American Skiing Company and Subsidiaries


                                  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 JANUARY 24, 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) 824-5196
              (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 March 9, 1999.

<PAGE>


                                Table of Contents

Part I - Financial Information

Item 1. Financial Statements

         Condensed Consolidated Statement of Operations (Unaudited)
         for the three months ended January 24, 1999 and January 25, 1998......3

         Condensed Consolidated Statement of Operations (Unaudited)
         for the six months ended January 24, 1999 and January 25, 1998........4

         Condensed Consolidated Balance Sheet
         as of January 24, 1999 (Unaudited) and July 26, 1998..................5

         Condensed Consolidated Statement of Cash Flows (Unaudited)
         for the six months ended January 24, 1999 and January 25, 1998........6

         Notes to (Unaudited) Condensed Consolidated Financial Statements......7

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

         General..............................................................12

         Liquidity and Capital Resources......................................12

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

         Changes in Financial Condition.......................................23

         Year 2000 Disclosure.................................................24

         Forward-Looking Statements...........................................27

Item 3.   Quantitative and Qualitative Disclosures
               About Market Risk..............................................27

Part II - Other Information

         Item 6. Exhibits and Reports on Form 8-K.............................28



                                       2
<PAGE>
<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
                                                                                    January 24,             January 25,
                                                                                       1999                    1998
                                                                                    (unaudited)             (unaudited)

<S>                                                                                  <C>                      <C>         
    Net  revenues:
         Resort                                                                      $    103,199             $    106,702
         Real estate                                                                        6,300                    7,890
                                                                                 -----------------       ------------------
              Total net revenues                                                          109,499                  114,592

    Operating expenses:
         Resort                                                                            68,681                   63,521
         Real estate                                                                        7,868                    5,223
         Marketing, general and administrative                                             18,483                   13,621
         Depreciation and amortization                                                     19,010                   15,009
                                                                                 -----------------       ------------------
              Total operating expenses                                                    114,042                   97,374
                                                                                 -----------------       ------------------
    Income (loss) from operations                                                         (4,543)                   17,218
         Interest expense                                                                  10,139                    9,094
                                                                                 -----------------       ------------------
    Income (loss) before provision (benefit) for income taxes                            (14,682)                    8,124

         Provision (benefit) for income taxes                                             (4,982)                    3,169
                                                                                 -----------------       ------------------

    Income (loss) from continuing operations                                              (9,700)                    4,955

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

    Net loss                                                                              (9,700)                    (126)

         Accretion of discount and dividends accrued on
             mandatorily redeemable preferred stock                                         1,079                      740
                                                                                 -----------------       ------------------
    Net loss available to common shareholders                                        $   (10,779)            $       (866)
                                                                                 =================       ==================

    Retained earnings (accumulated deficit), beginning of period                     $   (20,257)             $   (11,121)
                                                                                                  

    Net loss available to common shareholders                                            (10,779)                    (866)
                                                                                 -----------------       ------------------

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

    Basic income (loss) per share (note 6)
    Income (loss) before extraordinary items                                          $    (0.36)            $        0.15

    Extraordinary loss                                                                          -                   (0.18)
                                                                                 -----------------       ------------------
    Net loss available to common shareholders                                         $    (0.36)            $      (0.03)
                                                                                 =================       ==================
    Diluted income (loss) per share (note 6)
    Income (loss) before extraordinary items                                          $    (0.36)            $        0.15
    Extraordinary loss                                                                          -                   (0.18)
                                                                                 -----------------       ------------------
    Net loss available to common shareholders                                         $    (0.36)             $     (0.03)
                                                                                 =================       ==================
    Weighted average common shares outstanding - basic                                 30,286,746               28,059,259
                                                                                 =================       ==================
    Weighted average common shares outstanding - diluted                               30,286,746               28,521,879
                                                                                 =================       ==================
</TABLE>
See  accompanying  notes  to  (Unaudited)   Condensed   Consolidated   Financial
Statements.
                                       3
<PAGE>


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

<CAPTION>
                                                                                         For the six months ended
                                                                                   January 24,              January 25,
                                                                                      1999                     1998
                                                                                   (unaudited)              (unaudited)

<S>                                                                                  <C>                      <C>             
Net  revenues:
         Resort                                                                      $    123,511             $    120,317
         Real estate                                                                       10,785                    8,700
                                                                                ------------------       ------------------
              Total net revenues                                                          134,296                  129,017

    Operating expenses:
         Resort                                                                            96,646                   81,133
         Real estate                                                                       11,831                    6,148
         Marketing, general and administrative                                             29,495                   20,466
         Stock compensation charge (note 9)                                                     -                   14,254
         Depreciation and amortization                                                     21,719                   16,515
                                                                                ------------------       ------------------
              Total operating expenses                                                    159,691                  138,516
                                                                                ------------------       ------------------

    Loss from operations                                                                 (25,395)                  (9,499)
         Interest expense                                                                  19,069                   17,542
                                                                                ------------------       ------------------

    Loss before benefit for income taxes and
         minority interest in loss of subsidiary                                         (44,464)                 (27,041)
         Benefit from income taxes                                                       (15,555)                 (10,545)
         Minority interest in loss of subsidiary                                                -                    (456)
                                                                                ------------------       ------------------

    Loss from continuing operations                                                      (28,909)                 (16,040)

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

    Net loss                                                                             (28,909)                 (21,121)

         Accretion of discount and dividends accrued on
             mandatorily redeemable preferred stock                                         2,138                    3,171
                                                                                ------------------       ------------------
    Net loss available to common shareholders                                        $   (31,047)            $    (24,292)
                                                                                ==================       ==================

    Retained earnings (accumulated deficit), beginning of period                     $         11            $      12,305

    Net loss available to common shareholders                                            (31,047)                 (24,292)
                                                                                 -----------------       ------------------
    Accumulated deficit, end of period                                               $   (31,036)             $   (11,987)
                                                                                ==================       ==================

    Basic loss per share (note 6)
    Loss before extraordinary items                                                   $    (1.03)             $     (0.90)
    Extraordinary loss                                                                          -                   (0.24)
                                                                                 -----------------       ------------------
    Net loss available to common shareholders                                         $    (1.03)             $     (1.14)
                                                                                 =================       ==================
    Diluted loss per share (note 6)
    Loss before extraordinary items                                                   $    (1.03)             $     (0.90)
    Extraordinary loss                                                                          -                   (0.24)
                                                                                 -----------------       ------------------
    Net loss available to common shareholders                                         $    (1.03)             $     (1.14)
                                                                                 =================       ==================

