----

|                                                                                                | **UNITED                  STATES**** SECURITIES                  AND EXCHANGE COMMISSION** **WASHINGTON,                  D.C. 20549**                                                                                                                                                                                                                                                                                                                                                                                       |                                                  |
|-----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------|
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | **FORM                  10-Q/A****AMENDMENT                  No. 1**                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | **x                  QUARTERLY REPORT                  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                  OF                  1934**                                                                                                                                                                                                                                                                                                                                                                      |                                                  |
|                                                                                                | For                  the quarterly period ended October 31, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | **¨                  TRANSITION REPORT                  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT                  OF                  1934**                                                                                                                                                                                                                                                                                                                                                                |                                                  |
|                                                                                                | For                  the transition period                  from       to                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | Commission                  File Number:  1-9614                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                  |
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|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | **Vail                  Resorts, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                  |
|                                                                                                | (Exact                  Name of Registrant as Specified in Its Charter)                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
| **Delaware**                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **51-0291762**                                        |   |   |
| (State                  or Other Jurisdiction of Incorporation or Organization)                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (I.R.S.                  Employer Identification No.) |   |   |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |   |   |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |   |   |
| **390                  Interlocken Crescent, Suite 1000,****Broomfield,                  Colorado** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **80021**                                             |   |   |
| (Address                  of Principal Executive Offices)                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | (Zip                  Code)                           |   |   |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |   |   |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |   |   |
|                                                                                                | **(303)                  404-1800**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                  |
|                                                                                                | (Registrant's                  Telephone Number, Including Area Code)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | Indicate                  by check mark whether the registrant: (1) has filed all reports                  required                  to be filed by Section 13 or 15(d) of the Securities Exchange Act                  of 1934                  during the preceding 12 months (or for such shorter period that                  the                  registrant was required to file such reports), and (2) has been                  subject to                  such filing requirements for the past 90 days.                     |                                                  |
|                                                                                                | x Yes ¨ No                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                | Indicate                  by check mark whether the registrant is a large accelerated filer,                  an                  accelerated filer, or a non-accelerated filer.  See definition                  of “accelerated filer and large accelerated filer” in Rule 12b-2 of the                  Exchange Act.                                                                                                                                                                                         |                                                  |
|                                                                                                | Large                  accelerated filer x                              Accelerated                  filer ¨                                   Non-accelerated                  filer ¨ |                                                  |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                |  Indicate                by check mark whether the registrant is a shell company (as defined                in                Rule 12b-2 of the Act).                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | ¨ Yes x No                        |
|                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                  |
|                                                                                                |  As                of December 5, 2006, 38,745,330 shares of the registrant’s common stock                were outstanding.                                                                                                                                                                                                                                                                                                                                                                                                 |

**Explanatory        Note**

| ·   | Part                  I – Item 1 – Financial Statements (Consolidated Statements of Cash Flows,                  Note 12 Guarantor Subsidiaries and Non-Guarantor Subsidiaries – Restated,                  Note 13 Restatement) and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Part                  I – Item 2 – Management’s Discussion and Analysis of Financial Condition                  and Results of Operations (Liquidity and Capital                  Resources). |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Table                  of Contents** |
|----------------------------------------|
|                                   |   |   |
| **PART                  I**            | **FINANCIAL                  INFORMATION** |   |
|                                   |   |   |
| Item                  1.               | Financial                  Statements. | F-1 |
| Item                  2.               | Management's                  Discussion and Analysis of Financial Condition                  and Results of Operations. | 1 |
| Item                  3.               | Quantitative                  and Qualitative Disclosures About Market                  Risk. | 10 |
| Item                  4.               | Controls                  and Procedures. | 11 |
|                                   |   |   |
|                                   |   |   |
| **PART                  II**           | **OTHER                  INFORMATION** |   |
|                                   |   |   |
| Item                  1.               | Legal                  Proceedings. | 11 |
| Item                  1A.              | Risk                  Factors. | 11 |
| Item                  2.               | Unregistered                  Sales of Equity Securities and Use of                  Proceeds. | 11 |
| Item                  3.               | Defaults                  Upon Senior Securities. | 12 |
| Item                  4.               | Submission                  of Matters to a Vote of Security                  Holders. | 12 |
| Item                  5.               | Other                  Information. | 12 |
| Item                  6.               | Exhibits. | 12 |

| **PART                  I**                                                                                                            | **FINANCIAL                  INFORMATION**                              |   |
|----------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------|--------|
|                                                                                                                                   |                                                                    |   |
| **Item                  1.**                                                                                                           | **Financial                  Statements --                  Unaudited** |   |
|                                                                                                                                   |                                                                    |   |
| Consolidated                  Condensed Balance Sheets as of October 31,                  2006, July 31, 2006 and October 31, 2005     | F-2                                                                     |
| Consolidated                  Condensed Statements of Operations for the                  Three Months Ended October 31, 2006 and 2005 | F-3                                                                     |
| Consolidated                  Condensed Statements of Cash Flows for                  the Three Months Ended October 31, 2006 and 2005 | F-4                                                                     |
| Notes                  to Consolidated Condensed Financial                  Statements                                                 | F-5                                                                     |

| **Vail                  Resorts, Inc.**                                       |                                                                                                                                                                                                                                                                                                    |
|-------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Consolidated                  Condensed Balance Sheets**                    |                                                                                                                                                                                                                                                                                                    |
| **(In                  thousands, except share and per share amounts)**       |                                                                                                                                                                                                                                                                                                    |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   |   | **October                  31,** |   |   | **July                  31,** |   |   | **October                  31,** |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   |   | **2006** |   |   | **2006** |   |   | **2005** |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   |   | **(unaudited)** |   |   |   |   |   | **(unaudited)** |   |
| Assets                                                                        |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Current                  assets:                                              |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|                                                                          | Cash                  and cash equivalents                                                                                                                                                                                                                                                              | $ | 117,311 |   | $ | 191,794 |   | $ | 58,692 |   |
|                                                                          | Restricted                  cash                                                                                                                                                                                                                                                                        |   | 20,354 |   |   | 20,322 |   |   | 17,400 |   |
|                                                                          | Trade                  receivables, net                                                                                                                                                                                                                                                                 |   | 27,532 |   |   | 35,949 |   |   | 25,458 |   |
|                                                                          | Inventories,                  net                                                                                                                                                                                                                                                                       |   | 56,623 |   |   | 42,278 |   |   | 50,571 |   |
|                                                                          | Other                  current assets                                                                                                                                                                                                                                                                   |   | 39,082 |   |   | 35,631 |   |   | 42,258 |   |
|                                                                          | Assets                  held for sale                                                                                                                                                                                                                                                                   |   | -- |   |   | -- |   |   | 26,857 |   |
|                                                                          | Total                  current assets                                                                                                                                                                                                                                                                   |   | 260,902 |   |   | 325,974 |   |   | 221,236 |   |
| Property,                  plant and equipment, net (Note 5)                  |                                                                                                                                                                                                                                                                                                    | 856,502 |   |   | 851,112 |   |   | 857,960 |   |
| Real                  estate held for sale and investment                     |                                                                                                                                                                                                                                                                                                    | 301,781 |   |   | 259,384 |   |   | 194,697 |   |
| Goodwill,                  net                                                |                                                                                                                                                                                                                                                                                                    | 135,811 |   |   | 135,811 |   |   | 135,507 |   |
| Intangible                  assets, net                                       |                                                                                                                                                                                                                                                                                                    | 74,252 |   |   | 75,109 |   |   | 77,642 |   |
| Other                  assets                                                 |                                                                                                                                                                                                                                                                                                    | 45,737 |   |   | 40,253 |   |   | 32,762 |   |
|                                                                          | Total                  assets                                                                                                                                                                                                                                                                           | $ | 1,674,985 |   | $ | 1,687,643 |   | $ | 1,519,804 |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |   |   |
| Liabilities                  and Stockholders' Equity                         |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Current                  liabilities:                                         |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|                                                                          | Accounts                  payable and accrued expenses (Note 5)                                                                                                                                                                                                                                         | $ | 268,490 |   | $ | 230,762 |   | $ | 246,801 |   |
|                                                                          | Income                  taxes payable                                                                                                                                                                                                                                                                   |   | 14,986 |   |   | 17,517 |   |   | 12,191 |   |
|                                                                          | Long-term                  debt due within one year (Note 4)                                                                                                                                                                                                                                            |   | 430 |   |   | 5,915 |   |   | 6,128 |   |
|                                                                          | Total                  current liabilities                                                                                                                                                                                                                                                              |   | 283,906 |   |   | 254,194 |   |   | 265,120 |   |
| Long-term                  debt (Note 4)                                      |                                                                                                                                                                                                                                                                                                    | 542,990 |   |   | 525,313 |   |   | 524,174 |   |
| Other                  long-term liabilities                                  |                                                                                                                                                                                                                                                                                                    | 165,746 |   |   | 158,490 |   |   | 133,140 |   |
| Deferred                  income taxes                                        |                                                                                                                                                                                                                                                                                                    | 46,959 |   |   | 73,064 |   |   | 49,741 |   |
| Commitments                  and contingencies (Note 10)                      |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
| Put                  option liabilities (Note 8)                              |                                                                                                                                                                                                                                                                                                    | 1,245 |   |   | 1,245 |   |   | 1,026 |   |
| Minority                  interest in net assets of consolidated subsidiaries |                                                                                                                                                                                                                                                                                                    | 29,835 |   |   | 32,560 |   |   | 26,659 |   |
| Stockholders'                  equity:                                        |                                                                                                                                                                                                                                                                                                    |   |   |   |   |   |   |   |   |
|                                                                          | Preferred                  stock, $0.01 par value, 25,000,000 shares authorized, zero shares                  issued                  and outstanding                                                                                                                                                   |   | -- |   |   | -- |   |   | -- |   |
|                                                                          | Common                  stock, $0.01 par value, 100,000,000 shares authorized, 39,210,917                  (unaudited), 39,036,282 and 37,166,504 (unaudited) shares issued                  as of                  October 31, 2006, July 31, 2006 and October 31, 2005,                  respectively |   | 392 |   |   | 390 |   |   | 372 |   |
|                                                                          | Additional                  paid-in capital                                                                                                                                                                                                                                                             |   | 514,345 |   |   | 509,505 |   |   | 455,935 |   |
|                                                                          | Retained                  earnings                                                                                                                                                                                                                                                                      |   | 107,906 |   |   | 143,721 |   |   | 63,637 |   |
|                                                                          | Treasury                  stock (Note 11)                                                                                                                                                                                                                                                               |   | (18,339 | ) |   | (10,839 | ) |   | -- |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    | Total                  stockholders' equity |   | 604,304 |   |   | 642,777 |   |   | 519,944 |   |
|                                                                          |                                                                                                                                                                                                                                                                                                    |   | Total                  liabilities and stockholders' equity | $ | 1,674,985 |   | $ | 1,687,643 |   | $ | 1,519,804 |   |

