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 October 31, 2006
 
     
 
¨ 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 December 5, 2006, 38,745,330 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 three months ended October 31, 2006 and 2005 as described in Note 13, 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 has restated 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 (increase) of cash flows provided by (used in) 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 January 31, 2007 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 December 11, 2006 (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 Statements of Cash Flows, Note 12 Guarantor Subsidiaries and Non-Guarantor Subsidiaries – Restated, Note 13 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 three months ended October 31, 2006, including any amendments to those filings.




     
PART I
FINANCIAL INFORMATION
 
     
Item 1.
F-1
Item 2.
1
Item 3.
10
Item 4.
11
     
     
PART II
OTHER INFORMATION
 
     
Item 1.
11
Item 1A.
11
Item 2.
11
Item 3.
12
Item 4.
12
Item 5.
12
Item 6.
12



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


 
Consolidated Condensed Balance Sheets
 
(In thousands, except share and per share amounts)
 
                       
       
October 31,
   
July 31,
   
October 31,
 
       
2006
   
2006
   
2005
 
       
(unaudited)
         
(unaudited)
 
Assets
                 
Current assets:
                 
 
Cash and cash equivalents
$
117,311
 
$
191,794
 
$
58,692
 
 
Restricted cash
 
20,354
   
20,322
   
17,400
 
 
Trade receivables, net
 
27,532
   
35,949
   
25,458
 
 
Inventories, net
 
56,623
   
42,278
   
50,571
 
 
Other current assets
 
39,082
   
35,631
   
42,258
 
 
Assets held for sale
 
--
   
--
   
26,857
 
 
Total current assets
 
260,902
   
325,974
   
221,236
 
Property, plant and equipment, net (Note 5)
 
856,502
   
851,112
   
857,960
 
Real estate held for sale and investment
 
301,781
   
259,384
   
194,697
 
Goodwill, net
 
135,811
   
135,811
   
135,507
 
Intangible assets, net
 
74,252
   
75,109
   
77,642
 
Other assets
 
45,737
   
40,253
   
32,762
 
 
Total assets
$
1,674,985
 
$
1,687,643
 
$
1,519,804
 
                       
Liabilities and Stockholders' Equity
                 
Current liabilities:
                 
 
Accounts payable and accrued expenses (Note 5)
$
268,490
 
$
230,762
 
$
246,801
 
 
Income taxes payable
 
14,986
   
17,517
   
12,191
 
 
Long-term debt due within one year (Note 4)
 
430
   
5,915
   
6,128
 
 
Total current liabilities
 
283,906
   
254,194
   
265,120
 
Long-term debt (Note 4)
 
542,990
   
525,313
   
524,174
 
Other long-term liabilities
 
165,746
   
158,490
   
133,140
 
Deferred income taxes
 
46,959
   
73,064
   
49,741
 
Commitments and contingencies (Note 10)
                 
Put option liabilities (Note 8)
 
1,245
   
1,245
   
1,026
 
Minority interest in net assets of consolidated subsidiaries
 
29,835
   
32,560
   
26,659
 
Stockholders' equity:
                 
 
Preferred stock, $0.01 par value, 25,000,000 shares authorized, zero shares issued and outstanding
 
--
   
--
   
--
 
 
Common stock, $0.01 par value, 100,000,000 shares authorized, 39,210,917 (unaudited), 39,036,282 and 37,166,504 (unaudited) shares issued as of October 31, 2006, July 31, 2006 and October 31, 2005, respectively
 
392
   
390
   
372
 
 
Additional paid-in capital
 
514,345
   
509,505
   
455,935
 
 
Retained earnings
 
107,906
   
143,721
   
63,637
 
 
Treasury stock (Note 11)
 
(18,339
)
 
(10,839
)
 
--
 
   
Total stockholders' equity
 
604,304
   
642,777
   
519,944
 
     
Total liabilities and stockholders' equity
$
1,674,985
 
$
1,687,643
 
$
1,519,804
 

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

      
      
    


   
 
Consolidated Condensed Statements of Operations
 
(In thousands, except per share amounts)
 
(Unaudited)
 
                   
         
