----

**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**

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

**Vail      Resorts, Inc.**

| **Delaware**                                                                                    |   | **51-0291762**                                      |
|-------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or Other Jurisdiction of Incorporation or Organization)                   |   | (I.R.S.                Employer Identification No.) |
|                                                                                            |   |                                                |
| **390                Interlocken Crescent, Suite 1000,****Broomfield,                Colorado** |   | **80021**                                           |
| (Address                of Principal Executive Offices)                                         |   | (Zip                Code)                           |

| **(303)                404-1800**                                                        |
|------------------------------------------------------------------------------------------|
| (Registrant’s                Telephone Number, Including Area                Code) |

**Explanatory      Note**

| ·   | Part                I – Item 1 – Financial Statements (Consolidated Condensed Statements of                Cash Flows, Note 13 Guarantor Subsidiaries and Non-Guarantor Subsidiaries                – Restated, Note 15 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. | 13 |
| Item                4.               | Controls                and Procedures. | 13 |
|                                 |   |   |
|                                 |   |   |
| **PART                II**           | **OTHER                INFORMATION** |   |
|                                 |   |   |
| Item                1.               | Legal                Proceedings. | 13 |
| Item                1A.              | Risk                Factors. | 13 |
| Item                2.               | Unregistered                Sales of Equity Securities and Use                of Proceeds. | 13 |
| Item                3.               | Defaults                Upon Senior Securities. | 14 |
| Item                4.               | Submission                of Matters to a Vote of Security                Holders. | 14 |
| Item                5.               | Other                Information. | 14 |
| Item                6.               | Exhibits. | 14 |

| **PART                I**                                                                                                                         | **FINANCIAL                INFORMATION**                            |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|--------|
|                                                                                                                                              |                                                                |   |
| **Item                1.**                                                                                                                        | **Financial                Statements --                Unaudited** |   |
|                                                                                                                                              |                                                                |   |
| Consolidated                Condensed Balance Sheets as of January                31, 2007, July 31, 2006 and January 31, 2006                    | F-2                                                                 |
| Consolidated                Condensed Statements of                Operations for the Three Months Ended January 31, 2007 and                2006 | F-3                                                                 |
| Consolidated                Condensed Statements of Operations                for the Six Months Ended January 31, 2007 and 2006                  | F-4                                                                 |
| Consolidated                Condensed Statements of Cash Flows                for the Six Months Ended January 31, 2007 and 2006                  | F-5                                                                 |
| Notes                to Consolidated Condensed Financial                Statements                                                                | F-6                                                                 |

**Vail      Resorts, Inc.**

**Consolidated      Condensed Balance Sheets**

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

|                                                                                                                                                                                                                                                                                                |   |   | **January                31,** |   |   |   | **July                31,** |   |   |   | **January                31,** |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------|--------|--------|--------|-----------------------------|--------|--------|--------|--------------------------------|--------|
|                                                                                                                                                                                                                                                                                                |   |   | **2007**                       |   |   |   | **2006**                    |   |   |   | **2006**                       |   |
|                                                                                                                                                                                                                                                                                                |   |   | **(Unaudited)**                |   |   |   |                        |   |   |   | **(Unaudited)**                |   |
| Assets                                                                                                                                                                                                                                                                                              |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Current                assets:                                                                                                                                                                                                                                                                      |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Cash                and cash equivalents                                                                                                                                                                                                                                                            |   | $      | 254,866                        |   |   | $      | 191,794                     |   |   | $      | 175,541                        |   |
| Restricted                cash                                                                                                                                                                                                                                                                      |   |   | 26,792                         |   |   |   | 20,322                      |   |   |   | 23,715                         |   |
| Trade                receivables, net                                                                                                                                                                                                                                                               |   |   | 43,728                         |   |   |   | 35,949                      |   |   |   | 39,712                         |   |
| Inventories,                net                                                                                                                                                                                                                                                                     |   |   | 49,825                         |   |   |   | 42,278                      |   |   |   | 43,977                         |   |
| Other                current assets                                                                                                                                                                                                                                                                 |   |   | 38,918                         |   |   |   | 35,631                      |   |   |   | 43,909                         |   |
| Total                current assets                                                                                                                                                                                                                                                                 |   |   | 414,129                        |   |   |   | 325,974                     |   |   |   | 326,854                        |   |
| Property,                plant and equipment, net (Note 5)                                                                                                                                                                                                                                          |   |   | 868,185                        |   |   |   | 851,112                     |   |   |   | 858,200                        |   |
| Real                estate held for sale and investment                                                                                                                                                                                                                                             |   |   | 293,219                        |   |   |   | 259,384                     |   |   |   | 221,048                        |   |
| Goodwill,                net                                                                                                                                                                                                                                                                        |   |   | 135,811                        |   |   |   | 135,811                     |   |   |   | 135,811                        |   |
| Intangible                assets, net                                                                                                                                                                                                                                                               |   |   | 73,715                         |   |   |   | 75,109                      |   |   |   | 77,541                         |   |
| Other                assets                                                                                                                                                                                                                                                                         |   |   | 47,557                         |   |   |   | 40,253                      |   |   |   | 33,226                         |   |
| Total                assets                                                                                                                                                                                                                                                                         |   | $      | 1,832,616                      |   |   | $      | 1,687,643                   |   |   | $      | 1,652,680                      |   |
|                                                                                                                                                                                                                                                                                                |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Liabilities                and Stockholders’ Equity                                                                                                                                                                                                                                           |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Current                liabilities:                                                                                                                                                                                                                                                                 |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Accounts                payable and accrued expenses (Note 5)                                                                                                                                                                                                                                       |   | $      | 305,690                        |   |   | $      | 230,762                     |   |   | $      | 295,092                        |   |
| Income                taxes payable                                                                                                                                                                                                                                                                 |   |   | 9,103                          |   |   |   | 17,517                      |   |   |   | 6,324                          |   |
| Long-term                debt due within one year (Note 4)                                                                                                                                                                                                                                          |   |   | 440                            |   |   |   | 5,915                       |   |   |   | 5,673                          |   |
| Total                current liabilities                                                                                                                                                                                                                                                            |   |   | 315,233                        |   |   |   | 254,194                     |   |   |   | 307,089                        |   |
| Long-term                debt (Note 4)                                                                                                                                                                                                                                                              |   |   | 551,866                        |   |   |   | 525,313                     |   |   |   | 517,638                        |   |
| Other                long-term liabilities (Note 5)                                                                                                                                                                                                                                                 |   |   | 185,849                        |   |   |   | 158,490                     |   |   |   | 132,933                        |   |
| Deferred                income taxes                                                                                                                                                                                                                                                                |   |   | 83,967                         |   |   |   | 73,064                      |   |   |   | 77,037                         |   |
| Commitments                and contingencies (Note 11)                                                                                                                                                                                                                                              |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Put                option liabilities (Note 9)                                                                                                                                                                                                                                                      |   |   | 1,245                          |   |   |   | 1,245                       |   |   |   | --                             |   |
| Minority                interest in net assets of consolidated subsidiaries                                                                                                                                                                                                                         |   |   | 36,035                         |   |   |   | 32,560                      |   |   |   | 31,345                         |   |
| Stockholders’                equity:                                                                                                                                                                                                                                                          |   |   |                           |   |   |   |                        |   |   |   |                           |   |
| Preferred                stock, $0.01 par value, 25,000,000 shares authorized, zero shares                issued                and outstanding                                                                                                                                                     |   |   | --                             |   |   |   | --                          |   |   |   | --                             |   |
| Common                stock, $0.01, 100,000,000 shares authorized, 38,802,817 (unaudited),                39,036,282 and 37,965,853 (unaudited) shares issued and outstanding                as of                January 31, 2007, July 31, 2006 and January 31, 2006,                respectively |   |   | 395                            |   |   |   | 390                         |   |   |   | 380                            |   |
| Additional                paid-in capital                                                                                                                                                                                                                                                           |   |   | 522,941                        |   |   |   | 509,505                     |   |   |   | 479,611                        |   |
| Retained                earnings                                                                                                                                                                                                                                                                    |   |   | 160,931                        |   |   |   | 143,721                     |   |   |   | 106,647                        |   |
| Treasury                stock (Note 12)                                                                                                                                                                                                                                                             |   |   | (25,846                        | )      |   |   | (10,839                     | )      |   |   | --                             |   |
| Total                stockholders’ equity                                                                                                                                                                                                                                                     |   |   | 658,421                        |   |   |   | 642,777                     |   |   |   | 586,638                        |   |
| Total                liabilities and stockholders’ equity                                                                                                                                                                                                                                     |   | $      | 1,832,616                      |   |   | $      | 1,687,643                   |   |   | $      | 1,652,680                      |   |