|                                                                 |                                                                         |
|----------------------------------------------------------------------|------------------------------------------------------------------------------|
| **Vail                  Resorts, Inc.**                              |                                                                         |
| **Consolidated                  Condensed Statements of Operations** |                                                                         |
| **(In                  thousands, except per share amounts)**        |                                                                         |
| **(Unaudited)**                                                      |                                                                         |
|                                                                 |                                                                         |   |   |   |   |   |   |   |   |
|                                                                 |                                                                         |   |   |   | **Three                  Months Ended** |   |
|                                                                 |                                                                         |   |   |   | **October                  31,** |   |
|                                                                 |                                                                         |   |   |   | **2006** |   |   | **2005** |   |
| Net                  revenue:                                        |                                                                         |   |   |   |   |   |
|                                                                 | Mountain                                                                     | $ | 46,164 |   | $ | 40,277 |   |
|                                                                 | Lodging                                                                      |   | 40,408 |   |   | 41,750 |   |
|                                                                 | Real                  estate                                                 |   | 26,922 |   |   | 3,393 |   |
|                                                                 |                                                                         | Total                  net revenue |   | 113,494 |   |   | 85,420 |   |
| Segment                  operating expense:                          |                                                                         |   |   |   |   |   |
|                                                                 | Mountain                                                                     |   | 79,487 |   |   | 72,291 |   |
|                                                                 | Lodging                                                                      |   | 36,349 |   |   | 37,641 |   |
|                                                                 | Real                  estate                                                 |   | 26,118 |   |   | 6,069 |   |
|                                                                 |                                                                         | Total                  segment operating expense |   | 141,954 |   |   | 116,001 |   |
| Other                  operating expense:                            |                                                                         |   |   |   |   |   |
|                                                                 | Depreciation                  and amortization                               |   | (21,585 | ) |   | (18,923 | ) |
|                                                                 | Relocation                  and separation charges (Note 7)                  |   | (735 | ) |   | -- |   |
|                                                                 | Asset                  impairment charges                                    |   | -- |   |   | (136 | ) |
|                                                                 | Loss                  on disposal of fixed assets, net                       |   | (81 | ) |   | (240 | ) |
| Loss                  from operations                                |                                                                         | (50,861 | ) |   | (49,880 | ) |
|                                                                 | Mountain                  equity investment income, net                      |   | 835 |   |   | 850 |   |
|                                                                 | Real                  estate equity investment income, net                   |   | -- |   |   | 69 |   |
|                                                                 | Investment                  income, net                                      |   | 2,063 |   |   | 1,188 |   |
|                                                                 | Interest                  expense, net                                       |   | (8,936 | ) |   | (9,437 | ) |
|                                                                 | Contract                  dispute charges (Note 10)                          |   | (3,605 | ) |   | -- |   |
|                                                                 | Loss                  on put options, net (Note 8)                           |   | -- |   |   | (992 | ) |
|                                                                 | Minority                  interest in loss of consolidated subsidiaries, net |   | 1,790 |   |   | 1,926 |   |
| Loss                  before benefit from income taxes               |                                                                         | (58,714 | ) |   | (56,276 | ) |
|                                                                 | Benefit                  from income taxes                                   |   | 22,899 |   |   | 21,947 |   |
| Net                  loss                                            | $                                                                            | (35,815 | ) | $ | (34,329 | ) |
|                                                                 |                                                                         |   |   |   |   |   |
| Per                  share amounts (Note 3):                         |                                                                         |   |   |   |   |   |
|                                                                 | Basic                  net loss per share                                    | $ | (0.93 | ) | $ | (0.93 | ) |
|                                                                 | Diluted                  net loss per share                                  | $ | (0.93 | ) | $ | (0.93 | ) |

| **Vail                  Resorts, Inc.**                              |
|----------------------------------------------------------------------|
| **Consolidated                  Condensed Statements of Cash Flows** |
| **(In                  thousands)**                                  |
| **(Unaudited)**                                                      |
|                                                                 |   |   |   |   |   |   |   |   |   |
|                                                                 |   |   |   |   | **Three                  Months Ended** |   |
|                                                                 |   |   |   |   | **October                  31,** |   |
|                                                                 |   |   |   |   | **2006** |   |   | **2005** |   |
|                                                                 |   |   |   |   | (as                  restated, |   |   | (as                  restated, |   |
|                                                                 |   |   |   |   | see                  Note 13) |   |   | see                  Note 13) |   |
| Net                  cash used in operating activities               | $ | (52,760 | ) | $ | (61,194 | ) |
| Cash                  flows from investing activities:               |   |   |   |   |   |   |
|                                                                 | Capital                  expenditures |   | (28,558 | ) |   | (32,448 | ) |
|                                                                 | Other                  investing activities, net |   | 89 |   |   | (3,953 | ) |
|                                                                 |   | Net                  cash used in investing activities |   | (28,469 | ) |   | (36,401 | ) |
| Cash                  flows from financing activities:               |   |   |   |   |   |   |
|                                                                 | Repurchases                  of common stock |   | (7,500 | ) |   | -- |   |
|                                                                 | Proceeds                  from borrowings under long-term debt |   | 42,039 |   |   | 18,887 |   |
|                                                                 | Payments                  of long-term debt |   | (29,847 | ) |   | (10,303 | ) |
|                                                                 | Proceeds                  from exercise of stock options |   | 2,324 |   |   | 11,502 |   |
|                                                                 | Other                  financing activities, net |   | (270 | ) |   | (379 | ) |
|                                                                 |   | Net                  cash provided by financing activities |   | 6,746 |   |   | 19,707 |   |
|                                                                 |   |   | Net                  decrease in cash and cash equivalents |   | (74,483 | ) |   | (77,888 | ) |
| Cash                  and cash equivalents:                          |   |   |   |   |   |   |
|                                                                 | Beginning                  of period |   | 191,794 |   |   | 136,580 |   |
|                                                                 | End                  of period | $ | 117,311 |   | $ | 58,692 |   |

