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

                             ----------------------

                                   FORM 10-Q

 (Mark One)
    [X]         QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended August 2, 2002

                                       OR

    [ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                       Commission File Number: 333-26091

                         BOOTH CREEK SKI HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

                   Delaware                         84-1359604
         (State or Other Jurisdiction            (I.R.S. Employer
       of Incorporation or Organization)      Identification Number)

       1000 South Frontage Road West,                  81657
                  Suite 100                         (Zip Code)
               Vail, Colorado
       (Address of Principal Executive
                   Offices)

                                 (970) 476-1311
              (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.  Yes[X] No[ ]

     As of  August 31,  2002,  the  number  of  shares  outstanding  of  the
registrant's  Common  Stock,  par  value  $.01 per  share,  was  1,000  shares.

===============================================================================

<PAGE>

                              TABLE OF CONTENTS



Item                                                                Page Number
----                                                                -----------
                       PART I - FINANCIAL INFORMATION

 1.  Financial Statements..............................................    1

 2.  Management's Discussion and Analysis of Financial Condition
     and Results of Operations.........................................   11

 3.  Quantitative and Qualitative Disclosures about Market Risk........   28

 4.  Controls and Procedures...........................................   28

                         PART II - OTHER INFORMATION

 1.  Legal Proceedings.................................................   29

 6.  Exhibits and Reports on Form 8-K..................................   31

     Signatures........................................................   33

     Certifications....................................................   34
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                         BOOTH CREEK SKI HOLDINGS, INC.

                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

                                          August 2,   November 2,      July 27,
                                            2002          2001          2001
                                        ------------  -----------   ------------
                  ASSETS                 (Unaudited)                 (Unaudited)

Current assets:
 Cash...................................  $     713    $     458     $      845
 Accounts receivable, net of allowance
  of $50, $39 and $58, respectively.....      1,334        1,937          1,272
 Insurance proceeds receivable..........        800        1,500          1,500
 Inventories ...........................      1,663        2,486          1,841
 Prepaid expenses and other current
  assets ...............................      1,176        1,616            948
 Assets held for sale...................     12,845            -              -
                                        ------------  -----------   ------------
Total current assets ...................     18,531        7,997          6,406

Property and equipment, net ............    118,133      139,347        140,929
Real estate held for development
 and sale ..............................      6,632        8,220          7,293
Deferred financing costs, net of
 accumulated amortization of $4,300,
 $5,128 and $4,888, respectively .......      4,435        4,087          4,327
Timber rights and other assets .........      6,085        6,429          6,169
Goodwill................................     22,938       23,138         23,724
                                        ------------  -----------   ------------
Total assets ...........................  $ 176,754    $ 189,218     $  188,848
                                        ============  ===========   ============

   LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities:
 Revolving credit facility .............  $   2,530    $  17,628     $    3,425
 Current portion of long-term debt .....      4,416        1,748          2,042
 Accounts payable and accrued
  liabilities ..........................     27,183       34,842         29,606
 Liabilities held for sale..............      1,232            -              -
                                        ------------  -----------   ------------
Total current liabilities ..............     35,361       54,218         35,073

Long-term debt .........................    120,433      128,664        128,676

Other long-term liabilities ............        767          767            760

Commitments and contingencies

Preferred stock of subsidiary...........          -        1,136          1,262

Shareholder's equity:
 Common stock, $.01 par value; 1,000
  shares authorized, issued and
  outstanding ..........................          -            -              -
 Additional paid-in capital ............     72,000       72,000         72,000
 Accumulated deficit ...................    (51,807)     (67,567)       (48,923)
                                        ------------  -----------   ------------
Total shareholder's equity .............     20,193        4,433         23,077
                                        ------------  -----------   ------------
Total liabilities and shareholder's
 equity ................................  $ 176,754    $ 189,218     $  188,848
                                        ============  ===========   ============

                            See accompanying notes.
                                       1
<PAGE>



                         BOOTH CREEK SKI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)


                                Three Months Ended          Nine Months Ended
                               ---------------------      ---------------------
                               August 2,    July 27,      August 2,    July 27,
                                  2002        2001           2002       2001
                               ---------   ---------      ---------   ---------
                                                  (Unaudited)
Revenue:
  Resort operations..........  $   3,482   $   3,248       $104,742    $101,819
  Real estate and other
   (including $2,400 and
   $11,300, respectively, in
   revenues with related
   parties for the three and
   nine month periods ended
   August 2, 2002 - Note 5)..      2,560         190         11,475         190
                               ---------   ---------      ---------   ---------
Total revenue................      6,042       3,438        116,217     102,009

Operating expenses:
  Cost of sales - resort
   operations................      6,248       5,910         56,268      54,707
  Cost of sales - real estate
   and other.................        564         167          2,737         167
  Depreciation and depletion.      3,939       4,663         12,506      14,036
  Amortization of goodwill
   and other intangible
   assets....................          -         595              -       1,785
  Selling, general and
   administrative expense....      4,149       4,110         17,751      16,854
                               ---------   ---------      ---------   ---------
Total operating expenses.....     14,900      15,445         89,262      87,549
                               ---------   ---------      ---------   ---------

Operating income (loss)......     (8,858)    (12,007)        26,955      14,460


Other income (expense):
  Interest expense...........     (3,572)     (4,006)       (11,645)    (12,415)
  Amortization of deferred
   financing costs...........       (307)       (239)          (817)       (726)
  Minority interest..........          -         (30)           (15)        (99)
  Other income (expense).....        (81)        133            (39)        256
                               ---------   ---------      ---------   ---------
  Other income
  (expense),net..............     (3,960)     (4,142)       (12,516)    (12,984)
                               ---------   ---------      ---------   ---------

Income (loss) from
  continuing operations
  before extraordinary item
  and change in accounting
  principle..................    (12,818)    (16,149)        14,439       1,476

Discontinued operations:
  Income (loss) from
   discontinued operatons of
   Bear Mountain resort......     (1,290)     (1,477)         1,960       1,651
  Impairment loss from
   anticipated disposal of
   Bear Mountain resort......     (3,200)          -         (3,200)          -
                               ---------   ---------      ---------   ---------
Income (loss) on discontinued
  operations.................     (4,490)     (1,477)        (1,240)      1,651
                               ---------   ---------      ---------   ---------

Income (loss) before
  extraordinary item and
  change in accounting
  principle..................    (17,308)    (17,626)        13,199       3,127

Extraordinary gain on early
  retirement of debt.........          -           -          2,761       1,723

Change in accounting
  principle for goodwill.....          -           -           (200)          -
                               ---------   ---------      ---------   ---------
Net income (loss)............  $ (17,308)  $ (17,626)     $  15,760   $   4,850
                               =========   =========      =========   =========

                            See accompanying notes.

                                        2
<PAGE>


                         BOOTH CREEK SKI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)


                                                        Nine Months Ended
                                                -------------------------------
                                                  August 2,            July 27,
                                                    2002                2001
                                                -------------     -------------
                                                          (Unaudited)

Cash flows from operating activities:
Net income.....................................   $  15,760         $    4,850
Adjustments to reconcile net income to
  net cash provided by operating activities:
   Depreciation and depletion..................      13,851             16,247
   Amortization of goodwill and other
    intangible assets .........................           -              1,785
   Noncash cost of real estate sales ..........       2,492                  -
   Amortization of deferred financing costs ...         817                726
   Minority interest ..........................          15                 99
   Impairment loss from anticipated disposal
    of Bear Mountain resort....................       3,200                  -
   Extraordinary gain on early retirement
    of debt....................................      (2,761)            (1,723)
   Change in accounting principle for goodwill.         200                  -
   Changes in operating assets and liabilities:
    Accounts receivable .......................         588                657
    Insurance proceeds receivable..............         700              2,570
    Inventories ...............................         561                265
    Prepaid expenses and other current assets..         437                246
    Accounts payable and accrued liabilities...      (7,012)            (4,309)
    Other long-term liabilities ...............           -                (25)
                                                -------------     -------------
Net cash provided by operating activities......      28,848             21,388

Cash flows from investing activities:
Capital expenditures for property and
 equipment ....................................      (6,637)            (8,029)
Capital expenditures for real estate
 held for development and sale ................        (904)              (727)
Other assets ..................................         223               (344)
                                                -------------     -------------
Net cash used in investing activities .........      (7,318)            (9,100)

Cash flows from financing activities:
Borrowings under revolving credit facility ....      11,265             16,313
Repayments under revolving credit facility ...      (26,363)           (19,240)
Proceeds of long-term debt.....................      25,000                  -
Principal payments of long-term debt ..........     (27,985)            (8,735)
Deferred financing costs ......................      (2,041)                (2)
Purchase of preferred stock of subsidiary
 and payment of dividends .....................      (1,151)              (475)
                                                -------------     -------------
Net cash used in financing activities .........     (21,275)           (12,139)
                                                -------------     -------------
Increase in cash...............................         255                149

Cash at beginning of period....................         458                696
                                                -------------     -------------
Cash at end of period.......................... $       713        $       845
                                                =============     =============

                            See accompanying notes.

                                        3
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 August 2, 2002


1.  Organization,  Basis of Presentation  and Summary of Significant  Accounting
Policies

    Booth Creek Ski Holdings, Inc. ("Booth Creek") owns and operates various ski
resorts, including Northstar-at-Tahoe ("Northstar"), Sierra-at-Tahoe ("Sierra"),
Bear Mountain,  Waterville Valley, Mt. Cranmore, Loon Mountain and the Summit at
Snoqualmie  (the  "Summit").  Booth  Creek also  conducts  certain  real  estate
development activities, primarily at Northstar.

    The consolidated  financial  statements  include the accounts of Booth Creek
and its subsidiaries  (collectively referred to as the "Company"),  all of which
are wholly-owned.  All significant  intercompany  transactions and balances have
been eliminated.

    Booth Creek is a  wholly-owned  subsidiary  of Booth  Creek Ski Group,  Inc.
("Parent").

    The accompanying  consolidated financial statements as of August 2, 2002 and
July 27, 2001 and for the three and nine month periods then ended are unaudited,
but include all adjustments  (consisting only of normal,  recurring  adjustments
and adjustments to recognize (a) the change in accounting principle for goodwill
during the nine months  ended  August 2, 2002,  (b) the  extraordinary  gains on
early  retirement of debt during the nine month periods ended August 2, 2002 and
July 27, 2001, and (c) the impairment loss from the anticipated disposal of Bear
Mountain  during the nine months ended August 2, 2002) which,  in the opinion of
management of the Company,  are considered  necessary for a fair presentation of
the Company's  financial  position at August 2, 2002 and July 27, 2001,  and its
operating  results  and cash  flows for the three and nine  month  periods  then
ended. Due to the highly seasonal nature of the Company's business,  the results
for the interim periods are not necessarily indicative of results for the entire
year. Certain information and footnote  disclosures  normally included in annual
financial  statements  prepared in accordance with generally accepted accounting
principles  have  been  omitted  pursuant  to  generally   accepted   accounting
principles  applicable  for  interim  periods.   Management  believes  that  the
disclosures made are adequate to make the information  presented not misleading.
The unaudited  consolidated  financial  statements should be read in conjunction
with the following notes and the Company's consolidated financial statements and
accompanying  notes included in the Company's Annual Report on Form 10-K for the
fiscal year ended November 2, 2001.

Cash

    Included in cash at August 2, 2002 is restricted cash of $571,000,  relating
to advance  deposits  and rental  fees due to  property  owners for  lodging and
property rentals.

Recently Adopted and Pending Accounting Pronouncements

    In June 2001,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No.  142,  "Goodwill  and Other
Intangible  Assets" ("SFAS No. 142"). The Company adopted SFAS No. 142 effective
as of  November  3,  2001.  Under  the new  rules,  goodwill  will no  longer be
amortized but will be subject to annual  impairment tests in accordance with the
pronouncement.  The  Company's  operating  results  for the three and nine month
periods  ended July 27, 2001  reflected  goodwill  amortization  of $586,000 and
$1,757,000,  respectively.  Adjusted  net  income or loss for the three and nine
months  ended July 27,  2001 would have been a net loss of  $17,040,000  and net
income of $6,607,000,  respectively,  excluding such goodwill  amortization.  In
connection  with  the  adoption  of  SFAS  No.  142,  the  Company  performed  a
transitional  impairment  test for recorded  goodwill as of November 3, 2001 for
each  resort.  Based on the results of the  transitional  impairment  test,  the
Company wrote down goodwill by $200,000 for one resort, which has been reflected
as the cumulative effect of a change in accounting principle in the accompanying
statement of operations for the nine months ended August 2, 2002.

    In June 2001, the FASB issued  Statement of Financial  Accounting  Standards
No. 143,  "Accounting for Asset Retirement  Obligations" ("SFAS No. 143"), which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible  long-lived assets and associated asset retirement costs.
The new rules  apply to legal  obligations  associated  with the  retirement  of
long-lived  assets that result from the acquisition,  construction,  development
and (or) normal operation of a long-lived  asset.  SFAS No. 143 is effective for
the Company at the beginning of fiscal 2003.  The Company  believes the adoption
of SFAS No. 143 will not have a material  impact on its  consolidated  financial
position or results of operations.

                                       4
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



Use of Estimates

    The  preparation  of  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the amounts  reported in the financial  statements  and
accompanying notes. Actual results could differ from those estimates.

2.  Paid Skier Visit Insurance Programs

    For the 2000/01  season,  the Company  arranged for four separate paid skier
visit  insurance  policies  covering Bear Mountain,  Loon  Mountain,  Waterville
Valley and the Summit.  The policies had a  deductible  for the initial  decline
from targeted paid skier visit and revenue  levels and stated  maximum  coverage
levels. In addition,  the policies required the insured to experience monthly or
annual snowfall amounts below certain agreed upon levels before a claim could be
filed for the decline in paid skier  visits.  For the nine months ended July 27,
2001, the Company recorded resort  operations  revenues of $1,500,000 for claims
attributable  to lower than agreed upon paid skier  visits and  snowfall  levels
under the Summit and  Waterville  Valley  policies.  The  Company's  claims were
determined  based on a specified  formula  under the paid skier visit  insurance
policies and snowfall  information  verified by an independent  third party. The
Company  believes  that it has fully  complied  with its  obligations  under the
policies,  and has  properly  reported  and made claims in  accordance  with the
policies  for losses  aggregating  in excess of  $1,500,000.  As a result of the
underwriters'  failure to properly  process the  Company's  claims,  in November
2001, the Company filed a lawsuit against the underwriters  seeking recovery for
breach of  contract,  breach of covenant of good faith and unfair and  deceptive
business  practices.  In April 2002,  the  underwriters  made a partial offer of
settlement of $700,000,  which the Company  accepted  with a reservation  of all
rights and  remedies  under the terms of the policies  and  applicable  law with
respect to its  remaining  claims.  The  Company  intends to  vigorously  pursue
collection  of its  remaining  claims.  The parties to the lawsuit are currently
conducting  discovery in the matter.  Based on an evaluation of  information  to
date and the advice of counsel,  the Company  believes that  realization  of its
recorded  claims is probable.  However,  no assurance can be given regarding the
timing of the resolution of this matter.

    For the 1999/00 ski season,  the Company  arranged  for four  separate  paid
skier visit insurance  policies  covering its Lake Tahoe resorts  (Northstar and
Sierra),  its New Hampshire resorts  (Waterville  Valley,  Mt. Cranmore and Loon
Mountain),  Bear  Mountain  and the Summit.  For the nine months  ended July 27,
2001,  resort  operations   revenues  included  $254,000  for  additional  claim
recoveries  received  upon the final  settlement of the 1999/00 paid skier visit
insurance  policies  in  excess of the  amounts  recognized  in  fiscal  2000 of
$6,600,000.

