The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended July 31, 2008 ("Form 10-K") and the Consolidated Condensed Financial Statements as of January 31, 2009 and 2008 for the three and six months then ended, included in Part I, Item 1 of this Form 10-Q, which provide additional information regarding the financial position, results of operations and cash flows of the Company. To the extent that the following Management's Discussion and Analysis contains statements which are not of a historical nature, such statements are forward-looking statements which involve risks and uncertainties. These risks include, but are not limited to those discussed in this Form 10-Q and in the Company's other filings with the Securities and Exchange Commission ("SEC"), including the risks described in Item 1A "Risk Factors" of Part I of the Form 10-K.

Management's Discussion and Analysis includes discussion of financial performance within each of the Company's segments. The Company has chosen to specifically include, Reported EBITDA (defined as segment net revenue less segment operating expense, plus segment equity investment income and for the Real Estate segment plus gain on sale of real property) and Net Debt (defined as long-term debt plus long-term debt due within one year less cash and cash equivalents), in the following discussion because management considers these measurements to be significant indications of the Company's financial performance and available capital resources. Reported EBITDA and Net Debt are not measures of financial performance or liquidity under accounting principles generally accepted in the United States of America ("GAAP"). The Company utilizes Reported EBITDA in evaluating performance of the Company and in allocating resources to its segments. Refer to the end of the Results of Operations section for a reconciliation of Reported EBITDA to net income. Management also believes that Net Debt is an important measurement as it is an indicator of the Company's ability to obtain additional capital resources for its future cash needs. Refer to the end of the Results of Operations section for a reconciliation of Net Debt.

Items excluded from Reported EBITDA and Net Debt are significant components in understanding and assessing financial performance or liquidity. Reported EBITDA and Net Debt should not be considered in isolation or as an alternative to, or substitute for, net income, net change in cash and cash equivalents or other financial statement data presented in the Consolidated Condensed Financial Statements as indicators of financial performance or liquidity. Because Reported EBITDA and Net Debt are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations, Reported EBITDA and Net Debt as presented may not be comparable to other similarly titled measures of other companies.

OVERVIEW

The Company's operations are grouped into three integrated and interdependent segments: Mountain, Lodging and Real Estate. The Mountain segment is comprised of the operations of five ski resort properties as well as ancillary businesses, primarily including ski school, dining and retail/rental operations. Mountain segment revenue is seasonal in nature, the majority of which is earned in the Company's second and third fiscal quarters. Operations within the Lodging segment include (i) ownership/management of a group of nine luxury hotels through the RockResorts International, LLC ("RockResorts") brand, including five proximate to the Company's ski resorts; (ii) the ownership/management of non-RockResorts branded hotels and condominiums proximate to the Company's ski resorts; (iii) Grand Teton Lodge Company ("GTLC"); (iv) Colorado Mountain Express ("CME"), a resort ground transportation company acquired in November 2008; and (v) golf courses. The Resort segment is the combination of the Mountain and Lodging segments. The Real Estate segment owns and develops real estate in and around the Company's resort communities.

The Company's five ski resorts opened for business for the 2008/2009 ski season in November, which fell in the Company's second fiscal quarter; the period during which the ski resorts are open (generally November through April) is the peak operating season for the Mountain segment. The Company's single largest source of Mountain segment revenue is the sale of lift tickets (including season passes), which represented approximately 49% and 48% of Mountain segment net revenue for the three months ended January 31, 2009 and 2008, respectively. Lift ticket revenue is driven by volume and pricing. Pricing is impacted by both absolute pricing as well as the demographic mix of guests, which impacts the price points at which various products are purchased. The demographic mix of guests is divided into two primary categories: 1) out-of-state and international guests ("Destination") and 2) in-state and local visitors ("In-State"). For the three months ended January 31, 2009, Destination guests comprised approximately 52% of the Company's skier visits, while In-State guests comprised approximately 48% of the Company's skier visits, which compares to approximately 59% and 41%, respectively, for the three months ended January 31, 2008. Destination guests generally purchase the Company's higher-priced lift ticket products and utilize more ancillary services such as ski school, lodging and retail/rental. Destination guests are less likely to be impacted by changes in the weather, due to the advance planning required for their trip, but can be impacted by the economy and the global geopolitical climate. In-State guests tend to be more weather-sensitive and value-oriented; to address this, the Company markets season passes to In-State guests. Given the success of In-State pass products in providing stabilization to lift revenue from In-State guests, the Company introduced a new season pass product (the "Epic Season Pass") for the 2008/2009 ski season, primarily marketed to its Destination guests (and also available to In-State guests) allowing pass holders unlimited and unrestricted access to all five ski resorts during the 2008/2009 ski season. The Company's season pass products are sold generally prior to the start of the ski season. For the three months ended January 31, 2009 and January 31, 2008, approximately 39% and 31%, respectively, of the total lift revenue recognized was comprised of season pass revenue (of which revenue recognized represents approximately 52% and 54%, respectively, of total season pass sales; the remaining season pass sales are recognized as lift ticket revenue in the Company's third fiscal quarter). The cost structure of ski resort operations is largely fixed (with the exception of certain variable expenses including USDA Forest Service ("Forest Service") fees, credit card fees, retail/rental operations, ski school labor and dining operations); as such, profit margins can fluctuate based on the level of revenues.

