Good morning, ladies and gentlemen, and thank you for standing by. Welcome to Vail Resorts Fiscal 2008 First Quarter Earnings Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. [Operator Instructions]. This conference is being recorded Monday, December 10, 2007. I would now like to turn the conference over to Rob Katz, Chief Executive Officer of Vail Resorts. Please go ahead, sir.

Thank you, operator. Good morning everyone. Welcome to the Vail Resorts fiscal 2008 first quarter earnings conference call and simultaneous webcast, both open to the public and press at large. I'm Rob Katz, Chief Executive Officer of Vail Resorts. Joining me on the call this morning is Jeff Jones, our Chief Financial Officer. Earlier this morning, we released our earnings for the first quarter ended October 31st, 2007. Before we review those results, I would like to remind you that we are using the terms for reported EBITDA and reported EBITDA excluding stock-based compensation to report earnings for each our operating segments;, Mountain Lodging and Resorts, which is the combination of the Mountain Lodging segments and Real Estate. Complete reconciliations of reported EBITDA, reported EBITDA excluding stock-based compensation and other non-GAAP financial measures can be found in this morning's earnings release and on the vailresorts.com website in the Investor Relations section under the quarterly and annual results tab. I also need to mention that comments made during this conference call other than statements of historical facts are forward-looking statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Certain risks and uncertainties could cause actual results to differ materially from those contained in the forward-looking statements. Investors are directed to the risks and uncertainties described in the documents filed by the company with the Securities and Exchange Commission, including the company's Form 10-K for the fiscal year ended July 31, 2007 and Form 10-Q for the first quarter fiscal 2008. In addition, the Safe Harbor language in today's press release also applies to our comments on this call. All guidance and forward-looking statements made on this call are made as of the date hereof and we do not undertake any obligation…

Thank you, Rob, and good morning everyone. As Rob mentioned earlier this morning, we released our earnings for our first fiscal quarter ended October 31, 2007. Also this morning, we filed our Form 10-Q for the first quarter. I would now like to take you through some of the highlights of our results. In our Mountain segment, Mountain revenue decreased 7.9% at $42.5 million, primarily as a result of the sale of the company's investment in RTP in April 2007, which was previously recorded in other Mountain revenue and generated $3.4 million of revenue in the first quarter of fiscal 2007. Excluding RTP, Mountain revenue would have been essentially flat. Dining revenue benefited from strong summer operations including group and wedding business and from the previous acquisition of two license Starbucks locations in Aspen and Dumont, Colorado. Retail rental revenue was negatively impacted by lower sales volumes primarily during current year fall's sales events compared to the prior year. Including the current year, Mountain operating expense of $2.3 million in legal fees related to the company's attempted acquisition of the Canyons ski resort in Park City, Utah, while the prior year quarter included 2.8 million of now-divested RTP expenses. Excluding the impact of these items, Mountain operating expense would have increased by only $1.9 million or 2.5%, which is primarily due to variable cost associated with increases in dining revenue and higher cost associated with the operations of 18 Breeze Ski Rental locations acquired in June 2007. Mountain equity investment income net increased $1.1 million, primarily as a result of improved results from the company's real estate brokerage joint venture, Slifer, Smith and Frampton, due to a significant amount of residential and commercial real estate closings approximate to Vail and Beaver Creek. Reported EBITDA loss for the Mountain segment increased…

