costs (which are not measures of financial performance under GAAP) as the reimbursements are made based upon the costs incurred with no added margin, as such the revenue and corresponding expense have no effect on our Lodging Reported EBITDA which we use to evaluate Lodging segment performance. Real Estate Segment
The Real Estate segment owns and develops real estate in and around our resort communities and primarily engages in vertical development of projects. Currently, the principal activities of our Real Estate segment include the marketing and selling of remaining condominium units that are available for sale, planning for future real estate development projects, including zoning and acquisition of applicable permits, and the purchase of selected strategic land parcels for future development. Revenue from vertical development projects is not recognized until closing of individual units within a project, which occurs after substantial completion of the project. We attempt to mitigate the risk of vertical development by often utilizing guaranteed maximum price construction contracts (although certain construction costs may not be covered by contractual limitations), pre-selling a portion of the project, requiring significant non-refundable deposits, and potentially obtaining non-recourse financing for certain projects (although our last two major vertical development projects have not incurred any such direct third party financing). Additionally, our real estate development projects most often result in the creation of certain resort assets that provide additional benefit to the Mountain and Lodging segments. Our revenue from the Real Estate segment, and associated expense, can fluctuate significantly based upon the timing of closings and the type of real estate being sold, causing volatility in the Real Estate segment's operating results from period to period.
Recent Trends, Risks and Uncertainties
Together with those risk factors that we have identified in our Form 10-K, our management has identified the following important factors (as well as risks and uncertainties associated with such factors) that could impact our future financial performance or condition:

• The timing and amount of snowfall can have an impact on Mountain and Lodging revenue particularly in regards to skier visits and the duration and frequency of guest visitation. For the 2011/2012 ski season there were unprecedented low snowfall conditions across the United States that resulted in a reduction of approximately 9.6 million, or 15.8%, skier visits industry wide and a 12.1% decline in our total visitation as compared to the 2010/2011 ski season which had record snowfall. To help mitigate the impact to our operating results from the timing and amount of snowfall, we sell a variety of season pass products prior to the beginning of the ski season resulting in a more stabilized stream of lift revenue within the second and third fiscal quarters, when the season pass sales are recorded as revenue. Additionally, our season pass products provide a value option to our guests, which in turn creates a guest commitment predominately prior to the start of the ski season. For the 2011/2012 ski season pass revenue represented approximately 40% of total lift revenue for the entire ski season. Through December 2, 2012 our season pass sales for the 2012/2013 ski season were up approximately 8% in sales dollars and 5% in units as compared to season pass sales through the similar period of the 2011/2012 ski season (including Kirkwood for both the current and prior year which prior year includes pass sales that occurred prior to our acquisition of Kirkwood). We cannot predict the ultimate impact that season pass sales will have on total lift revenue or effective ticket price for the 2012/2013 ski season.

• Weak economic conditions currently present or recently present in the United States, Europe and parts of the rest of the world, including uncertainties surrounding the United States pending "fiscal cliff", high unemployment, erosion of consumer confidence, European debt crisis, and financial instability in the global markets, may potentially have negative effects on the travel and leisure industry and on our results of operations. Given the current uncertainties around global economic trends, we cannot predict what impact this will have on overall travel and leisure or more specifically, on our guest visitation, guest spending or other related trends for the upcoming 2012/2013 ski season.

• Real Estate Reported EBITDA is highly dependent on, among other things, the timing of closings on condominium units available for sale, which determines when revenue and associated cost of sales is recognized. Changes to the anticipated timing or mix of closing on one or more real estate projects, or unit closings within a real estate project, could materially impact Real Estate Reported EBITDA for a particular quarter or fiscal year. We currently have 28 units at The Ritz-Carlton Residences, Vail and 41 units at One Ski Hill Place in Breckenridge available for sale. We cannot predict the ultimate number of units that we will sell, the ultimate price we will receive, or when the units will sell, although we currently believe the selling process will take multiple years. Additionally, if a prolonged weakness in the real estate market or general economic conditions were to occur we may have to adjust our selling prices more than currently anticipated in an effort to sell and close on units available for sale. However, our risk associated with adjusting selling prices to levels that may not be acceptable to us is partially mitigated by the fact that we do generate cash flow from placing unsold units into our rental program until such time selling prices are at acceptable levels to us.

