form10q.htm

		April 30,			July 31,			April 30,
		2009			2008			2008
		(Unaudited)						(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	170,537		$	162,345		$	304,133
Restricted cash		10,129			58,437			60,562
Trade receivables, net		47,729			50,185			39,054
Inventories, net		45,667			49,708			45,084
Other current assets		34,761			38,220			41,846
Total current assets		308,823			358,895			490,679
Property, plant and equipment, net (Note 5)		1,066,165			1,056,837			979,511
Real estate held for sale and investment		276,952			249,305			394,008
Goodwill, net		167,950			142,282			142,011
Intangible assets, net		79,607			72,530			72,597
Other assets		41,154			46,105			42,620
Total assets	$	1,940,651		$	1,925,954		$	2,121,426

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities (Note 5)	$	220,927		$	294,182		$	315,373
Income taxes payable		32,156			57,474			25,418
Long-term debt due within one year (Note 4)		350			15,355			74,192
Total current liabilities		253,433			367,011			414,983
Long-term debt (Note 4)		491,668			541,350			575,275
Other long-term liabilities (Note 5)		221,462			183,643			172,380
Deferred income taxes		131,970			75,279			129,487
Commitments and contingencies (Note 8)
Minority interest in net assets of consolidated subsidiaries		33,578			29,915			33,133
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, 40,034,958 (unaudited), 39,926,496 and 39,914,385 (unaudited) shares issued, respectively		400			399			399
Additional paid-in capital		552,748			545,773			543,318
Retained earnings		395,725			308,045			319,165
Treasury stock, at cost; 3,600,235 (unaudited), 3,004,108 and 1,506,233 (unaudited) shares, respectively (Note 10)		(140,333	)		(125,461	)		(66,714	)
Total stockholders’ equity		808,540			728,756			796,168
Total liabilities and stockholders’ equity	$	1,940,651		$	1,925,954		$	2,121,426

	Three Months Ended
	April 30,
		2009			2008
Net revenue:
Mountain	$	279,180		$	325,726
Lodging		44,896			43,590
Real estate		9,407			54,474
Total net revenue		333,483			423,790
Segment operating expense (exclusive of depreciation and amortization shown separately below):
Mountain		144,998			157,807
Lodging		38,988			35,513
Real estate		14,129			53,562
Total segment operating expense		198,115			246,882
Other operating (expense) income:
Depreciation and amortization		(27,582	)		(25,471	)
(Loss) gain on disposal of fixed assets, net		(206	)		24
Income from operations		107,580			151,461
Mountain equity investment (loss) income, net		(410	)		698
Investment income		449			2,459
Interest expense, net		(6,490	)		(8,441	)
Minority interest in income of consolidated subsidiaries, net		(2,753	)		(4,621	)
Income before provision for income taxes		98,376			141,556
Provision for income taxes		(36,737	)		(54,215	)
Net income	$	61,639		$	87,341

Per share amounts (Note 3):
Basic net income per share	$	1.69		$	2.26
Diluted net income per share	$	1.68		$	2.24

	Nine Months Ended
	April 30,
		2009			2008
Net revenue:
Mountain	$	578,447		$	647,984
Lodging		131,299			121,734
Real estate		165,314			111,978
Total net revenue		875,060			881,696
Segment operating expense (exclusive of depreciation and amortization shown separately below):
Mountain		382,409			401,942
Lodging		122,583			113,530
Real estate		125,014			104,885
Total segment operating expense		630,006			620,357
Other operating (expense) income:
Depreciation and amortization		(80,098	)		(69,854	)
Gain on sale of real property		--			709
Loss on disposal of fixed assets, net		(808	)		(367	)
Income from operations		164,148			191,827
Mountain equity investment income, net		1,766			3,592
Investment income		1,428			7,697
Interest expense, net		(21,732	)		(23,620	)
Contract dispute credit, net (Note 8)		--			11,920
Minority interest in income of consolidated subsidiaries, net		(4,190	)		(7,468	)
Income before provision for income taxes		141,420			183,948
Provision for income taxes		(53,740	)		(69,901	)
Net income	$	87,680		$	114,047

Per share amounts (Note 3):
Basic net income per share	$	2.39		$	2.94
Diluted net income per share	$	2.39		$	2.91

	Nine Months Ended
	April 30,
	2009			2008
Cash flows from operating activities:
Net income	$	87,680		$	114,047
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		80,098			69,854
Cost of real estate sales		94,330			79,244
Stock-based compensation expense		7,794			6,194
Deferred income taxes, net		53,549			54,935
Minority interest in income of consolidated subsidiaries, net		4,190			7,468
Other non-cash income, net		(4,286	)		(5,913	)
Changes in assets and liabilities:
Restricted cash		48,308			(5,813	)
Accounts receivable, net		2,999			(1,222	)
Inventories, net		4,041			2,980
Investments in real estate		(117,895	)		(168,964	)
Accounts payable and accrued liabilities		(42,715	)		(5,437	)
Deferred real estate deposits		(36,078	)		18,869
Private club deferred initiation fees and deposits		40,960			14,670
Other assets and liabilities, net		(14,964	)		(12,768	)
Net cash provided by operating activities		208,011			168,144
Cash flows from investing activities:
Capital expenditures		(87,089	)		(112,602	)
Acquisition of business		(38,170	)		--
Other investing activities, net		(355	)		2,943
Net cash used in investing activities		(125,614	)		(109,659	)
Cash flows from financing activities:
Repurchases of common stock		(14,872	)		(40,868	)
Proceeds from borrowings under non-recourse real estate financings		9,013			125,418
Payments of non-recourse real estate financings		(58,407	)		(70,226	)
Proceeds from borrowings under other long-term debt		63,396			70,837
Payments of other long-term debt		(78,689	)		(71,236	)
Other financing activities, net		5,354			904
Net cash (used in) provided by financing activities		(74,205	)		14,829
Net increase in cash and cash equivalents		8,192			73,314
Cash and cash equivalents:
Beginning of period		162,345			230,819
End of period	$	170,537		$	304,133

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”) currently operate in three business segments: Mountain, Lodging and Real Estate. In the Mountain segment, the Company owns and operates five world-class ski resort properties at the Vail, Breckenridge, Keystone and Beaver Creek mountain resorts in Colorado and the Heavenly Mountain Resort in the Lake Tahoe area of California and Nevada, as well as ancillary businesses, primarily including ski school, dining and retail/rental operations. These resorts operate primarily on Federal land under the terms of Special Use Permits granted by the USDA Forest Service (the “Forest Service”). The Company holds a 69.3% interest in SSI Venture, LLC (“SSV”), a retail/rental company. The Company’s mountain business is seasonal in nature with its peak operating season from mid-November through mid-April. In the Lodging segment, the Company owns and/or manages a collection of luxury hotels under its RockResorts brand, as well as other strategic lodging properties and a large number of condominiums located in proximity to the Company’s ski resorts, the Grand Teton Lodge Company (“GTLC”), which operates three destination resorts at Grand Teton National Park (under a National Park Service concessionaire contract), Colorado Mountain Express (“CME”), a resort ground transportation company, and golf courses. The Company’s lodging properties at or around the Company’s ski resorts are seasonal in nature with peak operating seasons from mid-November through mid-April. The Company’s operations at GTLC and its golf courses generally only operate from mid-May through mid-October. 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 also has non-majority owned investments in various other entities, some of which are consolidated (see Note 6, Variable Interest Entities).

In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to state fairly the Company's financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. Results for interim periods are not indicative of the results for the entire fiscal year. The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended July 31, 2008. Certain information and footnote disclosures, including significant accounting policies, normally included in fiscal year financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. The July 31, 2008 Consolidated Condensed Balance Sheet was derived from audited financial statements.

Reclassification of Book Overdrafts-- Book overdrafts represent checks issued that had not been presented for payment to the banks and are classified as accounts payable in the Company’s Consolidated Condensed Balance Sheets. The Company typically funds these overdrafts through normal collections of funds or transfers from other bank balances. For the nine months ended April 30, 2008, the Company revised its presentation of changes in book overdrafts from a financing activity to an operating activity in its Consolidated Condensed Statement of Cash Flows to conform to its current year presentation. In the Company’s Annual Report on Form 10-K for the year ended July 31, 2008, the Company also presented changes in book overdrafts as an operating activity. The effect of this change increased cash provided by operating activities for the nine months ended April 30, 2008 from $147.1 million (as previously disclosed in the April 30, 2008 Quarterly Report on Form 10-Q) to $168.1 million with a corresponding decrease in the cash flows provided by financing activities for the nine months ended April 30, 2008 from $35.9 million (as previously disclosed in the April 30, 2008 Quarterly Report on Form 10-Q) to $14.8 million.

New Accounting Pronouncements-- In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements, but rather provides guidance on how to measure fair value by providing a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value. The Company adopted SFAS 157 beginning August 1, 2008 (see Note 7, Fair Value Measurements, for more information on the adoption of SFAS 157).

In February 2008, the FASB issued Staff Position 157-2, “Effective Date of FASB Statement No. 157” (“FSP 157-2”). This FSP delays the effective date of SFAS 157 for all nonfinancial assets and liabilities, except those that are recognized or disclosed at fair value on a recurring basis (at least annually), to fiscal years beginning after November 15, 2008 (the Company's fiscal year ending July 31, 2010) and interim periods within the fiscal year of adoption. The Company has deferred the application of SFAS 157 for nonfinancial assets and liabilities as prescribed by FSP 157-2. The Company is currently evaluating the impact, if any, the adoption of the provisions of SFAS 157 for nonfinancial assets and liabilities will have on the Company’s financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations” (“SFAS 141R”), which establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in an acquiree, including the recognition and measurement of goodwill acquired in a business combination. SFAS 141R also requires acquisition-related transaction expenses and restructuring costs be expensed as incurred rather than capitalized as a component of the business combination. The Company will apply SFAS 141R prospectively to business combinations consummated after July 31, 2009 (the Company’s fiscal year ending July 31, 2010).