3.  Accounts Payable and Accrued Liabilities

    Accounts payable and accrued liabilities consist of the following:

                                          August 2,    November 2,      July 27,
                                             2002          2001          2001
                                         -----------   -----------   -----------
                                                     (In thousands)

     Accounts payable....................  $   2,751     $   7,836     $   2,828
     Accrued compensation and benefits...      3,869         4,159         4,023
     Taxes other than income taxes.......        663         1,131           979
     Unearned revenue and deposits-
      resort operations..................      4,903        11,601         5,665
     Unearned deposits-
      real estate operations (Note 5)....      5,610         6,000         6,000
     Interest............................      4,567         2,063         5,707
     Other...............................      4,820         2,052         4,404
                                         -----------   -----------   -----------
                                           $  27,183     $  34,842     $  29,606
                                         ===========   ===========   ===========



                                       5

<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



4.  Financing Arrangements

Senior Credit Facility

    Effective March 15, 2002, the Company and its  subsidiaries  entered into an
Amended and Restated Credit Agreement (the "Senior Credit  Facility") with Fleet
National Bank, as  administrative  agent  ("Agent"),  and certain  lenders.  The
following is a summary of certain provisions of the Senior Credit Facility.

        General - The Senior  Credit  Facility  provides for a revolving  credit
    facility (the "Revolving Credit Facility") with borrowing availability of up
    to  $25,000,000,  and a  term  loan  facility  (the  "Term  Facility")  with
    borrowing  availability  of up to $25,000,000.  Borrowings  under the Senior
    Credit Facility are collectively referred to herein as "Loans."

        Interest - For purposes of  calculating  interest,  Loans can be, at the
    election  of  the  Company,  Base  Rate  Loans  or  LIBOR  Rate  Loans  or a
    combination  thereof.  Base Rate Loans bear  interest  at the sum of (a) the
    higher of (i)  Agent's  prime rate or (ii) the  federal  funds rate plus .5%
    plus (b) a margin of 1.5%.  LIBOR Rate Loans bear interest at the LIBOR rate
    plus a margin of 4%. Interest on Loans outstanding is payable quarterly. The
    Senior Credit  Facility also  requires  commitment  fees of .5% based on the
    unused borrowing  availability of the Revolving Credit Facility.  Borrowings
    outstanding under the Term Facility as of August 2, 2002 bore interest at an
    annual rate of 6.8% pursuant to the LIBOR rate option.  Borrowings under the
    Revolving  Credit  Facility as of August 2, 2002 bore  interest at an annual
    rate of 6.25% pursuant to the base rate option.

        Repayment - Subject to the provisions of the Senior Credit Facility, the
    Company  may,  from  time to time,  borrow,  repay  and  reborrow  under the
    Revolving  Credit  Facility.  The Senior Credit  Facility  requires that the
    Company not have any borrowings  under the Revolving  Credit  Facility for a
    period of 30 consecutive  days  commencing  sometime  between January 15 and
    February  28  of  each  year.  The  Term  Facility  provides  for  quarterly
    commitment reductions of $1,000,000 on the last day of January,  April, July
    and  October of each year  beginning  on  January  31,  2003 and  continuing
    through  October 31, 2005, the maturity date of the Senior Credit  Facility.
    The Company is required to repay amounts outstanding under the Term Facility
    on such dates by an amount  equal to the  greater of (i) the amount by which
    outstanding Term Facility  borrowings exceed the  then-applicable  term loan
    commitment  and (ii) the  Excess  Cash  Proceeds  (as  defined in the Senior
    Credit  Facility)  derived from specified real estate asset sales determined
    on a cumulative basis. No amount of the Term Facility which is repaid may be
    reborrowed.  The entire unpaid  balance under the Senior Credit  Facility is
    due and payable on October 31, 2005.

        Security - Borrowings  under the Senior  Credit  Facility are secured by
    (a) a  pledge  to the  Agent  for  the  ratable  benefit  of  the  financial
    institutions party to the Senior Credit Facility of all of the capital stock
    of  Booth  Creek's  principal  subsidiaries  and (b) a grant  of a  security
    interest in substantially all of the consolidated  assets of Booth Creek and
    its subsidiaries.

        Covenants - The Senior  Credit  Facility  contains  financial  covenants
    relating to the  maintenance of (a) minimum  consolidated  resort EBITDA (as
    defined in the Senior Credit Facility)  measured quarterly on a rolling four
    quarter  basis,  (b) the ratio of  consolidated  EBITDA  (as  defined in the
    Senior Credit  Facility) to  consolidated  debt  service,  and (c) levels of
    adjusted  consolidated  leverage.  The Senior Credit  Facility also contains
    restrictive  covenants  pertaining to the  management and operation of Booth
    Creek and its subsidiaries. The covenants include, among others, significant
    limitations  on  indebtedness,   guarantees,   letters  of  credit,   liens,
    investments,  distributions,  capital expenditures,  mergers,  acquisitions,
    asset sales,  fundamental  corporate changes,  transactions with affiliates,
    optional  payments and  modification  of debt  instruments  and issuances of
    stock.

        Use of Proceeds - Borrowings  under the Revolving Credit Facility may be
    used for working capital and other general  corporate  purposes.  Borrowings
    under the Term Facility may be used to repurchase the Company's 12.5% senior
    notes due 2007 (the "Senior  Notes") or repay  certain  other  indebtedness,
    together with accrued and unpaid  interest  thereon.  During the nine months
    ended  August  2,  2002,  the  Company  repurchased   $29,325,000  aggregate
    principal  amount  of  Senior  Notes  in  privately-negotiated  transactions
    through borrowings under the Term Facility and available cash resources.  As
    of  August 2,  2002,  outstanding  borrowings  under  the  Revolving  Credit
    Facility and Term Facility were $2,530,000 and $25,000,000, respectively.

                                       6
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


    The  Company  has  entered  into two  interest  rate cap  agreements  for an
aggregate  notional  amount of $15,000,000  through July 31, 2005,  declining to
$14,000,000  through  October  31,  2005.  In exchange  for upfront  payments of
$179,000,   the  Company  will  receive   floating   rate   payments   from  the
counterparties to the interest rate cap agreements during those periods in which
the three month LIBOR rate exceeds 6%. These  agreements  are  accounted  for at
their  fair  value,  with   fluctuations   recorded  through  the  statement  of
operations.

Senior Notes

    As of August 2, 2002,  the Company  had  outstanding  $96,175,000  aggregate
principal amount of its Senior Notes. The Senior Notes mature on March 15, 2007,
and bear  interest  at 12.5% per annum,  payable  semi-annually  on March 15 and
September 15. The Senior Notes are  redeemable at the option of the Company,  in
whole or in part, at any time after March 15, 2002,  with an initial  redemption
price of 106.25% declining through maturity, plus accrued and unpaid interest to
the redemption date. The Senior Notes are general senior  unsecured  obligations
of the Company  ranking  equally in right of payment with all other existing and
future senior  indebtedness of the Company and senior in right of payment to any
subordinated indebtedness of the Company.

    The Senior Notes are  unconditionally  guaranteed,  on an  unsecured  senior
basis, as to the payment of principal,  premium,  if any, and interest,  jointly
and severally (the "Guarantees"), by all Restricted Subsidiaries of the Company,
as  defined in the  indenture  for the Senior  Notes (the  "Indenture"),  having
either assets or shareholders'  equity in excess of $20,000 (the  "Guarantors").
All  of  the  Company's   direct  and  indirect   subsidiaries   are  Restricted
Subsidiaries, except DRE, L.L.C.

    The Senior  Notes are  effectively  subordinated  in right of payment to all
secured indebtedness of the Company and the Guarantors,  including  indebtedness
under the Senior Credit Facility. In addition, the Senior Notes are structurally
subordinated  to any  indebtedness  of the Company's  subsidiaries  that are not
Guarantors.  The Indenture  contains covenants for the benefit of the holders of
the Senior Notes that, among other things,  limit the ability of the Company and
any Restricted  Subsidiaries  to: (i) incur  additional  indebtedness;  (ii) pay
dividends and make other distributions;  (iii) issue stock of subsidiaries; (iv)
make certain  investments;  (v) repurchase stock; (vi) create liens; (vii) enter
into  transactions  with  affiliates,  (viii)  enter  into  sale  and  leaseback
transactions,  (ix) create  dividend  or other  payment  restrictions  affecting
Restricted Subsidiaries; (x) merge or consolidate the Company or any Guarantors;
and (xi) sell assets.

    The Guarantors are  wholly-owned  subsidiaries of Booth Creek and have fully
and  unconditionally  guaranteed  the Senior Notes on a joint and several basis.
Booth Creek is a holding  company and has no significant  operations,  assets or
cash flows separate from its investments in its subsidiaries.  In addition,  the
assets,  equity,  revenues,  income and cash flow of DRE, L.L.C.,  Booth Creek's
only non-guarantor  subsidiary,  are minor and the membership  interests in DRE,
L.L.C. are entirely owned by Booth Creek. There are no significant  restrictions
on the ability of the Guarantors to pay dividends or otherwise transfer funds to
Booth  Creek.  Accordingly,  Booth Creek has not  presented  separate  financial
statements and other disclosures  concerning the Guarantors or its non-guarantor
subsidiary  because  management  has  determined  that such  information  is not
material to investors.

    During  the nine  months  ended  August 2,  2002,  the  Company  repurchased
$29,325,000  aggregate  principal amount of Senior Notes for $25,588,000.  After
giving effect to the write-off of related deferred  financing and other costs of
$976,000, the Company recognized an extraordinary gain of $2,761,000.

    During  the  nine  months  ended  July 27,  2001,  the  Company  repurchased
$8,000,000  aggregate  principal  amount of Senior Notes for  $5,990,000.  After
giving effect to the write-off of related deferred  financing costs of $287,000,
the Company recognized an extraordinary gain of $1,723,000.

Other Debt

    During the nine month  periods  ended August 2, 2002 and July 27, 2001,  the
Company entered into long-term debt and capital lease  obligations of $1,644,000
and $3,317,000, respectively, for the purchase of equipment.

                                       7
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



5.  Real Estate Transactions with Related Parties

Unit 7 and 7A Development

    On November 17, 1999,  Trimont Land Company ("TLC"),  the owner and operator
of Northstar and a wholly-owned subsidiary of the Company,  consummated the sale
to Trimont Land Holdings,  Inc. ("TLH"), a wholly-owned subsidiary of Parent and
an affiliate of the  Company,  of certain  single  family  development  property
underlying  a portion  of the Unit 7 and 7A  developments  at  Northstar  for an
aggregate sales price of $7,050,000,  subject to adjustment as described  below.
The  consideration  paid to TLC consisted of $6,000,000 in cash and a promissory
note (the "TLH  Note")  for  $l,050,000,  subject  to  adjustment.  The  Company
obtained  a  fairness  opinion  for the  transaction  from an  independent  firm
qualified in the subject matter of the transaction.  In connection with the sale
of  development  real estate on  September  22, 2000 as described  below,  TLH's
interests  in the Unit 7A lots were  transferred  back to TLC on  September  22,
2000.

    Under  the  terms of the TLH  Note,  TLC will  receive  the  greater  of (a)
$1,050,000  plus accrued  interest at 7% per annum, or (b) the Net Cash Proceeds
(as defined)  derived  from the resale of TLH's lots within Unit 7.  Pursuant to
the terms of the sale,  TLC retained the  obligation  to complete the  scheduled
construction  of the Unit 7 development,  which was  substantially  completed in
November  2001.  The Company  recognizes  revenue and related costs of sales for
this real estate  transaction upon the close of escrow for lot sales between TLH
and third party buyers,  and had reflected the  $6,000,000 in cash received as a
deposit liability as of November 2, 2001.

    During the nine months ended August 2, 2002, TLH  consummated the sale of 25
Unit 7 lots for net proceeds of approximately  $11,300,000.  As the net proceeds
of the 25 lot sales were more than the  $6,000,000 in cash initially paid by TLH
for the  underlying  real estate,  additional  cash proceeds of $5,300,000  were
distributed to TLC during the nine months ended August 2, 2002. In addition, the
Company  relieved  the existing  $6,000,000  deposit  liability  during the nine
months ended August 2, 2002. One lot currently remains available for sale within
the Unit 7 subdivision.

Development Real Estate

    On September  22, 2000,  TLC and TLH entered into an Agreement  for Purchase
and Sale of Real Property (the  "Northstar Real Estate  Agreement")  pursuant to
which TLC agreed to sell to TLH certain  development  real estate  consisting of
approximately  550 acres of land located at  Northstar  (the  "Development  Real
Estate") for a total purchase price of $27,600,000,  of which 85% was payable in
cash  and 15%  was  payable  in the  form of  convertible  secured  subordinated
promissory notes. The purchase price was based on an appraisal  obtained from an
independent  third  party  appraiser.   Concurrently  therewith,   TLC  and  TLH
consummated  the sale of the initial land parcels  contemplated by the Northstar
Real Estate  Agreement,  and TLC transferred  the bulk of the  Development  Real
Estate to TLH for a total purchase price of $21,000,000,  of which  $17,850,000,
or 85%,  was  paid in cash  and  $3,150,000,  or 15%,  was paid in the form of a
convertible secured  subordinated  promissory note. During the nine months ended
August 2, 2002, TLH transferred  cash of $5,610,000 to TLC, which represents the
cash portion of the purchase  price for the remaining  Development  Real Estate.
The  $5,610,000  payment has been  deferred as a deposit  liability  pending the
consummation  of the sale of the  remaining  Development  Real Estate  under the
Northstar  Real  Estate  Agreement,  which is  subject  to  certain  subdivision
requirements  to effect  the  transfer  of such  property  and other  normal and
customary  closing  conditions,  and is expected to be  consummated  in calendar
2002.

                                       8
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)



6.  Income Taxes

    As of  November  2, 2001,  the  Company had  estimated  net  operating  loss
carryforwards  of  approximately  $84,700,000  for federal  income tax reporting
purposes,  which  expire  between  2012 and 2021.  The tax  benefits of such net
operating losses are fully offset by a valuation reserve. Based on the Company's
current tax  attributes,  no income tax provision or benefit is expected for the
year ending November 1, 2002.  Accordingly,  during the nine months ended August
2, 2002, no income tax provision has been provided.