Lodging properties (including CME) at or around the Company's ski resorts represented approximately 93% and 87% of Lodging segment revenue for the three months ended January 31, 2009 and 2008, respectively, and are closely aligned with the performance of the Mountain segment, particularly with respect to visitation by Destination guests. Revenue generated through management fees is based upon the revenue of managed individual hotel properties within the lodging portfolio, and to the extent that these managed properties are not proximate to ski resorts, the seasonality of those hotels more closely resembles the seasonality and trends within their geographical region and the overall travel industry. Revenue of the Lodging segment during the Company's first and fourth fiscal quarters is generated primarily by the operations of GTLC (as GTLC's peak operating season occurs during the summer months), as well as golf operations and seasonally low operations from the Company's other owned and managed properties.

The Company's Real Estate segment primarily engages in the vertical development of projects, as well as the sale of land to third-party developers, which often includes a contingent revenue structure based on the ultimate sale of the developed units. The Company attempts to mitigate the risk of vertical development by often utilizing guaranteed maximum price construction contracts (although certain construction costs may not be covered by contractual limitations), pre-selling all or a portion of the project, requiring significant non-refundable deposits, and potentially obtaining non-recourse financing for certain projects. The Company's real estate development projects also may result in the creation of certain resort assets that provide additional benefit to the Resort (Mountain and Lodging) segment. The Company's Real Estate revenue and associated expense fluctuate based upon the timing of closings and the type of real estate being sold, causing volatility in Real Estate operating results from period to period.

Recent Trends, Risks and Uncertainties

Together with those risk factors identified in the Company's Form 10-K, the Company's management has identified the following important factors (as well as risks and uncertainties associated with such factors) that could impact the Company's future financial performance or condition:

· The economic recession currently affecting the U.S. and the global economy, the current global credit crisis and eroded consumer confidence has continued to have a negative impact on overall trends in the travel and leisure industries. Consequently, although overall visitation to the Company's resorts remained relatively flat in the three months ended January 31, 2009 compared to the same period in the prior year, the Company experienced a significant decline in Destination guest visitation and overall guest spending, especially in ancillary areas such as ski school, dining and retail/rental operations. Additionally, the Company continues to experience a significant decline in reservations from Destination guests as compared to the same period in the prior year. Booking trends have also changed such that bookings are now much closer to the actual date of stay when compared to the same period in the prior year. In an attempt to mitigate the impact of the current environment, the Company has offered various discounts, promotions and incentives in areas such as lodging, ski school and retail/rental operations. The Company cannot predict the ultimate impact this will have on its visitation and results of operations for the remaining 2008/2009 ski season, depending upon whether these trends continue, worsen or improve within the macroeconomic environment.

· A large portion of the Mountain segment operating expenses are fixed costs (with the exception of certain variable expenses including Forest Service fees, other resort related fees, credit card fees, retail/rental operations, ski school labor and dining operations) which could negatively impact the Company's results of operations and cash flows if there is a significant decline in the level of revenues. In response to anticipated lower revenue streams during the three months ended January 31, 2009, the Company has implemented a cost savings plan which includes the elimination of certain positions, not filling vacant positions, a reduction in employee benefits and reductions in other general and administration expenses. However, due to the large fixed cost structure of the Mountain segment operations, these cost saving initiatives are not anticipated to offset the declining revenue trends the Company is currently experiencing.