    Weighted average common shares outstanding - basic                                 30,286,149               21,373,158
                                                                                ==================       ==================
    Weighted average common shares outstanding - diluted                               30,286,149               21,373,158
                                                                                ==================       ==================
</TABLE>
See  accompanying  notes  to  (Unaudited)   Condensed   Consolidated   Financial
Statements.
                                       4
<PAGE>

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

<CAPTION>
                                                                                         January 24, 1999         July 26, 1998
                                                                                            (unaudited)
<S>                                                                                            <C>                      <C>      
Assets
Current assets
     Cash and cash equivalents                                                                 $   18,598               $  15,370
     Restricted cash                                                                                9,908                   6,260
     Accounts receivable                                                                           10,428                   7,538
     Inventory                                                                                     19,992                  13,353
     Prepaid expenses                                                                               3,627                   3,709
     Deferred income taxes                                                                            752                   1,413
                                                                                         -----------------      ------------------
          Total current assets                                                                     63,305                  47,643

Property and equipment, net                                                                       542,810                 521,139
Real estate developed for sale                                                                    127,504                  78,636
Goodwill                                                                                           77,909                  78,687
Intangible assets                                                                                  23,295                  23,706
Deferred financing costs                                                                            9,134                   9,212
Long-term investments                                                                               6,907                   7,397
Other assets                                                                                       17,820                  14,479
                                                                                         -----------------      ------------------
          Total assets                                                                        $   868,684             $   780,899
                                                                                         =================      ==================

Liabilities, Mandatorily Redeemable Preferred Stock and Shareholders' Equity
Current liabilities
     Current portion of long-term debt                                                        $    49,330             $    44,153
     Accounts payable and other current liabilities                                                86,458                  44,372
     Deposits and deferred revenue                                                                 37,982                  10,215
     Demand note, Principal Shareholder                                                             1,846                   1,846
                                                                                         -----------------      ------------------
      Total current liabilities                                                                   175,616                 100,586

Long-term debt, excluding current portion                                                         267,314                 211,570
Subordinated notes and debentures, excluding current portion                                      127,613                 127,497
Other long-term liabilities                                                                        11,980                  10,484
Deferred income taxes                                                                               6,502                  22,719
Minority interest in subsidiary                                                                       386                     375
                                                                                         -----------------      ------------------
         Total liabilities                                                                        589,411                 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 at July 26, 1998 and $41,602 at January 24, 1999)                                    41,602                  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 at January 24, 1999                                            148                     148
     Common stock, par value of $.01 per share; 100,000,000 shares                                               
     authorized; 15,526,243 issued and outstanding at January 24, 1999                                155                     155
     Additional paid-in capital                                                                   268,404                 267,890
     Retained earnings (deficit)                                                                 (31,036)                      11
                                                                                         -----------------      ------------------
        Total shareholders' equity                                                                237,671                 268,204
                                                                                         =================      ==================
Total liabilities, mandatorily redeemable preferred stock and shareholders' equity          $     868,684          $      780,899
                                                                                         =================      ==================
</TABLE>
See  accompanying  notes  to  (Unaudited)   Condensed   Consolidated   Financial
Statements.
                                       5
<PAGE>

<TABLE>

                 Condensed Consolidated Statement of Cash Flows
                                 (In thousands)

<CAPTION>
                                                                                               For the six months ended
                                                                                       January 24, 1999           January 25,
                                                                                                                     1998
                                                                                         (unaudited)              (unaudited)

<S>                                                                                       <C>                       <C>         
Cash flows from operating activities
Net loss                                                                                  $   (28,909)              $   (21,121)
Adjustments to reconcile net loss to net cash used in operating activities:
       Minority interest in loss of subsidiary                                                       -                     (456)
       Depreciation and amortization                                                            21,719                    16,515
       Amortization of discount on debt                                                            164                       927
       Deferred income taxes                                                                  (15,555)                  (13,933)
       Stock compensation charge                                                                   514                    14,254
       Extraordinary loss                                                                            -                     8,329
       Gain/loss from sale of assets                                                                24                         -
       Decrease (increase) in assets:
            Restricted cash                                                                    (3,648)                     (810)
            Accounts receivable                                                                (2,890)                   (7,976)
            Inventory                                                                          (6,639)                   (6,627)
            Prepaid expenses                                                                        82                     (869)
            Real estate developed for sale                                                    (48,868)                  (48,848)
            Other assets                                                                       (3,341)                   (3,133)
       Increase (decrease) in liabilities:
            Accounts payable and other current liabilities                                      42,086                    17,861
            Deposits and deferred revenue                                                       27,767                    20,470
            Other long-term liabilities                                                          1,496                     5,232
                                                                                      -----------------        ------------------
Net cash used in operating activities                                                         (15,998)                  (20,185)
                                                                                      -----------------        ------------------

Cash flows from investing activities
       Payments for purchases of businesses, net of cash acquired                                    -                 (288,499)
       Capital expenditures                                                                   (35,246)                  (50,062)
       Long-term investments                                                                       490                     1,075
       Assets held for sale                                                                          -                   (5,780)
       Proceeds from sale of assets                                                              1,740                         -
       Other, net                                                                                 (14)                         -
                                                                                      -----------------        ------------------
Net cash used in investing activities                                                         (33,030)                 (343,266)
                                                                                      -----------------        ------------------

Cash flows from financing activities
         Net borrowings under New Credit Facility                                              (5,837)                   166,765
         Repayment of Old Credit Facility                                                            -                  (59,623)
         Proceeds from long-term debt                                                           67,025                    50,432
         Repayment of long-term debt                                                           (8,367)                   (7,859)
         Deferred financing costs                                                                (565)                         -
         Net proceeds from initial public offering                                                   -                   244,619
         Repayment of subordinated debt                                                              -                  (21,882)
         Proceeds from issuance of mandatorily redeemable securities                                 -                    16,920
         Cash payment in connection with the early retirement of debt                                -                   (5,086)
                                                                                      -----------------        ------------------
Net cash provided by financing activities                                                       52,256                   384,286
                                                                                      -----------------        ------------------

Net increase in cash and cash equivalents                                                        3,228                    20,835
Cash and cash equivalents, beginning of period                                                  15,370                    15,558
                                                                                      -----------------        ------------------
Cash and cash equivalents, end of period                                                   $    18,598               $    36,393
                                                                                      =================        ==================

</TABLE>

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

                                       6
<PAGE>

        Notes to (Unaudited) Condensed Consolidated Financial Statements

         1. Change in Accounting Estimate.  Effective July 27, 1998, the Company
extended the  estimated  useful  lives of some of its ski lifts.  As a result of
this  change  in  estimate,  the  Company  expects  to  realize  a  decrease  in
depreciation  expense of approximately $0.7 million in Fiscal 1999, $0.3 million
of which has been realized in the current  quarter 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 and six
months ended January 24, 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 January 24, 1999, the
results of  operations  for the three and six months ended  January 24, 1999 and
January  25,  1998,  and the  statement  of cash flows for the six months  ended
January 24, 1999 and January 25, 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. Income  Taxes.  The expense  (benefit) for taxes on income (loss) is
based on a projected annual effective tax rate of 35.0%. 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.

