UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 xQUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
quarterly period ended January 31, 2010
 
  ̈TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
 For the
transition period from       to
 
 Commission
File Number:  001-09614
 
 
 Vail
Resorts, Inc.
 (Exact
Name of Registrant as Specified in Its Charter)
 
 
 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)
 
 (303)
      404-1800(Registrant’s
      Telephone Number, Including Area
Code)
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days.
 x Yes  ̈ No
 
 Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files).
  ̈ Yes  ̈ No
 
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
 Large accelerated filerx                                                                                 
Accelerated filer ̈
 Non-accelerated
filer  ̈ (Do not
check if a smaller reporting company)Smaller reporting
company  ̈
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act.
  ̈ Yes x No
 As of
March 5, 2010, 36,248,333 shares of the registrant’s common stock were
outstanding.
  
  Table
      of ContentsPART
      I
              FINANCIAL
      INFORMATIONItem
      1.
              Financial Statements.
              F-1Item
      2.
              Management's Discussion and Analysis of Financial Condition
      and Results of Operations.
              1Item
      3.
              Quantitative and Qualitative Disclosures About Market
      Risk.
              16Item
      4.
              Controls and Procedures.
              16PART
      II
              OTHER
      INFORMATIONItem
      1.
              Legal Proceedings.
              17Item
      1A.
              Risk Factors.
              18Item
      2.
              Unregistered Sales of Equity Securities and Use
      of Proceeds.
              18Item
      3.
              Defaults Upon Senior Securities.
              18Item
      4.
              Reserved.
              18Item
      5.
              Other Information.
              18Item
      6.
              Exhibits.
              18
 
 PART
      I
              FINANCIAL
      INFORMATIONItem
      1.
              Financial Statements --
    UnauditedConsolidated Condensed Balance Sheets as of January
      31, 2010, July 31, 2009 and January 31, 2009
              F-2Consolidated Condensed Statements of
      Operations for the Three Months Ended January 31, 2010 and
      2009
              F-3Consolidated Condensed Statements of Operations
      for the Six Months Ended January 31, 2010 and 2009
              F-4Consolidated Condensed Statements of Cash Flows
      for the Six Months Ended January 31, 2010 and 2009
              F-5Notes to Consolidated Condensed Financial
      Statements
              F-6
 
 Vail Resorts, Inc.
 Consolidated
Condensed Balance Sheets
 (In
thousands, except share and per share amounts)
 
 January
      31,
              
              
              
              July
      31,
              
              
              
              January
      31,2010
              
              
              
              2009
              
              
              
              2009(Unaudited)
              
              
              
              
              
              
              
              (Unaudited)AssetsCurrent
      assets:Cash
      and cash equivalents
              
              $
              58,008
              
              
              $
              69,298
              
              
              $
              139,172Restricted
      cash
              
              
              15,532
              
              
              
              11,065
              
              
              
              14,603Trade
      receivables, net
              
              
              45,366
              
              
              
              58,063
              
              
              
              50,495Inventories,
      net
              
              
              51,641
              
              
              
              48,947
              
              
              
              52,189Other
      current assets
              
              
              51,684
              
              
              
              41,615
              
              
              
              39,112Total
      current assets
              
              
              222,231
              
              
              
              228,988
              
              
              
              295,571Property,
      plant and equipment, net (Note 5)
              
              
              1,039,555
              
              
              
              1,057,658
              
              
              
              1,084,031Real
      estate held for sale and investment
              
              
              414,501
              
              
              
              311,485
              
              
              
              247,329Goodwill,
      net
              
              
              167,950
              
              
              
              167,950
              
              
              
              167,950Intangible
      assets, net
              
              
              79,167
              
              
              
              79,429
              
              
              
              79,785Other
      assets
              
              
              32,661
              
              
              
              38,970
              
              
              
              42,931Total
      assets
              
              $
              1,956,065
              
              
              $
              1,884,480
              
              
              $
              1,917,597Liabilities
      and Stockholders’ EquityCurrent
      liabilities:Accounts
      payable and accrued liabilities (Note 5)
              
              $
              339,256
              
              
              $
              245,536
              
              
              $
              302,118Income
      taxes payable
              
              
              10,482
              
              
              
              5,460
              
              
              
              33,315Long-term
      debt due within one year (Note 4)
              
              
              1,870
              
              
              
              352
              
              
              
              304Total
      current liabilities
              
              
              351,608
              
              
              
              251,348
              
              
              
              335,737Long-term
      debt (Note 4)
              
              
              489,865
              
              
              
              491,608
              
              
              
              491,777Other
      long-term liabilities (Note 5)
              
              
              197,759
              
              
              
              233,169
              
              
              
              221,814Deferred
      income taxes
              
              
              113,808
              
              
              
              112,234
              
              
              
              93,469Commitments
      and contingencies (Note 9)Redeemable
      noncontrolling interest (Note 8)
              
              
              21,318
              
              
              
              15,415
              
              
              
              25,455Stockholders’
      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, 40,125,318
      (unaudited), 40,049,988 and 40,007,068 (unaudited) shares issued,
      respectively
              
              
              401
              
              
              
              400
              
              
              
              400Additional
      paid-in capital
              
              
              561,103
              
              
              
              555,728
              
              
              
              549,729Retained
      earnings
              
              
              356,512
              
              
              
              356,995
              
              
              
              330,701Treasury
      stock, at cost, 3,878,535 (unaudited), 3,878,535 and 3,600,235 (unaudited)
      shares, respectively (Note 11)
              
              
              (147,828
              )
              
              
              (147,828
              )
              
              
              (140,333
              )Total
      Vail Resorts, Inc. stockholders’ equity
              
              
              770,188
              
              
              
              765,295
              
              
              
              740,497Noncontrolling
      interests
              
              
              11,519
              
              
              
              15,411
              
              
              
              8,848Total
      stockholders’ equity
              
              
              781,707
              
              
              
              780,706
              
              
              
              749,345Total
      liabilities and stockholders’ equity
              
              $
              1,956,065
              
              
              $
              1,884,480
              
              
              $
              1,917,597
 
 TheaccompanyingNotes are an integral part of these
consolidated condensed financial statements.
  
  Vail Resorts, Inc.
 Consolidated
Condensed Statements of Operations
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Three
      months endedJanuary
      31,2010
              
              
              2009Net
      revenue:Mountain
              $
              260,978
              
              $
              258,489Lodging
              
              38,676
              
              
              41,150Real
      estate
              
              870
              
              
              89,157Total
      net revenue
              
              300,524
              
              
              388,796Segment
      operating expense (exclusive of depreciation and amortization shown
      separately below):Mountain
              
              154,018
              
              
              156,188Lodging
              
              37,788
              
              
              38,697Real
      estate
              
              7,417
              
              
              59,508Total
      segment operating expense
              
              199,223
              
              
              254,393Other
      operating (expense) income:Depreciation
      and amortization
              
              (27,772
              )
              
              (27,438
              )Gain
      (loss) on disposal of fixed assets, net
              
              12
              
              
              (422
              )Income
      from operations
              
              73,541
              
              
              106,543Mountain
      equity investment income, net
              
              207
              
              
              1,161Investment
      income
              
              192
              
              
              336Interest
      expense, net
              
              (4,148
              )
              
              (7,295
              )Income
      before provision for income taxes
              
              69,792
              
              
              100,745Provision
      for income taxes
              
              (24,713
              )
              
              (36,412
              )Net
      income
              
              45,079
              
              
              64,333Net
      income attributable to noncontrolling interests
              
              (4,389
              )
              
              (3,788
              )Net
      income attributable to Vail Resorts, Inc.
              $
              40,690
              
              $
              60,545Per
      share amounts (Note 3):Basic
      net income per share attributable to Vail Resorts, Inc.
              $
              1.12
              
              $
              1.66Diluted
      net income per share attributable to Vail Resorts, Inc.
              $
              1.11
              
              $
              1.65
 
 
 TheaccompanyingNotes are an integral part of these
consolidated condensed financial statements.
  
  Vail Resorts, Inc.
 Consolidated
Condensed Statements of Operations
 (In
thousands, except per share amounts)
 (Unaudited)
 
 Six
      months endedJanuary
      31,2010
              
              
              2009Net
      revenue:Mountain
              $
              300,182
              
              $
              299,267Lodging
              
              80,031
              
              
              86,403Real
      estate
              
              1,075
              
              
              155,907Total
      net revenue
              
              381,288
              
              
              541,577Segment
      operating expense (exclusive of depreciation and amortization shown
      separately below):Mountain
              
              230,486
              
              
              237,411Lodging
              
              80,411
              
              
              83,595Real
      estate
              
              12,594
              
              
              110,885Total
      segment operating expense
              
              323,491
              
              
              431,891Other
      operating (expense) income:Depreciation
      and amortization
              
              (54,956
              )
              
              (52,516
              )Gain
      on sale of real property
              
              6,087
              
              
              --Loss
      on disposal of fixed assets, net
              
              (101
              )
              
              (602
              )Income
      from operations
              
              8,827
              
              
              56,568Mountain
      equity investment income, net
              
              461
              
              
              2,176Investment
      income
              
              422
              
              
              979Interest
      expense, net
              
              (8,983
              )
              
              (15,242
              )Income
      before benefit (provision) for income taxes
              
              727
              
              
              44,481Benefit
      (provision) for income taxes
              
              841
              
              
              (17,003
              )Net
      income
              
              1,568
              
              
              27,478Net
      income attributable to noncontrolling interests
              
              (2,051
              )
              
              (1,437
              )Net
      (loss) income attributable to Vail Resorts, Inc.
              $
              (483
              )
              $
              26,041Per
      share amounts (Note 3):Basic
      net (loss) income per share attributable to Vail Resorts,
    Inc.
              $
              (0.01
              )
              $
              0.71Diluted
      net (loss) income per share attributable to Vail Resorts,
    Inc.
              $
              (0.01
              )
              $
              0.71
 
 The
accompanying Notes are an integral part of these consolidated condensed
financial statements.
  
  Vail Resorts, Inc.
 Consolidated
Condensed Statements of Cash Flows
 (In
thousands)
 (Unaudited)
 
 Six
      Months EndedJanuary
      31,2010
              
              2009Cash
      flows from operating activities:Net
      income
              
              $
              1,568
              
              
              $
              27,478Adjustments
      to reconcile net income to net cash provided by operating
      activities:Depreciation
      and amortization
              
              
              54,956
              
              
              
              52,516Cost
      of real estate sales
              
              
              --
              
              
              
              87,631Stock-based
      compensation expense
              
              
              6,368
              
              
              
              5,242Deferred
      income taxes, net
              
              
              (841
              )
              
              
              16,204Gain
      on sale of real property
              
              
              (6,087
              )
              
              
              --Other
      non-cash income, net
              
              
              (3,009
              )
              
              
              (3,998
              )Changes
      in assets and liabilities:Restricted
      cash
              
              
              (4,467
              )
              
              
              43,834Trade
      receivables, net
              
              
              12,697
              
              
              
              358Inventories,
      net
              
              
              (2,694
              )
              
              
              (2,481
              )Investments
      in real estate
              
              
              (109,186
              )
              
              
              (80,567
              )Accounts
      payable and accrued liabilities
              
              
              61,238
              
              
              
              36,725Deferred
      real estate deposits
              
              
              139
              
              
              
              (36,117
              )Private
      club deferred initiation fees and deposits
              
              
              1,271
              
              
              
              39,667Other
      assets and liabilities, net
              
              
              2,178
              
              
              
              (19,828
              )Net
      cash provided by operating activities
              
              
              14,131
              
              
              
              166,664Cash
      flows from investing activities:Capital
      expenditures
              
              
              (36,245
              )
              
              
              (77,560
              )Acquisition
      of business
              
              
              --
              
              
              
              (38,170
              )Cash
      received from sale of real property
              
              
              8,920
              
              
              
              --Other
      investing activities, net
              
              
              (234
              )
              
              
              (417
              )Net
      cash used in investing activities
              
              
              (27,559
              )
              
              
              (116,147
              )Cash
      flows from financing activities:Repurchases
      of common stock
              
              
              --
              
              
              
              (14,872
              )Proceeds
      from borrowings under non-recourse real estate financings
              
              
              --
              
              
              
              9,013Payments
      of non-recourse real estate financings
              
              
              --
              
              
              
              (58,407
              )Proceeds
      from borrowings under other long-term debt
              
              
              85,962
              
              
              
              55,782Payments
      of other long-term debt
              
              
              (86,188
              )
              
              
              (71,013
              )Other
      financing activities, net
              
              
              2,364
              
              
              
              5,807Net
      cash provided by (used in) financing activities
              
              
              2,138
              
              
              
              (73,690
              )Net
      decrease in cash and cash equivalents
              
              
              (11,290
              )
              
              
              (23,173
              )Cash
      and cash equivalents:Beginning
      of period
              
              
              69,298
              
              
              
              162,345End
      of period
              
              $
              58,008
              
              
              $
              139,172
 
 The
accompanying Notes are an integral part of these consolidated condensed
financial statements.
  
  Vail Resorts, Inc.
 Notes
to Consolidated Condensed Financial Statements
 (Unaudited)
 
 1.           Organization
and Business
  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 services, 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.  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. Vail Resorts Development Company (“VRDC”), a
wholly-owned subsidiary, conducts the operations of the Company’s Real Estate
segment, which owns and develops real estate in and around the Company’s resort
communities.  The Company’s mountain business and its lodging
properties at or around the Company’s 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 operate from mid-May
through mid-October. The Company also has non-majority owned investments in
various other entities, some of which are consolidated (see Note 6, Variable
Interest Entities).
 
 2.           Summary
of Significant Accounting Policies
 
 The
Financial Accounting Standards Board (“FASB”) has established the FASB
Accounting Standards Codification (“ASC”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the United States of America for financial statements of interim and
annual periods ending after September 15, 2009.  This standard does
not alter current accounting principles generally accepted in the United States
of America (“GAAP”), but rather integrates existing accounting standards with
other authoritative guidance.
 
 Basis
of Presentation
  Consolidated Condensed Financial
Statements--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, 2009.  Certain information and
footnote disclosures, including significant accounting policies, normally
included in fiscal year financial statements prepared in accordance with GAAP
have been condensed or omitted.  The July 31, 2009 Consolidated
Condensed Balance Sheet was derived from audited financial
statements.
 
 Use of Estimates--The
preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the balance
sheet date and the reported amounts of revenue and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
 Noncontrolling Interests in
Consolidated Financial Statements--Effective August 1, 2009, the Company
adopted Statement of Financial Accounting Standards (“SFAS”) No. 160,
“Noncontrolling Interest in Consolidated Financial Statements – an Amendment of
Accounting Research Bulletin No. 51” (“SFAS 160”).  The guidance of
this statement is now included in ASC Topic 810 “Consolidation.” This statement
requires the presentation of net income or loss attributable to noncontrolling
interests (previously referred to as minority interest) along with net income or
loss attributable to the stockholders of the Company separately in its
consolidated statement of operations.  Additionally, noncontrolling
interests in the consolidated subsidiaries of the Company are reported as a
separate component of equity in the consolidated balance sheet, apart from the
Company’s equity.  However, redeemable noncontrolling interests in
which the Company is subject to a put option under which it may be required to
repurchase an interest in a consolidated subsidiary from a noncontrolling
interest holder, must be classified outside of stockholders’
equity.  Since the Company is subject to a put option with respect to
SSV beginning August 1, 2010 and each year thereafter (see Note 8, Redeemable
Noncontrolling Interest, of the Notes to Consolidated Condensed Financial
Statements), the redeemable noncontrolling interest in SSV has been classified
in the mezzanine section of the accompanying consolidated condensed balance
sheets at the redemption value as prescribed in the SSV operating agreement at
the end of each reporting period.
 