Three Months Ended
 
         
October 31,
 
         
2006
   
2005
 
Net revenue:
           
 
Mountain
$
46,164
 
$
40,277
 
 
Lodging
 
40,408
   
41,750
 
 
Real estate
 
26,922
   
3,393
 
   
Total net revenue
 
113,494
   
85,420
 
Segment operating expense:
           
 
Mountain
 
79,487
   
72,291
 
 
Lodging
 
36,349
   
37,641
 
 
Real estate
 
26,118
   
6,069
 
   
Total segment operating expense
 
141,954
   
116,001
 
Other operating expense:
           
 
Depreciation and amortization
 
(21,585
)
 
(18,923
)
 
Relocation and separation charges (Note 7)
 
(735
)
 
--
 
 
Asset impairment charges
 
--
   
(136
)
 
Loss on disposal of fixed assets, net
 
(81
)
 
(240
)
Loss from operations
 
(50,861
)
 
(49,880
)
 
Mountain equity investment income, net
 
835
   
850
 
 
Real estate equity investment income, net
 
--
   
69
 
 
Investment income, net
 
2,063
   
1,188
 
 
Interest expense, net
 
(8,936
)
 
(9,437
)
 
Contract dispute charges (Note 10)
 
(3,605
)
 
--
 
 
Loss on put options, net (Note 8)
 
--
   
(992
)
 
Minority interest in loss of consolidated subsidiaries, net
 
1,790
   
1,926
 
Loss before benefit from income taxes
 
(58,714
)
 
(56,276
)
 
Benefit from income taxes
 
22,899
   
21,947
 
Net loss
$
(35,815
)
$
(34,329
)
             
Per share amounts (Note 3):
           
 
Basic net loss per share
$
(0.93
)
$
(0.93
)
 
Diluted net loss per share
$
(0.93
)
$
(0.93
)

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

      
            
    


Consolidated Condensed Statements of Cash Flows
(In thousands)
(Unaudited)
                   
         
Three Months Ended
 
         
October 31,
 
         
2006
   
2005
 
         
(as restated,
   
(as restated,
 
         
see Note 13)
   
see Note 13)
 
Net cash used in operating activities
$
(52,760
)
$
(61,194
)
Cash flows from investing activities:
           
 
Capital expenditures
 
(28,558
)
 
(32,448
)
 
Other investing activities, net
 
89
   
(3,953
)
   
Net cash used in investing activities
 
(28,469
)
 
(36,401
)
Cash flows from financing activities:
           
 
Repurchases of common stock
 
(7,500
)
 
--
 
 
Proceeds from borrowings under long-term debt
 
42,039
   
18,887
 
 
Payments of long-term debt
 
(29,847
)
 
(10,303
)
 
Proceeds from exercise of stock options
 
2,324
   
11,502
 
 
Other financing activities, net
 
(270
)
 
(379
)
   
Net cash provided by financing activities
 
6,746
   
19,707
 
     
Net decrease in cash and cash equivalents
 
(74,483
)
 
(77,888
)
Cash and cash equivalents:
           
 
Beginning of period
 
191,794
   
136,580
 
 
End of period
$
117,311
 
$
58,692
 

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 13.  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 Loss 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 shareholders 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 common shares that would then share in the earnings of the Company.  Presented below is basic and diluted EPS for the three months ended October 31, 2006 and 2005 (in thousands, except per share amounts):

   
Three Months Ended October 31,
 
2006
 
2005
 
Basic
 
Diluted
 
Basic
 
Diluted
Net loss per common share:
                             
Net loss
$
(35,815
)
 
$
(35,815
)
 
$
(34,329
)
 
$
(34,329
)
                               
Weighted-average shares outstanding
 
38,715
     
38,715
     
36,790
     
36,790
 
Effect of dilutive securities
 
--
     
--
     
--
     
--
 
Total shares
 
38,715
     
38,715
     
36,790
     
36,790
 
                               
Net loss per common share
$
 
(0.93
)
 
$
(0.93
)
 
$
(0.93
)
 
$
(0.93
)

The number of shares issuable on the exercise of stock based awards that were excluded from the calculation of diluted net loss per share because the effect of their inclusion would have been anti-dilutive totaled 1.6 million and 3.8 million (maximum number of vested and unvested stock based awards) for the three months ended October 31, 2006 and 2005, respectively.  

