MTN: 09/10 Pass Sales A Good Early Sign, But Remaining Cautious • Q3 TOPS CONSENSUS ON RESORT COST CUTTING. Vail Resorts reported fiscal Q3 2009 EPS of $1.68, $0.12 above consensus and $0.17 above our estimate. Revenue was 2% below consensus while EBITDA was 2.7% above due to stronger than-expected cost cutting. Considering the headwinds it faced this year, we believe Vail did a good job in attracting skiers to its Resorts, aided by the timely intro of the Epic Pass, and cutting costs both at the Resort and corporate level. • MOUNTAIN. Skier visits declined 9.0% in Q3 and 5.3% in 08/09, lift ticket revenue declined 11% in Q3 and 8.4% in 08/09, and the ETP declined 2.2% and 3.3%. The higher-rated Destination guest accounted for 57% of visits vs 63% last year. The decline negatively impacted ancillary businesses with ski school revenue per skier visit down 13.5% in Q3, dining (12.2%), and retail/rental (11.0%). • LODGING. Lodging revenue of $44.9MM and EBITDA of $5.9MM produced margins of 13.1%, with a 40% margin at the recently acquired CME. RevPAR declined 18.6%, or 30bps better than the U.S. and 400bps better than Resorts. • REAL ESTATE. The last Chalet closed in May for $20.2MM. Since Vail announced the price reduction at its Ritz-Carlton Residences, no add'l units have gone under contract, but MTN expects more activity during the summer in Vail. • PASS SALES A GOOD EARLY SIGN, BUT REMAINING CAUTIOUS. 2009-2010 season pass sales increased 37% in units and 39% in dollars through the spring season, with all products up, led by the Epic Pass. We view this as a positive early sign heading into next season, although as the spring season typically accounts for only 30% of total sales, it is not clear how many bought earlier than in prior years, and a question mark hangs over the higher-rated Destination guest, we believe it is prudent to remain cautious on the outlook for 09/10 at this time. • RAISING FISCAL 2009, 2010 ESTIMATES, OUTLOOK REITERATED. We are raising our 2009 EPS estimate to $1.23, from $1.19, and our 2010 estimate to $0.21, from $0.20. Our Resort EBITDA estimates are $168.8MM and $159.9MM, and our total EBITDA estimates are $210.8MM and $150.0MM. MTN reiterated its 2009 outlook for EBITDA of $204-218MM (consensus was 1.2% below the midpoint) and net income of $41-51MM (consensus was 4.4% below). Valuation Range: $28 to $30 Our valuation range is based on 7.25-7.75x FTM Resort EBITDA plus estimated real estate held for investment/DCF developments. Risks to our valuation range include a significant slowing in high-end U.S. consumption, continued deceleration in destination skier visits, incremental reduction in off-mountain spend per visit and a delay in development/closing of residential units.