 Upon
adoption, the provisions of this statement have been applied to all
noncontrolling interests prospectively, except for the presentation and
disclosure requirements, which have been applied retrospectively for all periods
presented.  The retrospective impact of applying this guidance was a
reclassification of $15.4 million and $25.5 million as of July 31, 2009 and
January 31, 2009, respectively, of minority interest to redeemable
noncontrolling interest, representing noncontrolling interest subject to the SSV
put option, and a reduction in retained earnings of $3.4 million as of January
31, 2009, representing the difference in the redemption value as of January 31,
2009 and the carrying value of the SSV noncontrolling interest.  In
addition, as of July 31, 2009 and January 31, 2010, the portion of
noncontrolling interest, which is not subject to the SSV put option, has been
reclassified as part of equity-noncontrolling interests.  The
following table summarizes the changes in total stockholders’ equity (in
thousands):
 
 For
      the Six Months Ended January 31,2010
              
              2009Vail
      Resorts Stockholders’ Equity
              
              
              Noncontrolling
      Interests
              
              
              Total
      Equity
              
              
              
              Vail
      Resorts Stockholders’ Equity
              
              
              Noncontrolling
      Interests
              
              
              Total
      EquityBalance,
      beginning of period
              $
              765,295
              
              $
              15,411
              
              $
              780,706
              
              
              $
              716,633
              
              $
              8,848
              
              $
              725,481Net
      (loss) income
              
              (483
              )
              
              2,051
              
              
              1,568
              
              
              
              26,041
              
              
              1,437
              
              
              27,478Stock-based compensation  expense
              
              6,368
              
              
              --
              
              
              6,368
              
              
              
              5,242
              
              
              --
              
              
              5,242Issuance
      of shares under share award plans
              
              (672
              )
              
              --
              
              
              (672
              )
              
              
              (1,052
              )
              
              --
              
              
              (1,052
              )Tax
      expense from share award plans
              
              (320
              )
              
              --
              
              
              (320
              )
              
              
              (232
              )
              
              --
              
              
              (232
              )Repurchases
      of common stock
              
              --
              
              
              --
              
              
              --
              
              
              
              (14,872
              )
              
              --
              
              
              (14,872
              )Adjustment
      to redemption value of redeemable noncontrolling interest
              
              --
              
              
              (5,903
              )
              
              (5,903
              )
              
              
              8,737
              
              
              (1,003
              )
              
              7,734Distributions
      to noncontrolling interests, net
              
              --
              
              
              (40
              )
              
              (40
              )
              
              
              --
              
              
              (434
              )
              
              (434
              )Balance,
      end of period
              $
              770,188
              
              $
              11,519
              
              $
              781,707
              
              
              $
              740,497
              
              $
              8,848
              
              $
              749,345
 
 Additionally,
upon adoption of this statement, even though the Company’s total provision
(benefit) for income taxes did not change, the Company’s effective tax rate
calculation has changed because net income or loss attributable to
noncontrolling interests is no longer included in the determination of pre-tax
income or loss in calculating its effective tax rate.
 
 Fair Value Instruments--The
recorded amounts for cash and cash equivalents, receivables, other current
assets, and accounts payable and accrued liabilities approximate fair value due
to their short-term nature.  The fair value of amounts outstanding
under the Employee Housing Bonds (Note 4, Long-Term Debt) approximate book value
due to the variable nature of the interest rate associated with that
debt.  The fair value of the 6.75% Senior Subordinated Notes
(“6.75%Notes”) (Note 4, Long-Term Debt) is based on quoted market
price.  The fair value of the Company's Industrial Development Bonds
(Note 4, Long-Term Debt) and other long-term debt have been estimated using
discounted cash flow analyses based on current borrowing rates for debt with
similar remaining maturities and ratings.  The estimated fair value of
the 6.75% Notes, Industrial Development Bonds and other long-term debt as of
January 31, 2010 is presented below (in thousands):
 
 January
      31, 2010Carrying
              
              FairValue
              
              Value6.75%
      Notes
              
              $
              390,000
              
              $
              387,075Industrial
      Development Bonds
              
              $
              42,700
              
              $
              46,368Other
      long-term debt
              
              $
              6,460
              
              $
              6,273
 
 
 New
Accounting Standards
 
 Fair Value Measurements and
Disclosures--In September 2006, the FASB issued guidance which is
included in ASC Topic 820, “Fair Value Measurements and Disclosures” (SFAS No.
157 “Fair Value Measurements”) on fair value measurements and
disclosures.  This standard defines fair value, establishes a
framework for measuring fair value and expands disclosures about fair value
measurements.  The fair value guidance in this standard for financial
assets and liabilities was effective for the Company on August 1,
2008.  The Company adopted the guidance for nonfinancial assets and
liabilities on August 1, 2009 and the provisions did not have a material impact
on the Company’s financial position or results of operations.
 
 Business Combinations--In
December 2007, the FASB issued guidance which is included in ASC Topic 805,
“Business Combinations” (SFAS No. 141R, “Business Combinations”) which
establishes principles and requirements on 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.  This standard also requires acquisition-related
transaction expenses and restructuring costs be expensed as incurred rather than
capitalized as a component of the business combination.  The guidance
was effective for the Company on August 1, 2009 and will be applied
prospectively to business combinations.
 
 Amendments to FASB Interpretation,
Consolidation of Variable Interest Entities--In June 2009, the FASB
issued guidance which is included in ASC 810, “Consolidation” (SFAS 167
“Amendments to FASB No. 46(R)”) which amends the consolidation guidance for
variable interest entities.  Under this new standard, entities must
perform a qualitative assessment in determining the primary beneficiary of a
variable interest entity which includes, among other things, consideration as to
whether a variable interest holder has the power to direct the activities that
most significantly impact the economic performance of the variable interest
entity and the obligation to absorb losses or the right to receive benefits of
the variable interest entity that could potentially be significant to the
variable interest entity.  This standard is effective for the Company
beginning August 1, 2010 (the Company’s fiscal year ending July 31,
2011).  The Company is currently evaluating the impacts, if any, the
adoption of this new standard will have on the Company’s financial position or
results of operations.
 
 Revenue Recognition Guidance for
Arrangements with Multiple Deliverables--In September 2009, the FASB
issued Accounting Standards Update (“ASU”) 2009-13, “Multiple-Deliverables
Revenue Arrangements” (amendments to ASC Topic 605, “Revenue Recognition,” and
the Emerging Issues Task Force Issue No. 08-01 “Revenue Arrangements with
Multiple Deliverables”) which amends the revenue recognition guidance for
arrangements with multiple deliverables.  This new standard requires
entities to allocate revenue in arrangements with multiple deliverables using
estimated selling prices and eliminates the use of the residual
method.  The provisions of this new standard are effective for the
Company beginning August 1, 2010 (the Company’s fiscal year ending July 31,
2011); however, early adoption is permitted.  The Company is currently
evaluating the impacts, if any, the adoption of this new standard will have on
the Company’s financial position or results of operations.
 
 3.           Net
Income (Loss) Per Common Share
 
 Basic
earnings per share (“EPS”) excludes dilution and is computed by dividing net
income (loss) attributable to Vail Resorts stockholders by the weighted-average
shares outstanding during the period.  Diluted EPS reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised, resulting in the issuance of shares of common stock
that would then share in the earnings of Vail Resorts.  Presented
below is basic and diluted EPS for the three months ended January 31, 2010 and
2009 (in thousands, except per share amounts):
 
 Three
      Months Ended January 31,2010
              
              2009Basic
              
              Diluted
              
              Basic
              
              DilutedNet
      income per share:Net
      income attributable to Vail Resorts
              
              $
              40,690
              
              
              $
              40,690
              
              
              $
              60,545
              
              
              $
              60,545Weighted-average
      shares outstanding
              
              
              36,245
              
              
              
              36,245
              
              
              
              36,570
              
              
              
              36,570Effect
      of dilutive securities
              
              
              --
              
              
              
              509
              
              
              
              --
              
              
              
              93Total
      shares
              
              
              36,245
              
              
              
              36,754
              
              
              
              36,570
              
              
              
              36,663Net
      income per share attributable to Vail Resorts
              
              $
              1.12
              
              
              $
              1.11
              
              
              $
              1.66
              
              
              $
              1.65
 
 The
number of shares issuable on the exercise of share based awards that were
excluded from the calculation of diluted net income per share because the effect
of their inclusion would have been anti-dilutive totaled 31,000 and 438,000 for
the three months ended January 31, 2010 and 2009, respectively.
 
 Presented
below is basic and diluted EPS for the six months ended January 31, 2010 and
2009 (in thousands, except per share amounts):
 
 Six
      Months Ended January 31,2010
              
              2009Basic
              
              Diluted
              
              Basic
              DilutedNet
      (loss) income per share:Net
      (loss) income attributable to Vail Resorts
              
              $
              (483
              )
              
              $
              (483
              )
              
              $
              26,041
              
              $
              26,041Weighted-average
      shares outstanding
              
              
              36,223
              
              
              
              36,223
              
              
              
              36,728
              
              
              36,728Effect
      of dilutive securities
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              184Total
      shares
              
              
              36,223
              
              
              
              36,223
              
              
              
              36,728
              
              
              36,912Net
      (loss) income per share attributable to Vail Resorts
              
              $
              (0.01
              )
              
              $
              (0.01
              )
              
              $
              0.71
              
              $
              0.71
 
 The
number of shares issuable on the exercise of share based awards that were
excluded from the calculation of diluted net (loss) income per share because the
effect of their inclusion would have been anti-dilutive totaled 1.2 million and
207,000 for the six months ended January 31, 2010 and 2009,
respectively.
 
 4.           Long-Term
Debt
 
 Long-term
debt as of January 31, 2010, July 31, 2009 and January 31, 2009 is summarized as
follows (in thousands):
 
 January
      31,
              July
      31,
              January
      31,Maturity
      (a)
              2010
              2009
              2009Credit
      Facility Revolver
              2012
              $
              --
              $
              --
              $
              --SSV
      Facility
              2011
              
              --
              
              --
              
              --Industrial
      Development Bonds
              2011-2020
              
              42,700
              
              42,700
              
              42,700Employee
      Housing Bonds
              2027-2039
              
              52,575
              
              52,575
              
              52,5756.75%
      Senior Subordinated Notes
              2014
              
              390,000
              
              390,000
              
              390,000Other
              2010-2029
              
              6,460
              
              6,685
              
              6,806Total
      debt
              
              
              491,735
              
              491,960
              
              492,081Less:  Current
      maturities (b)
              
              
              1,870
              
              352
              
              304Long-term
      debt
              
              $
              489,865
              $
              491,608
              $
              491,777
 
 (a)
              Maturities
      are based on the Company's July 31 fiscal year
  end.
 
 (b)
              Current
      maturities represent principal payments due in the next 12
      months.
 
 
 Aggregate
maturities for debt outstanding as of January 31, 2010 reflected by fiscal year
are as follows (in thousands):
 
 2010
              $
              1222011
              
              1,8312012
              
              3052013
              
              3192014
              
              390,219Thereafter
              
              98,939Total
      debt
              $
              491,735
 
 
 
 The
Company incurred gross interest expense of $8.5 million and $8.7 million for the
three months ended January 31, 2010 and 2009, respectively, of which $0.4
million in each period was amortization of deferred financing costs. The Company
capitalized $4.4 million and $1.4 million of interest during the three months
ended January 31, 2010 and 2009, respectively.  The Company incurred
gross interest expense of $16.9 million and $18.4 million for the six months
ended January 31, 2010 and 2009, respectively, of which $0.8 million and $1.2
million, respectively, was amortization of deferred financing costs.  The
Company capitalized $7.9 million and $3.1 million of interest during the six
months ended January 31, 2010 and 2009, respectively.
 
 5.           Supplementary
Balance Sheet Information
 
 The
composition of property, plant and equipment follows (in
thousands):
 
 January
      31,
              
              July
      31,
              
              January
      31,2010
              
              2009
              
              2009Land
      and land improvements
              
              $
              269,248
              
              
              $
              262,255
              
              
              $
              263,922Buildings
      and building improvements
              
              
              738,165
              
              
              
              734,576
              
              
              
              736,730Machinery
      and equipment
              
              
              513,874
              
              
              
              498,912
              
              
              
              499,744Furniture
      and fixtures
              
              
              189,742
              
              
              
              187,316
              
              
              
              175,291Software
              
              
              52,942
              
              
              
              44,584
              
              
              
              43,753Vehicles
              
              
              35,208
              
              
              
              33,991
              
              
              
              34,573Construction
      in progress
              
              
              36,970
              
              
              
              40,724
              
              
              
              27,243Gross
      property, plant and equipment
              
              
              1,836,149
              
              
              
              1,802,358
              
              
              
              1,781,256Accumulated
      depreciation
              
              
              (796,594
              )
              
              
              (744,700
              )
              
              
              (697,225
              )Property,
      plant and equipment, net
              
              $
              1,039,555
              
              
              $
              1,057,658
              
              
              $
              1,084,031
 
 The
composition of accounts payable and accrued liabilities follows (in
thousands):
 
 January
      31,
              
              July
      31,
              
              January
      31,2010
              
              2009
              
              2009Trade
      payables
              
              $
              55,677
              
              
              $
              42,530
              
              
              $
              56,758Real
      estate development payables
              
              
              42,635
              
              
              
              45,681
              
              
              
              38,098Deferred
      revenue
              
              
              83,363
              
              
              
              57,171
              
              
              
              80,762Deferred
      real estate and other deposits
              
              
              64,279
              
              
              
              21,637
              
              
              
              30,104Accrued
      salaries, wages and deferred compensation
              
              
              21,404
              
              
              
              15,202
              
              
              
              18,578Accrued
      benefits
              
              
              24,974
              
              
              
              23,496
              
              
              
              25,118Accrued
      interest
              
              
              13,788
              
              
              
              14,002
              
              
              
              13,910Liabilities
      to complete real estate projects, short term
              
              
              1,970
              
              
              
              3,972
              
              
              
              6,950Other
      accruals
              
              
              31,166
              
              
              
              21,845
              
              
              
              31,840Total
      accounts payable and accrued liabilities
              
              $
              339,256
              
              
              $
              245,536
              
              
              $
              302,118
 
 The
composition of other long-term liabilities follows (in thousands):
 
 January
      31,
              
              July
      31,
              
              January
      31,2010
              
              2009
              
              2009Private
      club deferred initiation fee revenue and deposits
              
              $
              150,980
              
              
              $
              153,265
              
              
              $
              155,195Deferred
      real estate deposits
              
              
              --
              
              
              
              32,792
              
              
              
              46,240Other
      long-term liabilities
              
              
              46,779
              
              
              
              47,112
              
              
              
              20,379Total
      other long-term liabilities
              
              $
              197,759
              
              
              $
              233,169
              
              
              $
              221,814
 
 
 6.           Variable
Interest Entities
 
 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
January 31, 2010, the Employee Housing Entities had total assets of $34.8
million (primarily recorded in property, plant and equipment, net) and total
liabilities of $62.4 million (primarily recorded in long-term debt as “Employee
Housing Bonds”).  The Company’s lenders have issued letters of credit
totaling $53.4 million under the Company’s senior credit facility (the “Credit
Facility”) related to Employee Housing Bonds.  Payments under the
letters of credit would be triggered in the event that one of the entities
defaults on required payments.  The letters of credit have no default
provisions.
 
 The
Company is the primary beneficiary of Avon Partners II, LLC (“APII”), which is a
VIE.  APII owns commercial space and the Company currently leases
substantially all of that space.  APII had total assets of $5.5
million (primarily recorded in property, plant and equipment, net) and no debt
as of January 31, 2010.
 
 The
Company, through various lodging subsidiaries, manages hotels in which the
Company has no ownership interest in the entities that own such hotels. The
Company has extended a $2.0 million note receivable to one of these entities.
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 seven hotel properties as of January 31,
2010.  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 $2.4 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 January 31, 2010.
 
 7.           Fair
Value Measurements
 
 The FASB
issued fair value guidance that establishes how reporting entities should
measure fair value for measurement and disclosure purposes.  The
guidance establishes a common definition of fair value applicable to all assets
and liabilities measured at fair value and prioritizes the inputs into valuation
techniques used to measure fair value.  Accordingly, the Company uses
valuation techniques which maximize the use of observable inputs and minimize
the use of unobservable inputs when determining fair value.  The three
levels of the hierarchy are as follows:
 
 Level 1:
Inputs that reflect unadjusted quoted prices in active markets that are
accessible to the Company for identical assets or liabilities;
 
 Level 2:
Inputs include quoted prices for similar assets and liabilities in active and
inactive markets or that are observable for the asset or liability either
directly or indirectly; and
 
 Level 3:
Unobservable inputs which are supported by little or no market
activity.
 
