----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K**

**x**
**      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT      OF      1934**

**མ**
**      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE      ACT      OF 1934**

**Vail      Resorts, Inc.**

| **Delaware**                                                                                    |   | **51-0291762**                                      |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization)                   |   | (I.R.S.                Employer Identification No.) |
|                                                                                            |   |                                                |
| **390                Interlocken Crescent, Suite 1000,****Broomfield,                Colorado** |   |  **80021**                                     |
| (Address                of principal executive offices)                                         |   | (Zip                Code)                           |

| **(303)                404-1800**                                         |
|---------------------------------------------------------------------------|
| (Registrant’s                telephone number, including area code) |
|                                                                      |

| Securities                registered pursuant to Section 12(b) of the Act:                |
|-------------------------------------------------------------------------------------------|
| Title                of each class:                                                       |   | Name                of each exchange on which registered: |
| Common                Stock, $0.01 par value                                              |   | New                York Stock Exchange |
|                                                                                      |
| Securities                registered pursuant to Section 12(g) of the Act:                |
|        None.        |
| (Title                of class)                                                           |

**x**

**x**

**x**

**x**

**x**

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| **Table                of Contents** |
|--------------------------------------|
|                                 |
| PART                I                |
|                                 |   |
| Item                1.               | Business. | 3 |
| Item                1A.              | Risk                Factors. | 14 |
| Item                1B.              | Unresolved                Staff Comments. | 23 |
| Item                2.               | Properties. | 23 |
| Item                3.               | Legal                Proceedings. | 24 |
| Item                4.               | Submission                of Matters to a Vote of Security Holders. | 25 |
|                                 |   |
| **P****A****RT                II**   |   |
|                                 |   |
| Item                5.               | Market                for Registrant's Common Equity, Related Stockholder Matters                and |   |
|                                 | Issuer                Purchases of Equity Securities. | 26 |
| Item                6.               | Selected                Financial Data. | 27 |
| Item                7.               | Management's                Discussion and Analysis of Financial Condition and Results of                Operations. | 29 |
| Item                7A.         | Quantitative                and Qualitative Disclosures About Market Risk. | 49 |
| Item                8.               | Financial                Statements and Supplementary Data. | F-1 |
| Item                9.               | Changes                in and Disagreements With Accountants on Accounting and Financial                Disclosure. | 50 |
| Item                9A.              | Controls                and Procedures. | 50 |
| Item                9B.              | Other                Information. | 50 |
|                                 |   |
| **PART                III**          |   |
|                                 |   |
| Item                10.              | Directors                and Executive Officers of the Registrant. | 50 |
| Item                11.              | Executive                Compensation. | 51 |
| Item                12.              | Security                Ownership of Certain Beneficial Owners and |   |
|                                 | Management                and Related Stockholder Matters. | 51 |
| Item                13.              | Certain                Relationships and Related Transactions. | 51 |
| Item                14.              | Principal                Accountant Fees and Services. | 51 |
|                                 |   |
| **PART                IV**           |   |
|                                 |   |
| Item                15.    | Exhibits,                Financial Statements Schedules. | 51 |

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**FORWARD-LOOKING      STATEMENTS**

|   | · | *economic                downturns;* |
|--------|--------|--------------------------------------|

|   | · | *terrorist                acts upon the United States;* |
|--------|--------|---------------------------------------------------------|

|   | · | *threat                of or actual war;* |
|--------|--------|-------------------------------------------|

|   | · | *unfavorable                weather conditions;* |
|--------|--------|--------------------------------------------------|

|   | · | *our                ability to obtain financing on terms acceptable to us to finance                our real                estate investments, capital expenditures and growth                strategy;* |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *our                ability to continue to grow our resort and real estate                operations;* |
|--------|--------|--------------------------------------------------------------------------------------------------------|

|   | · | *competition                in our Mountain and Lodging                businesses;* |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | *termination                of existing hotel management                contracts;* |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | *adverse                changes in real estate                markets;* |
|--------|--------|-------------------------------------------------------------------------|

|   | · | *failure                to commence or complete the planned real estate development                projects;* |
|--------|--------|---------------------------------------------------------------------------------------------------------------|

|   | · | *failure                to achieve the anticipated short and long-term financial benefits                from the                planned real estate development                projects;* |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *shortages                or rising costs in construction                materials;* |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | *implications                arising from new Financial Accounting Standards Board(“FASB”)/governmental                legislation, rulings or                interpretations;* |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *our                reliance on government permits or approvals for our use of federal                land or                to make operational                improvements;* |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *our                ability to integrate and successfully operate future acquisitions;                and* |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | *adverse                consequences of current or future legal                claims.* |
|--------|--------|-----------------------------------------------------------------------------------------|

----

**PART      I**

**ITEM      1.** **BUSINESS.**

**General**

**Mountain      Segment**

|   | · | Vail                Mountain ("Vail")-- the largest single ski mountain complex in North                America and the most visited ski resort in the United States for                the                2005/06 ski season and currently ranked as the number one ski resort                in                North America by *SKI*                magazine; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Breckenridge                Mountain ("Breckenridge")-- an attractive destination resort with                numerous                après-ski activities, an extensive bed base, the second most visited                resort in the United States for the 2005/06 ski season and currently                ranked as the number six ski resort in North America by *SKI*                magazine; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Keystone                Resort ("Keystone")-- a year-round family-oriented vacation destination,                the fifth most visited resort in the United States for the 2005/06                ski                season and currently ranked as the number fourteen ski resort in                North                America by *SKI*                magazine; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Heavenly                Mountain Resort ("Heavenly")-- the third largest ski resort in North                America, the eighth most visited resort in the United States for                the                2005/06 ski season and currently ranked as the number seventeen ski                resort                in North America by *SKI*                magazine; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Beaver                Creek Resort ("Beaver Creek")-- one of the world's premier luxury                mountain                resorts, the ninth most visited ski resort in the United States for                the                2005/06 ski season and currently ranked as the number eight ski resort                in                North America by *SKI*                magazine. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company has some of the most expansive and varied terrain in North                America--Vail alone offers approximately 5,300 skiable acres and                Heavenly                offers approximately 4,800 skiable acres. The Company's five ski                resorts                offer nearly 17,000 skiable acres in aggregate, with substantial                offerings                for beginner, intermediate and advanced skiers. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | With                the growing popularity of freestyle skiing and riding, each of the                Company's resorts is committed to providing exceptional terrain parks                and                pipes. Each resort has multiple parks and pipes that include terrain                that                will challenge expert and professional riders as well as areas for                learning and children. Keystone’s A51 Terrain Park is one of the largest                parks offering night riding in the                country. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company is involved in initiatives that support the National Ski                Area                Association's programs to grow participation in snowsports. Each                of the                Company's resorts runs specific programs designed to attract and                retain                newcomers to snowsports. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company's locations in the Colorado Rocky Mountains receive average                yearly                snowfall of between 20 and 30 feet and the Sierra Nevada Mountains                receive                average yearly snowfall of between 25 and 35 feet, which is significantly                higher than the average for all U.S. ski                resorts. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company's Colorado resorts are proximate to both Denver International                Airport and Eagle County Regional Airport, and Heavenly is proximate                to                both Reno/Tahoe International Airport and Sacramento International                Airport. This provides ease of access to the Company's resorts for                destination visitors. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Colorado Front Range market, with a population of approximately 3.7                million, is within approximately 100 miles from each of the Company's                Colorado resorts, with access via a major interstate                highway. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Heavenly                is proximate to two large California population centers, the                Sacramento/Central Valley and the San Francisco Bay                Area. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company continues to invest in the latest technology in ticketing                and                snowmaking systems, and the Company has an extensive fleet of grooming                equipment. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company systematically replaces lifts, and in the past three fiscal                years,                the Company has installed seven high-speed chairlifts across its                resorts:                one four-passenger chairlift at Breckenridge, four four-passenger                chairlifts at Beaver Creek and one six-passenger chairlift and one                four-passenger chairlift at Heavenly. The Company is installing one                eight-passenger gondola at Breckenridge for the 2006/07 ski season.                At a                minimum, the Company plans to install a four-passenger high-speed                chairlift at Heavenly for the 2007/08 ski                season. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company provides a wide variety of quality dining venues both on-                and                off-mountain, ranging from top-rated fine dining establishments to                trailside express food service                outlets. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company, through SSI Venture, LLC ("SSV"), has over 120 retail/rental                outlets specializing in sporting goods including ski, golf and bicycle                equipment. In addition to providing a major retail/rental presence                at each                of the Company's ski resorts, the Company also has retail/rental                locations                throughout the Colorado Front Range, at other Colorado ski resorts                and in                the San Francisco Bay Area. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company's twelve owned and managed hotels and inventory of approximately                1,800 managed condominium rooms (included in the operations of the                Lodging                segment) located in proximity to the Company's Colorado ski resorts                provide accommodation options for all guests, with a variety of prices                ranging from high upscale to moderate, which appeal to the varied                needs of                guests and families. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company is an industry leader in providing on- and off-mountain amenities,                including substantial full-service retail and equipment rental facilities,                mountain-top activities centers, and resort-wide charging, which                enables                guests to use their lift ticket or pass to make purchases at many                Company-owned facilities. The Company's innovative frequent guest                programs                and extensive array of lift ticket products at varied price points                provide                value to guests. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company is strongly committed to providing quality guest service,                including world class ski and snowboarding schools, teams of on-mountain                hosts and new technology centers, where guests can try the latest                technical innovations in snowsports equipment. The Company solicits                guest                feedback through extensive use of surveys, which the Company utilizes                to                ensure high levels of customer                satisfaction. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company continually upgrades and expands available services and amenities                through capital improvements and real estate development activities.                Current projects include the major revitalization of the primary                portals                to Vail Mountain at Vail Village and LionsHead, collectively known                as                "Vail's New Dawn", developing new villages at the base of Breckenridge's                Peaks 7 and 8, collectively known as “The Peaks of Breckenridge”,                upgrading dining at Vail, Beaver Creek and Heavenly, a new gondola                at                Breckenridge connecting the town with Peaks 7 and 8, snowmaking upgrades                at Vail, Beaver Creek, Keystone and Breckenridge and additional planning                and development projects in and around each of the Company's resorts.                The                Company must obtain a variety of necessary approvals for certain                of these                projects before the Company can proceed with its overall                plans. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | As                part of a long-standing commitment to responsible stewardship of                its                natural mountain settings, the Company recently launched two                initiatives in environmental sustainability. First, it has chosen                to                offset 100% of its energy use by purchasing nearly 152,000 megawatt-hours                of wind energy credits annually for its five mountain resorts, its                lodging                properties including RockResorts International, LLC (“RockResorts”) and                Grand Teton Lodge Company (“GTLC”), all of its retail/rental locations and                its new corporate headquarters in Broomfield, Colorado. Second, the                Company is partnering with the National Forest Foundation to raise                funds                for various conservation projects in the White River National Forest                in                Colorado and the National Forests of Tahoe Basin in California/Nevada                where the Company operates its five mountain resorts. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Lodging      Segment**

|   | · | RockResorts--a                luxury hotel management company with a portfolio of three Company-owned                and five managed, third-party owned resort hotels with locations                across                the U.S.; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | GTLC--a                summer destination resort with three resort properties in the Park                and the                Jackson Hole Golf & Tennis Club (“JHG&TC”) near Jackson,                Wyoming; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Six                independently flagged Company-owned hotels (besides GTLC), management                of                the Vail Marriott Mountain Resort & Spa ("Vail Marriott") and Austria                Haus Hotel and condominium management operations in and around the                Company's Colorado ski resorts; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Six                owned resort golf courses. |
|--------|--------|-----------------------------------------------|

|                                             |                                     |                                   |      |
|--------------------------------------------------|------------------------------------------|----------------------------------------|-----------|
| **Name**                                         | **Location**                             | **Own/Manage**                         | **Rooms** |
|                                             |                                     |                                   |      |
| *RockResorts:*                                   |                                     |                                   |      |
| The                Equinox                       | Manchester                Village, VT    | Manage                                 | 179       |
| The                Lodge at Vail                 | Vail,                CO                  | Own                                    | 152       |
| La                Posada de Santa Fe             | Santa                Fe, NM              | Manage                                 | 157       |
| The                Keystone Lodge                | Keystone,                CO              | Own                                    | 152       |
| Snake                River Lodge & Spa       | Teton                Village, WY         | Manage                                 | 140       |
| Rosario                Resort & Spa          | San                Juan Islands, WA      | Manage                                 | 116       |
| The                Pines Lodge                   | Beaver                Creek, CO          | Own                                    | 70        |
| The                Lodge & Spa at Cordillera | Edwards,                CO               | Manage                                 | 65        |
|                                             |                                     |                                   |      |
| *Other                Hotels:*                   |                                     |                                   |      |
| Jackson                Lake Lodge                | Grand                Teton Nat'l Pk., WY | Concessionaire                Contract | 385       |
| Colter                Bay Village                | Grand                Teton Nat'l Pk., WY | Concessionaire                Contract | 166       |
| Jenny                Lake Lodge                  | Grand                Teton Nat'l Pk., WY | Concessionaire                Contract | 37        |
| Vail                Marriott Mountain Resort     | Vail,                CO                  | Manage                                 | 345       |
| &                Spa                         |                                     |                                   |      |
| The                Great Divide Lodge            | Breckenridge,                CO          | Own                                    | 208       |
| Inn                at Keystone                   | Keystone,                CO              | Own                                    | 103       |
| Breckenridge                Mountain Lodge       | Breckenridge,                CO          | Own                                    | 71        |
| Village                Hotel                     | Breckenridge,                CO          | Own                                    | 60        |
| Inn                at Beaver Creek               | Beaver                Creek, CO          | Own                                    | 46        |
| Austria                Haus Hotel                | Vail,                CO                  | Manage                                 | 25        |
| Ski                Tip Lodge                     | Keystone,                CO              | Own                                    | 10        |

|   | · | All                of the Company's hotels are located in highly desirable resort                destinations. |
|--------|--------|----------------------------------------------------------------------------------------------------------------|

|   | · | The                Company's hotel portfolio has achieved some of the most prestigious                hotel                designations in the world, including two hotels designated as Leading                Hotels of the World, five designated as Preferred Hotels & Resorts and                two designated as Historic Hotels of America. The Company has six                properties and four hotel restaurants in its portfolio that are currently                rated as AAA 4-Diamond. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                RockResorts brand is an historic brand name with a rich tradition                associated with high quality luxury resort                hotels. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Many                of the Company's hotels (both owned and managed) are designed to                provide a                look that feels indigenous to their surroundings, enhancing the guest's                vacation experience. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Many                of the hotels in the Company's portfolio provide a wide array of                amenities                available to the guest such as access to world-class ski and golf                resorts,                spa facilities, water sports and a number of other outdoor activities                as                well as highly acclaimed dining                options. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Conference                space with the latest technology is available at most of the Company's                hotels. In addition, guests at Keystone can use the Company-owned                Keystone                Conference Center, the largest conference facility in the Colorado                Rocky                Mountain region with more than 100,000 square feet of meeting, exhibit                and                function space. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company has a central reservations system in Colorado that leverages                off                of its ski resort reservations system and has a web-based central                reservation system that provides guests with the ability to plan                their                vacation online. Non-Colorado properties are served by a central                reservations system and global distribution system provided by a                third                party. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company actively upgrades the quality of the accommodations and amenities                available at its hotels through capital improvements. Capital funding                for                third-party owned properties is provided by the owners of the properties.                Recent projects include an extensive room upgrades at The Lodge at                Vail,                renovation of the Avanyu Spa at La Posada de Santa Fe, renovation                of the                hotel room bathrooms at La Posada de Santa Fe and the addition of                new                meeting space and a remodel of the fitness center and spa at the                Vail                Marriott. Planned and current projects include the rebuild of the                clubhouse and a number of golf course improvements at JHG&TC,                extensive facility and technology upgrades at GTLC’s properties within the                Park, a full remodel of the Vail Marriott Grand Ballroom, a new 9,000                square foot Avanyu Spa and guest suites at The Lodge at Vail being                completed in connection with the "Front Door" project in Vail, extensive                upgrades to a portion of The Pines Lodge bathrooms, full renovation                and                repositioning of the Village at Breckenridge and five additional                rooms                being added to the Snake River Lodge & Spa                (“SRL&S”). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Golf      Digest*
*Golf      Digest*
*Golf      Digest*
*Golf      Magazine*

**Real      Estate Segment**

**Employees      **

**Regulation      and Legislation **

*Special      Use Permits*

*Federal      Regulations, Company Proposals and Related Approvals*

*Breckenridge      Regulatory Matters*

*Keystone      Regulatory Matters*

*Vail      and Beaver Creek Regulatory Matters*

*Revision      of Forest Plan*

*Heavenly      Regulatory Matters*

*GTLC      Concession Contract Process*

**Available      Information**

**ITEM      1A.** **RISK      FACTORS.**

**Risks      Related to the Company’s Business**

**The      Company’s business is seasonal.**

**The      Company is vulnerable to the risk of unfavorable weather      conditions.**

**The      Company is subject to the risk of economic downturns.**

**The      Company depends on a seasonal workforce.**

**Terrorist      acts upon the United States and acts of war (actual or threatened) could have      a      material adverse effect on the Company.**

**The      Company faces significant competition.**

**The      Company’s future acquisitions might not be successful.**

**The      Company’s future development plans might not be successful.**

**The      Company may not be able to fund development plans. **

**The      Company relies on government permits.**

**The      Company is subject to extensive environmental laws and regulations in the      ordinary course of business. **

**The      Company is subject to litigation in the ordinary course of business.**

**The      Company is subject to the risks of brand concentration.**

**The      Company’s future growth and real estate development requires additional capital      whose availability is not assured.**

**Future      changes in the real estate market could affect the value of the Company’s      investments.**

**If      the Company does not retain its key personnel, its business may      suffer.**

**The      Company is subject to accounting regulations and uses certain accounting      estimates and judgments that may differ significantly from actual results.      **

**Risks      Relating to The Company’s Capital Structure**

**Future      sales of shares of the Company’s common stock could depress the price of the      common stock. **

**The      Company’s stock price is highly volatile. **

**The      Company has not historically paid cash dividends to its common stockholders.      **

**Anti-takeover      provisions affecting the Company could prevent or delay a change of control      that      is beneficial to its shareholders. **

**The      Company’s indebtedness could adversely affect its financial health and prevent      the Company from fulfilling its obligations.**

**There      are restrictions imposed by the terms of the Company’s      indebtedness.**

**ITEM      1B. UNRESOLVED      STAFF COMMENTS.**

**ITEM      2.** **PROPERTIES.**

| **Location**                                                 |   | **Ownership**                                |   | **Use**                                                                                                                                                                                     |
|--------------------------------------------------------------|--------|----------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Arrowhead                Mountain, CO             |   |  Owned                                  |   |  Ski                trails and ski resort operations, including ski lifts, buildings                and other                improvements, commercial space                            |
|  Avon,                CO                                |   |  Owned                                  |   |  Warehouse                facility                                                                                                                                                     |
|  BC                Housing Riveredge, CO                |   |  26%                Owned               |   |  Employee                housing facilities                                                                                                                                            |
|  Bachelor                Gulch Village, CO         |   |  Owned                                  |   |  Ski                resort operations, including ski lifts, ski trails, buildings and                other                improvements, commercial space                               |
|  Beaver                Creek Mountain, CO          |   |  Owned                                  |   |  Ski                resort operations, including ski lifts, buildings and other improvements,                commercial space, real estate held for sale or                development |
|  Beaver                Creek Mountain, CO (3,801 acres) |   |  Special                Use Permit      |   |  Ski                trails, ski lifts, buildings and other improvements                                                                                                                |
|  Beaver                Creek Resort, CO            |   |  Owned                                  |   |  Golf                course, clubhouse commercial space and residential                spaces                                                                                          |
|  Breckenridge                Mountain, CO               |   |  Owned                                  |   |  Ski                resort operations, including ski lifts, buildings and other improvements,                commercial space, real estate held for sale or                development |
|  Breckenridge                Mountain, CO (5,702 acres) |   |  Special                Use Permit      |   |  Ski                trails, ski lifts, buildings and other improvements                                                                                                                |
|  Breckenridge                Terrace, CO                |   |  50%                Owned               |   |  Employee                housing facilities                                                                                                                                            |
|  Broomfield,                CO                          |   |  Leased                                 |   |  Corporate                offices                                                                                                                                                      |
|  Colter                Bay Village, WY                  |   |  Concessionaire                contract |   |  Lodging,                dining                                                                                                                                                        |
|  Great                Divide Lodge, CO                  |   |  Owned                                  |   |  Lodging,                dining and conference facilities                                                                                                                              |
|  Heavenly                Mountain Resort, CA            |   |  Owned                                  |   |  Ski                resort operations, including ski lifts, buildings and other improvements,                commercial space                                                          |
|  Heavenly                Mountain, CA (7,050 acres)     |   |  Special                Use Permit      |   |  Ski                trails, ski lifts, buildings and other improvements                                                                                                                |
|  Inn                at Beaver Creek, CO                 |   |  Owned                                  |   |  Lodging,                dining and conference facilities                                                                                                                              |
|  Inn                at Keystone, CO                     |   |  Owned                                  |   |  Lodging,                dining and conference facilities                                                                                                                              |
|  Jackson                Hole Golf & Tennis Club, WY |   |  Owned                                  |   |  Golf                course, clubhouse, tennis facilities, dining, real estate held for                sale or                development                                              |
|  Jackson                Lake Lodge, WY                  |   |  Concessionaire                contract |   |  Lodging,                dining, conference facilities                                                                                                                                 |
|  Jenny                Lake Lodge, WY                    |   |  Concessionaire                contract |   |  Lodging,                dining                                                                                                                                                        |
|  Keystone                Conference Center, CO          |   |  Owned                                  |   |  Conference                facility                                                                                                                                                    |
|  Keystone                Lodge, CO                      |   |  Owned                                  |   |  Lodging,                dining and conference facilities                                                                                                                              |
|  Keystone                Mountain, CO                   |   |  Owned                                  |   |  Ski                resort operations, including ski lifts, buildings and other improvements,                commercial space                                                          |
|  Keystone                Mountain, CO (8,376 acres)     |   |  Special                Use Permit      |   |  Ski                trails, ski lifts, buildings and other                improvements                                                                                                 |

|  Keystone                Ranch, CO                  |   |  Owned                             |   |  Golf                course, clubhouse and restaurant facilities                                                                                           |
|----------------------------------------------------------|--------|-----------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  Keystone                Resort, CO                 |   |  Owned                             |   |  Resort                operations, dining, commercial space, conference facilities, real                estate                held for sale or development |
|  Lakewood,                CO                        |   |  Leased                            |   |  Administrative                offices                                                                                                                     |
|  Red                Sky Ranch, CO                   |   |  Owned                             |   |  Golf                course, clubhouses and real estate held for sale and                development                                                       |
|  River                Course at Keystone, CO        |   |  Owned                             |   |  Golf                course and clubhouse                                                                                                                  |
|  Seasons                at Avon, CO                 |   |  Leased/50%                owned   |   |  Administrative                offices                                                                                                                     |
|  Ski                Tip Lodge, CO                   |   |  Owned                             |   |  Lodging                and dining facilities                                                                                                              |
|  The                Lodge at Vail, CO               |   |  Owned                             |   |  Lodging,                dining and conference facilities, real estate held for sale or                development                                         |
|  The                Tarnes at Beaver Creek, CO      |   |  31%                Owned          |   |  Employee                housing facilities                                                                                                                |
|  Tenderfoot                Housing, CO              |   |  50%                Owned          |   |  Employee                housing facilities                                                                                                                |
|  The                Pines Lodge at Beaver Creek, CO |   |  Owned                             |   |  Lodging,                dining, conference facilities                                                                                                     |
|  Vail                Mountain, CO              |   |  Owned                             |   |  Ski                resort operations, including ski lifts, buildings and other improvements,                commercial space                              |
|  Vail                Mountain, CO (12,226 acres)    |   |  Special                Use Permit |   |  Ski                trails, ski lifts, buildings and other improvements                                                                                    |
|  Village                at Breckenridge, CO         |   |  Owned                             |   |  Lodging,                dining, conference facilities and commercial space                                                                                |
|  SSV                Properties                      |   |  61.7%-owned                       |   |  Over                120 retail stores for recreational products including                rental                                                           |