7.  Business Segments

    The Company currently operates in two business  segments,  resort operations
and real estate and other. Data by segment is as follows:

                               Three Months Ended         Nine Months Ended
                            -----------------------    -----------------------
                             August 2,    July 27,      August 2,    July 27,
                               2002        2001            2002       2001
                            ----------  -----------    -----------  ----------
                                             (In thousands)
   Revenue:
    Resort operations....    $   3,482   $   3,248      $  104,742   $  101,819
    Real  estate  and
      other..............        2,560         190          11,475          190
                            ----------  -----------    -----------  -----------
                             $   6,042   $   3,438      $  116,217   $  102,009
                            ==========  ===========    ===========  ===========

   Operating income (loss):
    Resort operations....    $ (10,579)  $ (11,704)     $   18,987   $   15,161
    Real  estate  and
      other.............         1,721        (303)          7,968         (701)
                            ----------  -----------    -----------  -----------
                             $  (8,858)  $ (12,007)     $   26,955   $   14,460
                            ==========  ===========    ===========  ===========


                                                 August 2,      November 2,
                                                   2002           2001
                                               -------------  -------------
                                                      (In thousands)
   Segment assets:
    Resort operations..................         $ 145,174       $ 169,919
    Real estate and other..............            10,716          12,345
    Assets held for sale (Note 8)......            12,845               -
    Corporate and other
      nonidentifiable assets...........             8,019           6,954
                                               -------------  -------------
                                                $ 176,754       $ 189,218
                                               =============  =============

   A reconciliation  of combined  operating income (loss) for resort operations
and real estate and other to  consolidated  income (loss)  before  extraordinary
item and change in accounting principle is as follows:

                                 Three Months Ended       Nine Months Ended
                               ----------------------   --------------------
                               August 2,     July 27,   August 2,   July 27,
                                 2002         2001        2002       2001
                               ---------    ---------   ---------  ---------
                                               (In thousands)

   Operating income (loss)for
    reportable segments.......  $ (8,858)    $(12,007)   $ 26,955   $ 14,460
   Interest expense...........    (3,572)      (4,006)    (11,645)   (12,415)
   Amortization of deferred
    financing costs...........      (307)        (239)       (817)      (726)
   Minority interest..........         -          (30)        (15)       (99)
   Other income (expense).....       (81)         133         (39)       256
                               ---------    ---------   ---------  ---------
   Income (loss) from
    continuing operations
    before extraordinary item
    and change in accounting
    principle.................  $(12,818)    $(16,149)   $ 14,439   $  1,476
                               =========    =========   =========  =========


                                       9
<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)


8.  Pending Sale of Bear Mountain Resort

    On July 22, 2002,  the Company  entered into  definitive  agreements for the
sale of all of the capital stock of Bear  Mountain,  Inc.  ("Bear  Mountain") to
Snow Summit Ski Corporation for a purchase price of $12,000,000 in cash, subject
to certain  adjustments  for working  capital,  assumed debt and  allocations of
off-season  operating  losses  and  capital  expenditures.  As a  result  of the
intended  disposition,  the Company has reflected the assets and  liabilities of
Bear Mountain as held for sale in the accompanying consolidated balance sheet as
of August 2, 2002,  and has reflected the operating  results of Bear Mountain as
discontinued  operations  in the  accompanying  statements  of  operations.  The
closing of the proposed  transaction is conditioned  upon the receipt of certain
third party consents and governmental  approvals,  including the approval of the
United  States Forest  Service,  and other  customary  closing  conditions.  The
Company is currently  seeking an amendment to the Senior Credit  Facility  which
would permit the sale transaction.  The closing of the sale is expected to occur
in the fourth quarter of fiscal 2002.  However,  no assurances can be given that
the transaction  will be consummated on the terms  contemplated or at all. Based
on the terms of the pending  transaction and the  anticipated  closing date, the
Company  recorded an estimated  impairment  loss of  $3,200,000  relating to the
long-lived assets of Bear Mountain.

    The components of Bear Mountain's assets and liabilities held for sale as of
August 2, 2002 are as follows:

                                                         (In thousands)
    Assets held for sale:
      Current assets..................................... $       280
      Property and equipment, net........................      12,535
      Other assets.......................................          30
                                                          -----------
        Total assets held for sale....................... $    12,845
                                                          ===========
    Liabilities held for sale:
      Current portion of long-term debt.................. $       135
      Accounts payable and accrued liabilities...........         647
      Long-term debt.....................................         450
                                                          -----------
        Total liabilities held for sale.................. $     1,232
                                                          ===========

    Summary operating results for Bear Mountain for the periods indicated below,
which have  historically been included in the Company's resort segment operating
results, are as follows:

                                Three Months Ended           Nine Months Ended
                              ----------------------       ---------------------
                                August 2,   July 27,        August 2,   July 27,
                                  2002        2001            2002        2001
                               ---------- ----------       ---------- ----------
                                               (In thousands)

    Total revenue.............. $   312    $   250          $ 13,820   $ 14,201
    Total expenses.............  (1,602)    (1,727)          (11,860)   (12,550)
                               ---------- ----------       ---------- ----------
    Total income (loss) from
      discontinued operations.. $(1,290)   $(1,477)         $  1,960   $  1,651
                               ========== ==========       ========== ==========


                                                  Year Ended
                                      -----------------------------------
                                          November 2,    October 27,
                                            2001            2000
                                      ----------------- -----------------
                                                 (In thousands)

    Total revenue...................    $   14,539        $   10,135
    Total expenses..................       (14,677)          (12,582)
                                       -------------     -------------
    Total loss from
      discontinued operations.......    $     (138)       $   (2,447)
                                       =============     =============

    Bear  Mountain  generated  income from  operations  before  depreciation  of
$2,863,000  and  $748,000  for the years ended  November 2, 2001 and October 27,
2000, respectively.


                                       10
<PAGE>



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

    The following discussion should be read in conjunction with the consolidated
financial  statements  and related  notes  thereto  included  elsewhere  in this
Report. The following  discussion  contains certain  forward-looking  statements
that involve risks and uncertainties.  The Company's actual results could differ
materially from those discussed  herein.  Factors that could cause or contribute
to the differences are discussed in  "Forward-Looking  Statements" and elsewhere
in this Report.

General

    The Company's ski operations are highly sensitive to weather  conditions and
the overall strength of the regional economies in the areas in which the Company
operates.  The Company believes that the geographic diversity of its resorts and
the use of extensive snowmaking  technology coupled with advanced trail grooming
equipment,   which  together  can  provide  consistent  skiing  conditions,  can
partially  mitigate  the risk of both  economic  downturns  and adverse  weather
conditions in any given region.  However, the Company remains vulnerable to warm
weather,  heavy rains, high winds,  drought and other types of severe or unusual
weather  conditions,  which  can  have a  significant  effect  on the  operating
revenues and profitability at one or more of the Company's resorts. For example,
the Northeast has  experienced  a drought  during the summer of 2002,  which may
negatively impact  snowmaking  operations at the Company's New Hampshire resorts
during the 2002/03 ski season.  Moreover,  since 2000,  the Company has sold one
resort  (Grand  Targhee) and entered  into an  agreement  to sell another  (Bear
Mountain), thereby reducing its geographical diversity.

    The Company's four most weather-sensitive resorts, Bear Mountain, Waterville
Valley,  Loon Mountain and Mt.  Cranmore,  have  invested  heavily in snowmaking
capabilities to provide  coverage on virtually all of their trails and have been
open for skiing at least 138, 136, 139 and 99 days, respectively, during each of
the last five ski  seasons,  including  the  2001/02 ski  season.  However,  the
efficiency and effectiveness of snowmaking operations can be negatively impacted
by numerous factors,  including  temperature  variability,  reliability of water
sources,  availability  and cost of adequate  energy  supplies  and  unfavorable
weather events such as heavy rains.

    Sierra and the Summit generally  experience  higher natural snowfall levels,
averaging approximately 484 and 450 inches of snowfall,  respectively,  per year
for the past five ski seasons.  As a result of their historic natural  snowfall,
their snowmaking  capabilities in terms of trail coverage are considerably  less
extensive  than  at Bear  Mountain,  Waterville  Valley,  Loon  Mountain  or Mt.
Cranmore.  However,  such resorts are  dependent  upon early season  snowfall to
provide  necessary  terrain for the  important  Christmas  holiday  period,  and
therefore,  the timing and extent of natural snowfall can  significantly  impact
operating conditions.

    Northstar has averaged approximately 285 inches of snowfall per year for the
past five ski  seasons.  The  resort  has  snowmaking  capabilities  to  provide
coverage on approximately  50% of its trails.  Although the resort's  operations
depend significantly on natural snowfall,  particularly in the early part of the
ski season,  in recent years the Company has invested in  additional  snowmaking
facilities to improve Northstar's snowmaking production capacity.

    The  Company's  results  of  operations  are also  highly  dependent  on the
Company's  ability to compete in each of the large regional ski markets in which
it operates. Management estimates that at Northstar and Sierra approximately 70%
of the 2001/02 ski season total skier days were attributable to residents of the
San Francisco/San  Jose,  Sacramento,  Central  California Valley and Lake Tahoe
regions.  At Bear Mountain,  more than 90% of the 2001/02 ski season total skier
days were  attributable  to residents of the Los Angeles,  Orange County and San
Diego  metropolitan  regions.  At  Waterville  Valley,  Loon  Mountain  and  Mt.
Cranmore,  more  than 75% of the  2001/02  ski  season  total  skier  days  were
attributable  to  residents of  Massachusetts  and New  Hampshire,  with a large
percentage of such  visitors  coming from the Boston  metropolitan  area. At the
Summit,  the Company estimates that  approximately 90% of the 2001/02 ski season
total  skier  days  were   attributable  to  residents  of  the   Seattle/Tacoma
metropolitan region.

    A meaningful  portion of total operating costs at the Company's  resorts are
variable,  consisting  primarily  of  retail  and food  service  cost of  sales,
utilities and labor expense.  These  variable costs can fluctuate  significantly
based  upon skier  days and  seasonal  factors.  With the  exception  of certain
management,  administrative and maintenance personnel,  substantially all of the
Company's  employees are compensated on an hourly basis.  Management  believes a
key element to maximizing  profitability  during the winter season is to closely
monitor  staffing  requirements and to adjust staffing levels when skier volumes
or seasonal needs dictate.

                                       11
<PAGE>

    The  Company's  resorts  utilize   significant  energy  resources  in  their
operations,  including  power for  operating  lifts and  snowmaking  facilities.
Volatility  in the  availability  and cost of energy  resources at the Company's
resorts could have an adverse effect on the Company's results of operations.  In
this regard,  in August 2001, Bear Mountain was informed by its local electrical
utility of new proposed  electrical rates that if adopted would have resulted in
an increase of  approximately  $1,100,000 to  $1,200,000  in annual  electricity
costs from the level incurred in 2001. Bear Mountain,  along with other parties,
intervened in the electrical  utility's rate application  proceeding  before the
Public Utilities  Commission of the State of California (the "PUC"). On February
8,  2002,  Bear  Mountain,  the  electrical  utility  and other  parties  to the
proceeding entered into a settlement  agreement which, among other things, would
serve  to  reduce  Bear  Mountain's   increased  annual  costs  to  a  range  of
approximately  $400,000 to $500,000 over 2001 levels.  The settlement  agreement
was approved by the PUC on July 17, 2002.

    Each of the  Company's  resorts is subject to the threat of personal  injury
claims  relating  principally to snow sports  activities as well as premises and
vehicular  operations and worker's  compensation  matters. The Company maintains
various forms of insurance  covering  claims related to its properties and usual
and customary  risks  associated  with the operation of  four-season  recreation
resorts.  As a result of the  terrorist  attacks  on  September  11,  2001,  the
insurance  industry  has  experienced   significant  losses  and  a  substantial
reduction  in   underwriting   capacity,   which  has   generally   resulted  in
significantly  higher  renewal  premiums for  companies  seeking  insurance.  In
connection  with its annual renewal of insurance  coverage for 2002, the Company
experienced  an increase in insurance  premium costs of  approximately  $650,000
over the level of such costs in 2001. Offsetting this increase was the effect of
the elimination of paid skier visit insurance coverage,  for which premiums were
approximately $1,100,000 in 2001. The Company has not yet renewed its commercial
insurance  coverage for 2003.  The Company can make no assurances  regarding the
availability  and  terms of  insurance  coverage  for  2003,  or the  extent  of
potential premium increases which the Company may experience.  In addition,  the
elimination  of paid skier  visit  insurance  coverage is likely to lead to more
variability in the Company's operating results.

Results of Operations of the Company

    Overview

    The opening and closing dates for the Company's  resorts for the 2001/02 and
2000/01 ski seasons were as follows:

                                              Opening Dates
                             ------------------------------------------------
                              2001/02 Season                 2000/01 Season
                             ----------------               ----------------
    Northstar.............   November 29, 2001              November 18, 2000
    Sierra................   November 25, 2001              November 3, 2000
    Bear Mountain.........   November 27, 2001              November 9, 2000
    Waterville Valley*....   November 16, 2001              November 19, 2000
    Mt. Cranmore..........   December 15, 2001              November 25, 2000
    Loon Mountain*........   November 16, 2001              November 22, 2000
    The Summit............   November 30, 2001              December 1, 2000


                                              Closing Dates
                             ------------------------------------------------
                              2001/02 Season                 2000/01 Season
                             ----------------               ----------------
    Northstar.............   April 21, 2002                 April 22, 2001
    Sierra................   April 15, 2002                 April 23, 2001
    Bear Mountain.........   April 14, 2002                 April 22, 2001
    Waterville Valley.....   April 7, 2002                  April 15, 2001
    Mt. Cranmore..........   March 24, 2002                 April 1, 2001
    Loon Mountain.........   April 14, 2002                 April 29, 2001
    The Summit............   May 5, 2002                    April 22, 2001


    * Following  their openings for the 2001/02  season,  Waterville  Valley and
Loon  Mountain  ceased  operations  in  December  2001  for six  and  ten  days,
respectively, due to eroding conditions as a result of warm weather.

                                       12
<PAGE>

    Due to warm  temperatures and the lack of natural snowfall in the Lake Tahoe
region  for most of  November  2001,  Northstar  and Sierra did not open for the
2001/02 season until after  Thanksgiving  Day,  whereas for the 2000/01  season,
Northstar opened on schedule and Sierra  experienced an unusually early opening.
In the first half of December 2001, the Lake Tahoe region received significantly
above average snowfall, which allowed Northstar and Sierra to open 100% of their
terrain earlier than usual,  and provided  favorable  conditions  going into the
Christmas holiday period and the first half of January 2002.  However,  snowfall
levels in the Lake  Tahoe  region  in  January  and  February  2002  were  below
historical levels,  and several weekends in March 2002 were negatively  impacted
by disruptive storms. In addition, the early timing of the Easter holiday period
and softening conditions in April 2002 negatively impacted late season business.
For the 2000/01 season as a whole, snowfall levels in the Lake Tahoe region were
below historical levels.

    For the 2001/02  season,  Bear Mountain  opened later than  scheduled due to
warm weather in Southern  California,  which  negatively  impacted  early season
skier volumes at Bear  Mountain as compared to the 2000/01 ski season.  However,
Bear Mountain experienced  favorable snowmaking conditions and adequate snowfall
in December  2001,  which  allowed for  increased  trail  availability  over the
Christmas  holiday.  As a result,  the  resort  experienced  a strong  Christmas
holiday period during the 2001/02 season,  which partially offset the effects of
the delayed  opening.  Bear Mountain  experienced  below  average  snowfall from
January  2002  through the end of the season,  compared  to  generally  adequate
levels of snowfall during the same period in the 2000/01 ski season.

    For the 2001/02 season, the Northeast experienced drought conditions and one
of the warmest  winters on record.  While  Waterville  Valley and Loon  Mountain
opened for the 2001/02 season as scheduled, the resorts were forced to close for
six and ten days, respectively, in early December 2001 due to eroding conditions
as a result of warm  weather.  Mt.  Cranmore  was unable to open for the 2001/02
season until December 15, 2001. In addition to difficult early season conditions
and below average snowfall,  the Company's New Hampshire resorts  experienced an
above  average  number of negative  weather  events  during the 2001/02  season,
including  periods of warm weather and rain. By comparison,  weather  conditions
for the Company's New Hampshire  resorts for the 2000/01  season were  generally
favorable, with cold temperatures and above average snowfall.

    The  Summit  received  above  average  snowfall  and  experienced  generally
favorable  conditions during the 2001/02 season,  whereas the 2000/01 season was
marked by significantly below average snowfall.

    On July 22, 2002,  the Company  entered into  definitive  agreements for the
sale of all of the capital stock of Bear  Mountain,  Inc.  ("Bear  Mountain") to
Snow Summit Ski Corporation for a purchase price of $12,000,000 in cash, subject
to certain  adjustments  for working  capital,  assumed debt and  allocations of
off-season  operating  losses  and  capital  expenditures.  As a  result  of the
intended  disposition,  the Company has reflected the assets and  liabilities of
Bear Mountain as held for sale in the accompanying consolidated balance sheet as
of August 2, 2002,  and has reflected the operating  results of Bear Mountain as
discontinued  operations  in the  accompanying  statements  of  operations.  The
closing of the proposed  transaction is conditioned  upon the receipt of certain
third party consents and governmental  approvals,  including the approval of the
United  States Forest  Service,  and other  customary  closing  conditions.  The
Company is currently  seeking an amendment to the Senior Credit  Facility  which
would permit the sale transaction.  The closing of the sale is expected to occur
in the fourth quarter of fiscal 2002.  However,  no assurances can be given that
the transaction  will be consummated on the terms  contemplated or at all. Based
on the terms of the pending  transaction and the  anticipated  closing date, the
Company  recorded an estimated  impairment  loss of  $3,200,000  relating to the
long-lived assets of Bear Mountain. Additional financial information relating to
Bear Mountain is included in Note 8 to the accompanying  consolidated  financial
statements.  The definitive agreements relating to the Bear Mountain transaction
are filed as Exhibit 10.1 to this Report.