 The table
below summarizes the Company’s cash equivalents measured at fair value (all
other assets and liabilities measured at fair value are immaterial) (in
thousands):
 
 Fair
      Value Measurements at
              January
      31,
              
              July
      31,
              
              January
      31,Reporting
      Date Using
              2010
              
              2009
              
              2009Level
      1
              $
              8,698
              
              
              $
              47,915
              
              
              $
              93,036Level
      2
              
              300
              
              
              
              13,300
              
              
              
              18,500Level
      3
              
              --
              
              
              
              --
              
              
              
              --Total
              $
              8,998
              
              
              $
              61,215
              
              
              $
              111,536
 
 The
Company’s cash equivalents include money market funds, U.S. government debt
securities and time deposits.
 
 8.           Redeemable
Noncontrolling Interest
 
 The
Company holds an approximate 69.3% ownership interest in
SSV.  Additionally, the Company holds call rights and GSSI LLC
(“GSSI”), the noncontrolling interest holder in SSV, holds put rights for the
remaining interest in SSV beginning August 1, 2010, as further discussed below,
and GSSI has a management agreement which extends to coincide with the exercise
of the put and call rights.
 
 The
Company’s and GSSI’s put and call rights are as follows: (i) beginning August 1,
2010 and each year thereafter, each of the Company and GSSI has the right to
call or put, respectively, 100% of GSSI's ownership interest in SSV to the
Company during certain periods each year and (ii) GSSI has the right to put to
the Company 100% of its ownership interest in SSV at any time after GSSI has
been removed as manager of SSV or after an involuntary transfer of the Company's
ownership interest in SSV has occurred.  The put and call pricing is
generally based on a multiple of the trailing twelve month EBITDA (as defined in
the operating agreement) of SSV for the fiscal period ended prior to the
commencement of the put or call period, as applicable.
 
 Since
GSSI's remaining interest in SSV has a redemption feature, as a result of the
put option, the Company has classified the redeemable noncontrolling interest in
SSV in the mezzanine section in the Consolidated Condensed Balance Sheets,
outside of stockholders' equity.  The Company has recorded the
redeemable noncontrolling interest at the redemption value as prescribed in the
operating agreement at the end of each reporting period.  At the end
of each reporting period if the redemption value is below the carrying value of
the noncontrolling interest, the difference is recorded in noncontrolling
interests as a component of stockholders’ equity; however, if the redemption
value exceeds the carrying value of the noncontrolling interest the difference
is recorded in retained earnings.  As of January 31, 2010, July 31,
2009 and January 31, 2009, the redemption value of the put/call option for the
remaining noncontrolling interest was $21.3 million, $15.4 million and $ 25.5
million, respectively.
 
 9.           Commitments
and Contingencies
 
 Metropolitan
Districts
 
 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
under 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
$1.8 million, $1.9 million and $1.5 million, primarily within “other long-term
liabilities” in the accompanying Consolidated Condensed Balance Sheets, as of
January 31, 2010, July 31, 2009 and January 31, 2009, 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,
2028.
 
 Guarantees
 
 As of
January 31, 2010, the Company had various other letters of credit in the amount
of $85.3 million, consisting primarily of $53.4 million in support of the
Employee Housing Bonds, $25.8 million of construction and development related
guarantees and $5.3 million for workers’ compensation and general liability
deductibles related to construction and development activities.
 
 In
addition to the guarantees noted above, the Company has entered into contracts
in the normal course of business which include certain indemnifications under
which it could be required to make payments to third parties upon the occurrence
or non-occurrence of certain future events.  These indemnities include
indemnities to licensees in connection with the licensees’ use of the Company’s
trademarks and logos, indemnities for liabilities associated with the
infringement of other parties’ technology and software products, indemnities
related to liabilities associated with the use of easements, indemnities related
to employment of contract workers, the Company’s use of trustees, indemnities
related to the Company’s use of public lands and environmental
indemnifications.  The duration of these indemnities generally is
indefinite and generally do not limit the future payments the Company could be
obligated to make.
 
 As
permitted under applicable law, the Company and certain of its subsidiaries
indemnify their directors and officers over their lifetimes for certain events
or occurrences while the officer or director is, or was, serving the Company or
its subsidiaries in such a capacity.  The maximum potential amount of
future payments the Company could be required to make under these
indemnification agreements is unlimited; however, the Company has a director and
officer insurance policy that should enable the Company to recover a portion of
any future amounts paid.
 
 Unless
otherwise noted, the Company has not recorded any significant liabilities for
the letters of credit, indemnities and other guarantees noted above in the
accompanying Consolidated Condensed Financial Statements, either because the
Company has recorded on its Consolidated Condensed Balance Sheets the underlying
liability associated with the guarantee, the guarantee is with respect to the
Company’s own performance and is therefore not subject to the measurement
requirements as prescribed by GAAP, or because the Company has calculated the
fair value of the indemnification or guarantee to be immaterial based upon the
current facts and circumstances that would trigger a payment under the
indemnification clause.  In addition, with respect to certain
indemnifications it is not possible to determine the maximum potential amount of
liability under these guarantees due to the unique set of facts and
circumstances that are likely to be involved in each particular claim and
indemnification provision.  Historically, payments made by the Company
under these obligations have not been material.
 
 As noted
above, the Company makes certain indemnifications to licensees in connection
with their use of the Company’s trademarks and logos.  The Company
does not record any liabilities with respect to these
indemnifications.
 
 Self
Insurance
 
 The
Company is self-insured for claims under its health benefit plans and for the
majority of 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).
 
 Legal
 
 The
Company is a party to various lawsuits arising in the ordinary course of
business.  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 January 31, 2010,
July 31, 2009 and January 31, 2009 the accrual for the above loss contingencies
was not material individually and in the aggregate.
 
 10.           Segment
Information
 
 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 services.  The Lodging segment
includes the operations of all of the Company’s owned hotels, RockResorts, GTLC,
condominium management, CME and golf operations.  The Real Estate
segment owns and develops real estate in and around the Company’s resort
communities.  The Company’s reportable segments, although integral to
the success of the others, offer distinctly different products and services and
require different types of management focus.  As such, these segments
are managed separately.
  The
Company reports its segment results using Reported EBITDA (defined as segment
net revenue less segment operating expenses, plus or minus segment equity
investment income or loss and for the Real Estate segment plus gain on sale of
real property), which is a non-GAAP financial measure.  The Company
reports segment results in a manner consistent with management’s internal
reporting of operating results to the chief operating decision maker (Chief
Executive Officer) for purposes of evaluating segment performance.
 
 Reported
EBITDA is not a measure of financial performance under GAAP.  Items
excluded from Reported EBITDA are significant components in understanding and
assessing financial performance.  Reported EBITDA should not be
considered in isolation or as an alternative to, or substitute for, net income
(loss), 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.
 
 Following
is key financial information by reportable segment which is used by management
in evaluating performance and allocating resources (in thousands):
 
 Three
      Months Ended
              
              Six
      Months EndedJanuary
      31,
              
              January
      31,2010
              
              2009
              
              2010
              
              2009Net
      revenue:Lift
      tickets
              $
              129,517
              
              
              $
              127,158
              
              
              $
              129,517
              
              
              $
              127,158Ski
      school
              
              30,069
              
              
              
              28,962
              
              
              
              30,069
              
              
              
              28,962Dining
              
              19,789
              
              
              
              20,281
              
              
              
              23,257
              
              
              
              24,210Retail/rental
              
              61,026
              
              
              
              59,238
              
              
              
              82,564
              
              
              
              81,664Other
              
              20,577
              
              
              
              22,850
              
              
              
              34,775
              
              
              
              37,273Total
      Mountain net revenue
              
              260,978
              
              
              
              258,489
              
              
              
              300,182
              
              
              
              299,267Lodging
              
              38,676
              
              
              
              41,150
              
              
              
              80,031
              
              
              
              86,403Total
      Resort net revenue
              
              299,654
              
              
              
              299,639
              
              
              
              380,213
              
              
              
              385,670Real
      Estate
              
              870
              
              
              
              89,157
              
              
              
              1,075
              
              
              
              155,907Total
      net revenue
              $
              300,524
              
              
              $
              388,796
              
              
              $
              381,288
              
              
              $
              541,577Operating
      expense:Mountain
              $
              154,018
              
              
              $
              156,188
              
              
              $
              230,486
              
              
              $
              237,411Lodging
              
              37,788
              
              
              
              38,697
              
              
              
              80,411
              
              
              
              83,595Total
      Resort operating expense
              
              191,806
              
              
              
              194,885
              
              
              
              310,897
              
              
              
              321,006Real
      estate
              
              7,417
              
              
              
              59,508
              
              
              
              12,594
              
              
              
              110,885Total
      segment operating expense
              $
              199,223
              
              
              $
              254,393
              
              
              $
              323,491
              
              
              $
              431,891Gain
      on sale of real property
              $
              --
              
              
              $
              --
              
              
              $
              6,087
              
              
              $
              --Mountain
      equity investment income, net
              $
              207
              
              
              $
              1,161
              
              
              $
              461
              
              
              $
              2,176Reported
      EBITDA:Mountain
              $
              107,167
              
              
              $
              103,462
              
              
              $
              70,157
              
              
              $
              64,032Lodging
              
              888
              
              
              
              2,453
              
              
              
              (380
              )
              
              
              2,808Resort
              
              108,055
              
              
              
              105,915
              
              
              
              69,777
              
              
              
              66,840Real
      Estate
              
              (6,547
              )
              
              
              29,649
              
              
              
              (5,432
              )
              
              
              45,022Total
      Reported EBITDA
              $
              101,508
              
              
              $
              135,564
              
              
              $
              64,345
              
              
              $
              111,862Real
      estate held for sale and investment
              $
              414,501
              
              
              $
              247,329
              
              
              $
              414,501
              
              
              $
              247,329Reconciliation
      to net income (loss) attributable to Vail Resorts, Inc:Total
      Reported EBITDA
              $
              101,508
              
              
              $
              135,564
              
              
              $
              64,345
              
              
              $
              111,862Depreciation
      and amortization
              
              (27,772
              )
              
              
              (27,438
              )
              
              
              (54,956
              )
              
              
              (52,516
              )Gain
      (loss) on disposal of fixed assets, net
              
              12
              
              
              
              (422
              )
              
              
              (101
              )
              
              
              (602
              )Investment
      income
              
              192
              
              
              
              336
              
              
              
              422
              
              
              
              979Interest
      expense, net
              
              (4,148
              )
              
              
              (7,295
              )
              
              
              (8,983
              )
              
              
              (15,242
              )Income
      before (provision) benefit for income taxes
              
              69,792
              
              
              
              100,745
              
              
              
              727
              
              
              
              44,481(Provision)
      benefit for income taxes
              
              (24,713
              )
              
              
              (36,412
              )
              
              
              841
              
              
              
              (17,003
              )Net
      income
              $
              45,079
              
              
              $
              64,333
              
              
              $
              1,568
              
              
              $
              27,478Net
      income attributable to noncontrolling interests
              
              (4,389
              )
              
              
              (3,788
              )
              
              
              (2,051
              )
              
              
              (1,437
              )Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              40,690
              
              
              $
              60,545
              
              
              $
              (483
              )
              
              $
              26,041
 
 11.           Stock
Repurchase Plan
 
 On March
9, 2006, the Company’s Board of Directors approved the repurchase of up to
3,000,000 shares of common stock and on July 16, 2008 approved an increase of
the Company’s common stock repurchase authorization by an additional 3,000,000
shares.  The Company did not repurchase any shares of common stock
during the three and six months ended January 31, 2010.  Since
inception of its stock repurchase plan through January 31, 2010, the Company has
repurchased 3,878,535 shares at a cost of approximately $147.8
million.  As of January 31, 2010, 2,121,465 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.
  12.           Guarantor
Subsidiaries and Non-Guarantor Subsidiaries
 
 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 January 31,
2010, July 31, 2009 and January 31, 2009.  Statements of operations
are presented for the three and six months ended January 31, 2010 and
2009.  Statements of cash flows are presented for the six months ended
January 31, 2010 and 2009.
 
 Investments
in subsidiaries are accounted for by the Parent Company and Guarantor
Subsidiaries using the equity method of accounting.  Net income (loss)
of Guarantor and 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 SheetAs
      of January 31, 2010(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              Other
              
              
              EliminatingCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              Entries
              
              
              ConsolidatedCurrent
      assets:Cash
      and cash equivalents
              $
              --
              
              $
              51,783
              
              $
              6,225
              
              $
              --
              
              $
              58,008Restricted
      cash
              
              --
              
              
              14,916
              
              
              616
              
              
              --
              
              
              15,532Trade
      receivables, net
              
              --
              
              
              41,054
              
              
              4,312
              
              
              --
              
              
              45,366Inventories,
      net
              
              --
              
              
              10,467
              
              
              41,174
              
              
              --
              
              
              51,641Other
      current assets
              
              23,754
              
              
              25,752
              
              
              2,178
              
              
              --
              
              
              51,684Total
      current assets
              
              23,754
              
              
              143,972
              
              
              54,505
              
              
              --
              
              
              222,231Property,
      plant and equipment, net
              
              --
              
              
              978,079
              
              
              61,476
              
              
              --
              
              
              1,039,555Real
      estate held for sale and investment
              
              --
              
              
              414,501
              
              
              --
              
              
              --
              
              
              414,501Goodwill,
      net
              
              --
              
              
              148,702
              
              
              19,248
              
              
              --
              
              
              167,950Intangible
      assets, net
              
              --
              
              
              63,321
              
              
              15,846
              
              
              --
              
              
              79,167Other
      assets
              
              2,871
              
              
              24,793
              
              
              4,997
              
              
              --
              
              
              32,661Investments
      in subsidiaries and advances to (from) parent
              
              1,299,947
              
              
              310,835
              
              
              (3,990
              )
              
              (1,606,792
              )
              
              --Total
      assets
              $
              1,326,572
              
              $
              2,084,203
              
              $
              152,082
              
              $
              (1,606,792
              )
              $
              1,956,065Current
      liabilities:Accounts
      payable and accrued liabilities
              $
              12,404
              
              $
              304,522
              
              $
              22,330
              
              $
              --
              
              $
              339,256Income
      taxes payable
              
              10,482
              
              
              --
              
              
              --
              
              
              --
              
              
              10,482Long-term
      debt due within one year
              
              --
              
              
              1,510
              
              
              360
              
              
              --
              
              
              1,870Total
      current liabilities
              
              22,886
              
              
              306,032
              
              
              22,690
              
              
              --
              
              
              351,608Long-term
      debt
              
              390,000
              
              
              41,214
              
              
              58,651
              
              
              --
              
              
              489,865Other
      long-term liabilities
              
              29,690
              
              
              165,601
              
              
              2,468
              
              
              --
              
              
              197,759Deferred
      income taxes
              
              113,808
              
              
              --
              
              
              --
              
              
              --
              
              
              113,808Redeemable
      noncontrolling interest
              
              --
              
              
              --
              
              
              21,318
              
              
              --
              
              
              21,318Total
      Vail Resorts, Inc. stockholders’ equity
              
              770,188
              
              
              1,571,356
              
              
              35,436
              
              
              (1,606,792
              )
              
              770,188Noncontrolling
      interests
              
              --
              
              
              --
              
              
              11,519
              
              
              --
              
              
              11,519Total
      stockholders’ equity
              
              770,188
              
              
              1,571,356
              
              
              46,955
              
              
              (1,606,792
              )
              
              781,707Total
      liabilities and stockholders' equity
              $
              1,326,572
              
              $
              2,084,203
              
              $
              152,082
              
              $
              (1,606,792
              )
              $
              1,956,065
 
  
 
  Supplemental
Condensed Consolidating Balance Sheet
 As
of July 31, 2009
 (in
thousands)
 
 100%
      OwnedParent
              
              Guarantor
              
              Other
              
              EliminatingCompany
              
              Subsidiaries
              
              Subsidiaries
              
              Entries
              
              ConsolidatedCurrent
      assets:Cash
      and cash equivalents
              
              $
              --
              
              
              $
              66,364
              
              
              $
              2,934
              
              
              $
              --
              
              
              $
              69,298Restricted
      cash
              
              
              --
              
              
              