· The timing and amount of snowfall as well as the economic environment 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 guests, who are the most weather sensitive visitors to the Company's ski resorts, and for the first time introduced the Epic Season Pass, primarily marketed to Destination guests whose visitation is more dependent on the overall economy, other vacation options and to a lesser degree the weather. The Company cannot predict the overall impact the Epic Season Pass will have on overall lift revenue and effective ticket price ("ETP"). Season pass revenue, although primarily collected prior to the ski season, is recognized in the Consolidated Condensed Statements of Operations throughout the ski season. Total season pass sales (including the Epic Season Pass) increased by $17.1 million as of January 31, 2009 for the 2008/2009 ski season over total season pass sales for the entire 2007/2008 ski season. Deferred revenue related to season pass sales was $45.9 million as of January 31, 2009 (compared to $36.5 million as of January 31, 2008) which will be recognized as lift revenue during the Company's third fiscal quarter ending April 30, 2009.

· Real Estate Reported EBITDA is highly dependent on, among other things, the timing of closings on real estate under contract, which determines when revenue and associated cost of sales is recognized. Changes to the anticipated timing of closing on one or more real estate projects, or unit closings within a real estate project, could materially impact Real Estate Reported EBITDA for a particular quarter or fiscal year. For example, the Company closed on 42 of the 45 units at Crystal Peak Lodge at Breckenridge ("Crystal Peak Lodge") during the six months ended January 31, 2009 and has the remaining three condominium units held for sale. The Company closed on seven Lodge at Vail Chalets ("Chalets") during the six months ended January 31, 2009, and expects to close on the remaining Chalet during the year ending July 31, 2009 upon final completion. The Company closed one unit at The Arrabelle at Vail Square ("Arrabelle") during the six months ended January 31, 2009, and expects to close on the one remaining unit in the year ending July 31, 2009.

· The Company has other real estate projects across its resorts under development and in the planning stage. While the current instability in the capital markets and slowdown in the national real estate market have not, to date, materially impacted the Company's Real Estate segment operating results, the Company does have increased risk associated with the selling and/or closing of its real estate under development as a result of the current economic climate. However, the Company believes that its current capital structure is sufficient to absorb any potential delay in the timing of receipt of anticipated proceeds to be generated from projects under development. The Company has two real estate projects currently under construction, which are scheduled to close in the Spring of 2010 (One Ski Hill Place) and the Fall of 2010 (The Ritz-Carlton Residences, Vail). The Company expects to incur between $280 million to $300 million of remaining developments costs subsequent to January 31, 2009 on these development projects.

· The Company had $139.2 million in cash and cash equivalents as of January 31, 2009 with no borrowings under the revolver component of its Credit Facility and has less than $3.0 million in principle maturities due through the year ending July 31, 2013. However, the potential impact of a sustained economic recession combined with the Company's plan to self-fund its current real estate under development could cause a decline in future cash being generated from operating activities potentially requiring the Company to borrow under the revolver component of its Credit Facility from time to time. The Company believes it has more than adequate availability under its revolver to support any such potential borrowing needs. Additionally, the Company does have the ability to manage its cash out flows to some extent by adjusting its discretionary capital expenditures and the timing of new real estate development projects.

· The U.S. stock and credit markets have recently experienced significant volatility which has led to a significant decline in market value of companies in the travel and leisure industry, including the Company. The Company's market capitalization has generally been higher than its shareholders' equity or book value during this period. Under GAAP, the Company is required to test goodwill for impairment annually and the Company does so during the fourth quarter of each fiscal year, as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of the Company's goodwill or indefinite lived intangible assets below book value. At this time the Company does not believe there have been any events or circumstances that would require it to perform an interim goodwill and/or indefinite lived intangible asset impairment analysis. However, due to the ongoing uncertainty in the market conditions and the economy, which may further negatively impact the performance of the Company's reporting units, the Company will continue to monitor and evaluate the carrying values of its goodwill and indefinite lived intangible assets. If market and economic conditions or individual reporting units' business performance deteriorates significantly, this could necessitate an interim impairment analysis. The Company evaluates the recoverability of goodwill by estimating the future discounted cash flows of the reporting units and terminal values of the businesses to which the goodwill relates. In determining the estimated future cash flows, the Company considers current and projected future levels of income as well as business trends, prospects and market and economic conditions. There are inherent uncertainties related to these factors and management's judgment in applying them to the analysis of goodwill impairment. If a prolonged economic downturn were to cause less than anticipated growth in the Company's lodging reporting units, an impairment could be reasonably possible. Any such impairment could result in a goodwill impairment charge in fiscal year 2009 or thereafter. As of January 31, 2009, the Company had a goodwill and indefinite-lived intangible assets balance of $240.3 million, of which $35.4 million is related to its lodging properties.

