form10qa.htm
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q/A
AMENDMENT No. 1


x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2007

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from       to

Commission File Number:  1-9614


Vail Resorts, Inc.
(Exact Name of Registrant as Specified in Its Charter)


Delaware
  
51-0291762
(State or Other Jurisdiction of Incorporation or Organization)
  
(I.R.S. Employer Identification No.)
     
390 Interlocken Crescent, Suite 1000,
Broomfield, Colorado
  
80021
(Address of Principal Executive Offices)
  
(Zip Code)

(303) 404-1800
(Registrant’s Telephone Number, Including Area Code)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x           Accelerated filer ¨                 Non-accelerated filer ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
¨ Yes x No

As of March 5, 2007, 38,880,704 shares of the registrant’s common stock were outstanding.


Explanatory Note

The Company is filing this amendment to its Quarterly Report on Form 10-Q (“Form 10-Q/A”) to restate its Consolidated Condensed Statements of Cash Flows for the six months ended January 31, 2007 and 2006 as described in Note 15, Restatement, of the Notes to Consolidated Condensed Financial Statements.  As previously disclosed in the Company’s Quarterly Report on Form 10-Q for the period ended April 30, 2007 filed with the United States Securities and Exchange Commission (the “SEC”) on June 8, 2007, the Company was in discussion with the staff of the SEC regarding the Company’s classification of its Real Estate segment cash inflows and outflows within the operating and investing sections of its Consolidated Condensed Statements of Cash Flows.  Following these discussions, the Company concluded to restate its Consolidated Condensed Statements of Cash Flows by reclassifying its cash outflows related to its investments in real estate, disclosed as a separate line item, from investing activities to operating activities.  Consequently, this restatement resulted in a reduction of cash flows provided by operating activities with an equal and off-setting impact to cash flows used in investing activities.  This restatement does not impact the Company’s previously reported overall net change in cash and cash equivalents in its Consolidated Condensed Statements of Cash Flows for any period presented.  Additionally, this restatement does not impact the Company’s Consolidated Condensed Balance Sheets or Consolidated Condensed Statements of Operations for any period presented.  The Company is also filing amendments to its Annual Report on Form 10-K for the year ended July 31, 2006 and Quarterly Reports on Form 10-Q for the quarters ended October 31, 2006 and April 30, 2007 to reflect this restatement.

For the convenience of the reader, this Form 10-Q/A sets forth the Company’s original Form 10-Q as filed with the SEC on March 12, 2007 (the “Original 10-Q") in its entirety, as amended by, and to reflect, the restatement.  No attempt has been made in this Form 10-Q/A to update other disclosures presented in the Original 10-Q, except as required to reflect the effects of the restatement.  This Form 10-Q/A does not reflect events occurring after the filing of the Original 10-Q or modify or update those disclosures, including the exhibits to the Original 10-Q affected by subsequent events.  The following sections of this Form 10-Q/A have been amended to reflect the restatement:

·  
Part I – Item 1 – Financial Statements (Consolidated Condensed Statements of Cash Flows, Note 13 Guarantor Subsidiaries and Non-Guarantor Subsidiaries – Restated, Note 15 Restatement) and
·  
Part I – Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations (Liquidity and Capital Resources).

This Form 10-Q/A has been signed as of a current date and all certifications of the Company’s Chief Executive Officer and Chief Financial Officer are given as of a current date.  Accordingly, this Form 10-Q/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Original 10-Q for the six months ended January 31, 2007, including any amendments to those filings.








Table of Contents
     
PART I
FINANCIAL INFORMATION
  
     
Item 1.
F-1
Item 2.
1
Item 3.
13
Item 4.
13
     
     
PART II
OTHER INFORMATION
  
     
Item 1.
13
Item 1A.
13
Item 2.
13
Item 3.
14
Item 4.
14
Item 5.
14
Item 6.
14






PART I
FINANCIAL INFORMATION
  
     
Item 1.
  
     
F-2
F-3
F-4
F-5
F-6















 




Vail Resorts, Inc.
Consolidated Condensed Balance Sheets
(In thousands, except share and per share amounts)

     
January 31,
      
July 31,
      
January 31,
  
     
2007
      
2006
      
2006
  
     
(Unaudited)
              
(Unaudited)
  
Assets
                        
Current assets:
                        
Cash and cash equivalents
  
$
254,866
    
$
191,794
    
$
175,541
  
Restricted cash
    
26,792
      
20,322
      
23,715
  
Trade receivables, net
    
43,728
      
35,949
      
39,712
  
Inventories, net
    
49,825
      
42,278
      
43,977
  
Other current assets
    
38,918
      
35,631
      
43,909
  
Total current assets
    
414,129
      
325,974
      
326,854
  
Property, plant and equipment, net (Note 5)
    
868,185
      
851,112
      
858,200
  
Real estate held for sale and investment
    
293,219
      
259,384
      
221,048
  
Goodwill, net
    
135,811
      
135,811
      
135,811
  
Intangible assets, net
    
73,715
      
75,109
      
77,541
  
Other assets
    
47,557
      
40,253
      
33,226
  
Total assets
  
$
1,832,616
    
$
1,687,643
    
$
1,652,680
  
                         
Liabilities and Stockholders’ Equity
                        
Current liabilities:
                        
Accounts payable and accrued expenses (Note 5)
  
$
305,690
    
$
230,762
    
$
295,092
  
Income taxes payable
    
9,103
      
17,517
      
6,324
  
Long-term debt due within one year (Note 4)
    
440
      
5,915
      
5,673
  
Total current liabilities
    
315,233
      
254,194
      
307,089
  
Long-term debt (Note 4)
    
551,866
      
525,313
      
517,638
  
Other long-term liabilities (Note 5)
    
185,849
      
158,490
      
132,933
  
Deferred income taxes
    
83,967
      
73,064
      
77,037
  
Commitments and contingencies (Note 11)
                        
Put option liabilities (Note 9)
    
1,245
      
1,245
      
--
  
Minority interest in net assets of consolidated subsidiaries
    
36,035
      
32,560
      
31,345
  
Stockholders’ equity:
                        
Preferred stock, $0.01 par value, 25,000,000 shares authorized, zero shares issued and outstanding
    
--
      
--
      
--
  
Common stock, $0.01, 100,000,000 shares authorized, 38,802,817 (unaudited), 39,036,282 and 37,965,853 (unaudited) shares issued and outstanding as of January 31, 2007, July 31, 2006 and January 31, 2006, respectively
    
395
      
390
      
380
  
Additional paid-in capital
    
522,941
      
509,505
      
479,611
  
Retained earnings
    
160,931
      
143,721
      
106,647
  
Treasury stock (Note 12)
    
(25,846
)
    
(10,839
)
    
--
  
Total stockholders’ equity
    
658,421
      
642,777
      
586,638
  
Total liabilities and stockholders’ equity
  
$
1,832,616
    
$
1,687,643
    
$
1,652,680
  

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.
 
Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

   
Three Months Ended
  
   
January 31,
  
     
2007
      
2006
  
Net revenue:
                
Mountain
  
$
272,026
    
$
246,228
  
Lodging
    
32,796
      
32,079
  
Real estate
    
56,216
      
9,709
  
Total net revenue
    
361,038
      
288,016
  
Segment operating expense:
                
Mountain
    
159,871
      
150,666
  
Lodging
    
30,757
      
32,894
  
Real estate
    
50,391
      
6,383
  
Total segment operating expense
    
241,019
      
189,943
  
Other operating (expense) income:
                
Depreciation and amortization
    
(21,759
)
    
(21,431
)
Relocation and separation charges (Note 7)
    
(500
)
    
--
  
Mold remediation credit (Note 11)
    
--
      
852
  
Loss on disposal of fixed assets, net
    
(10
)
    
(486
)
Income from operations
    
97,750
      
77,008
  
Mountain equity investment income, net
    
1,496
      
1,455
  
Real estate equity investment income
    
--
      
31
  
Investment income
    
2,417
      
1,046
  
Interest expense, net
    
(7,911
)
    
(9,502
)
Gain on sale of businesses, net (Note 8)
    
--
      
4,625
  
Contract dispute charges (Note 11)
    
(672
)
    
--
  
Gain on put options (Note 9)
    
--
      
1,026
  
Other income, net
    
--
      
51
  
Minority interest in income of consolidated subsidiaries, net
    
(6,152
)
    
(5,231
)
Income before provision for income taxes
    
86,928
      
70,509
  
Provision for income taxes
    
(33,902
)
    
(27,498
)
Net income
  
$
53,026
    
$
43,011
  
                 
Per share amounts (Note 3):
                
Basic net income per share
  
$
1.37
    
$
1.15
  
Diluted net income per share
  
$
1.35
    
$
1.12
  

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.


Vail Resorts, Inc.
Consolidated Condensed Statements of Operations
(In thousands, except per share amounts)
(Unaudited)

   
Six Months Ended
  
   
January 31,
  
     
2007
      
2006
  
Net revenue:
                
Mountain
  
$
318,189
    
$
286,505
  
Lodging
    
73,204
      
73,829
  
Real estate
    
83,138
      
13,102
  
Total net revenue
    
474,531
      
373,436
  
Segment operating expense:
                
Mountain
    
239,358
      
222,957
  
Lodging
    
67,106
      
70,535
  
Real estate
    
76,509
      
12,452
  
Total segment operating expense
    
382,973
      
305,944
  
Other operating (expense) income:
                
Depreciation and amortization
    
(43,344
)
    
(40,354
)
Relocation and separation charges (Note 7)
    
(1,235
)
    
--
  
Asset impairment charge
    
--
      
(136
)
Mold remediation credit (Note 11)
    
--
      
852
  
Loss on disposal of fixed assets, net
    
(91
)
    
(726
)
Income from operations
    
46,888
      
27,128
  
Mountain equity investment income, net
    
2,331
      
2,305
  
Real estate equity investment income
    
--
      
100
  
Investment income
    
4,481
      
2,234
  
Interest expense, net
    
(16,847
)
    
(18,939
)
Gain on sale of businesses, net (Note 8)
    
--
      
4,625
  
Contract dispute charges (Note 11)
    
(4,276
)
    
--
  
Gain on put options (Note 9)
    
--
      
34
  
Other income, net
    
--
      
51
  
Minority interest in income of consolidated subsidiaries, net
    
(4,363
)
    
(3,305
)
Income before provision for income taxes
    
28,214
      
14,233
  
Provision for income taxes
    
(11,004
)
    
(5,551
)
Net income
  
$
17,210
    
$
8,682
  
                 
Per share amounts (Note 3):
                
Basic net income per share
  
$
0.44
    
$
0.23
  
Diluted net income per share
  
$
0.44
    
$
0.23
  

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.


Vail Resorts, Inc.
Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)

   
Six Months Ended
   
January 31,
   
2007
  
2006
   
(as restated,
  
(as restated,
   
see Note 15)
  
see Note 15)
Net cash provided by operating activities
  
$
108,319
    
$
35,521
  
Cash flows from investing activities:
                
Capital expenditures
    
(62,058
)
    
(55,112
)
Proceeds from sale of businesses
    
--
      
30,712
  
Other investing activities, net
    
354
      
(4,018
)
Net cash used in investing activities
    
(61,704
)
    
(28,418
)
Cash flows from financing activities:
                
Repurchases of common stock
    
(15,007
)
    
--
  
Proceeds from borrowings under Non-Recourse Real Estate Financings
    
33,067
      
5,233
  
Payments of Non-Recourse Real Estate Financings
    
(1,493
)
    
--
  
Proceeds from borrowings under other long-term debt
    
48,012
      
20,980
  
Payments of other long-term debt
    
(58,508
)
    
(24,909
)
Proceeds from exercise of stock options
    
6,803
      
27,635
  
Other financing activities, net
    
3,583
      
2,919
  
Net cash provided by financing activities
    
16,457
      
31,858
  
Net increase in cash and cash equivalents
    
63,072
      
38,961
  
Cash and cash equivalents:
                
Beginning of period
    
191,794
      
136,580
  
End of period
  
$
254,866
    
$
175,541
  

The accompanying Notes to Consolidated Condensed Financial Statements are an integral part of these financial statements.


Vail Resorts, Inc.
Notes to Consolidated Condensed Financial Statements
(Unaudited)

1.           Organization and Business

Vail Resorts, Inc. ("Vail Resorts" or the “Parent Company”) is organized as a holding company and operates through various subsidiaries.  Vail Resorts and its subsidiaries (collectively, the "Company") currently operate in three business segments: Mountain, Lodging and Real Estate.  In the Mountain segment, the Company owns and operates five world-class ski resorts and related ancillary businesses at Vail, Breckenridge, Keystone and Beaver Creek mountains in Colorado and the Heavenly Ski Resort ("Heavenly") in the Lake Tahoe area of California and Nevada.  These resorts use federal land under the terms of Special Use Permits granted by the USDA Forest Service (the “Forest Service”).  The Company also holds a 61.7% interest in SSI Venture, LLC ("SSV"), a retail/rental company.  In the Lodging segment, the Company owns and operates various hotels, as well as RockResorts International, LLC ("RockResorts"), a luxury hotel management company, and Grand Teton Lodge Company ("GTLC"), which operates three resorts within Grand Teton National Park (under a National Park Service concessionaire contract), and the Jackson Hole Golf & Tennis Club (“JHG&TC”) in Wyoming.  Vail Resorts Development Company ("VRDC"), a wholly-owned subsidiary, conducts the operations of the Company's Real Estate segment.  The Company's Mountain business and its Lodging properties at or around the Company’s ski resorts are seasonal in nature with peak operating seasons from mid-November through mid-April.  The Company's operations at GTLC generally run from mid-May through mid-October.  The Company also has non-majority owned investments in various other entities, some of which are consolidated (see Note 6, Variable Interest Entities).

