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

                                 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 July 30, 1999

                                       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) 476-4030
              (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 27, 1999, 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..................................      9

 3.   Quantitative and Qualitative Disclosures about Market Risk.     19

                          PART II - OTHER INFORMATION

 1.   Legal Proceedings..........................................     20

 4.   Submission of Matters to a Vote of Security Holders........     22

 6.   Exhibits and Reports on Form 8-K...........................     22

Signatures.......................................................     23

<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)


                                                    July 30,      October 30,
                                                      1999           1998
                                                --------------- ---------------
                  ASSETS                          (Unaudited)

Current assets:
  Cash .......................................  $           984 $           625
  Accounts receivable, net of allowance of
   of $55 and $54, respectively...............            1,335           1,573
  Note receivable from sale of real estate ...            1,500               -
  Inventories ................................            2,670           4,370
  Prepaid expenses and other current
   assets ....................................            1,051           1,377
                                                --------------- ---------------
Total current assets .........................            7,540           7,945

Property and equipment, net ..................          154,758         156,469
Real estate held for development and sale ....           11,297          10,155
Deferred financing costs, net of
  accumulated amortization of $2,848 and
  $1,985, respectively .......................            6,292           6,649
Timber rights and other assets ...............            8,185           7,428
Goodwill, net of accumulated amortization
  of $5,949 and $4,190, respectively .........           28,643          29,900
                                                --------------- ---------------
Total assets .................................  $       216,715 $       218,546
                                                =============== ===============

   LIABILITIES AND SHAREHOLDER'S EQUITY

Current liabilities:
  Senior credit facility ....................   $        13,307 $        17,143
  Current portion of long-term debt .........             1,446           1,785
  Accounts payable and accrued liabilities ..            34,270          22,110
                                                --------------- ---------------
Total current liabilities ...................            49,023          41,038

Long-term debt ..............................           136,487         137,352

Other long-term liabilities .................                50             145

Commitments and contingencies

Preferred stock of subsidiary; 28,000
  shares authorized, 18,000 shares issued
  and outstanding at July 30, 1999
  (21,000 shares at October 30, 1998);
  liquidation preference and redemption
  value of $2,258 at July 30, 1999 ..........             2,258           2,634

Shareholder's equity:
  Common stock, $.01 par value; 1,000
   shares authorized, issued and
   outstanding ..............................                 -               -
  Additional paid-in capital ................            72,000          72,000
  Accumulated deficit .......................           (43,103)        (34,623)
                                                --------------- ---------------
Total shareholder's equity ..................            28,897          37,377
                                                --------------- ---------------
Total liabilities and shareholder's
  equity ....................................   $       216,715 $       218,546
                                                =============== ===============

                            See accompanying notes.

<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)


                                        Three Months Ended   Nine Months Ended
                                        ------------------  ------------------
                                         July 30, July 31,   July 30, July 31,
                                          1999      1998      1999      1998
                                        --------- --------  --------- --------
                                                     (Unaudited)

Revenue:
  Resort operations ...............     $  4,113  $  3,861  $107,203  $ 91,709
  Real estate and other ...........          332       207       332       207
                                        --------  --------  --------  --------
Total revenue .....................        4,445     4,068   107,535    91,916

Operating expenses:
  Cost of sales - resort
   operations .....................        6,835     6,381    66,102    54,952
  Cost of sales - real estate
   and other ......................          198        96       198        96
  Depreciation and depletion.......        4,750     4,033    14,353    10,675
  Amortization of goodwill and
   other intangible assets ........          596       556     1,786     1,672
  Selling, general and
   administrative expense .........        4,072     4,034    17,938    14,288
                                        --------  --------  --------  --------
Total operating expenses ..........       16,451    15,100   100,377    81,683
                                        --------  --------  --------  --------

Operating income (loss) ...........      (12,006)  (11,032)    7,158    10,233

Other income (expense):
  Interest expense ................       (4,724)   (4,607)  (14,412)  (12,954)
  Amortization of deferred
  financing costs .................         (227)     (369)     (863)     (980)
  Other income (expense) ..........          (20)        4      (195)       11
                                        --------  --------  --------  --------
  Other income (expense), net .....       (4,971)   (4,972)  (15,470)  (13,923)
                                        --------  --------  --------  --------
Loss before minority interest .....      (16,977)  (16,004)   (8,312)   (3,690)

Minority interest .................          (54)      (70)     (168)     (208)
                                        --------  --------  --------  --------
Net loss ..........................     $(17,031) $(16,074) $ (8,480) $ (3,898)
                                        ========  ========  ========  ========

                            See accompanying notes.

<PAGE>

                        BOOTH CREEK SKI HOLDINGS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)


                                                        Nine Months Ended
                                                -------------------------------
                                                  July 30,           July 31,
                                                    1999               1998
                                                -------------     -------------
                                                          (Unaudited)

Cash flows from operating activities:
Net loss ...................................... $      (8,480)    $      (3,898)
Adjustment to reconcile net loss to
  net cash provided by operating activities:
   Depreciation and depletion .................        14,353            10,675
   Amortization of goodwill and other
    intangible assets .........................         1,786             1,672
   Amortization of deferred financing costs ...           863               980
   Minority interest ..........................           168               208
   Changes in operating assets and liabilities:
    Accounts receivable .......................           238               480
    Inventories ...............................         1,700               806
    Prepaid expenses and other current assets .           326               (47)
    Accounts payable and accrued liabilities ..        10,660               482
    Other long-term liabilities ...............           (95)              (83)
                                                -------------     -------------
Net cash provided by operating activities......        21,519            11,275

Cash flows from investing activities:
Capital expenditures for property and
 equipment ....................................       (12,107)           (8,604)
Acquisition of businesses .....................          (661)          (30,016)
Capital expenditures for real estate
 held for development and sale ................        (1,142)             (684)
Other assets ..................................          (780)              643
                                                -------------     -------------
Net cash used in investing activities .........       (14,690)          (38,661)

Cash flows from financing activities:
Net (repayments) borrowings under senior
 credit facility ..............................        (3,836)            4,414
Proceeds of long-term debt ....................             -            17,500
Principal payments of long-term debt ..........        (1,584)           (2,213)
Deferred financing costs ......................          (506)           (1,557)
Purchase of preferred stock of subsidiary
 and payment of dividends .....................          (544)             (793)
Capital contributions .........................             -            10,500
                                                -------------     -------------
Net cash (used in) provided by financing
 activities ...................................        (6,470)           27,851
                                                -------------     -------------
Increase in cash ..............................           359               465

Cash at beginning of period ...................           625               462
                                                -------------     -------------
Cash at end of period ......................... $         984     $         927
                                                =============     =============

                            See accompanying notes.

<PAGE>

                         BOOTH CREEK SKI HOLDINGS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 July 30, 1999

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

   Booth Creek Ski Holdings,  Inc.  ("Booth Creek") was organized on October 8,
1996 in the State of  Delaware  for the  purpose  of  acquiring  and  operating
various    ski    resorts,    including    Northstar-at-Tahoe    ("Northstar"),
Sierra-at-Tahoe  ("Sierra"),  Bear Mountain,  Waterville  Valley, Mt. Cranmore,
the Summit at Snoqualmie Pass (the "Summit"), Grand Targhee and Loon Mountain.

   The consolidated  financial  statements  include the accounts of Booth Creek
and its subsidiaries  (collectively referred to as the "Company").  Booth Creek
owns all of the common stock of its  subsidiaries.  Ski Lifts,  Inc. (the owner
and  operator  of the  Summit)  has shares of  preferred  stock  owned by third
parties.  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 July 30, 1999 and
for the three and nine  month  periods  ended July 30,  1999 and July 31,  1998
are  unaudited,  but  include  all  adjustments  (consisting  only  of  normal,
recurring  adjustments)  which,  in the opinion of  management  of the Company,
are considered  necessary for a fair  presentation  of the Company's  financial
position at July 30,  1999,  and its  operating  results and cash flows for the
three and nine month  periods  ended July 30,  1999 and July 31,  1998.  Due to
the  highly  seasonal  nature  of the  Company's  business  and the  effect  of
acquisitions   (Note  2),  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 year ended October 30, 1998.

Reporting Periods

   The  Company's  reporting  periods  end on the Friday  closest to the end of
each month.

