resort EBITDA and 10% was based upon achievement of the VRDC Performance Goals, including Real Estate EBITDA. Under the MIP, if we achieve 100% of the Resort EBITDA target, the MIP is funded at 100% of the target funding level for that component, as more fully detailed in the table below. If our performance exceeds 100% of the Resort EBITDA target, the MIP is funded above the target funding level for that component up to a maximum of 200% of the target funding level. If our performance falls below 100% of the annual Resort EBITDA target, the MIP is funded below the target funding level for that component. If our performance falls below 80% of the annual Resort Reported target, the MIP is not funded for that component. MIP Funding for Resort EBITDA Component Percentage of Target Performance Achieved Less than 80% 80% 90% 95% 100% 110% 120% or greater Percentage of Annual Target Funding Level Available under the MIP 0% 15% 25% 50% 100% 175% 200% The other component of the MIP funding calculation for NEOs is the attainment of the VRDC Performance Goals. If the minimum percentage of the Resort EBITDA target is not reached and no VRDC Performance Goals are met, then the MIP is not funded for the NEOs and no MIP awards are paid to them. In the event our Resort EBITDA for any fiscal year meets the specific threshold or target level, and/or we achieve any of the VRDC Performance Goals, then the MIP is funded at the appropriate level and each NEO is eligible to receive a MIP award. In addition, once the MIP is funded based upon each NEO’s target MIP award percentage, the total pool for NEOs is increased by 5%, with such excess being paid out, if any, at the discretion of the Compensation Committee based upon individual performance. 42 Target Annual MIP Awards. For fiscal 2015, each NEO was eligible for an annual MIP award based on a percentage of annual base salary as follows: Name Robert A. Katz . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Michael Z. Barkin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Blaise T. Carrig . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . David T. Shapiro(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Randall E. Mehrberg(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2015 Target Annual MIP Award as Percentage of Base Salary 100.0% 50.0% 60.0% 50.0% 50.0% 50.0% (1) Mr. Shapiro, who joined the Company late in fiscal 2015, was not eligible under the terms of the MIP to receive an annual cash MIP award for fiscal 2015. (2) Mr. Mehrberg, who left the Company on April 17, 2015, was not eligible to receive an annual cash MIP award for fiscal 2015 because he was not employed by us on the date the MIP award was paid. The differences between the NEOs’ target MIP awards as a percentage of their base salaries was determined based upon the perceived ability each executive position has to influence our performance. The positions deemed to have the most potential impact upon our performance have the greatest potential for annual MIP award potential, putting a greater proportion of such NEO’s total pay at-risk relative to performance, in accordance with our executive compensation philosophy. Threshold, target and maximum awards payable under the MIP for fiscal 2015 are reported in the Grants of Plan-Based Awards Table. Individual MIP Award Determination. Once funding is established, the actual MIP award paid to each NEO is determined by individual performance objectives (other than for Mr. Katz, whose award is based solely on the funded amount of target MIP determined by Company performance because, unlike other NEOs, he is responsible for all aspects of Company performance). This structure reflects our objective to put more emphasis on individual performance oriented compensation, while at the same time requiring that overall Company performance standards are met before MIP funding can occur. Achievement of individual performance objectives can result in the NEO receiving a MIP award equal to 0%, 70%, 100%, 115% or 130% of the funded amount (subject to availability of funds under the MIP) and subject to further adjustments (including the 5% adjustment described above) at the discretion of the Compensation Committee. Individual performance objectives vary depending upon our strategic plan and each NEO’s individual responsibilities and are established at the beginning of each fiscal year, with the expectation in fiscal 2015 that the target level of performance of these objectives would require significant effort and substantial progress toward the goals of our strategic plan in light of the current business environment. As a result, each NEO’s attainment of his or her performance objectives in fiscal 2015 was moderately likely. Example. An executive whose MIP award funding is 90% based on Resort EBITDA and 10% based upon achievement of VRDC Performance Goals, earning $300,000 annually with a target MIP award of 50% of base salary, would have an available MIP award funding of $135,000 for 100% achievement of Resort EBITDA (100% times 50% salary target times 90% funding), plus $15,000 for 100% achievement of VRDC Performance Goals (100% times 50% salary target times 10% funding), for a total of $150,000, or 100%, of target funding. However, because 100% of an executive’s total MIP award is determined by the achievement of individual performance objectives, an executive’s ultimate total MIP award can be paid out in an amount equal to 0%, 70%, 100%, 115% or 130% of the target amount based on individual performance (subject to availability of funds under the MIP). 43 Fiscal 2015 Results. In fiscal 2015, the Compensation Committee adjusted Resort EBITDA actual results to: (i) exclude a $16.4 million non-cash gain associated with the litigation surrounding the Canyons and Park City lease because this amount was non-cash in nature and does not reflect the ongoing operations of the business; (ii) exclude $7.4 million of income from Perisher ski resort in Australia, which was acquired in June 2015, because the acquisition was not contemplated in the annual budget; and (iii) exclude $0.4 million in non-cash accounting adjustments not reflected in the annual budget, which the Compensation Committee did not consider to be relevant to the performance of the Company’s Mountain and Lodging divisions, which comprise Resort EBITDA. As a result, in fiscal 2015, we met 97.3% of the Resort EBITDA target, which resulted in a funding level at 72.8% of the target funding level for that component of the funding calculation. In fiscal 2015, VRDC achieved VRDC Performance Goals resulting in a funding level of 150.0% for the VRDC Performance Goals component of the funding calculation. Combined with the Resort EBITDA funding, this resulted in an overall funding level of 80.52% of the target funding level for each NEO. Messrs. Mehrberg and Shapiro were intentionally omitted from the table below because they were not eligible under the terms of the MIP to receive an annual cash MIP award for fiscal 2015. Based upon these results and individual performance, the Compensation Committee determined the final MIP award amounts as follows: Name Fiscal 2015 Target MIP Award Actual Fiscal 2015 Payout Percentages(1) Fiscal 2015 Actual Fiscal 2014 Actual MIP Award MIP Award MIP Award Change from Fiscal 2014 Actual Robert A. Katz(2) . . . . . . . . . . . . . . Michael Z. Barkin . . . . . . . . . . . . . Blaise T. Carrig . . . . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . . . . $847,819 $195,000 $257,137 $195,000 x x x x 80.52% = $682,664 80.52% = $157,014 80.52% = $207,046 80.52% = $157,014 $525,976 $106,479 $159,525 $108,072 29.8% 47.5% 29.8% 45.3% (1) Actual payout percentages are based upon the MIP funded amount and, for each NEO other than the CEO whose payout percentage equals the 80.52% funding level of the MIP, achievement of his or her individual performance objectives. In fiscal 2015, payout percentages were based upon the 80.52% funding level of the MIP and no adjustments were made based upon individual performance objectives. (2) Pursuant to his employment agreement, Mr. Katz’s MIP award is paid 50% in cash and 50% in RSUs. Long-Term Equity Incentives Our long-term equity incentive award program is designed to promote long-term Company performance and align each executive’s risk with stockholder interest, to reward the achievement of long-term goals, and to promote stability and corporate loyalty among our executives. The Compensation Committee bases awards of long-term equity compensation on a number of different factors, including competitive market practices as determined by our peer group analysis, the information provided by our independent compensation consultant, the amount of cash compensation that is currently paid to each NEO, each NEO’s level of responsibility, our retention objectives and our pay-for-performance philosophy. In general, the Compensation Committee makes long-term equity award determinations for executive officers in September of each year and typically consults with our CEO in determining the size of grants to each NEO, other than himself, although the Compensation Committee makes all final determinations. The non-management directors’ practice is to meet in executive session following the Board meeting in September of each year to review and ratify the Compensation Committee’s annual review of the CEO. For fiscal 2015, the Compensation Committee concluded that instead of providing the long-term equity incentive awards as 50% Premium SARs and 50% Market SARs (as was done for fiscal 2014), the Compensation Committee awarded Mr. Katz his long-term equity incentive awards as approximately 50% of the award value in RSUs and approximately 50% of the award value in a combination of Premium SARs and Market SARs. In fiscal 2015, the Compensation Committee granted long-term equity incentive awards under the 2002 Plan. 44 As noted above, the long-term equity values awarded to our NEOs are based on a number of different factors considered by the Compensation Committee. For fiscal 2015, the Compensation Committee awarded each NEO an equity value increased by 3.5% from the prior fiscal year, plus an additional $50,000 equity award value to recognize their outstanding performance and changes in scope of responsibility. As described elsewhere in this CD&A, 33% of the long-term equity incentive award value awarded to Mr. Katz is performance-based SARs with an exercise price equal to 125% of the closing price on the date of grant. In connection with Mr. Shapiro’s appointment as Executive Vice President, General Counsel and Secretary on July 13, 2015, Mr. Shapiro was eligible to receive 16.7% of the value of the equity awards granted to our NEOs in fiscal 2015. On August 1, 2015, the first day of our fiscal 2016, Mr. Shapiro was awarded (i) 162 RSUs and (ii) 1,539 SARs, with an exercise price of $109.69, that each vest in three equal annual installments commencing on the first anniversary date of the grant. In addition, also on August 1, 2015, Mr. Shapiro was awarded $500,000 in RSUs that cliff vest three years after the date of grant for retention purposes. As in previous years, the long-term equity incentive awards granted to our NEOs in fiscal 2015 consisted of RSUs and SARs. In determining the mix of RSUs and SARs granted to each of our NEOs in fiscal 2015, the Compensation Committee considered that, of the two forms of equity awards, RSUs have a relatively greater retentive effect, and SARs have a relatively greater performance incentive impact. For fiscal 2015, approximately 28.6% of the long-term equity incentive award value granted is attributed to RSUs and approximately 71.4% of the award value granted is attributed to SARs for our NEOs other than the CEO. For our CEO, approximately 54.1% of the long-term equity incentive award value granted is attributed to RSUs and approximately 45.9% of the award value granted is attributed to SARs. To further promote retention, the RSUs and SARs granted in fiscal 2015 vest in equal annual installments over a three year period commencing on the first anniversary date of the grant. As the awards are inherently tied to the performance of our common stock, we consider a vesting schedule based upon continued service appropriate to meet the desire for both retention and performance incentive. The value of the equity awards granted to our NEOs in fiscal 2015 are reported in the Summary Compensation Table and are further described in the Grants of Plan-Based Awards Table. Discretionary Bonus or Equity Grant The Compensation Committee may choose to approve a sign-on or discretionary bonus or equity grant for a senior executive if it deems it necessary as a recruitment tool or to recognize outstanding performance. Discretionary cash bonuses, including a sign-on bonus, are included in the ‘‘Bonus’’ column of the Summary Compensation Table for Fiscal 2015 and the grant date fair value of a sign-on or discretionary equity award is included in either the ‘‘Stock Awards’’ or ‘‘Option/Share Appreciation Right Awards’’ column of the table, as appropriate. As noted above, for fiscal 2015, the Compensation Committee awarded each NEO an additional $50,000 in equity award value to recognize their outstanding performance and changes in scope of responsibility. In addition, in connection with Mr. Shapiro’s appointment as Executive Vice President, General Counsel and Secretary on July 13, 2015, the Compensation Committee awarded Mr. Shapiro a $200,000 sign-on cash bonus. In addition, on August 1, 2015, Mr. Shapiro was granted $500,000 in RSUs (as described above) that cliff vests three years after the date of grant for retention purposes. No other sign-on or discretionary cash or equity bonuses were made to our NEOs during fiscal 2015. Other Executive Compensation Policies and Practices Clawback Policy In line with corporate governance best practices, the Compensation Committee has adopted a clawback policy that allows the Company to seek repayment of incentive compensation that was 45 erroneously paid. The policy provides that if the Board determines that there has been a material restatement of publicly issued financial results from those previously issued to the public, our Board will review all MIP awards and equity awards made to executive officers during the three-year period prior to the restatement on the basis of having met or exceeded specific performance targets. If such payments would have been lower had they been calculated based on such restated results, our Board will (to the extent permitted by governing law) seek to recoup the payments in excess of the amount that would have been paid based on the restated results. Equity Grant Practices We generally seek to make equity compensation grants in the first quarter following the completion of a given fiscal year. SARs are granted with an exercise price equal to or higher than the market price of our common stock on the date of grant, which is the date the Compensation Committee approves the award. We do not have any specific program, plan or practice related to timing equity compensation awards to executives; however, the Compensation Committee generally grants annual awards on the date of the regularly scheduled first fiscal quarter Board meeting in September. Other than grants made in connection with hiring, promotions or to replace certain new hire grants once they vest and/or are exercised, equity awards are granted to NEOs at the same time that equity awards are granted to all other employees who are eligible for such awards. Stock Ownership Guidelines for Executives Consistent with our objective of encouraging executive stock ownership to create long-term stockholder value by aligning the interests of our executives with our stockholders, the Company has adopted executive stock ownership guidelines. Under the guidelines, our executive officers are expected to hold shares of our common stock equal to multiples of their base salaries as follows: Chief Executive Officer—6x; Chief Financial Officer—3x; Presidents—3x; and Executive Vice Presidents—2x. Until an executive achieves the required level of ownership, he or she is required to retain at least 75% of the net shares received as a result of the vesting of RSUs or restricted stock or the exercise of SARs or stock options. Net shares are those that remain after shares are netted to pay any applicable exercise price or statutory tax withholdings. Shares of common stock, stock owned in a directed retirement plan or IRA and the intrinsic value of vested equity grants count as stock ownership for purposes of these guidelines. As of the date of this proxy statement, all NEOs who are subject to our stock ownership guidelines, except Mr. Shapiro, who became subject to our stock ownership guidelines in July 2015, have met their required level of stock ownership. Policy Prohibiting Hedging Transactions Our Insider Trading Compliance Program prohibits executives from engaging in hedging transactions designed to offset decreases in the market value of the Company’s securities, including engaging in short sales or investing in other derivatives of the Company’s securities, including put and call options and collar transactions. Post-Termination Compensation Pursuant to their respective employment agreements, each of Messrs. Katz and Carrig are entitled to receive severance payments and continuation of certain benefits upon certain terminations of employment, including certain resignations for ‘‘good reason’’ (as defined in their respective agreements). Pursuant to the Company’s executive severance policy, Messrs. Barkin, Mehrberg and Shapiro and Ms. Lynch are or were entitled to receive severance payments upon certain terminations of employment. In addition, each NEO is entitled to receive payments upon a termination occurring within a limited period of time following a change in control. We believe the change in control arrangements provide continuity of management in the event of an actual or threatened change in control. We also believe that our termination and severance provisions reflect both market practices and competitive factors. Our Board believed that these severance payments and benefit arrangements were necessary to attract and retain our executives when these agreements were entered into. 46 Executive Tax Deductibility of Executive Compensation Section 162(m) of the Internal Revenue Code (the ‘‘Code’’) generally provides that no federal income tax business expense deduction is allowed for annual compensation in excess of $1 million paid by a publicly traded corporation to its chief executive officer and its three other most highly compensated executive officers (other than the chief financial officer). Under the Code, however, compensation that is considered ‘‘performance-based compensation’’ (within the meaning of the Code) does not count towards the $1 million limit. While the Compensation Committee considers the impact of the tax treatment, the primary factor influencing program design is the support of business objectives. The Compensation Committee reserves the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. Accordingly, the Compensation Committee retains flexibility to structure our compensation programs in a manner that is not tax-deductible in order to achieve a strategic result that the Compensation Committee determines to be more appropriate. We have typically intended to structure certain quantitative portions of our cash-based incentive compensation and our equity awards to our covered executive officers under the 2002 Plan and MIP as qualifying performance-based compensation for Section 162(m) purposes. However, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given, notwithstanding our efforts, that compensation intended by us to satisfy the requirements for deductibility under Section 162(m) does in fact do so. SUMMARY COMPENSATION TABLE FOR FISCAL 2015 The following table summarizes the total compensation paid or earned by the named executive officers for each of the last three fiscal years during which the officer was a named executive officer: Name and Principal Position Fiscal Year Salary ($)(1) Bonus ($) Option/Share Appreciation Right Awards ($)(3) Stock Awards ($)(2) Change in Pension Value and Nonqualified Deferred Non-Equity Incentive Plan Compensation Compensation ($)(4) Earnings ($) All Other Compensation ($)(5) . Robert A. Katz . . Chairman and Chief Executive Officer . . . . . . . . . . . . . . . . . . Michael Z. Barkin . . Executive Vice President and Chief Financial Officer . . . . . . . . . . . . . . . . . . Blaise T. Carrig . . President—Mountain Division . . . . . . . . . . . . . . . . . . Kirsten A. Lynch . . Executive Vice President and Chief Marketing Officer . . . . . . . . . . . . . . . . . . 2015 2014 2013 2015 2014 2013 2015 2014 2013 2015 2014 846,281 822,602 798,553 382,187 334,046 286,769 427,784 415,815 404,889 382,968 338,037 — 2,231,712(6) 262,910(7) — 255,228(7) — 1,890,372 3,652,979 3,529,457 341,332(7) 262,988(7) 255,249(7) — — — — — — — — 187,852 103,552 565,422 231,935 675,853 146,593 187,852 100,719 462,029 346,673 229,457 626,957 605,711 608,480 462,029 346,920 157,014 106,479 82,315 207,046 159,525 162,572 157,014 108,072 David T. Shapiro . . Executive Vice President, General Counsel and Secretary . . . . . . . . . . . . . . . . . . 2015 21,635 200,000(8) — — — Randall E. Mehrberg . . Former Executive Vice President, General Counsel and Secretary . . . . . . . . . . . . . . . . 2015 2014 246,668 227,538 — — 157,045 786,293 358,643 288,894 — 72,420 — — — — — — — — — — — — — — Total ($) 5,344,423 5,031,466 4,872,050 1,208,894 898,693 1,167,276 1,511,315 1,894,201 1,340,146 1,201,108 913,439 34,726 29,987 33,563 19,812 7,943 3,313 17,593 37,297 17,612 11,245 19,691 — 221,635 328,676 32,288 1,091,032 1,407,433 (1) (2) (3) Amounts shown reflect salary earned during the fiscal year, which differ from base salaries in that year based in part on the timing of previous year annual adjustments, mid-year promotions, service period and other adjustments in any given year. Awards consist of RSUs. The amounts represent the aggregate grant date fair value of RSUs granted during the applicable fiscal year computed in accordance with FASB ASC Topic 718, and do not represent cash payments made to individuals or amounts realized, or amounts that may be realized. Assumptions used in the calculation of these amounts are included in note 16 to our audited financial statements for fiscal 2015, which are included in our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on September 28, 2015. Awards consist of SARs. The amounts represent the aggregate grant date fair value of SARs granted during the applicable fiscal year computed in accordance with FASB ASC Topic 718, and do not represent cash payments made to individuals or amounts realized, or amounts that may be realized. Assumptions used in the calculation of these amounts are included in note 16 to our audited financial statements for fiscal 2015, which are included in our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on September 28, 2015. 47 (4) In September 2015, pursuant to the MIP, as more fully described in the CD&A section of this proxy statement, and based upon the attainment of performance targets previously established by the Compensation Committee under the MIP, the Compensation Committee approved 2015 cash MIP awards for its NEOs. Such amounts were paid in October 2015. (5) All other compensation for fiscal 2015 includes the following: Company Contributions Under 401(k) Savings Plan ($)(a) Company-paid Company-paid Supplemental Supplemental Disability Life Insurance Insurance Premiums Premiums ($)(c) ($)(b) Company-paid Relocation Compensation(d) Company-paid Relocation Compensation Tax Gross-Up 7,774 8,632 4,982 8,546 — 3,402 7,014 619 619 619 — 206 1,824 — 11,992 2,080 — — — — — — — 226,597 — — — — — 78,932 Fiscal Year 2015 2015 2015 2015 2015 2015 . . . . . . . . . . . . . . . . . . Company-paid Lodging, Ski School Privileges and Discretionary Spending on Goods and Services ($)(e) 18,114 10,561 — — — 19,539 Total ($) 34,726 19,812 17,593 11,245 — 328,676 Name . . Robert A. Katz . . Michael Z. Barkin . . . Blaise T. Carrig . . . Kirsten A. Lynch . David T. Shapiro . . . Randall E. Mehrberg . . . . . . (a) (b) (c) (d) (e) Consists of Company contributions to the NEO’s accounts in the Company’s tax-qualified 401(k) plan. Consists of premiums paid on behalf of the NEO for supplemental life insurance. Consists of premiums paid on behalf of the NEO for supplemental disability insurance. In fiscal 2015, we provided relocation benefits to Mr. Mehrberg as part of our standard relocation benefits available to all similarly situated employees. In fiscal 2015, the relocation benefits consisted of home sale expenses, household moving expenses, and fees associated with a third party relocation service provider. In fiscal 2015, our NEOs were entitled to participate in our Perquisite Fund Program, under which certain of the Company’s executive officers receive an annual allowance based on executive level to be used at the Company’s resorts. For fiscal 2015, annual allowances for NEOs were as follows: CEO— $70,000; President—$40,000; and Executive Vice President—$30,000. Executives may draw against the account to pay for services or goods at the market rate. Amounts of the fund used by the NEO are taxed as ordinary income, like other compensation. The amounts reported include the amounts used by the NEO towards lodging, ski school privileges and discretionary spending on services or goods at our properties for personal use. In accordance with SEC rules, the value of these benefits is measured on the basis of the estimated aggregate incremental cost to the Company for providing these benefits, and perquisites and personal benefits are not reported for any NEO for whom such amounts were less than $10,000 in the aggregate for the fiscal year. In fiscal 2015, the Company also provided to each NEO benefits relating to the use of one or more of our private clubs, for which the Company incurred no incremental costs. NEOs are responsible for the payment of their individual, non-business related expenditures incurred at such clubs, although these expenses would qualify for reimbursement under the Perquisite Fund Program if within the NEO’s allowance under that program. (6) (7) The amount shown in the ‘‘Stock Awards’’ column for fiscal 2015 includes $341,332 for 50% payment of Mr. Katz’s total MIP award and $1,890,381 as part of his long-term equity incentive award, which represent the aggregate grant date fair value of RSUs, based on the 3,350 and 22,642 RSUs granted on September 25, 2015 and September 23, 2014, respectively. Mr. Katz’s MIP award is paid 50% in cash and 50% in RSUs that vest annually over a three year period. For fiscal 2015, the Compensation Committee awarded Mr. Katz his long term equity incentive awards as approximately 50% of the award value in RSUs and approximately 50% of the award value in a combination of Premium SARs and Market SARs. Mr. Katz’s MIP award is paid 50% in cash and 50% in RSUs that vest annually over a three year period. The amount shown in the ‘‘Stock Awards’’ column includes $262,910 and $255,228, which represent the aggregate grant date fair value of RSUs, based on the 3,149 and 3,802 RSUs granted on September 23, 2014 and September 26, 2013, respectively, for 50% payment of Mr. Katz’s total MIP award. The amounts reported in the ‘‘Non-Equity Incentive Plan Compensation’’ column for fiscal 2015, 2014 and 2013 reflect only the cash amount paid to Mr. Katz for 50% of Mr. Katz’s total MIP award for such fiscal year. (8) Represents a cash sign-on bonus upon joining the Company on July 13, 2015. 48 GRANTS OF PLAN-BASED AWARDS IN FISCAL 2015 The following table shows certain information regarding grants of plan-based awards to the named executive officers during fiscal 2015: Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) All Other All Other Option/SAR Exercise Awards: Number of Securities Underlying Stock Awards: Number of Shares of or Base Grant Date Fair Value Price of of Stock Option/ and Option SAR Awards ($)(7) Name Grant Date Threshold Target Maximum Stock or Options/SARs Awards ($/Sh) Units(#)(5) (#)(6) ($)(3) ($)(4) ($)(2) Robert A. Katz . . . . . . . . 21,195 847,819 1,653,247 Michael Z. Barkin . . . . . . Blaise T. Carrig . . . . . . . . Kirsten A. Lynch . . . . . . . 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 09/23/14 3,413 195,000 494,325 4,500 257,137 651,841 3,413 195,000 494,325 David T. Shapiro . . . . . . . — — — Randall E. Mehrberg(8) . . . 2,043 116,733 295,919 09/23/14 09/23/14 09/23/14 — 3,149 22,642 — 1,652 598 — 2,180 598 — 1,652 598 — — 1,283 598 — 21,611 49,063 — 15,360 — 20,843 — 15,360 — — 11,923 — — n/a 262,910 n/a 1,890,381 87.18 650,059 108.98 1,240,313 — 137,925 49,927 462,029 — 182,008 49,927 626,957 — 137,925 49,927 462,029 — — n/a n/a 87.18 — n/a n/a 87.18 — n/a n/a 87.18 — — n/a n/a 87.18 — 107,118 49,927 358,643 (1) (2) (3) (4) The estimated possible payouts are based on the parameters applicable to each NEO at the time the Compensation Committee established the relevant performance goals in writing at the beginning of fiscal 2015, as more fully described in the CD&A section of this proxy statement. The actual earned and subsequently paid amounts are reported in the Summary Compensation Table under the ‘‘Non-Equity Incentive Plan Compensation’’ column. The Threshold amount is based on the MIP’s minimum target funding level based upon the minimum achievement of VRDC Performance Goals and no achievement of Resort EBITDA targets for fiscal 2015, with the resulting funding applied to the NEO’s target percentage of base salary and then paid out at the 70% threshold level for individual performance (other than for Mr. Katz, whose MIP award is tied entirely to corporate performance and payout is 50% cash and 50% RSUs that vest over three years). The Target amount is based on the MIP’s target funding level of 100% upon achievement by the Company of 100% of certain Resort EBITDA targets and VRDC Performance Goals for fiscal 2015, with the resulting funding applied to the NEO’s target percentage of base salary and then paid out at the 100% target level for individual performance (other than for Mr. Katz, whose MIP award is tied entirely to corporate performance and payout is 50% cash and 50% RSUs that vest over three years). The Maximum amount is based on the MIP’s maximum funding level of 200% upon achievement by the Company of at least 120% of certain Resort EBITDA targets and maximum achievement of the VRDC Performance Goals for fiscal 2015, with the resulting funding applied to the NEO’s target percentage of base salary and then paid out at the 130% maximum level for individual performance (other than for Mr. Katz, whose MIP award is tied entirely to corporate performance and payout is 50% cash and 50% RSUs that vest over three years). 49 (5) Represents RSUs that vest in three equal annual installments beginning on the first anniversary of the date of grant. The grants were made pursuant to the 2002 Plan. In the case of Mr. Katz, the number of shares includes 3,149 RSUs for 50% payment of Mr. Katz’s total MIP award for fiscal 2014 and 22,642 RSUs as part of his long-term equity incentive award for fiscal 2015. (6) Represents SARs that vest in three equal annual installments beginning on the first anniversary of the date of grant. The exercise price of each SAR is equal to the closing price of our common stock on the date of grant, except in the case of 66% of the SARs award value granted to Mr. Katz on September 23, 2014, for which the exercise price was 125% of the closing price of our common stock on the date of grant. Upon the exercise of a SAR, the actual number of shares the Company will issue to the NEO is equal the quotient of (i) the product of (x) the excess of the per share fair market value of our common stock on the date of exercise over the exercise price, multiplied by (y) the number of SARs exercised, divided by (ii) the per share fair market value of our common stock on the date of exercise, less any shares withheld to cover payment of applicable tax withholding obligations. The grants were made pursuant to the 2002 Plan. (7) The amounts shown represent the aggregate fair value of the award calculated as of the grant date in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in note 16 to our audited financial statements for fiscal 2015, which are included in our Annual Report on Form 10-K for fiscal 2015 filed with the SEC on September 28, 2015. (8) These awards were forfeited by Mr. Mehrberg upon leaving the Company in fiscal 2015. EMPLOYMENT AGREEMENTS The Company has entered into employment agreements with Messrs. Katz and Carrig, both of which were approved by the Compensation Committee. The Company’s other NEOs do not have employment agreements with the Company. Robert A. Katz, Chairman and Chief Executive Officer The Company entered into an employment agreement with Mr. Katz on October 15, 2008, as amended on September 30, 2011 and April 11, 2013. The employment agreement had an initial term through October 15, 2011, and provides for automatic renewal for successive one year periods if neither party provides written notice of non-renewal to the other not less than 60 days prior to the then-current scheduled expiration date. Under the employment agreement, the initial base salary was set at $843,500, subject to annual adjustments by the Compensation Committee, though in no case may the base salary be reduced at any time below the then-current level. As part of the Company-wide wage reduction plan effective April 2, 2009, Mr. Katz waived this requirement and did not take any salary for a twelve month period. Effective April 1, 2010, Mr. Katz’s salary was reinstated at 85% of his prior pre-wage reduction salary. Pursuant to the employment agreement, Mr. Katz also participates in the Company’s MIP, as more fully described in the CD&A. Under the employment agreement, if the Company achieves specified performance targets for the year under the MIP, Mr. Katz’s ‘‘target opportunity’’ will be no less than 100% of his base salary. The employment agreement provides that Mr. Katz’s MIP award is to be paid 50% in cash and 50% in RSUs that vest annually over a three year period. Mr. Katz also receives other benefits and perquisites on the same terms as afforded to senior executives generally, including customary health, disability and insurance benefits, certain membership benefits at the Company’s private clubs and participation in the Perquisite Fund Program. The employment agreement also provides for certain payments in connection with the termination (including constructive termination) of Mr. Katz under certain circumstances, as more fully described under the heading ‘‘Potential Payments Upon Termination or Change in Control’’ below. The September 2011 amendment eliminated his rights to (i) receive cash severance benefits upon his voluntary resignation within six months following a change in control, and (ii) to be eligible to receive tax gross-up payments on severance and other benefits payable in connection with a change in control. The April 2013 amendment eliminated his rights to paid time off in connection with the Company’s adoption of a flexible time off policy. 50 Mr. Katz’s employment agreement contains standard provisions for non-competition and non-solicitation of the Company’s managerial employees that become effective as of the date of Mr. Katz’s termination of employment and that continue for two years thereafter. Mr. Katz is also subject to a permanent covenant to maintain confidentiality of the Company’s confidential information. Blaise T. Carrig, President—Mountain Division Vail Holdings, Inc., a wholly-owned subsidiary of the Company, entered into an employment agreement with Blaise T. Carrig on October 15, 2008, as amended on April 11, 2013. The agreement had an initial term through October 15, 2011 and provides for automatic renewal for successive one year periods if neither party provides written notice of non-renewal to the other not less than 60 days prior to the then-current scheduled expiration date. Mr. Carrig provided appropriate notice of his intent to resign as President—Mountain Division on August 1, 2015 as part of a planned leadership succession and non-renewal of his employment agreement. Effective August 1, 2015, Mr. Carrig ceased serving as our President—Mountain Division and transitioned to the non-executive officer role of senior mountain advisor through October 1, 2017. See ‘‘Potential Payments Upon Termination or Change in Control’’ below for a discussion of his compensation arrangements during this period. Under the employment agreement, the initial base salary was set at $365,000, subject to annual adjustments by the Compensation Committee, though in no case may the base salary be reduced at any time below the then-current level. As part of the Company-wide wage reduction plan effective April 2, 2009, Mr. Carrig waived this requirement and accepted a salary reduction of 10%. In addition, the employment agreement provides that Mr. Carrig’s base salary would increase to $385,000 effective August 1, 2009; however, consistent with the waiver noted above, this new salary took effect on such date at a 10% reduced level. Pursuant to the employment agreement, Mr. Carrig also participated in the Company’s MIP, as more fully described in the CD&A. Under the employment agreement, if the Company achieves specified performance targets for the year under the MIP, Mr. Carrig’s ‘‘target opportunity’’ will be no less than 50% of his base salary. Mr. Carrig also received other benefits and perquisites on the same terms as afforded to senior executives generally, including customary health, disability and insurance benefits, certain membership benefits at the Company’s private clubs and participation in the Perquisite Fund Program. The employment agreement also provided for certain payments in connection with the termination (including constructive termination) of Mr. Carrig under certain circumstances. The April 2013 amendment eliminated his rights to paid time off in connection with the Company’s adoption of a flexible time off policy. Mr. Carrig’s employment agreement contained standard provisions for non-competition and non-solicitation of the Company’s managerial employees that become effective as of the date of Mr. Carrig’s termination of employment and that continue for one year thereafter. Mr. Carrig is also subject to a permanent covenant to maintain confidentiality of the Company’s confidential information. 51 OUTSTANDING EQUITY AWARDS AT FISCAL 2015 YEAR-END The following table shows certain information regarding outstanding equity awards held by the named executive officers as of July 31, 2015: Option Awards Stock Awards Number of Securities Underlying Unexercised Options/SARs Number of Securities Underlying Unexercised Options/SARs Exercise Exercisable (#)(1) Unexercisable (#)(1)(2) Price ($)(3) Option/SAR Option/SAR or Units of Stock Market Value of Number of Shares Shares or Units of Stock That Have That Have Not Vested (#)(4)(5) Not Vested ($)(6) Name Robert A. Katz . . . . . . . . 72,428 (SARs) 113,871 (SARs) 521,262 (SARs) 123,539 (SARs) 108,344 (SARs) 142,384 (SARs) 142,384 (SARs) 67,055 (SARs) 67,055 (SARs) 27,114 (SARs) 27,114 (SARs) 33,528 (SARs) 33,528 (SARs) 54,226 (SARs) 54,226 (SARs) 21,611 (SARs) 49,063 (SARs) Michael Z. Barkin . . . . . . 1,457 (SARs) 5,261 (SARs) 2,434 (SARs) 4,719 (SARs) 2,630 (SARs) 1,217 (SARs) 9,437 (SARs) 15,360 (SARs) Blaise T. Carrig . . . . . . . . 4,885 (SARs) 21,110 (SARs) 20,234 (SARs) 10,597 (SARs) 16,490 (SARs) 20,843 (SARs) Kirsten A. Lynch . . . . . . . 2,800 (SARs) 19,048 (SARs) 9,066(SARs) 4,722 (SARs) 4,533 (SARs) 9,444 (SARs) 15,360 (SARs) Expiration Date 9/25/17 9/23/18 3/01/19 9/22/19 9/21/20 9/20/21 9/20/21 9/21/22 9/21/22 9/26/23 9/26/23 9/23/24 9/23/24 7/30/22 9/21/22 4/08/23 9/26/23 9/23/24 3/10/19 9/21/20 9/20/21 9/21/22 9/26/23 9/23/24 7/5/21 9/20/21 9/21/22 9/26/23 9/23/24 60.05 40.09 18.88 35.84 37.20 39.65 49.56 54.07 67.59 68.98 86.23 87.18 108.98 50.11 54.07 60.67 68.98 87.18 16.51 37.20 39.65 54.07 68.98 87.18 46.75 39.65 54.07 68.98 87.18 988 2,534 3,149 22,642 108,374 277,954 345,414 2,483,601 278 122 8,592 1,028 2,250 929 1,746 7,561 2,778 479 7,717 1,000 2,250 — — 30,494 13,382 942,456 112,761 246,803 101,902 191,519 829,366 304,719 52,542 846,478 109,690 246,803 — — David T. Shapiro . . . . . . . Randall E. Mehrberg(7) . . . . — — — — — — — — (1) Represents exercisable or unexercisable SARs that vest in three equal annual installments beginning on the first anniversary of the date of grant. Upon the exercise of a SAR, the actual number of shares the Company will issue to the NEO is equal the quotient of (i) the product of (x) the excess of the per share fair market value of our common stock on the date of exercise over the exercise price, multiplied by (y) the number of SARs exercised, divided by (ii) the per share fair market value of our common stock on the date of exercise, less any shares withheld to cover payment of applicable tax withholding obligations. 52 (2) The grant dates and vesting dates of each unexercisable SAR award as of July 31, 2015 are as follows: Number of Unexercisable SARs Grant Date Vesting Schedule of Original Total Grant Vesting Date (date award is vested in full) Robert A. Katz . . . . . . . . . . . . 33,528 September 21, 2012 Equal annual installments over a September 21, 2015 three-year period beginning on anniversary of the date of grant. 33,528 September 21, 2012 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 54,226 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 54,226 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 21,611 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 49,063 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 2,630 September 21, 2012 Equal annual installments over a 1,217 April 8, 2013 three-year period beginning on anniversary of the date of grant. Equal annual installments over a three-year period beginning on anniversary of the date of grant. 9,437 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 15,360 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 10,597 September 21, 2012 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 16,490 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 20,843 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 4,533 September 21, 2012 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 9,444 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 15,360 September 23, 2014 Equal annual installments over a September 21, 2015 September 26, 2016 September 26, 2016 September 23, 2017 September 23, 2017 September 21, 2015 April 8, 2016 September 26, 2016 September 23, 2017 September 21, 2015 September 26, 2016 September 23, 2017 September 21, 2015 September 26, 2016 September 23, 2017 Michael Z. Barkin . . . . . . . . . . . Blaise T. Carrig . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . David T. Shapiro . . . . . . . . . . . Randall E. Mehrberg(7) . . . . . . . — — — — three-year period beginning on anniversary of the date of grant. — — — — (3) The exercise price of each SAR is equal to the closing price of our common stock on the date of grant, except for the performance-based SARs granted to Mr. Katz with exercise prices of $49.56, $67.59, $86.23 and $108.98, which are equal to 125% of the closing price of our common stock on the date of grant. (4) Represents unvested RSUs that, unless otherwise specifically noted in footnote 5 below, vest in three equal annual installments beginning on the first anniversary of the date of grant. 53 (5) The grant dates and vesting dates of RSUs that have not vested as of July 31, 2015 are as follows: Robert A. Katz . . . . . . . . . . . . 988 September 21, 2012 Equal annual installments over a September 21, 2015 Number of Unvested RSUs Grant Date Vesting Schedule of Original Total Grant Vesting Date (date award is vested in full) three-year period beginning on anniversary of the date of grant. 2,534 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 25,791 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 278 September 21, 2012 Equal annual installments over a Michael Z. Barkin . . . . . . . . . . . September 26, 2016 September 23, 2017 September 21, 2015 April 8, 2016 April 8, 2016 September 26, 2016 September 23, 2017 September 21, 2015 September 26, 2016 122 April 8, 2013 three-year period beginning on anniversary of the date of grant. Equal annual installments over a three-year period beginning on anniversary of the date of grant. Cliff vest in full on the third anniversary of the date of grant. 1,028 September 26, 2013 Equal annual installments over a 8,592 April 8, 2013 three-year period beginning on anniversary of the date of grant. 2,250 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 929 September 21, 2012 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 1,746 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 7,561 September 26, 2013 Cliff vest in full on the third September 26, 2016 anniversary of the date of grant. 2,778 September 23, 2014 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 479 September 21, 2012 Equal annual installments over a September 23, 2017 September 21, 2015 three-year period beginning on anniversary of the date of grant. 7,717 September 21, 2012 Cliff vest in full on the third September 21, 2015 anniversary of the date of grant. 1,000 September 26, 2013 Equal annual installments over a three-year period beginning on anniversary of the date of grant. 2,250 September 23, 2014 Equal annual installments over a September 26, 2016 September 23, 2017 Blaise T. Carrig . . . . . . . . . . . . Kirsten A. Lynch . . . . . . . . . . . David T. Shapiro . . . . . . . . . . . Randall E. Mehrberg(7) . . . . . . . — — — — three-year period beginning on anniversary of the date of grant. — — — — (6) The fair market value of these unvested RSU awards was determined based on the last reported closing price of our common stock of $109.69 per share on July 31, 2015, multiplied by the number of units. (7) Awards were forfeited by Mr. Mehrberg upon leaving the Company in fiscal 2015. 54 OPTION EXERCISES AND STOCK VESTED IN FISCAL 2015 The following table shows for fiscal 2015 certain information regarding stock option and SAR exercises and stock vested during the last fiscal year with respect to the named executive officers: Name Robert A. Katz . . . . . . . . . . Michael Z. Barkin . . . . . . . Blaise T. Carrig . . . . . . . . . . Kirsten A. Lynch . . . . . . . . David T. Shapiro . . . . . . . . . Randall E. Mehrberg . . . . . Option Awards Stock Awards Number of Shares Acquired on Exercise(#)(1) Value Realized on Exercise ($)(2) Number of Shares Acquired on Vesting(#)(1) 315,000(4) 23,211,150(4) — 60,797 — — 3,652 — 3,020,659 — — 127,637 5,737 1,485 2,770 1,622 — 397 Value Realized on Vesting ($)(3) 503,402 143,358 245,707 141,951 — 35,377 (1) Represents the aggregate number of shares acquired on vesting or exercise, as applicable. The amounts shown do not reflect amounts withheld by the Company to satisfy tax withholding requirements or to satisfy the exercise price. (2) The aggregate dollar value realized upon the exercise of options/SARs was computed by multiplying the difference between the closing price of the Company’s common stock on the exercise date and the exercise price for the award by the number of awards exercised. (3) The aggregate dollar value realized on the vesting of RSUs was computed by multiplying the closing price of the Company’s common stock on the vesting date by the number of shares vested. (4) Mr. Katz exercised 15,000 options on September 16, 2014 with an exercise price of $18.73 and an expiration date of September 28, 2014. In addition, Mr. Katz exercised 300,000 SARs on June 17, 2015 with an exercise price of $31.69 and an expiration date of February 28, 2016. PENSION BENEFITS The Company does not provide pension benefits or a defined contribution plan to the named executive officers other than the Company’s tax-qualified 401(k) plan. NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2015 The following table shows for fiscal 2015 certain information regarding nonqualified deferred compensation benefits for the named executive officers: Name Robert A. Katz . . . . . . . . Michael Z. Barkin . . . . . . Blaise T. Carrig . . . . . . . . Kirsten A. Lynch . . . . . . David T. Shapiro . . . . . . . Randall E. Mehrberg . . . Executive Registrant Contributions Contributions in Last FY($)(1) in Last FY($) Aggregate Aggregate Balance Aggregate Earnings in Last at Last Withdrawals/ FY($)(2) Distributions($) FYE($)(3) — — 134,741 — — — — — — — — 18,954 — — — — — — — — — — — 348,443 — — — — — — (1) Represents amount deferred, which is reported as compensation to the named executive officer in the Summary Compensation Table. (2) None of the amounts set forth are reported in the Summary Compensation Table because above-market or preferential earnings are not available under the plan. (3) Includes executive contributions of $376,293 that were previously reported in the Summary Compensation Table for prior fiscal years. This amount reflects actual amounts reported and does not include accumulated earnings or withdrawals or distributions. 55 On September 15, 2000, Vail Associates, Inc., an indirect wholly-owned subsidiary of the Company, which we refer to in this section of the proxy statement as the Employer, adopted a Deferred Compensation Plan, which we refer to as the Grandfathered Plan, for the benefit of a select group of management or highly compensated employees, or participants. The Grandfathered Plan is not tax qualified. Section 409A of the Internal Revenue Code, enacted as part of the American Jobs Creation Act of 2004, sets forth specific tax requirements related to nonqualified deferred compensation plans, including the Grandfathered Plan. Rules under Section 409A were effective for nonqualified deferrals of compensation after December 31, 2004. As a result, after December 31, 2004, no new contributions were accepted into the Grandfathered Plan. Effective January 1, 2005, the Employer began operating a new nonqualified deferred compensation plan designed to comply with Section 409A, which we refer to as the Plan. The Plan provides for two classes of participants. Class 1 participants may contribute to the Plan up to 95% of their base pay and up to 95% of any Employer-paid bonus. Class 2 participants may defer only an amount of base pay equal to any 401(k) compliance test refund. Effective January 1, 2007, all participants became eligible to defer up to 80% of their base salary (including an amount of base pay equal to any 401(k) compliance test refund) and 100% of any Employer-paid bonus. Members of the Board may contribute up to 100% of their director fees. All contributions made by participants are 100% vested. The Employer may, on an annual basis, elect to make matching and/or discretionary employer contributions, although to date, the Employer has not made any such contributions. Matching and discretionary contributions vest as determined by the Employer or the Plan’s administrative committee, which we refer to in this section of the proxy statement as the Plan Committee. The Employer or the Plan Committee may accelerate the vesting on matching and/or discretionary Employer contributions at any time, and accelerated vesting will generally occur automatically upon a change in control as defined in Section 409A. Under the Plan, all contributions for a Plan year are allocated among the following two types of accounts at the election of the Participant: Separation from Service accounts and Scheduled Distribution accounts. Separation from Service accounts are generally payable in a lump sum or installments six months following the termination of a Participant’s employment. Scheduled Distribution accounts are generally payable as a lump sum at a designated date at least three years from the year of deferral. Participants have limited rights to delay distributions from either type of account, provided that the election to delay a distribution (i) is made at least twelve months prior to the date the distribution would otherwise have been made, and (ii) delays the distribution for at least five years. All accounts are payable immediately upon the Participant’s disability or death. Participants generally have the right to receive an early distribution from their accounts only upon an unforeseeable emergency. Participants have the right to designate hypothetical investments for their accounts, and their accounts are credited with gains or losses in accordance with the Participants’ selections. All contributions are placed in a rabbi trust which restricts the Employer’s use of and access to the contributions. However, all money in the rabbi trust remains subject to the Employer’s general creditors in the event of bankruptcy. The trustee, Wells Fargo Bank, N.A., is entitled to invest the trust fund in accordance with guidelines established by the Employer. Currently, all assets are invested in a Trust- Owned Life Insurance policy. To the extent that the funds in the trust are insufficient to pay Plan benefits, the Employer is required to fund the difference. The Plan Committee is charged with responsibility to select certain mutual funds, insurance company separate accounts, indexed rates or other methods, which we refer to as Measurement Funds, for purposes of crediting or debiting additional amounts to Participants’ account balances. Participants may elect one or more of these Measurement Funds for purposes of crediting or debiting additional amounts to his or her account balance. As necessary, the Plan Committee may discontinue, substitute or add a Measurement Fund. Each such action will take effect as of the first day of the first calendar quarter that begins at least thirty days after the day on which the Plan Committee gives Participants advance written notice of such 56 change. Participants can change their Measurement Fund allocations daily. The Measurement Funds are valued daily at their net asset values. Using the weighted average return methodology, the rate of return for the Plan, as a weighted portfolio, for the prior twelve-month period ended July 31, 2015 was 5.93%. The rate of return of the S&P 500 for that same period was 11.21%. For this purpose, the weighted portfolio is a weighted average percentage allocation based on the Plan sponsor’s liability holdings for a given point in time, and the weighted average returns are calculated based on the weights assigned using the returns of the underlying funds. Actual account cash balances were not used in calculating this performance. In addition, account deposits, withdrawals, transfers, loans and death benefits, as well as the timing of any flows were not considered in this performance calculation. The Plan does not provide for the payment of interest based on above-market rates. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL The employment agreements with Messrs. Katz and Carrig and the Company’s executive severance policy, which applies or applied to Messrs. Barkin, Mehrberg and Shapiro and Ms. Lynch, require us to provide certain compensation in the event of certain terminations of employment or upon a change in control of the Company. Each of the employment agreements and the executive severance policy provide that the Company may terminate the executive at any time with or without cause. However, if the executive’s employment is terminated without cause or terminated by the executive for good reason, then the executive shall be entitled, in exchange for a signed release, to receive compensation in the amounts and under the circumstances described below. In addition, the forms of award agreements used with all of our employees provide for the full acceleration of vesting of outstanding stock options, SARs, restricted stock, and RSUs upon a change in control of the Company. In accordance with the employment agreements for Messrs. Katz and Carrig, if the executive breaches the post-employment non-competition or non-solicitation covenants to which he is subject under his employment agreement, then the executive must promptly reimburse the Company for any severance payments received from, or payable by, the Company. Except in the case of Messrs. Carrig and Mehrberg, the amounts shown in the tables below are estimates of the value of the payments and benefits each of our named executive officers would have been entitled to receive had a termination event and/or a change in control of the Company occurred, effective as of July 31, 2015. Mr. Carrig did not receive any severance payments in connection with the voluntary termination of his employment agreement and his planned transition to the non-executive officer role of senior mountain advisor. Mr. Mehrberg did not receive any severance payments upon leaving the Company. The actual compensation to be paid to a named executive officer can only be determined at the time such named executive officer’s employment is terminated and may vary based on factors such as the timing during the year of any such event, the Company’s stock price, and any changes to our benefit arrangements and policies. Robert A. Katz, Chairman and Chief Executive Officer Mr. Katz’s employment agreement provides that upon (i) the giving of notice of non-renewal by the Company or termination by the Company without cause or (ii) termination by Mr. Katz for good reason, Mr. Katz is entitled to receive certain benefits so long as he has executed a release in connection with his termination, including: (a) two years of then-current base salary payable in a lump sum, (b) a prorated MIP award (provided that performance targets are met) for the portion of the Company’s fiscal year through the effective date of the termination or non-renewal, payable in lump sum, (c) one year’s COBRA premiums for continuation of health and dental coverage, payable in a lump sum, and (d) full vesting of any RSUs, SARs or other equity awards held by Mr. Katz. If, within twelve months of the consummation of a change in control, (i) the Company terminates Mr. Katz without cause or gives notice of non-renewal of his agreement or (ii) Mr. Katz terminates for good reason, Mr. Katz is entitled to receive, so long as he has 57 executed a release in connection with his termination: (a) two years of then-current base salary payable in a lump sum, (b) a prorated MIP award (provided that performance targets are met) for the portion of the Company’s fiscal year through the effective date of the termination or non-renewal, payable in lump sum, (c) an amount equal to the cash MIP award paid to Mr. Katz in the prior year, payable in lump sum, and (d) to the extent not already vested, full vesting of any RSUs, SARs or other equity awards held by Mr. Katz. The following table describes the estimated potential compensation to Mr. Katz upon termination or a change in control of the Company: Executive Benefits and Payments(1) Base Salary . . . . . . . . . . . . . . . . . . . . SAR/RSU Acceleration . . . . . . . . . . . MIP Award . . . . . . . . . . . . . . . . . . . . Health Insurance . . . . . . . . . . . . . . . . Termination without Cause or Resignation for Good Reason Change in Control Termination following Change in Control(2) $ 1,695,638 10,492,680 847,819 14,504 $ — 10,492,680 — — $1,695,638 — 1,110,807 — $2,806,445 Total . . . . . . . . . . . . . . . . . . . . . . . $13,050,641 $10,492,680 (1) Assumes the following: (a) base salary equal to $847,819 is in effect as of the assumed termination or change in control date of July 31, 2015; (b) executive’s unvested RSUs and SARs at July 31, 2015 would be subject to accelerated vesting on that date (when the last reported closing price per share of our common stock was $109.69); and (c) all Company targets under the MIP are met and executive’s pro rata MIP award payable as of the termination date is the Target amount indicated under Non-Equity Incentive Plan Awards in the Grants of Plan-Based Awards Table above. (2) Benefits triggered upon termination without cause or resignation for good reason would apply in the same manner following a change in control when the new owners are bound by the terms of the employment agreement, except that equity awards would have already accelerated in full upon the change in control event. Michael Z. Barkin, Executive Vice President and Chief Financial Officer Pursuant to the Company’s executive severance policy, Mr. Barkin is entitled to receive severance payments upon certain terminations of employment. In addition, Mr. Barkin is entitled to receive payments upon a termination occurring within a certain period of time following a change in control. The following table describes the estimated potential compensation to Mr. Barkin upon termination or a change in control of the Company: Executive Benefits and Payments(1) Base Salary . . . . . . . . . . . . . . . . . . . . SAR/RSU Acceleration . . . . . . . . . . . MIP Award . . . . . . . . . . . . . . . . . . . . Health Insurance . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . Termination without Cause or Resignation for Good Reason Change in Control Termination following Change in Control(2) $390,000 — — — $390,000 $ — 2,281,768 — — $2,281,768 $390,000 — 157,014 — $547,014 (1) Assumes the following: (a) base salary equal to $390,000 is in effect as of the assumed termination or change in control date of July 31, 2015; (b) executive’s unvested SARs and RSUs at July 31, 2015 would be subject to accelerated vesting on that date (when the last reported closing price per share of our common stock was $109.69); and (c) MIP award payable under the executive severance policy upon a termination following a change in control is equal to the most recent MIP award paid to the executive. (2) Benefits triggered upon termination without cause or resignation for good reason would apply in the same manner following a change in control pursuant to the Company’s executive severance policy when the new owners are bound by the terms of the executive severance policy, except that equity awards would have already accelerated in full upon the change in control event. 58 Kirsten A. Lynch, Executive Vice President and Chief Marketing Officer Pursuant to the Company’s executive severance policy, Ms. Lynch is entitled to receive severance payments upon certain terminations of employment. In addition, Ms. Lynch is entitled to receive payments upon a termination occurring within a certain period of time following a change in control. The following table describes the estimated potential compensation to Ms. Lynch upon termination or a change in control of the Company: Executive Benefits and Payments(1) Base Salary . . . . . . . . . . . . . . . . . . . . SAR/RSU Acceleration . . . . . . . . . . . MIP Award . . . . . . . . . . . . . . . . . . . . Health Insurance . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . Termination without Cause or Resignation for Good Reason Change in Control Termination following Change in Control(2) $390,000 — — — $390,000 $ — 2,237,856 — — $2,237,856 $390,000 — 157,014 — $547,014 (1) Assumes the following: (a) base salary equal to $390,000 is in effect as of the assumed termination or change in control date of July 31, 2015; (b) executive’s unvested SARs and RSUs at July 31, 2015 would be subject to accelerated vesting on that date (when the last reported closing price per share of our common stock was $109.69); and (c) MIP award payable under the executive severance policy upon a termination following a change in control is equal to the most recent MIP award paid to the executive. (2) Benefits triggered upon termination without cause or resignation for good reason would apply in the same manner following a change in control pursuant to the Company’s executive severance policy when the new owners are bound by the terms of the executive severance policy, except that equity awards would have already accelerated in full upon the change in control event. David T. Shapiro, Executive Vice President, General Counsel and Secretary Pursuant to the Company’s executive severance policy, Mr. Shapiro is entitled to receive severance payments upon certain terminations of employment. In addition, Mr. Shapiro is entitled to receive payments upon a termination occurring within a certain period of time following a change in control. The following table describes the estimated potential compensation to Mr. Shapiro upon termination or a change in control of the Company: Executive Benefits and Payments(1) Base Salary . . . . . . . . . . . . . . . . . . . . SAR/RSU Acceleration . . . . . . . . . . . MIP Award . . . . . . . . . . . . . . . . . . . . Health Insurance . . . . . . . . . . . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . Termination without Cause or Resignation for Good Reason Change in Control Termination following Change in Control(2) $375,000 — — — $375,000 — — — — — $375,000 — — — $375,000 (1) Assumes the following: (a) base salary equal to $375,000 is in effect as of the assumed termination or change in control date of July 31, 2015; (b) executive’s unvested SARs and RSUs at July 31, 2015 would be subject to accelerated vesting on that date (when the last reported closing price per share of our common stock was $109.69); and (c) MIP award payable under the executive severance policy upon a termination following a change in control is equal to the most recent MIP award paid to the executive. (2) Benefits triggered upon termination without cause or resignation for good reason would apply in the same manner following a change in control pursuant to the Company’s executive severance policy when the new owners are bound by the terms of the executive severance policy, except that equity awards would have already accelerated in full upon the change in control event. 59 Blaise T. Carrig, President—Mountain Division Effective August 1, 2015, Mr. Carrig ceased serving as our President-Mountain Division and transitioned to the non-executive officer role of senior mountain advisor through October 1, 2017. Effective August 1, 2015, Mr. Carrig will be entitled to receive (i) an annual base salary of $428,561, (ii) participation in the Perquisite Fund Program with an annual allowance of $30,000 per year to be used at the Company’s owned or operated resorts and (iii) other customary benefits provided to senior executives of the Company. He will not be eligible to participate in the Company’s Management Incentive Plan and additional equity awards. If his employment is terminated by the Company ‘‘without cause’’ prior to October 1, 2017, Mr. Carrig will be entitled to receive the remaining compensation through October 1, 2017. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The following table summarizes the Company’s equity compensation plans as of July 31, 2015: Plan Category Equity compensation plans approved by security holders . . . . . . . . . . . . . Equity compensation plans not approved by security holders . . . . . . Total . . . . . . . . . . . . . . . . . . . . . . . . . (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)(2) (in thousands) (b) Weighted average exercise price of outstanding options, warrants and rights (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (in thousands) 2,656 — 2,656 $47.96 — $47.96 2,084 — 2,084 (1) Includes 271,000 RSUs that are not included in the calculation of the Weighted-Average Exercise Price in column (b). (2) Includes the gross number of shares underlying outstanding SARs. Upon the exercise of a SAR, the actual number of shares we will issue to the participant is equal the quotient of (i) the product of (x) the excess of the per share fair market value of our common stock on the date of exercise over the exercise price, multiplied by (y) the number of SARs exercised, divided by (ii) the per share fair market value of our common stock on the date of exercise, less any shares withheld to cover payment of applicable tax withholding obligations. 60 PROPOSAL 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION As required by Section 14A of the Exchange Act, we are asking stockholders to approve an advisory resolution, commonly referred to as a ‘‘say-on-pay’’ resolution, approving our executive compensation as reported in this proxy statement. As described in the CD&A section of this proxy statement, our executive compensation program is designed to incentivize achievement of short- and long-term Company and individual performance. We believe this compensation approach aligns the interests of our executive officers with those of our stockholders. The Compensation Committee has structured our executive compensation program to achieve the following key objectives: (cid:127) Emphasizing Pay-for-Performance. Emphasize pay-for-performance by tying annual and long-term compensation incentives to achievement of specified performance objectives or overall stock performance. (cid:127) Attracting, Retaining and Motivating. Attract, retain and motivate talented executives who will determine our long-term success through a program competitive with compensation paid by companies in the same market for executive talent. (cid:127) Rewarding Contributions and Creating Long-Term Value. Recognize and reward contributions of all employees, including executive officers, in achieving strategic goals and business objectives, while aligning the program with stockholder interests. We encourage stockholders to read the CD&A (as well as the other narrative disclosures included in this proxy statement), which describes in more detail how our executive compensation program operates and is designed to achieve our compensation objectives, including through the use of annual incentive awards, long-term equity awards, a high percentage of compensation that is variable or ‘‘at-risk’’ and performance-based stock awards for our CEO. The Compensation Committee and the Board believe that the policies and procedures articulated in the CD&A are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has supported and contributed to the Company’s recent and long-term success and is aligned with the interests of our stockholders. At the 2014 annual meeting, we submitted a ‘‘say-on-pay’’ resolution to our stockholders. Our stockholders approved this proposal with approximately 99.9% of the votes cast on the proposal voting in favor of the resolution. Because our Board views the annual advisory vote as a good corporate governance practice, and because at our 2011 annual meeting approximately 91.7% of the votes cast on the frequency proposal were in favor of an annual advisory vote, we are again asking stockholders to approve the compensation of our NEOs as disclosed in this proxy statement. Accordingly, the Board unanimously recommends that stockholders approve the following advisory resolution at the annual meeting: ‘‘RESOLVED, that the compensation paid to the named executive officers of Vail Resorts, Inc., as disclosed pursuant to the rules of the Securities and Exchange Commission, including the CD&A, compensation tables and related narrative discussion, is hereby APPROVED.’’ Although this vote is advisory and is not binding on the Company, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. THE BOARD RECOMMENDS THAT YOU VOTE ‘‘FOR’’ THE APPROVAL OF EXECUTIVE COMPENSATION. 