Vail Resorts under investigation by SEC for profit restatements |

Vail Resorts under investigation by SEC for profit restatements

AVON – Vail Resorts stock prices fell 48 cents in moderate trading Wednesday accompanied by an announcement that the Securities and Exchange Commission is formally investigating the ski company’s accounting.

The SEC inquiry follows Vail Resort’s October restatement of profits from 1999 to 2001. VR initially reported a net income of $46.8 million but corrected that figure to $32.9 million.

VR stock closed Wednesday at $12.76 a share, down 49 cents from the day before. The stock price fell again Thursday to $12.28. The price rebounded Friday to $13.13. Director of investor relations Leslie Roubos said the price fluctuation likely had more to do with overall market fluctuation than the announcement of the investigation.

At issue is the accounting of club memberships. VR counted club membership payments as revenue in those years, boosting the ski company’s bottom line. In 1999, however, the SEC issued a guideline indicating that such income should be spread out over the period of the membership.

VR collects tens of thousands of dollars from members at such clubs as the Game Creek Club and Passport Club, among many others.

In the summer of 2002, VR switched auditing firms. New auditors Pricewaterhouse-

Coopers LLC recalculated financial statements originally authored by Arthur Anderson for the years in question, as well as statements for 2002.

Similar SEC investigations can take from six months to a year to complete. Depending on cooperation from the company, an investigation typically ends in a settlement, including a fine. VR’s profit restatements are a fraction of those seen in the past year by companies such as Enron and are not likely to raise equal ire among SEC investigators. The change does open the door for shareholder lawsuits, though.

The SEC declined to comment on the investigation.

Vail Resorts officials said in a press release that the company is fully cooperating with investigators. The statement said the accounting change will not impact other historical financial filings, and an internal review found no impropriety by Vail employees.

“Very often, the SEC initiates an inquiry whenever a company restates,” Roubos said.

Roubos said the restatement has not affected VR’s cash position, as all membership fees and dues were collected in those years. She said amortizing the club revenues simply changes the company’s revenue stream.

“It’s a timing issue,” Roubos said.

Standard and Poor’s Ratings Services said Friday that Vail’s announcement would not affect its credit rating or outlook.


Reid Williams can be reached at (970) 668-3998, ext. 237, or

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