4.  Long-Term Debt

Long-term debt as of October 31, 2006, July 31, 2006 and October 31, 2005 is summarized as follows (in thousands):
 
   
October 31,
July 31,
October 31,
 
Maturity (a)
2006
2006
2005
Credit Facility Revolver
2010
$
--
$
--
$
--
SSV Facility
2011
 
--
 
6,261
 
17,785
Industrial Development Bonds
2007-2020
 
57,700
 
61,700
 
61,700
Employee Housing Bonds
2027-2039
 
52,575
 
52,575
 
52,575
Non-Recourse Real Estate Financings (b)
2009
 
35,970
 
13,357
 
382
6.75% Senior Subordinated Notes ("6.75% Notes")
2014
 
390,000
 
390,000
 
390,000
Other
2007-2029
 
7,175
 
7,335
 
7,860
Total debt
   
543,420
 
531,228
 
530,302
Less:  Current maturities (c)
   
430
 
5,915
 
6,128
Long-term debt
 
$
542,990
$
525,313
$
524,174

(a)  
Maturities are based on the Company's July 31 fiscal year end.

(b)  
At October 31, 2006 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 three months ended October 31, 2006.

(c)  
Current maturities represent principal payments due in the next 12 months.

Aggregate maturities for debt outstanding as of October 31, 2006 are as follows (in thousands):

Fiscal 2007
 
$
270
Fiscal 2008
   
344
Fiscal 2009
   
51,235
Fiscal 2010
   
262
Fiscal 2011
   
1,738
Thereafter
   
489,571
Total debt
 
$
543,420

The Company incurred gross interest expense of $10.2 million and $9.5 million for the three months ended October 31, 2006 and 2005, respectively, of which $673,000 and $484,000 was amortization of deferred financing costs.  The Company capitalized $1.3 million and $83,000 of interest during the three months ended October 31, 2006 and 2005, respectively.

5.  Supplementary Balance Sheet Information

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

 
October 31,
July 31,
October 31,
 
2006
2006
2005
Land and land improvements
$
244,786
 
$
248,941
 
$
236,441
 
Buildings and building improvements
 
531,829
   
529,316
   
506,281
 
Machinery and equipment
 
426,886
   
426,457
   
396,705
 
Vehicles
 
25,502
   
25,671
   
24,867
 
Furniture and fixtures
 
117,574
   
113,696
   
101,743
 
Construction in progress
 
57,678
   
39,149
   
75,064
 
 
Gross property, plant and equipment
 
1,404,255
   
1,383,230
   
1,341,101
 
Accumulated depreciation
 
(547,753
)
 
(532,118
)
 
(483,141
)
 
Property, plant and equipment, net
$
856,502
 
$
851,112
 
$
857,960
 

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

     
October 31,
 
July 31,
 
October 31,
     
2006
 
2006
 
2005
Trade payables
$
103,975
 
$
82,599
 
$
85,482
   
Deferred revenue
 
68,277
   
30,785
   
59,737
   
Deferred credits and deposits
 
24,318
   
24,026
   
31,779
   
Accrued salaries, wages and deferred compensation
 
17,370
   
31,954
   
15,488
   
Accrued benefits
 
23,428
   
24,538
   
17,864
   
Accrued interest
 
7,434
   
14,969
   
6,803
   
Liabilities to complete real estate projects, short term
 
4,363
   
5,951
   
9,597
   
Other accruals
 
19,325
   
15,940
   
20,051
   
 
Total accounts payable and accrued expenses
$
268,490
 
$
230,762
 
$
246,801
   

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, 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 October 31, 2006, the Employee Housing Entities had total assets of $41.8 million (primarily recorded in property, plant and equipment, net) and total liabilities of $65.0 million (primarily recorded in long-term debt as “Employee Housing Bonds”).  All of the assets ($7.3 million as of October 31, 2006) 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 $4.2 million (primarily recorded in property, plant and equipment, net) and no debt as of October 31, 2006.