In the opinion of the Company, the accompanying Consolidated Condensed Financial Statements reflect all adjustments necessary to state fairly the Company's financial position, results of operations and cash flows for the interim periods presented.  All such adjustments are of a normal recurring nature, except for the restatement discussed in Note 15.  Results for interim periods are not indicative of the results for the entire year.  The accompanying Consolidated Condensed Financial Statements should be read in conjunction with the audited Consolidated Financial Statements included in the Company's Annual Report on Form 10-K/A for the year ended July 31, 2006.  Certain information and footnote disclosures, including significant accounting policies, normally included in fiscal year financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  The July 31, 2006 Consolidated Condensed Balance Sheet was derived from audited financial statements.

2.           Summary of Significant Accounting Policies

Use of Estimates--The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

3.           Net Income Per Common Share

Statement of Financial Accounting Standards (“SFAS”) No. 128, “Earnings Per Share” (“EPS”), establishes standards for computing and presenting EPS.  SFAS No. 128 requires the dual presentation of basic and diluted EPS on the face of the Consolidated Condensed Statements of Operations and requires a reconciliation of numerators (net income/loss) and denominators (weighted-average shares outstanding) for both basic and diluted EPS in the footnotes.  Basic EPS excludes dilution and is computed by dividing net income/loss available to common stockholders by the weighted-average shares outstanding.  Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, resulting in the issuance of shares of common stock that would then share in the earnings of the Company.  Presented below is basic and diluted EPS for the three months ended January 31, 2007 and 2006 (in thousands, except per share amounts):

   
Three Months Ended January 31,
   
2007
  
2006
   
Basic
  
Diluted
  
Basic
  
Diluted
Net income per share:
                                
Net income
  
$
53,026
    
$
53,026
    
$
43,011
    
$
43,011
  
                                 
Weighted-average shares outstanding
    
38,753
      
38,753
      
37,467
      
37,467
  
Effect of dilutive securities
    
--
      
486
      
--
      
855
  
Total shares
    
38,753
      
39,239
      
37,467
      
38,322
  
                                 
Net income per share
  
$
1.37
    
$
1.35
    
$
1.15
    
$
1.12
  

The number of shares issuable on the exercise of stock based awards that were excluded from the calculation of diluted net income per share because the effect of their inclusion would have been anti-dilutive totaled 24,000 and 448,000 for the three months ended January 31, 2007 and 2006, respectively.

Presented below is basic and diluted EPS for the six months ended January 31, 2007 and 2006 (in thousands, except per share amount):

   
Six Months Ended January 31,
   
2007
  
2006
   
Basic
  
Diluted
  
Basic
Diluted
Net income per share:
                              
Net income
  
$
17,210
    
$
17,210
    
$
8,682
  
$
8,682
  
                               
Weighted-average shares outstanding
    
38,734
      
38,734
      
37,133
    
37,133
  
Effect of dilutive securities
    
--
      
465
      
--
    
848
  
Total shares
    
38,734
      
39,199
      
37,133
    
37,981
  
                               
Net income per share
  
$
0.44
    
$
0.44
    
$
0.23
  
$
0.23
  

The number of shares issuable on the exercise of stock based awards that were excluded from the calculation of diluted net income per share because the effect of their inclusion would have been anti-dilutive totaled 116,000 and 448,000 for the six months ended January 31, 2007 and 2006, respectively.

4.           Long-Term Debt

Long-term debt as of January 31, 2007, July 31, 2006 and January 31, 2006 is summarized as follows (in thousands):

   
January 31,
July 31,
January 31,
 
Maturity (a)
2007
2006
2006
Credit Facility Revolver
2010
$
--
$
--
$
--
SSV Facility
2011
  
--
  
6,261
  
6,233
Industrial Development Bonds
2009-2020
  
57,700
  
61,700
  
61,700
Employee Housing Bonds
2027-2039
  
52,575
  
52,575
  
52,575
Non-Recourse Real Estate Financings (b)
2009
  
44,931
  
13,357
  
5,233
6.75% Senior Subordinated Notes ("6.75% Notes")
2014
  
390,000
  
390,000
  
390,000
Other
2007-2029
  
7,100
  
7,335
  
7,570
Total debt
    
552,306
  
531,228
  
523,311
Less:  Current maturities (c)
    
440
  
5,915
  
5,673
Long-term debt
  
$
551,866
$
525,313
$
517,638

   
(a)
Maturities are based on the Company's July 31 fiscal year end.
 
  
(b)
At January 31, 2007, Non-Recourse Real Estate Financings consist of borrowings under the $175 million construction agreement for Arrabelle at Vail Square, LLC (“Arrabelle”).  At July 31, 2006, Non-Recourse Real Estate Financings also included borrowings under the $30 million construction agreement for Gore Creek Place, LLC (“Gore Creek”) which were paid in full during the six months ended January 31, 2007.
   
(c)
Current maturities represent principal payments due in the next 12 months.

Aggregate maturities for debt outstanding as of January 31, 2007 are as follows (in thousands):

Fiscal 2007
  
$
175
Fiscal 2008
    
363
Fiscal 2009
    
60,197
Fiscal 2010
    
262
Fiscal 2011
    
1,738
Thereafter
    
489,571
Total debt
  
$
552,306

The Company incurred gross interest expense of $10.3 million and $9.8 million for the three months ended January 31, 2007 and 2006, respectively, of which $463,000 and $483,000 was amortization of deferred financing costs.  The Company incurred gross interest expense of $20.5 million and $19.3 million for the six months ended January 31, 2007 and 2006, respectively, of which $930,000 and $1.0 million was amortization of deferred financing costs.  The Company capitalized $2.3 million and $250,000 of interest during the three months ended January 31, 2007 and 2006, respectively.  The Company capitalized $3.6 million and $333,000 of interest during the six months ended January 31, 2007 and 2006, respectively.

5.           Supplementary Balance Sheet Information

The composition of property, plant and equipment follows (in thousands):

     
January 31,
  
July 31,
  
January 31,
     
2007
  
2006
  
2006
Land and land improvements
  
$
247,997
    
$
248,941
    
$
244,841
  
Buildings and building improvements
    
538,426
      
529,316
      
526,808
  
Machinery and equipment
    
455,382
      
426,457
      
426,726
  
Vehicles
    
27,121
      
25,671
      
25,436
  
Furniture and fixtures
    
124,201
      
113,696
      
111,610
  
Construction in progress
    
41,035
      
39,149
      
21,024
  
 
Gross property, plant and equipment
    
1,434,162
      
1,383,230
      
1,356,445
  
Accumulated depreciation
    
(565,977
)
    
(532,118
)
    
(498,245
)
 
Property, plant and equipment, net
  
$
868,185
    
$
851,112
    
$
858,200
  

The composition of accounts payable and accrued expenses follows (in thousands):

