Vail Resorts Announces Fiscal 2005 Third Quarter and First Nine-Months Results

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. October 14, 2008

VAIL, CO, June 9, 2005. Vail Resorts Announces Fiscal 2005 Third QuThe Company uses the term "Reported EBITDA" when reporting financial results. The Company defines Reported EBITDA for the Mountain, Lodging and Resort (the combination of mountain and lodging) segments as segment net revenue less segment operating expense plus segment equity investment income or loss. The Company defines Reported EBITDA for the Real Estate segment as segment net revenue less segment operating expense plus gain on transfer of property plus segment equity investment income or loss. See reconciliation of non-GAAP measures included in this release.

THIRD QUARTER PERFORMANCE

Mountain revenue for the third quarter of fiscal 2005 was $256.8 million, a 10.0% increase from $233.4 million for the comparable period last year. Mountain expense increased $6.5 million, or 5.2%, from $125.9 million to $132.4 million.

Lodging revenue for the quarter grew $5.4 million, or 10.6%, from $50.9 million to $56.3 million. Lodging expense increased $3.7 million, or 9.4%, from $39.5 million to $43.2 million.

Resort revenue, the combination of mountain and lodging revenues, rose $28.8 million, or 10.1%, from $284.3 million to $313.1 million. Resort expense increased 6.2% from $165.4 million to $175.6 million, up $10.2 million.

Real Estate revenue for the quarter rose $10.1 million to $14.3 million. Real Estate expense increased $24.8 million to $16.2 million due primarily to the relief of a $15.1 million capital improvement fee liability in the third quarter of fiscal 2004. The elimination of the liability and corresponding reduction in real estate operating expense resulted from the third quarter 2004 payoff of the outstanding Smith Creek Metropolitan District bonds by the Bachelor Gulch Metropolitan District.

Total revenue grew $39.0 million, or 13.5%, from $288.5 million to $327.5 million and total segment operating expense increased $34.8 million, or 22.2%, from $156.9 million to $191.7 million.

Income from operations for the quarter was $109.1 million versus $109.2 million for the same period last year. Included in the third quarter of fiscal 2005 was a $1.6 million asset impairment charge associated with the

call option on RockResorts which was determined to have no value after the put option was settled in May 2005. Vail Resorts now owns 100% of RockResorts.

Reported EBITDA for the Mountain segment grew $16.8 million, or 15.5%, to $124.9 million compared to $108.1 million for the comparable period last year.

Reported EBITDA for the Lodging segment improved from $12.0 million in the third quarter of last year to $13.1 million in the current year third quarter, a 9.2% increase. Included in the third quarter of fiscal 2004 was equity investment income of $0.6 million associated with the Bachelor Gulch Resort, LLC ("BG Resort"), the entity which owned the Ritz-Carlton, Bachelor Gulch. In December 2004 the Company sold its 49% interest in BG Resort.

Third quarter Resort Reported EBITDA rose $17.9 million to $138.0 million, a 14.9% improvement over the $120.1 million reported for the comparable period last year.

Real Estate Reported EBITDA for the quarter fell $15.1 million to negative $1.9 million from positive $13.2 million last year, primarily due to the prior year relief of the $15.1 million capital improvement fee liability described above.

The Company reported third quarter fiscal 2005 net income of $58.8 million, or $1.61 per diluted share, compared to net income of $62.5 million, or $1.77 per diluted share, for the same period last year.

NINE-MONTH PERFORMANCE

Mountain revenue for the nine months ended April 30, 2005 was $505.5 million, an 8.2%, or $38.5 million, increase from $467.0 million for the comparable period last year. Mountain expense increased $16.5 million, or 5.3%, from $312.7 million to $329.2 million.

Lodging revenue for the nine months grew $11.2 million, or 8.4%, from $133.9 million to $145.1 million. Lodging expense increased $6.7 million, or 5.6%, from $120.6 million to $127.3 million.

Resort revenue, the combination of Mountain and Lodging revenues, rose $49.7 million, or 8.3%, from $600.9 million to $650.6 million. Resort expense increased 5.4% to $456.5 million, up $23.2 million from the comparable period last year.

Real Estate revenue for the nine-month period rose $0.7 million from $38.6 million last year to $39.3 million this year. Real Estate expense increased $23.3 million from $9.6 million last year to $32.9 million this year due primarily to the prior year relief of the $15.1 million capital improvement fee liability described above. Included in the nine-month Real Estate revenue for fiscal 2005 is $2.5 million of previously deferred land sale revenue associated with the December 2004 sale of the Company's investment in BG Resort.

Total revenue grew $50.5 million, or 7.9%, to $690.0 million up from $639.5 million last year, and total segment operating expense increased $46.5 million, or 10.5%, to $489.4 million up from $442.9 million last year.

