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 April 30, 2009 and 2008 for the three and nine 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 or minus segment equity investment income or loss 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. Resort is the combination of the Mountain and Lodging segments.

Mountain Segment

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. The Company's five ski resorts were open for business for the 2008/2009 ski season from mid-November through mid-April, which 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 54% and 52% of Mountain segment net revenue for the three months ended April 30, 2009 and 2008, respectively, and approximately 48% and 47% of Mountain segment net revenue for the nine months ended April 30, 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 2008/2009 ski season, Destination guests comprised approximately 57% of the Company's skier visits, while In-State guests comprised approximately 43% of the Company's skier visits, which compares to approximately 63% and 37%, respectively, for the 2007/2008 ski season.

Destination guests generally purchase the Company's higher-priced lift ticket products and utilize more ancillary services such as ski school, dining and retail/rental. The Company has historically marketed season passes to In-State guests. Given the success of In-State pass products in providing stabilization to lift revenue, 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. Season pass revenue, although primarily collected prior to the ski season, is recognized in the Consolidated Condensed Statement of Operations ratably over the ski season. For the nine months ended April 30, 2009 and 2008 approximately 34% and 26%, respectively, of total lift revenue recognized was comprised of season pass revenue.

The cost structure of ski resort operations is primarily fixed, with variable expenses including, but not limited to, USDA Forest Service ("Forest Service") fees, credit card fees, retail/rental operations, ski school labor and dining operations; as such, profit margins can fluctuate mostly based on the level of revenues.

Lodging Segment

Operations within the Lodging segment include (i) ownership/management of a group of nine luxury hotels through the RockResorts brand, including five proximate to the Company's ski resorts; (ii) 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.

Lodging properties (including managed condominium rooms) at or around the Company's ski resorts, and CME, are closely aligned with the performance of the Mountain segment, particularly with respect to visitation by Destination guests and represented approximately 94% and 91% of Lodging segment revenue for the three months ended April 30, 2009 and 2008, respectively, and 76% and 72% of Lodging segment revenue for the nine months ended April 30, 2009 and 2008, respectively. 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 operating season occurs generally mid-May to mid-October), golf operations and seasonally low operations from the Company's other owned and managed properties.

Real Estate Segment

The Real Estate segment owns and develops real estate in and around the Company's resort communities and 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. Revenue from vertical development projects is not recognized until closing of individual units within a project which generally occurs after substantial completion of the project. Contingent future profits from land sales, if any, are recognized only when received. 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 Mountain and Lodging segments. 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 significant tightening of the credit markets and eroded consumer confidence have continued to have a negative impact on overall trends in the travel and leisure industries. In this environment, the Company realized a 5.3% decrease in overall skier visitation and a 4.3 percentage point decrease in occupancy for the nine months ended April 30, 2009 (which includes the entire 2008/2009 ski season). Additionally, the Company experienced a significant decline in overall guest spending primarily resulting from a decline in Destination guest visitation, especially in ancillary areas such as ski school, dining and retail/rental operations. While the Company anticipates these trends to continue for the remainder of the fiscal year (which primarily includes lodging operations), the Company cannot predict the extent to which these negative trends will continue and the timing and nature of any improvements to the macroeconomic environment and the impact it may have on its future results of operations, in particular on the 2009/2010 ski season.

· In the Spring of 2008, the Company introduced the Epic Season Pass, which contributed to season pass revenue as a percent of total lift revenue increasing from 26% for the 2007/2008 ski season to 34% for the 2008/2009 ski season. In March 2009, the Company began its pass sales campaign for the 2009/2010 ski season, including the Epic Season Pass. As of April 30, 2009, the Company has experienced a significant increase in advance sales of season pass products for the 2009/2010 ski season compared to sales through April 30, 2008 for the 2008/2009 ski season. However, the Company cannot predict if this trend will continue through the Fall 2009 pass sales campaign or the overall impact that season pass sales will have on lift revenue for the 2009/2010 ski season.