**ITEM      3.** **LEGAL      PROCEEDINGS.**

*Cheeca      Lodge & Spa Contract Dispute*

*Breckenridge      Terrace Employee Housing Construction Defect/Water Intrusion      Claims*

**ITEM      4.** **SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS.**

----

**PART      II**

**ITEM      5.** **MARKET      FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PUCHASES      OF EQUITY SECURITIES.**

|                                    |   | **Vail                Resorts** |
|-----------------------------------------|--------|---------------------------------|
|                                    |   | **Common                Stock** |
|                                    |   | **High**                        |   | **Low** |
| Year                Ended July 31, 2006 |   |                            |   |   |   |   |
| 1st                Quarter              |   | $                               | 33.66 |   | $ | 26.30 |
| 2nd                Quarter              |   |                            | 38.89 |   |   | 30.16 |
| 3rd                Quarter              |   |                            | 39.13 |   |   | 30.10 |
| 4th                Quarter              |   |                            | 39.98 |   |   | 33.58 |
|                                    |   |                            |   |   |   |   |
| Year                Ended July 31, 2005 |   |                            |   |   |   |   |
| 1st                Quarter              |   | $                               | 20.48 |   | $ | 17.30 |
| 2nd                Quarter              |   |                            | 24.00 |   |   | 18.85 |
| 3rd                Quarter              |   |                            | 26.95 |   |   | 22.83 |
| 4th                Quarter              |   |                            | 29.73 |   |   | 25.10 |

***Repurchase      of equity securities***

| ** Period**                                                |                           |                **Total                Number of Shares Repurchased** |   |    |                **Average                Price Paid per Share** |   |                **Total                Number of Shares Purchased as Part of Publicly Announced Plans or                Programs                (1)** |   |  **Number                of Shares that May yet Be Purchased Under the Plans or Programs                (1)** |
|-----------------------------------------------------------------|--------------------------------|---------------------------------------------------------------------------|--------|---------|---------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------|
|                May                1, 2006 - May 31, 2006   |                           |  --                                                                  |   |  $ |  --                                                            |   |  --                                                                                                                                                  |   |  3,000,000                                                                                                    |
|                June                1, 2006 - June 30, 2006 |       |  315,100                                                             |   |    |  34.37                                                         |   |  315,100                                                                                                                                             |   |  2,684,900                                                                                                    |
|                July                1, 2006 - July 31, 2006 |                           |  --                                                                  |   |    |  --                                                            |   |  --                                                                                                                                                  |   |  2,684,900                                                                                                    |
|                Total                                       |                           |  315,100                                                             |   |  $ |  34.37                                                         |   |  315,100                                                                                                                                             |   |                                                                                                               |

----

**ITEM      6.** **SELECTED      FINANCIAL DATA.**

|                                                                         |   | **Year                Ended July 31,** |
|------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                         |   | **2006**(1)                            |   | **2005**(1) |   | **2004**** **(1) | **2003**(1) |   | **2002**(1) |
| **Statement                of Operations Data:**                             |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenue:                                                                     |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 620,441 |   |   | $ | 540,855 |   |   | $ | 500,995 |   | $ | 460,568 |   |   | $ | 396,572 |   |
| Lodging                                                                      |   |                                   | 155,807 |   |   |   | 196,351 |   |   |   | 180,525 |   |   | 172,003 |   |   |   | 154,834 |   |
| Real                estate                                                   |   |                                   | 62,604 |   |   |   | 72,781 |   |   |   | 45,123 |   |   |  80,401 |   |   |   | 63,854 |   |
| Total                net revenue                                             |   |                                   | 838,852 |   |   |   | 809,987 |   |   |   | 726,643 |   |   | 712,972 |   |   |   | 615,260 |   |
| Segment                operating expense:                                    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   |                                   | 443,116 |   |   |   | 391,889 |   |   |   | 368,875 |   |   | 362,131 |   |   |   | 305,299 |   |
| Lodging                                                                      |   |                                   | 142,693 |   |   |   | 177,469 |   |   |   | 165,983 |   |   | 161,846 |   |   |   | 140,856 |   |
| Real                estate                                                   |   |                                   | 56,676 |   |   |   | 58,254 |   |   |   | 16,791 |   |   | 66,642 |   |   |   | 51,326 |   |
| Total                segment operating expense                               |   |                                   | 642,485 |   |   |   | 627,612 |   |   |   | 551,649 |   |   | 590,619 |   |   |   | 497,481 |   |
| Gain                on transfer of property, net                             |   |                                   | -- |   |   |   | -- |   |   |   | 2,147 |   |   | -- |   |   |   | -- |   |
| Mountain                equity investment income, net                        |   |                                   | 3,876 |   |   |   | 2,303 |   |   |   | 1,376 |   |   | 1,009 |   |   |   | 1,748 |   |
| Lodging                equity investment loss, net                           |   |                                   | -- |   |   |   | (2,679 | ) |   |   | (3,432 | ) |   | (5,995 | ) |   |   | (57 | ) |
| Real                estate equity investment income (loss), net              |   |                                   | 791 |   |   |   | (102 | ) |   |   | 460 |   |   | 3,962 |   |   |   | 2,744 |   |
| Interest                expense                                              |   |                                   | (36,478 | ) |   |   | (40,298 | ) |   |   | (47,479 | ) |   | (50,001 | ) |   |   | (38,788 | ) |
| Relocation                and separation charges                             |   |                                   | (5,096 | ) |   |   | -- |   |   |   | -- |   |   | -- |   |   |   | -- |   |
| Loss                on extinguishment of debt                                |   |                                   | -- |   |   |   | (612 | ) |   |   | (37,084 | ) |   | -- |   |   |   | -- |   |
| Contract                dispute charges                                      |   |                                   | (3,282 | ) |   |   | -- |   |   |   | -- |   |   | -- |   |   |   | -- |   |
| Mold                remediation credit (charge)                              |   |                                   | 1,411 |   |   |   | -- |   |   |   | (5,500 | ) |   | -- |   |   |   | -- |   |
| Gain                (loss) from sale of businesses, net                      |   |                                   | 4,625 |   |   |   | (7,353 | ) |   |   | -- |   |   | -- |   |   |   | -- |   |
| Net                income (loss)                                             |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) | $ | (8,527 | ) |   | $ | 7,050 |   |
| Diluted                per share net income (loss)                           |   | $                                      | 1.19 |   |   | $ | 0.64 |   |   | $ | (0.17 | ) | $ | (0.24 | ) |   | $ | 0.20 |   |
|                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Other                Data:**                                               |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Mountain**                                                                 |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Skier                visits(2)                                               |   |                                   | 6,288 |   |   |   | 5,940 |   |   |   | 5,636 |   |   | 5,730 |   |   |   | 4,732 |   |
| ETP                (3)                                                       |   | $                                      | 41.83 |   |   | $ | 39.30 |   |   | $ | 37.67 |   | $ | 34.13 |   |   | $ | 34.22 |   |
| **Lodging**                                                                  |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ADR(4)                                                                       |   | $                                      | 202.27 |   |   | $ | 196.26 |   |   | $ | 187.90 |   | $ | 184.25 |   |   | $ | 185.97 |   |
| RevPAR(5)                                                                    |   | $                                      | 92.41 |   |   | $ | 90.98 |   |   | $ | 81.33 |   | $ | 77.86 |   |   | $ | 80.35 |   |
| **Resort**                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Resort                revenue per skier visit(6)                             |   | $                                      | 116.25 |   |   | $ | 112.09 |   |   | $ | 109.72 |   | $ | 99.18 |   |   | $ | 106.53 |   |
| **Real                Estate**                                               |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Real                estate held for sale and investment(7)                   |   | $                                      | 259,384 |   |   | $ | 154,874 |   |   | $ | 134,548 |   | $ | 123,223 |   |   | $ | 161,778 |   |
| **Other                Balance Sheet Data**                                  |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents(8)                                  |   | $                                      | 191,794 |   |   | $ | 136,580 |   |   | $ | 46,328 |   | $ | 7,874 |   |   | $ | 13,110 |   |
| Total                assets                                                  |   | $                                      | 1,687,643 |   |   | $ | 1,525,921 |   |   | $ | 1,533,957 |   | $ | 1,455,442 |   |   | $ | 1,449,026 |   |
| Long-term                debt (including long-term debt due within one year) |   | $                                      | 531,228 |   |   | $ | 521,710 |   |   | $ | 625,803 |   | $ | 584,151 |   |   | $ | 602,786 |   |
| Net                debt(9)                                                   |   | $                                      | 339,434 |   |   | $ | 385,130 |   |   | $ | 579,475 |   | $ | 576,277 |   |   | $ | 589,676 |   |
| Stockholders'                equity                                          |   | $                                      | 642,777 |   |   | $ | 540,529 |   |   | $ | 491,163 |   | $ | 496,246 |   |   | $ | 504,004 |   |

*(footnotes      to selected financial data appear on following page)*

----

*Footnotes      to Selected Financial Data:*

| *(1)* | *The                Company has made several acquisitions and dispositions which impact                comparability between years during the past five years: Heavenly                Ski                Resort (acquired in May 2002), Vail Marriott (acquired in December                2001                and subsequently sold in June 2005), The Lodge at Rancho Mirage (“Rancho                Mirage”) (acquired in November 2001 and subsequently sold in July 2005),                RockResorts (acquired in November 2001), investment in Ritz-Carlton,                Bachelor Gulch (“BG Resort”) (opened November 2002 and subsequently sold                in December 2004) and SRL&S (sold in January 2006). In addition, the                Company consolidated several entities during the year ended July                31, 2004                as a result of the adoption of FASB Interpretation No. 46, "Consolidation                of Variable Interest Entities-an Interpretation of ARB No. 51, Revised"                ("FIN 46R"). See Note 7,* *Variable                Interest Entities, of the Notes to Consolidated Financial Statements                included in Item 8 of this Form 10-K for information regarding the                entities consolidated under FIN 46R. Effective August 1, 2005, the                Company                adopted Statement of Financial Accounting Standards ("SFAS") No.                123R,                "Share-Based Payment" ("SFAS 123R"). See Note 2, Summary of Significant                Accounting Policies, of the Notes to Consolidated Financial Statements                in                Item 8 of this Form 10-K for the impact to the consolidated statement                of                operations as a result of the adoption of SFAS                123R.* |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(2)* | *A                skier visit represents a person utilizing a ticket or pass to access                a                mountain resort for any part of one day, and includes both paid and                complimentary access.* |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(3)* | *ETP                is defined as lift ticket revenue divided by total skier                visits.* |
|-------|------------------------------------------------------------------------------------------------------|

| *(4)* | *ADR                is calculated by dividing total room revenue by the number of occupied                rooms during the respective                periods.* |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(5)* | *RevPAR                is calculated by dividing total room revenue by the number of rooms                that                are available to guests during the respective                periods.* |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(6)* | *Resort                revenue per skier visit is defined as the sum of the Mountain and                Lodging                revenue (excluding revenue generated by GTLC, SRL&S, Rancho Mirage and                RockResorts) divided by skier                visits.* |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(7)* | *Real                estate held for sale and investment includes all land, development                costs                and other improvements associated with real estate held for sale                and                investment, as well as investments in real estate joint                ventures.* |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(8)* | *Cash                and cash equivalents excludes restricted                cash.* |
|-------|-------------------------------------------------------------------------------------|

| *(9)* | *Net                debt is defined as long-term debt plus long-term debt due within                one year                less cash and cash equivalents.* |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**ITEM      7.** **MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS.**

**Overview**

**Recent      Trends, Risks and Uncertainties**

|   | · | The                timing and amount of snowfall has an impact on skier visits. To mitigate                this impact, the Company focuses efforts on sales of season passes                prior                to the beginning of the season to In-State skiers, as most weather                sensitive visitors to the Company’s ski resorts tend to be from the                Colorado Front Range, to whom the Company markets season pass products.                Additionally, the Company has invested in snowmaking upgrades in                an effort                to address the inconsistency of early season snowfall where possible.                In                the year ended July 31, 2006, season pass sales represented 23% of                total                lift revenues, which represented approximately 10% of total net revenues                for the Mountain segment. Season pass sales to date for the 2006/07                season                indicate favorable trends in revenue. However, there can be no certainty                that such favorable trends will continue in the                future. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Consistent                with prior years, the Company plans to raise prices on all lift ticket                products, including season pass products, for the 2006/07 ski season                and                continues to charge some of the highest prices in the industry. While                pricing increases historically have not reduced demand, there can                be no                assurances that demand will remain price                inelastic. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company operates its ski areas under various Forest Service permits,                and                many of the Company's operations require permits and approval from                governmental authorities; therefore many of the Company’s on-mountain                capital improvements must go through an approval process. Changes                or                impacts of the regulatory environment applicable to the Company may                have                detrimental effects on the Company. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | During                the years ended July 31, 2006 and 2005, the Company successfully                executed                its strategy to reduce hotel ownership in favor of selectively increasing                its managed property portfolio. Sales of owned hotel properties included                SRL&S in January 2006, Rancho Mirage in July 2005, Vail Marriott in                June 2005 and the sale of the Company's investment in the BG Resort                in                December 2004. The Company retained management contracts for SRL&S,                Rancho Mirage and Vail Marriott, although the Rancho Mirage contract                was                subsequently terminated in the first quarter of the year ending July                31,                2007 in conjunction with the closing of the hotel by the new owners                for                redevelopment purposes. The Company continues to evaluate potential                sales                and other strategic initiatives which could also involve the conversion                of                hotel rooms to real estate product with respect to some of its lodging                properties; however, the Company does not anticipate future sales                of hotel                properties will approach the magnitude of recent activity. The sale                of                owned hotel properties results in Lodging Reported EBITDA no longer                reflecting the operating results of the hotels, but includes management                fee revenue in cases where the management contract is retained. See                "Results of Operations" for information regarding the financial impacts                of                these transactions. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Potential                ownership changes of hotels currently under RockResorts management                could                result in the termination of existing RockResorts management contracts,                which could impact the results of operations of the Lodging segment.                In                August 2006, RockResorts' management agreement for Rancho Mirage                was                terminated in conjunction with the closing of the hotel as part of                a of                redevelopment plan by the current hotel owner, which will result                in the                Company earning a termination fee subsequent to July 31, 2006, but                loss of                future management fees. RockResorts                recognized $644,000 in revenue related to the management of this                property                in the year ended July 31, 2006. However,                the Company continues to pursue new management contracts, which may                include, in addition to management fees, marketing license fees and                technical service fees in conjunction with a project’s development and                sales. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | On                March 6, 2006, RockResorts was notified by the ownership of Cheeca,                formerly a RockResorts managed property, that its management agreement                was                being terminated effective immediately. RockResorts recognized $666,000                in                revenue related to the management of this property in the                year ended July 31, 2005                (its last full year of the Company’s management of the property).                RockResorts believes and asserts that the termination is in violation                of                the management agreement and is seeking recovery of monetary damages                for                the loss of the remaining 27 years of management fees, inclusive                of                renewal periods under the contract, attorneys’ fees and costs. Pursuant to                the dispute resolution provisions of the management agreement, the                disputed matter is pending before a single judge arbitrator at the                JAMS                Arbitration Tribunal in Chicago, Illinois. The arbitration hearing                is                scheduled to conclude in early October 2006, and the Company expects                the                arbitrator to render a decision by the end of the second quarter                for the                year ending July 31, 2007. Cheeca Holdings, LLC, the entity owner                of the                hotel property, asserts that RockResorts breached the management                contract,                among other alleged breaches, and seeks a ruling that it had a right                to                terminate the management agreement and recovery of monetary damages,                attorneys’ fees and costs. The Company has recorded $3.3 million in legal                related costs (classified as “contract dispute charges” in the                accompanying consolidated statement of operations) in the year ended                July                31, 2006 as a result of legal action against the hotel owner and                anticipates incurring substantially more legal related costs until                this                matter is resolved. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  · | GTLC operates three lodging properties, food and              beverage              services, retail, camping and other services within the Park under              a              concession contract with the NPS. In accordance with Federal law, the              NPS              had considered competitive bids for a new concession contract as the              Company’s contract had expired, and in May 2006, the Company was informed              it was awarded a new 15 year agreement to continue as the concessionaire              for GTLC. The Company expects to execute the contract within the current              calendar year. Provisions of the new agreement include an increase              in the              NPS franchise fee. On an annual basis, effective              January 1, 2007, assuming final approval by the United States Congress              and              the NPS, the Company will pay approximately $2.0 million more annually              in              franchise fees to the NPS than it has previously incurred. Additionally,              the Company expects the new contract will require capital improvement              outlays in excess of historical              expenditures. |
|--------|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  | In recent years, the Company has shifted              its              real estate focus to more vertical development, which requires significant              capital investment prior to project completion. For example, the Company              expects to incur between $325 million and $375 million of construction              costs subsequent to July 31, 2006 on the Arrabelle and The Lodge at              Vail              Chalets projects (including the construction of related resort depreciable              assets). The Company mitigates the risk associated with vertical              development by utilizing the following: (1) the Company generally              pre-sells residential units and requires non-refundable deposits of              at              least 15% of the sales prices. Pre-sales require buyers to provide              earnest              money deposits to the Company, which would be refundable to the buyer              should the Company fail to complete the related development. Pre-sale              targets are set by management. Generally, the Company strives to meet              its              pre-sale targets in the period between the commencement of the marketing              of a development and the planned commencement of construction, (2)              the              Company attempts to secure guaranteed maximum price contracts with              its              general contractors which helps protect the Company against rising              costs              of construction and (3) the Company generally uses non-recourse financing              for its vertical development projects that only allow for recourse              against              the specific project’s assets. |
|--------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | · | Real                Estate Reported EBITDA is highly dependent on, among other things,                the                timing of closings on real estate under contract. Changes to the                anticipated timing of closing on one or more real estate units could                materially impact Real Estate Reported EBITDA for a particular quarter                or                fiscal year. Additionally, the magnitude of real estate projects                currently                under development or contemplated could result in a significant increase                in Real Estate Reported EBITDA as these projects close, expected                in the                year ending July 31, 2008 and beyond. However, continual increases                in                construction costs, including construction-related commodities, have                resulted in increases in the total costs for certain of the Company's                current development projects. Additionally, the profitability and/or                viability of current or proposed real estate development projects                could be                adversely affected by continued escalation in construction costs                and/or a                slow-down in market demand, as well as project difficulties or delays                and                the resulting potential negative financial impact associated with                design                or construction issues that may arise in the course of                construction. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company and the minority shareholder in SSV have put and call rights                whereby starting on August 1, 2007, each of the Company and the minority                shareholder may call or put the remaining minority interest in SSV                to the                Company. Execution of the put or call by either party may modify                the                management agreement of SSV and could impact the Company’s ownership                percentage and the way the SSV business is managed. The Company has                entered into preliminary discussions with the minority shareholder,                with                the intent of both parties being to extend the existing management                agreement. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company had $191.8 million in cash and cash equivalents as of July                31,                2006 with no borrowings under its revolver and expects to generate                additional cash from operations including future closures on real                estate.                The Company is currently evaluating how to use its excess cash, including                a combination of the following strategic options: increase real estate                investment for further development; increase Resort capital expenditures;                pursue strategic acquisitions; pay cash dividends; repurchase additional                stock of the Company (see Note 17, Capitalization, of the Notes to                Consolidated Financial Statements for more information regarding                the                Company’s stock repurchase plan) or payoff outstanding debt. The Company’s                debt generally has favorable fixed interest rates and is long-term                in                nature. Additionally, the Company’s Credit Facility and Indenture limit                the Company’s ability to pay dividends, repurchase stock and pay off                certain of its debt, including its 6.75%                Notes. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The                Company uses many methods, estimates and judgments in applying its                accounting policies (see “Critical Accounting Policies” in this section of                this Form 10-K). Such methods, estimates and judgments are, by their                nature, subject to substantial risks, uncertainties and assumptions,                and                factors may arise over time that lead the Company to change its methods,                estimates and judgments. Changes in those methods, estimates and                judgments                could significantly affect the Company’s results of                operations. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Due                to the adoption of SFAS 123R, the Company's operating expenses have                increased by $6.1 million for the year ended July 31, 2006, as compared                to                the previous year, after considering the change in the Company's                compensation strategy to issue a portion of its stock-based compensation                as restricted stock to certain levels of employees.                The Company cannot predict the impact to future operating results                of                expensing stock-based compensation as the expense is predicated on                the                amount and type of future stock based compensation awards granted                and the                fair value of those awards to be determined at the time of                grant. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Results      of Operations **

***Summary***

|                                                                          |   | **Year                Ended July 31,** |
|-------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                          |   | **2006**                               |   | **2005** |   | **2004** |
| Mountain                Reported EBITDA excluding stock-based compensation    |   | $                                      | 184,886 |   |   | $ | 151,523 |   |   | $ | 133,649 |   |
| Lodging                Reported EBITDA excluding stock-based compensation     |   |                                   | 14,448 |   |   |   | 16,291 |   |   |   | 11,163 |   |
| Real                Estate Reported EBITDA excluding stock-based compensation |   |                                   | 8,223 |   |   |   | 14,520 |   |   |   | 30,981 |   |
| Income                (loss) before (provision) benefit for income taxes      |   |                                   | 75,010 |   |   |   | 37,623 |   |   |   | (8,516 | ) |
| Net                income (loss)                                              |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |

***Mountain      Segment***

|                                                  |   |                                   |    |         |   |     |   |          |    |          | **Percentage** |
|-------------------------------------------------------|--------|----------------------------------------|---------|--------------|--------|----------|--------|---------------|---------|---------------|----------------|
|                                                  |   | **Year                Ended July 31,** |    | **Increase** |
|                                                  |   | **2006**                               |    | **2005**     |   | **2004** |   | **2006/2005** |    | **2005/2004** |
| Mountain                segment revenues:             |   |                                   |    |         |   |     |   |          |
| Lift                tickets                           |   | $                                      | 263,036 |         | $      | 233,458  |   | $             | 212,329 |          | 12.7           | % |   | 10.0 | % |
| Ski                school                             |   |                                   | 72,628  |         |   | 63,915   |   |          | 58,526  |          | 13.6           | % |   | 9.2 | % |
| Dining                                                |   |                                   | 56,657  |         |   | 53,688   |   |          | 51,511  |          | 5.5            | % |   | 4.2 | % |
| Retail/rental                                         |   |                                   | 149,350 |         |   | 120,149  |   |          | 115,044 |          | 24.3           | % |   | 4.4 | % |
| Other                                                 |   |                                   | 78,770  |         |   | 69,645   |   |          | 63,585  |          | 13.1           | % |   | 9.5 | % |
| Total                Mountain net revenue             |   |                                   | 620,441 |         |   | 540,855  |   |          | 500,995 |          | 14.7           | % |   | 8.0 | % |
| Total                Mountain operating expense       |   |                                   | 443,116 |         |   | 391,889  |   |          | 368,875 |          | 13.1           | % |   | 6.2 | % |
| Mountain                equity investment income, net |   |                                   | 3,876   |         |   | 2,303    |   |          | 1,376   |          | 68.3           | % |   | 67.4 | % |
| Total                Mountain Reported EBITDA         |   | $                                      | 181,201 |         | $      | 151,269  |   | $             | 133,496 |          | 19.8           | % |   | 13.3 | % |
| Total                Mountain Reported EBITDA         |   |                                   |    |         |   |     |   |          |    |          |           |   |   |   |   |
| excluding                stock-based compensation     |   | $                                      | 184,886 |         | $      | 151,523  |   | $             | 133,649 |          | 22.0           | % |   | 13.4 | % |
|                                                  |   |                                   |    |         |   |     |   |          |    |          |           |   |   |   |   |
| Total                skier visits                     |   |                                   | 6,288   |         |   | 5,940    |   |          | 5,636   |          | 5.9            | % |   | 5.4 | % |
| ETP                                                   |   | $                                      | 41.83   |         | $      | 39.30    |   | $             | 37.67   |          | 6.4            | % |   | 4.3 | % |