----

**Vail      Resorts,      Inc.**

**Consolidated      Condensed Statements of Operations**

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

**(Unaudited)**

|                                                                         |   | **Three                Months Ended** |     |
|------------------------------------------------------------------------------|--------|---------------------------------------|----------|
|                                                                         |   | **January                31,**        |     |
|                                                                         |   |                                  | **2007** |   |   |   | **2006** |   |
| Net                revenue:                                                  |   |                                  |     |   |   |   |   |   |
| Mountain                                                                     |   | $                                     | 272,026  |   |   | $ | 246,228 |   |
| Lodging                                                                      |   |                                  | 32,796   |   |   |   | 32,079 |   |
| Real                estate                                                   |   |                                  | 56,216   |   |   |   | 9,709 |   |
| Total                net revenue                                             |   |                                  | 361,038  |   |   |   | 288,016 |   |
| Segment                operating expense:                                    |   |                                  |     |   |   |   |   |   |
| Mountain                                                                     |   |                                  | 159,871  |   |   |   | 150,666 |   |
| Lodging                                                                      |   |                                  | 30,757   |   |   |   | 32,894 |   |
| Real                estate                                                   |   |                                  | 50,391   |   |   |   | 6,383 |   |
| Total                segment operating expense                               |   |                                  | 241,019  |   |   |   | 189,943 |   |
| Other                operating (expense) income:                             |   |                                  |     |   |   |   |   |   |
| Depreciation                and amortization                                 |   |                                  | (21,759  | ) |   |   | (21,431 | ) |
| Relocation                and separation charges (Note 7)                    |   |                                  | (500     | ) |   |   | -- |   |
| Mold                remediation credit (Note 11)                             |   |                                  | --       |   |   |   | 852 |   |
| Loss                on disposal of fixed assets, net                         |   |                                  | (10      | ) |   |   | (486 | ) |
| Income                from operations                                        |   |                                  | 97,750   |   |   |   | 77,008 |   |
| Mountain                equity investment income, net                        |   |                                  | 1,496    |   |   |   | 1,455 |   |
| Real                estate equity investment income                          |   |                                  | --       |   |   |   | 31 |   |
| Investment                income                                             |   |                                  | 2,417    |   |   |   | 1,046 |   |
| Interest                expense, net                                         |   |                                  | (7,911   | ) |   |   | (9,502 | ) |
| Gain                on sale of businesses, net (Note 8)                      |   |                                  | --       |   |   |   | 4,625 |   |
| Contract                dispute charges (Note 11)                            |   |                                  | (672     | ) |   |   | -- |   |
| Gain                on put options (Note 9)                                  |   |                                  | --       |   |   |   | 1,026 |   |
| Other                income, net                                             |   |                                  | --       |   |   |   | 51 |   |
| Minority                interest in income of consolidated subsidiaries, net |   |                                  | (6,152   | ) |   |   | (5,231 | ) |
| Income                before provision for income taxes                      |   |                                  | 86,928   |   |   |   | 70,509 |   |
| Provision                for income taxes                                    |   |                                  | (33,902  | ) |   |   | (27,498 | ) |
| Net                income                                                    |   | $                                     | 53,026   |   |   | $ | 43,011 |   |
|                                                                         |   |                                  |     |   |   |   |   |   |
| Per                share amounts (Note 3):                                   |   |                                  |     |   |   |   |   |   |
| Basic                net income per share                                    |   | $                                     | 1.37     |   |   | $ | 1.15 |   |
| Diluted                net income per share                                  |   | $                                     | 1.35     |   |   | $ | 1.12 |   |

**Vail      Resorts, Inc.**

**Consolidated      Condensed Statements of Operations**

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

**(Unaudited)**

|                                                                         |   | **Six                Months Ended** |     |
|------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                         |   | **January                31,**      |     |
|                                                                         |   |                                | **2007** |   |   |   | **2006** |   |
| Net                revenue:                                                  |   |                                |     |   |   |   |   |   |
| Mountain                                                                     |   | $                                   | 318,189  |   |   | $ | 286,505 |   |
| Lodging                                                                      |   |                                | 73,204   |   |   |   | 73,829 |   |
| Real                estate                                                   |   |                                | 83,138   |   |   |   | 13,102 |   |
| Total                net revenue                                             |   |                                | 474,531  |   |   |   | 373,436 |   |
| Segment                operating expense:                                    |   |                                |     |   |   |   |   |   |
| Mountain                                                                     |   |                                | 239,358  |   |   |   | 222,957 |   |
| Lodging                                                                      |   |                                | 67,106   |   |   |   | 70,535 |   |
| Real                estate                                                   |   |                                | 76,509   |   |   |   | 12,452 |   |
| Total                segment operating expense                               |   |                                | 382,973  |   |   |   | 305,944 |   |
| Other                operating (expense) income:                             |   |                                |     |   |   |   |   |   |
| Depreciation                and amortization                                 |   |                                | (43,344  | ) |   |   | (40,354 | ) |
| Relocation                and separation charges (Note 7)                    |   |                                | (1,235   | ) |   |   | -- |   |
| Asset                impairment charge                                       |   |                                | --       |   |   |   | (136 | ) |
| Mold                remediation credit (Note 11)                             |   |                                | --       |   |   |   | 852 |   |
| Loss                on disposal of fixed assets, net                         |   |                                | (91      | ) |   |   | (726 | ) |
| Income                from operations                                        |   |                                | 46,888   |   |   |   | 27,128 |   |
| Mountain                equity investment income, net                        |   |                                | 2,331    |   |   |   | 2,305 |   |
| Real                estate equity investment income                          |   |                                | --       |   |   |   | 100 |   |
| Investment                income                                             |   |                                | 4,481    |   |   |   | 2,234 |   |
| Interest                expense, net                                         |   |                                | (16,847  | ) |   |   | (18,939 | ) |
| Gain                on sale of businesses, net (Note 8)                      |   |                                | --       |   |   |   | 4,625 |   |
| Contract                dispute charges (Note 11)                            |   |                                | (4,276   | ) |   |   | -- |   |
| Gain                on put options (Note 9)                                  |   |                                | --       |   |   |   | 34 |   |
| Other                income, net                                             |   |                                | --       |   |   |   | 51 |   |
| Minority                interest in income of consolidated subsidiaries, net |   |                                | (4,363   | ) |   |   | (3,305 | ) |
| Income                before provision for income taxes                      |   |                                | 28,214   |   |   |   | 14,233 |   |
| Provision                for income taxes                                    |   |                                | (11,004  | ) |   |   | (5,551 | ) |
| Net                income                                                    |   | $                                   | 17,210   |   |   | $ | 8,682 |   |
|                                                                         |   |                                |     |   |   |   |   |   |
| Per                share amounts (Note 3):                                   |   |                                |     |   |   |   |   |   |
| Basic                net income per share                                    |   | $                                   | 0.44     |   |   | $ | 0.23 |   |
| Diluted                net income per share                                  |   | $                                   | 0.44     |   |   | $ | 0.23 |   |

**Vail      Resorts, Inc.**

**Consolidated      Condensed Statements of Cash Flows**

**(In      thousands)**

**(Unaudited)**

|                                                                              |   | **Six                Months Ended** |
|-----------------------------------------------------------------------------------|--------|-------------------------------------|
|                                                                              |   | **January                31,**      |
|                                                                              |   | **2007**                            |   | **2006** |
|                                                                              |   | (as                restated,        |   | (as                restated, |
|                                                                              |   | see                Note 15)         |   | see                Note 15) |
| Net                cash provided by operating activities                          |   | $                                   | 108,319 |   |   | $ | 35,521 |   |
| Cash                flows from investing activities:                              |   |                                |   |   |   |   |   |   |
| Capital                expenditures                                               |   |                                | (62,058 | ) |   |   | (55,112 | ) |
| Proceeds                from sale of businesses                                   |   |                                | -- |   |   |   | 30,712 |   |
| Other                investing activities, net                                    |   |                                | 354 |   |   |   | (4,018 | ) |
| Net                cash used in investing activities                              |   |                                | (61,704 | ) |   |   | (28,418 | ) |
| Cash                flows from financing activities:                              |   |                                |   |   |   |   |   |   |
| Repurchases                of common stock                                        |   |                                | (15,007 | ) |   |   | -- |   |
| Proceeds                from borrowings under Non-Recourse Real Estate Financings |   |                                | 33,067 |   |   |   | 5,233 |   |
| Payments                of Non-Recourse Real Estate Financings                    |   |                                | (1,493 | ) |   |   | -- |   |
| Proceeds                from borrowings under other long-term debt                |   |                                | 48,012 |   |   |   | 20,980 |   |
| Payments                of other long-term debt                                   |   |                                | (58,508 | ) |   |   | (24,909 | ) |
| Proceeds                from exercise of stock options                            |   |                                | 6,803 |   |   |   | 27,635 |   |
| Other                financing activities, net                                    |   |                                | 3,583 |   |   |   | 2,919 |   |
| Net                cash provided by financing activities                          |   |                                | 16,457 |   |   |   | 31,858 |   |
| Net                increase in cash and cash equivalents                          |   |                                | 63,072 |   |   |   | 38,961 |   |
| Cash                and cash equivalents:                                         |   |                                |   |   |   |   |   |   |
| Beginning                of period                                                |   |                                | 191,794 |   |   |   | 136,580 |   |
| End                of period                                                      |   | $                                   | 254,866 |   |   | $ | 175,541 |   |

**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      Income Per Common Share**

|                                               |   | **Three                Months Ended January 31,** |
|----------------------------------------------------|--------|---------------------------------------------------|
|                                               |   | **2007**                                          |   | **2006** |
|                                               |   | **Basic**                                         |   | **Diluted** |   | **Basic** |   | **Diluted** |
| Net                income per share:               |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                          |   | $                                                 | 53,026 |   |   | $ | 53,026 |   |   | $ | 43,011 |   |   | $ | 43,011 |   |
|                                               |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                shares outstanding |   |                                              | 38,753 |   |   |   | 38,753 |   |   |   | 37,467 |   |   |   | 37,467 |   |
| Effect                of dilutive securities       |   |                                              | -- |   |   |   | 486 |   |   |   | -- |   |   |   | 855 |   |
| Total                shares                        |   |                                              | 38,753 |   |   |   | 39,239 |   |   |   | 37,467 |   |   |   | 38,322 |   |
|                                               |   |                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per share                |   | $                                                 | 1.37 |   |   | $ | 1.35 |   |   | $ | 1.15 |   |   | $ | 1.12 |   |

|                                               |   | **Six                Months Ended January 31,** |
|----------------------------------------------------|--------|-------------------------------------------------|
|                                               |   | **2007**                                        |   | **2006** |
|                                               |   | **Basic**                                       |   | **Diluted** |   | **Basic** | **Diluted** |
| Net                income per share:               |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income                          |   | $                                               | 17,210 |   |   | $ | 17,210 |   |   | $ | 8,682 |   | $ | 8,682 |   |
|                                               |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average                shares outstanding |   |                                            | 38,734 |   |   |   | 38,734 |   |   |   | 37,133 |   |   | 37,133 |   |
| Effect                of dilutive securities       |   |                                            | -- |   |   |   | 465 |   |   |   | -- |   |   | 848 |   |
| Total                shares                        |   |                                            | 38,734 |   |   |   | 39,199 |   |   |   | 37,133 |   |   | 37,981 |   |
|                                               |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                income per share                |   | $                                               | 0.44 |   |   | $ | 0.44 |   |   | $ | 0.23 |   | $ | 0.23 |   |