Income from operations for the nine months improved $2.7 million, or 2.2%, to $128.1 million compared to $125.4 million for the same period last year. Included in the first nine months of fiscal 2004 was a $5.5 million mold remediation charge associated with an employee housing facility.

Reported EBITDA for the Mountain segment improved $22.8 million, or 14.7%, to $178.3 million compared to $155.5 million for the comparable period last year.

Reported EBITDA for the Lodging segment improved from $11.0 million for the nine-month period last year to $15.2 million in the current year, a 38.2% improvement. Included in the nine months of fiscal 2005 and fiscal 2004 was an equity investment loss of $2.7 million and $2.2 million, respectively, associated with BG Resort. The Company sold its 49% interest in BG Resort in December 2004.

Resort Reported EBITDA rose $27.0 million to $193.5 million, a 16.2% improvement over the $166.5 million reported for the nine-month period last year.

Real Estate Reported EBITDA for the nine months decreased $25.5 million, as expected, to $6.3 million from $31.8 million for the same period a year ago primarily due to the prior year relief of the $15.1 million capital improvement fee liability described above.

Reported net income for the nine months of fiscal 2005 was $59.6 million, or $1.65 per diluted share, compared to net income of $30.3 million, or $0.86 per diluted share, for the same period last year.

Excluding the $5.7 million gain on sale of equity investment in fiscal 2005, the charges for early extinguishment of debt in both fiscal years, and the fiscal 2004 mold remediation charge, and using a normalized tax rate, the Company's nine month net income would have been $55.1 million, or $1.53 per diluted share, for fiscal 2005, a 5.8% improvement as compared to net income of $52.1 million, or $1.48 per diluted share, in fiscal 2004.

Adam Aron, Vail Resorts Chairman and Chief Executive Officer, commented, "This is one of those quarters where the numbers comprising the success of Vail Resorts operating performance literally speak for themselves."

He said, "In the February, March and April peak months of the 2004-2005 ski season, Vail Resorts generated year-over-year third quarter revenue growth of 10% and Reported EBITDA growth of 16% in our Mountain segment. Skier visits at our five resorts grew 8.5%, and we experienced a 3.6% increase in average realized lift ticket prices. For the entire ski season, Beaver Creek and Heavenly both had record skier visits for the third consecutive year, Breckenridge also had its best visitation year ever, and four of our five mountain resorts (Vail, Breckenridge, Heavenly and Keystone) each catered to over one million skier visits."

He added, "Lodging segment results also generated an 11% increase in revenue and a 9% increase in Reported EBITDA for the quarter. The increase was primarily driven by growth in both occupancies and average daily rates at a majority of our owned hotels. In addition, as to our previously articulated strategy to alter the balance from owning fewer to managing more of our hotel properties, in May we entered into a contract to sell the Vail Marriott at a favorable valuation, while maintaining a long-term 15-year management contract on the hotel. We also continue to receive and evaluate offers from third parties to acquire certain of our remaining owned hotels while we retain management.

"Turning to our real estate business, it has performed financially as expected thus far in fiscal 2005. More importantly, the redevelopment of Vail's New Dawn has begun in earnest. We have now closed on all of the 114 deeded parking spaces in the new $100,000 per space garage in Vail Village. We have also successfully converted from deposited reservation to binding contracts on all 67 condominiums at The Arrabelle at Vail Square. Similarly, we have signed contracts on all 16 of the Gore Creek residences. Based on achieving current construction cost estimates, we estimate that taken together The Arrabelle and Gore Creek Place projects will generate approximately $80 to $92 million in income, before provision for taxes and before allocated corporate or Vail Resorts Development Company overhead, which is likely to be recorded upon completion of construction between the summer of 2006 and the fall of 2007. In a separate press release issued today, we also announced we will be seeking approvals from the Town of Vail and U.S. Forest Service for the next project of Vail's New Dawn. 'The Ritz-Carlton Residences, Vail' are to be located immediately adjacent to the Vail Marriott. We have every reason to expect this new luxury condominium project next to a proposed new base village high-speed lift will be both a lucrative real estate development effort for us and give Vail visitors an attractive fifth access portal to Vail Mountain," continued Aron.

Aron further added, "Based on the results announced today, Resort Reported EBITDA is already $27.0 million favorable to last year through the third quarter, with three months remaining in fiscal 2005. The mid-point of our previously announced full-year guidance range contemplated an $11.4 million year-over-year increase in Resort Reported EBITDA for the entire twelve months. While we do expect a portion of the year-to-date favorable variance to reverse itself in the fourth quarter, we nonetheless believe it is prudent to increase our earnings guidance ranges at this time. As such, we currently expect Vail Resorts full-year Fiscal 2005 Resort Reported EBITDA to range between $160 and $166 million. We expect Real Estate Reported EBITDA to remain at the previously announced range of $10 to $16 million. The Company now expects to report a net income for the year ranging from approximately $22 to $29 million."