----

**Vail        Resorts, Inc.**

**Notes        to Consolidated Condensed Financial Statements**

**(Unaudited)**

**1.  Organization        and        Business**

**2.  Summary        of Significant Accounting Policies**

*Use        of Estimates--*

**3.  Net        Loss Per Common Share**

|                                                 |      | **Three                  Months Ended October 31,** |
|------------------------------------------------------|-----------|-----------------------------------------------------|
|                                                 | **2006**  |                                                | **2005** |
|                                                 | **Basic** |                                                | **Diluted** |   | **Basic** |   | **Diluted** |
| Net                  loss per common share:          |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss                            | $         | (35,815                                             | ) |   | $ | (35,815 | ) |   | $ | (34,329 | ) |   | $ | (34,329 | ) |
|                                                 |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                  shares outstanding |      | 38,715                                              |   |   |   | 38,715 |   |   |   | 36,790 |   |   |   | 36,790 |   |
| Effect                  of dilutive securities       |      | --                                                  |   |   |   | -- |   |   |   | -- |   |   |   | -- |   |
| Total                  shares                        |      | 38,715                                              |   |   |   | 38,715 |   |   |   | 36,790 |   |   |   | 36,790 |   |
|                                                 |      |                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss per common share           | $         |  (0.93                                         | ) |   | $ | (0.93 | ) |   | $ | (0.93 | ) |   | $ | (0.93 | ) |

**4.  Long-Term        Debt**

|                                                             |                              | **October                  31,** | **July                  31,** | **October                  31,** |
|------------------------------------------------------------------|-----------------------------------|----------------------------------|-------------------------------|----------------------------------|
|                                                             | **Maturity                  (a)** | **2006**                         | **2006**                      | **2005**                         |
| Credit                  Facility Revolver                        | 2010                              | $                                | --                            | $                                | -- | $ | -- |
| SSV                  Facility                                    | 2011                              |                             | --                            |                             | 6,261 |   | 17,785 |
| Industrial                  Development Bonds                    | 2007-2020                         |                             | 57,700                        |                             | 61,700 |   | 61,700 |
| Employee                  Housing Bonds                          | 2027-2039                         |                             | 52,575                        |                             | 52,575 |   | 52,575 |
| Non-Recourse                  Real Estate Financings (b)         | 2009                              |                             | 35,970                        |                             | 13,357 |   | 382 |
| 6.75%                  Senior Subordinated Notes ("6.75% Notes") | 2014                              |                             | 390,000                       |                             | 390,000 |   | 390,000 |
| Other                                                            | 2007-2029                         |                             | 7,175                         |                             | 7,335 |   | 7,860 |
| Total                  debt                                      |                              |                             | 543,420                       |                             | 531,228 |   | 530,302 |
| Less:  Current                  maturities (c)         |                              |                             | 430                           |                             | 5,915 |   | 6,128 |
| Long-term                  debt                                  |                              | $                                | 542,990                       | $                                | 525,313 | $ | 524,174 |

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

| (b)   | At                  October 31, 2006 Non-Recourse Real Estate Financings consist of                  borrowings                  under the $175 million construction agreement for Arrabelle at                  Vail                  Square, LLC (“Arrabelle”).  At July 31, 2006 Non-Recourse Real                  Estate Financings also included borrowings under the $30 million                  construction agreement for Gore Creek Place, LLC (“Gore Creek”) which were                  paid in full during the three months ended October 31,                  2006. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

| Fiscal                  2007 |   | $      | 270     |
|------------------------------|--------|--------|---------|
| Fiscal                  2008 |   |   | 344     |
| Fiscal                  2009 |   |   | 51,235  |
| Fiscal                  2010 |   |   | 262     |
| Fiscal                  2011 |   |   | 1,738   |
| Thereafter                   |   |   | 489,571 |
| Total                  debt  |   | $      | 543,420 |

**5.  Supplementary        Balance Sheet        Information**

|                                                 | **October                  31,**                     | **July                  31,** | **October                  31,** |
|------------------------------------------------------|------------------------------------------------------|-------------------------------|----------------------------------|
|                                                 | **2006**                                             | **2006**                      | **2005**                         |
| Land                  and land improvements          | $                                                    | 244,786                       |                             | $ | 248,941 |   | $ | 236,441 |   |
| Buildings                  and building improvements |                                                 | 531,829                       |                             |   | 529,316 |   |   | 506,281 |   |
| Machinery                  and equipment             |                                                 | 426,886                       |                             |   | 426,457 |   |   | 396,705 |   |
| Vehicles                                             |                                                 | 25,502                        |                             |   | 25,671 |   |   | 24,867 |   |
| Furniture                  and fixtures              |                                                 | 117,574                       |                             |   | 113,696 |   |   | 101,743 |   |
| Construction                  in progress            |                                                 | 57,678                        |                             |   | 39,149 |   |   | 75,064 |   |
|                                                 | Gross                  property, plant and equipment |                          | 1,404,255                        |   |   | 1,383,230 |   |   | 1,341,101 |   |
| Accumulated                  depreciation            |                                                 | (547,753                      | )                                |   | (532,118 | ) |   | (483,141 | ) |
|                                                 | Property,                  plant and equipment, net  | $                             | 856,502                          |   | $ | 851,112 |   | $ | 857,960 |   |

|                                                                      |                                                         |    | **October                  31,** |   | **July                  31,** |    | **October                  31,** |
|---------------------------------------------------------------------------|--------------------------------------------------------------|---------|----------------------------------|--------|-------------------------------|---------|----------------------------------|
|                                                                      |                                                         |    | **2006**                         |   | **2006**                      |    | **2005**                         |
| Trade                  payables                                           | $                                                            | 103,975 |                             | $      | 82,599                        |    | $                                | 85,482 |   |   |
| Deferred                  revenue                                         |                                                         | 68,277  |                             |   | 30,785                        |    |                             | 59,737 |   |   |
| Deferred                  credits and deposits                            |                                                         | 24,318  |                             |   | 24,026                        |    |                             | 31,779 |   |   |
| Accrued                  salaries, wages and deferred compensation        |                                                         | 17,370  |                             |   | 31,954                        |    |                             | 15,488 |   |   |
| Accrued                  benefits                                         |                                                         | 23,428  |                             |   | 24,538                        |    |                             | 17,864 |   |   |
| Accrued                  interest                                         |                                                         | 7,434   |                             |   | 14,969                        |    |                             | 6,803 |   |   |
| Liabilities                  to complete real estate projects, short term |                                                         | 4,363   |                             |   | 5,951                         |    |                             | 9,597 |   |   |
| Other                  accruals                                           |                                                         | 19,325  |                             |   | 15,940                        |    |                             | 20,051 |   |   |
|                                                                      | Total                  accounts payable and accrued expenses | $       | 268,490                          |   | $                             | 230,762 |                             | $ | 246,801 |   |   |