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 October 31, 2006.

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 has managed the day-to-day operations of four of the hotel properties since November 2001, began managing two of the properties during the fourth quarter of the year ended July 31, 2005 and began managing one of the properties during the second quarter of the year ended July 31, 2006.  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 $185.4 million and total liabilities of approximately $75.8 million as of October 31, 2006.  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 October 31, 2006.

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) is expected to be substantially completed by the end of the second quarter of the year ending July 31, 2007.  The Company currently expects that the total charges associated with the relocation that will result in cash expenditures will be approximately $3.7 million to $4.1 million (which includes charges for severance and retention of approximately $1.7 million, charges for contract termination costs of approximately $400,000 and facility and employee and other relocation costs of approximately $1.6 million to $2.0 million), of which $3.1 million was incurred through October 31, 2006.  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
 
66 
 
 
33 
 
 
636
 
 
735
 
 Payments
 
 (768
)
 
 (33
)
 
 (880
)
 
 (1,681
)
 Balance at October, 31, 2006
 $
171
 
 $
--
 
 $
39
 
 $
 210
 
 
In addition, in February 2006, Adam Aron, the former Chairman and Chief Executive Officer of the Company, resigned.  In connection with Mr. Aron's resignation, the Company entered into a separation agreement with Mr. Aron, whereby the Company recorded $2.7 million of separation related expenses, which was included in “relocation and separation charges” in the Consolidated Statements of Operation for the year ended July 31, 2006.  Payments of Mr. Aron’s separation benefits were made during the three months ended October 31, 2006.

8.  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 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 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.  In October 2006, the put period was extended (the “Provisional Put Period”).  The Provisional Put Period will expire no later than March 3, 2007.  As a result of the extension, 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 months ended October 31, 2006.  For the three months ended October 31, 2005, the Company recorded a loss of $992,000 representing an increase in the estimated fair value of the put option liability during the period.  As of October 31, 2006, the Company had a 54.5% interest in RTP.  RTP's minority shareholder has the option to put a remaining 27.8% of its remaining 45.5% interest in RTP to the Company as of October 31, 2006.

9.  Related Party Transactions

As of October 31, 2005, the Company had outstanding a $500,000 long-term 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.

10.  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 $1.3 million, $1.3 million and $1.7 million, primarily within "other long-term liabilities" in the accompanying Consolidated Condensed Balance Sheets, as of October 31, 2006, July 31, 2006 and October 31, 2005, 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 October 31, 2006, the Company had various other letters of credit outstanding in the amount of $67.9 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, $8.1 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 Regional Airport; these guarantees are generally capped at certain levels.  As of October 31, 2006, the Company has recorded a liability related to the airline guarantees of $870,000, which also represents the maximum amount the Company would 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 Sheets, to complete or fund certain improvements with respect to real estate developments; the Company has estimated such costs to be approximately $10.7 million as of October 31, 2006, and anticipates completion of the majority of these commitments within the next two years.

The Company has commenced 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 has agreed to contribute $6.7 million to fund construction of the gondola, as well as the already completed skiway.  The funds that will be contributed by the Town will reduce the book value of the gondola and related infrastructure.  The estimated net cost to the Company to complete the gondola and related infrastructure as of October 31, 2006 is $1.4 million.

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 related (Mountain and Lodging) 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.  See also “Cheeca Lodge & Spa Contract Dispute” discussion below.

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 believes that the termination is in violation of the management agreement and is seeking recovery of monetary damages for the loss of the remaining 27 years of management fees, inclusive of renewal periods under the contract, attorneys’ fees and costs.  Pursuant to the dispute resolution provisions of the management agreement, the disputed matter is pending before a single judge arbitrator at the JAMS Arbitration Tribunal in Chicago, Illinois.  The arbitration hearing concluded in early October 2006, and the Company expects the arbitrator to render a decision by the end of the second quarter in the year ending July 31, 2007. Cheeca Holdings, LLC, the entity owner of the hotel property, asserts that RockResorts breached the management contract, among other alleged breaches, and seeks a ruling that it had the right to terminate the management contract and recovery of monetary damages, attorneys’ fees and costs.  The Company has incurred $3.6 million of legal related costs related to this matter in the three months ended October 31, 2006, which is included in “contract dispute charges” in the accompanying Consolidated Condensed Statement of Operations for the three months ended October 31, 2006.