Furthermore, if the current weakness in the real estate market were to persist for multiple years thus requiring us to sell remaining units below recent pricing levels (including any sales concessions and discounts) for the remaining inventory of units at The Ritz-Carlton Residences, Vail or One Ski Hill Place in Breckenridge, it may result in an impairment charge on one or both projects.

• We had $44.0 million in cash and cash equivalents as of October 31, 2012 as well as $332.7 million available under the revolver component of our senior credit facility ("Credit Agreement") (which represents the total commitment of $400.0 million less certain letters of credit outstanding of $67.3 million). Additionally, we believe that the terms of our 6.50% Senior Subordinated Notes due 2019 ("6.50% Notes") and our Credit Agreement allow for sufficient flexibility in our ability to make future acquisitions, investments, distributions to stockholders and incur additional debt. This, combined with the completion of our real estate projects where the proceeds from future real estate closings on The Ritz-Carlton Residences, Vail, and One Ski Hill Place in Breckenridge are expected to significantly exceed future carrying costs, and the continued positive cash flow from operating activities less capital expenditures has and is anticipated to continue to provide us with significant liquidity which we believe will allow us to consider strategic investments and other forms of providing return to our stockholders including the continued payment of a quarterly cash dividend. We cannot predict that any strategic initiatives undertaken will achieve the anticipated results.

• Under GAAP we test goodwill and indefinite lived intangible assets for impairment annually as well as on an interim basis to the extent factors or indicators become apparent that could reduce the fair value of our goodwill or indefinite-lived intangible assets below book value and we evaluate long-lived assets for potential impairment whenever events or change in circumstances indicate that the carrying amount of an asset may not be recoverable. We evaluate the recoverability of our goodwill by estimating the future discounted cash flows of our reporting units and terminal values of the businesses using projected future levels of income as well as business trends, prospects and market and economic conditions. We evaluate the recoverability of indefinite-lived intangible assets using the income approach based upon estimated future revenue streams, and we evaluate long-lived assets based upon estimated undiscounted future cash flows. Our fiscal 2012 annual impairment test did not result in a goodwill or indefinite-lived intangible asset impairment. However, if lower than projected levels of cash flows were to occur due to prolonged abnormal weather conditions or a prolonged weakness in general economic conditions, among other risks, it could cause less than expected growth and/or a reduction in terminal values and cash flows and could result in an impairment charge attributable to certain goodwill, indefinite-lived intangible assets and/or long-lived assets (particularly related to our Lodging operations), negatively impacting our results of operations and stockholders' equity.

RESULTS OF OPERATIONS
Summary
Due to the seasonality of our Resort operations, we normally incur net losses
during the first fiscal quarter, as shown in the summary of operating results
below for the three months ended October 31, 2012, compared to the three months
ended October 31, 2011 (in thousands):

                                                 Three Months Ended
                                                     October 31,
                                                 2012          2011
Mountain Reported EBITDA                      $ (55,202 )   $ (48,455 )
Lodging Reported EBITDA                             702        (1,707 )
Resort Reported EBITDA                          (54,500 )     (50,162 )
Real Estate Reported EBITDA                      (3,684 )      (4,738 )
Loss before benefit from income taxes           (98,186 )     (92,121 )
Net loss attributable to Vail Resorts, Inc.   $ (60,580 )   $ (55,709 )

A discussion of the segment results and other items can be found below. Mountain Segment
Three months ended October 31, 2012 compared to the three months ended October 31, 2011
Mountain segment operating results for the three months ended October 31, 2012 and 2011 are presented by category as follows (in thousands):

                                            Three Months Ended       Percentage
                                                October 31,           Increase
                                            2012          2011       (Decrease)
Net Mountain revenue:
Lift tickets                             $       -     $       -            -  %
Ski school                                       -             -            -  %
Dining                                       6,373         5,647         12.9  %
Retail/rental                               26,725        26,964         (0.9 )%
Other                                       18,814        17,059         10.3  %
Total Mountain net revenue               $  51,912     $  49,670          4.5  %
Mountain operating expense:
Labor and labor-related benefits         $  34,294     $  30,093         14.0  %
Retail cost of sales                        16,191        15,530          4.3  %
General and administrative                  27,304        25,706          6.2  %
Other                                       29,759        27,226          9.3  %
Total Mountain operating expense         $ 107,548     $  98,555          9.1  %
Mountain equity investment income, net         434           430          0.9  %
Mountain Reported EBITDA                 $ (55,202 )   $ (48,455 )      (13.9 )%