    Three Months  Ended  August 2, 2002  Compared to the Three Months Ended July
27, 2001

Continuing Operations:

    Total revenue for the three months ended August 2, 2002 was  $6,042,000,  an
increase of $2,604,000  from the  Company's  revenues for the three months ended
July  27,  2001.  Revenues  from  resort  operations  for the 2002  period  were
$3,482,000,  an increase of $234,000, or 7%, as compared to the 2001 period. The
increase  was  primarily  the result of increased  golf rounds at Northstar  and
improved  summer  operations  at  Loon  Mountain.   Revenues  from  real  estate
operations for the three months ended August 2, 2002 were $2,400,000,  which was
due to the  close of  escrow  on five  lots  within  the Unit 7  development  at
Northstar. There were no real estate sales in the 2001 period. Timber operations
contributed  revenues  of $160,000 in the 2002 period as compared to $190,000 in
the 2001 period.

                                       13
<PAGE>

    Cost of sales for resort  operations  for the three  months  ended August 2,
2002 were  $6,248,000,  an increase of $338,000,  or 6%, as compared to the 2001
period.  The increase was  primarily  the result of  increased  summer  business
volumes and normal inflationary factors.

    Cost of sales for real  estate and timber  operations  for the three  months
ended August 2, 2002 was $564,000,  including  noncash cost of real estate sales
of  $363,000,  as a result of the close of escrow on five lots within the Unit 7
development  at  Northstar.  Cost of sales for timber  operations  for the three
months ended July 27, 2001 were $167,000.

    Depreciation and depletion expense for the three months ended August 2, 2002
was  $3,939,000,  a decrease of $724,000  from the 2001 period.  The decline was
primarily due to certain assets acquired in connection with the Company's resort
acquisitions in 1996 and 1997 having become fully depreciated.

    In June 2001,  the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial  Accounting  Standards  No.  142,  "Goodwill  and Other
Intangible  Assets" ("SFAS No. 142"). The Company adopted SFAS No. 142 effective
as of  November  3,  2001.  Under  the new  rules,  goodwill  will no  longer be
amortized but will be subject to annual  impairment tests in accordance with the
pronouncement.  The Company's  operating results for the three months ended July
27, 2001 reflected goodwill amortization of $586,000.  Adjusted net loss for the
three  months  ended July 27, 2001 would have been  $17,040,000  excluding  such
goodwill amortization.

    Selling,  general and  administrative  expenses  for the three  months ended
August 2, 2002 were  $4,149,000,  an increase of $39,000,  or 1%, as compared to
the 2001 period.  Selling,  general and administrative expenses for the 2002 and
2001 periods  included  $184,000  and  $242,000,  respectively,  relating to the
Company's real estate segment.

    Operating loss for the three months ended August 2, 2002 was $8,858,000,  an
improvement of $3,149,000 from the operating loss generated for the 2001 period,
as a result of the factors discussed above.

    Interest  expense  for  the  three  months  ended  August  2,  2002  totaled
$3,572,000,  a decrease of $434,000, or 11%, from the Company's interest expense
for the three months ended July 27, 2001,  due to reduced  borrowings  and lower
average interest rates.

    As of  November  2, 2001,  the  Company had  estimated  net  operating  loss
carryforwards  of  approximately  $84,700,000  for federal  income tax reporting
purposes,  which  expire  between  2012 and 2021.  The tax  benefits of such net
operating losses are fully offset by a valuation reserve. Based on the Company's
current tax  attributes,  no income tax provision or benefit is expected for the
year ending November 1, 2002. Accordingly,  during the three months ended August
2, 2002, no income tax provision has been provided.

    The Company's  loss from  continuing  operations  for the three months ended
August 2, 2002 was $12,818,000,  an improvement of $3,331,000 from the loss from
continuing  operations of $16,149,000  generated for the three months ended July
27, 2001, as a result of the factors discussed above.

Discontinued Operations:

    The Company's loss from  discontinued  operations for the three months ended
August 2, 2002,  excluding  the  impairment  loss  recorded  on the  anticipated
disposition of Bear Mountain,  was  $1,290,000,  an improvement of $187,000,  or
13%,  from the loss from  discontinued  operations  of  $1,477,000  for the 2001
period.  The  improvement  was  primarily  the result of decreased  depreciation
expense as certain assets  acquired as part of the  acquisition of Bear Mountain
in December 1996 have become fully depreciated.

    Based on the terms of the pending sale of Bear Mountain and the  anticipated
closing date, during the three months ended August 2, 2002, the Company recorded
an estimated  impairment loss of $3,200,000 relating to the long-lived assets of
Bear Mountain.


                                       14
<PAGE>


Combined Operations:

    The  Company's  net loss for the  three  months  ended  August  2,  2002 was
$17,308,000,  an  improvement  of  $318,000  from  the net  loss of  $17,626,000
generated  for the three months ended July 27, 2001,  as a result of the factors
discussed above.

    The financial  information  presented  below includes  information on "Total
EBITDA from Continuing  Operations," "Noncash Cost of Real Estate Sales," "Total
EBITDA from Continuing Operations (excluding Noncash Cost of Real Estate Sales)"
and "Total EBITDA (excluding  Noncash Cost of Real Estate Sales)." "Total EBITDA
from  Continuing  Operations"  represents  operating  loss before  depreciation,
depletion  and  amortization  expense.  "Noncash  Cost  of  Real  Estate  Sales"
represents  the  allocated  portion  of  real  estate  development  expenditures
previously  capitalized  (including  acquisition  costs allocated to real estate
development) which relate to current real estate sales. "Total EBITDA (excluding
Noncash  Cost of Real Estate  Sales)"  includes  Total  EBITDA  from  Continuing
Operations  and  EBITDA  associated  with the  discontinued  operations  of Bear
Mountain.  Although  EBITDA is not a measure  of  performance  under  accounting
principles generally accepted in the United States ("GAAP"),  the information is
presented because management believes it provides useful information regarding a
company's  ability to incur and service debt.  Further,  Total EBITDA (excluding
Noncash Cost of Real Estate Sales) is calculated  essentially in the manner that
"EBITDA" is calculated under the indenture  governing the Company's 12.5% senior
notes due 2007 (the "Senior  Notes"),  and therefore,  management  believes this
measure is  meaningful  to holders of the  Senior  Notes.  EBITDA  should not be
considered  in  isolation  or as a  substitute  for net income,  cash flows from
operating  activities  and other income or cash flow  statement data prepared in
accordance  with  GAAP,  or as a  measure  of  profitability  or  liquidity.  In
addition, the EBITDA measures as determined by the Company may not be comparable
to  related  or similar  measures  as  reported  by other  companies  and do not
represent funds available for discretionary use.


                                        Three Months Ended
                                      ----------------------
                                        August 2, July 27,            Percentage
                                         2002       2001     Increase  Increase
                                       --------- ---------   --------  --------
                                                (In thousands)
Total EBITDA from Continuing
  Operations........................   $(4,919)   $(6,749)   $ 1,830      27%
Noncash Cost of Real Estate Sales...   $   363    $     -    $   363     100
Total EBITDA from Continuing
  Operations (excluding Noncash Cost
  of Real Estate Sales).............   $(4,556)   $(6,749)   $ 2,193      32
Total EBITDA (excluding Noncash Cost
  of Real Estate Sales).............   $(5,356)   $(7,477)   $ 2,121      28



    Nine Months Ended August 2, 2002  Compared to the Nine Months Ended July 27,
2001

Continuing Operations:

    Total revenue for the nine months ended August 2, 2002 was $116,217,000,  an
increase of $14,208,000, or 14%, over the Company's revenues for the nine months
ended July 27, 2001.  Revenues from resort  operations  for the 2002 period were
$104,742,000,  an increase of $2,923,000, or 3%, as compared to the 2001 period.
Revenues  from real estate  operations  for the nine months ended August 2, 2002
were  $11,300,000,  which were due to the close of escrow on 25 lots  within the
Unit 7  development  at  Northstar.  There were no real estate sales in the 2001
period. Timber operations contributed revenues of $175,000 in the 2002 period as
compared to $190,000 in the 2001 period.


                                       15
<PAGE>


    The following  table  summarizes the sources of the Company's  revenues from
resort operations for the nine months ended August 2, 2002 and July 27, 2001:


                                 Nine Months Ended
                               ----------------------             Percentage
                               August 2,     July 27,   Increase   Increase
                                 2002         2001     (Decrease) (Decrease)
                               ---------    ---------  ---------   ---------
                                           (In thousands)


   Lift Tickets...............  $ 42,930     $ 42,731    $    199          -%
   Season Passes..............    14,521       11,573       2,948         25
   Snow School................     8,118        7,318         800         11
   Equipment Rental...........     8,931        8,749         182          2
   Retail.....................     4,408        4,335          73          2
   Food and Beverage..........    14,972       14,804         168          1
   Other......................    10,862       10,555         307          3
                               ---------    ---------   ---------
   Revenues from Resort
     Operations before Paid
     Skier Visit Insurance....   104,742      100,065       4,677          5
   Paid Skier Visit Insurance.         -        1,754      (1,754)      (100)
                               ---------    ---------   ---------
   Total Resort Operations
     Revenues.................  $104,742     $101,819    $  2,923          3
                               =========    =========   =========


    Total skier visits  generated by each of the Company's  resorts for the nine
months ended August 2, 2002 and July 27, 2001 were as follows:

                                 Nine Months Ended
                               ----------------------             Percentage
                               August 2,     July 27,   Increase   Increase
                                 2002         2001     (Decrease) (Decrease)
                               ---------    ---------  ---------   ---------
                                           (In thousands)


   Northstar..................       521          519           2          -%
   Sierra.....................       419          391          28          7
   Waterville Valley..........       205          235         (30)       (13)
   Mt. Cranmore...............        96          129         (33)       (26)
   Loon Mountain..............       301          385         (84)       (22)
   The Summit.................       612          508         104         20
                                  -------      -------     -------
                                   2,154        2,167         (13)        (1)
                                  =======      =======     =======


    For the 2000/01  season,  the Company  arranged for four separate paid skier
visit  insurance  policies  covering Bear Mountain,  Loon  Mountain,  Waterville
Valley and the Summit.  The policies had a  deductible  for the initial  decline
from targeted paid skier visit and revenue  levels and stated  maximum  coverage
levels. In addition,  the policies required the insured to experience monthly or
annual snowfall amounts below certain agreed upon levels before a claim could be
filed for the decline in paid skier  visits.  For the nine months ended July 27,
2001, the Company recorded resort  operations  revenues of $1,500,000 for claims
attributable  to lower than agreed upon paid skier  visits and  snowfall  levels
under the Summit and  Waterville  Valley  policies.  The  Company's  claims were
determined  based on a specified  formula  under the paid skier visit  insurance
policies and snowfall  information  verified by an independent  third party. The
Company  believes  that it has fully  complied  with its  obligations  under the
policies,  and has  properly  reported  and made claims in  accordance  with the
policies  for losses  aggregating  in excess of  $1,500,000.  As a result of the
underwriters'  failure to properly  process the  Company's  claims,  in November
2001, the Company filed a lawsuit against the underwriters  seeking recovery for
breach of  contract,  breach of covenant of good faith and unfair and  deceptive
business  practices.  In April 2002,  the  underwriters  made a partial offer of
settlement of $700,000,  which the Company  accepted  with a reservation  of all
rights and  remedies  under the terms of the policies  and  applicable  law with
respect to its  remaining  claims.  The  Company  intends to  vigorously  pursue
collection  of its  remaining  claims.  The parties to the lawsuit are currently
conducting  discovery in the matter.  Based on an evaluation of  information  to
date and the advice of counsel,  the Company  believes that  realization  of its
recorded  claims is probable.  However,  no assurance can be given regarding the
timing of the resolution of this matter.

                                       16
<PAGE>


    For the 1999/00 ski season,  the Company  arranged  for four  separate  paid
skier visit insurance  policies  covering its Lake Tahoe resorts  (Northstar and
Sierra),  its New Hampshire resorts  (Waterville  Valley,  Mt. Cranmore and Loon
Mountain),  Bear  Mountain  and the Summit.  For the nine months  ended July 27,
2001,  resort  operations   revenues  included  $254,000  for  additional  claim
recoveries  received  upon the final  settlement of the 1999/00 paid skier visit
insurance  policies  in  excess of the  amounts  recognized  in  fiscal  2000 of
$6,600,000.

    Resort  operations  revenues,  excluding  the  effect  of paid  skier  visit
insurance,  were  $104,742,000  for the nine  months  ended  August 2, 2002,  an
increase of  $4,677,000,  or 5%, from the 2001 period.  Revenues  for  Northstar
increased  by  $1,375,000,  primarily  due to higher per skier  revenue  yields.
Revenues  for Sierra  increased  by  $1,535,000  due to higher  skier visits and
increased season pass sales, as well as moderate  increases in per skier revenue
yields. Revenues for Waterville Valley, Mt. Cranmore and Loon Mountain decreased
by $466,000, $682,000 and $860,000,  respectively,  primarily due to lower skier
visits,  partially  offset by improved per skier  revenue  yields.  The Summit's
revenues  increased by $3,775,000  due  primarily to a  significant  increase in
skier visits, as well as higher season pass revenues and yield improvements. The
improvement in per skier revenue  yields at the Company's  resorts was primarily
due to price increases, and to a lesser extent, sales of additional services and
products to the Company's guests.

    Cost of sales for resort operations for the nine months ended August 2, 2002
were  $56,268,000,  an  increase of  $1,561,000,  or 3%, as compared to the 2001
period.  The increase was the result of the  combined  effects of the  following
items:  (1)  increased   workers'   compensation   provisions  of  approximately
$1,300,000  for  unfavorable  trends in workers'  compensation  exposures at the
Company's  California and Washington  resorts,  (2) increased credit card costs,
United States Forest  Service  permit fees and other  variable  operating  costs
related to increased revenues, and (3) normal inflationary factors.

    Cost of sales for real  estate and  timber  operations  for the nine  months
ended August 2, 2002 was $2,737,000, including noncash cost of real estate sales
of  $2,492,000,  primarily  as a result of the close of escrow on 25 lots within
the Unit 7 development at Northstar. Cost of sales for timber operations for the
nine months ended July 27, 2001 were $167,000.

    Depreciation and depletion  expense for the nine months ended August 2, 2002
was $12,506,000,  a decrease of $1,530,000 from the 2001 period.  The decline in
depreciation  expense was primarily due to certain assets acquired in connection
with the  Company's  resort  acquisitions  in 1996 and 1997 having  become fully
depreciated.

    The  Company's  operating  results for the nine  months  ended July 27, 2001
reflected goodwill amortization of $1,757,000.  Adjusted net income for the nine
months ended July 27, 2001 would have been  $6,607,000  excluding  such goodwill
amortization.  In  connection  with the  adoption of SFAS No.  142,  the Company
performed a transitional impairment test for recorded goodwill as of November 3,
2001 for each resort. Based on the results of the transitional  impairment test,
the  Company  wrote down  goodwill by  $200,000  for one resort,  which has been
reflected as the  cumulative  effect of a change in accounting  principle in the
accompanying statement of operations for the nine months ended August 2, 2002.