11.       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 months ended October 31, 2006, the Company repurchased 190,700 shares of common stock at a cost of $7.5 million.  Since inception of this stock repurchase plan, the Company has repurchased 505,800 shares at a cost of approximately $18.3 million.  As of October 31, 2006, 2,494,200 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 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.

12.  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 October 31, 2006, July 31, 2006 and October 31, 2005.  Statement of operations and statement of cash flows data are presented for the three months ended October 31, 2006 and 2005.

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 October 31, 2006
(in thousands)
                                       
               
100% Owned
                   
       
Parent
   
Guarantor
Other
 
 Eliminating
       
       
Company
   
Subsidiaries
Subsidiaries
 
Entries
 
Consolidated
 
Current assets:
                                 
 
Cash and cash equivalents
$
--
   
$
108,569
 
$
8,742
 
$
--
 
$
117,311
 
 
Restricted cash
 
--
     
16,341
   
4,013
   
--
   
20,354
 
 
Trade receivables, net
 
--
     
23,150
   
4,382
   
--
   
27,532
 
 
Inventories, net
 
--
     
8,587
   
48,036
   
--
   
56,623
 
 
Other current assets
 
12,676
     
23,590
   
2,816
   
--
   
39,082
 
   
Total current assets
 
12,676
     
180,237
   
67,989
   
--
   
260,902
 
Property, plant and equipment, net
 
--
     
788,984
   
67,518
   
--
   
856,502
 
Real estate held for sale and investment
 
--
     
165,788
   
135,993
   
--
   
301,781
 
Goodwill, net
   
--
     
118,475
   
17,336
   
--
   
135,811
 
Intangible assets, net
 
--
     
57,518
   
16,734
   
--
   
74,252
 
Other assets
 
5,179
     
26,536
   
14,022
   
--
   
45,737
 
Investments in subsidiaries and advances to
                             
(from) parent
1,002,008
     
(483,368
)
 
(58,742
)
 
(459,898
)
 
--
 
 
Total assets
 
$
1,019,863
   
$
854,170
 
$
260,850
 
$
(459,898
)
$
1,674,985
 
                                 
Current liabilities:
                               
 
Accounts payable and accrued expenses
$
10,630
   
$
192,742
 
$
65,118
 
$
--
 
$
268,490
 
 
Income taxes payable
 
14,913
     
73
   
--
   
--
   
14,986
 
 
Long-term debt due within one year
 
--
     
44
   
386
   
--
   
430
 
   
Total current liabilities
 
25,543
     
192,859
   
65,504
   
--
   
283,906
 
Long-term debt
   
390,000
     
57,726
   
95,264
   
--
   
542,990
 
Other long-term liabilities
 
16
     
126,507
   
39,223
   
--
   
165,746
 
Deferred income taxes
 
--
     
46,877
   
82
   
--
   
46,959
 
Put option liabilities
 
--
     
1,245
   
--
   
--
   
1,245
 
Minority interest in net assets of consolidated
                             
subsidiaries
--
     
--
   
29,835
   
--
   
29,835
 
Total stockholders' equity
 
604,304
     
428,956
   
30,942
   
(459,898
)
 
604,304
 
 
Total liabilities and stockholders' equity
$
1,019,863
   
$
854,170
 
$
260,850
 
$
(459,898
)
$
1,674,985
 


 



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 October 31, 2005
(in thousands)
                                       
               
100% Owned
                   
       
Parent
   
Guarantor
Other
 
 Eliminating
       
       
Company
   
Subsidiaries
Subsidiaries
 
Entries
 
Consolidated
 
Current assets:
                                 