61 PROPOSAL 3. APPROVAL OF THE VAIL RESORTS, INC. 2015 OMNIBUS INCENTIVE PLAN The Board is seeking stockholder approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan (the ‘‘2015 Plan’’). The Board believes the adoption of the 2015 Plan is in the best interests of stockholders and the Company because cash- and equity-based awards help to attract, motivate and retain talented employees, directors and other service providers, align employee and stockholder interests, link employee compensation with performance and maintain a culture based upon employee stock ownership. Stockholder approval of the 2015 Plan is necessary in order for the Company to: (i) meet the NYSE stockholder approval requirements; (ii) meet stockholder approval requirements for the grant of stock options that qualify as ‘‘incentive stock options’’ under Section 422 of the Internal Revenue Code of 1986, as amended (the ‘‘Code’’); and (iii) take tax deductions for certain compensation resulting from awards granted under the 2015 Plan intended to qualify as performance-based compensation under Section 162(m) of the Code. Approval of the 2015 Plan will constitute approval of the material terms of the 2015 Plan pursuant to the stockholder approval requirements of Section 162(m) of the Code. BACKGROUND On September 25, 2015, upon the recommendation and approval of the Compensation Committee, the Board adopted the 2015 Plan, subject to stockholder approval. The 2015 Plan will become effective upon approval by the Company’s stockholders (the ‘‘Effective Date’’). The 2015 Plan is intended to replace the Company’s existing equity compensation plan, the Amended and Restated 2002 Long-Term Incentive and Share Award Plan (the ‘‘2002 Plan’’). If the Company’s stockholders approve the 2015 Plan, no additional awards will be granted under the 2002 Plan after the date of such approval. Outstanding awards under the 2002 Plan, however, will continue to be governed by the 2002 Plan and the agreements under which they were granted. If the Company’s stockholders do not approve the 2015 Plan, the 2002 Plan will continue in effect until its stated expiration date of November 6, 2016, unless the 2002 Plan is otherwise amended. The 2015 Plan provides for the grant of awards of options (nonqualified stock options or incentive stock options), share appreciation rights (‘‘SARs’’), restricted shares, restricted share units, performance shares, performance units, performance cash awards, dividend equivalent rights and other share-based awards (each, an ‘‘Award’’ and collectively, the ‘‘Awards’’). Subject to adjustment as provided in the 2015 Plan, the maximum number of shares of stock reserved for issuance under the 2015 Plan will be equal to the sum of (i) 2,600,000 shares, plus (ii) the number of shares available for issuance under the 2002 Plan as of the Effective Date, and (iii) the number of shares, if any, that are subject to awards issued under the 2002 Plan that are forfeited, canceled, terminated or surrendered on or after the Effective Date. As of October 9, 2015, there were a total of 1,805,301 shares of common stock available for issuance under the 2002 Plan, and awards (net of canceled or expired awards) covering an aggregate of 11,796,456 shares of common stock had been granted under the 2002 Plan. The per share closing price of the Company’s common stock on October 9, 2015 was $107.77. The following summary of the 2015 Plan is qualified in its entirety by reference to the full text of the 2015 Plan, a copy of which is attached as Appendix A to this proxy statement. 62 KEY FEATURES OF THE 2015 PLAN The Board believes the 2015 Plan contains several features that are consistent with protecting the interests of stockholders and sound corporate governance practices, including the following: (cid:127) Fungible share pool—The total number of shares available for issuance under the 2015 Plan will be reduced by 3.0 shares for each share issued pursuant to restricted stock and other ‘‘full-value’’ stock awards. (cid:127) No automatic share replenishment or ‘‘evergreen’’ provision—There is no evergreen feature pursuant to which the shares authorized for issuance under the 2015 Plan can be automatically replenished. (cid:127) No discounted options or SARs—Stock options and stock appreciation rights (SARs) may not be granted with an exercise or grant price lower than the fair market value of the underlying shares on the date of grant. (cid:127) No repricing of options or SARs without stockholder approval—The 2015 Plan prohibits the direct or indirect repricing of stock options or SARs without prior stockholder approval. (cid:127) No liberal share counting or ‘‘recycling’’ of shares from exercised stock options or SARs—Shares withheld by or delivered to the Company to satisfy the exercise or grant price of stock options and SARs or tax withholding obligations upon such exercise will not be available for future grants. (cid:127) No liberal change-in-control definition—Change in control benefits are triggered only by the occurrence, rather than stockholder approval, of a merger or other change in control event. (cid:127) Non-employee director award limit—The 2015 Plan establishes a maximum amount of shares that may be granted to a non-employee director in any fiscal year. (cid:127) Minimum vesting requirements—‘‘Full value’’ awards are required to meet minimum vesting requirements of at least one year with limited exceptions. Historically, it has been the Company’s practice to grant awards to employees, including our NEOs, that generally vest over a three-year period or that cliff vest after three years. (cid:127) No dividends on unearned performance-based awards—Dividends or dividend equivalents may not be paid on unearned performance-based awards. (cid:127) Awards subject to clawback policy—Awards granted under the 2015 Plan are subject to the Company’s clawback policy. (cid:127) No excise tax gross-ups on change in control—The 2015 Plan does not provide for any excise tax gross-ups. (cid:127) No transferability—Awards generally may not be transferred, except by will or the laws of descent and distribution, unless the transfer is approved by the Compensation Committee and is for no consideration. (cid:127) Independent administration—Members of the committee administering the 2015 Plan are non-employee, independent and outside directors. BACKGROUND FOR REQUESTED SHARE AUTHORIZATION The number of shares of common stock reserved for issuance under the 2015 Plan was determined after consideration of a number of factors, including (i) the number of shares available under the 2002 Plan, (ii) the Company’s historical equity grant practices, including its ‘‘burn rate’’, which is below the industry and Russell 3000 index thresholds established by certain major proxy advisory firms, and 63 (iii) expected dilution to existing stockholders. In particular, the Board was mindful that a significant portion (approximately 63% of the outstanding shares as of October 12, 2015) of the outstanding shares under the 2002 Plan are held by Mr. Katz, who has historically retained his equity awards until close to expiration. For example, in fiscal 2015, Mr. Katz exercised 15,000 options on September 16, 2014 with an expiration date of September 28, 2014 and exercised 300,000 SARs on June 17, 2015 with an expiration date of February 28, 2016. Mr. Katz’s decision not to exercise his outstanding SARs and sell the underlying shares inflates the outstanding SARs under the 2002 Plan, but ensures that Mr. Katz has a very significant ongoing participation in the Company’s stock performance. We are seeking to include additional shares of common stock under the 2015 Plan beyond the shares of stock that remain available for future awards under the 2002 Plan in order to provide us with flexibility in structuring our compensation arrangements going forward and to enable us to grant equity compensation at a level that allows us to continue to attract and retain employees in the competitive labor markets in which we compete. DESCRIPTION OF THE 2015 PLAN Purpose The 2015 Plan is intended to advance the interests of the Company and its stockholders by providing a means to attract, retain, and motivate employees, consultants and directors of the Company upon whose judgment, initiative and efforts the continued success, growth and development of the Company is dependent. Eligibility and Term Any employee or consultant of the Company, a subsidiary or an affiliate, and any director of the Company, as the Committee (as defined below) determines and designates from time to time, is eligible to receive Awards under the 2015 Plan. As of October 8, 2015, approximately 9,660 employees, and all of the Company’s non-employee directors, are eligible to participate in the 2015 Plan. The 2015 Plan will become effective as of the Effective Date and will terminate on the first to occur of (i) the date that is ten years after the Effective Date, or (ii) the date determined in accordance with the Board’s authority to amend, alter, suspend, discontinue, or terminate the 2015 Plan. Administration The 2015 Plan will be administered by the Compensation Committee of the Board or a subcommittee thereof, or such other Board committee as designated by the Board to administer the Plan (the ‘‘Committee’’). The Committee will consist of not fewer than two directors of the Company, each of whom will be (i) a ‘‘non-employee director’’ within the meaning of Rule 16b-3 of the Exchange Act, (ii) an ‘‘outside director’’ within the meaning of Section 162(m) of the Code, and (iii) an independent director in accordance with the rules of any stock exchange on which the Company’s shares are listed. The Committee may (subject to express limitations in the 2015 Plan), among other things: (cid:127) select persons eligible for Awards; (cid:127) determine the type of Awards, number of shares to which an Award may relate, terms and conditions of any Award, and all other matters to be determined in connection with an Award; (cid:127) determine whether, to what extent, and when an Award may be settled, or the exercise price of an Award may be paid, in cash, shares, other Awards or other property; (cid:127) determine whether, to what extent, and when cash, shares, other Awards or other property payable with respect to an Award will be deferred; (cid:127) prescribe the form of each award agreement; 64 (cid:127) adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the 2015 Plan; (cid:127) correct any defect or supply any omission or reconcile any inconsistency in the 2015 Plan and to construe and interpret the 2015 Plan and any Award, rules and regulations, award agreement or other instrument under the 2015 Plan; (cid:127) accelerate the exercisability or vesting of all or any portion of any Award or to extend the period during which an Award is exercisable; and (cid:127) make all other decisions and determinations as may be required under the terms of the 2015 Plan or as the Committee may deem necessary or advisable for the administration of the 2015 Plan. The Committee may also determine whether, to what extent, and when an Award may be canceled, forfeited, exchanged or surrendered, and may waive any conditions or rights under, amend, modify or supplement the terms of, or amend, alter, suspend, discontinue or terminate an Award, but may not, except in connection with a corporate transaction involving the Company: (i) amend the terms of outstanding options or SARs to reduce the exercise price of such outstanding options or SARs; (ii) exchange outstanding options or SARs for options or SARs with an exercise price that is less than the exercise price of the original options or SARs; or (iii) cancel outstanding options or SARs with exercise prices above the current fair market value of a share in exchange for cash or other securities, in each case, unless such action is subject to and approved by the Company’s stockholders. To the extent permitted by Rule 16b-3 of the Exchange Act and applicable laws, the Committee may delegate its authority with respect to the 2015 Plan and Awards to other members of the Board or officers or managers of the Company or any subsidiary or affiliate. Minimum Vesting Period. Except with respect to a maximum of 5% of the shares of stock reserved under the 2015 Plan, as may be adjusted pursuant to the terms of the 2015 Plan, and except in connection with a Change in Control (as defined below), no Full Value Award (as defined below) will provide for vesting which is any more rapid than vesting on the one year anniversary of the grant date or, with respect to Awards that vest upon the attainment of performance goals, a performance period that is less than twelve months. Shares Available for Issuance Subject to adjustment as provided in the 2015 Plan, the maximum number of shares of stock reserved for issuance under the 2015 Plan will be equal to the sum of (i) 2,600,000 shares, plus (ii) the number of shares available for issuance under the Company’s 2002 Plan as of the Effective Date, and (iii) the number of shares, if any, that are subject to awards issued under the 2002 Plan that are forfeited, canceled, terminated or surrendered on or after the Effective Date. Any or all of the shares of stock reserved for issuance under the 2015 Plan will be available for issuance pursuant to incentive stock options. The Committee will have the right to cause the Company to substitute or assume Awards in connection with mergers, reorganizations, separations or other transactions. In connection with any dividend in shares, recapitalization, share split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase or share exchange, or other similar corporate transaction or event, the Committee will make equitable changes or adjustments that it deems appropriate in order to prevent dilution or enlargement of the rights of participants under the 2015 Plan, and adjust any or all of (i) the number and kind of shares that may be issued under the 2015 Plan, (ii) the number and kind of shares, other securities or other consideration issued or issuable with respect to outstanding Awards, or (iii) the exercise price, grant price or purchase price relating to any Awards. Shares of stock covered by an Award will be counted as used as of the grant date to calculate the number of shares of stock available for issuance. The number of shares of stock subject to an Award other 65 than an Award in the form of an option or SAR, and which is settled by issuing shares of stock (‘‘Full Value Awards’’) will be counted against the share reserve as three shares of stock for every one share of stock subject to an Award. Any shares of stock subject to Awards other than Full Value Awards will be counted against the share reserve as one share of stock for every one share of stock subject to such Award. The number of shares subject to an Award of SARs will be counted against the share reserve as one share for every one share subject to an Award regardless of the number of shares of stock actually issued to settle such SARs upon the exercise of the SARs. The target number of shares of stock issuable under a performance share or performance unit will be counted against the share reserve as of the grant date, but such number will be adjusted to reflect the actual number of shares of stock issued upon settlement of the performance shares or performance units, as applicable, to the extent different from such target number of shares. Awards that do not entitle a participant to receive or purchase shares and Awards that are settled in cash will not be counted against the share reserve. If any Awards are forfeited, canceled, terminated, exchanged or surrendered or such Award is settled in cash or otherwise terminates without a distribution of shares to the participant, then the number of shares counted against the share reserve with respect to such Award will, to the extent of such forfeiture, settlement, termination, cancellation, exchange or surrender, again be available for Awards under the 2015 Plan. The number of shares of stock available for issuance under the 2015 Plan will not be increased by the number of shares (i) tendered, withheld or subject to an Award granted under the 2015 Plan surrendered in connection with the purchase of shares upon exercise of an option, (ii) that were not issued upon the net settlement or net exercise of a share-settled SAR granted under the 2015 Plan, (iii) deducted or delivered from payment of an Award granted under the 2015 Plan in connection with the Company’s tax withholding obligations, or (iv) purchased by the Company with proceeds from option exercises. The maximum number of shares of stock subject to options or SARs that can be granted under the 2015 Plan in any one calendar year to any person, other than non-employee directors, is 1,000,000. The maximum number of shares of stock subject to performance shares, performance units, restricted shares or restricted share units that can be granted under the 2015 Plan in any one calendar year to any person, other than non-employee directors, is 200,000. The maximum amount that may be paid as a cash-denominated performance share or performance unit (whether or not cash-settled), or as a performance cash award, for a performance period to any participant is $12,000,000. The maximum fair market value of shares of stock that may be granted under the 2015 Plan in any one calendar year to any non-employee director is $600,000. Types of Awards Under the 2015 Plan, the Committee may award options (nonqualified stock options or incentive stock options), SARs, restricted shares, restricted share units, performance shares, performance units, performance cash awards, dividend equivalent rights, and other share-based awards. Options. An option is a right to purchase shares of the Company’s common stock. The exercise price of each option will be determined by the Committee, provided that the exercise price per share will be at least the fair market value of one share of stock on the grant date. If a participant is a 10% stockholder, the exercise price of an option granted to such participant that is intended to be an incentive stock option will be not less than 110% of the fair market value of one share of stock on the grant date. Subject to certain limitations set forth in the 2015 Plan, each option granted under the 2015 Plan will become vested and/or exercisable at such times and under such conditions as determined by the Committee. The Committee will determine the time or times at which the option may be exercisable, the methods by which the exercise price may be paid or deemed paid (including broker-assisted exercise arrangements), the form of such payments (including cash, shares of stock, or other property), and the methods by which the shares of stock will be delivered or deemed delivered. The term of each option will be determined by the Committee, but 66 will not be longer than ten years from the date of grant, provided that, in the event that a participant is a 10% stockholder, an option granted to such participant that is intended to be an incentive stock option will not be exercisable after five years from the date of grant. Options granted to participants who are foreign nationals or employed outside of the United States may have a term longer than ten years. Share Appreciation Rights (SARs). The holder of a SAR will be entitled to receive, upon exercise thereof, an amount measured by the difference between (i) the fair market value of one share of stock on the date the SAR is exercised (or, if the Committee determines, the fair market value of one share of stock at any time during a specified period before or after the date of exercise), over (ii) the SAR exercise price as determined by the Committee as of the date of grant (which will not be less than the fair market value per share on the date of grant). The Committee will determine, on the date of grant or thereafter, the time or times at which a SAR may be exercised in whole or in part (which will not be more than ten years after the date of grant of the SAR), method of exercise, method of settlement, form of consideration payable in settlement (which may be cash, shares or other property), method by which shares of stock will be delivered or deemed delivered, whether or not a SAR will be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, a SAR granted in tandem with any nonqualified stock option may be granted at the time of grant of the related nonqualified stock option or at any time thereafter, and a SAR granted in tandem with any incentive stock option may only be granted at the time of grant of the related incentive stock option. Restricted Shares. Restricted shares are shares of the Company’s common stock subject to certain restrictions and to a risk of forfeiture. Awards of restricted shares will be subject to such restrictions as imposed by the Committee (including, the achievement of performance criteria). Unless provided otherwise in an award agreement, holders of restricted shares will have all the rights of stockholders, including the right to vote restricted shares and the right to receive any dividends thereon. Such dividends may be paid on either the dividend payment date or deferred to such date determined by the Committee, and will be paid in cash or in unrestricted shares having a fair market value equal to the amount of the dividends. Shares distributed in connection with a share split or share dividend, and other property distributed as a dividend, will be subject to restrictions and a risk of forfeiture to the same extent as the restricted shares with respect to which such shares or other property have been distributed. Restricted shares may be evidenced in a manner as the Committee determines. If the certificates representing the restricted shares are registered in the name of the participant, the certificates will bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such restricted shares, and the Company will retain physical possession of the certificate. Upon the termination of a participant’s service during the restricted period, any restricted shares held by such participant to which all applicable restrictions and conditions have not lapsed will be deemed forfeited, unless the Committee provides otherwise by rule or regulation or in an award agreement, or determines otherwise in any individual case. Upon the forfeiture of restricted shares, any accrued but unpaid dividends or dividend equivalent rights that are at the time subject to restrictions will also be forfeited. Restricted Share Units. A restricted share unit is a right to receive shares of the Company’s common stock or cash at the end of a specified deferral period. Awards of restricted share units will be subject to such restrictions as imposed by the Committee (including, the achievement of performance criteria). Upon expiration of the deferral period specified by the Committee (or, if permitted by the Committee, the deferral period elected by the holder), holders of restricted share units will have the right to receive shares of stock or cash in settlement of such units. Upon the termination of a participant’s service during the deferral period, any restricted share units held by such participant to which all applicable restrictions and conditions have not lapsed will be deemed forfeited, unless the Committee provides otherwise by rule or regulation or in an award agreement, or determines otherwise in any individual case. 67 Performance Shares, Performance Units, and Performance Cash Awards. The right of a participant to exercise or to receive a grant or settlement of any performance share, performance unit or performance cash award, and the timing thereof, will be subject to such performance objectives as specified by the Committee. Except as described below for awards that are intended to satisfy the Section 162(m) exception for qualified performance-based compensation, the Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. The performance period for performance shares, performance units and performance cash awards will be a period of one or more years, as determined by the Committee. At the beginning of a performance period, the Committee will determine for each participant or group of participant with respect to that performance period (x) the range of number of shares, if any, in the case of performance shares, (y) the range of dollar values, if any, in the case of performance units, or (z) the range of cash awards in the case of performance cash awards which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which will be paid to a participant as an Award if the relevant measure of Company performance for the performance period is met. The Committee may revise a performance objective during the course of a performance period if a significant event occurs that the Committee expects to have a substantial effect on such performance objective during the period (subject to the requirements of Section 162(m) of the Code). The Committee will not have any discretion to increase the amount of compensation payable under an Award that is intended to satisfy the Section 162(m) exception for qualified performance-based compensation to the extent that such an increase would cause the Award to fail to satisfy the requirements of such exception, but the Committee may, in its sole discretion, reduce the amount of a payment otherwise to be made in connection with performance shares, performance units and performance cash awards. Upon the termination of a participant’s service during a performance period, performance shares, performance units and performance cash awards for which the performance period was prescribed will be forfeited, unless the Committee provides otherwise by rule or regulation or in an award agreement, or determines otherwise in any individual case. Each performance share or performance unit may be paid in whole shares of stock, cash or a combination of shares and cash, and may be paid either as a lump sum payment or in installments, as determined by the Committee. Each performance cash award will be paid in cash, commencing as soon as practicable after the end of the relevant performance period. Dividend Equivalents. A dividend equivalent is a right to receive cash, shares of stock or other property equal in value to dividends paid with respect to a specified number of shares. Dividend equivalents may be awarded on a free-standing basis or in connection with another Award, and may be paid out currently or on a deferred basis. The Committee may provide that dividend equivalents may be paid or distributed when accrued or may be deemed to be reinvested in additional shares of stock or other investment vehicles specified by the Committee. Dividend equivalents (other than freestanding dividend equivalents) are subject to all conditions and restrictions of the underlying Awards to which they relate. Dividend equivalents may not be awarded in connection with, or related to, an Award of options or SARs. Other Share-Based Awards. The Committee may, subject to applicable laws and the terms of the 2015 Plan, grant other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to shares of stock, as deemed by the Committee to be consistent with the purposes of the 2015 Plan, including unrestricted shares, other rights convertible or exchangeable into shares of stock, purchase rights for shares of stock, awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and awards valued by reference to the performance of specified subsidiaries or affiliates. The Committee will determine the terms and conditions of such Awards at the time of grant or thereafter. Recoupment. Any Award granted pursuant to the 2015 Plan will be subject to mandatory repayment by the participant to the Company (i) to the extent set forth in the 2015 Plan or an award agreement or (ii) to the extent the participant is, or in the future becomes, subject to (a) any Company or affiliate 68 ‘‘clawback’’ or recoupment policy that is adopted to comply with the requirements of any applicable laws, rules or regulations, or otherwise, or (b) any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws. Change in Control. Except as otherwise provided in the applicable award agreement, in another agreement with the participant, or as otherwise set forth in writing, upon the occurrence of a Change in Control (as defined below) the following provisions will apply to outstanding awards: i. Immediately prior to the occurrence of such Change in Control, in each case with the exception of performance shares, performance units, performance cash awards and other Awards that vest based on achievement of performance criteria, all outstanding restricted shares, restricted share units, other share-based awards and dividend equivalent rights will be deemed to have vested, and all shares of stock and/or cash subject to such Awards will be delivered; and one or both of the following two actions will be taken: a. At least 15 days prior to the scheduled consummation of such Change in Control, all outstanding options and SARs will become immediately exercisable and will remain exercisable for a period of 15 days. Any exercise of an option or SAR during this period will be conditioned upon the consummation of the Change in Control and will be effective only immediately before such consummation. All outstanding but unexercised options and SARs will terminate upon the consummation of the Change in Control, and/or b. The Committee may elect to cancel any outstanding options, SARs, restricted shares, restricted share units, other share-based awards, and/or dividend equivalent rights in connection with the Change in Control and pay or deliver to the holder of such Award an amount in cash or capital stock having a value, in the case of restricted shares, restricted share units, other share-based awards and dividend equivalent rights, equal to the formula or fixed price per share paid to the stockholders pursuant to such Change in Control and, in the case of options or SARs, equal to the product of the number of shares of stock subject to such options or SARs multiplied by the amount, if any, by which the formula or fixed price per share paid to stockholders pursuant to such Change in Control exceeds the exercise price applicable to such shares of stock (in the event the option or SAR exercise price of an Award exceeds the price per share paid to stockholders in the Change in Control, such options and SARs may be terminated for no consideration). ii. For performance shares, performance units, performance cash awards and any other Awards that vest based on the achievement of performance criteria, (a) if less than half of the performance period has lapsed, such Awards will be treated as though target performance has been achieved, and (b) if at least half of the performance period has lapsed, actual performance will be determined as of a date reasonably proximal to the date of the Change in Control, provided that if, based on the discretion of the Committee, actual performance is not determinable, such Awards will be treated as though target performance has been achieved. Any Awards that are earned as provided in the preceding sentence will be settled under the applicable provision set forth in item (i) above. A Change in Control under the 2015 Plan means the occurrence of any of the following: i. any person or group (within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting it its capacity as trustee, agent or other fiduciary or administrator of any such plan) becomes the beneficial owner (within the meaning of Rule 13d-3and 13d-5 promulgated under the Exchange Act), directly or indirectly, of 35% or more of the equity securities of the Company entitled to vote for members of the Board or equivalent governing body of the Company on a fully-diluted basis; or 69 ii. during any period of 24 consecutive months, a majority of the members of the Board or other equivalent governing body of the Company cease to be composed of individuals (a) who were members of that Board on the first day of such period, (b) whose election or nomination to that Board was approved by individuals referred to in clause (a) above constituting at the time of such election or nomination at least a majority of that Board or equivalent governing body, or (c) whose election or nomination to that Board or other equivalent governing body was approved by individuals referred to in clauses (a) and (b) above constituting at the time of such election or nomination at least a majority of that Board or equivalent governing body (excluding, in the case of both clause (b) and clause (c), any individual whose initial nomination for, or assumption of office as, a member of that Board occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the Board); or iii. any person or persons acting in concert acquire, by contract or otherwise, control over the equity securities of the Company entitled to vote for members of the Board or equivalent governing body of the Company on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) representing 51% or more of the combined voting power of such securities; or iv. the consummation of a merger, reorganization, consolidation or similar transaction involving the Company; provided, however, a Change in Control shall not be deemed to have occurred (i) if such merger, reorganization, consolidation or similar transaction would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) either directly or indirectly more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, reorganization, consolidation or similar transaction, or (ii) if following the merger, reorganization, consolidation or similar transaction, the members of the Board prior to such merger, reorganization, consolidation or similar transaction constitute at least a majority of the Board of the Company or the entity that directly or indirectly controls the Company after such merger, reorganization, consolidation or similar transaction; or v. the Company sells or transfers (other than by mortgage or pledge) all or substantially all of its properties and assets to, another person or group (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act). Section 162(m) of the Code. Section 162(m) of the Code (‘‘Section 162(m)’’) generally provides that no federal income tax business expense deduction is allowed for annual compensation in excess of $1 million paid by a publicly-traded corporation to certain of its officers (the ‘‘covered employees’’). For purposes of Section 162(m), a covered employee means any person who, as of the last day of the Company’s taxable year, is the chief executive officer or one of the Company’s three highest compensated executive officers (other than the chief executive officer and chief financial officer), as determined under SEC rules. Under Section 162(m), however, there is no limitation on the deductibility of compensation that constitutes ‘‘qualified performance-based compensation.’’ Qualified performance-based compensation by the Company must be paid solely on account of the attainment of one or more objective performance goals established in writing by the Committee while the attainment of such goals is substantially uncertain. For awards that are intended to satisfy the Section 162(m) exception for qualified performance-based compensation, the awards will be subject to one or more, or any combination, of the following business criteria and a targeted level or level of performance with respect to each criteria, as specified by the Committee: (cid:127) Reported EBITDA (as defined below) results for the mountain segment; 70 (cid:127) Reported EBITDA results for the lodging segment; (cid:127) Reported EBITDA results on a resort basis (a combination of the reported mountain segment EBITDA and reported lodging segment EBITDA); (cid:127) Reported EBITDA results for the real estate segment; (cid:127) Reported EBITDA results excluding stock-based compensation expense for any of the mountain, lodging or real estate segments, and/or on a resort basis; (cid:127) real estate segment goals, including pre-sales targets, sales, closing timing and profitability targets, and construction related approvals and timing milestones; (cid:127) revenue; (cid:127) net income; (cid:127) net income excluding stock-based compensation; (cid:127) pretax earnings; (cid:127) earnings before interest expense, taxes, depreciation and amortization; (cid:127) operating margin; (cid:127) earnings per share; (cid:127) return on equity; (cid:127) return on capital; (cid:127) return on investment; (cid:127) operating earnings; (cid:127) working capital; (cid:127) ratio of debt to stockholders’ equity; (cid:127) Net Debt (as defined below); (cid:127) ratio of Net Debt to Reported EBITDA; and/or (cid:127) total stockholder return. ‘‘Reported EBITDA’’ is calculated as segment net revenue less segment operating expense plus or minus segment equity investment income or loss, and for the real estate segment, plus gain on sale of real property. ‘‘Net Debt’’ is defined as long-term debt plus long-term debt due within one-year less cash and cash equivalents. The foregoing performance criteria may be determined by reference to the performance of the Company, a subsidiary or affiliate, or of a division or unit of any of the foregoing. Performance under any of the performance goals described above (a) may be used to measure the performance of (i) the Company, its subsidiaries, and other affiliates as a whole, (ii) the Company, any subsidiary, any other affiliate or any combination thereof, or (iii) any one or more business units or operating segments of the Company, any subsidiary, and/or any other affiliate, in each case as the Committee, in its sole discretion, deems appropriate, (b) may be compared to the performance of one or more other companies or one or more published or special indices designated or approved by the Committee for such comparison, as the Committee, in its sole discretion, deems appropriate, (c) may be stated as a combination of one or more performance objectives, and (d) may be measured on an absolute or relative basis and on a GAAP or non-GAAP basis. In addition, the Committee, in its sole discretion, may select performance under the total stockholder return performance criteria specified above for comparison to performance under one or 71 more stock market indices designated or approved by the Committee. The Committee will also have the authority to provide for accelerated vesting of any Award intended to qualify as performance-based compensation based on the achievement of performance objectives pursuant to the performance criteria specified above. The Committee may provide in any performance share, performance unit or performance cash award that any evaluation of performance may include or exclude any of the following events that occur during a performance period: (a) asset write-downs; (b) litigation or claims, judgments or settlements; (c) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (d) any reorganization or restructuring events or programs; (e) extraordinary, noncore, non-operating or non-recurring items; (f) acquisitions or divestitures; (g) foreign exchange gains and losses; (h) impact of shares of stock purchased through share repurchase programs; (i) tax valuation allowance reversals; (j) impairment expense; and (k) environmental expense. To qualify as performance-based compensation under Section 162(m): i. the compensation must be paid solely on account of the attainment of one or more pre-established, objective performance goals; ii. the performance goal under which compensation is paid must be established by a compensation committee comprised solely of two or more directors who qualify as outside directors for purposes of the exception (the Committee is expected to meet this requirement); iii. the material terms under which the compensation is to be paid must be disclosed to and subsequently approved by stockholders before payment is made (the approval of the 2015 Plan will constitute approval of the material terms of the compensation granted thereunder); and iv. the Committee must certify in writing before payment of the compensation, that the performance goals and any other material terms were in fact satisfied. Transferability Unless otherwise set forth by the Committee in an award agreement, Awards (except for vested shares) are nontransferable by a participant, except by will or by the laws of descent and distribution, (except pursuant to a beneficiary designation) and will be exercisable during the lifetime of a participant only by such person or such person’s guardian or legal representative. A participant’s rights under the 2015 Plan may not be pledged, mortgaged, hypothecated or otherwise encumbered, and will not be subject to claims of the person’s creditors. Amendments The Board may amend, alter, suspend, discontinue or terminate the 2015 Plan, provided that any amendment, alteration, suspension, discontinuation or termination of the 2015 Plan will not materially and adversely affect the rights of a participant without the consent of the affected participant. The Committee may waive any conditions or rights under, amend, modify or supplement the terms of, or amend, alter, suspend, discontinue or terminate, any Award, prospectively or retrospectively, provided that, without the consent of a participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and adversely affect the rights of such participant under the Award. FEDERAL INCOME TAX CONSEQUENCES The federal income tax consequences of Awards under the 2015 Plan for participants and the Company will depend on the type of Award granted. The following description of tax consequences is intended only for the general information of stockholders. This discussion is general in nature; we have not taken into account a number of considerations which may apply in light of the circumstances of a particular 72 participant. A participant in the 2015 Plan should not rely on this description and instead should consult his or her own tax advisor. Options. Under current law the grant of an option generally will have no federal income tax consequences for the participant or the Company. Upon the exercise of an option, the participant will recognize ordinary income in an amount equal to the excess of the fair market value of the stock on the exercise date over the exercise price. Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Incentive Stock Options. Under current law, the grant of an incentive stock option will not be a taxable event for the participant or for the Company. In addition, a participant generally will not recognize taxable income upon exercise of an incentive stock option. A participant’s alternative minimum taxable income, however, will be increased by the amount by which the aggregate fair market value of the shares of the stock underlying the option, which is generally determined as of the date of exercise, exceeds the aggregate exercise price of the option. Any gain realized upon a disposition of the shares of stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the participant holds the shares for at least two years after the date of grant and for one year after the date of exercise (the ‘‘holding period requirement’’). The Company will not be entitled to any income tax deduction with respect to the exercise of an incentive stock option, except as discussed below. For the exercise of an incentive stock option to qualify for the foregoing tax treatment, the participant generally must be an employee of the Company or a subsidiary from the date the option is granted through a date within three months before the date of exercise of the option. If all of the foregoing requirements are met except the holding period requirement mentioned above, the participant will recognize ordinary income upon the disposition of the shares of stock in an amount generally equal to the excess of the fair market value of the shares of stock at the time the incentive stock option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. The Company will generally be allowed an income tax deduction to the extent the participant recognizes ordinary income, subject to the Company’s compliance with Section 162(m) and to certain reporting requirements. Share Appreciation Rights (SARs). Under current law, the grant of a SAR generally will have no federal income tax consequences for the participant. Upon the exercise of a SAR, the participant will recognize ordinary income equal to the amount measured by the difference between (i) the fair market value of one share of stock on the date the SAR is exercised over (ii) the SAR exercise price as determined by the Committee as of the date of grant. Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Restricted Shares. Under current law, the grant of restricted shares generally will have no federal income tax consequences to the participant or the Company. The participant will generally recognize ordinary income on the date the award vests, in an amount equal to the value of the shares of stock on the vesting date. Under Section 83 of the Code, a participant may elect to recognize income on the date of grant rather than the date of vesting in an amount equal to the fair market value of the shares of stock on the date of grant (less the purchase price for such shares of stock, if any). Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable 73 reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Restricted Share Units, Performance Shares, Performance Units, and Performance Cash Awards. Under current law, the grant of a restricted share unit award, performance share, performance unit or performance cash award generally will have no federal income tax consequences to the participant or the Company. The participant generally will recognize ordinary income when payment is actually or constructively received by the participant in satisfaction of the restricted share unit award, performance share, performance unit or performance cash award, in an amount equal to the amount of cash paid, if any, and the fair market value of any shares of stock delivered to the participant. Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Unrestricted Shares. Under current law, upon the grant of an award of unrestricted shares, a participant will be required to recognize ordinary income in an amount equal to the fair market value of the shares of stock on the date of grant, reduced by the amount, if any, paid for such shares. Upon a participant’s disposition of such shares of stock, any gain realized in excess of the amount reported as ordinary income will be reportable by the participant as a capital gain, and any loss will be reportable as a capital loss. Capital gain or loss will be long-term if the participant held the shares of stock for more than one year (otherwise, the capital gain or loss will be short-term). Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Dividend Equivalents. Under current law, the grant of dividend equivalents generally will have no federal income tax consequences for the participant. Generally, the participant will recognize ordinary income on the amount distributed to the participant pursuant to the award of dividend equivalent rights. Generally, the Company will be entitled to a deduction equal to the amount of ordinary income recognized by the participant and at the time the participant recognizes such income for tax purposes, if the Company complies with applicable reporting requirements and subject to the limit on the deductibility under Section 162(m), as described above. Certain payments made to employees and other service providers in connection with a change in control may constitute ‘‘parachute payments’’ subject to tax penalties imposed on both the Company and the recipient under Sections 280G and 4999 of the Code. In general, when the value of parachute payments equals or exceeds three times the employee’s ‘‘base amount,’’ the employee is subject to a 20% nondeductible excise tax on the excess over the base amount and the Company is denied a tax deduction for the excess payments. The base amount is generally defined as the employee’s average compensation for the five calendar years prior to the date of the change in control. The value of accelerated vesting of options, SARs, restricted shares, restricted share units, performance shares, performance units, performance cash awards, dividend equivalent rights or other Awards in connection with a change in control can constitute a parachute payment. The 2015 Plan contains a ‘‘better of’’ provision, meaning, if any of the payments or benefits provided to the participant under the 2015 Plan, other agreements, and all benefit arrangements would constitute parachute payments within the meaning of Section 280G of the Code and be subject to the excise tax imposed under Section 4999 of the Code, the payments or benefits will be reduced or eliminated to the extent required to avoid the excise tax if such a reduction would give the participant a better after-tax result than receiving the full payments and benefits. 74 NEW PLAN BENEFITS As of the date of this proxy statement, no Awards have been made under the 2015 Plan. Because benefits under the 2015 Plan are discretionary and will depend on the actions of the Committee, the performance of the Company and the value of our common stock, it is not possible to determine the benefits that will be received if stockholders approve the 2015 Plan. THE BOARD RECOMMENDS THAT YOU VOTE ‘‘FOR’’ THE APPROVAL OF THE VAIL RESORTS, INC. 2015 OMNIBUS INCENTIVE PLAN. 75 PROPOSAL 4. RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM selected, and The Audit Committee has selection of, PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for fiscal 2016, and has further directed that management submit the selection of independent auditors for ratification by the stockholders at the annual meeting. PricewaterhouseCoopers LLP has been the Company’s independent registered public accounting firm since 2002. PricewaterhouseCoopers LLP expects to have a representative at the annual meeting who will have the opportunity to make a statement and who will be available to answer appropriate questions. the Board has ratified the firm. However, Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain PricewaterhouseCoopers LLP. It is understood that even if the selection is ratified, the Audit Committee, in its discretion, may direct the appointment of a new independent accounting firm at any time during the year if the Audit Committee believes that such a change would be in the best interests of the Company and its stockholders. the Audit Committee submitting selection the is FEES BILLED TO VAIL RESORTS BY PRICEWATERHOUSECOOPERS LLP DURING FISCAL 2015 AND FISCAL 2014 Audit Fees. Audit the Company by fees (including expenses) billed (or billable) PricewaterhouseCoopers LLP for the audit of our annual financial statements included in our Form 10-K and the review of the financial statements included in our Forms 10-Q with respect to fiscal 2015 and fiscal 2014 were $2,157,000 and $1,831,788, respectively. For both fiscal years, such fees included fees for PricewaterhouseCoopers LLP’s examination of the effectiveness of the Company’s internal control over financial reporting. to Audit-Related Fees. There were no audit related fees billed by PricewaterhouseCoopers LLP with respect to fiscal 2015 and fiscal 2014. Tax Fees. Tax fees billed or billable by PricewaterhouseCoopers LLP with respect to fiscal 2015 were $40,986. Such fees related to tax services provided to the Company in connection with an international transaction by the Company. There were no tax fees billed by PricewaterhouseCoopers LLP with respect to fiscal 2014. All Other Fees. All other fees (including expenses) billed by PricewaterhouseCoopers LLP with respect to fiscal 2015 and fiscal 2014 were $3,600 and $3,704, respectively. Such fees were for access to a research database. The Audit Committee determined that the provision of services other than audit services by PricewaterhouseCoopers LLP was compatible with maintaining PricewaterhouseCoopers LLP’s independence. The Audit Committee has the sole authority to approve all audit engagement fees and terms and pre-approve all audit and permissible non-audit services provided by the Company’s independent registered public accounting firm. The Audit Committee has delegated authority to the Chairman of the Audit Committee to pre-approve services between Audit Committee meetings, which must be reported to the full Audit Committee at its next meeting. Fees for permissible non-audit services that are not 76 pre-approved must be less than 5% of total fees paid. For fiscal 2015 and fiscal 2014, all of the fees included under the headings ‘‘Tax Fees’’ and ‘‘All Other Fees’’ above were pre-approved by the Audit Committee. THE BOARD RECOMMENDS THAT YOU VOTE ‘‘FOR’’ THE RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JULY 31, 2016. THE ANNUAL MEETING AND VOTING – QUESTIONS AND ANSWERS What is the difference between a stockholder of record and a ‘‘street name’’ holder? If your shares are registered directly in your name with the Company’s transfer agent, Wells Fargo Shareowner Services, then you are a stockholder of record. If your shares are not held in your name, but rather are held through an intermediary, such as in an account at a brokerage firm or by a bank, trustee or other nominee, then you are the beneficial owner of shares held in ‘‘street name.’’ However, as a beneficial owner, you have the right to direct your broker or other nominee regarding how to vote the shares held in your account. Who is entitled to vote at or attend the annual meeting? Holders of record of our common stock as of the close of business on October 12, 2015, which we refer to as the record date, are entitled to vote. On the record date, we had 36,397,973 shares of common stock outstanding. Each share is entitled to one vote on each item being voted on at the annual meeting. You are entitled to attend the annual meeting only if you were a stockholder or joint holder as of the record date or you hold a valid proxy for the annual meeting. If you are a stockholder of record: As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the annual meeting, we urge you to vote by proxy in advance of the annual meeting over the telephone or on the Internet as instructed in the Notice of Internet Availability of Proxy Materials to ensure your vote is counted. If you are a street name holder: As a street name holder, you may not vote your shares in person at the annual meeting unless you request and obtain a valid proxy from your broker or other nominee and bring such proxy to the annual meeting. If you want to attend the annual meeting, but not vote at the annual meeting, you must provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to October 12, 2015, a copy of the voting instruction card provided by your broker or other nominee, or other similar evidence of ownership. Whether or not you plan to attend the annual meeting, we urge you to vote by proxy in advance of the annual meeting over the telephone or on the Internet as instructed in the Notice of Internet Availability of Proxy Materials to ensure your vote is counted. How do I vote my shares? If you are a stockholder of record: By Telephone or the Internet Stockholders of record can vote their shares via telephone or the Internet as instructed in the Notice of Internet Availability of Proxy Materials. The telephone and Internet procedures are designed to 77 authenticate a stockholder’s identity, to allow stockholders to vote their shares and confirm that their instructions have been properly recorded. The telephone and Internet voting facilities will close at 11:59 p.m., Eastern Standard Time, on December 3, 2015. By Mail Stockholders who elect to vote by mail should request a paper proxy card by telephone or Internet and should complete, sign and date their proxy cards and mail them in the pre-addressed envelopes that accompany the delivery of paper proxy cards. Proxy cards submitted by mail must be received by the time of the meeting in order for your shares to be voted. At the Meeting Shares held in your name as the stockholder of record may be voted by you in person at the annual meeting. If you are a street name holder: By Telephone or the Internet If your broker or other nominee provides for a means to submit your voting instructions by telephone or the Internet, you will be provided with directions on doing so by your broker or other nominee. By Mail Street name holders may vote by mail by requesting a paper voting instruction card according to the instructions contained in the materials received from your broker or other nominee. At the Annual Meeting Shares held in street name may be voted by you in person at the annual meeting only if you obtain a valid proxy from the broker or other nominee that holds your shares giving you the right to vote the shares and bring such proxy to the annual meeting. Can I change my vote? If you are a stockholder of record, you may change your vote at any time prior to the vote at the annual meeting by: (cid:127) providing timely delivery of a later-dated proxy (including by telephone or Internet vote); (cid:127) providing timely written notice of revocation to our Secretary at 390 Interlocken Crescent, Broomfield, Colorado 80021; or (cid:127) attending the annual meeting and voting in person. To be timely, later dated proxy cards and written notices if revocation is submitted by mail, must be received by the time of the annual meeting. In order to change your vote by telephone or Internet, you must do so before the telephone and Internet voting facilities close at 11:59 p.m., Eastern Standard Time, on December 3, 2015. If you are a street name holder, you may change your vote by timely submitting new voting instructions to your broker or other nominee following the instructions they provided, or, if you have obtained a valid proxy from your broker or other nominee giving you the right to vote your shares, by attending the meeting and voting in person. 78 How many shares must be present or represented to conduct business at the annual meeting? The quorum requirement for holding the annual meeting and transacting business is that holders of a majority of the issued and outstanding common stock that is entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes described below are counted for the purpose of determining the presence of a quorum. If there is no quorum, the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the annual meeting to another date. How are abstentions treated? Abstentions are counted for purposes of determining whether a quorum is present. For purposes of determining whether the stockholders have approved a matter, abstentions are not treated as votes cast affirmatively or negatively, and therefore do not have any effect on the outcome of a matter to be voted on at the annual meeting that requires an affirmative vote of a majority of the votes cast by holders of our common stock present in person or by proxy at the annual meeting. A ‘‘majority of votes cast’’ means the number of ‘‘FOR’’ votes exceeds the number of ‘‘AGAINST’’ votes. What are the voting requirements? Proposal 1—Election of Directors In the election of directors named in this proxy statement, you may vote ‘‘FOR’’ one or more of the nominees or your vote may be ‘‘AGAINST’’ one or more of the nominees. Alternatively, you may vote ‘‘ABSTAIN’’ with respect to one or more nominees. You may not cumulate your votes for the election of directors. To be elected, each director nominee requires a majority of the votes cast for his or her election, which means that each director nominee must receive more votes cast ‘‘FOR’’ than ‘‘AGAINST’’ that director nominee. Abstentions are not treated as voting on this proposal. If stockholders do not elect a nominee who is already serving as a director, Delaware law provides that the director would continue to serve on the Board as a ‘‘holdover director,’’ rather than causing a vacancy, until a successor is duly elected or until the director resigns. Under our Corporate Governance Guidelines and as permitted by our Bylaws, each director has submitted an advance, contingent resignation that the Board may accept if stockholders do not elect the director. In that situation, our Nominating & Governance Committee would make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. The Board will promptly publicly disclose its decision regarding the director’s resignation. Proposal 2—Advisory Vote to Approve Executive Compensation In the advisory vote to approve executive compensation, you may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ This proposal requires the affirmative vote of a majority of those shares present in person or represented by proxy, entitled to vote, and actually voting on the proposal at the annual meeting. Abstentions are not treated as voting on this proposal. The vote is advisory, and therefore not binding on the Company, the Compensation Committee or the Board. However, the Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation as it deems appropriate. Proposal 3—Approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan In the proposal to approve the Vail Resorts, Inc. 2015 Omnibus Incentive Plan, you may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ This proposal requires the affirmative vote of a majority of those shares present in person or represented by proxy, entitled to vote, and actually voting on the proposal at the annual meeting. Abstentions are not treated as voting on this proposal. 79 Proposal 4—Ratification of Selection of PricewaterhouseCoopers LLP In the ratification of the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending July 31, 2016, you may vote ‘‘FOR,’’ ‘‘AGAINST’’ or ‘‘ABSTAIN.’’ This proposal requires the affirmative vote of a majority of those shares present in person or represented by proxy, entitled to vote, and actually voting on the proposal at the annual meeting. Abstentions are not treated as voting on this proposal. What are ‘‘broker non-votes’’? If you hold shares in street name through a broker and do not provide your broker with voting instructions, your shares may constitute ‘‘broker non- votes.’’ Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given by the beneficial owner. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are considered present for purpose of determining a quorum but are not considered entitled to vote or votes cast on that proposal. Thus, a broker non-vote will make a quorum more readily attainable, but, broker non-votes will not affect the outcome of any matter being voted on at the annual meeting, assuming that a quorum is obtained. If your shares are held in street name and you do not instruct your broker on how to vote your shares, your brokerage firm, in its discretion, may either leave your shares unvoted or vote your shares on ‘‘routine’’ matters. The proposal to ratify the selection of our independent registered public accounting firm for the current fiscal year (Proposal 4) is considered a routine matter. Under the rules of the New York Stock Exchange, or the NYSE, the election of directors (Proposal 1), the advisory vote to approve executive compensation (Proposal 2) and the approval of the Vail Resorts, Inc. 2015 Omnibus Incentive Plan (Proposal 3) are not considered routine matters and, consequently, without your voting instructions, your broker cannot vote your uninstructed shares on these proposals. Who will serve as inspector of elections? The inspector of elections will be a representative from Broadridge Financial Solutions, Inc. Who will bear the cost of soliciting votes for the annual meeting? We will bear the cost of soliciting proxies. In addition to the original solicitation of proxies, proxies may be solicited personally, by telephone or other means of communication, by our directors and employees. Directors and employees will not be paid any additional compensation for soliciting proxies. We may reimburse brokers holding common stock in their names or in the names of their nominees for their expenses in sending proxy material to the beneficial owners of such common stock. What does it mean if I receive more than one Notice of Internet Availability of Proxy Materials? If you receive more than one Notice of Internet Availability of Proxy Materials, it means that you have multiple accounts at the transfer agent or with brokers or other nominees. Please vote all of your shares as described herein, or follow the instructions received from each broker or other nominee, to ensure that all of your shares are voted. What if I submit a proxy but do not make specific choices? If a proxy is voted by telephone or Internet, or is signed and returned by mail without choices specified, in the absence of contrary instructions, the shares of common stock represented by such proxy will be voted as recommended by the Board, and will be voted in the proxy holders’ discretion as to other matters that may properly come before the annual meeting. 80 How can I find out the results of the voting at the annual meeting? Preliminary voting results will be announced at the annual meeting. Final voting results will be reported in a Form 8-K, which will be filed with the SEC following the annual meeting. Annual Meeting Materials The Notice of Internet Availability of Proxy Materials, Notice of Annual Meeting, this proxy statement and the annual report of the Company for the fiscal year ended July 31, 2015 have been made available to all stockholders entitled to Notice of Internet Availability of Proxy Materials and entitled to vote at the annual meeting. The annual report is not incorporated into this proxy statement and is not considered proxy-soliciting material. STOCKHOLDER PROPOSALS FOR 2016 ANNUAL MEETING The deadline for stockholders to submit proposals pursuant to Rule 14a-8 of the Exchange Act for inclusion in the Company’s proxy statement and proxy for the 2016 annual meeting of stockholders is June 24, 2016. If you wish to nominate a director or submit a proposal for consideration at the Company’s 2016 annual meeting of stockholders that is not to be included in next year’s proxy materials, your proposal or nomination must be submitted in writing to the Secretary of the Company not later than September 5, 2016 nor earlier than August 6, 2016. You are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. Such notices must be in accordance with the procedures described in our Bylaws. You can obtain a copy of our Bylaws by writing the Secretary at the address shown on the cover of this proxy statement. HOUSEHOLDING OF PROXY MATERIALS The SEC has adopted rules that permit companies and intermediaries, such as brokers, to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as ‘‘householding,’’ potentially means extra convenience for stockholders and cost savings for companies. This year, a number of brokers with account holders who are Company stockholders may be ‘‘householding’’ our proxy materials to the extent such stockholders have given their prior express or implied consent in accordance with SEC rules. A single Notice of Internet Availability of Proxy Materials, proxy statement and annual report (if you requested one) will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be ‘‘householding’’ communications to your address, ‘‘householding’’ will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, proxy statement and annual report, please notify your broker to discontinue householding and direct your written request to receive a separate Notice of Internet Availability of Proxy Materials, proxy statement and annual report to the Company at: Vail Resorts, Inc., Attention: Investor Relations, 390 Interlocken Crescent, Broomfield, Colorado, 80021, or by calling (303) 404-1800. Stockholders who currently receive multiple copies of the Notice of Internet Availability of Proxy Materials, proxy statement and annual report at their address and would like to request householding of their communications should contact their broker. 81 OTHER MATTERS At the date of this proxy statement, the Board has no knowledge of any business other than that described herein which will be presented for consideration at the annual meeting. In the event any other business is presented at the annual meeting, the persons named in the enclosed proxy will vote such proxy thereon in accordance with their judgment in the best interests of the Company. 14OCT201521542843 David T. Shapiro Executive Vice President, General Counsel and Secretary October 22, 2015 A copy of the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2015 is available without charge upon written request to: Secretary, Vail Resorts, Inc., 390 Interlocken Crescent, Broomfield, Colorado 80021. 82 APPENDIX A VAIL RESORTS, INC. 2015 OMNIBUS INCENTIVE PLAN 1. Purposes. The purposes of the 2015 Omnibus Incentive Plan are to advance the interests of Vail Resorts, Inc. and its shareholders by providing a means to attract, retain, and motivate employees, consultants and directors of the Company upon whose judgment, initiative and efforts the continued success, growth and development of the Company is dependent. 