              11,065
              
              
              
              --
              
              
              
              --
              
              
              
              11,065Trade
      receivables, net
              
              
              --
              
              
              
              56,834
              
              
              
              1,229
              
              
              
              --
              
              
              
              58,063Inventories,
      net
              
              
              --
              
              
              
              11,895
              
              
              
              37,052
              
              
              
              --
              
              
              
              48,947Other
      current assets
              
              
              21,333
              
              
              
              18,407
              
              
              
              1,875
              
              
              
              --
              
              
              
              41,615Total
      current assets
              
              
              21,333
              
              
              
              164,565
              
              
              
              43,090
              
              
              
              --
              
              
              
              228,988Property,
      plant and equipment, net
              
              
              --
              
              
              
              991,027
              
              
              
              66,631
              
              
              
              --
              
              
              
              1,057,658Real
      estate held for sale and investment
              
              
              --
              
              
              
              311,485
              
              
              
              --
              
              
              
              --
              
              
              
              311,485Goodwill,
      net
              
              
              --
              
              
              
              148,702
              
              
              
              19,248
              
              
              
              --
              
              
              
              167,950Intangible
      assets, net
              
              
              --
              
              
              
              63,580
              
              
              
              15,849
              
              
              
              --
              
              
              
              79,429Other
      assets
              
              
              3,226
              
              
              
              30,710
              
              
              
              5,034
              
              
              
              --
              
              
              
              38,970Investments
      in subsidiaries and advances to (from) parent
              
              
              1,290,532
              
              
              
              307,124
              
              
              
              (15,179
              )
              
              
              (1,582,477
              )
              
              
              --Total
      assets
              
              $
              1,315,091
              
              
              $
              2,017,193
              
              
              $
              134,673
              
              
              $
              (1,582,477
              )
              
              $
              1,884,480Current
      liabilities:Accounts
      payable and accrued liabilities
              
              $
              12,412
              
              
              $
              214,021
              
              
              $
              19,103
              
              
              $
              --
              
              
              $
              245,536Income
      taxes payable
              
              
              5,460
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              5,460Long-term
      debt due within one year
              
              
              --
              
              
              
              9
              
              
              
              343
              
              
              
              --
              
              
              
              352Total
      current liabilities
              
              
              17,872
              
              
              
              214,030
              
              
              
              19,446
              
              
              
              --
              
              
              
              251,348Long-term
      debt
              
              
              390,000
              
              
              
              42,716
              
              
              
              58,892
              
              
              
              --
              
              
              
              491,608Other
      long-term liabilities
              
              
              29,690
              
              
              
              200,974
              
              
              
              2,505
              
              
              
              --
              
              
              
              233,169Deferred
      income taxes
              
              
              112,234
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              112,234Redeemable
      noncontrolling interest
              
              
              --
              
              
              
              --
              
              
              
              15,415
              
              
              
              --
              
              
              
              15,415Total
      Vail Resorts, Inc. stockholders’ equity
              
              
              765,295
              
              
              
              1,559,473
              
              
              
              23,004
              
              
              
              (1,582,477
              )
              
              
              765,295Noncontrolling
      interests
              
              
              --
              
              
              
              --
              
              
              
              15,411
              
              
              
              --
              
              
              
              15,411Total
      stockholders’ equity
              
              
              765,295
              
              
              
              1,559,473
              
              
              
              38,415
              
              
              
              (1,582,477
              )
              
              
              780,706Total
      liabilities and stockholders’ equity
              
              $
              1,315,091
              
              
              $
              2,017,193
              
              
              $
              134,673
              
              
              $
              (1,582,477
              )
              
              $
              1,884,480
 
 
 
 
 Supplemental
Condensed Consolidating Balance Sheet
 As
of January 31, 2009
 (in
thousands)
 (Unaudited)
 
 
 100%
      OwnedParent
              
              Guarantor
              
              Other
              
              EliminatingCompany
              
              Subsidiaries
              
              Subsidiaries
              
              Entries
              
              ConsolidatedCurrent
      assets:Cash
      and cash equivalents
              
              $
              --
              
              
              $
              135,264
              
              
              $
              3,908
              
              
              $
              --
              
              
              $
              139,172Restricted
      cash
              
              
              --
              
              
              
              14,268
              
              
              
              335
              
              
              
              --
              
              
              
              14,603Trade
      receivables, net
              
              
              --
              
              
              
              46,253
              
              
              
              4,242
              
              
              
              --
              
              
              
              50,495Inventories,
      net
              
              
              --
              
              
              
              11,079
              
              
              
              41,110
              
              
              
              --
              
              
              
              52,189Other
      current assets
              
              
              17,129
              
              
              
              19,655
              
              
              
              2,328
              
              
              
              --
              
              
              
              39,112Total
      current assets
              
              
              17,129
              
              
              
              226,519
              
              
              
              51,923
              
              
              
              --
              
              
              
              295,571Property,
      plant and equipment, net
              
              
              --
              
              
              
              1,014,366
              
              
              
              69,665
              
              
              
              --
              
              
              
              1,084,031Real
      estate held for sale and investment
              
              
              --
              
              
              
              247,329
              
              
              
              --
              
              
              
              --
              
              
              
              247,329Goodwill,
      net
              
              
              --
              
              
              
              148,702
              
              
              
              19,248
              
              
              
              --
              
              
              
              167,950Intangible
      assets, net
              
              
              --
              
              
              
              63,933
              
              
              
              15,852
              
              
              
              --
              
              
              
              79,785Other
      assets
              
              
              3,581
              
              
              
              34,284
              
              
              
              5,066
              
              
              
              --
              
              
              
              42,931Investments
      in subsidiaries and advances to (from) parent
              
              
              1,252,220
              
              
              
              358,925
              
              
              
              (20,886
              )
              
              
              (1,590,259
              )
              
              
              --Total
      assets
              
              $
              1,272,930
              
              
              $
              2,094,058
              
              
              $
              140,868
              
              
              $
              (1,590,259
              )
              
              $
              1,917,597Current
      liabilities:Accounts
      payable and accrued liabilities
              
              $
              12,507
              
              
              $
              266,525
              
              
              $
              23,086
              
              
              $
              --
              
              
              $
              302,118Income
      taxes payable
              
              
              33,315
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              33,315Long-term
      debt due within one year
              
              
              --
              
              
              
              11
              
              
              
              293
              
              
              
              --
              
              
              
              304Total
      current liabilities
              
              
              45,822
              
              
              
              266,536
              
              
              
              23,379
              
              
              
              --
              
              
              
              335,737Long-term
      debt
              
              
              390,000
              
              
              
              42,720
              
              
              
              59,057
              
              
              
              --
              
              
              
              491,777Other
      long-term liabilities
              
              
              3,142
              
              
              
              215,861
              
              
              
              2,811
              
              
              
              --
              
              
              
              221,814Deferred
      income taxes
              
              
              93,469
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              93,469Redeemable
      noncontrolling interest
              
              
              --
              
              
              
              --
              
              
              
              25,455
              
              
              
              --
              
              
              
              25,455Total
      Vail Resorts, Inc. stockholders’ equity
              
              
              740,497
              
              
              
              1,568,941
              
              
              
              21,318
              
              
              
              (1,590,259
              )
              
              
              740,497Noncontrolling
      interests
              
              
              --
              
              
              
              --
              
              
              
              8,848
              
              
              
              --
              
              
              
              8,848Total
      stockholders’ equity
              
              
              740,497
              
              
              
              1,568,941
              
              
              
              30,166
              
              
              
              (1,590,259
              )
              
              
              749,345Total
      liabilities and stockholders’ equity
              
              $
              1,272,930
              
              
              $
              2,094,058
              
              
              $
              140,868
              
              
              $
              (1,590,259
              )
              
              $
              1,917,597
  
  Supplemental
      Condensed Consolidating Statement of OperationsFor
      the three months ended January 31, 2010(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              Other
              
              
              EliminatingCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Entries
              
              
              ConsolidatedTotal
      net revenue
              $
              --
              
              $
              238,757
              
              $
              64,327
              
              $
              (2,560
              )
              $
              300,524Total
      operating expense
              
              158
              
              
              179,433
              
              
              49,914
              
              
              (2,522
              )
              
              226,983(Loss)
      income from operations
              
              (158
              )
              
              59,324
              
              
              14,413
              
              
              (38
              )
              
              73,541Other
      (expense) income, net
              
              (6,760
              )
              
              2,876
              
              
              (110
              )
              
              38
              
              
              (3,956
              )Equity
      investment income, net
              
              --
              
              
              207
              
              
              --
              
              
              --
              
              
              207(Loss)
      income before benefit (provision) for income taxes
              
              (6,918
              )
              
              62,407
              
              
              14,303
              
              
              --
              
              
              69,792Benefit
      (provision) for income taxes
              
              3,033
              
              
              (27,746
              )
              
              --
              
              
              --
              
              
              (24,713
              )Net
      (loss) income before equity in income (loss)of
      consolidated subsidiaries
              
              (3,885
              )
              
              34,661
              
              
              14,303
              
              
              --
              
              
              45,079Equity
      in income (loss) of consolidated subsidiaries
              
              44,575
              
              
              9,914
              
              
              --
              
              
              (54,489
              )
              
              --Net
      income (loss)
              
              40,690
              
              
              44,575
              
              
              14,303
              
              
              (54,489
              )
              
              45,079Net
      income attributable to noncontrolling interests
              
              --
              
              
              --
              
              
              (4,389
              )
              
              --
              
              
              (4,389
              )Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              40,690
              
              $
              44,575
              
              $
              9,914
              
              $
              (54,489
              )
              $
              40,690
  
  Supplemental
      Condensed Consolidating Statement of OperationsFor
      the three months ended January 31, 2009(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              Other
              
              
              EliminatingCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Entries
              
              
              ConsolidatedTotal
      net revenue
              $
              --
              
              $
              343,277
              
              $
              48,386
              
              $
              (2,867
              )
              $
              388,796Total
      operating expense
              
              98
              
              
              245,356
              
              
              39,628
              
              
              (2,829
              )
              
              282,253(Loss)
      income from operations
              
              (98
              )
              
              97,921
              
              
              8,758
              
              
              (38
              )
              
              106,543Other
      (expense) income, net
              
              (6,757
              )
              
              326
              
              
              (566
              )
              
              38
              
              
              (6,959
              )Equity
      investment income, net
              
              --
              
              
              1,161
              
              
              --
              
              
              --
              
              
              1,161(Loss)
      income before benefit (provision) for income taxes
              
              (6,855
              )
              
              99,408
              
              
              8,192
              
              
              --
              
              
              100,745Benefit
      (provision) for income taxes
              
              2,951
              
              
              (39,360
              )
              
              (3
              )
              
              --
              
              
              (36,412
              )Net
      (loss)  income before equity in income (loss)of
      consolidated subsidiaries
              
              (3,904
              )
              
              60,048
              
              
              8,189
              
              
              --
              
              
              64,333Equity
      in income (loss) of consolidated subsidiaries, net
              
              64,449
              
              
              (4,942
              )
              
              --
              
              
              (59,507
              )
              
              --Net
      income (loss)
              
              60,545
              
              
              55,106
              
              
              8,189
              
              
              (59,507
              )
              
              64,333Net
      income attributable to noncontrolling interests
              
              --
              
              
              --
              
              
              (3,788
              )
              
              --
              
              
              (3,788
              )Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              60,545
              
              $
              55,106
              
              $
              4,401
              
              $
              (59,507
              )
              $
              60,545
 
 
 
 
  
  Supplemental
      Condensed Consolidating Statement of OperationsFor
      the six months ended January 31, 2010(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              Other
              
              
              EliminatingCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Entries
              
              
              ConsolidatedTotal
      net revenue
              $
              --
              
              $
              298,577
              
              $
              87,302
              
              $
              (4,591
              )
              $
              381,288Total
      operating expense
              
              320
              
              
              295,150
              
              
              81,506
              
              
              (4,515
              )
              
              372,461(Loss)
      income from operations
              
              (320
              )
              
              3,427
              
              
              5,796
              
              
              (76)
              
              
              8,827Other
      (expense) income, net
              
              (13,518
              )
              
              5,381
              
              
              (500
              )
              
              76
              
              
              (8,561
              )Equity
      investment income, net
              
              
              
              
              461
              
              
              --
              
              
              --
              
              
              461(Loss)
      income before benefit (provision) for income taxes
              
              (13,838
              )
              
              9,269
              
              
              5,296
              
              
              --
              
              
              727Benefit
      (provision) for income taxes
              
              5,594
              
              
              (4,753
              )
              
              --
              
              
              --
              
              
              841Net
      (loss) income before equity in income (loss)of
      consolidated subsidiaries
              
              (8,244
              )
              
              4,516
              
              
              5,296
              
              
              --
              
              
              1,568Equity
      in income (loss) of consolidated subsidiaries, net
              
              7,761
              
              
              3,245
              
              
              --
              
              
              (11,006
              )
              
              --Net
      (loss) income
              
              (483
              )
              
              7,761
              
              
              5,296
              
              
              (11,006
              )
              
              1,568Net
      income attributable to noncontrolling interests
              
              --
              
              
              --
              
              
              (2,051
              )
              
              --
              
              
              (2,051
              )Net
      (loss) income attributable to Vail Resorts, Inc.
              $
              (483
              )
              $
              7,761
              
              $
              3,245
              
              $
              (11,006
              )
              $
              (483
              )
 
 
  
  Supplemental
      Condensed Consolidating Statement of OperationsFor
      the six months ended January 31, 2009(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              Other
              
              
              EliminatingCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              Entries
              
              
              ConsolidatedTotal
      net revenue
              $
              --
              
              $
              460,445
              
              $
              87,224
              
              $
              (6,092
              )
              $
              541,577Total
      operating expense
              
              267
              
              
              407,513
              
              
              83,245
              
              
              (6,016
              )
              
              485,009(Loss)
      income from operations
              
              (267
              )
              
              52,932
              
              
              3,979
              
              
              (76
              )
              
              56,568Other
      (expense) income, net
              
              (13,518
              )
              
              794
              
              
              (1,615
              )
              
              76
              
              
              (14,263
              )Equity
      investment income, net
              
              --
              
              
              2,176
              
              
              --
              
              
              --
              
              
              2,176(Loss)
      income before benefit (provision) for income taxes
              
              (13,785
              )
              
              55,902
              
              
              2,364
              
              
              --
              
              
              44,481Benefit
      (provision) for income taxes
              
              5,445
              
              
              (22,442
              )
              
              (6
              )
              
              --
              
              
              (17,003
              )Net
      (loss) income before equity in income (loss)of
      consolidated subsidiaries
              
              (8,340
              )
              
              33,460
              
              
              2,358
              
              
              --
              
              
              27,478Equity
      in income (loss) of consolidated subsidiaries, net
              
              34,381
              
              
              921
              
              
              --
              
              
              (35,302
              )
              
              --Net
      income (loss)
              
              26,041
              
              
              34,381
              
              
              2,358
              
              
              (35,302
              )
              
              27,478Net
      income attributable to noncontrolling interests
              
              --
              
              
              --
              
              
              (1,437
              )
              
              --
              
              
              (1,437
              )Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              26,041
              
              $
              34,381
              
              $
              921
              
              $
              (35,302
              )
              $
              26,041
 
 
 
 
  
  Supplemental
      Condensed Consolidating Statement of Cash FlowsFor
      the six months ended January 31, 2010(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              OtherCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              ConsolidatedNet
      cash (used in) provided by operating activities
              $
              (4,108
              )
              $
              15,183
              
              $
              3,056
              
              $
              14,131Cash
      flows from investing activities:Capital
      expenditures
              
              --
              
              
              (33,761
              )
              
              (2,484
              )
              
              (36,245
              )Cash
      received from sale of real property
              
              --
              
              
              8,920
              
              
              --
              
              
              8,920Other
      investing activities, net
              
              --
              
              
              (400
              )
              
              166
              
              
              (234
              )Net
      cash used in investing activities
              
              --
              
              
              (25,241
              )
              
              (2,318
              )
              
              (27,559
              )Cash
      flows from financing activities:Proceeds
      from borrowings under other long-term debt
              
              --
              
              
              60,000
              
              
              25,962
              
              
              85,962Payments
      of other long-term debt
              
              --
              
              
              (60,000
              )
              