Thanks, Jeff. Turning to our real estate activity, we recently launched the first building of One Ski Hill Place in Breckenridge. This first building as part of a phased five to six building multi-use development, which will be branded a RockResorts property will include 90 ski-in/ski-out residences ranging from studio to five-bedroom with approximately 102,000 saleable residential square feet. We announced the pricing for the first phase of this project on November 28 and have just begun accepting reservations on the first 15 units at an average price per square foot of $1,182. We continue to build on the momentum at Breckenridge, where we now also have executed contracts on all 46 units at Crystal Peak Lodge at an average per square foot of $964. As an update on the Vail Mountain Club, even during the traditionally slower summer and fall sales periods, we have continued to add new members to the Vail Mountain Club and exclusive private club steps on the Vista Bahn Express lift. To date, we have sold 250 memberships, including 120 full memberships, which include parking privileges, and an additional 130 social memberships, which excludes parking privileges, representing total sales commitments of $43.2 million of total proceeds when paid in full. This includes the sale of 10 full memberships and 7 social memberships since the end of September 2007. We are currently gearing up for a more intense marketing effort going into the winter season. Turning to our Lodging development, we're excited that December 19th will mark the opening of the first of fourth phases of The Landings St. Lucia located on Rodney Bay, St. Lucia in the West Indies, the latest addition to the RockResorts luxury hotel portfolio. RockResorts will manage the resort operations including 231 waterfront residences ranging from 950 to 2300 square feet.…

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer. [Operator Instructions]. Our first question comes from Felicia Hendricks with Lehman Brothers. Please go ahead.

Hi, guys. Good morning.

Hi, Felicia. Good morning.

Few questions for you. First just a point of clarification regarding your guidance, you didn't mention anything of that in the press release. And are we to assume that that is unchanged?

Yes, based on everything that we are seeing, we did not feel the need to change our previously announced guidance.

Okay, great. The next thing is, you are also some more cautious in the release. And I'm wondering are you seeing anything on the margin that should indicate that the economy is playing a role in your resort business to this point?

I think that's hard to say, Felicia. I mean, I guess, I don't think we are seeing anything different in the economy than everybody else is seeing. I think certainly some of the metrics we are seeing on the early part of our season that we've just announced, I think what we said earlier we really stand by, which is we are very pleased with them given everything that we are seeing. But obviously, we also don't want to have our heads in the sand and obviously everyday you're reading about issues that are going on around us. I think you guys know probably better than us, what that environment is like. But so far to date, the metrics that we've just announced we are very pleased with.

Okay. And than I just want to also... my last question is on some of the statistics that you provided, particularly along the lines of room pricing. It looks like you're getting pricing at the expense of occupancy a bit, and then I am wondering if you could just talk about your strategy there and how that could help perhaps your booking trends for the rest of the season?

Well, I think there's no question that there's been real strength in the overall lodging market. I think that you are seeing that through ADRs generally throughout the industry. I think we are benefiting from that as well. I think I am not sure that we are trading off rate for occupancy. I think as of right now what we would say is that we are seeing a booking curve that is not as early as it was last year, because when you look at the numbers versus two years ago, what you realize is that we are actually pretty strongly ahead even in room nights of two years ago. Interestingly enough, last year although our room nights were up significantly at this point in last year, they ultimately ended basically flat. So what right now we are looking at is potentially people making their decisions a little bit later, but we have no reason to believe that ultimately at the end of the season, there's going to be a material change.

And is there anything specific, specifically that you are seeing about the mix of the rooms that you are seeing that you could share?

Jeff?

That's certainly when you look at the difference between sales dollars and room night trends, I think the difference is going to be either through absolute price increases or ADR increases or a mix shift to people booking higher priced rooms earlier in the booking period. And so I think it's both of those that will impact that relationship between sales dollars and units on a booking curve. And obviously again, we will continue to monitor as the season progresses. It's certainly, back here fortunately, it's certainly in our best interest to drive occupancy around our mountain resorts because of all the ancillary business that benefits from people being in rooms during the winter.

Right. Okay, thanks a lot.

Thanks.

The next question comes from Michael Savner with Banc of America. Please go ahead.

Hi. Yes, well this is Jake Hindelong [ph] calling from Michael. Couple of questions. First, just in the near term as far as the second quarter skier days are concerned, when we are thinking about we want to look a little closer at what's going on with holiday season bookings, just wondering how they have been relative to last year and if there is a pickup or if you expect a pickup based on the recent storms?