Certain Mountain segment operating expenses presented above for the three months ended October 31, 2011 have been reclassified to conform to the current fiscal quarter presentation.
Mountain Reported EBITDA includes $2.7 million and $2.6 million of stock-based compensation expense for the three months ended October 31, 2012 and 2011, respectively.
Our first fiscal quarter historically results in negative Mountain Reported EBITDA, as our ski resorts generally do not open for ski operations until our second fiscal quarter. The first fiscal quarter consists primarily of operating and administrative expense plus summer and retail operations. Mountain Reported EBITDA for the three months ended October 31, 2012 was unfavorably impacted as compared to the three months ended October 31, 2011 due to the inclusion of first quarter operating results of Kirkwood (acquired on April 12, 2012) which generated $1.8 million of negative EBITDA due to no ski operations and due to the timing of the acquisition of Skiinfo (acquired on February 1, 2012) which generated $0.5 million of negative EBITDA.
Dining revenue increased $0.7 million, or 12.9%, for the three months ended October 31, 2012 compared to the same period in the prior year, primarily due to the addition of Kirkwood, which contributed $0.4 million. Additionally, dining revenue was also favorably impacted by improved summer visitation to our Colorado mountain resorts.

Retail/rental revenue decreased $0.2 million, or 0.9%, for the three months ended October 31, 2012 compared to the same period in the prior year, which was primarily due to lower retail sales at our Colorado front range and Any Mountain bay area
stores due to lower sales at pre-ski season sales events compared to prior year record sales from our pre-ski season sales events, partially offset by an increase in retail sales generated by our on-line retailer and improved retail sales at our mountain resort stores.
Other revenue mainly consists of private club revenue (which includes both club dues and amortization of initiation fees), summer visitation and other mountain activities revenue, marketing and internet advertising revenue, commercial leasing revenue, employee housing revenue, municipal services revenue and other recreation activity revenue. For the three months ended October 31, 2012, other revenue increased $1.8 million, or 10.3%, compared to the three months ended October 31, 2011, primarily due to internet advertising revenue from Skiinfo (acquired in February 2012) of $0.6 million, an increase in cooperative marketing revenue largely due to timing of marketing campaigns, higher strategic alliance marketing revenue, an increase in summer activities revenue and increased municipal services revenue (primarily transportation services provided on behalf of certain municipalities).
Operating expense increased $9.0 million, or 9.1%, for the three months ended October 31, 2012 compared to the three months ended October 31, 2011. Labor and labor-related benefits increased $4.2 million, or 14.0%, partly due to incremental labor from the acquisitions of Kirkwood and Skiinfo. Excluding Kirkwood and Skiinfo, labor and labor-related benefits increased $2.7 million, or 8.8%, primarily due to normal wage adjustments, increased staffing levels to support higher volumes in summer operations and increased retail labor primarily due to new stores. Other expense increased $2.5 million, or 9.3%, primarily due to Kirkwood and Skiinfo. Excluding Kirkwood and Skiinfo, other expense increased $1.3 million, or 4.7%, which was driven by increased supplies expense and professional services. General and administrative expense increased $1.6

million, or 6.2%, partially due to the acquisition of Kirkwood and Skiinfo. Excluding Kirkwood and Skiinfo, general and administrative expense increased $1.1 million, or 4.2%, due to increased sales and marketing expense due to the timing of our marketing campaigns and a shift in allocated corporate expenses from the Real Estate segment to the Mountain segment, partially offset by lower employee medical costs. Retail cost of sales increased $0.7 million, or 4.3%, primarily due to a higher mix of on-line sales and sales of hard goods which both produce lower margins.
Mountain equity investment income primarily includes our share of income from the operations of a real estate brokerage joint venture.

Lodging Segment
Three months ended October 31, 2012 compared to the three months ended
October 31, 2011
Lodging segment operating results for the three months ended October 31, 2012
and 2011 are presented by category as follows (in thousands, except average
daily rates ("ADR") and revenue per available room ("RevPAR")):