**4.           Long-Term      Debt**

|                                                           |                            | **January                31,** | **July                31,** | **January                31,** |
|----------------------------------------------------------------|---------------------------------|--------------------------------|-----------------------------|--------------------------------|
|                                                           | **Maturity                (a)** | **2007**                       | **2006**                    | **2006**                       |
| Credit                Facility Revolver                        | 2010                            | $                              | --                          | $                              | -- | $ | -- |
| SSV                Facility                                    | 2011                            |                           | --                          |                           | 6,261 |   | 6,233 |
| Industrial                Development Bonds                    | 2009-2020                       |                           | 57,700                      |                           | 61,700 |   | 61,700 |
| Employee                Housing Bonds                          | 2027-2039                       |                           | 52,575                      |                           | 52,575 |   | 52,575 |
| Non-Recourse                Real Estate Financings (b)         | 2009                            |                           | 44,931                      |                           | 13,357 |   | 5,233 |
| 6.75%                Senior Subordinated Notes ("6.75% Notes") | 2014                            |                           | 390,000                     |                           | 390,000 |   | 390,000 |
| Other                                                          | 2007-2029                       |                           | 7,100                       |                           | 7,335 |   | 7,570 |
| Total                debt                                      |                            |                           | 552,306                     |                           | 531,228 |   | 523,311 |
| Less:  Current                maturities (c)         |                            |                           | 440                         |                           | 5,915 |   | 5,673 |
| Long-term                debt                                  |                            | $                              | 551,866                     | $                              | 525,313 | $ | 517,638 |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (a)    | Maturities                are based on the Company's July 31 fiscal year end.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (b)    | At                January 31, 2007, 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 six months ended January 31,                2007. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| (c)    | Current                maturities represent principal payments due in the next 12                months.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |

| Fiscal                2007 |   | $      | 175     |
|----------------------------|--------|--------|---------|
| Fiscal                2008 |   |   | 363     |
| Fiscal                2009 |   |   | 60,197  |
| Fiscal                2010 |   |   | 262     |
| Fiscal                2011 |   |   | 1,738   |
| Thereafter                 |   |   | 489,571 |
| Total                debt  |   | $      | 552,306 |

**5.           Supplementary      Balance Sheet Information**

|                                               |                                               |   | **January                31,** |      | **July                31,** |   | **January                31,** |
|----------------------------------------------------|----------------------------------------------------|--------|--------------------------------|-----------|-----------------------------|--------|--------------------------------|
|                                               |                                               |   | **2007**                       |      | **2006**                    |   | **2006**                       |
| Land                and land improvements          |                                               | $      | 247,997                        |      |                        | $      | 248,941                        |   |   | $ | 244,841 |   |
| Buildings                and building improvements |                                               |   | 538,426                        |      |                        |   | 529,316                        |   |   |   | 526,808 |   |
| Machinery                and equipment             |                                               |   | 455,382                        |      |                        |   | 426,457                        |   |   |   | 426,726 |   |
| Vehicles                                           |                                               |   | 27,121                         |      |                        |   | 25,671                         |   |   |   | 25,436 |   |
| Furniture                and fixtures              |                                               |   | 124,201                        |      |                        |   | 113,696                        |   |   |   | 111,610 |   |
| Construction                in progress            |                                               |   | 41,035                         |      |                        |   | 39,149                         |   |   |   | 21,024 |   |
|                                               | Gross                property, plant and equipment |   |                           | 1,434,162 |                        |   |                           | 1,383,230 |   |   |   | 1,356,445 |   |
| Accumulated                depreciation            |                                               |   | (565,977                       | )         |                        |   | (532,118                       | ) |   |   | (498,245 | ) |
|                                               | Property,                plant and equipment, net  |   | $                              | 868,185   |                        |   | $                              | 851,112 |   |   | $ | 858,200 |   |

|                                                             |                                                       |   | **January                31,** |    | **July                31,** |   | **January                31,** |
|------------------------------------------------------------------|------------------------------------------------------------|--------|--------------------------------|---------|-----------------------------|--------|--------------------------------|
|                                                             |                                                       |   | **2007**                       |    | **2006**                    |   | **2006**                       |
| Trade                payables                                    |                                                       | $      | 103,718                        |    |                        | $      | 82,599                         |   |   | $ | 92,565 |   |
| Deferred                revenue                                  |                                                       |   | 66,627                         |    |                        |   | 30,785                         |   |   |   | 62,048 |   |
| Deferred                credits and deposits                     |                                                       |   | 27,071                         |    |                        |   | 24,026                         |   |   |   | 43,885 |   |
| Accrued                salaries, wages and deferred compensation |                                                       |   | 34,709                         |    |                        |   | 31,954                         |   |   |   | 29,181 |   |
| Accrued                benefits                                  |                                                       |   | 26,704                         |    |                        |   | 24,538                         |   |   |   | 20,011 |   |
| Accrued                interest                                  |                                                       |   | 14,614                         |    |                        |   | 14,969                         |   |   |   | 14,686 |   |
| Liabilities                to complete real estate projects      |                                                       |   | 5,262                          |    |                        |   | 5,951                          |   |   |   | 7,575 |   |
| Other                accruals                                    |                                                       |   | 26,985                         |    |                        |   | 15,940                         |   |   |   | 25,141 |   |
|                                                             | Total                accounts payable and accrued expenses |   | $                              | 305,690 |                        |   | $                              | 230,762 |   |   | $ | 295,092 |   |

|                                                        |                                             |   | **January                31,** |    | **July                31,** |   | **January                31,** |
|-------------------------------------------------------------|--------------------------------------------------|--------|--------------------------------|---------|-----------------------------|--------|--------------------------------|
|                                                        |                                             |   | **2007**                       |    | **2006**                    |   | **2006**                       |
| Private                club deferred initiation fee revenue |                                             | $      | 94,110                         |    |                        | $      | 91,438                         |   |   | $ | 90,270 |   |
| Deferred                real estate credits                 |                                             |   | 62,774                         |    |                        |   | 54,578                         |   |   |   | 33,876 |   |
| Private                club initiation deposits             |                                             |   | 9,330                          |    |                        |   | 1,308                          |   |   |   | 1,253 |   |
| Liabilities                to complete real estate projects |                                             |   | 6,301                          |    |                        |   | 550                            |   |   |   | 550 |   |
| Other                long-term liabilities                  |                                             |   | 13,334                         |    |                        |   | 10,616                         |   |   |   | 6,984 |   |
|                                                        | Total                other long-term liabilities |   | $                              | 185,849 |                        |   | $                              | 158,490 |   |   | $ | 132,933 |   |

**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          |    |  67            |   |    |  303             |   |    |  865                            |   |    |  1,235     |   |
|  Payments                                     |    |  (911          | )      |    |  (106            | )      |    |  (1,060                         | )      |    |  (2,077    | )      |
|  Balance                  at January 31, 2007 |  $ |  29            |   |  $ |  197             |   |  $ |  88                             |   |  $ |  314       |   |

**8.           Sale      of Businesses**

**9.           Put      and Call Options**

**10.           Related      Party Transactions**

**11.           Commitments      and Contingencies**

*Metropolitan      Districts*

*Guarantees*

*Commitments*

*Cheeca      Lodge & Spa Contract Dispute*

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

**12.           Stock      Repurchase Plan**

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

| **Supplemental                Condensed Consolidating Balance Sheet**       |
|-----------------------------------------------------------------------------|
| **As                of January 31, 2007**                                   |
| **(in                thousands)**                                           |
| **(Unaudited)**                                                             |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |
|                                                                        |   |   |   | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |
|                                                                        |   |   |   | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   | **Entries** |   |   | **Consolidated** |
| Current                assets:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        | Cash                and cash equivalents | $ | -- |   | $ | 247,083 |   | $ | 7,783 |   | $ | -- |   | $ | 254,866 |
|                                                                        | Restricted                cash |   | -- |   |   | 25,404 |   |   | 1,388 |   |   | -- |   |   | 26,792 |
|                                                                        | Trade                receivables, net |   | -- |   |   | 37,578 |   |   | 6,150 |   |   | -- |   |   | 43,728 |
|                                                                        | Inventories,                net |   | -- |   |   | 9,034 |   |   | 40,791 |   |   | -- |   |   | 49,825 |
|                                                                        | Other                current assets |   | 13,338 |   |   | 23,509 |   |   | 2,071 |   |   | -- |   |   | 38,918 |
|                                                                        |   | Total                current assets |   | 13,338 |   |   | 342,608 |   |   | 58,183 |   |   | -- |   |   | 414,129 |
| Property,                plant and equipment, net                           |   | -- |   |   | 784,486 |   |   | 83,699 |   |   | -- |   |   | 868,185 |
| Real                estate held for sale and investment                     |   | -- |   |   | 118,917 |   |   | 174,302 |   |   | -- |   |   | 293,219 |
| Goodwill,                net                                                |   | -- |   |   | 118,475 |   |   | 17,336 |   |   | -- |   |   | 135,811 |
| Intangible                assets, net                                       |   | -- |   |   | 57,168 |   |   | 16,547 |   |   | -- |   |   | 73,715 |
| Other                assets                                                 |   | 5,001 |   |   | 26,948 |   |   | 15,608 |   |   | -- |   |   | 47,557 |
| Investments                in subsidiaries and advances to (from) parent    |   | 1,059,064 |   |   | (535,123 | ) |   | (64,043 | ) |   | (459,898 | ) |   | -- |
|                                                                        | Total                assets | $ | 1,077,403 |   | $ | 913,479 |   | $ | 301,632 |   | $ | (459,898 | ) | $ | 1,832,616 |
|                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Current                liabilities:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                        | Accounts                payable and accrued expenses | $ | 19,866 |   | $ | 231,873 |   | $ | 53,951 |   | $ | -- |   | $ | 305,690 |
|                                                                        | Income                taxes payable |   | 9,103 |   |   | -- |   |   | -- |   |   | -- |   |   | 9,103 |
|                                                                        | Long-term                debt due within one year |   | -- |   |   | 35 |   |   | 405 |   |   | -- |   |   | 440 |
|                                                                        |   | Total                current liabilities |   | 28,969 |   |   | 231,908 |   |   | 54,356 |   |   | -- |   |   | 315,233 |
| Long-term                debt                                               |   | 390,000 |   |   | 57,727 |   |   | 104,139 |   |   | -- |   |   | 551,866 |
| Other                long-term liabilities                                  |   | 13 |   |   | 124,415 |   |   | 61,421 |   |   | -- |   |   | 185,849 |
| Deferred                income taxes                                        |   | -- |   |   | 83,946 |   |   | 21 |   |   | -- |   |   | 83,967 |
| Put                option liabilities                                       |   | -- |   |   | 1,245 |   |   | -- |   |   | -- |   |   | 1,245 |
| Minority                interest in net assets of consolidated subsidiaries |   | -- |   |   | -- |   |   | 36,035 |   |   | -- |   |   | 36,035 |
| Total                stockholders' equity                                   |   | 658,421 |   |   | 414,238 |   |   | 45,660 |   |   | (459,898 | ) |   | 658,421 |
|                                                                        |   | Total                liabilities and stockholders' equity | $ | 1,077,403 |   | $ | 913,479 |   | $ | 301,632 |   | $ | (459,898 | ) | $ | 1,832,616 |