Costs of Computer Software Developed or Obtained for Internal Use

   In  March  1998,  the  Accounting   Standards   Executive  Committee  issued
Statement  of  Position  ("SOP")  98-1,  "Accounting  for the Costs of Computer
Software  Developed  or Obtained for  Internal  Use." SOP 98-1,  which has been
adopted  prospectively  by the Company as of October  31,  1998,  requires  the
capitalization  of certain  costs  incurred in  connection  with  developing or
obtaining  internal  use  software.  Prior to the  adoption  of SOP  98-1,  the
Company  expensed  development,  production and  maintenance  costs  associated
with computer  software  developed for internal use. The effect of adopting SOP
98-1 was to  increase  net income for the nine  months  ended July 30,  1999 by
approximately $198,000.

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.

<PAGE>

2. Acquisitions

Pro Forma Financial Information

   The Company  acquired  Loon  Mountain on February 26,  1998,  which has been
included  in  the   Company's   results  of   operations   since  the  date  of
acquisition.  The following  table  represents  unaudited  pro forma  financial
information  which  presents the Company's  consolidated  results of operations
for the nine  months  ended July 31, 1998 as if the Loon  Mountain  acquisition
and related financing transactions occurred on November 1, 1997.

                                                                Nine Months
                                                                   Ended
                                                               July 1, 1998
                                                              --------------
                                                              (In thousands)
    Statement of operations data:
     Revenue ..............................................     $  102,555
     Operating income .....................................     $   13,885
     Net loss .............................................     $   (1,125)
    Other data:
     EBITDA ...............................................     $   27,026

   EBITDA represents income from operations before depreciation,  depletion and
amortization  expense and the noncash cost of real estate sales.  EBITDA is not
intended to  represent  cash flow from  operations  or net income as defined by
generally  accepted  accounting  principles  and should not be  considered as a
measure of liquidity or an alternative to, or more meaningful  than,  operating
income or  operating  cash flow as an  indication  of the  Company's  operating
performance.

   The pro forma  information does not purport to be indicative of results that
actually  would  have  occurred  had the  acquisition  been  made  on the  date
indicated or of results which may occur in the future.

Proposed Seven Springs Acquisition

   On  August  28,  1998,  the  Company,  Booth  Creek Ski  Acquisition,  Inc.,
("Acquisition  Sub")  a  wholly-owned  subsidiary  of the  Company,  and  Seven
Springs  Farm,  Inc.  ("Seven  Springs"),  the owner and  operator of the Seven
Springs Mountain  Resort,  a ski resort and conference  center in Pennsylvania,
entered  into an  Agreement  of Merger (the  "Merger  Agreement"),  pursuant to
which  the  Company  would   acquire  Seven  Springs   through  the  merger  of
Acquisition   Sub  with  and  into  Seven   Springs.   The   aggregate   merger
consideration  and related  payments was to be  approximately  $83 million plus
certain deferred payments, subject to certain price adjustments.

   In  connection  with  the  proposed  Seven  Springs   acquisition,   certain
shareholders  of Seven  Springs filed a lawsuit in the Court of Common Pleas of
Somerset County,  Pennsylvania against the Company,  Acquisition Sub, and Seven
Springs and certain of its  directors,  seeking a declaratory  judgment,  along
with  other  relief  including  the  rescission  of the Merger  Agreement.  The
plaintiffs  alleged that the terms of a certain  shareholders'  agreement among
Seven Springs and its shareholders (the "Seven Springs Shareholder  Agreement")
banned the consummation of the proposed  acquisition.  On October 29, 1998, the
Court entered  judgment denying the relief sought by plaintiffs and authorizing
the consummation of the transactions  contemplated by the Merger Agreement. The
plaintiffs thereafter appealed that judgment, and on July 1, 1999, the Superior
Court of  Pennsylvania  affirmed  the judgment in a 2-1  decision.  On July 15,
1999,  plaintiffs  filed an application for reargument of the Superior  Court's
July 1, 1999 order.  On  September  3, 1999,  the  Superior  Court  granted the
plaintiff's application and agreed to hear reargument of the appeal.


   The Merger  Agreement  provided  that the Company's  obligations  thereunder
were subject to satisfaction of various  conditions,  including the requirement
that  there  shall have been a judicial  determination  that the Seven

<PAGE>

2. Acquisitions - (Continued)

Proposed Seven Springs Acquisition - (Continued)

Springs  Shareholder  Agreement was  inapplicable to the Merger  Agreement.  If
these  conditions were not satisfied on or before October 31, 1998, the Company
was free to terminate the Merger  Agreement,  upon which termination the Merger
Agreement  required  Seven  Springs  to  pay  the  Company  a  break-up  fee of
$1,000,000.  On June 18, 1999, the Company  terminated the Merger Agreement and
demanded  payment of the break-up  fee.  Seven  Springs has refused to make the
required payment,  claiming that the October 31, 1998 date had been extended to
December  31, 1999 by an alleged  amendment  to the Merger  Agreement  that had
never been  approved  or  executed by the  Company.  Consequently,  the Company
commenced  an action  against  Seven  Springs on June 30,  1999,  in the United
States District Court for the Southern District of New York, seeking damages of
$1,000,000  plus  interest and costs.  Seven  Springs has not yet answered that
complaint.

   On July 2,  1999,  Seven  Springs  filed for a writ of summons  against  the
Company in the Court of Common  Pleas of  Somerset  County.  That  writ,  which
has not yet been  served on the  Company,  does not specify  what claims  Seven
Springs  intends to assert against the Company.  The plaintiff  shareholders in
the prior Seven Springs  Shareholder  Agreement  litigation have filed a motion
seeking leave to intervene in this new Court of Common Pleas  action,  alleging
that Seven  Springs'  payment of the  $1,000,000  break-up  fee required by the
Merger  Agreement  would itself be violative of the Seven  Springs  Shareholder
Agreement.  The Company  intends to oppose that motion,  which has not yet been
submitted to the court for decision.

   While the Company  believes it is entitled to the  $1,000,000  break-up  fee
under  the  terms  of  the  Merger  Agreement,   the  ultimate  impact  of  the
resolution  of these  matters on the  Company"s  financial  condition or future
results of operations is not currently determinable.

3. Accounts Payable and Accrued Liabilities

   Accounts payable and accrued liabilities consist of the following:

                                                       July 30,  October 30,
                                                         1999        1998
                                                      ----------  ----------
                                                          (In thousands)


     Accounts payable ............................    $    7,867  $   10,652
     Accrued compensation and benefits ...........         2,626       3,164
     Taxes other than income .....................           905         973
     Unearned revenue from real estate sales .....        10,000           -
     Unearned revenue and deposits ...............         3,110       4,017
     Interest ....................................         6,611       2,349
     Other .......................................         3,151         955
                                                      ----------  ----------
                                                      $   34,270  $   22,110
                                                      ==========  ==========

4. Financing Arrangements

Senior Credit Facility

   The  total  maximum  borrowing  availability  under  the  provisions  of the
Company's  Amended and Restated Credit Agreement (the "Senior Credit Facility")
is $25 million.  On May 18, 1999,  the final maturity date of the Senior Credit
Facility was  extended  from  November  15, 1999 to March 31, 2002.  The Senior
Credit  Facility  requires that the Company not have  borrowings  thereunder in
excess of $8 million in addition to certain  amounts

<PAGE>

4.    Financing Arrangements - (Continued)

Senior Credit Facility - (Continued)

maintained by the Company in certain depository accounts with BankBoston, N.A.,
for a period of 60 consecutive days each year commencing between February 1 and
February 28. In June 1999,  the Company  obtained an amendment  from the lender
that modified certain covenants at July 30, 1999. Total borrowings  outstanding
under the Senior  Credit  Facility  at July 30, 1999 were  approximately  $13.3
million, which bore interest at 8% per annum.

Long-Term Debt

   As of July 30, 1999, the Company had  outstanding  $133.5 million  aggregate
principal  amount of its senior  notes (the "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  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)  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 the Real Estate
LLC. Each Guarantee is  effectively  subordinated  to all secured  indebtedness
of such Guarantor.  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  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 for the Senior Notes (the
"Indenture")  contains  covenants  for the benefit of the holders of the Senior
Notes that,  among other  things,  restrict  the ability of the Company and any
Restricted  Subsidiaries  to:  (i)  incur  additional  indebtedness;  (ii)  pay
dividends  and make  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) transfer and 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  operations,  assets or cash flows
separate from its  investments in its  subsidiaries.  In addition,  the assets,
equity,  income  and cash  flow of the Real  Estate  LLC,  Booth  Creek's  only
non-guarantor  subsidiary,  are  inconsequential and the membership interest of
the Real  Estate  LLC is  entirely  owned by 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.