     
January 31,
  
July 31,
  
January 31,
     
2007
  
2006
  
2006
Trade payables
  
$
103,718
    
$
82,599
    
$
92,565
  
Deferred revenue
    
66,627
      
30,785
      
62,048
  
Deferred credits and deposits
    
27,071
      
24,026
      
43,885
  
Accrued salaries, wages and deferred compensation
    
34,709
      
31,954
      
29,181
  
Accrued benefits
    
26,704
      
24,538
      
20,011
  
Accrued interest
    
14,614
      
14,969
      
14,686
  
Liabilities to complete real estate projects
    
5,262
      
5,951
      
7,575
  
Other accruals
    
26,985
      
15,940
      
25,141
  
 
Total accounts payable and accrued expenses
  
$
305,690
    
$
230,762
    
$
295,092
  

The composition of other long-term liabilities follows (in thousands):

     
January 31,
  
July 31,
  
January 31,
     
2007
  
2006
  
2006
Private club deferred initiation fee revenue
  
$
94,110
    
$
91,438
    
$
90,270
  
Deferred real estate credits
    
62,774
      
54,578
      
33,876
  
Private club initiation deposits
    
9,330
      
1,308
      
1,253
  
Liabilities to complete real estate projects
    
6,301
      
550
      
550
  
Other long-term liabilities
    
13,334
      
10,616
      
6,984
  
 
Total other long-term liabilities
  
$
185,849
    
$
158,490
    
$
132,933
  

6.           Variable Interest Entities

The Company has determined that it is the primary beneficiary of four employee housing entities (collectively, the "Employee Housing Entities"), Breckenridge Terrace, LLC (“Breckenridge Terrace”), The Tarnes at BC, LLC ("Tarnes"), BC Housing LLC and Tenderfoot Seasonal Housing, LLC, which are Variable Interest Entities ("VIEs"), and has consolidated them in its Consolidated Condensed Financial Statements.  As a group, as of January 31, 2007, the Employee Housing Entities had total assets of $41.4 million (primarily recorded in property, plant and equipment, net) and total liabilities of $65.4 million (primarily recorded in long-term debt as “Employee Housing Bonds”).  All of the assets ($7.1 million as of January 31, 2007) of Tarnes serve as collateral for Tarnes' Tranche B Employee Housing Bonds.  The Company has issued under its senior credit facility (the “Credit Facility”) $38.3 million letters of credit related to the Tranche A Employee Housing Bonds and $12.6 million letters of credit related to the Tranche B Employee Housing Bonds.  The letters of credit would be triggered in the event that one of the entities defaults on required payments.  The letters of credit have no default provisions.

The Company has determined that it is the primary beneficiary of Avon Partners II (“APII”), which is a VIE.  APII owns commercial space and the Company currently leases substantially all of that space.  APII had total assets of $4.5 million (primarily recorded in property, plant and equipment, net) and no debt as of January 31, 2007.

The Company has determined that it is the primary beneficiary of FFT Investment Partners (“FFT”), which is a VIE.  FFT owns a private residence in Eagle County, Colorado.  The entity had total assets of $5.6 million (primarily recorded in real estate held for sale and investment) and no debt as of January 31, 2007.  In March 2007, the private residence owned by FFT was sold for $6.7 million, and as such, FFT is expected to be dissolved.

The Company, through various lodging subsidiaries, manages the operations of several entities that own hotels in which the Company has no ownership interest.  The Company also has extended a $1.5 million note receivable to one of these entities.  These entities were formed to acquire, own, operate and realize the value in resort hotel properties.  The Company managed the day-to-day operations of seven hotel properties as of January 31, 2007.  The Company has determined that the entities that own the hotel properties are VIEs, and the management contracts are significant variable interests in these VIEs.  The Company has also determined that it is not the primary beneficiary of these entities and, accordingly, is not required to consolidate any of these entities.  Based on information provided to the Company by owners of the entities, these VIEs had total assets of approximately $194.5 million and total liabilities of approximately $79.4 million as of January 31, 2007.  The Company's maximum exposure to loss as a result of its involvement with these VIEs is limited to the note receivable and accrued interest of approximately $1.7 million and the net book value of the intangible asset associated with the management agreements in the amount of $2.4 million as of January 31, 2007.

7.           Relocation and Separation Charges
 
In February 2006, the Company announced a plan to relocate its corporate headquarters; the plan was formally approved by the Company’s Board of Directors in April 2006.  The relocation process (which also includes the consolidation of certain other operations of the Company) was substantially completed by January 31, 2007.  The Company currently expects that the total charges associated with the relocation that will result in cash expenditures will be approximately $3.8 million (which includes charges for severance and retention of approximately $1.7 million, charges for contract termination costs of approximately $400,000 and facility, employee and other relocation costs of approximately $1.7 million), of which $3.6 million was incurred through January 31, 2007.  The above amounts do not reflect any of the anticipated benefits expected to be realized from the relocation and consolidation of offices.
 
 
The following table summarizes the activity and balances of the liability related to future payments of relocation charges, which has been recorded in “accounts payable and accrued expenses” in the accompanying Consolidated Condensed Balance Sheets (in thousands):
 
 
 
 
 
 
 
 
 
 Facility,
 
 
 
 
 
 
 Severance
 
 
 
 
 
 Employee
 
 
 
 
 
 
 and
 
 
 Contact
 
 
 and Other
 
 
 
 
 
 
 Retention
 
 
 Termination
 
 
 Relocation
 
 
 
 
 
 
 Benefits
 
 
 Costs
 
 
 Costs
 
 
 Total
 
 Balance at July 31, 2006
 $
 873
 
 $
 --
 
 $
 283
 
 $
 1,156
 
 Relocation charges
 
 67
 
 
 303
 
 
 865
 
 
 1,235
 
 Payments
 
 (911
)
 
 (106
)
 
 (1,060
)
 
 (2,077
)
 Balance at January 31, 2007
 $
 29
 
 $
 197
 
 $
 88
 
 $
 314
 

8.           Sale of Businesses

On January 19, 2006, JHL&S LLC, a limited liability company owned by wholly-owned subsidiaries of the Company, sold the assets constituting Snake River Lodge & Spa ("SRL&S") to Lodging Capital Partners, a private, Chicago-based hospitality investment firm ("LCP"), for $32.5 million, the proceeds of which were adjusted for normal working capital prorations.  The carrying value of the assets sold (net of liabilities assumed) was $26.9 million, which were recorded as "assets held for sale" prior to the sale.  The Company recorded a $4.7 million gain after consideration of all costs involved, which is included in "gain on sale of businesses, net" in the accompanying Consolidated Condensed Statements of Operations for the three and six months ended January 31, 2006.  The Company continues to manage SRL&S pursuant to a 15-year management agreement with LCP.

In conjunction with the December 8, 2004 sale of the Company’s 49% minority equity interest in Bachelor Gulch Resort, LLC (“BG Resort”), the Company had guaranteed payment of certain contingencies of BG Resort upon settlement.  At the time of sale, the Company recorded a liability related to these contingencies in the amount of $130,000.  In February 2006, the Company reached a settlement of these contingencies and recorded an additional liability in the amount of $82,000, which was recorded as a loss within "gain on sale of businesses, net" in the accompanying Consolidated Condensed Statements of Operations for the three and six months ended January 31, 2006.