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB No. 51” (“SFAS 160”), which will change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity within the balance sheet. Currently, noncontrolling interests (minority interests) are reported as a liability in the Company’s consolidated balance sheet and the related income (loss) attributable to minority interests is reflected as an expense (credit) in arriving at net income. Upon adoption of SFAS 160, the Company will be required to report its minority interests as a separate component of stockholders’ equity and present net income allocable to the minority interests along with net income attributable to the stockholders of the Company separately in its consolidated statement of operations. SFAS 160 requires retroactive adoption of the presentation and disclosure requirements for existing minority interests. All other requirements of SFAS 160 shall be applied prospectively. The requirements of SFAS 160 are effective for the Company beginning August 1, 2009 (the Company’s fiscal year ending July 31, 2010).

SFAS No. 128, “Earnings Per Share” (“SFAS 128”), establishes standards for computing and presenting earnings per share (“EPS”). SFAS 128 requires the dual presentation of basic and diluted EPS on the face of the Consolidated Condensed Statements of Operations and requires a reconciliation of numerators (net income) and denominators (weighted-average shares outstanding) for both basic and diluted EPS in the footnotes. Basic EPS excludes dilution and is computed by dividing net income available to holders of common stock by the weighted-average shares outstanding. 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 the Company. Presented below is basic and diluted EPS for the three months ended April 30, 2009 and 2008 (in thousands, except per share amounts):

		April 30,		July 31,		April 30,
	Maturity (a)	2009		2008		2008
Credit Facility Revolver	2012	$	--	$	--	$	--
SSV Facility	2011		--		--		--
Industrial Development Bonds (b)	2011-2020		42,700		57,700		57,700
Employee Housing Bonds	2027-2039		52,575		52,575		52,575
Non-Recourse Real Estate Financings (c)	--		--		49,394		142,075
6.75% Senior Subordinated Notes ("6.75% Notes")	2014		390,000		390,000		390,000
Other	2009-2029		6,743		7,036		7,117
Total debt			492,018		556,705		649,467
Less: Current maturities (d)			350		15,355		74,192
Long-term debt		$	491,668	$	541,350	$	575,275

(b)

The Company has outstanding $42.7 million of industrial development bonds (collectively, the “Industrial Development Bonds”), of which $41.2 million were issued by Eagle County, Colorado and mature, subject to prior redemption, on August 1, 2019. The Series 1991 Sports Facilities Refunding Revenue Bonds, issued by Summit County, Colorado, have an aggregate outstanding principal amount of $1.5 million and mature, subject to prior redemption, on September 1, 2010. On August 29, 2008, $15.0 million of borrowings under the Series 1990 Sports Facilities Refunding Revenue Bonds, issued by Summit County, Colorado were paid in full at maturity.

(c)

The non-recourse real estate financing for The Chalets at The Lodge at Vail, LLC (“Chalets”) was paid in full during the nine months ended April 30, 2009. As of July 31, 2008 non-recourse real estate financings consisted of borrowings under the construction agreement for the Chalets of $49.4 million. As of April 30, 2008 non-recourse real estate financings consisted of borrowings of $58.8 million under the construction agreement for Arrabelle at Vail Square, LLC (“Arrabelle”) and borrowings of $83.3 million under the construction agreement for the Chalets.

The Company incurred gross interest expense of $8.4 million and $11.1 million for the three months ended April 30, 2009 and 2008, respectively, of which $0.4 million and $0.6 million was amortization of deferred financing costs. The Company capitalized $1.9 million and $2.7 million of interest during the three months ended April 30, 2009 and 2008, respectively. The Company incurred gross interest expense of $26.7 million and $33.9 million for the nine months ended April 30, 2009 and 2008, respectively, of which $1.6 million and $1.8 million was amortization of deferred financing costs. The Company capitalized $5.0 million and $10.3 million of interest during the nine months ended April 30, 2009 and 2008, respectively.

		April 30,			July 31,			April 30,
		2009			2008			2008
Land and land improvements		$	262,974		$	265,123		$	254,475
Buildings and building improvements			747,775			685,393			653,964
Machinery and equipment			498,771			457,825			462,966
Furniture and fixtures			169,465			149,251			131,021
Software			44,114			39,605			35,811
Vehicles			34,300			28,829			28,260
Construction in progress			32,063			80,601			54,799
	Gross property, plant and equipment		1,789,462			1,706,627			1,621,296
Accumulated depreciation			(723,297	)		(649,790	)		(641,785	)
	Property, plant and equipment, net	$	1,066,165		$	1,056,837		$	979,511

		April 30,		July 31,		April 30,
		2009		2008		2008
Trade payables		$	49,657	$	53,187	$	65,269
Real estate development payables			34,925		52,574		52,131
Deferred revenue			42,516		45,805		29,924
Deferred real estate and other deposits			18,737		58,421		89,740
Accrued salaries, wages and deferred compensation			17,167		22,397		23,467
Accrued benefits			27,251		22,777		27,058
Accrued interest			6,591		14,552		6,844
Liabilities to complete real estate projects, short term			5,639		4,199		7,327
Other accruals			18,444		20,270		13,613
	Total accounts payable and accrued liabilities	$	220,927	$	294,182	$	315,373

On November 1, 2008, the Company acquired substantially all of the assets of CME, a resort ground transportation business, for a total consideration of $38.2 million, as well as $0.9 million to reimburse the seller for certain new capital expenditures as provided for in the purchase agreement. The acquisition was accounted for as a business purchase combination using the purchase method of accounting under the provisions of SFAS No. 141, “Business Combinations.” The purchase price was allocated to tangible and identifiable intangible assets acquired based on their estimated fair values at the acquisition date. The Company has completed its preliminary purchase price allocation and has recorded $25.7 million in goodwill and $7.5 million in intangible assets on the date of acquisition. The operating results of CME are reported within the Lodging segment.

The Company is the primary beneficiary of four employee housing entities (collectively, the “Employee Housing Entities”), Breckenridge Terrace, LLC, The Tarnes at BC, LLC, BC Housing, LLC and Tenderfoot Seasonal Housing, LLC, which are Variable Interest Entities (“VIEs”), and has consolidated them in its Consolidated Condensed Financial Statements. As a group, as of April 30, 2009, the Employee Housing Entities had total assets of $37.9 million (primarily recorded in property, plant and equipment, net) and total liabilities of $70.5 million (primarily recorded in long-term debt as “Employee Housing Bonds”). The Company has issued under its senior credit facility (the “Credit Facility”) $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, through various lodging subsidiaries, manages hotels in which the Company has no ownership interest in the entities that own such hotels. These entities were formed by unrelated third parties to acquire, own, operate and realize the value in resort hotel properties. The Company managed the day-to-day operations of six hotel properties as of April 30, 2009. The Company has determined that the entities that own the hotel properties are VIEs, and the management contracts are significant variable interests in these VIEs. The Company has also determined that it is not the primary beneficiary of these entities and, accordingly, is not required to consolidate any of these entities. Based upon the latest information provided by these third party entities, these VIEs had estimated total assets of approximately $229 million and total liabilities of approximately $151 million. The Company's maximum exposure to loss as a result of its involvement with these VIEs is limited to a $2.3 million note receivable including accrued interest from one of the third parties and the net book value of the intangible asset associated with a management agreement in the amount of $0.6 million as of April 30, 2009.

SFAS 157 establishes how reporting entities should measure fair value for measurement and disclosure purposes. The Standard does not require any new fair value measurements but rather establishes a common definition of fair value applicable to all assets and liabilities measured at fair value. SFAS 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy established by SFAS 157 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:

The Company credit-enhances $8.5 million of bonds issued by Holland Creek Metropolitan District (“HCMD”) through an $8.6 million letter of credit issued against the Company's Credit Facility. 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 $1.4 million, $1.6 million and $1.7 million, primarily within “other long-term liabilities” in the accompanying Consolidated Condensed Balance Sheets, as of April 30, 2009, July 31, 2008 and April 30, 2008, 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, 2018.

In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business which include certain indemnifications within the scope of FASB Financial Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others” (“FIN 45”) 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 Condensed Financial Statements, either because the Company has recorded on its Consolidated Condensed Balance Sheets the underlying liability associated with the guarantee, the guarantee or indemnification existed prior to January 1, 2003, the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements of FIN 45, 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 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.

The Company is self-insured for claims under its health benefit plans and for workers’ compensation claims, subject to a stop loss policy. 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 5, Supplementary Balance Sheet Information).

The Company is a party to various lawsuits arising in the ordinary course of business, including Resort (Mountain and Lodging) related cases and contractual and commercial litigation that arises from time to time in connection with the Company's real estate operations. Management believes the Company has adequate insurance coverage or has accrued for loss contingencies for all known matters that are deemed to be probable losses and estimable. As of April 30, 2009, July 31, 2008 and April 30, 2008 the accrual for the above loss contingencies was not material individually and in the aggregate.

The Company has three reportable segments: Mountain, Lodging and Real Estate. The Mountain segment includes the operations of the Company’s ski resorts and related ancillary activities. The Lodging segment includes the operations of all of the Company’s owned hotels, RockResorts, GTLC, CME, condominium management and golf operations. Resort is the combination of the Mountain and Lodging segments. 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 expense, plus or minus segment equity investment income or loss and for the Real Estate segment plus gain on sale of real property), which is a non-GAAP financial measure. SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information” requires the Company to report 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 condensed 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. 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.