Other Debt

   During the nine  months  ended  July 30,  1999,  the  Company  entered  into
capital lease obligations of $380,000 for the purchase of equipment.

<PAGE>

5.    Income Taxes

   Due to the  Company's  lack  of  profitable  history,  the tax  benefits  of
operating  losses are fully offset by a valuation  reserve.  No federal  income
tax  provision  is  expected  for  the  year  ended  October  29,  1999  due to
continued  operating  losses.  Accordingly,  during the nine months  ended July
30, 1999, no federal income tax provision has been provided.

6.    Northstar Real Estate Sales

   On July 28, 1999, Northstar  consummated the sale of the property comprising
Phases 4 and 4A of the Big Springs  development to Trimont Land Holdings,  Inc.
("TLH"),  a  wholly-owned  subsidiary  of the  Parent and an  affiliate  of the
Company,  for an aggregate  sales price of  $10,000,000,  subject to adjustment
as  described  below.  The  consideration   paid  to  Northstar   consisted  of
$8,500,000  in cash and a  promissory  note (the "TLH  Note")  for a minimum of
$1,500,000.  Under  the  terms of the TLH  Note,  Northstar  will  receive  the
greater of (a)  $1,500,000  plus accrued  interest at 7% per annum,  or (b) the
Net Cash  Proceeds  of the  resale  of the lots  within  Phases 4 and 4A.  "Net
Cash  Proceeds"  is  defined  as  gross  proceeds  received  by  TLH  from  the
subsequent  resale of the lots,  after  deduction for (i) the proceeds  applied
to repay any  indebtedness  incurred by TLH in connection with its financing of
the  purchase  of the lots,  (ii) any fees or other  costs  incurred  by TLH in
connection  with its financing of the purchase or sales of the lots,  and (iii)
any corporate  overhead  costs  incurred by TLH  attributable  to the purchase,
maintenance,  marketing  or sale of the  lots.  The TLH Note is  prepayable  at
any time,  and is due on the  earlier to occur of January  15, 2001 or the date
on which  the last of the lots  owned  by TLH has been  sold.  Pursuant  to the
terms  of  the  sale,   Northstar  retained  the  obligation  to  complete  the
scheduled  construction  of the  development  in  accordance  with the approved
site  development  plan.  Due to the remaining  construction  obligations,  the
Company  has  deferred  the  recognition  of the  sale of the  property  in the
accompanying consolidated financial statements as of July 30, 1999.

   On August 1, 1999,  TLH  conducted an auction of 46 of the available 47 lots
within Phases 4 and 4A of the Big Springs  development.  As of August 31, 1999,
binding sales  contracts have been executed for 45 lots for an aggregate  sales
price of  $13,726,000.  The average  sales price of $305,000  represents  a 44%
increase over the average lot price of $212,000 realized for the prior phase of
the development.  Upon the close of escrows for binding  contracts  between TLH
and the respective lot purchasers,  the Company expects to receive net proceeds
of  approximately   $4,100,000  in  September  1999,  after  deduction  for  i)
$8,500,000  previously  received on July 28, 1999, ii) TLH's financing costs of
approximately $189,000, iii) third party sales commissions of $824,000, and iv)
other  estimated  closing  costs and  expenses in the amount of  $113,000.  The
remaining 2 available lots within the  development are currently being marketed
by TLH for an aggregate list price of $645,000, which will result in additional
cash proceeds upon the ultimate sale of such properties.

<PAGE>

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

   The  discussion  and  analysis  below  relates to the  historical  financial
statements  and  historical  and pro forma results of operations of the Company
and  the  liquidity  and  capital  resources  of  the  Company.  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 regional  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  the  Company's  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, drought
and other  types of  severe or  unusual  weather  conditions,  which can have a
significant  effect on the operating  revenues and  profitability at any one of
the Company's resorts.

    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  123,  143,  142,  and 103  days,
respectively,  during each of the last five ski seasons,  including the 1998/99
ski season. The Company's Northstar,  Sierra,  Summit and Grand Targhee resorts
are  less  weather-sensitive   based  on  their  historical  natural  snowfall,
averaging   approximately   367,   546,   493,  and  544  inches  of  snowfall,
respectively,  per year for the past  five ski  seasons.  As a result  of their
historic  natural  snowfall,  their  snowmaking  capabilities  are considerably
less extensive than at Bear Mountain,  Waterville Valley,  Loon Mountain or Mt.
Cranmore.

   The  Company's  results  of  operations  are also  highly  dependent  on its
ability  to  compete  in each of the large  regional  ski  markets  in which it
operates.  At  Northstar  and  Sierra,  more than 70% of the 1998/99 ski season
total  skier  days  were  attributable  to  residents  of  the  San  Francisco,
Sacramento,   Central  California  Valley  and  Lake  Tahoe  regions.  At  Bear
Mountain,  more  than 90% of the  1998/99  ski  season  total  skier  days were
attributable  to  residents  of the  Los  Angeles  and San  Diego  metropolitan
regions.  At Waterville Valley,  Loon Mountain and Mt. Cranmore,  more than 70%
of the 1998/99 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 more than 90% of the 1998/99  ski season  total skier days were
attributable  to  residents  of the  Seattle/Tacoma  metropolitan  region.  The
Company's  Grand  Targhee  resort  attracts  more than 40% of its  skiers  from
outside its regional skiing population.

   In  addition to revenue  generated  from skiing  operations,  the  Company's
resorts generate  significant revenue from non-ski  operations,  including real
estate  and timber  sales,  lodging,  conference  center  services,  health and
tennis clubs and summer  activities  such as mountain  biking  rentals and golf
course fees.

   A significant  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 other  seasonal  factors.  With the  exception  of
certain management,  marketing and maintenance personnel,  all of the Company's
employees are compensated on an hourly basis.

Results of Operations of the Company

   Overview

   The Company's  results of operations are  significantly  impacted by weather
conditions.   Northstar  and  Sierra  experienced   generally   favorable  snow
conditions  during the 1998/99 ski season.  While Bear  Mountain  enjoyed  cold
temperatures  in early November which  facilitated an early opening on man-made
snow,  the resort  suffered  from a

<PAGE>

lack of natural snowfall  throughout the season.  Snowfall at Bear Mountain for
the 1998/99 ski season was 30% of its five year average for the five  preceding
ski seasons.  The East experienced mild  temperatures  through mid December and
rainfall on most weekends during January.  These conditions negatively impacted
snow conditions,  terrain availability and skier days at Waterville Valley, Mt.
Cranmore  and  Loon  Mountain   during  the  Company's  first  fiscal  quarter.
Conditions and momentum for the Eastern resorts improved in February and March,
although the resorts closed earlier than  anticipated  due to declining  demand
and Spring-like  conditions in April. The Summit experienced a prolonged period
of  continual  snowfall,  which  resulted in  increased  snow removal and other
operating costs.  While Grand Targhee enjoyed  favorable snow  conditions,  its
operations were negatively impacted by unusually high winds on a number of days
during December through February.

   The Company's  results of operations for the historical three and nine month
periods  ended July 30,  1999  includes  the  results  of all of the  Company's
resorts for the entire  period.  The results of operations  for the  historical
three and nine month  periods  ended July 31, 1998 includes the results of Loon
Mountain since February 26, 1998, the date it was acquired by the Company.

   Historical  Three Months  Ended July 30, 1999 as Compared to the  Historical
Three Months Ended July 31, 1998

   Total  revenue for the three months ended July 30, 1999 was  $4,445,000,  an
increase of $377,000,  or 9%, over the Company's  revenues for the three months
ended July 31, 1998.  Revenue from resort  operations  increased  $252,000,  or
7%,  due  primarily  to  increased  summer  lodging,  golf  and  retail  sales.
Revenues from timber  operations  increased  $125,000 in the 1999 period due to
the timing of timber harvesting.