I guess I'd said we are not going to comment in any more specificity on our bookings. What I can say is that we are certainly feeling good about the experience that we are going to be providing over the holiday period. I think all of our resorts right now are doing great. Obviously, the recent snowfall I think helps on two fronts: both the people that come out obviously have a great experience, and think that word of mouth travels pretty quickly. And number two, obviously, it tends to create some excitement back East, and I think one of the things we have done as some of you may have seen is start to advertise some of these great conditions either online or in the New York Times, and so we think that's the right strategy to really kind of generate that added excitement for the rest of the season.

And I think I'd just clarify that the bookings stats that we did give today are bookings through November 30th this year as compared to end of November last year, so certainly all the snowstorms that happened over the last week have not been incorporated in those booking stats that we gave today.

Okay, great. That definitely helps. And then just looking further out into the fiscal third quarter and actually the next year, with the Arrabelle, what is your expected occupancy for the remainder of the ski season once you are open and then would you expect that to ramp up and be higher next year?

I don't think we are going to talk about specific occupancy guided for the Arrabelle for this year. But I would say there is no question because it's a new property that we would certainly expect occupancy next year to be much higher, and we have our full marketing effort going for full year. And obviously when people are going to come back and the editorial writers and everything else are going to stay at the Arrabelle and start writing about the experience, which we believe is going to be outstanding, we think that's going to really help for next year as well. The other thing is that although the hotel rooms are going to be open for a big part of this season, most of the condos and the lock-loss associated with those condos are not going to be open for a full season until next year.

Great. That's very helpful. Thanks guys.

Thank you.

Next question comes from Hayley Wolff with Rochdale Securities. Please go ahead.

Hi there.

Hi.

Hi.

I have a couple of questions. First, what gives you confidence that the booking curve that you are seeing this year is more comparable to '05 versus just being weak against '06?

Well, I think I mean again I... I think what we are looking at is that last year, we were up significantly over '05, but in the end for the full year our overall room nights booked were relatively unchanged. Though clearly last year, what we saw was the increase in '06 over '05 was not an ultimate increase in room nights booked but just an earlier booking curve, and I think to Jeff's point earlier, we had a lot of early season snow last year and that may have helped dry some of those early season bookings. We also had really, really strong snow the year before. For this year, we know that we didn't have great early season snow meaning in November, we now have great snow in December. And I'd say beyond and we were also seeing that we are up nicely over '05. So I guess that I'd say is this, we are not seeing evidence yet that we will be ultimately down over '06, but obviously this is... these are merely comments looking at data. We don't have any assurance of either way.

Okay. Is there any meaningful variance at the different resorts?

There are differences at the different resorts and I think... but again it's hard to say how much of that is based on just differences at this time of year. How much of that is based on how much lodging we do at each of the various resorts or again whether or not that's going to be an ultimate difference when we get to the end of the season.

Okay. If you overlay the economy against the different demographics at your four Colorado based mountains, is there anything that you can come up with that shows any signs of economically, basically be at your business. Clearly, Beaver Creek's at the high end, so may be it's more immune versus a Keystone or Breckenridge?

What I say is as of today, no. We don't have any data that would necessarily suggest the economy as it work. I think that we... there is no question that certainly one of the things we looked out was a lot of the retail numbers that came out and what something you saw was at the higher end retailers seem to do better. I think that certainly would bode better for, Vail or Beaver Creek where the average income higher than our other three resorts. But with that said, we don't know yet as whether or not the booking curve has again shifted from last year or will be ultimately lower in terms of room nights booked. At this point, like I said, I think we're looking more at the booking curve than we are at data that tells that we're going to see that impact right up front. With all of that said, obviously the economy affects everyone in some way and we don't think our entire business can be immune to anything that's going on in the general economy.

Okay. Last question, just anything coming out of the international markets that's noteworthy in terms of bookings?

I think at this point, we are seeing very strong numbers coming out of the international markets and we really doubled our efforts, so to speak going into this season, really both because we've seen some very good trends there before. We obviously have a weak dollar and so we're certainly expecting some very good results out of the international markets for this season.