***Lodging      Segment***

|                                               |   |                                   |    |                    |   |     |    |          |   |          |    |   |   | **Percentage** |
|----------------------------------------------------|--------|----------------------------------------|---------|-------------------------|--------|----------|---------|---------------|--------|---------------|---------|--------|--------|----------------|
|                                               |   | **Year                Ended July 31,** |    | **Increase/(Decrease)** |
|                                               |   | **2006**                               |    | **2005**                |   | **2004** |    | **2006/2005** |   | **2005/2004** |
|                                               |   |                                   |    |                    |   |     |    |          |   |          |
| Total                Lodging net revenue           |   | $                                      | 155,807 |                    |   | $        | 196,351 |          |   | $             | 180,525 |   |   | (20.6          | ) | % |   | 8.8 |   | % |
| Total                Lodging operating expense     |   |                                   | 142,693 |                    |   |     | 177,469 |          |   |          | 165,983 |   |   | (19.6          | ) | % |   | 6.9 |   | % |
| Lodging                equity investment loss, net |   |                                   | --      |                    |   |     | (2,679  | )             |   |          | (3,432  | )      |   | 100.0          |   | % |   | (21.9 | ) | % |
| Total                Lodging Reported EBITDA       |   | $                                      | 13,114  |                    |   | $        | 16,203  |          |   | $             | 11,110  |   |   | (19.1          | ) | % |   | 45.8 |   | % |
| Total                Lodging Reported EBITDA       |   |                                   |    |                    |   |     |    |          |   |          |    |   |   |           |   |   |   |   |   |   |
| excluding                stock-based compensation  |   | $                                      | 14,448  |                    |   | $        | 16,291  |          |   | $             | 11,163  |   |   | (11.3          | ) | % |   | 45.9 |   | % |
|                                               |   |                                   |    |                    |   |     |    |          |   |          |    |   |   |           |   |   |   |   |   |   |
| ADR                                                |   | $                                      | 202.27  |                    |   | $        | 196.26  |          |   | $             | 187.90  |   |   | 3.1            |   | % |   | 4.4 |   | % |
| RevPAR                                             |   | $                                      | 92.41   |                    |   | $        | 90.98   |          |   | $             | 81.33   |   |   | 1.6            |   | % |   | 11.9 |   | % |

***Real      Estate Segment***

|                                                            |   |                                   |   |                    |   |     |   |          |   |          |   | **Percentage** |
|-----------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------|--------|----------|--------|---------------|--------|---------------|--------|----------------|
|                                                            |   | **Year                Ended July 31,** |   | **Increase/(Decrease)** |
|                                                            |   | **2006**                               |   | **2005**                |   | **2004** |   | **2006/2005** |   | **2005/2004** |
|                                                            |   |                                   |   |                    |   |     |
| Single                family land sales                         |   | $                                      | 8,261  |                    | $      | 23,872   |   |          | $      | 13,313        |   | (65.4          | ) | % |   | 79.3 |   | % |
| Multi-family                unit and land sales                 |   |                                   | 47,912 |                    |   | 28,798   |   |          |   | 30,740        |   | 66.4           |   | % |   | (6.3 | ) | % |
| Parking                unit sales                               |   |                                   | --     |                    |   | 11,750   |   |          |   | --            |   | (100.0         | ) | % |   | 100.0 |   | % |
| Other                                                           |   |                                   | 6,431  |                    |   | 8,361    |   |          |   | 1,070         |   | (23.1          | ) | % |   | 681.4 |   | % |
| Total                Real Estate net revenue                    |   |                                   | 62,604 |                    |   | 72,781   |   |          |   | 45,123        |   | (14.0          | ) | % |   | 61.3 |   | % |
| Gain                on transfer of property                     |   |                                   | --     |                    |   | --       |   |          |   | 2,147         |   | --             |   | % |   | (100.0 | ) | % |
| Real                Estate operating expense                    |   |                                   | 56,676 |                    |   | 58,254   |   |          |   | 16,791        |   | (2.7           | ) | % |   | 246.9 |   | % |
| Real                Estate equity investment income (loss), net |   |                                   | 791    |                    |   | (102     | )      |          |   | 460           |   | 875.5          |   | % |   | (122.2 | ) | % |
| Total                Real Estate Reported EBITDA                |   | $                                      | 6,719  |                    | $      | 14,425   |   |          | $      | 30,939        |   | (53.4          | ) | % |   | (53.4 | ) | % |
| Total                Real Estate Reported EBITDA                |   |                                   |   |                    |   |     |   |          |   |          |   |           |   |   |   |   |   |   |
| excluding                stock-based compensation               |   | $                                      | 8,223  |                    | $      | 14,520   |   |          | $      | 30,981        |   | (43.4          | ) | % |   | (53.1 | ) | % |

***Other      Items***

*Depreciation      and amortization*

*Relocation      and separation charges.*

*Asset      impairment charges. *

*Mold      remediation credit/charge. *

*Investment      income, net.*

*Interest      expense, net.*

*Loss      on extinguishment of debt.*

*Gain/loss      on sale of businesses, net.*

*Contract      dispute charges. *

*Gain/loss      on put options, net.*

*Minority      interest in income of consolidated subsidiaries. *

*Income      taxes.*

***Reconciliation      of Non-GAAP Measures***

|                                                                          |   | **Year                Ended July 31,** |
|-------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                          |   | **2006**                               |   | **2005** |   | **2004** |
| Mountain                Reported EBITDA excluding stock-based compensation    |   | $                                      | 184,886 |   |   | $ | 151,523 |   |   | $ | 133,649 |   |
| Mountain                segment stock-based compensation                      |   |                                   | (3,685 | ) |   |   | (254 | ) |   |   | (153 | ) |
| Mountain                Reported EBITDA                                       |   |                                   | 181,201 |   |   |   | 151,269 |   |   |   | 133,496 |   |
| Lodging                Reported EBITDA excluding stock-based compensation     |   |                                   | 14,448 |   |   |   | 16,291 |   |   |   | 11,163 |   |
| Lodging                segment stock-based compensation                       |   |                                   | (1,334 | ) |   |   | (88 | ) |   |   | (53 | ) |
| Lodging                Reported EBITDA                                        |   |                                   | 13,114 |   |   |   | 16,203 |   |   |   | 11,110 |   |
| Real                Estate Reported EBITDA excluding stock-based compensation |   |                                   | 8,223 |   |   |   | 14,520 |   |   |   | 30,981 |   |
| Real                Estate segment stock-based compensation                   |   |                                   | (1,504 | ) |   |   | (95 | ) |   |   | (42 | ) |
| Real                Estate Reported EBITDA                                    |   |                                   | 6,719 |   |   |   | 14,425 |   |   |   | 30,939 |   |
| Total                Reported EBITDA                                          |   |                                   | 201,034 |   |   |   | 181,897 |   |   |   | 175,545 |   |
| Depreciation                and amortization                                  |   |                                   | (86,098 | ) |   |   | (89,968 | ) |   |   | (86,377 | ) |
| Relocation                and separation charges                              |   |                                   | (5,096 | ) |   |   | -- |   |   |   | -- |   |
| Asset                impairment charges                                       |   |                                   | (210 | ) |   |   | (2,550 | ) |   |   | (1,108 | ) |
| Mold                remediation credit (charge)                               |   |                                   | 1,411 |   |   |   | -- |   |   |   | (5,500 | ) |
| Loss                on disposal of fixed assets, net                          |   |                                   | (1,035 | ) |   |   | (1,528 | ) |   |   | (2,345 | ) |
| Investment                income, net                                         |   |                                   | 7,995 |   |   |   | 2,066 |   |   |   | 1,886 |   |
| Interest                expense, net                                          |   |                                   | (36,478 | ) |   |   | (40,298 | ) |   |   | (47,479 | ) |
| Loss                on extinguishment of debt                                 |   |                                   | -- |   |   |   | (612 | ) |   |   | (37,084 | ) |
| Gain                (loss) on sale of businesses, net                         |   |                                   | 4,625 |   |   |   | (7,353 | ) |   |   | -- |   |
| Contract                dispute charges                                       |   |                                   | (3,282 | ) |   |   | -- |   |   |   | -- |   |
| (Loss)                gain on put options, net                                |   |                                   | (1,212 | ) |   |   | 1,158 |   |   |   | (1,875 | ) |
| Other                income (expense), net                                    |   |                                   | 50 |   |   |   | 50 |   |   |   | (179 | ) |
| Minority                interest in income of consolidated subsidiaries, net  |   |                                   | (6,694 | ) |   |   | (5,239 | ) |   |   | (4,000 | ) |
| Income                (loss) before (provision) benefit for income taxes      |   |                                   | 75,010 |   |   |   | 37,623 |   |   |   | (8,516 | ) |
| (Provision)                benefit for income taxes                           |   |                                   | (29,254 | ) |   |   | (14,485 | ) |   |   | 2,557 |   |
| Net                income (loss)                                              |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |

**Liquidity      and Capital Resources**

***Significant      Sources of Cash***

***Significant      Uses of Cash***

***Covenants      and Limitations***

***Capital      Structure***

**Contractual      Obligations**

|                                                            |   |      |      | **Payments                Due by Period** |
|-----------------------------------------------------------------|--------|-----------|-----------|-------------------------------------------|
|                                                            |   |      |      |                                      |   | **2-3** |   | **4-5** |   |   | **More                than** |
| **Contractual                Obligations**                      |   | **Total** |      | **2007**                                  |   | **years** |   | **years** |   |   | **5                years** |
| **Long-Term                Debt****(1)**                        |   | $         | 531,228   |                                      | $ | 5,915 |   | $ | 27,482 |   | $ | 8,260 |   | $ | 489,571 |
| **Fixed                Rate Interest****(1)**                   |   |      | 258,023   |                                      |   | 30,997 |   |   | 61,068 |   |   | 59,204 |   |   | 106,754 |
| **Operating                Leases and Service Contracts**       |   |      | 49,319    |                                      |   | 12,527 |   |   | 16,293 |   |   | 8,703 |   |   | 11,796 |
| **Purchase                Obligations****(2)**                  |   |      | 525,835   |                                      |   | 507,440 |   |   | 18,395 |   |   | -- |   |   | -- |
| **Other                Long-Term Obligations****(3)**** ** |   |      | 1,283     |                                      |   | 520 |   |   | 763 |   |   | -- |   |   | -- |
| **Total                Contractual Cash Obligations**           |   | $         | 1,365,688 |                                      | $ | 557,399 |   | $ | 124,001 |   | $ | 76,167 |   | $ | 608,121 |

*(1)*
*The      fixed-rate interest payments included in the table above assume that all      fixed-rate debt outstanding as of July 31, 2006 will be held to maturity.      Interest payments associated with variable-rate debt have not been included      in      the table. Assuming that the amounts outstanding under variable-rate long-term      debt as of July 31, 2006 are held to maturity, and utilizing interest rates      in      effect at July 31, 2006, the Company anticipates that its annual interest      payments (including commitment fees and letter of credit fees) on variable      rate      long-term debt as of July 31, 2006 will be in the range of $3.0 million to      $5.0      million for at least the next five years. The future annual interest obligations      noted herein are estimated only in relation to debt outstanding as of July      31,      2006, and do not reflect interest obligations on potential future debt or on      non-recourse financing associated with real estate      development.*

*(2)*
*Purchase      obligations include amounts which are classified as trade payables, accrued      payroll and benefits, accrued fees and assessments, accrued taxes, accrued      interest, and commitments (including advances) to complete real estate projects      on the Company's consolidated balance sheet as of July 31, 2006 and other      commitments for goods and services not yet received.*

*(3)*
*Other      long-term obligations include amounts which become due based on deficits in      underlying cash flows of the metropolitan district as described in Note 14,      Commitments and Contingencies, of the Notes to Consolidated Financial      Statements.*

**Off      Balance Sheet Arrangements**

**Critical      Accounting Policies**

***Real      Estate Revenue and Cost of Sales***

*Description*

*Judgments      and Uncertainties*

*Effect      if Actual Results Differ From Assumptions*

***Intangible      Assets.***

*Description*

*Judgments      and Uncertainties*

*Effect      if Actual Results Differ From Assumptions*

***Income      Taxes.***

*Description*

*Judgments      and Uncertainties*

*Effect      if Actual Results Differ From Assumptions*

***Tax      Contingencies.***

*Description*

*Judgments      and Uncertainties*

*Effect      if Actual Results Differ From Assumptions*

***Depreciable      Lives of Assets.***

*Description*

*Judgments      and Uncertainties*

*Effect      if Actual Results Differ From Assumptions*

**New      Accounting Pronouncements**

**Inflation      **

**Seasonality      and Quarterly Results**

**Labor      Market**

**ITEM      7A.** **QUANTITATIVE      AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.**

*Interest      Rate Risk. *

----

**ITEM      8.** **FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA.**

**Vail      Resorts, Inc.**

*Consolidated      Financial Statements for the Years Ended July 31, 2006, 2005 and      2004*

| *Management's                Report on Internal Control Over Financial Reporting** *                                                                                                                                                                                              | F-2    |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                                                   |   |
| *Report                of Independent Registered Public Accounting Firm*                                                                                                                                                                                                               | F-3    |
|                                                                                                                                                                                                                                                                                   |   |
| *Consolidated                Financial Statements*                                                                                                                                                                                                                                     |   |
| Consolidated                Balance Sheets                                                                                                                                                                                                                                             | F-5    |
| Consolidated                Statements of Operations                                                                                                                                                                                                                                   | F-6    |
| Consolidated                Statements of Stockholders' Equity                                                                                                                                                                                                                         | F-7    |
| Consolidated                Statements of Cash Flows                                                                                                                                                                                                                                   | F-8    |
| Supplemental                Schedule of Non-Cash Transactions                                                                                                                                                                                                                          | F-9    |
| Notes                to Consolidated Financial Statements                                                                                                                                                                                                                              | F-10   |
|                                                                                                                                                                                                                                                                                   |   |
| *Financial                Statement Schedule:*                                                                                                                                                                                                                                         |   |
| The                following consolidated financial statement schedule of the Company                is                filed as part of this Report on Form 10-K and should be read in                conjunction with the Company's Consolidated Financial                Statements: |   |
|                                                                                                                                                                                                                                                                                   |   |
| Schedule                II - Valuation and Qualifying Accounts and Reserves                                                                                                                                                                                                            | 58     |

----

***Management's      Report on Internal Control over Financial      Reporting***

*Internal      Control-Integrated Framework*

----

**Report      of Independent Registered Public Accounting Firm**

*Consolidated      financial statements and financial statement schedule*

** **
** **

*Internal      control over financial reporting*

*Internal      Control - Integrated Framework*
*Internal      Control - Integrated Framework*

----

**Vail      Resorts, Inc.**

**Consolidated      Balance Sheets**

**(In      thousands, except share and per share amounts)**

|                                                                                                                                                                           |   | **July                31,** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
|                                                                                                                                                                           |   |                        | **2006** |   |   | **2005** |
| **Assets**                                                                                                                                                                     |   |                        |   |   |   |   |
| Current                assets:                                                                                                                                                 |   |                        |   |   |   |   |
| Cash                and cash equivalents                                                                                                                                       |   | $                           | 191,794 |   | $ | 136,580 |
| Restricted                cash                                                                                                                                                 |   |                        | 20,322 |   |   | 18,253 |
| Trade                receivables, net of allowances of $1,388 and $1,335,                respectively                                                                          |   |                        | 35,949 |   |   | 33,136 |
| Inventories,                net of reserves of $755 and $719, respectively                                                                                                     |   |                        | 42,278 |   |   | 36,078 |
| Deferred                income taxes (Note 12)                                                                                                                                 |   |                        | 11,938 |   |   | 11,405 |
| Other                current assets                                                                                                                                            |   |                        | 23,693 |   |   | 20,697 |
| Assets                held for sale (Note 2)                                                                                                                                   |   |                        | -- |   |   | 26,735 |
| Total                current assets                                                                                                                                            |   |                        | 325,974 |   |   | 282,884 |
| Property,                plant and equipment, net (Note 5)                                                                                                                     |   |                        | 851,112 |   |   | 843,047 |
| Real                estate held for sale and investment                                                                                                                        |   |                        | 259,384 |   |   | 154,874 |
| Deferred                charges and other assets                                                                                                                               |   |                        | 29,615 |   |   | 23,172 |
| Notes                receivable                                                                                                                                                |   |                        | 10,638 |   |   | 9,463 |
| Goodwill,                net (Note 5)                                                                                                                                          |   |                        | 135,811 |   |   | 135,507 |
| Intangible                assets, net (Note 5)                                                                                                                                 |   |                        | 75,109 |   |   | 76,974 |
| Total                assets                                                                                                                                                    |   | $                           | 1,687,643 |   | $ | 1,525,921 |
|                                                                                                                                                                           |   |                        |   |   |   |   |
| **Liabilities                and Stockholders' Equity**                                                                                                                        |   |                        |   |   |   |   |
| Current                liabilities:                                                                                                                                            |   |                        |   |   |   |   |
| Accounts                payable and accrued expenses (Note 5)                                                                                                                  |   | $                           | 230,762 |   | $ | 209,369 |
| Income                taxes payable                                                                                                                                            |   |                        | 17,517 |   |   | 12,979 |
| Long-term                debt due within one year (Note 4)                                                                                                                     |   |                        | 5,915 |   |   | 2,004 |
| Total                current liabilities                                                                                                                                       |   |                        | 254,194 |   |   | 224,352 |
| Long-term                debt (Note 4)                                                                                                                                         |   |                        | 525,313 |   |   | 519,706 |
| Other                long-term liabilities (Note 5)                                                                                                                            |   |                        | 158,490 |   |   | 140,421 |
| Deferred                income taxes (Note 12)                                                                                                                                 |   |                        | 73,064 |   |   | 71,209 |
| Commitments                and contingencies (Note 14)                                                                                                                         |   |                        |   |   |   |   |
| Put                option liabilities (Note 10)                                                                                                                                |   |                        | 1,245 |   |   | 34 |
| Minority                interest in net assets of consolidated subsidiaries                                                                                                    |   |                        | 32,560 |   |   | 29,670 |
| Stockholders’                equity:                                                                                                                                     |   |                        |   |   |   |   |
| Preferred                stock, $0.01 par value, 25,000,000 shares authorized, no shares issued                and                outstanding                                  |   |                        | -- |   |   | -- |
| Common                stock, $0.01 par value, 100,000,000 shares authorized, and 39,036,282                and                36,596,193 shares issued, respectively (Note 17) |   |                        | 390 |   |   | 366 |
| Additional                paid-in capital                                                                                                                                      |   |                        | 509,505 |   |   | 442,527 |
| Deferred                compensation                                                                                                                                           |   |                        | -- |   |   | (329) |
| Retained                earnings                                                                                                                                          |   |                        | 143,721 |   |   | 97,965 |
| Treasury                stock (Note 17)                                                                                                                                        |   |                        | (10,839 | ) |   | -- |
| Total                stockholders’ equity                                                                                                                                |   |                        | 642,777 |   |   | 540,529 |
| Total                liabilities and stockholders’ equity                                                                                                                |   | $                           | 1,687,643 |   | $ | 1,525,921 |

----

**Vail      Resorts, Inc.**

**Consolidated      Statements of Operations**

**(In      thousands, except per share amounts)**

|                                                                         |   | **Year                Ended July 31,** |
|------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                         |   | **2006**                               |   | **2005** |   | **2004** |
| Net                revenue:                                                  |   |                                   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 620,441 |   |   | $ | 540,855 |   |   | $ | 500,995 |   |
| Lodging                                                                      |   |                                   | 155,807 |   |   |   | 196,351 |   |   |   | 180,525 |   |
| Real                estate                                                   |   |                                   | 62,604 |   |   |   | 72,781 |   |   |   | 45,123 |   |
| Total                net revenue                                             |   |                                   | 838,852 |   |   |   | 809,987 |   |   |   | 726,643 |   |
| Operating                expense:                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   |                                   | 443,116 |   |   |   | 391,889 |   |   |   | 368,875 |   |
| Lodging                                                                      |   |                                   | 142,693 |   |   |   | 177,469 |   |   |   | 165,983 |   |
| Real                estate                                                   |   |                                   | 56,676 |   |   |   | 58,254 |   |   |   | 16,791 |   |
| Total                segment operating expense                               |   |                                   | 642,485 |   |   |   | 627,612 |   |   |   | 551,649 |   |
| Other                operating income (expense):                             |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Gain                on transfer of property, net                             |   |                                   | -- |   |   |   | -- |   |   |   | 2,147 |   |
| Depreciation                and amortization                                 |   |                                   | (86,098 | ) |   |   | (89,968 | ) |   |   | (86,377 | ) |
| Relocation                and separation charges (Note 8)                    |   |                                   | (5,096 | ) |   |   | -- |   |   |   | -- |   |
| Asset                impairment charges (Note 11)                            |   |                                   | (210 | ) |   |   | (2,550 | ) |   |   | (1,108 | ) |
| Mold                remediation credit (charge) (Note 14)                    |   |                                   | 1,411 |   |   |   | -- |   |   |   | (5,500 | ) |
| Loss                on disposal of fixed assets, net                         |   |                                   | (1,035 | ) |   |   | (1,528 | ) |   |   | (2,345 | ) |
| Income                from operations                                        |   |                                   | 105,339 |   |   |   | 88,329 |   |   |   | 81,811 |   |
| Mountain                equity investment income, net                        |   |                                   | 3,876 |   |   |   | 2,303 |   |   |   | 1,376 |   |
| Lodging                equity investment loss, net                           |   |                                   | -- |   |   |   | (2,679 | ) |   |   | (3,432 | ) |
| Real                estate equity investment income (loss), net              |   |                                   | 791 |   |   |   | (102 | ) |   |   | 460 |   |
| Investment                income, net                                        |   |                                   | 7,995 |   |   |   | 2,066 |   |   |   | 1,886 |   |
| Interest                expense, net                                         |   |                                   | (36,478 | ) |   |   | (40,298 | ) |   |   | (47,479 | ) |
| Loss                on extinguishment of debt                                |   |                                   | -- |   |   |   | (612 | ) |   |   | (37,084 | ) |
| Gain                (loss) on sale of businesses, net (Note 9)               |   |                                   | 4,625 |   |   |   | (7,353 | ) |   |   | -- |   |
| Contract                dispute charges (Note 14)                            |   |                                   | (3,282 | ) |   |   | -- |   |   |   | -- |   |
| (Loss)                gain on put options, net (Note 10)                     |   |                                   | (1,212 | ) |   |   | 1,158 |   |   |   | (1,875 | ) |
| Other                income (expense), net                                   |   |                                   | 50 |   |   |   | 50 |   |   |   | (179 | ) |
| Minority                interest in income of consolidated subsidiaries, net |   |                                   | (6,694 | ) |   |   | (5,239 | ) |   |   | (4,000 | ) |
| Income                (loss) before (provision) benefit for income taxes     |   |                                   | 75,010 |   |   |   | 37,623 |   |   |   | (8,516 | ) |
| (Provision)                benefit for income taxes (Note 12)                |   |                                   | (29,254 | ) |   |   | (14,485 | ) |   |   | 2,557 |   |
| Net                income (loss)                                             |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |
|                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Per                share amounts (Note 3):                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Basic                net income (loss) per share                             |   | $                                      | 1.21 |   |   | $ | 0.65 |   |   | $ | (0.17 | ) |
| Diluted                net income (loss) per share                           |   | $                                      | 1.19 |   |   | $ | 0.64 |   |   | $ | (0.17 | ) |