· 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 or mix 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. During the nine months ended April 30, 2009 the Company closed on 42 units at Crystal Peak Lodge at Breckenridge ("Crystal Peak Lodge"), seven Lodge at Vail Chalets ("Chalets") and two units at The Arrabelle at Vail Square ("Arrabelle"). As of April 30, 2009, the Company had available for sale three units at Crystal Peak Lodge and had one Lodge at Vail Chalet unit which closed in May 2009.

· The Company has increased risk associated with selling and closing real estate as a result of the continued instability in the capital and credit markets and a slowdown in the overall real estate market. The Company has two real estate projects currently under construction which are scheduled to be completed in the Spring of 2010 (One Ski Hill Place) and the Fall of 2010 (The Ritz-Carlton Residences, Vail). In April 2009, in response to current market conditions, the Company announced a reduction of approximately 20% to the listed selling prices of its Ritz-Carlton Residences, Vail, as well as price reductions of approximately 15% for purchasers currently under contract. The Company cannot predict the ultimate number of units that will close or the ultimate price for which the units will sell.

· The Company had $170.5 million in cash and cash equivalents as of April 30, 2009 with no borrowings under the revolver component of its senior credit facility (the "Credit Facility") and has less than $3.0 million in principal 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 (the Company estimates to incur between $220 million and $240 million subsequent to April 30, 2009 for projects under construction) 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 outflows 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 experienced significant volatility over the past several months which has led to a significant decline in market value of many 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. 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, if market and economic conditions or individual reporting units' business performance deteriorates significantly for a prolonged period, this could necessitate an impairment charge. 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. The Company evaluates the recoverability of indefinite lived intangible assets primarily using the income approach based upon estimated future revenue streams. There are inherent uncertainties related to these factors and management's judgment in applying them to the analysis of goodwill or indefinite lived intangibles impairment. If a more severely prolonged economic downturn were anticipated it could cause less than expected growth and/or reduction in terminal values in the Company's lodging and retail/rental reporting units, and an impairment charge could be reasonably possible in fiscal year 2009 or thereafter. As of April 30, 2009, the Company had a goodwill and indefinite-lived intangible assets balance of $247.6 million, of which $35.4 and $30.5 million is related to its lodging properties (excluding CME) and retail/rental operations, respectively.

RESULTS OF OPERATIONS

Summary

Shown below is a summary of operating results for both the three and nine months
ended April 30, 2009, compared to the three and nine months ended April 30, 2008
(in thousands):

                                                Three Months Ended           Nine Months Ended
                                                     April 30,                   April 30,
                                                2009          2008          2009          2008
  Mountain Reported EBITDA                   $ 133,772     $ 168,617     $ 197,804     $ 249,634
  Lodging Reported EBITDA                        5,908         8,077         8,716         8,204
  Resort Reported EBITDA                       139,680       176,694       206,520       257,838
  Real Estate Reported EBITDA                   (4,722 )         912        40,300         7,802

  Income from operations                     $ 107,580     $ 151,461     $ 164,148     $ 191,827
  Income before provision for income taxes      98,376       141,556       141,420       183,948
  Net income                                 $  61,639     $  87,341     $  87,680     $ 114,047

A discussion of segment results and other items can be found below.

Mountain Segment

Three months ended April 30, 2009 compared to the three months ended April 30, 2008

Mountain segment operating results for the three months ended April 30, 2009 and 2008 are presented by category as follows (in thousands, except effective ticket price ("ETP")):

                                                    Three Months Ended     Percentage
                                                        April 30,           Increase
                                                     2009        2008      (Decrease)
  Lift tickets                                     $ 149,384   $ 167,793     (11.0 ) %
  Ski school                                          36,374      46,229     (21.3 ) %
  Dining                                              24,246      30,344     (20.1 ) %
  Retail/rental                                       48,214      59,533     (19.0 ) %
  Other                                               20,962      21,827      (4.0 ) %
  Total Mountain net revenue                         279,180     325,726     (14.3 ) %
  Total Mountain operating expense                   144,998     157,807      (8.1 ) %
  Mountain equity investment (loss) income, net         (410 )       698    (158.7 ) %
  Total Mountain Reported EBITDA                   $ 133,772   $ 168,617     (20.7 ) %

  Total skier visits                                   3,086       3,391      (9.0 ) %
  ETP                                              $   48.41   $   49.48      (2.2 ) %

Total Mountain Reported EBITDA includes $1.1 million and $1.0 million of stock-based compensation expense for the three months ended April 30, 2009 and 2008, respectively.