   On July 28, 1999, Northstar  consummated the sale of the property comprising
Phases 4 and 4A of the Big Springs  development to Trimont Land Holdings,  Inc.
("TLH"),  a  wholly-owned  subsidiary  of the  Parent and an  affiliate  of the
Company,  for an aggregate  sales price of  $10,000,000,  subject to adjustment
as  described  below.  The  consideration   paid  to  Northstar   consisted  of
$8,500,000  in cash and a  promissory  note (the "TLH  Note")  for a minimum of
$1,500,000.  Under  the  terms of the TLH  Note,  Northstar  will  receive  the
greater of (a)  $1,500,000  plus accrued  interest at 7% per annum,  or (b) the
Net Cash  Proceeds  of the  resale  of the lots  within  Phases 4 and 4A.  "Net
Cash  Proceeds"  is  defined  as  gross  proceeds  received  by  TLH  from  the
subsequent  resale of the lots,  after  deduction for (i) the proceeds  applied
to repay any  indebtedness  incurred by TLH in connection with its financing of
the  purchase  of the lots,  (ii) any fees or other  costs  incurred  by TLH in
connection  with its financing of the purchase or sales of the lots,  and (iii)
any corporate  overhead  costs  incurred by TLH  attributable  to the purchase,
maintenance,  marketing  or sale of the  lots.  The TLH Note is  prepayable  at
any time,  and is due on the  earlier to occur of January  15, 2001 or the date
on which  the last of the lots  owned  by TLH has been  sold.  Pursuant  to the
terms  of  the  sale,   Northstar  retained  the  obligation  to  complete  the
scheduled  construction  of the  development  in  accordance  with the approved
site  development  plan.  Due to the remaining  construction  obligations,  the
Company  has  deferred  the  recognition  of the  sale of the  property  in its
consolidated financial statements as of July 30, 1999.

   On August 1, 1999,  TLH  conducted an auction of 46 of the available 47 lots
within Phases 4 and 4A of the Big Springs  development.  As of August 31, 1999,
binding sales  contracts have been executed for 45 lots for an aggregate  sales
price of  $13,726,000.  The average  sales price of $305,000  represents  a 44%
increase over the average lot price of $212,000 realized for the prior phase of
the development.  Upon the close of escrows for binding  contracts  between TLH
and the respective lot purchasers,  the Company expects to receive net proceeds
of  approximately   $4,100,000  in  September  1999,  after  deduction  for  i)
$8,500,000  previously  received on July 28, 1999, ii) TLH's financing costs of
approximately $189,000, iii) third party sales commissions of $824,000, and iv)
other  estimated  closing  costs and  expenses in the amount of  $113,000.  The
remaining 2 available lots within the  development are currently being marketed
by TLH for an aggregate list price of $645,000, which will result in additional
cash proceeds upon the ultimate sale of such properties.

   Total  operating  expenses  for the three  months  ended July 30,  1999 were
$16,451,000,  an  increase  of  $1,351,000,  or 9%,  over the  Company's  total
operating  expenses for the three  months  ended July 31,  1998.  Cost of sales
for resort operations  increased by $454,000,  or 7%, in line with the increase
in summer revenues and normal  inflationary  impacts.  Cost of sales for timber
operations  increased  $102,000  due to the increase in timber sales and higher
removal costs due to steeper  terrain.  Depreciation  and  depletion  increased
by $717,000 as a result of higher  average  asset  balances  and an increase in
the amount of timber  harvested.  Selling,  general  and  administrative  costs
were generally consistent between the periods.

<PAGE>

   Interest   expense  for  the  three  months  ended  July  30,  1999  totaled
$4,724,000,  an increase of $117,000  over the Company's  interest  expense for
the three months ended July 31, 1998,  reflecting  generally  higher  levels of
borrowings in the 1999 period.

   Due to the  Company's  lack  of  profitable  history,  the tax  benefits  of
operating  losses are fully offset by a valuation  reserve.  No federal  income
tax  provision  is  expected  for  the  year  ended  October  29,  1999  due to
continued  operating  losses.  Accordingly,  during the three months ended July
30, 1999, no federal income tax provision has been provided.

   EBITDA  loss  for the  historical  three  months  ended  July  30,  1999 was
$6,660,000,  an increase of $217,000 or 3% over EBITDA loss of  $6,443,000  for
the historical three months ended July 31, 1998.

   Historical  Nine Months  Ended July 30,  1999 as Compared to the  Historical
Nine Months Ended July 1, 1998

   Total revenue for the nine months ended July 30, 1999 was  $107,535,000,  an
increase  of  $15,619,000,  or 17%,  over the  Company's  revenue  for the nine
months ended July 31, 1998.  The increase is  principally  due to the inclusion
of Loon Mountain for the entire 1999 period,  which  accounted  for  $9,975,000
of the  increase  in  revenues  for the nine  months  ended  July  30,  1999 as
compared  to the 1998  period.  In  addition,  Northstar  and Sierra  generated
increased  revenues of $1,212,000 and $1,175,000,  respectively,  primarily due
to  improved  yields in terms of  revenues  per skier  visit.  Bear  Mountain's
revenues  declined  slightly  due to lower skier visits as a result of the lack
of  natural  snowfall,  partially  offset  by  improved  yields.  Revenues  for
Waterville  Valley were slightly lower due to poor weather and snow  conditions
in the first quarter,  partially  offset by improved  yields.  Revenues for Mt.
Cranmore  increased  $460,000,  or 13%, due to improved yields and higher skier
visits  as  a  result  of  new  pricing   strategies.   The  Summit   generated
$2,632,000,  or  25%,  in  additional  revenues  due  to  an  earlier  opening,
extended  season,  higher  skier  days  and  improved  yields  in its  food and
beverage,  snow  school  and  retail  businesses.  Revenues  for Grand  Targhee
increased by $399,000, or 6%, due to slightly higher skier visits.

   Total  operating  expenses  for the nine  months  ended  July 30,  1999 were
$100,377,000,  an increase of $18,694,000  over the Company's  total  operating
expenses for the nine months ended July 31, 1998.  The principal  causes of the
increase are as follows:

                                                          (In thousands)

   Total operating expenses - nine months ended
    July 31, 1998......................................        $81,683
   Acquisition of Loon Mountain:
    Cost of sales - resort operations..................          5,192
    Selling, general and administrative................            569
    Depreciation and amortization......................            818
                                                             ---------
                                                                 6,579
   Nonrecurring maintenance, operations, snow
    removal and severance costs, and increased costs
    associated with an earlier opening, extended
    season and revenue penetration efforts and new
    operations during the winter season at the Summit..          4,197
   Costs of nonrecurring corporate initiatives and
    process improvements and increased costs
    associated with new management personnel and
    functional expertise...............................          1,974
   Increased depreciation due to higher average
    asset balances.....................................          2,860
   Increased snowmaking costs at Bear Mountain due
    to the lack of natural snowfall....................            480
   Lease costs for three new lifts at the
    Summit and Bear Mountain...........................            494
   Labor associated with earlier openings at
    Northstar, Sierra and Bear Mountain................            197
   Inflation and other changes, net....................          1,913
                                                             ---------
   Total operating expenses - nine months ended
    July 30, 1999......................................       $100,377
                                                             =========

   As  reflected  above,  the  inclusion  of Loon  Mountain for the entire 1999
period  resulted  in  an  increase  of  $6,579,000  in  operating  expenses  as
compared to the 1998 period.

<PAGE>

   At the Summit,  the Company incurred  significant  nonrecurring costs during
the nine months ended July 30, 1999 to  appropriately  prepare its  facilities,
vehicle and snow grooming fleet,  communications  infrastructure  and processes
and systems for the  operation  of the resort.  In addition,  record  levels of
snowfall  severely  hampered  operating  efforts and  resulted  in  significant
increases in snow removal,  grounds  maintenance and related costs. The Company
also accrued  severance costs associated with certain  personnel changes at the
Summit.  Management  believes  that  approximately  $2,500,000 to $3,000,000 of
the cost  increases  at the Summit are of a  nonrecurring  nature and would not
be  incurred  in a  typical  year of  operation.  Further,  the  resort  opened
thirteen  days  earlier  for the  1998/99  ski season as  compared to the prior
season,  and operated for an  additional  six days in April 1999 as compared to
April 1998. Also, the resort implemented  various revenue  penetration  efforts
and  operated a new ski  school  business  that was  previously  operated  by a
third  party,  which  contributed  to the cost  increases  at the  Summit.  The
earlier  opening,  extended  season,  revenue  penetration  efforts and new ski
school  generated  an increase in  revenues of  $2,632,000  for the nine months
ended July 30, 1999 as compared to the 1998 period.