    Selling,  general and  administrative  expenses  for the nine  months  ended
August 2, 2002 were $17,751,000,  an increase of $897,000, or 5%, as compared to
the 2001 period.  Selling,  general and administrative expenses for the 2002 and
2001  periods  include  $679,000  and  $640,000,  respectively,  relating to the
Company's  real  estate  segment.  The  increase in total  selling,  general and
administrative expenses between the 2002 and 2001 periods was principally due to
the following factors:  (1) an increase in legal and professional costs for Loon
Mountain due to  significant  activity  during the 2002 period on various  legal
matters,  (2) an increase in payroll due to the  addition of certain  resort and
corporate  management  and  administrative   positions,  as  well  as  increased
commission costs due to higher commissionable sales, and (3) normal inflationary
factors.

    Operating  income for the nine months ended August 2, 2002 was  $26,955,000,
an increase of  $12,495,000  over the  operating  income  generated for the 2001
period, as a result of the factors discussed above.

    Interest   expense  for  the  nine  months  ended  August  2,  2002  totaled
$11,645,000,  a decrease of $770,000, or 6%, from the Company's interest expense
for the nine months ended July 27, 2001, as a result of reduced  borrowings  and
lower average interest rates.

    The Company's  income from  continuing  operations for the nine months ended
August 2, 2002 was $14,439,000,  an increase of $12,963,000 from the income from
continuing  operations  of  $1,476,000  for the 2001 period,  as a result of the
factors discussed above.

                                       17
<PAGE>

    As of  November  2, 2001,  the  Company had  estimated  net  operating  loss
carryforwards  of  approximately  $84,700,000  for federal  income tax reporting
purposes,  which  expire  between  2012 and 2021.  The tax  benefits of such net
operating losses are fully offset by a valuation reserve. Based on the Company's
current tax  attributes,  no income tax provision or benefit is expected for the
year ending November 1, 2002.  Accordingly,  during the nine months ended August
2, 2002, no income tax provision has been provided.

Discontinued Operations:

    The Company  recognized  income  from the  discontinued  operations  of Bear
Mountain,  excluding the impairment loss recorded on the anticipated disposition
of Bear  Mountain,  of  $1,960,000  for the nine months ended August 2, 2002, an
increase of $309,000 from the income generated for the 2001 period. The increase
was  primarily  the result of  reduced  depreciation  expense as certain  assets
acquired as part of the  acquisition  of Bear Mountain in 1996 have become fully
depreciated,  partially offset by (1) decreased revenues principally as a result
of lower skier visits during the 2001/02 ski season,  and (2) increased  cost of
sales  primarily as a result of the Company's  involvement  in  electrical  rate
proceedings and other regulatory matters involving Bear Mountain.

    Based on the terms of the pending sale of Bear Mountain and the  anticipated
timing of close,  during  the nine  months  ended  August 2, 2002,  the  Company
recorded an estimated  impairment loss of $3,200,000  relating to the long-lived
assets of Bear Mountain.

Combined Operations:

    The Company recognized  extraordinary  gains on the early retirement of debt
of $2,761,000  and  $1,723,000 for the nine months ended August 2, 2002 and July
27, 2001, respectively.

    The  Company's  net  income  for the nine  months  ended  August 2, 2002 was
$15,760,000,  an improvement  of  $10,910,000  from the net income of $4,850,000
generated  for the nine months ended July 27,  2001,  as a result of the factors
discussed above.

    The financial  information  presented  below includes  information on "Total
EBITDA from Continuing  Operations," "Noncash Cost of Real Estate Sales," "Total
EBITDA from Continuing Operations (excluding Noncash Cost of Real Estate Sales)"
and "Total EBITDA (excluding  Noncash Cost of Real Estate Sales)." "Total EBITDA
from Continuing  Operations"  represents  operating income before  depreciation,
depletion  and  amortization  expense.  "Noncash  Cost  of  Real  Estate  Sales"
represents  the  allocated  portion  of  real  estate  development  expenditures
previously  capitalized  (including  acquisition  costs allocated to real estate
development) which relate to current real estate sales. "Total EBITDA (excluding
Noncash  Cost of Real Estate  Sales)"  includes  Total  EBITDA  from  Continuing
Operations  and  EBITDA  associated  with the  discontinued  operations  of Bear
Mountain.  Although  EBITDA is not a measure  of  performance  under  accounting
principles generally accepted in the United States ("GAAP"),  the information is
presented because management believes it provides useful information regarding a
company's  ability to incur and service debt.  Further,  Total EBITDA (excluding
Noncash Cost of Real Estate Sales) is calculated  essentially in the manner that
"EBITDA" is calculated under the Indenture governing the Company's Senior Notes,
and therefore,  management believes this measure is meaningful to holders of the
Senior  Notes.  EBITDA  should not be considered in isolation or as a substitute
for net income,  cash flows from  operating  activities and other income or cash
flow  statement  data  prepared  in  accordance  with  GAAP,  or as a measure of
profitability  or liquidity.  In addition,  the EBITDA measures as determined by
the Company may not be comparable to related or similar  measures as reported by
other companies and do not represent funds available for discretionary use.


                                       18
<PAGE>


                                         Nine Months Ended
                                      ----------------------
                                        August 2, July 27,            Percentage
                                         2002       2001     Increase  Increase
                                       --------- ---------   --------  --------
                                                (In thousands)
Total EBITDA from Continuing
  Operations........................   $ 39,461   $ 30,281   $  9,180      30%
Noncash Cost of Real Estate Sales...   $  2,492   $      -   $  2,492     100
Total EBITDA from Continuing
  Operations (excluding Noncash Cost
  of Real Estate Sales).............   $ 41,953   $ 30,281   $ 11,672      39
Total EBITDA (excluding Noncash Cost
  of Real Estate Sales).............   $ 45,306   $ 34,198   $ 11,108      32


Liquidity and Capital Resources

    The  Company's  primary  liquidity  needs are to fund capital  expenditures,
service  indebtedness  and support seasonal  working capital  requirements.  The
Company's  primary  sources of liquidity are cash, cash flow from operations and
borrowings under the Senior Credit Facility (as defined below). Virtually all of
the Company's  operating income is generated by its  subsidiaries.  As a result,
the Company is dependent on the  earnings  and cash flow of, and  dividends  and
distributions  or advances from, its subsidiaries to provide the funds necessary
to meet its debt service obligations.

    Effective March 15, 2002, the Company and its  subsidiaries  entered into an
Amended and Restated Credit Agreement (the "Senior Credit  Facility") with Fleet
National Bank, as  administrative  agent  ("Agent"),  and certain  lenders.  The
following  summary of the terms of the Senior  Credit  Facility is  qualified by
reference to the complete agreement governing the Senior Credit Facility,  which
was filed as an exhibit to the Company's  Form 10-Q for its fiscal quarter ended
February 1, 2002.

    The  Senior  Credit  Facility  provides a  revolving  credit  facility  (the
"Revolving Credit  Facility") with borrowing  availability of up to $25,000,000,
and a term loan facility (the "Term Facility") with borrowing availability of up
to $25,000,000.  The Senior Credit  Facility  requires that the Company not have
any  borrowings  under  the  Revolving  Credit  Facility  for  a  period  of  30
consecutive days commencing  sometime between January 15 and February 28 of each
year.  The  Term  Facility  provides  for  quarterly  commitment  reductions  of
$1,000,000  on the last day of  January,  April,  July and  October of each year
beginning  on January 31, 2003 and  continuing  through  October 31,  2005,  the
maturity  date of the Senior Credit  Facility.  The Company is required to repay
amounts  outstanding under the Term Facility on such dates by an amount equal to
the  greater of (i) the amount by which  outstanding  Term  Facility  borrowings
exceed  the  then-applicable  term  loan  commitment  and (ii) the  Excess  Cash
Proceeds (as defined in the Senior Credit Facility)  derived from specified real
estate  asset sales  determined  on a  cumulative  basis.  No amount of the Term
Facility which is repaid may be reborrowed.  The entire unpaid balance under the
Senior Credit Facility is due and payable on October 31, 2005.  Borrowings under
the  Senior  Credit  Facility  are  secured by (a) a pledge to the Agent for the
ratable  benefit  of the  financial  institutions  party  to the  Senior  Credit
Facility of all of the capital stock of Booth Creek's principal subsidiaries and
(b) a grant of a security  interest  in  substantially  all of the  consolidated
assets of Booth Creek and its subsidiaries.

    The Senior Credit  Facility  contains  financial  covenants  relating to the
maintenance of (a) minimum  consolidated resort EBITDA (as defined in the Senior
Credit  Facility)  measured  quarterly on a rolling four quarter basis,  (b) the
ratio of  consolidated  EBITDA (as  defined in the Senior  Credit  Facility)  to
consolidated debt service, and (c) levels of adjusted consolidated leverage. The
Senior Credit  Facility also contains  restrictive  covenants  pertaining to the
management  and  operation of Booth Creek and its  subsidiaries.  The  covenants
include,  among others,  significant  limitations on  indebtedness,  guarantees,
letters of credit,  liens,  investments,  distributions,  capital  expenditures,
mergers, acquisitions,  asset sales, fundamental corporate changes, transactions
with  affiliates,  optional  payments and  modification of debt  instruments and
issuances of stock.

    For purposes of calculating interest, loans under the Senior Credit Facility
can be, at the election of the Company, Base Rate Loans or LIBOR Rate Loans or a
combination thereof.  Base Rate Loans bear interest at the sum of (a) the higher
of (i)  Agent's  prime rate or (ii) the  federal  funds rate plus .5% plus (b) a
margin of 1.5%.  LIBOR Rate Loans bear  interest at the LIBOR rate plus a margin
of 4%.  Interest on loans  outstanding is payable  quarterly.  The Senior Credit
Facility  also  requires  commitment  fees of .5% based on the unused  borrowing
availability of the Revolving Credit Facility.  Borrowings outstanding under the
Term  Facility  as of August 2, 2002  bore  interest  at an annual  rate of 6.8%
pursuant  to the  LIBOR  rate  option.  Borrowings  under the  Revolving  Credit
Facility as of August 2, 2002 bore interest at an annual rate of 6.25%  pursuant
to the base rate option.

                                       19
<PAGE>

    Borrowings  under the  Revolving  Credit  Facility  may be used for  working
capital and general corporate  purposes.  Borrowings under the Term Facility may
be used to  repurchase  the  Company's  Senior  Notes  or  repay  certain  other
indebtedness, together with accrued and unpaid interest thereon. During the nine
months  ended  August 2, 2002,  the Company  repurchased  $29,325,000  aggregate
principal amount of Senior Notes in  privately-negotiated  transactions  through
borrowings under the Term Facility and available cash resources. As of August 2,
2002,  outstanding  borrowings  under the  Revolving  Credit  Facility  and Term
Facility were $2,530,000 and $25,000,000, respectively.

    The Company had a net working  capital deficit of $6,317,000 as of August 2,
2002 (including $2,530,000 in outstanding  borrowings under the Revolving Credit
Facility and excluding  $10,513,000 of unearned revenue and deposits from resort
and real estate operations,  which will not require cash spending to settle such
liabilities),  which will negatively  affect  liquidity  during the remainder of
2002.

    The Company generated cash from operating  activities of $28,848,000 for the
nine months ended August 2, 2002 as compared to $21,388,000  for the nine months
ended July 27, 2001.  The  increase in operating  cash flows for the 2002 period
was primarily due to the improved operating results for such period.

    Cash used in investing  activities totaled $7,318,000 and $9,100,000 for the
nine months ended August 2, 2002 and July 27,  2001,  respectively.  The results
for the 2002 and 2001 periods  primarily  reflect capital  expenditures  for the
purchase of property and equipment.

    Cash used in financing  activities  totaled  $21,275,000 and $12,139,000 for
the nine  months  ended  August 2,  2002 and July 27,  2001,  respectively.  The
results for the 2002 and 2001 periods  reflect net  repayments  of the Revolving
Credit Facility and scheduled payments of long-term debt and preferred stock. In
the 2002 period, the Company borrowed $25,000,000 under the Term Facility, which
together with  available  cash  resources,  were used to repurchase  $29,325,000
aggregate principal amount of Senior Notes for $25,588,000.  In the 2001 period,
the Company  utilized  available  cash  resources of  $5,990,000  to  repurchase
$8,000,000  aggregate principal amount of Senior Notes. The Company may consider
repurchasing  additional  Senior  Notes  in  the  future  if it  could  do so on
favorable terms subject to financing and other liquidity constraints.

    On November 17, 1999,  Trimont Land Company ("TLC"),  the owner and operator
of Northstar and a wholly-owned subsidiary of the Company,  consummated the sale
to Trimont Land Holdings,  Inc. ("TLH"), a wholly-owned subsidiary of Parent and
an affiliate of the  Company,  of certain  single  family  development  property
underlying  a portion  of the Unit 7 and 7A  developments  at  Northstar  for an
aggregate sales price of $7,050,000,  subject to adjustment as described  below.
The  consideration  paid to TLC consisted of $6,000,000 in cash and a promissory
note (the "TLH  Note")  for  $1,050,000,  subject  to  adjustment.  The  Company
obtained  a  fairness  opinion  for the  transaction  from an  independent  firm
qualified in the subject matter of the transaction.  In connection with the sale
of  development  real estate on  September  22, 2000 as described  below,  TLH's
interests  in the Unit 7A lots were  transferred  back to TLC on  September  22,
2000.

    Under  the  terms of the TLH  Note,  TLC will  receive  the  greater  of (a)
$1,050,000  plus accrued  interest at 7% per annum, or (b) the Net Cash Proceeds
(as defined)  derived  from the resale of TLH's lots within Unit 7.  Pursuant to
the terms of the sale,  TLC retained the  obligation  to complete the  scheduled
construction  of the Unit 7 development,  which was  substantially  completed in
November  2001.  The Company  recognizes  revenue and related costs of sales for
this real estate  transaction upon the close of escrow for lot sales between TLH
and third party  buyers,  and had reflected  the  $6,000,000  cash received as a
deposit liability as of November 2, 2001.

    During the nine months ended August 2, 2002, TLH  consummated the sale of 25
Unit 7 lots for net proceeds of approximately  $11,300,000.  As the net proceeds
of the 25 lot sales were more than the  $6,000,000 in cash initially paid by TLH
for the  underlying  real estate,  additional  cash proceeds of $5,300,000  were
distributed to TLC during the nine months ended August 2, 2002. In addition, the
Company  relieved  the existing  $6,000,000  deposit  liability  during the nine
months ended August 2, 2002. One lot currently remains available for sale within
the Unit 7 subdivision.

                                       20
<PAGE>

    On September  22, 2000,  TLC and TLH entered into an Agreement  for Purchase
and Sale of Real Property (the  "Northstar Real Estate  Agreement")  pursuant to
which TLC agreed to sell to TLH certain  development  real estate  consisting of
approximately  550 acres of land located at  Northstar  (the  "Development  Real
Estate") for a total purchase price of $27,600,000,  of which 85% was payable in
cash  and 15%  was  payable  in the  form of  convertible  secured  subordinated
promissory notes. The purchase price was based on an appraisal  obtained from an
independent  third  party  appraiser.   Concurrently  therewith,   TLC  and  TLH
consummated  the sale of the initial land parcels  contemplated by the Northstar
Real Estate  Agreement,  and TLC transferred  the bulk of the  Development  Real
Estate to TLH for a total purchase price of $21,000,000,  of which  $17,850,000,
or 85%,  was  paid in cash  and  $3,150,000,  or 15%,  was paid in the form of a
convertible secured  subordinated  promissory note. During the nine months ended
August 2, 2002, TLH transferred  cash of $5,610,000 to TLC, which represents the
cash portion of the purchase  price for the remaining  Development  Real Estate.
The  $5,610,000  payment has been  deferred as a deposit  liability  pending the
consummation  of the sale of the  remaining  Development  Real Estate  under the
Northstar  Real  Estate  Agreement,  which is  subject  to  certain  subdivision
requirements  to effect  the  transfer  of such  property  and other  normal and
customary  closing  conditions,  and is expected to be  consummated  in calendar
2002.