**6.  Variable        Interest        Entities **

**7.        Relocation and Separation Charges**

|                                                  |    |                |   |    |                  |   |    | ** Facility,**                    |   |    |            |   |
|-------------------------------------------------------|---------|---------------------|--------|---------|-----------------------|--------|---------|----------------------------------------|--------|---------|-----------------|--------|
|                                                  |    | ** Severance** |   |    |                  |   |    | ** Employee**                     |   |    |            |   |
|                                                  |    | ** and**       |   |    | ** Contact**     |   |    | ** and                    Other** |   |    |            |   |
|                                                  |    | ** Retention** |   |    | ** Termination** |   |    | ** Relocation**                   |   |    |            |   |
|                                                  |    | ** Benefits**  |   |    | ** Costs**       |   |    | ** Costs**                        |   |    | ** Total** |   |
|  Balance                    at July 31, 2006     |  $ |  873           |   |  $ |  --              |   |  $ |  283                              |   |  $ |  1,156     |   |
|  Relocation                    charges           |    | 66             |   |    | 33               |   |    | 636                                    |   |    | 735             |   |
|  Payments                                        |    |  (768          | )      |    |  (33             | )      |    |  (880                             | )      |    |  (1,681    | )      |
|  Balance                    at October, 31, 2006 |  $ | 171                 |   |  $ | --                    |   |  $ | 39                                     |   |  $ |  210       |   |

**8.  Put        and Call Options**

**9.  Related        Party        Transactions**

**10.  Commitments        and        Contingencies**

*Metropolitan        Districts*

*Guarantees*

*Cheeca        Lodge & Spa Contract Dispute*

**11.       Stock        Repurchase Plan**

**12.  Guarantor        Subsidiaries and Non-Guarantor        Subsidiaries -- Restated**

----

| **Supplemental                  Condensed Consolidating Balance Sheet** |
|-------------------------------------------------------------------------|
| **As                  of October 31, 2006**                             |
| **(in                  thousands)**                                     |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   | **100%                  Owned** |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   | **Parent** |   |   | **Guarantor** | **Other** |   | ** Eliminating** |   |   |   |   |
|                                                                    |   |   |   | **Company** |   |   | **Subsidiaries** | **Subsidiaries** |   | **Entries** |   | **Consolidated** |   |
| Current                  assets:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | Cash                  and cash equivalents | $ | -- |   |   | $ | 108,569 |   | $ | 8,742 |   | $ | -- |   | $ | 117,311 |   |
|                                                                    | Restricted                  cash |   | -- |   |   |   | 16,341 |   |   | 4,013 |   |   | -- |   |   | 20,354 |   |
|                                                                    | Trade                  receivables, net |   | -- |   |   |   | 23,150 |   |   | 4,382 |   |   | -- |   |   | 27,532 |   |
|                                                                    | Inventories,                  net |   | -- |   |   |   | 8,587 |   |   | 48,036 |   |   | -- |   |   | 56,623 |   |
|                                                                    | Other                  current assets |   | 12,676 |   |   |   | 23,590 |   |   | 2,816 |   |   | -- |   |   | 39,082 |   |
|                                                                    |   | Total                  current assets |   | 12,676 |   |   |   | 180,237 |   |   | 67,989 |   |   | -- |   |   | 260,902 |   |
| Property,                  plant and equipment, net                     |   | -- |   |   |   | 788,984 |   |   | 67,518 |   |   | -- |   |   | 856,502 |   |
| Real                  estate held for sale and investment               |   | -- |   |   |   | 165,788 |   |   | 135,993 |   |   | -- |   |   | 301,781 |   |
| Goodwill,                  net                                          |   |   | -- |   |   |   | 118,475 |   |   | 17,336 |   |   | -- |   |   | 135,811 |   |
| Intangible                  assets, net                                 |   | -- |   |   |   | 57,518 |   |   | 16,734 |   |   | -- |   |   | 74,252 |   |
| Other                  assets                                           |   | 5,179 |   |   |   | 26,536 |   |   | 14,022 |   |   | -- |   |   | 45,737 |   |
| Investments                  in subsidiaries and advances to            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (from)                  parent                                          | 1,002,008 |   |   |   | (483,368 | ) |   | (58,742 | ) |   | (459,898 | ) |   | -- |   |
|                                                                    | Total                  assets |   | $ | 1,019,863 |   |   | $ | 854,170 |   | $ | 260,850 |   | $ | (459,898 | ) | $ | 1,674,985 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  liabilities:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | Accounts                  payable and accrued expenses | $ | 10,630 |   |   | $ | 192,742 |   | $ | 65,118 |   | $ | -- |   | $ | 268,490 |   |
|                                                                    | Income                  taxes payable |   | 14,913 |   |   |   | 73 |   |   | -- |   |   | -- |   |   | 14,986 |   |
|                                                                    | Long-term                  debt due within one year |   | -- |   |   |   | 44 |   |   | 386 |   |   | -- |   |   | 430 |   |
|                                                                    |   | Total                  current liabilities |   | 25,543 |   |   |   | 192,859 |   |   | 65,504 |   |   | -- |   |   | 283,906 |   |
| Long-term                  debt                                         |   |   | 390,000 |   |   |   | 57,726 |   |   | 95,264 |   |   | -- |   |   | 542,990 |   |
| Other                  long-term liabilities                            |   | 16 |   |   |   | 126,507 |   |   | 39,223 |   |   | -- |   |   | 165,746 |   |
| Deferred                  income taxes                                  |   | -- |   |   |   | 46,877 |   |   | 82 |   |   | -- |   |   | 46,959 |   |
| Put                  option liabilities                                 |   | -- |   |   |   | 1,245 |   |   | -- |   |   | -- |   |   | 1,245 |   |
| Minority                  interest in net assets of consolidated        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| subsidiaries                                                            | -- |   |   |   | -- |   |   | 29,835 |   |   | -- |   |   | 29,835 |   |
| Total                  stockholders' equity                             |   | 604,304 |   |   |   | 428,956 |   |   | 30,942 |   |   | (459,898 | ) |   | 604,304 |   |
|                                                                    | Total                  liabilities and stockholders' equity | $ | 1,019,863 |   |   | $ | 854,170 |   | $ | 260,850 |   | $ | (459,898 | ) | $ | 1,674,985 |   |

| **Supplemental                  Condensed Consolidating Balance Sheet**       |
|-------------------------------------------------------------------------------|
| **As                  of July 31, 2006**                                      |
| **(in                  thousands)**                                           |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   |   |   |   |   | **100%                  Owned** |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                          |   | **Parent** |   | **Guarantor** |   | **Other** |   | **Eliminating** |   |   |   |   |
|                                                                          |   | **Company** |   | **Subsidiaries** |   | **Subsidiaries** |   | **Entries** |   | **Consolidated** |
| Current                  assets:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                    |   | $ | -- |   |   | $ | 179,998 |   |   | $ | 11,796 |   |   | $ | -- |   |   | $ | 191,794 |   |
| Restricted                  cash                                              |   |   | -- |   |   |   | 14,787 |   |   |   | 5,535 |   |   |   | -- |   |   |   | 20,322 |   |
| Trade                  receivables, net                                       |   |   | -- |   |   |   | 31,030 |   |   |   | 4,919 |   |   |   | -- |   |   |   | 35,949 |   |
| Inventories,                  net                                             |   |   | -- |   |   |   | 8,595 |   |   |   | 33,683 |   |   |   | -- |   |   |   | 42,278 |   |
| Other                  current assets                                         |   |   | 11,945 |   |   |   | 21,308 |   |   |   | 2,378 |   |   |   | -- |   |   |   | 35,631 |   |
| Total                  current assets                                         |   |   | 11,945 |   |   |   | 255,718 |   |   |   | 58,311 |   |   |   | -- |   |   |   | 325,974 |   |
| Property,                  plant and equipment, net                           |   |   | -- |   |   |   | 782,158 |   |   |   | 68,954 |   |   |   | -- |   |   |   | 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 | ) |   |   | (51,690 | ) |   |   | (459,898 | ) |   |   | -- |   |
| Total                  assets                                                 |   | $ | 1,070,510 |   |   | $ | 847,755 |   |   | $ | 229,276 |   |   | $ | (459,898 | ) |   | $ | 1,687,643 |   |
|                                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  liabilities:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Accounts                  payable and accrued expenses                        |   | $ | 19,857 |   |   | $ | 161,179 |   |   | $ | 49,726 |   |   | $ | -- |   |   | $ | 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 |   |   |   | 51,596 |   |   |   | -- |   |   |   | 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 |   |   |   | 19,275 |   |   |   | -- |   |   |   | 32,560 |   |
| Total                  stockholders’ equity                             |   |   | 642,777 |   |   |   | 415,353 |   |   |   | 44,545 |   |   |   | (459,898 | ) |   |   | 642,777 |   |
| Total                  liabilities and stockholders’ equity             |   | $ | 1,070,510 |   |   | $ | 847,755 |   |   | $ | 229,276 |   |   | $ | (459,898 | ) |   | $ | 1,687,643 |   |