                                                    Three Months Ended           Percentage
                                                       October 31,                Increase
                                                   2012            2011          (Decrease)
Lodging net revenue:
Owned hotel rooms                             $     13,694     $    12,032            13.8  %
Managed condominium rooms                            5,814           5,546             4.8  %
Dining                                              10,610           9,557            11.0  %
Transportation                                       1,691           1,702            (0.6 )%
Golf                                                 7,536           7,445             1.2  %
Other                                                9,983           9,577             4.2  %
                                                    49,328          45,859             7.6  %
Payroll cost reimbursements                          3,180           7,735           (58.9 )%
Total Lodging net revenue                     $     52,508     $    53,594            (2.0 )%
Lodging operating expense:
Labor and labor-related benefits              $     23,450     $    22,569             3.9  %
General and administrative                           7,024           7,528            (6.7 )%
Other                                               18,152          17,469             3.9  %
                                                    48,626          47,566             2.2  %
Reimbursed payroll costs                             3,180           7,735           (58.9 )%
Total Lodging operating expense               $     51,806     $    55,301            (6.3 )%
Lodging Reported EBITDA                       $        702     $    (1,707 )         141.1  %

Owned hotel statistics:
ADR                                           $     180.70     $    188.98            (4.4 )%
RevPar                                        $     113.32     $    102.50            10.6  %
Managed condominium statistics:
ADR                                           $     194.26     $    191.48             1.5  %
RevPar                                        $      30.75     $     29.11             5.6  %
Owned hotel and managed condominium
statistics (combined):
ADR                                           $     184.89     $    189.79            (2.6 )%
RevPar                                        $      60.54     $     56.15             7.8  %

Lodging Reported EBITDA includes $0.4 million and $0.6 million of stock-based compensation expense for the three months ended October 31, 2012 and 2011, respectively.
Total Lodging net revenue (excluding payroll cost reimbursements) for the three months ended October 31, 2012 increased $3.5 million, or 7.6%, as compared to the three months ended October 31, 2011, which increase includes $1.9 million of revenue from Flagg Ranch (NPS concessionaire contract was awarded in November 2011). Additionally, Flagg Ranch contributed $0.6 million of EBITDA for the three months ended October 31, 2012. Excluding the impact of Flagg Ranch, total

Lodging net revenue (before payroll cost reimbursements) increased $1.5 million, or 3.4%, which is largely attributable to an increase in revenue at our mountain properties from improved summer visitation and an increase in group business, especially at Keystone, partially offset by a decline in revenue at GTLC primarily due to adverse conditions from wild fires in the region. Revenue from owned hotel rooms increased $1.7 million, or 13.8%, for the three months ended October 31, 2012 compared to the three months ended October 31, 2011, primarily driven by $1.0 million of incremental room revenue from Flagg Ranch partially offset by a decrease in transient revenue of $0.3 million from GTLC due to the adverse conditions caused by wild fires. Owned room revenue was also positively impacted by our Colorado lodging properties, which revenue increased $1.0 million, resulting from improved summer visitation to our Colorado mountain resorts and an increase in group business primarily at our Keystone resort. Revenue from managed condominium rooms increased $0.3 million, or 4.8%, for the three months ended October 31, 2012 compared to the three months ended October 31, 2011, primarily driven by additional managed condominium units at One Ski Hill Place in Breckenridge, The Ritz-Carlton Residences, Vail and Kirkwood.
Dining revenue for the three months ended October 31, 2012 increased $1.1 million, or 11.0%, as compared to the three months ended October 31, 2011, primarily due to an increase in group business at our Keystone resort resulting in a $0.6 million increase in revenue and incremental dining revenue from Flagg Ranch. Golf revenue increased $0.1 million, or 1.2%, for the three months ended October 31, 2012 compared to the three months ended October 31, 2012, primarily due to an increase in the number of paid golf rounds played at our Red Sky Ranch courses. Other revenue increased $0.4 million, or 4.2%, in the three months ended October 31, 2012 compared to the three months ended October 31, 2011, primarily due to an increase in conference services provided to our group business at our Keystone resort and an increase in retail and ancillary revenue resulting from the addition of Flagg Ranch.
Operating expense (excluding reimbursed payroll costs) increased $1.1 million, or 2.2%, for the three months ended October 31, 2012 compared to the three months ended October 31, 2011. Labor and labor-related benefits increased $0.9 million, or 3.9%, resulting from normal wage adjustments, higher staffing levels associated with increased occupancy at our Colorado lodging properties, increased conference services provided to our group business and incremental labor costs associated with Flagg Ranch of $0.4 million. These labor increases were partially offset by lower overhead labor costs associated with the previously announced RockResorts reorganization plan. General and administrative expense decreased $0.5 million, or 6.7%, primarily due the RockResorts reorganization plan. Other expense increased $0.7 million, or 3.9%, primarily due to the addition of Flagg Ranch, partially offset by a decrease in . . .