· On November 1, 2008, the Company closed its transaction to acquire CME, for a total consideration of $38.3 million, as well as $0.9 million to reimburse the seller for certain new capital expenditures as provided for in the acquisition agreement. The operating results of CME are reported within the Lodging segment beginning with the three months ended January 31, 2009.

RESULTS OF OPERATIONS

Summary

Shown below is a summary of operating results for both the three and six months
ended January 31, 2009, compared to the three and six months ended January 31,
2008 (in thousands):

                                              Three Months Ended           Six Months Ended
                                                  January 31,                January 31,
                                              2009          2008          2009          2008
Mountain Reported EBITDA                   $ 103,462     $ 117,460     $  64,032     $ 81,017
Lodging Reported EBITDA                        2,453        (1,955 )       2,808          126
Resort Reported EBITDA                       105,915       115,505        66,840       81,143
Real Estate Reported EBITDA                   29,649         1,771        45,022        6,891
Total Reported EBITDA                        135,564       117,276       111,862       88,034
Income before provision for income taxes      96,957        83,072        43,044       42,391
Net income                                 $  60,545     $  51,319     $  26,041     $ 26,706

The six months ended January 31, 2008 income before provision for income taxes includes an $11.9 million contract dispute credit, net. A further discussion of segment results and other items can be found below.

Mountain Segment

Mountain segment operating results for the three and six months ended January
31, 2009 and 2008 are presented by category as follows (in thousands, except
effective ticket price ("ETP")):

                                                 Three Months Ended     Percentage
                                                    January 31,          Increase
                                                  2009        2008      (Decrease)
      Lift tickets                              $ 127,158   $ 133,998      (5.1 ) %
      Ski school                                   28,962      35,155     (17.6 ) %
      Dining                                       20,281      22,895     (11.4 ) %
      Retail/rental                                59,238      66,771     (11.3 ) %
      Other                                        22,850      20,903       9.3   %
      Total Mountain net revenue                  258,489     279,722      (7.6 ) %
      Total Mountain operating expense            156,188     163,188      (4.3 ) %
      Mountain equity investment income, net        1,161         926      25.4   %
      Total Mountain Reported EBITDA            $ 103,462   $ 117,460     (11.9 ) %

      Total skier visits                            2,778       2,799      (0.8 ) %
      ETP                                       $   45.77   $   47.87      (4.4 ) %

Total Mountain Reported EBITDA includes $1.1 million and $0.8 million of stock-based compensation expense for the three months ended January 31, 2009 and 2008, respectively.

                                                 Six Months Ended      Percentage
                                                    January 31,         Increase
                                                 2009        2008      (Decrease)
      Lift tickets                             $ 127,158   $ 133,998      (5.1 ) %
      Ski school                                  28,962      35,155     (17.6 ) %
      Dining                                      24,210      27,658     (12.5 ) %
      Retail/rental                               81,664      90,311      (9.6 ) %
      Other                                       37,273      35,136       6.1   %
      Total Mountain net revenue                 299,267     322,258      (7.1 ) %
      Total Mountain operating expense           237,411     244,136      (2.8 ) %
      Mountain equity investment income, net       2,176       2,895     (24.8 ) %
      Total Mountain Reported EBITDA           $  64,032   $  81,017     (21.0 ) %

      Total skier visits                           2,778       2,799      (0.8 ) %
      ETP                                      $   45.77   $   47.87      (4.4 ) %

Total Mountain Reported EBITDA includes $2.3 million and $1.9 million of stock-based compensation expense for the six months ended January 31, 2009 and 2008, respectively.

As the Company's five ski resorts opened during the Company's second fiscal quarter, the results of the six months ended January 31, 2009 and 2008 are driven by substantially the same factors and trends as the three months ended January 31, 2009 and 2008.