2. Definitions. For purposes of the Plan, the following terms shall be defined as set forth below: (a) (b) (c) (d) (e) (f) (g) ‘‘Affiliate’’ means any entity other than the Company and its Subsidiaries that is designated by the Board or the Committee as a participating employer under the Plan; provided, however, that the Company directly or indirectly owns at least 20% of the combined voting power of all classes of stock of such entity or at least 20% of the ownership interests in such entity. ‘‘Award’’ means any Option, SAR, Restricted Share, Restricted Share Unit, Performance Share, Performance Unit, Performance Cash Award, Dividend Equivalent, or Other Share-Based Award granted to an Eligible Person under the Plan. ‘‘Award Agreement’’ means any written agreement, contract, or other instrument or document evidencing an Award. ‘‘Beneficiary’’ means the Person, Persons, trust or trusts which have been designated by an Eligible Person in his or her most recent written beneficiary designation filed with the Company to receive the benefits specified under this Plan upon the death of the Eligible Person, or, if there is no designated Beneficiary or surviving designated Beneficiary, then the Person, Persons, trust or trusts entitled by will or the laws of descent and distribution to receive such benefits. ‘‘Benefit Arrangement’’ means any formal or informal plan or other arrangement for the direct or indirect provision of compensation to a Participant (including groups or classes of Participants or beneficiaries of which the Participant is a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for the Participant. ‘‘Board’’ means the Board of Directors of the Company. ‘‘Capital Stock’’ means, with respect to any Person, any and all shares, interests, participations, or other equivalents (however designated, whether voting or non-voting) in equity of such Person, whether outstanding on the Effective Date or issued thereafter, including, without limitation, all Shares. (h) ‘‘Change in Control’’ means an event or series of events by which: (i) any ‘‘person’’ or ‘‘group’’ (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its subsidiaries, and any person or entity acting in its capacity as trustee, agent, or other fiduciary or administrator of any such plan) becomes the ‘‘beneficial owner’’ (as defined in Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of 35% or more of the equity securities of the Company entitled to vote for members of the Board or equivalent governing body of the Company on a fully-diluted basis; or (ii) during any period of twenty four (24) consecutive months, a majority of the members of the Board or other equivalent governing body of the Company cease to be composed of individuals (1) who were members of that Board or equivalent governing body on the first A-1 day of such period, (2) whose election or nomination to that Board or equivalent governing body was approved by individuals referred to in clause (1) above constituting at the time of such election or nomination at least a majority of that Board or equivalent governing body, or (3) whose election or nomination to that Board or other equivalent governing body was approved by individuals referred to in clauses (1) and (2) above constituting at the time of such election or nomination at least a majority of that Board or equivalent governing body (excluding, in the case of both clause (2) and clause (3), any individual whose initial nomination for, or assumption of office as, a member of that Board or equivalent governing body occurs as a result of an actual or threatened solicitation of proxies or consents for the election or removal of one or more directors by any person or group other than a solicitation for the election of one or more directors by or on behalf of the Board); or (iii) any person or two or more persons acting in concert shall have acquired, by contract or otherwise, control over the equity securities of the Company entitled to vote for members of the Board or equivalent governing body of the Company on a fully-diluted basis (and taking into account all such securities that such person or group has the right to acquire pursuant to any option right) representing 51% or more of the combined voting power of such securities; or (iv) the consummation of a merger, reorganization, consolidation or similar transaction involving the Company; provided, however, a Change in Control shall not be deemed to have occurred (i) if such merger, reorganization, consolidation or similar transaction would result in all or a portion of the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) either directly or indirectly more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger, reorganization, consolidation or similar transaction, or (ii) if following the merger, reorganization, consolidation or similar transaction, the members of the Board prior to such merger, reorganization, consolidation or similar transaction constitute at least a majority of the Board of the Company or the entity that directly or indirectly controls the Company after such merger, reorganization, consolidation or similar transaction; or (v) the Company sells or transfers (other than by mortgage or pledge) all or substantially all of its properties and assets to, another ‘‘person’’ or ‘‘group’’ (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act). (i) (j) The Board shall have full and final authority, in its sole discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control, and any incidental matters relating thereto. ‘‘Code’’ means the Internal Revenue Code of 1986, as amended from time to time. References to any provision of the Code shall be deemed to include successor provisions thereto and regulations thereunder. ‘‘Committee’’ means the Compensation Committee of the Board or a subcommittee thereof, or such other Board committee (or if the Board so designates, the entire Board) as may be designated by the Board to administer the Plan; provided, however, that, unless otherwise determined by the Board, the Committee shall consist of two or more directors of the Company, each of whom is a ‘‘non-employee director’’ within the meaning of Rule 16b-3 under the Exchange Act, to the extent applicable, and each of whom is an ‘‘outside director’’ within the meaning of Section 162(m) of the Code, to the extent applicable, and each of whom is an independent director in accordance with the rules of any stock exchange on which the Shares are listed; provided, further, that the mere fact that the Committee shall fail to qualify under A-2 each of the foregoing requirements shall not invalidate any Award made by the Committee which Award is otherwise validly made under the Plan. (k) (l) ‘‘Company’’ means Vail Resorts, Inc., a corporation organized under the laws of Delaware, or any successor corporation. ‘‘Director’’ means a member of the Board who is not an employee of the Company, a Subsidiary or an Affiliate. (m) ‘‘Disqualified Individual’’ shall have the meaning set forth in Code Section 280G(c). (n) (o) (p) (q) (r) (s) (t) (u) ‘‘Dividend Equivalent’’ means a right, granted under Section 5(g), to receive cash, Shares, or other property equal in value to dividends paid with respect to a specified number of Shares. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award, and may be paid currently or on a deferred basis; provided, however, that no Dividend Equivalents may be awarded in connection with, or related to, an Award of Options or SARs. ‘‘Effective Date’’ means [ the Company. ], 2015, the date the Plan is approved by stockholders of ‘‘Eligible Person’’ means (i) an employee or consultant of the Company, a Subsidiary or an Affiliate, including any director who is an employee, or (ii) a Director. Notwithstanding any provisions of this Plan to the contrary, an Award may be granted to an employee or consultant, in connection with his or her hiring or retention prior to the date the employee or consultant first performs services for the Company, a Subsidiary or an Affiliate; provided, however, that any such Award shall not become vested prior to the date the employee or consultant first performs such services. ‘‘Exchange Act’’ means the Securities Exchange Act of 1934, as amended from time to time. References to any provision of the Exchange Act shall be deemed to include successor provisions thereto and regulations thereunder. ‘‘Fair Market Value’’ means, with respect to Shares or other property, the fair market value of such Shares or other property determined by such methods or procedures as shall be established from time to time by the Committee. If the Shares are listed on any established stock exchange or a national market system, unless otherwise determined by the Committee in good faith, the Fair Market Value of Shares shall mean the closing price per Share on the date of grant or such other determination date (or, if the Shares were not traded on that day, the next preceding day that the Shares were traded) on the principal exchange or market system on which the Shares are traded (if there is more than one such exchange or market the Committee shall determine the appropriate exchange or market), as such prices are officially quoted on such exchange or market. ‘‘Full Value Award’’ means an Award other than an Award in the form of an Option or SAR, and which is settled by the issuance of Shares. ‘‘GAAP’’ means generally accepted accounting principles in the United States of America in effect from time to time. ‘‘ISO’’ means any option intended to be and designated as an incentive stock option within the meaning of Section 422 of the Code. (v) ‘‘NQSO’’ means any Option that is not an ISO. (w) ‘‘Option’’ means a right granted under Section 5(b), to purchase Shares. A-3 (x) (y) (z) ‘‘Other Agreement’’ means any agreement, contract, or understanding heretofore or hereafter entered into by a Participant with the Company or an Affiliate, except an agreement, contract, or understanding that expressly addresses Code Section 280G and/or Code Section 4999. ‘‘Other Share-Based Award’’ means a right, granted under Section 5(h), that relates to or is valued by reference to Shares. ‘‘Parachute Payment’’ means a Section 280G(b)(2). ‘‘parachute payment’’ within the meaning of Code (aa) ‘‘Participant’’ means an Eligible Person who has been granted an Award under the Plan. (bb) ‘‘Performance-Based Compensation’’ means compensation under an Award that is intended to satisfy the requirements of Code Section 162(m) and the regulations thereunder for qualified performance-based compensation paid to a Participant who is, or could become, a ‘‘covered employee’’ within the meaning of Code Section 162(m)(3). (cc) ‘‘Performance Cash Award’’ means a performance cash award granted under Section 5(f). (dd) ‘‘Performance Share’’ means a performance share granted under Section 5(f). (ee) ‘‘Performance Unit’’ means a performance unit granted under Section 5(f). (ff) ‘‘Person’’ shall mean an individual, a corporation, a partnership, a limited liability company, an association, a trust, or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. (gg) ‘‘Plan’’ means this 2015 Omnibus Incentive Plan. (hh) ‘‘Restricted Shares’’ means an Award of Shares under Section 5(d) that may be subject to certain restrictions and to a risk of forfeiture. (ii) (jj) (kk) ‘‘Restricted Share Unit’’ means a right, granted under Section 5(e), to receive Shares or cash at the end of a specified deferral period. ‘‘Rule 16b-3’’ means Rule 16b-3, as from time to time in effect and applicable to the Plan and Participants, promulgated by the Securities and Exchange Commission under Section 16 of the Exchange Act. ‘‘SAR’’ or ‘‘Share Appreciation Right’’ means the right, granted under Section 5(c), to be paid an amount measured by the difference between the exercise price of the right and the Fair Market Value of Shares on the date of exercise of the right, with payment to be made in cash, Shares, or property as specified in the Award or determined by the Committee. (ll) ‘‘Separation from Service’’ shall have the meaning set forth in Code Section 409A. (mm) ‘‘Shares’’ means common stock, $.01 par value per share, of the Company. (nn) ‘‘Short-Term Deferral Period’’ shall have the meaning set forth in Code Section 409A. (oo) (pp) ‘‘Subsidiary’’ means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations (other than the last corporation in the unbroken chain) owns shares possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain. ‘‘Ten Percent Shareholder’’ means a natural Person who owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, the Company’s parent (if any), or any of the Company’s Subsidiaries. In determining stock ownership, the attribution rules of Code Section 424(d) shall be applied. A-4 3. Administration. (a) Authority of the Committee. The Plan shall be administered by the Committee, and the Committee shall have full and final authority to take the following actions, in each case subject to and consistent with the provisions of the Plan: (i) to select Eligible Persons to whom Awards may be granted; (ii) to designate Affiliates; (iii) to determine the type or types of Awards to be granted to each Eligible Person; (iv) to determine the type and number of Awards to be granted, the number of Shares to which an Award may relate, the terms and conditions of any Award granted under the Plan (including, but not limited to, any exercise price, grant price, or purchase price, and any bases for adjusting such exercise, grant or purchase price, any restriction or condition, any schedule for lapse of restrictions or conditions relating to transferability or forfeiture, exercisability, or settlement of an Award, and waiver or accelerations thereof, and waivers of performance conditions relating to an Award, based in each case on such considerations as the Committee shall determine), and all other matters to be determined in connection with an Award; (v) to determine whether, to what extent, and under what circumstances an Award may be settled, or the exercise price of an Award may be paid, in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, exchanged, or surrendered; (vi) to determine whether, to what extent, and under what circumstances cash, Shares, other Awards, or other property payable with respect to an Award will be deferred either automatically, at the election of the Committee, or at the election of the Eligible Person; (vii) to prescribe the form of each Award Agreement, which need not be identical for each Eligible Person; (viii) to adopt, amend, suspend, waive, and rescind such rules and regulations and appoint such agents as the Committee may deem necessary or advisable to administer the Plan; (ix) to correct any defect or supply any omission or reconcile any inconsistency in the Plan and to construe and interpret the Plan and any Award, rules and regulations, Award Agreement, or other instrument hereunder; (x) to accelerate the exercisability or vesting of all or any portion of any Award or to extend the period during which an Award is exercisable; and (xi) to make all other decisions and determinations as may be required under the terms of the Plan or as the Committee may deem necessary or advisable for the administration of the Plan. (b) Manner of Exercise of Committee Authority. The Committee shall have sole discretion in exercising its authority under the Plan. Any action of the Committee with respect to the Plan shall be final, conclusive, and binding on all Persons, including the Company, Subsidiaries, Affiliates, Eligible Persons, any Person claiming any rights under the Plan from or through any Eligible Person, and shareholders. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to other members of the Board or officers or managers of the Company or any Subsidiary or Affiliate the authority, subject to such terms as the Committee shall determine, to perform administrative functions and, with respect to Awards granted to Eligible Persons not subject to Section 16 of the Exchange Act, to A-5 (c) perform such other functions as the Committee may determine, to the extent permitted under Rule 16b-3 (if applicable) and applicable law. Limitation of Liability. Each member of the Committee shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or other employee of the Company or any Subsidiary or Affiliate, the Company’s independent certified public accountants, or other professional retained by the Company to assist in the administration of the Plan. No member of the Committee, and no officer or employee of the Company acting on behalf of the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Committee and any officer or employee of the Company acting on their behalf shall, to the extent permitted by law, be fully indemnified and protected by the Company with respect to any such action, determination, or interpretation. (d) Limitation on Committee’s Discretion. Anything in this Plan to the contrary notwithstanding, in the case of any Award which is intended to qualify as Performance-Based Compensation, if the Award Agreement so provides, the Committee shall have no discretion to increase the amount of compensation payable under the Award to the extent such an increase would cause the Award to lose its qualification as such performance-based compensation. (e) No Option or SAR Repricing Without Shareholder Approval. Except as provided in the first sentence of Section 4(e) hereof relating to certain antidilution adjustments, unless the approval of shareholders of the Company is obtained, Options and SARs issued under the Plan shall not be (i) amended to lower their exercise price, (ii) exchanged for other Options or SARs with lower exercise prices, or (iii) with respect to Options and SARs with an exercise price above the current Fair Market Value of a Share, canceled in exchange for cash or other securities. 4. Shares Subject to the Plan. (a) Subject to adjustment as provided in Section 4(e) hereof, the total number of Shares reserved for issuance in connection with Awards under the Plan shall be 2,600,000; provided, however, that such number shall be increased by (i) the number of Shares available for issuance under the Company’s Amended and Restated 2002 Long-Term Incentive and Share Award Plan as of the Effective Date and (ii) the number of Shares, if any, that are subject to awards issued under the Company’s Amended and Restated 2002 Long-Term Incentive and Share Award Plan that are forfeited, canceled, terminated or surrendered on or after the Effective Date. All Shares issuable under the Plan may be issued as ISOs. Shares issued or to be issued under the Plan shall be authorized but unissued shares or, to the extent permitted by applicable law, issued shares that have been reacquired by the Company. No Award may be granted if the number of Shares to which such Award relates, when added to the number of Shares previously issued under the Plan, exceeds the number of Shares reserved under the preceding sentence. If any Awards are forfeited, canceled, terminated, exchanged or surrendered or such Award is settled in cash or otherwise terminates without a distribution of Shares to the Participant, any Shares counted against the number of Shares reserved and available under the Plan with respect to such Award shall, to the extent of any such forfeiture, settlement, termination, cancellation, exchange or surrender, again be available for Awards under the Plan. Upon the exercise of any Award granted in tandem with any other Awards, such related Awards shall be canceled to the extent of the number of Shares as to which the Award is exercised. The number of Shares reserved and available under the Plan will not be increased by the number of Shares (i) tendered, withheld, or subject to an Award granted under the Plan surrendered in connection with the purchase of Shares upon exercise of an Option, (ii) that were not issued upon the net settlement or net exercise of a Share-settled SAR granted under the Plan, (iii) deducted or delivered from payment of an Award granted under the Plan in connection with the Company’s tax withholding obligations as provided in Section 9(c), or (iv) purchased by the Company with proceeds from Option exercises. A-6 (b) (c) (d) (e) Shares covered by an Award shall be counted as used as of the date of grant of such Award for purposes of calculating the number of Shares available for issuance under Section 4(a). Any Shares that are subject to Full Value Awards will be counted against the share reserve set forth in Section 4(a) as three (3) Shares for every one (1) Share subject to an Award. Any Shares that are subject to Awards other than Full Value Awards will be counted against the share reserve set forth in Section 4(a) as one (1) Share for every one (1) Share subject to an Award. The number of Shares subject to an Award of SARs will be counted against the share limit set forth in Section 4(a) as one (1) Share for every one (1) Share subject to such Award regardless of the number of Shares actually issued to settle such SARs upon the exercise of the SARs. The target number of Shares issuable under a Performance Share or Performance Unit grant shall be counted against the share limit set forth in Section 4(a) in accordance with this Section 4(b) as of the date of grant of such Award, but such number shall be adjusted to reflect the actual number of Shares issued upon settlement of the Performance Shares or Performance Units, as applicable, to the extent different from such target number of Shares. Awards that do not entitle the Participant thereof to receive or purchase Shares and Awards that are settled in cash shall not be counted against the share limit set forth in Section 4(a). The Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Code Section 424(a) applies. The number of Shares reserved pursuant to Section 4(a) may be increased by the corresponding number of Awards assumed and, in the case of a substitution, by the net increase in the number of Shares subject to Awards before and after the substitution. Subject to adjustment as provided in Section 4(e) hereof, (i) the maximum number of Shares with respect to which Options or SARs may be granted during a calendar year to any Eligible Person under this Plan, other than Directors, shall be 1,000,000 Shares, (ii) the maximum number of Shares with respect to which Performance Shares, Performance Units, Restricted Shares or Restricted Share Units may be granted during a calendar year to any Eligible Person under this Plan, other than Directors, shall be 200,000 Shares, (iii) the maximum amount that may be paid as a cash-denominated Performance Share or Performance Unit (whether or not cash-settled), or as a Performance Cash Award, for a Performance Period to any Eligible Person shall be twelve million dollars ($12,000,000), and (iv) the maximum Fair Market Value of Shares with respect to which Awards may be granted during a calendar year to any Director under this Plan shall be six hundred thousand dollars ($600,000). In the event that the Committee shall determine that any dividend in Shares, recapitalization, Share split, reverse split, reorganization, merger, consolidation, spin-off, combination, repurchase, or share exchange, or other similar corporate transaction or event, affects the Shares such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Eligible Persons under the Plan, then the Committee shall make such equitable changes or adjustments as it deems appropriate and, in such manner as it may deem equitable, adjust any or all of (i) the number and kind of shares which may thereafter be issued under the Plan, (ii) the number and kind of shares, other securities or other consideration issued or issuable in respect of outstanding Awards, and (iii) the exercise price, grant price, or purchase price relating to any Award; provided, however, in each case that, with respect to ISOs, such adjustment shall be made in accordance with Section 424(a) of the Code, unless the Committee determines otherwise. In addition, the Committee is authorized to make adjustments in the terms and conditions of, and the criteria and performance objectives included in, Awards in recognition of unusual or non-recurring events (including, without limitation, events described in the preceding sentence) affecting the Company or any Subsidiary or Affiliate or the financial statements of the Company or any Subsidiary or Affiliate, or in response to changes in applicable laws, regulations, or accounting principles; provided, however, that, the Committee A-7 shall not have discretion to increase the amount of compensation payable under the Award to the extent such an increase would cause the Award to lose its qualification as Performance- Based Compensation for purposes of Section 162(m)(4)(C) of the Code and the regulations thereunder. (f) Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or treasury Shares including Shares acquired by purchase in the open market or in private transactions. 5. Specific Terms of Awards. (a) General. Awards may be granted on the terms and conditions set forth in this Section 5. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 9(d)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms regarding forfeiture of Awards or continued exercisability of Awards in the event of termination of service by the Eligible Person. (b) Options. The Committee is authorized to grant Options, which may be NQSOs or ISOs, to Eligible Persons on the following terms and conditions: (i) Exercise Price. The exercise price per Share purchasable under an Option shall be determined by the Committee; provided, however, that the exercise price per Share of an Option shall not be less than the Fair Market Value of a Share on the date of grant of the Option; provided, further, that, in the event that a Participant is a Ten Percent Shareholder, the exercise price of an Option granted to such Participant that is intended to be an ISO shall be not less than one hundred ten percent (110%) of the Fair Market Value of one (1) Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be determined by the Committee; provided, however, that such term shall not be longer than ten years from the date of grant of the Option; provided, further, that, in the event that the Participant is a Ten Percent Shareholder, an Option granted to such Participant that is intended to be an ISO shall not be exercisable after the fifth (5th) anniversary of the date of grant of such Option; provided, further, that, to the extent deemed necessary or appropriate by the Committee to reflect differences in local law, tax policy, or custom with respect to any Option granted to a Participant who is a foreign national or who is employed outside the United States, such Option may have a term that is longer than ten years from the date of grant of the Option as the Committee shall determine. (iii) Time and Method of Exercise. The Committee shall determine at the date of grant or thereafter the time or times at which an Option may be exercised in whole or in part (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), the methods by which such exercise price may be paid or deemed to be paid (including, without limitation, broker-assisted exercise arrangements), the form of such payment (including, without limitation, cash, Shares or other property), and the methods by which Shares will be delivered or deemed to be delivered to Eligible Persons; provided, however, that in no event may any portion of the exercise price be paid with Shares acquired either under an Award granted pursuant to this Plan, upon exercise of a stock option granted under another Company plan or as a stock bonus or other stock award granted under another Company plan unless, in any such case, the Shares were acquired and vested more than six months in advance of the date of exercise. A-8 (iv) ISOs. The terms of any ISO granted under the Plan shall comply in all respects with the provisions of Section 422 of the Code, including but not limited to the requirement that the ISO shall be granted within ten years from the earlier of the date of adoption or shareholder approval of the Plan. An Option shall constitute an ISO only (a) if the Participant of such Option is an employee of the Company or any Subsidiary, (b) to the extent specifically provided in the related Award Agreement, and (c) to the extent that the aggregate Fair Market Value (determined at the time such Option is granted) of the Shares with respect to which all ISOs held by such Participant become exercisable for the first time during any calendar year (under the Plan and all other plans of the Company and its Affiliates) does not exceed one hundred thousand dollars ($100,000). Except to the extent provided in the regulations under Code Section 422, this limitation shall be applied by taking Options into account in the order in which they were granted. If any Participant shall make any disposition of Shares issued pursuant to the exercise of an ISO under the circumstances provided in Code Section 421(b) (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition immediately but in no event later than ten (10) days thereafter. (c) SARs. The Committee is authorized to grant SARs (Share Appreciation Rights) to Eligible Persons on the following terms and conditions: (i) Right to Payment. A SAR shall confer on the Eligible Person to whom it is granted a right to receive with respect to each Share subject thereto, upon exercise thereof, the excess of (1) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine in the case of any such right, the Fair Market Value of one Share at any time during a specified period before or after the date of exercise) over (2) the exercise price of the SAR as determined by the Committee as of the date of grant of the SAR (which shall not be less than the Fair Market Value per Share on the date of grant of the SAR and, in the case of a SAR granted in tandem with an Option, shall be equal to the exercise price of the underlying Option). (ii) Other Terms. The Committee shall determine, at the time of grant or thereafter, the time or times at which a SAR may be exercised in whole or in part (which shall not be more than ten years after the date of grant of the SAR), the method of exercise, method of settlement, form of consideration payable in settlement, method by which Shares will be delivered or deemed to be delivered to Eligible Persons, whether or not a SAR shall be in tandem with any other Award, and any other terms and conditions of any SAR. Unless the Committee determines otherwise, a SAR (1) granted in tandem with an NQSO may be granted at the time of grant of the related NQSO or at any time thereafter and (2) granted in tandem with an ISO may only be granted at the time of grant of the related ISO. (d) Restricted Shares. The Committee is authorized to grant Restricted Shares to Eligible Persons on the following terms and conditions: (i) Issuance and Restrictions. Restricted Shares shall be subject to such restrictions on transferability and other restrictions, if any, as the Committee may impose at the date of grant or thereafter, which restrictions may lapse separately or in combination at such times, under such circumstances (including, without limitation, upon achievement of performance criteria if deemed appropriate by the Committee), in such installments, or otherwise, as the Committee may determine. Except to the extent restricted under the Award Agreement relating to the Restricted Shares, an Eligible Person granted Restricted Shares shall have all of the rights of a shareholder including, without limitation, the right to vote Restricted Shares and the right to receive dividends thereon. If the lapse of restrictions is conditioned on the achievement of performance criteria, and the Award of Restricted Shares is intended A-9 to qualify as Performance-Based Compensation, the Committee shall select the criterion or criteria from the list of criteria set forth in Section 5(f)(iii). With respect to Awards of Restricted Shares that are intended to qualify as Performance-Based Compensation, the Committee must certify in writing prior to the lapse of restrictions conditioned on achievement of performance criteria that such performance criteria were in fact satisfied. (ii) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon termination of service during the applicable restriction period, Restricted Shares and any accrued but unpaid dividends or Dividend Equivalents that are at that time subject to restrictions shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Shares will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Shares. (iii) Certificates for Shares. Restricted Shares granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Shares are registered in the name of the Eligible Person, such certificates shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Shares, and the Company shall retain physical possession of the certificate. (iv) Dividends. Dividends paid on Restricted Shares shall be either paid at the dividend payment date, or deferred for payment to such date as determined by the Committee, in cash or in unrestricted Shares having a Fair Market Value equal to the amount of such dividends; provided, however, that dividends payable in respect of Restricted Shares that vest based on the achievement of performance criteria shall be subject to all conditions and restrictions of the underlying Restricted Shares to which they relate. Shares distributed in connection with a Share split or dividend in Shares, and other property distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Shares with respect to which such Shares or other property has been distributed. (e) Restricted Share Units. The Committee is authorized to grant Restricted Share Units to Eligible Persons, subject to the following terms and conditions: limitation, the achievement of performance criteria (i) Award and Restrictions. Delivery of Shares or cash, as the case may be, will occur upon expiration of the deferral period specified for Restricted Share Units by the Committee (or, if permitted by the Committee, as elected by the Eligible Person). In addition, Restricted Share Units shall be subject to such restrictions as the Committee may impose, if any (including, without if deemed appropriate by the Committee), at the date of grant or thereafter, which restrictions may lapse at the expiration of the deferral period or at earlier or later specified times, separately or in combination, in installments or otherwise, as the Committee may determine. If the lapse of restrictions is conditioned on the achievement of performance criteria, and the to qualify as Performance-Based Award of Restricted Share Units Compensation, the Committee shall select the criterion or criteria from the list of criteria set forth in Section 5(f)(iii). With respect to Awards of Restricted Share Units that are intended to qualify as Performance-Based Compensation, the Committee must certify in writing prior to the lapse of restrictions conditioned on the achievement of performance criteria that such performance criteria were in fact satisfied. intended is (ii) Forfeiture. Except as otherwise determined by the Committee at date of grant or thereafter, upon termination of service (as determined under criteria established by the Committee) during the applicable deferral period or portion thereof to which forfeiture conditions apply A-10 (as provided in the Award Agreement evidencing the Restricted Share Units), or upon failure to satisfy any other conditions precedent to the delivery of Shares or cash to which such Restricted Share Units relate, all Restricted Share Units that are at that time subject to deferral or restriction shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in any individual case, that restrictions or forfeiture conditions relating to Restricted Share Units will be waived in whole or in part in the event of termination resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Restricted Share Units. (f) Performance Shares, Performance Units and Performance Cash Awards. The Committee is authorized to grant Performance Shares, Performance Units, and Performance Cash Awards to Eligible Persons on the following terms and conditions: (i) General; Performance Period. The right of a Participant to exercise or to receive a grant or settlement of any Performance Share, Performance Unit or Performance Cash Award, and the timing thereof, shall be subject to such performance objectives as may be specified by the Committee. Except as provided in Section 5(f)(iii) hereof, the Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions. The Committee shall determine a performance period (the ‘‘Performance Period’’) of one or more years and shall determine the performance objectives for grants of Performance Shares, Performance Units and Performance Cash Awards. Performance Periods may overlap and Eligible Persons may participate simultaneously with respect to Performance Shares, Performance Units and Performance Cash Awards for which different Performance Periods are prescribed. (ii) Performance Objectives Intended for Awards to Qualify as Performance-Based Compensation. The performance objectives for Performance Shares, Performance Units and Performance Cash Awards that are intended to qualify as Performance-Based Compensation shall consist of one or more business criteria and a targeted level or levels of performance with respect to each of such criteria, as specified by the Committee. The performance objectives for any Performance Shares, Performance Units and Performance Cash Awards that are intended to qualify as Performance-Based Compensation shall be objective and shall otherwise meet the requirements of Code Section 162(m), including the requirement that the level or levels of performance targeted by the Committee result in the achievement of ‘‘substantially uncertain.’’ The performance objectives for any Performance Shares, Performance Units and Performance Cash Awards that are intended to qualify as Performance-Based Compensation shall be established in writing not later than the earlier of (a) ninety (90) days after the beginning of any Performance Period applicable to such Award, and (b) the date on which twenty-five percent (25%) of any Performance Period applicable to such Award has expired, or at such other date as may be required or permitted for compensation to constitute Performance- Based Compensation. the performance objectives being (iii) Performance Criteria for Awards as Performance-Based Intended Compensation. The performance objectives for Awards that are intended to qualify as Performance-Based Compensation may vary from Eligible Person to Eligible Person and shall be based upon one or more of the following performance criteria as the Committee may deem appropriate, and in any relative proportion to the extent multiple goals are used in combination: to Qualify (1) Reported EBITDA (as defined below) results for our mountain segment; (2) Reported EBITDA results for our lodging segment; A-11 (3) Reported EBITDA results on a resort basis (which is a combination of our Reported mountain segment EBITDA and Reported lodging segment EBITDA); (4) Reported EBITDA results for our real estate segment; (5) Reported EBITDA results excluding stock-based compensation expense for any of our mountain, lodging or real estate segments, and/or on a resort basis; (6) real estate segment goals, including pre-sales targets, sales, closing timing and profitability targets, and construction related approvals and timing milestones; (7) revenue; (8) net income; (9) net income excluding stock-based compensation; (10) pretax earnings; (11) earnings before interest expense, taxes, depreciation and amortization; (12) operating margin; (13) earnings per share; (14) return on equity; (15) return on capital; (16) return on investment; (17) operating earnings; (18) working capital; (19) ratio of debt to stockholders’ equity; (20) Net Debt (as defined below); (21) ratio of Net Debt to Reported EBITDA; and/or (22) total stockholder return. ‘‘Reported EBITDA’’ is calculated as segment net revenue less segment operating expense plus or minus segment equity investment income or loss, and for the real estate segment, plus gain on sale of real property. ‘‘Net Debt’’ is defined as long-term debt plus long-term debt due within one year less cash and cash equivalents. The foregoing performance criteria may be determined by reference to the performance of the Company, or of a Subsidiary or Affiliate, or of a division or unit of any of the foregoing. Performance under any of the foregoing performance criteria (a) may be used to measure the performance of (i) the Company, its Subsidiaries, and other Affiliates as a whole, (ii) the Company, any Subsidiary, any other Affiliate, or any combination thereof, or (iii) any one or more business units or operating segments of the Company, any Subsidiary, and/or any other Affiliate, in each case as the Committee, in its sole discretion, deems appropriate, (b) may be compared to the performance of one or more other companies or one or more published or special indices designated or approved by the Committee for such comparison, as the Committee, in its sole discretion, deems appropriate, (c) may be stated as a combination of one or more performance objectives, and (d) may be measured on an absolute or relative basis and on a GAAP or non-GAAP basis. In addition, the Committee, in its sole discretion, may select performance under the total shareholder return performance criteria specified above for comparison to performance under one or more stock market indices designated or approved A-12 by the Committee. The Committee shall also have the authority to provide for accelerated vesting of any Award intended to qualify as Performance-Based Compensation based on the achievement of performance objectives pursuant to the performance criteria specified above. (iv) Evaluation of Performance. The Committee may provide in any Performance Share, Performance Unit or Performance Cash Award that any evaluation of performance may include or exclude any of the following events that occur during a Performance Period: (a) asset write-downs; (b) litigation or claims, judgments, or settlements; (c) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (d) any reorganization or restructuring events or programs; (e) extraordinary, non-core, non-operating, or non-recurring items; (f) acquisitions or divestitures; (g) foreign exchange gains and losses; (h) impact of shares of Stock purchased through share repurchase programs; impairment expense; and (k) environmental expense. To the extent such inclusions or exclusions affect Awards that are intended to qualify as Performance-Based Compensation, such inclusions or exclusions shall be prescribed in a form that meets the requirements of Code Section 162(m) for deductibility. tax valuation allowance reversals; (i) (j) (v) Award Value. At the beginning of a Performance Period, the Committee shall determine for each Eligible Person or group of Eligible Persons with respect to that Performance Period (A) the range of number of Shares, if any, in the case of Performance Shares, (B) the range of dollar values, if any, in the case of Performance Units, or (C) the range of cash awards in the case of Performance Cash Awards which may be fixed or may vary in accordance with such performance or other criteria specified by the Committee, which shall be paid to an Eligible Person as an Award if the relevant measure of Company performance for the Performance Period is met. (vi) Significant Events. If during the course of a Performance Period there shall occur significant events as determined by the Committee which the Committee expects to have a substantial effect on a performance objective during such period, the Committee may revise such objective; provided, however, that, any such revision in respect of an Award that is intended to qualify as Performance-Based Compensation shall be consistent with the requirements of Code Section 162(m) for deductibility; provided, further, that, the Committee shall not have any discretion to increase the amount of compensation payable under an Award intended to qualify as Performance-Based Compensation to the extent such an increase would cause the Award to lose its qualification as performance-based compensation for purposes of Section 162(m)(4)(C) of the Code and the regulations thereunder. The Committee may, in its sole discretion, reduce the amount of a payment otherwise to be made in connection with Performance Shares, Performance Units and Performance Cash Awards. (vii) Forfeiture. Except as otherwise determined by the Committee, at the date of grant or thereafter, upon termination of service during the applicable Performance Period, Performance Shares, Performance Units and Performance Cash Awards for which the Performance Period was prescribed shall be forfeited; provided, however, that the Committee may provide, by rule or regulation or in any Award Agreement, or may determine in an individual case, that restrictions or forfeiture conditions relating to Performance Shares, Performance Units and Performance Cash Awards will be waived in whole or in part in the event of terminations resulting from specified causes, and the Committee may in other cases waive in whole or in part the forfeiture of Performance Shares, Performance Units and Performance Cash Awards. A-13 (viii) Payment. Each Performance Share or Performance Unit may be paid in whole Shares, or cash, or a combination of Shares and cash either as a lump sum payment or in installments, all as the Committee shall determine, at the time of grant of the Performance Share or Performance Unit or otherwise, commencing as soon as practicable after the end of the relevant Performance Period; provided, that, unless specifically provided in the applicable Award Agreement, payment in respect of an Award shall occur no later than the fifteenth (15th) day of the third (3rd) month following the end of the fiscal year in which such Performance Period ends. Each Performance Cash Award shall be paid in cash, commencing as soon as practicable after the end of the relevant Performance Period; provided, that, unless specifically provided in the applicable Award Agreement, payment in respect of an Award shall occur no later than the fifteenth (15th) day of the third (3rd) month following the end of the fiscal year in which such Performance Period ends. With respect to any Award that is intended to qualify as Performance-Based Compensation, the Committee must certify in writing prior to the payment of any such Award that the performance objectives and any other material terms were in fact satisfied. (g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents to Eligible Persons. The Committee may provide, at the date of grant or thereafter, that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Shares, or other investment vehicles as the Committee may specify; provided, however, that Dividend Equivalents (other than freestanding Dividend Equivalents) shall be subject to all conditions and restrictions of the underlying Awards to which they relate; provided, further, that no Dividend Equivalents may be awarded in connection with, or related to, an Award of Options or SARs. (h) Other Share-Based Awards. The Committee is authorized, subject to limitations under applicable law, to grant to Eligible Persons such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Shares, as deemed by the Committee to be consistent with the purposes of the Plan, including, without limitation, subject to Section 6(f) hereof, unrestricted shares awarded purely as a ‘‘bonus’’ and not subject to any restrictions or conditions, other rights convertible or exchangeable into Shares, purchase rights for Shares, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the performance of specified Subsidiaries or Affiliates. The Committee shall determine the terms and conditions of such Awards at date of grant or thereafter. Shares delivered pursuant to an Award in the nature of a purchase right granted under this Section 5(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Shares, notes or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, shall also be authorized pursuant to this Section 5(h). 6. Certain Provisions Applicable to Awards. (a) Stand-Alone, Additional, Tandem and Substitute Awards. Awards granted under the Plan may, in the discretion of the Committee, be granted to Eligible Persons either alone or in addition to, in tandem with, or in exchange or substitution for, any other Award granted under the Plan or any award granted under any other plan or agreement of the Company, any Subsidiary or Affiliate, or any business entity to be acquired by the Company or a Subsidiary or Affiliate, or any other right of an Eligible Person to receive payment from the Company or any Subsidiary or Affiliate. Awards may be granted in addition to or in tandem with such other Awards or awards, and may be granted either as of the same time as or a different time from the grant of such other Awards or awards. Subject to the provisions of Section 3(e) hereof prohibiting Option and SAR repricing A-14 without shareholder approval, the per Share exercise price of any Option, grant price of any SAR, or purchase price of any other Award conferring a right to purchase Shares which is granted, in connection with the substitution of awards granted under any other plan or agreement of the Company or any Subsidiary or Affiliate or any business entity to be acquired by the Company or any Subsidiary or Affiliate, shall be determined by the Committee, in its discretion. (b) Terms of Awards. The term of each Award granted to an Eligible Person shall be for such period as may be determined by the Committee; provided, however, that in no event shall the term of any Option or a SAR granted in tandem therewith exceed a period of ten years from the date of its grant (or such shorter period as may be applicable under Section 422 of the Code). (c) Form of Payment Under Awards. Subject to the terms of the Plan and any applicable Award Agreement, payments to be made by the Company or a Subsidiary or Affiliate upon the grant, maturation, or exercise of an Award may be made in such forms as the Committee shall determine at the date of grant or thereafter, including, without limitation, cash, Shares, or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis. The Committee may make rules relating to installment or deferred payments with respect to Awards, including the rate of interest to be credited with respect to such payments, and the Committee may require deferral of payment under an Award if, in the sole judgment of the Committee, it may be necessary in order to avoid nondeductibility of the payment under Section 162(m) of the Code. (d) Nontransferability. Unless otherwise set forth by the Committee in an Award Agreement, Awards (except for vested shares) shall not be transferable by an Eligible Person except by will or the laws of descent and distribution (except pursuant to a Beneficiary designation) and shall be exercisable during the lifetime of an Eligible Person only by such Eligible Person or his guardian or legal representative. An Eligible Person’s rights under the Plan may not be pledged, mortgaged, hypothecated, or otherwise encumbered, and shall not be subject to claims of the Eligible Person’s creditors. (e) Noncompetition. The Committee may, by way of the Award Agreements or otherwise, establish such other terms, conditions, restrictions and/or limitations, if any, of any Award, provided they are not inconsistent with the Plan, including, without limitation, the requirement that the Participant not engage in competition with the Company. (f) Minimum Vesting Period. Except with respect to a maximum of five percent (5%) of the number of Shares reserved under the Plan pursuant to Section 4(a), and except as otherwise provided in Section 7, no Full Value Award shall provide for vesting which is any more rapid than vesting on the one (1) year anniversary of the date of grant of such Full Value Award or, with respect to Full Value Awards that vest upon the attainment of performance goals, a Performance Period that is less than twelve (12) months. (g) Forfeiture; Recoupment. Any Award granted pursuant to the Plan shall be subject to mandatory repayment by the Participant to the Company (i) to the extent set forth in this Plan or an Award Agreement or (ii) to the extent the Participant is, or in the future becomes, subject to (A) any Company or Affiliate ‘‘clawback’’ or recoupment policy that is adopted to comply with the requirements of any applicable laws, rules or regulations, or otherwise, or (B) any applicable laws which impose mandatory recoupment, under circumstances set forth in such applicable laws. A-15 7. Effect of Change in Control. Except as otherwise provided in the applicable Award Agreement, in another agreement with the Participant, or as otherwise set forth in writing, upon the occurrence of a Change in Control, the following provisions shall apply to outstanding Awards: (a) Immediately prior to the occurrence of such Change in Control, in each case with the exception of Performance Shares, Performance Units, Performance Cash Awards and other Awards that vest based on the achievement of performance criteria, all outstanding Restricted Shares, Restricted Share Units, Other Share-Based Awards and Dividend Equivalents shall be deemed to have vested, and all Shares and/or cash subject to such Awards shall be delivered; and one or both of the two (2) actions described below in Sections 7(a)(i) and 7(a)(ii) shall be taken: (i) At least fifteen (15) days prior to the scheduled consummation of such Change in Control, all Options and SARs outstanding hereunder shall become immediately exercisable and shall remain exercisable for a period of fifteen (15) days. Any exercise of an Option or SAR during this fifteen (15)-day period shall be conditioned upon the consummation of the applicable Change in Control and shall be effective only immediately before the consummation thereof, and upon consummation of such Change in Control, the Plan and all outstanding but unexercised Options and SARs shall terminate, with or without consideration (including, without limitation, consideration in accordance with clause (2) below) as determined by the Committee in its sole discretion. The Committee shall send notice of an event that shall result in such a termination to all Persons who hold Options and SARs not later than the time at which the Company gives notice thereof to its stockholders. (ii) The Committee may elect, in its sole discretion, to cancel any outstanding Awards of Options, SARs, Restricted Shares, Restricted Share Units, Other Share-Based Awards and/or Dividend Equivalents and pay or deliver, or cause to be paid or delivered, to the holder thereof an amount in cash or Capital Stock having a value (as determined by the Committee acting in good faith), in the case of Restricted Shares, Restricted Share Units, Other Share-Based Awards and Dividend Equivalents (for Shares subject thereto), equal to the formula or fixed price per share paid to holders of Shares pursuant to such Change in Control and, in the case of Options or SARs, equal to the product of the number of Shares subject to such Options or SARs multiplied by the amount, if any, by which (x) the formula or fixed price per share paid to holders of Shares pursuant to such transaction exceeds (y) the Option Price or SAR Price applicable to such Options or SARs. For the avoidance of doubt, if the formula or fixed price per share paid to holders of Shares pursuant to such transaction is equal to or less than the Option Price or SAR Price applicable to a given Option or SAR, then such Option or SAR may be cancelled without payment therefore. (b) For Performance Shares, Performance Units, Performance Cash Awards and any other Awards that vest based on the achievement of performance criteria, if less than half of the Performance Period has lapsed, such Awards shall be treated as though target performance has been achieved. If at least half of the Performance Period has lapsed, actual performance to date shall be determined as of a date reasonably proximal to the date of consummation of the Change in Control as determined by the Committee in its sole discretion, and that level of performance thus determined shall be treated as achieved immediately prior to occurrence of the Change in Control. For purposes of the preceding sentence, if, based on the discretion of the Committee, actual performance is not determinable, Performance Shares, Performance Units, Performance Cash Awards and any other Awards that vest based on the achievement of performance criteria shall be treated as though target performance has been achieved. After application of this Section 7(b), if any Awards arise from application of this Section 7(b), such Awards shall be settled under the applicable provision of Section 7(a). A-16 8. Parachute Limitations. (a) If any Participant is a Disqualified Individual, then, notwithstanding any other provision of the Plan or of any Other Agreement to the contrary and notwithstanding any Benefit Arrangement, any right of the Participant to any exercise, vesting, payment, or benefit under the Plan shall be reduced or eliminated: (i) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for the Participant under the Plan, all Other Agreements, and all Benefit Arrangements, would cause any exercise, vesting, payment, or benefit to the Participant under the Plan to be considered a Parachute Payment; and (ii) if, as a result of receiving such Parachute Payment, the aggregate after-tax amounts received by the Participant from the Company under the Plan, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by the Participant without causing any such payment or benefit to be considered a Parachute Payment. (b) Except as required by Code Section 409A or to the extent that Code Section 409A permits discretion, the Committee shall have the right, in the Committee’s sole discretion, to designate those rights, payments, or benefits under the Plan, all Other Agreements, and all Benefit Arrangements that should be reduced or eliminated so as to avoid having such rights, payments, or benefits be considered a Parachute Payment; provided, however, to the extent any payment or benefit constitutes deferred compensation under Code Section 409A, in order to comply with Code Section 409A, the Company shall instead accomplish such reduction by first reducing or eliminating any cash payments (with the payments to be made furthest in the future being reduced first), then by reducing or eliminating any accelerated vesting of Performance Shares, Performance Units or Performance Cash Awards, then by reducing or eliminating any accelerated vesting of Options or SARs, then by reducing or eliminating any accelerated vesting of Restricted Shares, Restricted Share Units, then by reducing or eliminating any other remaining Parachute Payments. 9. General Provisions. (a) Compliance with Legal and Trading Requirements. The Plan, the granting and exercising of Awards thereunder, and the other obligations of the Company under the Plan and any Award Agreement, shall be subject to all applicable federal and state laws, rules and regulations, and to such approvals by any regulatory or governmental agency as may be required. The Company, in its discretion, may postpone the issuance or delivery of Shares under any Award until completion of such stock exchange or market system listing or registration or qualification of such Shares or other required action under any state or federal law, rule or regulation as the Company may consider appropriate, and may require any Participant to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of Shares in compliance with applicable laws, rules and regulations. No provisions of the Plan shall be interpreted or construed to obligate the Company to register any Shares under federal or state law. The Shares issued under the Plan may be subject to such other restrictions on transfer as determined by the Committee. (b) No Right to Continued Employment or Service. Neither the Plan nor any action taken thereunder shall be construed as giving any employee, consultant or director the right to be retained in the employ or service of the Company or any of its Subsidiaries or Affiliates, nor shall it interfere in any way with the right of the Company or any of its Subsidiaries or Affiliates to terminate any employee’s, consultant’s or director’s employment or service at any time. A-17 (c) Taxes. The Company or any Subsidiary or Affiliate is authorized to withhold from any Award granted, any payment relating to an Award under the Plan, including from a distribution of Shares, or any payroll or other payment to an Eligible Person, amounts of withholding and other taxes due in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Eligible Persons to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Shares or other property and to make cash payments in respect thereof in satisfaction of an Eligible Person’s tax obligations. Notwithstanding the foregoing, the maximum number of Shares that may be withheld from any Award to satisfy any federal, state, or local tax withholding requirements upon the exercise, vesting, or lapse of restrictions applicable to any Award or payment of Shares pursuant to such Award, as applicable, may not exceed such number of Shares having a Fair Market Value equal to the minimum statutory amount required by the Company or the applicable Subsidiary or Affiliate to be withheld and paid to any such federal, state, or local taxing authority with respect to such exercise, vesting, lapse of restrictions, or payment of Shares, or such greater amount as may be permitted under applicable accounting standards. (d) Changes to the Plan and Awards. The Board may amend, alter, suspend, discontinue, or terminate the Plan or the Committee’s authority to grant Awards under the Plan without the consent of shareholders of the Company or Participants, except that any such amendment or alteration as it applies to ISOs shall be subject to the approval of the Company’s shareholders to the extent such shareholder approval is required under Section 422 of the Code; provided, however, that, without the consent of an affected Participant, no amendment, alteration, suspension, discontinuation, or termination of the Plan may materially and adversely affect the rights of such Participant under any Award theretofore granted to him or her. Subject to the limitation on repricing in Section 3(e), the Committee may waive any conditions or rights under, amend, modify or supplement the terms of, or amend, alter, suspend, discontinue or terminate, any Award theretofore granted, prospectively or retrospectively, which authority shall include the authority, in order to effectuate the purposes of the Plan but without amending the Plan, to make Awards or to modify outstanding Awards made to Eligible Persons who are foreign nationals or who are employed outside the United States to reflect differences in local law, tax policy, or custom; provided, however, that, without the consent of a Participant, no amendment, alteration, suspension, discontinuation or termination of any Award may materially and, adversely affect the rights of such Participant under any Award theretofore granted to him or her. (e) No Rights to Awards; No Shareholder Rights. No Eligible Person or employee shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons and employees. No Award shall confer on any Eligible Person any of the rights of a shareholder of the Company unless and until Shares are duly issued or transferred to the Eligible Person in accordance with the terms of the Award. (f) Unfunded Status of Awards. The Plan is intended to constitute an ‘‘unfunded’’ plan for incentive compensation. With respect to any payments not yet made to a Participant pursuant to an Award, nothing contained in the Plan or any Award shall give any such Participant any rights that are greater than those of a general creditor of the Company; provided, however, that the Committee may authorize the creation of trusts or make other arrangements to meet the Company’s obligations under the Plan to deliver cash, Shares, other Awards, or other property pursuant to any Award, which trusts or other arrangements shall be consistent with the ‘‘unfunded’’ status of the Plan unless the Committee otherwise determines with the consent of each affected Participant. (g) Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board nor its submission to the shareholders of the Company for approval shall be construed as creating any limitations on A-18 the power of the Board to adopt such other incentive arrangements as it may deem desirable, including, without limitation, the granting of options and other awards otherwise than under the Plan, and such arrangements may be either applicable generally or only in specific cases. (h) Not Compensation for Benefit Plans. No Award payable under this Plan shall be deemed salary or compensation for the purpose of computing benefits under any benefit plan or other arrangement of the Company for the benefit of its employees, consultants or directors unless the Company shall determine otherwise. (i) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional Shares or whether such fractional Shares or any rights thereto shall be forfeited or otherwise eliminated. (j) Section 409A of the Code. The Plan is intended to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan will be interpreted and administered to be in compliance with Code Section 409A. Any payments described in the Plan that are due within the Short-Term Deferral Period will not be treated as deferred compensation unless applicable laws require otherwise. Notwithstanding any provision of the Plan to the contrary, to the extent required to avoid accelerated taxation and tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Plan during the six (6)-month period immediately following the Participant’s Separation from Service will instead be paid on the first payroll date after the six (6)-month anniversary of the Participant’s Separation from Service (or the Participant’s death, if earlier). Furthermore, notwithstanding anything in the Plan to the contrary, in the case of an Award that is characterized as deferred compensation under Code Section 409A, and pursuant to which settlement and delivery of the cash or Shares subject to the Award is triggered based on a Change in Control, in no event will a Change in Control be deemed to have occurred for purposes of such settlement and delivery of cash or Shares if the transaction is not also a ‘‘change in the ownership or effective control of’’ the Company or ‘‘a change in the ownership of a substantial portion of the assets of’’ the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder). If an Award characterized as deferred compensation under Code Section 409A is not settled and delivered on account of the provision of the preceding sentence, the settlement and delivery shall occur on the next succeeding settlement and delivery triggering event that is a permissible triggering event under Code Section 409A. No provision of this Section shall in any way affect the determination of a Change in Control for purposes of vesting in an Award that is characterized as deferred compensation under Code Section 409A. Notwithstanding the foregoing, neither the Company nor the Committee will have any obligation to take any action to prevent the assessment of any excise tax or penalty on any Participant under Code Section 409A, and neither the Company or an Affiliate nor the Board or the Committee will have any liability to any Participant for such tax or penalty. (k) Governing Law. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award Agreement shall be determined in accordance with the laws of the State of Delaware without giving effect to principles of conflict of laws. (l) Effective Date; Plan Termination. The Plan was approved by the Board on September 25, 2015, subject to approval by stockholders of the Company. The Plan shall become effective as of the Effective Date. The Plan shall terminate as to future awards on the date which is ten (10) years after the Effective Date. (m) Titles and Headings. The titles and headings of the sections in the Plan are for convenience of reference only. In the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. A-19 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July 31, 2015 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF or 1934 For the transition period from to Commission File Number: 001-09614 Vail Resorts, Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation or organization) 51-0291762 (I.R.S. Employer Identification No.) 390 Interlocken Crescent Broomfield, Colorado (Address of principal executive offices) 80021 (Zip Code) (303) 404-1800 (Registrant’s telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock, $0.01 par value Name of each exchange on which registered New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None (Title of class) 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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T 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 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 Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Accelerated filer Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based on the closing price of $87.76 per share as reported on the New York Stock Exchange Composite Tape on January 30, 2015 (the last business day of the registrant’s most recently completed second fiscal quarter) was $3,160,590,658. As of September 23, 2015, 36,546,790 shares of Common Stock were outstanding. Portions of the registrant’s definitive Proxy Statement for its 2015 Annual Meeting of Stockholders to be filed with the Securities and Exchange Commission within 120 days of July 31, 2015 are incorporated by reference herein into Part III, Items 10 through 14, of this Annual Report. DOCUMENTS INCORPORATED BY REFERENCE 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 Accounting 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. Item 15. Exhibits, Financial Statement Schedules. PART IV 3 21 29 30 32 32 33 34 37 57 F- 1 58 58 58 58 58 59 59 59 60 1 FORWARD-LOOKING STATEMENTS Except for any historical information contained herein, the matters discussed in this Annual Report on Form 10-K (this “Form 10-K”) contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. These forward-looking statements are identified by their use of terms and phrases such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward- looking statements are reasonable, we cannot assure you that such plans, intentions or expectations will be achieved. Important factors that could cause actual results to differ materially from our forward-looking statements include, but are not limited to: • • • • • • • • • • • • • • • • • • • • • • prolonged weakness in general economic conditions, including adverse effects on the overall travel and leisure related industries; unfavorable weather conditions or natural disasters; willingness of our guests to travel due to terrorism, the uncertainty of military conflicts or outbreaks of contagious diseases, and the cost and availability of travel options; adverse events that occur during our peak operating periods combined with the seasonality of our business; competition in our mountain and lodging businesses; high fixed cost structure of our business; our ability to fund resort capital expenditures; our reliance on government permits or approvals for our use of federal land or to make operational and capital improvements; risks related to federal, state, local and foreign government laws, rules and regulations; risks related to our reliance on information technology; our failure to maintain the integrity of our customer or employee data; adverse consequences of current or future legal claims; a deterioration in the quality or reputation of our brands, including from the risk of accidents at our mountain resorts; our ability to hire and retain a sufficient seasonal workforce; risks related to our workforce, including increased labor costs; loss of key personnel; our ability to successfully integrate acquired businesses or future acquisitions; our ability to realize anticipated financial benefits from Park City and Canyons; fluctuations in foreign currency exchange rates, in particular the Australian Dollar; impairments or write downs of our assets; changes in accounting estimates and judgments, accounting principles, policies or guidelines; and a materially adverse change in our financial condition. All forward-looking statements attributable to us or any persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected. Given these uncertainties, users of the information included in this Form 10-K, including investors and prospective investors, are cautioned not to place undue reliance on such forward-looking statements. Actual results may differ materially from those suggested by the forward-looking statements that we make for a number of reasons including those described in Part I, Item 1A, “Risk Factors” of this Form 10-K. All forward-looking statements are made only as of the date hereof. Except as may be required by law, we do not intend to update these forward- looking statements, even if new information, future events or other circumstances have made them incorrect or misleading. 