   The Company has been executing numerous  nonrecurring efforts to improve its
marketing  collateral and database,  establish strategic  marketing  alliances,
introduce   new  service   offerings,   evaluate   potential   revenue   growth
opportunities  and strategies,  install public  relations  channels,  implement
enhanced   guest  service   training  for  employees,   institute   performance
management  systems and evaluate  technology  related tools and  methodologies.
Further,  the Company has been  conducting  system and process  improvements in
substantially  all  key   administrative   and  operations  areas.   Management
believes that  approximately  $600,000 of the increased  corporate  spending is
of a  nonrecurring  nature.  The Company has also added  certain key  corporate
personnel and functional  expertise to enhance its management team.  Management
believes  that  the   nonrecurring   initiatives,   process   improvements  and
personnel  additions  have begun to favorably  impact the Company's  operations
through  improved  yields and higher  guest  service  survey  scores,  and will
positively impact the Company's financial performance in future periods.

   Interest   expense  for  the  nine  months   ended  July  30,  1999  totaled
$14,412,000,  an increase of  $1,458,000  over the Company's  interest  expense
for the nine months ended July 31, 1998,  reflecting  generally  higher  levels
of  borrowings in the 1999 period due  principally  to debt incurred to finance
the Loon Mountain acquisition.

   Due to the  Company's  lack  of  profitable  history,  the tax  benefits  of
operating  losses are fully offset by a valuation  reserve.  No federal  income
tax  provision  is  expected  for  the  year  ended  October  29,  1999  due to
continued  operating  losses.  Accordingly,  during the nine months  ended July
30, 1999, no federal income tax provision has been provided.

   EBITDA for the historical  nine months ended July 30, 1999 was  $23,297,000,
an increase of $717,000 or 3% over  historical  EBITDA of  $22,580,000  for the
nine months ended July 31, 1998.

   Historical  Nine  Months  Ended July 30,  1999 as  Compared to the Pro Forma
Nine Months Ended July 31, 1998

   The  following  unaudited pro forma results of operations of the Company for
the nine months ended July 31, 1998 assume that the Loon  Mountain  acquisition
and related  financing  had occurred on November 1, 1997.  These  unaudited pro
forma  results  of  operations  are not  necessarily  indicative  of the actual
results of operations  that would have been  achieved nor are they  necessarily
indicative of future results of operations.

<PAGE>

                                              Historical nine  Pro forma nine
                                                months ended    months ended
                                               July 30, 1999   July 31, 1998
                                              ---------------  --------------
                                                       (In thousands)

  Statement of Operations Data:
   Revenue:
     Resort operations .....................  $       107,203  $      102,348
     Real estate and other .................              332             207
                                              ---------------  --------------
                                                      107,535         102,555

   Operating expenses:
     Resort operations .....................           84,040          75,433
     Real estate and other .................              198              96
     Depreciation, depletion and
     amortization ..........................           16,139          13,141
                                              ---------------  --------------
   Operating income ........................            7,158          13,885
   Interest expense and other, net .........           15,470          14,802
                                              ---------------  --------------
   Loss before minority interest ...........           (8,312)           (917)
   Minority interest .......................              168             208
                                              ---------------  --------------
   Net loss ................................  $        (8,480) $       (1,125)
                                              ===============  ==============
  Other Data:
   EBITDA ..................................  $        23,297  $       27,026


   Total  historical  revenues  for the nine  months  ended July 30,  1999 were
$107,535,000,  an increase of $4,980,000,  or 5%, over the comparable pro forma
period in 1998.  Total skier days for the nine months  ended July 30, 1999 were
2,433,000,  an increase of 47,000 days,  or 2%, over the  comparable  pro forma
period in 1998.  Total skier days increased due to  significantly  higher skier
days at the Summit and a larger number of skier visits  attributable  to season
pass  sales  and  promotional   offerings.   Northstar  and  Sierra   generated
increased  revenues  of  $1,212,000  and  $1,175,000,   respectively,   due  to
improved  yields.  Bear  Mountain's  revenues  declined  slightly  due to lower
skier visits as a result of the lack of natural  snowfall,  partially offset by
improved yields.  Revenues for Waterville  Valley and Loon Mountain declined by
$202,000 and $656,000,  respectively,  due to poor weather and snow  conditions
in the first quarter,  partially  offset by improved  yields.  Revenues for Mt.
Cranmore  increased  $460,000,  or 13%, due to improved yields and higher skier
visits  as  a  result  of  new  pricing   strategies.   The  Summit   generated
$2,632,000,  or  25%,  in  additional  revenues  due  to  an  earlier  opening,
extended  season,  higher  skier days and improved  yields.  Revenues for Grand
Targhee increased by $399,000, or 6%, due to slightly higher skier visits.

   Historical resort operating expenses, excluding depreciation,  depletion and
amortization,  for the nine  months  ended July 30, 1999 were  $84,040,000,  an
increase of  $8,607,000,  or 11%, over the comparable pro forma period in 1998.
Increased  costs of winter  operations at the Summit of  $4,197,000  and higher
corporate  expenses  of  $1,974,000  for  nonrecurring  corporate  initiatives,
process  improvements  and new  management  personnel as  previously  discussed
were the principal  contributors to the increase.  Increased  snowmaking  costs
at Bear Mountain of $480,000 due to the lack of natural  snowfall,  lease costs
in the  amount  of  $494,000  for  three  new  lifts  at the  Summit  and  Bear
Mountain,   $197,000  of  incremental   labor  costs  associated  with  earlier
openings  at  Northstar,  Sierra  and Bear  Mountain  and  normal  inflationary
impacts also contributed to the increase.

   Historical  depreciation,  depletion  and  amortization  for the nine months
ended July 30, 1999 was  $16,139,000.  The increase of $2,998,000 over the 1998
pro forma period was due to higher average asset balances in the 1999 period.

   Interest  expense and other income  (expense),  net for the historical  nine
months ended July 30, 1999 totaled  $15,470,000,  an increase of $668,000 or 5%
from the comparable pro forma period in 1998. The increase was  principally due
to interest expense on borrowings under the Senior Credit Facility used to fund
capital  expenditures,  maintenance  activities  and  normal  seasonal  working
capital requirements in the off-season period prior to the start of the 1998/99
ski season.

<PAGE>

   EBITDA for the historical nine months ended July 30, 1999 was $23,297,000, a
decrease of  $3,729,000  or 14% from the pro forma nine  months  ended July 31,
1998.

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 flow from  operations  and
borrowings  under the Senior  Credit  Facility.  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.  The Senior  Credit  Facility
currently  provides for borrowing  availability of up to $25 million during the
term of such  facility.  On May 18, 1999, the final maturity date of the Senior
Credit  Facility was  extended  from  November 15, 1999 to March 31, 2002.  The
Senior  Credit   Facility   requires  that  the  Company  not  have  borrowings
thereunder  in excess of $8 million,  in addition to amounts  maintained by the
Company in certain depository  accounts with BankBoston,  N.A., for a period of
60 consecutive  days each year commencing  between  February 1 and February 28.
In June 1999,  the Company  obtained an amendment from the lender that modified
certain  covenants  at July 30,  1999.  The Company  intends to use  borrowings
under the Senior  Credit  Facility  to meet  seasonal  fluctuations  in working
capital   requirements,   primarily   related  to  off-season   operations  and
maintenance  activities  during the  months of May  through  November,  to fund
capital  expenditures  for lifts,  trail  work,  grooming  equipment  and other
on-mountain  equipment and  facilities,  to build retail and other  inventories
prior to the start of the ski  season and for other  cash  requirements.  As of
July 30,  1999 and August 31,  1999,  outstanding  borrowings  under the Senior
Credit  Facility  totaled   approximately  $13.3  million  and  $15.4  million,
respectively,  which  reflects the receipt of $8.5 million in proceeds from the
sale of real estate by Northstar on July 28, 1999.

   The Company had a net working  capital  deficit of $28.4 million  (excluding
$10.0  million and $3.1 million in unearned  revenue from real estate sales and
resort  operations,  respectively,  which will not  require  cash  spending  to
settle  such  liabilities)  as of July 30,  1999 which will  negatively  affect
liquidity during the remainder of 1999.

   The Company  generated cash from  operating  activities of $21.5 million for
the nine months  ended July 30, 1999 as compared to $11.3  million for the nine
months ended July 31,  1998.  The  increase is  principally  due to the receipt
of $8.5  million in proceeds  from the sale of real estate by Northstar on July
28, 1999.

   Cash used in investing  activities  totaled  $14.7 million and $38.7 million
for the nine months  ended July 30, 1999 and July 31, 1998,  respectively.  The
results for the 1999 period  primarily  reflect  capital  expenditures  for the
purchase of  property  and  equipment,  whereas the results for the 1998 period
also reflect the acquisition of Loon Mountain.