9.           Put and Call Options

The Company holds an approximate 61.7% ownership interest in SSV.  The Company and GSSI, LLC ("GSSI"), the minority shareholder in SSV, have remaining put and call rights with respect to SSV: (1) beginning August 1, 2007 and each year thereafter, each of the Company and GSSI shall have the right to call or put respectively, 100% of GSSI's ownership interest in SSV to the Company during certain periods each year; and (2) GSSI has the right to put to the Company 100% of its ownership interest in SSV at any time after GSSI has been removed as manager of SSV or an involuntary transfer of the Company's ownership interest in SSV has occurred.  The put and call pricing is generally based on the trailing twelve month EBITDA (as defined in the operating agreement) of SSV for the fiscal period ended prior to the commencement of the put or call period, as applicable.

In February 2007, the Company and GSSI entered into an amended operating agreement whereby the Company will acquire 20% of GSSI’s ownership interest for $8.4 million, which is expected to close March 31, 2007.  As a result of this transaction, the Company will hold an approximate 69.3% ownership interest in SSV.  In addition, the put and call rights for GSSI’s remaining interest in SSV were extended to begin August 1, 2010 and the existing management agreement was extended to coincide with the exercise of the remaining put and call rights.

In March 2001, in connection with the Company's acquisition of a 51% ownership interest in RTP, LLC ("RTP"), the Company and RTP's minority shareholder entered into a put agreement whereby the minority shareholder can put up to an aggregate one-third of its original 49% interest in RTP to the Company during the period from August 1 through October 31 annually.  The put price is determined primarily by the trailing twelve month EBITDA (as defined in the underlying agreement) for the period ending prior to the beginning of each put period.  The Company has determined that this put option should be marked to fair value through earnings.  The put period was extended in October 2006, and again in February 2007 (the “Provisional Put Period”).  The Provisional Put period will expire no later than June 30, 2007.  As a result of the extensions, the Company did not recognize any gain or loss as the estimated fair value of the put option liability did not change during the three and six months ended January 31, 2007.  For the three and six months ended January 31, 2006, the Company recorded gains of $1.0 million and $34,000, respectively, representing a decrease in the estimated fair value of the put option liability during those periods.  As of January 31, 2007, the Company had a 54.5% interest in RTP.  RTP's minority shareholder has the option to put 27.8% of its remaining interest in RTP to the Company as of January 31, 2007.

In March 2007, the Company and RTP’s minority shareholder entered into a definitive agreement under which RTP’s minority shareholder will acquire the Company’s 54.5% interest in RTP for approximately $3.5 million.  As part of this agreement the Company will retain source code rights to its internal use software and internet solutions.  This transaction is expected to close on or around April 30, 2007.  As a result of this transaction, the Company will record a net loss of approximately $100,000 on the sale of its investment in RTP including the elimination of the put option liability and the write-off of the associated put option intangible asset.

10.           Related Party Transactions

In June 2006, the Company invested in the purchase of a residence in the Denver/Boulder, Colorado area, for Jeffrey W. Jones, the Company’s Senior Executive Vice President and Chief Financial Officer, and his family in connection with his relocation to the Company’s new headquarters in Broomfield, Colorado.  The Company contributed $650,000 towards the purchase price of the residence and thereby obtained a 31.0% undivided ownership interest in such residence.  In January 2007, Mr. Jones repurchased the Company’s 31.0% undivided ownership interest for an appraised value of $650,000.  The sale of the Company’s undivided ownership interest had been approved by the Board of Directors of the Company, in accordance with the Company's related party transactions policy.

In January 2007, Robert A. Katz, Chief Executive Officer of the Company, executed a purchase and sale agreement for the purchase of a unit at The Lodge at Vail Chalets project located near the Vista Bahn at the base of Vail Mountain for a total purchase price of $12.5 million.  Mr. Katz provided an earnest money deposit of $1.9 million.  The earnest money deposits will be used to fund the construction of The Lodge at Vail Chalets project.  The sale of the unit has been approved by the Board of Directors of the Company, in accordance with the Company's related party transactions policy.

As of January 31, 2006, the Company had outstanding a $500,000 note receivable from Keystone/Intrawest, LLC, a real estate development venture in which the Company has an equity-method investment.  This note was related to the fair market value of the land originally contributed to the partnership, and was repaid in the year ended July 31, 2006, as the underlying land was sold to third parties.

11.           Commitments and Contingencies

Metropolitan Districts

The Company credit-enhances $8.5 million of bonds issued by Holland Creek Metropolitan District ("HCMD") through an $8.6 million letter of credit issued against the Company's Credit Facility.  HCMD's bonds were issued and used to build infrastructure associated with the Company's Red Sky Ranch residential development.  The Company has agreed to pay capital improvement fees to Red Sky Ranch Metropolitan District ("RSRMD") until RSRMD's revenue streams from property taxes are sufficient to meet debt service requirements under HCMD's bonds, and the Company has recorded a liability of $1.1 million, $1.3 million and $1.7 million, primarily within "other long-term liabilities" in the accompanying Consolidated Condensed Balance Sheets, as of January 31, 2007, July 31, 2006 and January 31, 2006, respectively, with respect to the estimated present value of future RSRMD capital improvement fees.  The Company estimates that it will make capital improvement fee payments under this arrangement through the year ending July 31, 2008.

Guarantees

As of January 31, 2007, the Company had various other letters of credit outstanding in the amount of $68.9 million, a portion of which are not issued against the Credit Facility, consisting primarily of $51.0 million in support of the Employee Housing Bonds, $4.5 million related to workers' compensation for Heavenly and The Lodge at Rancho Mirage, $9.1 million of construction performance guarantees and $2.9 million for workers' compensation and general liability deductibles related to the construction of Gore Creek and Arrabelle.

In addition to the guarantees noted above, the Company has entered into contracts in the normal course of business which include certain indemnifications within the scope of Financial Interpretations No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others" (“FIN 45”) under which it could be required to make payments to third parties upon the occurrence or non-occurrence of certain future events.  These indemnities include indemnities to licensees in connection with the licensees' use of the Company's trademarks and logos, indemnities for liabilities associated with the infringement of other parties' technology based upon the Company's software products, indemnities related to liabilities associated with the use of easements, indemnities related to employment of contract workers, the Company's use of trustees, indemnities related to the Company's use of public lands and environmental indemnifications.  The duration of these indemnities generally is indefinite and generally do not limit the future payments the Company could be obligated to make.

As permitted under applicable law, the Company and certain of its subsidiaries indemnify their directors and officers over their lifetimes for certain events or occurrences while the officer or director is, or was, serving the Company or its subsidiaries in such a capacity.  The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a director and officer insurance policy that should enable the Company to recover a portion of any future amounts paid.

The Company guarantees the revenue streams associated with selected routes flown by certain airlines into Eagle County, Colorado, Regional Airport; these guarantees are generally capped at certain levels.  As of January 31, 2007, the Company has recorded a liability related to the airline guarantees of $850,000, which represents the estimated amount the Company will be required to pay.  Payments, if any, under these guarantees are expected to be made during the year ending July 31, 2007.

