UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q
               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                      FOR THE QUARTER ENDED APRIL 25, 1999

                        --------------------------------
                         Commission File Number 1-13507
                        --------------------------------

                             American Skiing Company
             (Exact name of registrant as specified in its charter)

         Maine                                        04-3373730
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

P.O. Box 450
Bethel, Maine                                                     04217
(Address of principal executive office)                        (Zip Code)


(207)  824-8100  (Registrant's  telephone  number,   including  area  code)  Not
Applicable

(Former name, former address and former fiscal year, if changed since
last report.)

         Indicate by checkmark  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 [  ]

         The number of shares  outstanding  of each of the  issuer's  classes of
common stock were 14,760,530 shares of Class A common stock, $.01 par value, and
15,526,243 shares of common stock, $.01 par value, as of June 9, 1999.

<PAGE>

                    American Skiing Company and Subsidiaries
                                Table of Contents

Part I - Financial Information

Item 1. Financial Statements

         Condensed Consolidated Statement of Operations (unaudited)
         for the three months ended April 25, 1999 and April 26, 1998..........1

         Condensed Consolidated Statement of Operations (unaudited)
         for the nine months ended April 25, 1999 and April 26, 1998...........2

         Condensed Consolidated Balance Sheet
         as of April 25, 1999 (unaudited) and July 26, 1998....................3

         Condensed Consolidated Statement of Cash Flows (unaudited)
         for the nine months ended April 25, 1999 and April 26, 1998...........4

         Notes to (unaudited) Condensed Consolidated Financial Statements......5

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

         General...............................................................9

         Liquidity and Capital Resources.......................................9

         Changes in Results of Operations.....................................18

         Changes in Financial Condition.......................................22

         Year 2000 Disclosure.................................................23

         Forward-Looking Statements...........................................26

Item 3.   Quantitative and Qualitative Disclosures
               About Market Risk..............................................26

Part II - Other Information

         Item 6. Exhibits and Reports on Form 8-K.............................27

                                       i
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>
                         Part I - Financial Information
                           Item 1 Financial Statements

                 Condensed Consolidated Statement of Operations
               (In thousands, except share and per share amounts)

<CAPTION>
                                                                                         For the three months ended
                                                                                  April 25, 1999           April 26, 1998
                                                                                                (unaudited)


<S>                                                                              <C>                     <C>
    Net  revenues:
         Resort                                                                  $        154,317        $         144,245
         Real estate                                                                       10,324                   40,914
                                                                                 -----------------       ------------------
              Total net revenues                                                          164,641                  185,159

    Operating expenses:
         Resort                                                                            74,573                   66,094
         Real estate                                                                        8,554                   28,451
         Marketing, general and administrative                                             14,519                   11,429
         Depreciation and amortization                                                     19,731                   17,960
                                                                                 -----------------       ------------------
              Total operating expenses                                                    117,377                  123,934
                                                                                 -----------------       ------------------

    Income from operations                                                                 47,264                   61,225
         Interest expense                                                                  10,144                    7,486
                                                                                 -----------------       ------------------

    Income before provision for income taxes                                               37,120                   53,739
         Provision for income taxes                                                        14,787                   20,958
                                                                                 -----------------       ------------------

    Income before preferred stock dividends and accretion                                  22,333                   32,781
             Accretion of discount and dividends accrued on
             mandatorily redeemable preferred stock                                         1,096                    1,091
                                                                                 -----------------       ------------------
    Net income available to common shareholders                                  $         21,237        $          31,690
                                                                                 =================       ==================

    Accumulated deficit, beginning of period                                     $       (31,036)                $(11,987)

    Net income available to common shareholders                                            21,237                   31,690
                                                                                 -----------------       ------------------

    Retained earnings (accumulated deficit), end of period                       $         (9,799)       $          19,703
                                                                                 =================       ==================

    Basic earnings per common share (note 7)
    Net income available to common shareholders                                  $            0.70       $            1.05
                                                                                 =================       ==================
    Diluted earnings per common share (note 7)
    Net income available to common shareholders                                  $            0.69       $            1.03
                                                                                 =================       ==================

    Weighted average common shares outstanding - basic                                 30,286,773               30,265,552
                                                                                 =================       ==================
    Weighted average common shares outstanding - diluted                               30,630,173               30,840,085
                                                                                 =================       ==================


 See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.

</TABLE>
                                       1
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>

                 Condensed Consolidated Statement of Operations
               (In thousands, except share and per share amounts)

<CAPTION>
                                                                                         For the nine months ended
                                                                                  April 25, 1999           April 26, 1998
                                                                                                (unaudited)

<S>                                                                             <C>                          <C>
    Net  revenues:
         Resort                                                                 $         277,833            $     264,141
         Real estate                                                                       21,109                   49,614
                                                                                ------------------       ------------------
              Total net revenues                                                          298,942                  313,755

    Operating expenses:
         Resort                                                                           171,897                  147,313
         Real estate                                                                       20,459                   34,706
         Marketing, general and administrative                                             43,267                   31,281
         Stock compensation charge (note 10)                                                    -                   14,254
         Depreciation and amortization                                                     41,450                   34,475
                                                                                ------------------       ------------------
              Total operating expenses                                                    277,073                  262,029
                                                                                ------------------       ------------------

    Income from operations                                                                 21,869                   51,726
         Interest expense                                                                  29,213                   25,028
                                                                                ------------------       ------------------

    Income (loss) before provision for (benefit from) income taxes and
         minority interest in loss of subsidiary                                          (7,344)                   26,698

         Provision for (benefit from) income taxes                                          (768)                   10,413
         Minority interest in loss of subsidiary                                                -                    (456)
                                                                                ------------------       ------------------

    Income (loss) before extraordinary items                                              (6,576)                   16,741

         Extraordinary loss, net of income tax benefit of $3,248                                -                    5,081
                                                                                ------------------       ------------------

    Income (loss) before preferred stock dividends and accretion                          (6,576)                   11,660

         Accretion of discount and dividends accrued on
             mandatorily redeemable preferred stock                                         3,234                    4,262
                                                                                ------------------       ------------------
    Net income (loss) available to common shareholders                          $         (9,810)             $      7,398
                                                                                ==================       ==================

    Retained earnings, beginning of year                                        $              11             $     12,305

    Net income (loss) available to common shareholders                                    (9,810)                    7,398
                                                                                 -----------------       ------------------

    Retained earnings (accumulated deficit), end of period                      $         (9,799)             $     19,703
                                                                                ==================       ==================

    Basic earnings (loss) per common share (note 7)
    Income (loss) before extraordinary items                                     $         (0.32)             $       0.51
    Extraordinary loss                                                                          -                   (0.21)
                                                                                 -----------------       ------------------
    Net income (loss) available to common shareholders                           $          (0.32)            $       0.30
                                                                                 =================       ==================
    Diluted earnings (loss) per common share (note 7)
    Income (loss) before extraordinary items                                     $          (0.32)            $       0.51
    Extraordinary loss                                                                           -                  (0.21)
                                                                                 -----------------       ------------------
    Net income (loss) available to common shareholders                           $          (0.32)            $      0.30
                                                                                 =================       ==================

    Weighted average common shares outstanding - basic                                 30,286,357               24,313,067
                                                                                ==================       ==================
    Weighted average common shares outstanding - diluted                               30,286,357               24,656,151
                                                                                ==================       ==================

 See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.

</TABLE>


                                       2
<PAGE>

                    American Skiing Company and Subsidiaries

<TABLE>
                      Condensed Consolidated Balance Sheet
               (In thousands, except share and per share amounts)

<CAPTION>
                                                                                          April 25, 1999          July 26, 1998
                                                                                            (unaudited)
<S>                                                                                      <C>                         <C>
Assets
Current assets
     Cash and cash equivalents                                                           $          9,107            $     15,370
     Restricted cash                                                                                6,815                   6,260
     Accounts receivable                                                                           13,009                   7,538
     Inventory                                                                                     13,357                  13,353
     Prepaid expenses                                                                               2,445                   3,709
     Deferred income taxes                                                                            652                   1,413
                                                                                         -----------------      ------------------
           Total current assets                                                                    45,385                  47,643

Property and equipment, net                                                                       529,643                 521,139
Real estate developed for sale                                                                    154,291                  78,636
Goodwill                                                                                           77,341                  78,687
Intangible assets                                                                                  23,089                  23,706
Deferred financing costs                                                                            9,585                   9,212
Long-term investments                                                                               6,147                   7,397
Other assets                                                                                       18,111                  14,479
                                                                                         -----------------      ------------------
          Total assets                                                                        $   863,592             $   780,899
                                                                                         =================      ==================

Liabilities, Mandatorily Redeemable Preferred Stock and Shareholders' Equity
Current liabilities
     Current portion of long-term debt                                                        $    19,691             $    44,153
     Accounts payable and other current liabilities                                                94,835                  44,372
     Deposits and deferred revenue                                                                 20,771                  10,215
     Demand note, Principal Shareholder                                                             1,846                   1,846
                                                                                         -----------------      ------------------
      Total current liabilities                                                                   137,143                 100,586

Long-term debt, excluding current portion                                                         263,739                 211,570
Subordinated notes and debentures, excluding current portion                                      127,672                 127,497
Other long-term liabilities                                                                        11,719                  10,484
Deferred income taxes                                                                              21,190                  22,719
Minority interest in subsidiary                                                                       392                     375
                                                                                         -----------------      ------------------
         Total liabilities                                                                        561,855                 473,231

Mandatorily Redeemable 10 1/2% Repriced Convertible Preferred Stock par value of
       $1,000 per share; 40,000 shares authorized; 36,626 shares issued and
       outstanding; including cumulative dividends in arrears (redemption value of
       $39,464 and $42,698, respectively)                                                          42,698                  39,464

Shareholders' Equity
     Common stock, Class A, par value of $.01 per share; 15,000,000 shares authorized;
     14,760,530 issued and outstanding                                                                148                     148
     Common stock, par value of $.01 per share; 100,000,000 shares
     authorized; 15,526,243 and 15,525,022 issued and outstanding, respectively                       155                     155
     Additional paid-in capital                                                                   268,535                 267,890
     Retained earnings (accumulated deficit)                                                      (9,799)                      11
                                                                                         -----------------      ------------------
        Total shareholders' equity                                                                259,039                 268,204
                                                                                         =================      ==================
Total liabilities, mandatorily redeemable preferred stock and shareholders' equity           $    863,592               $ 780,899
                                                                                         =================      ==================

 See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.