              (26,188
              )
              
              (86,188
              )Other
      financing activities, net
              
              294
              
              
              (709
              )
              
              2,779
              
              
              2,364Advances
      from (to) affiliates
              
              3,814
              
              
              (3,814
              )
              
              --
              
              
              --Net
      cash provided by (used in) financing activities
              
              4,108
              
              
              (4,523
              )
              
              2,553
              
              
              2,138Net
      (decrease) increase in cash and cash equivalents
              
              --
              
              
              (14,581
              )
              
              3,291
              
              
              (11,290
              )Cash
      and cash equivalents:Beginning
      of period
              
              --
              
              
              66,364
              
              
              2,934
              
              
              69,298End
      of period
              $
              --
              
              $
              51,783
              
              $
              6,225
              
              $
              58,008
 
 
 
 Supplemental
      Condensed Consolidating Statement of Cash FlowsFor
      the six months ended January 31, 2009(in
      thousands)(Unaudited)100%
      OwnedParent
              
              
              Guarantor
              
              
              OtherCompany
              
              
              Subsidiaries
              
              
              Subsidiaries
              
              
              ConsolidatedNet
      cash (used in) provided by operating activities
              $
              (16,952
              )
              $
              186,007
              
              $
              (2,391
              )
              $
              166,664Cash
      flows from investing activities:Capital
      expenditures
              
              --
              
              
              (71,551
              )
              
              (6,009
              )
              
              (77,560
              )Acquisition
      of business
              
              --
              
              
              (38,170
              )
              
              --
              
              
              (38,170
              )Other
      investing activities, net
              
              --
              
              
              (740
              )
              
              323
              
              
              (417
              )Net
      cash used in investing activities
              
              --
              
              
              (110,461
              )
              
              (5,686
              )
              
              (116,147
              )Cash
      flows from financing activities:Repurchases
      of common stock
              
              (14,872
              )
              
              --
              
              
              --
              
              
              (14,872
              )Proceeds
      from borrowings under non-recourse real estate financings
              
              --
              
              
              9,013
              
              
              --
              
              
              9,013Payments
      of non-recourse real estate financings
              
              --
              
              
              (58,407
              )
              
              --
              
              
              (58,407
              )Proceeds
      from borrowings under other long-term debt
              
              --
              
              
              --
              
              
              55,782
              
              
              55,782Payments
      of other long-term debt
              
              --
              
              
              (15,014
              )
              
              (55,999
              )
              
              (71,013
              )Other
      financing activities, net
              
              (213
              )
              
              4,428
              
              
              1,592
              
              
              5,807Advances
      from (to) affiliates
              
              32,037
              
              
              (37,084
              )
              
              5,047
              
              
              --Net
      cash provided by (used in) financing activities
              
              16,952
              
              
              (97,064
              )
              
              6,422
              
              
              (73,690
              )Net
      decrease in cash and cash equivalents
              
              --
              
              
              (21,518
              )
              
              (1,655
              )
              
              (23,173
              )Cash
      and cash equivalents:Beginning
      of period
              
              --
              
              
              156,782
              
              
              5,563
              
              
              162,345End
      of period
              $
              --
              
              $
              135,264
              
              $
              3,908
              
              $
              139,172
 
 
 ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
 
 The
following Management's Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended July 31, 2009 (“Form 10-K”) and the
Consolidated Condensed Financial Statements as of January 31, 2010 and 2009 and
for the three and six 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 (loss) attributable to
Vail Resorts, Inc.  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 (loss), 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.
 
 Overview
 
 The
Company's operations are grouped into three integrated and interdependent
segments: Mountain, Lodging and Real Estate.  Resort is the
combination of the Mountain and Lodging segments.
 
 Mountain
Segment
 
 The
Mountain segment is comprised of the operations of five ski resort properties as
well as ancillary services, primarily including ski school, dining and
retail/rental operations.  The Company’s five ski resorts are
typically open for business 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 50% and 49% of
Mountain segment net revenue for the three months ended January 31, 2010 and
2009, 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:  (i)
Destination guests and (ii) In-State guests.  For the three months
ended January 31, 2010, Destination guests comprised approximately 54% of the
Company's skier visits, while In-State guests comprised approximately 46% of the
Company's skier visits, which compares to approximately 52% and 48%,
respectively, for the three months ended January 31, 2009.
 
 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, as
well as the lodging at or around the Company’s resorts.  Destination
guest visitation is less likely to be impacted by changes in the weather due to
the advance planning generally required for vacation trips, but can be more
impacted by adverse economic conditions or the global geopolitical
climate.  In-State guests tend to be more value-oriented and weather
sensitive.  Prior to the 2008/2009 ski season, the Company primarily
marketed season passes to In-State guests in an effort to offer a value option
in turn for a commitment predominately prior to the beginning of the ski season
by In-State guests to ski at the Company’s resorts.  This in turn has
developed a loyal customer base that generally skis multiple days each season at
the Company’s resorts and provides a more stabilized stream of lift revenue to
the Company.  Given the success of In-State pass products, the Company
introduced a new season pass product (the “Epic Season Pass”) for the 2008/2009
ski season, marketed to its Destination guests (and also marketed to In-State
guests) allowing pass holders unlimited and unrestricted access to all five of
its ski resorts during the entire ski season.  All of the Company’s
season pass products, including the Epic Season Pass, are sold predominately
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 three months ended January 31, 2010 and 2009, approximately 40% and 39%,
respectively, of the total lift revenue recognized was comprised of season pass
revenue (of which revenue recognized represents approximately 52% of total
season pass sales for each ski season; the remaining season pass sales will be
recognized as lift ticket revenue in the Company’s third fiscal
quarter).
 
 The cost
structure of ski resort operations is primarily fixed, with variable expenses
including, but not limited to, USDA Forest Service (“Forest Service”) fees,
credit card fees, retail/rental operations, ski school labor and dining
operations; as such, profit margins can fluctuate greatly based on the level of
revenues.
 
 Lodging
Segment
 
 Operations
within the Lodging segment include (i) ownership/management of a group of luxury
hotels through the RockResorts brand, including several proximate to the
Company's ski resorts; (ii) ownership/management of non-RockResorts branded
hotels and condominiums proximate to the Company's ski resorts; (iii) Grand
Teton Lodge Company (“GTLC”); (iv) Colorado Mountain Express (“CME”), a resort
ground transportation company; and (v) golf courses.
 
 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 and experience similar seasonal trends as the Mountain segment,
particularly with respect to visitation by Destination
guests.  Lodging revenue from properties (including managed
condominium rooms) at or around the Company’s ski resorts, and CME, represented
approximately 92% and 93% of Lodging segment revenue for the three months ended
January 31, 2010 and 2009, respectively.  Lodging segment revenue
during the Company's first and fourth fiscal quarters is generated primarily by
the operations of GTLC (as GTLC's operating season generally occurs from mid-May
to mid-October), golf operations and seasonally low operations from the
Company's other owned and managed properties.
 
 Real
Estate Segment
 
 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, occasionally 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 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 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 revenue from the Real Estate segment, and
associated expense, fluctuate based upon the timing of closings and the type of
real estate being sold, causing volatility in the Real Estate segment’s
operating results from period to period.
 
 Recent
Trends, Risks and Uncertainties
 
 Together
with those risk factors identified in the Company’s Form 10-K, the Company’s
management has identified the following important factors (as well as risks and
uncertainties associated with such factors) that could impact the Company’s
future financial performance or condition:
 
 ·
              The
      economic recession that has affected the U.S. and the global economy
      throughout calendar year 2009 and the uncertainty over its breadth, depth
      and duration have had a negative impact on overall trends in the travel
      and leisure industries and on the Company’s results of
      operations.  In this environment the Company’s skier visitation
      and overall guest spend on ancillary services, including ski school,
      dining and retail/rental, has reflected declines for the periods including
      the 2009/2010 ski season to date through January 31, 2010 and the entire
      2008/2009 ski season when compared to the similar periods of the previous
      two ski seasons prior to the economic recession.  Additionally,
      the declines in skier visitation, in particular Destination guests, have
      negatively impacted occupancy at the Company’s owned and managed lodging
      properties proximate to the Company’s ski resorts.  Furthermore,
      the Company continues to experience a change in booking trends such that
      guest reservations are being made much closer to the actual date of
      stay.  The Company cannot predict the extent to which the
      effects of the current economic environment will continue, worsen or
      improve or the timing and nature of any changes to the macroeconomic
      environment, including the impact it may have on the Company’s results of
      operations for the remaining 2009/2010 ski
  season.
 ·
              The
      timing and amount of snowfall can have an impact on Mountain and Lodging
      revenue particularly in regards to skier visits and the duration and
      frequency of guest visitation.  To mitigate this impact, the
      Company focuses efforts on the sale of season passes prior to the
      beginning of the season to In-State guests and Destination
      guests.  Additionally, the Company has invested in snowmaking
      upgrades in an effort to address the inconsistency of early season
      snowfall where possible.  Snowfall, especially from the early
      season through mid January 2010, for the 2009/2010 ski season has been
      significantly lower than the historical average (with the exception of the
      Company’s Heavenly resort), which the Company believes had a negative
      impact on visitation.  The Company cannot predict the degree to
      which these snowfall trends will continue, or if snowfall will return to
      historical levels in similar future
periods.
 ·
              The
      Company’s season pass products provide a value option to its guests which
      in turn creates a guest commitment predominately prior to the start of the
      ski season resulting in a more stabilized stream of lift revenue for the
      Company.  Total season pass sales (including the Epic Season
      Pass) increased by $5.7 million as of January 31, 2010 for the 2009/2010
      ski season over total season pass sales for the entire 2008/2009 ski
      season.  Deferred revenue related to season pass sales was $48.4
      million as of January 31, 2010 (compared to $45.9 million as of January
      31, 2009) which will be recognized as lift revenue during the Company’s
      third fiscal quarter ending April 30,
2010.
 ·
              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 fiscal quarter or
      fiscal year. The Company has two real estate projects currently under
      development which are scheduled to be completed in the spring/summer of
      2010 (One Ski Hill Place in Breckenridge) and the fall of 2010 (The
      Ritz-Carlton Residences, Vail) and expects to begin closing on units under
      contract beginning in the fourth quarter of fiscal 2010.  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 slowdown in the overall real estate market, including the risk that
      certain buyers may be unable to close on their units due to a reduction in
      funds available to buyers and/or decreases in mortgage availability, as
      well as the potential of certain buyers being successful in seeking
      rescission of their contracts (see Part II Item 1. Legal
      Proceedings).  As such, the Company cannot predict the ultimate
      number of units that it will sell and/or close, the ultimate price it will
      receive, or when the units will sell and/or
      close.  Additionally, if a more severe prolonged economic
      downturn were to occur the Company may have to adjust its selling prices
      in an effort to sell and close on units currently under development,
      although it currently has no plans to do
so.
 ·
              Over
      the past three years the Company’s Real Estate segment results through
      July 31, 2009 have reflected the successful completion of several real
      estate projects including the Arrabelle at Vail Square, Vail’s Front Door,
      Crystal Peak Lodge at Breckenridge, Gore Creek Place in Vail’s Lionshead
      Village and Mountain Thunder in Breckenridge.  Additionally, as
      mentioned above, the Company expects to complete One Ski Hill Place and
      The Ritz-Carlton Residences, Vail in the near future, of which revenue and
      profit from these projects are expected to be recognized beginning in the
      fourth quarter of fiscal year 2010 as units close.  Although the
      Company continues to do planning and design work on future projects, it
      currently does not plan to undertake significant development activities on
      new projects until the current economic environment
      improves.  The Company believes that due to its low carrying
      costs of real estate held for sale and investment combined with no third
      party debt being held associated with its real estate investments, that it
      is well situated to time the launch of future projects with a more
      favorable economic environment.
 ·
              The
      Company had $58.0 million in cash and cash equivalents as of January 31,
      2010 as well as $308.1 million available under the revolver component of
      its senior credit facility (the “Credit Facility”). The Company plans
      to continue to self-fund its current real estate projects under
      construction (the Company estimates to incur between $100 and $120 million
      in cash expenditures subsequent to January 31, 2010 on the projects
      currently under construction) which has and may require the Company to
      borrow under the revolver component of its Credit Facility from time to
      time during fiscal 2010; however, the Company currently believes it has
      adequate capacity under its revolver to address potential borrowing needs,
      even in the event of a more sustained negative economic
      environment.
 ·
              Under
      GAAP, the Company is required to test goodwill for impairment annually,
      which the Company does so during the fourth quarter of each fiscal
      year.  The Company evaluates the recoverability of its goodwill
      by estimating the future discounted cash flows of its reporting units and
      terminal values of the businesses using projected future levels of income
      as well as business trends, prospects and market and economic
      conditions.  The Company evaluates the recoverability of
      indefinite-lived intangible assets using the income approach based upon
      estimated future revenue streams.  The Company’s fiscal 2009
      annual impairment test did not result in a goodwill or indefinite-lived
      intangible asset impairment, however, if a more severe prolonged economic
      downturn were to occur it could cause less than expected growth and/or
      reduction in terminal values of the Company’s reporting units which may
      result in a goodwill and/or indefinite-lived intangible asset impairment
      charge.
 
 RESULTS
OF OPERATIONS
 
 Summary
 
 Shown
below is a summary of operating results for both the three and six months ended
January 31, 2010, compared to the three and six months ended January 31, 2009
(in thousands):
 
 Three
      Months Ended
              
              Six
      Months EndedJanuary
      31,
              
              January
      31,2010
              
              2009
              
              2010
              
              2009Mountain
      Reported EBITDA
              $
              107,167
              
              
              $
              103,462
              
              
              $
              70,157
              
              
              $
              64,032Lodging
      Reported EBITDA
              
              888
              
              
              
              2,453
              
              
              
              (380
              )
              
              
              2,808Resort
      Reported EBITDA
              
              108,055
              
              
              
              105,915
              
              
              
              69,777
              
              
              
              66,840Real
      Estate Reported EBITDA
              
              (6,547
              )
              
              
              29,649
              
              
              
              (5,432
              )
              
              
              45,022Income
      before (provision) benefit for income taxes
              
              69,792
              
              
              
              100,745
              
              
              
              727
              
              
              
              44,481Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              40,690
              
              
              $
              60,545
              
              
              $
              (483
              )
              
              $
              26,041
 
 A
discussion of the segment results and other items can be found
below.
 
 Mountain
Segment
  Three months ended January 31, 2010
compared to the three months ended January 31, 2009
 
 Mountain
segment operating results for the three months ended January 31, 2010 and 2009
are presented by category as follows (in thousands, except effective ticket
price ("ETP")):
 
 Three
      Months Ended
              
              PercentageJanuary
      31,
              
              Increase2010
              
              2009
              
              (Decrease)Net
      Mountain revenue:Lift
      tickets
              
              $
              129,517
              
              $
              127,158
              
              1.9
              %Ski
      school
              
              
              30,069
              
              
              28,962
              
              3.8
              %Dining
              
              
              19,789
              
              
              20,281
              
              (2.4
              )
      %Retail/rental
              
              
              61,026
              
              
              59,238
              
              3.0
              %Other
              
              
              20,577
              
              
              22,850
              
              (9.9
              )
      %Total
      Mountain net revenue
              
              $
              260,978
              
              $
              258,489
              
              1.0
              %Mountain
      operating expense:Labor
      and labor-related benefits
              
              $
              57,859
              
              $
              59,849
              
              (3.3
              )
      %Retail
      cost  of sales
              
              
              23,731
              
              
              24,662
              
              (3.8
              )
      %Resort
      related fees
              
              
              14,381
              
              
              14,247
              
              0.9
              %General
      and administrative
              
              
              26,043
              
              
              24,082
              
              8.1
              %Other
              
              
              32,004
              
              
              33,348
              
              (4.0
              )
      %Total
      Mountain operating expense
              
              $
              154,018
              
              $
              156,188
              
              (1.4
              )
      %Mountain
      equity investment income, net
              
              
              207
              
              
              1,161
              
              (82.2
              )
      %Total
      Mountain Reported EBITDA
              
              $
              107,167
              
              $
              103,462
              
              3.6
              %Total
      skier visits
              
              
              2,782
              
              
              2,778
              
              0.1
              %ETP
              
              $
              46.56
              
              $
              45.77
              
              1.7
              %
 
 Total
Mountain Reported EBITDA includes $1.3 million and $1.1 million of stock-based
compensation expense for the three months ended January 31, 2010 and 2009,
respectively.
  Lift
revenue increased $2.4 million, or 1.9%, for the three months ended January 31,
2010 compared to the same period in the prior year, primarily due to a $3.1
million, or 6.2%, increase in season pass revenue, partially offset by a
decrease in lift revenue excluding season passes of $0.7 million, or
0.9%.  The increase in season pass revenue was due to an increase in
season pass units sold.  Total skier visitation was up 0.1% with
overall visitation for the four Colorado resorts (excluding Heavenly) being down
1.6%.  The four Colorado resorts were negatively impacted by
significantly below average snowfall particularly in the early season up to
mid-January 2010.  Total skier visitation and to a lesser degree total
lift revenue was favorably impacted by the timing of the current year quarter
end compared to the prior year (the current year quarter ended on a Sunday
versus the prior year quarter which ended on a Saturday).  Despite the
increase in season pass units sold, visitation for pass holders was relatively
flat while visitation excluding season pass holders was up slightly by 0.2%, as
season pass holder visitation was impacted more by the earlier season
historically low snowfall levels at the Company’s Colorado
resorts.  In addition, ETP growth of 1.7% was driven by an increase in
season pass revenue when combined with a decline in the average number of days
skied by passholders, partially offset by a decline of 1.1% in ETP excluding
season pass products.
 
