Good day ladies and gentlemen and thank you for standing by. Welcome to the Vail Resorts Fiscal 2014 Second Quarter Results Conference Call. (Operator instructions) This conference is being recorded today, Wednesday, March 12th, 2014. I would now like to turn the conference over to Mr. Rob Katz, Chief Executive Officer. Please go ahead, sir.

Thank you. Good afternoon everyone. Welcome to our fiscal second quarter 2014 earnings conference call. Joining me on the call this afternoon is Michael Barkin, our Chief Financial Officer. Before we start, I will remind you that some information provided during this call may include forward-looking statements that are based on certain assumptions and are subject to a number of risks and uncertainties as described in our SEC filings and actual future results may vary materially. Forward-looking statements in the press release that we issued this afternoon along with our remarks today are made as of today March 12, 2014 and we undertake no duty to update them as actual events unfold. Today's remarks also include certain non-GAAP financial measurements. Reconciliation of these measurements is provided in the tables included with our press release and in our quarterly report on 10-Q filed this afternoon with the Securities and Exchange Commission and is also available on the investor relations section of our website at www.vailresorts.com. So, with that said, let's turn to our second quarter fiscal 2014 results. Overall, we’re very pleased with our performance in the second quarter of fiscal 2014. Despite the very challenging conditions in Tahoe, where total snowfall was down 73% as of January 31st compared to the prior year, we have seen overall growth in visitation of 9.1% and increased guest spending highlighting the strength of our geographically diverse business model. Total lift revenue was up 11.2% for the quarter, ski school was up 12.5%, and total mountain revenue increased by 8.3% compared to the prior year. Results in Colorado were particularly encouraging with total visitation up 11.9%, ski school revenue up 9.7%, and dining revenue up 16% compared to the prior year. Our strong Colorado results were driven by the significant growth in our season…

Thanks, Rob, and good afternoon everyone. Before discussing our results and the season-to-date metrics, I want to remind you that you can find a full discussion of our financial results for our second quarter of fiscal 2014 ended January 31st, 2014 in our quarterly report on Form 10-Q, which we filed today with the SEC. Our Form 10-Q and our earnings announcement can be found on our website at www.vailresorts.com. As Rob mentioned, we’re pleased with our second quarter results. Resort net revenue was $447.8 million for the second quarter, up 9.7% from the prior year period. And Resort Reported EBITDA was $151.1 million for the second quarter of fiscal 2014, up 6% from the prior year period. Mountain Reported EBITDA increased $7.3 million or 5.2% for the quarter compared to the same period in the prior year. This was driven by both increased lift revenue and increased ancillary spending. Total lift revenue for the quarter increased $19.7 million or 11.2% compared to the same period in the prior year. Season pass revenue was the largest component of the increase in our lift revenue increasing $13.7 million or 18% over the prior year period. In addition to season pass revenue growth, lift revenue excluding season pass revenue increased 6% driven by our Colorado Resorts and incremental revenue from Canyons, partially offset by lower revenue at our Tahoe Resorts were visitation excluding season pass holders declined by 27.9% compared to the same period in the prior year. Ancillary revenue continue to perform well in the second quarter. With ski school revenue increasing by $5.2 million or 12.5% and dining revenue increasing by $2.8 million or 9.3% compared to the same period in the prior year. Retail rental revenues improved by $2 million driven by strong performance in our Colorado and Utah…

Thanks, Michael. When we issued our metrics release in early January, we felt that we could still meet our original guidance if Tahoe had normal conditions by the end of January giving the market enough time to recover in February and March. While Tahoe did finally receive substantial snowfall ahead of the Presidents' Day holiday, we experienced very weak results in our Tahoe Resorts through mid-February and conditions did not meaningfully recover until the end of the month. The continuation of the historic early-season drought impacted not only February results, but the remainder of the season as well as we believe many guests in the San Francisco Bay area made alternative plans due to poor snow leading up to that period. The full season impact from Tahoe's performance has resulted in lower expectations for our overall profitability this year. Consequently, we have revised our guidance for Resort Reported EBITDA for the full fiscal year 2014 to $255 million to $265 million, which reflects an approximately 10% reduction in Resort Reported EBITDA from our original guidance. Almost all of the reduction reflects the lower than anticipated contribution from our Tahoe Resorts and San Francisco Bay area retail operation. Also included in our estimates for fiscal 2014, Resort Reported EBITDA is approximately $9.5 million of integration and litigation-related expenses, including approximately $7.5 million in fees associated with the Park City Mountain Resort litigation. The increase in PCMR litigation expense from our original estimate is related to the addition of new claims and counterclaims in the case. Net income attributable to Vail Resorts is now expected to be in the range of $23 million to $36 million in fiscal 2014. I'm pleased to announce two important decisions related to our capital allocation strategies. We remained committed to returning capital to stockholders and believe…

Thank you, sir. (Operator Instructions) And our first question comes from the line of Shaun Kelley with Bank of America, Merrill Lynch. Please go ahead.