Okay, great. Thank you.

Thank you.

Our next question comes from Will Marks with JMP Securities. Please go ahead.

Thank you. Hello, Rob. Hello Jeff.

Hello.

The first question on guidance, you did... I just looked back in first quarter of '07, you did in the press release you mentioned that you're maintaining guidance. I'm just curious what you're thinking was and maybe there's legal issues but why you didn't just bother to mention it in the press release?

Again, I'll just repeat it. I don't want to get into why it was or wasn't in the press release. But I will say it again. Based on everything that we're seeing, we don't feel the need to change our previously announced guidance, and we want to make that clear.

Okay. Fair enough. Next question on Breckenridge, you mentioned 90 units. I'm curious on why? You also mentioned 15 are now for sale. I mean, how did the 90 plan on being leaked out?

We are doing a number of stages in the sale process that we're taking reservations one stage at a time and then reserving the right to watch the new phase as we think it's appropriate. And so... that's a strategy we've used before in another of our projects, and so that's... I think we just think it's better to really build demand for certain products. And what we do in each phase is take a real cross section of the building, and we think that helps build momentum for the overall sales efforts.

Will, that's exactly we did at Crystal Peak. We went out in 15 and 16 and we now have all 46 sold well in advance of winter. The construction is going to be complete. So we've taken a similar approach that we did at Crystal Peak and Peak 7 to the first building in Peak 8. And obviously you also saw in our release today that the pricing that we have announced, is sizably ahead of Crystal Peak. Certainly, we accept those prices with full knowledge of the current market environment. So we are using a similar approach and you can see what we've done at least on the first, on the pricing for the first piece of that.

Is there any timeframe when all 90 expect to be on the market?

No, we don't know. We don't actually give... that's not something that we are trying to understand. Obviously, our goal is to both sell all 90 units over a good timeframe, but at the same time we are also looking to maximize revenue and so we balance those two things out in terms of determining how to set the process, how quickly, when to move new phases or new releases really, I should say, of those units into the marketplace. Again, it was a strategy we used at Crystal Peak very successfully and it's something we're going to use again at One Ski Hill Place.

Okay. And on the risk development, can you remind us where we are now in terms of sales and are you happy with that. Has there been any lately, if not, is it just due to the ski season just getting started?

What I can say is we are very happy with the sales that we made on the Ritz over the summer. There's very little activity that goes between, I'd say the end of the September and where we are today. We currently have a total of 46 of our units under contract and we have all 45 fractional units under contract, which is about 60... two-thirds of the total expected revenue. So we actually were not expecting really to make sales in October, November that's not a prime time but we are gearing up and we'll have a major sales push starting now really as we go into the winter season.

Okay. And then just to give us comfort with the 25, I guess that are left, can you characterize the strength of the Vail residential market?

I think certainly what we've seen is that I think it may not be as floppy as it once was, but we are still seeing some strength when we're looking at resale through our Slifer, Smith and Frampton brokerage units. I think that we, at the same time, we are now going into a new selling season and I think we will have a much better sense of all this when we get on the phone again in March for reporting our second quarter.

Okay. I have just one final question, anything you can tell us about Utah and the resort there?

No, no update at this point.

Thanks, guys.

Thank you.

Thanks Will.

[Operator Instructions]. Your next question comes from Yasuna Murakami with MC2 Capital Management. Please go ahead.

Hi.

Hi.

Hey, I got a couple of questions. You mentioned there is a great question on international efforts. And I guess I wanted to know how targeted are you guys talking just from kind of knowing that whole space in the area. There seemed to be a large influx from South America as well as Europe, I mean have you been targeting those specific areas or is it just a generic... I mean what have you guys been doing and what can you talk about, I guess?