 Ski
school revenue increased $1.1 million, or 3.8%, in the three months ended
January 31, 2010 compared to the same period in the prior year primarily due to
a 3.7% increase in yield per skier visit as both group and private lessons
benefited from higher guest spend and were also favorably impacted by new
programs being offered in ski school this year.  Dining revenue
decreased $0.5 million, or 2.4%, in the three months ended January 31, 2010
compared to the same period in the prior year, due to an approximate 5.6%
decrease in the number of total on-mountain food and beverage transactions
partially offset by a 4.2% increase in revenue per
transaction.  Dining operations were impacted by the significantly
lower than average early season snowfall which resulted in delays in the opening
of certain on-mountain dining venues.  Additionally, fine dining was
down approximately 4.4% driven by lower revenue per
transaction.  Revenue from retail/rental operations increased $1.8
million, or 3.0%, primarily due to higher retail sales and rental volumes at the
Company’s Vail and Breckenridge mountain resort stores and San Francisco Bay
area stores.
 
 Other
revenue mainly consists of private club revenue (which includes both club dues
and amortization of initiation fees), other mountain activities revenue,
marketing revenue, commercial leasing revenue, employee housing revenue,
municipal services revenue and other recreation activity
revenue.   For the three months ended January 31, 2010 other
revenues decreased $2.3 million, or 9.9%, compared to the three months ended
January 31, 2009, primarily due to a decrease in employee housing revenue
especially at Breckenridge and Vail, strategic alliance marketing revenue and
other revenue associated with parking and mountain ski area transportation
services.
 
 Operating
expense decreased $2.2 million, or 1.4%, during for the three months ended
January 31, 2010 compared to the same period in the prior year.  This
decrease primarily resulted from a decrease in labor and labor-related benefits
expense of $2.0 million, or 3.3%, due to the impacts of cost reduction
initiatives including the suspension of the Company’s matching contribution to
its 401(k) program effective January 2009 and a company-wide wage reduction plan
implemented in April 2009 and lower workers’ compensation costs; and a $0.9
million, or 3.8%, decrease in retail cost of sales due to improved inventory
management and lower average inventory costs resulting in improved gross
margins.  Additionally, other expenses decreased $1.3 million, or
4.0%, due primarily to lower food and beverage cost of sales, supplies and fuel
expense.  All of the above decreases were partially offset by a $2.0
million, or 8.1%, increase in general and administrative expenses primarily
attributable to increased employee medical costs, as well as the timing of
marketing spend, as more marketing expenditures occurred in the first quarter of
the prior year as compared to the second quarter of the current
year.
 
 Mountain
equity investment income primarily includes the Company's share of income from
the operations of a real estate brokerage joint venture.  The decrease
in equity investment income for the three months ended January 31, 2010 compared
to the three months ended January 31, 2009 is primarily due to decreased
commissions earned by the brokerage due to a lower level of real estate closures
primarily on multi-unit projects compared to the three months ended January 31,
2009.
 
 Six
months ended January 31, 2010 compared to the six months ended January 31,
2009
 
 Mountain
segment operating results for the six months ended January 31, 2010 and 2009 are
presented by category as follows (in thousands, except ETP):
 
 Six
      Months Ended
              
              PercentageJanuary
      31,
              
              Increase2010
              
              2009
              
              (Decrease)Net
      Mountain revenue:Lift
      tickets
              
              $
              129,517
              
              $
              127,158
              
              1.9
              %Ski
      school
              
              
              30,069
              
              
              28,962
              
              3.8
              %Dining
              
              
              23,257
              
              
              24,210
              
              (3.9
              )
      %Retail/rental
              
              
              82,564
              
              
              81,664
              
              1.1
              %Other
              
              
              34,775
              
              
              37,273
              
              (6.7
              )
      %Total
      Mountain net revenue
              
              $
              300,182
              
              $
              299,267
              
              0.3
              %Mountain
      operating expense:Labor
      and labor-related benefits
              
              $
              81,243
              
              $
              83,865
              
              (3.1
              )
      %Retail
      cost  of sales
              
              
              36,294
              
              
              37,914
              
              (4.3
              )
      %Resort
      related fees
              
              
              15,106
              
              
              14,962
              
              1.0
              %General
      and administrative
              
              
              46,570
              
              
              47,337
              
              (1.6
              )
      %Other
              
              
              51,273
              
              
              53,333
              
              (3.9
              )
      %Total
      Mountain operating expense
              
              $
              230,486
              
              $
              237,411
              
              (2.9
              )
      %Mountain
      equity investment income, net
              
              
              461
              
              
              2,176
              
              (78.8
              )
      %Total
      Mountain Reported EBITDA
              
              $
              70,157
              
              $
              64,032
              
              9.6
              %Total
      skier visits
              
              
              2,782
              
              
              2,778
              
              0.1
              %ETP
              
              $
              46.56
              
              $
              45.77
              
              1.7
              %
 
 Total
Mountain Reported EBITDA includes $2.9 million and $2.3 million of stock-based
compensation expense for the six months ended January 31, 2010 and 2009,
respectively.
 
 As the
Company's five ski resorts opened during the Company’s second fiscal quarter,
the results of the six months ended January 31, 2010 and 2009 for lift ticket
revenue and ski school revenue are the same as the three months ended January
31, 2010 and 2009.
 
 Dining
revenue decreased $1.0 million, or 3.9%, in the six months ended January 31,
2010 compared to the same period in the prior year, due to an approximate 5.3%
decrease in the number of total on-mountain food and beverage transactions
partially offset by an increase of 2.7% in revenue per
transaction.  Additionally, fine dining experienced a decrease of
approximately 4.0% and 2.5% in the number of transactions and revenue per
transaction, respectively.  Revenue from retail/rental operations
increased $0.9 million, or 1.1%, primarily due to higher retail sales and rental
volumes at the Company’s Vail and Breckenridge mountain resort stores and San
Francisco Bay area stores during the three months ended January 31, 2010
compared to the same period in the prior year.
 
 Other
revenue mainly consists of private club revenue (which includes both club dues
and amortization of initiation fees), summer visitation and other mountain
activities revenue, marketing revenue, commercial leasing revenue, employee
housing revenue, municipal services revenue and other recreation activity
revenue.  For the six months ended January 31, 2010 other revenues
decreased $2.5 million, or 6.7%, compared to the six months ended January 31,
2009, primarily due to a decrease in employee housing revenue especially at
Breckenridge and Vail, strategic alliance marketing revenue and other revenue
associated with parking and mountain ski area transportation services, partially
offset by an increase in private club operations resulting from the opening of
the Vail Mountain Club in November 2008 and an increase in on-mountain summer
activities in Breckenridge and Keystone as the prior year’s on-mountain summer
activities were negatively impacted by construction activities at the respective
resorts.
 Operating
expense decreased $6.9 million, or 2.9%, for the six months ended January 31,
2010 compared to the same period in the prior year.  This decrease
primarily resulted from a decrease in labor and labor-related benefits expense
of $2.6 million, or 3.1%, due to the impacts of cost reduction initiatives
including the suspension of the Company’s matching contribution to its 401(k)
program effective January 2009 and a company-wide wage reduction plan
implemented in April 2009 and lower workers’ compensation costs; and a $1.6
million, or 4.3%, decrease in retail cost of sales due to improved inventory
management and lower average inventory costs resulting in improved gross
margins.  Additionally, other expenses decreased $2.1 million, or
3.9%, due primarily to lower food and beverage cost of sales, supplies, repairs
and maintenance and fuel expense, partially offset by higher property taxes;
and, general and administrative expenses decreased $0.8 million, or 1.6%,
primarily due to the timing of marketing spend and lower employee housing costs,
partially offset by higher employee medical costs.
 
 Mountain
equity investment income primarily includes the Company's share of income from
the operations of a real estate brokerage joint venture.  The decrease
in equity investment income for the six months ended January 31, 2010 compared
to the six months ended January 31, 2009 is primarily due to decreased
commissions earned by the brokerage due to a lower level of real estate closures
primarily on multi-unit projects compared to the six months ended January 31,
2009.
 
 Lodging
Segment
  Three
months ended January 31, 2010 compared to the three months ended January 31,
2009
 
 Lodging
segment operating results for the three months ended January 31, 2010 and 2009
are presented by category as follows (in thousands, except average daily rates
(“ADR”) and revenue per available room (“RevPAR”)):
 
 Three
      months ended
              
              PercentageJanuary
      31,
              
              Increase2010
              
              2009
              
              (Decrease)Lodging
      net revenue:Owned
      hotel rooms
              $
              8,286
              $
              8,774
              
              (5.6
              )
              %Managed
      condominium rooms
              
              10,819
              
              12,164
              
              (11.1
              )
              %Dining
              
              4,522
              
              4,989
              
              (9.4
              )
              %Transportation
              
              7,341
              
              7,528
              
              (2.5
              )
              %Other
              
              7,708
              
              7,695
              
              0.2
              
              %Total
      Lodging net revenue
              $
              38,676
              $
              41,150
              
              (6.0
              )
              %Lodging
      operating expense:Labor
      and labor-related benefits
              $
              18,449
              $
              20,408
              
              (9.6
              )
              %General
      and administrative
              
              7,653
              
              6,547
              
              16.9
              
              %Other
              
              11,686
              
              11,742
              
              (0.5
              )
              %Total
      Lodging operating expense
              $
              37,788
              $
              38,697
              
              (2.3
              )
              %Total
      Lodging Reported EBITDA
              $
              888
              $
              2,453
              
              (63.8
              )
              %Owned
      hotel statistics:ADR
              $
              205.85
              $
              206.25
              
              (0.2
              )
              %RevPar
              $
              103.50
              $
              117.95
              
              (12.3
              )
              %Managed
      condominium statistics:ADR
              $
              336.13
              $
              348.07
              
              (3.4
              )
              %RevPar
              $
              113.13
              $
              126.37
              
              (10.5
              )
              %Owned
      hotel and managed condominium statistics (combined):ADR
              $
              280.84
              $
              286.93
              
              (2.1
              )
              %RevPar
              $
              109.95
              $
              123.64
              
              (11.1
              )
              %
  Total
Lodging Reported EBITDA includes $0.5 million of stock-based compensation
expense for both the three months ended January 31, 2010 and 2009.
  Total
Lodging net revenue for the three months ended January 31, 2010 decreased $2.5
million, or 6.0%, compared to the three months ended January 31,
2009.  Revenue from owned hotel rooms decreased $0.5 million, or 5.6%,
for the three months ended January 31, 2010 compared to the three months ended
January 31, 2009, which was driven by a decrease in occupancy of 6.9 percentage
points primarily due to significant declines in transient guest
visitation.  Revenue from managed condominium rooms decreased $1.3
million, or 11.1%, for the three months ended January 31, 2010 compared to the
three months ended January 31, 2009, primarily due to a decline in transient
guest visitation at Keystone resulting in a decrease in revenue of $0.7
million.
 
 Dining
revenue for the three months ended January 31, 2010 decreased $0.5 million, or
9.4%, as compared to the three months ended January 31, 2009, mainly due to
decreased occupancy and the temporary closing of one restaurant for
renovation.  Transportation revenue for the three months ended January
31, 2010 decreased $0.2 million, or 2.5%, as compared to the three months ended
January 31, 2009 primarily due to a slight decrease in revenue per
passenger.  Other revenue increased 0.2% due to an increase in revenue
from managed properties.
 
 Operating
expense decreased $0.9 million, or 2.3%, for the three months ended January 31,
2010 compared to the three months ended January 31, 2009, primarily due to (i) a
decrease in labor and labor-related benefits of $2.0 million, or 9.6%, primarily
due to lower staffing levels associated with decreased occupancy and impacts of
cost reduction initiatives including the suspension of the Company’s matching
contribution to its 401(k) program effective January 2009 and a company-wide
wage reduction plan implemented in April 2009, and (ii) a decrease in other
expense of $0.1 million, or 0.5%, primarily due to decreased variable operating
costs associated with lower revenue including lower food and beverage cost of
sales and other operating expense partially offset by higher property
taxes.  The above decreases were partially offset by an increase in
general and administrative expense of $1.1 million, or 16.9%, primarily due to
higher employee medical costs.
 
 Six
months ended January 31, 2010 compared to the six months ended January 31,
2009
 
 Lodging
segment operating results for the six months ended January 31, 2010 and 2009 are
presented by category as follows (in thousands, except ADR and
RevPAR):
 
 Six
      months ended
              
              PercentageJanuary
      31,
              
              Increase2010
              
              
              2009
              
              (Decrease)Lodging
      net revenue:Owned
      hotel rooms
              $
              19,282
              
              $
              20,974
              
              (8.1
              )
              %Managed
      condominium rooms
              
              15,229
              
              
              17,219
              
              (11.6
              )
              %Dining
              
              13,468
              
              
              15,478
              
              (13.0
              )
              %Transportation
              
              8,974
              
              
              7,528
              
              19.2
              
              %Golf
              
              6,823
              
              
              8,055
              
              (15.3
              )
              %Other
              
              16,255
              
              
              17,149
              
              (5.2
              )
              %Total
      Lodging net revenue
              $
              80,031
              
              $
              86,403
              
              (7.4
              )
              %Lodging
      operating expense:Labor
      and labor-related benefits
              $
              38,824
              
              $
              41,252
              
              (5.9
              )
              %General
      and administrative
              
              14,631
              
              
              14,028
              
              4.3
              
              %Other
              
              26,956
              
              
              28,315
              
              (4.8
              )
              %Total
      Lodging operating expense
              $
              80,411
              
              $
              83,595
              
              (3.8
              )
              %Total
      Lodging Reported EBITDA
              $
              (380
              )
              $
              2,808
              
              (113.5
              )
              %Owned
      hotel statistics:ADR
              $
              187.90
              
              $
              180.85
              
              3.9
              
              %RevPar
              $
              94.98
              
              $
              107.86
              
              (11.9
              )
              %Managed
      condominium statistics:ADR
              $
              286.90
              
              $
              283.41
              
              1.2
              
              %RevPar
              $
              69.91
              
              $
              82.10
              
              (14.8
              )
              %Owned
      hotel and managed condominium statistics (combined):ADR
              $
              231.42
              
              $
              226.73
              
              2.1
              
              %RevPar
              $
              79.45
              
              $
              91.76
              
              (13.4
              )
              %
 
 Total
Lodging Reported EBITDA includes $1.0 million and $0.9 million of stock-based
compensation expense for the six months ended January 31, 2010 and 2009,
respectively.
 