		Three Months Ended						Nine Months Ended
		April 30,						April 30,
		2009			2008			2009			2008
Net revenue:
Lift tickets		$	149,384		$	167,793		$	276,542		$	301,791
Ski school			36,374			46,229			65,336			81,384
Dining			24,246			30,344			48,456			58,002
Retail/rental			48,214			59,533			129,878			149,844
Other			20,962			21,827			58,235			56,963
Total Mountain net revenue			279,180			325,726			578,447			647,984
Lodging			44,896			43,590			131,299			121,734
Total Resort net revenue			324,076			369,316			709,746			769,718
Real Estate			9,407			54,474			165,314			111,978
Total net revenue		$	333,483		$	423,790		$	875,060		$	881,696
Operating expense:
Mountain		$	144,998		$	157,807		$	382,409		$	401,942
Lodging			38,988			35,513			122,583			113,530
Total Resort operating expense			183,986			193,320			504,992			515,472
Real estate			14,129			53,562			125,014			104,885
Total segment operating expense		$	198,115		$	246,882		$	630,006		$	620,357
Gain on sale of real property		$	--		$	--		$	--		$	709
Mountain equity investment (loss) income, net		$	(410	)	$	698		$	1,766		$	3,592

Reported EBITDA:
Mountain		$	133,772		$	168,617		$	197,804		$	249,634
Lodging			5,908			8,077			8,716			8,204
Resort			139,680			176,694			206,520			257,838
Real Estate			(4,722	)		912			40,300			7,802
Total Reported EBITDA		$	134,958		$	177,606		$	246,820		$	265,640

Real estate held for sale and investment		$	276,952		$	394,008		$	276,952		$	394,008

Reconciliation to net income:
Total Reported EBITDA		$	134,958		$	177,606		$	246,820		$	265,640
Depreciation and amortization			(27,582	)		(25,471	)		(80,098	)		(69,854	)
(Loss) gain on disposal of fixed assets, net			(206	)		24			(808	)		(367	)
Investment income			449			2,459			1,428			7,697
Interest expense, net			(6,490	)		(8,441	)		(21,732	)		(23,620	)
Contract dispute credit, net			--			--			--			11,920
Minority interest in income of consolidated subsidiaries, net			(2,753	)		(4,621	)		(4,190	)		(7,468	)
Income before provision for income taxes			98,376			141,556			141,420			183,948
	Provision for income taxes		(36,737	)		(54,215	)		(53,740	)		(69,901	)
Net income		$	61,639		$	87,341		$	87,680		$	114,047

The Company’s payment obligations under the 6.75% Notes (see Note 4, Long-Term Debt) are fully and unconditionally guaranteed on a joint and several, senior subordinated basis by substantially all of the Company’s consolidated subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined below), the “Guarantor Subsidiaries”) except for Eagle Park Reservoir Company, Gros Ventre Utility Company, Mountain Thunder, Inc., SSV, Larkspur Restaurant & Bar, LLC, Gore Creek Place, LLC and certain other insignificant entities (together, the “Non-Guarantor Subsidiaries”). APII and the Employee Housing Entities are included with the Non-Guarantor Subsidiaries for purposes of the consolidated financial information, but are not considered subsidiaries under the indenture governing the 6.75% Notes.

Presented below is the consolidated financial information of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries. Financial information for the Non-Guarantor Subsidiaries is presented in the column titled “Other Subsidiaries.” Balance sheets are presented as of April 30, 2009, July 31, 2008 and April 30, 2008. Statements of operations are presented for the three and nine months ended April 30, 2009 and 2008. Statements of cash flows are presented for the nine months ended April 30, 2009 and 2008.

Investments in subsidiaries are accounted for by the Parent Company and Guarantor Subsidiaries using the equity method of accounting. Net income (loss) of Non-Guarantor Subsidiaries is, therefore, reflected in the Parent Company's and Guarantor Subsidiaries' investments in and advances to (from) subsidiaries. Net income (loss) of the Guarantor and Non-Guarantor Subsidiaries is reflected in Parent Company and Guarantor Subsidiaries as equity in income (loss) of consolidated subsidiaries. The elimination entries eliminate investments in Other Subsidiaries and intercompany balances and transactions for consolidated reporting purposes.

Supplemental Condensed Consolidating Balance Sheet
As of April 30, 2009
(in thousands)
(Unaudited)

						100% Owned
				Parent		Guarantor		Other			Eliminating
				Company		Subsidiaries		Subsidiaries			Entries			Consolidated
Current assets:
	Cash and cash equivalents		$	--	$	161,853	$	8,684		$	--		$	170,537
	Restricted cash			--		9,881		248			--			10,129
	Trade receivables, net			--		45,990		1,739			--			47,729
	Inventories, net			--		10,321		35,346			--			45,667
	Other current assets			18,102		14,770		1,889			--			34,761
		Total current assets		18,102		242,815		47,906			--			308,823
Property, plant and equipment, net				--		999,086		67,079			--			1,066,165
Real estate held for sale and investment				--		276,952		--			--			276,952
Goodwill, net				--		148,702		19,248			--			167,950
Intangible assets, net				--		63,757		15,850			--			79,607
Other assets				3,403		32,700		5,051			--			41,154
Investments in subsidiaries and advances to (from) parent				1,350,254		307,604		(13,220	)		(1,644,638	)		--
	Total assets		$	1,371,759	$	2,071,616	$	141,914		$	(1,644,638	)	$	1,940,651

Current liabilities:
	Accounts payable and accrued liabilities		$	5,951	$	198,486	$	16,490		$	--		$	220,927
	Income taxes payable			32,156		--		--			--			32,156
	Long-term debt due within one year			--		9		341			--			350
		Total current liabilities		38,107		198,495		16,831			--			253,433
Long-term debt				390,000		42,717		58,951			--			491,668
Other long-term liabilities				3,142		216,118		2,202			--			221,462
Deferred income taxes				131,970		--		--			--			131,970
Minority interest in net assets of consolidated subsidiaries				--		--		--			33,578			33,578
Total stockholders' equity				808,540		1,614,286		63,930			(1,678,216	)		808,540
		Total liabilities and stockholders' equity	$	1,371,759	$	2,071,616	$	141,914		$	(1,644,638	)	$	1,940,651

Supplemental Condensed Consolidating Balance Sheet
As of July 31, 2008
(in thousands)


						100% Owned
				Parent		Guarantor		Other			Eliminating
				Company		Subsidiaries		Subsidiaries			Entries			Consolidated
Current assets:
	Cash and cash equivalents		$	--	$	156,782	$	5,563		$	--		$	162,345
	Restricted cash			--		10,526		47,911			--			58,437
	Trade receivables, net			--		47,953		2,232			--			50,185
	Inventories, net			--		11,786		37,922			--			49,708
	Other current assets			15,142		19,205		3,873			--			38,220
		Total current assets		15,142		246,252		97,501			--			358,895
Property, plant and equipment, net				--		806,696		250,141			--			1,056,837
Real estate held for sale and investment				--		204,260		45,045			--			249,305
Goodwill, net				--		123,034		19,248			--			142,282
Intangible assets, net				--		56,650		15,880			--			72,530
Other assets				3,936		34,922		7,247			--			46,105
Investments in subsidiaries and advances to (from) parent				1,248,019		599,199		(61,968	)		(1,785,250	)		--
	Total assets		$	1,267,097	$	2,071,013	$	373,094		$	(1,785,250	)	$	1,925,954

Current liabilities:
	Accounts payable and accrued liabilities		$	12,446	$	196,360	$	85,376		$	--		$	294,182
	Income taxes payable			57,474		--		--			--			57,474
	Long-term debt due within one year			--		15,022		333			--			15,355
		Total current liabilities		69,920		211,382		85,709			--			367,011
Long-term debt				390,000		42,722		108,628			--			541,350
Other long-term liabilities				3,142		149,557		30,944			--			183,643
Deferred income taxes				75,279		--		--			--			75,279
Minority interest in net assets of consolidated subsidiaries				--		--		--			29,915			29,915
Total stockholders' equity				728,756		1,667,352		147,813			(1,815,165	)		728,756
		Total liabilities and stockholders' equity	$	1,267,097	$	2,071,013	$	373,094		$	(1,785,250	)	$	1,925,954

Supplemental Condensed Consolidating Balance Sheet
As of April 30, 2008
(in thousands)
(Unaudited)

						100% Owned
				Parent		Guarantor		Other			Eliminating
				Company		Subsidiaries		Subsidiaries			Entries			Consolidated
Current assets:
	Cash and cash equivalents		$	--	$	288,205	$	15,928		$	--		$	304,133
	Restricted cash			--		10,212		50,350			--			60,562
	Trade receivables, net			--		36,711		2,343			--			39,054
	Inventories, net			--		9,611		35,473			--			45,084
	Other current assets			17,395		15,406		9,045			--			41,846
		Total current assets		17,395		360,145		113,139			--			490,679
Property, plant and equipment, net				--		798,732		180,779			--			979,511
Real estate held for sale and investment				--		98,314		295,694			--			394,008
Goodwill, net				--		123,034		18,977			--			142,011
Intangible assets, net				--		56,715		15,882			--			72,597
Other assets				4,114		27,991		10,515			--			42,620
Investments in subsidiaries and advances to (from) parent				1,327,512		527,762		(104,346	)		(1,750,928	)		--
	Total assets		$	1,349,021	$	1,992,693	$	530,640		$	(1,750,928	)	$	2,121,426