    The  transactions  described above between TLC and TLH have  facilitated the
sale and  development  of real  estate  at  Northstar  while  at the  same  time
minimizing  development  risk to the Company  and  providing  the  Company  with
immediate liquidity. Management believes that the terms of the transactions have
been at least as favorable as would have been available from unrelated  parties.
As noted above,  the Company has obtained  fairness  opinions and/or  appraisals
from independent  third parties to support this belief.  Neither the Company nor
any of its  subsidiaries,  including TLC, has provided  credit support to TLH or
has any commitment or obligation to provide funds to TLH in the future.

    The Company's  capital  expenditures  for property and equipment  during the
nine  months  ended  August 2, 2002 were  $8,281,000  (including  $1,644,000  of
equipment  acquired  through  capital  leases),  and consisted  primarily of the
remaining  portion of the  Company's  2001  capital  programs,  acquisitions  of
grooming  equipment  and  the  initial  stages  of the  Company's  2002  capital
programs.  Management anticipates that total capital expenditures for its fiscal
2002 capital programs will be approximately $12,000,000 to $14,000,000, of which
approximately  $4,000,000 had been incurred  through  August 2, 2002.  Depending
upon the timing of certain approvals,  capital expenditures for real estate held
for  development and sale are anticipated to range from $1,800,000 to $2,100,000
in fiscal  2002.  Total  capital  expenditures  for the  Company's  2003 capital
programs  are   preliminarily   estimated  to  range  between   $12,000,000  and
$15,000,000.  The  Company  plans  to  fund  future  capital  expenditures  from
available  cash flow,  anticipated  net proceeds from the sale of Bear Mountain,
vendor  financing to the extent  permitted  under the Senior Credit Facility and
the Indenture for the Company's Senior Notes and/or  borrowings under the Senior
Credit Facility.  Commitments for future capital expenditures were approximately
$4,000,000 at August 2, 2002.

    Management  believes that there is a  considerable  degree of flexibility in
the timing  (and,  to a lesser  degree,  the scope) of its  capital  expenditure
program,  and  even  greater  flexibility  as to  its  real  estate  development
objectives. While the capital expenditure program described above is regarded by
management  as  important,  both as to timing and scope,  discretionary  capital
spending  above  maintenance  levels  can be  deferred,  in some  instances  for
substantial periods of time, in order to address cash flow or other constraints.

    With   respect  to  the   Company's   potential   real  estate   development
opportunities,  management  believes that such efforts would enhance ski-related
revenues and contribute  independently to earnings. In addition, with respect to
significant  development  projects,  the  Company  expects to continue to pursue
arrangements  that would  reduce  infrastructure  and other  development  costs.
Nonetheless,  existing  lodging  facilities  in the  vicinity of each resort are
believed  to be  adequate  to support  current  skier  volumes and a deferral or
curtailment  of  development  efforts is not regarded by management as likely to
adversely  affect  skier days and  ski-related  revenues or  profitability.  The
Company also believes that its current  infrastructure  is sufficient,  and that
development of real estate  opportunities is not presently  necessary to support
its existing operations.




                                       21
<PAGE>


    The Company's  significant  contractual  obligations  include long-term debt
(including  capital lease  obligations)  and operating  leases.  As of August 2,
2002, excluding  liabilities and commitments relating to Bear Mountain which are
classified  as held for sale,  the Company's  scheduled  maturities of long-term
debt and operating lease  commitments for the periods  indicated were as follows
(in thousands):

           Three
           Months
           Ending              Year Ending October
           October ----------------------------------------------------
            2002    2003    2004      2005   2006     2007   Thereafter    Total
           ------  ------  ------   ------  ------   ------  ----------   ------
Long-term
 Debt    $    -  $ 5,390 $ 5,877  $ 17,379  $  23  $ 96,180  $      -   $124,849
         ======= ======= ======== ========  ====== ========= =========  ========
Operating
 Leases  $  100  $ 1,027 $   767  $    608  $ 232  $    110  $  2,069   $  4,913
         ======= ======= ======== ========  ====== ========= =========  ========

    The  Company's  liquidity  has been and will  continue  to be  significantly
affected  by its high  leverage.  As a result  of its  leveraged  position,  the
Company  will have  significant  cash  requirements  to  service  debt and funds
available for working capital,  capital  expenditures,  acquisitions and general
corporate  purposes are limited.  In addition,  the Company's high level of debt
may increase its  vulnerability to competitive  pressures and the seasonality of
the skiing and recreational  industries.  Any decline in the Company's  expected
operating  performance  could have a material  adverse  effect on the  Company's
liquidity  and on its  ability to  service  its debt and make  required  capital
expenditures.

    In addition,  the Senior  Credit  Facility and the  Indenture  governing the
Company's  Senior  Notes each  contains  covenants  that,  among  other  things,
significantly  limit the  Company's  ability  to obtain  additional  sources  of
capital and may affect the Company's  liquidity.  These  covenants  restrict the
ability of the Company and its Restricted  Subsidiaries  to, among other things,
incur  additional  indebtedness,  create  liens,  make  investments,  consummate
certain asset sales, create subsidiaries, issue subsidiary stock, consolidate or
merge with any other person,  or transfer all or substantially all of the assets
of the Company.  Further, upon the occurrence of a Change of Control (as defined
in the Indenture), the Company may be required to repurchase the Senior Notes at
101% of the principal  amount  thereof,  plus accrued and unpaid  interest.  The
occurrence of a Change of Control may also constitute a default under the Senior
Credit  Facility.  No assurance  can be given that the Company  would be able to
finance a Change of Control  repurchase  offer.  The Senior Credit Facility also
requires the Company to maintain  specified  consolidated  financial  ratios and
satisfy certain  consolidated  financial  tests.  The Company's  ability to meet
these  financial  covenants  may be affected by events  beyond its control,  and
there can be no assurance that the Company will meet those covenants.

    As of August 2, 2002, the Company had  $124,849,000  of total long-term debt
(excluding  debt  associated  with Bear  Mountain).  The  Company  expects  that
existing cash,  cash generated from operations and cash proceeds of planned real
estate  sales  at  Northstar,  together  with  borrowing  availability,  will be
adequate  to  fund  the  Company's   debt  service  and  other  cash   operating
requirements  over the next  twelve  months.  In  order to focus  the  Company's
resources on attractive  investment  opportunities at certain of its resorts and
to satisfy short-term and long-term liquidity  requirements,  the Company may in
the future consider divestitures of non-strategic assets,  including resorts, if
such transactions can be completed on favorable terms.

    Any decline in the Company's expected operating performance or the inability
of management to successfully  implement the Company's business strategy,  could
have  a  material  adverse  effect  on  the  Company's  financial  position  and
liquidity.  In such case,  the Company could be required to attempt to refinance
all or a portion of its existing  debt,  sell other assets or obtain  additional
financing.  No assurance can be given of the  Company's  ability to do so or the
terms of any such transaction. In addition, the Company would require additional
financing for expansion of its existing  properties or for future  acquisitions,
if any. No assurances can be given that any such financing would be available on
commercially reasonable terms. See "Forward-Looking Statements" herein.

    The Company  believes that inflation has had little effect on its results of
operations and any impact on costs has been largely offset by increased pricing.

                                       22
<PAGE>

Significant Accounting Policies

    The Company's  significant  accounting  policies are more fully described in
Note 1 to the  Company's  consolidated  financial  statements  accompanying  its
Annual Report on Form 10-K for the year ended  November 2, 2001.  Certain of the
Company's  accounting policies require the application of judgment by management
in selecting the appropriate assumptions for calculating financial estimates. By
their nature,  these judgments are subject to an inherent degree of uncertainty.
These judgments are based on historical experience,  terms of existing contracts
and customer  arrangements  and  information  available from other  sources,  as
appropriate. The Company's significant accounting policies include:

    Revenue  Recognition for Resort Operations - Revenues from resort operations
are generated from a wide variety of sources,  including lift ticket sales, snow
school  lessons,  equipment  rentals,  retail product  sales,  food and beverage
operations,  lodging and property  management  services  and other  recreational
activities,  and are  recognized as services are provided and products are sold.
Sales of season passes are initially deferred in unearned revenue and recognized
ratably  over the  season.  Revenues  relating  to paid  skier  visit  insurance
arrangements in prior years were recognized based on an evaluation of the policy
arrangements,  actual and forecasted  skier visits,  actual snowfall amounts and
other   relevant   factors.   The  Company  also   periodically   evaluates  the
collectibility  of all of its  receivables,  and, if necessary,  provides for an
adequate allowance for doubtful accounts.

    Revenue Recognition for Real Estate Sales - Sales and profits on real estate
sales are  recognized  using  the full  accrual  method  at the  point  that the
Company's receivables from land sales are deemed collectible and the Company has
no significant  remaining  obligations for  construction  or development,  which
typically  occurs upon transfer of title.  If such  conditions  are not met, the
recognition  of all or part of the sales and profit is  postponed.  The  Company
thoroughly  evaluates  contractual  agreements  and  the  underlying  facts  and
circumstances  relating  to  its  real  estate  transactions  to  determine  the
appropriate  revenue  recognition  treatment of such  transactions in accordance
with Statement of Financial  Accounting  Standards No. 66, "Accounting for Sales
of Real Estate," and related pronouncements.

    Valuation  of  Long-Lived  Assets and  Goodwill - The  Company  periodically
evaluates  whether there are facts and  circumstances  that  indicate  potential
impairment of its long-lived assets. If impairment  indicators are present,  the
Company  reviews  the  carrying  value of its  long-lived  assets for  continued
appropriateness.  The  Company  also  performs  periodic  impairment  tests  for
recorded goodwill. The impairment evaluations for long-lived assets and goodwill
are based upon projections of future cash flows,  estimated  purchase  multiples
and other  relevant  factors.  While the  Company  believes  its  estimates  are
reasonable, different assumptions could materially affect these evaluations.

    Evaluation  of  Contingencies  - The  Company's  operations  are affected by
various contingencies,  including commercial litigation,  personal injury claims
relating  principally  to  snow  sports  activities  and  workers'  compensation
matters.  The Company performs periodic  evaluations of these contingencies and,
based on the advice of  counsel,  information  provided  by  third-party  claims
administrators and other pertinent  information,  provides reserves for its best
estimate of the eventual  outcome of these matters.  While the Company  believes
its estimates are reasonable,  different  assumptions  could  materially  affect
these evaluations.

Pending Accounting Pronouncement

    In June 2001, the FASB issued  Statement of Financial  Accounting  Standards
No. 143,  "Accounting for Asset Retirement  Obligations" ("SFAS No. 143"), which
addresses financial accounting and reporting for obligations associated with the
retirement of tangible  long-lived assets and associated asset retirement costs.
The new rules  apply to legal  obligations  associated  with the  retirement  of
long-lived  assets that result from the acquisition,  construction,  development
and (or) normal operation of a long-lived  asset.  SFAS No. 143 is effective for
the Company at the beginning of fiscal 2003.  The Company  believes the adoption
of SFAS No. 143 will not have a material  impact on its  consolidated  financial
position or results of operations.

Seasonality

    The business of the Company is highly  seasonal,  with the vast  majority of
its annual revenues  expected to be generated between November and April of each
fiscal year.  Management  considers it  essential to achieve  optimal  operating
results  during key  holidays and weekends  during this  period.  The  Company's
results of operations are, in turn, significantly dependent on favorable weather
conditions and other factors beyond the Company's  control.  In prior years, the
Company sought to partially  mitigate the downside risk of its seasonal business
by purchasing  paid skier visit insurance  policies.  The Company did not obtain
paid skier visit  insurance  coverage for its resorts for the 2001/02 ski season
as effective policies were not available on commercially viable terms.

                                       23
<PAGE>

    During the off-season  months of May through October,  the Company's resorts
typically experience a substantial reduction in labor and utility expense due to
the absence of ski operations, but make significant expenditures for maintenance
and capital improvements in preparation for the ensuing ski season.

Regulation and Legislation

    The Company's  operations  are dependent  upon its ownership or control over
the real property used in its ski  operations at each resort.  The real property
presently  used at the  Northstar  and Mt.  Cranmore  resorts  is  owned  by the
Company,  leased from third parties or controlled by easements.  The Company has
the right to use a substantial  portion of the real property associated with the
Bear Mountain,  Sierra,  Summit and Waterville Valley resorts under the terms of
Term Special Use Permits  issued by the United States Forest  Service.  The Bear
Mountain  permit  expires  in 2020,  the  Sierra  permit  expires  in 2039,  the
Waterville Valley permit expires in 2034 and the Summit permit expires in 2032.

    A substantial portion of the real property associated with the Loon Mountain
resort is likewise used under United States Forest Service permits. In 1993, the
United States Forest  Service  authorized  various  lift,  trail and  snowmaking
improvements on Loon Mountain and an expansion onto South Mountain. In 1996, the
United  States  Court of Appeals for the First  Circuit  (the  "First  Circuit")
overturned  this  authorization  on the  ground  that the United  States  Forest
Service had failed to properly  address certain  environmental  issues under the
National  Environmental Policy Act ("NEPA").  Certain improvements,  including a
snowmaking  pipeline and part of the expansion,  had been constructed before the
First Circuit ruled.  On May 5, 1997,  the United States  District Court for the
District of New Hampshire  (the  "District  Court")  entered a stipulated  order
which  authorized  existing   improvements  to  remain  in  place  and  existing
operations to continue but generally prohibited future construction,  restricted
use of a major  snowmaking  water source,  and required  certain water discharge
permits to be pursued,  pending United States Forest Service  reconsideration of
the projects under NEPA. These  authorizations and limitations were incorporated
into the final order  issued by the  District  Court on December  11,  1998.  On
February 12,  1999,  the District  Court  agreed that the United  States  Forest
Service could combine this NEPA review with its  evaluation  and analysis of the
existing snowmaking pipeline.

    In August  1997,  the  United  States  Forest  Service  authorized  the Loon
Mountain resort to construct a new snowmaking  pipeline  across  permitted land.
The United States Forest  Service found that such  construction  was  consistent
with the  District  Court order and enabled the resort to modify its  snowmaking
operations to better  protect water  resources and replace  snowmaking  capacity
lost  under  the  order.  Although  the  pipeline  was  completed,  its  use was
challenged by private parties who asserted that the United States Forest Service
violated NEPA. On January 20, 1998, the District Court issued a decision finding
that the United  States Forest  Service  violated NEPA in failing to address the
potential  for the new  pipeline  to  increase  the  amount of snow made and any
associated environmental effects. On March 10, 1998, the District Court issued a
series of further orders which,  among other things,  directed the United States
Forest Service to re-evaluate the pipeline and enjoined Loon Mountain from using
the pipeline  pending  further action by the court.  On July 2, 1998, the United
States Forest  Service issued a new decision  approving the pipeline,  which was
challenged by several private parties, who again asserted that it violated NEPA.
The United States Forest Service subsequently  withdrew its decision authorizing
the pipeline to conduct further review and the District Court  consolidated  the
lawsuits  concerning  the  pipeline.  On November 19, 1998,  the District  Court
modified the injunction,  allowing Loon Mountain to use the pipeline to withdraw
and convert  159.7  million  gallons of water per ski season into snow while the
United  States  Forest  Service  further  reviewed the pipeline  under NEPA.  On
February 12, 1999, the District Court issued a final order,  which dismissed the
consolidated  lawsuit  concerning  the  pipeline  in light of the United  States
Forest  Service's  decision  to  conduct  further  review of the  pipeline,  and
specified that the limitation on pipeline usage would continue until that review
was completed and a new decision was issued.

    On February 26, 2002,  the United States Forest Service issued its Record of
Decision  ("ROD")  approving  the  Loon  Mountain  Final  Environmental   Impact
Statement ("Final EIS"). In general, the ROD and Final EIS collectively:

      o     Authorize Loon Mountain's addition of new ski terrain,  construction
            of ski trails,  installation and upgrades of lifts, expansion of new
            on-mountain facilities and installation of snowmaking infrastructure
            to serve all ski terrain.
      o     Authorize  the  current   location  and  operation  of  the  16-inch
            snowmaking  water  pipeline  at  levels  restricted  only  by  water
            withdrawal limitations and pumping capacities originating on private
            land.
      o     Authorize  the issuance of a new Special Use Permit for a term of 40
            years to  replace  the  three  existing  Special  Use  Permits  that
            previously  authorized Loon Mountain to occupy and use United States
            Forest Service lands,  including the South Mountain area, to operate
            the ski  resort.  The new  Special Use Permit was issued on June 24,
            2002.