Hi. Good afternoon, guys. May be I just wanted to start with kind of the change in guidance. I think, Rob, you gave a lot of good clarity on this, but just to dig in a little bit further, obviously there were a little bit more handle litigation charges as related to PCMR. And then, you also called out the kind of the change in the online retail strategy. Is there any one-time cost associated with the online change, or any other one-time cost and hear that might have impacted the flow-throughs that we saw in the quarter?

No. So the online -- our decision to close down the current effort that the operation actually is going to be pretty much on-target with our original expectations for the season, may be. Look, loss is there a little bit more than that but not material to the overall guidance. And that decision did not impact at all our reduction in guidance.

Okay. And just when you think about the overall magnitude of the reduction, was it really kind of something in and around? I mean, you've got the snowfall for President's Day, but was it something in and around -- just not get the visitation uplift that you saw, you might see when the snow actually came. Is that really kind of what ultimately happened here in terms of the delta to your expectation from early January?

No, no, not really. What I would say, in early January when we gave out our guidance, obviously at that point we really had no idea when snow is going to come. I mean, we were looking at weather forecast for the next five to seven days at best. I think we still like -- if we could start to get more traditional snowfall in mid-January that could set us up quite nicely for February, for President's Day, for spring brake, and obviously all the way through the season. When you push out, when we actually got the snowfall to kind of about at least a month if not six weeks, because although we got snowfall before President's Day in terms of having, what we call normal condition, that didn't really show up until really almost early March. And so, once you start to push out by four to six week, but one week after snow, then what's happening is that the impact about it is not only -- obviously we're doing worse in the second half of January and all of February that we might have hoped in the beginning of January. But then we're also -- we know, affecting people's decisions, right. So although we did see a huge visitation increase, we know there are a lot of people that start to make other plans when they start waiting for the snow and don't see it. So somebody who might have booked a vacation over President's Day in let's say late January when they're looking at the conditions and realizing that there's no snow, still they make other plans. And then even when the snow came, right, that person is not -- you can't really get that person back to the resort. That's now, of course, we didn't see big visitation increases. No question once the snow comes, but no where near where we would have expected with normal conditions throughout the season. So what I'd say is that when we gave that commentary in January, it was really around on assumption that we could get real snowfall in second half of January, we still had a very good chance to make our guidance but that got pushed off four to six weeks given that this whole season is only 12 weeks. That's a pretty big impact.

Okay, okay. Now that's helpful color. And may be just to switch gears, you mentioned that Canyons is ramping up, generally in line with expectations despite a slow start. Could you just remind us of what those targets were? I believe if you guys gave it, I think in the first full year of contribution you're targeting around $15 million EBITDA and then that ramping over the next three years to something maybe like 25, but could you just remind us what those targets are and how you're kind of thinking about it today.

Yeah. What we said was the net increase to EBITDA from the Canyons acquisition was exactly what you outlined, $15 million in that first year ramping up to $25 million over three years, and we feel right now we're tracking very, very much on that. We feel very good about that, and Canyons -- actually I would say although Colorado, we obviously focus a lot on Colorado and the snow in Colorado was quite good almost throughout the seasons. Utah, really did not have a great impact to the season in terms of snowfall, which I think certainly might have put some of that in parallel and actually we feel very good about how strong the resort has performed under our ownership that we're still on target.

Great. And just my last one will be any update on the PCMR litigation and just really the timing because we know you can't really comment too much about it. But anything, any color you could give for investors. This question we get a lot. Thanks a lot.

Sure. So right now we -- there is both sides of litigation are filing a variety of summary judgment motions and oppositions and replies. The Judge set two different hearings on those motions for the very end of March and the beginning of April. And we would expect rulings from those hearing within the following 30 to 60 days. Obviously, that is nearly an expectation and as with any litigation, everything is subject to change. But that's pretty much where we sit in the litigation right now.

Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Felicia Hendrix with Barclays. Please go ahead.

Hi there. Well, I apologies if I missed this, but did you give us season pass sales update?

We did not. So we did release separate press release a couple of days ago that had all the details of our new passes for this year just giving the length of this week, we decided not to add it on that. Obviously we'll be talking about that in more detail at our investor conference next week. May be it is out there. I would say it is a consistent set of products and promotions with what we've had in the past. There are price increases across most our product line in the range of 3% to 5%, depending on the different products. Obviously, we're incredibly pleased to have added the Seiko Japan to the Epic Pass, particularly at that product as that resort in Japan is incredibly popular within Australia, which is also a key market for us as well. So again, we feel pretty good and actually I'd say you've seen you've seen and mountain collective also come out with their own new products. We actually think this is good news all around because it brings more attention, anytime you see articles on any of our passes. They tend to certainly mention hours. And so, we actually feel very good about kind of the excitement and passion going into this selling season.

Okay. I know you have the other one, I just didn't know. Did you want to read in too much that you didn't mention anything in here again. The other thing on Tahoe just wondering as you -- it's hard targeting about next season, but as you think about next season, do you think there's any risk to your business there, particularly since that's mainly a day trip market or drive through market. I would think not versus those seasons that you had bad snowfall in Colorado perhaps that might affect how destination guests think about the following, booking for the following year. Is that the right way to think about Tahoe? Each season is kind of more compartmentalized than may be some of your destination resorts.