Current liabilities:
	Accounts payable and accrued liabilities		$	5,859	$	186,889	$	122,625		$	--		$	315,373
	Income taxes payable			25,418		--		--			--			25,418
	Long-term debt due within one year			--		15,028		59,164			--			74,192
		Total current liabilities		31,277		201,917		181,789			--			414,983
Long-term debt				390,000		42,728		142,547			--			575,275
Other long-term liabilities				2,089		104,422		65,869			--			172,380
Deferred income taxes				129,487		--		--			--			129,487
Minority interest in net assets of consolidated subsidiaries				--		--		--			33,133			33,133
Total stockholders' equity				796,168		1,643,626		140,435			(1,784,061	)		796,168
		Total liabilities and stockholders' equity	$	1,349,021	$	1,992,693	$	530,640		$	(1,750,928	)	$	2,121,426

	Supplemental Condensed Consolidating Statement of Operations
	For the three months ended April 30, 2009
	(in thousands)
	(Unaudited)

							100% Owned
				Parent			Guarantor			Other			Eliminating
				Company			Subsidiaries			Subsidiaries			Entries			Consolidated
Total net revenue			$	--		$	284,871		$	51,677		$	(3,065	)	$	333,483
Total operating expense				111			186,169			42,650			(3,027	)		225,903
		(Loss) income from operations		(111	)		98,702			9,027			(38	)		107,580
Other (expense) income, net				(6,758	)		1,207			(528	)		38			(6,041	)
Equity investment (loss), net				--			(410	)		--			--			(410	)
Minority interest in income of consolidated subsidiaries, net				--			--			--			(2,753	)		(2,753	)
		(Loss) income before income taxes		(6,869	)		99,499			8,499			(2,753	)		98,376
		Benefit (provision) for income taxes		2,403			(39,137	)		(3	)		--			(36,737	)
		Net (loss) income before equity in income
		(loss) of consolidated subsidiaries		(4,466	)		60,362			8,496			(2,753	)		61,639
Equity in income (loss) of consolidated subsidiaries				66,105			5,743			--			(71,848	)		--
Net income (loss)			$	61,639		$	66,105		$	8,496		$	(74,601	)	$	61,639

	Supplemental Condensed Consolidating Statement of Operations
	For the three months ended April 30, 2008
	(in thousands)
	(Unaudited)

							100% Owned
				Parent			Guarantor			Other			Eliminating
				Company			Subsidiaries			Subsidiaries			Entries			Consolidated
Total net revenue			$	--		$	311,082		$	115,593		$	(2,885	)	$	423,790
Total operating expense				27			181,592			93,557			(2,847	)		272,329
		(Loss) income from operations		(27	)		129,490			22,036			(38	)		151,461
Other (expense) income, net				(6,733	)		1,525			(812	)		38			(5,982	)
Equity investment income, net				--			698			--			--			698
Minority interest in income of consolidated subsidiaries, net				--			--			--			(4,621	)		(4,621	)
		(Loss) income before income taxes		(6,760	)		131,713			21,224			(4,621	)		141,556
		Benefit (provision) for income taxes		2,672			(56,887	)		--			--			(54,215	)
		Net (loss) income before equity in income
		(loss) of consolidated subsidiaries		(4,088	)		74,826			21,224			(4,621	)		87,341
Equity in income (loss) of consolidated subsidiaries				91,429			--			--			(91,429	)		--
Net income (loss)			$	87,341		$	74,826		$	21,224		$	(96,050	)	$	87,341

		Supplemental Condensed Consolidating Statement of Operations
		For the nine months ended April 30, 2009
		(in thousands)
		(Unaudited)

							100% Owned
				Parent			Guarantor			Other			Eliminating
				Company			Subsidiaries			Subsidiaries			Entries			Consolidated
Total net revenue			$			$	745,316		$	138,901		$	(9,157	)	$	875,060
Total operating expense				378			593,682			125,895			(9,043	)		710,912
	(Loss) income from operations			(378	)		151,634			13,006			(114	)		164,148
Other (expense) income, net				(20,276	)		2,001			(2,143	)		114			(20,304	)
Equity investment income, net				--			1,766			--			--			1,766
Minority interest in income of consolidated subsidiaries, net				--			--			--			(4,190	)		(4,190	)
	(Loss) income before income taxes			(20,654	)		155,401			10,863			(4,190	)		141,420
	Benefit (provision) for income taxes			7,848			(61,579	)		(9	)		--			(53,740	)
	Net (loss) income before equity in income
	(loss) of consolidated subsidiaries			(12,806	)		93,822			10,854			(4,190	)		87,680
Equity in income (loss) of consolidated subsidiaries				100,486			6,664			--			(107,150	)		--
Net income (loss)			$	87,680		$	100,486		$	10,854		$	(111,340	)	$	87,680

		Supplemental Condensed Consolidating Statement of Operations
		For the nine months ended April 30, 2008
		(in thousands)
		(Unaudited)

							100% Owned
				Parent			Guarantor			Other			Eliminating
				Company			Subsidiaries			Subsidiaries			Entries			Consolidated
Total net revenue			$	--		$	641,345		$	248,494		$	(8,143	)	$	881,696
Total operating expense				(41	)		482,023			215,916			(8,029	)		689,869
	Income (loss) from operations			41			159,322			32,578			(114	)		191,827
Other (expense) income, net				(20,251	)		19,112			(2,978	)		114			(4,003	)
Equity investment income, net				--			3,592			--			--			3,592
Minority interest in income of consolidated subsidiaries, net				--			--			--			(7,468	)		(7,468	)
	(Loss) income before income taxes			(20,210	)		182,026			29,600			(7,468	)		183,948
	Benefit (provision) for income taxes			7,985			(77,886	)		--			--			(69,901	)
	Net (loss) income before equity in income
	(loss) of consolidated subsidiaries			(12,225	)		104,140			29,600			(7,468	)		114,047
Equity in income (loss) of consolidated subsidiaries				126,272			--			--			(126,272	)		--
Net income (loss)			$	114,047		$	104,140		$	29,600		$	(133,740	)	$	114,047

				Supplemental Condensed Consolidating Statement of Cash Flows
				For the nine months ended April 30, 2009
				(in thousands)
				(Unaudited)


									100% Owned
						Parent			Guarantor			Other
						Company			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by operating activities					$	8,154		$	188,502		$	11,355		$	208,011
Cash flows from investing activities:
	Capital expenditures					--			(80,174	)		(6,915	)		(87,089	)
	Acquisition of business					--			(38,170	)		--			(38,170	)
	Other investing activities, net					--			(538	)		183			(355	)
		Net cash used in investing activities				--			(118,882	)		(6,732	)		(125,614	)
Cash flows from financing activities:
	Repurchases of common stock					(14,872	)		--			--			(14,872	)
	Proceeds from borrowings under non-recourse real estate financings					--			9,013			--			9,013
	Payments of non-recourse real estate financings					--			(58,407	)		--			(58,407	)
	Proceeds from borrowings under other long-term debt					--			--			63,396			63,396
	Payments of other long-term debt					--			(15,017	)		(63,672	)		(78,689	)
	Other financing activities, net					671			4,351			332			5,354
	Advances from (to) affiliates					6,047			(4,489	)		(1,558	)		--
		Net cash used in financing activities				(8,154	)		(64,549	)		(1,502	)		(74,205	)
			Net increase in cash and cash equivalents			--			5,071			3,121			8,192
Cash and cash equivalents:
	Beginning of period					--			156,782			5,563			162,345
	End of period				$	--		$	161,853		$	8,684		$	170,537

				Supplemental Condensed Consolidating Statement of Cash Flows
				For the nine months ended April 30, 2008
				(in thousands)
				(Unaudited)


									100% Owned
						Parent			Guarantor			Other
						Company			Subsidiaries			Subsidiaries			Consolidated
Net cash provided by operating activities					$	26,447		$	131,058		$	10,639		$	168,144
Cash flows from investing activities:
	Capital expenditures					--			(68,992	)		(43,610	)		(112,602	)
	Other investing activities, net					--			3,300			(357	)		2,943
		Net cash used in investing activities				--			(65,692	)		(43,967	)		(109,659	)
Cash flows from financing activities:
	Repurchases of common stock					(40,868	)		--			--			(40,868	)
	Proceeds from borrowings under non-recourse real estate financings					--			--			125,418			125,418
	Payments of non-recourse real estate financings					--			--			(70,226	)		(70,226	)
	Proceeds from borrowings under other long-term debt					--			--			70,837			70,837
	Payments of other long-term debt					--			(53	)		(71,183	)		(71,236	)
	Other financing activities, net					3,574			3,393			(6,063	)		904
	Advances from (to) affiliates					10,847			(6,453	)		(4,394	)		--
		Net cash (used in) provided by financing activities				(26,447	)		(3,113	)		44,389			14,829
			Net increase in cash and cash equivalents			--			62,253			11,061			73,314
Cash and cash equivalents:
	Beginning of period					--			225,952			4,867			230,819
	End of period				$	--		$	288,205		$	15,928		$	304,133

The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended July 31, 2008 (“Form 10-K”) and the Consolidated Condensed Financial Statements as of April 30, 2009 and 2008 for the three and nine months then ended, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding the financial position, results of operations and cash flows of the Company. 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 this Form 10-Q and in the Company's other filings with the Securities and Exchange Commission (“SEC”), including the risks described in Item 1A “Risk Factors” of Part I of the Form 10-K.

Management’s Discussion and Analysis includes discussion of financial performance within each of the Company’s segments. The Company has chosen to specifically include, Reported EBITDA (defined 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) 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 management considers these measurements to be significant indications of the Company's financial performance and available capital resources. Reported EBITDA and Net Debt are not measures of financial performance or liquidity under accounting principles generally accepted in the United States of America (“GAAP”). The Company utilizes Reported EBITDA in evaluating performance of the Company and in allocating resources to its segments. Refer to the end of the Results of Operations section for a reconciliation of Reported EBITDA to net income. Management also believes that Net Debt is an important measurement as it is an indicator of the Company’s ability to obtain additional capital resources for its 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 Condensed 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.