I think we are targeting... yes, we are targeting all those areas and I think it's... when we increase our effort, it's really by bringing down more sales people, doing more events, putting more marketing dollars behind our PR or advertising and they did it both of those. It is... the markets that you just described and more and it is a very focused approach with different people in different parts of the country including in Asia, including in Australia, including Russia and we are really targeting to really bring in that clientele, which... like as I said I think we've seen although our overall international business has stayed relatively constant as a percentage with our total skiers over the last few years, the business is coming in. We have been able to really kind of get out of some of the discounting and the kind of wholesale touring where that's really lower price and really bringing in the higher margin, upper income demographic and that's really been I think a huge benefit and I think that's shown up in our results and that's certainly something that we are going to be focused on for this season as well.

Yes. And I recall hearing about a lot of the charter flights from South America going into Eagle's Nest and it sounded like it was a... a big potential driver that you guys are going to concentrate. And I remember that last year at least. Now I guess the... are you... it seems that this year at least when you're at certainly the season, there has been a pretty even amount of snow falling all over the place. Do you see that as being good for sales in Colorado like having more... your forwards are always there. How do you think this affects Heavenly for instance, which seemed to be kind of the weaker end of the scale, I guess. how is Heavenly doing at this point?

I think there is no question that Heavenly does... the early season of snow at Heavenly was also challenging just like it was in Colorado in November, but the recent snow fall there. They have got great terrain open. They have had some of the best terrain over the last few weeks and I think that's just going to continue. I think it's great. I think as we continue to see weather patterns develop, Heavenly is really going to shape up for a terrific Christmas season. But yes, there is no question that I think people are given last year's more difficult weather in Toronto, I think there is certainly no question that skiers out there are going to wait to see the snowfall and the great conditions for them to start getting out and that's one of the things we think is going to happen after this past week.

Has this corresponded into the season ticket side, I mean like how is that going as far as compared to last year?

Well, I think what we announced today was obviously that our... just reading between the numbers that our Colorado season pass sales were up stronger than our heavenly season past sales and I think that that... there is no question that weather had played a part in that and I think that will get reenergized with the new snow and I think that will continue to happen as there is new snowfall at Heavenly.

Okay. No, I think that's about it for right now. Thank you.

Great. Thanks.

Thanks.

Our next question is a follow-up from Hayley Wolff. Please go ahead.

Hi there. I just wanted to follow up on Will's question regarding Breckenridge units. You have talked about Crystal Peak how you did a phase launch. Can you comment on what the other pricing delta was throughout the different phases, if you did move it up?

Hayley, we can get back to you. I don't have it off the top of my... sort of my tongue but I think that it was in the single-digit percentages type thing. It was, we're not talking about huge percentage deltas between each phase.

And then, can you... you said retail was down in the quarter but you have more units coming out of the Breeze acquisition?

Yes, that's correct. Obviously, seasonally they do very little sales volume in the quarter that we just completed and will really be obviously coming into play here in the winter season because they're heavily skewed towards rentals.

Okay, all right. Thanks a lot.

[Operator Instructions]. The next question is a follow-up from Yasuna Murakami. Please go ahead.

Hey guys. One last question, I guess. In light of the last two years, I guess elsewhere and kind of following up on the bad weather effect, are you guys considering anything out in other region of the US or anything maybe the challenge Intrawest expansion and kind of demise of the American Ski Company here?

Again, one of the key parts of our strategy is strategic growth and that's something we're always looking at and if we've had got something to announce, obviously we'll let everybody know. But until then I think there's not additional details we can put into that other than to say it's still a very important part of our overall strategy.

Okay. Okay, thanks.

Thank you.

Mr. Katz, Mr. Jones there are no further questions in the queue. Please continue with your closing remarks.

Thank you, operator, and thanks to everyone who participated in our conference call today. Please feel free to contact me or Jeff directly should you have any further questions. Thanks for your time this morning and goodbye.

Ladies and gentlemen, this does conclude the Vail Resorts fiscal 2008 first quarter earnings conference call. You may now disconnect and we thank you for using AT&T conferencing.