----

**Vail      Resorts, Inc.**

**Consolidated      Statements of Stockholders' Equity**

**(In      thousands, except share amounts)**

|                                                                          |   | **Common                Stock** |       |  **Additional** |   |         |   |                                                                  |       |                                  |   | **Total**                                                                                            |   |
|-------------------------------------------------------------------------------|--------|---------------------------------|------------|----------------------|--------|-------------------|--------|----------------------------------------------------------------------------|------------|--------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|
|                                                                          |   | **Shares**                      |       |            |   |  **Paid-in** |   |  **Deferred**                                                         |       | **Retained**                               |   |  **Treasury**                                                                                   |   | **Stockholders'** |   |
|                                                                          |   | **Class                A**      |       |  **Common**     |   |  **Total**   |   | **Amount**                                                                 |       |  **Capital**                          |   |  **Compensation**                                                                               |   | **Earnings** |   |  **Stock** |   | **Equity** |   |
| Balance,                July 31, 2003                                         |   | 7,439,834                       |       |  27,835,042     |   |  35,274,876  |   | $                         352 |       | $                   415,306 |   | $                             (198) |   | $                    80,786 |   | $                            -- |   | $                        496,246 |   |
| Net                loss                                                       |   | --                              |       |  --             |   |  --          |   |  --                                                                   |       |  --                                   |   |  --                                                                                             |   |  (5,959) |   |  -- |   |  (5,959) |   |
| Conversion                of Class A shares                                   |   |                            |       |            |   |         |   |                                                                  |       |                                  |   |                                                                                            |   |    |   |    |   |    |   |
| to                common shares (Note 17)                                     |   | (1,325,000)                     |       |  1,325,000      |   |  --          |   |  --                                                                   |       |  --                                   |   |  --                                                                                             |   |  -- |   |  -- |   |  -- |   |
| Amortization                of deferred                                       |   |                            |       |            |   |         |   |                                                                  |       |                                  |   |                                                                                            |   |    |   |    |   |    |   |
| compensation                                                                  |   | --                              |       |  --             |   |  --          |   |  --                                                                   |       |  --                                   |   |  250                                                                                            |   |  -- |   |  -- |   |  250 |   |
| Issuance                of shares pursuant to                                 |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options                exercised (Note 19)                                    |   |                            | --         |                 |   | 62,786            |   |                                                                       | 62,786     |                                       |   | 1                                                                                                    |   |   | 561 |   |   | -- |   |   | -- |   |   | -- |   |   | 562 |   |
| Tax                benefit of stock option                                    |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exercises                                                                     |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | 64 |   |   | -- |   |   | -- |   |   | -- |   |   | 64 |   |
| Restricted                stock granted                                       |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | 729 |   |   | (729 | ) |   | -- |   |   | -- |   |   | -- |   |
| Balance,                July 31, 2004                                         |   |                            | 6,114,834  |                 |   | 29,222,828        |   |                                                                       | 35,337,662 |                                       |   | 353                                                                                                  |   |   | 416,660 |   |   | (677 | ) |   | 74,827 |   |   | -- |   |   | 491,163 |   |
| Net                income                                                     |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | -- |   |   | -- |   |   | 23,138 |   |   | -- |   |   | 23,138 |   |
| Conversion                of Class A shares                                   |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to                common shares (Note 17)                                     |   |                            | (6,114,834 | )                    |   | 6,114,834         |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |   | -- |   |
| Amortization                of deferred                                       |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| compensation                                                                  |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | -- |   |   | 348 |   |   | -- |   |   | -- |   |   | 348 |   |
| Issuance                of shares pursuant to                                 |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options                exercised and issuance                                 |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                restricted shares (Note 19)                                 |   |                            | --         |                 |   | 1,258,531         |   |                                                                       | 1,258,531  |                                       |   | 13                                                                                                   |   |   | 21,928 |   |   | -- |   |   | -- |   |   | -- |   |   | 21,941 |   |
| Tax                benefit of stock option                                    |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exercises                                                                     |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | 3,939 |   |   | -- |   |   | -- |   |   | -- |   |   | 3,939 |   |
| Balance,                July 31, 2005                                         |   |                            | --         |                 |   | 36,596,193        |   |                                                                       | 36,596,193 |                                       |   | 366                                                                                                  |   |   | 442,527 |   |   | (329 | ) |   | 97,965 |   |   | -- |   |   | 540,529 |   |
| Net                income                                                     |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | -- |   |   | -- |   |   | 45,756 |   |   | -- |   |   | 45,756 |   |
| Stock-based                compensation                                       |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                19)                                                      |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | 6,476 |   |   | -- |   |   | -- |   |   | -- |   |   | 6,476 |   |
| Reversal                of deferred compensation due to adoption of SFAS 123R |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | (329 | ) |   | 329 |   |   | -- |   |   | -- |   |   | -- |   |
| Issuance                of shares pursuant to                                 |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| options                exercised and issuance                                 |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| of                restricted shares (Note 19)                                 |   |                            | --         |                 |   | 2,440,089         |   |                                                                       | 2,440,089  |                                       |   | 24                                                                                                   |   |   | 46,508 |   |   | -- |   |   | -- |   |   | -- |   |   | 46,532 |   |
| Tax                benefit of stock option                                    |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| exercises                                                                     |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | 14,323 |   |   | -- |   |   | -- |   |   | -- |   |   | 14,323 |   |
| Repurchase                of common stock                                     |   |                            |       |                 |   |              |   |                                                                       |       |                                       |   |                                                                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (Note                17)                                                      |   |                            | --         |                 |   | --                |   |                                                                       | --         |                                       |   | --                                                                                                   |   |   | -- |   |   | -- |   |   | -- |   |   | (10,839 | ) |   | (10,839 | ) |
| Balance,                July 31, 2006                                         |   |                            | --         |                 |   | 39,036,282        |   |                                                                       | 39,036,282 |                                       | $      | 390                                                                                                  |   | $ | 509,505 |   | $ | -- |   | $ | 143,721 |   | $ | (10,839 | ) | $ | 642,777 |   |

----

**Vail      Resorts, Inc.**

**Consolidated      Statements of Cash Flows**

**(In      thousands)**

|                                                                                                                   |   | **Year                Ended July 31,** |
|------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                                                                   |   | **2006**                               |   | **2005** |   | **2004** |
| Cash                flows from operating activities:                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                                                                                       |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |
| Adjustments                to reconcile net income (loss) to net cash provided by operating                activities: |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and amortization                                                                           |   |                                   | 86,098 |   |   |   | 89,968 |   |   |   | 86,377 |   |
| Non-cash                cost of real estate sales                                                                      |   |                                   | 35,121 |   |   |   | 38,425 |   |   |   | (1,654 | ) |
| Non-cash                gain on transfer of property, net                                                              |   |                                   | -- |   |   |   | -- |   |   |   | (2,147 | ) |
| Non-cash                stock-based compensation expense                                                               |   |                                   | 6,523 |   |   |   | 437 |   |   |   | 248 |   |
| Asset                impairment charges                                                                                |   |                                   | 210 |   |   |   | 2,550 |   |   |   | 1,108 |   |
| Non-cash                mold remediation (credit) charge                                                               |   |                                   | (559 | ) |   |   | -- |   |   |   | 5,500 |   |
| (Gain)                loss on sale of businesses, net                                                                  |   |                                   | (4,625 | ) |   |   | 7,353 |   |   |   | -- |   |
| Loss                on extinguishment of debt                                                                          |   |                                   | -- |   |   |   | 612 |   |   |   | 37,084 |   |
| Deferred                income taxes, net                                                                              |   |                                   | 1,322 |   |   |   | (7,514 | ) |   |   | (1,018 | ) |
| Minority                interest in net income of consolidated subsidiaries                                            |   |                                   | 6,694 |   |   |   | 5,239 |   |   |   | 4,000 |   |
| Other                non-cash (income) expense, net                                                                    |   |                                   | (6,291 | ) |   |   | (3,433 | ) |   |   | 5,708 |   |
| Changes                in assets and liabilities:                                                                      |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Restricted                cash                                                                                         |   |                                   | (2,069 | ) |   |   | (2,222 | ) |   |   | (4,965 | ) |
| Accounts                receivable, net                                                                                |   |                                   | (2,644 | ) |   |   | (3,665 | ) |   |   | 7,254 |   |
| Notes                receivable                                                                                        |   |                                   | (1,925 | ) |   |   | 4,052 |   |   |   | 1,685 |   |
| Inventories,                net                                                                                        |   |                                   | (4,811 | ) |   |   | (5,074 | ) |   |   | 605 |   |
| Accounts                payable and accrued expenses                                                                   |   |                                   | 26,213 |   |   |   | 26,443 |   |   |   | 20,512 |   |
| Income                taxes receivable/payable                                                                         |   |                                   | 4,538 |   |   |   | 21,960 |   |   |   | 6,940 |   |
| Deferred                real estate credits                                                                            |   |                                   | 14,539 |   |   |   | 29,755 |   |   |   | 11,453 |   |
| Private                club deferred initiation fees                                                                   |   |                                   | 7,126 |   |   |   | 8,324 |   |   |   | 8,358 |   |
| Other                assets and liabilities, net                                                                       |   |                                   | (17,812 | ) |   |   | (16,007 | ) |   |   | (152 | ) |
| Net                cash provided by operating activities                                                               |   |                                   | 193,404 |   |   |   | 220,341 |   |   |   | 180,937 |   |
| Cash                flows from investing activities:                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Capital                expenditures                                                                                    |   |                                   | (88,901 | ) |   |   | (79,975 | ) |   |   | (62,960 | ) |
| Investments                in real estate                                                                              |   |                                   | (129,728 | ) |   |   | (72,164 | ) |   |   | (27,802 | ) |
| Distributions                from joint ventures                                                                       |   |                                   | 522 |   |   |   | 6,588 |   |   |   | 4,849 |   |
| Cash                received from disposal of fixed assets                                                             |   |                                   | 823 |   |   |   | 2,019 |   |   |   | 2,658 |   |
| Cash                received from sale of businesses                                                                   |   |                                   | 30,712 |   |   |   | 108,399 |   |   |   | -- |   |
| Purchase                of minority interests                                                                          |   |                                   | -- |   |   |   | (9,748 | ) |   |   | -- |   |
| Other                investing                                                                                         |   |                                   | (5,149 | ) |   |   | -- |   |   |   | (110 | ) |
| Net                cash used in investing activities                                                                   |   |                                   | (191,721 | ) |   |   | (44,881 | ) |   |   | (83,365 | ) |
| Cash                flows from financing activities:                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Proceeds                from borrowings under 6.75% Notes                                                              |   |                                   | -- |   |   |   | -- |   |   |   | 390,000 |   |
| Payment                of tender and call of 8.75% Notes                                                               |   |                                   | -- |   |   |   | -- |   |   |   | (360,000 | ) |
| Payment                of tender premium                                                                               |   |                                   | -- |   |   |   | -- |   |   |   | (23,825 | ) |
| Repurchases                of common stock                                                                             |   |                                   | (10,839 | ) |   |   | -- |   |   |   | -- |   |
| Payment                of financing costs                                                                              |   |                                   | (1,584 | ) |   |   | (1,774 | ) |   |   | (6,828 | ) |
| Payment                of Credit Facility Term Loan                                                                    |   |                                   | -- |   |   |   | (98,750 | ) |   |   | (1,000 | ) |
| Proceeds                from borrowings under other long-term debt                                                     |   |                                   | 63,660 |   |   |   | 176,423 |   |   |   | 173,253 |   |
| Payments                of other long-term debt                                                                        |   |                                   | (54,439 | ) |   |   | (181,239 | ) |   |   | (234,234 | ) |
| Distributions                from joint ventures to minority shareholders                                              |   |                                   | (4,239 | ) |   |   | (1,807 | ) |   |   | (1,474 | ) |
| Proceeds                from exercise of stock options                                                                 |   |                                   | 46,649 |   |   |   | 21,939 |   |   |   | 562 |   |
| Tax                benefit from exercise of stock options                                                              |   |                                   | 14,323 |   |   |   | -- |   |   |   | -- |   |
| Net                cash provided by (used in) financing activities                                                     |   |                                   | 53,531 |   |   |   | (85,208 | ) |   |   | (63,546 | ) |
| Net                increase in cash and cash equivalents                                                               |   |                                   | 55,214 |   |   |   | 90,252 |   |   |   | 34,026 |   |
| Net                increase in cash due to adoption of FIN 46R                                                         |   |                                   | -- |   |   |   | -- |   |   |   | 4,428 |   |
| Cash                and cash equivalents:                                                                              |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Beginning                of period                                                                                     |   |                                   | 136,580 |   |   |   | 46,328 |   |   |   | 7,874 |   |
| End                of period                                                                                           |   | $                                      | 191,794 |   |   | $ | 136,580 |   |   | $ | 46,328 |   |
|                                                                                                                   |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Cash                paid for interest, net of amounts capitalized                                                      |   | $                                      | 33,550 |   |   | $ | 38,158 |   |   | $ | 38,578 |   |
| Taxes                paid (refunds received), net                                                                      |   |                                   | 8,617 |   |   |   | -- |   |   |   | (8,827 | ) |

----

**Vail      Resorts, Inc.**

**Supplemental      Schedule of Non-Cash Transactions**

**(In      thousands)**

|                                                                  |   | **Year                Ended July 31,** |
|-----------------------------------------------------------------------|--------|----------------------------------------|
|                                                                  |   |                                   | **2006** |   |   | **2005** |   |   | **2004** |
| Distributions                (net of liabilities assumed) from KRED   |   | $                                      | -- |   | $ | -- |   | $ | 25,600 |
| Capital                leases entered into for operating fixed assets |   |                                   | -- |   |   | -- |   |   | 1,312 |
| Increase                in assets due to adoption of FIN 46R          |   |                                   | -- |   |   | -- |   |   | 49,860 |
| Increase                in liabilities due to adoption of FIN 46R     |   |                                   | -- |   |   | -- |   |   | 48,972 |
| Land                exchange with the United States Forest Service    |   |                                   | 5,407 |   |   | -- |   |   | -- |

----

**Notes      to Consolidated Financial Statements**

**1.**
**Organization      and Business**

**2.**
**Summary      of Significant Accounting Policies**

*Principles      of Consolidation--*

*Cash      and Cash Equivalents-- *

*Restricted      Cash-- *

*Trade      Receivables*

*Inventories--      *

*Property,      Plant and Equipment-- *

|                                               | **Estimated                Life** |
|----------------------------------------------------|-----------------------------------|
|                                               | **in                Years**       |
|                                               |                              |
| Land                improvements                   | 20                                |
| Buildings                and building improvements | 7-30                              |
| Machinery                and equipment             | 2-30                              |
| Furniture                and fixtures              | 3-10                              |
| Vehicles                                           | 3                                 |

*Real      Estate Held for Sale and Investment*

*Assets      Held for Sale-- *

*Deferred      Financing Costs-- *

*Goodwill      and Intangible Assets*

*Long-lived      Assets-- *

*Revenue      Recognition-- *

*Real      Estate Cost of Sales--*

*Deferred      Revenue--*

*Reserve      Estimates--*

*Advertising      Costs*

*Income      Taxes-- *

*Net      Income (Loss) Per Share*

*Fair      Value of Financial Instruments*

|                                        |   | **July                31, 2006** |    | **July                31, 2005** |
|---------------------------------------------|--------|----------------------------------|---------|----------------------------------|
|                                        |   | **Carrying**                     |    | **Fair**                         |   | **Carrying** |   | **Fair** |
|                                        |   | **Value**                        |    | **Value**                        |   | **Value** |   | **Value** |
| 6.75%                Notes                  |   | $                                | 390,000 |                             | $ | 372,450 |   | $ | 390,000 |   | $ | 397,800 |
| Industrial                Development Bonds |   |                             | 61,700  |                             |   | 63,423 |   |   | 61,700 |   |   | 71,266 |
| Other                long-term debt         |   |                             | 7,335   |                             |   | 7,211 |   |   | 8,006 |   |   | 9,074 |

*Stock      Compensation--*

|                                                    |   | **Year                Ended July 31,** |
|---------------------------------------------------------|--------|----------------------------------------|
|                                                    |   | **2006**                               | **2005** |   | **2004** |
| Mountain                operating expense               |   | $                                      | 3,685 |   | $ | 254 |   |   | $ | 153 |   |
| Lodging                operating expense                |   |                                   | 1,334 |   |   | 88 |   |   |   | 53 |   |
| Real                estate operating expense            |   |                                   | 1,504 |   |   | 95 |   |   |   | 42 |   |
| Pre-tax                stock-based compensation expense |   |                                   | 6,523 |   |   | 437 |   |   |   | 248 |   |
| Less:                benefit for income taxes           |   |                                   | 2,450 |   |   | 164 |   |   |   | 93 |   |
| Net                stock-based compensation expense     |   | $                                      | 4,073 |   | $ | 273 |   |   | $ | 155 |   |

|                                                                                                                                                                                                    |   | **Year                Ended July 31,** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                                                                                                                                                    |   | **2005**                               |   | **2004** |
| Net                income (loss)                                                                                                                                                                        |   |                                   |   |   |   |   |   |   |
| As                reported                                                                                                                                                                              |   | $                                      | 23,138 |   |   | $ | (5,959 | ) |
| Add:                stock-based employee compensation expense included in reported net                income                (loss), net of related tax effects                                          |   |                                   | 273 |   |   |   | 155 |   |
| Deduct:                total stock-based employee compensation expense determined under                fair                value-based method for all awards, net of related tax                effects |   |                                   | (2,987 | ) |   |   | (2,546 | ) |
| Pro                forma                                                                                                                                                                                |   | $                                      | 20,424 |   |   | $ | (8,350 | ) |
|                                                                                                                                                                                                    |   |                                   |   |   |   |   |   |   |
| Basic                net income (loss) per share                                                                                                                                                        |   |                                   |   |   |   |   |   |   |
| As                reported                                                                                                                                                                              |   | $                                      | 0.65 |   |   | $ | (0.17 | ) |
| Pro                forma                                                                                                                                                                                |   | $                                      | 0.57 |   |   | $ | (0.24 | ) |
|                                                                                                                                                                                                    |   |                                   |   |   |   |   |   |   |
| Diluted                net income (loss) per share                                                                                                                                                      |   |                                   |   |   |   |   |   |   |
| As                reported                                                                                                                                                                              |   | $                                      | 0.64 |   |   | $ | (0.17 | ) |
| Pro                forma                                                                                                                                                                                |   | $                                      | 0.56 |   |   | $ | (0.24 | ) |

*Concentration      of Credit Risk-- *

*Use      of Estimates-- *

*Reclassifications--      *

*New      Accounting Pronouncements-- *

**3.**
**Net      Income (Loss) Per Common Share**

|                                               |   | **Year                Ended July 31,** |
|----------------------------------------------------|--------|----------------------------------------|
|                                               |   | **2006**                               |   | **2005** |   | **2004** |
|                                               |   | **Basic**                              |   | **Diluted** |   | **Basic** |   | **Diluted** |   | **Basic** |   | **Diluted** |
| **Net                income (loss) per share:**    |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income (loss)                   |   | $                                      | 45,756 |   |   | $ | 45,756 |   |   | $ | 23,138 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |   | $ | (5,959 | ) |
|                                               |   |                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                shares outstanding |   |                                   | 37,866 |   |   |   | 37,866 |   |   |   | 35,712 |   |   |   | 35,712 |   |   |   | 35,294 |   |   |   | 35,294 |   |
| Effect                of dilutive securities       |   |                                   | -- |   |   |   | 701 |   |   |   | -- |   |   |   | 648 |   |   |   | -- |   |   |   | -- |   |
| Total                shares                        |   |                                   | 37,866 |   |   |   | 38,567 |   |   |   | 35,712 |   |   |   | 36,360 |   |   |   | 35,294 |   |   |   | 35,294 |   |
| Net                income (loss) per share         |   | $                                      | 1.21 |   |   | $ | 1.19 |   |   | $ | 0.65 |   |   | $ | 0.64 |   |   | $ | (0.17 | ) |   | $ | (0.17 | ) |

**4.**
**Long-Term      Debt**

|                                                                           | **Fiscal                Year**  |   |   | **July                31,** |   |   | **July                31,** |
|--------------------------------------------------------------------------------|---------------------------------|--------|--------|-----------------------------|--------|--------|-----------------------------|
|                                                                           | **Maturity                (i)** |   |   | **2006**                    |   |   | **2005**                    |
|                                                                           |                            |   |   |                        |   |   |                        |
| Credit                Facility Revolver (a)                                    | 2010                            |   | $      | --                          |   | $      | --                          |
| SSV                Facility (b)                                                | 2011                            |   |   | 6,261                       |   |   | 9,429                       |
| Industrial                Development Bonds (c)                                | 2007-2020                       |   |   | 61,700                      |   |   | 61,700                      |
| Employee                Housing Bonds (d)                                      | 2027-2039                       |   |   | 52,575                      |   |   | 52,575                      |
| Non-Recourse                Real Estate Financings (e)                         | 2007-2009                       |   |   | 13,357                      |   |   | --                          |
| 6.75%                Senior Subordinated Notes (“6.75% Notes”) (f) | 2014                            |   |   | 390,000                     |   |   | 390,000                     |
| Other                (g)                                                       | 2007-2029                       |   |   | 7,335                       |   |   | 8,006                       |
| Total                debt                                                      |                            |   |   | 531,228                     |   |   | 521,710                     |
| Less:                current maturities (h)                                    |                            |   |   | 5,915                       |   |   | 2,004                       |
| Long-term                debt                                                  |                            |   | $      | 525,313                     |   | $      | 519,706                     |

| (a) | The                Company amended its senior credit facility (the "Credit Facility")                in                January 2005. Key modifications to the Credit Facility included,                among                other things, payoff of the $100 million term loan (the "Credit Facility                Term Loan"), the expansion of the revolving credit facility (the                "Credit                Facility Revolver") to $400 million from $325 million, extension                of the                maturity on the Credit Facility Revolver to January 2010 from June                2007,                reduced pricing for interest rate margins and commitment fees, and                improved flexibility in the Company's ability to make investments                and                distributions. The Company recorded a $612,000 loss on extinguishment                of                debt in the year ended July 31, 2005 for the remaining unamortized                deferred financing costs associated with the pay off of the Credit                Facility Term Loan. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | In                September 2005, SSV entered into a new credit facility ("SSV Facility"),                with U.S. Bank National Association ("U.S. Bank") as lender, to refinance                its existing credit facility and to provide additional financing                for                future acquisitions. The new facility provides for financing up to                an                aggregate $33 million, consisting of (i) an $18 million working capital                revolver, (ii) a $10 million reducing revolver and (iii) a $5 million                acquisition revolver. Obligations under the SSV Facility are                collateralized by a first priority security interest in all the assets                of                SSV ($79.4 million at July 31, 2006). Availability under the SSV                Facility                is based on the book values of accounts receivable, inventories and                rental                equipment of SSV. The SSV Facility matures September 2010. Borrowings                bear                interest annually at SSV's option of (i) LIBOR plus 0.875% (6.27%                at July                31, 2006) or (ii) U.S. Bank's prime rate minus 1.75% (6.5% at July                31,                2006). Proceeds under the working capital revolver are for SSV's                seasonal                working capital needs. No principal payments are due until maturity,                and                principal may be drawn and repaid at any time. Proceeds under the                reducing                revolver were used to pay off SSV's existing credit facility. Principal                under the reducing revolver may be drawn and repaid at any time.                The                reducing revolver commitments decrease by $312,500 on January 31,                April                30, July 31 and October 31 of each year beginning January 31, 2006.                Any                outstanding balance in excess of the reduced commitment amount will                be due                on the day of each commitment reduction. The acquisition revolver                is to be                utilized to make acquisitions subject to U.S. Bank's approval. Principal                under the acquisition revolver may be drawn and repaid at any time.                The                acquisition revolver commitments decrease by $156,250 on January                31, April                30, July 31 and October 31 of each year beginning January 31, 2007.                Any                outstanding balance in excess of the reduced commitment amount will                be due                on the day of each commitment reduction. The SSV Facility contains                certain                restrictive financial covenants, including the Consolidated Leverage                Ratio                and Minimum Fixed Charge Coverage Ratio (each as defined in the underlying                credit agreement). |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (c) |  The                Company has outstanding $61.7 million of industrial development bonds                (collectively, the "Industrial Development Bonds"), of which $41.2                million                were issued by Eagle County, Colorado (the "Eagle County Bonds")                and                mature, subject to prior redemption, on August 1, 2019. These bonds                accrue                interest at 6.95% per annum, with interest being payable semi-annually                on                February 1 and August 1. The promissory note with respect to the                Eagle                County Bonds between Eagle County and the Company is collateralized                by the                Forest Service permits for Vail and Beaver Creek. In addition, the                Company                has outstanding two series of refunding bonds (collectively, the                "Summit                County Bonds"). The Series 1990 Sports Facilities Refunding Revenue                Bonds,                issued by Summit County, Colorado, have an aggregate outstanding                principal                amount of $19.0 million, maturing in installments of $4.0 million                in the                year ending July 31, 2007 and $15.0 million in the year ending July                31,                2009. These bonds bear interest at a rate of 7.75% for bonds maturing                in                the year ending July 31, 2007 and 7.875% for bonds maturing in the                year                ending July 31, 2009. The Series 1991 Sports Facilities Refunding                Revenue                Bonds, issued by Summit County, Colorado, have an aggregate outstanding                principal amount of $1.5 million maturing in the year ending July                31, 2011                and bear interest at 7.375%. The promissory note with respect to                the                Summit County Bonds between Summit County and the Company is pledged                and                endorsed to the Bank of New York as Trustee under the Indenture of                Trust                underlying the Summit County Bonds. The promissory note is also                collateralized in accordance with a guaranty from Ralston Purina                Company                (subsequently assumed by The Vail Corporation) to the Trustee for                the                benefit of the registered owners of the                bonds. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|