The Mountain segment is comprised of the operations of five ski resort properties as well as ancillary businesses, primarily including ski school, dining and retail/rental operations. The Company's five ski resorts were open for business for the 2008/2009 ski season from mid-November through mid-April, which is the peak operating season for the Mountain segment. The Company’s single largest source of Mountain segment revenue is the sale of lift tickets (including season passes), which represented approximately 54% and 52% of Mountain segment net revenue for the three months ended April 30, 2009 and 2008, respectively, and approximately 48% and 47% of Mountain segment net revenue for the nine months ended April 30, 2009 and 2008, respectively.

Lift ticket 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 is divided into two primary categories: 1) out-of-state and international guests ("Destination") and 2) in-state and local visitors ("In-State"). For the 2008/2009 ski season, Destination guests comprised approximately 57% of the Company's skier visits, while In-State guests comprised approximately 43% of the Company's skier visits, which compares to approximately 63% and 37%, respectively, for the 2007/2008 ski season.

Destination guests generally purchase the Company's higher-priced lift ticket products and utilize more ancillary services such as ski school, dining and retail/rental. The Company has historically marketed season passes to In-State guests. Given the success of In-State pass products in providing stabilization to lift revenue, the Company introduced a new season pass product (the “Epic Season Pass”) for the 2008/2009 ski season, primarily marketed to its Destination guests (and also available to In-State guests) allowing pass holders unlimited and unrestricted access to all five ski resorts during the 2008/2009 ski season. The Company’s season pass products are sold generally prior to the start of the ski season. Season pass revenue, although primarily collected prior to the ski season, is recognized in the Consolidated Condensed Statement of Operations ratably over the ski season. For the nine months ended April 30, 2009 and 2008 approximately 34% and 26%, respectively, of total lift revenue recognized was comprised of season pass revenue.

Lodging properties (including managed condominium rooms) at or around the Company’s ski resorts, and CME, are closely aligned with the performance of the Mountain segment, particularly with respect to visitation by Destination guests and represented approximately 94% and 91% of Lodging segment revenue for the three months ended April 30, 2009 and 2008, respectively, and 76% and 72% of Lodging segment revenue for the nine months ended April 30, 2009 and 2008, respectively. Revenue of the Lodging segment during the Company's first and fourth fiscal quarters is generated primarily by the operations of GTLC (as GTLC's operating season occurs generally mid-May to mid-October), golf operations and seasonally low operations from the Company's other owned and managed properties.

The Real Estate segment owns and develops real estate in and around the Company's resort communities and primarily engages in the vertical development of projects, as well as, the sale of land to third-party developers which often includes a contingent revenue structure based on the ultimate sale of the developed units. Revenue from vertical development projects is not recognized until closing of individual units within a project which generally occurs after substantial completion of the project. Contingent future profits from land sales, if any, are recognized only when received. The Company attempts to mitigate the risk of vertical development by often utilizing guaranteed maximum price construction contracts (although certain construction costs may not be covered by contractual limitations), pre-selling all or a portion of the project, requiring significant non-refundable deposits, and potentially obtaining non-recourse financing for certain projects. The Company's real estate development projects also may result in the creation of certain resort assets that provide additional benefit to the Mountain and Lodging segments. The Company’s Real Estate revenue and associated expense fluctuate based upon the timing of closings and the type of real estate being sold, causing volatility in Real Estate operating results from period to period.

The economic recession currently affecting the U.S. and the global economy, the significant tightening of the credit markets and eroded consumer confidence have continued to have a negative impact on overall trends in the travel and leisure industries. In this environment, the Company realized a 5.3% decrease in overall skier visitation and a 4.3 percentage point decrease in occupancy for the nine months ended April 30, 2009 (which includes the entire 2008/2009 ski season). Additionally, the Company experienced a significant decline in overall guest spending primarily resulting from a decline in Destination guest visitation, especially in ancillary areas such as ski school, dining and retail/rental operations. While the Company anticipates these trends to continue for the remainder of the fiscal year (which primarily includes lodging operations), the Company cannot predict the extent to which these negative trends will continue and the timing and nature of any improvements to the macroeconomic environment and the impact it may have on its future results of operations, in particular on the 2009/2010 ski season.

In the Spring of 2008, the Company introduced the Epic Season Pass, which contributed to season pass revenue as a percent of total lift revenue increasing from 26% for the 2007/2008 ski season to 34% for the 2008/2009 ski season. In March 2009, the Company began its pass sales campaign for the 2009/2010 ski season, including the Epic Season Pass. As of April 30, 2009, the Company has experienced a significant increase in advance sales of season pass products for the 2009/2010 ski season compared to sales through April 30, 2008 for the 2008/2009 ski season. However, the Company cannot predict if this trend will continue through the Fall 2009 pass sales campaign or the overall impact that season pass sales will have on lift revenue for the 2009/2010 ski season.

Real Estate Reported EBITDA is highly dependent on, among other things, the timing of closings on real estate under contract, 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. During the nine months ended April 30, 2009 the Company closed on 42 units at Crystal Peak Lodge at Breckenridge (“Crystal Peak Lodge”), seven Lodge at Vail Chalets (“Chalets”) and two units at The Arrabelle at Vail Square (“Arrabelle”). As of April 30, 2009, the Company had available for sale three units at Crystal Peak Lodge and had one Lodge at Vail Chalet unit which closed in May 2009.

The Company has increased risk associated with selling and closing real estate as a result of the continued instability in the capital and credit markets and a slowdown in the overall real estate market. The Company has two real estate projects currently under construction which are scheduled to be completed in the Spring of 2010 (One Ski Hill Place) and the Fall of 2010 (The Ritz-Carlton Residences, Vail). In April 2009, in response to current market conditions, the Company announced a reduction of approximately 20% to the listed selling prices of its Ritz-Carlton Residences, Vail, as well as price reductions of approximately 15% for purchasers currently under contract. The Company cannot predict the ultimate number of units that will close or the ultimate price for which the units will sell.

The Company had $170.5 million in cash and cash equivalents as of April 30, 2009 with no borrowings under the revolver component of its senior credit facility (the “Credit Facility”) and has less than $3.0 million in principal maturities due through the year ending July 31, 2013. However, the potential impact of a sustained economic recession combined with the Company’s plan to self-fund its current real estate under development (the Company estimates to incur between $220 million and $240 million subsequent to April 30, 2009 for projects under construction) could cause a decline in future cash being generated from operating activities potentially requiring the Company to borrow under the revolver component of its Credit Facility from time to time. The Company believes it has more than adequate availability under its revolver to support any such potential borrowing needs. Additionally, the Company does have the ability to manage its cash outflows to some extent by adjusting its discretionary capital expenditures and the timing of new real estate development projects.

The U.S. stock and credit markets have experienced significant volatility over the past several months which has led to a significant decline in market value of many companies in the travel and leisure industry, including the Company. The Company’s market capitalization has generally been higher than its shareholders’ equity or book value during this period. Under GAAP, the Company is required to test goodwill for impairment annually and the Company does so during the fourth quarter of each fiscal year, as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of the Company’s goodwill or indefinite lived intangible assets below book value. The Company does not believe there have been any events or circumstances that would require it to perform an interim goodwill and/or indefinite lived intangible asset impairment analysis. However, if market and economic conditions or individual reporting units’ business performance deteriorates significantly for a prolonged period, this could necessitate an impairment charge. The Company evaluates the recoverability of goodwill by estimating the future discounted cash flows of the reporting units and terminal values of the businesses to which the goodwill relates. In determining the estimated future cash flows, the Company considers current and projected future levels of income as well as business trends, prospects and market and economic conditions. The Company evaluates the recoverability of indefinite lived intangible assets primarily using the income approach based upon estimated future revenue streams. There are inherent uncertainties related to these factors and management’s judgment in applying them to the analysis of goodwill or indefinite lived intangibles impairment. If a more severely prolonged economic downturn were anticipated it could cause less than expected growth and/or reduction in terminal values in the Company’s lodging and retail/rental reporting units, and an impairment charge could be reasonably possible in fiscal year 2009 or thereafter. As of April 30, 2009, the Company had a goodwill and indefinite-lived intangible assets balance of $247.6 million, of which $35.4 and $30.5 million is related to its lodging properties (excluding CME) and retail/rental operations, respectively.