 Total
Lodging net revenue for the six months ended January 31, 2010 decreased $6.4
million, or 7.4%, compared to the six months ended January 31,
2009.  Due to the acquisition of CME on November 1, 2008, Lodging net
revenue for the six months ended January 31, 2009 includes only three months of
operations for CME.  Excluding the impact of CME revenue for the three
months ended October 31, 2009, total Lodging net revenue decreased $8.0 million,
or 9.3% for the six months ended January 31, 2010 compared to the six months
ended January 31, 2009.
 
 Revenue
from owned hotel rooms decreased $1.7 million, or 8.1%, for the six months ended
January 31, 2010 compared to the six months ended January 31, 2009, which was
driven by a decrease in occupancy of 9.1 percentage points due to declines in
group business and transient guest visitation, partially offset by an increase
in ADR of 3.9%.  The increase in ADR was primarily due to GTLC, as
GTLC’s ADR increased by 9.7%.  Revenue from managed condominium rooms
decreased $2.0 million, or 11.6%, for the six months ended January 31, 2010
compared to the six months ended January 31, 2009, due to a decline in both
transient guest visitation and group business at Keystone resulting in a
decrease in revenue of $1.0 million.
 
 Dining
revenue for the six months ended January 31, 2010 decreased $2.0 million, or
13.0%, as compared to the six months ended January 31, 2009, due to decreased
transient guest and group visitation primarily at the Company’s Colorado
mountain resorts.  Golf revenues decreased $1.2 million, or 15.3%, for
the six months ended January 31, 2010 compared to the six months ended January
31, 2009, resulting from a 15% decrease in the number of golf rounds played
combined with lower revenue per round.  Other revenue decreased $0.9
million, or 5.2%, in the six months ended January 31, 2010 compared to the six
months ended January 31, 2009, primarily due to a decrease in revenue from spa
and conference services, which were negatively impacted by lower occupancy from
groups.  Transportation revenues were up $1.4 million, or 19.2%, due
to a full six months of operations for CME included in the six months ended
January 31, 2010 compared to only three months of operations for CME in the six
months ended January 31, 2009.
  Operating
expense decreased $3.2 million, or 3.8%, for the six months ended January 31,
2010 compared to the six months ended January 31, 2009.  Due to the
acquisition of CME on November 1, 2008, operating expenses for the six months
ended January 31, 2010 included six months of CME operating expenses compared to
only three months of CME operating expenses for the six months ended January 31,
2009.  Excluding the impact of CME operating expenses for the three
months ended October 31, 2009 of $2.7 million, operating expenses decreased $5.9
million, or 7.1%, primarily due to (i) a decrease in labor and labor-related
benefits of $4.1 million, or 10.0%, primarily due to lower staffing levels
associated with decreased occupancy and the impacts of cost reduction
initiatives including the suspension of the Company’s matching contribution to
its 401(k) program effective January 2009 and a company-wide wage reduction plan
implemented in April 2009, and (ii) a decrease in other expense of $2.4 million,
or 8.4 %, primarily due to decreased variable operating costs associated with
lower revenue including lower food and beverage cost of sales and a decrease in
supplies and utilities expense.  The above decreases were partially
offset by an increase in general and administrative expense of $0.6 million, or
4.3%, primarily due to higher employee medical costs.
 
 Real
Estate Segment
  Three
months ended January 31, 2010 compared to the three months ended January 31,
2009
 Real
Estate segment operating results for the three months ended January 31, 2010 and
2009 are presented by category as follows (in thousands):
 
 Three
      Months Ended
              
              PercentageJanuary
      31,
              
              Increase2010
              2009
              (Decrease)Total
      Real Estate net revenue
              
              $
              870
              
              $
              89,157
              
              (99.0
              )
              %Total
      Real Estate operating expense
              
              
              7,417
              
              
              59,508
              
              (87.5
              )
              %Total
      Real Estate Reported EBITDA
              
              $
              (6,547
              )
              $
              29,649
              
              (122.1
              )
              %
 
 Real
Estate Reported EBITDA includes $1.1 million of stock-based compensation expense
for both the three months ended January 31, 2010 and 2009.
 
 The
Company’s Real Estate operating revenue is primarily determined by the timing of
closings and the mix of real estate sold in any given
period.  Different types of projects have different revenue and
expense volumes and margins; therefore, as the real estate inventory mix changes
it can greatly impact Real Estate segment net revenue, operating expense and
Real Estate Reported EBITDA.
 
 Three
months ended January 31, 2010
 
 Real
Estate segment net revenue for the three months ended January 31, 2010 primarily
included allocated corporate revenue.  Operating expense for the three
months ended January 31, 2010 primarily included general and administrative
costs of approximately $7.2 million (including $1.1 million of stock-based
compensation expense).  General and administrative costs were
primarily comprised of marketing expense for the real estate projects under
development, overhead costs such as labor and labor-related benefits and
allocated corporate costs.
 
 Three
months ended January 31, 2009
 
 Real
Estate segment net revenue for the three months ended January 31, 2009 was
driven primarily by the closing of six Lodge at Vail Chalet (“Chalet”) units
($76.9 million of revenue with an average selling price per unit of $12.8
million and an average price per square foot of $2,689), three residences at
Crystal Peak Lodge ($3.7 million of revenue with an average selling price per
unit of $1.2 million and an average price per square foot of $972) and the
closing of one condominium at Arrabelle ($7.7 million of revenue with an average
price per square foot of $1,533).  The higher average price per square
foot for the Chalet units was driven by their premier location at the base of
Vail mountain in Vail Village and the fact that this development consisted of
only 13 exclusive chalets.  The Arrabelle average price per square
foot is driven by its ski-in/ski-out location in Vail, and the comprehensive
offering of amenities resulting from this project.  The Crystal Peak
Lodge average price per square foot though significantly lower than the Vail
project real estate sales, is significantly higher than historical Breckenridge
project real estate sales and is primarily driven by its ski-in/ski-out location
at the base of Peak 7 in Breckenridge and close proximity to the BreckConnect
Gondola.
 
 Operating
expense for the three months ended January 31, 2009 included cost of sales of
$44.5 million commensurate with revenue recognized, primarily driven by the
closing of six Chalets units ($36.6 million in cost of sales with an average
cost per square foot of $1,280), three residences at Crystal Peak Lodge ($1.5
million in cost of sales with an average cost per square foot of $416) and the
closing of one condominium at Arrabelle ($6.3 million in cost of sales with an
average cost per square foot of $1,251).  The cost per square foot for the
Chalets and Arrabelle are reflective of the high-end features and amenities
associated with these projects and the relatively high construction costs
associated with mountain resort development.  The cost per square foot
for Crystal Peak Lodge is reflective of its less complicated design features and
fewer amenities associated with this project relative to the Chalets and
Arrabelle.  Operating expense also included sales commissions of
approximately $4.6 million commensurate with revenue recognized and general and
administrative costs of approximately $7.4 million (including $1.1 million of
stock-based compensation expense).  General and administrative costs
were primarily comprised of marketing expense 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, 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, which is reflected in
Real Estate segment operating expense in the three months ended January 31,
2009.
  Six
months ended January 31, 2010 compared to the six months ended January 31,
2009
 
 Real
Estate segment operating results for the six months ended January 31, 2010
and 2009 are presented by category as follows (in thousands):
  Six
      Months Ended
              
              PercentageJanuary
      31,
              
              Increase2010
              2009
              (Decrease)Total
      Real Estate net revenue
              
              $
              1,075
              
              $
              155,907
              
              (99.3
              )
              %Total
      Real Estate operating expense
              
              
              12,594
              
              
              110,885
              
              (88.6
              )
              %Gain
      on sale of real property
              
              
              6,087
              
              
              --
              
              --
              
              %Total
      Real Estate Reported EBITDA
              
              $
              (5,432
              )
              $
              45,022
              
              (112.1
              )
              %
 
 Real
Estate Reported EBITDA includes $2.5 million and $2.0 million of stock-based
compensation expense for the six months ended January 31, 2010 and 2009,
respectively.
 
 Six
months ended January 31, 2010
 
 Real
Estate segment net revenue for the six months ended January 31, 2010 primarily
included allocated corporate revenue.  In addition, during the six
months ended January 31, 2010 the Company sold a land parcel located at the
Arrowhead base area of the Beaver Creek Resort for $8.5 million and recorded a
gain on sale of real property of $6.1 million (net of $2.4 million in related
cost of sales).
 
 Operating
expense for the six months ended January 31, 2010 primarily included general and
administrative costs of approximately $12.3 million (including $2.5 million of
stock-based compensation expense).  General and administrative costs
were primarily comprised of marketing expense 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.
 
 Six
months ended January 31, 2009
 
 Real
Estate segment net revenue for the six months ended January 31, 2009 was driven
primarily by the closing of 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 $1,038), the closing of seven Chalet units ($91.3
million of revenue with an average selling price per unit of $13.0 million and
price per square foot of $2,718) and one condominium unit at Arrabelle ($7.7
million of revenue with an average price per square foot
of  $1,533).  The higher average price per square foot for
the Chalet units was driven by the premier location at the base of Vail mountain
in Vail Village and the fact that this development consisted of only 13
exclusive chalets.  The Arrabelle average price per square foot is
driven by its ski-in/ski-out location in Vail, and the comprehensive offering of
amenities resulting from this project.  The Crystal Peak Lodge average
price per square foot though significantly lower than the Vail project real
estate sales, was significantly higher than historical Breckenridge project real
estate sales and was primarily driven by its ski-in/ski-out location at the base
of Peak 7 in Breckenridge and close proximity to the BreckConnect
Gondola.
 
 Operating
expense for the six months ended January 31, 2009 included cost of sales of
$84.6 million commensurate with revenue recognized, primarily driven by the
closing of seven Chalet units ($43.9 million in cost of sales with an average
cost per square foot of $1,308), the closing of 42 residences at Crystal Peak
Lodge ($34.6 million in cost of sales with an average cost per square foot of
$660), and one condominium unit at Arrabelle ($6.3 million in cost of sales with
an average cost per square foot of $1,251).  The cost per square foot
for the Arrabelle and Chalets are reflective of the high-end features and
amenities associated with this project and the relatively high construction
costs associated with mountain resort development.  The cost per
square foot for Crystal Peak Lodge is reflective of its less complicated design
features and fewer amenities associated with this project relative to the
Arrabelle and Chalets.  Operating expense also included sales
commissions of approximately $8.8 million commensurate with revenue recognized
and general and administrative costs of approximately $14.5 million (including
$2.0 million of stock-based compensation expense).  General and
administrative costs were primarily comprised of marketing expense 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, 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 JHG&TC development, which is reflected in Real Estate segment
operating expense in the six months ended January 31, 2009.
 
 Other
Items
 
 In
addition to segment operating results, the following material items contributed
to the Company's overall financial position.
 
 Depreciation and
amortization.  Depreciation and amortization expense for the
three and six months ended January 31, 2010 increased $0.3 million and $2.4
million, respectively, compared to the same periods in the prior year, primarily
due to an increase in the fixed asset base due to incremental capital
expenditures including a new gondola placed in-service within the last year,
renovations to certain lodging properties and the acquisition of
CME.
 
 Investment
income.  Investment income decreased $0.1 million and $0.6
million for the three and six months ended January 31, 2010, respectively,
compared to the same periods in the prior year, primarily due to a decrease in
average invested cash during the period.
 
 Interest expense,
net.  For the three and six months ended January 31, 2010,
interest expense, net decreased $3.1 million and $6.3 million, respectively,
compared to the same periods in the prior year primarily due to an increase in
capitalized interest on self-funded real estate projects.
 
 Income taxes.  The
effective tax rate for the three and six months ended January 31, 2010 was 35.4%
and 115.7%, respectively, compared to the effective tax rate for the three and
six months ended January 31, 2009 of 36.1% and 38.2%,
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) and the amount of net income attributable to
noncontrolling interest recorded during the period.  Additionally, the
Company recorded a $0.3 million income tax benefit in the six months ended
January 31, 2010 due to a reversal of an income tax contingency resulting from
the expiration of the statue of limitations.
 Beginning
August 1, 2009, the Company adopted a FASB statement regarding noncontrolling
interest (see Note 2, Summary of Significant Accounting Policies, of the Notes
to Consolidated Condensed Financial Statements) which requires that the net
income or loss attributable to noncontrolling interest in the Company’s
consolidated subsidiaries no longer be included in the determination of pretax
income or loss in the Company’s effective tax rate calculation.
 
 In 2005,
the Company amended previously filed tax returns (for the tax years from 1997
through 2002) in an effort to remove restrictions under Section 382 of the
Internal Revenue Code on approximately $73.8 million of 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 $19.6 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 request for refund and its position to remove the
restriction on the NOLs.  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 in August 2009, filed a complaint in
the United States District Court for the District of Colorado seeking recovery
of $6.2 million in over payments that were previously denied by the IRS, plus
interest.  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
its action regarding this matter it will not negatively impact the Company’s
results of operations.
  Reconciliation
of Non-GAAP Measures
 
 The
following table reconciles from segment Reported EBITDA to net income (loss)
attributable to Vail Resorts, Inc. (in thousands):
 
 Three
      Months Ended
              
              Six
      Months EndedJanuary
      31,
              
              January
      31,2010
              
              2009
              
              2010
              
              2009Mountain
      Reported EBITDA
              $
              107,167
              
              
              $
              103,462
              
              
              $
              70,157
              
              
              $
              64,032Lodging
      Reported EBITDA
              
              888
              
              
              
              2,453
              
              
              
              (380
              )
              
              
              2,808Resort
      Reported EBITDA
              
              108,055
              
              
              
              105,915
              
              
              
              69,777
              
              
              
              66,840Real
      Estate Reported EBITDA
              
              (6,547
              )
              
              
              29,649
              
              
              
              (5,432
              )
              
              
              45,022Total
      Reported EBITDA
              
              101,508
              
              
              
              135,564
              
              
              
              64,345
              
              
              
              111,862Depreciation
      and amortization
              
              (27,772
              )
              
              
              (27,438
              )
              
              
              (54,956
              )
              
              
              (52,516
              )Gain
      (loss) on disposal of fixed assets, net
              
              12
              
              
              
              (422
              )
              
              
              (101
              )
              
              
              (602
              )Investment
      income
              
              192
              
              
              
              336
              
              
              
              422
              
              
              
              979Interest
      expense, net
              
              (4,148
              )
              
              
              (7,295
              )
              
              
              (8,983
              )
              
              
              (15,242
              )Income
      before (provision) benefit for income taxes
              
              69,792
              
              
              
              100,745
              
              
              
              727
              
              
              
              44,481(Provision)
      benefit for income taxes
              
              (24,713
              )
              
              
              (36,412
              )
              
              
              841
              
              
              
              (17,003
              )Net
      income
              
              45,079
              
              
              
              64,333
              
              
              
              1,568
              
              
              
              27,478Net
      income attributable to noncontrolling interests
              
              (4,389
              )
              
              
              (3,788
              )
              
              
              (2,051
              )
              
              
              (1,437
              )Net
      income (loss) attributable to Vail Resorts, Inc.
              $
              40,690
              
              
              $
              60,545
              
              
              $
              (483
              )
              
              $
              26,041
 
 The
following table reconciles Net Debt (in thousands):
 
 January
      31,2010
              
              2009Long-term
      debt
              
              $
              489,865
              
              $
              491,777Long-term
      debt due within one year
              
              
              1,870
              
              
              304Total
      debt
              
              
              491,735
              
              
              492,081Less:
      cash and cash equivalents
              
              
              58,008
              
              
              139,172Net
      debt
              
              $
              433,727
              
              $
              352,909
 
 LIQUIDITY
AND CAPITAL RESOURCES
 
 Significant
Sources of Cash
 
 The
Company's second and third fiscal quarters historically result in seasonally
high cash on hand as the Company's ski resorts are generally open for ski
operations from mid-November to mid-April, from which the Company has
historically generated a significant portion of its operating cash flows for the
year.  Additionally, cash provided by operating activities can be
significantly impacted by the timing of closings on and investment in real
estate development projects.
 
 In
addition to the Company’s $58.0 million of cash and cash equivalents at January
31, 2010, the Company has $308.1 million available under its Credit Facility
(which represents the total commitment of $400.0 million less certain letters of
credit outstanding of $91.9 million).  The Company continued to
self-fund its current real estate projects under construction (the Company
estimates to incur between $100 and $120 million in cash expenditures subsequent
to January 31, 2010) which has and may require the Company to borrow under the
revolver component of its Credit Facility from time to time during fiscal
2010.  The Company expects that its liquidity needs in the near term
will be met by the utilization of cash flows generated by operating activities
and borrowings under the Credit Facility.  The Company believes the
Credit Facility, which matures in 2012, provides adequate flexibility and is
priced favorably with any new borrowings currently being priced at LIBOR plus
1.0%.
 