| **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 January 31, 2006**                             |                                                                        |
| **(in                thousands)**                                     |                                                                        |
| **(Unaudited)**                                                       |                                                                        |
|                                                                  |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |                                                                        |   |   |   |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |   |
|                                                                  |                                                                        |   |   |   | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |   |   |
|                                                                  |                                                                        |   |   |   | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Entries** |   |   | **Consolidated** |   |
|                                                                  | Current                assets:                                              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |                                                                        | Cash                and cash equivalents | $ | -- |   | $ | 134,279 |   | $ | 41,262 |   | $ | -- |   | $ | 175,541 |   |
|                                                                  |                                                                        | Restricted                cash |   | -- |   |   | 20,546 |   |   | 3,169 |   |   | -- |   |   | 23,715 |   |
|                                                                  |                                                                        | Receivables,                net |   | -- |   |   | 35,038 |   |   | 4,674 |   |   | -- |   |   | 39,712 |   |
|                                                                  |                                                                        | Inventories,                net |   | -- |   |   | 8,669 |   |   | 35,308 |   |   | -- |   |   | 43,977 |   |
|                                                                  |                                                                        | Other                current assets |   | 12,769 |   |   | 24,764 |   |   | 6,376 |   |   | -- |   |   | 43,909 |   |
|                                                                  |                                                                        |   | Total                current assets |   | 12,769 |   |   | 223,296 |   |   | 90,789 |   |   | -- |   |   | 326,854 |   |
|                                                                  | Property,                plant and equipment, net                           |   | -- |   |   | 787,860 |   |   | 70,340 |   |   | -- |   |   | 858,200 |   |
|                                                                  | Real                estate held for sale and investment                     |   | -- |   |   | 138,559 |   |   | 82,489 |   |   | -- |   |   | 221,048 |   |
|                                                                  | Goodwill,                net                                                |   | -- |   |   | 135,811 |   |   | -- |   |   | -- |   |   | 135,811 |   |
|                                                                  | Intangible                assets, net                                       |   | -- |   |   | 42,902 |   |   | 34,639 |   |   | -- |   |   | 77,541 |   |
|                                                                  | Other                assets                                                 |   | 5,711 |   |   | 16,292 |   |   | 11,223 |   |   | -- |   |   | 33,226 |   |
|                                                                  | Investments                in subsidiaries and advances to (from) parent    |   | 979,831 |   |   | (449,031 | ) |   | (70,902 | ) |   | (459,898 | ) |   | -- |   |
|                                                                  |                                                                        |   | Total                assets | $ | 998,311 |   | $ | 895,689 |   | $ | 218,578 |   | $ | (459,898 | ) | $ | 1,652,680 |   |
|                                                                  |                                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  | Current                liabilities:                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                  |                                                                        | Accounts                payable and accrued expenses | $ | 14,986 |   | $ | 224,339 |   | $ | 55,767 |   | $ | -- |   | $ | 295,092 |   |
|                                                                  |                                                                        | Income                taxes payable |   | 6,324 |   |   | -- |   |   | -- |   |   | -- |   |   | 6,324 |   |
|                                                                  |                                                                        | Long-term                debt due within one year |   | -- |   |   | 4,044 |   |   | 1,629 |   |   | -- |   |   | 5,673 |   |
|                                                                  |                                                                        |   | Total                current liabilities |   | 21,310 |   |   | 228,383 |   |   | 57,396 |   |   | -- |   |   | 307,089 |   |
|                                                                  | Long-term                debt                                               |   | 390,000 |   |   | 57,767 |   |   | 69,871 |   |   | -- |   |   | 517,638 |   |
|                                                                  | Other                long-term liabilities                                  |   | 363 |   |   | 98,648 |   |   | 33,922 |   |   | -- |   |   | 132,933 |   |
|                                                                  | Deferred                income taxes                                        |   | -- |   |   | 76,770 |   |   | 267 |   |   | -- |   |   | 77,037 |   |
|                                                                  | Minority                interest in net assets of consolidated subsidiaries |   | -- |   |   | -- |   |   | 31,345 |   |   | -- |   |   | 31,345 |   |
|                                                                  | Total                stockholders' equity                                   |   | 586,638 |   |   | 434,121 |   |   | 25,777 |   |   | (459,898 | ) |   | 586,638 |   |
|                                                                  |                                                                        |   | Total                liabilities and stockholders' equity | $ | 998,311 |   | $ | 895,689 |   | $ | 218,578 |   | $ | (459,898 | ) | $ | 1,652,680 |   |

|                                                                                       | **Supplemental                Condensed Consolidating Statement of                Operations** |
|--------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                       | **For                the three months ended January 31, 2007**                                 |
|                                                                                       | **(in                thousands)**                                                              |
|                                                                                       | **(Unaudited)**                                                                                |
|                                                                                       |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                                                           |   |   |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                                                           |   |   | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |   |   |   |
|                                                                                       |                                                                                           |   |   | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Entries** |   |   | **Consolidated** |   |   |
| Total                net revenue                                                           | $                                                                                              | -- |   | $ | 259,244 |   | $ | 104,346 |   | $ | (2,552 | ) | $ | 361,038 |   |   |
| Total                operating expense                                                     |                                                                                           | 4,584 |   |   | 181,996 |   |   | 79,260 |   |   | (2,552 | ) |   | 263,288 |   |   |
|                                                                                       | (Loss)                income from operations                                                   |   | (4,584 | ) |   | 77,248 |   |   | 25,086 |   |   | -- |   |   | 97,750 |   |   |
| Other                expense, net                                                          |                                                                                           | (6,751 | ) |   | 1,584 |   |   | (999 | ) |   | -- |   |   | (6,166 | ) |   |
| Equity                investment income, net                                               |                                                                                           | -- |   |   | 1,496 |   |   | -- |   |   | -- |   |   | 1,496 |   |   |
| Minority                interest in income ofconsolidated                subsidiaries, net |                                                                                           | -- |   |   | -- |   |   | (6,152 | ) |   | -- |   |   | (6,152 | ) |   |
|                                                                                       | (Loss)                income before income taxes                                               |   | (11,335 | ) |   | 80,328 |   |   | 17,935 |   |   | -- |   |   | 86,928 |   |   |
|                                                                                       | Benefit                (provision) for income taxes                                            |   | 4,420 |   |   | (38,400 | ) |   | 78 |   |   | -- |   |   | (33,902 | ) |   |
|                                                                                       | Net                (loss) income before equity in income                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       | (loss)                of consolidated subsidiaries                                             |   | (6,915 | ) |   | 41,928 |   |   | 18,013 |   |   | -- |   |   | 53,026 |   |   |
| Equity                in income (loss) ofconsolidated                subsidiaries          |                                                                                           | 59,941 |   |   | -- |   |   | -- |   |   | (59,941 | ) |   | -- |   |   |
| Net                income (loss)                                                           | $                                                                                              | 53,026 |   | $ | 41,928 |   | $ | 18,013 |   | $ | (59,941 | ) | $ | 53,026 |   |   |