</TABLE>


                                       3
<PAGE>

                    American Skiing Company and Subsidiaries
<TABLE>

                 Condensed Consolidated Statement of Cash Flows
                                 (In thousands)
<CAPTION>
                                                                                                For the nine months ended
                                                                                         April 25, 1999          April 26, 1998
                                                                                                       (unaudited)

<S>                                                                                          <C>                      <C>
Cash flows from operating activities
Net income (loss)                                                                            $   (6,576)              $   11,660
Adjustments to reconcile net loss to net cash used in operating activities:
       Minority interest in loss of subsidiary                                                         -                   (456)
       Depreciation and amortization                                                              41,450                  33,088
       Amortization of discount on debt                                                              247                   2,183
       Deferred income taxes                                                                       (768)                   6,960
       Stock compensation charge                                                                     644                  14,254
       Extraordinary loss                                                                              -                   8,329
       Gain/loss from sale of assets                                                                  95                       -
       Decrease (increase) in assets:
                  Restricted cash                                                                  (555)                   (733)
                  Accounts receivable                                                            (5,471)                (14,287)
                  Inventory                                                                          (4)                 (2,475)
                  Prepaid expenses                                                                 1,264                   (490)
                  Real estate developed for sale                                                (71,549)                (45,919)
                  Other assets                                                                   (3,632)                 (5,657)
       Increase (decrease) in liabilities:
                  Accounts payable and other current liabilities                                  50,463                  13,630
                  Deposits and deferred revenue                                                   10,556                 (2,914)
                  Other long-term liabilities                                                      1,235                 (6,161)
                                                                                        -----------------       -----------------
Net cash provided by operating activities                                                        17,399                  11,012
                                                                                        -----------------       -----------------

Cash flows from investing activities
       Payments for purchases of businesses, net of cash acquired                                      -               (294,364)
       Capital expenditures                                                                     (43,319)                (70,371)
       Long-term investments                                                                       1,250                     497
       Assets held for sale                                                                            -                       -
       Proceeds from sale of assets                                                                  365                  11,599
       Other, net                                                                                      5                       -
                                                                                        -----------------       -----------------
Net cash used in investing activities                                                           (41,699)               (352,639)
                                                                                        -----------------       -----------------

Cash flows from financing activities
         Borrowings (repayments) under New Credit Facility                                      (46,794)                 155,787
         Repayment of Old Credit Facility                                                              -                (59,623)
         Proceeds from long-term debt                                                             19,920                   9,062
         Proceeds from non-recourse real estate debt                                              71,223                  31,219
         Repayment of long-term debt                                                             (6,730)                 (9,619)
         Repayment of non-recourse real estate debt                                             (18,211)                       -
         Deferred financing costs                                                                (1,371)                 (3,255)
         Proceeds from initial public offering                                                         -                 244,555
         Repayment of subordinated notes                                                               -                (21,882)
         Proceeds from issuance of mandatorily redeemable securities                                   -                  17,500
         Cash payment in connection with early retirement of debt                                      -                 (5,087)
                                                                                        =================       =================
Net cash provided by financing activities                                                         18,037                358,657
                                                                                        =================       =================
Net increase (decrease) in cash and cash equivalents                                             (6,263)                 17,030
Cash and cash equivalents, beginning of period                                                    15,370                 15,558
                                                                                        -----------------       -----------------
Cash and cash equivalents, end of period                                                     $     9,107             $   32,588
                                                                                        =================       =================


 See accompanying notes to (unaudited) Condensed Consolidated Financial Statements.

</TABLE>



                                       4
<PAGE>


                    American Skiing Company and Subsidiaries

        Notes to (unaudited) Condensed Consolidated Financial Statements

         1. Change in Accounting Estimate.  Effective July 27, 1998, the Company
extended the estimated  useful lives of certain of its ski lifts. As a result of
this change in estimate, the Company realized a decrease in depreciation expense
of  approximately  $0.7 million over the period  including  the second and third
quarters of fiscal 1999, as the Company  records a full year of  depreciation on
ski-related assets evenly over the second and third quarters of its fiscal year.
This  reduction  of  depreciation  expense  has  resulted  in an increase in net
earnings per common share of $0.01 for the three months ended April 25, 1999 and
$0.02 for the nine months ended April 25,  1999.  The Company is  continuing  to
evaluate the current  depreciable  lives of various  other assets to ensure they
appropriately reflect their actual useful lives.

         2. General. In the opinion of the Company,  the accompanying  unaudited
condensed consolidated financial statements contain all adjustments necessary to
present  fairly the financial  position of the Company as of April 25, 1999, the
results of  operations  for the three and nine  months  ended April 25, 1999 and
April 26, 1998,  and the statement of cash flows for the nine months ended April
25, 1999 and April 26, 1998. All adjustments are of a normal  recurring  nature.
The unaudited  condensed  consolidated  financial  statements  should be read in
conjunction  with the following notes and the Company's  consolidated  financial
statements in the Form 10-K,  filed with the Securities and Exchange  Commission
on October 27, 1998.

         3. Inventories.  Inventories are stated at the lower of cost (first-in,
first-out) or market,  and consist  primarily of retail goods, food and beverage
products and operating supplies.

         4. Property and  Equipment.  The Company has  identified  non-strategic
assets with a carrying value of approximately $15 million for sale. These assets
are  currently  classified as property and equipment and are still in use by the
Company,  but the Company  expects  these assets to be sold during the next nine
months.  The Company has reviewed these assets for impairment in accordance with
Financial   Accounting  Standards  Board's  Statement  of  Financial  Accounting
Standards No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets  to be  Disposed  of",  and has  made no  adjustments  to the
carrying values based on the results of such review.

         5. Income  Taxes.  The expense  (benefit) for taxes on income (loss) is
based on a projected  nine month  effective tax rate of 10.5%.  The net deferred
income tax liability  includes the cumulative  reduction in current income taxes
payable  resulting  principally  from the excess of  depreciation  reported  for
income tax purposes over that reported for financial reporting purposes.

         6. Seasonal Business. Results for interim periods are not indicative of
the results  expected for the year due to the seasonal  nature of the  Company's
business.

         7. Earnings  (loss) per Common Share.  Effective  January 25, 1998, the
Company  adopted the provisions of the Financial  Accounting  Standards  Board's
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128").  SFAS  128  specifies  the  computation,   presentation,  and  disclosure
requirements  for earnings per share for public  entities.  Earnings  (loss) per
common  share for the three and nine months  ending April 25, 1999 and April 26,
1998 were determined based on the following data:



                                       5
<PAGE>


                    American Skiing Company and Subsidiaries

<TABLE>
<CAPTION>
                                                              Three Months Ended                  Nine Months Ended
                                                          April 25,        April 26,          April 25,       April 26,
                                                            1999             1998               1999            1998
                                                         (unaudited)      (unaudited)        (unaudited)     (unaudited)
                                                        --------------   --------------     --------------  --------------
<S>                                                         <C>              <C>               <C>              <C>
                     Income (loss)
Income (loss) before preferred stock dividends and
   accretion and extraordinary items                        $  22,333        $  32,781         $  (6,576)       $  16,741
Accretion of discount and dividends accrued on
   mandatorily redeemable preferred stock                     (1,096)          (1,091)            (3,234)         (4,262)
                                                        --------------   --------------     --------------  --------------
Income (loss) before extraordinary items                       21,237           31,690            (9,810)          12,479
Extraordinary loss                                                  -                -                  -         (5,081)
                                                        ==============   ==============     ==============  ==============
Net income (loss) available to common shareholders          $  21,237        $  31,690         $  (9,810)       $   7,398
                                                        ==============   ==============     ==============  ==============

                        Shares
Total weighted average shares outstanding (basic)              30,287           30,266             30,286          24,313
Dilutive common stock options                                     343              574                  -             343
                                                        ==============   ==============     ==============  ==============
Total weighted average shares outstanding (diluted)            30,630           30,840             30,286          24,656
                                                        ==============   ==============     ==============  ==============
</TABLE>

The Company  currently has outstanding  36,626 shares of Mandatorily  Redeemable
Convertible  Preferred Stock which are convertible  into shares of the Company's
Common  Stock.   The  Common  Stock  shares  into  which  these  securities  are
convertible  have  not  been  included  in the  dilutive  share  calculation  in
accordance with the  if-converted  method as the impact of their inclusion would
be anti-dilutive.

         8.  Reclassifications.  Certain  amounts in the prior year's  unaudited
condensed consolidated financial statements and the audited financial statements
as filed with the  Securities  and Exchange  Commission on October 27, 1998 have
been reclassified to conform to the current period presentation.

         9. Pro forma disclosure. The following unaudited pro forma statement of
operations for the nine months ended April 26, 1998 is presented for comparative
purposes.  The pro forma results  assume that the  acquisition  of Steamboat and
Heavenly on November 12, 1997 and the initial public  offering of the Company on
November 6, 1997 were  consummated  on July 26, 1997.  Pro forma results are not
indicative of what actual  results would have been,  nor an indication of future
results.

                      Consolidated Statement of Operations
                      (In thousands, except per share data)
                                    Pro Forma

                                                               For the nine
                                                                months ended
                                                               April 26, 1998
                                                                 (unaudited)

Total net revenues                                                $317,361
                                                             ================

Income (loss) before extraordinary items                          $  9,192
                                                             ================

Net loss available to common shareholders                         $  (151)
                                                             ================

Basic and diluted loss per share
Income (loss) before extraordinary items                         $   0.16
                                                             ================
Net loss available to common shareholders                        $ (0.01)
                                                              ================



                                       6
<PAGE>

         10. Stock  option plan.  The Company  recorded a  compensation  expense
charge  of $14.3  million  in the first  quarter  of  fiscal  1998 to  recognize
compensation  expense  for stock  options  granted  to  certain  key  members of
management. This charge is based on the difference between the exercise price of
$2.00  per share of common  stock  and the fair  market  value as of the date of
grant of $18.00 per share.  Under these grant agreements,  the Company agreed to
pay the  optionees a fixed tax  "bonus" to provide  for certain tax  liabilities
that the optionees  may incur upon  exercise.  The  estimated  amount of the tax
liability  payment of $5.7 million was fully accrued along with the stock option
compensation  charge of $8.6  million.  During the three and nine  months  ended
April 25, 1999 the Company recorded stock  compensation  expense of $0.1 million
and $0.6 million, respectively, which represents the vesting of additional stock
options.  Such amounts are  included in  marketing,  general and  administrative
expenses in the accompanying  condensed consolidated statement of operations for
the three and nine months ended April 25, 1999.

         11. Long Term Debt. The Company established a senior credit facility on
November 12, 1997 (as amended to date, the "Senior Credit Facility"). The Senior
Credit  Facility  is divided  into two  sub-facilities,  $65 million of which is
available  for  borrowings  by ASC East,  Inc. and its  subsidiaries  (the "East
Facility") and $150 million of which is available for borrowings by ASC Utah and
ASC West, Inc. and its  subsidiaries  (the "West  Facility").  The East Facility
consists of a six-year  revolving  credit  facility in the amount of $35 million
and an eight-year term facility in the amount of $30 million.  The West Facility
consists  of a six-year  revolving  facility in the amount of $75 million and an
eight-year term facility in the amount of $75 million.