| (d) | As                of November 1, 2003, the Company began consolidating four employee                housing                entities (each an “Employee Housing Entity” and collectively, the                "Employee Housing Entities"): Breckenridge Terrace, Tarnes, BC Housing                and                Tenderfoot. The Employee Housing Entities had previously been accounted                for under the equity method (see Note 7, Variable Interest Entities).                Accordingly, the outstanding indebtedness of the entities (collectively,                the "Employee Housing Bonds") is included in the Company's consolidated                balance sheets as of July 31, 2006 and 2005. The proceeds of the                Employee                Housing Bonds were used to develop apartment complexes designated                primarily for use by the Company's employees. The Employee Housing                Bonds                are variable rate, interest-only instruments with interest rates                tied to                LIBOR plus 0.01% to 0.05% (5.40% to 5.45% at July 31, 2006). Interest                on                the Employee Housing Bonds is paid monthly in arrears, and the interest                rate is adjusted weekly. No principal payments are due on the Employee                Housing Bonds until maturity. Each Employee Housing Entity’s bonds were                issued in two series. The Series A bonds for each employee housing                Employee Housing Entity and the Series B bonds for Breckenridge Terrace,                BC Housing and Tenderfoot are backed by letters of credit issued                under the                Credit Facility. The Series B bonds for Tarnes are backed by a letter                of                credit issued by a bank, for which the assets of Tarnes serve as                collateral ($7.5 million at July 31, 2006). The table below presents                the                principal amounts outstanding for the Employee Housing Bonds as of                July                31, 2006 and 2005 (in thousands): |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | Maturity |   |   | Tranche                A |   |   | Tranche                B |   |   | Total  |
|-------------------------------------|----------|--------|--------|--------------------------|--------|--------|--------------------------|--------|--------|--------|
| Breckenridge                Terrace | 2039     |   | $      | 14,980                   |   | $      | 5,000                    |   | $      | 19,980 |
| Tarnes                              | 2039     |   |   | 8,000                    |   |   | 2,410                    |   |   | 10,410 |
| BC                Housing           | 2027     |   |   | 9,100                    |   |   | 1,500                    |   |   | 10,600 |
| Tenderfoot                          | 2035     |   |   | 5,700                    |   |   | 5,885                    |   |   | 11,585 |
| Total                               |     |   | $      | 37,780                   |   | $      | 14,795                   |   | $      | 52,575 |

| (e) | On                July 19, 2005, Gore Creek Place, LLC ("Gore Creek"), a wholly-owned                subsidiary of the Company, entered into a Construction Loan Agreement                (the                "Gore Creek Facility") in the amount of up to $30 million with U.S.                Bank,                as administrative agent and lender. Borrowings under the Gore Creek                Facility are non-revolving and must be used for the payment of certain                costs associated with the construction and development of Gore Creek                Place, a residential development consisting of 16 luxury duplex                residences. The Gore Creek Facility matures on July 19, 2007, and                principal payments are due at the earlier of closing of sales for                the Gore                Creek residences or maturity. Gore Creek has the option to extend                maturity                for six months, subject to certain requirements. Borrowings under                the Gore                Creek Facility bear interest annually at Gore Creek's option at the                rate                of (i) LIBOR plus 1.50% (6.89% at July 31, 2006) or (ii) the                administrative agent's prime commercial lending rate (8.25% at July                31,                2006). Interest is payable monthly in arrears. The Gore Creek Facility                provides for affirmative and negative covenants that restrict, among                other                things, Gore Creek's ability to dispose of assets, transfer or pledge                its                equity interest, incur indebtedness and make investments or distributions.                The Gore Creek Facility contains non-recourse provisions to the Company                with respect to repayment, whereby under event of default, U.S. Bank                has                recourse only against Gore Creek's assets ($18.6 million at July                31, 2006)                and the Completion Guaranty Agreement ("Guaranty Agreement") described                below. U.S. Bank does not have recourse against assets held by the                Company                or The Vail Corporation. All assets of Gore Creek are provided as                collateral under the Gore Creek Facility. At                July 31, 2006, borrowings under the                Gore Creek Facility were $1.5 million. On August 3, 2006 the borrowings                under the Gore Creek Facility were paid in                full. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (f) | The                Company has outstanding $390 million of Senior Subordinated Notes                due 2014                (the "6.75% Notes") issued in January 2004, the proceeds of which                were                used to purchase the previously outstanding $360 million principal                amount                of Senior Subordinated Notes due 2009 (the "8.75% Notes") and pay                related                premiums, fees and expenses. The 6.75% Notes have a fixed annual                interest                rate of 6.75% with interest due semi-annually on February 15 and                August                15, beginning August 15, 2004. The 6.75% Notes will mature February                2014                and no principal payments are due to be paid until maturity. The                Company                has certain early redemption options under the terms of the 6.75%                Notes.                The premium for early redemption of the 6.75% Notes ranges from 0%                to                3.375%, depending on the date of redemption. The 6.75% Notes are                subordinated to certain of the Company's debts, including the Credit                Facility, and will be subordinated to certain of the Company's future                debts. The Company's payment obligations under the 6.75% Notes are                jointly                and severally guaranteed by substantially all of the Company's current                and                future domestic subsidiaries (See Note 21, Guarantor Subsidiaries                and                Non-Guarantor Subsidiaries). The indenture governing the 6.75% Notes                contains restrictive covenants which, among other things, limit the                ability of the Company and its Restricted Subsidiaries (as defined                in the                Indenture) to (i) borrow money or sell preferred stock, (ii) create                liens,                (iii) pay dividends on or redeem or repurchase stock, (iv) make certain                types of investments, (v) sell stock in the Restricted Subsidiaries,                (vi)                create restrictions on the ability of the Restricted Subsidiaries                to pay                dividends or make other payments to the Company, (vii) enter into                transactions with affiliates, (viii) issue guarantees of debt and                (ix)                sell assets or merge with other                companies. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (g) | Other                obligations primarily consist of a $6.6 million note outstanding                to the                Colorado Water Conservation Board, which matures in the year ending                July                31, 2029, and capital leases totaling $704,000. Other obligations,                including the Colorado Water Conservation Board note and the capital                leases, bear interest at rates ranging from 3.5% to 6.0% and have                maturities ranging from the year ending July 31, 2007 to the year                ending                July 31, 2029. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h) | Current                maturities represent principal payments due in the next 12                months. |
|-----|----------------------------------------------------------------------------------------------------------|

| (i) | Maturities                are based on the Company's July 31 fiscal year                end. |
|-----|----------------------------------------------------------------------------------------------|

| 2007                      |   | $      | 5,915   |
|---------------------------|--------|--------|---------|
| 2008                      |   |   | 352     |
| 2009                      |   |   | 27,130  |
| 2010                      |   |   | 262     |
| 2011                      |   |   | 7,998   |
| Thereafter                |   |   | 489,571 |
| Total                debt |   | $      | 531,228 |

**5.**
**Supplementary      Balance Sheet Information (in thousands)**

|                                               |   | **July                31,** |
|----------------------------------------------------|--------|-----------------------------|
|                                               |   | **2006**                    |   | **2005** |
| Land                and land improvements          |   | $                           | 248,941 |   |   | $ | 236,424 |   |
| Buildings                and building improvements |   |                        | 529,316 |   |   |   | 504,662 |   |
| Machinery                and equipment             |   |                        | 426,457 |   |   |   | 398,342 |   |
| Vehicles                                           |   |                        | 25,671 |   |   |   | 24,449 |   |
| Furniture                and fixtures              |   |                        | 113,696 |   |   |   | 97,780 |   |
| Construction                in progress            |   |                        | 39,149 |   |   |   | 47,973 |   |
| Gross                property, plant and equipment |   |                        | 1,383,230 |   |   |   | 1,309,630 |   |
| Accumulated                depreciation            |   |                        | (532,118 | ) |   |   | (466,583 | ) |
| Property,                plant and equipment, net  |   | $                           | 851,112 |   |   | $ | 843,047 |   |

|                                                    |   | **July                31,** |
|---------------------------------------------------------|--------|-----------------------------|
|                                                    |   |                        | **2006** |   |   |   | **2005** |   |
| *Indefinite                lived intangible assets*     |   |                        |   |   |   |   |   |   |
| Trademarks                                              |   | $                           | 59,379 |   |   | $ | 58,142 |   |
| Water                rights                             |   |                        | 11,180 |   |   |   | 11,180 |   |
| Excess                reorganization value              |   |                        | 14,145 |   |   |   | 14,145 |   |
| Other                intangible assets                  |   |                        | 6,577 |   |   |   | 6,143 |   |
| Gross                indefinite lived intangible assets |   |                        | 91,281 |   |   |   | 89,610 |   |
| Accumulated                amortization                 |   |                        | (24,752 | ) |   |   | (24,752 | ) |
| Indefinite                lived intangible assets, net  |   |                        | 66,529 |   |   |   | 64,858 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| *Goodwill*                                              |   |                        |   |   |   |   |   |   |
| Goodwill                                                |   |                        | 153,165 |   |   |   | 152,861 |   |
| Accumulated                amortization                 |   |                        | (17,354 | ) |   |   | (17,354 | ) |
| Goodwill,                net                            |   |                        | 135,811 |   |   |   | 135,507 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| *Amortizable                intangible assets*          |   |                        |   |   |   |   |   |   |
| Customer                lists                           |   |                        | 18,087 |   |   |   | 18,047 |   |
| Property                management contracts            |   |                        | 10,869 |   |   |   | 10,869 |   |
| Intellectual                property                    |   |                        | 4,348 |   |   |   | 4,348 |   |
| United                States Forest Service permits     |   |                        | 5,905 |   |   |   | 5,010 |   |
| Other                intangible assets                  |   |                        | 15,320 |   |   |   | 15,627 |   |
| Gross                amortizable intangible assets      |   |                        | 54,529 |   |   |   | 53,901 |   |
| *Accumulated                amortization*               |   |                        |   |   |   |   |   |   |
| Customer                lists                           |   |                        | (17,851 | ) |   |   | (17,843 | ) |
| Property                management contracts            |   |                        | (8,345 | ) |   |   | (5,364 | ) |
| Intellectual                property                    |   |                        | (3,968 | ) |   |   | (3,315 | ) |
| United                States Forest Service permits     |   |                        | (1,826 | ) |   |   | (1,674 | ) |
| Other                intangible assets                  |   |                        | (13,959 | ) |   |   | (13,589 | ) |
| Accumulated                amortization                 |   |                        | (45,949 | ) |   |   | (41,785 | ) |
| Amortizable                intangible assets, net       |   |                        | 8,580 |   |   |   | 12,116 |   |
|                                                    |   |                        |   |   |   |   |   |   |
| Total                gross intangible assets            |   |                        | 298,975 |   |   |   | 296,372 |   |
| Total                accumulated amortization           |   |                        | (88,055 | ) |   |   | (83,891 | ) |
| Total                intangible assets, net             |   | $                           | 210,920 |   |   | $ | 212,481 |   |

|                                                | **July                31,** |
|-----------------------------------------------------|-----------------------------|
|                                                | **2006**                    |   | **2005** |
| Trademarks                                          | 7                           |   | 7 |
| Customer                lists                       | 8                           |   | 8 |
| Property                management contracts        | 10                          |   | 14 |
| Intellectual                property                | 6                           |   | 6 |
| United                States Forest Service permits | 35                          |   | 37 |
| Franchise                agreement                  | 20                          |   | 20 |
| Other                intangible assets              | 8                           |   | 8 |

| **Balance                at July 31, 2003**    |   | $      | 145,049 |   |
|------------------------------------------------|--------|--------|---------|--------|
| Put                exercise adjustment         |   |   | 41      |   |
| **Balance                at July 31, 2004**    |   | $      | 145,090 |   |
| Sale                of Rancho Mirage           |   |   | (6,396  | )      |
| Assets                held for sale adjustment |   |   | (185    | )      |
| Purchase                of minority interest   |   |   | (1,775  | )      |
| Put                exercise adjustment         |   |   | (1,227  | )      |
| **Balance                at July 31, 2005**    |   | $      | 135,507 |   |
| Acquisition                                    |   |   | 304     |   |
| **Balance                at July 31, 2006**    |   | $      | 135,811 |   |

|                                                                  |   | **July                31,** |
|-----------------------------------------------------------------------|--------|-----------------------------|
|                                                                  |   | **2006**                    | **2005** |
| Trade                payables                                         |   | $                           | 82,599 |   | $ | 67,368 |
| Deferred                revenue                                       |   |                        | 30,785 |   |   | 32,474 |
| Deferred                credits and deposits                          |   |                        | 24,026 |   |   | 21,609 |
| Accrued                salaries, wages and deferred compensation      |   |                        | 31,954 |   |   | 26,571 |
| Accrued                benefits                                       |   |                        | 24,538 |   |   | 19,379 |
| Accrued                interest                                       |   |                        | 14,969 |   |   | 14,274 |
| Liability                to complete real estate projects, short term |   |                        | 5,951 |   |   | 5,188 |
| Other                accruals                                         |   |                        | 15,940 |   |   | 22,506 |
| Total                accounts payable and accrued expenses            |   | $                           | 230,762 |   | $ | 209,369 |

|                                                        |   | **July                31,** |
|-------------------------------------------------------------|--------|-----------------------------|
|                                                        |   | **2006**                    | **2005** |
| Private                club deferred initiation fee revenue |   | $                           | 95,848 |   | $ | 92,395 |
| Deferred                real estate credits                 |   |                        | 54,578 |   |   | 37,829 |
| Other                long-term liabilities                  |   |                        | 8,064 |   |   | 10,197 |
| Total                other long-term liabilities            |   | $                           | 158,490 |   | $ | 140,421 |

**6.**
**Investments      in Affiliates**

| **Equity                Method Affiliates**                                                                                             |   | **Ownership****Interest** |
|-----------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|
| KRED                                                                                                                                    |   | 50                        | % |
| Slifer,                Smith, and Frampton/Vail Associates Real Estate, LLC                ("SSF/VARE")                                 |   | 50                        | % |
| Clinton                Ditch and Reservoir Company                                                                                      |   | 43                        | % |
| Eclipse                Television & Sports Marketing, LLC                                                                           |   | 20                        | % |
| Bachelor                Gulch Resort, LLC (“BG Resort”)                                                                     |   | *                         |   |
|                                                                                                                                    |   |                      |   |
| *                The Company had a 49% ownership interest in BG Resort which it sold                on                December 8, 2004. |

|                                                      |   | **SSF/VARE** | **BG                Resort** |   | **All                Other****Affiliates** |
|-----------------------------------------------------------|--------|--------------|------------------------------|--------|--------------------------------------------|
| *Financial                data for 2006:*                 |   |         |                         |   |                                       |   |   |   |   |   |   |
| Current                assets                             |   | $            | 10,190                       |   | $                                          | -- |   |   | $ | 2,320 |   |
| Other                assets                               |   |         | 4,574                        |   |                                       | -- |   |   |   | 9,392 |   |
| Total                assets                               |   | $            | 14,764                       |   | $                                          | -- |   |   | $ | 11,712 |   |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| Current                liabilities                        |   | $            | 6,102                        |   | $                                          | -- |   |   | $ | 1,451 |   |
| Other                liabilities                          |   |         | --                           |   |                                       | -- |   |   |   | -- |   |
| Shareholders'                equity                       |   |         | 8,662                        |   |                                       | -- |   |   |   | 10,261 |   |
| Total                liabilities and shareholders' equity |   | $            | 14,764                       |   | $                                          | -- |   |   | $ | 11,712 |   |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| Net                revenue                                |   | $            | 61,449                       |   | $                                          | -- |   |   | $ | 10,167 |   |
| Operating                income (loss)                    |   |         | 7,668                        |   |                                       | -- |   |   |   | (40 | ) |
| Net                income (loss)                          |   |         | 7,877                        |   |                                       | -- |   |   |   | (7 | ) |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| *Financial                data for 2005:*                 |   |         |                         |   |                                       |   |   |   |   |   |   |
| Current                assets                             |   | $            | 6,177                   |   | $                                          | -- |   |   | $ | 1,655 |   |
| Other                assets                               |   |         | 3,458                        |   |                                       | -- |   |   |   | 13,514 |   |
| Total                assets                               |   | $            | 9,635                        |   | $                                          | -- |   |   | $ | 15,169 |   |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| Current                liabilities                        |   | $            | 4,686                        |   |                                       | -- |   |   | $ | 237 |   |
| Other                liabilities                          |   |         | --                           |   |                                       | -- |   |   |   | 502 |   |
| Shareholders'                equity                       |   |         | 4,949                        |   |                                       | -- |   |   |   | 14,430 |   |
| Total                liabilities and shareholders' equity |   | $            | 9,635                        |   | $                                          | -- |   |   | $ | 15,169 |   |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| Net                revenue                                |   | $            | 52,381                       |   | $                                          | 8,006 |   |   | $ | 17,522 |   |
| Operating                income (loss)                    |   |         | 4,462                        |   |                                       | (2,355 | ) |   |   | (42 | ) |
| Net                income (loss)                          |   |         | 4,496                        |   |                                       | (5,730 | ) |   |   | (88 | ) |
|                                                      |   |         |                         |   |                                       |   |   |   |   |   |   |
| *Financial                data for 2004:*                 |   |         |                         |   |                                       |   |   |   |   |   |   |
| Net                revenue                                |   | $            | 38,276                       |   | $                                          | 30,573 |   |   | $ | 26,912 |   |
| Operating                income (loss)                    |   |         | 3,293                        |   |                                       | (2,482 | ) |   |   | 961 |   |
| Net                income (loss)                          |   |         | 3,224                        |   |                                       | (5,895 | ) |   |   | 646 |   |

**7.**
**Variable      Interest Entities **

**8.**
**Relocation      and Separation Charges**

|                                    |   | **Severance                and**      |   | **Facility,                Employee and Other** |   |      |
|-----------------------------------------|--------|---------------------------------------|--------|-------------------------------------------------|--------|-----------|
|                                    |   | **Retention                Benefits** |   | **Relocation                Costs**             |   | **Total** |
| Balance                at July 31, 2005 |   | $                                     | --     |                                            |   | $         | -- |   |   | $ | -- |   |
| Relocation                charges       |   |                                  | 1,440  |                                            |   |      | 911 |   |   |   | 2,351 |   |
| Payments                                |   |                                  | (567   | )                                               |   |      | (628 | ) |   |   | (1,195 | ) |
| Balance                at July 31, 2006 |   | $                                     | 873    |                                            |   | $         | 283 |   |   | $ | 1,156 |   |

**9.**
**Sale      of Businesses**

**10.**
**Put      and Call Options**

**11.**
**Asset      Impairment Charges**

**12.**
**Income      Taxes**

|                                                                    |   | **July                  31,** |
|-------------------------------------------------------------------------|--------|-------------------------------|
|                                                                    |   | **2006**                      |   | **2005** |
| Deferred                  income tax liabilities:                       |   |                          |   |   |   |   |   |   |
| Fixed                  assets                                           |   | $                             | 94,411 |   |   | $ | 100,453 |   |
| Intangible                  assets                                      |   |                          | 19,884 |   |   |   | 19,309 |   |
| Other,                  net                                             |   |                          | 4,147 |   |   |   | 2,595 |   |
| Total                                                                   |   |                          | 118,442 |   |   |   | 122,357 |   |
| Deferred                  income tax assets:                            |   |                          |   |   |   |   |   |   |
| Real                  estate and other investments                      |   |                          | 8,440 |   |   |   | 3,146 |   |
| Deferred                  compensation and other accrued expenses       |   |                          | 13,474 |   |   |   | 11,675 |   |
| Net                  operating loss carryforwards and minimum and       |   |                          |   |   |   |   |   |   |
| other                  tax credits                                      |   |                          | 5,584 |   |   |   | 17,106 |   |
| Deferred                  membership revenue                            |   |                          | 29,519 |   |   |   | 29,284 |   |
| Other,                  net                                             |   |                          | 1,904 |   |   |   | 2,947 |   |
| Total                                                                   |   |                          | 58,921 |   |   |   | 64,158 |   |
| Valuation                  allowance for deferred income taxes          |   |                          | (1,605 | ) |   |   | (1,605 | ) |
| Deferred                  income tax assets, net of valuation allowance |   |                          | 57,316 |   |   |   | 62,553 |   |
| Net                  deferred income tax liability                      |   | $                             | 61,126 |   |   | $ | 59,804 |   |

|                                                         |   | **July                31,** |
|--------------------------------------------------------------|--------|-----------------------------|
|                                                         |   | **2006**                    |   | **2005** |
|                                                         |   |                        |   |   |   |   |   |
| Net                current deferred income tax asset         |   | $                           | 11,938 |   | $ | 11,405 |   |
| Net                non-current deferred income tax liability |   |                        | 73,064 |   |   | 71,209 |   |
| Net                deferred income tax liability             |   | $                           | 61,126 |   | $ | 59,804 |   |

|                                                |   | **Year                Ended July 31,** |
|-----------------------------------------------------|--------|----------------------------------------|
|                                                |   | **2006**                               |   | **2005** |   | **2004** |
| Current:                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Federal                                             |   | $                                      | 22,757 |   |   | $ | 18,987 |   |   | $ | (1,762 | ) |
| State                                               |   |                                   | 4,196 |   |   |   | 2,873 |   |   |   | 223 |   |
| Total                current                        |   |                                   | 26,953 |   |   |   | 21,860 |   |   |   | (1,539 | ) |
| Deferred:                                           |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Federal                                             |   |                                   | 3,383 |   |   |   | (6,731 | ) |   |   | (843 | ) |
| State                                               |   |                                   | (1,082 | ) |   |   | (644 | ) |   |   | (175 | ) |
| Total                deferred                       |   |                                   | 2,301 |   |   |   | (7,375 | ) |   |   | (1,018 | ) |
| Provision                (benefit) for income taxes |   | $                                      | 29,254 |   |   | $ | 14,485 |   |   | $ | (2,557 | ) |

|                                                    |   | **Year                Ended July 31,** |
|---------------------------------------------------------|--------|----------------------------------------|
|                                                    |   | **2006**                               | **2005** |   | **2004** |
| At                U.S. federal income tax rate          |   | 35.0                                   |   | % | 35.0 |   | % |   | (35.0 | ) | % |
| State                income tax, net of federal benefit |   | 2.7                                    |   | % | 3.3 |   | % |   | -- |   | % |
| Nondeductible                compensation               |   | 1.4                                    |   | % | 0.7 |   | % |   | 6.0 |   | % |
| Nondeductible                meals or entertainment     |   | 0.2                                    |   | % | 0.6 |   | % |   | 2.5 |   | % |
| General                business credits                 |   | (1.0                                   | ) | % | (1.2 | ) | % |   | (4.5 | ) | % |
| Other                                                   |   | 0.7                                    |   | % | 0.1 |   | % |   | 1.0 |   | % |
|                                                    |   | 39.0                                   |   | % | 38.5 |   | % |   | (30.0 | ) | % |

**13.**
**Related      Party Transactions**

**14.**
**Commitments      and Contingencies**

| 2007       | $      | 12,527 |
|------------|--------|--------|
| 2008       |   | 9,864  |
| 2009       |   | 6,429  |
| 2010       |   | 4,979  |
| 2011       |   | 3,724  |
| Thereafter |   | 11,796 |
| Total      | $      | 49,319 |

*Cheeca      Lodge & Spa Contract Dispute*

*Breckenridge      Terrace Employee Housing Construction Defect/Water Intrusion      Claims*