|                                                                                       |                                                     | **Supplemental                Condensed Consolidating Statement of                Operations** |
|--------------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                       |                                                     | **For                the three months ended January 31, 2006**                                 |
|                                                                                       |                                                     | **(in                thousands)**                                                              |
|                                                                                       |                                                     | **(Unaudited)**                                                                                |
|                                                                                       |                                                     |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Entries** |   |   | **Consolidated** |   |   |
| Total                net revenue                                                           | $                                                        | --                                                                                             |   | $ | 226,506 |   | $ | 63,570 |   | $ | (2,060 | ) | $ | 288,016 |   |   |
| Total                operating expense                                                     |                                                     | 4,082                                                                                          |   |   | 160,439 |   |   | 48,547 |   |   | (2,060 | ) |   | 211,008 |   |   |
|                                                                                       | (Loss)                income from operations             |                                                                                           | (4,082 | ) |   | 66,067 |   |   | 15,023 |   |   | -- |   |   | 77,008 |   |   |
| Other                expense, net                                                          |                                                     | (6,872                                                                                         | ) |   | (722 | ) |   | (811 | ) |   | -- |   |   | (8,405 | ) |   |
| Equity                investment income, net                                               |                                                     | --                                                                                             |   |   | 1,486 |   |   | -- |   |   | -- |   |   | 1,486 |   |   |
| Gain                on sale of businesses, net                                             |                                                     | --                                                                                             |   |   | 4,625 |   |   | -- |   |   | -- |   |   | 4,625 |   |   |
| Gain                on put options                                                         |                                                     | --                                                                                             |   |   | 1,026 |   |   | -- |   |   | -- |   |   | 1,026 |   |   |
| Minority                interest in income ofconsolidated                subsidiaries, net |                                                     | --                                                                                             |   |   | -- |   |   | (5,231 | ) |   | -- |   |   | (5,231 | ) |   |
|                                                                                       | (Loss)                income before income taxes         |                                                                                           | (10,954 | ) |   | 72,482 |   |   | 8,981 |   |   | -- |   |   | 70,509 |   |   |
|                                                                                       | Benefit                (provision) for income taxes      |                                                                                           | 4,272 |   |   | (31,831 | ) |   | 61 |   |   | -- |   |   | (27,498 | ) |   |
|                                                                                       | Net                (loss) income before equity in income |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       | (loss)                of consolidated subsidiaries       |                                                                                           | (6,682) |   |   | 40,651 |   |   | 9,042 |   |   | -- |   |   | 43,011 |   |   |
| Equity                in income (loss) ofconsolidated                subsidiaries          |                                                     | 49,691                                                                                         |   |   | -- |   |   | -- |   |   | (49,691 | ) |   | -- |   |   |
| Net                income (loss)                                                           | $                                                        | 43,009                                                                                         |   | $ | 40,651 |   | $ | 9,042 |   | $ | (49,691 | ) | $ | 43,011 |   |   |

|                                                                                       |                                                     |    | **Supplemental                Condensed Consolidating Statement of                Operations** |
|--------------------------------------------------------------------------------------------|----------------------------------------------------------|---------|------------------------------------------------------------------------------------------------|
|                                                                                       |                                                     |    | **For                the six months ended January 31, 2007**                                   |
|                                                                                       |                                                     |    | **(in                thousands)**                                                              |
|                                                                                       |                                                     |    | **(Unaudited)**                                                                                |
|                                                                                       |                                                     |    |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |    |                                                                                           |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |    |                                                                                           | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |   |   |   |
|                                                                                       |                                                     |    |                                                                                           | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Entries** |   |   | **Consolidated** |   |   |
| Total                net revenue                                                           | $                                                        | --      |                                                                                           | $ | 335,205 |   | $ | 143,641 |   | $ | (4,315 | ) | $ | 474,531 |   |   |
| Total                operating expense                                                     |                                                     | 7,579   |                                                                                           |   | 303,372 |   |   | 121,007 |   |   | (4,315 | ) |   | 427,643 |   |   |
|                                                                                       | (Loss)                income from operations             |    | (7,579                                                                                         | ) |   | 31,833 |   |   | 22,634 |   |   | -- |   |   | 46,888 |   |   |
| Other                expense, net                                                          |                                                     | (13,508 | )                                                                                              |   | (1,089 | ) |   | (2,045 | ) |   | -- |   |   | (16,642 | ) |   |
| Equity                investment income, net                                               |                                                     | --      |                                                                                           |   | 2,331 |   |   | -- |   |   | -- |   |   | 2,331 |   |   |
| Minority                interest in income ofconsolidated                subsidiaries, net |                                                     | --      |                                                                                           |   | -- |   |   | (4,363 | ) |   | -- |   |   | (4,363 | ) |   |
|                                                                                       | (Loss)                income before income taxes         |    | (21,087                                                                                        | ) |   | 33,075 |   |   | 16,226 |   |   | -- |   |   | 28,214 |   |   |
|                                                                                       | Benefit                (provision) for income taxes      |    | 8,223                                                                                          |   |   | (19,350 | ) |   | 123 |   |   | -- |   |   | (11,004 | ) |   |
|                                                                                       | Net                (loss) income before equity in income |    |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       | (loss)                of consolidated subsidiaries       |    | (12,864                                                                                        | ) |   | 13,725 |   |   | 16,349 |   |   | -- |   |   | 17,210 |   |   |
| Equity                in income (loss) ofconsolidated                subsidiaries          |                                                     | 30,074  |                                                                                           |   | -- |   |   | -- |   |   | (30,074 | ) |   | -- |   |   |
| Net                income (loss)                                                           | $                                                        | 17,210  |                                                                                           | $ | 13,725 |   | $ | 16,349 |   | $ | (30,074 | ) | $ | 17,210 |   |   |

|                                                                                       |                                                     | **Supplemental                Condensed Consolidating Statement of                Operations** |
|--------------------------------------------------------------------------------------------|----------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                                                       |                                                     | **For                the six months ended January 31, 2006**                                   |
|                                                                                       |                                                     | **(in                thousands)**                                                              |
|                                                                                       |                                                     | **(Unaudited)**                                                                                |
|                                                                                       |                                                     |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   | **Eliminating** |   |   |   |   |   |
|                                                                                       |                                                     |                                                                                           |   | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Entries** |   |   | **Consolidated** |   |   |
| Total                net revenue                                                           | $                                                        | --                                                                                             |   | $ | 287,303 |   | $ | 90,200 |   | $ | (4,067 | ) | $ | 373,436 |   |   |
| Total                operating expense                                                     |                                                     | 7,850                                                                                          |   |   | 261,145 |   |   | 81,380 |   |   | (4,067 | ) |   | 346,308 |   |   |
|                                                                                       | (Loss)                income from operations             |                                                                                           | (7,850 | ) |   | 26,158 |   |   | 8,820 |   |   | -- |   |   | 27,128 |   |   |
| Other                expense, net                                                          |                                                     | (13,632                                                                                        | ) |   | (1,571 | ) |   | (1,451 | ) |   | -- |   |   | (16,654 | ) |   |
| Equity                investment income, net                                               |                                                     | --                                                                                             |   |   | 2,405 |   |   | -- |   |   | -- |   |   | 2,405 |   |   |
| Gain                on sale of businesses, net                                             |                                                     | --                                                                                             |   |   | 4,625 |   |   | -- |   |   | -- |   |   | 4,625 |   |   |
| Gain                on put options                                                         |                                                     | --                                                                                             |   |   | 34 |   |   | -- |   |   | -- |   |   | 34 |   |   |
| Minority                interest in income ofconsolidated                subsidiaries, net |                                                     | --                                                                                             |   |   | -- |   |   | (3,305 | ) |   | -- |   |   | (3,305 | ) |   |
|                                                                                       | (Loss)                income before income taxes         |                                                                                           | (21,482 | ) |   | 31,651 |   |   | 4,064 |   |   | -- |   |   | 14,233 |   |   |
|                                                                                       | Benefit                (provision) for income taxes      |                                                                                           | 8,378 |   |   | (14,036 | ) |   | 107 |   |   | -- |   |   | (5,551 | ) |   |
|                                                                                       | Net                (loss) income before equity in income |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                       | (loss)                of consolidated subsidiaries       |                                                                                           | (13,104 | ) |   | 17,615 |   |   | 4,171 |   |   | -- |   |   | 8,682 |   |   |
| Equity                in income (loss) of consolidatedsubsidiaries                         |                                                     | 21,785                                                                                         |   |   | -- |   |   | -- |   |   | (21,785 | ) |   | -- |   |   |
| Net                income (loss)                                                           | $                                                        | 8,681                                                                                          |   | $ | 17,615 |   | $ | 4,171 |   | $ | (21,785 | ) | $ | 8,682 |   |   |

|                                                               |                                                         |                                                               |                                                                              | **Supplemental                Condensed Consolidating Statement of Cash                Flows** |
|--------------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                               |                                                         |                                                               |                                                                              | **For                the six months ended January 31, 2007**                                   |
|                                                               |                                                         |                                                               |                                                                              | **(in                thousands)**                                                              |
|                                                               |                                                         |                                                               |                                                                              | **(Unaudited)**                                                                                |
|                                                               |                                                         |                                                               |                                                                              | **(as                restated, see Note 15)**                                                  |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Consolidated** |   |   |
| Net                cash (used in) provided by operating activities | $                                                            | (35,705                                                            | )                                                                                 | $                                                                                              | 160,969 |   | $ | (16,945 | ) | $ | 108,319 |   |   |
| Cash                flows from investing activities:               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Capital                expenditures                          |                                                               | --                                                                                |                                                                                           |   | (42,349 | ) |   | (19,709 | ) |   | (62,058 | ) |   |
|                                                               | Other                investing activities, net               |                                                               | --                                                                                |                                                                                           |   | 2,578 |   |   | (2,224 | ) |   | 354 |   |   |
|                                                               |                                                         | Net                cash used in investing activities               |                                                                              | --                                                                                             |   |   | (39,771 | ) |   | (21,933 | ) |   | (61,704 | ) |   |
| Cash                flows from financing activities:               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Repurchases                of common stock                   |                                                               | --                                                                                |                                                                                           |   | (15,007 | ) |   | -- |   |   | (15,007 | ) |   |
|                                                               | Proceeds                from borrowings under long-term debt |                                                               | --                                                                                |                                                                                           |   | 1,645 |   |   | 79,434 |   |   | 81,079 |   |   |
|                                                               | Payments                of long-term debt                    |                                                               | --                                                                                |                                                                                           |   | (5,662 | ) |   | (54,339 | ) |   | (60,001 | ) |   |
|                                                               | Proceeds                from exercise of stock options       |                                                               | 6,803                                                                             |                                                                                           |   | -- |   |   | -- |   |   | 6,803 |   |   |
|                                                               | Other                financing activities, net               |                                                               | 3,432                                                                             |                                                                                           |   | (2,604 | ) |   | 2,755 |   |   | 3,583 |   |   |
|                                                               | Advances                from (to) affiliates                 |                                                               | 25,470                                                                            |                                                                                           |   | (32,485 | ) |   | 7,015 |   |   | -- |   |   |
|                                                               |                                                         | Net                cash (used in) provided by financing activities |                                                                              | 35,705                                                                                         |   |   | (54,113 | ) |   | 34,865 |   |   | 16,457 |   |   |
|                                                               |                                                         |                                                               | Net                increase (decrease) in cashand                cash equivalents |                                                                                           | -- |   |   | 67,085 |   |   | (4,013 | ) |   | 63,072 |   |   |
| Cash                and cash equivalents:                          |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Beginning                of period                           |                                                               | --                                                                                |                                                                                           |   | 179,998 |   |   | 11,796 |   |   | 191,794 |   |   |
|                                                               | End                of period                                 | $                                                                  | --                                                                                |                                                                                           | $ | 247,083 |   | $ | 7,783 |   | $ | 254,866 |   |   |