         The Company  negotiated an amendment to the Senior  Credit  Facility on
March 3, 1999 (the "Credit Facility Amendment") which significantly modifies the
covenant  requirements for the second and third fiscal quarters of 1999 and on a
prospective  basis. The Credit Facility  Amendment  requires  minimum  quarterly
EBITDA levels and places a maximum range of non-real estate capital expenditures
for fiscal 2000 of between $15 and $20 million, with maximum levels depending on
the Company's  ability to consummate sales of certain  non-strategic  assets, as
defined in the Credit Facility  Amendment.  Following fiscal 2000, annual resort
capital expenditures  (exclusive of real estate) are capped at the lesser of (i)
$35  million  or (ii)  the  total of  consolidated  EBITDA  for the four  fiscal
quarters ended April of the previous fiscal year less  consolidated debt service
for the same period.

         On January 8, 1999,  the  Company's  real  estate  development  holding
company, American Skiing Company Resort Properties,  Inc. ("Resort Properties"),
closed on a term loan  facility (the "Resort  Properties  Term  Facility")  with
BankBoston.  The Resort  Properties Term Facility has a maximum principal amount
of $58 million,  bears  interest at a variable rate equal to  BankBoston's  base
rate plus 8.25%, or a current rate of 16% per annum (payable monthly in arrears)
and matures on June 30, 2001. The terms of the Resort  Properties  Term Facility
are subject to change as the arrangement  becomes fully  syndicated.  The Resort
Properties  Term Facility is currently  fully  underwritten  by BankBoston.  The
Resort Properties Term Facility is collateralized by security  interests in, and
mortgages on,  substantially all of Resort Properties'  assets,  which primarily
consist  of  undeveloped  real  property  and  the  stock  of  its  real  estate
development  subsidiaries  (including  Grand  Summit  Resort  Properties,   Inc.
("GSRP"), the Company's hotel development subsidiary). As of April 25, 1999, the
total assets that  collateralized  the Resort Properties Term Facility,  and are
included in the accompanying  condensed  consolidated  balance sheet, had a book
value of approximately  $194.2 million.  The Resort  Properties Term Facility is
non-recourse  to the Company  and its resort  operating  subsidiaries,  however,


                                       7
<PAGE>

alterations in the Resort  Properties Term Facility  resulting from  syndication
requirements  could also modify the non-recourse  nature of that facility to the
Company  and its  resort  operating  subsidiaries  (other  than ASC East and its
resort operating subsidiaries).

         On September 25, 1998, GSRP closed on a construction loan facility with
TFC Textron Financial (the "Textron Facility").  The Textron Facility matures on
September  24,  2002.   The  principal  of  the  Textron   Facility  is  payable
incrementally  as  quartershare  sales are  closed at the rate of 80% of the net
proceeds of each closing.  The Textron Facility is  collateralized  by mortgages
against the project  sites  (including  the  completed  Grand  Summit  Hotels at
Killington,  Mt. Snow,  Sunday River and Attitash Bear Peak),  and is subject to
covenants,   representations   and   warranties   customary  for  this  type  of
construction  facility.  The Textron Facility is non-recourse to the Company and
its resort operating  subsidiaries (although it is collateralized by substantial
assets of GSRP ($64.5 million as of April 25, 1999), which comprise  substantial
assets of the Company).

     The Textron  Facility was structured to finance two of the Company's  hotel
projects, one at The Canyons and one at Steamboat.  In early March, 1999 Textron
advised GSRP that it was having  difficulties  syndicating the Steamboat portion
of the  Textron  Facility.  On March 8, 1999,  GSRP  released  Textron  from any
further  obligation to syndicate the Steamboat  portion of the Textron Facility.
On April 8, 1999, Textron renewed its commitment to fund the initial $12 million
in  construction  draws on the Steamboat  portion of the Textron  Facility.  The
amendment  to the Textron  Facility  further  modified the loan to provide for a
total syndication requirement of $105 million, in order for the Textron Facility
to  be  considered  "fully  funded".   In  addition,   in  order  to  facilitate
syndication,  the interest  rate of the Textron  Facility was changed from prime
plus 1.5% per annum to prime plus 2.5% per annum.  Also on April 8, 1999, Resort
Properties and BankBoston amended the Resort Properties Term Facility to provide
that  BankBoston  would not declare a default under the Resort  Properties  Term
Facility, due to the Textron Facility not being fully syndicated,  until July 8,
1999, so long as Textron  continued to fund the Steamboat portion of the Textron
Facility.  During the period from April 8, 1999 through  July 8, 1999,  Textron,
BankBoston and Resort Properties agreed to coordinate their efforts to syndicate
the balance of the Textron  Facility.  On June 1, 1999,  Textron notified Resort
Properties  that it had received  written  commitments for the syndication of an
additional $40 million of the Textron Facility,  which,  following  execution of
documentation  adding those  additional  lenders to the Textron  Facility,  will
bring the total  syndicated  amount of the Textron  Facility to $110 million and
cause the Textron  Facility to be fully funded.  Upon closing of the $40 million
in  syndication   commitments,   the  proceeds  of  the  Textron  Facility  will
consequently  be available to fund the expected  remaining  project costs of the
hotels at both The Canyons and Steamboat.

         On December 19, 1998, Canyons Resort Properties,  Inc., (a wholly owned
subsidiary of Resort  Properties),  and KeyBank,  N.A.  closed on a construction
loan facility (the "Key Facility") for an additional  hotel project (the Sundial
Lodge) at The Canyons.  The Key Facility has a maximum  principal  amount of $29
million,  bears interest at a rate of prime plus 1/4% per annum (payable monthly
in arrears), and matures on June 30, 2000. The Key Facility is collateralized by
a mortgage and security  interest in the Sundial Lodge  project,  a $5.8 million
payment guaranty of Resort Properties,  and a full completion guaranty of Resort
Properties.  The Key  Facility  is  non-recourse  to the  Company and its resort
operating subsidiaries.

         12.  Commitments  and  Contingencies.  The Company's  President,  Chief
Executive Officer and majority  shareholder (the "Majority  Shareholder") is the
obligor  under a  margin  loan  (the  "Margin  Loan")  with ING  (U.S.)  Capital
Corporation  ("ING").  The Margin Loan has two different  maintenance bases: (i)


                                       8
<PAGE>

one which  requires  that the aggregate  market value of the  collateral be at a
certain level in order to take additional advances under the arrangement to make
interest  payments  (the  "Advance  Base") and (ii) one which  requires that the
aggregate market value of the collateral be at a certain level in order to avoid
a default  under the terms of the Margin Loan (the "Minimum  Base").  The Margin
Loan is  collateralized  by the  Majority  Shareholder's  833,333  shares of the
Company's  Common Stock and  14,760,530  shares of the Company's  Class A Common
Stock and a note receivable from one of the Company's subsidiaries.  At any time
that the aggregate market value of the collateral is below the Minimum Base, the
Majority  Shareholder  is required  either to pay down the balance of the Margin
Loan or to pledge  additional  collateral.  The Company is not liable for nor do
any of its assets  collateralize the Margin Loan.  However,  a default under the
Margin Loan that is not cured within the applicable grace period could result in
a realization by ING of some or all of the Majority  Shareholder's shares of the
Company's  Common and Class A Common  Stock  which  could  result in a change in
control of the Company. A change in control of the Company could cause a default
under one or more of the Company's major credit  facilities,  which would likely
be  material  and  adverse  to the  Company,  and could  also  limit the  annual
utilization of the Company's current net operating losses for income taxes under
section 382 of the Internal Revenue Code.

         On March 3, 1999,  as  additional  security  for the Margin  Loan,  the
Majority  Shareholder pledged to ING a promissory note from one of the Company's
subsidiaries  to the Majority  Shareholder.  The balance of the note as of April
25, 1999 was $1.8 million.  The note was  established  in order to cover certain
income tax  liabilities  generated when the Company's  subsidiary  (which at the
time  was  wholly  owned  by  the  Majority  Shareholder)  converted  from  an S
Corporation  to a C Corporation  as defined by the Internal  Revenue  Code.  The
pledge of the note was required to enable the Majority  Shareholder to obtain an
interest  advance  under the Margin Loan  without  violating  the  Advance  Base
maintenance base.

     During the last two weeks of April  1999,  there were three  separate  days
when the  Maintenance  Base of the Margin  Loan was below the  required  minimum
collateral  base.  ING waived this  violation  with the  understanding  that the
Majority  Shareholder would develop a plan to reduce the outstanding  balance on
the Margin Loan.

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

                                     General

         The  following  is  management's  discussion  and analysis of financial
condition  and results of  operations  for the three and nine months ended April
25, 1999. As you read the material below, we urge you to carefully  consider our
condensed,   consolidated  financial  statements  and  related  notes  contained
elsewhere in this report and the audited financial  statements and related notes
contained in our Form 10-K filed with the Securities and Exchange  Commission on
October 27, 1998.

                         Liquidity and Capital Resources

         Short-Term.  The  Company's  primary  short-term  liquidity  needs  are
funding  seasonal working capital  requirements,  continuing and completing real
estate development projects, funding its summer 1999 capital improvement program


                                       9
<PAGE>

and servicing  indebtedness.  Cash  requirements for ski-related and real estate
development  activities are provided by separate sources.  The Company's primary
sources of liquidity for ski-related  working  capital and  ski-related  capital
improvements  are cash flow from operations of its non-real estate  subsidiaries
and borrowings under the Senior Credit Facility (as hereinafter  defined).  Real
estate  development and real estate working capital is funded primarily  through
construction  financing facilities established for major real estate development
projects and through a term loan facility established through the Company's real
estate development  holding company,  American Skiing Company Resort Properties,
Inc. ("Resort  Properties").  The construction  financing  facilities and Resort
Properties  Term  Facility  (collectively,  the "Real  Estate  Facilities")  are
without recourse to the Company and its resort operating subsidiaries.  The Real
Estate Facilities are collateralized by significant real estate assets of Resort
Properties and its subsidiaries,  including,  without limitation, the assets and
stock of Grand Summit Resort Properties,  Inc.  ("GSRP"),  the Company's primary
hotel development subsidiary.  As of April 25, 1999, the book value of the total
assets that  collateralized the Real Estate Facilities,  and are included in the
accompanying  condensed  consolidated  balance sheet, were approximately  $194.2
million.

         Resort Liquidity.  The Company  established a senior credit facility on
November 12, 1997 (as amended to date, the "Senior Credit Facility"). The Senior
Credit Facility is divided into two  sub-facilities,  $65 million of which ($5.4
million of which was available at June 1, 1999) is available  for  borrowings by
ASC East, Inc. and its  subsidiaries  (the "East  Facility") and $150 million of
which ($12.9  million of which was  available at June 1, 1999) is available  for
borrowings  by ASC Utah and ASC  West,  Inc.  and its  subsidiaries  (the  "West
Facility").  The East Facility consists of a six-year  revolving credit facility
in the amount of $35 million and an  eight-year  term  facility in the amount of
$30 million.  The West Facility consists of a six-year revolving facility in the
amount of $75  million  and an  eight-year  term  facility  in the amount of $75
million.