2 PART I ITEM 1. BUSINESS General Vail Resorts, Inc., together with its subsidiaries, is referred to throughout this document as “we,” “us,” “our” or the “Company.” Vail Resorts, Inc., a Delaware corporation, was organized as a holding company in 1997 and operates through various subsidiaries. Our operations are grouped into three business segments: Mountain, Lodging and Real Estate, which represented approximately 79%, 18% and 3%, respectively, of our net revenue for our fiscal year ended July 31, 2015 (“Fiscal 2015”). In Fiscal 2015 our Mountain segment operated ten world-class mountain resort properties (including Perisher Ski Resort acquired on June 30, 2015) and two urban ski areas, as well as ancillary services, primarily including ski school, dining and retail/rental operations. Our Lodging segment owns and/or manages a collection of luxury hotels under our RockResorts brand, as well as other strategic lodging properties, and a large number of condominiums located in proximity to our mountain resorts, certain National Park Service ("NPS") concessionaire properties, including Grand Teton Lodge Company (“GTLC”), which operates destination resorts at Grand Teton National Park; Colorado Mountain Express (“CME”), a Colorado resort ground transportation company; and, mountain resort golf courses. Collectively, the Mountain and Lodging segments are considered the Resort segment. Our Real Estate segment owns and develops real estate in and around our resort communities. For financial information and other information about the Company’s segments, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Item 8. “Financial Statements and Supplementary Data” below. Mountain Segment Our portfolio of world-class mountain resorts and urban ski areas includes: • Breckenridge Ski Resort (“Breckenridge”) - the single most visited mountain resort in the United States for the 2014/2015 ski season with five interconnected peaks offering an expansive variety of terrain for every skill level, including the recent addition of Peak 6 which provides access to above tree line intermediate and expert terrain, and progressive and award-winning terrain parks. The Town of Breckenridge is well known for its historic town and vibrant nightlife. • Vail Mountain (“Vail Mountain”) - the second most visited mountain resort in the United States for the 2014/2015 ski season. Vail Mountain offers some of the most expansive and varied terrain in North America with approximately 5,300 skiable acres including seven world renowned back bowls and the resort's rustic Blue Sky Basin. • Keystone Resort (“Keystone”) - the third most visited mountain resort in the United States for the 2014/2015 ski season and home to the highly renowned A51 Terrain Park, as well as the largest area of night skiing in Colorado. Keystone also offers guests a unique skiing opportunity through guided snow cat ski tours accessing five bowls. Keystone is a premier destination for families with its “Kidtopia” program focused on providing activities for kids on and off the mountain. • Beaver Creek Resort (“Beaver Creek”) - the fifth most visited mountain resort in the United States for the 2014/2015 ski season. Beaver Creek is a European-style resort with multiple villages and also includes a world renowned children's ski school program focused on providing a first-class experience with unique amenities such as a dedicated children's gondola. Beaver Creek also annually hosts the only North American men's World Cup downhill races, and with Vail Mountain hosted the 2015 FIS World Alpine Ski Championships. • Park City Mountain Resort ("Park City") - acquired on September 11, 2014, is located in the heart of historic Park City, Utah, one of the country's great ski destinations. Park City offers terrain for every type of skier and snowboarder on over 3,300 acres including manicured groomed runs, bowls and some of the industry's most progressive terrain parks and half pipes. Park City’s location provides easy access to outstanding lodging, dining and shopping. • Canyons Resort ("Canyons") - the largest mountain resort in Utah offering over 4,000 skiable acres and featuring a modern base area located less than 35 miles from the Salt Lake City International Airport and adjacent to the historic 3 downtown of Park City with all of its distinctive restaurants and nightlife. The resort offers guests an outstanding ski experience with fine dining, ski school, retail and lodging. In Fiscal 2015, we announced a $50 million transformation plan to connect Park City and Canyons which will create the largest ski resort by acreage in the United States with more than 7,300 acres of skiable terrain. We began implementing our planned upgrades to Park City in Summer 2015 and are in the process of installing an eight- passenger gondola connecting Park City and Canyons, upgrading two chairlifts, and making major on-mountain restaurant improvements. The planned upgrades are expected to be completed by the start of the 2015/2016 ski season and we will operate the two resorts as one unified branded mountain resort under the name “Park City.” The Canyons base area will now be known as “Canyons Village” at Park City. • Heavenly Mountain Resort (“Heavenly”) - located near the South Shore of Lake Tahoe with over 4,800 skiable acres, straddling the border of California and Nevada, offers unique and spectacular views of Lake Tahoe and boasts the largest snowmaking capacity in the Lake Tahoe region. Heavenly offers great nightlife, including its proximity to several casinos. • Northstar Resort (“Northstar”) - the premier luxury mountain resort destination near Lake Tahoe, offers premium lodging, a vibrant base area and over 3,000 skiable acres. Northstar’s village features high-end shops and restaurants, a conference center and a 9,000 square-foot skating rink. • Kirkwood Mountain Resort (“Kirkwood”) - located southwest of Lake Tahoe, offering a unique location atop the Sierra Crest. Kirkwood is recognized for offering some of the best high alpine advanced terrain in North America with 2,000 feet of vertical drop and over 2,300 acres of terrain. • Perisher Ski Resort ("Perisher") - acquired on June 30, 2015, is located in New South Wales, Australia, and is the largest and most visited ski resort in Australia and the Southern Hemisphere. Perisher provides accessibility, significant lodging and the market’s most skiable acreage for the country's largest cities, including Sydney, Melbourne, Adelaide, Canberra and Brisbane. Perisher offers over 3,000 skiable acres on seven peaks and includes the resort areas known as Perisher Valley, Smiggin Holes, Blue Cow and Guthega, along with ski school, lodging, food and beverage, retail/rental and transportation operations. • Urban Ski Areas - Afton Alps Ski Area ("Afton Alps") is the largest ski area near a major city in the Midwest (33 miles from the Minneapolis/St. Paul metropolitan area) and offers 48 trails on 300 skiable acres, with night skiing, riding and tubing. Mount Brighton Ski Area ("Mt. Brighton") is located 43 miles from Detroit and offers 26 trails on 130 skiable acres offering night skiing and riding. We have made significant upgrades at both Afton Alps and Mt. Brighton to enhance the ski and base area experience for skiers and riders in each market. The following discussion of our business excludes the recent acquisition of Perisher, unless otherwise noted. For additional information, including the total revenue and estimated fair value of assets acquired and liabilities assumed related to Perisher, see Note 5, Acquisitions, of the Notes to Consolidated Financial Statements. Vail Mountain, Beaver Creek, Breckenridge and Keystone, all located in the Colorado Rocky Mountains; Park City and Canyons, located in Utah; and, Heavenly, Northstar and Kirkwood, located in the Lake Tahoe region of California/Nevada, are year-round mountain resorts that provide a comprehensive resort experience to a diverse clientele with an attractive demographic profile. Each resort offers a broad complement of winter and summer recreational activities, including skiing, snowboarding, snowshoeing, snowtubing, sightseeing, mountain biking, guided hiking, zip lines, challenge ropes courses, alpine slide and mountain coaster, children's activities and other recreational activities. Our Mountain segment derives revenue through the sale of lift tickets and season passes, as well as a comprehensive offering of amenities available to guests, including ski and snowboard lessons, equipment rentals and retail merchandise sales, a variety of dining venues, private club operations and other winter and summer recreational activities. In addition to providing extensive guest amenities, we also lease some of our owned and leased commercial space to third party operators to add unique restaurants and retail stores to the mix of amenities at the base of our resorts. Ski Industry/Market There are approximately 760 ski areas in North America and approximately 470 in the United States, ranging from small ski area operations that service day skiers to large resorts that attract both day skiers and destination resort guests looking for a comprehensive vacation experience. One of the primary ski industry statistics for measuring performance is “skier visit,” which 4 represents a person utilizing a ticket or pass to access a mountain resort for any part of one day during a winter ski season, and includes both paid and complimentary access. During the 2014/2015 ski season, combined skier visits for all ski areas in the United States were approximately 53.6 million and all North American skier visits were approximately 70.8 million. Our U.S. mountain resorts and urban ski areas had approximately 8.2 million skier visits during the 2014/2015 ski season, or approximately 15.3% of United States skier visits, and an approximate 11.6% share of the North American skier visits. Our largest presence is in the Rocky Mountain region, including our Colorado and Utah mountain resorts, and the Lake Tahoe region. Our Rocky Mountain region mountain resorts appeal to both day skiers and destination guests due to the Colorado resorts' proximity to Colorado's Front Range (Denver/Colorado Springs/Boulder metropolitan areas) and the Utah resorts' proximity to the Salt Lake City metropolitan area; accessibility from several airports, including Denver International Airport and Eagle County Airport in Colorado and the Salt Lake City International Airport in Utah; and, the wide range of amenities available at each resort, as well as within the proximate base areas/villages and towns. The Rocky Mountain region has 94 ski areas. All ski areas within the Rocky Mountain region combined recorded approximately 20.8 million skier visits for the 2014/2015 ski season with skier visits at our Rocky Mountain region mountain resorts totaling 6.7 million, or approximately 32.2% of all Rocky Mountain region skier visits for the 2014/2015 ski season. Lake Tahoe, which straddles the border of California and Nevada, is a major skiing destination less than 100 miles from Sacramento and Reno and approximately 200 miles from San Francisco, drawing skiers from the entirety of California and Nevada and making it a convenient destination for both day skiers and destination guests. Heavenly located near the South Shore of Lake Tahoe, Northstar located near the North Shore of Lake Tahoe, and Kirkwood located about 35 miles southwest of South Lake Tahoe are popular year-round vacation destinations, featuring outstanding winter sports offerings and extensive summer attractions. Heavenly, Northstar and Kirkwood are proximate to both the Reno/Tahoe International Airport and the Sacramento International Airport. California and Nevada collectively have 33 ski areas. Our Lake Tahoe resorts had 1.2 million skier visits for the 2014/2015 ski season, which was approximately 26.7% of California's and Nevada's approximately 4.5 million total skier visits for the 2014/2015 ski season. Competition There is limited opportunity for development of new ski areas due to the limited private lands on which ski areas can be built, the difficulty in obtaining the appropriate governmental approvals to build on public lands and the significant capital needed to construct the necessary infrastructure. As such, there have been virtually no new major resorts in North America for more than 30 years, which has and should continue to allow the best positioned resorts, including all of our resorts, to benefit from future industry growth. Our resorts compete with other major destination mountain resorts, including Aspen/Snowmass, Copper Mountain, Deer Valley, Squaw Valley USA, Steamboat, Whistler Blackcomb and Winter Park, as well as other ski areas in Colorado, California, Nevada, Utah, the Pacific Northwest and Southwest, and other destination ski areas worldwide and non- ski related vacation options and destinations. While the ski industry has performed well in recent years in terms of number of skier visits, with the six best seasons occurring in the past 10 years for United States visitation, a particular ski area's growth is also largely dependent on either attracting skiers away from other resorts, generating more revenue per skier visit and/or generating more visits from each skier. Better capitalized mountain resorts, including our mountain resorts, are expanding their offerings, as well as enhancing the quality and experience by adding new high speed chairlifts, gondolas, terrain parks, state of the art grooming machines, expanded terrain, on-mountain dining venues, as well as amenities at the base areas of the resorts, including dining, retail and lodging, all of which are aimed at increasing guest visitation and revenue per skier visit. Our premier resorts and business model differentiate our Company from the rest of the ski industry. We have iconic, branded mountain resorts in three important ski destinations in Colorado, Utah and Lake Tahoe. Through our sales of season passes, we provide our guests with a strong value proposition in return for guests committing to ski at our resorts prior to, or very early into the ski season, which we believe attracts more guests to our resorts. We believe we invest in more capital improvements than our competitors and we create synergies by operating multiple resorts, which enhances our profitability. Additionally, our mountain resorts located in the United States, with the exception of Kirkwood, typically rank in the 25 most visited ski resorts in the United States, and most of our mountain resorts consistently rank in the top 25 ranked ski resorts in North America according to industry surveys, which we attribute to our mountain resorts' ability to provide a high-quality experience. Summer tourism in Colorado, Utah and Lake Tahoe exceeds winter tourism, which provides for a strong summer business opportunity. Our mountain resorts offer non-ski related attractions such as sightseeing, mountain biking, guided hiking, 4x4 Jeep tours, zip line tours, challenge ropes courses, alpine slide and coaster, children's activities and other recreational activities. 5 In the fall of 2011, the Ski Area Recreational Opportunities Enhancement Act was enacted into law which allows our mountain resorts on USDA Forest Service ("Forest Service") land to offer more summer-season recreational opportunities. We have a comprehensive summer activities plan for Vail Mountain, Breckenridge, and Heavenly, that includes a number of new activities, including zip lines, challenge ropes courses, tubing, mountain excursions, canopy tours and Forest Flyers (i.e. alpine coasters). At Vail Mountain, we installed two challenge ropes courses and zip lines. Additionally, zip lines have been completed at Breckenridge and Heavenly. Smaller scale improvements are planned for Beaver Creek, Keystone and Northstar. These new activities are already popular with summer travelers and will introduce a new guest demographic to our mountain resorts. The ski industry statistics stated in this section have been derived from data published by Colorado Ski Country USA, Canadian Ski Council, Kottke National End of Season Survey 2014/2015 (the “Kottke Survey”) and other industry publications. Our Competitive Strengths All of our mountain resorts maintain the distinction of competing effectively as both market leaders and quality leaders. The following factors contribute directly to each resort's success: Exceptional mountain experience -- • World-Class Mountain Resorts and Integrated Base Resort Areas All of our mountain resorts offer a multitude of skiing and snowboarding experiences for the beginner, intermediate, advanced and expert levels. Each mountain resort is also fully integrated into expansive resort base areas offering a broad array of lodging, dining, retail, nightlife and other amenities to the resort's guests, some of which we own or manage. • Snow Conditions Our mountain resorts are located in areas that generally receive significantly higher than average snowfall compared to most other ski resort locations in the United States. Our resorts in the Rocky Mountains of Colorado and Utah and the Sierra Nevada Mountains in Lake Tahoe receive average yearly snowfall between 20 and 39 feet. Average yearly snowfall in Australia is significantly lower than in the United States, although Perisher generally receives higher average yearly snowfall compared to other Australian alpine ski resorts due to its location in the Australian Alps and the elevation of its terrain. Even in these abundant snowfall areas, we have significant snowmaking systems that can help provide a more consistent experience, especially in the early season. Additionally, we provide several hundred acres of groomed terrain at each of our mountain resorts with extensive fleets of snow grooming equipment. • Lift Service We systematically upgrade our lifts and put in new lifts to increase uphill capacity and streamline skier traffic to maximize the guest experience. In the past several years, we have installed several high-speed chairlifts and gondolas across our mountain resorts, including a new high-speed, state-of-the-art combination gondola and chairlift replacing the Centennial Express Lift at Beaver Creek; a new high-speed, six-passenger chairlift replacing the Colorado SuperChair at Breckenridge, which is the primary chairlift serving the critical Peak 8 base area; a new high-speed, six- passenger chairlift and a new four-passenger chairlift to access the Peak 6 area in Breckenridge; a state-of-the-art ten passenger gondola (Gondola 1) at Vail, replacing a four-passenger high-speed chairlift; a new high-speed, six- passenger chairlift servicing mid-Vail, replacing a four-passenger chairlift; and, a four-passenger high-speed chairlift servicing Vail Mountain's back bowls. Additionally, for the 2015/2016 ski season we are installing an eight-passenger gondola connecting Park City and Canyons, upgrading the King Con chairlift from a four-passenger to a six-passenger high-speed chairlift, and upgrading the Motherlode chairlift from a fixed-grip triple to a four-passenger high-speed detachable chairlift at Park City; and, installing a six-passenger high-speed chairlift to upgrade Vail Mountain's Avanti Chair (Chair 2). • Terrain Parks Our mountain resorts and urban ski areas are committed to leading the industry in terrain park design, education and events for the growing segment of freestyle skiers and snowboarders. Each of our mountain resorts has multiple terrain parks that include progressively-challenging features. These park structures, coupled with freestyle ski school programs, promote systematic learning from basic to professional skills. 6 Extraordinary service and amenities -- • Commitment to the Guest Experience Our focus is to provide quality service at every level of the guest experience. Prior to arrival at our mountain resorts, guests can receive personal assistance through our full-service, in-house travel center and through our comprehensive websites to book desired lodging accommodations, lift tickets, ski school lessons, equipment rentals and travel arrangements. Upon arrival, our resort staff serve as ambassadors to engage guests, answer questions and create a customer focused environment. In addition, we offer guests what we believe is the industry leading EpicMix application. EpicMix is an online and mobile application that, through radio frequency technology, captures a guest's activity on the mountain (e.g. number of ski days, vertical feet skied, and chairlift activity) and allows a guest to share his or her experience and accomplishments with family and friends on social networks. Since the initial launch of our EpicMix technology, we have expanded the offering to include: • EpicMix Photo - EpicMix Photo provides professional photos and allows guests to take and share photos on social networks; • EpicMix Racing - EpicMix Racing allows our guests a new way to experience ski racing at our mountain resorts/ ski areas and compare their race times to ski racing great, Lindsey Vonn, as well as compete against racers from all over our mountain resorts/ski areas and track and share all of their accomplishments; • EpicMix Academy - EpicMix Academy allows our ski school instructors to certify the attainment of certain skills and ski levels for any of the students in their classes and allows students to earn permanent recognition and review their accomplishments; • EpicMix Guide - EpicMix Guide uses guest input including desired resort; starting location at the resort; terrain difficulty desired; and, length of time available, to generate customized, step-by-step navigational guides to experience our mountains in Colorado, Utah, and Tahoe. • EpicMix Time - EpicMix Time will allow guests to access real-time lift line wait times enabling them to better navigate the mountain and make the most out of their ski and ride experience. EpicMix Time will be available during the 2015/2016 ski season at our four Colorado mountain resorts, and at our other mountain resorts in future ski seasons. We also solicit guest feedback through a variety of surveys and results, which are used to ensure high levels of customer satisfaction, understand trends and develop future resort programs and amenities. • Season Pass Products We offer a variety of season pass products for all of our mountain resorts and urban ski areas that are marketed towards both out-of-state and international (“Destination”) guests and in-state and local (“In-state”) guests. Our season pass products are available for purchase predominately during the period prior to the start of the ski season, offering our guests a better value in exchange for their commitment to ski at our resorts before the season begins. As such, our season pass program drives strong customer loyalty, mitigates exposure to more weather sensitive guests leading to greater revenue stability, and allows us to capture valuable guest data. Additionally, our season pass customers typically ski more days each season than those guests who do not buy season passes, which leads to additional ancillary spending. Season pass products generated approximately 40% of our total lift revenue for the 2014/2015 ski season. In addition, our season pass products attract new guests to our mountain resorts and urban ski areas. Sales of season pass products are a key component of our overall Mountain segment revenue and helps create strong synergies among our mountain resorts. Our season pass products range from providing access to one or a combination of our mountain resorts and urban ski areas to our Epic Pass which provides unrestricted access to all our mountain resorts and urban ski areas. For the 2015/2016 ski season, we are providing, among others, the following season pass product options to our guests: • Epic Pass - The Epic Pass provides unlimited and unrestricted access to all of our operated mountain resorts and urban ski areas, Arapahoe Basin, as well as limited access to Verbier in Switzerland; • Epic Local Pass - The Epic Local Pass provides unlimited, unrestricted skiing or riding at Breckenridge, Keystone, Afton Alps, Mt. Brighton and Arapahoe Basin with limited restrictions at Park City, Canyons, 7 Heavenly, Northstar and Kirkwood; it also includes a total of ten days at Vail and Beaver Creek with holiday restrictions; • Epic 7-Day - The Epic 7-Day provides a total of seven unrestricted days valid at Vail, Beaver Creek, Breckenridge, Keystone, Park City, Canyons, Heavenly, Northstar, Kirkwood and Arapahoe Basin, plus seven days at Afton Alps or Mt. Brighton; • Epic 4-Day - The Epic 4-Day provides a total of four unrestricted days valid at Vail, Beaver Creek, Breckenridge, Keystone, Park City, Canyons, Heavenly, Northstar, Kirkwood and Arapahoe Basin, plus four days at Afton Alps or Mt. Brighton; • Summit Value Pass - The Summit Value Pass provides unlimited skiing or riding at Keystone and Arapahoe Basin with limited restrictions at Breckenridge; • Tahoe Local Pass - The Tahoe Local Pass provides access to Heavenly, Northstar and Kirkwood, with limited holiday restrictions, plus five days at Vail, Beaver Creek, Breckenridge, Keystone, Park City, Canyons or Arapahoe Basin; • Tahoe Value Pass - The Tahoe Value Pass provides access to Heavenly, Kirkwood and Northstar with limited restrictions; and • Perisher Freedom Pass - The Perisher Freedom pass provides unlimited and unrestricted access to Perisher for the 2015 season and access, with limited restrictions, at Breckenridge, Keystone, Park City, Canyons, Heavenly, Northstar, Kirkwood, Afton Alps, Mt. Brighton and Arapahoe Basin; it also includes a total of ten days at Vail and Beaver Creek with holiday restrictions. As part of our continued strategy to drive season pass sales and create a stronger connection between key skier markets and our iconic destination mountain resorts, we acquired Perisher in New South Wales, Australia in June 2015. Australia is an important international market for ski resorts across the Northern Hemisphere, generating an estimated more than 1.0 million skier visits annually to resorts in North America, Japan and Europe. We have re- branded the Perisher Freedom Pass for the 2016 Perisher season, now the Epic Australia Pass, to align the brand with our other season pass products. Additionally, we acquired Afton Alps in Minnesota and Mt. Brighton in Michigan in December 2012, which serve major snow sports markets in the Midwest with more than 468,000 active skiers and snowboarders in the Minneapolis-St. Paul and Detroit metropolitan areas. We believe our strategy increases the value of our season pass products and dramatically enhances the connection between our destination mountain resorts and these key skier markets. • Premier Ski Schools Our mountain resorts are home to some of the highest quality and most widely recognized ski and snowboard schools in the industry. Through a combination of outstanding training and abundant work opportunities, our ski schools have become home to many of the most experienced and credentialed professionals in the business. We complement our instructor staff with state-of-the-art facilities and extensive learning terrain, all with a keen attention to guest needs. We offer a wide variety of adult and child group and private lesson options with a goal of creating lifelong skiers and riders and showcasing to our guests all the terrain our resorts have to offer. • Dining Our resorts provide a variety of quality on-mountain and base village dining venues, ranging from top-rated fine dining restaurants to trailside express food service outlets. We operate approximately 134 dining venues at our nine U.S. mountain resorts and two urban ski areas. • Retail/Rental We have approximately 185 retail/rental locations specializing in sporting goods including ski, snowboard, golf and cycling equipment. In addition to providing a major retail/rental presence at each of our mountain resorts, we also have retail/rental locations throughout the Colorado Front Range and at other Colorado, California and Utah ski resorts, as well as the San Francisco Bay Area, Salt Lake City, Minneapolis and Appleton, Wisconsin. Many of the locations in the Colorado Front Range and in the San Francisco Bay Area also offer prime venues for selling our season pass products. 8 • On-Mountain Activities and Epic Discovery We are a ski industry leader in providing comprehensive destination vacation experiences, including on-mountain activities designed to appeal to a broad range of interests. In addition to our exceptional ski experiences, guests can choose from a variety of non-ski related activities such as snowtubing, snowshoeing, guided snowmobile and scenic cat tours, backcountry expeditions, horse-drawn sleigh rides and high altitude dining. During the summer, on- mountain recreational activities provide guests with a wide array of options including scenic chairlift and gondola rides; mountain biking; horseback riding; hiking; 4x4 Jeep tours; and, our Epic Discovery program at Vail Mountain, Breckenridge and Heavenly. The Epic Discovery program, which will be introduced at Vail and Heavenly in Fiscal 2016, encourages “learn through play” by featuring extensive environmental educational elements interspersed between numerous new fun activities, which consists of zip lines, children's activities, challenge ropes courses, tubing, mountain excursions, and an alpine slide and an alpine coaster. Additionally, we are constructing an alpine coaster and canopy tour at both Vail Mountain and Heavenly, which we expect to be completed and operational in fiscal 2016. • Lodging and Real Estate Quality lodging options are an integral part of providing a complete resort experience. Our 18 owned or managed hotels and resorts proximate to our mountain resorts, including five RockResorts branded properties, and a significant inventory of managed condominium units provide numerous accommodation options for our mountain resort guests. More recently, our real estate efforts have focused on the potential to expand our destination bed base and upgrade our resorts through the sale of land parcels to third-party developers which in turn provides opportunity for the development of condominiums, luxury hotels, parking and commercial space for restaurants and retail shops. Our Lodging and Real Estate segments have and continue to invest in resort related assets and amenities or seek opportunities to expand and enhance the overall resort experience. • Environmental Stewardship and Social Responsibility Environmental stewardship is a core philosophy for us. Our resorts operate in some of the world's greatest natural environments, and we are compelled to care for and conserve them. Through our sustainability program, Epic Promise, we focus on resource conservation, forest health and building stronger local communities through contributions to local non-profits. Our environmental stewardship efforts are diverse and touch nearly every area of our operations. One of the most encompassing programs is our commitment to energy reduction. After reaching an initial goal to reduce our energy consumption by 10%, we have set a new goal of another 10% reduction by 2020. In addition, we have partnered with several organizations to help raise resources for local environmental programs, including the National Forest Foundation, The Tahoe Fund and Mountain Trails Foundation in Park City. We also have an extensive on-mountain recycling program that diverted approximately 45% or our total waste. We encourage our employees to help protect the environment with over 20,000 volunteer hours donated annually. Lastly, our charitable giving focuses on supporting education and youth programs, encouraging innovation in, and implementation of, environmental stewardship practices and enhancing the quality of life in the communities in which we operate. Accessibility from major metropolitan areas-- Our mountain resorts and urban ski areas are well located and easily accessible by both Destination and In-State guests. • Colorado Resorts The Colorado Front Range, with a population of approximately 4.5 million, and growing faster than the national average over the past 10 years, is within approximately 100 miles from each of our Colorado resorts, with access via a major interstate highway. Additionally, our Colorado resorts are proximate to both Denver International Airport and Eagle County Airport. • Utah Resorts The Salt Lake City metropolitan area, with a population of over 1.1 million, is approximately 30 miles from our Utah mountain resorts and is accessible via a major interstate highway. Additionally, the Salt Lake City International Airport is just a two-hour flight from either the Los Angeles International Airport or the San Diego International 9 Airport; which are the two major airports serving the Southern California region that has a population of approximately 23.0 million. • Lake Tahoe Resorts Heavenly, Northstar, and Kirkwood, are proximate to two large California population centers, the Sacramento/Central Valley and the San Francisco Bay Area and draw skiers from throughout California and Nevada. Each of our Lake Tahoe resorts is approximately 100 miles from Sacramento/Central Valley and approximately 200 miles from the San Francisco Bay area via major interstate highways. Additionally, our Lake Tahoe resorts are serviced by the Reno/ Tahoe International Airport, Sacramento International Airport and the San Francisco International Airport. • Urban Ski Areas Afton Alps and Mt. Brighton are located within 50 miles of Minneapolis/St. Paul and Detroit, respectively. This close proximity to major Midwestern skier markets allows guests to visit regularly during the week, including popular night skiing, or on the weekends. Additionally, both cities offer major airports with routine direct flights to Denver, San Francisco and Salt Lake City. Marketing and Sales Our marketing and sales efforts are increasingly oriented around data analytics to drive targeted and personalized marketing to our existing and prospective guests. We capture marketable data on the vast majority of guest transactions through our season pass program, e-commerce platforms including mobile lift ticket sales, the EpicMix application and operational processes at our lift ticket windows. We promote our resorts through customer relationship marketing ("CRM") to targeted audiences via email and direct mail, promotional programs, digital marketing (including social, search and display) and traditional media advertising where appropriate (e.g. targeted print, TV, radio). Additionally, our resorts and the snowsports industry are frequently featured through our OnTheSnow.com and Skiinfo.com websites, which are two of the world's most visited online snowsports portals. We also have marketing programs directed at attracting groups, corporate meetings and convention business. Most marketing efforts drive traffic to our websites, where we provide our guests with information regarding each of our resorts, including services and amenities, reservations information, virtual tours and the opportunity to book/purchase multiple products for their vacations or other visits. We also enter into strategic alliances with companies to enhance the guest in-resort experience and to create opportunities for cross-marketing. Seasonality Ski resort operations are highly seasonal in nature, with a typical ski season in North America beginning in mid-November and running through mid-April. In an effort to partially mitigate the concentration of our revenue in the winter months in the United States, we offer several non-ski related activities such as sightseeing, mountain biking, guided hiking, 4x4 Jeep tours, golf (included in the operations of the Lodging segment) and our Epic Discovery program, which includes zip lines, challenge ropes courses, an alpine slide and coaster, children's activities, tubing and mountain excursions. These activities also help attract destination conference and group business to our resorts in our off-season. In addition, the operating results of Perisher, with its ski season from June through early October, partially counterbalance the concentration of our revenues during this seasonally low period. Lodging Segment Our Lodging segment includes the following operations: • RockResorts -- a luxury hotel management company with a current portfolio of six properties, including four • Company-owned hotels and two managed resort properties with locations in Colorado and Jamaica; Five additional Company-owned hotels, management of the Vail Marriott Mountain Resort & Spa (“Vail Marriott”), Mountain Thunder Lodge, Crystal Peak Lodge, Austria Haus Hotel, Grand Summit Hotel, Silverado Lodge, Sundial Lodge, DoubleTree by Hilton Park City - The Yarrow, and condominium management operations, which are in and around our mountain resorts in the Colorado, Lake Tahoe and Utah regions; • Two NPS concessionaire properties - GTLC, a summer destination resort with three resort properties in the Grand Teton National Park, and Headwaters Lodge & Cabins at Flagg Ranch (“Flagg Ranch”) located between Yellowstone National Park and Grand Teton National Park in Wyoming; • CME -- a resort ground transportation company in Colorado; and • Five Company-owned mountain resort golf courses in Colorado, one owned in Wyoming and one operated in Lake Tahoe, California. 10 The Lodging segment currently includes approximately 5,000 owned and managed hotel rooms and condominium units. Our resort hotels collectively offer a wide range of services to guests. Our portfolio of owned or managed luxury resort hotels and other hotels and properties currently includes: Name RockResorts: The Lodge at Vail The Arrabelle at Vail Square The Pines Lodge The Osprey at Beaver Creek Half Moon One Ski Hill Place Other Hotels and Properties: DoubleTree by Hilton Breckenridge The Keystone Lodge Inn at Keystone Village Hotel Ski Tip Lodge Jackson Lake Lodge Colter Bay Village Jenny Lake Lodge Headwaters Lodge & Cabins at Flagg Ranch Location Vail, CO Vail, CO Beaver Creek, CO Beaver Creek, CO Rose Hall, Jamaica Breckenridge, CO Breckenridge, CO Keystone, CO Keystone, CO Breckenridge, CO Keystone, CO Grand Teton Nat’l Pk., WY Grand Teton Nat’l Pk., WY Grand Teton Nat’l Pk., WY Moran, WY Vail Marriott Mountain Resort & Spa Vail, CO Mountain Thunder Lodge Crystal Peak Lodge Breckenridge, CO Breckenridge, CO Austria Haus Hotel Vail, CO Park City, UT Grand Summit Hotel Park City, UT Silverado Lodge Sundial Lodge Park City, UT DoubleTree by Hilton Park City - The Yarrow Park City, UT Own/Manage Rooms/Units* Own Own Own Own Manage Manage Own Own Own Own Own Concessionaire Contract Concessionaire Contract Concessionaire Contract Concessionaire Contract Manage Manage Manage Manage Manage Manage Manage Manage 164** 84** 71** 47** 383 59*** 208 152 103 60 10 385 166 37 92 344 87 25 25 282 142 114 182 *Rooms/Units excludes approximately 1,800 managed condominium units. **Includes individual owner units that are in a rental program managed by us. ***Includes owned and managed whole ownership units that are in a rental program managed by us. The RockResorts brand was originally created by Laurance S. Rockefeller in 1956 and was purchased by us in December 2001. The RockResorts collection includes luxury hotels influenced by a strong connection to the natural surrounding environment and features award-winning dining, and state-of-the-art spas and fitness centers. The properties incorporate the indigenous environment into the guest experience and feature access to a variety of year-round outdoor activities ranging from skiing to golf. Our lodging strategy seeks to complement and enhance our mountain resort operations through our ownership or management of lodging properties and condominiums proximate to our mountain resorts and selective management of luxury resorts in premier destination locations. 11 In addition to our portfolio of owned or managed luxury resort hotels and other hotels and properties, our lodging business also features a Colorado ground transportation company, CME, which represents the first point of contact with many of our guests when they arrive by air to Colorado. CME offers year-round ground transportation from Denver International Airport and Eagle County Airport to the Vail Valley (locations in and around Vail, Beaver Creek, Avon and Edwards), Aspen (locations in and around Aspen and Snowmass) and Summit County (which includes Keystone, Breckenridge, Copper Mountain, Frisco and Silverthorne) for mountain resort experiences. CME offers four primary types of services; door-to-door shuttle business; point- to-point shuttle business with centralized drop-off at transportation hubs; private chartered vans; and, premier luxury charter vehicles. CME's vehicle fleet consists of approximately 260 vans and luxury SUVs, and transported approximately 395,000 resort guests in Fiscal 2015. Lodging Industry/Market Hotels are categorized by Smith Travel Research, a leading lodging industry research firm, as luxury, upper upscale, upscale, mid-price and economy. The service quality and level of accommodations of our RockResorts' hotels place them in the luxury segment, which represents hotels achieving the highest average daily rates (“ADR”) in the industry, and includes such brands as the Four Seasons, Ritz-Carlton and Starwood's Luxury Collection hotels. Our other hotels are categorized in the upper upscale and upscale segments of the hotel market. The luxury and upper upscale segments consist of approximately 686,000 rooms at approximately 1,900 properties in the United States as of July 2015. For Fiscal 2015, our owned hotels, which include a combination of certain RockResort hotels, as well as other hotels in proximity to our mountain resorts, had an overall ADR of $216.76, a paid occupancy rate of 64.7% and revenue per available room (“RevPAR”) of $140.28, as compared to the upper upscale segment's ADR of $173.36, a paid occupancy rate of 74.1% and RevPAR of $128.44. We believe that this comparison to the upper upscale segment is appropriate as our mix of owned hotels include those in the luxury and upper upscale segments, as well as certain of our hotels that fall in the upscale segment. The highly seasonal nature of our lodging properties generally results in lower average occupancy as compared to the upper upscale segment of the lodging industry. Competition Competition in the hotel industry is generally based on quality and consistency of rooms, restaurant and meeting facilities and services, attractiveness of locations, availability of a global distribution system and price. Our properties compete within their geographic markets with hotels and resorts that include locally-owned independent hotels, as well as facilities owned or managed by national and international chains, including such brands as Four Seasons, Hilton, Hyatt, Marriott, Ritz-Carlton, Starwood's Luxury Collection and Westin. Our properties also compete for convention and conference business across the national market. We believe we are highly competitive in the resort hotel niche for the following reasons: • All of our hotels are located in unique highly desirable resort destinations; • Our hotel portfolio has achieved some of the most prestigious hotel designations in the world, including four properties in our portfolio that are currently rated as AAA 4-Diamond; • Many of our hotels (both owned and managed) are designed to provide a look that feels indigenous to their surroundings, enhancing the guest's vacation experience; • Each of our RockResorts hotels provides the same high level of quality and services, while still providing unique characteristics which distinguish the resorts from one another. This appeals to travelers looking for consistency in quality and service offerings together with an experience more unique than typically offered by larger luxury hotel chains, which has resulted in all six of our RockResort properties being recognized with the TripAdvisor Certificate of Excellence in recent years; • Many of the hotels in our portfolio provide a wide array of amenities available to the guest such as access to world-class ski and golf resorts, spa and fitness facilities, water sports and a number of other outdoor activities, as well as highly acclaimed dining options; • Conference space with the latest technology is available at most of our hotels. In addition, guests at Keystone can use our company-owned Keystone Conference Center, the largest conference facility in the Colorado Rocky Mountain region with more than 100,000 square feet of meeting, exhibit and function space; • We have a central reservations system that leverages off of our mountain resort reservations system and has an online planning and booking platform, offering our guests a seamless and useful way to make reservations at our resorts; and • We actively upgrade the quality of the accommodations and amenities available at our hotels through capital improvements. Capital funding for third-party owned properties is provided by the owners of those properties to maintain standards required by our management contracts. Projects at our owned properties completed over the past several years include extensive refurbishments and upgrades to the DoubleTree by Hilton Breckenridge, renovations of guest rooms and the front lobby at The Lodge at Vail, pool and restaurant (Elway's) upgrades to 12 The Lodge at Vail, guest room renovations at the Keystone Lodge, a restaurant renovation at The Arrabelle at Vail Square, and guest room upgrades at The Pines Lodge. National Park Concessionaire Properties We own GTLC, which is based in the Jackson Hole area in Wyoming and operates within the Grand Teton National Park under a 15-year concessionaire agreement (that expires December 31, 2021) with the NPS. We also own Flagg Ranch, located in Moran, Wyoming and is centrally located between Yellowstone National Park and Grand Teton National Park on the John D. Rockefeller, Jr. Memorial Parkway (the "Parkway"). Flagg Ranch operates under a 15-year concessionaire agreement (that expires October 31, 2026) with the NPS. GTLC also owns Jackson Hole Golf & Tennis Club ("JHG&TC"), located outside Grand Teton National Park near Jackson, Wyoming. GTLC's operations within the Grand Teton National Park and JHG&TC have operating seasons that generally run from June through the end of September. There are 407 areas within the National Park System covering approximately 84 million acres across the United States and its territories. Of the 407 areas, 59 are classified as National Parks. While there are more than 500 NPS concessionaires, ranging from small, privately-held businesses to large corporate conglomerates, we primarily compete with such companies as Aramark Parks & Resorts, Delaware North Companies Parks & Resorts, Forever Resorts and Xanterra Parks & Resorts in retaining and obtaining National Park Concessionaire agreements. The NPS uses “recreation visits” to measure visitation within the National Park System. In calendar year 2014, areas designated as National Parks received approximately 68.9 million recreation visits. The Grand Teton National Park, which spans approximately 310,000 acres, had approximately 2.8 million recreation visits during calendar year 2014, or approximately 4.1% of total National Park recreation visits. Four full service concessionaires provide accommodations within the Grand Teton National Park, including GTLC. GTLC offers three lodging options within the Grand Teton National Park: Jackson Lake Lodge, a full-service, 385-room resort with 17,000 square feet of conference facilities which can accommodate up to 600 people; the Jenny Lake Lodge, a small, rustically elegant retreat with 37 cabins; and, Colter Bay Village, a facility with 166 log cabins, 66 tent cabins, 361 campsites and a 112-space RV park. GTLC offers dining options as extensive as its lodging options, with cafeterias, casual eateries and fine dining establishments. GTLC's resorts provide a wide range of activities for guests to enjoy, including cruises on Jackson Lake, boat rentals, horseback riding, guided fishing, float trips, golf and guided Grand Teton National Park tours. As a result of the extensive amenities offered, as well as the tremendous popularity of the National Park System, GTLC's accommodations within the Grand Teton National Park operate near full capacity during their operating season. Flagg Ranch features a range of lodging options from 92 standard, deluxe and premium cabins and 40 camper cabins, to a 97- space RV park and 34 campsites. Flagg Ranch also offers additional amenities including dining, retail and activities for our guests to enjoy, including horseback riding, guided fishing, float trips and guided Yellowstone National Park and Grand Teton National Park tours. In addition to these summer offerings, Flagg Ranch provides limited winter operations to support Yellowstone National Park snowmobile tours. Marketing and Sales We promote our hotels and lodging properties through marketing and sales programs, which include marketing directly to many of our guests through our digital channels (search, social, and display), promotional programs and print media advertising. We also promote comprehensive vacation experiences through various package offerings and promotions (combining lodging, lift tickets, ski school lessons, ski rental equipment, transportation and dining), all of which are designed to drive traffic to our websites and central reservations call center. Where appropriate, we market our resort properties in conjunction with our mountain resort marketing efforts. Additionally, our individual hotels have active sales forces to generate conference and group business. Seasonality Our lodging business is highly seasonal in nature, with peak seasons primarily in the winter months (with the exception of GTLC, Flagg Ranch, certain managed properties and mountain resort golf operations). We actively promote our extensive conference facilities and have added more off-season activities to help offset the seasonality of our lodging business. Additionally, we operate seven golf courses: The Beaver Creek Golf Club, The Keystone Ranch Golf Course, The River Course at Keystone, JHG&TC near Jackson, Wyoming, The Northstar Resort Golf Course and the Tom Fazio and Greg Norman courses at Red Sky Ranch near the Beaver Creek Resort. In 2015, The Tom Fazio course at Red Sky Ranch was ranked number 69 out of the Top 100 Resort Courses by Golfweek Magazine. 13 Real Estate Segment We have extensive holdings of real property at our mountain resorts primarily throughout Summit and Eagle Counties in Colorado. Our real estate operations, through Vail Resorts Development Company (“VRDC”), a wholly-owned subsidiary, include planning, oversight, infrastructure improvement, development, marketing and sale of our real property holdings. In addition to the cash flow generated from real estate development sales, these development activities benefit our Mountain and Lodging segments by (1) creating additional resort lodging and other resort related facilities and venues (primarily restaurants, spas, commercial space, private mountain clubs, skier services facilities and parking structures) that provide us with the opportunity to create new sources of recurring revenue, enhance the guest experience and expand our destination bed base; (2) controlling the architectural themes of our resorts; and, (3) expanding our property management and commercial leasing operations. The principal activities of our Real Estate segment include the marketing and selling of remaining condominium units available for sale, which primarily relate to The Ritz-Carlton Residences, Vail, and One Ski Hill Place in Breckenridge; planning for future real estate development projects, including zoning and acquisition of applicable permits; and, the occasional purchase of selected strategic land parcels for future development, as well as the sale of land parcels to third-party developers. We continue undertaking preliminary planning and design work on future projects and are pursuing opportunities with third-party developers rather than undertaking our own significant vertical development projects. We believe that, due to our low carrying cost of real estate land investments, we are well situated to promote future projects with third-party developers while limiting our financial risk. Employees At fiscal year end, we employed approximately 5,200 year-round employees. During the height of our operating seasons, we employ approximately 21,300 additional seasonal employees. In addition, we employ approximately 300 year-round employees and 100 seasonal employees on behalf of the owners of our managed hotel properties. We consider employee relations to be good. Intellectual Property The development of intellectual property is part of our overall business strategy, and we regard our intellectual property as an important element of our success. We seek to establish and maintain our proprietary rights in our business operations and technology through the use of trademarks and trade secret laws. We file applications for and obtain trademarks, copyrights and patents in the United States. We also seek to maintain our trade secrets and confidential information by nondisclosure policies and through the use of appropriate confidentiality agreements. In the highly competitive industry in which we operate, trademarks, service marks, trade names and logos are very important in the sales and marketing of our mountain resorts and urban ski areas, lodging properties and services. We have a significant number of trademarks, service marks, trade names, logos and pending registrations, and seek to register and protect our trademarks, service marks, trade names and logos, which we believe have become synonymous in the travel and leisure industry with a reputation for excellence in service and authentic hospitality. 14 Regulation and Legislation Federal Regulation The 1986 Ski Area Permit Act (the “1986 Act”) allows the Forest Service to grant Term Special Use Permits (each, a “SUP”) for the operation of ski areas and construction of related facilities on National Forest lands. In addition, the 1986 Act requires a Master Development Plan ("MDP") for each ski area that is granted a SUP. In November 2011, the 1986 Act was amended by the Ski Area Recreational Opportunity Enhancement Act (the “Enhancement Act”) to clarify the Forest Service's authority to approve facilities primarily for year-round recreation. Each individual national forest is required by the National Forest Management Act to develop and maintain a Land and Resource Management Plan (a “Forest 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 authority to review and approve the location, design and construction of improvements in the permit area and many operational matters. Virtually all of the skiable terrain at Vail Mountain, Breckenridge, Heavenly, Keystone, and Kirkwood is located on Forest Service land. While Beaver Creek also operates on Forest Service land, a significant portion of the skiable terrain, primarily in the lower main mountain, Western Hillside, Bachelor Gulch and Arrowhead Mountain areas, is located on land that we own. Each of these six ski resorts operates under a SUP. The operations of Northstar, Afton Alps, Mt. Brighton, Park City and Canyons are conducted primarily on private land, and are not under the jurisdiction of the Forest Service. Special Use Permits Vail Mountain operates under a SUP for the use of 12,353 acres that expires December 1, 2031. Breckenridge operates under a SUP for the use of 5,702 acres that expires December 31, 2029. Keystone operates under a SUP for the use of 8,376 acres that expires December 31, 2032. Beaver Creek operates under a SUP for the use of 3,849 acres that expires November 8, 2039. Heavenly operates under a SUP for the use of 7,050 acres that expires May 1, 2042. Kirkwood operates under a SUP for the use of approximately 2,330 acres that expires March 1, 2052. We anticipate requesting a new SUP for each resort prior to its expiration date as provided by Forest Service regulations and the terms of each existing SUP. We are not aware of the Forest Service refusing to issue a new SUP to replace an expiring SUP for a ski resort in operation at the time of expiration. Each SUP contains a number of requirements, including indemnifying the Forest Service from third-party claims arising out of our operation under the SUP and compliance with applicable laws, such as those relating to water quality and endangered or threatened species. For use of the SUPs, we pay a fee to the Forest Service ranging from 1.5% to 4.0% of sales for services occurring on Forest Service land. Included in the calculation are sales from, among other things, lift tickets, season passes, ski school lessons, food and beverage, certain summer activities, equipment rentals and retail merchandise. The SUPs may be revised or amended to accommodate changes initiated by us or by the Forest Service to change the permit area or permitted uses. The Forest Service may amend a SUP if it determines that such amendment is in the public interest. While the Forest Service is required to seek the permit holder's consent to any amendment, an amendment can be finalized over a permit holder's objection. Permit amendments must be consistent with the Forest Plan and are subject to the provisions of the National Environmental Policy Act (“NEPA”), both of which are discussed below. The Forest Service can also terminate a SUP if it determines that termination is required in the public interest. However, to our knowledge, no SUP has ever been terminated by the Forest Service over the opposition of the permit holder. Master Development Plans All improvements that we propose to make on National Forest System lands under any of our SUPs must be included in a MDP. MDPs describe the existing and proposed facilities, developments and area of activity within the permit area. We prepare MDPs, which set forth a conceptual overview of all potential projects at each resort. The MDPs are reviewed by the Forest Service for compliance with the Forest Plan and other applicable laws and, if found to be compliant, are accepted by the Forest Service. Notwithstanding acceptance by the Forest Service of the conceptual MDPs, individual projects still require separate applications and compliance with NEPA and other applicable laws before the Forest Service will approve such projects. We update or amend our MDPs for Vail Mountain, Beaver Creek, Keystone, Breckenridge, Heavenly, and Kirkwood from time to time. 15 Forest Plans Operational and development activities on National Forest System lands at our four Colorado mountain resorts are subject to the additional regulatory and planning requirements set forth in the April 2002 Record of Decision (the “2002 ROD”) for the White River National Forest Land and Resources Management Plan (the “White River Forest Plan”). At Heavenly, operational and development activities on National Forest System lands are subject to the Lake Tahoe Basin Management Unit Land and Resources Management Plan (the “LTBMU Forest Plan”), which was adopted in 1988. The Forest Service is currently in the process of amending the LTBMU Forest Plan. A draft decision adopting a new LTBMU Forest Plan has been released. The Forest Service is working through a formal objection process before finalizing the new LTBMU Forest Plan, which we expect will occur before the end of calendar year 2015. At Kirkwood, operational and development activities on National Forest System lands are subject to the Eldorado National Forest Land and Resources Management Plan (the “Eldorado Forest Plan”), which was adopted in 1989. When approving our application for development, area expansion or other activities on National Forest System lands, the Forest Service must adhere to the applicable Forest Plan. Any such decision may be subject to judicial review in federal court if a party, with standing, challenges a Forest Service decision that applies the requirements of a Forest Plan at one of our six mountain resorts located on Forest Service lands. National Environmental Policy Act; California Environmental Quality Act NEPA requires an assessment of the environmental impacts of “significant” proposed actions on National Forest land, such as expansion of a ski area, installation of new lifts or snowmaking facilities, or construction of new trails or buildings. We must comply with NEPA when seeking Forest Service approval of such improvements. The Forest Service is responsible for preparing and compiling the required environmental studies, usually through third-party consultants. NEPA allows for different types of environmental studies, depending on, among other factors, the scope and size of the expected impact of the proposed project. An Environmental Assessment (“EA”) is typically used for projects where the environmental impacts are expected to be limited. For projects with more significant expected impacts, an Environmental Impact Statement (“EIS”) is more commonly required. An EIS is more detailed and broader in scope than an EA. The Forest Service usually takes more time to prepare, review and issue an EIS. Consequently, projects that require an EIS typically take longer to approve. During the requisite environmental study, the Forest Service is required to analyze alternatives to the proposed action (including not taking the proposed action), as well as impacts that may be unavoidable. Following completion of the requisite environmental study, the Forest Service may decide not to approve the proposed action or may decide to approve an alternative. In either case we may be forced to abandon or alter our development or expansion plans. In limited cases, projects can be subject to a Categorical Exclusion, which allows approval by the Forest Service without preparation of an environmental study required by NEPA. The Forest Service has a list of available Categorical Exclusions, which typically are only available for projects that are not expected to have environmental impacts, such as certain utilities installed in an existing, previously disturbed corridor. California Environmental Quality Act Proposed actions at Kirkwood, Northstar and certain portions of Heavenly may also be subject to the California Environmental Quality Act (“CEQA”), which is similar to NEPA in that it requires the California governmental entity approving any proposed action at Kirkwood, Northstar, or on the California portion of Heavenly to study potential environmental impacts. Projects with significant expected impacts require an Environmental Impact Report (“EIR”) while more limited projects may be approved based on a Mitigated Negative Declaration. State and Local Land Use Regulations In addition to federal and environmental regulations, each resort is subject to and must comply with state, county, regional and local government land use regulations and restrictions, including, for example, employee housing ordinances, zoning and density restrictions, noise ordinances, wildlife regulations, and water and air quality restrictions. Recent specific regulatory matters including approvals, requests and status of the more significant regulatory activities associated with our mountain resorts and ski areas are discussed in the following section. 16 Breckenridge Regulatory Matters In March 2014, we received approval from the Forest Service to replace the Colorado Super Chair with a six-passenger chairlift. As this chairlift is located on both National Forest System lands and private lands within the Town of Breckenridge, approval was pursuant to a Forest Service Categorical Exclusion and Class C permit from the Town of Breckenridge. Work started in June 2014 and was completed for the 2014/2015 ski season. In January 2015, the Forest Service released a draft EIS for a number of summer recreation activities, including zip lines, canopy tours, ropes challenge courses and new mountain biking and hiking trails. The draft EIS analyzed environmental affects and alternatives including our proposal. In August 2015, the Forest Service released its final EIS and draft record of decision approving various new facilities and summer recreation activities. The draft record of decision is subject to a 45-day objection period, which expires on September 28, 2015. Vail Mountain Regulatory Matters In July 2012, we submitted to the Forest Service a project proposal under a Categorical Exclusion for construction of summer recreational activities and related projects under our Epic Discovery program. Two challenge ropes courses and zip lines were approved and construction was completed in August 2013. A children’s zip line and children’s challenge course were also approved and construction was completed in July 2014. Summer tubing was installed and opened in July 2015. In July 2012, we also submitted a project proposal to the Forest Service to develop a larger, more comprehensive program of summer activities and environmental education opportunities, including horse, bike and hiking trails, a new deck at Eagles Nest, canopy tours, lookout towers, and Forest Flyers. Various hiking and biking trails, the Game Creek Canopy Tour and the Adventure Ridge Forest Flyer are under construction and are expected to be completed by November 2015, with operation of the new activities anticipated during the 2015/2016 ski season. In December 2014, we submitted a proposal to the Forest Service for the replacement of Chair 2 with a high speed detachable six-passenger chairlift, which was accepted and approved by the Forest Service. The lift is being built during summer 2015 and is anticipated to be operational for the 2015/2016 ski season. In June 2014, a proposal to expand racing and training terrain on Golden Peak was submitted to the Forest Service. The Forest Service has accepted the proposal for NEPA review beginning in the fall of 2015. Beaver Creek Regulatory Matters We are currently evaluating a proposal to locate summer activities including a Forest Flyer in the area around Spruce Saddle, which would require Forest Service review and approval. We submitted an amendment to Beaver Creek’s MDP in the fall of 2014 that contemplates year round activities on Beaver Creek. That amendment was accepted by the Forest Service in June 2015. In May 2014, the Forest Service approved, under a NEPA Categorical Exclusion, the replacement of the Centennial Express Lift. It was updated to a combination 6-passenger chairlift that also has 10-passenger gondola cabins. Construction was completed during the summer of 2014 and the lift was operational for the 2014/2015 ski season. In May 2015, the Forest Service approved, under a NEPA Categorical Exclusion, the replacement and upgrade of the Red Tail snowmaking system. This upgrade is underway and is expected to be completed for the 2015/2016 ski season. Keystone Regulatory Matters None. Park City and Canyons Regulatory Matters Park City and Canyons are located primarily on private land leased by us and not subject to Forest Service authorization or oversight. Canyons is part of the Canyons Specially Planned Area (“SPA”) pursuant to a Summit County, Utah ordinance adopted in 1998, and a Development Agreement and Master Development Plan with affected property owners, developers and the county, the most recent versions of which were adopted in 1999. Land use within the SPA is within the jurisdiction of Summit County. Land use at Park City is within the jurisdiction of Summit County and Park City Municipal Corporation. The 17 portions of the resort located within Park City Municipal Corporation are subject to a Development Agreement with the municipality, the most recent version of which was entered into in 1998. In February 2014, we received a conditional use permit from Summit County for construction of a new Cloud Dine restaurant, which was completed for the 2014/2015 ski season. From December 2014 through April 2015, Canyons and Park City submitted applications to the Park City Municipal Corporation and Summit County with respect to the installation of the Interconnect Gondola connecting Canyons and Park City, replacement of the Snow Hut Lodge at Park City, expansion of the Red Pine Lodge at Canyons, renovation of Summit House at Park City, relocation and replacement of the King Con chairlift, and the improvement and installation of new trails and snowmaking infrastructure at Canyons. These projects were approved during the first half of calendar year 2015 and construction is underway. We expect to complete these improvements for the 2015/2016 ski season. Northstar Regulatory Matters Northstar is located entirely on private land leased by us and is not subject to Forest Service authorization or oversight. However, site specific projects at Northstar are approved by Placer County, California, pursuant to a series of minor use and conditional use permits. In May 2013, Northstar received approval from Placer County to construct a Forest Flyer near the mid-mountain lodge. The approval has been appealed and an appeal hearing was scheduled for late July 2013. Northstar has requested a continuance of the appeal hearing in order to more fully understand and respond to the issues raised. Heavenly Regulatory Matters In the fall of 2012, we submitted a project proposal to the Forest Service and to the Tahoe Regional Planning Agency ("TRPA") for additional summer activities to be located at the top of the gondola. In December 2012 and April 2013, those activities were approved for implementation by the TRPA and the Forest Service, respectively. Subsequently, we received approval for a climbing wall following implementation of the Forest Service regulations which occurred in 2014. The climbing wall is completed and operational. In June 2013, Heavenly submitted a project proposal to the Forest Service and TRPA to develop a larger, more comprehensive program of summer activities and environmental education opportunities on the upper mountain under our Epic Discovery program, which includes canopy tours, hiking and biking trails, Forest Flyers and zip lines. The proposal was slightly modified and resubmitted in September 2013. In 2014, a joint EIS was prepared and circulated for public comment. A draft decision approving the Epic Discovery proposal was released in February 2015 by the Forest Service and no objections were filed on the draft decision. In April 2015, the Forest Service issued a final decision approving the project. In March 2015, the TRPA certified the EIS and approved the Epic Discovery project. The Epic Discovery project also went through the CEQA process for the portions of project located in California. In November 2013, the Forest Service Lake Tahoe Basin Management Unit (“LTBMU”) issued a draft record of decision and final EIS for revisions to the LTBMU Forest Plan. A large portion of Heavenly is located within the LTBMU. Elements of the revised LTBMU Forest Plan may have an adverse impact on future development opportunities at Heavenly, including a proposal to limit future development to certain areas where Heavenly currently operates or within other limited areas of land. In January 2014, Heavenly submitted objections to the revised LTBMU Forest Plan. In May 2014 and July 2014, we attended hearings with the Forest Service and other objectors. We continue to work with the Forest Service to resolve our objections and expect the Forest Service to adopt the revised LTBMU Forest Plan before the end of 2015. Kirkwood Regulatory Matters None. Afton Alps Regulatory Matters None. Mt. Brighton Regulatory Matters None. 18 Perisher Regulatory Matters Perisher is located in the Kosciuszko National Park, the largest national park in New South Wales, Australia. The resort includes four villages (Perisher Valley, Smiggin Holes, Guthega and Blue Cow) and their associated ski fields, as well as the site of the Skitube Alpine Railway at Bullock’s Flat. The Office of Environment and Heritage (“OEH”), an agency of the New South Wales government, which is part of the Department of Planning and Environment, is responsible for the protection and conservation of the Kosciuszko National Park. The National Parks and Wildlife Act 1974 (NSW) (“NPW Act”) establishes the National Parks and Wildlife Service, headed by a Director-General, in whom the care, control and management of the Kosciusko National Park is vested. The NPW Act requires the Kosciuszko National Park to be managed in accordance with the principles specified in that legislation, including the provision for sustainable visitor or tourist use and enjoyment that is compatible with the conservation of the national park’s natural and cultural values. The legislation also authorizes the Minister for the Environment and the Minister for Heritage (the “Minister”) to grant leases and licenses of land within the Kosciuszko National Park for various purposes, including for purposes related to sustainable visitor or tourist use and enjoyment. Under this power, the Minister has granted to Perisher a lease and a license of specified land within the Kosciusko National Park until June 30, 2048, each with an option to renew for an additional period of 20 years. The Minister has also granted Perisher a lease of the parking lot at Perisher Valley that expires on December 31, 2025. The Environmental Planning and Assessment Act 1979 (NSW) (“EPA Act”) is the principal legislation regulating land use and development in New South Wales. Perisher relies on a suite of planning approvals (and existing use rights) granted under the EPA Act to operate the resort. Various types of development that facilitate commercial ski resort operations are also permitted to be carried out without planning approval pursuant to the State Environmental Planning Policy (Kosciusko National Park - Alpine Resorts) 2007 and the Snowy River Local Environmental Plan 2013. Strategic planning documents have been adopted to provide a framework for the assessment and approval of future development at the resort, including the Perisher Range Resorts Master Plan, Perisher Blue Ski Resort Ski Slope Master Plan and Kosciuszko National Park Plan of Management. The Perisher Range Resorts and Perisher Ski Slope Master Plans are due to be updated in 2016. Perisher holds a number of environmental approvals to regulate its operations, including an environment protection license in respect of the water treatment plant at Bullock’s Flat Terminal and a suite of dangerous goods licenses in respect of the storage of diesel, heating oil and propane in storage tanks across the resort. Perisher implemented an Environmental Management System to manage compliance with the environmental regulatory framework, and mitigate potential environmental risks arising from its operations. The lease and license provide for the payment of a minimum annual base rent with periodic increases in base rent over the term, turnover rent payments based on 2.0% of certain gross revenue, remittance of park user fees, and certain other charges, also subject to periodic increases over the term. GTLC Concession Contract GTLC operates three lodging properties, food and beverage services, retail, camping and other services within the Grand Teton National Park under a concession contract with the NPS. Our concession contract with the NPS for GTLC expires on December 31, 2021. Upon expiration of the concession contract, we will have to bid against other prospective concessionaires for award of a new contract. The NPS may suspend operations under the concession contract at any time if the NPS determines it is necessary to protect visitors or resources within the Grand Teton National Park or during a Federal Government shutdown. NPS also has the right to terminate the concession contract for breach following notice and a 15 day cure period or if it believes termination is necessary to protect visitors or resources within the Grand Teton National Park. We pay a fee of 8.01% to the NPS on the majority of our sales occurring in the Grand Teton National Park. Flagg Ranch Concession Contract In August 2011, the NPS selected Flagg Ranch Company, a wholly-owned subsidiary, to provide lodging, food and beverage services, retail, service station, recreation and other services on the Parkway located between Grand Teton National Park and Yellowstone National Park. Our concession contract with the NPS for the Parkway expires on October 31, 2026. Upon expiration of the concession contract, we will have to bid against other prospective concessionaires for award of a new contract. 