|                                                               |                                                         |                                                               |                                                                              | **Supplemental                Condensed Consolidating Statement of Cash                Flows** |
|--------------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------------|-----------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|
|                                                               |                                                         |                                                               |                                                                              | **For                the six months ended January 31, 2006**                                   |
|                                                               |                                                         |                                                               |                                                                              | **(in                thousands)**                                                              |
|                                                               |                                                         |                                                               |                                                                              | **(Unaudited)**                                                                                |
|                                                               |                                                         |                                                               |                                                                              | **(as                restated, see Note 15)**                                                  |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   | **100%                Owned** |   |   |   |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           | **Parent** |   |   | **Guarantor** |   |   | **Other** |   |   |   |   |   |
|                                                               |                                                         |                                                               |                                                                              |                                                                                           | **Company** |   |   | **Subsidiaries** |   |   | **Subsidiaries** |   |   | **Consolidated** |   |   |
| Net                cash (used in) provided by operating activities | $                                                            | (19,028                                                            | )                                                                                 | $                                                                                              | 64,873 |   | $ | (10,324 | ) | $ | 35,521 |   |   |
| Cash                flows from investing activities:               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Capital                expenditures                          |                                                               | --                                                                                |                                                                                           |   | (48,510 | ) |   | (6,602 | ) |   | (55,112 | ) |   |
|                                                               | Proceeds                from sale of businesses              |                                                               | --                                                                                |                                                                                           |   | 30,712 |   |   | -- |   |   | 30,712 |   |   |
|                                                               | Other                investing activities, net               |                                                               | --                                                                                |                                                                                           |   | 414 |   |   | (4,432 | ) |   | (4,018 | ) |   |
|                                                               |                                                         | Net                cash used in investing activities               |                                                                              | --                                                                                             |   |   | (17,384 | ) |   | (11,034 | ) |   | (28,418 | ) |   |
| Cash                flows from financing activities:               |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Proceeds                from borrowings under long-term debt |                                                               | --                                                                                |                                                                                           |   | 20,392 |   |   | 5,821 |   |   | 26,213 |   |   |
|                                                               | Payments                of long-term debt                    |                                                               | --                                                                                |                                                                                           |   | (24,909 | ) |   | -- |   |   | (24,909 | ) |   |
|                                                               | Proceeds                from exercise of stock options       |                                                               | 27,635                                                                            |                                                                                           |   | -- |   |   | -- |   |   | 27,635 |   |   |
|                                                               | Other                financing activities, net               |                                                               | 6,376                                                                             |                                                                                           |   | 1,792 |   |   | (5,249 | ) |   | 2,919 |   |   |
|                                                               | Advances                (to) from affiliates                 |                                                               | (14,983                                                                           | )                                                                                              |   | (3,364 | ) |   | 18,347 |   |   | -- |   |   |
|                                                               |                                                         | Net                cash provided by (used in) financing activities |                                                                              | 19,028                                                                                         |   |   | (6,089 | ) |   | 18,919 |   |   | 31,858 |   |   |
|                                                               |                                                         |                                                               | Net                increase (decrease) in cashand                cash equivalents |                                                                                           | -- |   |   | 41,400 |   |   | (2,439 | ) |   | 38,961 |   |   |
| Cash                and cash equivalents:                          |                                                         |                                                               |                                                                              |                                                                                           |   |   |   |   |   |   |   |   |   |
|                                                               | Beginning                of period                           |                                                               | --                                                                                |                                                                                           |   | 92,879 |   |   | 43,701 |   |   | 136,580 |   |   |
|                                                               | End                of period                                 | $                                                                  | --                                                                                |                                                                                           | $ | 134,279 |   | $ | 41,262 |   | $ | 175,541 |   |   |

**14.           Subsequent      Event**

*Cheeca      Lodge & Spa Contract Dispute*

**15.           Restatement**

|                                                     |   | **Six                Months Ended January 31, 2007** |
|----------------------------------------------------------|--------|------------------------------------------------------|
|                                                     |   | **As                Reported**                       |   | **Adjustment** |   | **As                Restated** |
| Net                cash provided by operating activities |   | $                                                    | 196,886 |   |   | $ | (88,567 | ) |   | $ | 108,319 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                flow from investing activities:      |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Investments                in real estate                |   |                                                 | (88,567 | ) |   |   | 88,567 |   |   |   | -- |   |
| Net                cash used in investing activities     |   |                                                 | (150,271 | ) |   |   | 88,567 |   |   |   | (61,704 | ) |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                flow from financing activities:      |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                cash provided by financing activities |   |                                                 | 16,457 |   |   |   | -- |   |   |   | 16,457 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                increase in cash and cash equivalents |   |                                                 | 63,072 |   |   |   | -- |   |   |   | 63,072 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents:                |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Beginning                of period                       |   |                                                 | 191,794 |   |   |   | -- |   |   |   | 191,794 |   |
| End                of period                             |   | $                                                    | 254,866 |   |   | $ | -- |   |   | $ | 254,866 |   |

|                                                     |   | **Six                Months Ended January 31, 2006** |
|----------------------------------------------------------|--------|------------------------------------------------------|
|                                                     |   | **As                Reported**                       |   | **Adjustment** |   | **As                Restated** |
| Net                cash provided by operating activities |   | $                                                    | 100,426 |   |   | $ | (64,905 | ) |   | $ | 35,521 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                flow from investing activities:      |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Investments                in real estate                |   |                                                 | (64,905 | ) |   |   | 64,905 |   |   |   | -- |   |
| Net                cash used in investing activities     |   |                                                 | (93,323 | ) |   |   | 64,905 |   |   |   | (28,418 | ) |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                flow from financing activities:      |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                cash provided by financing activities |   |                                                 | 31,858 |   |   |   | -- |   |   |   | 31,858 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Net                increase in cash and cash equivalents |   |                                                 | 38,961 |   |   |   | -- |   |   |   | 38,961 |   |
|                                                     |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Cash                and cash equivalents:                |   |                                                 |   |   |   |   |   |   |   |   |   |   |
| Beginning                of period                       |   |                                                 | 136,580 |   |   |   | -- |   |   |   | 136,580 |   |
| End                of period                             |   | $                                                    | 175,541 |   |   | $ | -- |   |   | $ | 175,541 |   |

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

**Restatement**

**OVERVIEW**

**TRENDS,      RISKS AND UNCERTAINTIES**

| **l** | 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,                  who are                  the most weather sensitive visitors to the Company’s ski                  resorts.  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.  Total season pass sales for the 2006/2007 ski season                  increased by 20.0% over sales for the 2005/2006 ski season as of                  January                  31, 2007.  Deferred revenue related to season pass sales was                  $34.5 million and $29.5 million as of January 31, 2007 and 2006,                  respectively, which will be recognized as lift revenue during the                  Company’s third fiscal quarter ending April 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| l     | 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 February 2007, RockResorts was notified by the                  ownership of The Equinox that the owner intends to sell the hotel,                  at                  which time the management agreement will be terminated (currently                  anticipated to be in the Company’s third fiscal quarter ending April 30,                  2007), which will result in the Company receiving a termination                  fee, but                  loss of future management fees.  RockResorts recognized $822,000                  in management fees from The Equinox in the year ended July 31,                  2006. 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 six months ended January                  31,                  2007.  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 of whole and fractional ownership of units within                  the                  resort and provide technical advisory services in the design and                  construction of the resort and will manage the new Eleven Biscayne                  Hotel                  & Spa in Miami, Florida and will provide technical advisory services                  for this resort.                                                                                                                                                                                                                     |
| l     | On                  February 28, 2007, the arbitrator of the JAMS Arbitration Tribunal                  in                  Chicago, Illinois, rendered a decision, awarding $8.5 million in                  damages                  in favor of RockResorts and against Cheeca Holdings, LLC, the ownership                  entity of Cheeca Lodge & Spa, the former RockResort managed property                  located in Islamorada, Florida.  The arbitrator found that the                  ownership group had wrongfully terminated the hotel management                  contract                  without good cause, as RockResorts had maintained in the proceedings,                  and                  that RockResorts had not breached the management contract, as the                  ownership group had alleged.  The Company has incurred $672,000                  and $4.3 million in the three and six months ended January 31,                  2007,                  respectively, and the Company incurred $3.3 million of legal related                  costs                  for the year ended July 31, 2006 in connection with the matter                  which are                  included in “contract dispute charges” in the Consolidated Condensed                  Statements of Operations in the respective periods.  In                  accordance with the arbitrator’s ruling, RockResorts will seek recovery of                  costs and attorneys’ fees in the last stage of the proceedings, which is                  expected to be concluded by the end of fiscal 2007.  Upon                  conclusion of that stage, the total award, which will incorporate                  the $8.5                  million damage award and any additional cost recovery award, is                  final,                  binding and not subject to appeal.  Upon completion of the cost                  recovery stage, RockResorts will proceed with the collection of                  the award                  and will record the actual amount received, upon receipt, in “contract                  dispute credit (charges), net.”  As previously disclosed,                  RockResorts was notified in March 2006 by the ownership entity                  of Cheeca                  Lodge & Spa that its management agreement was being terminated                  effective immediately.  RockResorts believed that the                  termination was in violation of the management agreement and sought                  monetary damages including recovery of costs and attorneys’ fees through                  binding arbitration in accordance with the dispute resolution provisions                  of the management agreement. |
| l     | 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 projects                  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.  For the                  six months ended January 31, 2007, the Company has recorded $3.9                  million                  of estimated unanticipated costs associated with construction and                  design                  issues related to its Jackson Hole Golf & Tennis Club (“JHG&TC”)                  residential development.  These costs include estimates to                  complete remediation work and take into consideration performance                  requirements and recoveries of costs from other parties involved                  in the                  design and construction of the JHG&TC residential development, and as                  such are subject to change which could impact future operating                  results.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| l     | In                  recent years, the Company has shifted its Real Estate focus to                  more                  vertical development, which requires significant capital investment                  prior                  to the project completion.  For example, in addition to                  previously announced development projects including the Arrabelle                  at Vail                  Square and The Lodge at Vail Chalets projects, the Company expects                  to move                  forward with the development of the Crystal Peak Lodge and The                  Ritz-Carlton Residences, Vail (including the construction of related                  Resort depreciable assets).  The Company expects to incur                  between $500 million and $575 million of construction costs related                  to                  these projects subsequent to January 31, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| l     | In                  February 2007, the Company and GSSI, LLC (“GSSI”) entered into an amended                  operating agreement whereby the Company will acquire 20% of GSSI’s                  ownership interest for $8.4 million, which is expected to close                  March 31,                  2007.  As a result of this transaction, the Company will hold an                  approximate 69.3% ownership interest in SSI Venture, LLC                  (“SSV”).  In addition, the put and call rights for GSSI’s                  remaining interest in SSV were extended to begin August 1, 2010                  and the                  existing management agreement was extended to coincide with the                  exercise                  of the remaining put and call rights.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| l     | In                  March 2007, the Company and RTP, LLC’s (“RTP”) minority shareholder                  entered into a definitive agreement under which RTP’s minority shareholder                  will acquire the Company’s 54.5% interest in RTP for approximately $3.5                  million.  As part of this agreement the Company will retain                  source code rights to its internal use software and internet                  solutions.  This transaction is expected to close on or around                  April 30, 2007.  As a result of this transaction, the Company                  will record a net loss of approximately $100,000 on the sale of                  its                  investment in RTP including the elimination of the put option liability                  and the write-off of the associated put option intangible                  asset.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| l     | The                  Company is in the process of amending its senior credit facility                  (the                  “Credit Facility”) with a closing anticipated in March 2007, to reduce the                  revolving credit facility from $400 million to $300 million (the“Credit                  Facility Revolver”), extend the maturity on the Credit Facility Revolver,                  reduce pricing for interest rate margins and commitment fees and                  improve                  flexibility in the Company’s ability to make                  investments.  Additionally, the amendment will include the                  elimination of certain covenant ratios and change, for pricing                  and                  covenant purposes, the gross debt leverage ratio to a net debt                  leverage                  ratio.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**RESULTS      OF OPERATIONS**