         The Senior  Credit  Facility  contains  restrictions  on the payment of
dividends by the Company on its common stock.  Those  restrictions  prohibit the
payment of dividends in excess of 50% of the Company's  consolidated  net income
after July 31, 1997,  and further  prohibit  the payment of dividends  under any
circumstances  when the effect of such payment  would be to cause the  Company's
debt to EBITDA (as defined within the credit  agreement)  ratio to exceed 4.0 to
1. Based upon these restrictions (as well as additional  restrictions  discussed
below), the Company does not expect that it will be able to pay dividends on its
common stock during either the current or next fiscal year.

        The maximum availability under the revolving facilities will reduce over
the term of the Senior Credit Facility by certain prescribed  amounts.  The term
facilities  amortize at an annual rate of  approximately  1.0% of the  principal
amount for the first six years with the  remaining  portion of the principal due
in two substantially  equal installments in years seven and eight.  Beginning in
July 1999, the Senior Credit Facility  requires  mandatory  prepayment of 50% of
the  Company's  excess  cash  flows  during any period in which the ratio of the
Company's  total senior debt to EBITDA exceeds 3.50 to 1. In no event,  however,
will such mandatory  prepayments  reduce either  revolving  facility  commitment
below $35 million.  Management does not presently expect to generate excess cash
flows,  as defined in the Senior Credit  Facility,  during fiscal 1999 or fiscal
2000.

        The Senior Credit Facility contains affirmative,  negative and financial
covenants customary for this type of credit facility,  including  maintenance of
certain financial ratios.  Except for a leverage test, compliance with financial
covenants is determined on a consolidated basis  notwithstanding the bifurcation


                                       10
<PAGE>

of the  Senior  Credit  Facility  into  sub-facilities.  The  East  Facility  is
collateralized  by  substantially  all the  assets  of ASC  East,  Inc.  and its
subsidiaries,  except its real estate  development  subsidiaries  (consisting of
Resort  Properties  and its  subsidiaries),  which are not  borrowers  under the
Senior Credit Facility. The West Facility is collateralized by substantially all
the assets of ASC Utah, ASC West,  Inc. and its  subsidiaries.  Each of the East
and West  facilities  is  collateralized  by a guaranty  of the  Company,  which
guaranty is secured by substantially all assets of the Company.

        The  revolving  facilities  are  subject  to annual  30-day  clean  down
requirements to an outstanding balance of not more than $10 million for the East
Facility and not more than $45 million for the West  Facility,  which clean down
period must include  April 30 of each fiscal  year.  The Company  completed  the
clean down requirement for both the East Facility and the West Facility on April
30, 1999.

         Due to the adverse weather  conditions in the eastern United States and
Colorado during the Company's  second fiscal quarter of 1999 and their effect on
the Company's second quarter revenue, EBITDA and net income, the Company entered
into an  amendment to the Senior  Credit  Facility on March 3, 1999 (the "Credit
Facility Amendment") which significantly  modified the covenant  requirements of
the Senior Credit  Facility for the second and third fiscal quarters of 1999 and
on a prospective basis. Based upon historical  operations,  management presently
anticipates that the Company will be able to meet the financial covenants of the
Senior Credit Facility, as amended by the Credit Facility Amendment.  Failure to
meet one or more of these  covenants  could result in an event of default  under
the Senior  Credit  Facility.  In the event that such default were not waived by
the  lenders  holding a majority of the debt under the Senior  Credit  Facility,
such default  would also  constitute  defaults  under one or more of the Textron
Facility,  the Key Facility,  the Resort Properties Term Loan, and the Indenture
(each as  hereinafter  defined),  the  consequences  of which  would  likely  be
material and adverse to the Company.

         The Credit  Facility  Amendment also places a maximum level of non-real
estate  capital  expenditures  for fiscal  2000 of between  $15  million and $20
million,  with maximum levels  depending on the Company's  ability to consummate
sales of certain  non-strategic  assets.  Following  fiscal 2000,  annual resort
capital expenditures  (exclusive of real estate capital expenditures) are capped
at the lesser of (i) $35  million or (ii) the total of  consolidated  EBITDA (as
defined  therein)  for the four fiscal  quarters  ended in April of the previous
fiscal year less consolidated debt service for the same period.

        The Company  intends to use borrowings  under the Senior Credit Facility
for seasonal working capital needs, summer 1999 resort capital  improvements and
to build retail and other  inventories  prior to the start of the  1999-2000 ski
season.  Due to the adverse  weather  conditions in the Company's  second fiscal
quarter and their impact on the  Company's  fiscal 1999 cash flows,  the Company
expects to maximize borrowings under the Senior Credit Facility sometime between
September and November of 1999. During this period,  the Company expects to have
little, if any, borrowing availability under the Senior Credit Facility and will
have limited ability to fund unusual and/or unanticipated  expenses. The working
capital  deficit  resulting from the Company's poor second quarter  results will
likely negatively effect the Company's  liquidity during the remainder of fiscal
1999 and through December of 1999.

        The  Company's  liquidity  is also  significantly  affected  by its high
leverage.  As a  result  of  its  leveraged  position,  the  Company  will  have
significant cash requirements to service interest and principal  payments on its


                                       11
<PAGE>

debt.  Consequently,  cash  availability  for  working  capital  needs,  capital
expenditures  and acquisitions is very limited.  Furthermore,  the Senior Credit
Facility and the Indenture each contain significant  restrictions on the ability
of the Company and its subsidiaries to obtain additional  sources of capital and
may affect the Company's  liquidity.  These restrictions include restrictions on
the sale of assets,  restrictions  on the incurrence of additional  indebtedness
and restrictions on the issuance of preferred stock.

        Due to the adverse weather conditions  experienced by the Company during
its second fiscal  quarter of 1999 and their  resulting  impact on the Company's
cash flows,  the Company is taking the following  steps in order to improve cash
flows for the remainder of fiscal 1999 and fiscal 2000:  (a) the sale of some of
the  Company's  non-strategic  assets  (assets  deemed by  management  not to be
significant to skiing and other resort activities or to real estate  development
plans), (b) a reduction of capital expenditures for the remainder of fiscal 1999
and fiscal  2000,  and (c) a  reduction  of the  operating  expenditures  of the
Company  and its  subsidiaries.  The  Company's  ability  to meet its short term
liquidity  requirements is largely dependent upon the successful  implementation
of its plan to sell certain non-strategic assets and reduce short term operating
costs.  There can be no assurance  that the Company will  continue to be able to
sell such  assets  and  reduce  costs or that the  resulting  proceeds  and cost
savings will be sufficient to allow the Company to meet its short term liquidity
needs.

        The  Company  has  engaged  Donaldson,   Lufkin  &  Jenrette  Securities
Corporation and ING Barings to explore  strategic  alternatives for the Company,
which may include the raising of equity and/or possible business combinations to
reduce the  Company's  leverage,  increase  liquidity,  and better  position the
Company to execute it's growth plan.  There can be no assurance that the Company
will be able to consummate such a transaction.

        ASC East,  Inc. is  prohibited  under the  indenture  governing its $120
million 12% Senior  Subordinated  Notes due 2006 (the  "Indenture")  from paying
dividends or making other  distributions  to the Company,  except under  certain
circumstances  (which are not currently applicable and are not anticipated to be
applicable in the foreseeable  future).  Therefore,  ASC East, Inc.'s ability to
distribute  excess  cash to the  Company  for use by the  Company  or its  other
subsidiaries  (other than subsidiaries of ASC East) is, and will likely continue
to be, significantly  limited. As of April 25, 1999, the amount of net assets of
ASC East, Inc. and its  subsidiaries  (including  Resort  Properties,  GSRP, and
their  respective  subsidiaries)  which are  restricted  under the Indenture was
approximately  $75.8  million.  These net assets are comprised of the following:
current assets of $35.9 million,  intangible assets of $21.5 million,  operating
assets of $460.6  million,  net of current  liabilities  of $153.6  million  and
long-term  liabilities  of $280.7  million.  As of the end of the  third  fiscal
quarter of 1999, ASC East had $0 available for distribution to the Company under
the terms of the Indenture.

        The Company  issued  $17.5  million of  convertible-preferred  stock and
$17.5 million of  convertible  notes in July,  1997 to fund  development  at The
Canyons.  These  securities were converted on November 12, 1997 into Mandatorily
Redeemable 10 1/2% Repriced  Convertible  Preferred Stock of the Company. The 10
1/2% Repriced Convertible  Preferred Stock shares are exchangeable at the option
of the holder into shares of the Company's common stock at a conversion price of
$17.10 for each common share. In the event that the 10 1/2% Repriced Convertible
Preferred  Stock is held to its maturity date of November 15, 2002,  the Company
will be  required  to pay the  holders  the face  value of  $36.6  million  plus
dividends  in arrears.  So long as the 10 1/2%  Repriced  Convertible  Preferred
Stock  remains  outstanding,  the Company may not pay any cash  dividends on its
common stock unless all accrued  dividends on the 10 1/2%  Repriced  Convertible
Stock  have  been  paid up to date and in cash.  Because  the  Company  has been
accruing unpaid dividends on the 10 1/2% Repriced  Convertible  Preferred Stock,
the Company is not presently  able to pay cash dividends on its common stock and
management  does not expect that the Company  will have this ability in the near
future.

         The  Company's   President,   Chief  Executive   Officer  and  majority
shareholder (the "Majority Shareholder") is the obligor under a margin loan (the
"Margin  Loan")  with ING (U.S.)  Capital  Corporation.  The Margin Loan has two
different  maintenance  bases:  (i) one which requires that the aggregate market
value of the  collateral  be at a  certain  level  in  order to take  additional
advances under the  arrangement to make interest  payments (the "Advance  Base")
and (ii) one which requires that the aggregate market value of the collateral be
at a  certain  level in order to avoid a default  under the terms of the  Margin
Loan (the "Minimum  Base").  The Margin Loan is  collateralized  by the Majority
Shareholder's 833,333 shares of the Company's Common Stock and 14,760,530 shares
of the  Company's  Class A Common Stock.  At any time that the aggregate  market

                                       12
<PAGE>

value of the collateral is below the Minimum Base,  the Majority  Shareholder is
required  to  either  pay down  the  balance  of the  Margin  Loan or to  pledge
additional  collateral.  The  Company is not liable for nor do any of its assets
collateralize the Margin Loan.  However, a default under the Margin Loan that is
not cured within the  applicable  grace period could result in a realization  by
ING of some or all of the Majority  Shareholder's shares of the Company's Common
and Class A Common  Stock  which  could  result in a change  in  control  of the
Company.  A change in control of the Company  could cause a default under one or
more of the Company's  major credit  facilities,  which would likely be material
and adverse to the Company,  and could also limit the annual  utilization of the
Company's current net operating losses for income taxes under section 382 of the
Internal Revenue Code.