Lift revenue decreased $18.4 million, or 11.0%, for the three months ended April 30, 2009 compared to the three months ended April 30, 2008, primarily as a result of a significant decline in lift revenue excluding season pass revenue which was down $27.7 million, or 21.0%, partially offset by an increase in season pass revenue of $9.3 million, or 26.0%. The increase in season pass revenue was driven by higher season pass sales resulting primarily from the introduction of the Epic Season Pass in the 2008/2009 ski season. Additionally, a portion of the decline in lift revenue excluding season pass revenue was caused by a shift in Destination guests purchasing the Epic Season Pass instead of other lift ticket products. Lift revenue (and to a larger degree visitation as discussed below) was also unfavorably impacted by the timing of the beginning of the current year quarter compared to the prior year (the current year quarter began on a Sunday versus the prior year quarter which began on a Friday). Adjusting for the timing of the quarter, lift revenue (and visitation) declines would have been more consistent with the declines experienced for the entire 2008/2009 ski season compared to the prior year discussed below in the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008.

Total skier visitation was down 9.0% in the three months ended April 30, 2009 compared to the same period in the prior year, primarily as a result of decreased visitation from Destination guests as well as the timing of the quarter start as described above. This decline was partially offset by strong season 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. ETP decreased 2.2%, driven by an increase in average season pass holder visitation per pass sold, partially offset by a 1.6% increase in ETP excluding season pass products.

Revenues for the Company's ski school, dining and retail/rental operations, were all negatively impacted by the severe downturn in the economic environment and a decrease in Destination guest visitation and overall spending per guest. Ski school revenue decreased $9.9 million, or 21.3%, in the three months ended April 30, 2009 compared to the same period in the prior year, as ski school revenue is primarily driven by Destination guests. Dining revenue decreased $6.1 million, or 20.1%, in the three months ended April 30, 2009 compared to the same period in the prior year, due to an approximately 15% decrease in the number of total on-mountain food and beverage transactions, coupled with an even greater decline in fine dining. Revenue from retail/rental operations decreased $11.3 million, or 19.0%, in the three months ended April 30, 2009 primarily due to lower sales and rental volumes at the Company's mountain resort stores. Other revenues were favorably impacted by club operations (which increased $1.2 million) due to the opening of the Vail Mountain Club, in November 2008, which partially offset other revenue declines.

Segment operating expenses decreased $12.8 million, or 8.1%, for the three months ended April 30, 2009 compared to the same period in the prior year. Excluding retail/rental expense (which has a high variable cost component and therefore decreased in relation to the retail/rental revenue, with retail/rental revenue down 19.0% and retail/rental expense down 13.1%), operating expense decreased $7.4 million, or 6.4%, for the three months ended April 30, 2009 compared to the three months ended April 30, 2008, which was primarily attributable to lower variable costs related to lower revenue, including Forest Service fees, other resort related fees and credit card fees (which decreased $2.0 million or 11.2%); lower labor and labor-related benefit costs including lower ski school labor expense due to lower ski school revenue (which decreased $5.1 million or 10.5%) and other operating expenses including SG&A (which decreased $0.3 million or 0.7%). Additionally, expenses were also favorably impacted by a cost savings plan implemented in the second quarter ended January 31, 2009, and a company-wide wage reduction plan implemented in April of the third quarter ended April 30, 2009. The 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 4 percentage points for the three months ended April 30, 2009 compared to the same period in the prior year.