 
Cash and cash equivalents
$
--
   
$
18,127
 
$
40,565
 
$
--
 
$
58,692
 
 
Restricted cash
 
--
     
14,865
   
2,535
   
--
   
17,400
 
 
Trade receivables, net
 
--
     
20,386
   
5,072
   
--
   
25,458
 
 
Inventories, net
 
--
     
8,458
   
42,113
   
--
   
50,571
 
 
Other current assets
 
12,140
     
23,714
   
6,404
   
--
   
42,258
 
 
Assets held for sale
 
--
     
26,857
   
--
   
--
   
26,857
 
   
Total current assets
 
12,140
     
112,407
   
96,689
   
--
   
221,236
 
Property, plant and equipment, net
 
--
     
790,406
   
67,554
   
--
   
857,960
 
Real estate held for sale and investment
 
--
     
127,484
   
67,213
   
--
   
194,697
 
Goodwill, net
   
--
     
135,507
   
--
   
--
   
135,507
 
Intangible assets, net
 
--
     
43,121
   
34,521
   
--
   
77,642
 
Other assets
 
5,889
     
16,674
   
10,199
   
--
   
32,762
 
Investments in subsidiaries and advances to
                             
(from) parent
911,105
     
(390,002
)
 
(61,205
)
 
(459,898
)
 
--
 
 
Total assets
 
$
929,134
   
$
835,597
 
$
214,971
 
$
(459,898
)
$
1,519,804
 
                                 
Current liabilities:
                               
 
Accounts payable and accrued expenses
$
6,631
   
$
181,890
 
$
58,280
 
$
--
 
$
246,801
 
 
Income taxes payable
 
12,191
     
--
   
--
   
--
   
12,191
 
 
Long-term debt due within one year
 
--
     
4,476
   
1,652
   
--
   
6,128
 
   
Total current liabilities
 
18,822
     
186,366
   
59,932
   
--
   
265,120
 
Long-term debt
   
390,000
     
57,777
   
76,397
   
--
   
524,174
 
Other long-term liabilities
 
368
     
98,768
   
34,004
   
--
   
133,140
 
Deferred income taxes
 
--
     
49,412
   
329
   
--
   
49,741
 
Put option liabilities
 
--
     
1,026
   
--
   
--
   
1,026
 
Minority interest in net assets of consolidated
                             
subsidiaries
--
     
--
   
26,659
   
--
   
26,659
 
Total stockholders' equity
 
519,944
     
442,248
   
17,650
   
(459,898
)
 
519,944
 
 
Total liabilities and stockholders' equity
$
929,134
   
$
835,597
 
$
214,971
 
$
(459,898
)
$
1,519,804
 
 

 

Supplemental Condensed Consolidating Statement of Operations
For the three months ended October 31, 2006
(in thousands)
                                           
             
100% Owned
                       
     
Parent
 
Guarantor
 
Other
 
Eliminating
       
     
Company
 
Subsidiaries
 
Subsidiaries
 
Entries
 
Consolidated
Total net revenue
 
$
--
   
$
75,962
   
$
39,295
   
$
(1,763
)
$
113,494
 
Total operating expense
   
2,995
     
121,376
     
41,747
     
(1,763
)
 
164,355
 
 
Loss from operations
   
(2,995
)
   
(45,414
)
 
(2,452
)
 
--
     
(50,861
)
Equity investment income, net
   
--
     
835
     
--
     
--
     
835
 
Other expense
   
(6,757
)
   
(2,675
)
 
(1,046
)
 
--
     
(10,478
)
Minority interest in loss of consolidated subsidiaries, net
   
--
     
--
     
1,790
     
--
     
1,790
 
 
Loss before income taxes
   
(9,752
)
   
(47,254
)
 
(1,708
)
 
--
     
(58,714
)
Benefit from income taxes
   
3,803
     
19,051
     
45
     
--
     
22,899
 
 
Net loss before equity in (loss) income of consolidated subsidiaries
   
(5,949
)
   
(28,203
)
   
(1,663
)
   
--
     
(35,815
)
Equity in (loss) income of consolidated subsidiaries
   
(29,866
)
   
--
     
--
     
29,866
     
--
 
 
Net (loss) income
 
$
(35,815
)
 
$
(28,203
)
$
(1,663
)
$
29,866
   
$
(35,815
)


      
               
    




Supplemental Condensed Consolidating Statement of Operations
For the three months ended October 31, 2005
(in thousands)
                                           