         On March 3, 1999,  as  additional  security  for the Margin  Loan,  the
Majority  Shareholder pledged to ING a promissory note from one of the Company's
subsidiaries  to the Majority  Shareholder.  The balance of the note as of April
25, 1999 was $1.8 million.  The note was  established  in order to cover certain
income tax  liabilities  generated when the Company's  subsidiary  (which at the
time  was  wholly  owned  by  the  Majority  Shareholder)  converted  from  an S
Corporation  to a C Corporation  as defined by the Internal  Revenue  Code.  The
pledge of the note was required to enable the Majority  Shareholder to obtain an
interest  advance  under the Margin Loan  without  violating  the  Advance  Base
maintenance base.

     During the last two weeks of April  1999,  there were three  separate  days
when the  Maintenance  Base of the Margin  Loan was below the  required  minimum
collateral  base.  ING waived this  violation  with the  understanding  that the
Majority  Shareholder would develop a plan to reduce the outstanding  balance on
the Margin Loan.

         The Majority  Shareholder  has  indicated to  management of the company
that  he has  both  the  means  and  the  intent  to  pay  down  and/or  further
collateralize the Margin Loan as necessary to prevent a default under such loan.
The Company can provide no assurances that the Majority Shareholder will prevent
a default.


     Real Estate Liquidity:  Funding of working capital for Resort Properties is
provided through (1) revenue from real estate sales and related operations, (2)

                                       13
<PAGE>

proceeds  from a term loan facility  between  BankBoston  and Resort  Properties
established  January 8, 1999 in the maximum principal amount of $58 million (the
"Resort Properties Term Facility") and (3) project-specific construction loans.

     The Resort  Properties  Term Facility  bears interest at a variable
rate equal to  BankBoston's  base rate plus 8.25%,  or a current rate of 16% per
annum (payable monthly in arrears),  and matures on June 30, 2001. As of June 1,
1999, $50.8 million was outstanding  under the Resort  Properties Term Facility.
The Resort Properties Term Facility is collateralized by security  interests in,
and  mortgages  on,  substantially  all  of  Resort  Properties'  assets,  which
primarily  consist of undeveloped real property and the stock of its real estate
development  subsidiaries (including GSRP). As of April 25, 1999, the book value
of the total assets that  collateralized  the Resort Properties Term Facilitity,
and are included in the accompanying  condensed  consolidated balance sheet, was
approximately   $194.2   million.   The  Resort   Properties  Term  Facility  is
non-recourse  to the Company  and its resort  operating  subsidiaries.

         In  conjunction  with  the  Resort  Properties  Term  Facility,  Resort
Properties  entered into a syndication  letter with BankBoston (the "Syndication
Letter")  pursuant to which BankBoston  agreed to syndicate up to $43 million of
the Resort Properties Term Facility.  Under the terms of the Syndication Letter,
one or more of the  terms of the  Resort  Properties  Term  Facility  (excepting
certain  terms  such as the  maturity  date and  commitment  fee) may be altered
depending on the  requirements  for  syndication  of the facility.  However,  no
alteration  of the terms of the facility may occur without the consent of Resort
Properties.   Although  Resort  Properties  expects  the  terms  of  the  Resort
Properties  Term  Facility to remain  substantially  similar to those  discussed
above,  one or more of such terms  could be altered  in order to  syndicate  the
facility, and such alterations could be material and adverse to the Company. The
Syndication Letter also provides that, in the event that BankBoston is unable to
syndicate  at least $33  million of the Resort  Properties  Term  Facility on or
before July 9, 1999, then BankBoston  may, at its option,  require  repayment of
the  outstanding  balance of the  facility  within 120 days of its  request  for
repayment  by  Resort  Properties.  As of  June  1,  1999,  BankBoston  had  not
syndicated any portion of the Resort  Properties  Term Facility.  BankBoston has
not indicated to the Company whether it intends to require repayment pursuant to
the foregoing terms if the Resort Properties Term Facility is not syndicated. If
BankBoston were to require repayment, there can be no assurance that the Company
could secure replacement financing for the Resort Properties Term Facility.  The
failure to secure replacement financing on terms similar to those existing under
the Resort Properties Term Facility could result in a material adverse effect on
the liquidity of Resort  Properties and its  subsidiaries,  including  GSRP, and
could  also  result  in a default  under the  Indenture  and the  Senior  Credit
Facility.

         The  Company  runs  substantially  all of its real  estate  development
through single purpose subsidiaries,  each of which is a wholly-owned subsidiary
of  Resort  Properties.  In its  fourth  fiscal  quarter  of 1998,  the  Company
commenced  construction  on three new hotel projects (two at The Canyons in Utah
and one at Steamboat  in  Colorado).  Two of these new hotel  projects are Grand
Summit Hotels which are being constructed by GSRP. The Grand Summit Hotel at The
Canyons is being financed  through a  construction  loan facility among GSRP and
various  lenders,  including TFC Textron  Financial,  the syndication  agent and


                                       14
<PAGE>

administrative   agent,  which  closed  on  September  25,  1998  (the  "Textron
Facility").  The Company's other Grand Summit Hotel is being  constructed at the
Company's Steamboat resort in Colorado.  The project was initially planned to be
financed through the Textron  Facility.  In early March,  1999,  Textron advised
GSRP that it was having  difficulties  syndicating the Steamboat  portion of the
Textron  Facility.  On March 8, 1999,  GSRP  released  Textron  from any further
obligation to syndicate the Steamboat portion of the Textron Facility.

     On April 8, 1999,  Textron  renewed its  commitment to fund the initial $12
million in construction  draws on the Steamboat portion of the Textron Facility.
The amendment to the Textron Facility further modified the loan to provide for a
total syndication requirement of $105 million, in order for the Textron Facility
to  be  considered  "fully  funded".   In  addition,   in  order  to  facilitate
syndication,  the interest  rate of the Textron  Facility was changed from prime
plus 1.5% per annum to prime plus 2.5% per annum.  Also on April 8, 1999, Resort
Properties and BankBoston amended the Resort Properties Term Facility to provide
that  BankBoston  would not declare a default under the Resort  Properties  Term
Facility, due to the Textron Facility not being fully syndicated,  until July 8,
1999, so long as Textron  continued to fund the Steamboat portion of the Textron
Facility.  During the period from April 8, 1999 through  July 8, 1999,  Textron,
BankBoston and Resort Properties agreed to coordinate their efforts to syndicate
the balance of the Textron  Facility.  On June 1, 1999,  Textron notified Resort
Properties  that it had received  written  commitments for the syndication of an
additional $40 million of the Textron Facility,  and which,  following execution
of documentation  adding those  additional  lenders to the Textron Facility will
bring the total  syndicated  amount of the Textron  Facility to $110 million and
cause the Textron Facility to be fully funded.  Following full syndication,  the
proceeds of the Textron  Facility  will  consequently  be  available to fund the
expected  remaining  project  costs  of the  hotels  at  both  The  Canyons  and
Steamboat.

     As of June 1, 1999, the amount  outstanding  under the Textron Facility was
$44.2 million. The Textron Facility matures on September 24, 2002. The principal
of the  Textron  Facility is payable  incrementally  as  quartershare  sales are
closed  at the rate of 80% of the net  proceeds  of each  closing.  The  Textron
Facility is collateralized by mortgages against the project sites (including the
completed Grand Summit Hotels at Killington, Mt. Snow, Sunday River and Attitash
Bear  Peak),  and  is  subject  to  covenants,  representations  and  warranties
customary  for this type of  construction  facility.  The  Textron  Facility  is
non-recourse to the Company and its resort operating  subsidiaries  (although it
is  collateralized  by substantial  assets of GSRP,  which comprise  substantial
assets of the Company).

         The  remaining  hotel  project  commenced  by the Company in 1998,  the
Sundial Lodge project at The Canyons,  is being financed  through a construction
loan  facility  between  Canyons  Resort   Properties,   Inc.,  (a  wholly-owned
subsidiary of Resort Properties) and KeyBank, N.A. (the "Key Facility"). The Key
Facility has a maximum principal amount of $29 million, bears interest at a rate
of prime plus 1/4% per annum (payable  monthly in arrears),  and matures on June
30, 2000.  Additional  costs  (approximately  $8 million) for the Sundial  Lodge
project  have been  financed  through  proceeds  of the Resort  Properties  Term
Facility,  which have been loaned on an intercompany  basis by Resort Properties
to Canyons  Resort  Properties,  Inc..  The Key Facility  closed on December 19,
1998.  The Company  began  drawing under the Key Facility in late April of 1999,
following  completion  of the required  equity  contribution  (approximately  $8
million)  of the  Company in the  Sundial  Lodge  project.  The  Company  had no


                                       15
<PAGE>

advances outstanding under the Key Facility as of April 25, 1999, but subsequent
to the end of the quarter the Company has drawn $3.9 million from this facility.
The Key Facility is  collateralized  by a mortgage and security  interest in the
Sundial Lodge project, a $5.8 million payment guaranty of Resort Properties, and
a  full  completion   guaranty  of  Resort  Properties.   The  Key  Facility  is
non-recourse to the Company and its resort operating  subsidiaries  (although it
is   collateralized   by  substantial   assets  of  Resort  Properties  and  its
subsidiaries).  As of April 25,  1999,  the book value of the total  assets that
collateralized the Real Estate Facilities,  and are included in the accompanying
condensed consolidated balance sheet, were approximately $194.2 million.

         Long-Term.  The Company's primary long-term liquidity needs are to fund
skiing related capital improvements at certain of its resorts and development of
its slopeside real estate.  The Company has invested over $175 million in skiing
related  facilities  in fiscal years 1997 and 1998  combined.  As a result,  the
Company expects its resort capital programs for the next several fiscal years to
be more limited in size. The fiscal 1999 resort  capital  program is expected to
total  approximately  $57  million,  substantially  all of which was expended or
fully  committed prior to April 25, 1999. The fiscal 2000 resort capital program
is estimated at between $15 million and $20 million.

         The Company's  largest long-term capital needs relate to certain resort
capital expenditure  projects and the Company's real estate development program.
For the next two fiscal years,  the Company  anticipates its annual  maintenance
capital needs to be approximately $12 million. There is a considerable degree of
flexibility in the timing and, to a lesser degree, scope of the Company's growth
capital  program.  Although  specific  capital  expenditures can be deferred for
extended periods,  continued growth of skier visits,  revenues and profitability
will require  continued  capital  investment in  on-mountain  improvements.  The
Company's practice is to finance on-mountain capital improvements through resort
cash flow and its  Senior  Credit  Facility.  The size and scope of the  capital
improvement  program will generally be determined annually depending upon future
availability  of cash flow from  each  season's  resort  operations  and  future
borrowing  availability  and  covenant  restrictions  under  the  Senior  Credit
Facility.  The Credit  Facility  Amendment  places a maximum  level of  non-real
estate capital  expenditures for fiscal 2001 and beyond at the lesser of (i) $35
million or (ii) the total of (a)  consolidated  EBITDA (as defined  therein) for
the four fiscal  quarters  ended in April of the  previous  fiscal year less (b)
consolidated  debt service for the same period.  Management  believes that these
capital  expenditure  amounts will be sufficient to meet the Company's needs for
non-real estate capital expenditures for the near future.