Unless otherwise noted, the Company has not recorded a liability for the letters of credit, indemnities and other guarantees noted above in the accompanying Consolidated Condensed Financial Statements, either because the Company has recorded on its Consolidated Condensed Balance Sheet the underlying liability associated with the guarantee, the guarantee or indemnification existed prior to January 1, 2003 or the guarantee is with respect to the Company’s own performance and is therefore not subject to the measurement requirements of FIN 45, or because the Company has calculated the fair value of the indemnification or guarantee to be immaterial based upon the current facts and circumstances that would trigger a payment under the indemnification clause.  In addition, with respect to certain indemnifications it is not possible to determine the maximum potential amount of liability under these guarantees due to the unique set of facts and circumstances that are likely to be involved in each particular claim and indemnification provision.  Historically, payments made by the Company under these obligations have not been material.

As noted above, the Company makes certain indemnifications to licensees in connection with their use of the Company's trademarks and logos.  The Company does not record any product warranty liability with respect to these indemnifications.

Commitments

In the ordinary course of obtaining necessary zoning and other approvals for the Company's potential real estate development projects, the Company may contingently commit to the completion of certain infrastructure, improvements and other costs related to the projects.  Fulfillment of such commitments is required only if the Company moves forward with the development project.  The determination of whether the Company ultimately completes a development project is entirely at the Company's discretion, and is generally contingent upon, among other considerations, receipt of satisfactory zoning and other approvals and the current status of the Company's analysis of the economic viability of the project, including the costs associated with the contingent commitments.  The Company currently has obligations, recorded as liabilities in the accompanying Consolidated Condensed Balance Sheet, to complete or fund certain improvements with respect to real estate developments; the Company has estimated such costs to be approximately $11.6 million as of January 31, 2007, and anticipates completion of the majority of these commitments within the next two years.

The Company has completed installing a new gondola lift and related infrastructure at Breckenridge for the 2006/07 ski season pursuant to an agreement with the Town of Breckenridge (the “Town”).  The Town agreed to contribute $6.7 million to fund construction of the gondola, as well as the already completed skiway.  The funds contributed by the Town reduced the book value of the gondola and related infrastructure.

Self Insurance

The Company is self-insured for claims under its health benefit plans and for workers’ compensation claims, subject to a stop loss policy.  The self-insurance liability related to workers' compensation is determined actuarially based on claims filed.  The self-insurance liability related to claims under the Company’s health benefit plans is determined based on internal and external analysis of actual claims.  The amounts related to these claims are included as a component of accrued benefits in accounts payable and accrued expenses (see Note 5, Supplementary Balance Sheet Information).

Legal

The Company is a party to various lawsuits arising in the ordinary course of business, including Resort (Mountain and Lodging) related cases and contractual and commercial litigation that arises from time to time in connection with the Company's real estate operations.  Management believes the Company has adequate insurance coverage or has accrued for loss contingencies for all known matters that are deemed to be probable losses and estimable.

Cheeca Lodge & Spa Contract Dispute

In March 2006, RockResorts was notified by the ownership of Cheeca Lodge & Spa, formerly a RockResorts managed property, that its management agreement was being terminated effective immediately.  RockResorts believed that the termination was in violation of the management agreement and sought monetary damages, and recovery of attorney’s fees and costs.  Cheeca Holdings, LLC, the entity owner of the hotel property, asserted that RockResorts breached the management contract, among other alleged breaches, and sought a ruling that it had the right to terminate the management contract and sought monetary damages, and recovery of attorneys’ fees and costs.  Pursuant to the dispute resolution provisions of the management agreement, the disputed matter went before a single judge arbitrator at the JAMS Arbitration Tribunal in Chicago, Illinois.  The Company has incurred $672,000 and $4.3 million of legal related costs related to this matter in the three and six months ended January 31, 2007, respectively, which is included in “contract dispute charges” in the accompanying Consolidated Condensed Statements of Operations for the three and six months ended January 31, 2007.  In February 2007, the arbitrator rendered a decision in favor of the Company (see Note 14, Subsequent Event, for more information regarding the arbitrator’s ruling).

Breckenridge Terrace Employee Housing Construction Defect/Water Intrusion Claims

During the year ended July 31, 2004, the Company became aware of water intrusion and condensation problems causing mold damage in the 17 building employee housing facility owned by Breckenridge Terrace, an Employee Housing Entity in which the Company is a member and manager.  As a result, the facility was not available for occupancy during the 2003/04 ski season.  All buildings at the facility required mold remediation and reconstruction and this work began in the year ended July 31, 2004.  Breckenridge Terrace recorded a $7.0 million liability in the year ended July 31, 2004 for the estimated cost of remediation and reconstruction efforts.  These costs were funded by a loan to Breckenridge Terrace from the Company member of Breckenridge Terrace.  As of July 31, 2006, Breckenridge Terrace had substantially completed all remediation efforts.

Forensic construction experts retained by Breckenridge Terrace determined that the water intrusion and condensation problems were the result of construction and design defects.  In accordance with Colorado law, Breckenridge Terrace served separate notices of claims on the general contractor, architect and developer and initiated arbitration proceedings which have since been closed.  During the three and six months ended January 31, 2006, the Company recorded a $852,000 mold remediation credit due to Breckenridge Terrace receiving reimbursement from third parties for costs incurred in conjunction with its mold remediation efforts.  This credit has been recognized by the Company as reduction of the remediation expense that was originally recognized in the year ended July 31, 2004.

12.           Stock Repurchase Plan

On March 9, 2006, the Company's Board of Directors approved the repurchase of up to 3,000,000 shares of common stock.  During the three and six months ended January 31, 2007, the Company repurchased 167,700 and 358,400 shares of common stock at a cost of $7.5 million and $15.0 million, respectively.  Since inception of this stock repurchase plan, the Company has repurchased 673,500 shares at a cost of approximately $25.8 million.  As of January 31, 2007, 2,326,500 shares remained available to repurchase under the existing repurchase authorization.  Shares of common stock purchased pursuant to the repurchase program will be held as treasury shares and may be used for the issuance of shares under the Company's employee stock based compensation plans.  Acquisitions under the share repurchase program will be made from time to time at prevailing prices as permitted by applicable laws, and subject to market conditions and other factors.  The timing as well as the number of shares that may be repurchased under the program will depend on a number of factors including the Company's future financial performance, the Company's available cash resources and competing uses for cash that may arise in the future, the restrictions in the Credit Facility and in the Indenture, dated as of January 29, 2004 among the Company, the guarantors therein and the Bank of New York, as Trustee, prevailing prices of the Company's common stock and the number of shares that become available for sale at prices that the Company believes are attractive.  The stock repurchase program may be discontinued at any time and is not expected to have a significant impact on the Company's capitalization.