**15.**
**Segment      Information**

|                                                                         |   | **Year                Ended July 31,** |
|------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                         |   | **2006**                               |   | **2005** |   | **2004** |
| Net                revenue:                                                  |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 620,441 |   |   | $ | 540,855 |   |   | $ | 500,995 |   |
| Lodging                                                                      |   |                                   | 155,807 |   |   |   | 196,351 |   |   |   | 180,525 |   |
| Resort                                                                       |   |                                   | 776,248 |   |   |   | 737,206 |   |   |   | 681,520 |   |
| Real                estate                                                   |   |                                   | 62,604 |   |   |   | 72,781 |   |   |   | 45,123 |   |
| Total                net revenue                                             |   | $                                      | 838,852 |   |   | $ | 809,987 |   |   | $ | 726,643 |   |
| Operating                expense:                                            |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 443,116 |   |   | $ | 391,889 |   |   | $ | 368,875 |   |
| Lodging                                                                      |   |                                   | 142,693 |   |   |   | 177,469 |   |   |   | 165,983 |   |
| Resort                                                                       |   |                                   | 585,809 |   |   |   | 569,358 |   |   |   | 534,858 |   |
| Real                estate                                                   |   |                                   | 56,676 |   |   |   | 58,254 |   |   |   | 16,791 |   |
| Total                segment operating expense                               |   | $                                      | 642,485 |   |   | $ | 627,612 |   |   | $ | 551,649 |   |
| Equity                investment income (loss):                              |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 3,876 |   |   | $ | 2,303 |   |   | $ | 1,376 |   |
| Lodging                                                                      |   |                                   | -- |   |   |   | (2,679 | ) |   |   | (3,432 | ) |
| Resort                                                                       |   |                                   | 3,876 |   |   |   | (376 | ) |   |   | (2,056 | ) |
| Real                estate                                                   |   |                                   | 791 |   |   |   | (102 | ) |   |   | 460 |   |
| Total                equity investment income (loss)                         |   | $                                      | 4,667 |   |   | $ | (478 | ) |   | $ | (1,596 | ) |
|                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Reported                EBITDA:                                              |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                                                                     |   | $                                      | 181,201 |   |   | $ | 151,269 |   |   | $ | 133,496 |   |
| Lodging                                                                      |   |                                   | 13,114 |   |   |   | 16,203 |   |   |   | 11,110 |   |
| Resort                                                                       |   |                                   | 194,315 |   |   |   | 167,472 |   |   |   | 144,606 |   |
| Real                estate                                                   |   |                                   | 6,719 |   |   |   | 14,425 |   |   |   | 30,939 |   |
| Total                Reported EBITDA                                         |   | $                                      | 201,034 |   |   | $ | 181,897 |   |   | $ | 175,545 |   |
|                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Investments                in real estate                                    |   | $                                      | 129,728 |   |   | $ | 72,164 |   |   | $ | 27,802 |   |
| Real                estate held for sale and investment                      |   | $                                      | 259,384 |   |   | $ | 154,874 |   |   | $ | 134,548 |   |
|                                                                         |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Reconciliation                to net income (loss):                     |   |                                   |   |   |   |   |   |   |   |   |   |   |
| Mountain                Reported EBITDA                                      |   |                                   | 181,201 |   |   |   | 151,269 |   |   |   | 133,496 |   |
| Lodging                Reported EBITDA                                       |   |                                   | 13,114 |   |   |   | 16,203 |   |   |   | 11,110 |   |
| Resort                Reported EBITDA                                        |   |                                   | 194,315 |   |   |   | 167,472 |   |   |   | 144,606 |   |
| Real                Estate Reported EBITDA                                   |   |                                   | 6,719 |   |   |   | 14,425 |   |   |   | 30,939 |   |
| Total                Reported EBITDA                                         |   |                                   | 201,034 |   |   |   | 181,897 |   |   |   | 175,545 |   |
| Depreciation                and amortization                                 |   |                                   | (86,098 | ) |   |   | (89,968 | ) |   |   | (86,377 | ) |
| Relocation                and separation charges                             |   |                                   | (5,096 | ) |   |   | -- |   |   |   | -- |   |
| Asset                impairment charges                                      |   |                                   | (210 | ) |   |   | (2,550 | ) |   |   | (1,108 | ) |
| Mold                remediation credit (charge)                              |   |                                   | 1,411 |   |   |   | -- |   |   |   | (5,500 | ) |
| Loss                on disposal of fixed assets, net                         |   |                                   | (1,035 | ) |   |   | (1,528 | ) |   |   | (2,345 | ) |
| Investment                income, net                                        |   |                                   | 7,995 |   |   |   | 2,066 |   |   |   | 1,886 |   |
| Interest                expense, net                                         |   |                                   | (36,478 | ) |   |   | (40,298 | ) |   |   | (47,479 | ) |
| Loss                on extinguishment of debt                                |   |                                   | -- |   |   |   | (612 | ) |   |   | (37,084 | ) |
| Gain                (loss) from sale of businesses, net                      |   |                                   | 4,625 |   |   |   | (7,353 | ) |   |   | -- |   |
| Contact                dispute charges                                       |   |                                   | (3,282 | ) |   |   | -- |   |   |   | -- |   |
| (Loss)                gain on put options, net                               |   |                                   | (1,212 | ) |   |   | 1,158 |   |   |   | (1,875 | ) |
| Other                income (expense), net                                   |   |                                   | 50 |   |   |   | 50 |   |   |   | (179 | ) |
| Minority                interest in income of consolidated subsidiaries, net |   |                                   | (6,694 | ) |   |   | (5,239 | ) |   |   | (4,000 | ) |
| Income                (loss) before (provision) benefit for income taxes     |   |                                   | 75,010 |   |   |   | 37,623 |   |   |   | (8,516 | ) |
| (Provision)                benefit for income taxes                          |   |                                   | (29,254 | ) |   |   | (14,485 | ) |   |   | 2,557 |   |
| Net                income (loss)                                             |   | $                                      | 45,756 |   |   | $ | 23,138 |   |   | $ | (5,959 | ) |

**16.**
**Selected      Quarterly Financial Data (Unaudited--in thousands, except per share      amounts)**

|                                                      |   | **2006**                    |
|-----------------------------------------------------------|--------|-----------------------------|
|                                                      |   | **Year**                    |   | **Quarter** |   | **Quarter** |   | **Quarter** |   | **Quarter** |
|                                                      |   | **Ended**                   |   | **Ended** |   | **Ended** |   | **Ended** |   | **Ended** |
|                                                      |   | **July                31,** |   | **July                31,** |   | **April                30,** |   | **January                31,** |   | **October                31,** |
|                                                      |   | **2006**                    |   | **2006** |   | **2006** |   | **2006** |   | **2005** |
| Mountain                revenue                           |   | $                           | 620,441 |   |   | $ | 39,163 |   |   | $ | 294,773 |   |   | $ | 246,228 |   |   | $ | 40,277 |   |
| Lodging                revenue                            |   |                        | 155,807 |   |   |   | 42,486 |   |   |   | 39,492 |   |   |   | 32,079 |   |   |   | 41,750 |   |
| Real                estate revenue                        |   |                        | 62,604 |   |   |   | 42,378 |   |   |   | 7,124 |   |   |   | 9,709 |   |   |   | 3,393 |   |
| Total                net revenue                          |   |                        | 838,852 |   |   |   | 124,027 |   |   |   | 341,389 |   |   |   | 288,016 |   |   |   | 85,420 |   |
| Income                (loss) from operations              |   |                        | 105,339 |   |   |   | (45,034 | ) |   |   | 123,245 |   |   |   | 77,008 |   |   |   | (49,880 | ) |
| Gain                from sale of businesses, net          |   |                        | 4,625 |   |   |   | -- |   |   |   | -- |   |   |   | 4,625 |   |   |   | -- |   |
| Net                income (loss)                          |   |                        | 45,756 |   |   |   | (31,263 | ) |   |   | 68,337 |   |   |   | 43,011 |   |   |   | (34,329 | ) |
| Basic                net income (loss) per common share   |   |                        | 1.21 |   |   |   | (0.80 | ) |   |   | 1.78 |   |   |   | 1.15 |   |   |   | (0.93 | ) |
| Diluted                net income (loss) per common share |   | $                           | 1.19 |   |   | $ | (0.80 | ) |   | $ | 1.75 |   |   | $ | 1.12 |   |   | $ | (0.93 | ) |
|                                                      |   |                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   | **2005**                    |
|                                                      |   | **Year**                    |   | **Quarter** |   | **Quarter** |   | **Quarter** |   | **Quarter** |
|                                                      |   | **Ended**                   |   | **Ended** |   | **Ended** |   | **Ended** |   | **Ended** |
|                                                      |   | **July                31,** |   | **July                31,** |   | **April                30,** |   | **January                31,** |   | **October                31,** |
|                                                      |   | **2005**                    |   | **2005** |   | **2005** |   | **2005** |   | **2004** |
| Mountain                revenue                           |   | $                           | 540,855 |   |   | $ | 35,371 |   |   | $ | 256,825 |   |   | $ | 214,166 |   |   | $ | 34,493 |   |
| Lodging                revenue                            |   |                        | 196,351 |   |   |   | 51,202 |   |   |   | 56,285 |   |   |   | 42,589 |   |   |   | 46,275 |   |
| Real                estate revenue                        |   |                        | 72,781 |   |   |   | 33,452 |   |   |   | 14,341 |   |   |   | 7,873 |   |   |   | 17,115 |   |
| Total                net revenue                          |   |                        | 809,987 |   |   |   | 120,025 |   |   |   | 327,451 |   |   |   | 264,628 |   |   |   | 97,883 |   |
| Income                (loss) from operations              |   |                        | 88,329 |   |   |   | (39,722 | ) |   |   | 109,073 |   |   |   | 60,599 |   |   |   | (41,621 | ) |
| (Loss)                gain from sale of businesses, net   |   |                        | (7,353 | ) |   |   | (13,043 | ) |   |   | (3 | ) |   |   | 5,693 |   |   |   | -- |   |
| Net                income (loss)                          |   |                        | 23,138 |   |   |   | (36,435 | ) |   |   | 58,788 |   |   |   | 32,241 |   |   |   | (31,456 | ) |
| Basic                net income (loss) per common share   |   |                        | 0.65 |   |   |   | (1.00 | ) |   |   | 1.64 |   |   |   | 0.91 |   |   |   | (0.89 | ) |
| Diluted                net income (loss) per common share |   | $                           | 0.64 |   |   | $ | (1.00 | ) |   | $ | 1.61 |   |   | $ | 0.89 |   |   | $ | (0.89 | ) |

**17.**
**Capitalization**

*Class      A Common Stock Conversion*

*Stock      Repurchase Plan*

**18.**
**Non-Cash      Deferred Compensation**

**1**
**9.**
**Stock      Compensation Plans**

|                                    |   | **Year                Ended July 31,** |
|-----------------------------------------|--------|----------------------------------------|
|                                    |   | **2006**                               |   | **2005** | **2004** |
| Expected                volatility      |   | 38.9                                   | % |   | 35.3 | % | 38.7 | % |
| Expected                dividends       |   | --                                     | % |   | -- | % | -- | % |
| Expected                term (in years) |   | 5.8-7.0                                |   |   | 5.0 |   | 5.0 |   |
| Risk-free                rate           |   | 4.0-4.6                                | % |   | 3.3 | % | 2.9 | % |

|                                        |   |       |   |   | **Weighted-Average** |   | **Weighted-Average**                |   | **Aggregate**            |
|---------------------------------------------|--------|------------|--------|--------|----------------------|--------|-------------------------------------|--------|--------------------------|
|                                        |   |       |   |   | **Exercise**         |   | **Remaining**                       |   | **Intrinsic**            |
|                                        |   | **Shares** |   |   | **Price**            |   | **Contractual                Term** |   | **Value**                |
| Outstanding                at July 31, 2003 |   | 3,940      |   |   | $                    | 19.07  |                                |   |                     |   |   |   |   |
| Granted                                     |   | 864        |   |   |                 | 13.93  |                                |   |                     |   |   |   |   |
| Exercised                                   |   | (54        | )      |   |                 | 12.96  |                                |   |                     |   |   |   |   |
| Forfeited                or expired         |   | (297       | )      |   |                 | 18.75  |                                |   |                     |   |   |   |   |
| Outstanding                at July 31, 2004 |   | 4,453      |   |   | $                    | 18.32  |                                |   |                     |   |   |   |   |
| Granted                                     |   | 790        |   |   |                 | 18.76  |                                |   |                     |   |   |   |   |
| Exercised                                   |   | (1,244     | )      |   |                 | 17.70  |                                |   |                     |   |   |   |   |
| Forfeited                or expired         |   | (119       | )      |   |                 | 17.21  |                                |   |                     |   |   |   |   |
| Outstanding                at July 31, 2005 |   | 3,880      |   |   | $                    | 18.64  |                                |   |                     |   |   |   |   |
| Granted                                     |   | 805        |   |   |                 | 29.86  |                                |   |                     |   |   |   |   |
| Exercised                                   |   | (2,433     | )      |   |                 | 19.27  |                                |   |                     |   |   |   |   |
| Forfeited                or expired         |   | (469       | )      |   |                 | 21.18  |                                |   |                     |   |   |   |   |
| Outstanding                at July 31, 2006 |   | 1,783      |   |   | $                    | 22.18  |                                |   | 7.8                years |   | $ | 22,120 |   |
| Exercisable                at July 31, 2006 |   | 675        |   |   | $                    | 18.31  |                                |   | 6.4                years |   | $ | 10,980 |   |

|                                         |   |       |   | **Weighted-Average**          |
|----------------------------------------------|--------|------------|--------|-------------------------------|
|                                         |   |       |   | **Grant-Date**                |
|                                         |   | **Shares** |   | **Fair                Value** |
| Outstanding                at August 1, 2005 |   | 1,472      |   | $                             | 6.17 |   |
| Granted                                      |   | 805        |   |                          | 12.71 |   |
| Vested                                       |   | (762       | )      |                          | 6.44 |   |
| Forfeited                                    |   | (407       | )      |                          | 8.21 |   |
| Nonvested                at July 31, 2006    |   | 1,108      |   | $                             | 9.99 |   |

|                                         |   |       |   | **Weighted-Average**          |
|----------------------------------------------|--------|------------|--------|-------------------------------|
|                                         |   |       |   | **Grant-Date**                |
|                                         |   | **Shares** |   | **Fair                Value** |
| Outstanding                at August 1, 2005 |   | 31         |   | $                             | 15.16 |   |
| Granted                                      |   | 208        |   |                          | 29.08 |   |
| Vested                                       |   | (19        | )      |                          | 20.06 |   |
| Forfeited                                    |   | (27        | )      |                          | 24.28 |   |
| Nonvested                at July 31, 2006    |   | 193        |   | $                             | 28.43 |   |

**20.**
**Retirement      and Profit Sharing Plans **

**21.**
**Guarantor      Subsidiaries and Non-Guarantor Subsidiaries**

----

**Supplemental      Condensed Consolidating Balance Sheet**

**As      of July 31, 2006**

**(in      thousands)**

|                                                                        |   |        |      |             |   | **100%                Owned** |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |
|-----------------------------------------------------------------------------|--------|-------------|-----------|------------------|--------|-------------------------------|----------|------------------|--------|-------------|--------|------------------|--------|--------|---------|--------|--------|--------|----------|--------|--------|--------|
|                                                                        |   | **Parent**  |      | **Guarantor**    |   |                          |     |             |   | **Other**   |   | **Eliminating**  |   |   |    |   |
|                                                                        |   | **Company** |      | **Subsidiaries** |   | **Larkspur**                  |     | **Subsidiaries** |   | **Entries** |   | **Consolidated** |
| Current                assets:                                              |   |        |      |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Cash                and cash equivalents                                    |   | $           | --        |             |   | $                             | 179,998  |             |   | $           | 35     |             |   | $      | 11,761  |   |   | $      | --       |   |   | $      | 191,794 |   |
| Restricted                cash                                              |   |        | --        |             |   |                          | 14,787   |             |   |        | --     |             |   |   | 5,535   |   |   |   | --       |   |   |   | 20,322 |   |
| Receivables,                net                                             |   |        | --        |             |   |                          | 31,030   |             |   |        | 120    |             |   |   | 4,799   |   |   |   | --       |   |   |   | 35,949 |   |
| Inventories,                net                                             |   |        | --        |             |   |                          | 8,595    |             |   |        | 193    |             |   |   | 33,490  |   |   |   | --       |   |   |   | 42,278 |   |
| Other                current assets                                         |   |        | 11,945    |             |   |                          | 21,308   |             |   |        | 46     |             |   |   | 2,332   |   |   |   | --       |   |   |   | 35,631 |   |
| Total                current assets                                         |   |        | 11,945    |             |   |                          | 255,718  |             |   |        | 394    |             |   |   | 57,917  |   |   |   | --       |   |   |   | 325,974 |   |
| Property,                plant and equipment, net                           |   |        | --        |             |   |                          | 782,158  |             |   |        | 425    |             |   |   | 68,529  |   |   |   | --       |   |   |   | 851,112 |   |
| Real                estate held for sale and investment                     |   |        | --        |             |   |                          | 154,330  |             |   |        | --     |             |   |   | 105,054 |   |   |   | --       |   |   |   | 259,384 |   |
| Goodwill,                net                                                |   |        | --        |             |   |                          | 118,475  |             |   |        | --     |             |   |   | 17,336  |   |   |   | --       |   |   |   | 135,811 |   |
| Intangible                assets, net                                       |   |        | --        |             |   |                          | 58,185   |             |   |        | --     |             |   |   | 16,924  |   |   |   | --       |   |   |   | 75,109 |   |
| Other                assets                                                 |   |        | 5,356     |             |   |                          | 20,510   |             |   |        | --     |             |   |   | 14,387  |   |   |   | --       |   |   |   | 40,253 |   |
| Investments                in subsidiaries and advances to (from) parent    |   |        | 1,053,209 |             |   |                          | (541,621 | )                |   |        | (149   | )                |   |   | (51,541 | )      |   |   | (459,898 | )      |   |   | -- |   |
| Total                assets                                                 |   | $           | 1,070,510 |             |   | $                             | 847,755  |             |   | $           | 670    |             |   | $      | 228,606 |   |   | $      | (459,898 | )      |   | $      | 1,687,643 |   |
|                                                                        |   |        |      |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Current                liabilities:                                         |   |        |      |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Accounts                payable and accrued expenses                        |   | $           | 19,857    |             |   | $                             | 161,179  |             |   | $           | 225    |             |   | $      | 49,501  |   |   | $      | --       |   |   | $      | 230,762 |   |
| Income                taxes payable                                         |   |        | 17,517    |             |   |                          | --       |             |   |        | --     |             |   |   | --      |   |   |   | --       |   |   |   | 17,517 |   |
| Long-term                debt due within one year                           |   |        | --        |             |   |                          | 4,045    |             |   |        | --     |             |   |   | 1,870   |   |   |   | --       |   |   |   | 5,915 |   |
| Total                current liabilities                                    |   |        | 37,374    |             |   |                          | 165,224  |             |   |        | 225    |             |   |   | 51,371  |   |   |   | --       |   |   |   | 254,194 |   |
| Long-term                debt                                               |   |        | 390,000   |             |   |                          | 57,734   |             |   |        | --     |             |   |   | 77,579  |   |   |   | --       |   |   |   | 525,313 |   |
| Other                long-term liabilities                                  |   |        | 359       |             |   |                          | 121,995  |             |   |        | --     |             |   |   | 36,136  |   |   |   | --       |   |   |   | 158,490 |   |
| Deferred                income taxes                                        |   |        | --        |             |   |                          | 72,919   |             |   |        | --     |             |   |   | 145     |   |   |   | --       |   |   |   | 73,064 |   |
| Put                option liabilities                                       |   |        | --        |             |   |                          | 1,245    |             |   |        | --     |             |   |   | --      |   |   |   | --       |   |   |   | 1,245 |   |
| Minority                interest in net assets of consolidated subsidiaries |   |        | --        |             |   |                          | 13,285   |             |   |        | 100    |             |   |   | 19,175  |   |   |   | --       |   |   |   | 32,560 |   |
| Total                stockholders’ equity                             |   |        | 642,777   |             |   |                          | 415,353  |             |   |        | 345    |             |   |   | 44,200  |   |   |   | (459,898 | )      |   |   | 642,777 |   |
| Total                liabilities and stockholders’ equity             |   | $           | 1,070,510 |             |   | $                             | 847,755  |             |   | $           | 670    |             |   | $      | 228,606 |   |   | $      | (459,898 | )      |   | $      | 1,687,643 |   |

----

**Supplemental      Condensed Consolidating Balance Sheet**

**As      of July 31, 2005**

**(in      thousands)**

|                                                                        |   |        |    |             |   | **100%                Owned** |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |
|-----------------------------------------------------------------------------|--------|-------------|---------|------------------|--------|-------------------------------|----------|------------------|--------|-------------|--------|------------------|--------|--------|---------|--------|--------|--------|----------|--------|--------|--------|
|                                                                        |   | **Parent**  |    | **Guarantor**    |   |                          |     |             |   | **Other**   |   | **Eliminating**  |   |   |    |   |
|                                                                        |   | **Company** |    | **Subsidiaries** |   | **Larkspur**                  |     | **Subsidiaries** |   | **Entries** |   | **Consolidated** |
| Current                assets:                                              |   |        |    |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Cash                and cash equivalents                                    |   | $           | --      |             |   | $                             | 92,879   |             |   | $           | 105    |             |   | $      | 43,596  |   |   | $      | --       |   |   | $      | 136,580 |   |
| Restricted                cash                                              |   |        | --      |             |   |                          | 7,390    |             |   |        | --     |             |   |   | 10,863  |   |   |   | --       |   |   |   | 18,253 |   |
| Trade                receivables, net                                       |   |        | --      |             |   |                          | 27,867   |             |   |        | 103    |             |   |   | 5,166   |   |   |   | --       |   |   |   | 33,136 |   |
| Inventories,                net                                             |   |        | --      |             |   |                          | 8,491    |             |   |        | 157    |             |   |   | 27,430  |   |   |   | --       |   |   |   | 36,078 |   |
| Other                current assets                                         |   |        | 11,418  |             |   |                          | 15,109   |             |   |        | 40     |             |   |   | 5,535   |   |   |   | --       |   |   |   | 32,102 |   |
| Assets                held for sale                                         |   |        | --      |             |   |                          | 26,735   |             |   |        | --     |             |   |   | --      |   |   |   | --       |   |   |   | 26,735 |   |
| Total                current assets                                         |   |        | 11,418  |             |   |                          | 178,471  |             |   |        | 405    |             |   |   | 92,590  |   |   |   | --       |   |   |   | 282,884 |   |
| Property,                plant and equipment, net                           |   |        | --      |             |   |                          | 776,425  |             |   |        | 530    |             |   |   | 66,092  |   |   |   | --       |   |   |   | 843,047 |   |
| Real                estate held for sale and investment                     |   |        | --      |             |   |                          | 106,777  |             |   |        | --     |             |   |   | 48,097  |   |   |   | --       |   |   |   | 154,874 |   |
| Goodwill,                net                                                |   |        | --      |             |   |                          | 118,475  |             |   |        | --     |             |   |   | 17,032  |   |   |   | --       |   |   |   | 135,507 |   |
| Intangible                assets, net                                       |   |        | --      |             |   |                          | 60,482   |             |   |        | --     |             |   |   | 16,492  |   |   |   | --       |   |   |   | 76,974 |   |
| Other                assets                                                 |   |        | 6,067   |             |   |                          | 16,320   |             |   |        | --     |             |   |   | 10,248  |   |   |   | --       |   |   |   | 32,635 |   |
| Investments                in subsidiaries and advances to (from) parent    |   |        | 942,888 |             |   |                          | (424,752 | )                |   |        | (202   | )                |   |   | (58,036 | )      |   |   | (459,898 | )      |   |   | -- |   |
| Total                assets                                                 |   | $           | 960,373 |             |   | $                             | 832,198  |             |   | $           | 733    |             |   | $      | 192,515 |   |   | $      | (459,898 | )      |   | $      | 1,525,921 |   |
|                                                                        |   |        |    |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Current                liabilities:                                         |   |        |    |             |   |                          |     |             |   |        |   |             |   |   |    |   |   |   |     |   |   |   |   |   |
| Accounts                payable and accrued expenses                        |   | $           | 16,600  |             |   | $                             | 161,452  |             |   | $           | 273    |             |   | $      | 31,044  |   |   | $      | --       |   |   | $      | 209,369 |   |
| Income                taxes payable                                         |   |        | 12,979  |             |   |                          | --       |             |   |        | --     |             |   |   | --      |   |   |   | --       |   |   |   | 12,979 |   |
| Long-term                debt due within one year                           |   |        | --      |             |   |                          | 467      |             |   |        | --     |             |   |   | 1,537   |   |   |   | --       |   |   |   | 2,004 |   |
| Total                current liabilities                                    |   |        | 29,579  |             |   |                          | 161,919  |             |   |        | 273    |             |   |   | 32,581  |   |   |   | --       |   |   |   | 224,352 |   |
| Long-term                debt                                               |   |        | 390,000 |             |   |                          | 61,789   |             |   |        | --     |             |   |   | 67,917  |   |   |   | --       |   |   |   | 519,706 |   |
| Other                long-term liabilities                                  |   |        | 265     |             |   |                          | 102,228  |             |   |        | --     |             |   |   | 37,928  |   |   |   | --       |   |   |   | 140,421 |   |
| Deferred                income taxes                                        |   |        | --      |             |   |                          | 70,819   |             |   |        | --     |             |   |   | 390     |   |   |   | --       |   |   |   | 71,209 |   |
| Put                option liabilities                                       |   |        | --      |             |   |                          | 34       |             |   |        | --     |             |   |   | --      |   |   |   | --       |   |   |   | 34 |   |
| Minority                interest in net assets of consolidated subsidiaries |   |        | --      |             |   |                          | --       |             |   |        | 100    |             |   |   | 29,570  |   |   |   | --       |   |   |   | 29,670 |   |
| Total                stockholders’ equity                             |   |        | 540,529 |             |   |                          | 435,409  |             |   |        | 360    |             |   |   | 24,129  |   |   |   | (459,898 | )      |   |   | 540,529 |   |
| Total                liabilities and stockholders’ equity             |   | $           | 960,373 |             |   | $                             | 832,198  |             |   | $           | 733    |             |   | $      | 192,515 |   |   | $      | (459,898 | )      |   | $      | 1,525,921 |   |

