Vail Resorts, Inc.'s mountain segment reported a 10.5% increase in fiscal second quarter revenues to $272.0 million from $246.2 million for the comparable quarter last fiscal year. Mountain expense increased $9.2 million, or 6.1%, to $159.9 million. Reported EBITDA for the Mountain segment grew $16.6 million, or 17.1%, to $113.7 million compared to $97.0 million for the comparable quarter last fiscal year.

Total revenue increased $73.0 million, or 25.4%, in the second quarter of fiscal 2007 to $361.0 million from $288.0 million for the comparable quarter last fiscal year. Income from operations for the quarter increased $20.7 million, or 26.9%, to $97.8 million. The company recorded total pre-tax stock-based compensation expense of $1.8 million in the three months ended January 31, 2007, which was relatively flat compared to the three months ended January 31, 2006.

The company reported second quarter fiscal 2007 net income of $53.0 million, or $1.35 per diluted share, compared to net income of $43.0 million, or $1.12 per diluted share, for the same quarter last fiscal year. Excluding stock-based compensation expense, the company's net income for the second quarter of fiscal 2007 would have been $54.1 million, or $1.38 per diluted share compared to net income of $44.1 million excluding stock-based compensation, or $1.15 per diluted share, for the same quarter last fiscal year.


Business Commentary and Outlook

Robert Katz, CEO, commented, “We are very pleased with our strong performance in the second quarter, which clearly exceeded our expectations. The second quarter, which essentially contains the first half of the 2006/2007 ski season, reflected a total Mountain segment revenue increase of 10.5% against record prior year comparables, with lift revenues up 13.4% and the ancillary businesses up commensurately. The lift revenue increase was helped by strong season pass sales, up 20.0% over the prior year (of which we recognized 52.4% in the second quarter, with the remainder to be recognized in the third quarter). Excluding skier visits from season passes, our skier visitation was up 4.8% at our Colorado resorts, reflecting strong destination guest visitation, partially offset by a weather impacted decrease of 6.2% in total skier visits at our Heavenly resort. Effective Ticket Price was up 7.0% excluding the season pass revenue, reflecting our continuing ability to increase absolute prices combined with the favorable mix impact resulting from the increase in destination guest visitation. The increase in destination visitors at our mountain resorts favorably impacted our lodging operations as well, with revenue per available room, or RevPAR, up 16.7% for the quarter on a “same store” basis at our owned lodging properties and condominiums we manage around our mountain resorts. The increased revenues in our Resort business flowed through at a very high rate to the bottom line, resulting in a 20.3% increase in Resort Reported EBITDA. It is certainly a testament to our incredible employee group that we continue to build upon our record success in prior years, while still delivering an exceptional experience to our guests.”

Katz concluded, “With the performance that we have achieved so far this fiscal year, we would like to take this opportunity to update the fiscal 2007 guidance that we previously provided in our fiscal 2006 year-end earnings release and reiterated during our first quarter earnings call. Based on our current estimates, we expect full year Resort Reported EBITDA, the combination of our Mountain and Lodging segments, to range from $211 million to $219 million, and Resort Reported EBITDA excluding stock-based compensation expense to range from $216 million to $224 million. The Resort guidance includes a range for Mountain Reported EBITDA of $193 million to $201 million, and Mountain Reported EBITDA excluding stock-based compensation expense of $197 million to $205 million, while we expect Lodging Reported EBITDA to range from $16 million to $21 million and Lodging Reported EBITDA excluding stock-based compensation expense to range from $17 million to $22 million. Conversely, we are reducing our guidance for Real Estate Reported EBITDA, given the additional unanticipated costs we incurred for our Jackson Hole Golf & Tennis Club development and timing of closings on certain transactions, among other things. As a result, we now expect Real Estate Reported EBITDA to range from zero to negative $5 million and Real Estate Reported EBITDA excluding stock-based compensation expense to range from $2 million to negative $3 million. Finally, based on our current estimates, we expect net income to range from $55 million to $63 million and net income excluding stock-based compensation expense to range from $60 million to $68 million. Also, in the second quarter, we continued our previously announced share repurchase program, resulting in the repurchase of 167,700 shares at an average price of $44.76 for a total amount of $7.5 million. Since inception of this program in fiscal 2006, the Company has repurchased 673,500 shares at an average price of $38.38 for a total amount of approximately $25.8 million, with 2,326,500 shares remaining available under the existing repurchase authorization.”

                                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                   (500)          --
      Mold remediation credit                               --          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                       --        4,625
      Contract dispute charges                            (672)          --
      Gain on put options                                   --        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:
      Basic net income per share                         $1.37        $1.15
      Diluted net income per share                       $1.35        $1.12

    Other Data:
    Mountain Reported EBITDA                          $113,651      $97,017
    Mountain Reported EBITDA excluding
     stock-based compensation                         $114,708      $98,016
    Lodging Reported EBITDA                             $2,039        $(815)
    Lodging Reported EBITDA excluding
     stock-based compensation                           $2,260        $(401)
    Resort Reported EBITDA                            $115,690      $96,202
    Resort Reported EBITDA excluding
     stock-based compensation                         $116,968      $97,615
    Real Estate Reported EBITDA                         $5,825       $3,357
    Real Estate Reported EBITDA excluding
     stock-based compensation                           $6,311       $3,758