13.           Guarantor Subsidiaries and Non-Guarantor Subsidiaries -- Restated

The Company's payment obligations under the 6.75% Notes (see Note 4, Long-Term Debt) are fully and unconditionally guaranteed on a joint and several, senior subordinated basis by substantially all of the Company's consolidated subsidiaries (collectively, and excluding Non-Guarantor Subsidiaries (as defined below), the "Guarantor Subsidiaries") except for Boulder/Beaver LLC, Colter Bay Corporation, Eagle Park Reservoir Company, Forest Ridge Holdings, Inc., Gros Ventre Utility Company, Jackson Lake Lodge Corporation, Jenny Lake Lodge, Inc., Mountain Thunder, Inc., RT Partners, Inc. and RTP, SSV, Larkspur Restaurant & Bar, LLC, Vail Associates Investments, Inc., Arrabelle, Gore Creek, Timber Trail, Inc. and VR Holdings, Inc. (together, the "Non-Guarantor Subsidiaries").  APII, FFT and the Employee Housing Entities are included with the Non-Guarantor Subsidiaries for purposes of the consolidated condensed financial information, but are not considered subsidiaries under the indentures governing the 6.75% Notes.

Presented below is the consolidated condensed financial information of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries.  Financial information for the Non-Guarantor subsidiaries is presented in the column titled "Other Subsidiaries."  Balance sheet data is presented as of January 31, 2007, July 31, 2006 and January 31, 2006.  Statement of operations data is presented for the three and six months ended January 31, 2007 and 2006.  Statement of cash flows data is presented for the six months ended January 31, 2007 and 2006.

Investments in subsidiaries are accounted for by the Parent Company and Guarantor Subsidiaries using the equity method of accounting.  Net income (loss) of Guarantor and Non-Guarantor Subsidiaries is, therefore, reflected in the Parent Company's and Guarantor Subsidiaries' investments in and advances to (from) subsidiaries.  Net income (loss) of the Guarantor and Non-Guarantor Subsidiaries is reflected in Guarantor Subsidiaries and Parent Company as equity in consolidated subsidiaries.  The elimination entries eliminate investments in Other Subsidiaries and intercompany balances and transactions for consolidated reporting purposes.




Supplemental Condensed Consolidating Balance Sheet
As of January 31, 2007
(in thousands)
(Unaudited)
                                 
             
100% Owned
                  
       
Parent
    
Guarantor
    
Other
    
Eliminating
    
       
Company
    
Subsidiaries
    
Subsidiaries
  
Entries
    
Consolidated
Current assets:
                            
 
Cash and cash equivalents
$
--
  
$
247,083
  
$
7,783
  
$
--
  
$
254,866
 
Restricted cash
  
--
    
25,404
    
1,388
    
--
    
26,792
 
Trade receivables, net
  
--
    
37,578
    
6,150
    
--
    
43,728
 
Inventories, net
  
--
    
9,034
    
40,791
    
--
    
49,825
 
Other current assets
  
13,338
    
23,509
    
2,071
    
--
    
38,918
   
Total current assets
  
13,338
    
342,608
    
58,183
    
--
    
414,129
Property, plant and equipment, net
  
--
    
784,486
    
83,699
    
--
    
868,185
Real estate held for sale and investment
  
--
    
118,917
    
174,302
    
--
    
293,219
Goodwill, net
  
--
    
118,475
    
17,336
    
--
    
135,811
Intangible assets, net
  
--
    
57,168
    
16,547
    
--
    
73,715
Other assets
  
5,001
    
26,948
    
15,608
    
--
    
47,557
Investments in subsidiaries and advances to (from) parent
  
1,059,064
    
(535,123
)
  
(64,043
)
  
(459,898
)
  
--
 
Total assets
$
1,077,403
  
$
913,479
  
$
301,632
  
$
(459,898
)
$
1,832,616
                                 
Current liabilities:
                            
 
Accounts payable and accrued expenses
$
19,866
  
$
231,873
  
$
53,951
  
$
--
  
$
305,690
 
Income taxes payable
  
9,103
    
--
    
--
    
--
    
9,103
 
Long-term debt due within one year
  
--
    
35
    
405
    
--
    
440
   
Total current liabilities
  
28,969
    
231,908
    
54,356
    
--
    
315,233
Long-term debt
  
390,000
    
57,727
    
104,139
    
--
    
551,866
Other long-term liabilities
  
13
    
124,415
    
61,421
    
--
    
185,849
Deferred income taxes
  
--
    
83,946
    
21
    
--
    
83,967
Put option liabilities
  
--
    
1,245
    
--
    
--
    
1,245
Minority interest in net assets of consolidated subsidiaries
  
--
    
--
    
36,035
    
--
    
36,035
Total stockholders' equity
  
658,421
    
414,238
    
45,660
    
(459,898
)
  
658,421
   
Total liabilities and stockholders' equity
$
1,077,403
  
$
913,479
  
$
301,632
  
$
(459,898
)
$
1,832,616



Supplemental Condensed Consolidating Balance Sheet
As of July 31, 2006
(in thousands)
                                     
           
100% Owned
                        
   
Parent
  
Guarantor
  
Other
  
Eliminating
        
   
Company
  
Subsidiaries
  
Subsidiaries
  
Entries
  
Consolidated
Current assets:
                                        
Cash and cash equivalents
  
$
--
    
$
179,998
    
$
11,796
    
$
--
    
$
191,794
  
Restricted cash
    
--
      
14,787
      
5,535
      
--
      
20,322
  
Trade receivables, net
    
--
      
31,030
      
4,919
      
--
      
35,949
  
Inventories, net
    
--
      
8,595
      
33,683
      
--
      
42,278
  
Other current assets
    
11,945
      
21,308
      
2,378
      
--
      
35,631
  
Total current assets
    
11,945
      
255,718
      
58,311
      
--
      
325,974
  
Property, plant and equipment, net
    
--
      
782,158
      
68,954
      
--
      
851,112
  
Real estate held for sale and investment
    
--
      
154,330
      
105,054
      
--
      
259,384
  
Goodwill, net
    
--
      
118,475
      
17,336
      
--
      
135,811
  
Intangible assets, net
    
--
      
58,185
      
16,924
      
--
      
75,109
  
Other assets
    
5,356
      
20,510
      
14,387
      
--
      
40,253
  
Investments in subsidiaries and advances to (from) parent
    
1,053,209
      
(541,621
)
    
(51,690
)
    
(459,898
)
    
--
  
Total assets
  
$
1,070,510
    
$
847,755
    
$
229,276
    
$
(459,898
)
  
$
1,687,643
  
                                         
Current liabilities:
                                        
Accounts payable and accrued expenses
  
$
19,857
    
$
161,179
    
$
49,726
    
$
--
    
$
230,762
  
Income taxes payable
    
17,517
      
--
      
--
      
--
      
17,517
  
Long-term debt due within one year
    
--
      
4,045
      
1,870
      
--
      
5,915
  
Total current liabilities
    
37,374
      
165,224
      
51,596
      
--
      
254,194
  
Long-term debt
    
390,000
      
57,734
      
77,579
      
--
      
525,313
  
Other long-term liabilities
    
359
      
121,995
      
36,136
      
--
      
158,490
  
Deferred income taxes
    
--
      
72,919
      
145
      
--
      
73,064
  
Put option liabilities
    
--
      
1,245
      
--
      
--
      
1,245
  
Minority interest in net assets of consolidated subsidiaries
    
--
      
13,285
      
19,275
      
--
      
32,560
  
Total stockholders’ equity
    
642,777
      
415,353
      
44,545
      
(459,898
)
    