19 Like our GTLC concession contract, the NPS may suspend operations under the concession contract at any time if the NPS determines it is necessary to protect visitors or resources within the Grand Teton National Park or during a Federal Government shutdown. NPS may also terminate the concession contract for breach, following notice and a 15 day cure period or if it believes termination is necessary to protect visitors or resources within the Grand Teton National Park. We pay a fee of 5.3% to the NPS on the majority of our sales occurring in the Parkway. Water and Snowmaking We rely on a supply of water for operation of our ski areas for domestic and snowmaking purposes and for real estate development. Availability of water depends on existence of adequate water rights, as well as physical delivery of the water when and where it is needed. To provide a level of predictability in dates of operation and favorable snow surface conditions at our ski areas, we rely on snowmaking. Snowmaking requires a significant volume of water, most of which is viewed as a non-consumptive use - approximately 80% of the water is returned to the watershed at spring runoff. In Colorado, we own or have ownership interests in water rights in reservoir companies, reservoirs, groundwater wells, and other sources. The primary source of water for Keystone and Breckenridge is the Clinton Reservoir, in which we own a non- controlling interest. For Vail Mountain and Beaver Creek, the primary water source is Eagle Park Reservoir, in which we own a controlling interest. We believe we have rights to sufficient quantities of water for the operation of our four Colorado resorts for the foreseeable future. Delivery of the water to each resort is typically by stream, from which the water is diverted by us to on-site storage facilities or directly into the snowmaking system. The streams that deliver the water are subject to minimum stream flows, freezing and other limitations that may prevent or reduce the amount of water physically available to the resort. Unlike our other Colorado resorts, Keystone does not have on-site storage for snowmaking water and may be more vulnerable to interruptions in delivery of constant physical supply of water during high demand snowmaking periods. Although we have not experienced significant issues to date, we continue to look for ways to improve storage and delivery options for Keystone. Park City receives water for snowmaking primarily from the Park City Municipal Corporation pursuant to various long-term agreements. Park City’s water is stored in retention ponds located at the Park City Golf Club. Canyons receives water for snowmaking primarily from the Summit Water Distribution Company pursuant to a long-term lease. Canyons' water is stored in a retention pond located at the resort, and at facilities owned or operated by the Summit Water Distribution Company. Heavenly's primary sources of water purchased for domestic and snowmaking uses are the South Tahoe Public Utility District (“STPUD”) and Kingsbury General Improvement District (“KGID”), which are California and Nevada utilities, respectively. The delivery systems of each utility are limited and may not be able to provide the immediate physical supply of water needed for optimal snowmaking. These sources are augmented by on-mountain underground wells that provide water for domestic uses at on-mountain lodges and for snowmaking. The underground water rights that are used for the East Peak Lake snowmaking well are held jointly with the Forest Service. In 2015, KGID began a public rate-making process to update its water rates. Under the proposed rate-making process, Heavenly will be treated as a separate industrial use customer class that is expected to result in a lower rate increase than is proposed for the residential and commercial customer classes. Northstar obtains water through a cooperative arrangement with the Northstar Community Services District (“NCSD”). Together with NCSD, we, through our lease with affiliates of CNL Lifestyles Properties, Inc., control surface water rights that we use for snowmaking. In addition, we have contractual rights to ground water from NCSD and from the adjacent Martis Camp residential development. We receive domestic water from NCSD and, for on-mountain facilities, from on-mountain wells and a series of significant near-surface springs. Kirkwood co-owns with the Forest Service surface water rights sufficient for current and planned snowmaking at the resort. Kirkwood's water is stored in nearby Caples Lake under contract with its owner/operator. Both Afton Alps and Mt. Brighton rely on on-site water wells and reservoirs for snowmaking. 20 Perisher is subject to the Water Act of 1912 (NSW) (“NSW Water Act”), which regulates the use of water sources (such as rivers, lakes and groundwater aquifers) in the Kosciuszko National Park. Perisher relies on six water licenses issued under the NSW Water Act and a water extraction agreement with an independent third party for the purposes of extracting water for snowmaking. Available Information We file with or furnish to the Securities and Exchange Commission (“SEC”) reports, including our annual report on Form 10- K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934. These reports, proxy statements and other information are available free of charge on our corporate website www.vailresorts.com as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Materials filed with or furnished to the SEC are also made available on its website at www.sec.gov. Copies of any materials we file with the SEC can be obtained at www.sec.gov or at the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the public reference room is available by calling the SEC at 1-800-SEC-0330. ITEM 1A. RISK FACTORS. Our operations and financial results are subject to various risks and uncertainties that could adversely affect our financial position, results of operations and cash flows. The risks described below should carefully be considered together with the other information contained in this report. Risks Related to Our Business We are subject to the risk of prolonged weakness in general economic conditions including adverse effects on the overall travel and leisure related industries. Economic conditions currently present or recently present in the United States, Europe and parts of the rest of the world, including high unemployment, erosion of consumer confidence, sovereign debt issues, and financial instability in the global markets, may potentially have negative effects on the travel and leisure industry and on our results of operations. As a result of these and other economic uncertainties, we have experienced and may experience in the future, among other items, a change in booking trends such that guest reservations are made much closer to the actual date of stay, a decrease in the length of stay and a decrease in group bookings. We cannot predict what impact these uncertainties may have on overall travel and leisure or more specifically, on our guest visitation, guest spending or other related trends and the ultimate impact it will have on our results of operations. Additionally, the actual or perceived fear of weakness in the economy could also lead to decreased spending by our guests. Skiing, travel and tourism are discretionary recreational activities that can entail a relatively high cost of participation and are adversely affected by economic slowdown or recession. This could further be exacerbated by the fact that we charge some of the highest prices for our lift tickets and ancillary services in the ski industry. In the event of a decrease in visitation and overall guest spending we may be required to offer a higher amount of discounts and incentives than we have historically, which would adversely impact our operating results. Our resorts also serve as a destination for international guests. To the extent there are material changes in exchange rates relative to the United States ("U.S.") dollar, it could impact the volume of international visitation. We are vulnerable to unfavorable weather conditions and the impact of natural disasters. Our ability to attract guests to our resorts is influenced by weather conditions and by the amount and timing of snowfall during the ski season. Unfavorable weather conditions can adversely affect skier visits and our revenue and profits. Unseasonably warm weather may result in inadequate natural snowfall and reduce skiable terrain, which increases the cost of snowmaking and could render snowmaking, wholly or partially, ineffective in maintaining quality skiing conditions, including in areas which are not accessible by snowmaking equipment. In addition, a severe and prolonged drought could affect our otherwise adequate snowmaking water supplies or increase the cost of snowmaking. Excessive natural snowfall may significantly increase the costs incurred to groom trails and may make it difficult for guests to obtain access to our mountain resorts. In the past 20 years, our mountain resorts have averaged between 20 and 39 feet of annual snowfall, which is significantly in excess of the average for United States ski resorts. However, there can be no assurance that our resorts will receive seasonal snowfalls near their historical average in the future. For example, we have experienced very poor conditions in the Lake Tahoe region during the three most recent ski seasons and experienced historic low snowfall across all our resorts during the 2011/2012 ski season. Past snowfall levels or consistency of snow conditions can impact the levels of sales of season passes. Additionally, the early season snow conditions and skier perceptions of early season snow conditions can influence the momentum and success of the overall ski season. Unfavorable weather conditions can adversely affect our resorts and lodging properties as guests tend to delay or postpone 21 vacations if conditions differ from those that typically prevail at such resorts for a given 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. A severe natural disaster, such as a forest fire, may interrupt our operations, damage our properties, reduce the number of guests who visit our resorts in affected areas and negatively impact our revenue and profitability. 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 and recoup lost profits. 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. Leisure and business travel are particularly susceptible to various factors outside of our control, including terrorism, the uncertainty of military conflicts, outbreaks of contagious diseases and the cost and availability of travel options. Our business is sensitive to the willingness of our guests to travel. Acts of terrorism, the spread of contagious diseases, political events and developments in military conflicts in areas of the world from which we draw our guests could depress the public's propensity to travel and cause severe disruptions in both domestic and international air travel and consumer discretionary spending, which could reduce the number of visitors to our resorts and have an adverse effect on our results of operations. Many of our guests travel by air and the impact of higher prices for commercial airline services and availability of air services could cause a decrease in visitation by Destination guests to our resorts. A significant portion of our guests also travel by vehicle and higher gasoline prices could adversely impact our guests' willingness to travel to our resorts. Higher cost of travel may also affect the amount that guests are willing to spend at our resorts and could negatively impact our revenue particularly for lodging, ski school, dining and retail/rental. Our business is highly seasonal. Our mountain and lodging operations are highly seasonal in nature. In particular, revenue and profits from our mountain and most of our lodging operations are substantially lower and historically result in losses from late spring to late fall. Conversely, peak operating seasons for Perisher (acquired on June 30, 2015), GTLC and Flagg Ranch, mountain summer activities/sightseeing and our golf courses generally occur from June to the end of September while the remainder of the year results in operating losses. Revenue and profits generated by Perisher, GTLC and Flagg Ranch, mountain summer activities/sightseeing and golf peak season operations are not nearly sufficient to fully offset our off-season losses from our other mountain and lodging operations. For Fiscal 2015, 80% of total combined Mountain and Lodging segment net revenue (excluding Lodging segment revenue associated with reimbursement of payroll costs) was earned during our second and third fiscal quarters. This seasonality is partially mitigated by the sale of season passes (which for the 2014/2015 ski season accounted for approximately 40% of the total lift revenue) predominately occurring during the period prior to the start of the ski season as the cash from those sales is collected in advance and revenue is mostly recognized in the second and third quarters. In addition, the timing of major holidays can impact vacation patterns and therefore visitation at our mountain resorts and urban ski areas. If we were to experience an adverse event or realize a significant deterioration in our operating results during our peak periods (our fiscal second and third quarters) we would be unable to fully recover any significant declines due to the seasonality of our business. Operating results for any three-month period are not necessarily indicative of the results that may be achieved for any subsequent quarter or for a full fiscal year (see Note 14, Selected Quarterly Financial Data, of the Notes to Consolidated Financial Statements). In the fall of 2011, the Ski Area Recreational Opportunity Enhancement Act was enacted into law which clarifies that the Forest Service is authorized to permit year-round recreational activities on land owned by the Forest Service. As such, this will allow our mountain resorts on Forest Service land to offer more summer-season recreational opportunities. We anticipate that if our proposed plans are approved and implemented, that once these summer activities mature, we could realize substantial incremental summer guest visitation and revenue. However, our new summer activities plan may not generate the initial projected revenue and profit margins we expect, and even if our plans are successful, we do not expect that these enhanced summer operations will fully mitigate the seasonal losses that our mountain operations experience from late spring to late fall. We face significant competition. The ski resort and lodging industries are highly competitive. The number of people who ski in the United States (as measured in skier visits) has generally ranged between 51 million and 61 million annually over the last decade, with approximately 53.6 million visits for the 2014/2015 ski season. There are approximately 470 ski areas in the United States that serve local and destination guests, and these ski areas can be more or less impacted by weather conditions based on their location and snowmaking capabilities. The factors that we believe are important to customers include: • • • proximity to population centers; availability and cost of transportation to ski areas; ease of travel to ski areas (including direct flights by major airlines); 22 • • • • • • pricing of lift tickets and/or season passes and the magnitude, quality and price of related ancillary services (ski school, dining and retail/rental), amenities and lodging; snowmaking facilities; type and quality of skiing and snowboarding offered; duration of the ski season; weather conditions; and reputation. We have many competitors for our guests, including other major resorts in Colorado, Utah, California, Nevada, the Pacific Northwest and Southwest and other major destination ski areas worldwide. Our guests can choose from any of these alternatives, as well as non-skiing vacation options and destinations around the world. In addition, other forms of leisure such as sporting events and participation in other competing indoor and outdoor recreational activities are available to potential guests. RockResorts hotels, our other hotels and our property management business compete with numerous other hotel and property management companies that may have greater financial resources than we do and they may be able to adapt more quickly to changes in customer requirements or devote greater resources to promotion of their offerings than us. We believe that developing and maintaining a competitive advantage will require us to make continued capital investments in our resorts. We cannot assure that we will have sufficient resources to make the necessary capital investments to do so, and we cannot assure that we will be able to compete successfully in this market or against such competitors. The high fixed cost structure of mountain resort operations can result in significantly lower margins if revenues decline. The cost structure of our mountain resort operations has a significant fixed component with variable expenses including, but not limited to, Forest Service fees, other 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 and fuel, property taxes, minimum lease payments and other expenses included in our fixed cost structure may also reduce our margin, profits and cash flows. We may not be able to fund resort capital expenditures. We regularly expend capital to construct, maintain and renovate our mountain resorts and properties in order to remain competitive, maintain the value and brand standards of our mountain resorts and properties and comply with applicable laws and regulations. We cannot always predict where capital will need to be expended in a given fiscal year and capital expenditures can increase due to forces beyond our control. We anticipate that resort capital expenditures will be approximately $110 million to $115 million for calendar year 2015, which excludes any capital expenditures for our Epic Discovery program. In addition, we expect to spend approximately $17 million on new summer activities related to our Epic Discovery program at Vail, Breckenridge and Heavenly. We anticipate future annual capital expenditures to be approximately $100 million (including the recent acquisitions of Park City and Perisher), in addition to adjustments for inflation, the growth in our resorts and future acquisitions. This amount excludes any investment we plan to make in our Epic Discovery program and summer related projects, some of which are subject to regulatory approval. Our ability to fund capital expenditures will depend on our ability to generate sufficient cash flow from operations and/or to borrow from third parties in the debt or equity markets. We cannot provide assurances that our operations will be able to generate sufficient cash flow to fund such costs, or that we will be able to obtain sufficient financing on adequate terms, or at all. Our ability to generate cash flow and to obtain third-party financing will depend upon many factors, including: • • • • our future operating performance; general economic conditions and economic conditions affecting the resort industry, the ski industry and the capital markets; competition; and legislative and regulatory matters affecting our operations and business; Any inability to generate sufficient cash flows from operations or to obtain adequate third-party financing could cause us to delay or abandon certain projects and/or plans. We rely on government permits and landlord approvals. Our resort operations require permits and approvals from certain federal, state, local and foreign authorities, including the Forest Service, U.S. Army Corps of Engineers, NPS and the OEH, an agency of the New South Wales government. Virtually all of our ski trails and related activities, including our current and proposed comprehensive summer activities plan, at Vail Mountain, Breckenridge, Keystone, Heavenly, Kirkwood and a 23 majority of Beaver Creek are located on National Forest land. The Forest Service has granted us permits to use these lands, but maintains the right to review and approve many operational matters, as well as the location, design and construction of improvements in these areas. Currently, our permits expire December 31, 2029 for Breckenridge; December 1, 2031 for Vail Mountain; December 31, 2032 for Keystone; November 8, 2039 for Beaver Creek; May 1, 2042 for Heavenly; and, March 1, 2052 for Kirkwood. The Forest Service can terminate or amend these permits if, in its opinion, such termination is required in the public interest. A termination or amendment of any of our permits could have a materially adverse effect on our business and operations. In order to undertake improvements and new development, we must apply for permits and other approvals. These efforts, if unsuccessful, could impact our expansion efforts. Furthermore, Congress may materially increase the fees we pay to the Forest Service for use of these National Forest lands. The Forest Service is in the process of developing SUP language that may burden our water rights or require us to transfer ownership of some water rights used within ski area SUP boundaries. Once the new SUP language is finalized, the Forest Service will have the right to amend our existing SUPs to include this new language. The new permit language may substantially impair the value of or our ability to fully use existing water rights at Breckenridge, Vail Mountain, Keystone, Beaver Creek or Heavenly and may make it difficult to acquire new sources of water in the future. Additionally, our operations at Northstar and our Utah resorts are conducted pursuant to long- term leases with third parties who require us to operate the resorts in accordance with the terms of the leases and seek certain approvals from the respective landlords for improvements made to the resorts. The initial lease term for Northstar with affiliates of CNL Lifestyle Properties, Inc. expires in January 2027, and allows for three 10-year renewal options. We entered into a transaction agreement, master lease agreement and ancillary transaction documents with affiliate companies of Talisker Corporation ("Talisker"), the initial lease term for our Utah resorts with Talisker expires in May 2063, and allows for six 50- year renewal options. We have a lease and a license for Perisher within the Kosciusko National Park which expires in June 2048, with an option to renew for an additional period of 20 years. Perisher relies on a suite of planning approvals (and existing use rights) granted under the Australian EPA Act to operate the resort. Strategic planning documents have been adopted to provide a framework for the assessment and approval of future development at the resort, some of which are due to be updated in 2016. Perisher also holds a number of environmental approvals to regulate its operations, including an environment protection license and a suite of dangerous goods licenses related to the storage of diesel, heating oil and propane in storage tanks across the resort. Additionally, GTLC and Flagg Ranch operate under concessionaire agreements with the NPS that expire on December 31, 2021 and October 31, 2026, respectively. There is no guarantee that at the end of the initial lease/ license or agreements under which we operate our resorts we will renew or, if desired, be able to negotiate new terms that are favorable to us. Additionally, our resorts that operate on privately-owned land are subject to local land use regulation and oversight by county and/or town government and may not be able to obtain the requisite approvals needed for resort improvements or expansions. Failure to comply with the provisions, obligations and terms (including renewal requirements and deadlines) of our material permits and leases could adversely impact our operating results. We are subject to extensive environmental and health and safety laws and regulations in the ordinary course of business. Our operations are subject to a variety of federal, state, local and foreign environmental laws and regulations including those relating to air emissions, discharges to water, storage, treatment and disposal of wastes and other liquids, land use, remediation of contaminated sites, protection of natural resources such as wetlands, and sustainable visitor or tourist use and enjoyment. For example, future expansions of certain of our mountain facilities must comply with applicable forest plans approved under the National Forest Management Act, federal, state and foreign wildlife protection laws or local zoning requirements. In addition, most projects to improve, upgrade or expand our ski areas are subject to environmental review under the NEPA, the CEQA, the Australian NPW Act or the Australian EPA Act, as applicable. The NEPA and CEQA require the Forest Service, or other governmental entities, to study any proposal for potential environmental impacts and include various alternatives in its analysis. Our ski area 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 or formerly owned 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. 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 sophisticated information technology and systems for central reservations, point of sale, procurement, administration and technologies we make available to our guests. 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. 24 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 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 the quality of service 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. Failure to maintain the integrity of internal or guest data could result in damages to our reputation and/or subject us to costs, fines or lawsuits. We collect and retain guest data, including credit card numbers and other personally identifiable information, for various business purposes, including transactional marketing and promotional purposes. We also maintain personally identifiable information about our employees. The integrity and privacy of our guest and employee information is very important to us, and our guests and employees have a high expectation that we will adequately protect their personal information. The regulatory environment, as well as the requirements imposed on us by the payment card industry, governing information, security and privacy laws is increasingly demanding and continue to evolve and on occasion may be inconsistent from one jurisdiction to another. Maintaining compliance with applicable security and privacy regulations may increase our operating costs and/or impact our ability to market our products, properties and services to our guests. Despite our efforts, information networks and systems are vulnerable to service interruptions or to security breaches from inadvertent or intentional actions by our employees or vendors, or from attacks by malicious third parties. In recent years, there has been a rise in the number of sophisticated cyber attacks on network and information systems, and as a result, the risks associated with such an event continue to increase. We have experienced, and expect to continue to be subject to, cybersecurity threats and incidents, none of which has been material to us to date. Although we have taken, and continue to take steps to address these concerns by implementing network security and internal controls, there can be no assurance that a system interruption, security breach or unauthorized access will not occur. Any such interruption, breach or unauthorized access to our network or systems could adversely affect our business operations and/or result in the loss of critical or sensitive confidential information or intellectual property, and could result in financial, legal, business and reputational harm to us. We are subject to litigation in the ordinary course of business. 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 you that the outcome of all current or future litigation will not have a material adverse effect on us and our results of operations. Our business depends on the quality and reputation of our brands, and any deterioration in the quality or reputation of these brands could have an adverse impact on our business. A negative public image or other adverse events could affect the reputation of one or more of our mountain resorts, other destination resorts, hotel properties and other businesses or more generally impact the reputation of our brands. If the reputation or perceived quality of our brands declines, our market share, reputation, business, financial condition or results of operations could be adversely impacted. The unauthorized use of our trademarks could also diminish the value of our brands and their market acceptance, competitive advantages or goodwill, which could adversely affect our business. There is a risk of accidents occurring at our mountain resorts or competing mountain resorts which may reduce visitation and negatively impact our operations. Our ability to attract and retain guests depends, in part, upon the external perceptions of the Company, the quality and safety of our resorts, services and activities, including summer activities, and our corporate and management integrity. While we maintain and promote an on-mountain safety program, there are inherent risks associated with our resort activities. An accident or an injury at any of our resorts or at resorts operated by competitors, particularly an accident or injury involving the safety of guests and employees that receives media attention, could negatively impact our brand or reputation, cause loss of consumer confidence in us, reduce visitation at our resorts, and negatively impact our results of operations. The considerable expansion in the use of social media over recent years has compounded the impact of negative publicity. If any such incident occurs during a time of high seasonal demand, the effect could disproportionately impact our results of operations. 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 25 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 risks associated with our workforce, including increased labor costs. We are subject to various federal, state and foreign laws governing matters such as minimum wage requirements, overtime compensation and other working conditions, work authorization requirements, discrimination and family and medical leave. Labor costs and labor-related benefits are primary components in the cost of our operations. Labor shortages, increased employee turnover and health care mandates could increase our labor costs. Also, during Fiscal 2015, we announced our plans to implement a Company-wide minimum wage in the United States of $10.00 per hour across all lines of business (except for employees at GTLC, the minimum wage will be $8.50 per hour because these employees also receive an employee housing benefit) effective September 2015. This is a wage above current minimum wages in all states where we operate. Our intention is also to raise this minimum wage by inflation each year going forward. As minimum wage rates increase, including further potential federal and state legislative changes to the minimum wage rate, we may need to increase not only the wages of our minimum wage employees but also the wages paid to employees at wage rates that are above the minimum wage. These potential labor impacts could adversely impact our financial results. If we do not retain our key personnel, our business may suffer. The success of our business is heavily dependent on the leadership of key management personnel, including our senior executive officers. If any of these persons were to leave, it could be difficult to replace them, and our business could be harmed. We do not maintain “key-man” life insurance on any of our employees. Our acquisitions or future acquisitions might not be successful. We have acquired certain mountain resorts, hotel properties and other businesses complementary to our own, as well as developable land in proximity to our resorts. Acquisitions are complex to evaluate, execute and integrate. We cannot assure you that we will be able to accurately evaluate or successfully integrate and manage acquired mountain resorts, properties and businesses and increase our profits from these operations. We continually evaluate potential acquisitions and intend to actively pursue acquisition opportunities, some of which could be significant. As a result, we face various risks from acquisitions, including: • • • • • • • our evaluation of the synergies and/or long-term benefits of an acquired business; our inability to integrate acquired businesses into our operations as planned; diversion of our management's attention; potential increased debt leverage; litigation arising from acquisition activity; potential goodwill or other intangible asset impairments; and unanticipated problems or liabilities. In addition, we run the risk that any new acquisitions may fail to perform in accordance with expectations, and that estimates of the costs of improvements and integration for such properties may prove inaccurate. We may not realize all the anticipated financial benefits from Park City and Canyons. In May 2013, we entered into a long-term lease to assume the resort operations of Canyons, including its ski area and related amenities, and the ski terrain of Park City (excluding the base area), which was subject to litigation. In September 2014, we acquired the resort operations of Park City (including the base area) and entered into ancillary transaction documents that provided for, among other things, the settlement of the litigation related to the ski terrain of Park City. Following the acquisition, the Park City ski terrain, which was previously subject to litigation, was incorporated into the Canyons lease under the existing terms of the lease. The Canyons lease has an initial term of 50 years with six 50-year renewal options and annual payments of $25 million. The lease payment is subject to annual increases based upon the increase in the CPI index less 1%, with a floor of 2% per year. As lease payments increase annually, we may be adversely impacted to the extent these increases are not offset by increases in cash flow generated from operations. We also anticipate realizing significant tax benefits which are subject to examination by the Internal Revenue Service. Additionally, we record liabilities for uncertain tax positions that may be inadequate. In addition, the Canyons lease requires us to pay participating contingent payments to Talisker equal to 42% of the amount by which EBITDA for the resort operations of both Canyons and Park City exceeds $35 million, which increases annually based upon the increase in the CPI index plus a 10% adjustment for any capital improvements or investments made under the lease by us, including the purchase price for Park City. We are required to measure at each reporting period the fair value of the future estimated participating contingent payments and record the change in fair value in our income (loss) from operations. This change in fair value of participating contingent payments could provide significant fluctuations in our operating results in a particular period. 26 Exchange rate fluctuations could result in significant foreign currency gains and losses and affect our business results. In June 2015, we acquired Perisher in Australia. We are exposed to currency translation risk because the results of Perisher are reported in local currency, which we then translate to U.S. dollars for inclusion in our consolidated financial statements. As a result, changes between the foreign exchange rates, in particular the Australian dollar and the U.S. dollar, affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results. We currently do not enter into hedging arrangements to minimize the impact of foreign currency fluctuations. We expect that our exposure to foreign currency exchange rate fluctuations will grow as the relative contribution of Perisher increases. We may be required to write-off a portion of our goodwill, indefinite-lived intangible asset and/or long-lived asset balances as a result of prolonged weakness in economic conditions. Under accounting principles generally accepted in the United States of America (“GAAP”), we test goodwill and indefinite-lived intangible assets for impairment annually, as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of our reporting units or indefinite-lived intangible assets below book value and we evaluate long-lived assets (including real estate held for sale) for potential impairment whenever events or change in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate the recoverability of goodwill by estimating the future discounted cash flows of our reporting units and terminal values of the businesses using projected future levels of income, as well as business trends, prospects and market and economic conditions. We evaluate the recoverability of indefinite-lived intangible assets using the income approach based upon estimated future revenue streams (see "Critical Accounting Policies" in Item 7 of this Form 10-K). We evaluate the recoverability of long-lived assets by estimating the future undiscounted cash flows using projected future levels of income. However, if lower than projected levels of cash flows were to occur due to prolonged abnormal weather conditions or a prolonged weakness in general economic conditions, among other risk factors, it could cause less than expected growth and/or a reduction in terminal values and cash flows and could result in an impairment charge attributable to certain goodwill, indefinite-lived intangible assets and/or long-lived assets, negatively impacting our results of operations and stockholders' equity. We are subject to accounting regulations and use certain accounting estimates and judgments that may differ significantly from actual results. Implementation of existing and future legislation, rulings, standards and interpretations from the Financial Accounting Standards Board (“FASB”) or other regulatory bodies could affect the presentation of our financial statements and related disclosures. Future regulatory requirements could significantly change our current accounting practices and disclosures. Such changes in the presentation of our financial statements and related disclosures could change an investor's interpretation or perception of our financial position and results of operations. We use many methods, estimates and judgments in applying our accounting policies (see "Critical Accounting Policies" in Item 7 of this Form 10-K). Such methods, estimates and judgments are, by their nature, subject to substantial risks, uncertainties and assumptions, and factors may arise over time that lead us to change our methods, estimates and judgments. Changes in those methods, estimates and judgments could significantly affect our results of operations. Risks Relating to Our Capital Structure Our stock price is highly volatile. The market price of our stock is highly volatile and subject to wide fluctuations in response to factors such as the following, some of which are beyond our control: • • • • • • • • • • • quarterly variations in our operating results; operating results that vary from the expectations of securities analysts and investors; change in valuations, including our real estate held for sale; changes in the overall travel, gaming, hospitality and leisure industries; changes in expectations as to our future financial performance, including financial estimates by securities analysts and investors or such guidance provided by us; announcements by us or companies in the travel, gaming, hospitality and leisure industries of significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures, capital commitments, plans, prospects, service offerings or operating results; additions or departures of key personnel; future sales of our securities; trading and volume fluctuations; other risk factors as discussed above; and other unforeseen events. 27 Stock markets in the United States have often experienced extreme price and volume fluctuations. Market fluctuations, as well as general political and economic conditions including acts of terrorism, military conflicts, prolonged economic uncertainty, a recession or interest rate or currency rate fluctuations, could adversely affect the market price of our stock. We cannot provide assurance that we will continue to increase dividend payments and/or pay dividends. In fiscal 2011, our Board of Directors approved the commencement of a regular quarterly cash dividend on our common stock at an annual rate of $0.60 per share, subject to quarterly declaration. Since the initial commencement of a regular quarterly cash dividend, our Board of Directors has annually approved an increase to our cash dividend on our common stock. On March 11, 2015, our Board of Directors approved a 50% increase to our quarterly cash dividend to $0.6225 per share, subject to quarterly declaration. This dividend is anticipated to be funded through cash flow from operations and available cash on hand. Although we anticipate paying regular quarterly dividends on our common stock for the foreseeable future, the declaration of dividends is subject to the discretion of our Board of Directors, and is limited by applicable state law concepts of available funds for distribution, as well as contractual restrictions. As a result, the amount, if any, of the dividends to be paid in the future will depend upon a number of factors, including our available cash on hand, anticipated cash needs, overall financial condition, restrictions contained in our senior credit facility, the Seventh Amended and Restated Credit Agreement (“Credit Agreement”), any future contractual restrictions, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board of Directors. In addition, our Board of Directors may also suspend the payment of dividends at any time if it deems such action to be in the best interests of the Company and its stockholders. If we do not pay dividends, the price of our common stock must appreciate for investors to realize a gain on their investment in Vail Resorts, Inc. This appreciation may not occur and our stock may in fact depreciate in value. Anti-takeover provisions affecting us could prevent or delay a change of control that is beneficial to our stockholders. Provisions of our certificate of incorporation and bylaws, provisions of our debt instruments and other agreements and provisions of applicable Delaware law and applicable federal and state regulations may discourage, delay or prevent a merger or other change of control that holders of our securities may consider favorable. These provisions could: • • • • delay, defer or prevent a change in control of our Company; discourage bids for our securities at a premium over the market price; adversely affect the market price of, and the voting and other rights of the holders of our securities; or impede the ability of the holders of our securities to change our management. Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations. As of July 31, 2015, we had $816.8 million of outstanding indebtedness. This amount includes $317.5 million for the Canyons Lease obligation. This amount also consists of $250.0 million of borrowings from the term loan facility under our Credit Agreement to redeem the outstanding aggregate principal amounts of our 6.50% Senior Subordinated Notes due 2019 (“6.50% Notes”) and Industrial Development Bonds in May 2015, and $185.0 million borrowings under the revolver portion of our Credit Agreement to fund the acquisition of Perisher in June 2015 and seasonal liquidity needs. Our borrowings under our senior credit facility are subject to interest rate changes substantially increasing our risk to changes in interest rates. Borrowings under the Credit Agreement, including the term loan facility, currently bear interest at a rate of LIBOR plus 1.25% on an annual basis. Interest rate margins may fluctuate based upon the ratio of our Net Funded Debt to Adjusted EBITDA on a trailing four-quarter basis. We also have, on a cumulative basis, minimum lease payment obligations under operating leases of approximately $292.0 million as of July 31, 2015. Our level of indebtedness and minimum lease payment obligations could have important consequences. For example, it could: • • • • • • make it more difficult for us to satisfy our obligations; increase our vulnerability to general adverse economic and industry conditions; require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, including the annual payments under the Canyons lease, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, real estate developments, marketing efforts and other general corporate purposes; limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; place us at a competitive disadvantage compared to our competitors that have less debt; and limit our ability to borrow additional funds. We may be able to incur substantial additional indebtedness in the future. The terms of our senior credit facility do not fully prohibit us from doing so. If we incur additional debt, the related risks that we face could intensify. There are restrictions imposed by the terms of our indebtedness. The operating and financial restrictions and covenants in our senior credit facility may adversely affect our ability to finance future operations or capital needs or to engage in other 28 business activities and strategic initiatives that may be in our long-term best interests. For example, the senior credit facility contains a number of restrictive covenants that impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things: • • • • • • • • • • incur additional debt or sell preferred stock; pay dividends, repurchase our stock and make other restricted payments; create liens; make certain types of investments; engage in sales of assets and subsidiary stock; enter into sales-leaseback transactions; enter into transactions with affiliates; issue guarantees of debt; transfer all or substantially all of our assets or enter into merger or consolidation transactions; and make capital expenditures. In addition, there can be no assurance that we will meet the financial covenants contained in our senior credit facility. If we breach any of these restrictions or covenants, or suffer a material adverse change which restricts our borrowing ability under our senior credit facility, we would not be able to borrow funds thereunder without a waiver. Any inability to borrow could have an adverse effect on our business, financial condition and results of operations. In addition, a breach, if uncured, could cause a default under the senior credit facility and our other debt. Our indebtedness may then become immediately due and payable. We may not have or be able to obtain sufficient funds to make these accelerated payments. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 29 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: Location Afton Alps, MN (296 acres) Arrowhead Mountain, CO BC Housing Riveredge, CO Bachelor Gulch Village, CO Beaver Creek Resort, CO Beaver Creek Mountain, CO (3,849 acres) Beaver Creek Mountain Resort, CO Breckenridge Ski Resort, CO Breckenridge Mountain, CO (5,702 acres) Breckenridge Terrace, CO Broomfield, CO Canyons Resort, UT (6,100 acres) Colter Bay Village, WY Eagle-Vail, CO Edwards, CO DoubleTree by Hilton Breckenridge, CO Headwaters Lodge & Cabins, WY Heavenly Mountain Resort, CA & NV Heavenly Mountain, CA & NV (7,050 acres) Inn at Keystone, CO Jackson Hole Golf & Tennis Club, WY Jackson Lake Lodge, WY Jenny Lake Lodge, WY Keystone Conference Center, CO Keystone Lodge, CO Ownership Use Owned Owned Ski resort operations, including ski lifts, ski trails, golf course, clubhouse, buildings, commercial space and other improvements Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management and commercial space 26% Owned Employee housing facilities Owned Owned SUP Owned Owned Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management and commercial space Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management, commercial space and real estate held for sale or development Ski trails, ski lifts, buildings and other improvements Golf course, clubhouse, commercial space and residential condominium units Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management, commercial space and real estate held for sale or development SUP Ski trails, ski lifts, buildings and other improvements 50% Owned Employee housing facilities Leased Leased * Corporate offices Ski resort operations, including ski lifts, ski trails, buildings, commercial space, dining facilities, property management, conference facilities and other improvements Concessionaire contract Lodging and dining facilities Warehouse facility Administrative offices Lodging, dining and conference facilities Lodging and dining facilities Ski resort operations, including ski lifts, ski trails, buildings and other improvements and commercial space Ski trails, ski lifts, buildings and other improvements Lodging, dining and conference facilities Golf course, clubhouse, tennis facilities, dining and real estate held for sale or development Lodging, dining and conference facilities Lodging and dining facilities Conference facility Lodging, spa, dining and conference facilities Owned Leased Owned Concessionaire contract Owned SUP Owned Owned Concessionaire contract Concessionaire contract Owned Owned 30 Keystone Resort, CO Keystone Mountain, CO (8,376 acres) Keystone Ranch, CO Kirkwood Mountain Resort, CA Kirkwood Mountain, CA (2,330 acres) Mt. Brighton, MI (193 acres) Northstar California Resort, CA** (7,200 acres) Northstar Village, CA** Park City Mountain Resort, UT (2,800 acres) Park City Mountain Resort, UT (220 acres) Perisher Ski Resort, NSW, Australia (3,335 acres) Red Cliffs Lodge, CA Red Sky Ranch, CO River Course at Keystone, CO Seasons at Avon, CO SSI Venture, LLC (“VRR”) Properties; CO, CA, NV, UT, MN & WI Ski Tip Lodge, CO The Arrabelle at Vail Square, CO The Lodge at Vail, CO The Osprey at Beaver Creek, CO The Tarnes at Beaver Creek, CO Tenderfoot Housing, CO The Pines Lodge at Beaver Creek, CO The Village Hotel, Breckenridge, CO Vail Mountain, CO Owned SUP Owned Owned SUP Owned Leased** Leased** Leased* Owned Ski resort operations, including ski lifts, ski trails, buildings and other improvements, commercial space, property management, dining and real estate held for sale or development Ski trails, ski lifts, buildings and other improvements Golf course, clubhouse and dining facilities Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management and commercial space Ski trails, ski lifts, buildings and other improvements Ski resort operations, including ski lifts, ski trails, golf course, clubhouse, buildings, commercial space and other improvements Ski trails, ski lifts, golf course, commercial space, dining facilities, buildings and other improvements Commercial space, ski resort operations, dining facilities, buildings, property management and other improvements Ski trails, ski lifts, dining facilities, buildings and other improvements Ski trails, ski lifts, dining facilities, commercial space, buildings, real estate held for sale or development, and other improvements Owned/Leased/ Licensed*** Ski trails, ski lifts, dining facilities, commercial space, railway, buildings, lodging, conference facilities and other improvements Leased Owned Owned Leased/50% Owned Owned/Leased Dining facilities, ski resort operations, commercial space, administrative offices Golf courses, clubhouses, dining facilities and real estate held for sale or development Golf course and clubhouse Administrative offices, commercial space Approximately 185 retail stores (of which 118 stores are currently held under lease) for recreational products, and 4 leased warehouses Owned Owned Owned Owned Lodging and dining facilities Lodging, spa, dining and conference facilities Lodging, spa, dining and conference facilities Lodging, dining and conference facilities 31% Owned 50% Owned Employee housing facilities Employee housing facilities Owned Owned Owned Lodging, dining and conference facilities Lodging, dining, conference facilities and commercial space Ski resort operations, including ski lifts, ski trails, buildings and other improvements, property management, commercial space and real estate held for sale or development Vail Mountain, CO (12,353 acres) SUP Ski trails, ski lifts, buildings and other improvements The Forest Service SUPs are encumbered under certain of our debt instruments. Many of our properties are used across all segments in complementary and interdependent ways. * The operations of Canyons and portions of Park City are conducted pursuant to a long-term lease on land and with certain operating assets owned by Talisker. The lease provides for the payment of a minimum annual base rent with periodic increases in base rent over the lease term and participating contingent payments of a percentage of the amount by which EBITDA for resort operations exceeds certain thresholds, also subject to periodic increases over the lease term. The initial term of the lease expires in fiscal 2063 and is subject to six 50-year renewal options. Additionally, in connection with the lease, we entered into certain ancillary agreements with third parties, including leases and easements, allowing for various resort operations. 31 ** The operations of Northstar are conducted on land and with operating assets owned by affiliates of CNL Lifestyle Properties, Inc. under operating leases which were assumed by us. The leases provide for the payment of a minimum annual base rent with periodic increases in base rent over the lease term. In addition, the leases provide for the payment of percentage rent based on a percentage of gross revenues generated at the property over certain thresholds. The initial term of the leases expires in fiscal 2027, and is subject to three 10-year renewal options. ***The operations of Perisher are conducted pursuant to a long-term lease and license of land and certain improvements owned by the government of New South Wales within Kosciuszko National Park pursuant to the National Parks and Wildlife Act of 1974. The lease and license provide for the payment of a minimum annual base rent with periodic increases in base rent over the term, turnover rent payments of a percentage of certain gross revenue, remittance of park user fees, and certain other charges, also subject to periodic increases over the term. The initial term of the lease and license expires in 2048 and is subject to one 20-year renewal option. ITEM 3. LEGAL PROCEEDINGS. We are a party to various lawsuits arising in the ordinary course of business. We believe that we have adequate insurance coverage and/or have accrued for loss contingencies for all known matters and that, although the ultimate outcome of such claims cannot be ascertained, current pending and threatened claims are not expected to have a material, individually and in the aggregate, adverse impact on our financial position, results of operations and cash flows. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 32 PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information and Dividend Policy Our common stock is traded on the New York Stock Exchange under the symbol “MTN.” As of September 23, 2015, 36,546,790 shares of common stock were outstanding, held by approximately 313 holders of record. The following table sets forth information on the high and low sales prices of our common stock on the New York Stock Exchange and the quarterly cash dividends declared per share of common stock for each quarterly period for the two most recently completed fiscal years. Quarter Ended Fiscal Year 2015 July 31, April 30, January 31, October 31, Fiscal Year 2014 July 31, April 30, January 31, October 31, Market Price Per Share Low High Cash Dividends Declared Per Share $ $ $ $ $ $ $ $ 112.34 108.29 94.16 89.99 79.47 73.08 76.90 73.11 $ $ $ $ $ $ $ $ 98.45 84.55 83.72 73.94 64.61 64.47 67.24 65.10 $ $ $ $ $ $ $ $ 0.6225 0.6225 0.4150 0.4150 0.4150 0.4150 0.2075 0.2075 In fiscal 2011, our Board of Directors approved the commencement of a regular quarterly cash dividend on our common stock at an annual rate of $0.60 per share, subject to quarterly declaration. Since the initial commencement of a regular quarterly cash dividend, our Board of Directors has annually approved an increase to our cash dividend on our common stock and on March 11, 2015, our Board of Directors approved a 50% increase to our quarterly cash dividend to an annual rate of $2.49 per share, subject to quarterly declaration. 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. The amount, if any, of the dividends to be paid in the future will depend upon our available cash on hand, anticipated cash needs, overall financial condition, restrictions contained in our Credit Agreement, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board of Directors. Repurchase of Equity Securities The Company did not repurchase any shares of common stock during the fourth quarter of Fiscal 2015. The share repurchase program is conducted under authorizations made from time to time by our Board of Directors. The Board of Directors initially authorized the repurchase of up to 3,000,000 shares of common stock (March 9, 2006), and later authorized additional repurchases of up to 3,000,000 additional shares (July 16, 2008). Since inception of this stock repurchase program through July 31, 2015, the Company has repurchased 4,949,111 shares at a cost of approximately $193.2 million. As of July 31, 2015, 1,050,889 shares remained available to repurchase under the existing repurchase authorization. Repurchases under these authorizations may be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors. These authorizations have no expiration date. 33 Performance Graph The total return graph above is presented for the period from the end of our 2010 fiscal year through the end of Fiscal 2015. The comparison assumes that $100 was invested at the beginning of the period in our common stock (“MTN”), The Russell 2000, The Standard & Poor’s 500 Stock Index and the Dow Jones U.S. Travel and Leisure Stock Index, with dividends reinvested where applicable. We included the Dow Jones U.S. Travel and Leisure Index as we believe we compete in the travel and leisure industry. The performance graph is not deemed filed with the SEC and is not to be incorporated by reference into any of our filings under the Securities Act of 1933 or the Securities Exchange Act of 1934, unless such filings specifically incorporate the performance graph by reference therein. ITEM 6. SELECTED FINANCIAL DATA. The following table presents selected historical consolidated financial data derived from our Consolidated Financial Statements for the periods indicated. The financial data for Fiscal 2015, the year ended July 31, 2014 (“Fiscal 2014”) and the year ended July 31, 2013 (“Fiscal 2013”) and as of July 31, 2015 and 2014 should be read in conjunction with the Consolidated Financial Statements, related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained elsewhere in this Form 10-K. The table presented below is unaudited. The data presented below are in thousands, except for diluted net income per share attributable to Vail Resorts, Inc., cash dividends declared per share, effective ticket price (“ETP”), ADR and RevPAR amounts. 34 Statement of Operations Data: Net revenue: Mountain Lodging Real estate Total net revenue Segment operating expense: Mountain Lodging Real estate Total segment operating expense Depreciation and amortization Gain on sale of real property Gain on litigation settlement Change in fair value of contingent consideration Mountain equity investment income, net Interest expense, net Loss on extinguishment of debt Income before provision for income taxes Net income Net loss attributable to noncontrolling interests Net income attributable to Vail Resorts, Inc. $ Diluted net income per share attributable to Vail Resorts, Inc. $ Cash dividends declared per share Other Data: Mountain Skier visits(2) ETP (3) Lodging ADR(4) RevPAR(5) Real Estate $ $ $ $ 2015(1) 2014(1) Year Ended July 31, 2013(1) 2012(1) 2011(1) $ 1,104,029 $ 963,573 $ 867,514 $ 766,608 $ 254,553 41,342 242,287 48,786 210,974 42,309 210,623 47,163 752,191 214,658 200,197 1,399,924 1,254,646 1,120,797 1,024,394 1,167,046 777,147 232,877 48,408 1,058,432 (149,123) 151 16,400 3,650 822 (51,241) (11,012) 149,328 114,610 144 114,754 3.07 2.075 8,466 63.37 270.84 112.67 712,785 225,563 55,826 994,174 (140,601) — — (1,400) 1,262 (63,997) (10,831) 44,072 28,206 272 28,478 0.77 1.245 7,688 58.18 257.14 100.57 157,858 44,406 2,173,849 626,622 582,216 820,843 $ $ $ $ $ $ $ $ $ $ $ $ 639,706 198,813 58,090 896,609 (132,688) 6,675 — — 891 (38,966) — 59,229 37,610 133 37,743 1.03 0.790 6,977 56.02 253.91 91.76 195,230 138,604 2,308,297 796,922 658,318 823,868 $ $ $ $ $ $ $ $ $ $ $ $ 568,578 204,270 63,170 836,018 (127,581) — — — 878 (33,586) — 27,092 16,391 62 16,453 0.45 0.675 6,144 55.75 255.21 88.68 237,668 46,053 1,927,614 490,765 444,712 802,311 $ $ $ $ $ $ $ $ $ $ $ $ 540,366 205,903 205,232 951,501 (117,957) — — — 1,342 (33,641) (7,372) 55,520 34,422 67 34,489 0.94 0.150 6,991 48.99 238.45 91.43 273,663 70,143 1,946,236 491,743 421,600 829,723 $ $ $ $ $ $ $ $ $ $ $ $ Real estate held for sale and investment(6) $ 129,825 Other Balance Sheet Data Cash and cash equivalents(7) Total assets Long-term debt (including long-term debt due within one year) Net Debt(8) Total Vail Resorts, Inc. stockholders’ equity $ $ $ $ $ 35,459 2,489,621 816,830 781,371 866,568 (footnotes to selected financial data appear on following page) 35 Footnotes to Selected Financial Data: (1) (2) (3) (4) (5) (6) (7) (8) We have made several acquisitions which impact comparability between years during the past five years. The more significant of those include: Perisher (acquired in June 2015); Park City (acquired in September 2014); Canyons transaction (entered into in May 2013); Urban ski areas (acquired in December 2012); Kirkwood (acquired in April 2012); Skiinfo (acquired February 2012); and, Northstar (acquired in October 2010). A skier visit represents a person utilizing a ticket or pass to access a mountain resort or Urban ski area for any part of one day during a winter ski season, and includes both paid and complimentary access. ETP is calculated by dividing lift revenue by total skier visits during the respective periods. ADR is calculated by dividing total room revenue (includes both owned room and managed condominium unit revenue) by the number of occupied rooms during the respective periods. ADR for all years presented above have been adjusted to exclude resort fee revenue from total room revenue for the calculation of ADR, as stipulated by the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition. RevPAR is calculated by dividing total room revenue (includes both owned room and managed condominium unit revenue) by the number of rooms that are available to guests during the respective periods. RevPAR for all years presented above have been adjusted to exclude resort fee revenue from total room revenue for the calculation of RevPAR, as stipulated by the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition. Real estate held for sale and investment includes all land, development costs and other improvements associated with real estate held for sale and investment. Cash and cash equivalents exclude restricted cash. Net Debt is defined as long-term debt plus long-term debt due within one year less cash and cash equivalents. 