***Summary***

|                                                    |   |    |   | **Three                Months Ended** |   | **Six                Months Ended** |
|---------------------------------------------------------|--------|---------|--------|---------------------------------------|--------|-------------------------------------|
|                                                    |   |    |   | **January                31,**        |   | **January                31,**      |
|                                                    |   |    |   | **2007**                              |   | **2006**                            |   | **2007** |   | **2006** |
| Mountain                Reported EBITDA                 | $      | 113,651 |   |                                  | $      | 97,017                              |   |   | $ | 81,162 |   |   | $ | 65,853 |   |
| Lodging                Reported EBITDA                  |   | 2,039   |   |                                  |   | (815                                | ) |   |   | 6,098 |   |   |   | 3,294 |   |
| Real                Estate Reported EBITDA              |   | 5,825   |   |                                  |   | 3,357                               |   |   |   | 6,629 |   |   |   | 750 |   |
| Total                Reported EBITDA                    |   | 121,515 |   |                                  |   | 99,559                              |   |   |   | 93,889 |   |   |   | 69,897 |   |
| Income                before provision for income taxes |   | 86,928  |   |                                  |   | 70,509                              |   |   |   | 28,214 |   |   |   | 14,233 |   |
| Net                income                               | $      | 53,026  |   |                                  | $      | 43,011                              |   |   | $ | 17,210 |   |   | $ | 8,682 |   |

***Mountain      Segment***

|                                                  |   | **Three                Months Ended** |    | **Percentage** |
|-------------------------------------------------------|--------|---------------------------------------|---------|----------------|
|                                                  |   | **January                31,**        |    | **Increase**   |
|                                                  |   | **2007**                              |    | **2006**       |   | **(Decrease)** |
| Lift                tickets                           |   | $                                     | 128,617 |           | $ | 113,468 |   | 13.4 | % |
| Ski                school                             |   |                                  | 34,198  |           |   | 30,752 |   | 11.2 | % |
| Dining                                                |   |                                  | 22,468  |           |   | 21,266 |   | 5.7 | % |
| Retail/rental                                         |   |                                  | 63,291  |           |   | 56,913 |   | 11.2 | % |
| Other                                                 |   |                                  | 23,452  |           |   | 23,829 |   | (1.6) | % |
| Total                Mountain net revenue             |   |                                  | 272,026 |           |   | 246,228 |   | 10.5 | % |
| Total                Mountain operating expense       |   |                                  | 159,871 |           |   | 150,666 |   | 6.1 | % |
| Mountain                equity investment income, net |   |                                  | 1,496   |           |   | 1,455 |   | 2.8 | % |
| Total                Mountain Reported EBITDA         |   | $                                     | 113,651 |           | $ | 97,017 |   | 17.1 | % |
|                                                  |   |                                  |    |           |   |   |   |   |   |
| Total                skier visits                     |   |                                  | 2,912   |           |   | 2,875 |   | 1.3 | % |
| ETP                                                   |   | $                                     | 44.17   |           | $ | 39.47 |   | 11.9 | % |

|                                                  |   | **Six                Months Ended** |    |           |
|-------------------------------------------------------|--------|-------------------------------------|---------|----------------|
|                                                  |   | **January                31,**      |    | **Percentage** |
|                                                  |   | **2007**                            |    | **2006**       |   | **Increase** |
| Lift                tickets                           |   | $                                   | 128,617 |           | $ | 113,468 |   | 13.4 | % |
| Ski                school                             |   |                                | 34,198  |           |   | 30,752 |   | 11.2 | % |
| Dining                                                |   |                                | 26,354  |           |   | 24,772 |   | 6.4 | % |
| Retail/rental                                         |   |                                | 87,809  |           |   | 78,618 |   | 11.7 | % |
| Other                                                 |   |                                | 41,211  |           |   | 38,895 |   | 6.0 | % |
| Total                Mountain net revenue             |   |                                | 318,189 |           |   | 286,505 |   | 11.1 | % |
| Total                Mountain operating expense       |   |                                | 239,358 |           |   | 222,957 |   | 7.4 | % |
| Mountain                equity investment income, net |   |                                | 2,331   |           |   | 2,305 |   | 1.1 | % |
| Total                Mountain Reported EBITDA         |   | $                                   | 81,162  |           | $ | 65,853 |   | 23.2 | % |
|                                                  |   |                                |    |           |   |   |   |   |   |
| Total                skier visits                     |   |                                | 2,912   |           |   | 2,875 |   | 1.3 | % |
| ETP                                                   |   | $                                   | 44.17   |           | $ | 39.47 |   | 11.9 | % |

***Lodging      Segment***

|                                           |   | **Three                Months Ended** |   | **Percentage** |
|------------------------------------------------|--------|---------------------------------------|--------|----------------|
|                                           |   | **January                31,**        |   | **Increase**   |
|                                           |   | **2007**                              |   | **2006**       |   | **(Decrease)** |
| Total                Lodging net revenue       |   | $                                     | 32,796 |           | $ | 32,079 |   | 2.2 |   | % |
| Total                Lodging operating expense |   |                                  | 30,757 |           |   | 32,894 |   | (6.5 | ) | % |
| Total                Lodging Reported EBITDA   |   | $                                     | 2,039  |           | $ | (815 | ) | 350.2 |   | % |
|                                           |   |                                  |   |           |   |   |   |   |   |   |
| ADR                                            |   | $                                     | 263.14 |           | $ | 242.67 |   | 8.4 |   | % |
| RevPAR                                         |   | $                                     | 127.41 |           | $ | 109.59 |   | 16.3 |   | % |

|                                           |   | **Six                Months Ended** |   | **Percentage** |
|------------------------------------------------|--------|-------------------------------------|--------|----------------|
|                                           |   | **January                31,**      |   | **Increase**   |
|                                           |   | **2007**                            |   | **2006**       |   | **(Decrease)** |
| Total                Lodging net revenue       |   | $                                   | 73,204 |           | $ | 73,829 |   | (0.8 | ) | % |
| Total                Lodging operating expense |   |                                | 67,106 |           |   | 70,535 |   | (4.9 | ) | % |
| Total                Lodging Reported EBITDA   |   | $                                   | 6,098  |           | $ | 3,294 |   | 85.1 |   | % |
|                                           |   |                                |   |           |   |   |   |   |   |   |
| ADR                                            |   | $                                   | 210.00 |           | $ | 201.00 |   | 4.5 |   | % |
| RevPAR                                         |   | $                                   | 88.62  |           | $ | 83.22 |   | 6.5 |   | % |