642,777
  
Total liabilities and stockholders’ equity
  
$
1,070,510
    
$
847,755
    
$
229,276
    
$
(459,898
)
  
$
1,687,643
  





Supplemental Condensed Consolidating Balance Sheet
  
As of January 31, 2006
  
(in thousands)
  
(Unaudited)
  
                                     
               
100% Owned
                    
         
Parent
    
Guarantor
    
Other
    
Eliminating
        
         
Company
    
Subsidiaries
    
Subsidiaries
    
Entries
    
Consolidated
  
 
Current assets:
                              
   
Cash and cash equivalents
$
--
  
$
134,279
  
$
41,262
  
$
--
  
$
175,541
  
   
Restricted cash
  
--
    
20,546
    
3,169
    
--
    
23,715
  
   
Receivables, net
  
--
    
35,038
    
4,674
    
--
    
39,712
  
   
Inventories, net
  
--
    
8,669
    
35,308
    
--
    
43,977
  
   
Other current assets
  
12,769
    
24,764
    
6,376
    
--
    
43,909
  
     
Total current assets
  
12,769
    
223,296
    
90,789
    
--
    
326,854
  
 
Property, plant and equipment, net
  
--
    
787,860
    
70,340
    
--
    
858,200
  
 
Real estate held for sale and investment
  
--
    
138,559
    
82,489
    
--
    
221,048
  
 
Goodwill, net
  
--
    
135,811
    
--
    
--
    
135,811
  
 
Intangible assets, net
  
--
    
42,902
    
34,639
    
--
    
77,541
  
 
Other assets
  
5,711
    
16,292
    
11,223
    
--
    
33,226
  
 
Investments in subsidiaries and advances to (from) parent
  
979,831
    
(449,031
)
  
(70,902
)
  
(459,898
)
  
--
  
     
Total assets
$
998,311
  
$
895,689
  
$
218,578
  
$
(459,898
)
$
1,652,680
  
                                 
 
Current liabilities:
                              
   
Accounts payable and accrued expenses
$
14,986
  
$
224,339
  
$
55,767
  
$
--
  
$
295,092
  
   
Income taxes payable
  
6,324
    
--
    
--
    
--
    
6,324
  
   
Long-term debt due within one year
  
--
    
4,044
    
1,629
    
--
    
5,673
  
     
Total current liabilities
  
21,310
    
228,383
    
57,396
    
--
    
307,089
  
 
Long-term debt
  
390,000
    
57,767
    
69,871
    
--
    
517,638
  
 
Other long-term liabilities
  
363
    
98,648
    
33,922
    
--
    
132,933
  
 
Deferred income taxes
  
--
    
76,770
    
267
    
--
    
77,037
  
 
Minority interest in net assets of consolidated subsidiaries
  
--
    
--
    
31,345
    
--
    
31,345
  
 
Total stockholders' equity
  
586,638
    
434,121
    
25,777
    
(459,898
)
  
586,638
  
     
Total liabilities and stockholders' equity
$
998,311
  
$
895,689
  
$
218,578
  
$
(459,898
)
$
1,652,680
  



 
Supplemental Condensed Consolidating Statement of Operations
 
For the three months ended January 31, 2007
 
(in thousands)
 
(Unaudited)
                                     
             
100% Owned
                      
       
Parent
    
Guarantor
    
Other
    
Eliminating
          
       
Company
    
Subsidiaries
    
Subsidiaries
    
Entries
    
Consolidated
    
Total net revenue
$
--
  
$
259,244
  
$
104,346
  
$
(2,552
)
$
361,038
    
Total operating expense
  
4,584
    
181,996
    
79,260
    
(2,552
)
  
263,288
    
 
(Loss) income from operations
  
(4,584
)
  
77,248
    
25,086
    
--
    
97,750
    
Other expense, net
  
(6,751
)
  
1,584
    
(999
)
  
--
    
(6,166
)
  
Equity investment income, net
  
--
    
1,496
    
--
    
--
    
1,496
    
Minority interest in income of
consolidated subsidiaries, net
  
--
    
--
    
(6,152
)
  
--
    
(6,152
)
  
 
(Loss) income before income taxes
  
(11,335
)
  
80,328
    
17,935
    
--
    
86,928
    
 
Benefit (provision) for income taxes
  
4,420
    
(38,400
)
  
78
    
--
    
(33,902
)
  
 
Net (loss) income before equity in income
                                
 
(loss) of consolidated subsidiaries
  
(6,915
)
  
41,928
    
18,013
    
--
    
53,026
    
Equity in income (loss) of
consolidated subsidiaries
  
59,941
    
--
    
--
    
(59,941
)
  
--
    
Net income (loss)
$
53,026
  
$
41,928
  
$
18,013
  
$
(59,941
)
$
53,026
    




   
Supplemental Condensed Consolidating Statement of Operations
   
For the three months ended January 31, 2006
   
(in thousands)
   
(Unaudited)
                                     
             
100% Owned
                      
       
Parent
    
Guarantor
    
Other
    
Eliminating
          
       
Company
    
Subsidiaries
    
Subsidiaries
    
Entries
    
Consolidated
    
Total net revenue
$
--
  
$
226,506
  
$
63,570
  
$
(2,060
)
$
288,016
    
Total operating expense
  
4,082
    
160,439
    
48,547
    
(2,060
)
  
211,008
    
 
(Loss) income from operations
  
(4,082
)
  
66,067
    
15,023
    
--
    
77,008
    
Other expense, net
  
(6,872
)
  
(722
)
  
(811
)
  
--
    
(8,405
)
  
Equity investment income, net
  
--
    
1,486
    
--
    
--
    
1,486
    
Gain on sale of businesses, net
  
--
    
4,625
    
--
    
--
    
4,625
    
Gain on put options
  
--
    
1,026
    
--
    
--
    
1,026
    
Minority interest in income of
consolidated subsidiaries, net
  
--
    
--
    
(5,231
)
  
--
    
(5,231
)
  
 
(Loss) income before income taxes
  
(10,954
)
  
72,482
    
8,981
    
--
    
70,509
    
 
Benefit (provision) for income taxes
  
4,272
    
(31,831
)
  
61
    
--
    
(27,498
)
  
 
Net (loss) income before equity in income
                                
 
(loss) of consolidated subsidiaries
  
(6,682)
    
40,651
    
9,042
    
--
    
43,011
    
Equity in income (loss) of
consolidated subsidiaries
  
49,691
    
--
    
--
    
(49,691
)
  
--
    
Net income (loss)
$
43,009
  
$
40,651
  
$
9,042
  
$
(49,691
)
$
43,011