| **Supplemental                  Condensed Consolidating Balance Sheet** |
|-------------------------------------------------------------------------|
| **As                  of October 31, 2005**                             |
| **(in                  thousands)**                                     |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   | **100%                  Owned** |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   |   |   | **Parent** |   |   | **Guarantor** | **Other** |   | ** Eliminating** |   |   |   |   |
|                                                                    |   |   |   | **Company** |   |   | **Subsidiaries** | **Subsidiaries** |   | **Entries** |   | **Consolidated** |   |
| Current                  assets:                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | Cash                  and cash equivalents | $ | -- |   |   | $ | 18,127 |   | $ | 40,565 |   | $ | -- |   | $ | 58,692 |   |
|                                                                    | Restricted                  cash |   | -- |   |   |   | 14,865 |   |   | 2,535 |   |   | -- |   |   | 17,400 |   |
|                                                                    | Trade                  receivables, net |   | -- |   |   |   | 20,386 |   |   | 5,072 |   |   | -- |   |   | 25,458 |   |
|                                                                    | Inventories,                  net |   | -- |   |   |   | 8,458 |   |   | 42,113 |   |   | -- |   |   | 50,571 |   |
|                                                                    | Other                  current assets |   | 12,140 |   |   |   | 23,714 |   |   | 6,404 |   |   | -- |   |   | 42,258 |   |
|                                                                    | Assets                  held for sale |   | -- |   |   |   | 26,857 |   |   | -- |   |   | -- |   |   | 26,857 |   |
|                                                                    |   | Total                  current assets |   | 12,140 |   |   |   | 112,407 |   |   | 96,689 |   |   | -- |   |   | 221,236 |   |
| Property,                  plant and equipment, net                     |   | -- |   |   |   | 790,406 |   |   | 67,554 |   |   | -- |   |   | 857,960 |   |
| Real                  estate held for sale and investment               |   | -- |   |   |   | 127,484 |   |   | 67,213 |   |   | -- |   |   | 194,697 |   |
| Goodwill,                  net                                          |   |   | -- |   |   |   | 135,507 |   |   | -- |   |   | -- |   |   | 135,507 |   |
| Intangible                  assets, net                                 |   | -- |   |   |   | 43,121 |   |   | 34,521 |   |   | -- |   |   | 77,642 |   |
| Other                  assets                                           |   | 5,889 |   |   |   | 16,674 |   |   | 10,199 |   |   | -- |   |   | 32,762 |   |
| Investments                  in subsidiaries and advances to            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (from)                  parent                                          | 911,105 |   |   |   | (390,002 | ) |   | (61,205 | ) |   | (459,898 | ) |   | -- |   |
|                                                                    | Total                  assets |   | $ | 929,134 |   |   | $ | 835,597 |   | $ | 214,971 |   | $ | (459,898 | ) | $ | 1,519,804 |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                  liabilities:                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    | Accounts                  payable and accrued expenses | $ | 6,631 |   |   | $ | 181,890 |   | $ | 58,280 |   | $ | -- |   | $ | 246,801 |   |
|                                                                    | Income                  taxes payable |   | 12,191 |   |   |   | -- |   |   | -- |   |   | -- |   |   | 12,191 |   |
|                                                                    | Long-term                  debt due within one year |   | -- |   |   |   | 4,476 |   |   | 1,652 |   |   | -- |   |   | 6,128 |   |
|                                                                    |   | Total                  current liabilities |   | 18,822 |   |   |   | 186,366 |   |   | 59,932 |   |   | -- |   |   | 265,120 |   |
| Long-term                  debt                                         |   |   | 390,000 |   |   |   | 57,777 |   |   | 76,397 |   |   | -- |   |   | 524,174 |   |
| Other                  long-term liabilities                            |   | 368 |   |   |   | 98,768 |   |   | 34,004 |   |   | -- |   |   | 133,140 |   |
| Deferred                  income taxes                                  |   | -- |   |   |   | 49,412 |   |   | 329 |   |   | -- |   |   | 49,741 |   |
| Put                  option liabilities                                 |   | -- |   |   |   | 1,026 |   |   | -- |   |   | -- |   |   | 1,026 |   |
| Minority                  interest in net assets of consolidated        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| subsidiaries                                                            | -- |   |   |   | -- |   |   | 26,659 |   |   | -- |   |   | 26,659 |   |
| Total                  stockholders' equity                             |   | 519,944 |   |   |   | 442,248 |   |   | 17,650 |   |   | (459,898 | ) |   | 519,944 |   |
|                                                                    | Total                  liabilities and stockholders' equity | $ | 929,134 |   |   | $ | 835,597 |   | $ | 214,971 |   | $ | (459,898 | ) | $ | 1,519,804 |   |

----

| **Supplemental                  Condensed Consolidating Statement of                  Operations** |
|----------------------------------------------------------------------------------------------------|
| **For                  the three months ended October 31, 2006**                                   |
| **(in                  thousands)**                                                                |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   | **100%                  Owned** |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   | **Parent** |   | **Guarantor** |   | **Other** |   | **Eliminating** |   |   |   |   |
|                                                                                               |   |   | **Company** |   | **Subsidiaries** |   | **Subsidiaries** |   | **Entries** |   | **Consolidated** |
| Total                  net revenue                                                                 |   | $ | -- |   |   | $ | 75,962 |   |   | $ | 39,295 |   |   | $ | (1,763 | ) | $ | 113,494 |   |
| Total                  operating expense                                                           |   |   | 2,995 |   |   |   | 121,376 |   |   |   | 41,747 |   |   |   | (1,763 | ) |   | 164,355 |   |
|                                                                                               | Loss                  from operations |   |   | (2,995 | ) |   |   | (45,414 | ) |   | (2,452 | ) |   | -- |   |   |   | (50,861 | ) |
| Equity                  investment income, net                                                     |   |   | -- |   |   |   | 835 |   |   |   | -- |   |   |   | -- |   |   |   | 835 |   |
| Other                  expense                                                                     |   |   | (6,757 | ) |   |   | (2,675 | ) |   | (1,046 | ) |   | -- |   |   |   | (10,478 | ) |
| Minority                  interest in loss of consolidated subsidiaries, net                       |   |   | -- |   |   |   | -- |   |   |   | 1,790 |   |   |   | -- |   |   |   | 1,790 |   |
|                                                                                               | Loss                  before income taxes |   |   | (9,752 | ) |   |   | (47,254 | ) |   | (1,708 | ) |   | -- |   |   |   | (58,714 | ) |
| Benefit                  from income taxes                                                         |   |   | 3,803 |   |   |   | 19,051 |   |   |   | 45 |   |   |   | -- |   |   |   | 22,899 |   |
|                                                                                               | Net                  loss before equity in (loss) income of consolidated                  subsidiaries |   |   | (5,949 | ) |   |   | (28,203 | ) |   |   | (1,663 | ) |   |   | -- |   |   |   | (35,815 | ) |
| Equity                  in (loss) income of consolidated subsidiaries                              |   |   | (29,866 | ) |   |   | -- |   |   |   | -- |   |   |   | 29,866 |   |   |   | -- |   |
|                                                                                               | Net                  (loss) income |   | $ | (35,815 | ) |   | $ | (28,203 | ) | $ | (1,663 | ) | $ | 29,866 |   |   | $ | (35,815 | ) |