         5. 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 which is the operation and development of ski resorts.

         6. 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 six months  ending  January 24, 1999 and January
25, 1998 were determined based on the following data:


                                       7
<PAGE>
<TABLE>
<CAPTION>
                                                             Three Months Ended                   Six Months Ended
                                                        January 24,      January 25,        January 24,      January 25,
                                                            1999             1998               1999            1998
                                                        -------------    -------------      -------------   --------------
<S>                                                       <C>               <C>               <C>             <C>                  
Income (loss)
Income (loss) from continuing operations                  $  (9,700)        $   4,955         $ (28,909)      $  (16,040)
Accretion of discount and dividends accrued on
   mandatorily redeemable preferred stock                    (1,079)            (740)            (2,138)          (3,171)
                                                        -------------    -------------      -------------   --------------
Income (loss) before extraordinary items                    (10,779)            4,215           (31,047)         (19,211)
Extraordinary loss                                                 -          (5,081)                  -          (5,081)
                                                        -------------    -------------      -------------   --------------
Net loss available to common shareholders                 $ (10,779)        $   (866)         $ (31,047)      $  (24,292)
                                                        =============    =============      =============   ==============

                        Shares
Total weighted average shares outstanding (basic)             30,287           28,059             30,286           21,373
Dilutive common stock options                                      -              463                  -                -
                                                        -------------    -------------      -------------   --------------
Total weighted average shares outstanding (diluted)           30,287           28,522             30,286           21,373
                                                        =============    =============      =============   ==============

</TABLE>

The Company has issued Mandatorilty 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.

         7.  Adjustments  and  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 presentation.

         8. Pro forma disclosure. The following unaudited pro forma statement of
operations for the three and six months ended January 25, 1998 are presented for
comparative purposes.

         The results of operations  for  Steamboat  and Heavenly  prior to their
acquisition  have been added  based on their  historical  results for the period
from August 1, 1997 through  November 11, 1997. Pro forma  adjustments have been
made to depreciation and amortization to reflect the purchase accounting for the
assets of  Steamboat  and  Heavenly  and the  changes in the  Company's  capital
structure.  Pro forma  adjustments have been made to interest expense to reflect
the change in the capital structure of the Company related to the acquisition of
Steamboat and Heavenly on November 12, 1997 and the initial  public  offering of
the Company on November 6, 1997.

<TABLE>
                                                      Consolidated Statement of Operations
                                                     (In thousands, except per share data)
                                                                   Pro Forma
<CAPTION>

                                                 For the three months ended              For the six months ended
                                               January 24,        January 25,          January 24,       January 25,
                                                  1999               1998                 1999              1998
                                               (unaudited)       (unaudited)           (unaudited)       (unaudited)

<S>                                              <C>                <C>                  <C>               <C>        
   Total net revenues                           $  109,499         $   114,811          $  134,296       $  132,623
                                              ==============   =================     ================   ===============
   Income (loss) before extraordinary items     $ (10,779)         $     2,727          $ (31,047)       $ (26,760)
                                              ==============   =================     ================   ===============
   Net loss available to common shareholders    $ (10,779)         $   (2,355)          $ (31,047)       $ (31,841)
                                              ==============   =================     ================   ===============
   Basic and diluted loss per share
   Income (loss) before extraordinary items     $   (0.36)         $      0.09          $   (1.03)       $   (0.91)
                                              ==============   =================     ================   ===============
   Net loss available to common shareholders    $   (0.36)         $    (0.08)          $   (1.03)       $   (1.08)
                                              ==============   =================     ================   ===============
</TABLE>


                                       8
<PAGE>

         9. 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 and the fair market  value as of the date of grant of $18.00.  Under these
grant agreements, the Company agreed to pay the optionees a fixed tax "bonus" to
provide for certain fixed tax  liabilities  that the  optionees  will incur upon
exercise.  The estimated amount of the tax liability payment of $5.7 million has
been fully  accrued  along  with the stock  option  compensation  charge of $8.6
million.  During the three  months ended  January 24, 1999 the Company  recorded
compensation  expense of $0.5 million  representing the vesting of certain stock
options.  Such  amount is  included in  marketing,  general  and  administrative
expenses in the accompanying  condensed consolidated statement of operations for
the three and six months ended January 24, 1999.

     10. Long Term Debt.  The Company has  negotiated an amendment to the Senior
Credit  Facility  on March 3,  1999  (the  "Credit  Facility  Amendment")  which
significantly  modifies the covenant requirements for the current quarter and on
a prospective  basis. The Credit Facility  Amendment  requires minimum quarterly
EBITDA (as  defined  within  the  credit  agreement)  levels  starting  with the
Company's  third  quarter of fiscal 1999 and places a maximum  level 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 September 25, 1998 one of the Company's  Subsidiaries,  Grand Summit
Resort  Properties,  Inc.,  ("GSRP",  the  Company's  Grand  Summit  development
subsidiary) closed on a construction loan facility (the "Textron Facility") with
TFC Textron Financial.  A project at the Canyons and a project at Steamboat were
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 its  obligation to syndicate  the Steamboat  portion of the Textron
Facility.

         The  construction  of the  Canyons  project  is being  financed  by the
Textron  Facility.  When fully  syndicated,  the  Textron  Facility  will have a
maximum  principal  amount of $95 million,  bears  interest at the rate of prime
plus 1.5% per annum  (payable  monthly in arrears),  is subject to a 9.25% floor
and 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
customary   covenants,   representations   and   warranties  for  this  type  of
construction  facility.  The Textron Facility is non-recourse to the Company and


                                       9
<PAGE>

its resort operating  subsidiaries (although it is collateralized by substantial
assets of GSRP, which comprise substantial assets of the Company). As of January
24, 1999, the total assets that  collateralized the Real Estate Facilities,  and
are included in the  accompanying  condensed  consolidated  balance  sheet,  was
approximately $164.5 million.

         The  Company  currently  expects  that the  Steamboat  project  will be
financed through a construction loan syndicated by BankBoston, N.A.

          On December 19, 1998 another of the Company's subsidiaries closed on 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 will have a maximum principal amount of $29 million,  will bear
an interest rate of prime plus 1/4% per annum (payable monthly in arrears),  and
matures on June 30, 2000.  The Company  expects to begin  drawing  under the Key
Facility in March or April of 1999,  following completion of the required equity
contribution of the Company.  The Key Facility is  collateralized  by a mortgage
and  security  interest  in the  Sundial  Lodge  project,  a $5 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).