         The Company's  business plan  anticipates the development of both Grand
Summit  hotels  and  condominium  hotels at several  resorts,  as well as resort
villages at Sunday River, Killington,  The Canyons,  Steamboat and Heavenly. The
timing and extent of these  projects  are subject to local and state  permitting
requirements  which  may be  beyond  the  Company's  control,  as well as to the
Company's  cash  flow   requirements  and  availability  of  external   capital.
Substantially all of the Company's real estate development is undertaken through
the Company's real estate development subsidiary, Resort Properties. Recourse on
indebtedness  incurred  to finance  this real estate  development  is limited to
Resort Properties and/or its subsidiaries (including GSRP). Such indebtedness is
generally   collateralized   by  the  projects  financed  under  the  particular
indebtedness  which,  in some cases,  constitutes a  significant  portion of the
assets  of  the  Company.   As  of  April  25,  1999,   the  total  assets  that
collateralized the Real Estate Facilities,  and are included in the accompanying
condensed  consolidated  balances sheet,  totaled  approximately $194.2 million.
Resort  Properties'  seven  existing  development  projects are currently  being
funded by the Resort Properties Term Facility,  the Textron Facility and the Key
Facility.

         The  Company  expects  to  undertake  future  real  estate  development
projects   through  special  purpose   subsidiaries   with  financing   provided
principally  on a  non-recourse  basis to the Company  and its resort  operating
subsidiaries.  Although  this  financing is expected to be  non-recourse  to the
Company  and its  resort  subsidiaries,  it will  likely  be  collateralized  by


                                       16
<PAGE>

existing  and future real estate  projects of the Company  which may  constitute
significant  assets of the  Company.  Required  equity  contributions  for these
projects must be generated  before those projects can be  undertaken.  Potential
sources of equity contributions include sales proceeds from existing real estate
projects  and  assets,  and  potential  sales  of  equity  interests  in  Resort
Properties   and/or  its  real  estate   development   subsidiaries.   Financing
commitments for future real estate  development do not currently  exist,  and no
assurance can be given that they will be available or  established.  The Company
will be required to establish both equity sources and construction facilities or
other  financing   arrangements  for  these  projects  before  undertaking  each
development.

         The Company from time to time considers  potential  acquisitions which,
based upon the historical performance of the target entities, are expected to be
accretive to earnings.  There are not currently any funding sources  immediately
available  to the  Company  for such  acquisitions.  The  Company  would need to
establish such sources prior to consummating any such acquisition.





                                       17
<PAGE>






                        Changes in Results of Operations

                                Third  Quarter of Fiscal 1999  compared to Third
Quarter of Fiscal 1998.

1. Resort revenues.  Resort revenues increased $10.1 million, or 7%, from $144.2
million for the three  months  ended  April 26,  1998 to $154.3  million for the
three  months  ended  April  25,  1999.  The  increase  is  attributable  to the
following:  a) $2.5  million,  or 3.2%,  increase in ticket  sales due to higher
yields on lower  skier  visits;  b) $2.3  million or 12.5%  increase in food and
beverage  revenue and $1.1  million,  or 5.9%,  increase in retail  sales due to
additional  outlets;  c) $1.9 million,  or 14.9%,  increase in skier development
revenue  due to the  establishment  of a new  skier  development  program  which
included  the  opening  of four new  Perfect  Turn  Discovery  Centers;  d) $1.7
million,  or 14.8%,  increase in lodging  revenue due to the addition of two new
hotels; and e) $0.6 million increase in other miscellaneous revenue sources.

2. Real estate revenues. Real estate revenues decreased $30.6 million, or 74.8%,
from $40.9  million for the three months  ended April 26, 1998 to $10.3  million
for the three  months ended April 25,  1999.  The  majority of this  decrease is
attributable to substantial  revenues recognized in fiscal 1998 from closings of
pre-sold  quartershare  units at the Company's Grand Summit Hotels at Killington
and Mt. Snow and the absence of new real estate  inventory in fiscal 1999. These
two projects were  completed  during the third fiscal  quarter of 1998, at which
time the company  realized  approximately  $28.1 million in sales  revenue.  The
Jordan Grand Hotel was  completed  during the second  quarter of fiscal 1998 and
generated  revenue of $7.9 million during the third quarter of 1998.  During the
third  fiscal  quarter of 1999,  the Company  realized  $7.7 million in on-going
sales of quartershare units at all three hotels.

3. Cost of resort operations.  Cost of resort operations increased $8.5 million,
or 12.9%,  from $66.1 million for the three months ended April 26, 1998 to $74.6
million for the three months ended April 25, 1999. The majority of this increase
is due to: a) $0.9  million in  additional  snowmaking  costs due to the lack of
natural snow at the  Company's  eastern  resorts;  b) $1.6 million in additional
costs  associated with increased food and beverage  outlets;  c) $0.6 million in
skier development  costs associated with a new skier  development  program which
included  four new Perfect Turn  Discovery  Centers;  d) $1.4 million in lodging
costs  associated  with  the  opening  of two new  hotels;  and e) $1.6  million
increase  in  property  taxes  due to  increased  tax  rates in  Vermont  and an
increased asset base at The Canyons.

4. Cost of real  estate  operations.  Cost of real estate  operations  decreased
$19.9 million, or 51.9%, from $28.5 million for the three months ended April 26,
1998 to $8.6 million for the three months ended April 25, 1999. This decrease is
attributable  to substantial  cost  recognized in the third quarter of 1998 from
closings of pre-sold  quartershare units at the Company's Grand Summit Hotels at
Killington and Mt. Snow. The Summit projects were completed in the third quarter
of 1998,  at which  time  the  Company  realized  costs of  approximately  $16.9
million.  The Jordan Grand Hotel was  completed  in the second  quarter of 1998,
during the third quarter of 1998 realized  costs totaled $4.1 million.  The cost
associated with the on-going sales of  quartershare  units at all three of these
hotels in the third quarter of 1999 totaled $4.1 million.



                                       18
<PAGE>

5. Marketing, general and administrative.  Marketing, general and administrative
expense  increased  $3.1  million,  or 27.2%,  from $11.4  million for the three
months  ended April 26, 1998 to $14.5  million for the three  months ended April
25, 1999.  This  increase can be  attributable  to the  following:  a) a planned
increase in marketing of $1.3 million at all of the resorts; b) $0.8 million due
to severance  payments and  restructuring  of management  compensation;  c) $0.3
million resulting from the expansion of management  information  systems; and d)
$0.7 million  increase  associated  with the  increased  scope of the  Company's
operations.

6. Depreciation and amortization.  Depreciation and amortization  increased $1.7
million,  or 9.4%,  from $18.0 million for the three months ended April 26, 1998
to $19.7  million for the three  months  ended April 25, 1999  primarily  due to
additional  depreciation  related  to  the  Company's  capital  improvements  of
approximately $52 million in the fourth quarter of 1998 and first three quarters
of fiscal 1999.  This increase is offset slightly by the change in the estimated
useful lives of certain of the Company's  ski-related  assets,  which  decreased
depreciation  expense by $0.3 million  compared to the third  fiscal  quarter of
1998.  See  footnote  1 to  the  Company's  financial  statements  -  Change  in
Accounting Estimate.

7. Interest  expense.  Interest expense  increased $2.6 million,  or 34.7%, from
$7.5 million for the three months ended April 26, 1998 to $10.1  million for the
three months ended April 25, 1999 mainly due to increased debt levels associated
with  financing  the  Company's  recent  capital  improvements  and real  estate
projects.

8. Provision for income taxes. Provision for income taxes decreased $6.2 million
from $21.0  million for the three months  ended April 26, 1998 to $14.8  million
for the three months ended April 25, 1999. The change is primarily  attributable
to the decrease in the Company's pre-tax income for the three months ended April
25, 1999 as compared to the Company's  pre-tax income for the three months ended
April 26, 1998.

               First Nine months of Fiscal 1999 compared to First
                          Nine Months of Fiscal 1998.

1. Resort  revenues.  Resort  revenues  increased  $13.7 million,  or 5.2%, from
$264.1  million for the nine months  ended April 26, 1998 to $277.8  million for
the nine  months  ended  April 25,  1999.  The  inclusion  of the  results  from
Steamboat and Heavenly resorts for the first fiscal quarter of 1999 accounts for
a $3.6 million  increase  (the results of Steamboat and Heavenly for fiscal 1998
are only included for the period  commencing  with the purchase of these resorts
on November 12, 1997). The remaining  increase is attributable to the following:
a) $4.0 million,  or 12.6%,  increase in food and beverage and $3.3 million,  or
9.1%,  increase in retail sales  associated  with  additional  outlets;  b) $1.8
million,  or 7.9%,  increase in skier  development  associated  with a new skier
development  program  which  included  the  opening  of four  new  Perfect  Turn
Discovery  Centers;  c) $3.9  million,  or 16.2%,  increase  in lodging  revenue
associated with the opening of three new hotels; and d) $2.5 million, or 134.5%,
increase  in  sponsorship  marketing  revenue  due to the  increased  number  of
sponsors and increase in funds received from existing sponsors. The increases in
revenues were offset by a decrease of $1.3 million,  or 0.8%, in ticket  revenue
due to a decrease  in skier  visits,  and $2.3  million  in other  miscellaneous
revenue sources.



                                       19
<PAGE>

2. Real estate revenues. Real estate revenues decreased $28.5 million, or 57.5%,
from $49.6 million for the nine months ended April 26, 1998 to $21.1 million for
the nine  months  ended  April  25,  1999.  The  majority  of this  decrease  is
attributable to the substantial revenues recognized in fiscal 1998 from closings
of  pre-sold  quartershare  units  at  the  Company's  Grand  Summit  Hotels  at
Killington,  Mt. Snow and Sunday River. These projects were completed during the
second and third  fiscal  quarters of 1998,  at which time the Company  realized
$42.4 million in sales revenue for the nine months ended April 26, 1998. For the
nine months ended April 25, 1999 the Company  realized $14.0 million in on-going
sales of quartershare units.