***Real      Estate Segment***

|                                                |   | **Three                Months Ended** |     | **Percentage** |
|-----------------------------------------------------|--------|---------------------------------------|----------|----------------|
|                                                |   | **January                31,**        |     | **Increase**   |
|                                                |   | **2007**                              | **2006** | **(Decrease)** |
| Single                family unit sales             |   | $                                     | 1,250    |           | $ | -- |   | N/A |   | % |
| Multi-family                unit sales              |   |                                  | 47,641   |           |   | -- |   | N/A |   | % |
| Developer                land sales                 |   |                                  | 6,489    |           |   | 9,288 |   | (30.1 | ) | % |
| Other                                               |   |                                  | 836      |           |   | 421 |   | 98.6 |   | % |
| Total                Real Estate net revenue        |   |                                  | 56,216   |           |   | 9,709 |   | 479.0 |   | % |
| Total                Real Estate operating expense  |   |                                  | 50,391   |           |   | 6,383 |   | 689.5 |   | % |
| Real                Estate equity investment income |   |                                  | --       |           |   | 31 |   | (100.0 | ) | % |
| Total                Real Estate Reported EBITDA    |   | $                                     | 5,825    |           | $ | 3,357 |   | 73.5 |   | % |

|                                                |   | **Six                Months Ended** |     | **Percentage** |
|-----------------------------------------------------|--------|-------------------------------------|----------|----------------|
|                                                |   | **January                31,**      |     | **Increase**   |
|                                                |   | **2007**                            | **2006** | **(Decrease)** |
| Single                family unit sales             |   | $                                   | 1,250    |           | $ | -- |   | N/A |   | % |
| Multi-family                unit sales              |   |                                | 67,861   |           |   | -- |   | N/A |   | % |
| Developer                land sales                 |   |                                | 11,791   |           |   | 12,568 |   | (6.2 | ) | % |
| Other                                               |   |                                | 2,236    |           |   | 534 |   | 318.7 |   | % |
| Total                Real Estate net revenue        |   |                                | 83,138   |           |   | 13,102 |   | 534.5 |   | % |
| Total                Real Estate operating expense  |   |                                | 76,509   |           |   | 12,452 |   | 514.4 |   | % |
| Real                Estate equity investment income |   |                                | --       |           |   | 100 |   | (100.0 | ) | % |
| Total                Real Estate Reported EBITDA    |   | $                                   | 6,629    |           | $ | 750 |   | 783.9 |   | % |

***Other      Items***

*Depreciation      and amortization*

*Relocation      and separation charges.*

*Mold      remediation credit*

*Investment      income.*

*Interest      expense, net.*

*Gain      on sale of businesses, net*

*Contract      dispute charges*

*Gain      on put option.*

*Income      taxes.*

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

|                                                                         |                                      |    |    | **Three                Months Ended** |   | **Six                Months Ended** |
|------------------------------------------------------------------------------|-------------------------------------------|---------|---------|---------------------------------------|--------|-------------------------------------|
|                                                                         |                                      |    |    | **January                31,**        |   | **January                31,**      |
|                                                                         |                                      |    |    | **2007**                              |   | **2006**                            |   | **2007** |   | **2006** |
| Mountain                Reported EBITDA                                      | $                                         | 113,651 |    |                                  | $      | 97,017                              |   |   | $ | 81,162 |   |   | $ | 65,853 |   |
| Lodging                Reported EBITDA                                       |                                      | 2,039   |    |                                  |   | (815                                | ) |   |   | 6,098 |   |   |   | 3,294 |   |
|                                                                         | Resort                Reported EBITDA     |    | 115,690 |                                  |   |                                | 96,202 |   |   |   | 87,260 |   |   |   | 69,147 |   |
| Real                Estate Reported EBITDA                                   |                                      | 5,825   |    |                                  |   | 3,357                               |   |   |   | 6,629 |   |   |   | 750 |   |
|                                                                         | Total                Reported EBITDA      |    | 121,515 |                                  |   |                                | 99,559 |   |   |   | 93,889 |   |   |   | 69,897 |   |
| Depreciation                and amortization                                 |                                      | (21,759 | )       |                                  |   | (21,431                             | ) |   |   | (43,344 | ) |   |   | (40,354 | ) |
| Relocation                and separation charges                             |                                      | (500    | )       |                                  |   | --                                  |   |   |   | (1,235 | ) |   |   | -- |   |
| Asset                impairment charge                                       |                                      | --      |    |                                  |   | --                                  |   |   |   | -- |   |   |   | (136 | ) |
| Mold                remediation credit                                       |                                      | --      |    |                                  |   | 852                                 |   |   |   | -- |   |   |   | 852 |   |
| Loss                on disposal of fixed assets, net                         |                                      | (10     | )       |                                  |   | (486                                | ) |   |   | (91 | ) |   |   | (726 | ) |
| Investment                income                                             |                                      | 2,417   |    |                                  |   | 1,046                               |   |   |   | 4,481 |   |   |   | 2,234 |   |
| Interest                expense, net                                         |                                      | (7,911  | )       |                                  |   | (9,502                              | ) |   |   | (16,847 | ) |   |   | (18,939 | ) |
| Gain                on sale of businesses, net                               |                                      | --      |    |                                  |   | 4,625                               |   |   |   | -- |   |   |   | 4,625 |   |
| Contract                dispute charges                                      |                                      | (672    | )       |                                  |   | --                                  |   |   |   | (4,276 | ) |   |   | -- |   |
| Gain                on put options                                           |                                      | --      |    |                                  |   | 1,026                               |   |   |   | -- |   |   |   | 34 |   |
| Other                income, net                                             |                                      | --      |    |                                  |   | 51                                  |   |   |   | -- |   |   |   | 51 |   |
| Minority                interest in income of consolidated subsidiaries, net |                                      | (6,152  | )       |                                  |   | (5,231                              | ) |   |   | (4,363 | ) |   |   | (3,305 | ) |
| Income                before provision for income taxes                      |                                      | 86,928  |    |                                  |   | 70,509                              |   |   |   | 28,214 |   |   |   | 14,233 |   |
|                                                                         | Provision                for income taxes |    | (33,902 | )                                     |   |                                | (27,498 | ) |   |   | (11,004 | ) |   |   | (5,551 | ) |
| Net                income                                                    | $                                         | 53,026  |    |                                  | $      | 43,011                              |   |   | $ | 17,210 |   |   | $ | 8,682 |   |

|                                              |   | **January                31,** |
|---------------------------------------------------|--------|--------------------------------|
|                                              |   | **2007**                       |   | **2006** |
| Long-term                debt                     |   | $                              | 551,866 |   | $ | 517,638 |
| Long-term                debt due within one year |   |                           | 440 |   |   | 5,673 |
| Total                debt                         |   |                           | 552,306 |   |   | 523,311 |
| Less:                cash and cash equivalents    |   |                           | 254,866 |   |   | 175,541 |
| Net                debt                           |   | $                              | 297,440 |   | $ | 347,770 |

**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)** |   |
|-------------------------------------------------------|--------|-------------------------------------------------------------|--------|---------|---------------------------------------------------------|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|--------|
| November                  1, 2006 - November 30, 2006 |   |  1,500                                                 |   |  $ |  38.53                                             |   |   |  1,500                                                                                                                                       |   |   |  2,492,700                                                                                                                |   |
| December                  1, 2006 - December 31, 2006 |   | 155,200                                                     |   |    | 44.82                                                   |   |   | 155,200                                                                                                                                           |   |   | 2,337,500                                                                                                                      |   |
| January                  1, 2007 - January 31, 2007   |   | 11,000                                                      |   |    | 44.89                                                   |   |   |  11,000                                                                                                                                      |   |   | 2,326,500                                                                                                                      |   |
| Total                                                 |   | 167,700                                                     |   |  $ | 44.76                                                   |   |   |  167,700                                                                                                                                     |   |   |                                                                                                                           |   |

| (1)   | On                March 9, 2006, the Company's Board of Directors approved the repurchase                of                up to 3,000,000 shares of common stock.  Acquisitions under the                share repurchase program will be made from time to time at prevailing                prices as permitted by applicable laws, and subject to market conditions                and other factors.  The stock repurchase program may be                discontinued at any time. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

|   | Director                           | For        |   Withheld |
|--------|------------------------------------|------------|----------------------|
|   | John                J. Hannan      | 33,879,469 | 3,678,706            |
|   | Roland                A. Hernandez | 36,317,940 | 1,240,235            |
|   | Thomas                D. Hyde      | 37,521,472 | 36,703               |
|   | Robert                A. Katz      | 37,523,456 | 34,719               |
|   | Richard                D. Kincaid  | 37,350,244 | 207,931              |
|   | Joe                R. Micheletto   | 37,323,178 | 234,997              |
|   | John                F. Sorte       | 36,894,762 | 663,413              |
|   | William                P. Stiritz  | 37,508,079 | 50,096               |

|   | For        | Against   | Abstain | Broker                Non-Vote |
|--------|------------|-----------|---------|--------------------------------|
|   | 27,036,870 | 5,286,413 | 25,973  | 5,208,919                      |

|   | For        | Against | Abstain | Broker                Non-Vote |
|--------|------------|---------|---------|--------------------------------|
|   | 37,517,688 | 36,896  | 3,591   | --                             |

**ITEM      5.  OTHER      INFORMATION.**

**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                              | Amended                and Restated 2002 Long Term Incentive and Share Award Plan (incorporated                by reference to Schedule 14A of Vail Resorts, Inc. as filed on November                22, 2006).                                                                                                                                                                                                                                                                                                                                                  |                                          |
| 10.2                              | Separation                Agreement and General Release, dated December 7, 2006 between Martha                D.                Rehm and Vail Resorts, Inc. and Amendment No. 1 thereto dated March                9,                2007 (incorporated by reference to Exhibit 10.2 on Form 10-Q of Vail                Resorts, Inc. for the quarter ended January 31, 2007).                                                                                                                                                                                   |                                          |
| 31.1                              | Certifications                of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                | 17                                            |
| 31.2                              | Certifications                of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley                Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                | 18                                            |
| 32                                | Certifications                of Chief Executive Officer and Chief Financial Officer pursuant to                18                U.S.C. Section 1350 as adopted pursuant to Section 906 of the                Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                        | 19                                            |
| 99.1                              | Description                of Amended and Restated 2002 Long-Term Incentive and Share Award                Plan from                proxy statement for the 2006 Annual Meeting of Stockholders (incorporated                by reference to Exhibit 99.1 on Form 10-Q of Vail Resorts, Inc. for                the                quarter ended January 31, 2007).                                                                                                                                                                                               |                                          |

| 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)            |