 Six months ended
January 31, 2010 compared to the six months ended January 31,
2009
 
 The
Company generated $14.1 million of cash from operating activities in the six
months ended January 31, 2010, a decrease of $152.5 million when compared to the
$166.7 million of cash generated in the six months ended January 31,
2009.  The decline in operating cash flows was primarily a result of
real estate closings that occurred in the six months ended January 31, 2009
which generated $116.8 million in proceeds.  Additionally, investments
in real estate increased $28.6 million during the six months ended January 31,
2010 compared to the six months ended January 31, 2009.  Further
contributing to the decrease in cash provided by operating activities for the
six months ended January 31, 2010 compared to the six months ended January 31,
2009 was the receipt of $38.4 million of private club initiation fees for the
Vail Mountain Club in the six months ended January 31, 2009 and a reduction in
restricted cash of $48.3 million in the prior year period which became available
for general purpose use due to the payoff of the Company’s non-recourse real
estate financing.  Partially offsetting the above items was a decrease
in income tax payments of $31.0 million, an increase in real estate development
payables of $11.4 million, an increase in trade payables of $9.5 million, as
well as, a reduction in accounts receivable primarily due to an increase in
proceeds from the sale of season passes.
 
 Cash used
in investing activities decreased by $88.6 million in the six months ended
January 31, 2010 compared to the six months ended January 31, 2009 due to a
decrease in resort capital expenditures of $41.3 million, cash receipts of $8.9
million primarily related to a land parcel the Company sold during the six
months ended January 31, 2010 and the acquisition of CME on November 1, 2008 in
the prior year.
 
 Cash used
in financing activities decreased $75.8 million in the six months ended January
31, 2010 compared to the six months ended January 31, 2009 resulting from the
$58.4 million payoff of the Company’s non-recourse real estate financings in the
six months ended January 31, 2009 and no repurchases of common stock during the
six months ended January 31, 2010, compared to repurchases of $14.9 million
during the six months ended January 31, 2009.  Additionally, the
Company paid $15.0 million for a scheduled debt maturity during the six months
ended January 31, 2009.
 
 Significant
Uses of Cash
 
 The
Company’s cash uses currently include providing for operating expenditures and
capital expenditures for assets to be used in operations and for real estate
projects under construction.
 
 The
Company expects to spend approximately $115 million to $135 million in calendar
year 2010 for real estate under development, including the construction of
associated resort-related depreciable assets, of which approximately $15 million
was spent as of January 31, 2010, leaving approximately $100 million to $120
million to spend in the remainder of the calendar year 2010.  The
Company has entered into contracts with third parties to provide services to the
Company throughout the course of project development; commitments for future
services to be performed under such current contracts total approximately $65
million and are expected to be performed primarily over the next calendar
year.
 
 The
Company has historically invested significant cash in capital expenditures for
its resort operations, and expects to continue to invest in the future; however,
plans for such investment were reduced in calendar year 2009 given the
significant level of capital expenditures made in the previous few years
including individually significant projects that do not annually re-occur such
as gondolas and major hotel renovations coupled with the current economic
environment.  The Company has increased its level of expected resort
discretionary investment for calendar year 2010 above the calendar year 2009
level, although such spending is still expected to remain well below the 2007
and 2008 calendar year levels.  Current capital expenditure levels
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 discretionary capital improvements based on an
expected level of return on investment.  The Company currently
anticipates it will spend approximately $75 million to $85 million of resort
capital expenditures for calendar year 2010, excluding resort depreciable assets
arising from real estate activities noted above.  Included in these
capital expenditures are approximately $37 million to $42 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.  Discretionary expenditures for
calendar 2010 are expected to include a new high speed chairlift to serve Vail
mountain’s back bowls; a new on-mountain restaurant at Heavenly; a new coaster
slide at Breckenridge; expansion of Vail mountain’s adventure ridge; Keystone
Lodge guest room renovation and new marketing campaign management software,
among other projects. The Company currently plans to utilize cash on hand,
borrowing available under its Credit Facility and/or cash flow generated from
future operations to provide the cash necessary to execute its capital
plans.
 
 Principal
payments on the vast majority of the Company’s long-term debt ($489.2 million of
the total $491.7 million debt outstanding as of January 31, 2010) are not due
until fiscal 2014 and beyond.  As of January 31, 2010 and 2009, total
long-term debt (including long-term debt due within one year) was $491.7 million
and $492.1 million, respectively.  Net Debt (defined as long-term debt
plus long-term debt due within one year less cash and cash equivalents)
increased from $352.9 million as of January 31, 2009 to $433.7 million as of
January 31, 2010 due primarily to the decrease in cash and cash
equivalents.
 
 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 January
31, 2010.  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 six months ended January 31, 2010.  Since inception of its
stock repurchase plan, the Company has repurchased 3,878,535 shares at a cost of
approximately $147.8 million, through January 31, 2010.  As of January
31, 2010, 2,121,465 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.
 
 Covenants
and Limitations
 
 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, the Interest Coverage ratio and Minimum Net Worth (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, which is based on the Company’s segment operating
performance, as defined in the Credit Agreement.
 
 The
Company was in compliance with all restrictive financial covenants in its debt
instruments as of January 31, 2010.  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, 2010.  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.
 
 OFF
BALANCE SHEET ARRANGEMENTS
 
 The
Company does not have off balance sheet transactions that are expected to have a
material effect on the Company's financial condition, revenue, expenses, results
of operations, liquidity, capital expenditures or capital
resources.
 
 FORWARD-LOOKING
STATEMENTS
 
 Except
for any historical information contained herein, the matters discussed in this
Form 10-Q contain certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.  These statements
relate to analyses and other information available as of the date hereof, which
are based on forecasts of future results and estimates of amounts not yet
determinable.  These statements also relate to our contemplated future
prospects, developments and business strategies.
 
 These
forward-looking statements are identified by their use of terms and phrases such
as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,”
“plan,” “predict,” “project,” “will” and similar terms and phrases, including
references to assumptions.  Although we believe that our plans,
intentions and expectations reflected in or suggested by such forward-looking
statements are reasonable, we cannot assure you that such plans, intentions or
expectations will be achieved.  Important factors that could cause
actual results to differ materially from our forward-looking statements include,
but are not limited to:
 
 ·
              prolonged
      downturn in general economic conditions, including continued adverse
      affects on the overall travel and leisure related
    industries;
 ·
              unfavorable
      weather conditions or natural
disasters;
 ·
              adverse
      events that occur during our peak operating periods combined with the
      seasonality of our business;
 ·
              competition
      in our mountain and lodging
businesses;
 ·
              our
      ability to grow our resort and real estate
  operations;
 ·
              our
      ability to successfully complete real estate development projects and
      achieve the anticipated financial benefits from such
    projects;
 ·
              further
      adverse changes in real estate
markets;
 ·
              continued
      volatility in credit markets;
 ·
              our
      ability to obtain financing on terms acceptable to us to finance our real
      estate development, capital expenditures and growth
    strategy;
 ·
              our
      reliance on government permits or approvals for our use of Federal land or
      to make operational improvements;
 ·
              adverse
      consequences of current or future legal
claims;
 ·
              our
      ability to hire and retain a sufficient seasonal
  workforce;
 ·
              willingness
      of our guests to travel due to terrorism, the uncertainty of military
      conflicts or outbreaks of contagious diseases, and the cost and
      availability of travel options;
 ·
              negative
      publicity or unauthorized use of our trademarks which diminishes the value
      of our brands;
 ·
              our
      ability to integrate and successfully operate future acquisitions;
      and
 ·
              implications
      arising from new Financial Accounting Standards Board
      (“FASB”)/governmental legislation, rulings or
    interpretations.
 
 All
forward-looking statements attributable to us or any persons acting on our
behalf are expressly qualified in their entirety by these cautionary
statements.
 
 If one or
more of these risks or uncertainties materialize, or if underlying assumptions
prove incorrect, our actual results may vary materially from those expected,
estimated or projected.  Given these uncertainties, users of the
information included in this Form 10-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.
 
 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
 
 Interest Rate
Risk.The Company's exposure to market risk is limited
primarily to the fluctuating interest rates associated with variable rate
indebtedness.  At January 31, 2010, the Company had $52.6 million of
variable rate indebtedness, representing 10.7% of the Company's total debt
outstanding, at an average interest rate during the three and six months ended
January 31, 2010 of 0.9% and 1.0%, respectively.  Based on
variable-rate borrowings outstanding as of January 31, 2010, 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.
 
 ITEM 4.  CONTROLS AND
PROCEDURES.
 
 Disclosure
Controls and Procedures
 
 Management
of the Company, under the supervision and with participation of the Chief
Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), have evaluated
the effectiveness of the Company's disclosure controls and procedures as such
term is defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934 (the “Act”) as of the end of the period covered by this report on
Form 10-Q.
 
 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.
 
 The
Company, including its CEO and CFO, does not expect that the Company's internal
controls and procedures will prevent or detect all error and all
fraud.  A control system, no matter how well conceived or operated,
can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.
 
 Changes
in Internal Control over Financial Reporting
 
 There
were no changes in the Company's internal control over financial reporting
during the period covered by this Form 10-Q that have materially affected, or
are reasonably likely to materially affect, the Company's internal control over
financial reporting.
 
 PART II OTHER INFORMATION
 
 ITEM 1.  LEGAL PROCEEDINGS.
 
 The Canyons Ski Resort
Litigation
 
 During
the fourth quarter of the 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.  The Company’s request for a preliminary
injunction to prevent the closing of the acquisition by Talisker of The Canyons
from ASC was denied.  Talisker filed an answer to the Company’s
complaint along with three counterclaims.  Peninsula filed a motion to
dismiss, which was denied.  On October 21, 2009, the Company filed a
Stipulated Motion to Dismiss ASC and agreed that it would not seek any relief
that would have the effect of invalidating the sale by ASC to Talisker Canyons
Finance Co, LLC.  On January 12, 2010, Peninsula filed an answer to
the Company’s complaint and brought cross claims against Talisker and a third
party complaint against Mark Robbins (Peninsula’s former managing member), Jacob
Bistricer (Talisker Corporation’s CEO), and Talisker Canyons Acquisition Co.
LLC.  Talisker moved to strike Peninsula’s answer, cross claims and
third party complaint.  The District Court subsequently vacated the
previous scheduling order, which included the July 19, 2010 trial date and set a
status conference date of March 26, 2010.  The Company continues to
pursue this action, but is unable to predict the ultimate outcome of the above
described actions.
 
 Internal Revenue Service
Litigation
 
 On August
24, 2009, the Company filed a complaint in the United States District Court for
the District of Colorado against the United States of America seeking a refund
of approximately $6.2 million in federal income taxes paid for the tax years
ended December 31, 2000 and December 31, 2001.  The Company’s amended
tax returns for those years included calculations of net operating losses
(“NOL”) carried forward from prior years to reduce its tax years 2000 and 2001
tax liabilities.  The Internal Revenue Service (“IRS”) has disallowed
refunds associated with those NOL carry forwards and the Company disagrees with
the IRS action disallowing the utilization of the NOLs.  The IRS filed
its answer on November 6, 2009 denying liability for the Company’s claimed
refunds.  The Company is unable to predict the ultimate outcome of
this matter.
  Ritz-Carlton Residences,
Vail
 
 The
holders of contracts to purchase 13 Ritz-Carlton Residences, Vail units have
sent notices of breach of contract to the Company or have commenced an action in
Eagle County, Colorado, District Court seeking rescission of their contracts
based on a disputed delivery date included in their respective purchase and sale
agreements.
 
 The
Company is a defendant in the following cases filed by holders of contracts to
purchase seven Ritz-Carlton Residences, Vail units: Levy and Weidhorn v. RCR Vail, LLC,
District Court, Eagle County, Colorado 09cv487 filed on August 6, 2009;
AR Homes, LP and Castletop
Capital Properties, LP v. RCR Vail, LLC District Court, Eagle County, Colorado
09cv527 filed on August 18, 2009; Masri and Assis v. RCR Vail, LLC
District Court, Eagle County, Colorado 09cv543 filed on August 26, 2009;
and Vail Ritz-Carlton, LLC v.
RCR Vail, LLC District Court, Eagle County, Colorado 10cv122,filed on
February 18, 2010.  The plaintiffs’ complaints allege similar causes
of action, primarily breach of contract, based on the failure of the Company to
deliver the units under the purchase and sale agreements by a certain specific
disputed date.  The plaintiffs seek rescission of their contracts and
return of their deposits under the purchase and sale agreements. The Company
disputes that it has breached its obligations under the purchase and sale
agreements and denies that the contract holders are entitled to the relief that
they are seeking.
 
 The
Company does not anticipate further breach of contract allegations based on the
disputed delivery date as all other Ritz-Carlton Residences, Vail contract
holders have signed contracts or amendments to contracts specifically
acknowledging the delivery date.
  ITEM 1A. RISK FACTORS.
 
 There
have been no material changes from risk factors previously disclosed in Item 1A
to Part I of the Company’s Form 10-K.
 
 ITEM 2.  UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF PROCEEDS.
 
 None.
 
 ITEM 3.  DEFAULTS UPON SENIOR
SECURITIES.
 
 None.
 
 ITEM 4.  RESERVED.
 
 ITEM 5.  OTHER INFORMATION.
 
 The
Company held its annual meeting of stockholders on December 4, 2009 in
Broomfield, Colorado.  The following matters were voted
on:
 
 1.  The
following persons were elected to serve as Directors of the Company until the
next annual meeting of the stockholders and the voting results for each Director
were as follows:
 
 Director
              For
              WithheldRoland
      A. Hernandez
              31,273,552
              3,459,398Thomas
      D. Hyde
              34,221,806
              511,144Jeffrey
      W. Jones
              32,793,367
              1,939,583Robert
      A. Katz
              34,464,807
              268,143Richard
      D. Kincaid
              32,790,874
              1,942,076John
      T. Redmond
              33,422,655
              1,310,295John
      F. Sorte
              33,153,225
              1,579,725
 
 2.  Approval
of an amendment to the 2002 Long-Term Incentive and Share Award Plan which
increases the number of shares authorized for issuance from 5,000,000 shares to
7,500,000 was approved as follows:
 
 For
              Against
              Abstain17,696,459
              15,666,067
              5,599
 
 3.  Appointment
of PricewaterhouseCoopers, LLP as the Company’s Independent Registered Public
Accounting Firm was ratified as follows:
 
 For
              Against
              Abstain34,695,893
              32,703
              4,354
 
 ITEM 6.  EXHIBITS.
 
 The
following exhibits are either filed herewith or, if so indicated, incorporated
by reference to the documents indicated in parentheses, which have previously
been filed with the Securities and Exchange Commission.
 
 Exhibit
      Number
              Description
              Sequentially
      Numbered Page3.1
              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.)4.1(g)
              Supplemental
      Indenture, dated as of August 24, 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(g)
      on Form 10-K of Vail Resorts, Inc. for the year ended July 31,
      2009.)10.15*
              Vail
      Resorts, Inc. Amended and Restated 2002 Long Term Incentive and Share
      Award Plan, as amended on December 4, 2009.  (Incorporated by
      reference to Exhibit 99.1 on Form 8-K of Vail Resorts, Inc. filed December
      10, 2009.)31.1
              Certifications
      of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
              2131.2
              Certifications
      of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.
              2232
              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.
              23
 
 *Management
contracts and compensatory plans and arrangements.
 
 
 
 SIGNATURES
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 Date:  March
      10, 2010
              Vail
      Resorts, Inc.By:
              /s/ Jeffrey W. JonesJeffrey
      W. JonesSenior
      Executive Vice President andChief
      Financial Officer(Duly
      Authorized Officer)
 
 
 Date:  March
      10, 2010
              Vail
      Resorts, Inc.By:
              /s/ Mark L. SchoppetMark
      L. SchoppetVice
      President, Controller andChief
      Accounting Officer