| **Supplemental                  Condensed Consolidating Statement of                  Operations** |
|----------------------------------------------------------------------------------------------------|
| **For                  the three months ended October 31, 2005**                                   |
| **(in                  thousands)**                                                                |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   | **100%                  Owned** |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   | **Parent** |   | **Guarantor** |   | **Other** |   | **Eliminating** |   |   |   |   |
|                                                                                               |   |   | **Company** |   | **Subsidiaries** |   | **Subsidiaries** |   | **Entries** |   | **Consolidated** |
| Total                  net revenue                                                                 |   | $ | -- |   |   | $ | 60,797 |   |   | $ | 26,630 |   |   | $ | (2,007 | ) | $ | 85,420 |   |
| Total                  operating expense                                                           |   |   | 3,768 |   |   |   | 100,706 |   |   |   | 32,833 |   |   |   | (2,007 | ) |   | 135,300 |   |
|                                                                                               | Loss                  from operations |   |   | (3,768 | ) |   |   | (39,909 | ) |   | (6,203 | ) |   | -- |   |   |   | (49,880 | ) |
| Equity                  investment income, net                                                     |   |   | -- |   |   |   | 919 |   |   |   | -- |   |   |   | -- |   |   |   | 919 |   |
| Loss                  on put options, net                                                          |   |   | -- |   |   |   | (992 | ) |   | -- |   |   |   | -- |   |   |   | (992 | ) |
| Other                  expense                                                                     |   |   | (6,760 | ) |   |   | (849 | ) |   | (640 | ) |   | -- |   |   |   | (8,249 | ) |
| Minority                  interest in loss of consolidated subsidiaries, net                       |   |   | -- |   |   |   | -- |   |   |   | 1,926 |   |   |   | -- |   |   |   | 1,926 |   |
|                                                                                               | Loss                  before income taxes |   |   | (10,528 | ) |   |   | (40,831 | ) |   | (4,916 | ) |   | -- |   |   |   | (56,276 | ) |
| Benefit                  from income taxes                                                         |   |   | 4,106 |   |   |   | 17,795 |   |   |   | 46 |   |   |   | -- |   |   |   | 21,947 |   |
|                                                                                               | Net                  loss before equity in (loss) income of consolidated                  subsidiaries |   |   | (6,422 | ) |   |   | (23,036 | ) |   |   | (4,870 | ) |   |   | -- |   |   |   | (34,329 | ) |
| Equity                  in (loss) income of consolidated subsidiaries                              |   |   | (27,907 | ) |   |   | -- |   |   |   | -- |   |   |   | 27,907 |   |   |   | -- |   |
|                                                                                               | Net                  (loss) income |   | $ | (34,329 | ) |   | $ | (23,036 | ) | $ | (4,870 | ) | $ | 27,907 |   |   | $ | (34,329 | ) |

| **Supplemental                  Condensed Consolidating Statement of Cash                  Flows** |
|----------------------------------------------------------------------------------------------------|
| **For                  the three months ended October 31, 2006**                                   |
| **(in                  thousands)**                                                                |
| **(as                  restated, see Note 13)**                                                    |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |   |   | ** 100%                  Owned** |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   | **Parent** |   | **Guarantor** | **Other** |   |   |   |   |
|                                                                                               |   |   |   |   | **Company** |   | **Subsidiaries** | **Subsidiaries** |   | **Consolidated** |
| Net                  cash used in operating activities                                             |   | $ | (16,714 | ) |   | $ | (10,004 | ) | $ | (26,042 | ) |   | $ | (52,760 | ) |
| Cash                  flows from investing activities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Capital                  expenditures |   |   | -- |   |   |   | (27,737 | ) |   | (821 | ) |   |   | (28,558 | ) |
|                                                                                               | Other                  investing activities, net |   |   | -- |   |   |   | (59 | ) |   | 148 |   |   |   | 89 |   |
|                                                                                               |   | Net                  cash used in investing activities |   |   | -- |   |   |   | (27,796 | ) |   | (673 | ) |   |   | (28,469 | ) |
| Cash                  flows from financing activities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Repurchases                  of common stock |   |   | -- |   |   |   | (7,500 | ) |   | -- |   |   |   | (7,500 | ) |
|                                                                                               | Proceeds                  from borrowings under long-term debt |   |   | -- |   |   |   | 19,577 |   |   | 22,462 |   |   |   | 42,039 |   |
|                                                                                               | Payments                  of long-term debt |   |   | -- |   |   |   | (23,586 | ) |   | (6,261 | ) |   |   | (29,847 | ) |
|                                                                                               | Proceeds                  from exercise of stock options |   |   | 2,324 |   |   |   | -- |   |   | -- |   |   |   | 2,324 |   |
|                                                                                               | Other                  financing activities, net |   |   | 968 |   |   |   | 453 |   |   | (1,691 | ) |   |   | (270 | ) |
|                                                                                               | Advances                  (to) from affiliates |   |   | 13,422 |   |   |   | (22,573 | ) |   | 9,151 |   |   |   | -- |   |
|                                                                                               |   | Net                  cash provided by (used in ) financing activities |   |   | 16,714 |   |   |   | (33,629 | ) |   | 23,661 |   |   |   | 6,746 |   |
|                                                                                               |   |   | Net                  (decrease) increase in cash and cash equivalents |   |   | -- |   |   |   | (71,429 | ) |   | (3,054 | ) |   |   | (74,483 | ) |
| Cash                  and cash equivalents:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Beginning                  of period |   |   | -- |   |   |   | 179,998 |   |   | 11,796 |   |   |   | 191,794 |   |
|                                                                                               | End                  of period |   | $ | -- |   |   | $ | 108,569 |   | $ | 8,742 |   |   | $ | 117,311 |   |

| **Supplemental                  Condensed Consolidating Statement of Cash                  Flows** |
|----------------------------------------------------------------------------------------------------|
| **For                  the three months ended October 31, 2005**                                   |
| **(in                  thousands)**                                                                |
| **(as                  restated, see Note 13)**                                                    |
|                                                                                               |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   |   |   |   |   | ** 100%                  Owned** |   |   |   |   |   |   |   |   |
|                                                                                               |   |   |   |   | **Parent** |   | **Guarantor** |   | **Other** |   |   |   |   |
|                                                                                               |   |   |   |   | **Company** |   | **Subsidiaries** |   | **Subsidiaries** |   | **Consolidated** |
| Net                  cash used in operating activities                                             |   | $ | (16,180 | ) |   | $ | (30,188 | ) |   | $ | (14,826 | ) |   | $ | (61,194 | ) |
| Cash                  flows from investing activities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Capital                  expenditures |   |   | -- |   |   |   | (30,642 | ) |   |   | (1,806 | ) |   |   | (32,448 | ) |
|                                                                                               | Other                  investing activities, net |   |   | -- |   |   |   | 41 |   |   |   | (3,994 | ) |   |   | (3,953 | ) |
|                                                                                               |   | Net                  cash used in investing activities |   |   | -- |   |   |   | (30,601 | ) |   |   | (5,800 | ) |   |   | (36,401 | ) |
| Cash                  flows from financing activities:                                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Proceeds                  from borrowings under long-term debt |   |   | -- |   |   |   | 10,293 |   |   |   | 8,594 |   |   |   | 18,887 |   |
|                                                                                               | Payments                  on long-term debt |   |   | -- |   |   |   | (10,303 | ) |   |   | -- |   |   |   | (10,303 | ) |
|                                                                                               | Proceeds                  from exercise of stock options |   |   | 11,502 |   |   |   | -- |   |   |   | -- |   |   |   | 11,502 |   |
|                                                                                               | Other                  financing activities, net |   |   | 873 |   |   |   | (364 | ) |   |   | (888 | ) |   |   | (379 | ) |
|                                                                                               | Advances                  (to) from affiliates |   |   | 3,805 |   |   |   | (13,589 | ) |   |   | 9,784 |   |   |   | -- |   |
|                                                                                               |   | Net                  cash provided by (used in ) financing activities |   |   | 16,180 |   |   |   | (13,963 | ) |   |   | 17,490 |   |   |   | 19,707 |   |
|                                                                                               |   |   | Net                  decrease in cash and cash equivalents |   |   | -- |   |   |   | (74,752 | ) |   |   | (3,136 | ) |   |   | (77,888 | ) |
| Cash                  and cash equivalents:                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                               | Beginning                  of period |   |   | -- |   |   |   | 92,879 |   |   |   | 43,701 |   |   |   | 136,580 |   |
|                                                                                               | End                  of period |   | $ | -- |   |   | $ | 18,127 |   |   | $ | 40,565 |   |   | $ | 58,692 |   |