     On January 8,  1999,  one of the  Company's  Subsidiaries  American  Skiing
Company Resort Properties  ("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,  currently  bears
interest at a 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 Property Term
Facility is currently fully  underwritten by Bank Boston.  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,  the Company's  hotel
development  subsidiary).  As  of  January  24,  1999,  the  total  assets  that
collateralized  the Resort  Properties  Term  Facility  and are  included in the
accompanying  condensed  consolidated  balance  sheet was  approximately  $164.5
million.  The Resort Properties Term Facility is non-recourse to American Skiing
Company  and its resort  operating  subsidiaries,  however,  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.


         11.  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.  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


                                       10
<PAGE>

Common Stock and 14,760,530 shares of the Company's Class A Common Stock. At any
time that the  aggregate  market  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. At no time during the six
month  period  ended  January 24,  1999 has the  aggregate  market  value of the
collateral  been below the Advance  Base or the Minimum  Base.  From January 25,
1999 through March 9, 1999, the aggregate market value of the collateral for the
Margin Loan has been, at times, below the Advance Base. However, at no time from
January 25, 1999  through  March 9, 1999 has the  aggregate  market value of the
collateral been below the Minimum Base.

         12. Recently Issued Accounting  Standards.  In June 1997, the Financial
Accounting  Standards  Board (FASB)  issued  Statement  of Financial  Accounting
Standards No. 130,  "Reporting  Comprehensive  Income" ("SFAS 130"). SFAS 130 is
effective for all fiscal  quarters of all fiscal years  beginning after December
15,  1997,  (the  fiscal  year  ending  July  25,  1999 for the  Company).  This
pronouncement  requires disclosure of comprehensive income and its components in
interim and annual reports.  Total  comprehensive  income components included in
stockholders'  equity include any changes in equity during a period that are not
the  result  of  transactions  with  owners,  including  cumulative  translation
adjustments,  unrealized gains and losses on  available-for-sale  securities and
minimum  pension  liabilities.  As of January 24, 1999,  the Company has no such
items of comprehensive  income. As such, the Company's  adoption of SFAS 130 had
no effect on the accompanying  condensed  consolidated  financial statements for
the three and six months ended January 24, 1999.

         In June  1997,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"  ("SFAS 131"). This statement  established  standards for reporting
information on operating  segments in interim and annual  financial  statements.
SFAS 131 is effective for fiscal years  beginning  after  December 15, 1997 (the
fiscal  year  ending  July 25,  1999  for the  Company)  and  does  not  require
application to interim financial  statements in the initial year of application.
As the company already discloses  segment  information under SFAS 14, "Financial
Reporting for Segments of a Business  Enterprise",  management  does not believe
the  adoption  of SFAS 131 will  result  in a change in the  composition  of the
Company's operating segments,  or in the previously reported net income for each
segment.  Additional  disclosure to comply with SFAS 131 will be required in the
Company's annual audited financial statements for the current fiscal year ending
July 25, 1999.

         In June  1998,  the  FASB  issued  Statement  of  Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  ("SFAS  133").  SFAS 133 is  effective  for fiscal  quarters of all
fiscal years beginning after June 15, 1999 (the fiscal year ending July 30, 2000
for the Company). This pronouncement requires that all derivative instruments be
recorded on the balance sheet at their fair value.  Changes in the fair value of
derivatives are recorded each period in current earnings or other  comprehensive
income,  depending  on whether a  derivative  is  designated  as part of a hedge
transaction  and,  if it is, the type of hedge  transaction.  Management  of the
Company  is  currently  reviewing  the  impact  of SFAS 133 on its  consolidated
financial statements.




                                       11
<PAGE>

                                     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 six months ended January
24, 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
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 loan facility  (collectively,  the "Real Estate Facilities") are
without   recourse  to  American   Skiing  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., the
Company's  primary hotel  development  subsidiary.  As of January 24, 1999,  the
total assets that collateralized the Real Estate Facilities, and are included in
the accompanying  condensed consolidated balance sheet, was approximately $164.5
million.

         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 ($19.2 million of which
was  available at March 1, 1999) is available for  borrowings by ASC East,  Inc.
and its  subsidiaries  (the "East  Facility")  and $150  million of which ($12.4
million of which was available at March 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 American  Skiing  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


                                       12
<PAGE>

Company's  debt to EBITDA (as  defined  within the  credit  agreement)  ratio to
exceed 4.0 to 1. Based upon these restrictions, 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. 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  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 American Skiing Company
(the  "Parent"),  which guaranty is secured by  substantially  all assets of the
Parent.

        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  anticipates  that
its most  immediate  capital  need is meeting  this  mandatory 30 day clean down
period in 1999. 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  expects to take one or more of the following
steps in order to meet the clean down  requirements  and 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),  (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.
During the clean down  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  infrequent  expenses.  The failure to meet the
clean down  requirements  under the East  Facility  or the West  Facility  would
result in an event of  default  under the  Senior  Credit  Facility,  which,  if
unremedied and not waived by the lenders under the Senior Credit Facility, would
also  constitute an event of default under the Resort  Properties Term Loan, the
Textron Facility, the Key Facility and the Indenture (each as defined below). In
the event of such defaults, the Company would be forced to renegotiate the terms
of such facilities with its respective  lenders and/or raise sufficient  capital
to refinance one or more of such facilities.  There can be no assurance that the
Company will generate sufficient cash from operations  (including  reductions of
expenses) or asset sales to meet the clean down  requirements or, if it fails to
do so, that the Company would be successful in its efforts to  renegotiate  such
terms or obtain such additional  capital,  and the  consequences of such failure
would likely be material and adverse to the Company.

         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


                                       13
<PAGE>

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  modifies the covenant  requirements of
the Senior Credit Facility for the current  quarter 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.

        Summer 1998 capital  improvements  were funded through the Senior Credit
Facility and a $31 million  leasing  facility  arranged by  BancBoston  Leasing,
Inc.. The Company's summer 1999 resort capital  improvement  program is expected
to be funded through the Senior Credit Facility.