	Three Months Ended					Nine Months Ended
	April 30,					April 30,
	2009			2008		2009		2008
Mountain Reported EBITDA	$	133,772		$	168,617	$	197,804	$	249,634
Lodging Reported EBITDA		5,908			8,077		8,716		8,204
Resort Reported EBITDA		139,680			176,694		206,520		257,838
Real Estate Reported EBITDA		(4,722	)		912		40,300		7,802

Income from operations	$	107,580		$	151,461	$	164,148	$	191,827
Income before provision for income taxes		98,376			141,556		141,420		183,948
Net income	$	61,639		$	87,341	$	87,680	$	114,047

	Three Months Ended					Percentage
	April 30,					Increase
	2009			2008		(Decrease)
Lift tickets	$	149,384		$	167,793	(11.0	) %
Ski school		36,374			46,229	(21.3	) %
Dining		24,246			30,344	(20.1	) %
Retail/rental		48,214			59,533	(19.0	) %
Other		20,962			21,827	(4.0	) %
Total Mountain net revenue		279,180			325,726	(14.3	) %
Total Mountain operating expense		144,998			157,807	(8.1	) %
Mountain equity investment (loss) income, net		(410	)		698	(158.7	) %
Total Mountain Reported EBITDA	$	133,772		$	168,617	(20.7	) %

Total skier visits		3,086			3,391	(9.0	) %
ETP	$	48.41		$	49.48	(2.2	) %

Lift revenue decreased $18.4 million, or 11.0%, for the three months ended April 30, 2009 compared to the three months ended April 30, 2008, primarily as a result of a significant decline in lift revenue excluding season pass revenue which was down $27.7 million, or 21.0%, partially offset by an increase in season pass revenue of $9.3 million, or 26.0%. The increase in season pass revenue was driven by higher season pass sales resulting primarily from the introduction of the Epic Season Pass in the 2008/2009 ski season. Additionally, a portion of the decline in lift revenue excluding season pass revenue was caused by a shift in Destination guests purchasing the Epic Season Pass instead of other lift ticket products. Lift revenue (and to a larger degree visitation as discussed below) was also unfavorably impacted by the timing of the beginning of the current year quarter compared to the prior year (the current year quarter began on a Sunday versus the prior year quarter which began on a Friday). Adjusting for the timing of the quarter, lift revenue (and visitation) declines would have been more consistent with the declines experienced for the entire 2008/2009 ski season compared to the prior year discussed below in the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008.

Total skier visitation was down 9.0% in the three months ended April 30, 2009 compared to the same period in the prior year, primarily as a result of decreased visitation from Destination guests as well as the timing of the quarter start as described above. This decline was partially offset by strong season pass holder visitation, especially from the new Epic Season Pass holders, who on average skied more in the current year per pass than holders of our other pass products. ETP decreased 2.2%, driven by an increase in average season pass holder visitation per pass sold, partially offset by a 1.6% increase in ETP excluding season pass products.

Revenues for the Company's ski school, dining and retail/rental operations, were all negatively impacted by the severe downturn in the economic environment and a decrease in Destination guest visitation and overall spending per guest. Ski school revenue decreased $9.9 million, or 21.3%, in the three months ended April 30, 2009 compared to the same period in the prior year, as ski school revenue is primarily driven by Destination guests. Dining revenue decreased $6.1 million, or 20.1%, in the three months ended April 30, 2009 compared to the same period in the prior year, due to an approximately 15% decrease in the number of total on-mountain food and beverage transactions, coupled with an even greater decline in fine dining. Revenue from retail/rental operations decreased $11.3 million, or 19.0%, in the three months ended April 30, 2009 primarily due to lower sales and rental volumes at the Company’s mountain resort stores. Other revenues were favorably impacted by club operations (which increased $1.2 million) due to the opening of the Vail Mountain Club, in November 2008, which partially offset other revenue declines.

Segment operating expenses decreased $12.8 million, or 8.1%, for the three months ended April 30, 2009 compared to the same period in the prior year. Excluding retail/rental expense (which has a high variable cost component and therefore decreased in relation to the retail/rental revenue, with retail/rental revenue down 19.0% and retail/rental expense down 13.1%), operating expense decreased $7.4 million, or 6.4%, for the three months ended April 30, 2009 compared to the three months ended April 30, 2008, which was primarily attributable to lower variable costs related to lower revenue, including Forest Service fees, other resort related fees and credit card fees (which decreased $2.0 million or 11.2%); lower labor and labor-related benefit costs including lower ski school labor expense due to lower ski school revenue (which decreased $5.1 million or 10.5%) and other operating expenses including SG&A (which decreased $0.3 million or 0.7%). Additionally, expenses were also favorably impacted by a cost savings plan implemented in the second quarter ended January 31, 2009, and a company-wide wage reduction plan implemented in April of the third quarter ended April 30, 2009. The decreases in operating expenses were not enough to offset the declines in segment revenues resulting in lower flow through of revenue to Mountain Reported EBITDA of approximately 4 percentage points for the three months ended April 30, 2009 compared to the same period in the prior year.

	Nine Months Ended				Percentage
	April 30,				Increase
	2009		2008		(Decrease)
Lift tickets	$	276,542	$	301,791	(8.4	) %
Ski school		65,336		81,384	(19.7	) %
Dining		48,456		58,002	(16.5	) %
Retail/rental		129,878		149,844	(13.3	) %
Other		58,235		56,963	2.2	%
Total Mountain net revenue		578,447		647,984	(10.7	) %
Total Mountain operating expense		382,409		401,942	(4.9	) %
Mountain equity investment income, net		1,766		3,592	(50.8	) %
Total Mountain Reported EBITDA	$	197,804	$	249,634	(20.8	) %

Total skier visits		5,864		6,190	(5.3	) %
ETP	$	47.16	$	48.75	(3.3	) %

Lift revenue decreased $25.2 million, or 8.4%, for the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008, primarily as a result of a significant decline in lift revenue excluding season pass revenue which was down $42.1 million, or 18.8%, partially offset by an increase in season pass revenue of $16.9 million, or 21.8%. The increase in season pass revenue was driven by higher season pass sales resulting primarily from the introduction of the Epic Season Pass in the 2008/2009 ski season. Additionally, a portion of the decline in lift revenue excluding season pass revenue was caused by a shift in Destination guests purchasing the Epic Season Pass instead of other lift ticket products.

Total skier visitation was down 5.3% in the nine months ended April 30, 2009 compared to the same period in the prior year, primarily as a result of decreased visitation from Destination guests. This decline was partially offset by strong season pass holder visitation, especially from the new Epic Season Pass holders, who on average skied more in the current year per pass than holders of our other pass products. ETP decreased 3.3%, driven by an increase in average season pass holder visitation per pass sold, partially offset by a 2.8% increase in ETP excluding season pass products.

Revenues for the Company's ski school, dining and retail/rental operations, were all negatively impacted by the severe downturn in the economic environment and a decrease in Destination guest visitation and overall spending per guest. Ski school revenue decreased $16.1 million, or 19.7%, in the nine months ended April 30, 2009 compared to the same period in the prior year, as ski school revenue is primarily driven by Destination guests. Dining revenue decreased $9.6 million, or 16.5%, in the nine months ended April 30, 2009 compared to the same period in the prior year, due to an approximately 11% decrease in the number of total on-mountain food and beverage transactions, coupled with an even greater decline in fine dining. Revenue from retail/rental operations decreased $20.0 million, or 13.3%, in the nine months ended April 30, 2009 primarily due to lower sales and rental volumes at the Company’s mountain resort stores. For the nine months ended April 30, 2009 other revenues increased $1.3 million, or 2.2%, primarily due to club operations (which increased $2.8 million) resulting from the opening of the Vail Mountain Club in November 2008.

Segment operating expenses decreased $19.5 million, or 4.9%, for the nine months ended April 30, 2009 compared to the same period in the prior year. Excluding retail/rental expense (which has a high variable cost component and therefore decreased in relation to the retail/rental revenue, with retail/rental revenue down 13.3% and retail/rental expense down 8.3%), operating expense decreased $9.9 million, or 3.5%, for the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008, which was primarily attributable to lower variable costs related to lower revenue, including Forest Service fees, other resort related fees and credit card fees (which decreased $2.8 million or 8.8%); lower labor and labor-related benefit costs including lower ski school labor expense due to lower ski school revenue (which decreased $6.3 million or 6.1%) and other operating expenses including SG&A (which decreased $0.7 million or 0.5%). Additionally, expenses were also favorably impacted by a cost savings plan implemented in the second quarter ended January 31, 2009, and a company-wide wage reduction plan in April of the third quarter ended April 30, 2009. The decreases in operating expenses were not enough to offset the declines in segment revenues resulting in lower flow through of revenue to Mountain Reported EBITDA of approximately 4 percentage points for the nine months ended April 30, 2009 compared to the same period in the prior year.

Total Lodging net revenue increased $1.3 million, or 3.0%, for the three months ended April 30, 2009, compared to the three months ended April 30, 2008, primarily due to the acquisition of CME on November 1, 2008. CME generated revenues of $8.2 million in the three months ended April 30, 2009. Excluding the impact of CME, revenue would have decreased $6.9 million, or 15.9%, for the three months ended April 30, 2009, compared to the three months ended April 30, 2008. This decline was driven by a decrease in occupancy of 7.0 percentage points and overall decreases in RevPAR resulting in room revenue decreases of $4.4 million, which primarily occurred at the lodging properties proximate to the Company’s ski resorts due to a decline in Destination visitation as discussed in the Company’s Mountain segment.

Operating expense increased $3.5 million, or 9.8%, for the three months ended April 30, 2009, compared to the three months ended April 30, 2008, primarily due to operating expenses associated with CME of $4.9 million. Excluding the impact of CME, operating expenses would have decreased $1.5 million, or 4.1%, for the three months ended April 30, 2009, compared to the three months ended April 30, 2008, which was attributable to the decline in revenue (excluding CME), other variable expenses associated with occupancy and a reduced cost structure from savings plan initiatives.

Total Lodging net revenue increased $9.6 million, or 7.9%, for the nine months ended April 30, 2009, compared to the nine months ended April 30, 2008, primarily due to the opening of the Arrabelle in January 2008 and the acquisition of CME on November 1, 2008. Year to date operations of the Arrabelle contributed $9.4 million in revenue for the nine months ended April 30, 2009 compared to $4.0 million in the nine months ended April 30, 2008. CME operations generated revenues of $16.1 million in the nine months ended April 30, 2009. Excluding the impact of the Arrabelle and CME, revenue would have decreased $11.9 million, or 10.1%, for the nine months ended April 30, 2009, compared to the nine months ended April 30, 2008. This decline was driven by a decrease in occupancy of 4.3 percentage points and overall decreases in RevPAR resulting in room revenue decreases of $9.7 million, primarily occurring at the lodging properties proximate to the Company’s ski resorts (excluding the Arrabelle) due to a decline in Destination visitation as discussed in the Company’s Mountain segment and a decline in group room nights. Excluding the Arrabelle, ADR and RevPAR declined 6.2% and 14.8%, respectively, for the nine months ended April 30, 2009 compared to the same period last year. Additionally, group room nights were down approximately 15% in the same period.