3. Cost of resort operations. Cost of resort operations increased $24.6 million,
or 16.7%, from $147.3 million for the nine months ended April 26, 1998 to $171.9
million for the nine months ended April 25, 1999. The inclusion of the Steamboat
and  Heavenly  resorts for the first  fiscal  quarter of 1999  accounts for $8.6
million of the increase  (the results of Steamboat  and Heavenly for fiscal 1998
are only included for the period  commencing  with the purchase of these resorts
on November 12, 1997). The majority of the remaining increase is attributable to
the following: a) $4.8 million in lodging costs associated with the operation of
three  new  hotels;  b)  $1.2  million  increase  associated  with  a new  skier
development  program  which  included  the  operation  of four new Perfect  Turn
Discovery  Centers;  c) $3.6  million  in food and  beverage  and  retail  costs
associated with increased outlets; d) $1.1 million increase in snowmaking due to
the lack of natural  snow at the  Company's  eastern  resorts;  e) $1.5  million
increase  in  property  taxes  due to  increased  tax  rates in  Vermont  and an
increased asset base at The Canyons; and f) $1.0 million increase in event costs
associated with marketing sponsorship.

4. Cost of real  estate  operations.  Cost of real estate  operations  decreased
$14.2 million,  or 40.9%, from $34.7 million for the nine months ended April 26,
1998 to $20.5 million for the nine months ended April 25, 1999. This decrease is
attributable  to the  substantial  cost  recognized in the third quarter of 1998
from  closings of pre-sold  quartershare  units at the  company's  Grand  Summit
Hotels at Killington,  Mt. Snow and Sunday River.  These projects were completed
in the second and third  quarters of fiscal 1998. The cost  associated  with the
revenue realized for the nine months ended April 26, 1998 totaled $24.8 million.
The cost  associated with the on-going sales of these units in the third quarter
of  1999  totaled  $8.3  million.  The  remaining  $2.2  million  difference  is
attributable  mainly to the write-off of $0.7 million in prepaid advertising and
commission charges incurred in generating pre-sale contracts, some of which have
subsequently  expired,  for a Grand  Summit  Hotel  at the  Company's  Sugarbush
resort.  The timing of development  for the Sugarbush  project is expected to be
re-evaluated by the Company during next year's skiing season. Additionally, $0.8
million of  expenses  were  incurred  during the second  quarter of fiscal  1999
relating to the  Company's  unsuccessful  $300 million bond  offering  which was
undertaken  to  provide  additional  financing  for the  Company's  real  estate
projects.

5. Marketing, general and administrative.  Marketing, general and administrative
expense  increased  $12.0  million,  or 38.3%,  from $31.3  million for the nine
months ended April 26, 1998 to $43.3 million for the nine months ended April 25,
1999.  The inclusion of the Steamboat and Heavenly  resorts for the first fiscal
quarter  of 1999  accounts  for $5.0  million  of the  increase.  The  remaining
increase can be attributed to the following:  a) a planned increase in marketing
expenses  at the all resorts of $2.9  million;  b) a stock  compensation  charge
relating to the vesting of additional shares of management stock options of $0.6


                                       20
<PAGE>

million;  c) $0.6 million of additional expenses resulting from the expansion of
management information services functions; d) $2.0 million of severance payments
and  restructuring of management  compensation;  and e) $0.6 million increase in
costs associated with being a public company.

6.  Stock  compensation  charge.  Stock  compensation  charges  decreased  $14.3
million,  or 100%. This charge was recognized during the nine months ended April
26,  1998 to  reflect  stock  options  granted  to  certain  members  of  senior
management in relation to the Company's  initial public offering.  Approximately
$0.6 million of stock compensation charges for the vesting of additional options
was expensed for the nine months ended April 25, 1999 to marketing,  general and
administrative. [See footnote 10 - Stock Option Plan].

7. Depreciation and amortization.  Depreciation and amortization  increased $7.0
million,  or 20.3%,  from $34.5 million for the nine months ended April 26, 1998
to $41.5 million for the nine months ended April 25, 1999.  The inclusion of the
Steamboat and Heavenly resorts for the first fiscal quarter of 1999 accounts for
$1.6  million of the  increase.  The  remaining  increase  is  primarily  due to
additional  depreciation on capital  improvements of  approximately  $52 million
made this  year.  These  increases  are  slightly  offset  by the  change in the
estimated  useful lives of certain of the Company's  ski-related  assets,  which
decreased depreciation expense by $0.7 million compared to the first nine months
of 1998. [See footnote 1 - Change in Accounting Estimate].

8. Interest  expense.  Interest expense  increased $4.2 million,  or 16.8%, from
$25.0  million for the nine months ended April 26, 1998 to $29.2 million for the
nine months ended April 25, 1999 mainly due to increased debt levels  associated
with  financing  the  Company's  recent  capital  improvements  and real  estate
projects.

9.  Provision  for (benefit  from) income taxes.  Provision  for (benefit  from)
income taxes  decreased  $11.2  million  from a provision of $10.4  million to a
benefit of $0.8 million,  which is primarily attributable to the increase in the
Company's  pre-tax  loss for the nine months ended April 25, 1999 as compared to
the nine months ended April 26, 1998, when the Company had pre-tax  income.  The
benefit for the nine months ended April 25, 1999 was reduced from the  statutory
rate due primarily to a decrease in estimated  deferred tax benefits relating to
stock compensation tax benefits.

10.  Accretion  of discount  and  dividends  accrued on  mandatorily  redeemable
preferred  stock.  Accretion of discount and  dividends  accrued on  mandatorily
redeemable  preferred stock decreased $1.1 million,  or 25.6%, from $4.3 million
for the nine months  ended  April 26,  1998 to $3.2  million for the nine months
ended April 25, 1999. The decrease is primarily  attributable to $0.9 million in
additional  accretion  recognized  during the nine  months  ended April 26, 1998
relating to a  conversion  feature on the  Company's  Series A 14%  Exchangeable
Preferred  Stock,  that allowed holders of these securities to convert to shares
of the Company's  Common Stock at a 5% discount to the Company's  initial public
offering   price.  An  additional  $0.9  million  of  the  decrease  is  due  to
amortization  of issuance  costs  recognized for the nine months ended April 26,
1998 related to the Company's Series A 14% Exchangeable Preferred Stock upon its
conversion into Mandatorily  Redeemable 10 1/2 % Repriced Convertible  Preferred
Stock.  These  decreases were offset by the full nine months  accretion for this
year and the compounding effect of the dividend accrual.



                                       21
<PAGE>

                         Changes in Financial Condition

          Third Quarter of Fiscal 1999 Compared to Fiscal Year End 1998

1. Cash and cash equivalents:  Cash and cash equivalents decreased $6.3 million,
or 40.9%,  from a balance of $15.4 million at July 26, 1998 to a balance of $9.1
million  at April  25,  1999.  The  decrease  is  primarily  attributable  to an
investment  made in the Company's real estate  subsidiaries of $5.5 million from
proceeds of the Company's initial public offering.

2. Accounts  receivable:  Accounts receivable  increased $5.5 million, or 73.3%,
from a balance of $7.5 million at July 26, 1998 to a balance of $13.0 million at
April 25,  1999.  The  increase  is  primarily  attributable  to an  increase in
receivables  of $5.3  million  at the  Company's  resorts  due to the  increased
business activity concurrent with the ski season.

3. Prepaid expenses:  Prepaid expenses decreased $1.3 million,  or 35.1%, from a
balance of $3.7  million at July 26, 1998 to a balance of $2.4  million at April
25,  1999.  The  write  off of sales  and  marketing  expenses  relating  to the
Sugarbush  Grand Summit Hotel project,  which has been  postponed,  accounts for
$0.7 million of the decrease.  The remaining decrease is primarily  attributable
to the  recognition of various  prepaid  advertising,  insurance and other costs
which were expensed over the 1998/99 ski season.

4.  Property,  plant and equipment,  net:  Property,  plant and equipment,  net,
increased  $8.5 million,  or 1.6%,  from a balance of $521.1 million at July 26,
1998 to a balance of $529.6 million at April 25, 1999. The increase is primarily
attributable to resort related capital improvements of $52.3 million, less $38.3
million in depreciation expense, $0.5 million in asset sales and $2.4 million in
assets transferred to real estate developed for sale.

5. Real estate developed for resale:  Real estate developed for resale increased
$75.7 million,  or 96.3%,  from a balance of $78.6 million at July 26, 1998 to a
balance  of  $154.3  million  at April  25,  1999.  The  increase  is  primarily
attributable  to the development of the Sundial Lodge project at The Canyons and
Grand Summit Resort Hotel projects at The Canyons and Steamboat, slightly offset
by sales of the eastern Grand Summit Hotel inventory.

6. Long-term  investments:  Long-term  investments  decreased  $1.3 million,  or
17.6%,  from a balance of $7.4  million  at the year  ended  July 26,  1998 to a
balance of $6.1  million at the quarter  ended April 25,  1999.  The decrease is
primarily  attributable to the maturity of certain long-term  investments at the
Company's captive insurance subsidiary which were held as cash at April 25, 1999
and were re-invested in long-term investments subsequent to the quarter end.

7. Other assets:  Other assets increased $3.6 million,  or 24.8%, from a balance
of $14.5  million  at July 26,  1998 to a balance  of $18.1  million at April 25
1999.  The  increase is  primarily  attributable  to $3.4 million in land option
payments made at The Canyons.

8.  Current  portion  of  long-term  debt:  Current  portion of  long-term  debt
decreased  $24.5  million,  or 55.4% from a balance of $44.2 million at July 26,


                                       22
<PAGE>

1998 to a balance of $19.7 million at April 25, 1999.  The decrease is primarily
attributable  to a  net  pay  down  of  the  Company's  Senior  Credit  Facility
consistent with the seasonal nature of the Company's cash flows.

9. Accounts  payable and other current  liabilities:  Accounts payable and other
accrued liabilities  increased $50.5 million, or 113.5%, from a balance of $44.4
million at July 26, 1998 to a balance of $94.8  million at April 25,  1999.  The
increase is  attributable  to i) an increase  of $14.0  million  relating to the
construction projects at the Company's real estate subsidiaries, ii) an increase
of $5.6  million in  accrued  interest  due to the  timing of  various  interest
payments, and iii) increases of $21.7 million in trade accounts payable and $9.1
million in other accruals due to the seasonal  operating  cycle of the Company's
business and timing of payments.

10. Deposits and deferred revenue: Deposits and deferred revenue increased $10.6
million,  or  103.9%,  from a balance  of $10.2  million  at July 26,  1998 to a
balance of $20.8 million at April 26, 1999. The change is  attributable to i) an
increase of $5.6 million in sales  deposits  taken at the Company's  real estate
subsidiaries,  ii) a deposit of $3.0  million  relating to  non-strategic  asset
sales  and  iii) an  increase  of $2.0  million  relating  to  deferred  revenue
associated with the Company's prepaid ticket programs.

11. Long-term debt, excluding current portion: Long-term debt, excluding current
portion,  increased $52.2 million, or 24.7%, from a balance of $211.6 million at
July 26, 1998 to a balance of $263.8  million at April 25, 1999. The increase is
attributable to i) a $48.6 million increase in debt at the Company's real estate
subsidiaries  to  finance  construction  of Grand  Summit  Resort  Hotels at The
Canyons and  Steamboat  and to finance the Sundial  Lodge at The Canyons,  ii) a
$16.0 million  decrease in debt due to net  repayments  on the Company's  Senior
Credit Facility and iii) an $18.7 million  increase in capital leases to finance
capital improvements.