         Interim funding of working  capital for Resort  Properties and its 1998
real estate  development  program was obtained  through a loan from  BankBoston,
N.A. in the maximum amount of $30 million, which closed on September 4, 1998 and
had an interest rate of 14% (the "Bridge Loan").  On January 8, 1999, the Bridge
Loan was paid with  proceeds from a term loan facility  between  BankBoston  and
Resort  Properties in the maximum  principal  amount of $58 million (the "Resort
Properties Term Facility").  The Resort Properties Term Facility currently bears
interest at a rate of 16% per annum (payable  monthly in arrears) and matures on
June 30, 2001.  As of March 1, 1999,  $39.9  million was  outstanding  under the
Resort Properties Term Facility.  Although the Company expects that the terms of
the Resort Properties Term Facility will remain substantially similar to current
terms, one or more of those terms (excepting  certain terms such as the maturity
date and  commitment  fee) may be  altered  depending  on the  requirements  for
syndication of the Resort  Properties Term Facility,  and such alterations could
be  material  and  adverse  to the  Company.  The  possibility  exists  that the
Company's   second  quarter   financial   results  could  adversely  affect  the
syndication of the Resort  Properties  Term Facility and result in alteration of
the terms of such facility to facilitate syndication, which alterations could be
material  and adverse to the Company.  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,  the Company's hotel development  subsidiary).  As of
January  24,  1999,  the  total  assets  that  collateralized  the  Real  Estate
Facilities,  and are included in the accompanying condensed consolidated balance
sheet, was approximately  $164.5 million. The Resort Properties Term Facility is
non-recourse to American Skiing Company and its resort  operating  subsidiaries,
however,  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.



                                       14
<PAGE>

         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 Grand Summit Resort Properties,  Inc.,
("GSRP",  the Company's Grand Summit development  subsidiary).  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 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 its obligation to
syndicate the Steamboat portion of the Textron Facility.

         When  fully  syndicated,  the  Textron  Facility  will  have a  maximum
principal  amount of $95 million.  As of March 1, 1999,  the amount  outstanding
under this loan was $25.2  million.  A portion of the  proceeds  of the  Textron
Facility  (approximately  $31 million)  were used to repay an existing  facility
with TFC Textron which had been applied to finance  construction of Grand Summit
Hotels at Killington, Mt. Snow, Sunday River and Attitash Bear Peak. The Textron
Facility  bears  interest  at the rate of prime  plus  1.5% per  annum  (payable
monthly in arrears),  is subject to a 9.25% floor and 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
site  (including  the  completed  Grand Summit Hotels at  Killington,  Mt. Snow,
Sunday River and  Attitash  Bear Peak),  and is subject to customary  covenants,
representations  and  warranties  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 Textron Facility, together with
funds  invested  by the  Company,  is  expected  to be  sufficient  to fund  the
Company's  Grand Summit Hotel  project at The Canyons.  The Textron  Facility is
currently being syndicated for participants for the full amount of the facility,
and, as of March 1, 1999, Textron has committed to, or secured  commitments for,
approximately  $70 million of the  facility on  currently  existing  terms.  The
Company  expects that the Textron  Facility  will be fully  syndicated  on terms
identical or substantially  similar to those currently in place. There can be no
assurance,  however,  that the Textron Facility will be fully syndicated or will
be fully  syndicated  on  terms  acceptable  to the  Company.  Failure  to fully
syndicate the Textron  Facility on terms acceptable to the Company would require
Resort  Properties and GSRP to seek alternative or additional  financing sources
for the Grand Summit Hotels  currently  under  construction at the Canyons or to
curtail  further  construction  activities.  The  possibility  exists  that  the
Company's   second  quarter   financial   results  could  adversely  affect  the
syndication  of the Textron  Facility and result in  alteration  of the terms of
such facility to facilitate syndication, which alterations could be material and
adverse to the Company and could change the  non-recourse  nature of the Textron
Facility to the Company and its resort  operating  subsidiaries  (other than ASC
East and its resort operating subsidiaries).

         The Company  currently  expects that the  Steamboat  Grand Summit Hotel
will be financed  through a construction  loan  syndicated by BankBoston,  N.A..
There can be no assurance,  however,  that this loan will be fully syndicated or
will be fully  syndicated on terms  acceptable to the Company.  Failure to fully
syndicate the  Steamboat  construction  loan on terms  acceptable to the Company


                                       15
<PAGE>

would  require  Resort  Properties  and GSRP to seek  alternative  or additional
funding  sources for the Grand  Summit Hotel  currently  under  construction  at
Steamboat or to curtail further construction activities.

         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  will have a maximum  principal  amount  of $29  million,  will bear an
interest  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  expects to begin drawing under the Key Facility
in  March  or  April  of  1999,  following  completion  of the  required  equity
contribution  (approximately  $8 million)  of the  Company in the Sundial  Lodge
project.  The Key Facility is collateralized by a mortgage and security interest
in  the  Sundial  Lodge  project,  a  $5  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 January 24, 1999, the total assets that  collateralized  the Real
Estate Facilities,  and are included in the accompanying  condensed consolidated
balance sheet, was approximately $164.5 million.

        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 January 24, 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  $65.0  million.  These net assets are comprised of the following:
current assets of $42.6 million,  intangible assets of $21.7 million,  operating
assets of $439.7  million,  net of current  liabilities  of $158.3  million  and
long-term  liabilities  of $280.7  million.  As of the end of the second  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.

         The  Company's   President,   Chief  Executive   Officer  and  majority
shareholder (the "Majority Shareholder") is the obligor under a margin loan (the


                                       16
<PAGE>

"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
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. At no time during the six month period ended January 24,
1999 has the  aggregate  market value of the  collateral  been below the Advance
Base or the Minimum  Base.  From  January 25, 1999  through  March 9, 1999,  the
aggregate market value of the collateral for the Margin Loan has been, at times,
below the Advance Base.  However, at no time from January 25, 1999 through March
9, 1999 has the aggregate  market value of the collateral been below the Minimum
Base. 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.

         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 $130 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 January 24,  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


                                       17
<PAGE>

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,  and resort villages at
Sunday River,  Killington,  The Canyons,  Steamboat and Heavenly. The timing and
extent of these projects is 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 January 24,  1999,  the total assets that  collateralized  the Real Estate
Facilities,  and are included in the accompanying condensed consolidated balance
sheet, totaled  approximately $164.5 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
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.


                        Changes in Results of Operations

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

1. Resort revenues. Resort revenues decreased $3.5 million, or 3.3%, from $106.7
million for the three  months ended  January 25, 1998 to $103.2  million for the
three months ended January 24, 1999. The decrease is primarily  attributable  to
unseasonably  warm  weather  and a lack of natural  snowfall  in New England and
Colorado,  which  resulted  in a  decline  in paid  skier  visits at many of the
Company's  resorts.  Resort revenues from the Company's eastern resorts are down
$5.8 million for the second fiscal quarter of 1999 compared to the second fiscal


                                       18
<PAGE>

quarter of 1998.  The  majority  of this  decrease  ($5.4  million) is from lift
ticket and skier development revenues, both of which are directly related to the
decrease in paid skier visits.  These  decreases  are offset  slightly by a $2.3
million  increase in revenues at the Company's  western  resorts,  mainly due to
increased skier visits at the Canyons and Heavenly  resorts and earlier openings
at the western resorts.