36 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Consolidated Financial Statements and notes related thereto included in this Form 10-K. To the extent that the following Management’s Discussion and Analysis contains statements which are not of a historical nature, such statements are forward-looking statements which involve risks and uncertainties. These risks include, but are not limited to, those discussed in Item 1A, “Risk Factors” in this Form 10-K. The following discussion and analysis should be read in conjunction with the Forward-Looking Statements section and Item 1A, “Risk Factors” each included in this Form 10-K. Management’s Discussion and Analysis includes discussion of financial performance within each of our segments. We have chosen to specifically include Reported EBITDA (defined as segment net revenue less segment operating expense, plus or minus segment equity investment income or loss, plus gain on litigation settlement and for the Real Estate segment, plus gain on sale of real property) and Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents), in the following discussion because we consider these measurements to be significant indications of our financial performance and available capital resources. Reported EBITDA and Net Debt are not measures of financial performance or liquidity under GAAP. We utilize Reported EBITDA in evaluating our performance and in allocating resources to our segments. Refer to the end of the Results of Operations section for a reconciliation of Reported EBITDA to net income attributable to Vail Resorts, Inc. We also believe that Net Debt is an important measurement as it is an indicator of our ability to obtain additional capital resources for our future cash needs. Refer to the end of the Results of Operations section for a reconciliation of Net Debt. Items excluded from Reported EBITDA and Net Debt are significant components in understanding and assessing financial performance or liquidity. Reported EBITDA and Net Debt should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the Consolidated Financial Statements as indicators of financial performance or liquidity. Because Reported EBITDA and Net Debt are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, Reported EBITDA and Net Debt as presented may not be comparable to other similarly titled measures of other companies. Overview Our operations are grouped into three integrated and interdependent segments: Mountain, Lodging and Real Estate. Resort is the combination of the Mountain and Lodging segments. The Mountain, Lodging and Real Estate segments represented approximately 79%, 18% and 3%, respectively, of our net revenue for Fiscal 2015. Mountain Segment During Fiscal 2015 the Mountain segment was comprised of the operations of ten mountain resort properties at the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado (“Colorado” resorts); the Park City (acquired in September 2014) and Canyons (transaction entered into in May 2013) mountain resorts in Park City, Utah (“Utah” resorts); the Heavenly, Northstar and Kirkwood mountain resorts in the Lake Tahoe area of California and Nevada (“Tahoe” resorts); Perisher Ski resort (“Perisher” acquired in June 2015) in New South Wales, Australia; and, the ski areas of Afton Alps in Minnesota and Mount Brighton in Michigan (both acquired in December 2012) (“Urban” ski areas); as well as ancillary services, primarily including ski school, dining, retail/rental operations, and for Perisher also lodging and transportation operations. Our mountain resorts located in the U.S. were open for business for the 2014/2015 ski season primarily from mid- November through mid-April, which is the peak operating season for the Mountain segment. Our single largest source of Mountain segment revenue is the sale of lift tickets (including season passes), which represented approximately 49%, 46% and 45% of Mountain segment net revenue for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Lift revenue is driven by volume and pricing. Pricing is impacted by both absolute pricing, as well as the demographic mix of guests, which impacts the price points at which various products are purchased. The demographic mix of guests to our U.S. mountain resorts is divided into two primary categories: (1) out-of-state and international (“Destination”) guests and (2) in- state and local (“In-State”) guests. For the 2014/2015 ski season, Destination guests comprised approximately 59% of our mountain resort skier visits, while In-State guests comprised approximately 41% of our mountain resort skier visits, which compares to approximately 56% and 44%, respectively for the 2013/2014 and 2012/2013 ski seasons. Destination guests generally purchase our higher-priced lift ticket products and utilize more ancillary services such as ski school, dining and retail/rental, as well as lodging at or around our mountain resorts. Destination guest visitation is less likely to be impacted by changes in the weather, but can be more impacted by adverse economic conditions or the global geopolitical climate. In-State guests tend to be more value-oriented and weather sensitive. We offer a variety of season pass products for 37 all of our mountain resorts and Urban ski areas, marketed towards both Destination and In-State guests. Our season pass product offerings range from providing access to one or a combination of our mountain resorts and Urban ski areas to our Epic Season Pass, which allows pass holders unlimited and unrestricted access to all of our mountain resorts and Urban ski areas. Our season pass program provides a compelling value proposition to our guests, which in turn assists us in developing a loyal base of customers who commit to ski at our mountain resorts and Urban ski areas generally in advance of the ski season and typically ski more days each season at our mountain resorts and Urban ski areas than those guests who do not buy season passes. As such, our season pass program drives strong customer loyalty; mitigates exposure to more weather sensitive guests; and, generates additional ancillary spending. In addition, our season pass program attracts new guests to our mountain resorts and Urban ski areas. All of our season pass products, including the Epic Pass, are predominately sold prior to the start of the ski season. Season pass revenue, although primarily collected prior to the ski season, is recognized in the Consolidated Statement of Operations ratably over the ski season. For Fiscal 2015, Fiscal 2014 and Fiscal 2013, approximately 40%, 40% and 38%, respectively, of total lift revenue was derived from season pass revenue. The cost structure of our mountain resort operations has a significant fixed component with variable expenses including, but not limited to, Forest Service fees, credit card fees, retail/rental cost of sales and labor, ski school labor and dining operations; as such, profit margins can fluctuate greatly based on the level of revenues. Lodging Segment Operations within the Lodging segment include (i) ownership/management of a group of luxury hotels through the RockResorts brand, the majority of which are proximate to our mountain resorts; (ii) ownership/management of non- RockResorts branded hotels and condominiums proximate to our mountain resorts; (iii) NPS concessionaire properties including GTLC; (iv) CME, a Colorado resort ground transportation company; and, (v) mountain resort golf courses. The performance of lodging properties (including managed condominium units) proximate to our mountain resorts, and CME, is closely aligned with the performance of the Mountain segment and generally experiences similar seasonal trends, particularly with respect to visitation by Destination guests, and represented approximately 70%, 71% and 67% of Lodging segment net revenue (excluding Lodging segment revenue associated with reimbursement of payroll costs) for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Management primarily focuses on Lodging net revenue excluding payroll cost reimbursements and Lodging operating expense excluding reimbursed payroll costs (which are not measures of financial performance under GAAP) as the reimbursements are made based upon the costs incurred with no added margin, as such the revenue and corresponding expense have no effect on our Lodging Reported EBITDA which we use to evaluate Lodging segment performance. Revenue of the Lodging segment during our first and fourth fiscal quarters is generated primarily by the operations of our NPS concessionaire properties (as their operating season generally occurs from June to the end of September); mountain resort golf operations and seasonally low operations from our other owned and managed properties and businesses. Real Estate Segment The principal activities of our Real Estate segment include the marketing and selling of remaining condominium units that are available for sale, which primarily relate to The Ritz-Carlton Residences, Vail, and One Ski Hill Place in Breckenridge; planning for future real estate development projects, including zoning and acquisition of applicable permits; and, the occasional purchase of selected strategic land parcels for future development, as well as the sale of land parcels to third-party developers. Revenue from vertical development projects is not recognized until closing of individual units within a project, which occurs after substantial completion of the project. Additionally, our real estate development projects most often result in the creation of certain resort assets that provide additional benefit to the Mountain and Lodging segments. We continue undertaking preliminary planning and design work on future projects and are pursuing opportunities with third-party developers rather than undertaking our own significant vertical development projects. We believe that, due to our low carrying cost of real estate land investments, we are well situated to promote future projects with third-party developers while limiting our financial risk. Our revenue from the Real Estate segment, and associated expense, can fluctuate significantly based upon the timing of closings and the type of real estate being sold, causing volatility in the Real Estate segment's operating results from period to period. Recent Trends, Risks and Uncertainties We have identified the following important factors (as well as uncertainties associated with such factors) that could impact our future financial performance: • The timing and amount of snowfall can have an impact on Mountain and Lodging revenue particularly in regards to skier visits and the duration and frequency of guest visitation. To help mitigate this impact, we sell a variety of season pass products prior to the beginning of the ski season resulting in a more stabilized stream of lift revenue. Additionally, our season pass products provide a compelling value proposition to our guests, which in turn creates a 38 • • • • • guest commitment predominantly prior to the start of the ski season. In March 2015, we began our pre-season pass sales program for the 2015/2016 ski season. Through September 20, 2015, pre-season pass sales for the upcoming 2015/2016 ski season have increased approximately 16% in units and increased approximately 22% in sales dollars, compared to the prior year period ended September 21, 2014, excluding pass sales at Perisher. We cannot predict if this favorable trend will continue through the fall 2015 pass sales campaign, nor can we predict the overall impact that season pass sales will have on lift revenue for the 2015/2016 ski season. In Fiscal 2015, our lift revenue was favorably impacted by price increases at our mountain resorts that were implemented for the 2014/2015 ski season. Prices for the 2015/2016 ski season have not yet been finalized; and, as such, there can be no assurances as to the level of price increases, if any, which will occur and the impact that pricing may have on visitation or revenue. Our Fiscal 2015 results for our Mountain and Lodging segments showed strong improvement over Fiscal 2014 largely due to strong pass sales growth for the 2014/2015 ski season, an increase in overall visitation at our Colorado resorts, and improved ancillary guest spend in our ski school, dining and retail/rental operations, as well as the addition of Park City and Perisher. However, our Fiscal 2015 results were negatively impacted by very poor conditions in the Tahoe region during the 2014/2015 ski season. We cannot predict whether snowfall levels will return to historical averages at our Tahoe resorts or that our Colorado and Utah resorts will experience normal snowfall conditions for the upcoming 2015/2016 ski season nor can we estimate the impact there may be to advance bookings, guest travel, season pass sales, lift revenue (excluding season passes), retail/rental sales or other ancillary services revenue next ski season as a result of past snowfall conditions. Although many key economic indicators have improved including stronger consumer confidence and declines in the unemployment rate, the growth in the U.S. economy may be challenged by declining or slowing growth in many economies outside of the U.S., accompanied by devaluation of currencies and, lower commodity prices. Given these economic trends and uncertainties, we cannot predict what the impact will be on overall travel and leisure spending or more specifically, on our guest visitation, guest spending or other related trends for the upcoming 2015/2016 ski season. In May 2013, we entered into a long-term lease with Talisker Corporation (“Talisker”) under which we assumed resort operations of Canyons, which includes the ski area and related amenities. In addition to the lease, we entered into ancillary transaction documents setting forth our rights related to, among other things, the litigation between the then current operator of Park City and Talisker concerning the validity of a lease of the Talisker-owned land under the ski terrain of Park City (excluding the base area). On September 11, 2014, we entered into a Purchase and Sale Agreement (the “Park City Purchase Agreement”) providing for the acquisition of substantially all of the assets related to Park City. Pursuant to the Park City Purchase Agreement and ancillary transaction documents dated the same date, we assumed resort operations of Park City. In addition, the parties entered into ancillary transaction documents, including an agreement that settled all litigation related to the validity of the lease of the Talisker-owned land. In connection with settling the litigation, we recorded a non-cash gain of $16.4 million during Fiscal 2015, based upon the estimated fair value of the settlement. We expect that Park City will significantly contribute to our results of operations; however, we cannot predict whether we will realize all of the synergies expected from the operations of our Utah resorts nor can we predict all the resources required to integrate Park City operations and the ultimate impact our Utah resorts will have on our future results of operations. On March 30, 2015, we entered into a Purchase and Sale Agreement (the “Perisher Purchase Agreement”) with Murray Publishers Pty Ltd, Consolidated Press Holdings Pty Limited, Transfield Corporate Pty Limited and Transfield Pty Limited (collectively, “Perisher Sellers”) providing for the acquisition of the entities that operate Perisher in New South Wales, Australia. On June 30, 2015, we closed on the acquisition of Perisher, for total cash consideration of AU$176.2 million (approximately US$134.8 million), excluding cash acquired and assumed working capital. The cash purchase price was funded through borrowings from the revolving portion of our senior credit facility, the Seventh Amended and Restated Credit Agreement (the “Credit Agreement”). We expect that Perisher will positively contribute to our results of operations with its peak operating season occurring during our first and fourth fiscal quarters. However, we cannot predict whether we will realize all of the synergies expected from the operations of Perisher and the ultimate impact Perisher will have on our future results of operations. The estimated fair values of assets acquired and liabilities assumed in the Perisher acquisition are preliminary and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. We believe that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but we are obtaining additional information necessary to finalize those fair values. Therefore, the preliminary measurements of fair value reflected within the Consolidated Balance Sheets as of July 31, 2015 are subject to change. 39 • • • As of July 31, 2015, we had $35.5 million in cash and cash equivalents, as well as $141.8 million available under the revolver component of our Credit Agreement (which represents the total commitment of $400.0 million less outstanding borrowing of $185.0 million and certain letters of credit outstanding of $73.2 million). The outstanding borrowings under the revolver component of our Credit Agreement are primarily a result of funding the cash purchase price of AU$176.2 million (approximately US$134.8 million), excluding cash acquired, for our acquisition of Perisher. In addition, the cash purchase price of $182.5 million for our acquisition of Park City in September 2014 was funded through borrowings under the revolver portion of our senior credit facility, the Sixth Amended and Restated Credit Agreement (the “Prior Credit Agreement”) which was repaid during Fiscal 2015 through cash flow generated from operating activities. In May 2015, we redeemed the outstanding $215.0 million aggregate principal amount of 6.50% Senior Subordinated Notes due 2019 (“6.50% Notes”) and the $41.2 million aggregate principal amount of 6.95% Eagle County Industrial Development Bonds ("Industrial Development Bonds"). Upon completion of the redemptions, no amounts of the 6.50% Notes or Industrial Development Bonds remain outstanding as of July 31, 2015. Additionally, we amended our Prior Credit Agreement to, among other items, provide for a $250.0 million term loan facility due May 2020, which borrowings from the term loan facility were used to fund the redemptions. We believe that the terms of our Credit Agreement allow for sufficient flexibility in our ability to make future acquisitions, investments, distributions to stockholders and incur additional debt. This, combined with the continued positive cash flow from operating activities of our Mountain and Lodging segments less resort capital expenditures, has and is anticipated to continue to provide us with significant liquidity. We believe our liquidity will allow us to consider strategic investments and other forms of returning value to our stockholders including the continued payment of a quarterly cash dividend. Real Estate Reported EBITDA is highly dependent on, among other things, the timing of closings on condominium units available for sale, which determines when revenue and associated cost of sales is recognized. Changes to the anticipated timing or mix of closing on one or more real estate projects, or unit closings within a real estate project, could materially impact Real Estate Reported EBITDA for a particular quarter or fiscal year. As of July 31, 2015, we had nine units (of which two units sold subsequent to July 31, 2015) at The Ritz-Carlton Residences, Vail and four units at One Ski Hill Place in Breckenridge available for sale with a remaining book value of approximately $28.0 million for both projects as of July 31, 2015. We cannot predict the ultimate number of units that we will sell, the ultimate price we will receive, or when the units will sell, although we currently anticipate the selling process will take less than two years to complete assuming continued stability in resort real estate markets. In accordance with GAAP, we test goodwill and indefinite-lived intangible assets for impairment annually, as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of our reporting units or indefinite-lived intangible assets below book value. We also evaluate long-lived assets (including real estate held for sale) for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate the recoverability of our goodwill by estimating the future discounted cash flows of our reporting units and terminal values of the businesses using projected future levels of income, as well as business trends, prospects and market and economic conditions. We evaluate the recoverability of indefinite-lived intangible assets using the income approach based upon estimated future revenue streams, and we evaluate long-lived assets based upon estimated undiscounted future cash flows. Our Fiscal 2015 annual impairment test did not result in a goodwill or indefinite-lived intangible asset impairment (see "Critical Accounting Policies" in this section of this Form 10-K). However, if lower than projected levels of cash flows were to occur due to prolonged abnormal weather conditions or a prolonged weakness in general economic conditions, among other risks, it could cause less than expected growth and/or a reduction in terminal values and cash flows and could result in an impairment charge attributable to certain goodwill, indefinite-lived intangible assets and/or long- lived assets, negatively impacting our results of operations and stockholders' equity. 40 Results of Operations Summary Shown below is a summary of operating results for Fiscal 2015, Fiscal 2014 and Fiscal 2013 (in thousands): Mountain Reported EBITDA Lodging Reported EBITDA Resort Reported EBITDA Real Estate Reported EBITDA Income before provision for income taxes Net income attributable to Vail Resorts, Inc. 2015 Year Ended July 31, 2014 2013 344,104 21,676 365,780 (6,915) 149,328 114,754 $ $ 252,050 16,724 268,774 (7,040) 44,072 28,478 $ $ 228,699 12,161 240,860 (9,106) 59,229 37,743 $ $ 41 Mountain Segment Mountain segment operating results for Fiscal 2015, Fiscal 2014 and Fiscal 2013 are presented by category as follows (in thousands, except ETP): Year Ended July 31, 2014 2015 Percentage Increase/(Decrease) 2013 2015/2014 2014/2013 Net Mountain revenue: Lift Ski school Dining Retail/rental Other Total Mountain net revenue Mountain operating expense: Labor and labor-related benefits Retail cost of sales Resort related fees General and administrative Other $ $ $ Total Mountain operating expense $ Gain on litigation settlement Mountain equity investment income, net Mountain Reported EBITDA Total skier visits ETP $ $ 536,458 126,206 101,010 219,153 121,202 1,104,029 291,582 87,817 59,685 143,772 194,291 777,147 16,400 822 344,104 8,466 63.37 $ $ $ $ $ $ 447,271 109,442 89,892 210,387 106,581 963,573 266,411 88,291 49,168 125,678 183,237 712,785 — 1,262 252,050 7,688 58.18 $ $ $ $ $ $ 390,820 95,254 81,175 199,418 100,847 867,514 243,208 88,500 42,020 109,181 156,797 639,706 — 891 228,699 6,977 56.02 19.9 % 15.3 % 12.4 % 4.2 % 13.7 % 14.6 % 9.4 % (0.5)% 21.4 % 14.4 % 6.0 % 9.0 % nm (34.9)% 36.5 % 10.1 % 8.9 % 14.4 % 14.9 % 10.7 % 5.5 % 5.7 % 11.1 % 9.5 % (0.2)% 17.0 % 15.1 % 16.9 % 11.4 % nm 41.6 % 10.2 % 10.2 % 3.9 % Certain Mountain segment operating expenses presented above for Fiscal 2014 and Fiscal 2013 have been reclassified to conform to Fiscal 2015 presentation. Mountain Reported EBITDA includes $11.8 million, $10.3 million and $9.0 million of stock-based compensation expense for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Fiscal 2015 compared to Fiscal 2014 Fiscal 2015 results reflect an increase in Mountain net revenue of $140.5 million, or 14.6%, compared to Fiscal 2014. This increase was primarily driven by strong pass sales growth for the 2014/2015 ski season, improved results at our Colorado resorts, which recorded increases in overall visitation, ancillary guest spend and yields for ski school, dining and retail/rental operations, as well as the addition of Park City (acquired September 2014) and Perisher (acquired June 2015). Perisher provided $7.4 million of incremental EBITDA, which includes $5.7 million of transaction, duties and transition costs, from one month of peak season operations. Additionally, Mountain Reported EBITDA for Fiscal 2015 was also positively impacted by the $16.4 million non-cash gain on the Park City litigation settlement. The non-cash gain on the Park City litigation represents the estimated fair value of the settlement, which we obtained the right to in the Canyons transaction, from the Canyons transaction date of May 29, 2013 to the Park City acquisition date. However, our results were negatively impacted by a challenging ski season for our Tahoe resorts, which experienced unseasonably warm temperatures and very low snowfall levels during the 2014/2015 ski season, adversely impacting skier visitation and guest spending. These poor conditions in the Tahoe region resulted in a 16.4% decline in overall skier visitation at our Tahoe resorts for the 2014/2015 ski season compared to the prior year, which also was impacted by challenging conditions. Lift revenue increased $89.2 million, or 19.9%, from the prior year, resulting from a $49.2 million, or 18.2%, increase in lift revenue excluding season pass revenue, as well as a $40.0 million, or 22.6%, increase in season pass revenue. The increase in 42 lift revenue excluding season pass revenue was driven by an increase in ETP excluding season pass holders of 7.2%, along with incremental revenue of $29.4 million from Park City and $9.0 million from Perisher, partially offset by lower lift revenue excluding season pass revenue at our Tahoe resorts, resulting from a decline in visitation excluding season pass holders. The increase in season pass revenue was driven by a combination of both an increase in units sold and pricing, along with incremental Perisher season pass revenue of $2.9 million. Total ETP increased $5.19, or 8.9%, due primarily to a combination of price increases in both lift ticket products and season pass products and lower average visitation by season pass holders during the 2014/2015 ski season, compared to the same period in the prior year. Ski school revenue increased $16.8 million, or 15.3%, for Fiscal 2015 compared to Fiscal 2014, with ski school revenue at our Colorado resorts increasing $5.5 million, or 6.4%, primarily driven by an increase in yield per skier visit; incremental revenue of $9.1 million and $2.7 million from Park City and Perisher, respectively; partially offset by declines in ski school revenue of $1.1 million, or 7.0%, at our Tahoe resorts, driven by a decline in skier visitation as discussed above. Dining revenue increased $11.1 million, or 12.4%, for Fiscal 2015 compared to Fiscal 2014, and was primarily attributable to our Colorado resorts generating a $4.2 million, or 6.7%, increase in revenue driven by higher yields per skier visit and improved summer visitation; as well as incremental revenue from Park City of $5.7 million and Perisher of $1.9 million; partially offset by declines in dining revenue at our Tahoe resorts of $0.7 million, or 3.8%, primarily driven by decreased skier visitation. Retail/rental revenue increased $8.8 million, or 4.2%, for Fiscal 2015 compared to Fiscal 2014 due to an increase in rental revenue of $5.9 million, or 10.7%, and an increase in retail sales of $2.9 million, or 1.8%. The increase in rental revenue was largely driven by stores in Colorado and the addition of Park City of $1.8 million and Perisher of $1.4 million. Retail revenue was favorably impacted by an increase in sales volume at our stores in Colorado (including strong sales at pre-ski season sales events) and incremental revenue from Park City of $1.5 million and Perisher of $0.6 million. The increases in retail sales were partially offset by the elimination of on-line retail sales in Fiscal 2015 due to the shut down of our on-line retail platform in Fiscal 2014 and declines in sales volume at stores proximate to our Tahoe resorts. Other revenue mainly consists of summer visitation and mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing and internet advertising revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue. Other revenue also is comprised of Perisher lodging and transportation revenue. For Fiscal 2015, other revenue increased $14.6 million, or 13.7%, compared to Fiscal 2014, primarily due to increases in summer activities revenue and municipal services revenue, as well as incremental revenue of $5.3 million from Park City and $3.3 million from Perisher. Operating expense for Fiscal 2015 increased $64.4 million, or 9.0%, compared to Fiscal 2014, which includes incremental operating expense from Park City of $38.5 million (including current year Park City litigation, integration and transaction costs of $5.5 million) and incremental operating expense from Perisher of $14.4 million (including transaction, duties and transition costs of $5.7 million). Operating expense in the prior year included $9.8 million of Canyons integration and Park City litigation related expenses. Excluding Park City and Perisher related expenses and Canyons integration expense, operating expense increased $21.3 million, or 3.0%. Labor and labor-related benefits (excluding Park City and Perisher) increased $7.0 million, or 2.6%, primarily due to normal wage adjustments. Retail cost of sales decreased $0.5 million, or 0.5%, as a result of improvement in the gross profit margin percentage at our retail outlets combined with no on-line retail sales in Fiscal 2015 due to the shutdown of our on-line retail platform in Fiscal 2014 (as discussed above), which had associated lower gross profit margins. Resort related fees (excluding Park City and Perisher) increased $4.8 million, or 9.8%, due to overall increases in revenue upon which those fees are based. General and administrative expense (excluding Park City and Perisher) increased $13.9 million, or 11.0%, primarily due to higher Mountain segment component of allocated corporate costs including increased information and technology expense, increased sales and marketing expense, increased human resources expense and increased legal costs. Other expense (excluding expenses related to Park City and Perisher, and Canyons integration expense) decreased $2.7 million, or 1.5%, primarily due to lower fuel and supplies expense, partially offset by higher operating expenses including food and beverage cost of sales commensurate with increased dining revenue. Mountain equity investment income, net primarily includes our share of income from the operations of a real estate brokerage joint venture. The decrease in equity investment income for Fiscal 2015 is primarily due to decreased commissions earned by the brokerage due to a lower level of real estate closures compared to Fiscal 2014. Fiscal 2014 compared to Fiscal 2013 Fiscal 2014 results reflect an increase in Mountain net revenue of $96.1 million, or 11.1%, compared to Fiscal 2013. This increase was primarily driven by strong pass sales growth for the 2013/2014 ski season, improved results for our Colorado resorts compared to Fiscal 2013, including particularly strong results in the spring break holiday time periods, which resulted in 43 an increase in visitation of 8.4% for the 2013/2014 ski season compared to the 2012/2013 ski season, combined with an improvement in yields per skier visit in ancillary guest spend in ski school, dining and retail/rental operations at our Colorado resorts and the addition of Canyons (transaction entered into in May 2013). However, our results were negatively impacted by very poor conditions in the Tahoe region during the 2013/2014 ski season. These challenging conditions resulted in a decrease in skier visitation at our Tahoe resorts of 16.2% for the 2013/2014 ski season compared to the 2012/2013 ski season. Lift revenue for Fiscal 2014 increased $56.4 million, or 14.4%, compared to Fiscal 2013, resulting from a $29.6 million, or 20.1%, increase in season pass revenue, as well as a $26.8 million, or 11.1%, increase in lift revenue excluding season pass revenue. The increase in season pass revenue was driven by a combination of both an increase in units sold and pricing and was favorably impacted by our entry into the Utah ski market with the addition of Canyons and the first full season of pass sales in our Urban ski area markets. The increase in lift revenue excluding season pass revenue was driven by an increase in ETP excluding season pass holders of 7.5%, along with higher visitation excluding season pass holders at our Colorado resorts combined with incremental revenue of $18.8 million from Canyons. These increases were partially offset by lower lift revenue excluding season pass revenue at our Tahoe resorts which was driven by a decline in visitation excluding season pass holders. Total ETP increased $2.16, or 3.9%, due primarily to price increases in both our lead/window lift ticket products and season pass products, partially offset by a higher mix of season pass revenue which has a lower associated ETP. Ski school revenue increased $14.2 million, or 14.9%, for Fiscal 2014 compared to Fiscal 2013, with ski school revenue at our Colorado resorts increasing $8.3 million, or 10.6%, and incremental revenue of $7.1 million from Canyons, partially offset by declines in ski school revenue of $1.5 million, or 8.6%, at our Tahoe resorts, driven by a decline in skier visitation as discussed above. Dining revenue for Fiscal 2014 increased $8.7 million, or 10.7%, compared to Fiscal 2013. This increase was primarily attributable to our Colorado resorts generating a $6.6 million, or 11.6%, increase in revenue due to increased skier visitation, higher yields per skier visit and improved summer visitation. Additionally, dining revenue was favorably impacted by incremental dining revenue of $4.5 million at Canyons. Dining revenue at our Tahoe resorts decreased $4.1 million, or 18.0%, compared to Fiscal 2013 driven by the decrease in skier visitation and fewer on-mountain locations being open during the first half of the 2013/2014 ski season due to limited available ski terrain combined with reduced operations for on-mountain locations during the second half of the 2013/2014 ski season as a result of lower volumes. Retail/rental revenue increased $11.0 million, or 5.5%, for Fiscal 2014 compared to Fiscal 2013 as we experienced an increase in both retail sales of $5.5 million, or 3.6%, and rental revenue of $5.5 million, or 11.4%. The increase in retail sales was driven by an increase in sales volume at stores proximate to our Colorado resorts, as well as our Colorado front range stores, incremental retail sales generated by Hoigaard's (our mid-west retailer acquired in April 2013) and the addition of Canyons and Urban ski areas. These retail sales increases were partially offset by a decrease in on-line sales due to the shutdown of our on- line retail platform in Fiscal 2014 as we transition to a different approach to on-line sales, and lower sales at stores proximate to our Tahoe resorts and Any Mountain stores located in the San Francisco Bay Area, which were impacted by the poor snowfall in the Tahoe region during the 2013/2014 ski season. The increase in rental revenue was primarily driven by stores proximate to our Colorado resorts, which experienced higher volumes due to increased skier visitation and the addition of Canyons and Urban ski areas, partially offset by revenue declines at stores proximate to our Tahoe resorts and Any Mountain stores, which were negatively impacted by poor snowfall as previously discussed. Other revenue mainly consists of summer visitation and other mountain activities revenue, employee housing revenue, guest services revenue, commercial leasing revenue, marketing and internet advertising revenue, private club revenue (which includes both club dues and amortization of initiation fees), municipal services revenue and other recreation activity revenue. For Fiscal 2014, other revenue increased $5.7 million, or 5.7%, compared to Fiscal 2013, primarily due to incremental revenue from Canyons of $1.7 million, as well as increases in summer activities revenue, guest services revenue, employee housing revenue and private club revenue, partially offset by declines in marketing and internet advertising revenue. Operating expense for Fiscal 2014 increased $73.1 million, or 11.4%, compared to Fiscal 2013, which includes incremental operating expense from Canyons of $36.8 million (including Fiscal 2014 Canyons transaction, integration and Park City litigation expense of $9.8 million, net of Fiscal 2013 Canyons transaction and integration expense of $5.5 million). Excluding these expenses, operating expense increased $36.3 million, or 5.7%. Labor and labor-related benefits (excluding Canyons) increased $8.9 million, or 3.7%, primarily due to normal wage adjustments, higher bonus expense, higher employee medical costs and increased staffing levels at our Colorado resorts to support higher volumes primarily in mountain operations, ski school, on-mountain dining, summer operations and higher store labor primarily due to new retail stores in Fiscal 2014. Resort related fees (excluding Canyons) increased $4.3 million, or 10.3%, due to overall increases in revenue upon which those fees are based. General and administrative expense (excluding Canyons) increased $10.5 million, or 9.7%, primarily due to higher Mountain segment component of allocated corporate costs including increased sales and marketing expense. Other expense (excluding Canyons operating, transaction, integration and Park City litigation expenses from both Fiscal 2014 and 2013) 44 increased $14.3 million, or 9.4%, which was driven by higher operating expenses including food and beverage cost of sales, supplies expense and utilities expense. Additionally, retail cost of sales decreased $1.7 million, or 1.9%, compared to an increase in retail sales of $5.5 million, or 3.6%, as a result of improvement in the gross profit margin percentage at our retail outlets combined with a decline in on-line sales due to the shutdown of our on-line retail platform (as discussed above) which had associated lower gross profit margins. Mountain equity investment income, net primarily includes our share of income from the operations of a real estate brokerage joint venture. The increase in equity investment income for Fiscal 2014 is primarily due to increased commissions earned by the brokerage due to a higher level of real estate closures compared to Fiscal 2013. Lodging Segment Lodging segment operating results for Fiscal 2015, Fiscal 2014 and Fiscal 2013 are presented by category as follows (in thousands, except ADR and RevPAR): Year Ended July 31, 2014 2015 Percentage Increase/(Decrease) 2013 2015/2014 2014/2013 Lodging net revenue: Owned hotel rooms Managed condominium rooms Dining Transportation Golf Other Payroll cost reimbursements Total Lodging net revenue Lodging operating expense: Labor and labor-related benefits General and administrative Other Reimbursed payroll costs Total Lodging operating expense Lodging Reported EBITDA Owned hotel statistics: ADR RevPar Managed condominium statistics: ADR RevPar Owned hotel and managed condominium statistics (combined): ADR RevPar $ $ $ $ $ $ $ $ $ $ $ 57,916 58,936 46,209 23,079 16,340 41,760 244,240 10,313 254,553 110,168 32,481 79,915 222,564 10,313 232,877 21,676 216.76 140.28 316.32 101.19 270.84 112.67 $ $ $ $ $ $ $ $ $ $ $ 53,199 55,214 44,023 22,006 15,410 42,204 232,056 10,231 242,287 105,504 30,022 79,806 215,332 10,231 225,563 16,724 205.59 131.04 301.03 88.60 257.14 100.57 $ $ $ $ $ $ $ $ $ $ $ 48,449 44,486 33,809 19,602 15,237 38,562 200,145 10,829 210,974 93,840 25,573 68,571 187,984 10,829 198,813 12,161 198.34 119.59 313.26 79.29 253.91 91.76 8.9 % 6.7 % 5.0 % 4.9 % 6.0 % (1.1)% 5.3 % 0.8 % 5.1 % 4.4 % 8.2 % 0.1 % 3.4 % 0.8 % 3.2 % 29.6 % 5.4% 7.1% 5.1% 14.2% 5.3% 12.0% 9.8 % 24.1 % 30.2 % 12.3 % 1.1 % 9.4 % 15.9 % (5.5)% 14.8 % 12.4 % 17.4 % 16.4 % 14.5 % (5.5)% 13.5 % 37.5 % 3.7 % 9.6 % (3.9)% 11.7 % 1.3 % 9.6 % Certain Lodging segment operating expenses presented above for Fiscal 2014 and Fiscal 2013 have been reclassified to conform to Fiscal 2015 presentation. In addition, the Lodging segment ADR and RevPAR statistics presented above for Fiscal 2014 and Fiscal 2013 have been adjusted to include the managed condominium rooms at Canyons (assumed in May 2013), and 45 exclude resort fee revenue from the calculations for ADR and RevPAR, as stipulated by the Uniform System of Accounts for the Lodging Industry, Eleventh Revised Edition. Lodging Reported EBITDA includes $2.6 million, $2.2 million and $1.9 million of stock-based compensation expense for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Fiscal 2015 compared to Fiscal 2014 Total Lodging net revenue (excluding payroll cost reimbursements) for Fiscal 2015 increased $12.2 million, or 5.3%, as compared to Fiscal 2014, primarily due to an increase in transient guest visitation to our Colorado lodging properties due to increased skier visitation during the 2014/2015 ski season (discussed in the mountain section); an increase in revenue at our mountain properties from improved summer visitation; and, an increase in revenue at GTLC. Improved results at GTLC for Fiscal 2015 compared to Fiscal 2014 were primarily driven by increased occupancy, ADR and guest spending on ancillary activities and services during the fourth quarter of Fiscal 2015 combined with the improved results for the first quarter of Fiscal 2015 which were partially attributable to reduced operations for the first quarter of Fiscal 2014 due to the government shutdown in October 2013 and the early closure of the Colter Bay Marina in August 2013 due to low water levels. Revenue from owned hotel rooms increased $4.7 million, or 8.9%, for Fiscal 2015 compared to Fiscal 2014. Owned room revenue was positively impacted by GTLC and Flagg Ranch, which revenue increased $2.5 million, resulting from increased ADR and group visitation; and, an increase in revenue at our Colorado lodging properties, which revenue increased $2.2 million, driven by an increase in transient guest visitation attributable to increased skier visits at our Colorado mountain resorts, improved summer visitation and an increase in ADR. Revenue from managed condominium rooms increased $3.7 million, or 6.7%, for Fiscal 2015 compared to Fiscal 2014, and was attributable to an increase in transient guest visitation at our managed condominium rooms in Colorado due to increased skier visitation and increased summer visitation, and an increase in ADR. Dining revenue for Fiscal 2015 increased $2.2 million, or 5.0%, compared to Fiscal 2014, primarily due to increased dining revenue generated at GTLC, Flagg Ranch and Canyons. Transportation revenue increased $1.1 million, or 4.9%, for Fiscal 2015 compared to Fiscal 2014 primarily due to an increase in total passengers of 4.7%. Golf revenue increased $0.9 million, or 6.0%, compared to Fiscal 2014 primarily due to incremental revenue from reimbursable expenses for managing the Canyons golf course beginning in the summer of 2015. Other revenue for Fiscal 2015 decreased $0.4 million, or 1.1%, as compared to Fiscal 2014, primarily due to a decrease of revenue from conference services at Canyons and a decrease in other ancillary services revenue. Operating expense (excluding reimbursed payroll costs) increased $7.2 million, or 3.4%, for Fiscal 2015 compared to Fiscal 2014. Labor and labor-related benefits increased $4.7 million, or 4.4%, resulting from normal wage adjustments, higher staffing levels associated with increased occupancy, and increased bonus expense. General and administrative expense increased $2.5 million, or 8.2%, for Fiscal 2015 compared to Fiscal 2014 due to higher allocated corporate costs, including increased sales and marketing expense and information and technology expense. Other expense increased $0.1 million, or 0.1%, for Fiscal 2015 compared with Fiscal 2014, primarily due to higher food and beverage cost of sales, partially offset by lower fuel costs. Revenue from payroll cost reimbursements and the corresponding reimbursed payroll costs relates to payroll costs at managed hotel properties where we are the employer and all payroll costs are reimbursed by the owners of the properties under contractual arrangements. Since the reimbursements are made based upon the costs incurred with no added margin, the revenue and corresponding expense have no effect on our Lodging Reported EBITDA. Fiscal 2014 compared to Fiscal 2013 Total Lodging net revenue (excluding payroll cost reimbursements) for Fiscal 2014 increased $31.9 million, or 15.9%, as compared to Fiscal 2013, including $16.3 million of incremental revenue from the addition of Canyons. Excluding the operations of Canyons, total Lodging net revenue (before payroll cost reimbursements) increased $15.6 million, or 7.8%, primarily due to an increase in transient guest visitation to our Colorado lodging properties due to increased skier visitation (discussed in the mountain section), an increase in revenue at our mountain resort properties from improved summer visitation and increased group business at our Colorado resort properties in Fiscal 2014 compared to Fiscal 2013. Revenue from owned hotel rooms increased $4.8 million, or 9.8%, for Fiscal 2014 compared to Fiscal 2013. Owned room revenue was primarily driven by an increase of $3.7 million from our Colorado lodging properties, resulting from an increase in group business and an increase in transient guest visitation attributable to increased skier visits at our Colorado resorts during the 2013/2014 ski season compared to the 2012/2013 ski season and improved summer visitation at our Colorado resorts. In addition, owned hotel room revenue was favorably impacted by an increase in occupancy and ADR at GTLC in the fourth quarter of Fiscal 2014 compared to Fiscal 2013. Overall, owned occupancy increased by 3.4 percentage points and RevPAR increased 9.6%. Revenue from managed condominium rooms increased $10.7 million, or 24.1%, for Fiscal 2014 compared to 46 Fiscal 2013, and was attributable to $7.1 million of incremental revenue from managed condominium units at Canyons, an increase in transient guest visitation at our managed condominium rooms in Colorado due to increased skier visitation, as well as an increase in group business at our Colorado resort properties. Dining revenue for Fiscal 2014 increased $10.2 million, or 30.2%, compared to Fiscal 2013, primarily due to $7.6 million in incremental Canyons dining revenue, as well as increased dining revenue from our Vail and Breckenridge mountain resort properties and an increase in group business at our Keystone resort. Transportation revenue increased $2.4 million, or 12.3%, for Fiscal 2014 compared to Fiscal 2013 primarily due to an increase in total passengers of 15.1%. Other revenue for Fiscal 2014 increased $3.6 million, or 9.4%, as compared to Fiscal 2013, primarily due to an increase in conference services provided to our group business at our Keystone resort and Canyons, increased spa revenue generated by our Colorado mountain properties and Canyons, increased employee housing revenue, an increase in revenue from our central reservations booking services, and increased retail and ancillary revenue from GTLC (during the fourth quarter of Fiscal 2014) and Canyons. These increases were partially offset by a decrease in ancillary revenue at GTLC during the first quarter of Fiscal 2014 due to the early closure in August 2013 of the Colter Bay Marina due to low water levels. Operating expense (excluding reimbursed payroll costs) increased $27.3 million, or 14.5%, for Fiscal 2014 compared to Fiscal 2013. Labor and labor-related benefits increased $11.7 million, or 12.4%, resulting from incremental labor costs associated with the Canyons, normal wage adjustments, higher staffing levels associated with increased occupancy, and increased staffing for conference services provided to our group business. Other expense increased $11.2 million, or 16.4%, primarily due to incremental expenses associated with Canyons, and higher variable operating costs including food and beverage cost of sales, repairs and maintenance, supplies, travel agent commissions and credit card fees. General and administrative expense increased $4.4 million, or 17.4%, for Fiscal 2014 compared to Fiscal 2013 due to higher allocated corporate costs, including an increase in expenses from our central reservations booking services, and increased marketing and sales expenses. Revenue from payroll cost reimbursements and the corresponding reimbursed payroll costs relates to payroll costs at managed hotel properties where we are the employer and all payroll costs are reimbursed by the owners of the properties under contractual arrangements. Since the reimbursements are made based upon the costs incurred with no added margin, the revenue and corresponding expense have no effect on our Lodging Reported EBITDA. Real Estate Segment Real Estate segment operating results for Fiscal 2015, Fiscal 2014 and Fiscal 2013 are presented by category as follows (in thousands): Total Real Estate net revenue Real Estate operating expense: Cost of sales (including sales commissions) Other Total Real Estate operating expense Gain on sale of real property Real Estate Reported EBITDA Year Ended July 31, Percentage Increase/(Decrease) 2015 2014 2013 2015/2014 2014/2013 $ 41,342 $ 48,786 $ 42,309 (15.3)% 15.3 % 34,765 13,643 48,408 151 $ (6,915) $ 41,274 14,552 55,826 — (7,040) $ 35,503 22,587 58,090 6,675 (9,106) (15.8)% (6.2)% (13.3)% nm 1.8 % 16.3 % (35.6)% (3.9)% (100)% 22.7 % Real Estate Reported EBITDA includes $1.3 million, $1.7 million and $1.4 million of stock-based compensation expense for Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Our Real Estate operating revenue is primarily determined by the timing of closings and the mix of real estate sold in any given period. Different types of projects have different revenue and profit margins; therefore, as the real estate inventory mix changes it can greatly impact Real Estate segment net revenue, operating expense and Real Estate Reported EBITDA. 47 Fiscal 2015 Real Estate segment net revenue for Fiscal 2015 was driven primarily by the closing of fourteen condominium units at One Ski Hill Place ($17.1 million of revenue with an average selling price per unit of $1.2 million and an average price per square foot of $1,145) and five condominium units at The Ritz-Carlton Residences, Vail ($13.7 million of revenue with an average selling price per unit of $2.7 million and an average price per square foot of $1,438). The average price per square foot for both projects is driven by their premier locations and the comprehensive and exclusive amenities related to these projects. Real Estate net revenue also included $8.5 million of revenue from the sale of a development land parcel in Vail and $0.6 million of rental revenue from placing unsold units into our rental program. Operating expense for Fiscal 2015 included cost of sales of $32.1 million primarily resulting from the closing of fourteen condominium units at One Ski Hill Place (average cost per square foot of $927), five condominium units at The Ritz-Carlton Residences, Vail (average cost per square foot of $1,129) and the sale of a development land parcel in Vail. The cost per square foot for the One Ski Hill Place and The Ritz-Carlton Residences, Vail projects is reflective of the high-end features and amenities and high construction costs associated with mountain resort development. Additionally, sales commissions of approximately $2.1 million were incurred commensurate with revenue recognized. Other operating expense of $13.6 million (including $1.3 million of stock-based compensation expense) was primarily comprised of general and administrative costs which includes marketing expense for the real estate available for sale (including those units that have not yet closed), carrying costs for units available for sale and overhead costs, such as labor and labor-related benefits and allocated corporate costs. Fiscal 2014 Real Estate segment net revenue for Fiscal 2014 was driven primarily by the closing of eight condominium units at The Ritz- Carlton Residences, Vail ($32.7 million of revenue with an average selling price per unit of $4.1 million and an average price per square foot of $1,367) and eleven condominium units at One Ski Hill Place ($13.9 million of revenue with an average selling price per unit of $1.3 million and an average price per square foot of $988). In addition, Real Estate net revenue included $1.4 million of rental revenue from placing certain of our unsold units into our rental program. Operating expense for Fiscal 2014 included cost of sales of $38.5 million resulting from the closing of eight condominium units at The Ritz-Carlton Residences, Vail (average cost per square foot of $1,120) and from the closing of eleven condominium units at One Ski Hill Place (average cost per square foot of $831). Additionally, sales commissions of approximately $2.6 million were incurred commensurate with revenue recognized. Other operating expense of $14.6 million (including $1.7 million of stock-based compensation expense) was primarily comprised of general and administrative costs which includes marketing expense for the real estate available for sale (including those units that have not yet closed), carrying costs for units available for sale and overhead costs, such as labor and labor-related benefits and allocated corporate costs. In addition, other segment operating expense includes $3.8 million (recorded as a credit to other expense) for the recovery of project costs on previously sold units. Fiscal 2013 Real Estate segment net revenue for Fiscal 2013 was driven primarily by the closing of ten condominium units at The Ritz- Carlton Residences, Vail ($25.7 million of revenue with an average selling price per unit of $2.6 million and an average price per square foot of $1,195) and twelve condominium units at One Ski Hill Place ($12.9 million of revenue with an average selling price per unit of $1.1 million and an average price per square foot of $924). Real Estate net revenue also included $1.5 million of rental revenue from placing certain of our unsold units into our rental program. Additionally, during Fiscal 2013 we recorded a gain on sale of real property of $6.7 million (net of $4.4 million in related cost of sales) for a land parcel at the base of Breckenridge's Peak 8 which sold for $11.1 million. Operating expense for Fiscal 2013 included cost of sales of $32.0 million resulting from the closing of ten condominium units at The Ritz-Carlton Residences, Vail (average cost per square foot of $987) and from the closing of twelve condominium units at One Ski Hill Place (average cost per square foot of $774). Additionally, sales commissions of approximately $2.4 million were incurred commensurate with revenue recognized. Other operating expense of $22.6 million (including $1.4 million of stock-based compensation expense) was primarily comprised of general and administrative costs which includes marketing expense for the real estate available for sale (including those units that have not yet closed), carrying costs for units available for sale and overhead costs, such as labor and labor-related benefits and allocated corporate costs. In addition, included in other segment operating expense is a $2.5 million charge recorded in the fourth quarter of Fiscal 2013 related to a legal dispute on a previously completed project. 48 Other Items In addition to segment operating results, the following material items contribute to our overall financial position. Depreciation and amortization. Depreciation and amortization expense for both Fiscal 2015 and Fiscal 2014 increased over the applicable prior fiscal year primarily due to an increase in the fixed asset base due to incremental capital expenditures and assets assumed in acquisitions. Change in fair value of contingent consideration. A gain of $3.6 million was recorded during Fiscal 2015 related to a decrease in the estimated fair value of the participating contingent payments to Talisker under the lease for Canyons. Commensurate with the acquisition of Park City (September 2014), the fair value of contingent consideration includes the resort operations of Park City in the calculation of EBITDA on which participating contingent payments are made, and increases the EBITDA threshold before which participating contingent payments are made by 10% of the purchase price paid by the Company for Park City along with all future capital expenditures associated with Canyons, Park City or the combined resort. A change in fair value of contingent consideration of $1.4 million was recorded as a charge in Fiscal 2014 and was related to an increase in the estimated fair value of the participating contingent payments to Talisker under the lease for Canyons. The estimated fair value of the contingent consideration was $6.9 million and $10.5 million as of July 31, 2015 and 2014, respectively. Loss on extinguishment of debt. In May 2015, we redeemed the remaining $215.0 million of our 6.50% Notes outstanding and the entire $41.2 million of our Industrial Development Bonds outstanding. As a result, we recorded a loss on extinguishment of debt of $11.0 million in Fiscal 2015 in connection with the redemptions. The loss included early redemption premiums of 3.25% for the 6.50% Notes and 4.00% for the Industrial Development Bonds, or $8.6 million in total, and a $2.4 million write- off of associated unamortized debt issuance costs. No amounts of the 6.50% Notes or Industrial Development Bonds remained outstanding as of July 31, 2015. In Fiscal 2014 we redeemed $175.0 million of our 6.50% Notes outstanding. As a result, we recorded a loss on extinguishment of debt of $10.8 million in Fiscal 2014 in connection with the redemption. The loss included an early redemption premium of 4.875%, or $8.5 million, for the portion of the principal redeemed, and a $2.3 million write-off of associated unamortized debt issuance costs. Interest expense. Interest expense for Fiscal 2015 decreased from Fiscal 2014 primarily due to the redemption of $175.0 million of our 6.50% Notes outstanding in July 2014; redemption of the remaining $215.0 million of our 6.50% Notes outstanding in May 2015; and, redemption of the entire $41.2 million of our Industrial Development Bonds outstanding in May 2015; partially offset by interest expense on the borrowings incurred under the Credit Agreement to fund the Park City and Perisher acquisitions and the $250.0 million term loan facility used to fund the redemption of the 6.50% Notes and Industrial Development Bonds in May 2015. Interest expense for Fiscal 2014 increased over Fiscal 2013 primarily due to $25.3 million of incremental interest expense related to the Canyons obligation recorded in conjunction with the Canyons transaction entered into in May 2013. Income taxes. Our effective tax rate was 23.2%, 36.0% and 36.5% in Fiscal 2015, Fiscal 2014 and Fiscal 2013, respectively. Our tax provision and effective tax rate are driven primarily by the amount of pre-tax income, which is adjusted for items that are deductible/non-deductible for tax purposes only (i.e. permanent items) and taxable income generated by state jurisdictions that varies from the consolidated pre-tax income. The income tax provision recorded for Fiscal 2015 reflects $23.8 million of income tax benefits due to the reversal of income tax contingencies, including accrued interest and penalties, resulting from a settlement with the Internal Revenue Service ("IRS") on the utilization of certain net operating losses ("NOLs"), as discussed below. In 2005, we amended previously filed tax returns (for the tax years from 1997 through 2002) in an effort to remove restrictions under Section 382 of the Internal Revenue Code on approximately $73.8 million of NOLs relating to fresh start accounting from our reorganization in 1992. As a result, we requested a refund related to the amended returns in the amount of $6.2 million and reduced our Federal tax liability in the amount of $19.6 million in subsequent tax returns. In 2006, the Internal Revenue Service ("IRS") completed its examination of our filing position in our amended returns and disallowed our request for refund and our position to remove the restriction on the NOLs. We appealed the examiner's disallowance of the NOLs to the Office of Appeals. In December 2008, the Office of Appeals denied our appeal, as well as a request for mediation. We disagreed with the IRS interpretation disallowing the utilization of the NOLs and in August 2009, filed a complaint in the United States District Court for the District of Colorado seeking recovery of $6.2 million in over payments that were previously denied by the IRS, plus interest. On July 1, 2011, the District Court granted us summary judgment, concluding that the IRS's decision disallowing the utilization of the NOLs was inappropriate. The District Court proceedings were stayed pending settlement discussions between the parties. We also filed two related tax proceedings in the United States Tax Court regarding calculation of NOL carryover deductions for tax years 2006, 2007 and 2008. The two proceedings involve substantially the same issues as the 49 litigation in the District Court wherein we disagreed with the IRS as to the utilization of NOLs. The Tax Court proceedings were continued pending settlement discussions between the In January 2015, the parties completed the execution of a comprehensive settlement agreement resolving all issues and computations in the above mentioned pending proceedings, which allowed us to utilize a significant portion of the NOLs. As a result, we reversed $27.7 million of other long-term liabilities related to uncertain tax benefits, and recorded income tax benefits of $23.8 million for the utilization of the NOLs, including the reversal of accrued interest and penalties, within our Consolidated Statements of Operations for Fiscal 2015. Reconciliation of Non-GAAP Measures The following table reconciles from segment Reported EBITDA to net income attributable to Vail Resorts, Inc. (in thousands): Mountain Reported EBITDA Lodging Reported EBITDA Resort Reported EBITDA Real Estate Reported EBITDA Total Reported EBITDA Depreciation and amortization Loss on disposal of fixed assets and other, net Change in fair value of contingent consideration Investment income, net Interest expense Loss on extinguishment of debt Income before provision for income taxes Provision for income taxes Net income Net loss attributable to noncontrolling interests Net income attributable to Vail Resorts, Inc. Year Ended July 31, 2014 2013 2015 344,104 21,676 365,780 (6,915) 358,865 (149,123) (2,057) 3,650 246 (51,241) (11,012) 149,328 (34,718) 114,610 144 114,754 $ $ 252,050 16,724 268,774 (7,040) 261,734 (140,601) (1,208) (1,400) 375 (63,997) (10,831) 44,072 (15,866) 28,206 272 28,478 $ $ 228,699 12,161 240,860 (9,106) 231,754 (132,688) (1,222) — 351 (38,966) — 59,229 (21,619) 37,610 133 37,743 $ $ The following table reconciles Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents) (in thousands): Long-term debt Long-term debt due within one year Total debt Less: cash and cash equivalents Net Debt Liquidity and Capital Resources Significant Sources of Cash July 31, 2015 2014 806,676 10,154 816,830 35,459 781,371 $ $ 625,600 1,022 626,622 44,406 582,216 $ $ Historically, we have lower cash available as of our fiscal year-end (as well as at the end of our first fiscal quarter of each year) as compared to our second and third fiscal quarter-ends primarily due to the seasonality of our Mountain segment operations. Additionally, cash provided by operating activities can be impacted by the timing or mix of closings on and investment in real estate development projects. We had $35.5 million of cash and cash equivalents as of July 31, 2015, compared to $44.4 million 50 as of July 31, 2014. We generated $303.7 million of cash from operating activities during Fiscal 2015 compared to $245.9 million and $222.4 million generated during Fiscal 2014 and Fiscal 2013, respectively. We currently anticipate that our Mountain and Lodging segment operating results will continue to provide a significant source of future operating cash flows (primarily those generated in our second and third fiscal quarters) combined with proceeds from the sale of remaining inventory of real estate available for sale from the completed Ritz-Carlton Residences, Vail and One Ski Hill Place at Breckenridge projects, and occasional land sales. In addition to our $35.5 million of cash and cash equivalents at July 31, 2015, we have $141.8 million available under our Credit Agreement (which represents the total commitment of $400.0 million less outstanding borrowing of $185.0 million and certain letters of credit outstanding of $73.2 million). We believe the Credit Agreement, which matures in 2020, provides adequate flexibility and is priced favorably with any new borrowings currently being priced at LIBOR plus 1.25%. Fiscal 2015 compared to Fiscal 2014 We generated $303.7 million of cash from operating activities in Fiscal 2015, an increase of $57.8 million when compared to the $245.9 million of cash generated in Fiscal 2014. The increase in operating cash flows was primarily a result of improved Mountain (including Park City and Perisher) and Lodging segment operating results in Fiscal 2015 compared to Fiscal 2014, excluding the non-cash gain on litigation settlement of $16.4 million recorded in Fiscal 2015; receipt of a $12.5 million legal settlement during Fiscal 2015; and, lower interest payments of $10.7 million primarily as a result from the pay-down and refinancing of our 6.50% Notes. These operating cash inflows were partially offset by a $10.0 million Park City litigation payment to Talisker during Fiscal 2015 and a decrease in the growth of accounts payable. Additionally, we generated $40.3 million in proceeds from real estate development project closings (net of sales commissions and deposits previously received) in Fiscal 2015 compared to $42.9 million in proceeds (net of sales commissions and deposits previously received) from real estate development project closings that occurred in Fiscal 2014. Cash used in investing activities increased by $309.2 million in Fiscal 2015 compared to Fiscal 2014, due to the acquisition of Park City for $182.5 million and Perisher for $124.6 million (net of cash acquired) during Fiscal 2015 and a $5.6 million increase in resort capital expenditures during Fiscal 2015 compared to Fiscal 2014, partially offset by cash received from the sale of real property. Cash provided by financing activities increased $337.5 million in Fiscal 2015 compared to Fiscal 2014, primarily due to $185.0 million of net borrowings under the revolving portion of our credit facility to fund the Perisher acquisition and off-season Mountain and Lodging operations, the early redemption of $175.0 million of principal under our 6.50% Notes in Fiscal 2014, an increase in the tax benefit realized for the exercise of stock appreciation rights and options of $8.3 million and a decrease in payments for commitments in conjunction with the Canyons transaction of $5.7 million. These net inflows were partially offset by an increase in the amount of cash dividends paid on our common stock of $30.5 million during Fiscal 2015 compared to Fiscal 2014. Fiscal 2014 compared to Fiscal 2013 We generated $245.9 million of cash from operating activities in Fiscal 2014, an increase of $23.5 million when compared to the $222.4 million of cash generated in Fiscal 2013. The increase in operating cash flows was primarily a result of improved Mountain and Lodging segment operating results in Fiscal 2014 compared to Fiscal 2013. Additionally, we generated $42.9 million in proceeds from real estate development project closings (net of sales commissions and deposits previously received) in Fiscal 2014 compared to $37.4 million in proceeds (net of sales commissions and deposits previously received) from real estate development project closings that occurred in Fiscal 2013. Additionally impacting cash flow from operating activities in Fiscal 2014 compared to Fiscal 2013 was an income tax refund of $6.8 million, payment of $10.6 million for the early redemption tender premium plus accrued interest on $175.0 million of principal redeemed under our 6.5% Notes, and an increase in accounts receivable. Cash used in investing activities increased by $9.7 million in Fiscal 2014 compared to Fiscal 2013, primarily due to a $23.4 million increase in resort capital expenditures during Fiscal 2014 compared to Fiscal 2013 and the cash receipt of $11.1 million related to the sale of real estate development land at the base of Breckenridge's Peak 8 in Fiscal 2013, partially offset by the acquisition of the Urban ski areas for a combined $20.0 million in Fiscal 2013 and a decrease in payments for commitments in conjunction with the Canyons transaction of $4.2 million. Cash used in financing activities increased $200.4 million in Fiscal 2014 compared to Fiscal 2013, primarily due to the early redemption of $175.0 million of principal under our 6.50% Notes in Fiscal 2014, an increase in the amount of cash dividends paid on our common stock of $16.7 million during Fiscal 2014 compared to Fiscal 2013, payments for commitments in 51 conjunction with the Canyons transaction of $5.7 million in Fiscal 2014, the payment of financing costs associated with the amended and restated Credit Agreement of $2.0 million in Fiscal 2014, as well as a decrease in proceeds from the exercise of stock options of $1.1 million in Fiscal 2014 compared to Fiscal 2013. Significant Uses of Cash Our cash uses include providing for working capital needs and capital expenditures for assets to be used in resort operations. We have historically invested significant cash in capital expenditures for our resort operations, and we expect to continue to make significant investments in the future subject to operating performance particularly as it relates to discretionary projects. Current planned capital expenditures primarily include investments that will allow us to maintain our high quality standards, as well as certain incremental discretionary improvements at our mountain resorts and Urban ski areas and throughout our owned hotels. We evaluate additional discretionary capital improvements based on an expected level of return on investment. We currently anticipate we will spend approximately $110 million to $115 million in resort capital expenditures for calendar year 2015, which excludes any capital expenditures for new summer activities. This capital plan includes approximately $50 million of capital expenditures for Park City and Canyons including the installation of an eight-passenger gondola connecting Park City and Canyons creating the largest ski resort by acreage in the United States, installing a new six-passenger high-speed chairlift and upgrading a fixed-grip triple chairlift to a four-passenger high-speed detachable chairlift, significantly expanding restaurant capacity with a new restaurant and renovations of existing on-mountain facilities and an expanded maintenance capital plan. Excluding investments in summer activities and the one-time $50 million investment in Park City and Canyons, we expect to invest approximately $60 million to $65 million in ongoing maintenance capital expenditures and discretionary capital expenditures that include, among other projects, upgrading Vail Mountain’s Avanti Chair (Chair 2) to a six-passenger high- speed chairlift, expanding the "refreshing" snowmaking system at Beaver Creek, adding new snowmaking on Peak 6 terrain at Breckenridge, renovating rooms at the Keystone Lodge, and investing in technology and marketing systems. In addition, we expect to spend approximately $17 million on new summer activities related to our Epic Discovery program at Vail, Breckenridge and Heavenly. Approximately $55 million was spent for capital expenditures in calendar year 2015 as of July 31, 2015, leaving approximately $72 million to $77 million to spend in the remainder of calendar year 2015. We currently plan to utilize cash on hand, borrowings available under our Credit Agreement and/or cash flow generated from future operations to provide the cash necessary to complete our capital plans. Principal payments on the vast majority of our long-term debt ($766.5 million of the total $816.8 million debt outstanding as of July 31, 2015) are not due until fiscal 2020 and beyond. As of July 31, 2015 and 2014, total long-term debt (including long- term debt due within one year) was $816.8 million and $626.6 million, respectively. Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents) increased from $582.2 million as of July 31, 2014 to $781.4 million as of July 31, 2015, primarily due to borrowings under the revolving portion of senior credit facility to fund the Perisher acquisition. Our debt service requirements can be impacted by changing interest rates as we had $487.6 million of variable-rate debt outstanding as of July 31, 2015. A 100-basis point change in LIBOR would cause our annual interest payments to change by approximately $4.9 million. Additionally, the annual payments associated with the financing of the Canyons transaction increase by the greater of CPI less 1%, or 2%. The fluctuation in our debt service requirements, in addition to interest rate and inflation changes, may be impacted by future borrowings under our Credit Agreement or other alternative financing arrangements we may enter into. Our long term liquidity needs depend upon operating results that impact the borrowing capacity under the Credit Agreement, which can be mitigated by adjustments to capital expenditures, flexibility of investment activities and the ability to obtain favorable future financing. We can respond to liquidity impacts of changes in the business and economic environment by managing our capital expenditures and the timing of new real estate development activity. Our share repurchase program is conducted under authorizations made from time to time by our Board of Directors. The Board of Directors initially authorized the repurchase of up to 3,000,000 shares of common stock (March 9, 2006) and later authorized additional repurchases of up to 3,000,000 additional shares (July 16, 2008). During the year ended July 31, 2015, we did not repurchase any shares of common stock. Since inception of this stock repurchase program through July 31, 2015, we have repurchased 4,949,111 shares at a cost of approximately $193.2 million. As of July 31, 2015, 1,050,889 shares remained available to repurchase under the existing repurchase authorization. Shares of common stock purchased pursuant to the repurchase program will be held as treasury shares and may be used for the issuance of shares under the Company’s employee share award plan. Repurchases under these authorizations may be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors. The timing, as well as the number of shares that may be repurchased under the program will depend on a number of factors, including our future financial performance, our available cash resources and competing uses for cash that may arise in the future, the restrictions in our Credit Agreement, prevailing prices of our common stock and the number of shares that become available for sale at prices that we believe are attractive. These authorizations have no expiration date. 52 In fiscal 2011, our Board of Directors approved the commencement of a regular quarterly cash dividend on our common stock at an annual rate of $0.60 per share, subject to quarterly declaration. Since the initial commencement of a regular quarterly cash dividend, our Board of Directors has annually approved an increase to our cash dividend on our common stock and on March 11, 2015, our Board of Directors approved a 50% increase to our quarterly cash dividend to $0.6225 per share (or approximately $22.7 million quarterly based upon shares outstanding as of July 31, 2015). For the year ended July 31, 2015, we paid cash dividends of $2.075 per share ($75.5 million in the aggregate). Our dividends were funded through available cash on hand and borrowing under the revolving portion of our senior credit facility. Subject to the discretion of our Board of Directors, applicable law and contractual restrictions, we anticipate paying regular quarterly cash dividends on our common stock for the foreseeable future. The amount, if any, of the dividends to be paid in the future will depend upon our available cash on hand, anticipated cash needs, overall financial condition, restrictions contained in our Credit Agreement, future prospects for earnings and cash flows, as well as other factors considered relevant by our Board of Directors. Covenants and Limitations We must abide by certain restrictive financial covenants under our Credit Agreement. The most restrictive of those covenants include the following Credit Agreement covenants: Net Funded Debt to Adjusted EBITDA ratio and the Interest Coverage ratio (each as defined in the Credit Agreement). In addition, our Credit Agreement limits our ability to incur certain indebtedness, make certain restricted payments, enter into certain investments, make certain affiliate transfers and may limit our ability to enter into certain mergers, consolidations or sales of assets. Our borrowing availability under the Credit Agreement is primarily determined by the Net Funded Debt to Adjusted EBITDA ratio, which is based on our segment operating performance, as defined in the Credit Agreement. We were in compliance with all restrictive financial covenants in our debt instruments as of July 31, 2015. We expect that we will continue to meet all applicable financial maintenance covenants in our Credit Agreement, including the Net Funded Debt to Adjusted EBITDA ratio throughout the year ending July 31, 2016. However, there can be no assurance that we will continue to meet such financial covenants. If such covenants are not met, we would be required to seek a waiver or amendment from the banks who are parties to the Credit Agreement. There can be no assurance that such waiver or amendment would be granted, which could have a material adverse impact on our liquidity. Contractual Obligations As part of our ongoing operations, we enter into arrangements that obligate us to make future payments under contracts such as debt agreements, lease agreements and construction agreements in conjunction with our resort capital expenditures. Debt obligations, which total $816.8 million as of July 31, 2015, are recognized as liabilities in our Consolidated Balance Sheet. Obligations under construction contracts are not recognized as liabilities in our Consolidated Balance Sheet until services and/ or goods are received which is in accordance with GAAP. Additionally, operating lease and service contract obligations, which total $302.3 million as of July 31, 2015, are not recognized as liabilities in our Consolidated Balance Sheet, which is in accordance with GAAP. A summary of our contractual obligations as of July 31, 2015 is presented below (in thousands): Contractual Obligations Long-Term Debt (Outstanding Principal) (1) $ Fixed Rate Interest (1) Canyons Obligation (2) Operating Leases and Service Contracts (3) Purchase Obligations and Other (4) Total Contractual Cash Obligations $ Total 816,830 2,246 1,742,201 302,294 356,973 3,220,544 $ $ Payments Due by Period Fiscal 2016 2-3 years 4-5 years More than 5 years 10,154 269 26,109 43,738 277,099 357,369 $ $ 26,751 497 53,796 61,661 66,492 209,197 $ $ 402,596 438 55,969 48,145 5,118 512,266 $ $ 377,329 1,042 1,606,327 148,750 8,264 2,141,712 (1) The fixed-rate interest payments, as well as long-term debt payments, included in the table above assume that all debt outstanding as of July 31, 2015 will be held to maturity. Interest payments associated with variable-rate debt have not been included in the table. Assuming that our $487.6 million of variable-rate long-term debt as of July 31, 2015 is held to maturity, and utilizing interest rates in effect at July 31, 2015, our annual interest payments (including commitment fees and letter of credit fees) on variable rate long-term debt as of July 31, 2015 is anticipated to be approximately $6.8 million for Fiscal 2016, $6.6 million for Fiscal 2017 and $6.3 million for at least each of the next three years subsequent to Fiscal 2017. The future annual interest obligations noted herein are estimated only in relation to debt outstanding as of July 31, 2015, and do not reflect interest obligations on potential future debt. 53 (2) (3) (4) Reflects interest expense payments associated with the remaining initial 50 year lease term of the Canyons obligation assuming a 2% per annum (floor) increase in payments. Any potential increases to the annual fixed payment above the 2% floor due to inflation linked index of CPI less 1% have been excluded. The payments under noncancelable operating leases included in the table above reflect the applicable minimum lease payments and exclude any potential contingent rent payments. Purchase obligations and other primarily include amounts which are classified as trade payables, accrued payroll and benefits, accrued fees and assessments, contingent consideration liability, accrued taxes (including taxes for uncertain tax positions) on our Consolidated Balance Sheet as of July 31, 2015; and, other commitments for goods and services not yet received, including construction contracts, not included on our Consolidated Balance Sheet as of July 31, 2015 in accordance with GAAP. Off Balance Sheet Arrangements We do not have off balance sheet transactions that are expected to have a material effect on our financial condition, revenue, expenses, results of operations, liquidity, capital expenditures or capital resources. 