----

**Supplemental      Condensed Consolidating Statement of Operations**

**For      the year ended July 31, 2006**

**(in      thousands)**

|                                                                                                 |   |        |    | **100%                Owned** |   |         |    |             |   |            |   |             |
|------------------------------------------------------------------------------------------------------|--------|-------------|---------|-------------------------------|--------|--------------|---------|------------------|--------|-----------------|--------|------------------|
|                                                                                                 |   | **Parent**  |    | **Guarantor**                 |   |         |    | **Other**        |   | **Eliminating** |   |             |
|                                                                                                 |   | **Company** |    | **Subsidiaries**              |   | **Larkspur** |    | **Subsidiaries** |   | **Entries**     |   | **Consolidated** |
| Total                net revenue                                                                     |   | $           | --      |                          |   | $            | 649,743 |             |   | $               | 3,790  |             |   | $ | 193,866 |   |   | $ | (8,547 | ) |   | $ | 838,852 |   |
| Total                operating expense                                                               |   |        | 18,204  |                          |   |         | 551,923 |             |   |            | 3,930  |             |   |   | 168,003 |   |   |   | (8,547 | ) |   |   | 733,513 |   |
| (Loss)                income from operations                                                         |   |        | (18,204 | )                             |   |         | 97,820  |             |   |            | (140   | )                |   |   | 25,863 |   |   |   | -- |   |   |   | 105,339 |   |
| Other                expense, net                                                                    |   |        | (27,149 | )                             |   |         | (1,857  | )                |   |            | (15    | )                |   |   | (2,694 | ) |   |   | -- |   |   |   | (31,715 | ) |
| Equity                investment income, net                                                         |   |        | --      |                          |   |         | 4,667   |             |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | 4,667 |   |
| Gain                on sale of businesses, net                                                       |   |        | --      |                          |   |         | 4,625   |             |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | 4,625 |   |
| Loss                on put options, net                                                              |   |        | --      |                          |   |         | (1,212  | )                |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | (1,212 | ) |
| Minority                interest in income of consolidated subsidiaries, net                         |   |        | --      |                          |   |         | --      |             |   |            | --     |             |   |   | (6,694 | ) |   |   | -- |   |   |   | (6,694 | ) |
| (Loss)                income before income taxes                                                     |   |        | (45,353 | )                             |   |         | 104,043 |             |   |            | (155   | )                |   |   | 16,475 |   |   |   | -- |   |   |   | 75,010 |   |
| Benefit                (provision) for income taxes                                                  |   |        | 17,688  |                          |   |         | (47,172 | )                |   |            | --     |             |   |   | 230 |   |   |   | -- |   |   |   | (29,254 | ) |
| Net                (loss) income before equity in income of consolidated                subsidiaries |   |        | (27,665 | )                             |   |         | 56,871  |             |   |            | (155   | )                |   |   | 16,705 |   |   |   | -- |   |   |   | 45,756 |   |
| Equity                in income of consolidated subsidiaries                                         |   |        | 73,421  |                          |   |         | --      |             |   |            | --     |             |   |   | -- |   |   |   | (73,421 | ) |   |   | -- |   |
| Net                income (loss)                                                                     |   | $           | 45,756  |                          |   | $            | 56,871  |             |   | $               | (155   | )                |   | $ | 16,705 |   |   | $ | (73,421 | ) |   | $ | 45,756 |   |

----

**Supplemental      Condensed Consolidating Statement of Operations**

**For      the year ended July 31, 2005**

**(in      thousands)**

|                                                                                                 |   |        |    | **100%                Owned** |   |         |    |             |   |            |   |             |
|------------------------------------------------------------------------------------------------------|--------|-------------|---------|-------------------------------|--------|--------------|---------|------------------|--------|-----------------|--------|------------------|
|                                                                                                 |   | **Parent**  |    | **Guarantor**                 |   |         |    | **Other**        |   | **Eliminating** |   |             |
|                                                                                                 |   | **Company** |    | **Subsidiaries**              |   | **Larkspur** |    | **Subsidiaries** |   | **Entries**     |   | **Consolidated** |
| Total                net revenue                                                                     |   | $           | 48      |                          |   | $            | 675,176 |             |   | $               | 3,291  |             |   | $ | 140,288 |   |   | $ | (8,816 | ) |   | $ | 809,987 |   |
| Total                operating expense                                                               |   |        | 15,515  |                          |   |         | 581,632 |             |   |            | 3,415  |             |   |   | 129,912 |   |   |   | (8,816 | ) |   |   | 721,658 |   |
| (Loss)                income from operations                                                         |   |        | (15,467 | )                             |   |         | 93,544  |             |   |            | (124   | )                |   |   | 10,376 |   |   |   | -- |   |   |   | 88,329 |   |
| Other                expense, net                                                                    |   |        | (27,706 | )                             |   |         | (7,921  | )                |   |            | (21    | )                |   |   | (3,146 | ) |   |   | -- |   |   |   | (38,794 | ) |
| Equity                investment loss, net                                                           |   |        | --      |                          |   |         | (478    | )                |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | (478 | ) |
| Loss                on sale of businesses, net                                                       |   |        | --      |                          |   |         | (7,353  | )                |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | (7,353 | ) |
| Gain                on put options, net                                                              |   |        | --      |                          |   |         | 1,158   |             |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | 1,158 |   |
| Minority                interest in loss (income) of consolidated subsidiaries,                net   |   |        | --      |                          |   |         | 476     |             |   |            | --     |             |   |   | (5,715 | ) |   |   | -- |   |   |   | (5,239 | ) |
| (Loss)                income before income taxes                                                     |   |        | (43,173 | )                             |   |         | 79,426  |             |   |            | (145   | )                |   |   | 1,515 |   |   |   | -- |   |   |   | 37,623 |   |
| Benefit                (provision) for income taxes                                                  |   |        | 16,622  |                          |   |         | (31,291 | )                |   |            | --     |             |   |   | 184 |   |   |   | -- |   |   |   | (14,485 | ) |
| Net                (loss) income before equity in income of consolidated                subsidiaries |   |        | (26,551 | )                             |   |         | 48,135  |             |   |            | (145   | )                |   |   | 1,669 |   |   |   | -- |   |   |   | 23,138 |   |
| Equity                in income of consolidated subsidiaries                                         |   |        | 49,689  |                          |   |         | --      |             |   |            | --     |             |   |   | -- |   |   |   | (49,689 | ) |   |   | -- |   |
| Net                income (loss)                                                                     |   | $           | 23,138  |                          |   | $            | 48,135  |             |   | $               | (145   | )                |   | $ | 1,699 |   |   | $ | (49,689 | ) |   | $ | 23,138 |   |

----

**Supplemental      Condensed Consolidating Statement of Operations**

**For      the year ended July 31, 2004**

**(in      thousands)**

|                                                                                                 |   |        |    | **100%                Owned** |   |         |    |             |   |            |   |             |
|------------------------------------------------------------------------------------------------------|--------|-------------|---------|-------------------------------|--------|--------------|---------|------------------|--------|-----------------|--------|------------------|
|                                                                                                 |   | **Parent**  |    | **Guarantor**                 |   |         |    | **Other**        |   | **Eliminating** |   |             |
|                                                                                                 |   | **Company** |    | **Subsidiaries**              |   | **Larkspur** |    | **Subsidiaries** |   | **Entries**     |   | **Consolidated** |
| Total                net revenue                                                                     |   | $           | 50      |                          |   | $            | 551,759 |             |   | $               | 2,859  |             |   | $ | 159,935 |   |   | $ | 12,040 |   |   | $ | 726,643 |   |
| Total                operating expense                                                               |   |        | 11,158  |                          |   |         | 484,784 |             |   |            | 3,107  |             |   |   | 133,743 |   |   |   | 12,040 |   |   |   | 644,832 |   |
| (Loss)                income from operations                                                         |   |        | (11,108 | )                             |   |         | 66,975  |             |   |            | (248   | )                |   |   | 26,192 |   |   |   | -- |   |   |   | 81,811 |   |
| Other                expense, net                                                                    |   |        | (67,759 | )                             |   |         | (12,780 | )                |   |            | (19    | )                |   |   | (2,298 | ) |   |   | -- |   |   |   | (82,856 | ) |
| Equity                investment loss, net                                                           |   |        | --      |                          |   |         | (1,596  | )                |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | (1,596 | ) |
| Loss                on put options, net                                                              |   |        | --      |                          |   |         | (1,875  | )                |   |            | --     |             |   |   | -- |   |   |   | -- |   |   |   | (1,875 | ) |
| Minority                interest in loss (income) of consolidated subsidiaries,                net   |   |        | --      |                          |   |         | 939     |             |   |            | --     |             |   |   | (4,939 | ) |   |   | -- |   |   |   | (4,000 | ) |
| (Loss)                income before income taxes                                                     |   |        | (78,867 | )                             |   |         | 51,663  |             |   |            | (267   | )                |   |   | 18,955 |   |   |   | -- |   |   |   | (8,516 | ) |
| Benefit                (provision) for income taxes                                                  |   |        | 23,660  |                          |   |         | (15,937 | )                |   |            | --     |             |   |   | (5,166 | ) |   |   | -- |   |   |   | 2,557 |   |
| Net                (loss) income before equity in income of consolidated                subsidiaries |   |        | (55,207 | )                             |   |         | 35,726  |             |   |            | (267   | )                |   |   | 13,789 |   |   |   | -- |   |   |   | (5,959 | ) |
| Equity                in income of consolidated subsidiaries                                         |   |        | 49,248  |                          |   |         | 10,085  |             |   |            | --     |             |   |   | -- |   |   |   | (59,333 | ) |   |   | -- |   |
| Net                (loss) income                                                                     |   | $           | (5,959  | )                             |   | $            | 45,811  |             |   | $               | (267   | )                |   | $ | 13,789 |   |   | $ | (59,333 | ) |   | $ | (5,959 | ) |

----

**Supplemental      Condensed Consolidating Statement of Cash Flows**

**For      the year ended July 31, 2006**

**(in      thousands)**

|                                                                |   |        |    |             |   | **100%                Owned** |     |             |   |             |   |   |   |   |    |   |   |   |
|---------------------------------------------------------------------|--------|-------------|---------|------------------|--------|-------------------------------|----------|------------------|--------|------------------|--------|--------|--------|--------|---------|--------|--------|--------|
|                                                                |   | **Parent**  |    | **Guarantor**    |   |                          |     |             |   | **Other**        |   |   |   |   |
|                                                                |   | **Company** |    | **Subsidiaries** |   | **Larkspur**                  |     | **Subsidiaries** |   | **Consolidated** |
| Net                cash (used in) provided by operating activities  |   | $           | (13,000 | )                |   | $                             | 165,339  |             |   | $                | (106   | )      |   | $      | 41,171  |   |   | $      | 193,404 |   |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from investing activities:                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Capital                expenditures                                 |   |        | --      |             |   |                          | (78,380  | )                |   |             | (51    | )      |   |   | (10,470 | )      |   |   | (88,901 | ) |
| Investments                in real estate                           |   |        | --      |             |   |                          | (72,771  | )                |   |             | --     |   |   |   | (56,957 | )      |   |   | (129,728 | ) |
| Cash                received from sale of businesses                |   |        | --      |             |   |                          | 30,712   |             |   |             | --     |   |   |   | --      |   |   |   | 30,712 |   |
| Other                investing activities, net                      |   |        | --      |             |   |                          | 277      |             |   |             | --     |   |   |   | (4,081  | )      |   |   | (3,804 | ) |
| Net                cash (used in) provided by investing activities  |   |        | --      |             |   |                          | (120,162 | )                |   |             | (51    | )      |   |   | (71,508 | )      |   |   | (191,721 | ) |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from financing activities:                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Repurchase                of common stock                           |   |        | --      |             |   |                          | (10,839  | )                |   |             | --     |   |   |   | --      |   |   |   | (10,839 | ) |
| Net                proceeds from borrowings under long-term debt    |   |        | --      |             |   |                          | 5,769    |             |   |             | --     |   |   |   | 3,452   |   |   |   | 9,221 |   |
| Proceeds                from exercise of stock options              |   |        | 46,649  |             |   |                          | --       |             |   |             | --     |   |   |   | --      |   |   |   | 46,649 |   |
| Tax                benefit from exercise of stock options           |   |        | 14,323  |             |   |                          | --       |             |   |             | --     |   |   |   | --      |   |   |   | 14,323 |   |
| Advances                (from) to affiliates                        |   |        | (47,972 | )                |   |                          | 49,590   |             |   |             | 87     |   |   |   | (1,705  | )      |   |   | -- |   |
| Other                financing activities, net                      |   |        | --      |             |   |                          | (2,578   | )                |   |             | --     |   |   |   | (3,245  | )      |   |   | (5,823 | ) |
| Net                cash provided by (used in) financing activities  |   |        | 13,000  |             |   |                          | 41,942   |             |   |             | 87     |   |   |   | (1,498  | )      |   |   | 53,531 |   |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents |   |        | --      |             |   |                          | 87,119   |             |   |             | (70    | )      |   |   | (31,835 | )      |   |   | 55,214 |   |
| Cash                and cash equivalents                            |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Beginning                of period                                  |   |        | --      |             |   |                          | 92,879   |             |   |             | 105    |   |   |   | 43,596  |   |   |   | 136,580 |   |
| End                of period                                        |   | $           | --      |             |   | $                             | 179,998  |             |   | $                | 35     |   |   | $      | 11,761  |   |   | $      | 191,794 |   |

----

**Supplemental      Condensed Consolidating Statement of Cash Flows**

**For      the year ended July 31, 2005**

**(in      thousands)**

|                                                                |   |        |    |             |   | **100%                Owned** |     |             |   |             |   |   |   |   |    |   |   |   |
|---------------------------------------------------------------------|--------|-------------|---------|------------------|--------|-------------------------------|----------|------------------|--------|------------------|--------|--------|--------|--------|---------|--------|--------|--------|
|                                                                |   | **Parent**  |    | **Guarantor**    |   |                          |     |             |   | **Other**        |   |   |   |   |
|                                                                |   | **Company** |    | **Subsidiaries** |   | **Larkspur**                  |     | **Subsidiaries** |   | **Consolidated** |
| Net                cash (used in) provided by operating activities  |   | $           | (4,690  | )                |   | $                             | 177,513  |             |   | $                | (53    | )      |   | $      | 47,571  |   |   | $      | 220,341 |   |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from investing activities:                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Capital                expenditures                                 |   |        | --      |             |   |                          | (71,532  | )                |   |             | (30    | )      |   |   | (8,413  | )      |   |   | (79,975 | ) |
| Investments                in real estate                           |   |        | --      |             |   |                          | (29,585  | )                |   |             | --     |   |   |   | (42,579 | )      |   |   | (72,164 | ) |
| Cash                received from sale of businesses                |   |        | --      |             |   |                          | 108,399  |             |   |             | --     |   |   |   | --      |   |   |   | 108,399 |   |
| Other                investing activities, net                      |   |        | --      |             |   |                          | (1,511   | )                |   |             | --     |   |   |   | 370     |   |   |   | (1,141 | ) |
| Net                cash provided by (used in) investing activities  |   |        | --      |             |   |                          | 5,771    |             |   |             | (30    | )      |   |   | (50,622 | )      |   |   | (44,881 | ) |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from financing activities:                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Proceeds                from exercise of stock options              |   |        | 21,939  |             |   |                          | --       |             |   |             | --     |   |   |   | --      |   |   |   | 21,939 |   |
| Net                payments on long-term debt                       |   |        | --      |             |   |                          | (98,945  | )                |   |             | --     |   |   |   | (4,621  | )      |   |   | (103,566 | ) |
| Advances                (from) to affiliates                        |   |        | (17,249 | )                |   |                          | (30,562  | )                |   |             | 18     |   |   |   | 47,793  |   |   |   | -- |   |
| Other                financing activities, net                      |   |        | --      |             |   |                          | (1,973   | )                |   |             | --     |   |   |   | (1,608  | )      |   |   | (3,581 | ) |
| Net                cash provided by (used in) financing activities  |   |        | 4,690   |             |   |                          | (131,480 | )                |   |             | 18     |   |   |   | 41,564  |   |   |   | (85,208 | ) |
|                                                                |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents |   |        | --      |             |   |                          | 51,804   |             |   |             | (65    | )      |   |   | 38,513  |   |   |   | 90,252 |   |
| Cash                and cash equivalents                            |   |        |    |             |   |                          |     |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Beginning                of period                                  |   |        | --      |             |   |                          | 41,075   |             |   |             | 171    |   |   |   | 5,082   |   |   |   | 46,328 |   |
| End                of period                                        |   | $           | --      |             |   | $                             | 92,879   |             |   | $                | 106    |   |   | $      | 43,595  |   |   | $      | 136,580 |   |

----

**Supplemental      Condensed Consolidating Statement of Cash Flows**

**For      the year ended July 31, 2004**

**(in      thousands)**

|                                                                |   |        |    |             |   | **100%                Owned** |    |             |   |             |   |   |   |   |    |   |   |   |
|---------------------------------------------------------------------|--------|-------------|---------|------------------|--------|-------------------------------|---------|------------------|--------|------------------|--------|--------|--------|--------|---------|--------|--------|--------|
|                                                                |   | **Parent**  |    | **Guarantor**    |   |                          |    |             |   | **Other**        |   |   |   |   |
|                                                                |   | **Company** |    | **Subsidiaries** |   | **Larkspur**                  |    | **Subsidiaries** |   | **Consolidated** |
| Net                cash provided by (used in) operating activities  |   | $           | 27,665  |             |   | $                             | 118,377 |             |   | $                | (140   | )      |   | $      | 35,035  |   |   | $      | 180,937 |   |
|                                                                |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from investing activities:                |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Capital                expenditures                                 |   |        | --      |             |   |                          | (55,316 | )                |   |             | (28    | )      |   |   | (7,616  | )      |   |   | (62,960 | ) |
| Investments                in real estate                           |   |        | --      |             |   |                          | (33,778 | )                |   |             | --     |   |   |   | 5,976   |   |   |   | (27,802 | ) |
| Other                investing activities, net                      |   |        | --      |             |   |                          | 7,397   |             |   |             | --     |   |   |   | --      |   |   |   | 7,397 |   |
| Net                cash used in investing activities                |   |        | --      |             |   |                          | (81,697 | )                |   |             | (28    | )      |   |   | (1,640  | )      |   |   | (83,365 | ) |
|                                                                |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Cash                flows from financing activities:                |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Net                proceeds (payments) on long-term debt            |   |        | 30,000  |             |   |                          | (54,268 | )                |   |             | --     |   |   |   | (7,713  | )      |   |   | (31,981 | ) |
| Payment                of tender premium                            |   |        | (23,825 | )                |   |                          | --      |             |   |             | --     |   |   |   | --      |   |   |   | (23,825 | ) |
| Advances                (from) to affiliates                        |   |        | (27,574 | )                |   |                          | 53,147  |             |   |             | 222    |   |   |   | (25,795 | )      |   |   | -- |   |
| Other                financing activities, net                      |   |        | (6,266  | )                |   |                          | 997     |             |   |             | --     |   |   |   | (2,471  | )      |   |   | (7,740 | ) |
| Net                cash (used in) provided by financing activities  |   |        | (27,665 | )                |   |                          | (124    | )                |   |             | 222    |   |   |   | (35,979 | )      |   |   | (63,546 | ) |
|                                                                |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents |   |        | --      |             |   |                          | 36,556  |             |   |             | 54     |   |   |   | (2,584  | )      |   |   | 34,026 |   |
| Net                increase in cash due to adoption of FIN 46R      |   |        | --      |             |   |                          | --      |             |   |             | --     |   |   |   | 4,428   |   |   |   | 4,428 |   |
| Cash                and cash equivalents                            |   |        |    |             |   |                          |    |             |   |             |   |   |   |   |    |   |   |   |   |   |
| Beginning                of period                                  |   |        | --      |             |   |                          | 5,898   |             |   |             | 117    |   |   |   | 1,859   |   |   |   | 7,874 |   |
| End                of period                                        |   | $           | --      |             |   | $                             | 42,454  |             |   | $                | 171    |   |   | $      | 3,703   |   |   | $      | 46,328 |   |