Nine months ended April 30, 2009 compared to the nine months ended April 30, 2008

Mountain segment operating results for the nine months ended April 30, 2009 and 2008 are presented by category as follows (in thousands, except ETP):

                                                 Nine Months Ended     Percentage
                                                     April 30,          Increase
                                                 2009        2008      (Decrease)
      Lift tickets                             $ 276,542   $ 301,791      (8.4 ) %
      Ski school                                  65,336      81,384     (19.7 ) %
      Dining                                      48,456      58,002     (16.5 ) %
      Retail/rental                              129,878     149,844     (13.3 ) %
      Other                                       58,235      56,963       2.2  %
      Total Mountain net revenue                 578,447     647,984     (10.7 ) %
      Total Mountain operating expense           382,409     401,942      (4.9 ) %
      Mountain equity investment income, net       1,766       3,592     (50.8 ) %
      Total Mountain Reported EBITDA           $ 197,804   $ 249,634     (20.8 ) %

      Total skier visits                           5,864       6,190      (5.3 ) %
      ETP                                      $   47.16   $   48.75      (3.3 ) %

Total Mountain Reported EBITDA includes $3.4 million and $2.8 million of stock-based compensation expense for the nine months ended April 30, 2009 and 2008, respectively.

Lift revenue decreased $25.2 million, or 8.4%, for the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008, primarily as a result of a significant decline in lift revenue excluding season pass revenue which was down $42.1 million, or 18.8%, partially offset by an increase in season pass revenue of $16.9 million, or 21.8%. The increase in season pass revenue was driven by higher season pass sales resulting primarily from the introduction of the Epic Season Pass in the 2008/2009 ski season. Additionally, a portion of the decline in lift revenue excluding season pass revenue was caused by a shift in Destination guests purchasing the Epic Season Pass instead of other lift ticket products.

Total skier visitation was down 5.3% in the nine months ended April 30, 2009 compared to the same period in the prior year, primarily as a result of decreased visitation from Destination guests. This decline was partially offset by strong season 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. ETP decreased 3.3%, driven by an increase in average season pass holder visitation per pass sold, partially offset by a 2.8% increase in ETP excluding season pass products.

Revenues for the Company's ski school, dining and retail/rental operations, were all negatively impacted by the severe downturn in the economic environment and a decrease in Destination guest visitation and overall spending per guest. Ski school revenue decreased $16.1 million, or 19.7%, in the nine months ended April 30, 2009 compared to the same period in the prior year, as ski school revenue is primarily driven by Destination guests. Dining revenue decreased $9.6 million, or 16.5%, in the nine months ended April 30, 2009 compared to the same period in the prior year, due to an approximately 11% decrease in the number of total on-mountain food and beverage transactions, coupled with an even greater decline in fine dining. Revenue from retail/rental operations decreased $20.0 million, or 13.3%, in the nine months ended April 30, 2009 primarily due to lower sales and rental volumes at the Company's mountain resort stores. For the nine months ended April 30, 2009 other revenues increased $1.3 million, or 2.2%, primarily due to club operations (which increased $2.8 million) resulting from the opening of the Vail Mountain Club in November 2008.

Segment operating expenses decreased $19.5 million, or 4.9%, for the nine months ended April 30, 2009 compared to the same period in the prior year. Excluding retail/rental expense (which has a high variable cost component and therefore decreased in relation to the retail/rental revenue, with retail/rental revenue down 13.3% and retail/rental expense down 8.3%), operating expense decreased $9.9 million, or 3.5%, for the nine months ended April 30, 2009 compared to the nine months ended April 30, 2008, which was primarily attributable to lower variable costs related to lower revenue, including Forest Service fees, other resort related fees and credit card fees (which decreased $2.8 million or 8.8%); lower labor and labor-related benefit costs including lower ski school labor expense due to lower ski school revenue (which decreased $6.3 million or 6.1%) and other operating expenses including SG&A (which decreased $0.7 million or 0.5%). Additionally, expenses were also favorably impacted by a cost savings plan implemented in the second quarter ended January 31, 2009, and a . . .