   Cash used in financing  activities  totaled $6.5 million for the nine months
ended July 30,  1999,  primarily  reflecting  repayments  on the Senior  Credit
Facility and  long-term  debt.  Cash provided by financing  activities  totaled
$27.9  million for the nine months  ended July 31, 1998,  primarily  reflecting
borrowings  and additional  capital  contributions  to fund the  acquisition of
Loon Mountain.

   The Company's  capital  expenditures for property and equipment for the nine
months  ended  July 30,  1999  were  approximately  $12.1  million.  Management
anticipates  that  remaining  expenditures  for its fiscal 1999 and fiscal 2000
capital programs will be approximately $15 million in the aggregate,  including
approximately $4 million in resort maintenance for each year. The Company plans
to fund these capital  expenditures  from available cash flow, vendor financing
to the extent  permitted under the Senior Credit Facility and the Indenture and
borrowings  under  the  Senior  Credit  Facility.   There  are  no  significant
commitments for future capital  expenditures at July 30, 1999.  However, in the
event the Company receives necessary  approvals for a land swap currently being
pursued for certain base area land at Grand Targhee and the Company  chooses to
exercise  its options to acquire  certain  real estate to  consummate  the land
swap, it would be obligated to fund approximately $4.5 million to complete such
land acquisitions.

   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

<PAGE>

substantial   periods  of  time,  in  order  to  address  cash  flow  or  other
constraints.  As a result of the Company's  recent  operating  performance  and
liquidity  constraints,  it may be required to defer or abandon  certain of its
capital expenditure projects.

   With   respect  to  the   Company's   potential   real  estate   development
opportunities,  management  believes that such efforts will enhance ski-related
revenues  and will  contribute  independently  to earnings.  In addition,  with
respect to significant  development projects,  the Company anticipates entering
into joint  venture  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.

   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  each contain
covenants that  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 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 Company  currently  has $133.5  million  aggregate  principal  amount of
Senior  Notes   outstanding,   which  will  result  in  annual  cash   interest
requirements  of  approximately  $16.7 million.  The Company  expects that cash
generated  from  operations,  cash  proceeds of planned  real  estate  sales at
Northstar  and  planned  divestitures  of other real  estate and  non-strategic
assets,  together  with  borrowing  availability,  will be adequate to fund the
interest  requirements  on the  Senior  Notes  and  the  Company's  other  cash
operating  and  debt  service   requirements   over  the  next  twelve  months.
However,  for the twelve  months ended July 30, 1999,  the  Company's  ratio of
EBITDA to interest  expense  was 1.25,  and as of July 30,  1999,  the ratio of
the  Company's  total debt to EBITDA for the last twelve  months was 6.49.  Any
decline in the  Company's  expected  operating  performance  or the  failure to
sell real estate at Northstar  or achieve  planned  divestitures  of other real
estate and non-strategic  assets, in each case on the terms anticipated,  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  significant   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.

Impact of the Year 2000 Issue

   The year 2000 issue is the result of computer  programs  being written using
two  digits  rather  than  four  to  define  the  applicable  year.  Any of the
Company's computer programs that have  date-sensitive  software may recognize a
date using "00" as the year 1900 rather than the year 2000.  This could  result
in a system  failure or  miscalculations  causing  disruptions  of  operations,
including,  among other things, a temporary  inability to process  transactions
or engage in normal business activities.

   The  Company  has   conducted  an   assessment   of  its   information   and
telecommunications  technology ("IT") assets and systems.  Substantially all of
the Company's IT systems,  except for a portion of the Company's  ticketing and

<PAGE>

sales systems,  operate using  software  developed and supported by third party
vendors.  The Company is in the process of implementing  its planned program to
remedy  such  third  party   developed   systems,   which  will  entail  either
modifications  to or  replacement of certain  existing IT systems.  The cost of
modifications  will  be  expensed  as  incurred  and  is  not  expected  to  be
significant.  The cost of purchased  replacements  will be  capitalized  and is
expected  to range  from  $600,000  to  $700,000,  of which  $530,000  has been
incurred through July 30, 1999.

   The Company has  substantially  completed  an  assessment  of the  necessary
efforts to make its primary  ticketing  and sales  system year 2000  compliant,
and is  currently  making  modifications  to such  system  to make it year 2000
compliant.  The Company  currently  expects to complete such efforts by October
1999.  The  cost  of  necessary   modifications  to  the  ticketing  and  sales
software  will be expensed as incurred  and will be performed  using  primarily
existing  internal  resources.   Purchases  of  replacement  hardware  will  be
capitalized.  The expected cost of software  modifications is expected to range
from  $130,000  to  $170,000.  Depending  upon the  results  of final  hardware
testing,  necessary hardware  replacements could require capital spending of up
to $200,000.

   The Company has commenced a program to ensure that  significant  vendors and
service  providers  with which it does  business  are year 2000  compliant.  In
addition,  the Company is conducting  an assessment of its operating  assets to
determine  whether there will be any  significant  financial  impacts to ensure
year 2000 compliance for such assets.

   The Company  intends to complete its year 2000  assessments  and remediation
program by October 1999.  However,  if the Company or its vendors are unable to
resolve the year 2000 issue in a timely  manner,  or the  Company's  assessment
of the  extent  of year  2000  issues  surrounding  its IT  systems,  operating
assets or  significant  vendors or service  providers are  incorrect,  the year
2000 issue could have a material  impact on the operations of the Company.  The
Company does not presently  have a contingency  plan in the event its year 2000
compliance program is unsuccessful or not completed on a timely basis.

   The cost of the project  and the date on which the Company  believes it will
complete  the  year  2000   modifications   are  based  on  management's   best
estimates,   which  were  derived  utilizing  numerous  assumptions  of  future
events,  including  the  continued  availability  of certain  resources,  third
party  modification  plans  and  other  factors.   However,  there  can  be  no
guarantee  that these  estimates  will be  achieved  and actual  results  could
differ  materially from those  anticipated.  Specific  factors that might cause
such material  differences  include,  but are not limited to, the  availability
and cost of  personnel  trained in this  area,  the  ability to finance  needed
system  replacements and  modifications,  the ability to locate and correct all
relevant  computer  codes  and  similar  uncertainties.   See  "Forward-Looking
Statements" herein.

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.  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,
expansion and capital improvement 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  constituting each resort.  The real property  presently used
at the  Northstar  and Mt.  Cranmore  resorts  is  owned  by the  Company.  The
Company  has the  right  to use a  substantial  portion  of the  real  property
associated  with  the  Bear  Mountain,  Sierra,  Summit,  Grand  Targhee,  Loon
Mountain and  Waterville  Valley resorts under the terms of Special Use Permits
issued by the United  States  Forest  Service.  The Special Use Permits for the
Bear  Mountain,  Sierra,  Waterville  Valley,  the  Summit  and  Grand  Targhee
resorts  were  reissued  at the  time  of the  Company's  acquisition  of  such
resorts,  with the Bear  Mountain  permit  expiring in 2020,  the Sierra permit
expiring in 2039,  the  Waterville  Valley permit  expiring in 2034, the Summit
permit expiring in 2032 and the Grand Targhee permit expiring in 2034.

   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

<PAGE>

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. In a December 4, 1998 filing,  the United States Forest Service  targeted
the  Fall  of  1999  for  issuance  of a  draft  NEPA  document  regarding  the
improvements and the proposed  expansion and stated that it intended to combine
such NEPA review with review of the existing snowmaking pipeline.  The District
Court entered a final order on December 11, 1998 specifying that the conditions
imposed on  operations at Loon Mountain in the May 5, 1997 order will remain in
effect until the United  States  Forest  Service  completes its NEPA review and
issues a new decision. On February 12, 1999, the District Court agreed that the
United States  Forest  Service may combine its  evaluation  and analysis of the
existing  snowmaking  pipeline  with its NEPA  review of the  improvements  and
proposed expansion.

   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,
direct the United  States Forest  Service to  re-evaluate  the pipeline,  allow
such  re-evaluation  to proceed  separate  from and prior to the United  States
Forest Service's  reconsideration of the larger expansion,  and enjoin the Loon
Mountain  Resort 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 and  addressing  its potential to increase the amount of
snow made.  This  decision  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  precluding  use of the pipeline to permit Loon  Mountain  Resort 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  reviews
the pipeline  under NEPA. On February 12, 1999,  the District  Court  dismissed
the  consolidated  lawsuit  concerning  the  pipeline  in light  of the  United
States  Forest   Service's   decision  to  combine  review  of  the  pipeline's
construction  and  operation  with  its NEPA  review  of the  improvements  and
proposed expansion.