12. Other  long-term  liabilities:  Other long-term  liabilities  increased $1.2
million, or 11.4%, from a balance of $10.5 million at July 26, 1998 to a balance
of $11.7 million at April 25, 1999.  The increase is primarily  attributable  to
cash  received on an interest rate swap  agreement  used as a cash flow hedge on
the Senior  Subordinated  Notes of the  Company's  subsidiary,  ASC East,  Inc.,
offset by a reduction in self insurance  reserve  requirements  at the Company's
captive insurance subsidiary.

13. Mandatorily  redeemable repriced  convertible  preferred stock:  Mandatorily
redeemable repriced convertible preferred stock increased $3.2 million, or 8.1%,
from a balance of $39.5  million at July 26, 1998 to a balance of $42.7  million
at April  26,  1999.  The  increase  is  attributable  to the  accretion  of the
dividends payable for the period.

14. Retained  earnings:  Retained earnings decreased $9.8 million from a balance
of $11  thousand at July  26,1998 to an  accumulated  deficit of $9.8 million at
April 25, 1999. The decrease is  attributable  to the Company's net loss for the
period.


Year 2000 disclosure

Background
         The  "Year  2000  Problem"  is the  result  of many  existing  computer
programs and embedded chip  technologies  containing  programming  code in which
calendar year data is  abbreviated  by using only two digits rather than four to
refer to a year. As a result of this,  some of these programs fail to operate or


                                       23
<PAGE>

may not properly  recognize a year that begins with "20"  instead of "19".  This
may cause such  software to  recognize a date using "00" as the year 1900 rather
than the year 2000. Even systems and equipment that are not typically thought of
as  computer-related  often  contain  embedded  hardware  or  software  that may
improperly  understand dates beginning with the year 2000.  Inability of systems
to  properly  recognize  the  year  2000  could  result  in  system  failure  or
miscalculations causing disruptions to operations, including temporary inability
to process transactions or engage in normal business activities.

         The  Company has  developed a Year 2000 task force with  representation
throughout  the  organization.  The task  force has  developed  a  comprehensive
strategy to systematically  evaluate and update systems as appropriate.  In some
cases, no system changes are necessary or the changes have already been made. In
all other cases,  modifications  are planned to prepare the Company's systems to
be Year 2000 compliant by September  1999. The  disclosure  below  addresses the
Company's Year 2000 Project.

Company's state of readiness
         The  Year  2000  Project  is  divided  into  three   initiatives:   (i)
Information  Technology  ("IT")  Systems,  (ii) Non-IT Systems and (iii) related
third party  providers.  The Company has  identified  the following  phases with
actual or estimated  dates of  completion:  1) identify an inventory of systems,
(completed  April  30,  1999),  2)  gather   certificates  and  warranties  from
providers,  (completed  April 30,  1999),  3)  determine  required  actions  and
budgets,  (completed April 30, 1999), 4) perform remediation and tests (expected
to be completed by September 1, 1999) and 5) designing  contingency and business
continuation  plans for each Company location  (expected to be completed by June
30, 1999).

         The following is a summary of the different phases and progress to date
for each initiative identified above:

         IT  Systems:  The Company has  continuously  updated or replaced  older
technology  with more  current  technology.  As the  Company  has  acquired  ski
resorts,  it updated certain technology at these resorts.  The Company's main IT
systems  include  an   enterprise-wide   client  server  financial   system,  an
enterprise-wide  client server  ticketing and direct to lift system, a mid-range
enterprise-wide  payroll system,  various point of sale and property  management
systems,  upgraded  personal  computers,  wide area  networking  and local  area
networking.  Phases 1  through  3 are  complete  and the  remaining  phases  are
currently  on  schedule.  During  phase 1 and 2,  the  Company  noted  that  its
Sugarloaf  and Sugarbush  resorts have not yet converted to Year 2000  compliant
lodging  systems.  The Company expects to convert these two resorts to Year 2000
compliant  systems  by  August 1,  1999.  The  Company  has  estimated  that all
deficiencies  will be remedied by September 1, 1999, which is in accordance with
the original timetable.

         Non-IT  Systems:  Internal  non-IT  systems  are  comprised  of  faxes,
copiers,  printers,  postal systems,  security systems, ski lifts, elevators and
telecommunication  systems.  Phases 1 through 3 are  complete.  The  Company has
estimated that  remediation  will be completed by September 1, 1999, which is in
accordance with the original timetable.

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<PAGE>

         Related third party  providers:  The Company has  identified  its major
related third party providers as certain  utility  providers,  employee  benefit
administrators and supply vendors.  Phases 1 through 3 are complete. The Company
has estimated that  remediation will be completed by September 1, 1999, which is
in accordance with the original timetable.

Actual and anticipated costs
         The total cost  associated with required  modifications  to become Year
2000  compliant  is not  expected  to be  material  to the  Company's  financial
position.  The  estimated  total cost of the Year 2000 Project is  approximately
$295,000.  This estimate includes  Information  System conversions for Year 2000
compliant lodging systems at Sugarloaf.  The Company had planned to update these
systems  regardless of Year 2000 issues to standardize  systems within  American
Skiing  Company  resorts.  The total  amount  expended on the Year 2000  Project
through April 25, 1999 was $100,000.  As of April 25, 1999, the estimated future
costs of the Year 2000  Project  are  $195,000,  of which  approximately  (1) $0
related to costs to modify software, hire internal personnel and hire outsourced
Year 2000 solution  providers and (2) $195,000  related to replacement  costs of
non-compliant  IT systems.  The  anticipated  costs related to non-IT systems is
deemed by management to be immaterial.

Risks
         The failure to correct a material  Year 2000 problem could result in an
interruption  in,  or a  failure  of,  certain  normal  business  activities  or
operations.  Such failures could  materially and adversely  affect the Company's
results of  operations,  liquidity and financial  condition.  Due to the general
uncertainty  inherent  in the Year  2000  problem,  resulting  in part  from the
uncertainty of the Year 2000  readiness of third-party  suppliers and customers,
the Company is unable to determine at this time whether the consequences of Year
2000  failures  will  have  a  material  impact  on  the  Company's  results  of
operations,  liquidity or financial condition. The Year 2000 Project is expected
to significantly  reduce the Company's level of uncertainty  about the Year 2000
problem.  The Company  believes that,  with the  implementation  of new business
systems and completion of the Year 2000 Project as scheduled, the possibility of
significant  interruptions of normal operations  should be reduced.  Readers are
cautioned  that  forward-looking  statements  contained  in the Year 2000 Update
should be read in conjunction with the Company's disclosures under the heading:
"Forward-Looking Statements".

Contingency plans
         As of April 25, 1999, the Company had not completed the  development of
a  contingency  plan related to Year 2000.  The Company  expects to complete the
contingency plan by June 30, 1999, 30 days behind the original schedule.


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<PAGE>

                           Forward-Looking Statements

         The  above  information  includes   forward-looking   statements,   the
realization  of which  may be  impacted  by the  factors  discussed  below.  The
forward-looking  statements  are made pursuant to the safe harbor  provisions of
the Private  Securities  Litigation Reform Act of 1995 (the "Act").  This report
contains forward looking statements that are subject to risks and uncertainties,
including,  but not  limited to,  uncertainty  as to future  financial  results,
substantial leverage of the Company, the capital intensive nature of development
of the Company's ski resorts;  rapid and  substantial  growth that could place a
significant  strain  on the  Company's  management,  employees  and  operations;
uncertainties  associated  with fully  syndicating  the Resort  Properties  Term
Facility,  the  Textron  Facility  and  various  capital  leases;  uncertainties
associated with obtaining  additional  financing for future real estate projects
and to undertake  future capital  improvements;  demand for and costs associated
with real estate development; change in market conditions affecting the interval
ownership  industry;   regulation  of  marketing  and  sales  of  the  Company's
quartershare  interests;   seasonality  of  resort  revenues;   fluctuations  in
operating  results;  the Company's ability to sell  non-strategic  assets to the
extent planned;  dependence on favorable weather  conditions;  the discretionary
nature of  consumers'  spending for skiing and resort real estate;  competition;
regional and national economic conditions;  laws and regulations relating to the
Company's  land  use,  development,   environmental  compliance  and  permitting
obligations;  renewal  or  extension  terms of the  Company's  leases and United
States  Forest  Service  permits;  industry  competition;  the adequacy of water
supply; the ability of the Company to make its information technology assets and
systems year 2000 compliant and the costs of any modifications necessary in that
regard; and other risks detailed from time to time in the Company's filings with
the  Securities and Exchange  Commission.  These risks could cause the Company's
actual results for fiscal year 1999 and beyond to differ  materially  from those
expressed  in any  forward  looking  statements  made by, or on behalf  of,  the
Company.  The foregoing list of factors should not be construed as exhaustive or
as any admission regarding the adequacy of disclosures made by the Company prior
to the date hereof or the effectiveness of said Act.



                                     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  included in Item 7A of Form 10-K as
filed with the Securities and Exchange Commission on October 27, 1998.



                                       26
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                           Part II - Other Information

                                     Item 6
                        Exhibits and Reports on Form 8-K

a) Exhibits

         Included  herewith is the Financial Data Schedule  submitted as Exhibit
27 in  accordance  with Item 601(c) of  Regulation  S-K.  Also  included are the
following material agreements entered into in the Company's third fiscal quarter
of 1999.

Exhibit No.                Description
-----------                -----------

     1)   First Amendment  Agreement Re: Loan and Security Agreement Among Grand
          Summit  Resort  Properties,  inc.,  as Borrower and Textron  Financial
          Corporation, as Administrative Agent dated as of April 5, 1999

     2)   Forbearance  Agreement  date as of March  8,  1999,  between  American
          Skiing Company Resort Properties, Inc. and BankBoston, N.A., as Agent

     3)   Amended and Restated Forbearance  Agreement dated as of April 20, 1999
          between   American   Skiing  Company  Resort   Properties,   Inc.  and
          BankBoston, N.A., as Agent

b) Reports on Form 8-K

           The  Company  filed a Form  8-K on  March  19,  1999,  reporting  the
resignation of PriceWaterhouseCoopers, LLP as its independent accountants.

         The  Company  filed  a  Form  8-K  on  April  1,  1999,  reporting  the
appointment of Arthur Andersen, LLP as its new independent accountants.





                                       27
<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.



Date:  June 9, 1999                                 /s/ Christopher E. Howard
----------------------------                        ----------------------------
                                                    Christopher E. Howard
                                                    Executive Vice President
                                                    (Duly Authorized Officer)


Date:  June 9, 1999                                 /s/ Mark J. Miller
--------------------------------                    ----------------------------
                                                    Mark J. Miller
                                                    Senior Vice President
                                                    Chief Financial Officer
                                                    (Principal Financial and
                                                       Accounting Officer)



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