----

**ITEM      9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND      FINANCIAL DISCLOSURE.**

**ITEM      9A.  CONTROLS AND PROCEDURES.**

**Disclosure      Controls and Procedures**

**Management's      Annual Report on Internal Control Over Financial Reporting**

**Attestation      Report of Registered Public Accounting Firm**

**Changes      in Internal Control Over Financial Reporting**

**ITEM      9B.  OTHER INFORMATION.**

**PART      III**

**ITEM      10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE      REGISTRANT.**

*Code      of Ethics.*

**ITEM      11.  EXECUTIVE COMPENSATION.**

**ITEM      12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT      AND RELATED STOCKHOLDER MATTERS.**

**ITEM      13.  CERTAIN RELATIONSHIPS AND RELATED      TRANSACTIONS.**

**ITEM      14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.**

**PART      IV**

**ITEM      15.  EXHIBITS, FINANCIAL STATEMENTS      SCHEDULES.**

|   | (1) | See                "Item 8. Financial Statements and Supplementary Data" for the index                to the                Financial Statements. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | All                other schedules have been omitted because the required information                is not                applicable or because the information required has been included                in the                financial statements or notes thereto. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (3) | Index to              Exhibits |
|--------|-----|--------------------------------|

| **Exhibit                Number** | **Description**                                                                                                                                                                                                                                                                                                       | **Sequentially                Numbered Page** |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------|
|  3.1                         |  Amended                and Restated Certificate of Incorporation of Vail Resorts, Inc.,                dated                January 5, 2005. (Incorporated by reference to Exhibit 3.1 on Form                10-Q of                Vail Resorts, Inc. for the quarter ended January 31,                2005.) |                                          |
|  3.2                         |  Amended                and Restated By-Laws. (Incorporated by reference to Exhibit 3.1 on                Form                8-K of Vail Resorts, Inc. filed on September 30, 2004.)                                                                                                                            |                                          |

|  4.1(a)  |  Purchase                Agreement, dated as of January 15, 2004 among Vail Resorts, Inc.,                the                guarantors named on Schedule I thereto, Banc of America Securities                LLC,                Deutsche Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman                Brothers Inc., Piper Jaffray & Co. and Wells Fargo Securities LLC.                (Incorporated by reference to Exhibit 4.2(c) on Form 10-Q of Vail                Resorts,                Inc. for the quarter ended January 31, 2004.) |   |
|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|  4.1(b)  |  Supplemental                Purchase Agreement, dated as of January 22, 2004 among Vail Resorts,                Inc.,                the guarantors named thereto, Banc of America Securities LLC, Deutsche                Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc.,                Piper Jaffray & Co. and Wells Fargo Securities LLC. (Incorporated by                reference to Exhibit 4.2(d) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended January 31, 2004.)                 |   |
|  4.2(a)  |  Indenture,                dated as of January 29, 2004, among Vail Resorts, Inc., the guarantors                therein and the Bank of New York as Trustee. (Incorporated by reference                to                Exhibit 4.1 on Form 8-K of Vail Resorts, Inc. filed on February 2,                2004.)                                                                                                                                                                                                                                                  |   |
|  4.2(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.)                                                                                                |   |
|  4.3     |  Form                of Global Note. (Incorporated by reference to Exhibit 4.1 on Form                8-K of                Vail Resorts, Inc. filed on February 2, 2004.)                                                                                                                                                                                                                                                                                                                                                                                          |   |
|  4.4     |  Registration                Rights Agreement dated as of January 29, 2004 among Vail Resorts,                Inc.,                the guarantors signatory thereto, Banc of America Securities LLC,                Deutsche                Banc Securities, Inc., Bear, Stearns & Co. Inc., Lehman Brothers Inc.,                Piper Jaffray & Co. and Wells Fargo Securities LLC. (Incorporated by                reference to Exhibit 4.5(c) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended January 31, 2004.) |   |
|  4.5     |  Conversion                and Registration Rights Agreement between Vail Resorts, Inc. and                Apollo                Ski Partners, L.P. dated as of September 30, 2004. (Incorporated                by                reference to Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed                on                September 30, 2004.)                                                                                                                                                                                                          |   |
|  4.6     |  Termination                Agreement, dated as of October 5, 2004, by and among Vail Resorts,                Inc.,                Ralcorp Holdings, Inc. and Apollo Ski Partners, L.P. (Incorporated                by                reference to Exhibit 99.6 on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended October 31, 2004.)                                                                                                                                                                                          |   |
|  10.1    |  Management                Agreement by and between Beaver Creek Resort Company of Colorado                and Vail                Associates, Inc. (Incorporated by reference to Exhibit 10.1 of the                registration statement on Form S-4 of Gillett Holdings, Inc. (File                No.                33-52854) including all amendments thereto.)                                                                                                                                                                                              |   |
|  10.2    |  Forest                Service Unified Permit for Heavenly ski area. (Incorporated by reference                to Exhibit 99.13 of the report on Form 10-Q of Vail Resorts, Inc.                for the                quarter ended April 30, 2002.)                                                                                                                                                                                                                                                                                                               |   |
|  10.3(a) |  Forest                Service Unified Permit for Keystone ski area. (Incorporated by reference                to Exhibit 99.2(a) on Form 10-Q of Vail Resorts, Inc. for the quarter                ended October 31, 2002.)                                                                                                                                                                                                                                                                                                                                        |   |

|  10.3(b) |  Amendment                No. 2 to Forest Service Unified Permit for Keystone ski area.                (Incorporated by reference to Exhibit 99.2(b) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended October 31, 2002.)             |   |
|---------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|  10.3(c) |  Amendment                No. 3 to Forest Service Unified Permit for Keystone ski area.                (Incorporated by reference to Exhibit 10.3 (c) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)                  |   |
|  10.3(d) |  Amendment                No. 4 to Forest Service Unified Permit for Keystone ski area.                (Incorporated by reference to Exhibit 10.3 (d) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)                  |   |
|  10.3(e) |  Amendment                No. 5 to Forest Service Unified Permit for Keystone ski area.                (Incorporated by reference to Exhibit 10.3 (e) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)                  |   |
|  10.4(a) |  Forest                Service Unified Permit for Breckenridge ski area. (Incorporated by                reference to Exhibit 99.3(a) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended October 31, 2002.)             |   |
|  10.4(b) |  Amendment                No. 1 to Forest Service Unified Permit for Breckenridge ski area.                (Incorporated by reference to Exhibit 99.3(b) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended October 31, 2002.)         |   |
|  10.4(c) |  Amendment                No. 2 to Forest Service Unified Permit for Breckenridge ski area.                (Incorporated by reference to Exhibit 10.4 (c) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)              |   |
|  10.4(d) |  Amendment                No. 3 to Forest Service Unified Permit for Breckenridge ski area.                (Incorporated by reference to Exhibit 10.4 (d) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)              |   |
|  10.4(e) |  Amendment                No. 4 to Forest Service Unified Permit for Breckenridge ski area.                (Incorporated by reference to Exhibit 10.4 (e) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)              |   |
|  10.4(f) |  Amendment                No. 5 to Forest Service Unified Permit for Breckenridge ski area.                (Incorporated by reference to Exhibit 10.4(f) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended January 31, 2006.)         |   |
|  10.5(a) |  Forest                Service Unified Permit for Beaver Creek ski area. (Incorporated by                reference to Exhibit 99.4(a) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended October 31, 2002.)             |   |
|  10.5(b) |  Exhibits                to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated                by reference to Exhibit 99.4(b) on Form 10-Q of Vail Resorts, Inc.                for the                quarter ended October 31, 2002.) |   |
|  10.5(c) |  Amendment                No. 1 to Forest Service Unified Permit for Beaver Creek ski area.                (Incorporated by reference to Exhibit 10.5 (c) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)              |   |
|  10.5(d) |  Amendment                No. 2 to Forest Service Unified Permit for Beaver Creek ski area.                (Incorporated by reference to Exhibit 10.5 (d) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)              |   |
|  10.5(e) |  Amendment                to Forest Service Unified Permit for Beaver Creek ski area. (Incorporated                by reference to Exhibit 10.5 (e) on Form 10-K of Vail Resorts, Inc.                for                the year ended July 31, 2005.)     |   |

|  10.6(a) |  Forest                Service Unified Permit for Vail ski area. (Incorporated by reference                to                Exhibit 99.5(a) on Form 10-Q of Vail Resorts, Inc. for the quarter                ended                October 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |
|---------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|  10.6(b) |  Exhibits                to Forest Service Unified Permit for Vail ski area. (Incorporated                by                reference to Exhibit 99.5(b) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended October 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|  10.6(c) |  Amendment                No. 2 to Forest Service Unified Permit for Vail ski area. (Incorporated                by                reference to Exhibit 99.5(c) on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended October 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|  10.6(d) |  Amendment                No. 3 to Forest Service Unified Permit for Vail ski area. (Incorporated                by                reference to Exhibit 10.6 (d) on Form 10-K of Vail Resorts, Inc.                for the                year ended July 31, 2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|  10.6(e) |  Amendment                No. 4 to Forest Service Unified Permit for Vail ski area. (Incorporated                by                reference to Exhibit 10.6 (e) on Form 10-K of Vail Resorts, Inc.                for the                year ended July 31, 2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |
|  10.7(a) |  Sports                and Housing Facilities Financing Agreement between the Vail Corporation                (d/b/a “Vail Associates, Inc.”) and Eagle County, Colorado, dated April 1,                1998. (Incorporated by reference to Exhibit 10 on Form 10-Q of Vail                Resorts, Inc. for the quarter ended April 30, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                          |   |
|  10.7(b) |  Trust                Indenture dated as of April 1, 1998 securing Sports and Housing Facilities                Revenue Refunding Bonds by and between Eagle County, Colorado and                U.S.                Bank, N.A., as Trustee. (Incorporated by reference to Exhibit 10.1                on Form                10-Q of Vail Resorts, Inc. for the quarter ended April 30,                1998.)                                                                                                                                                                                                                                                                                                                                                                       |   |
|  10.8(a) |  Fourth                Amended and Restated Credit Agreement dated as of January 28, 2005                among                The Vail Corporation (d/b/a Vail Associates, Inc.), as borrower,                Bank of                America, N.A., as Administrative Agent, U.S. Bank National Association                and                Wells Fargo Bank, National Association as Co-Syndication Agents,                Deutsche                Bank Trust Company Americas and LaSalle Bank National Association                as                Co-Documentation Agents and the Lenders party thereto. (Incorporated                by                reference to Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed                on                January 31, 2005.) |   |
|  10.8(b) |  First                Amendment to Fourth Amended and Restated Credit Agreement dated as                of June                29, 2005 among The Vail Corporation (d/b/a Vail Associates, Inc.),                as                borrower and Bank of America, N.A., as Administrative Agent. (Incorporated                by reference to Exhibit 10.16(b) on Form 10-K of Vail Resorts, Inc.                for                the year ended July 31, 2005.)                                                                                                                                                                                                                                                                                                                    |   |
|  10.8(c) |  Second                Amendment to Fourth Amended and Restated Credit Agreement among The                Vail                Corporation, the Required Lenders and Bank of America, as Administrative                Agent. (Incorporated by reference to Exhibit 10.3 of Form 8-K of                Vail                Resorts, Inc. filed on March 3, 2006.)                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
|  10.9(a) |  Purchase                and Sale Agreement by and between VAHMC, Inc. and DiamondRock Hospitality                Limited Partnership, dated May 3, 2005. (Incorporated by reference                to                Exhibit 10.18(a) on Form 10-Q of Vail Resorts, Inc. for the quarter                ended                April 30, 2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |

|  10.9(b)  |  First                Amendment to Purchase and Sale Agreement by and between VAHMC, Inc.                and                DiamondRock Hospitality Limited Partnership, dated May 10, 2005.                (Incorporated by reference to Exhibit 10.18(b) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended April 30, 2005.)        |     |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|  10.10    |  Purchase                and Sale Agreement by and between VA Rancho Mirage Resort L.P., Rancho                Mirage Concessions, Inc. and GENLB-Rancho, LLC, dated July 1, 2005.                (Incorporated by reference to Exhibit 10.21 on Form 10-K of Vail                Resorts,                Inc. for the year ended July 31, 2005.)          |     |
|  10.11(a) |  Construction                Loan Agreement by and between Gore Creek Place, LLC and U.S. Bank                National                Association dated July 19, 2005. (Incorporated by reference to Exhibit                10.22(a) on Form 10-K of Vail Resorts, Inc. for the year ended July                31,                2005.)                   |     |
|  10.11(b) |  First                Amendment to Construction Loan Agreement by and between Gore Creek                Place,                LLC and U.S. Bank National Association dated December 1,                2005.                                                                                                                                                |  61 |
|  10.11(c) |  Second                Amendment to Construction Loan Agreement by and between Gore Creek                Place,                LLC and U.S. Bank National Association dated July 5, 2006                                                                                                                                                                   |  68 |
|  10.11(d) |  Amended                and Restated Completion Guaranty Agreement among Vail Resorts, Inc.,                The                Vail Corporation and U.S. Bank National Association dated December                1,                2005.                                                                                                                   |  73 |
|  10.12    |  Amended                and Restated Revolving Credit and Security Agreement between SSI                Venture,                LLC and U.S. Bank National Association dated September 23, 2005.                (Incorporated by reference to Exhibit 10.1 on Form 8-K of Vail Resorts,                Inc. filed on September 29, 2005.)                  |     |
|  10.13    |  Purchase                and Sale Contract between JHL&S, LLC and Lodging Capital Partners,                LLC, dated December 22, 2005. (Incorporated by reference to Exhibit                10.32                on Form 10-Q of Vail Resorts, Inc. for the quarter ended January                31,                2006.)                           |     |
|  10.14(a) |  Construction                Loan Agreement, dated January 31, 2006 among Arrabelle at Vail Square,                LLC, U.S. Bank National Association and Wells Fargo Bank, N.A..                (Incorporated by reference to Exhibit 10.33(a) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended January 31, 2006.)                |     |
|  10.14(b) |  Completion                Guaranty Agreement by and between The Vail Resorts Corporation and                U.S.                Bank National Association dated January 31, 2006. (Incorporated by                reference to Exhibit 10.33(b) on Form 10-Q of Vail Resorts, Inc.                for the                quarter ended January 31, 2006.) |     |
|  10.14(c) |  Completion                Guaranty Agreement by and between Vail Resorts, Inc. and U.S. Bank                National Association dated January 31, 2006. (Incorporated by reference                to                Exhibit 10.33(c) on Form 10-Q of Vail Resorts, Inc. for the quarter                ended                January 31, 2006.)           |     |
|  10.15    |  Purchase                and Sale Agreement between VR Holdings, Inc. as Seller and GHR, LLC                as                Purchaser dated December 8, 2004. (Incorporated by reference to Exhibit                99.2 on Form 8-K of Vail Resorts, Inc. dated December 8,                2004.)                                                        |     |
|  10.16*   |  1993                Stock Option Plan of Gillett Holdings, Inc. (Incorporated by reference                to                Exhibit 10.20 of the report on Form 10-K of Gillett Holdings, Inc.                for the                period from October 9, 1992 through September 30, 1993.)                                                             |     |

|  10.17*    |  1996                Stock Option Plan (Incorporated by reference to the Exhibit 10.26                of the                registration statement on Form S-2/A, File No. 333-5341.)                                                                                                                                                                                                    |     |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|  10.18*    |  Vail                Resorts, Inc. 1999 Long Term Incentive and Share Award Plan. (Incorporated                by reference to the registration statement on Form S-8 of Vail Resorts,                Inc., File No. 333-32320.)                                                                                                                                                         |     |
|  10.19*    |  2002                Long Term Incentive and Share Award Plan. (Incorporated by reference                to                Exhibit 10.17 on Form 10-Q of Vail Resorts, Inc. for the quarter                ended                October 31, 2002.)                                                                                                                                       |     |
|  10.20*    |  Restricted                Share [Unit] Agreement.                                                                                                                                                                                                                                                                                                                                       |  82 |
|  10.21*    |  Form                of Stock Option Agreement. (Incorporated by reference to Exhibit                10.5 on                Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)                                                                                                                                                                                                      |     |
|  10.22*    |  Form                of Share Appreciation Rights Agreement.                                                                                                                                                                                                                                                                                                                             |  86 |
|  10.23*    |  Vail                Resorts Deferred Compensation Plan effective as of October 1, 2000.                (Incorporated by reference to Exhibit 10.23 on Form 10-K of Vail                Resorts,                Inc. for the year ended July 31, 2000.)                                                                                                                                  |     |
|  10.24*    |  Relocation                and Separation Policy for Executives. (Incorporated by reference                to                Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed on April 14,                2006.)                                                                                                                                                                     |     |
|  10.25(a)* |  Employment                Agreement dated July 29, 1996 between Vail Resorts, Inc. and Adam                M. Aron.                (Incorporated by reference to Exhibit 10.21 of the registration statement                on Form S-2/A of Vail Resorts, Inc. (File No. 333-5341) including                all                amendments thereto.)                                    |     |
|  10.25(b)* |  Amendment                to the Employment Agreement dated May 1, 2001 between Vail Resorts,                Inc.                and Adam M. Aron. (Incorporated by reference to Exhibit 10.14(b)                of the                report on Form 10-K of Vail Resorts, Inc. for the year ended July                31,                2001.)                                        |     |
|  10.25(c)* |  Second                Amendment to Employment Agreement of Adam M. Aron, as Chairman of                the                Board and Chief Executive Officer of Vail Resorts, Inc. dated July                29,                2003. (Incorporated by reference to Exhibit 10.14(c) on Form 10-K                of Vail                Resorts, Inc. for the year ended July 31, 2003.) |     |
|  10.26*    |  Separation                Agreement and General Release, dated as of February 27, 2006, between                Adam                M. Aron and Vail Resorts, Inc. (Incorporated by reference to Exhibit                10.2                on Form 8-K of Vail Resorts, Inc. filed on March 3, 2006.)                                                                                   |     |
|  10.27*    |  Employment                Agreement, dated as of February 28, 2006, between Vail Resorts, Inc.                and                Robert A. Katz. (Incorporated by reference to Exhibit 10.1 on Form                8-K of                Vail Resorts, Inc. filed on March 3, 2006.)                                                                                                    |     |
|  10.28*    |  Amended                and Restated Employment Agreement of Jeffrey W. Jones, as Chief Financial                Officer of Vail Resorts, Inc. dated September 29, 2004. (Incorporated                by                reference to Exhibit 10.9 of Form 10-K of Vail Resorts, Inc. for                the year                ended July 31, 2004.)                                    |     |
|  10.29*    |  Stock                Option Agreement between Vail Resorts, Inc. and Jeffrey W. Jones.                (Incorporated by reference to Exhibit 10.6 on Form 8-K of Vail Resorts,                Inc. filed on March 3, 2006.)                                                                                                                                                              |     |
|  10.30*    |  Restricted                Share Agreement between Vail Resorts, Inc. and Jeffrey W. Jones.                (Incorporated by reference to Exhibit 10.6 on Form 8-K of Vail Resorts,                Inc. filed on March 3, 2006.)                                                                                                                                                          |     |

|  10.31*    |  Housing                Agreement, dated as of June 21, 2006, between Jeffrey W. Jones and                the                Vail Corporation (d/b/a Vail Associates, Inc.). (Incorporated by                reference                to Exhibit 10.1 on Form 8-K of Vail resorts, Inc. filed on June 23,                2006.                                                                    |     |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|  10.32(a)* |  Employment                Agreement of Martha D. Rehm as Senior Vice President and General                Counsel                of Vail Resorts, Inc. dated May 10, 1999. (Incorporated by reference                to                Exhibit 10.24 (a) on Form 10-K of Vail Resorts, Inc. for the year                ended                July 31, 2005.)                                     |     |
|  10.32(b)* |  First                Amendment to Employment Agreement of Martha D. Rehm as Senior Vice                President and General Counsel of Vail Resorts, Inc. dated April 8,                2004.                (Incorporated by reference to Exhibit 10.24 (b) on Form 10-K of Vail                Resorts, Inc. for the year ended July 31, 2005.)                                               |     |
|  10.33(a)* |  Employment                Agreement of William A. Jensen as Senior Vice President and Chief                Operating Officer - Breckenridge Ski Resort dated May 1, 1997.                (Incorporated by reference to Exhibit 10.9(a) on Form 10-Q of Vail                Resorts, Inc. for the quarter ended October 31, 2004.)                                                                |     |
|  10.33(b)* |  First                Amendment to the Employment Agreement of William A. Jensen as Senior                Vice                President and Chief Operating Officer - Vail Ski Resort dated August                1,                1999. (Incorporated by reference to Exhibit 10.9(b) on Form 10-Q                of Vail                Resorts, Inc. for the quarter ended October 31, 2004.) |     |
|  10.33(c)* |  Second                Amendment to the Employment Agreement of William A. Jensen as Senior                Vice                President and Chief Operating Officer - Vail Ski Resort dated July                22,                1999. (Incorporated by reference to Exhibit 10.9(c) on Form 10-Q                of Vail                Resorts, Inc. for the quarter ended October 31, 2004.) |     |
|  10.34*    |  Employment                Agreement and Addendum of Roger McCarthy as Senior Vice President                and                Chief Operating Officer - Breckenridge Ski Resort dated July 17,                2000.                (Incorporated by reference to Exhibit 10.10 on Form 10-Q of Vail                Resorts,                Inc. for the quarter ended October 31, 2004.)         |     |
|  10.35(a)* |  Employment                Agreement dated October 30, 2001 by and between RockResorts International,                LLC and Edward Mace. (Incorporated by reference to Exhibit 10.21                of the                report on Form 10-K of Vail Resorts, Inc. for the year ended July                31,                2002.)                                                             |     |
|  10.35(b)* |  Addendum                to the Employment Agreement dated October 30, 2001 by and between                RockResorts International, LLC and Edward Mace. (Incorporated by                reference                to Exhibit 10.21 of the report on Form 10-K of Vail Resorts, Inc.                for the                year ended July 31, 2002.)                                             |     |
|  10.36*    |  Separation                Agreement and General Release, dated as of April 15, 2006, between                Edward                E. Mace and RockResorts International., LLC (Incorporated by reference                to                Exhibit 10.1 on Form 8-K of Vail Resorts, Inc. filed on April 20,                2006.)                                                                |     |
|  10.37*    |  Employment                Agreement, dated as of May 4, 2006, between Keith Fernandez and Vail                Resorts Development Company, (Incorporated by reference to Exhibit                10.1 on                Form 8-K of Vail Resorts, Inc. filed on May 9, 2006.)                                                                                                                     |     |
|  10.38*    |  Summary                of Vail Resorts, Inc. Director Compensation effective February 27,                2006.                                                                                                                                                                                                                                                                                   |  91 |
|  21        |  Subsidiaries                of Vail Resorts, Inc.                                                                                                                                                                                                                                                                                                                                                |  92 |
|  22        |  Consent                of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                         |  95 |

|  23                                                                            |  Power                of Attorney. Included on signature pages hereto.                                                                                         |     |
|-------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|  31                                                                            |  Certifications                of Robert A. Katz and Jeffrey W. Jones Pursuant to Section 302 of                the                Sarbanes-Oxley Act of 2002. |  96 |
|  32                                                                            |  Certifications                of Robert A. Katz and Jeffrey W. Jones Pursuant to Section 906 of                the                Sarbanes-Oxley Act of 2002. |  98 |
|  *Management                contracts and compensatory plans and arrangements. |                                                                                                                                                                |

| **Consolidated                Financial Statement Schedule**                                   |
|------------------------------------------------------------------------------------------------|
| **Schedule                II - Valuation and Qualifying Accounts and                Reserves** |
| **(in                thousands)**                                                              |
| **For                the Years Ended July 31**                                                 |
|                                                                                           |   |   |   |   |   |   |   |   |
|                                                                                           |   | **Balance                at** |   | **Charged                to** |   |   |   | **Balance                at** |
|                                                                                           |   | **beginning                of** |   | **costs                and** |   |   |   | **End                of** |
|                                                                                           |   | **period** |   | **expenses** |   | **Deductions** |   | **period** |
| 2004                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Inventory                Reserves                                                              |   | $ | 1,277 |   | $ | 1,510 |   | $ | (2,049 | ) |   | $ | 738 |
| Valuation                Allowance on Income Taxes                                             |   |   | 493 |   |   | 193 |   |   | -- |   |   |   | 686 |
| Trade                Receivable Allowances                                                     |   |   | 1,091 |   |   | 729 |   |   | (555 | ) |   |   | 1,265 |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Inventory                Reserves                                                              |   |   | 738 |   |   | 1,754 |   |   | (1,773 | ) |   |   | 719 |
| Valuation                Allowance on Income Taxes                                             |   |   | 686 |   |   | 919 |   |   | -- |   |   |   | 1,605 |
| Trade                Receivable Allowances                                                     |   |   | 1,265 |   |   | 766 |   |   | (696 | ) |   |   | 1,335 |
|                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2006                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Inventory                Reserves                                                              |   |   | 719 |   |   | 2,139 |   |   | (2,103 | ) |   |   | 755 |
| Valuation                Allowance on Income Taxes                                             |   |   | 1,605 |   |   | -- |   |   | -- |   |   |   | 1,605 |
| Trade                Receivable Allowances                                                     |   | $ | 1,335 |   | $ | 694 |   | $ | (641 | ) |   | $ | 1,388 |

**SIGNATURES**

| Vail                Resorts, Inc. |
|-----------------------------------|
|                              |   |
| By:                               | /s/                Jeffrey W. Jones |
|                              | Jeffrey                W. Jones |
|                              | Senior                Executive Vice President, |
|                              | Chief                Financial Officer andChief                Accounting Officer |
|                              |   |
| Date:                             | October                5, 2006 |

**POWER      OF ATTORNEY**

| **Signature**                          | **Title**                                                   |
|----------------------------------------|-------------------------------------------------------------|
| /s/                Robert A. Katz      | Chief                Executive Officer and Director         |
| Robert                A. Katz          | (Principal                Executive Officer)                |
| /s/                Jeffrey W. Jones    | Senior                Executive Vice President and          |
| Jeffrey                W. Jones        | Chief                Financial Officer                      |
|                                   | (Principal                Financial and Accounting Officer) |
| /s/                Joe R. Micheletto   |                                                        |
| Joe                R. Micheletto       | Chairman                of the Board                        |
| /s/                John J. Hannan      |                                                        |
| John                J. Hannan          | Director                                                    |
| /s/                Roland A. Hernandez |                                                        |
| Roland                A. Hernandez     | Director                                                    |
| /s/                Thomas D. Hyde      |                                                        |
| Thomas                D. Hyde          | Director                                                    |
| /s/                Richard D. Kincaid  |                                                        |
| Richard                D. Kincaid      | Director                                                    |

| /s/                John F. Sorte      |     |
|---------------------------------------|----------|
| John                F. Sorte          | Director |
| /s/                William P. Stiritz |     |
| William                P. Stiritz     | Director |
|                                  |     |