**13.       Restatement**

|                                                                 |   | **Three                  Months Ended October 31, 2006** |
|----------------------------------------------------------------------|--------|----------------------------------------------------------|
|                                                                 |   | **As                  Reported**                         |   | **Adjustment** |   | **As                  Restated** |
| Net                  cash provided by (used in) operating activities |   | $                                                        | 2,239 |   |   | $ | (54,999 | ) |   | $ | (52,760 | ) |
|                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  flow from investing activities:                |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Investments                  in real estate                          |   |                                                     | (54,999 | ) |   |   | 54,999 |   |   |   | -- |   |
| Net                  cash used in investing activities               |   |                                                     | (83,468 | ) |   |   | 54,999 |   |   |   | (28,469 | ) |
|                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  flow from financing activities:                |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  cash provided by financing activities           |   |                                                     | 6,746 |   |   |   | -- |   |   |   | 6,746 |   |
|                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  decrease in cash and cash equivalents           |   |                                                     | (74,483 | ) |   |   | -- |   |   |   | (74,483 | ) |
|                                                                 |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents:                          |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Beginning                  of period                                 |   |                                                     | 191,794 |   |   |   | -- |   |   |   | 191,794 |   |
| End                  of period                                       |   | $                                                        | 117,311 |   |   | $ | -- |   |   | $ | 117,311 |   |

|                                                       |   | **Three                  Months Ended October 31, 2005** |
|------------------------------------------------------------|--------|----------------------------------------------------------|
|                                                       |   | **As                  Reported**                         |   | **Adjustment** |   | **As                  Restated** |
| Net                  cash used in operating activities     |   | $                                                        | (23,082 | ) |   | $ | (38,112 | ) |   | $ | (61,194 | ) |
|                                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  flow from investing activities:      |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Investments                  in real estate                |   |                                                     | (38,112 | ) |   |   | 38,112 |   |   |   | -- |   |
| Net                  cash used in investing activities     |   |                                                     | (74,513 | ) |   |   | 38,112 |   |   |   | (36,401 | ) |
|                                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  flow from financing activities:      |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  cash provided by financing activities |   |                                                     | 19,707 |   |   |   | -- |   |   |   | 19,707 |   |
|                                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Net                  decrease in cash and cash equivalents |   |                                                     | (77,888 | ) |   |   | -- |   |   |   | (77,888 | ) |
|                                                       |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents:                |   |                                                     |   |   |   |   |   |   |   |   |   |   |
| Beginning                  of period                       |   |                                                     | 136,580 |   |   |   | -- |   |   |   | 136,580 |   |
| End                  of period                             |   | $                                                        | 58,692 |   |   | $ | -- |   |   | $ | 58,692 |   |

**ITEM        2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL        CONDITION AND RESULTS OF OPERATIONS.**

**Restatement**

**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.  Season pass revenue, although                  primarily collected prior to the ski season, is recognized in the                  Consolidated Condensed Statements of Operations during the ski                  season.  Deferred revenue related to season pass sales was $53.0                  million and $41.1 million as of October 31, 2006 and 2005,                  respectively. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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                  The Lodge at Rancho Mirage (“Rancho Mirage”) was terminated in conjunction                  with the closing of the hotel as part of a redevelopment plan by                  the                  current hotel owner, which resulted in the Company earning a termination                  fee of $2.4 million (pursuant to the terms of the management agreement),                  which the Company recorded as lodging revenue in the three months                  ended                  October 31, 2006.  RockResorts recognized $644,000 in revenue                  related to the management of this property in the year ended July                  31,                  2006.  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.  For example, the Company recently announced that it will                  manage the new Rum Cay Resort on Rum Cay Island, Bahamas and will                  assist                  in the marketing and provide technical advisory services for this                  resort. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | On                  March 6, 2006, RockResorts was notified by the ownership of Cheeca                  Lodge & Spa (“Checca”), 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 concluded 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. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | 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.  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 substantive discussions                  with the minority shareholder, with the intent of both parties                  being to                  extend the existing management                  agreement. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**RESULTS        OF OPERATIONS**

***Summary***

|                                                   |   | **Three                  Months Ended** |
|--------------------------------------------------------|--------|-----------------------------------------|
|                                                   |   | **October                  31,**        |
|                                                   |   | **2006**                                |   | **2005** |   |
| Mountain                  Reported EBITDA              |   | $                                       | (32,488 | ) |   | $ | (31,164 | ) |   |
| Lodging                  Reported EBITDA               |   |                                    | 4,059 |   |   |   | 4,109 |   |   |
| Real                  Estate Reported EBITDA           |   |                                    | 804 |   |   |   | (2,607 | ) |   |
| Loss                  before benefit from income taxes |   |                                    | (58,714 | ) |   |   | (56,276 | ) |   |
| Net                  loss                              |   | $                                       | (35,815 | ) |   | $ | (34,329 | ) |   |

***Mountain        Segment***

|                                                                                                                                                                                              |   | **Three                  Months Ended** |   | **Percentage** |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|--------|----------------|
|                                                                                                                                                                                              |   | **October                  31,**        |   | **Increase**   |
|                                                                                                                                                                                              |   | **2006**                                |   |           | **2005** |   | **(Decrease)** |
| Lift                  tickets                                                                                                                                                                     | $      | --                                      |   | $              | -- |   | -- |   | % |
| Ski                  school                                                                                                                                                                       |   | --                                      |   |           | -- |   | -- |   | % |
| Dining                                                                                                                                                                                            |   | 3,887                                   |   |           | 3,506 |   | 10.9 |   | % |
| Retail/rental                                                                                                                                                                                     |   | 24,518                                  |   |           | 21,705 |   | 13.0 |   | % |
| Other                                                                                                                                                                                             |   | 17,759                                  |   |           | 15,066 |   | 17.9 |   | % |
| Total                  Mountain net operating revenue                                                                                                                                             |   | 46,164                                  |   |           | 40,277 |   | 14.6 |   | % |
| Total                  Mountain operating expense                                                                                                                                                 |   | 79,487                                  |   |           | 72,291 |   | 10.0 |   | % |
| Mountain                  equity investment income, net                                                                                                                                           |   | 835                                     |   |           | 850 |   | (1.8 | ) | % |
| Total                  Mountain Reported EBITDA                                                                                                                                                   | $      | (32,488                                 | )      | $              | (31,164 | ) | (4.2 | ) | % |
|                                                                                                                                                                                              |
| Total                  Mountain Reported EBITDA includes $1.0 million of stock-based compensation                  expense for the three months ended October 31, 2006 and                  2005. |
|                                                                                                                                                                                              |   |                                    |   |           |   |   |   |

***Lodging        Segment***

|                                                                                                                                                                                                                                     | **Three                  Months Ended** |           |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|----------------|
|                                                                                                                                                                                                                                     | **October                  31,**        | **Percentage** |
|                                                                                                                                                                                                                                     | **2006**                                | **2005**       | **Decrease** |
| Total                  Lodging net operating revenue                                                                                                                                                                                     | $                                       | 40,408         |   | $ | 41,750 |   | (3.2 | ) | % |
| Total                  Lodging operating expense                                                                                                                                                                                         |                                    | 36,349         |   |   | 37,641 |   | (3.4 | ) | % |
| Total                  Lodging Reported EBITDA                                                                                                                                                                                           | $                                       | 4,059          |   | $ | 4,109 |   | (1.2 | ) | % |
|                                                                                                                                                                                                                                     |                                    |           |   |   |   |   |   |   |   |
| ADR                                                                                                                                                                                                                                      | $                                       | 149.94         |   | $ | 158.50 |   | (5.4 | ) | % |
| RevPAR                                                                                                                                                                                                                                   | $                                       | 55.25          |   | $ | 60.48 |   | (8.6 | ) | % |
|                                                                                                                                                                                                                                     |
| Total                  Lodging Reported EBITDA includes $333,000 and $406,000 of stock-based                  compensation expense for the three months ended October 31, 2006                  and 2005,                  respectively. |