                                       24
<PAGE>

      o     Confirm that the activities  and  developments  contemplated  by the
            Final EIS are  consistent  with the 1986  Forest  Plan for the White
            Mountain  National Forest and authorize the amendment of such Forest
            Plan to accommodate the expansion onto South Mountain.
      o     Document  all  mitigation   measures  and  monitoring   required  to
            adequately avoid or minimize potential environmental harm associated
            with the activities and developments contemplated by the Final EIS.


    Two  written  administrative  appeals  to the ROD were filed with the United
States Forest Service, in response to which Loon Mountain filed a response.  One
of the two appellants  withdrew his appeal after reaching a settlement with Loon
Mountain.  The United States Forest  Service  denied the other appeal and upheld
the ROD in a letter dated June 7, 2002.  With these  actions,  the United States
Forest Service has concluded its administrative  appeal process. The decision by
the  United  States  Forest  Service  in its June 7, 2002  letter is  subject to
judicial  review in  federal  court  under  the  Administrative  Procedure  Act.
Elements of the expansion and development  activities addressed in the Final EIS
that occur on private lands will be subject to separate federal, state and local
permitting  processes.  While the  Company  believes  that it will  successfully
navigate these  remaining  steps to undertaking  the activities  outlined in the
Final  EIS,  it can give no  assurance  regarding  the timing or outcome of such
processes.

    The United  States  Forest  Service has the right to approve  the  location,
design and  construction of  improvements  in permit areas and many  operational
matters at resorts with permits. Under the Term Special Use Permits, the Company
is required to pay fees to the United States Forest Service. The fees range from
1.5% to approximately  4.0% of certain revenues,  with the rate generally rising
with increased revenues. The calculation of gross revenues includes, among other
things,  revenue from lift  ticket,  season pass,  ski school  lesson,  food and
beverage,  rental equipment and retail merchandise sales. Total fees paid to the
United States Forest  Service by the Company  during the year ended  November 2,
2001 were $1,215,000.

    The  Company  believes  that its  relations  with the United  States  Forest
Service are good, and, to the best of its knowledge,  no Term Special Use Permit
for any major ski resort has ever been  terminated  by the United  States Forest
Service.  The United States  Secretary of Agriculture has the right to terminate
any Term Special Use Permit upon 180-days notice if, in planning for the uses of
the national forest, the public interest requires termination.  Term Special Use
Permits may also be terminated  or suspended  because of  non-compliance  by the
permitee;  however, the United States Forest Service would be required to notify
the Company of the  grounds  for such  action and to provide it with  reasonable
time to correct any curable non-compliance.

    The  Company's  resorts are subject to a wide variety of federal,  state and
local laws and  regulations  relating to land use, water  resources,  discharge,
storage,  treatment and disposal of various  materials  and other  environmental
matters.  Except as  described in this  section,  management  believes  that the
Company's   resorts  are  presently  in   compliance   with  all  land  use  and
environmental  laws, except where  non-compliance is not expected to result in a
material  adverse  effect  on its  financial  condition.  While the  Company  is
required from time to time to undertake remediation activities at its resorts to
assure   compliance  with   environmental   laws  or  to  address  instances  of
non-compliance,  the  Company  believes  that the cost of  complying  with known
requirements,  as well as anticipated  investigation and remediation activities,
will not have a material  adverse  effect on its  financial  condition or future
results of operations. However, failure to comply with such laws could result in
the imposition of severe penalties and other costs or restrictions on operations
by  government  agencies  or  courts  that  could  materially  adversely  affect
operations.

    The operations at the resorts  require  numerous  permits and approvals from
federal,  state and local  authorities,  including permits relating to land use,
ski  lifts and the sale of  alcoholic  beverages.  In  addition,  the  Company's
operations  are heavily  dependent on its continued  ability,  under  applicable
laws, regulations,  policies, permits, licenses or contractual arrangements,  to
have  access to  adequate  supplies of water with which to make snow and service
the other needs of its  facilities,  and  otherwise  to conduct its  operations.
There can be no assurance that new  applications  of existing laws,  regulations
and policies,  or changes in such laws,  regulations and policies will not occur
in a manner  that  could  have a  detrimental  effect  on the  Company,  or that
material permits,  licenses or agreements will not be canceled,  not renewed, or
renewed on terms  materially less favorable to the Company.  Major expansions of
any one or more of the Company's resorts could require,  among other things, the
filing of an  environmental  impact  statement or other  documentation  with the
United  States  Forest  Service  and state or local  governments  under NEPA and
certain state or local NEPA  counterparts if it is determined that the expansion
may have a significant impact upon the environment.  Although the Company has no
reason to believe that it will not be successful in implementing  its operations
and  development  plans,  no assurance can be given that  necessary  permits and
approvals will be obtained or renewed.

                                       25
<PAGE>

    Bear  Mountain  operates in an area  subject to an air  emissions  reduction
program  and  regulated  by the South  Coast  Air  Quality  Management  District
("SCAQMD") in California.  Prior to mid 2000, the Company  anticipated that Bear
Mountain  would  eventually  be required to  participate  in an emission  credit
program  whereby Bear Mountain  would be permitted to operate its  diesel-fueled
snowmaking  compressor  engines if it acquired  "banked"  emission  credits from
SCAQMD-regulated   facilities  which  had  already  implemented  nitrogen  oxide
emission reduction  programs.  However,  in August 2000 the Company was notified
that SCAQMD will not allow Bear Mountain to participate in the emission  credits
program and, further,  that Bear Mountain's  applications to operate the engines
were denied  because they were not  equipped  with the "Best  Available  Control
Technology,"  thus  violating  SCAQMD rules.  Recognizing  the importance of the
current  compressor  engines  to Bear  Mountain's  operations,  SCAQMD  and Bear
Mountain  agreed to a  Stipulated  Order of Abatement  whereby Bear  Mountain is
subject to certain  requirements  including  investigating  and  implementing  a
remedial  alternative  according to a particular  timeline through 2002,  record
keeping and reporting to SCAQMD,  payment of certain usage fees,  and particular
interim operational dictates concerning the engines.  Pursuant to the Stipulated
Order  of  Abatement,   Bear  Mountain  is  required  to  implement  a  remedial
alternative  by October 15,  2002.  Bear  Mountain is currently  implementing  a
remedial alternative involving the installation of new snowmaking equipment.  As
of August 2, 2002,  the remaining  capital  commitments  for the new  snowmaking
infrastructure  was approximately  $500,000.  However,  no assurance can be made
regarding the outcome or timing of resolution of this matter.

    Pursuant to the previously  described  decision of the First Circuit and the
order of the District Court,  Loon Mountain  applied for and was issued,  by the
Environmental Protection Agency ("EPA"), a Clean Water Act (the "CWA") discharge
permit covering discharges  associated with its snowmaking  operations.  Certain
ongoing  discharges  were  authorized by the District  Court order pending final
action on the  permit and  subject to the  District  Court's  reserved  power to
modify such approval to address any resulting environmental issues.

    Certain regulatory  approvals associated with the new snowmaking pipeline at
Loon Mountain, as well as certain contractual obligations, impose minimum stream
flow requirements on Loon Mountain. These requirements will compel Loon Mountain
to construct water storage facilities within  approximately five years, and such
construction  may  require  further   regulatory   approvals  and  environmental
documentation  under  NEPA.  No  assurances  can be given  that such  regulatory
approvals will be obtained or that the Company will have the financial resources
to complete such construction.

    In  addition,  Loon  Mountain  was  notified in  September  1997 that it had
allegedly  filled  certain  wetlands at the resort in  violation  of the CWA. In
response,  Loon  Mountain  worked  with the EPA to remove the  alleged  fill and
implement certain erosion control  measures.  On January 15, 1998, an individual
notified the EPA, Loon  Mountain,  and certain other persons that he intended to
initiate a lawsuit  under the CWA regarding the alleged  wetland  violation.  On
February 2, 1998, the EPA wrote to such individual stating that the alleged fill
had  been  removed  and that the EPA  does  not  believe  there is a  continuing
violation at the site. On January 18, 2000,  in papers filed in connection  with
the District Court's modification of the final order in the pipeline litigation,
the same  individual  again  alleged that Loon  Mountain had  previously  filled
wetlands in  violation of the CWA. The same  individual  has orally  advised the
Company that he still  intends to initiate a lawsuit under the CWA regarding the
alleged wetland fill.

    Except for certain permitting and environmental  compliance matters relating
to the Loon Mountain and Bear Mountain  resorts  described above and in Part II,
Item 1. "Legal Proceedings," the Company has not received any notice of material
non-compliance  with permits,  licenses or approvals necessary for the operation
of its properties or of any material  liability under any  environmental  law or
regulation.



                                       26
<PAGE>


Forward-Looking Statements

    Except for  historical  matters,  the matters  discussed  in Part I, Item 2.
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations"  and elsewhere in this Report are  forward-looking  statements  that
involve  risks  and  uncertainties.  The  forward-looking  statements  are  made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform Act of 1995. The reader can identify these statements by  forward-looking
words  such  as  "may,"  "will,"  "expect,"   "plan,"  "intend,"   "anticipate,"
"believe,"   "estimate,"  and  "continue"  or  similar  words.   Forward-looking
statements are based on  management's  current views and assumptions and involve
risks and uncertainties that could  significantly  affect the Company's business
and expected  operating  results.  The Company wishes to caution the reader that
certain  factors,  including  those described  below,  could  significantly  and
materially  affect  the  Company's  actual  results,  causing  results to differ
materially from those in any forward-looking  statement.  These factors include,
but are not limited to:

      o     Uncertainty as to future financial results,

      o     Whether  or not the  pending  sale of the Bear  Mountain  resort  is
            consummated and the timing of the closing date,

      o     The substantial leverage and liquidity constraints of the Company,

      o     Significant   operating   restrictions   under  the  Company's  debt
            agreements,

      o     The capital  intensive  nature of  development  of the Company's ski
            resorts,

      o     Uncertainties  associated  with obtaining  financing for future real
            estate projects and to undertake future capital improvements,

      o     Uncertainties  regarding  the timing and  success of our real estate
            development  projects  and their  ultimate  impact on our  operating
            results,

      o     Demand for and costs associated with real estate development,

      o     The  discretionary  nature of  consumers'  spending  for  skiing and
            resort real estate,

      o     Regional and national economic conditions,

      o     Weather conditions,

      o     Negative demand for our services and products  resulting from recent
            and  potential  terrorism  threats  (including  the  effect  of  the
            September 11th attacks),

      o     Availability of commercial air service,

      o     Availability and terms of insurance coverage,  as well as volatility
            in the cost of insurance coverage,

      o     Natural disasters (such as earthquakes and floods),

      o     Competition and pricing pressures,

      o     Governmental  regulation and  litigation and other risks  associated
            with expansion and development,

      o     The adequacy of the water supplies at each of the Company's resorts,

      o     Availability  of adequate  energy  supplies for the operation of the
            Company's resorts,  including snowmaking operations,  and volatility
            in the prices charged for energy and fuel, and

      o     The  occupancy of leased  property and property used pursuant to the
            United States Forest Service permits.



                                       27
<PAGE>



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

    The Company's  market risk sensitive  instruments do not subject the Company
to material  market risk  exposures,  except for risks  related to interest rate
fluctuations.  As of August 2, 2002,  the  Company had debt  outstanding  with a
carrying  value of  $127,379,000  and an estimated  fair value of  approximately
$116,000,000.

    Fixed interest rate debt  outstanding  as of August 2, 2002,  which excludes
borrowings under the Senior Credit Facility, was $99,849,000, carried an average
interest rate of approximately 12%, and matures as follows (in thousands):

           Three
           Months
           Ending              Year Ending October
           October ------------------------------------------
            2002    2003     2004      2005   2006     2007       Total
           ------  ------   ------   ------  ------   ------     ------
Senior
 Notes   $    -  $     -  $     -   $     -  $   -  $ 96,175  $  96,175

Other
 Debt         -    1,390    1,877       379     23         5      3,674
         ------- -------  --------  ------- -------  --------  --------

         $    -  $ 1,390  $ 1,877   $   379  $  23  $ 96,180  $  99,849
         ======= =======  ========  ======= =======  ========  ========


    The  amount of  borrowings  under the  Revolving  Credit  Facility  and Term
Facility as of August 2, 2002 were $2,530,000 and $25,000,000, respectively. For
purposes of calculating  interest,  borrowings  under the Senior Credit Facility
can be, at the election of the Company, Base Rate Loans or LIBOR Rate Loans or a
combination thereof.  Base Rate Loans bear interest at the sum of (a) the higher
of (i)  Agent's  prime rate or (ii) the  federal  funds rate plus .5% plus (b) a
margin of 1.5%.  LIBOR Rate Loans bear  interest at the LIBOR rate plus a margin
of 4%. Borrowings  outstanding under the Term Facility as of August 2, 2002 bore
interest at an annual rate of 6.8% pursuant to the LIBOR rate option. Borrowings
under the  Revolving  Credit  Facility as of August 2, 2002 bore  interest at an
annual rate of 6.25% pursuant to the base rate option.

    The  Company  has  entered  into two  interest  rate cap  agreements  for an
aggregate  notional  amount of $15,000,000  through July 15, 2005,  declining to
$14,000,000  through  October  31,  2005.  In exchange  for upfront  payments of
$179,000,   the  Company  will  receive   floating   rate   payments   from  the
counterparties to the interest rate cap agreements during those periods in which
the three month LIBOR rate exceeds 6%.

    A 10% increase or decrease in interest rates would have an immaterial effect
on the Company's future pretax earnings and cash flows.



ITEM 4. CONTROLS AND PROCEDURES

    We have recently  evaluated our internal  controls.  During the three months
ended August 2, 2002, there were no significant  corrective  actions taken by us
or other significant changes made to these internal controls,  nor do we believe
there  were  changes in other  factors  that could  significantly  affect  these
controls subsequent to the date of our evaluation.



                                       28
<PAGE>
                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    Each of the  Company's  resorts  has  pending  and is  regularly  subject to
litigation,  and the threat  thereof,  with  respect to personal  injury  claims
relating  principally  to snow  sports  activities  at its resorts as well as to
premises and vehicular operations and workers' compensation matters. The Company
maintains  liability  insurance  that the Company  considers  adequate to insure
claims related to such usual and customary  risks  associated with the operation
of four-season recreation resorts.

    In connection with the 1998 merger with Loon Mountain Recreation Corporation
("LMRC"), certain shareholders of LMRC (the "LMRC Shareholder Plaintiffs") filed
a lawsuit seeking to obtain an injunction  against LMRC and its former directors
alleging  breach of  fiduciary  duty and against the Company  alleging  that the
Company  aided and abetted the former  directors'  breach of fiduciary  duty and
failed to comply with the New Hampshire  Security  Takeover  Disclosure Act (the
"Takeover  Statute") in connection with the  transaction.  The two lawsuits were
consolidated in the Superior Court of Grafton County, New Hampshire. The Company
answered the LMRC Shareholder Plaintiffs' petition and filed a motion to dismiss
the LMRC Shareholder  Plaintiffs'  action against the Company asserting that the
Takeover  Statute did not apply to the transaction as a matter of law. The court
initially  denied the  Company's  motion to dismiss  but  granted  the motion to
dismiss  upon  reconsideration.  The LMRC  Shareholder  Plaintiffs  appealed the
dismissal to the New Hampshire  Supreme Court.  The New Hampshire  Supreme Court
upheld  the  Superior  Court's  dismissal  of the  plaintiffs'  claim  under the
Takeover Statute in a ruling issued on November 20, 2001.