Yeah. I think that's actually -- I think that is a good point and I think that is largely how we think about it. I do think -- I think we're certainly cognizant of the possibility that it could have an impact on Tahoe pass sales as we go into the spring selling season. On the other hand, of course, our Colorado comp sales right -- those guys have seen an incredible season. And so, I think we'd see potentially a coronary effect there in Colorado with about a much, much larger market than our Tahoe market. So while the -- we're kind of looking at that as kind of may be an evening out as we head into this pass selling season. By the time we get to next season, I think it will absolutely be about what the conditions are like next season and I think we'd be -- you're surprised to see a very material hangover.

Okay. Great. And then finally on your real estate, just wondering if your pace of salesm both Edwin still place and rates were within your expectations, and any update to how you're marketing each of those projects?

I would say yeah. I think sales are -- and we characterize them as relatively strong. So relative to the last few years I think we're seeing more interest, more engagement. We're staring to sell units at slightly better pricing. We are selling units that are, in some cases north facing or may be less desirable units from when we started the project. And we're starting to hit down some inventory level of both project which is much -- very manageable as you think about over the next couple of years. So I think we feel like we're making great progress at both properties and we intend to continue to firm up pricing as we see the market continue to come up. We're also seeing chatter about new projects that might be launched in our various markets. Nothing that's really out of the ground yet of course, but again, I think the overall market has been much slower to come back as we've talked about in the vacation market, but we're starting to see some strength in the second half market now.

Okay. Great. Thank you very much.

Thank you.

Thank you. Our next question comes from the line of Joel Simkins with Credit Suisse. Please go ahead.

Yeah, hi. Good afternoon, guys. It's actually follow-up a little bit on Felicia's question earlier on real estate. I guess, Rob and Mike, as you think about real estate getting a little bit better over the next couple of years, I mean what do you need to see to really start to think a little bit more about Ever Vail and just how do you frame up potential opportunities there to either do it on your own or certainly partner with some other folks to take more of the capital risk.

I think we still need to see a greater level of velocity in sales for us to really launch Ever Vail. I think we're making huge strides against where the market was a couple of years ago, but still quite a bit of way-- quite a ways away from where we were certainly in the 03 to 08 time period. And I do think we need to see kind of return to some of that momentum to launch a project of the size and scale of Ever Vail. I think there's no question that when we do launch Ever Vail we will look to bring in other capital partners. It's not a project that we would look to put on our balance sheet in totality at all. So I think just given again size and scope, I do think there are other opportunities though for the company on the real estate side that could happen even before Ever Vail, or certainly other parcels at PK, next the one peak whole place at Breckenridge parcels next to the gondola at Keystone. So that are -- I'm actually kind of more ready to go and without more significant infrastructure that Ever Vail has connected with it.

Okay. And I know a lot obviously hinges on sort of what happens here with PCMR. Obviously if you're able to come to a favorable resolution there's some capital, I could go to that opportunity longer term, but with that in mind, obviously you're transitioning a little bit more towards the dividend. How are you guys still thinking broadly about let's say tuck-in urban resort M&A versus sort of definition opportunities.

I would say that's completely unchanged. I think we still remain aggressive on looking for the right acquisition opportunities and securing them where we think they make sense, whether that's an urban resort or destination resort. We felt the decision with the divined the Board did, given the performance and stability that we've been able to show through a whole wide range of weather issues of economic issues. Give them ton of confidence in our free cash flow generating capability, but that is in addition to continuing to pursue both internal and external growth.

Okay. Thank you.

Thanks.

Thank you. (Operator Instructions) Our next question comes from the line of Bob Lafleur with JMP Securities. Please go ahead.

Hi guys. Question about CapEx, you said $85 million of run rate not including acquisitions or upgrades you need to make to existing acquisitions, and you specifically mentioned excluding Canyons from that number. What is the state of the current CapEx plans for that mountain and how much is that dependent on the outcome of litigation and how much are you going to be spending there this year. Thanks.

So, yeah. I would say our capital plans for Canyons is absolutely dependent on the outcome of the PCMR litigation and those discussions and how that opportunity unfolds over time. So we've not announced or disclosed what that package could look like. This year the one item -- obviously everyone of our mountain including Canyons has a maintenance capital budget. But in addition to that we are renovating and expanding the Cloud Dine restaurant at Canyons I would say, it's not overly material to the -- we don't disclose specific dollar amounts for each one of our projects, but I would say that that project in and of itself is not overly material to the $85 million total plan. So that's about as much as I could say on Canyons at this point.

But that project is within the confineds of this year's $85 million.

Yes. All right, sorry. That's a good clarification, yes sort of.

Okay. Thank you.

Thank you.

Thank you. I'm showing no further questions in the queue at this time. I'd like to turn the conference back over to Mr. Katz for any closing remarks.

Thank you, operator. This concludes our fiscal second quarter 2014 earnings call. Thanks to everyone who joined us on the conference call today. Please feel free to contact myself or Michael directly should you have any further questions. Thank you for your time this afternoon and good bye.