             
100% Owned
                       
     
Parent
 
Guarantor
 
Other
 
Eliminating
       
     
Company
 
Subsidiaries
 
Subsidiaries
 
Entries
 
Consolidated
Total net revenue
 
$
--
   
$
60,797
   
$
26,630
   
$
(2,007
)
$
85,420
 
Total operating expense
   
3,768
     
100,706
     
32,833
     
(2,007
)
 
135,300
 
 
Loss from operations
   
(3,768
)
   
(39,909
)
 
(6,203
)
 
--
     
(49,880
)
Equity investment income, net
   
--
     
919
     
--
     
--
     
919
 
Loss on put options, net
   
--
     
(992
)
 
--
     
--
     
(992
)
Other expense
   
(6,760
)
   
(849
)
 
(640
)
 
--
     
(8,249
)
Minority interest in loss of consolidated subsidiaries, net
   
--
     
--
     
1,926
     
--
     
1,926
 
 
Loss before income taxes
   
(10,528
)
   
(40,831
)
 
(4,916
)
 
--
     
(56,276
)
Benefit from income taxes
   
4,106
     
17,795
     
46
     
--
     
21,947
 
 
Net loss before equity in (loss) income of consolidated subsidiaries
   
(6,422
)
   
(23,036
)
   
(4,870
)
   
--
     
(34,329
)
Equity in (loss) income of consolidated subsidiaries
   
(27,907
)
   
--
     
--
     
27,907
     
--
 
 
Net (loss) income
 
$
(34,329
)
 
$
(23,036
)
$
(4,870
)
$
27,907
   
$
(34,329
)

      
               
    





Supplemental Condensed Consolidating Statement of Cash Flows
For the three months ended October 31, 2006
(in thousands)
(as restated, see Note 13)
                                     
                 
 100% Owned
             
         
Parent
 
Guarantor
Other
       
         
Company
 
Subsidiaries
Subsidiaries
 
Consolidated
Net cash used in operating activities
 
$
(16,714
)
 
$
(10,004
)
$
(26,042
)
 
$
(52,760
)
Cash flows from investing activities:
                             
 
Capital expenditures
   
--
     
(27,737
)
 
(821
)
   
(28,558
)
 
Other investing activities, net
   
--
     
(59
)
 
148
     
89
 
   
Net cash used in investing activities
   
--
     
(27,796
)
 
(673
)
   
(28,469
)
Cash flows from financing activities:
                             
 
Repurchases of common stock
   
--
     
(7,500
)
 
--
     
(7,500
)
 
Proceeds from borrowings under long-term debt
   
--
     
19,577
   
22,462
     
42,039
 
 
Payments of long-term debt
   
--
     
(23,586
)
 
(6,261
)
   
(29,847
)
 
Proceeds from exercise of stock options
   
2,324
     
--
   
--
     
2,324
 
 
Other financing activities, net
   
968
     
453
   
(1,691
)
   
(270
)
 
Advances (to) from affiliates
   
13,422
     
(22,573
)
 
9,151
     
--
 
   
Net cash provided by (used in ) financing activities
   
16,714
     
(33,629
)
 
23,661
     
6,746
 
     
Net (decrease) increase in cash and cash equivalents
   
--
     
(71,429
)
 
(3,054
)
   
(74,483
)
Cash and cash equivalents:
                             
 
Beginning of period
   
--
     
179,998
   
11,796
     
191,794
 
 
End of period
 
$
--
   
$
108,569
 
$
8,742
   
$
117,311
 


      
               
    


Supplemental Condensed Consolidating Statement of Cash Flows
For the three months ended October 31, 2005
(in thousands)
(as restated, see Note 13)
                                       
                 
 100% Owned
               
         
Parent
 
Guarantor
 
Other
       
         
Company
 
Subsidiaries
 
Subsidiaries
 
Consolidated
Net cash used in operating activities
 
$
(16,180
)
 
$
(30,188
)
 
$
(14,826
)
 
$
(61,194
)
Cash flows from investing activities:
                               
 
Capital expenditures
   
--
     
(30,642
)
   
(1,806
)
   
(32,448
)
 
Other investing activities, net