    The LMRC  Shareholder  Plaintiffs  amended  their breach of  fiduciary  duty
claims to seek money damages against the Company, LMRC and its former directors.
The trial on the LMRC Shareholder  Plaintiffs'  breach of fiduciary duty claims,
which was  consolidated  with the Corporation Act case described below, was held
between  December  11,  2001  and  January  16,  2002.  On April  8,  2002,  the
Hillsborough  County,  New Hampshire  Superior Court issued an Opinion and Order
(the "Opinion and Order") announcing its decision in the case. The Court held in
favor of the  defendants on all counts,  finding no breach of fiduciary  duty by
the former LMRC directors and no aiding and abetting breach of fiduciary duty by
the Company. In addition,  the Court found that the LMRC Shareholder  Plaintiffs
lacked a good faith  basis for  pursuing  certain of their  claims  against  the
former  LMRC  directors  and the  Company and  ordered  further  proceedings  to
determine sanctions against the LMRC Shareholder Plaintiffs. Following an appeal
by the LMRC Shareholder  Plaintiffs,  the New Hampshire  Supreme Court summarily
affirmed  the judgment of the  Hillsborough  County  Superior  Court on July 30,
2002.

    On February 22, 2001, certain additional former shareholders of LMRC who are
family  members of one of the LMRC  Shareholder  Plaintiffs  commenced an action
which  remains  pending  in the  Superior  Court  of  Hillsborough  County,  New
Hampshire  seeking  damages for breach of fiduciary duty against the former LMRC
directors,  breach of contract against the former LMRC directors and the Company
and violations of the New Hampshire Consumer Protection Statute.  The plaintiffs
formerly held 4,375 shares of LMRC common stock. The Company and the former LMRC
directors have filed a motion which remains pending to dismiss the claims on the
grounds  that they fail to state a valid  cause of action  and are barred by the
statute of  limitations.  In light of the  Court's  findings  in the Opinion and
Order,  the  plaintiffs  in this  action have agreed with the Company to dismiss
this action with prejudice.

    Also  in  connection  with  the  merger  with  LMRC,  the  LMRC  Shareholder
Plaintiffs  exercised  dissenters'  rights  under  the  New  Hampshire  Business
Corporation  Act (the  "Corporation  Act").  Under the  statutory  procedure for
settling the LMRC Shareholder  Plaintiffs'  dissenters'  rights, LMRC offered to
pay the plaintiffs an aggregate of $34,436, or $30.61 per share, as its estimate
of the fair  value of  their  1,125  shares.  The  LMRC  Shareholder  Plaintiffs
demanded  additional  payments  necessary to compensate  them for the $91.90 per
share  price,  plus  interest,  which they  asserted  as the fair value of their
shares.  Pursuant to the  Corporation  Act,  LMRC  commenced a proceeding in the
Superior Court of Grafton County,  New Hampshire seeking a judicial appraisal of
the value of the LMRC  Shareholder  Plaintiffs'  shares in LMRC.  The matter was
consolidated  for trial with the fiduciary  duty case  described  above.  In the
April 8, 2002 Opinion and Order described above, the  Hillsborough  County,  New
Hampshire  Superior  Court  found  that the  LMRC  Shareholder  Plaintiffs  were
entitled  to be paid  $21.17  per  share  as the fair  value  of  their  shares.
Accordingly, the Company will be required to pay the LMRC Shareholder Plaintiffs
the aggregate sum of $23,816 plus interest for their 1,125 shares.

    On January 3, 2002, an adjacent  property owner (the  "Easement  Plaintiff")
affiliated  with the LMRC  Shareholder  Plaintiffs,  filed suit against LMRC and
Loon Realty Corp. in the Grafton County,  New Hampshire Superior Court. LMRC and
Loon Realty Corp. are the  beneficiaries  of certain  easements  across Easement
Plaintiff's  land,  and Easement  Plaintiff  seeks to vacate such  easements and
recover damages  relating to the use thereof.  This action was the refiling of a
suit raising identical claims that was ultimately dismissed by the New Hampshire
Supreme Court. On June 5, 2002, the Grafton County, New Hampshire Superior Court
dismissed this suit and, based on its determination  that the Easement Plaintiff
brought  this  action in bad faith,  ruled that LMRC and Loon Realty  Corp.  are
entitled to recovery of attorney's  fees and costs.  The Easement  Plaintiff has
appealed to the New Hampshire  Supreme Court the Superior  Court's  dismissal of
the suit.
                                       29
<PAGE>

    In 1995,  an individual  sued the United States Forest  Service (the "Forest
Service") in the United States  District Court for the District of New Hampshire
(the  "District  Court")  alleging  that the Forest  Service  had  violated  the
National  Environmental Policy Act ("NEPA"), the Clean Water Act ("CWA"), and an
executive order in approving  improvements to facilities on Loon Mountain and an
expansion  of the  Loon  Mountain  resort  on to  South  Mountain.  LMRC  and an
environmental  group  intervened  in the  lawsuit.  The District  Court  entered
summary  judgment  for  the  Forest  Service  on all  claims  and  the  original
plaintiff,  along with the  intervening  environmental  group  (collectively  or
individually,  the "Environmental Plaintiffs"),  appealed. In December 1996, the
United  States  Court of Appeals for the First  Circuit  (the  "First  Circuit")
reversed the  District  Court  decision  and ruled that the Forest  Service must
reconsider certain  environmental  issues under NEPA and that LMRC must obtain a
discharge  permit  under  the CWA for  certain  discharges  from its  snowmaking
system.  The District Court then entered a stipulated  order that:  enjoins LMRC
from any further  construction  implementing  the project with  certain  limited
exceptions;   imposes  various   restrictions  on  LMRC's  existing   snowmaking
operations and requires LMRC to apply for a CWA discharge  permit for discharges
of water and any pollutants  associated  with its  snowmaking;  allows  existing
construction to remain in place and existing uses to continue;  requires LMRC to
undertake certain erosion control and monitoring  measures;  requires the Forest
Service to prepare  supplemental  NEPA  documentation  on the  improvements  and
expansion;  and reserves  the right to require  restoration  of areas  developed
under the original Forest Service approval to their preexisting condition if not
ultimately  re-approved  by the Forest  Service.  This order  remained in effect
until the supplemental NEPA process was completed.  As described in Part I, Item
2. "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  - Regulation  and  Legislation",  on February  26, 2002,  the Forest
Service issued its Record of Decision ("ROD")  approving the Loon Mountain Final
Environmental Impact Statement. The Forest Service's denial of an administrative
appeal to the ROD  pursuant  to its June 7, 2002  letter is subject to  judicial
review in federal  court.  The Company can give no assurance  regarding  whether
such a judicial appeal will be filed or the timing or outcome of such process.

    The  Environmental  Plaintiffs also filed a motion asking the District Court
to impose against LMRC a CWA civil penalty of $5,550,125 and attorney's fees and
costs in connection with LMRC's  discharges into Loon Pond during its snowmaking
operations  for the  1996/97  ski season and prior  years.  The  District  Court
dismissed the claim for civil  penalties and attorney's  fees under the CWA, and
one of the Environmental  Plaintiffs  appealed to the First Circuit.  The appeal
was stayed to permit settlement  negotiations,  and these negotiations concluded
with the execution of a settlement  agreement  between the  appellant,  LMRC and
Loon Realty Corp.  effective as of February 22,  2001.  In  accordance  with the
terms of the agreement,  the  appellant's  claims against LMRC were dismissed on
March 14, 2001.

    In 1997, the  Environmental  Plaintiffs  filed a second lawsuit  against the
Forest Service in the District  Court alleging that the Forest Service  violated
NEPA in authorizing  LMRC to construct and operate a snowmaking  pipeline across
permitted land. LMRC intervened in the lawsuit. The District Court held that the
Forest Service had violated NEPA by failing to consider the potential effects of
an increase in  snowmaking  capacity.  The  District  Court then  enjoined  Loon
Mountain  from using the pipeline but later  modified the  injunction  to permit
LMRC to use the pipeline  provided  that,  among other things,  it does not make
snow in excess of the historic  production level utilizing 159.7 million gallons
per ski season.  On February 12, 1999, the District Court dismissed the pipeline
litigation  and allowed the Forest  Service to combine its NEPA  analysis of the
pipeline with the pending NEPA  analysis of the South  Mountain  expansion.  The
injunction  authorizing  LMRC to use the  pipeline  to supply  water for  making
historical   levels  of  snow  remained  in  place  until  the  additional  NEPA
documentation  was completed and the Forest Service issued a new decision on the
pipeline. As described in Part I, Item 2. "Management's  Discussion and Analysis
of Financial  Condition and Results of Operations - Regulation and Legislation",
on February 26, 2002, the Forest Service issued its Record of Decision approving
the Loon Mountain Final  Environmental  Impact  Statement.  The Forest Service's
denial  of an  administrative  appeal  to the ROD  pursuant  to its June 7, 2002
letter is subject to judicial  review in federal court.  The Company can give no
assurance  regarding  whether such a judicial appeal will be filed or the timing
or outcome of such process.

    Effective  February 22, 2001,  both  Environmental  Plaintiffs  entered into
settlement agreements with LMRC, which resolve all issues among them relating to
LMRC's  prior  operations  and  current  proposal  for near term  expansion  and
upgrading of the Loon  Mountain  resort.  Among other things,  these  agreements
impose  certain  restrictions  on the  operation  of the  resort  and the future
development of certain private land at the resort.

                                       30
<PAGE>

    Killington West, Ltd.,  formerly known as Bear Mountain,  Ltd.  ("Killington
West "), filed a breach of contract  lawsuit in the Superior  Court of the State
of  California,   San  Bernardino   County,   against   Fibreboard   Corporation
("Fibreboard")  and  Bear  Mountain,  Inc.,  a  wholly-owned  subsidiary  of the
Company,  alleging that  Fibreboard and Bear Mountain,  Inc.  breached the asset
purchase   agreement   dated  October  6,  1995  (the  "Original  Bear  Mountain
Agreement") among Killington West,  Fibreboard and Bear Mountain,  Inc. pursuant
to which  Bear  Mountain,  Inc.  acquired  the Bear  Mountain  ski  resort  from
Killington  West.  Killington  West's  lawsuit  concerned  an alleged  breach by
Fibreboard  and Bear  Mountain,  Inc.  of a change of control  provision  in the
Original Bear Mountain Agreement.  In connection with the Company's  acquisition
of Bear Mountain,  Inc. in December 1996, the Company  obtained from  Fibreboard
indemnification  for any  claim  that  might  be made by  Killington  West,  and
further,  required  that $1  million  of the  purchase  price be held in  escrow
pending the outcome of any potential  disputes with Killington West.  Fibreboard
acknowledged its obligation to indemnify Bear Mountain, Inc. with respect to the
Killington  West lawsuit and is defending  such lawsuit on behalf of  Fibreboard
and Bear Mountain, Inc.

    On November 13, 2001, the Company filed a lawsuit against ASU  International
LLC,  Essex  Insurance   Company  and  Certain   Underwriters,   Lloyd's  London
(collectively,  the "Insurers") in Superior Court in Massachusetts.  The Company
had placed  with the  Insurers  weather/income  stabilization  coverage  for the
2000/01 ski season for certain of its resorts.  During the applicable  period of
the  policies,  the  Company  incurred  losses at two of its  resorts  which the
Company  believes  were covered  under the terms of such  policies.  The Company
believes  that it has complied with its  obligations  under the policies and has
properly  reported  and made claims in  accordance  with the policies for losses
aggregating in excess of $1.5 million.  In response to the Insurers'  failure to
properly process the Company's claims,  the Company seeks recovery for breach of
contract,  breach of  covenant of good faith and unfair and  deceptive  business
practices.  The Company's  complaint  seeks  recovery for the full amount of its
claims as well as multiple damages and attorneys' fees based on its assertion of
unfair and deceptive claims practices by the Insurers.

    An informal  settlement  conference  between  the  Company and the  Insurers
occurred  on January  31,  2002,  and no  progress  was made  toward an amicable
resolution  of  the  matter.  Following  such  settlement  conference,   partial
resolution  of the claims was reached and a payment of $700,000  was made by the
Insurers in April 2002. This payment was made and accepted without  prejudice to
the remainder of the  Company's  claims.  This lawsuit  remains in the discovery
phase.  Based on an evaluation of information to date and the advice of counsel,
the Company  believes  that  realization  of its  recorded  claims is  probable.
However,  no assurance  can be given  regarding the timing of resolution of this
matter.

ITEM 6. EXHIBITS AND REPORTS ON FORM-8-K

    a. Exhibits

       Exhibit No.      Description of Exhibit

            10.1        Stock Purchase  Agreement dated July 22, 2002 among Bear
                        Mountain  Resort,  Inc., Snow Summit Ski Corporation and
                        Booth Creek Ski Holdings, Inc.

            10.2        Ski Area Term  Special Use Permit No.  4008/1 dated June
                        24, 2002,  issued by the United States Forest Service to
                        Loon Mountain Recreation Corporation.

            99.1        Certification of George N. Gillett, Jr., Chief Executive
                        Officer,  pursuant to 18 U.S.C. Section 1350, as adopted
                        pursuant  to Section  906 of the  Sarbanes-Oxley  Act of
                        2002.



                                       31
<PAGE>


       Exhibit No.      Description of Exhibit

            99.2        Certification  of  Christopher  P. Ryman,  President and
                        Chief Operating Officer,  pursuant to 18 U.S.C.  Section
                        1350,  as  adopted   pursuant  to  Section  906  of  the
                        Sarbanes-Oxley Act of 2002.

            99.3        Certification  of  Elizabeth  J.  Cole,  Executive  Vice
                        President and Chief  Financial  Officer,  pursuant to 18
                        U.S.C.  Section 1350, as adopted pursuant to Section 906
                        of the Sarbanes-Oxley Act of 2002.

b.  Reports on Form 8-K

No  reports on Form 8-K were filed  during the quarterly  period ended August 2,
2002.


                                       32
<PAGE>


                                   SIGNATURES

    Pursuant to the  requirements  of the  Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
Undersigned, thereunto duly authorized.


                                              BOOTH CREEK SKI HOLDINGS, INC.
                                                      (Registrant)


                               By:               /s/ ELIZABETH J. COLE
                               -------------------------------------------------
                                                     Elizabeth J. Cole
                                                Executive Vice President and
                                                   Chief Financial Officer
                                                (Principal Financial Officer)


                               By:                 /s/ BRIAN J. POPE
                               -------------------------------------------------
                                                       Brian J. Pope
                                        Vice President of Accounting and Finance
                                             (Principal Accounting Officer)



September 13, 2002


                                       33
<PAGE>



                                 CERTIFICATIONS


I,  George N. Gillett, Jr., certify that:

1.  I have  reviewed  this  quarterly  report  on Form  10-Q of Booth  Creek Ski
    Holdings, Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report.

September 13, 2002

                                  By:            /s/ GEORGE N. GILLETT, JR.
                                  ----------------------------------------------
                                                     George N. Gillett, Jr.
                                                    Chief Executive Officer

I,  Christopher P. Ryman, certify that:

1.  I have  reviewed  this  quarterly  report  on Form  10-Q of Booth  Creek Ski
    Holdings, Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report.

September 13, 2002

                                  By:            /s/ CHRISTOPHER P. RYMAN
                                  ----------------------------------------------
                                                     Christopher P. Ryman
                                           President and Chief Operating Officer

I,  Elizabeth J. Cole, certify that:

1.  I have  reviewed  this  quarterly  report  on Form  10-Q of Booth  Creek Ski
    Holdings, Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report.

September 13, 2002

                                  By:            /s/ ELIZABETH J. COLE
                                  ----------------------------------------------
                                                     Elizabeth J. Cole
                                                Executive Vice President and
                                                  Chief Financial Officer


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