Lift revenues decreased $6.8 million, or 5.1%, for the three months ended January 31, 2009 compared to the same period in the prior year, reflecting a significant decline in lift revenue excluding season pass revenue (including a shift of certain Destination based visitors to the new Epic Season Pass product) due to the current downturn in the economy, partially offset by a significant increase in season pass sales, a portion of which was recorded as revenue in the second quarter. Total skier visitation, which was down 0.8%, and to a lesser degree total lift revenue was favorably impacted by the timing of the current year quarter end compared to the prior year (the current year quarter ended on a Saturday versus the prior year quarter which ended on a Thursday). Additionally, visitation was favorably improved by overall strong pass holder visitation, especially from the new Epic Season Pass holders, who on average skied more in the current year per pass than holders of our other pass products. Season pass revenue recorded for the three months ended January 31, 2009, was $49.2 million, a $7.6 million, or 18.2%, increase over the same period in the prior year, driven by higher season pass sales resulting primarily from the introduction of the Epic Season Pass in the 2008/2009 ski season. Lift revenue excluding season pass revenue decreased $14.4 million, or 15.6%, driven by a 19.3% decrease in skier visits excluding season pass holders, which primarily occurred during the non-holiday periods. ETP decreased 4.4%, driven by an increase in average season pass holder visitation per pass sold, partially offset by a 4.6% increase in ETP excluding season pass products. Effective pass price actually increased by 8.4%; however, since the number of pass visits increased significantly, overall ETP was negatively impacted.

Revenues for the Company's ski school, dining and retail/rental operations, were all negatively impacted by the current downturn in the economic environment and a decrease in Destination guest visitation and overall spending per guest. Ski school revenue decreased $6.2 million, or 17.6%, in the three months ended January 31, 2009 compared to the same period in the prior year, as ski school revenue is primarily driven by Destination guests. Dining revenue decreased $2.6 million, or 11.4%, in the three months ended January 31, 2009 compared to the same period in the prior year, due to a 6.6% decrease in the number of total on-mountain food and beverage transactions, coupled with a greater decline in overall fine dining. Revenue from retail/rental operations decreased $7.5 million, or 11.3%, primarily due to lower sales and rental volumes at the Company's mountain resort stores. Other revenues increased $1.9 million, or 9.3%, primarily due to the opening (November 2008) of the Vail Mountain Club.

Segment expenses decreased $7.0 million, or 4.3%, for the three months ended January 31, 2009 compared to the same period in the prior year, driven by lower cost of sales commensurate with lower retail/rental sales and a decrease in other variable expenses including Forest Service fees, credit card fees, ski school labor and dining operations. However, decreases in operating expenses were not enough to offset the declines in segment revenues resulting in lower flow through of revenue to Mountain Reported EBITDA of approximately 2 percentage points for the three months ended January 31, 2009 compared to the same period in the prior year.

Lodging Segment

Lodging segment operating results for the three and six months ended January 31,
2009 and 2008 are presented by category as follows (in thousands, except average
daily rates ("ADR") and revenue per available room ("RevPAR")):

                                             Three Months Ended      Percentage
                                                January 31,           Increase
                                              2009         2008      (Decrease)
         Total Lodging net revenue          $   41,150   $ 34,827       18.2   %
         Total Lodging operating expense        38,697     36,782        5.2   %
         Total Lodging Reported EBITDA      $    2,453   $ (1,955 )    225.5   %

ADR $ 286.93 $ 290.21 (1.1 ) % RevPAR $ 123.64 $ 137.13 (9.8 ) %

Total Lodging Reported EBITDA includes $0.5 million and $0.3 million of stock-based compensation expense for the three months ended January 31, 2009 and 2008, respectively.

                                              Six Months Ended      Percentage
                                                January 31,          Increase
                                              2009        2008      (Decrease)
          Total Lodging net revenue          $ 86,403   $ 78,144       10.6   %
          Total Lodging operating expense      83,595     78,018        7.1   %
          Total Lodging Reported EBITDA      $  2,808   $    126    2,128.6   %

          ADR                                $ 226.73   $ 223.91        1.3   %
          RevPAR                             $  91.76   $  97.66       (6.0 ) %

Total Lodging Reported EBITDA includes $0.9 million and $0.6 million of . . .