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 Audit Committee of the Board of Directors. Goodwill and Intangible Assets Description The carrying value of goodwill and indefinite-lived intangible assets are evaluated for possible impairment on an annual basis or between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit or indefinite-lived intangible asset below its carrying value. Other intangible assets are evaluated for impairment only when there is evidence that events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. We determine goodwill impairment using a two-step process. The first step is used to identify potential impairment by comparing the fair value of a reporting unit with its carrying amount. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. If the carrying amount of the reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The impairment test for indefinite-lived intangible assets consists of a comparison of the estimated fair value of the intangible asset with its carrying value. If the carrying value of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Judgments and Uncertainties Application of the goodwill and indefinite-lived intangible asset impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of reporting units and indefinite-lived intangible assets. We determine the estimated fair value of our reporting units using a discounted cash flow analysis. The estimated fair value of indefinite-lived intangible assets is primarily determined using the income approach based upon estimated future revenue streams. These analyses require significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, available industry/ market data (to the extent available), estimation of the long-term rate of growth for our business including expectations and assumptions regarding the impact of general economic conditions on our business, estimation of the useful life over which cash flows will occur (including terminal multiples), determination of the respective weighted average cost of capital and market participant assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and impairment for each reporting unit or indefinite-lived intangible asset. We evaluate our reporting units on an annual basis and 54 allocate goodwill to our reporting units based on the reporting units expected to benefit from the acquisition generating the goodwill. Effect if Actual Results Differ From Assumptions Goodwill and indefinite-lived intangible assets are tested for impairment at least annually as of May 1st. Based upon our annual impairment test performed during the fourth fiscal quarter of Fiscal 2015 the estimated fair value of our reporting units and indefinite-lived intangible assets were in excess of their respective carrying values, and as such no impairment of goodwill or indefinite-lived intangible assets existed and the second step of the goodwill impairment test was not required. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be an accurate prediction of the future. Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of our reporting units may include such items as: (1) prolonged adverse weather conditions resulting in a sustained decline in guest visitation; (2) a prolonged weakness in the general economic conditions in which guest visitation and spending is adversely impacted; and, (3) volatility in the equity and debt markets which could result in a higher discount rate. While historical performance and current expectations have resulted in fair values of our reporting units in excess of carrying values, if our assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future. However, it is not possible at this time to determine if an impairment charge would result or if such a charge would be material. As of July 31, 2015, we have $500.4 million of goodwill and $80.4 million of indefinite-lived intangible assets recorded on our Consolidated Balance Sheets. There can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment tests for goodwill will prove to be an accurate prediction of the future. Tax Contingencies 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 largest tax benefit that is cumulatively greater 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, interpretation of 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 The estimates of our tax contingencies reserve contains uncertainty because management must use judgment to estimate the potential exposure associated with our various filing positions. Effect if Actual Results Differ From Assumptions We believe the estimates and judgments discussed herein are reasonable and we have adequate reserves for our tax contingencies for uncertain tax positions. Our reserves for uncertain tax positions, including any income tax related interest and penalties ($39.1 million as of July 31, 2015), relate to the treatment of the Talisker lease payments as payments of debt obligations and that the tax basis in Canyons goodwill is deductible. 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 increased tax expense and effective tax rate and/or adjustments to our deferred tax assets and deferred tax liabilities 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 and deferred tax liabilities in the year of settlement or in future years. 55 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 the remaining book value would be written- off or we could incur costs to remove or dispose of assets no longer in use. Judgments and Uncertainties The estimates 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 useful lives of depreciable assets would have increased depreciation expense by approximately $10.4 million for Fiscal 2015. Business Combinations Description A component of our growth strategy has been to acquire and integrate businesses that complement our existing operations. We account for business combinations in accordance with the guidance for business combinations and related literature. Accordingly, we allocate the purchase price of acquired businesses to the identifiable tangible and intangible assets acquired and liabilities assumed based upon their estimated fair values at the date of acquisition. The difference between the purchase price and the fair value of the net assets acquired or the excess of the aggregate fair values of assets acquired and liabilities assumed is recorded as goodwill. In determining the fair values of assets acquired and liabilities assumed in a business combination, we use various recognized valuation methods including present value modeling and referenced market values (where available). Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate. Judgments and Uncertainties Accounting for business combinations requires our management to make significant estimates and assumptions, especially at the acquisition date including our estimates for intangible assets, contractual obligations assumed and contingent consideration, where applicable. Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain. Examples of critical estimates in valuing certain of the intangible assets we have acquired include but are not limited to determination of weighted average cost of capital, market participant assumptions, royalty rates, terminal multiples, and estimates of future cash flows to be generated by the acquired assets. In addition to the estimates and assumptions applied to valuing intangible assets acquired, the determination of the fair value of contingent consideration, including estimating the likelihood and timing of achieving the relevant thresholds for contingent consideration payments, requires the use of subjective judgments. We estimate the fair value of the Canyons contingent consideration payments using an option pricing valuation model which incorporates, among other factors, projected achievement of specified financial performance measures, discounts rates, volatility, credit risk and estimation of the long-term rate of growth for the respective business. Effect if Actual Results Differ From Assumptions We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that a marketplace participant would use. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments would be recorded in our Consolidated Statements of Operations. We recognize the fair value of contingent consideration at the date of acquisition as part of the consideration transferred to acquire a business. The liability associated with contingent consideration is remeasured to fair value at each reporting period 56 subsequent to the date of acquisition taking into consideration changes in financial projections and long-term growth rates, among other factors, that may impact the timing and amount of contingent consideration payments until the term of the agreement has expired or the contingency is resolved. Increases in the fair value of contingent consideration are recorded as losses in our Consolidated Statements of Operations, while decreases in fair value are recorded as gains. New Accounting Standards Refer to Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements for a discussion of new accounting standards. Inflation Although we cannot accurately determine the precise effect of inflation on our operations, management does not believe inflation has had a material effect on the results of operations in the last three fiscal years. When the costs of operating resorts increase, we generally have been able to pass the increase on to our customers. However, there can be no assurance that increases in labor and other operating costs due to inflation will not have an impact on our future profitability. In May 2013, we entered into a long-term lease pursuant to which we assumed the operations of Canyons which includes the ski terrain and related amenities. The lease has an initial term of 50 years with six 50-year renewal options. The lease provides for $25 million in annual payments, which increase each year by an inflation linked index of CPI less 1%, with a floor of 2% per annum. As lease payments increase annually, there can be no assurance that these increases will be off-set by increased cash flow generated from operations at Canyons. Seasonality and Quarterly Results Our mountain and lodging operations are seasonal in nature. In particular, revenue and profits for our U.S. mountain and most of our lodging operations are substantially lower and historically result in losses from late spring to late fall. Conversely, peak operating seasons for our NPS concessionaire properties, our mountain resort golf courses and Perisher's ski season occur during the U.S. summer months while the U.S. winter months result in operating losses. Revenue and profits generated by NPS concessionaire properties summer operations, golf operations and Perisher's ski operations are not sufficient to fully offset our off-season losses from our U.S. mountain and other lodging operations. During Fiscal 2015, 80% of total combined Mountain and Lodging segment net revenue (excluding Lodging segment revenue associated with reimbursement of payroll costs) was earned during the second and third fiscal quarters. Therefore, the operating results for any three-month period are not necessarily indicative of the results that may be achieved for any subsequent quarter or for a full year (see Note 14, Selected Quarterly Financial Data (unaudited), of the Notes to Consolidated Financial Statements). ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Interest Rate Risk. Our exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. At July 31, 2015, we had $487.6 million of variable rate indebtedness, representing approximately 59.7% of our total debt outstanding, at an average interest rate during Fiscal 2015 of 0.5%. Based on variable-rate borrowings outstanding as of July 31, 2015, a 100-basis point (or 1.0%) change in LIBOR would result in our annual interest payments changing by $4.9 million. Our market risk exposure fluctuates based on changes in underlying interest rates. Foreign Currency Exchange Rate Risk. We are exposed to currency translation risk because the results of our international entities are reported in local currency, which we then translate to U.S. dollars for inclusion in our consolidated financial statements. As a result, changes between the foreign exchange rates, in particular the Australian dollar and the U.S. dollar, affect the amounts we record for our foreign assets, liabilities, revenues and expenses, and could have a negative effect on our financial results. We currently do not enter into hedging arrangements to minimize the impact of foreign currency fluctuations. The following table summarizes the amounts of foreign currency translation income (losses) (in thousands): Foreign currency translation adjustments, net of tax $ (4,714) $ (132) Year Ended July 31, 2015 2014 57 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Vail Resorts, Inc. Consolidated Financial Statements for the Years Ended July 31, 2015, 2014 and 2013 Management’s Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Consolidated Financial Statements Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Comprehensive Income Consolidated Statements of Stockholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Financial Statement Schedule: The following consolidated financial statement schedule of the Company is filed as part of this Report on Form 10-K and should be read in conjunction with the Company’s Consolidated Financial Statements: Schedule II - Valuation and Qualifying Accounts and Reserves F- 2 F- 3 F- 4 F- 5 F- 6 F- 7 F- 8 F- 9 65 F- 1 Management’s Report on Internal Control over Financial Reporting Management of Vail Resorts, Inc. (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management, including the Company’s Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of July 31, 2015. In making this assessment, management used the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment, management concluded that, as of July 31, 2015, the Company’s internal control over financial reporting was effective. Management's evaluation and conclusion on the effectiveness of internal control over financial reporting as of July 31, 2015 excluded certain elements of internal controls of Perisher due to the timing of this acquisition, which was completed on June 30, 2015. As of July 31, 2015, those elements of Perisher's internal controls that have been excluded represent 1% of total consolidated assets and total consolidated net revenue of the Company. The Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an attestation report on the Company’s internal control over financial reporting as of July 31, 2015, as stated in the Report of Independent Registered Public Accounting Firm on the following page. F- 2 Report of Independent Registered Public Accounting Firm To Shareholders and Board of Directors of Vail Resorts, Inc.: In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Vail Resorts, Inc. and its subsidiaries at July 31, 2015 and 2014, and the results of their operations and their cash flows for each of the three years in the period ended July 31, 2015 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of July 31, 2015, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express opinions on these financial statements, on the financial statement schedule and on the Company's internal control over financial reporting based on our integrated 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 audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. As described in Management's Report on Internal Control over Financial Reporting, management has excluded certain elements of the internal control over financial reporting of Perisher that the Company acquired in a purchase business combination in June of 2015 from its assessment of internal control over financial reporting as of July 31, 2015. Subsequent to the acquisition, certain elements of the acquired business’ internal control over financial reporting and related functions, processes, and systems were integrated into the Company’s existing internal control over financial reporting and related functions, processes and systems. Those elements of the acquired business’ internal control over financial reporting that were not integrated into the Company’s existing internal control over financial reporting have been excluded from management’s assessment of the effectiveness of internal control over financial reporting as of July 31, 2015. We have also excluded these elements of Perisher from our audit of internal control over financial reporting. Those elements of the acquired business’ internal control over financial reporting that have been excluded represent 1% of total assets and total revenues of the related consolidated financial statement amounts as of and for the year ended July 31, 2015. /s/ PricewaterhouseCoopers LLP Denver, Colorado September 25, 2015 F- 3 Vail Resorts, Inc. Consolidated Balance Sheets (In thousands, except share and per share amounts) Assets Current assets: Cash and cash equivalents Restricted cash Trade receivables, net of allowances of $746 and $681, respectively Inventories, net of reserves of $1,915 and $2,136, respectively Deferred income taxes (Note 10) Other current assets Total current assets Property, plant and equipment, net (Note 6) Real estate held for sale and investment Deferred charges and other assets Goodwill, net (Note 6) Intangible assets, net (Note 6) Total assets Liabilities and Stockholders’ Equity Current liabilities: Accounts payable and accrued liabilities (Note 6) Income taxes payable Long-term debt due within one year (Note 4) Total current liabilities Long-term debt (Note 4) Other long-term liabilities (Note 6) Deferred income taxes (Note 10) Commitments and contingencies (Note 12) Stockholders’ equity: Preferred stock, $0.01 par value, 25,000,000 shares authorized, no shares issued and outstanding Common stock, $0.01 par value, 100,000,000 shares authorized, and 41,462,941 and 41,152,800 shares issued, respectively Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock, at cost; 4,949,111 shares (Note 15) Total Vail Resorts, Inc. stockholders’ equity Noncontrolling interests Total stockholders’ equity Total liabilities and stockholders’ equity July 31, 2015 2014 35,459 $ 13,012 113,990 73,485 27,962 24,235 288,143 1,386,275 129,825 40,796 500,433 144,149 2,489,621 $ 331,299 $ 57,194 10,154 398,647 806,676 255,916 147,796 44,406 13,181 95,977 67,183 29,249 25,050 275,046 1,147,990 157,858 97,284 378,148 117,523 2,173,849 289,218 33,966 1,022 324,206 625,600 260,681 128,562 — — 415 623,510 (4,913) 440,748 (193,192) 866,568 14,018 880,586 2,489,621 $ 412 612,322 (199) 401,500 (193,192) 820,843 13,957 834,800 2,173,849 $ $ $ $ The accompanying Notes are an integral part of these consolidated financial statements. F- 4 Vail Resorts, Inc. Consolidated Statements of Operations (In thousands, except per share amounts) Net revenue: Mountain Lodging Real Estate Total net revenue Segment operating expense (exclusive of depreciation and amortization shown separately below): Mountain Lodging Real Estate Total segment operating expense Other operating (expense) income: Depreciation and amortization Gain on sale of real property Gain on litigation settlement (Note 5) Change in fair value of contingent consideration (Note 9) Loss on disposal of fixed assets and other, net Income from operations Mountain equity investment income, net Investment income, net Interest expense Loss on extinguishment of debt (Note 4) Income before provision for income taxes Provision for income taxes (Note 10) Net income Net loss attributable to noncontrolling interests Net income attributable to Vail Resorts, Inc. Per share amounts (Note 3): Basic net income per share attributable to Vail Resorts, Inc. Diluted net income per share attributable to Vail Resorts, Inc. Cash dividends declared per share 2015 Year Ended July 31, 2014 2013 1,104,029 $ 254,553 41,342 1,399,924 963,573 $ 242,287 48,786 1,254,646 867,514 210,974 42,309 1,120,797 777,147 232,877 48,408 1,058,432 (149,123) 151 16,400 3,650 (2,057) 210,513 822 246 (51,241) (11,012) 149,328 (34,718) 114,610 $ 144 114,754 $ 3.16 $ 3.07 $ 2.0750 $ 712,785 225,563 55,826 994,174 (140,601) — — (1,400) (1,208) 117,263 1,262 375 (63,997) (10,831) 44,072 (15,866) 28,206 $ 272 28,478 $ 0.79 $ 0.77 $ 1.2450 $ 639,706 198,813 58,090 896,609 (132,688) 6,675 — — (1,222) 96,953 891 351 (38,966) — 59,229 (21,619) 37,610 133 37,743 1.05 1.03 0.7900 $ $ $ $ $ $ The accompanying Notes are an integral part of these consolidated financial statements. F- 5 Vail Resorts, Inc. Consolidated Statements of Comprehensive Income (In thousands) Net income Foreign currency translation adjustments (net of tax of $2,578, $82 and $41, respectively) Comprehensive income Comprehensive loss attributable to noncontrolling interests Comprehensive income attributable to Vail Resorts, Inc. $ $ 2015 Year Ended July 31, 2014 2013 114,610 $ 28,206 $ (4,714) 109,896 144 (132) 28,074 272 110,040 $ 28,346 $ 37,610 188 37,798 133 37,931 The accompanying Notes are an integral part of these consolidated financial statements. F- 6 Vail Resorts, Inc. Consolidated Statements of Stockholders’ Equity (In thousands, except share amounts) Additional Paid in Capital Retained Earnings Treasury Stock Accumulated Other Comprehensi ve Loss Total Vail Resorts, Inc. Stockholders’ Equity Noncont rolling Interests Total Stockholders’ Equity Common Stock Shares Amount Balance, July 31, 2012 40,531,204 $ 405 $ 586,691 $ 408,662 $ (193,192) $ (255) $ 802,311 $ 14,017 $ 816,328 Comprehensive income (loss): Net income (loss) Foreign currency translation adjustments, net of tax Total comprehensive income (loss) Stock-based compensation (Note 16) Issuance of shares under share award plan net of shares withheld for taxes (Note 16) Tax benefit from share award plan Dividends Contributions from noncontrolling interests, net — — — 372,527 — — — Balance, July 31, 2013 40,903,731 Comprehensive income (loss): Net income (loss) Foreign currency translation adjustments, net of tax Total comprehensive income (loss) Stock-based compensation (Note 16) Issuance of shares under share award plan net of shares withheld for taxes (Note 16) Tax benefit from share award plan Dividends Contributions from noncontrolling interests, net — — — 249,069 — — — Balance, July 31, 2014 41,152,800 Comprehensive income (loss): Net income (loss) Foreign currency translation adjustments, net of tax Total comprehensive income (loss) Stock-based compensation (Note 16) Issuance of shares under share award plan net of shares withheld for taxes (Note 16) Tax benefit from share award plan Dividends Contributions from noncontrolling interests, net — — — 310,141 — — — — — — 4 — — — 409 — — — 3 — — — 412 — — — 3 — — — — — 12,349 (4,606) 4,241 37,743 — — — — — (28,362) — — — — — — — — — 598,675 418,043 (193,192) — — 14,224 (4,738) 4,161 28,478 — — — — — (45,021) — — — — — — — — — — 188 — — — — — (67) 37,743 (133) 37,610 188 — 188 37,931 (133) 37,798 12,349 (4,602) 4,241 (28,362) — — — — 12,349 (4,602) 4,241 (28,362) — 117 117 823,868 14,001 837,869 — 28,478 (272) 28,206 (132) (132) — (132) 28,346 (272) 28,074 14,224 (4,735) 4,161 (45,021) — — — — 14,224 (4,735) 4,161 (45,021) — 228 228 — — — — — 612,322 401,500 (193,192) (199) 820,843 13,957 834,800 — 114,754 — — 15,753 (17,189) 12,624 — — — — (75,506) — — — — — — — — — — 114,754 (144) 114,610 (4,714) (4,714) — (4,714) 110,040 (144) 109,896 15,753 (17,186) 12,624 (75,506) — — — — 15,753 (17,186) 12,624 (75,506) — 205 205 — — — — — Balance, July 31, 2015 41,462,941 $ 415 $ 623,510 $ 440,748 $ (193,192) $ (4,913) $ 866,568 $ 14,018 $ 880,586 The accompanying Notes are an integral part of these consolidated financial statements. F- 7 Vail Resorts, Inc. Consolidated Statements of Cash Flows (In thousands) Cash flows from operating activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Year Ended July 31, 2015 2014 2013 $ 114,610 $ 28,206 $ 37,610 Depreciation and amortization Cost of real estate sales Stock-based compensation expense Deferred income taxes, net Canyons obligation accreted interest expense Change in fair value of contingent consideration Gain on litigation settlement Park City litigation settlement payment Gain on sale of real property Loss on extinguishment of debt Payment of tender premium Other non-cash income, net Changes in assets and liabilities, net of effects of acquisitions: Restricted cash Accounts receivable, net Inventories, net Accounts payable and accrued liabilities Income taxes payable Other assets and liabilities, net Net cash provided by operating activities Cash flows from investing activities: Capital expenditures Acquisition of businesses, net of cash acquired Cash received from sale of real property Other investing activities, net Net cash used in investing activities Cash flows from financing activities: Payments on tender of 6.50% Notes Payments on tender of Industrial Development Bonds Proceeds from borrowings under Credit Facility Term Loan Proceeds from borrowings under Credit Facility Revolver Payments on Credit Facility Revolver Payments of other long-term debt Dividends paid Other financing activities, net Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Net (decrease) increase in cash and cash equivalents Cash and cash equivalents: Beginning of period End of period Cash paid for interest Taxes (refunded) paid, net Non-cash investing activities: Accrued capital expenditures Capital expenditures made under long-term financing 149,123 32,190 15,753 12,968 5,596 (3,650) (16,400) (10,000) (151) 11,012 (8,636) (6,930) 162 (15,350) (1,304) 4,498 41,783 (21,614) 303,660 (123,884) (307,051) 2,541 1,326 140,601 37,400 14,224 6,219 5,544 1,400 — — — 10,831 (8,531) (8,570) (559) (17,007) 1,332 20,724 12,198 1,866 245,878 (118,305) — — 399 (427,068) (117,906) (215,000) (41,200) 250,000 438,000 (253,000) (1,022) (75,506) 12,979 115,251 (790) (8,947) 44,406 $ 35,459 $ 46,483 $ (4,421) $ 6,267 $ 7,037 $ (175,000) — — — — (998) (45,021) (1,193) (222,212) 42 (94,198) 138,604 $ 44,406 $ 57,217 $ (6,787) $ 12,254 $ — $ $ $ $ $ $ $ 132,688 32,076 12,349 (8,125) 985 — — — (6,675) — — (8,093) 1,647 (11,715) (105) 19,774 21,717 (1,710) 222,423 (94,946) (19,958) 11,090 (4,424) (108,238) — — — 96,000 (96,000) (1,011) (28,362) 7,583 (21,790) 156 92,551 46,053 138,604 34,222 3,984 12,775 — The accompanying Notes are an integral part of these consolidated financial statements. F- 8 1. Organization and Business Notes to Consolidated Financial Statements Vail Resorts, Inc. (“Vail Resorts” or the “Parent Company”) is organized as a holding company and operates through various subsidiaries. Vail Resorts and its subsidiaries (collectively, the “Company”) operate in three business segments: Mountain, Lodging and Real Estate. In the Mountain segment, the Company operates ten world-class mountain resort properties at the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado; Park City Mountain Resort ("Park City" acquired on September 11, 2014) and Canyons mountain resorts in Utah; the Heavenly, Northstar, and Kirkwood mountain resorts in the Lake Tahoe area of California and Nevada; Perisher Ski Resort ("Perisher" acquired on June 30, 2015) in New South Wales, Australia; and the ski areas of Afton Alps in Minnesota and Mount Brighton in Michigan ("Urban" ski areas); as well as ancillary services, primarily including ski school, dining and retail/rental operations. The resorts located in the United States (except for Northstar, Park City, Canyons and the Urban ski areas) operate primarily on federal land under the terms of Special Use Permits granted by the USDA Forest Service (the “Forest Service”). The operations of Perisher are conducted pursuant to a long-term lease and license on land owned by the government of New South Wales, Australia. In the Lodging segment, the Company owns and/or manages a collection of luxury hotels and condominiums under its RockResorts brand, as well as other strategic lodging properties and a large number of condominiums located in proximity to the Company’s mountain resorts, National Park Service (“NPS”) concessionaire properties including the Grand Teton Lodge Company (“GTLC”), which operates destination resorts in the Grand Teton National Park, Colorado Mountain Express (“CME”), a Colorado resort ground transportation company, and mountain resort golf courses. Vail Resorts Development Company (“VRDC”), a wholly-owned subsidiary, conducts the operations of the Company’s Real Estate segment, which owns and develops real estate in and around the Company’s resort communities. The Company’s mountain business and its lodging properties at or around the Company’s mountain resorts are seasonal in nature with peak operating seasons primarily from mid-November through mid-April in the United States. The Company’s peak operating seasons at Perisher, its NPS concessionaire properties and its golf courses generally occur from June to the end of September. The Company also has non-majority owned investments in various other entities, some of which are consolidated (see Note 8, Variable Interest Entities). 2. Summary of Significant Accounting Policies Principles of Consolidation-- The accompanying Consolidated Financial Statements include the accounts of the Company, its majority-owned subsidiaries and all variable interest entities for which the Company is the primary beneficiary. Investments in which the Company does not have a controlling interest or is not the primary beneficiary are accounted for under the equity method. All significant intercompany transactions have been eliminated in consolidation. Cash and Cash Equivalents-- The Company considers all highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. Restricted Cash-- Restricted cash primarily represents amounts held as state-regulated reserves for self-insured workers’ compensation claims. Trade Receivables-- The Company records trade accounts receivable in the normal course of business related to the sale of products or services. The Company generally charges interest on past due accounts at a rate of 18% per annum. The allowance for doubtful accounts is based on a specific reserve analysis and on a percentage of accounts receivable, and takes into consideration such factors as historical write-offs, the economic climate and other factors that could affect collectability. Write- offs are evaluated on a case by case basis. Inventories-- The Company’s inventories consist primarily of purchased retail goods, food and beverage items and spare parts. Inventories are stated at the lower of cost or fair value, determined using primarily an average weighted cost method. The Company records a reserve for estimated shrinkage and obsolete or unusable inventory. Property, Plant and Equipment-- Property, plant and equipment is carried at cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Expenditures that improve the functionality of the related asset or extend the useful life are capitalized. When property, plant and equipment is retired or otherwise disposed of, the related gain or loss is included in operating income. Leasehold improvements are amortized on the straight-line method over the shorter of the remaining lease F- 9 term or estimated useful life of the asset. Depreciation is calculated on the straight-line method, including property, plant and equipment under capital leases, generally based on the following useful lives: Land improvements Buildings and building improvements Machinery and equipment Furniture and fixtures Software Vehicles Estimated Life in Years 10-35 7-30 2-30 3-10 3 3-10 Real Estate Held for Sale and Investment-- The Company capitalizes as real estate held for sale and investment the original land acquisition cost, direct construction and development costs, property taxes, interest recorded on costs related to real estate under development and other related costs. Additionally, the Company records depreciation on completed condominium units that are placed in rental programs until such units are sold. Sales and marketing expenses are charged against income in the period incurred. Sales commission expenses are charged against income in the period that the related revenue from real estate sales is recorded. The Company records capitalized interest once construction activities commence and real estate deposits have been utilized in construction. The Company did not capitalize interest on real estate development projects, as it had no projects under construction during the years ended July 31, 2015, 2014 and 2013. Deferred Financing Costs-- Certain costs incurred with the issuance of debt securities are capitalized and included in deferred charges and other assets, net of accumulated amortization. Amortization is charged to interest expense over the respective term of the applicable debt issues. When debt is extinguished prior to its maturity date, the amortization of the remaining unamortized deferred financing costs, or pro-rata portion thereof, is also charged to interest expense. Goodwill and Intangible Assets-- The Company has classified as goodwill the cost in excess of fair value of the net assets of businesses acquired in purchase transactions. The Company’s major intangible asset classes are trademarks, water rights, customer lists, property management contracts, Forest Service permits and excess reorganization value. Goodwill and various indefinite-lived intangible assets, including excess reorganization value and certain trademarks and water rights, are not amortized, but are subject to at least annual impairment testing. The Company tests annually (or more often, if necessary) for impairment as of May 1. Amortizable intangible assets are amortized over the shorter of their contractual terms or estimated useful lives. The testing for impairment consists of a comparison of the fair value of the assets with their carrying values. If the carrying amount of the assets exceed its fair value, an impairment will be recognized in an amount equal to that excess. If the carrying amount of the assets does not exceed the fair value, no impairment loss is recognized. For the testing of goodwill for impairment, the Company determines the estimated fair value of its reporting units using discounted cash flow analyses. The fair value of indefinite-lived intangible assets is estimated using an income approach. The Company determined that there was no impairment to goodwill or significant intangible assets for the years ended July 31, 2015, 2014 and 2013. 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 July 31, 2015, 2014 and 2013. Revenue Recognition-- The following describes the composition of revenues for the Company: • Mountain revenue is derived from a wide variety of sources, including, among other things, sales of lift tickets (including season passes), ski school operations, other on-mountain activities, dining operations, retail sales, equipment rentals, private ski club amortized initiation fees and dues, marketing and internet advertising, commercial leasing, employee housing, municipal services, and lodging and transportation operations at Perisher, and is recognized as products are delivered or services are performed. The Company records deferred revenue related to the sale of season ski passes. The number of season pass holder visits is estimated based on historical data and the deferred revenue is recognized throughout the ski season based F- 10 • • • on this estimate, or on a straight-line basis if usage patterns cannot be determined based on available historical data. Lodging revenue is derived from a wide variety of sources, including, among other things, hotel operations, dining operations, property management services, managed hotel property payroll cost reimbursements, private golf club amortized initiation fees and dues, transportation services and golf course greens fees, and is recognized as products are delivered or services are performed. Revenue from payroll cost reimbursements relates to payroll costs of managed hotel properties where the Company is the employer. The reimbursements are based upon the costs incurred with no added margin; therefore, these revenues and corresponding expenses have no net effect on the Company’s operating income or net income. Revenue from non-refundable private club initiation fees is recognized over the estimated life of the facilities on a straight-line basis upon inception of the club. As of July 31, 2015, the weighted average remaining period over which the private club initiation fees will be recognized is approximately 14 years. Additionally, certain club initiation fees are refundable in 30 years after the date of acceptance of a member. Under these memberships, the difference between the amount paid by the member and the present value of the refund obligation is recorded as deferred initiation fee revenue in the Company’s Consolidated Balance Sheets and recognized as revenue on a straight-line basis over 30 years. The present value of the refund obligation is recorded as an initiation deposit liability and accretes over the nonrefundable term using the effective interest method. The accretion is included in interest expense. Real estate revenue primarily includes the sale of condominium units and land parcels and is recorded primarily using the full accrual method and occurs only upon the following: (i) substantial completion of the entire development project, (ii) receipt of certificates of occupancy or temporary certificates of occupancy from local governmental agencies, if applicable, (iii) closing of the sales transaction including receipt of all, or substantially all, sales proceeds (including any deposits previously received), and (iv) transfer of ownership. Real Estate Cost of Sales-- Costs of real estate transactions include direct project costs, common cost allocations (primarily determined on relative sales value) and sales commission expense. The Company utilizes the relative sales value method to determine cost of sales for condominium units sold within a project, when specific identification of costs cannot be reasonably determined. Foreign Currency Translation -- The functional currency of the Company's entities operating outside of the United States is the principal currency of the economic environment in which the entity primarily generates and expends cash, which is the local currency. The assets and liabilities of these foreign operations are translated at the exchange rate in effect as of the balance sheet dates. Income and expense items are translated using the weighted average exchange rate for the period. Translation adjustments from currency exchange are recorded in accumulated other comprehensive income as a separate component of stockholders’ equity. Reserve Estimates-- The Company uses estimates to record reserves for certain liabilities, including medical claims, workers’ compensation claims, third-party loss contingencies, property taxes and loyalty reward programs among other items. The Company estimates the probable costs related to these liabilities that will be incurred and records that amount as a liability in its consolidated financial statements. Additionally, the Company records, as applicable, receivables related to insurance recoveries for loss contingencies if deemed probable of recovery. These estimates are reviewed and adjusted as the facts and circumstances change. The Company records legal costs related to defending claims as incurred. Advertising Costs-- Advertising costs are expensed at the time such advertising commences. Advertising expense for the years ended July 31, 2015, 2014 and 2013 was $27.5 million, $25.7 million and $25.5 million, respectively. Prepaid advertising costs as of July 31, 2015 and 2014 was $0.3 million and $0.2 million, respectively and are reported within “other current assets” in the Company’s Consolidated Balance Sheets. Income Taxes-- The Company’s provision for income taxes is based on current pre-tax income, changes in deferred tax assets and liabilities and changes in estimates with regard to uncertain tax positions. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying Consolidated Balance Sheets and for operating loss and tax credit carryforwards. The change in deferred tax assets and liabilities for the period measures the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to the tax provision or benefit in the period of enactment. The Company provides for taxes that may be payable if undistributed earnings of foreign subsidiaries were to be remitted to the U.S. The Company’s deferred tax assets have been reduced by a valuation allowance to the extent it is deemed to be more likely than not that some or all of the deferred tax assets will not be realized. The Company recognizes liabilities for F- 11 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” to be sustained, on audit, including resolution of related appeals or litigation processes, if any. The second step requires the Company to estimate and measure the largest tax benefit that is cumulatively greater than 50% likely of being realized upon ultimate settlement. Interest and penalties accrued in connection with uncertain tax positions are recognized as a component of income tax expense (see Note 10, Income Taxes, for more information). Fair Value of Financial Instruments-- The recorded amounts for cash and cash equivalents, receivables, other current assets, and accounts payable and accrued liabilities approximate fair value due to their short-term nature. The fair value of amounts outstanding under Credit Facility Revolver, Credit Facility Term Loan and the Employee Housing Bonds (as defined in Note 4, Long-Term Debt) approximate book value due to the variable nature of the interest rate associated with the debt. The fair value of the 6.50% Senior Subordinated Notes due 2019 (“6.50% Notes”) (Note 4, Long-Term Debt) are based on quoted market prices (a Level 1 input). The fair value of the Company’s Industrial Development Bonds and other long-term debt (Note 4, Long-Term Debt) have been estimated using discounted cash flow analyses based on borrowing rates for debt with similar remaining maturities and ratings (a Level 3 input). The estimated fair value of the 6.50% Notes, Industrial Development Bonds and other long-term debt as of July 31, 2015 and 2014 is presented below (in thousands): 6.50% Notes Industrial Development Bonds Other long-term debt July 31, 2015 July 31, 2014 Carrying Value Fair Value Carrying Value Fair Value $ $ $ — $ — $ 11,765 $ — $ — $ 12,328 $ 215,000 $ 41,200 $ 5,163 $ 223,600 48,003 5,758 Stock-Based Compensation-- Stock-based compensation expense is measured at the grant date based upon the fair value of the portion of the award that is ultimately expected to vest and is recognized as expense over the applicable vesting period of the award generally using the straight-line method (see Note 16, Stock Compensation Plan for more information). The following table shows total stock-based compensation expense for the years ended July 31, 2015, 2014 and 2013 included in the Consolidated Statements of Operations (in thousands): Mountain stock-based compensation expense Lodging stock-based compensation expense Real Estate stock-based compensation expense Pre-tax stock-based compensation expense Less: benefit from income taxes Net stock-based compensation expense Year Ended July 31, 2014 2013 2015 $ $ 11,841 $ 2,621 1,291 15,753 6,026 9,727 $ 10,292 $ 2,203 1,729 14,224 5,435 8,789 $ 9,007 1,917 1,425 12,349 4,709 7,640 Concentration 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 places its cash and temporary cash investments in high quality credit institutions, but these investments may be in excess of FDIC insurance limits. The Company does not enter into financial instruments for hedging, trading or speculative purposes. Concentration of credit risk with respect to trade and notes receivables is limited due to the wide variety of customers and markets in which the Company transacts business, as well as their dispersion across many geographical areas. The Company performs ongoing credit evaluations of its customers and generally does not require collateral, but does require advance deposits on certain transactions. Use of Estimates-- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. New Accounting Standards-- In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC”) 605, “Revenue Recognition”. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the F- 12 consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of the new revenue standard by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This standard will be effective for the first interim period within fiscal years beginning after December 15, 2017 (the Company's 2019 first fiscal quarter if it does not early adopt), using one of two retrospective application methods. The Company is evaluating the impacts, if any, the adoption of this accounting standard will have on the Company's financial position or results of operations and cash In February 2015, the FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis", which amends the consolidation requirements in ASC 810, "Consolidation". This ASU affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. Specifically, the amendments: (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities ("VIEs") or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidated analysis of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships and (iv) provide a scope exception for certain entities. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2015 (the Company's 2017 first fiscal quarter). The standard may be applied retrospectively or through a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is evaluating the impacts, if any, the adoption of this accounting standard will have on the Company's financial position or results of operations and cash flows. In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance in the new standard is limited to the presentation of debt issuance costs and does not affect the recognition and measurement of debt issuance costs. In June 2015, the FASB issued ASU No. 2015-15, "Interest - Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of- Credit Arrangements." The guidance in ASU No. 2015-03 does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU No. 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff stated that they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2015 (the Company’s 2017 first fiscal quarter) and early adoption is permitted for financial statements that have not been previously issued. The standard should be applied on a retrospective basis. The adoption of this new accounting standard will amend presentation and disclosure requirements concerning debt issuance costs, and as such the adoption will not affect the Company’s financial position or results of operations and cash In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement." The standard provides guidance about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the software license element of the arrangement should be accounted for as an acquisition of a software license. If a cloud computing arrangement does not include a software license, it should be accounted for as a service contract. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2015 (the Company’s 2017 first fiscal quarter) and may be adopted either retrospectively or prospectively. The Company is evaluating the impacts, if any, the adoption of this accounting standard will have on the Company's financial position or results of operations and cash flows. In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory.” This standard provides guidance on the measurement of inventory that is measured using first-in, first-out or average cost. An entity should measure in scope inventory at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. The standard will be effective for the first interim period within fiscal years beginning after December 15, 2016 (the Company’s 2018 first fiscal quarter) and is required to be adopted prospectively and early adoption is permitted. The Company is evaluating the impacts, if any, the adoption of this accounting standard will have on the Company's financial position or results of operations and cash flows. F- 13 3. Net Income Per Common Share Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income attributable to Vail Resorts stockholders by the weighted-average shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of Vail Resorts. Presented below is basic and diluted EPS for the years ended July 31, 2015, 2014 and 2013 (in thousands, except per share amounts): Net income per share: Net income attributable to Vail Resorts Weighted-average shares outstanding Effect of dilutive securities Total shares 2015 Year Ended July 31, 2014 2013 Basic Diluted Basic Diluted Basic Diluted $ 114,754 $ 114,754 $ 28,478 $ 28,478 $ 37,743 $ 37,743 36,342 — 36,342 36,342 1,064 37,406 36,127 36,127 35,859 35,859 — 930 — 874 36,127 37,057 35,859 36,733 Net income per share attributable to Vail Resorts $ 3.16 $ 3.07 $ 0.79 $ 0.77 $ 1.05 $ 1.03 The Company computes the effect of dilutive securities using the treasury stock method and average market prices during the period. The number of shares issuable on the exercise of share based awards that were excluded from the calculation of diluted net income per share because the effect of their inclusion would have been anti-dilutive totaled approximately 11,000, 17,000 and 19,000 for the years ended July 31, 2015, 2014 and 2013, respectively. In fiscal 2011, the Company’s Board of Directors approved the commencement of a regular quarterly cash dividend on the Company's common stock at an annual rate of $0.60 per share, subject to quarterly declaration. Since the initial commencement of a regular quarterly cash dividend, the Company's Board of Directors has annually approved an increase to the cash dividend on the Company's common stock and on March 11, 2015, the Company’s Board of Directors approved an increase of 50% in the annual cash dividend to an annual rate of $2.49 per share, subject to quarterly declaration. For the year ended July 31, 2015, the Company paid cash dividends of $2.075 per share ($75.5 million in the aggregate). On September 25, 2015 the Company’s Board of Directors approved a quarterly cash dividend of $0.6225 per share payable on October 26, 2015 to stockholders of record as of October 9, 2015. 4. Long-Term Debt Long-term debt as of July 31, 2015 and 2014 is summarized as follows (in thousands): Credit Facility Revolver (b) Credit Facility Term Loan (b) Industrial Development Bonds (c) Employee Housing Bonds (d) 6.50% Notes (e) Canyons obligation (f) Other (g) Total debt Less: Current maturities (h) Long-term debt Fiscal Year Maturity (a) 2020 2020 2020 2027-2039 2019 2063 2016-2029 July 31, 2015 July 31, 2014 185,000 $ 250,000 — 52,575 — 317,455 11,800 816,830 10,154 806,676 $ — — 41,200 52,575 215,000 311,858 5,989 626,622 1,022 625,600 $ $ (a) (b) Maturities are based on the Company’s July 31 fiscal year end. On May 1, 2015, Vail Holdings, Inc. (“VHI”), a wholly-owned subsidiary of the Company, amended and restated its senior credit facility. F- 14 Key modifications to the senior credit facility included, among other things, the extension of the maturity on the revolving credit facility from March 2019 to May 2020 and increases in certain baskets for and improved flexibility to incur debt and make distributions. The amended credit facility is now referred to as the Seventh Amended and Restated Credit Agreement (the “Credit Agreement”) with VHI, as borrower, the Company and certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as administrative agent, and the other Lenders party thereto, and consists of a $400 million revolving credit facility. The Credit Agreement also provides for a term loan facility in an aggregate principal amount of $250.0 million. VHI’s obligations under the Credit Agreement are guaranteed by the Company and certain of its subsidiaries and are collateralized by a pledge of all the capital stock of VHI and substantially all of its subsidiaries (with certain additional exceptions for the pledge of the capital stock of foreign subsidiaries). In addition, pursuant to the terms of the Credit Agreement, VHI has the ability to increase availability (under the revolver or in the form of term loans) to an aggregate principal amount not to exceed the greater of (i) $950.0 million and (ii) the product of 2.75 and the trailing twelve-month Adjusted EBITDA, as defined in the Credit Agreement. The term loan facility is subject to quarterly amortization of principal, commencing on January 31, 2016, in equal installments, with five percent payable in each year and the final payment of all amounts outstanding, plus accrued and unpaid interest due on May 1, 2020. The proceeds of the loans made under the Credit Agreement may be used, in addition to the redemptions of the 6.50% Notes and industrial development bonds (as discussed below), to fund the Company’s working capital needs, capital expenditures, acquisitions, investments and other general corporate purposes, including the issuance of letters of credit. The Credit Agreement matures in May 2020. Borrowings under the Credit Agreement, including the term loan facility, bear interest annually at the Company's option at the rate of (i) LIBOR plus 1.125% as of July 31, 2015 (1.32% as of July 31, 2015) or (ii) the Agent's prime lending rate plus a margin (3.50% as of July 31, 2015). Interest rate margins may fluctuate based upon the ratio of the Company’s Net Funded Debt to Adjusted EBITDA on a trailing four-quarter basis. The Credit Agreement also includes a quarterly unused commitment fee, which is equal to a percentage determined by the Net Funded Debt to Adjusted EBITDA ratio, as each such term is defined in the Credit Agreement, times the daily amount by which the Credit Agreement commitment exceeds the total of outstanding loans and outstanding letters of credit. The unused amounts are accessible to the extent that the Net Funded Debt to Adjusted EBITDA ratio does not exceed the maximum ratio allowed at quarter-ends and the Adjusted EBITDA to interest on Funded Debt (as defined in the Credit Agreement) ratio does not fall below the minimum ratio allowed at quarter- ends. The Credit Agreement provides for affirmative and negative covenants that restrict, among other things, the Company’s ability to incur indebtedness, dispose of assets, make capital expenditures, make distributions and make investments. In addition, the Credit Agreement includes the following restrictive financial covenants: Net Funded Debt to Adjusted EBITDA ratio and Adjusted EBITDA to interest on Funded Debt ratio. (c) (d) At July 31, 2014, the Company had outstanding $41.2 million of industrial development bonds, which were issued by Eagle County, Colorado (the “Eagle County Bonds”) and mature, subject to prior redemption, on August 1, 2019. These bonds accrued interest at 6.95% per annum, with interest being payable semi-annually on February 1 and August 1. The promissory note with respect to the Eagle County Bonds between Eagle County and the Company was collateralized by the Forest Service permits for Vail and Beaver Creek. On May 1, 2015, the Company redeemed the outstanding aggregate principal amounts of the industrial development bonds, which was funded by the $250.0 million term loan under our senior credit facility and cash on hand. As a result, the Company incurred an early redemption premium of 4.0%, or $1.6 million, for the portion of the principal redeemed, which was recorded, along with a write- off of $0.1 million of unamortized debt issuance costs, as a loss on extinguishment of debt during the year ended July 31, 2015. As of July 31, 2015, no amount of the industrial development bonds remain outstanding. The Company has recorded for financial reporting purposes the outstanding debt of four Employee Housing Entities (each an “Employee Housing Entity” and collectively the “Employee Housing Entities”): Breckenridge Terrace, Tarnes, BC Housing and Tenderfoot. The proceeds of the Employee Housing Bonds were used to develop apartment complexes designated primarily for use by the Company’s seasonal employees at its mountain resorts. The Employee Housing Bonds are variable rate, interest-only instruments with interest rates tied to LIBOR plus 0% to 0.05% (0.19% to 0.24% as of July 31, 2015). Interest on the Employee Housing Bonds is paid monthly in arrears and the interest rate is adjusted weekly. No principal payments are due on the Employee Housing Bonds until maturity. Each Employee Housing Entity’s bonds were issued in two series. The bonds for each Employee Housing Entity are backed by letters of credit issued under the Credit Agreement. The table below presents the principal amounts outstanding for the Employee Housing Bonds as of July 31, 2015 (in thousands): F- 15 Breckenridge Terrace Tarnes BC Housing Tenderfoot Total Maturity (a) Tranche A Tranche B Total 2039 2039 2027 2035 $ $ 14,980 $ 8,000 9,100 5,700 37,780 $ 5,000 $ 2,410 1,500 5,885 14,795 $ 19,980 10,410 10,600 11,585 52,575 (e) (f) On April 25, 2011, the Company completed a private offering for $390 million of 6.50% Notes. The 6.50% Notes had a fixed annual interest rate of 6.50% and would have matured May 1, 2019 with no principal payments due until maturity. The Company had certain early redemption options under the terms of the 6.50% Notes. The premium for early redemption of the 6.50% Notes ranged from 4.875% to 0%, depending on the date of redemption. The 6.50% Notes were subordinated to certain of the Company’s debts, including the senior credit facility. On July 7, 2014, the Company redeemed $175.0 million of the 6.50% Notes. As a result, the Company incurred an early redemption premium of 4.875%, or $8.5 million, for the portion of the principal redeemed, which was recorded, along with a write-off of $2.3 million of unamortized debt issuance costs, as a loss on extinguishment of debt during the year ended July 31, 2014. As of July 31, 2014, $215.0 million of the 6.50% Notes remained outstanding. On May 1, 2015, the Company redeemed the remaining outstanding aggregate principal amount of its 6.50% Notes, which was funded by the $250.0 million term loan under its senior credit facility and cash on hand. As a result, the Company incurred an early redemption premium of 3.250%, or $7.0 million, for the portion of the principal redeemed, which was recorded, along with a write-off of $2.3 million of unamortized debt issuance costs, as a loss on extinguishment of debt during the year ended July 31, 2015. As of July 31, 2015, no amount of the 6.50% Notes remain outstanding. On May 24, 2013, VR CPC Holdings, Inc. (“VR CPC”), a wholly-owned subsidiary of the Company, entered into a transaction agreement (the "Transaction Agreement") with affiliate companies of Talisker Corporation ("Talisker") pursuant to which the parties entered into a master lease agreement (the "Lease") and certain ancillary transaction documents on May 29, 2013 related to the Canyons mountain resort (see Note 5, Acquisitions), pursuant to which the Company assumed the resort operations of Canyons mountain resort in Park City, Utah. The Lease between VR CPC and Talisker has an initial term of 50 years with six 50-year renewal options. The Lease provides for $25 million in annual payments, which increase each year by an inflation linked index of CPI less 1%, with a floor of 2% per annum. The Parent Company has guaranteed the payments under the Lease. The obligation at July 31, 2015 represents future lease payments for the remaining initial lease term of 50 years (including annual increases at the floor of 2%) discounted using an interest rate of 10%, and includes accumulated accreted interest expense of $12.1 million. (g) Other obligations primarily consist of a $4.9 million note outstanding to the Colorado Water Conservation Board, which matures on September 16, 2028, capital leases and other financing arrangements. Other obligations, including the Colorado Water Conservation Board note and the capital leases, bear interest at rates ranging from 0.2% to 5.5% and have maturities ranging from in the year ending July 31, 2016 to the year ending July 31, 2029. (h) Current maturities represent principal payments due in the next 12 months. Aggregate maturities for debt outstanding, including capital lease obligations, as of July 31, 2015 reflected by fiscal year are as follows (in thousands): 2016 2017 2018 2019 2020 Thereafter Total debt Total 10,154 13,354 13,397 13,455 389,141 377,329 816,830 $ $ The Company recorded gross interest expense of $51.2 million, $64.0 million and $39.0 million for the years ended July 31, 2015, 2014 and 2013, respectively, of which $1.3 million, $1.9 million and $2.0 million was amortization of deferred financing costs. The Company was in compliance with all of its financial and operating covenants required to be maintained under its debt instruments for all periods presented. F- 16 5. Acquisitions Perisher Ski Resort On March 30, 2015, VR Australia Holdings Pty Limited, a wholly-owned subsidiary of the Company, and Murray Publishers Pty Ltd, Consolidated Press Holdings Pty Limited, Transfield Corporate Pty Limited and Transfield Pty Limited (collectively, “Perisher Sellers”) entered into a Purchase and Sale Agreement (the “Perisher Purchase Agreement”) providing for the acquisition of 100% of the stock and units in the entities that operate Perisher Ski Resort ("Perisher") in New South Wales, Australia. On June 30, 2015, the Company closed on the acquisition of Perisher, for total cash consideration of $124.6 million, net of cash acquired. The Company funded the cash purchase price through borrowings under the revolver portion of its Credit Agreement. Perisher holds a long-term lease and license with the New South Wales Government under the National Parks and Wildlife Act, which expires in 2048 with a 20-year renewal option. As provided under the Perisher Purchase Agreement, the Company acquired the entities that hold the assets, conduct operations and includes the long-term lease and license with the New South Wales government for the ski area and related amenities of Perisher, including assumed liabilities, from Perisher Sellers. The following summarizes the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands). Accounts receivable Inventory Property, plant and equipment Intangible assets Other assets Goodwill Total identifiable assets acquired Accounts payable and accrued liabilities Deferred revenue Deferred income tax liability, net Total liabilities assumed Total purchase price, net of cash acquired Estimates of Fair Value at Effective Date of Transaction $ $ $ $ $ 1,494 4,859 126,287 5,458 525 31,657 170,280 11,394 15,906 18,429 45,729 124,551 The estimated fair values of assets acquired and liabilities assumed in the acquisition of Perisher are preliminary and are based on the information that was available as of the acquisition date to estimate the fair value of assets acquired and liabilities assumed. The Company believes that information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but the Company is obtaining additional information necessary to finalize those fair values. Therefore, the preliminary measurements of fair value reflected are subject to change. The Company expects to finalize the valuation and complete the purchase price allocation as soon as practicable but no later than one year from the acquisition date. The excess of the purchase price over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Perisher and other factors. None of the goodwill is expected to be deductible for income tax purposes under Australian tax law. The intangible assets primarily consist of trademarks and customer lists. The definite-lived intangible assets have a weighted- average amortization period of approximately 4 years. The operating results of Perisher, which are recorded in the Mountain segment, contributed $21.8 million of net revenue for the year ended July 31, 2015. The Company has recognized $5.2 million of transaction related expenses, including duties, in Mountain operating expense in the Consolidated Statements of Operations for the year ended July 31, 2015. Park City On September 11, 2014, VR CPC Holdings, Inc. ("VR CPC"), a wholly-owned subsidiary of the Company, and Greater Park City Company, Powdr Corp., Greater Properties, Inc., Park Properties, Inc., and Powdr Development Company (collectively, “Park City Sellers”) entered into a Purchase and Sale Agreement (the “Purchase Agreement”) providing for the acquisition of F- 17 substantially all of the assets related to Park City in Park City, Utah. The cash purchase price was $182.5 million and was funded through borrowings under the revolver portion of the Company's senior credit facility. As provided under the Purchase Agreement, the Company acquired the property, assets and operations of Park City, which includes the ski area and related amenities, from Park City Sellers and assumed leases of certain realty, acquired certain assets, and assumed certain liabilities of Park City Sellers relating to Park City. In addition to the Purchase Agreement, the parties settled the litigation related to the validity of a lease of certain land owned by Talisker Land Holdings, LLC under the ski terrain of Park City (the "Park City Litigation"). In connection with settling the Park City Litigation, the Company recorded a non-cash gain of $16.4 million in the Mountain segment for the year ended July 31, 2015. The gain on litigation settlement represents the estimated fair value of the rents (including damages and interest) due the Company from the Park City Sellers for their use of land and improvements from the Canyons transaction date of May 29, 2013 to the Park City acquisition date. Additionally, the Company assigned a fair value of $10.1 million to the settlement of the Park City Litigation that applied to the period prior to the Canyons transaction. The combined fair value of the Park City Litigation settlement of $26.5 million was determined by applying market capitalization rates to the estimated fair market value of the land and improvements, plus an estimate of statutory damages and interest. The estimated fair value of the Park City Litigation settlement was not received in cash, but was instead reflected as part of the cash price negotiated for the Park City acquisition. Accordingly, the estimated fair value of the Park City Litigation settlement was included in the total consideration for the acquisition of Park City. Under an agreement entered into in conjunction with the Canyons transaction as discussed below, the Company made a $10.0 million payment to Talisker in the year ended July 31, 2015, resulting from the settlement of the Park City Litigation. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands). Accounts receivable Other assets Property, plant and equipment Deferred income tax assets, net Real estate held for sale and investment Intangible assets Goodwill Total identifiable assets acquired Accounts payable and accrued liabilities Deferred revenue Total liabilities assumed Total purchase price Acquisition Date Fair Value 930 3,075 76,605 7,428 7,000 27,650 92,516 215,204 1,935 4,319 6,254 208,950 $ $ $ $ $ During the year ended July 31, 2015, the Company recorded an adjustment in the measurement period to its purchase price allocation of $13.0 million, which reduced real estate held for sale and investment with a corresponding increase to goodwill and will reflect this as a retrospective adjustment as of October 31, 2014. The excess of the purchase price over the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized is attributable primarily to expected synergies, the assembled workforce of Park City and other factors. The majority of goodwill is expected to be deductible for income tax purposes. The intangible assets primarily consist of trademarks, water rights, and customer lists. The intangible assets have a weighted-average amortization period of approximately 46 years at the date of acquisition. The operating results of Park City, which are recorded in the Mountain segment, contributed $67.1 million of net revenue (including an allocation of season pass revenue) for the year ended July 31, 2015. The Company has recognized $0.8 million of transaction related expenses in Mountain operating expense in the Consolidated Condensed Statements of Operations for the year ended July 31, 2015. Certain land and improvements in the Park City ski area (excluding the base area) were part of the Talisker leased premises to Park City and was subject to the Park City Litigation as of the Canyons transaction date, and as such, was recorded as a deposit ("Park City Deposit") for the potential future interests in the land and associated improvements at its estimated fair value in conjunction with the Canyons transaction (refer to the Canyons Transaction Agreement below). Upon settlement of the Park F- 18 City Litigation, the land and improvements associated with the Talisker leased premises became subject to the Canyons lease, and as a result, the Company reclassified the Park City Deposit to the respective assets within property, plant and equipment in the year ended July 31, 2015. The inclusion of the land and certain land improvements that was subject to the Park City Litigation and now included in the Canyons lease requires no additional consideration from the Company to Talisker, but the financial contribution from the operations of Park City will be included as part of the calculation of EBITDA for the resort operations, and as a result, factor into the participating contingent payments (see Note 9, Fair Value Measurements). The majority of the assets acquired under the Park City acquisition, although not under lease, are subject to the terms and conditions of the Canyons lease. Perisher and Park City Pro Forma Financial Information The following presents the unaudited pro forma consolidated financial information of the Company as if the acquisitions of Perisher and Park City were completed on August 1, 2013. The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment; (ii) amortization of intangible assets recorded at the date of the transactions; (iii) related-party land leases; and (iv) transaction and business integration related costs. This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2013 (in thousands, except per share amounts). Pro forma net revenue Pro forma net income attributable to Vail Resorts, Inc. Pro forma basic net income per share attributable to Vail Resorts, Inc. Pro forma diluted net income per share attributable to Vail Resorts, Inc. $ $ $ $ Year Ended July 31, 2015 2014 1,452,542 $ 120,201 $ 1,383,141 35,367 3.31 $ 3.21 $ 0.98 0.95 Canyons In May 2013, VR CPC and Talisker entered into the Transaction Agreement, the Lease and ancillary transaction documents, pursuant to which the Company assumed the resort operations of Canyons mountain resort in Park City, Utah, which includes the ski area, property management and related amenities. Canyons is a year round mountain resort providing a comprehensive offering of recreational activities, including both snow sports and summer activities. The Lease between VR CPC and Talisker has an initial term of 50 years with six 50-year renewal options. The Lease provides for $25 million in annual payments, which increase each year by an inflation linked index of CPI less 1%, with a floor of 2% per annum. In addition, the Lease includes participating contingent payments (described more fully below). The Parent Company has guaranteed the payments under the Lease. Additionally, the transaction documents set forth the rights and obligations of the parties with respect to the acquisition of certain real estate and personal property, future resort development, access, water rights, intellectual property, transition services, and rights with respect to the Park City Litigation. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed at the date the transaction was effective (in thousands). F- 19 Accounts receivable Other current assets Property, plant and equipment Property, plant and equipment (under capital lease) Deferred income tax assets, net Intangible assets Park City deposit Goodwill Total identifiable assets acquired Accounts payable and accrued liabilities Deferred revenue Other liabilities Canyons obligation Contingent consideration Total liabilities assumed $ $ $ $ Acquisition Date Fair Value 2,211 1,698 5,475 127,885 11,869 30,700 57,800 106,414 344,052 6,723 1,134 21,766 305,329 9,100 344,052 Land and certain improvements under the Park City ski area was subject to the Park City Litigation at the transaction date. As such, the Company recorded the Park City Deposit for the potential future interests (at the Canyons transaction date) in the land and associated improvements at its estimated fair value at the transaction date. Refer to the discussion on the Park City Deposit above. The excess of the aggregate fair values of assets acquired and liabilities assumed was recorded as goodwill. The goodwill recognized was attributable primarily to expected synergies, including the potential inclusion of a portion of the ski terrain of Park City in the Lease, the assembled workforce of Canyons and other factors. The Company believes that for income tax purposes the lease payments should primarily be treated as payments of a debt obligation and that the tax basis of the goodwill is deductible. The intangible assets have a weighted-average amortization period of approximately 50 years (at the transaction date). Additionally, the Company recorded $20.3 million at the transaction date in additional consideration associated with certain Talisker obligations, primarily related to resort development. The following table shows the composition of Canyons property, plant and equipment recorded under capital leases as of July 31, 2015 and 2014: Land Land improvements Buildings and building improvements Machinery and equipment Gross property, plant and equipment Accumulated depreciation Property, plant and equipment, net $ $ July 31, 2015 2014 31,818 $ 49,228 42,910 61,175 185,131 (17,212) 167,919 $ 18,500 29,980 32,800 46,605 127,885 (7,596) 120,289 As of July 31, 2015, the Canyons obligation was $317.5 million, which represents the estimated annual lease payments for the remaining initial 50 year term of the lease assuming annual increases at the floor of 2% and discounted using an interest rate of 10%. Future minimum lease payments under the Lease as of July 31, 2015 reflected by fiscal year are as follows (in thousands): F- 20 2016 2017 2018 2019 2020 Thereafter Total future minimum lease payments Less amount representing interest Net future minimum lease payments $ 26,101 26,623 27,156 27,699 28,253 1,923,824 2,059,656 (1,742,201) $ 317,455 The Lease also provides for participating contingent payments to Talisker of 42% of the amount by which EBITDA for the resort operations, as calculated under the Lease, exceeds approximately $35 million, with such threshold amount increased by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the Lease by the Company (the "Contingent Consideration"). At the date of the transaction the Company estimated the likelihood and timing of achieving the relevant thresholds for the Contingent Consideration payments. The Company determined the estimated fair value of the Contingent Consideration to be $9.1 million as of the transaction date (see Note 9, Fair Value Measurements). The operating results of Canyons which are recorded in the Mountain and Lodging segments contributed $3.9 million of net revenue for the year ended July 31, 2013. Additionally, the Company recognized $4.4 million of transaction related expenses in the Consolidated Statements of Operations for the year ended July 31, 2013. The following presents the unaudited pro forma consolidated financial information of the Company as if the Canyons transaction was completed on August 1, 2012. The following unaudited pro forma financial information includes adjustments for (i) depreciation on acquired property, plant and equipment; (ii) amortization of intangible assets recorded at the date of the transaction; (iii) interest expense relating to the Canyons obligation; and (iv) transaction and business integration related costs. This unaudited pro forma financial information is presented for informational purposes only and does not purport to be indicative of the results of future operations or the results that would have occurred had the transaction taken place on August 1, 2012 (in thousands, except per share amounts). $ Pro forma net revenue $ Pro forma net income (loss) attributable to Vail Resorts, Inc. Pro forma basic net income (loss) per share attributable to Vail Resorts, Inc. $ Pro forma diluted net income (loss) per share attributable to Vail Resorts, Inc. $ 1,172,159 20,714 0.58 0.56 Year Ended July 31, 2013 Urban Ski Areas In December 2012, the Company acquired all of the assets of two ski areas in the Midwest, Afton Alps in Minnesota and Mount Brighton in Michigan, for total cash consideration of $20.0 million, net of cash acquired. The purchase price was allocated to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The Company completed its purchase price allocation and recorded $17.8 million in property, plant and equipment, $1.0 million in other assets, $2.0 million in goodwill, $1.0 million in other intangible assets (with a weighted-average amortization period of 10 years), and $1.8 million of assumed liabilities on the date of acquisition. The operating results of Afton Alps and Mount Brighton are reported within the Mountain segment. F- 21 6. Supplementary Balance Sheet Information The composition of property, plant and equipment, including capital lease assets, follows (in thousands): July 31, Land and land improvements Buildings and building improvements Machinery and equipment Furniture and fixtures Software Vehicles Construction in progress Gross property, plant and equipment Accumulated depreciation Property, plant and equipment, net $ 2015 431,854 $ 2014 348,328 907,280 700,745 269,209 98,653 55,724 31,487 2,411,426 (1,263,436) $ 1,386,275 $ 1,147,990 1,006,821 815,946 286,863 106,433 61,036 53,158 2,762,111 (1,375,836) Depreciation expense, which included depreciation of assets recorded under capital leases, for the years ended July 31, 2015, 2014 and 2013 totaled $144.0 million, $136.6 million and $130.2 million, respectively. The composition of goodwill and intangible assets follows (in thousands): Goodwill Goodwill Accumulated amortization Goodwill, net Indefinite-lived intangible assets Gross indefinite-lived intangible assets Accumulated amortization Indefinite-lived intangible assets, net Amortizable intangible assets Gross amortizable intangible assets Accumulated amortization Amortizable intangible assets, net Total gross intangible assets Total accumulated amortization Total intangible assets, net July 31, 2015 2014 $ 517,787 $ 395,502 (17,354) 378,148 (17,354) 500,433 105,150 (24,713) 80,437 100,834 (24,713) 76,121 118,482 (54,770) 63,712 91,233 (49,831) 41,402 223,632 (79,483) 192,067 (74,544) $ 144,149 $ 117,523 Amortization expense for intangible assets subject to amortization for the years ended July 31, 2015, 2014 and 2013 totaled $5.1 million, $4.0 million and $2.5 million, respectively, and is estimated to be approximately $3.1 million annually, on average, for the next five fiscal years. The changes in the net carrying amount of goodwill allocated between the Company’s segments for the years ended July 31, 2015 and 2014 are as follows (in thousands): F- 22 Balance at July 31, 2013 Acquisition (measurement period adjustments) Effects of changes in foreign currency exchange rates Balance at July 31, 2014 Acquisitions Effects of changes in foreign currency exchange rates Balance at July 31, 2015 Mountain 313,558 $ (3,220) (89) 310,249 124,173 (1,888) 432,534 $ $ $ Lodging Goodwill, net 381,699 (3,462) (89) 378,148 124,173 (1,888) 500,433 68,141 $ (242) — 67,899 — — 67,899 $ The composition of accounts payable and accrued liabilities follows (in thousands): July 31, Trade payables Deferred revenue Accrued salaries, wages and deferred compensation Accrued benefits Deposits Other accruals Total accounts payable and accrued liabilities The composition of other long-term liabilities follows (in thousands): $ 2015 62,099 $ 2014 71,823 110,566 29,833 21,351 15,272 40,373 $ 331,299 $ 289,218 145,949 33,461 24,436 19,336 46,018 Private club deferred initiation fee revenue Unfavorable lease obligation, net Other long-term liabilities Total other long-term liabilities July 31, 2015 2014 $ 126,104 $ 128,824 31,338 100,519 $ 255,916 $ 260,681 29,997 99,815 7. Investments in Affiliates The Company held the following investments in equity method affiliates as of July 31, 2015: Equity Method Affiliates Slifer, Smith, and Frampton/Vail Associates Real Estate, LLC (“SSF/VARE”) KRED Clinton Ditch and Reservoir Company Ownership Interest 50% 50% 43% The Company had total net investments in equity method affiliates of $7.4 million and $7.5 million as of July 31, 2015 and 2014, respectively, classified as “deferred charges and other assets” in the accompanying Consolidated Balance Sheets. The amount of retained earnings that represent undistributed earnings of 50-percent-or-less-owned entities accounted for by the equity method was $4.1 million and $4.2 million as of July 31, 2015 and 2014, respectively. During the years ended July 31, 2015, 2014 and 2013, distributions in the amounts of $1.0 million, $1.0 million and $0.7 million, respectively, were received from equity method affiliates. SSF/VARE is a real estate brokerage with multiple locations in Eagle and Summit Counties, Colorado in which the Company has a 50% ownership interest. SSF/VARE has been the broker for several of the Company’s developments. The Company recorded net real estate commissions expense of zero, zero and $0.3 million for payments made to SSF/VARE during the years ended July 31, 2015, 2014 and 2013, respectively. SSF/VARE leases space for real estate offices from the Company. The F- 23 Company recognized approximately $0.5 million in revenue related to these leases for each of the years ended July 31, 2015, 2014 and 2013. 8. Variable Interest Entities The Company is the primary beneficiary of the Employee Housing Entities, which are Variable Interest Entities (“VIEs”), and has consolidated them in its Consolidated Financial Statements. As a group, as of July 31, 2015, the Employee Housing Entities had total assets of $26.4 million (primarily recorded in property, plant and equipment, net) and total liabilities of $64.0 million (primarily recorded in long-term debt as “Employee Housing Bonds”). The Company has issued under its Credit Agreement $53.4 million letters of credit related to Employee Housing Bonds. The letters of credit would be triggered in the event that one of the entities defaults on required payments. The letters of credit have no default provisions. The Company is the primary beneficiary of Avon Partners II, LLC (“APII”), which is a VIE. APII owns commercial space and the Company currently leases substantially all of that space. APII had total assets of $4.3 million (primarily recorded in property, plant and equipment) and no debt as of July 31, 2015. 9. Fair Value Measurements The FASB issued fair value guidance that establishes how reporting entities should measure fair value for measurement and disclosure purposes. The guidance establishes a common definition of fair value applicable to all assets and liabilities measured at fair value and prioritizes the inputs into valuation techniques used to measure fair value. Accordingly, the Company uses valuation techniques which maximize the use of observable inputs and minimize the use of unobservable inputs when determining fair value. The three levels of the hierarchy are as follows: Level 1: Inputs that reflect unadjusted quoted prices in active markets that are accessible to the Company for identical assets or liabilities; Level 2: Inputs include quoted prices for similar assets and liabilities in active and inactive markets or that are observable for the asset or liability either directly or indirectly; and Level 3: Unobservable inputs which are supported by little or no market activity. The table below summarizes the Company’s cash equivalents and Contingent Consideration measured at fair value (all other assets and liabilities measured at fair value are immaterial) (in thousands): Description Assets: Money Market Commercial Paper Certificates of Deposit Liabilities: Contingent Consideration Description Assets: Money Market Commercial Paper Certificates of Deposit Liabilities: Contingent Consideration Fair Value Measurement as of July 31, 2015 Balance at July 31, 2015 Level 1 Level 2 Level 3 7,577 $ 2,401 $ 2,651 $ 7,577 $ — $ — $ — $ 2,401 $ 2,651 $ — — — 6,900 $ — $ — $ 6,900 Fair Value Measurement as of July 31, 2014 Balance at July 31, 2014 Level 1 Level 2 Level 3 9,022 $ 630 $ 880 $ 9,022 $ — $ — $ — $ 630 $ 880 $ — — — 10,500 $ — $ — $ 10,500 $ $ $ $ $ $ $ $ F- 24 The Company’s cash equivalents are measured utilizing quoted market prices or pricing models whereby all significant inputs are either observable or corroborated by observable market data. The following change in Contingent Consideration during the years ended July 31, 2014 and 2015 were as follows: Balance at July 31, 2013 Change in fair value Balance at July 31, 2014 Change in fair value Balance at July 31, 2015 $ $ $ 9,100 1,400 10,500 (3,600) 6,900 The lease for Canyons provides for participating contingent payments to Talisker of 42% of the amount by which EBITDA for the resort operations, as calculated under the Lease, exceed approximately $35 million, as established at the transaction date, with such threshold amount subsequently increased annually by an inflation linked index and a 10% adjustment for any capital improvements or investments made under the lease by the Company. The fair value of Contingent Consideration includes the resort operations of Park City, following completion of the acquisition, in the calculation of EBITDA on which participating contingent payments are made, and increases the EBITDA threshold before which participating contingent payments are made by 10% of the purchase price paid by the Company for Park City along with all future capital expenditures associated with Canyons, Park City or the combined resort. The Company estimated the fair value of the Contingent Consideration payments using an option pricing valuation model. Key assumptions included a discount rate of 11.5%, volatility of 20.0%, and credit risk of 2.5%. The model also incorporates assumptions for EBITDA and capital expenditures, which are unobservable inputs and thus are considered Level 3 inputs. As Contingent Consideration is classified as a liability, the liability is remeasured to fair value at each reporting date until the contingency is resolved. During the year ended July 31, 2015, the Company recorded a decrease of $3.6 million in the estimated fair value of the participating contingent payments, and recorded the related gain in income from operations. The estimated fair value of the contingent consideration is $6.9 million as of July 31, 2015 and this liability is recorded in other long-term liabilities in the Consolidated Condensed Balance Sheets. 10. Income Taxes The Company had federal net operating loss (“NOL”) carryforwards that expired in the year ended July 31, 2008 and were limited in deductibility each year under Section 382 of the Internal Revenue Code. The Company had only been able to use these NOL carryforwards to the extent of approximately $8.0 million per year through December 31, 2007 (the “Section 382 Amount”). However, during the year ended July 31, 2005, the Company amended previously filed tax returns (for tax years 1997-2002) in an effort to remove the restrictions under Section 382 of the Internal Revenue Code on approximately $73.8 million of NOL carryforwards to reduce future taxable income. As a result, the Company requested a refund related to the amended returns in the amount of $6.2 million and reduced its federal tax liability in the amount of $19.6 million in subsequent returns. These NOL carryforwards relate to fresh start accounting from the Company’s reorganization in 1992. During the year ended July 31, 2006, the Internal Revenue Service (“IRS”) completed its examination of the Company’s filing position in these amended returns and disallowed the Company’s request for refund and its position to remove the restrictions under Section 382 of the Internal Revenue Code. The Company appealed the examiner’s disallowance of these NOL carryforwards to the Office of Appeals. In December 2008, the Office of Appeals denied the Company’s appeal, as well as a request for mediation. The Company disagreed with the IRS interpretation disallowing the utilization of the NOL’s and in August 2009, the Company filed a complaint in the United States District Court for the District of Colorado against the United States of America seeking a refund of approximately $6.2 million in federal income taxes paid, plus interest. On July 1, 2011, the District Court granted the Company summary judgment, concluding that the IRS’s decision disallowing the utilization of the NOLs was inappropriate. The computations themselves, however, remained in dispute, and the District Court's ruling was subject to appeal by the IRS. Subsequently, the District Court proceedings were continued pending settlement discussions between the parties. The Company also filed two related tax proceedings in the United States Tax Court regarding calculation of NOL carryover deductions for tax years 2006, 2007, and 2008. The two proceedings involved substantially the same issues as the litigation in the District Court for tax years 2000 and 2001 in which the Company disagreed with the IRS as to the utilization of NOLs. Like the District Court proceedings, the Tax Court proceedings were continued pending settlement discussions between the parties. On January 29, 2015, the parties completed the execution of a comprehensive settlement agreement resolving all issues and computations in the above mentioned pending proceedings, which allowed the Company to utilize a significant portion of the NOLs. As a result, the Company reversed $27.7 million of other long-term liabilities related to uncertain tax benefits, and F- 25 recorded income tax benefits of $23.8 million for the utilization of the NOLs, including the reversal of accrued interest and penalties, within its Consolidated Condensed Statements of Operations for the year ended July 31, 2015. U.S. and foreign components of income before provision for income taxes is as follows (in thousands): U.S. Foreign Income before income taxes Year Ended July 31, 2015 2014 2013 $ $ 142,190 $ 7,138 149,328 $ 45,895 $ (1,823) 44,072 $ 60,906 (1,677) 59,229 The Company has NOL carryforwards totaling $34.3 million which are primarily comprised of state NOL carryforwards that expire by the year ending July 31, 2031. As of July 31, 2015, the Company recorded a valuation allowance on $29.4 million of these NOL carryforwards as the Company has determined that it is more likely than not that these NOL carryforwards will not be realized. Additionally, the Company has foreign tax credit carryforwards of $0.7 million which expire by the year ending July 31, 2026. As of July 31, 2015, the Company has recorded a valuation allowance of $0.7 million on foreign tax credit carryforwards as the Company has determined that it is more likely than not that these foreign tax credit carryforwards will not be realized. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows (in thousands): Deferred income tax liabilities: Fixed assets Intangible assets Total Deferred income tax assets: Canyons obligation Deferred private club membership revenue Real estate and other investments Deferred compensation and other accrued benefits Stock-based compensation Unfavorable lease obligation, net Net operating loss carryforwards and other tax credits Other, net Total Valuation allowance for deferred income taxes Deferred income tax assets, net of valuation allowance Net deferred income tax liability July 31, 2015 2014 $ 173,908 $ 154,874 46,980 201,854 53,654 227,562 18,687 18,085 7,771 12,590 15,896 11,510 3,610 23,066 111,215 (3,487) 107,728 $ 119,834 $ 18,481 19,643 7,130 11,180 15,309 12,995 3,984 16,836 105,558 (3,017) 102,541 99,313 The net current and non-current components of deferred income taxes recognized in the Consolidated Balance Sheets are as follows (in thousands): Net current deferred income tax asset Net non-current deferred income tax asset Net non-current deferred income tax liability Net deferred income tax liability F- 26 July 31, $ 2015 27,962 $ — 147,796 $ 119,834 $ 2014 29,249 — 128,562 99,313 Significant components of the provision (benefit) for income taxes are as follows (in thousands): Year Ended July 31, 2014 2013 2015 Current: Federal State Foreign Total current Deferred: Federal State Foreign Total deferred Provision for income taxes $ $ 12,668 $ 5,501 3,581 21,750 11,534 1,623 (189) 12,968 34,718 $ 8,082 $ 1,565 — 9,647 25,753 3,991 — 29,744 5,470 749 — 6,219 15,866 $ (7,175) (950) — (8,125) 21,619 A reconciliation of the income tax provision from continuing operations and the amount computed by applying the United States federal statutory income tax rate to income before income taxes is as follows: Year Ended July 31, 2014 2013 2015 At U.S. federal income tax rate State income tax, net of federal benefit Nondeductible meals or entertainment General business credits IRS settlement on NOL utilization Domestic production deduction Change in valuation allowance Other Effective tax rate 35.0 % 3.2 % 0.2 % (0.5)% (16.0)% (0.7)% 0.5 % 1.5 % 23.2 % 35.0 % 3.4 % 0.7 % (1.7)% — % (1.4)% — % — % 36.0 % 35.0 % 3.3 % 0.4 % (1.2)% — % (1.2)% — % 0.2 % 36.5 % A reconciliation of the beginning and ending amount of unrecognized tax benefits associated with uncertain tax positions, excluding associated deferred tax benefits and accrued interest and penalties, if applicable, is as follows (in thousands): Year Ended July 31, 2015 2014 2013 Balance, beginning of year Additions based on tax positions related to the current year Additions for tax positions of prior years Reductions for tax positions of prior years Lapse of statute of limitations Settlements Balance, end of year $ $ 46,973 $ — 17,443 (21,574) — (4,270) 38,572 $ 26,205 $ 21,082 — — (314) — 46,973 $ 26,271 — — — (66) — 26,205 As of July 31, 2015 the Company's unrecognized tax benefits associated with uncertain tax positions relate to the treatment of the Talisker lease payments as payments of debt obligations and that the tax basis in Canyons goodwill is deductible, and are included within “other long-term liabilities” in the accompanying Consolidated Balance Sheets. The Company does not anticipate a significant change to its unrecognized tax benefits recorded as of July 31, 2015 during the twelve months ending July 31, 2016. As of July 31, 2015 and 2014, accrued interest and penalties, net of tax, was $0.5 million F- 27 and $1.9 million, respectively. For the years ended July 31, 2015, 2014 and 2013, the Company recognized as income tax (benefit) expense $(1.4) million, $0.1 million and zero of interest (income) expense and penalties, net of tax, respectively. The Company's major tax jurisdictions in which it files income tax returns is the U.S. federal jurisdiction, various state jurisdictions and Australia. As discussed above, on January 29, 2015, all issues and computations were resolved upon the completion of a comprehensive settlement agreement with the IRS in regards to the federal NOL carryforward dispute. The Company is no longer subject to U.S. federal examinations for tax years prior to 2012. With few exceptions, the Company is no longer subject to examination by various state jurisdictions for tax years prior to 2006. 11. Related Party Transactions The Company has the right to appoint four of nine directors of the Beaver Creek Resort Company of Colorado (“BCRC”), a non-profit entity formed for the benefit of property owners and certain others in Beaver Creek. The Company has a management agreement with the BCRC, renewable for one-year periods, to provide management services on a fixed fee basis. Management fees and reimbursement of operating expenses paid to the Company under its agreement with the BCRC during the years ended July 31, 2015, 2014 and 2013 were $7.1 million, $7.0 million, and $7.0 million, respectively. 12. Commitments and Contingencies Metropolitan Districts The Company credit-enhances $8.0 million of bonds issued by Holland Creek Metropolitan District (“HCMD”) through an $8.1 million letter of credit issued under the Company’s Credit Agreement. HCMD’s bonds were issued and used to build infrastructure associated with the Company’s Red Sky Ranch residential development. The Company has agreed to pay capital improvement fees to Red Sky Ranch Metropolitan District (“RSRMD”) until RSRMD’s revenue streams from property taxes are sufficient to meet debt service requirements under HCMD’s bonds, and the Company has recorded a liability of $1.8 million, primarily within “other long-term liabilities” in the accompanying Consolidated Balance Sheets as of July 31, 2015 and 2014, respectively, with respect to the estimated present value of future RSRMD capital improvement fees. The Company estimates that it will make capital improvement fee payments under this arrangement through the year ending July 31, 2029. Guarantees/Indemnifications As of July 31, 2015, the Company had various other letters of credit in the amount of $65.2 million, consisting primarily of $53.4 million in support of the Employee Housing Bonds and $11.8 million for workers’ compensation, general liability construction related deductibles and other activities. In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business which include certain indemnifications under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events. These indemnities include indemnities to licensees in connection with the licensees’ use of the Company’s trademarks and logos, indemnities for liabilities associated with the infringement of other parties’ technology and software products, indemnities related to liabilities associated with the use of easements, indemnities related to employment of contract workers, the Company’s use of trustees, indemnities related to the Company’s use of public lands and environmental indemnifications. The duration of these indemnities generally is indefinite and generally do not limit the future payments the Company could be obligated to make. As permitted under applicable law, the Company and certain of its subsidiaries indemnify their directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was, serving the Company or its subsidiaries in such a capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that should enable the Company to recover a portion of any future amounts paid. Unless otherwise noted, the Company has not recorded any significant liabilities for the letters of credit, indemnities and other guarantees noted above in the accompanying Consolidated Financial Statements, either because the Company has recorded on its Consolidated Balance Sheets the underlying liability associated with the guarantee, the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements as prescribed by GAAP, or because the Company has calculated the fair value of the indemnification or guarantee to be immaterial based upon the current facts and circumstances that would trigger a payment under the indemnification clause. In addition, with respect to certain indemnifications it is not possible to determine the maximum potential amount of liability under these guarantees due to the F- 28 unique set of facts and circumstances that are likely to be involved in each particular claim and indemnification provision. Historically, payments made by the Company under these obligations have not been material. As noted above, the Company makes certain indemnifications to licensees in connection with their use of the Company’s trademarks and logos. The Company does not record any product warranty liability with respect to these indemnifications. Commitments The operations of Northstar are conducted on land and with operating assets owned by affiliates of CNL Lifestyle Properties, Inc., a real-estate investment trust, primarily under operating leases which were assumed in the acquisition of Northstar by the Company. The leases provide for the payment of a minimum annual base rent with a rate of 10.25% increasing to 11% of assets under lease over the lease term which is recognized on a straight-line basis over the remaining lease term from the date of assumption. In addition, beginning in fiscal 2013 the leases provide for the payment of percentage rent at a rate of 11.5% of certain gross revenues generated at the property over a revenue threshold which is incrementally adjusted annually. The initial term of the leases expires in fiscal 2027 and allows for three 10-year extensions at the Company’s option. The operations of Perisher are conducted on land under a license and lease granted by the Office of Environment and Heritage, an agency of the New South Wales government, that initially commenced in 2008, which the Company assumed in its acquisition of Perisher. The lease and license has a term that expires in fiscal 2048 and allows for an option to renew for an additional 20 years. The lease and license provide for the payment of an initial minimum annual base rent of AUS $1.8 million, with annual CPI increases, and percentage rent at a rate of 2% of certain gross revenue generated at the property. In addition, the Company has executed or assumed as lessee other operating leases for the rental of office and commercial space, employee residential units and land primarily through fiscal 2079. Certain of these leases have renewal terms at the Company’s option, escalation clauses, rent holidays and leasehold improvement incentives. Rent holidays and rent escalation clauses are recognized on a straight-line basis over the lease term. Leasehold improvement incentives are recorded as leasehold improvements and amortized over the shorter of their economic lives or the term of the lease. For the years ended July 31, 2015, 2014 and 2013, the Company recorded lease expense (including Northstar and Perisher), excluding executory costs, related to these agreements of $39.5 million, $37.3 million and $35.1 million, respectively, which is included in the accompanying Consolidated Statements of Operations. Future minimum operating lease payments under the above leases as of July 31, 2015 reflected by fiscal year are as follows (in thousands): 2016 2017 2018 2019 2020 Thereafter Total $ 34,937 31,417 28,701 25,447 22,698 148,750 $ 291,950 Self Insurance The Company in the U.S. is self-insured for claims under its health benefit plans and for workers’ compensation claims, subject to stop loss policies. The self-insurance liability related to workers’ compensation is determined actuarially based on claims filed. The self-insurance liability related to claims under the Company’s health benefit plans is determined based on analysis of actual claims. The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued liabilities (see Note 6, Supplementary Balance Sheet Information). Legal The Company is a party to various lawsuits arising in the ordinary course of business. Management believes the Company has adequate insurance coverage and/or has accrued for loss contingencies for all known matters that are deemed to be probable losses and estimable. As of July 31, 2015 and 2014, the accrual for loss contingencies was not material individually and in the aggregate. F- 29 13. Segment Information The Company has three reportable segments: Mountain, Lodging and Real Estate. The Mountain segment includes the operations of the Company’s mountain resorts/ski areas and related ancillary activities. The Lodging segment includes the operations of the Company’s owned hotels, RockResorts, NPS concessionaire properties, condominium management, CME and mountain resort golf operations. The Real Estate segment owns and develops real estate in and around the Company’s resort communities. The Company’s reportable segments, although integral to the success of the others, offer distinctly different products and services and require different types of management focus. As such, these segments are managed separately. The Company reports its segment results using Reported EBITDA (defined as segment net revenue less segment operating expenses, plus or minus segment equity investment income or loss, plus gain on litigation settlement and for the Real Estate segment, plus gain on sale of real property) which is a non-GAAP financial measure. The Company reports segment results in a manner consistent with management’s internal reporting of operating results to the chief operating decision maker (Chief Executive Officer) for purposes of evaluating segment performance. Reported EBITDA is not a measure of financial performance under GAAP. Items excluded from Reported EBITDA are significant components in understanding and assessing financial performance. Reported EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because Reported EBITDA is not a measurement determined in accordance with GAAP and thus is susceptible to varying calculations, Reported EBITDA as presented may not be comparable to other similarly titled measures of other companies. The Company utilizes Reported EBITDA in evaluating performance of the Company and in allocating resources to its segments. Mountain Reported EBITDA consists of Mountain net revenue less Mountain operating expense plus or minus Mountain equity investment income or loss plus gain on litigation settlement. Lodging Reported EBITDA consists of Lodging net revenue less Lodging operating expense. Real Estate Reported EBITDA consists of Real Estate net revenue less Real Estate operating expense plus gain on sale of real property. All segment expenses include an allocation of corporate administrative expense. Assets are not allocated between segments, or used to evaluate performance, except as shown in the table below. The accounting policies specific to each segment are the same as those described in Note 2, Summary of Significant Accounting Policies. Following is key financial information by reportable segment which is used by management in evaluating performance and allocating resources (in thousands): F- 30 Year Ended July 31, 2014 2013 2015 $ 536,458 $ 126,206 101,010 219,153 121,202 1,104,029 254,553 1,358,582 41,342 390,820 95,254 81,175 199,418 100,847 867,514 210,974 1,078,488 42,309 $ 1,399,924 $ 1,254,646 $ 1,120,797 447,271 $ 109,442 89,892 210,387 106,581 963,573 242,287 1,205,860 48,786 $ 777,147 $ 232,877 1,010,024 48,408 $ 1,058,432 $ 16,400 $ $ 151 $ $ 822 $ $ $ $ $ $ $ 344,104 $ 21,676 365,780 (6,915) 358,865 $ 129,825 $ 358,865 $ (149,123) 3,650 (2,057) 246 (51,241) (11,012) 149,328 (34,718) 114,610 144 114,754 $ 712,785 $ 225,563 938,348 55,826 994,174 $ — $ — $ 1,262 $ 252,050 $ 16,724 268,774 (7,040) 261,734 $ 157,858 $ 261,734 $ (140,601) (1,400) (1,208) 375 (63,997) (10,831) 44,072 (15,866) 28,206 272 28,478 $ 639,706 198,813 838,519 58,090 896,609 — 6,675 891 228,699 12,161 240,860 (9,106) 231,754 195,230 231,754 (132,688) — (1,222) 351 (38,966) — 59,229 (21,619) 37,610 133 37,743 Net revenue: Lift tickets Ski school Dining Retail/rental Other Total Mountain net revenue Lodging Resort Real Estate Total net revenue Segment operating expense: Mountain Lodging Resort Real Estate Total segment operating expense Gain on litigation settlement Gain on sale of real property Mountain equity investment income, net Reported EBITDA: Mountain Lodging Resort Real Estate Total Reported EBITDA Real estate held for sale and investment Reconciliation to net income attributable to Vail Resorts, Inc.: Total Reported EBITDA Depreciation and amortization Change in fair value of contingent consideration Loss on disposal of fixed assets and other, net Investment income, net Interest expense Loss on extinguishment of debt Income before provision for income taxes Provision for income taxes Net income Net loss attributable to noncontrolling interests Net income attributable to Vail Resorts, Inc. F- 31 14. Selected Quarterly Financial Data (Unaudited--in thousands, except per share amounts) 2015 Quarter Ended, July 31, 2015 Quarter Ended, April 30, 2015 Quarter Ended, January 31, 2015 Quarter Ended, October 31, 2014 81,061 $ 69,373 11,648 162,082 (88,478) (70,168) 499,551 $ 67,323 12,469 579,343 227,752 133,402 463,031 $ 59,364 7,842 530,237 160,071 115,700 60,386 58,493 9,383 128,262 (88,832) (64,324) Year Ended July 31, 2015 $ 1,104,029 $ 254,553 41,342 1,399,924 210,513 114,610 114,754 $ (70,142) $ 133,410 $ 115,762 $ (64,276) 3.16 $ (1.92) $ 3.67 $ 3.19 $ 3.07 $ (1.92) $ 3.56 $ 3.10 $ (1.77) (1.77) Mountain revenue Lodging revenue Real Estate revenue Total net revenue Income (loss) from operations Net income (loss) Net income (loss) attributable to Vail Resorts, Inc. Basic net income (loss) per share attributable to Vail Resorts, Inc. Diluted net income (loss) per share attributable to Vail Resorts, Inc. $ $ $ 2014 Quarter Ended, July 31, 2014 Quarter Ended, April 30, 2014 Quarter Ended, January 31, 2014 Quarter Ended, October 31, 2013 53,999 $ 62,593 18,896 135,488 (94,493) (75,423) 460,587 $ 66,293 16,167 543,047 203,165 117,866 391,656 $ 56,187 4,877 452,720 110,695 59,200 57,331 57,214 8,846 123,391 (102,104) (73,437) Year Ended July 31, 2014 $ 963,573 $ 242,287 48,786 1,254,646 117,263 28,206 28,478 $ (75,355) $ 117,946 $ 59,263 $ (73,376) 0.79 $ (2.08) $ 3.26 $ 1.64 $ (2.04) 0.77 $ (2.08) $ 3.18 $ 1.60 $ (2.04) Mountain revenue Lodging revenue Real Estate revenue Total net revenue Income (loss) from operations Net income (loss) Net income (loss) attributable to Vail Resorts, Inc. Basic net income (loss) per share attributable to Vail Resorts, Inc. Diluted net income (loss) per share attributable to Vail Resorts, Inc. $ $ $ 15. Stock Repurchase Plan On March 9, 2006, the Company’s Board of Directors approved the repurchase of up to 3,000,000 shares of common stock and on July 16, 2008 approved an increase of the Company’s common stock repurchase authorization by an additional 3,000,000 shares. The Company did not repurchase any shares of common stock during the years ended July 31, 2015, 2014 or 2013. Since inception of this stock repurchase program through July 31, 2015, the Company has repurchased 4,949,111 shares at a cost of approximately $193.2 million. As of July 31, 2015, 1,050,889 shares remained available to repurchase under the existing repurchase authorization. These authorizations have no expiration date. Shares of common stock purchased pursuant to the repurchase program will be held as treasury shares and may be used for issuance under the Company’s employee share award plan. 16. Stock Compensation Plan The Company has a share award plan (the “Plan”) which has been approved by the Company’s stockholders. Under the Plan, up to 7.5 million shares of common stock could be issued in the form of options, stock appreciation rights, restricted shares, restricted share units, performance shares, performance share units, dividend equivalents or other share-based awards to employees, directors or consultants of the Company or its subsidiaries or affiliates. The terms of awards granted under the Plan, F- 32 including exercise price, vesting period and life, are set by the Compensation Committee of the Board of Directors. All share- based awards (except for restricted shares and restricted share units) granted under the Plan have a life of ten years. Most awards vest ratably over three years; however, some have been granted with different vesting schedules. Of the awards outstanding, none have been granted to non-employees (except those granted to non-employee members of the Board of Directors of the Company) under the Plan. At July 31, 2015, approximately 2.1 million share based awards were available to be granted under the Plan. The fair value of stock-settled stock appreciation rights (“SARs”) granted in the years ended July 31, 2015, 2014 and 2013 were estimated on the date of grant using a lattice-based option valuation model that applies the assumptions noted in the table below. A lattice-based model considers factors such as exercise behavior, and assumes employees will exercise equity awards at different times over the contractual life of the equity awards. As a lattice-based model considers these factors, and is more flexible, the Company considers it to be a better method of valuing equity awards than a closed-form Black-Scholes model. Because lattice-based option valuation models incorporate ranges of assumptions for inputs, those ranges are disclosed. Expected volatility is based on historical volatility of the Company’s stock. The Company uses historical data to estimate equity award exercises and employee terminations within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of equity awards granted is derived from the output of the option valuation model and represents the period of time that equity awards granted are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the equity award is based on the United States Treasury yield curve in effect at the time of grant. Expected volatility Expected dividends Expected term (average in years) Risk-free rate Year Ended July 31, 2013 2014 2015 42.6% 41.2% 40.6% 1.5% 1.2% 1.9% 4.9-5.6 6.0-6.2 5.5-5.9 0.1-2.6% 0.1-2.8% 0.2-1.6% The Company has estimated forfeiture rates that range from 0.0% to 21.3% based upon the class of employees receiving stock- based compensation in its calculation of stock-based compensation expense for the year ended July 31, 2015. These estimates are based on historical forfeiture behavior exhibited by employees of the Company. A summary of aggregate option and SARs award activity under the Plan as of July 31, 2013, 2014 and 2015, and changes during the years then ended is presented below (in thousands, except exercise price and contractual term): Outstanding at August 1, 2012 Granted Exercised Forfeited or expired Outstanding at July 31, 2013 Granted Exercised Forfeited or expired Outstanding at July 31, 2014 Granted Exercised Forfeited or expired Outstanding at July 31, 2015 Vested and expected to vest at July 31, 2015 Exercisable at July 31, 2015 Awards Weighted- Average Exercise Price 34.20 57.43 33.22 43.21 37.63 73.13 37.62 48.87 42.06 91.64 36.20 75.99 47.96 47.63 38.80 3,170 $ 412 (735) (94) 2,753 $ 352 (321) (28) 2,756 $ 242 (575) (38) 2,385 $ 2,355 $ 1,817 $ Weighted-Average Remaining Contractual Term Aggregate Intrinsic Value 5.7 years 5.7 years 4.9 years $ $ $ 147,196 146,176 128,829 The weighted-average grant-date fair value of SARs granted during the years ended July 31, 2015, 2014 and 2013 was $29.12, $23.60 and $18.38, respectively. The total intrinsic value of options and SARs exercised during the years ended July 31, 2015, F- 33 2014 and 2013 was $37.4 million, $10.8 million and $18.6 million, respectively. The Company had 420,000, 421,000 and 414,000 SARs that vested during the years ended July 31, 2015, 2014 and 2013, respectively. These awards had a total fair value of $13.6 million, $9.8 million and $6.5 million at the date of vesting for the years ended July 31, 2015, 2014 and 2013, respectively. A summary of the status of the Company’s nonvested SARs as of July 31, 2015, and changes during the year then ended, is presented below (in thousands, except fair value amounts): Outstanding at July 31, 2014 Granted Vested Forfeited Nonvested at July 31, 2015 Awards 783 242 (420) (38) 567 $ $ Weighted-Average Grant-Date Fair Value 19.42 29.12 17.41 26.57 24.56 A summary of the status of the Company’s nonvested restricted share units as of July 31, 2015, and changes during the year then ended, is presented below (in thousands, except fair value amounts): Outstanding at July 31, 2014 Granted Vested Forfeited Nonvested at July 31, 2015 Awards 274 143 (113) (33) 271 $ $ Weighted-Average Grant-Date Fair Value 58.68 83.50 54.38 70.91 72.10 The Company granted 143,000 restricted share units during the year ended July 31, 2015 with a weighted-average grant-date fair value of $83.50. The Company granted 152,000 restricted share units during the year ended July 31, 2014 with a weighted- average grant-date fair value of $67.48. The Company granted 159,000 restricted share units during the year ended July 31, 2013 with a weighted-average grant-date fair value of $52.94. The Company had 113,000, 166,000 and 134,000 restricted share units that vested during the years ended July 31, 2015, 2014 and 2013, respectively. These units had a total fair value of $9.9 million, $6.9 million and $5.0 million at the date of vesting for the years ended July 31, 2015, 2014 and 2013, respectively. As of July 31, 2015, there was $18.2 million of total unrecognized compensation expense related to nonvested share-based compensation arrangements granted under the Plan, of which $11.2 million, $6.1 million and $0.9 million of expense is expected to be recognized in the years ending July 31, 2016, 2017 and 2018, respectively, assuming no future share-based awards are granted. Cash received from options exercised under all share-based payment arrangements was $1.1 million, $1.8 million and $3.0 million for the years ended July 31, 2015, 2014 and 2013, respectively. The tax benefit realized or to be realized from options/ SARs exercised and restricted stock units vested was $18.1 million, $8.5 million and $9.8 million for the years ended July 31, 2015, 2014 and 2013, respectively. The Company has a policy of using either authorized and unissued shares or treasury shares, including shares acquired by purchase in the open market, to satisfy equity award exercises. 17. Retirement and Profit Sharing Plans The Company maintains a defined contribution retirement plan (the “Retirement Plan”), qualified under Section 401(k) of the Internal Revenue Code, for its employees. Under this Retirement Plan, employees are eligible to make before-tax contributions on the first day of the calendar month following the later of: (i) their employment commencement date or (ii) the date they turn 21. Participants may contribute up to 100% of their qualifying annual compensation up to the annual maximum specified by the Internal Revenue Code. The Company matches an amount equal to 50% of each participant’s contribution up to 6% of a F- 34 participant’s bi-weekly qualifying compensation upon obtaining the later of: (i) 12 consecutive months of employment and 1,000 service hours or (ii) 1,500 service hours since the employment commencement date. The Company’s matching contribution is entirely discretionary and may be reduced or eliminated at any time. Total Retirement Plan expense recognized by the Company for the years ended July 31, 2015, 2014 and 2013 was $4.5 million, $4.1 million and $3.7 million, respectively. F- 35 ITEM 9. None. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. ITEM 9A. CONTROLS AND PROCEDURES. Disclosure Controls and Procedures Management of the Company, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Form 10-K. The term “disclosure controls and procedures” means controls and other procedures established by the Company that are designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Based upon their evaluation of the Company’s disclosure controls and procedures, the CEO and the CFO concluded that, as of the end of the period covered by this Form 10-K, the disclosure controls are effective to provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure and are effective to provide reasonable assurance that such information is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms. The Company, including its CEO and CFO, does not expect that the Company’s controls and procedures will prevent or detect all error and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Management’s Annual Report on Internal Control Over Financial Reporting The report of management required under this Item 9A is contained in Item 8 of this Form 10-K under the caption “Management’s Report on Internal Control over Financial Reporting.” Attestation Report of the Independent Registered Public Accounting Firm The attestation report required under this Item 9A is contained in Item 8 of this Form 10-K under the caption “Report of Independent Registered Public Accounting Firm.” Changes in Internal Control Over Financial Reporting There were no changes in the Company’s internal control over financial reporting during the quarter ended July 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by this item is incorporated herein by reference from the Company’s definitive proxy statement for the 2015 annual meeting of stockholders. ITEM 11. EXECUTIVE COMPENSATION. The information required by this item is incorporated herein by reference from the Company’s definitive proxy statement for the 2015 annual meeting of stockholders. 58 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by this item is incorporated herein by reference from the Company’s definitive proxy statement for the 2015 annual meeting of stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by this item is incorporated herein by reference from the Company’s definitive proxy statement for the 2015 annual meeting of stockholders. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES. The information required by this item is incorporated herein by reference from the Company’s definitive proxy statement for the 2015 annual meeting of stockholders. 59 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. a) Index to Financial Statements and Financial Statement Schedules. (1) (2) (3) See “Item 8. Financial Statements and Supplementary Data” for the index to the Financial Statements and Schedules. Schedule II - Valuation and Qualifying Accounts. All other schedules have been omitted because the required information is not applicable or because the information required has been included in the financial statements or notes thereto. See the Index to Exhibits below. The following exhibits are either filed herewith or, if so indicated, incorporated by reference to the documents indicated in parentheses, which have previously been filed with the Securities and Exchange Commission. Posted Exhibit Number 2.1 2.2 3.1 3.2 3.3 4.1(a) 4.1(b) 4.1(c) Description Sequentially Numbered Page Transaction Agreement, dated as of May 24, 2013, between VR CPC Holdings, Inc. and ASC Utah LLC, Talisker Land Holdings, LLC, Talisker Canyons Lands LLC, Talisker Canyons Leaseco LLC, American Skiing Company Resort Properties LLC, Talisker Canyons Propco LLC and Talisker Canyons Finance Co LLC. (Incorporated by reference to Exhibit 2.1 on Form 8-K of Vail Resorts, Inc. filed on May 30, 2013) (File No. 001-09614). Purchase and Sale Agreement, dated as of September 11, 2014, between VR CPC Holdings, Inc. and Greater Park City Company, Powdr Corp., Greater Properties, Inc., Park Properties, Inc. and Powdr Development Company. (Incorporated by reference to Exhibit 2.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2014) (File No. 001-09614). Amended and Restated Certificate of Incorporation of Vail Resorts, Inc., dated January 5, 2005. (Incorporated by reference to Exhibit 3.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2005)(File No. 001-09614). Certificate of Amendment of Amended and Restated Certificate of Incorporation of Vail Resorts, Inc., dated December 7, 2011. (Incorporated by reference to Exhibit 3.1 on Form 8-K of Vail Resorts, Inc. filed on December 8, 2011) (File No. 001-09614). Amended and Restated Bylaws of Vail Resorts, Inc. , dated December 7, 2011. (Incorporated by reference to Exhibit 3.2 on Form 8-K of Vail Resorts, Inc. filed on December 8, 2011) (File No. 001-09614). Indenture, dated April 25, 2011, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. filed on April 26, 2011) (File No. 001-09614). Supplemental Indenture, dated October 24, 2011, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.2 on Form S-4 filed on November 4, 2011) (File No. 333-177756). Supplemental Indenture, dated April 11, 2012, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2012) (File No. 001-09614). 60 Sequentially Numbered Page Posted Exhibit Number 4.1(d) 4.1(e) 4.1(f) 4.1(g) 10.1 10.2(a) 10.2(b) 10.2(c) 10.2(d) 10.2(e) 10.3(a) 10.3(b) 10.3(c) 10.3(d) 10.3(e) Description Supplemental Indenture, dated November 29, 2012, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 10- Q of Vail Resorts, Inc. for the quarter ended January 31, 2013) (File No. 001-09614). Supplemental Indenture, dated January 24, 2013, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.2 on Form 10- Q of Vail Resorts, Inc. for the quarter ended January 31, 2013) (File No. 001-09614). Supplemental Indenture, dated April 26, 2013, by and among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2013) (File No. 001-09614). Supplemental Indenture, dated October 5, 2014, by and among Vail Resorts, Inc. as Issuer, the Guarantors named therein as Guarantors, and The Bank of New York Mellon Trust Company, N.A., as Trustee. (Incorporated by reference to Exhibit 4.1 on Form 10- Q of Vail Resorts, Inc. for the quarter ended October 31, 2014) (File No. 001-09614). Forest Service Unified Permit for Heavenly ski area, dated April 29, 2002. (Incorporated by reference to Exhibit 99.13 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2002) (File No. 001-09614). Forest Service Unified Permit for Keystone ski area, dated December 30, 1996. (Incorporated by reference to Exhibit 99.2(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 2 to Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 99.2(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 3 to Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 10.3 (c) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 4 to Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 10.3 (d) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 5 to Forest Service Unified Permit for Keystone ski area. (Incorporated by reference to Exhibit 10.3 (e) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Forest Service Unified Permit for Breckenridge ski area, dated December 30, 1996. (Incorporated by reference to Exhibit 99.3(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 1 to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 99.3(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 2 to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 10.4 (c) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 3 to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 10.4 (d) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 4 to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 10.4 (e) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). 61 Sequentially Numbered Page Posted Exhibit Number 10.3(f) 10.4(a) 10.4(b) 10.4(c) 10.4(d) 10.4(e) 10.4(f) 10.5(a) 10.5(b) 10.5(c) 10.5(d) 10.5(e) 10.6(a) 10.6(b) 10.7(a) Description Amendment No. 5 to Forest Service Unified Permit for Breckenridge ski area. (Incorporated by reference to Exhibit 10.4(f) on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2006) (File No. 001-09614). Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 99.4(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Exhibits to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 99.4(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 1 to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.5(c) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 2 to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.5(d) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.5(e) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 3 to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated by reference to Exhibit 10.4(f) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008) (File No. 001-09614). Forest Service Unified Permit for Vail ski area, dated November 23, 1993. (Incorporated by reference to Exhibit 99.5(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Exhibits to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 99.5(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 2 to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 99.5(c) on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2002) (File No. 001-09614). Amendment No. 3 to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 10.6 (d) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Amendment No. 4 to Forest Service Unified Permit for Vail ski area. (Incorporated by reference to Exhibit 10.6 (e) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2005) (File No. 001-09614). Purchase and Sale Agreement by and between VAHMC, Inc. and DiamondRock Hospitality Limited Partnership, dated May 3, 2005. (Incorporated by reference to Exhibit 10.18(a) on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2005) (File No. 001-09614). First Amendment to Purchase and Sale Agreement by and between VAHMC, Inc. and DiamondRock Hospitality Limited Partnership, dated May 10, 2005. (Incorporated by reference to Exhibit 10.18(b) on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2005) (File No. 001-09614). Sports and Housing Facilities Financing Agreement between the Vail Corporation (d/b/ a “Vail Associates, Inc.”) and Eagle County, Colorado, dated April 1, 1998. (Incorporated by reference to Exhibit 10 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 1998) (File No. 001-09614). 62 Sequentially Numbered Page Posted Exhibit Number 10.7(b) 10.8* 10.9* 10.10* 10.11* 10.12* 10.13(a)* 10.13(b)* 10.13(c)* 10.14(a)* 10.14(b)* 10.14(c)* 10.15* 10.16 Description Trust Indenture, dated as of April 1, 1998 securing Sports and Housing Facilities Revenue Refunding Bonds by and between Eagle County, Colorado and U.S. Bank, N.A., as Trustee. (Incorporated by reference to Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 1998) (File No. 001-09614). Vail Resorts, Inc. Amended and Restated 2002 Long Term Incentive and Share Award Plan. (Incorporated by reference to Exhibit 99.1 on Form 8-K of Vail Resorts, Inc. filed on December 10, 2009) (File No. 001-09614). Form of Stock Option Agreement. (Incorporated by reference to Exhibit 10.20 of Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2007) (File No. 001-09614). Form of Restricted Share Unit Agreement. (Incorporated by reference to Exhibit 10.17 on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008) (File No. 001-09614). Form of Share Appreciation Rights Agreement. (Incorporated by reference to Exhibit 10.18 on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008) (File No. 001-09614). Vail Resorts Deferred Compensation Plan, effective as of January 1, 2005. (Incorporated by reference to Exhibit 10.22 on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2009) (File No. 001-09614). Executive Employment Agreement made and entered into October 15, 2008 by and between Vail Resorts, Inc. and Robert A. Katz. (Incorporated by reference to Exhibit 10.1 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2008) (File No. 001-09614). First Amendment to Employment Agreement, dated September 30, 2011, by and between Vail Resorts, Inc. and Robert A. Katz (Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed September 30, 2011) (File No. 001-09614). Amendment to Executive Employment Agreement, dated April 11, 2013, by and between Vail Resorts, Inc. and Robert A. Katz. (Incorporated by reference to Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2013) (File No. 001-09614). Executive Employment Agreement made and entered into October 15, 2008 by and between Vail Holdings, Inc., a wholly-owned subsidiary of Vail Resorts, Inc., and Blaise Carrig. (Incorporated by reference to Exhibit 10.5 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2008) (File No. 001-09614). Addendum to the Employment Agreement, dated September 1, 2002, between Blaise Carrig and Heavenly Valley, Limited Partnership. (Incorporated by reference to Exhibit 10.31(b) of Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008) (File No. 001-09614). Amendment to Executive Employment Agreement, dated April 11, 2013, by and between Vail Holdings, Inc. and Blaise Carrig. (Incorporated by reference to Exhibit 10.2 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2013) (File No. 001-09614). Form of Indemnification Agreement. (Incorporated by reference to Exhibit 10.8 of the report on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2008) (File No. 001-09614). Master Agreement of Lease, dated May 29, 2013, between VR CPC Holdings, Inc. and Talisker Canyons Leaseco LLC. (Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed on May 30, 2013) (File No. 001-09614). 63 Posted Exhibit Number 10.17 10.18 10.19* 10.20 21 23 24 31.1 31.2 32 101 Sequentially Numbered Page 68 80 81 82 83 Description Guaranty of Vail Resorts, Inc., dated May 29, 2013, in connection with the Master Agreement of Lease between VR CPC Holdings, Inc. and Talisker Canyons Leaseco LLC. (Incorporated by reference to Exhibit 10.2 on Form 8-K of Vail Resorts, Inc. filed on May 30, 2013) (File No. 001-09614). Sixth Amended and Restated Credit Agreement, dated as of March 13, 2014, among Vail Holdings, Inc., as borrower, Bank of America, N.A., as administrative agent, U.S. Bank National Association and Wells Fargo Bank, National Association, as co-syndication agents, BBVA Compass, as documentation agent, Merrill Lynch Pierce, Fenner & Smith Incorporated and U.S. Bank National Association, as joint lead arrangers and joint bookrunners, Wells Fargo Securities, LLC, as joint lead arranger, and the Lenders party thereto (Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed on March 18, 2014)(File No. 001-09614). Vail Resorts, Inc. Management Incentive Plan. (Incorporated by reference to Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended October 31, 2014) (File No. 001-09614). Seventh Amended and Restated Credit Agreement, Annex A to that certain Amendment Agreement, dated as of May 1, 2015, among Vail Holdings, Inc., as borrower, Bank of America, N.A., as administrative agent, U.S. Bank National Association and Wells Fargo Bank, National Association, as co-syndication agents, BBVA Compass, as documentation agent, and the Lenders party thereto. (Incorporated by reference to Exhibit 10.1 on Form 10-Q of Vail Resorts, Inc. for the quarter ended April 30, 2015) (File No. 001-09614). Subsidiaries of Vail Resorts, Inc. Consent of Independent Registered Public Accounting Firm. Power of Attorney. Included on signature pages hereto. Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. The following information from the Company's Year End Report on Form 10-K for the year ended July 31, 2015 formatted in eXtensible Business Reporting Language: (i) Consolidated Balance Sheets as of July 31, 2015 and July 31, 2014; (ii) Consolidated Statements of Operations as of July 31, 2015, July 31, 2014 and July 31, 2013; (iii) Consolidated Statements of Comprehensive Income as of July 31, 2015, July 31, 2014 and July 31, 2013; (iv) Consolidated Statements of Stockholders' Equity as of July 31, 2015, July 31, 2014 and July 31, 2013 (v) Consolidated Statements of Cash Flows as of July 31, 2015, July 31, 2014 and July 31, 2013; and (vi) Notes to the Consolidated Financial Statements. *Management contracts and compensatory plans and arrangements. 64 Consolidated Financial Statement Schedule Schedule II - Valuation and Qualifying Accounts and Reserves (in thousands) For the Years Ended July 31, 2013 Inventory Reserves Valuation Allowance on Income Taxes Trade Receivable Allowances 2014 Inventory Reserves Valuation Allowance on Income Taxes Trade Receivable Allowances 2015 Inventory Reserves Valuation Allowance on Income Taxes Trade Receivable Allowances Balance at Beginning of Period Charged to Costs and Expenses Deductions Balance at End of Period $ $ 1,864 1,588 4,553 1,760 3,062 478 2,136 3,017 681 $ $ 2,203 1,474 773 2,279 — 914 2,643 470 1,303 $ $ (2,307) — (4,848) (1,903) (45) (711) (2,864) — (1,238) $ $ 1,760 3,062 478 2,136 3,017 681 1,915 3,487 746 65 SIGNATURES 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. Date: September 28, 2015 Vail Resorts, Inc. By: /s/ Michael Z. Barkin Michael Z. Barkin Executive Vice President and Chief Financial Officer (Principal Financial Officer) Date: September 28, 2015 Vail Resorts, Inc. By: /s/ Mark L. Schoppet Mark L. Schoppet Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) POWER OF ATTORNEY Each person whose signature appears below hereby constitutes and appoints Michael Z. Barkin or Mark L. Schoppet his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments or supplements to this Form 10-K and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing necessary or appropriate to be done with this Form 10-K and any amendments or supplements hereto, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. 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 indicated on September 28, 2015. 66 /s/ Robert A. Katz Robert A. Katz /s/ Michael Z. Barkin Michael Z. Barkin /s/ Mark L. Schoppet Mark L. Schoppet /s/ Roland A. Hernandez Roland A. Hernandez /s/ John T. Redmond John T. Redmond /s/ Hilary A. Schneider Hilary A. Schneider /s/ D. Bruce Sewell D. Bruce Sewell /s/ John F. Sorte John F. Sorte /s/ Peter A. Vaughn Peter A. Vaughn Chief Executive Officer and Chairman of the Board (Principal Executive Officer) Executive Vice President and Chief Financial Officer (Principal Financial Officer) Senior Vice President, Controller and Chief Accounting Officer (Principal Accounting Officer) Director Director Director Director Director Director 67 Board of Directors Senior Executives Corporate Information CORPORATE DATA Robert A. Katz Chairman and Chief Executive Officer, Vail Resorts, Inc. Susan L. Decker Principal, Deck3 Ventures LLC Roland A. Hernandez Founding Principal and Chief Executive Officer, Hernandez Media Ventures John T. Redmond Former Managing Director and Chief Executive Officer, Echo Entertainment Group Limited Hilary A. Schneider President, Lifelock, Inc. D. Bruce Sewell Senior Vice President, General Counsel and Secretary, Apple Inc. John F. Sorte Executive Chairman, Morgan Joseph TriArtisan LLC Peter A. Vaughn Founder and Managing Director, Vaughn Advisory Group, LLC Robert A. Katz Chairman and Chief Executive Officer Patricia A. Campbell President—Mountain Division Michael Z. Barkin Executive Vice President and Chief Financial Officer Mark R. Gasta Executive Vice President and Chief People Officer Christopher E. Jarnot Executive Vice President and Chief Operating Officer, Vail Mountain Kirsten A. Lynch Executive Vice President and Chief Marketing Officer David T. Shapiro Executive Vice President, General Counsel and Secretary Robert N. Urwiler Executive Vice President and Chief Information Officer James C. O’Donnell Senior Vice President—Lodging and Real Estate Corporate Offices Vail Resorts, Inc. 390 Interlocken Crescent Broomfield, Colorado 80021 303.404.1800 Stock Exchange Listing The common shares of Vail Resorts, Inc. are listed and traded on the New York Stock Exchange under the ticker symbol MTN. Independent Auditors PricewaterhouseCoopers LLP Denver, Colorado Securities Counsel Hogan Lovells US LLP Washington, DC Transfer Agent and Registrar Wells Fargo Shareowner Services St. Paul, Minnesota 800.468.9716 Investor Relations InvestorRelations@vailresorts.com Websites www.vailresorts.com www.snow.com 13OCT201019001526 

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