   Existing  use of  Loon  Mountain  is  authorized  under a Term  Special  Use
Permit,  which  covers  facilities  and  expires  in 2006,  and a  supplemental
permit,  which covers the balance of Loon Mountain;  existing non-skiing use of
South  Mountain  is  authorized  under an annual  permit  issued by the  United
States  Forest  Service  that is expected to be reissued  each year.  After the
United  States  Forest  Service  reconsiders  the  pipeline   improvements  and
expansion  under  NEPA,  it  will  need  to  render  a  new  decision  and,  if
appropriate,  issue a new permit.  At that time,  the District Court order will
terminate.   Based  upon  the  existing   administrative  record,  and  certain
proposed   modifications  to  the  resort's  snowmaking  operations  which  are
intended  to better  protect  water  resources,  the Company  expects  that the
pipeline  improvements  and  expansion  will be approved  by the United  States
Forest  Service.  However,  no assurance  can be given  regarding the timing or
outcome of this process.

   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 permits, the Company is required to
pay  fees  to  the  United  States  Forest  Service.   Under  recently  enacted
legislation,  retroactively effective to the 1995/96 ski season, the fees range
from 1.5% to approximately  4.0% of certain  revenues,  with the rate generally
rising with increased  revenues.  Through fiscal 1998, the Company was required
to pay the greater of (i) the fees due under the new  legislation  and (ii) the
fees  actually  paid for the 1994/95 ski season  unless gross  revenue in a ski
season  falls more than 10% below that of the  1994/95 ski season in which case
the fees due are calculated  solely under the new legislation.  The calculation
of gross revenues includes,  among other things,  revenue from lift ticket, 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 October 30, 1998 were $1,014,000. The new

<PAGE>

legislation is not expected to have a material effect on fees payable in future
periods.

   The  Company  believes  that its  relations  with the United  States  Forest
Service  are good,  and,  to the best of its  knowledge,  no 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 Special Use Permit upon  180-days  notice if, in planning for the
uses  of  the  national  forest,  the  public  interest  requires  termination.
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.  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.  The Company  also  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
adversely affect operations.

   The  operations at the resorts  require  permits and approvals  from certain
federal,  state and local authorities.  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 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.

   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.
However,  at Grand Targhee,  following the Wyoming  Department of Environmental
Quality  (the "DEQ")  issuing a Notice of  Violation  of state water  pollution
requirements  based on alleged  discharge  from a wastewater  lagoon  without a
permit,  the Company entered into an negotiated  compliance  order with the DEQ
requiring  construction  and operation of a new  wastewater  facility at a cost
of  approximately  $1  million.   The  Company  constructed  a  new  wastewater
facility  and the new  facility  commenced  operation  on December  19, 1998. A
DEQ  inspection  on July 12, 1999  verified  that the  facility  was  operating
satisfactorily.  On July 16,  1999,  the DEQ  formally  found that the  Company
had satisfied all terms of the negotiated compliance order.

   Pursuant to the air emissions  reduction  program currently in effect in the
area  regulated  by  the  South  Coast  Air  Quality  Management   District  in
California  where  Bear  Mountain  is  located,  depending  on Bear  Mountain's
operations  and  emissions,  Bear Mountain may be required to acquire  emission
credits from other  facilities  which have already  implemented  nitrogen oxide
emission  reductions.   When  necessary,  the  Company  may  purchase  "banked"
emission credits at prevailing market rates.

   Bear  Mountain has a water supply  contract for 500  acre-feet per year with
Big Bear  Municipal  Water  District  executed  January  8, 1988,  the  initial
fifteen-year term of which expires on January 7, 2003. Big Bear Municipal Water
District's  primary  source of water is from a portion of the water in Big Bear
Lake shared with Bear Valley  Mutual  Water  Company,  the senior  water rights
holder.  The water supply contract provides for water primarily for snow making
and slope  irrigation  purposes.  The  obligation of Big Bear  Municipal  Water
District to supply  water is excused only if the level of Big Bear Lake recedes
below 6,735.2 feet above sea level or eight feet below the top of Big Bear Lake
Dam. Bear Valley Mutual Water Company  recently  claimed that its rights in the
lake are not subject

<PAGE>

to Big Bear  Municipal  Water  District's  obligation  to supply  water to Bear
Mountain.  This  claim  is  vigorously  contested  by  all  interested  parties
including Bear Mountain and a two-year moratorium agreement between Bear Valley
Mutual  Water  Company and Big Bear  Municipal  Water  District was executed in
November  1998,  which  withdraws  Bear Valley's  claim for two years while the
issues  between Bear Valley and Big Bear  Municipal are worked out. This allows
continued  service  to  Bear  Mountain  on  an  uncontested  basis  during  the
moratorium  period.  The  Company  expects  that  the  issue  will be  resolved
favorable to the interests of Bear Mountain  because of its contribution to the
local  economy,  the  strength of its contract  rights with Big Bear  Municipal
Water District and the alternate sources of water supply that are available. It
should be noted the foregoing is premised on normal  conditions  prevailing and
the  absence of  droughts,  earthquakes,  dam failure or other types of similar
calamities  that impact the ability to obtain or supply water. No assurance can
be made  regarding  the outcome of this  situation  or the timing  negotiations
during the next two years.

   Pursuant to the decision of the First  Circuit and the order of the District
Court the Loon  Mountain  Resort has  applied to the  Environmental  Protection
Agency  ("EPA")  for a Clean Water Act (the "CWA")  discharge  permit  covering
discharges   associated  with  its  snowmaking   operations.   Certain  ongoing
discharges  are  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.  The EPA issued a
continuing discharge permit prior to the 1998/99 ski season.

   Certain regulatory  approvals associated with the new snowmaking pipeline at
Loon  Mountain  impose  minimum  stream  flow  requirements  on  Loon  Mountain
Resort.  These  requirements  will compel  Loon  Mountain  Resort to  construct
water  storage  facilities  within  the next ten years,  and such  construction
will require  further  regulatory  approvals  and  environmental  documentation
under NEPA.

   In addition,  the Loon Mountain  Resort was notified in September  1997 that
it had  allegedly  filled  certain  wetlands at the resort in  violation of the
CWA. In response,  the Loon  Mountain  Resort worked with the EPA to remove the
alleged fill and implement  certain  erosion control  measures.  On January 15,
1998, an individual  notified the EPA, the Loon  Mountain  Resort,  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.  The Company
does not have any  further  notice of any  threatened  lawsuit or other  action
regarding this matter.

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"   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.
Forward-looking   statements  are  based  on  management's  current  views  and
assumptions  and  involve  risks and  uncertainties  that  could  significantly
affect  expected  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:  uncertainty as to future financial  results,
the  substantial  leverage  and  liquidity  constraints  of  the  Company,  the
capital   intensive  nature  of  development  of  the  Company's  ski  resorts,
uncertainties  associated  with  obtaining  financing  for future  real  estate
projects and to undertake  future  capital  improvements,  demand for and costs
associated  with  real  estate   development,   the  discretionary   nature  of
consumers'  spending for skiing and resort real  estate,  regional and national
economic  conditions,  the successful or  unsuccessful  integration of acquired
businesses,  weather  conditions,  natural  disasters  (such as earthquakes and
floods),   industry  competition,   governmental  regulation  and  other  risks
associated  with expansion and  development,  the occupancy of leased  property
and property used pursuant to the United States  Forest  Service  permits,  and
the  ability  of the  Company  to make its  information  technology  assets and
systems year 2000  compliant  and the costs of any  modifications  necessary in
this regard.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

   There have been no material  changes in information  relating to market risk
since the Company's  disclosure  in Item 7a. of the Company's  Annual Report on
Form 10-K for the year ended  October  30,  1998 as filed  with the  Securities
and Exchange Commission.

<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 skiing  activities at its resorts but also relating to
premises and  vehicular  operations  and  worker's  compensation  matters.  The
Company  maintains  extensive  liability  insurance that the Company  considers
adequate  to  monetarily  insure  claims  related to such  usual and  customary
risks associated with the operation of four-season recreation resorts.

   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.  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
defended  such  lawsuit on behalf of  Fibreboard  and Bear  Mountain,  Inc. The
lawsuit  was  settled in February  1999 and the  Company  has  determined  Bear
Mountain, Inc. has no further interest in the matter.