2. Real estate revenues.  Real estate revenues decreased $1.6 million, or 20.2%,
from $7.9 million for the three  months  ended  January 25, 1998 to $6.3 million
for the three months ended  January 24, 1999.  The majority of this  decrease is
attributable to the substantial levels of revenues in fiscal 1998 resulting from
closing  of  pre-sold  quartershare  units at the Jordan  Grand  Hotel at Sunday
River.  This hotel was completed  during the second  fiscal  quarter of 1998, at
which time the Company  recorded  $6.3 million in sales  revenue,  most of which
represented  closings of units pre-sold over the previous 14 months.  During the
second  fiscal  quarter of 1999,  the Company  realized $1.6 million in on-going
sales at the Jordan  Grand  Hotel.  This $4.8  million  decrease in sales at the
Jordan Grand Hotel was offset by increases  in  quartershare  unit sales of $1.2
million each at the Company's  Grand Summit  Hotels at Killington  and Mt. Snow,
both  of  which  were  completed  during  the  third  fiscal  quarter  of  1998.
Accordingly,  no sales revenue was realized for these projects during the second
fiscal  quarter of 1998.  The Company also realized $0.9 million of revenue from
the sale of Locke  Mountain  Townhouses  at Sunday  River in the  second  fiscal
quarter of 1999.

3. Cost of resort operations.  Cost of resort operations increased $5.2 million,
or 8.2%, from $63.5 for the three months ended January 25, 1998 to $68.7 million
for the three months ended January 24, 1999.  The inclusion of the Steamboat and
Heavenly  resorts for the period from October 26, 1998 through November 12, 1998
accounts for $1.2 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).  An additional $2.8 million of the increase
is primarily due to earlier openings this season at Heavenly and The Canyons, as
well as  additional  food,  beverage  and retail  outlets at all of the  western
resorts. The cost of operations for the eastern resorts was up $1.2 million over
the second quarter of 1998,  mainly due to increased costs  associated with four
new hotels and four new Perfect Turn Discovery  Centers.  These increases at the
eastern resorts were slightly offset by decreased  mountain  operating costs due
to the slow start to the ski season in the east.

4. Cost of real estate operations. Cost of real estate operations increased $2.7
million, or 51.9%, from $5.2 million for the three months ended January 25, 1998
to $7.9 million for the three months ended  January 24, 1999.  This  increase is
attributable  to a) 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,  of which the timing of development is currently  being  re-evaluated by
the Company,  b) $0.8  million of expenses  incurred  relating to the  Company's
unsuccessful  $300 million bond offering  which was  undertaken  principally  to
provide additional financing for the Company's real estate projects,  c) cost of
unit sales of Locke Mountain Townhouses at Sunday River of $0.9 million,  and d)
an increase of $1.2 million in selling and administrative  costs associated with
increased  activity  relating to the Company's  existing and planned real estate
projects. These increases were slightly offset by an overall decrease in cost of
sales of quartershare  units of $0.9 million at the existing Grand Summit Hotels
($2.8  million  decrease  due to  decreased  sales at the Jordan  Grand Hotel at
Sunday River and increases at the Killington and Mt. Snow hotels of $1.0 million
and $0.9 million,  respectively  due to increased sales at those hotels).  These
costs of unit sales  also  include  $0.5  million  in  expenses  related to unit
upgrades at these hotels.



                                       19
<PAGE>

5. Marketing, general and administrative.  Marketing, general and administrative
expense  increased  $4.9  million,  or 36.0%,  from $13.6  million for the three
months  ended  January 25,  1998 to $18.5  million  for the three  months  ended
January 24, 1999.  The inclusion of the  Steamboat and Heavenly  resorts for the
period from October 26, 1998 through November 12, 1998 accounts for $1.2 million
of the  increase  as the  results  from the  prior  year only  include  expenses
commencing  with the  purchase  of those  resorts  on  November  12,  1997.  The
remaining  increase can be attributed to the following:  a) increased  marketing
expenses  at  the  Company's  western  resorts  of  $2.1  million,  b)  a  stock
compensation  charge relating to the vesting of additional  shares of management
stock options of $0.5  million,  c) marketing  charges  related to the Company's
four new hotels of $0.3  million,  and d) $0.8  million of  additional  expenses
resulting  from the  expansion of  management  information  services  functions,
additional  costs associated with being a public company and the increased scope
of the Company's operations.

6. Depreciation and amortization.  Depreciation and amortization  increased $4.0
million,  or 26.7%,  from $15.0  million for the three months ended  January 25,
1998 to $19.0 million for the three months ended January 24, 1999  primarily due
to additional depreciation related to the Company's recent capital improvements.
The change in the estimated useful lives of certain of the Company's ski-related
assets  decreased  depreciation  expense by $0.3 million  compared to the second
fiscal quarter of 1998. See Note 1 - Change in Accounting Estimate.

7. Interest  expense.  Interest expense  increased $1.0 million,  or 11.0%, from
$9.1 million for the three months  ended  January 25, 1998 to $10.1  million for
the three  months  ended  January 24, 1999 mainly due to  increased  debt levels
associated with financing the Company's recent capital improvements.

8.  Provision  for (benefit  from) income taxes.  Provision  for (benefit  from)
income  taxes  decreased  $8.2  million from a provision of $3.2 million for the
three months  ended  January 25, 1998 to a benefit of $5.0 million for the three
months ended  January 24,  1999.  The change is  primarily  attributable  to the
Company's net loss from continuing operations for the three months ended January
24, 1999 as compared to the Company's net income from continuing  operations for
the three months ended January 25, 1998.  The benefit for the three months ended
January 24, 1999 was  reduced by $0.5  million due to the  decrease in the stock
price during the quarter ended January 24, 1999 and the resulting  impact on the
deferred tax asset relating to the stock compensation charge to date.

9.  Accretion  of  discount  and  dividends  accrued on  mandatorily  redeemable
preferred  stock.  Accretion of discount and  dividends  accrued on  mandatorily
redeemable  preferred stock increased $0.4 million,  or 57.1%, from $0.7 million
for the three months ended January 25, 1998 to $1.1 million for the three months
ended  January  24,  1999.  The  majority  of the  increase  ($0.3  million)  is
attributable  to a full  quarter of  dividends  accrued in 1999  compared to two
months  during  the second  fiscal  quarter  of 1998.  The  effect of  quarterly
compounding of the dividends accounts for $0.1 million of the increase.