Operating expense increased $9.0 million, or 8.0%, for the nine months ended April 30, 2009, compared to the nine months ended April 30, 2008, due to operating expenses associated with the Arrabelle of $10.1 million and CME of $10.3 million, partially offset by start-up and pre-opening expenses associated with the opening of the Arrabelle recorded in the prior year of approximately $3.1 million. Excluding the impact of the Arrabelle and CME, operating expenses would have decreased $4.6 million, or 4.3%, for the nine months ended April 30, 2009, compared to the nine months ended April 30, 2008, which was attributable to the decline in revenue (excluding the Arrabelle and CME), other variable expenses associated with occupancy and a reduced cost structure from savings plan initiatives.

Real Estate segment net revenue for the three months ended April 30, 2009 was primarily comprised of the closing of one condominium unit at The Arrabelle ($9.0 million of revenue with an average price per square foot of $1,708). Operating expense for the three months ended April 30, 2009 included cost of sales (including sales commissions) of $7.4 million, as well as general and administrative expenses of $6.7 million. General and administrative costs are primarily comprised of marketing expenses for the real estate projects under development (including those that have not yet closed), overhead costs such as labor and labor-related benefits and allocated corporate costs.

Real Estate segment net revenue for the nine months ended April 30, 2009 was driven primarily by the closings of seven Chalets units ($91.3 million of revenue with an average selling price per unit of $13.1 million and an average price per square foot of $2,721), 42 residences at Crystal Peak Lodge ($54.9 million of revenue with an average selling price per unit of $1.3 million and an average price per square foot of $1,028) and two condominium units at The Arrabelle ($16.7 million of revenue with an average selling price per unit of $8.4 million and an average price per square foot of $1,623). Operating expense for the nine months ended April 30, 2009 included cost of sales (including sales commissions) of $103.8 million, which increased commensurate with higher revenue recognized, as well as general and administrative expenses of $21.2 million. General and administrative costs are primarily comprised of marketing expenses for the real estate projects under development (including those that have not yet closed), overhead costs such as labor and labor-related benefits and allocated corporate costs. In addition, included in segment operating expense in the nine months ended April 30, 2009, the Company recorded $3.0 million of costs in excess of anticipated sales proceeds for an affordable housing commitment resulting from the cancellation of a contract by a third party developer related to its Jackson Hole Golf & Tennis Club (“JHG&TC”) development.

Real Estate segment net revenue for the nine months ended April 30, 2008 was driven primarily by the closings of 29 condominium units at The Arrabelle ($88.6 million of revenue with an average selling price per unit of $3.1 million and an average price per square foot of $1,106), the closings of the remaining JHG&TC cabins ($9.0 million of revenue with an average selling price per unit of $0.8 million and an average price per square foot of $360) and contingent gains on development parcels sales that closed in previous periods of $13.0 million. Operating expense for the nine months ended April 30, 2008 included cost of sales (including sales commissions) of $85.6 million, as well as general and administrative expenses of $19.2 million.

Income taxes. The effective tax rate for the three and nine months ended April 30, 2009 was 37.3% and 38.0%, respectively, as compared to the effective tax rate for the three and nine months ended April 30, 2008 of 38.3% and 38.0%, respectively. The interim period effective tax rate is primarily driven by the amount of anticipated pre-tax book income for the full fiscal year adjusted for items that are deductible/non-deductible for tax purposes only (i.e. permanent items). The income tax provision recorded for the three and nine months ended April 30, 2009 was favorably impacted by an increase in permanent items deductible for tax purposes offset by a favorable tax settlement with state tax authorities of $1.0 million recorded in the nine months ended April 30, 2008.

In 2005, the Company amended previously filed tax returns (for the tax years 1997-2002) in an effort to remove restrictions under Section 382 of the Internal Revenue Code on approximately $73.8 million of net operating losses (“NOLs”) relating to fresh start accounting from the Company’s reorganization in 1992. As a result, the Company requested a refund related to the amended returns in the amount of $6.2 million and has reduced its Federal tax liability in the amount of $18.5 million in subsequent tax returns. In 2006, the Internal Revenue Service (“IRS”) completed its examination of the Company’s filing position in its amended returns and disallowed the Company’s position to remove the restriction on the NOLs and the Company’s request for a refund. The Company appealed the examiner’s disallowance of the NOLs 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 disagrees with the IRS interpretation disallowing the utilization of the NOLs and intends to pursue available legal remedies. Due to the uncertainty surrounding the utilization of the NOLs, the Company has not reflected any of the benefits of the utilization of the NOLs within its financial statements; thus if the Company is unsuccessful in any future action regarding this matter it will not negatively impact the Company’s results of operations.

		Three Months Ended						Nine Months Ended
		April 30,						April 30,
		2009			2008			2009			2008
Mountain Reported EBITDA		$	133,772		$	168,617		$	197,804		$	249,634
Lodging Reported EBITDA			5,908			8,077			8,716			8,204
	Resort Reported EBITDA		139,680			176,694			206,520			257,838
Real Estate Reported EBITDA			(4,722	)		912			40,300			7,802
	Total Reported EBITDA		134,958			177,606			246,820			265,640
Depreciation and amortization			(27,582	)		(25,471	)		(80,098	)		(69,854	)
(Loss) gain on disposal of fixed assets, net			(206	)		24			(808	)		(367	)
Investment income			449			2,459			1,428			7,697
Interest expense, net			(6,490	)		(8,441	)		(21,732	)		(23,620	)
Contract dispute credit, net			--			--			--			11,920
Minority interest in income of consolidated subsidiaries, net			(2,753	)		(4,621	)		(4,190	)		(7,468	)
Income before provision for income taxes			98,376			141,556			141,420			183,948
	Provision for income taxes		(36,737	)		(54,215	)		(53,740	)		(69,901	)
Net income		$	61,639		$	87,341		$	87,680		$	114,047

The Company generated $208.0 million of cash from operating activities in the nine months ended April 30, 2009, an increase of $39.9 million when compared to the $168.1 million of cash generated in the nine months ended April 30, 2008. Cash flows generated from operations for the nine months ended April 30, 2009 was positively impacted by real estate activity as proceeds from Real Estate sales increased by $26.6 million combined with a reduction in investments in real estate of $51.1 million partially offset by a reduction of $31.6 million in deposits received on projects under development. Additionally, the Company received $41.8 million in proceeds for the final installment related to private club initiation fees to the Vail Mountain Club that opened in November 2008 and a reduction in restricted cash of $54.1 million which became available for general purpose use due to the payoff of the Company’s non-recourse real estate financings. Partially offsetting the above sources of cash from operations was a decrease in cash generated by resort operations as Resort Reported EBITDA decreased by $51.3 million for the nine months ended April 30, 2009 compared to the same period in the prior year and a decline in accounts payable and other accrued liabilities of $37.3 million primarily as a result of a decline in real estate investment activity and lower trade payables associated with lower operating volume. Additionally, the Company received $11.9 million in cash (net of legal costs) for the Cheeca settlement in the nine months ended April 30, 2008.

In addition to the Company’s $170.5 million of cash and cash equivalents at April 30, 2009, the Company has available $304.4 million under its Credit Facility (which represents the total commitment of $400.0 million less certain letters of credit outstanding of $95.6 million). As of April 30, 2009 and 2008, total long-term debt (including long-term debt due within one year) was $492.0 million and $649.5 million, respectively, with the decrease at April 30, 2009 being primarily due to the pay off of the non-recourse real estate financings related to the Company’s vertical development projects. Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents) decreased from $345.3 million as of April 30, 2008 to $321.5 million as of April 30, 2009 due primarily to the pay off of the Company’s non-recourse real estate financings partially offset by the decrease in cash and cash equivalents.

The Company expects to spend approximately $180 million to $200 million in calendar year 2009 for current real estate projects under construction, including the construction of associated resort-related depreciable assets, of which approximately $40 million was spent as of April 30, 2009, leaving approximately $140 million to $160 million to spend in the remainder of the calendar year 2009. The Company has entered into contracts with third parties to provide construction-related services to the Company throughout the course of construction for real estate projects under development; commitments for future services to be performed over the next few years under such current contracts total approximately $181 million.

The Company has historically invested significant cash in capital expenditures for its resort operations, and expects to continue to invest in the future; however, such investment in the near term will be reduced in light of the current economic recession, but will primarily include investments that allow the Company to maintain its high quality standards, as well as certain incremental discretionary improvements at the Company’s five ski resorts and throughout its owned hotels. The Company evaluates additional capital improvements based on expected strategic impacts and/or expected return on investment. The Company currently anticipates it will spend approximately $50 million to $60 million of resort capital expenditures for calendar year 2009, excluding resort depreciable assets arising from real estate activities noted above, of which approximately $7 million was spent as of April 30, 2009, leaving approximately $43 million to $53 million to spend the remainder of the calendar year 2009. Included in these capital expenditures are approximately $32 million to $37 million which are necessary to maintain appearance and level of service appropriate to the Company’s resort operations, including routine replacement of snow grooming equipment and rental fleet equipment. The Company currently plans to utilize cash flow from operations and cash on hand to provide the cash necessary to execute its capital plan.