***Real        Estate Segment***

|                                                                                                                                                                                                                                   | **Three                  Months Ended** |     | **Percentage** |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|----------|----------------|
|                                                                                                                                                                                                                                   | **October                  31,**        |     | **Increase**   |
|                                                                                                                                                                                                                                   | **2006**                                | **2005** |           | **(Decrease)** |
| Single                  family unit and land sales                                                                                                                                                                                     | $                                       | --       |           | $ | 994 |   |   | (100.0 | ) | % |
| Multi-family                  unit and land sales                                                                                                                                                                                      |                                    | 25,522   |           |   | 2,287 |   |   | 1,016.0 |   | % |
| Other                                                                                                                                                                                                                                  |                                    | 1,400    |           |   | 112 |   |   | 1,150.0 |   | % |
| Total                  Real Estate net operating revenue                                                                                                                                                                               |                                    | 26,922   |           |   | 3,393 |   |   | 693.5 |   | % |
| Total                  Real Estate operating expense                                                                                                                                                                                   |                                    | 26,118   |           |   | 6,069 |   |   | 330.4 |   | % |
| Real                  Estate equity investment income, net                                                                                                                                                                             |                                    | --       |           |   | 69 |   |   | (100.0 | ) | % |
| Total                  Real Estate Reported EBITDA                                                                                                                                                                                     | $                                       | 804      |           | $ | (2,607 | ) |   | 130.8 |   | % |
|                                                                                                                                                                                                                                   |
| Real                  Estate Reported EBITDA includes $608,000 and $381,000 of stock-based                  compensation expense for the three months ended October 31, 2006                  and 2005,                  respectively. |

***Other        Items***

*Depreciation        and amortization*

*Relocation        and separation charges.*

*Investment        income, net.*

*Interest        expense, net.*

*Contract        dispute charges.  *

*Gain/loss        on put option.*

*Income        taxes.*

***Reconciliation        of Non-GAAP measures***

|                                                                           |                                         | **Three                    Months Ended** |    |
|--------------------------------------------------------------------------------|----------------------------------------------|-------------------------------------------|---------|
|                                                                           |                                         | **October                    31,**        |    |
|                                                                           |                                         | **2006**                                  |    |   |   | **2005** |   |
| Mountain                    Reported EBITDA                                    | $                                            | (32,488                                   | )       |   | $ | (31,164 | ) |
| Lodging                    Reported EBITDA                                     |                                         | 4,059                                     |    |   |   | 4,109 |   |
|                                                                           | Resort                    Reported EBITDA    |                                      | (28,429 | ) |   |   | (27,055 | ) |
| Real                    Estate Reported EBITDA                                 |                                         | 804                                       |    |   |   | (2,607 | ) |
|                                                                           | Total                    Reported EBITDA     |                                      | (27,625 | ) |   |   | (29,662 | ) |
| Depreciation                    and amortization                               |                                         | (21,585                                   | )       |   |   | (18,923 | ) |
| Relocation                    and separation charges                           |                                         | (735                                      | )       |   |   | -- |   |
| Asset                    impairment charges                                    |                                         | --                                        |    |   |   | (136 | ) |
| Loss                    on disposal of fixed assets                            |                                         | (81                                       | )       |   |   | (240 | ) |
| Investment                    income, net                                      |                                         | 2,063                                     |    |   |   | 1,188 |   |
| Interest                    expense, net                                       |                                         | (8,936                                    | )       |   |   | (9,437 | ) |
| Contract                    dispute charges                                    |                                         | (3,605                                    | )       |   |   | -- |   |
| Loss                    on put options, net                                    |                                         | --                                        |    |   |   | (992) |   |
| Minority                    interest in loss of consolidated subsidiaries, net |                                         | 1,790                                     |    |   |   | 1,926 |   |
| Loss                    before benefit from income taxes                       |                                         | (58,714                                   | )       |   |   | (56,276 | ) |
|                                                                           | Benefit                    from income taxes |                                      | 22,899  |   |   |   | 21,947 |   |
| Net                    loss                                                    |                                         | $                                         | (35,815 | ) |   | $ | (34,329 | ) |

**LIQUIDITY        AND CAPITAL RESOURCES**

***Significant        Sources of Cash***

***Significant        Uses of Cash***

***Covenants        and Limitations***

**OFF        BALANCE SHEET ARRANGEMENTS**

**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.* |
|----------------------|---------------------------------------------------------------------------------------------|

**ITEM        3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET        RISK.**

*Interest        Rate Risk.  *

**ITEM        4.  CONTROLS AND        PROCEDURES.**

**Consideration          of Restatement**

**Disclosure          Controls and Procedures**

**Changes          in Internal Control over Financial Reporting**

**PART        II OTHER INFORMATION**

**ITEM        1.  LEGAL PROCEEDINGS.**

**ITEM        1A. RISK        FACTORS.**

**ITEM        2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF        PROCEEDS.**

***Repurchase        of equity securities***

|  **Period**                                            |   |  **Total                      Number of Shares Purchased** |   |    |  **Average                      Price Paid per Share** |   |   |  **Total                      Number of Shares Purchased as Part of Publicly Announced Plans                      or Programs                      (1)** |   |   |  **Maximum                      Number of Shares that May Yet Be Purchased Under the Plans                      or Programs                      (1)** |
|-------------------------------------------------------------|--------|-----------------------------------------------------------------|--------|---------|-------------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
| August                      1, 2006 – August 31, 2006 |   | --                                                              |   |  $ | --                                                          |   |   | --                                                                                                                                                            |   |   | 2,684,900                                                                                                                                                   |
| September                      1, 2006 - September 30, 2006 |   | --                                                              |   |    | --                                                          |   |   | --                                                                                                                                                            |   |   | 2,684,900                                                                                                                                                   |
| October                      1, 2006 - October 31, 2006     |   | 190,700                                                         |   |    | 39.33                                                       |   |   | 190,700                                                                                                                                                       |   |   | 2,494,200                                                                                                                                                   |
| Total                                                       |   | 190,700                                                         |   |  $ | 39.33                                                       |   |   | 190,700                                                                                                                                                       |   |   |                                                                                                                                                        |

** **

**ITEM        3.  DEFAULTS UPON SENIOR        SECURITIES.**

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

**ITEM        5.  OTHER INFORMATION.**

None.

**ITEM        6.  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                                | Form                  of Restricted Share [Unit] Agreement (incorporated by reference                  to Exhibit                  10.20 on Form 10-K for the year ended July 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                            |                                            |
| 10.2                                | Form                  of Share Appreciation Rights Agreement (incorporated by reference                  to                  Exhibit 10.22 on Form 10-K for the year ended July 31,                  2006).                                                                                                                                                                                                                                                                                                                                                                         |                                            |
| 31.1                                | Certifications                  of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                              | 15                                              |
| 31.2                                | Certifications                  of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                  Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                              | 16                                              |
| 32                                  | Certifications                  of Chief Executive Officer and Chief Financial Officer pursuant                  to 18                  U.S.C. Section 1350 as adopted pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                  | 17                                              |

| b)  Exhibits                                                                                                                                                                    |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                      |
| The                  exhibits filed herewith as indicated in the exhibit listed above                  following                  the Signatures section of this                  report. |

**SIGNATURES**

| Date:  August                  24, 2007 | Vail                  Resorts, Inc.                  |
|---------------------------------------------------|------------------------------------------------------|
|                                              |                                                 |
|                                              | By:                                                  | /s/                  Jeffrey W. Jones |
|                                              | Jeffrey                  W. Jones                    |
|                                              | Senior                  Executive Vice President and |
|                                              | Chief                  Financial Officer             |
|                                              | (Chief                  Accounting Officer and       |
|                                              | Duly                  Authorized Officer)            |