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

1. Resort revenues. Resort revenues increased $3.2 million, or 2.7%, from $120.3
million for the six months ended January 25, 1998 to $123.5  million for the six


                                       20
<PAGE>

months ended January 24, 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 only are
only  included for the period  commencing  with the purchase of these resorts on
November 12, 1997).  Resort revenues from the Company's eastern resorts are down
$2.9  million for the six months  ended  January  24,  1999  compared to the six
months ended January 25, 1998.  The majority of this decrease  ($5.4 million) is
from lift  ticket and skier  development  revenues,  both of which are  directly
related to the  decrease  in paid  skier  visits  due to the  unseasonably  warm
weather and the lack of natural  snowfall  experienced in New England during the
period.  Partially offsetting this decrease in lift ticket and skier development
revenues are  increased  food and beverage and lodging  revenues  (approximately
$2.6 million) related to the Company's four new hotels.  The overall decrease in
revenues at the eastern resorts is offset slightly by a $2.4 million increase in
revenues at the Company's western resorts,  mainly due to increased skier visits
at the Canyons and Heavenly resorts and earlier openings at the western resorts.

2. Real estate revenues.  Real estate revenues increased $2.1 million, or 24.1%,
from $8.7 million for the six months ended January 25, 1998 to $10.8 million for
the six months ended January 24, 1999. The increase is primarily attributable to
$4.5 million in  quartershare  unit sales at Grand Summit  Resort  Hotels at the
Company's  Killington ($2.0 million) and Mount Snow ($2.5 million) resorts,  and
$2.0 million from the sale of Locke Mountain  townhouses at the Company's Sunday
River  resort  during the six months ended  January 24,  1999.  All three of the
above  projects  commenced  sales  during  the  third  fiscal  quarter  of 1998.
Accordingly,  no sales  revenues  were  realized for these  projects for the six
months ended January 25, 1998. These increases in sales were partially offset by
decreased revenues from sales of quartershare units at the Jordan Grand Hotel at
Sunday River. This hotel was completed during the second fiscal quarter of 1998,
at which time the Company recorded $6.3 million in sales revenue,  most of which
represented  closings of units pre-sold over the previous 14 months. The Company
realized  $1.9  million in ongoing  sales at the Jordan  Grand Hotel  during the
first six months of 1999.

3. Cost of resort operations. Cost of resort operations increased $15.5 million,
or 19.1%,  from $81.1 for the six months ended January 25, 1998 to $96.6 million
for the six months ended  January 24, 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 only are
only  included for the period  commencing  with the purchase of these resorts on
November 12, 1997). Of the remaining increase,  $2.8 million is primarily due to
earlier openings this season at Heavenly and The Canyons,  as well as additional
food,  beverage and retail  outlets at all of the western  resorts.  The cost of
operations  for the eastern  resorts was up $4.1 million over the same period in
1998, mainly due to increased costs associated with four new hotels and four new
Perfect Turn  Discovery  Centers.  These  increases at the eastern  resorts were
slightly offset by decreased  mountain  operating costs due to the slow start to
the ski season in the east.

4. Cost of real estate operations. Cost of real estate operations increased $5.7
million,  or 93.4%,  from $6.1 million for the six months ended January 25, 1998
to $11.8  million for the six months ended  January 24, 1999.  This  increase is
attributable  to a) 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,  of which the timing of development is currently  being  re-evaluated by
the Company,  b) $0.8  million of expenses  incurred  relating to the  Company's


                                       21
<PAGE>

unsuccessful  $300 million bond offering  which was  undertaken  principally  to
provide additional financing for the Company's real estate projects,  c) cost of
unit sales of Locke Mountain  Townhouses at Sunday River of $1.7 million,  d) an
increase of $2.0 million in selling and  administrative  costs  associated  with
increased  activity  relating to the Company's  existing and planned real estate
projects,  and e) an  increase  in cost of sales of  quartershare  units of $0.5
million at the  existing  Grand  Summit  Hotels  ($1.6  million and $1.5 million
increases,  respectively, at the Killington and Mt. Snow hotels due to increased
sales  offset by a $2.6  million  decrease  at the Jordan  Grand  Hotel due to a
decrease  in sales).  These  costs of unit sales also  include  $0.5  million in
expenses related to unit upgrades at these hotels.

5. Marketing, general and administrative.  Marketing, general and administrative
expense increased $9.0 million,  or 43.9%, from $20.5 million for the six months
ended  January 25, 1998 to $29.5  million for the six months  ended  January 24,
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) increased marketing expenses at
the Company's western resorts of $1.8 million,  b) a stock  compensation  charge
relating to the vesting of additional shares of management stock options of $0.5
million,  c) marketing  charges related to the Company's four new hotels of $0.6
million, and d) $1.1 million of additional expenses resulting from the expansion
of management  information services functions,  additional costs associated with
being a public company and the increased scope of the Company's operations.

6. Stock compensation charge. Stock compensation charge decreased $14.3 million,
or 100%. This charge was recognized during the six months ended January 25, 1998
to reflect  stock  options  granted to certain  members of senior  management in
relation to the Company's initial public offering.

7. Depreciation and amortization.  Depreciation and amortization  increased $5.2
million,  or 31.5%, from $16.5 million for the six months ended January 25, 1998
to $21.7 million for the six months ended January 24, 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  related to the Company's recent capital  improvements.
The change in the estimated useful lives of certain of the Company's ski-related
assets decreased  depreciation expense by $0.3 million compared to the first six
months of 1998.
See Note 1 - Change in Accounting Estimate.

8. Interest  expense.  Interest  expense  increased $1.6 million,  or 9.1%, from
$17.5 million for the six months ended January 25, 1998 to $19.1 million for the
six months ended January 24, 1999 mainly due to increased debt levels associated
with financing the Company's recent capital improvements.

9. Benefit from income taxes.  Benefit from income taxes increased $5.1 million,
or 48.6%,  from $10.5 million for the six months ended January 25, 1998 to $15.6
million for the six months ended January 24, 1999. The increase is  attributable
to the increase in the  Company's  net loss for the six months ended January 24,
1999 as compared to the six months ended  January 25, 1998.  The benefit for the
six  months  ended  January  24,  1999 was  reduced by $1.8  million  due to the
decrease in the stock price during the six months ended January 24, 1999 and the
resulting  impact on the deferred tax asset  relating to the stock  compensation
charge to date.



                                       22
<PAGE>

10.  Accretion  of discount  and  dividends  accrued on  mandatorily  redeemable
preferred  stock.  Accretion of discount and  dividends  accrued on  mandatorily
redeemable  preferred stock decreased $1.0 million,  or 32.2%, from $3.1 million
for the six months  ended  January 25,  1998 to $2.1  million for the six months
ended January 24, 1999. The decrease is primarily  attributable  to $0.9 million
in additional  accretion recognized during the six months ended January 25, 1998
relating to a  conversion  feature on the  Company's  Series A 14%  Exchangeable
Preferred  Stock,  allowing  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 six months ended January 25,
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.