   In  connection  with the merger with Loon  Mountain  Recreation  Corporation
("LMRC"),  certain shareholders of LMRC (the "Shareholder  Plaintiffs") filed a
lawsuit  against  LMRC and its former  directors  alleging  breach of fiduciary
duty and against the Company  alleging  that the Company  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.  Prior to the filing of the
lawsuit  against the  Company,  the Company  received a "no action"  order from
the Bureau of Securities  Regulation,  New  Hampshire  Department of State (the
"Bureau")  finding that the Takeover  Statute was  inapplicable to the proposed
merger.  The  Shareholder   Plaintiffs'   initial  request  for  a  preliminary
injunction  prohibiting  the Company (or its  affiliates)  from proceeding with
the LMRC  merger  was  denied by the court.  Before  the  litigation  proceeded
further,  and prior to the merger,  the parties to the merger agreement amended
such  agreement.  The Company then obtained an  additional  order by the Bureau
that  the  Takeover  Statute  did not  apply  to the  merger  transaction.  The
Company  answered the  Shareholder  Plaintiffs'  petition and filed a motion to
dismiss the 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.  Shareholder  Plaintiffs  have  appealed the
dismissal to the New  Hampshire  Supreme  Court.  The parties have filed briefs
in the  appeal  and  requested  oral  argument,  which has not been  scheduled.
Potential  remedies  under the  Takeover  Statute  include  money  damages  and
rescission   of  the   transaction.   While  the   Company   does  not  believe
Shareholder  Plaintiffs  will prevail in their  actions,  no assurances  can be
made regarding the outcome of these actions.

   Shareholder  Plaintiffs'  breach of fiduciary  duty action  against LMRC and
its  former   directors   remains  pending  and  limited   discovery  has  been
conducted;  a  trial  date  will  be set  after  April  15,  2000.  Shareholder
Plaintiffs  were  given  leave by the court to amend  their  complaint  to seek
money  damages  against  the  Company,  LMRC and its former  directors.  If the
Shareholder  Plaintiffs  are  successful  in  obtaining a judgment  against the
former LMRC  directors,  the Company may have certain  obligations to indemnify
the former  directors  pursuant to the former LMRC  by-laws.  While the Company
does not  believe  Shareholder  Plaintiffs  will  prevail in this  lawsuit,  no
assurances can be made regarding the outcome of this litigation.

   Also in  connection  with  the  merger  with  LMRC,  Shareholder  Plaintiffs
exercised  dissenters' rights under the New Hampshire Business  Corporation Act
(the  "Corporation  Act").  Under the  statutory  procedure  for  settling  the
Shareholder  Plaintiffs'  dissenters' rights, LMRC paid Plaintiffs an aggregate
of  $34,436,  or $30.61 per share,  as its  estimate of the fair value of their
1,125 shares. Shareholder Plaintiffs demanded additional payments necessary to

<PAGE>

compensate  them for the  $71.38 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 Shareholder  Plaintiffs'
shares in LMRC.  Discovery in the case is pending.  While the Company  believes
that  the  amount  paid to the  Plaintiff's  prior to the  commencement  of the
appraisal proceeding represents the fair value of their shares, there can be no
assurance  as to the value which the  appraisal  proceeding  will assign to the
Plaintiffs 1,125 shares.

   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 Appeal for the First  Circuit (the
"First  Circuit")  reversed  the  District  Court  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  associated  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  remains  in effect  until the  supplemental  NEPA
process is  completed.  The Forest  Service  has  previously  stated it expects
to issue  draft NEPA  documentation  in the Fall of 1999,  however  the Company
can give no  assurance  regarding  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
discharge  at issue  involves  water  transfers  from the  East  Branch  of the
Pemigewasset  River and drain back from the  snowmaking  system into Loon Pond.
The District  Court  dismissed the claim for civil  penalties and attorney fees
under the CWA and one of the  Environmental  Plaintiffs  appealed  to the First
Circuit.  The  appeal  is  stayed  pending  a  decision  of the  United  States
Supreme Court in a different  case  involving  the CWA. In connection  with the
merger with LMRC, the Company  obtained a specific  insurance  policy providing
$4.5 million of coverage  (above a $1.2 million  deductible) to cover any civil
penalties, fees and costs that the District Court may assess against LMRC.

      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.  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 remains in place.

   In  connection  with  the  proposed  Seven  Springs   acquisition,   certain
shareholders  of Seven  Springs filed a lawsuit in the Court of Common Pleas of
Somerset County,  Pennsylvania against the Company,  Acquisition Sub, and Seven
Springs and certain of its  directors,  seeking a declaratory  judgment,  along
with other relief  including  the  rescission  of the  Agreement of Merger (the
"Merger  Agreement").  The  plaintiffs  alleged  that the  terms  of a  certain
shareholders'  agreement among Seven Springs and its  shareholders  (the "Seven
Springs  Shareholder  Agreement")  banned  the  consummation  of  the  proposed
acquisition. On October 29, 1998, the Court entered judgment denying the relief
sought by plaintiffs  and  authorizing  the  consummation  of the  transactions
contemplated by the Merger Agreement.  The plaintiffs  thereafter appealed that
judgment,  and on July 1, 1999, the Superior Court of Pennsylvania affirmed the
judgment in a 2-1 decision.  On July 15, 1999,  plaintiffs filed an application
for

<PAGE>

reargument  of the Superior  Court's July 1, 1999 order.  On September 3, 1999,
the  Superior  Court  granted the  plaintiff's  application  and agreed to hear
reargument of the appeal.

   The Merger  Agreement  provided  that the Company's  obligations  thereunder
were subject to satisfaction of various  conditions,  including the requirement
that  there  shall have been a judicial  determination  that the Seven  Springs
Shareholder  Agreement  was  inapplicable  to the  Merger  Agreement.  If these
conditions  were not satisfied on or before  October 31, 1998,  the Company was
free to  terminate  the Merger  Agreement,  upon which  termination  the Merger
Agreement  required  Seven  Springs  to  pay  the  Company  a  break-up  fee of
$1,000,000.  On June 18,  1999,  the Company  terminated  the Merger  Agreement
and demanded  payment of the break-up  fee.  Seven  Springs has refused to make
the  required  payment,  claiming  that  the  October  31,  1998  date had been
extended to December 31, 1999 by an alleged  amendment to the Merger  Agreement
that had never been  approved  or executed by the  Company.  Consequently,  the
Company  commenced an action  against  Seven  Springs on June 30, 1999,  in the
United States  District  Court for the Southern  District of New York,  seeking
damages of  $1,000,000  plus  interest  and costs.  Seven  Springs  has not yet
answered that complaint.

   On July 2,  1999,  Seven  Springs  filed for a writ of summons  against  the
Company in the Court of Common  Pleas of  Somerset  County.  That  writ,  which
has not yet been  served on the  Company,  does not specify  what claims  Seven
Springs  intends to assert against the Company.  The plaintiff  shareholders in
the prior Seven Springs  Shareholder  Agreement  litigation have filed a motion
seeking leave to intervene in this new Court of Common Pleas  action,  alleging
that Seven  Springs'  payment of the  $1,000,000  break-up  fee required by the
Merger  Agreement  would itself be violative of the Seven  Springs  Shareholder
Agreement.  The Company  intends to oppose that motion,  which has not yet been
submitted to the court for decision.

   While the Company  believes it is entitled to the  $1,000,000  break-up  fee
under  the  terms  of  the  Merger  Agreement,   the  ultimate  impact  of  the
resolution  of these  matters on the  Company's  financial  condition or future
results of operations is not currently determinable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   On July 28, 1999,  George N. Gillett,  Jr., Sandeep D. Alva, Dean C. Kehler,
Edward  Levy and Daniel C. Budde were  elected to serve as the sole  members of
the  Board of  Directors  of the  Parent  and the  Company,  with  Mr.  Gillett
continuing to serve as Chairman and Chief Executive Officer of the Company.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

   a. Exhibits

   Exhibit No.                               Description of Exhibit
   -----------                               ----------------------
      27.1                                   Financial Data Schedule

   b. Reports on Form 8-K

   The  Company  filed a  Current  Report  on Form 8-K  dated  June  22,  1999,
reporting  under  Item 5 thereof  the  statement  to the Press  dated  June 21,
1999,  announcing the Company's  decision to terminate the agreement  regarding
the purchase of the Seven Springs Resort in Somerset County, Pennsylvania.

<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
                                             (Duly Authorized Officer)


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



September 10, 1999