The Company’s debt service requirements can be impacted by changing interest rates as the Company had $52.6 million of variable-rate debt outstanding as of April 30, 2009. A 100-basis point change in LIBOR would cause the Company’s annual interest payments to change by approximately $0.5 million. The fluctuation in the Company’s debt service requirements, in addition to interest rate changes, may be impacted by future borrowings under its Credit Facility or other alternative financing arrangements, including non-recourse real estate financings, it may enter into. The Company’s long term liquidity needs are dependent upon operating results that impact the borrowing capacity under the Credit Facility, which can be mitigated by adjustments to capital expenditures, flexibility of investment activities and the ability to obtain favorable future financing. The Company can respond to liquidity impacts of changes in the business and economic environment by managing its capital expenditures and the timing of new real estate development activity.

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 three months ended April 30, 2009. During the nine months ended April 30, 2009 the Company repurchased 596,127 shares of common stock at a cost of $14.9 million. Since inception of this stock repurchase plan, the Company has repurchased 3,600,235 shares at a cost of approximately $140.3 million, through April 30, 2009. As of April 30, 2009, 2,399,765 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 plans. Acquisitions under the stock repurchase program 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 the Company’s future financial performance, the Company’s available cash resources and competing uses for cash that may arise in the future, the restrictions in the Company’s Fourth Amended and Restated Credit Agreement, dated as of January 28, 2005, as amended, between The Vail Corporation (a wholly-owned subsidiary of the Company), Bank of America, N.A. as administrative agent and the Lenders party thereto (the “Credit Agreement”) governing the Company’s Credit Facility and the Indenture, dated as of January 29, 2004 among the Company, the guarantors therein and The Bank of New York Mellon Trust Company, N.A. as Trustee (“Indenture”), governing the 6.75% Senior Subordinated Notes due 2014 (“6.75% Notes”), prevailing prices of the Company’s common stock and the number of shares that become available for sale at prices that the Company believes are attractive. The stock repurchase program may be discontinued at any time and is not expected to have a significant impact on the Company’s capitalization.

The Company must abide by certain restrictive financial covenants under its Credit Facility and the Indenture. The most restrictive of those covenants include the following Credit Facility covenants: Net Funded Debt to Adjusted EBITDA ratio, Minimum Net Worth and the Interest Coverage ratio (each as defined in the Credit Agreement). In addition, the Company’s financing arrangements, including the Indenture, limit its ability to incur certain indebtedness, make certain restricted payments, enter into certain investments, make certain affiliate transfers and may limit its ability to enter into certain mergers, consolidations or sales of assets. The Company’s borrowing availability under the Credit Facility is primarily determined by the Net Funded Debt to Adjusted EBITDA ratio as defined in the Credit Agreement.

The Company was in compliance with all restrictive financial covenants in its debt instruments as of April 30, 2009. The Company expects it will meet all applicable financial maintenance covenants in its Credit Agreement, including the Net Funded Debt to Adjusted EBITDA ratio throughout the year ending July 31, 2009. However, there can be no assurance that the Company will continue to meet such financial covenants. If such covenants are not met, the Company would be required to seek a waiver or amendment from the banks participating in the Credit Facility. While the Company anticipates that it would obtain such waiver or amendment, if any were necessary, there can be no assurance that such waiver or amendment would be granted, which could have a material adverse impact on the liquidity of the Company.

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:

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-Q, 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 the Company makes for a number of reasons including those described in this Form 10-Q and in Part I, Item 1A “Risk Factors” of the Form 10-K. All forward-looking statements are made only as of the date hereof. Except as may be required by law, the Company does not intend to update these forward-looking statements, even if new information, future events or other circumstances have made them incorrect or misleading.

Interest Rate Risk. The Company's exposure to market risk is limited primarily to the fluctuating interest rates associated with variable rate indebtedness. At April 30, 2009, the Company had $52.6 million of variable rate indebtedness, representing 10.7% of the Company's total debt outstanding, at an average annualized interest rate during the three and nine months ended April 30, 2009 of 1.8% and 3.0%, respectively. Based on variable-rate borrowings outstanding as of April 30, 2009, a 100-basis point (or 1.0%) change in LIBOR would have caused the Company's annual interest payments to change by $0.5 million. The Company's market risk exposure fluctuates based on changes in underlying interest rates.

Based upon their evaluation of the Company's disclosure controls and procedures, the CEO and the CFO concluded that 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.

During the fourth quarter of the fiscal year ended July 31, 2007, the Company entered into an agreement with Peninsula Advisors, LLC (“Peninsula”) for the negotiation and mutual acquisition of The Canyons and the land underlying The Canyons. On July 15, 2007, American Skiing Company (“ASC”) entered into an agreement to sell The Canyons to Talisker Corporation and Talisker Canyons Finance Company, LLC (together “Talisker”). On July 27, 2007, the Company filed a complaint in the District Court in Colorado against Peninsula and Talisker claiming, among other things, breach of contract by Peninsula and intentional interference with contractual relations and prospective business relations by Talisker and seeking damages, specific performance and injunctive relief. On October 19, 2007, the Company’s request for a preliminary injunction to prevent the closing of the acquisition by Talisker of The Canyons from ASC was denied. On November 8, 2007, Talisker filed an answer to the Company’s complaint along with three counterclaims. On November 12, 2007, Peninsula filed a motion to dismiss and for partial summary judgment, which was heard on March 21, 2009 and denied. The Company is unable to predict the ultimate outcome of the above described actions.

Exhibit Number	Description	Sequentially Numbered Page
3.1	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.)
3.2	Amended and Restated By-Laws. (Incorporated by reference to Exhibit 3.1 on Form 8-K of Vail Resorts, Inc. filed February 6, 2009.)
4.1(a)	Indenture, dated as of January 29, 2004, among Vail Resorts, Inc., the guarantors therein and the Bank of New York as Trustee (Including Exhibit A, Form of Global Note). (Incorporated by reference to Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. filed on February 2, 2004.)
4.1(b)	Supplemental Indenture, dated as of March 10, 2006 to Indenture dated as of January 29, 2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 10.34 on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2006.)
4.1(c)	Form of Global Note. (Incorporated by reference to Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. filed February 2, 2004.)
4.1(d)	Supplemental Indenture, dated as of April 26, 2007 to Indenture dated as of January 29, 2004 among Vail Resorts, Inc., as Issuer, the Guarantors named therein, as Guarantors, and The Bank of New York, as Trustee. (Incorporated by reference to Exhibit 4.1(d) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008.)
4.1(e)	Supplemental Indenture, dated as of July 11, 2008 to Indenture dated as of January 29, 2004 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(e) on Form 10-K of Vail Resorts, Inc. for the year ended July 31, 2008.)
4.1(f)	Supplemental Indenture, dated as of January 29, 2009 to Indenture dated as of January 29, 2004 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(f) on Form 10-Q of Vail Resorts, Inc. for the quarter ended January 31, 2009.)
31.1	Certifications of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	17
31.2	Certifications of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.	18
32	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.	19

Delaware		51-0291762
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

390 Interlocken Crescent Broomfield, Colorado		80021
(Address of Principal Executive Offices)		(Zip Code)

Table of Contents

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements.	F-1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	1
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	13
Item 4.	Controls and Procedures.	13


PART II	OTHER INFORMATION

Item 1.	Legal Proceedings.	14
Item 1A.	Risk Factors.	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	14
Item 3.	Defaults Upon Senior Securities.	14
Item 4.	Submission of Matters to a Vote of Security Holders.	14
Item 5.	Other Information.	14
Item 6.	Exhibits.	14

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements -- Unaudited

Consolidated Condensed Balance Sheets as of April 30, 2009, July 31, 2008 and April 30, 2008		F-2
Consolidated Condensed Statements of Operations for the Three Months Ended April 30, 2009 and 2008		F-3
Consolidated Condensed Statements of Operations for the Nine Months Ended April 30, 2009 and 2008		F-4
Consolidated Condensed Statements of Cash Flows for the Nine Months Ended April 30, 2009 and 2008		F-5
Notes to Consolidated Condensed Financial Statements		F-6

			Fair Value Measurements at Reporting Date Using
	Balance at
	April 30,
Description	2009			Level 1		Level 2		Level 3
Cash equivalents	$	156,742		$	121,742	$	35,000	$	--

Date: June 4, 2009		Vail Resorts, Inc.

	By:	/s/ Jeffrey W. Jones
		Jeffrey W. Jones
		Senior Executive Vice President and
		Chief Financial Officer
		(Duly Authorized Officer)

	Three Months Ended April 30,
	2009				2008
	Basic		Diluted		Basic		Diluted
Net income per share:
Net income	$	61,639	$	61,639	$	87,341	$	87,341

Weighted-average shares outstanding		36,574		36,574		38,655		38,655
Effect of dilutive securities		--		99		--		274
Total shares		36,574		36,673		38,655		38,929

Net income per share	$	1.69	$	1.68	$	2.26	$	2.24

	Nine Months Ended April 30,
	2009				2008
	Basic		Diluted		Basic		Diluted
Net income per share:
Net income	$	87,680	$	87,680	$	114,047	$	114,047

Weighted-average shares outstanding		36,624		36,624		38,809		38,809
Effect of dilutive securities		--		128		--		327
Total shares		36,624		36,752		38,809		39,136

Net income per share	$	2.39	$	2.39	$	2.94	$	2.91

2009	$	59
2010		349
2011		1,830
2012		305
2013		318
Thereafter		489,157
Total debt	$	492,018

Date: June 4, 2009		Vail Resorts, Inc.

	By:	/s/ Mark L. Schoppet
		Mark L. Schoppet
		Vice President, Controller and
		Chief Accounting Officer