                         Changes in Financial Condition

         Second Quarter of Fiscal 1999 Compared to Fiscal Year End 1998

1. Cash and cash equivalents.  Cash and cash equivalents increased $3.2 million,
or 20.8%,  from $15.4  million at July 26, 1998 to $18.6  million at January 24,
1999 . The increase is  primarily  attributable  to the  seasonal  nature of the
Company's operating cycle.

2. Restricted cash.  Restricted cash increased $3.6 million, or 57.1%, from $6.3
million at July 26, 1998 to $9.9  million at January 24,  1999.  The majority of
the increase is due to advance deposits received for ski and lodging through the
Company's  central  reservation  systems,  which is consistent with the seasonal
nature of the  Company's  operating  cycle.  In  addition,  $0.8  million of the
increase is due to advance deposits received for future real estate sales.

3. Accounts  receivable.  Accounts receivable  increased $2.9 million, or 38.7%,
from $7.5  million at July 26, 1998 to $10.4  million at January 24,  1999.  The
increase is  primarily  attributable  to the  seasonal  nature of the  Company's
operating cycle.

4. Inventory.  Inventory increased $6.6 million, or 49.3%, from $13.4 million at
July 26, 1998 to $20.0  million at January 24,  1999.  The increase is primarily
attributable to the seasonal nature of the Company's operating cycle.

5. Property and  equipment,  net.  Property and equipment,  net increased  $21.7
million,  or 4.2%,  from $521.1  million at July 26,  1998 to $542.8  million at
January 24, 1999. The increase is attributable  to the Company's  summer capital
improvement program.

6. Real estate  developed for sale.  Real estate  developed  for sale  increased
$48.9 million,  or 62.2%,  from $78.6 million at July 26, 1998 to $127.5 million
at January 24, 1999. The increase is primarily  attributable  to construction of
Grand  Summit  Hotels at the  Company's  resorts at The Canyons  and  Steamboat,
construction of the Sundial Lodge at the Canyons and other discrete  projects at
various resorts.



                                       23
<PAGE>

7. Other assets.  Other assets increased by $3.3 million,  or 22.8%,  from $14.5
million at July 26, 1998 to $17.8 million at January 24, 1999.  This increase is
primarily  attributable  to land option payments of $3.2 million related to land
acquisition activities at the Canyons.

8.  Current  portion  of  long-term  debt.  Current  portion of  long-term  debt
increased $5.1 million,  or 11.5%,  from $44.2 million at July 26, 1998 to $49.3
million at January 24,  1999.  The majority of this  increase  relates to a $7.3
million increase in short term notes payable at ACS Leasing,  Inc., a subsidiary
of the Company.  This funding was received in anticipation of the  establishment
of long-term capital leases for certain of the Company's  ski-related assets and
is expected to be converted into  long-term  capital leases during the Company's
third fiscal quarter of 1999.

9. Accounts  payable and other current  liabilities.  Accounts payable and other
current  liabilities  increased $42.1 million,  or 94.8%,  from $44.4 million at
July 26, 1998 to $86.5 million at January 24, 1999. The increase is attributable
to the Company's seasonal operating cycle and due to increased  construction and
retail purchasing.

10. Deposits and deferred revenue. Deposits and deferred revenue increased $27.8
million,  or 272.5%,  from $10.2  million at July 26,  1998 to $38.0  million at
January 24, 1999. The increase is primarily attributable to deferred revenue for
season passes and ski and lodging  deposits for the 1998/1999 ski season and due
to a $0.8 million increase in real estate deposits.

11. Long-term debt,  excluding  current portion.  Long-term debt increased $55.7
million,  or 26.3%,  from $211.6  million at July 26, 1998 to $267.3  million at
January 24,  1999.  The majority of this  increase in due to advances  under the
Resort Properties Term Facility to finance on-going construction projects.  Also
contributing  to the increase are new capital  leases  arranged to help fund the
Company's summer 1998 capital improvements.

12.  Deferred  income taxes.  Deferred income taxes decreased $16.2 million from
$22.7 million at July 26, 1998 to $6.5 million at January 24, 1999. The decrease
is  attributable  to the benefit from income taxes  related to the Company's net
loss during the first six months of fiscal 1999.

13. Mandatorily  redeemable  preferred stock.  Mandatorily  redeemable preferred
stock  increased $2.1 million,  or 5.3%,  from $39.5 million at July 26, 1998 to
$41.6 million at January 24, 1999.  The increased is  attributable  to dividends
accrued during the six months ended January 24, 1999.

14.  Retained  earnings.  Retained  earnings  decreased $31.0 million due to the
Company's net loss during the six months ended January 24, 1999.


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
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


                                       24
<PAGE>

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.

         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
(expected  to be  complete  by  April  1,  1999),  2)  gather  certificates  and
warranties  from  providers  (expected  to be  complete  by April 1,  1999),  3)
determine  required  actions and budgets  (expected  to be completed by April 1,
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 May 31, 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, 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 and 2, as noted above,  are complete  (except for personal
computer  inventory and  warranties)  and the remaining  phases are currently on
schedule.  During phase 1 and 2, the Company noted that  Sugarloaf and Sugarbush
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. Also, the Company estimates that  approximately 20% of personal  computers
for employees are not Year 2000 compliant.  The Company has estimated that these
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 4 are scheduled for  completion by
March 31, 1999 which is 105 days behind schedule. The Company has estimated that
remediation  is scheduled  for  completion  by  September  1, 1999,  which is in
accordance with the original timetable.

         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  4 are  scheduled  for
completion by March 31, 1999, which is 105 days behind schedule. The Company has
estimated  that  remediation  is scheduled for  completion by September 1, 1999,
which is in accordance with the original timetable.



                                       25
<PAGE>

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  $450,000.
This estimate includes  Information  System  conversions for Year 2000 compliant
lodging  systems at  Sugarloaf  and  Sugarbush.  The Company is  updating  those
systems to standardize systems within American Skiing Company resorts. The total
amount  expended on the Year 2000 Project through January 24, 1999 was $0. As of
January 24,  1999,  the  estimated  future  costs of the Year 2000  Project were
$450,000, of which approximately (1) $0 related to cost to modify software, hire
internal  personnel and hire  outsourced  Year 2000  solution  providers and (2)
$450,000  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 January 24,  1999,  the Company has not  developed a  contingency
plan related to Year 2000. The Company expects to have a contingency plan by May
31, 1999.


                                       26
<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,  the Steamboat  construction  loan 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;  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  permits;  the adequacy of water  supply;  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.


                                       27
<PAGE>

                           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  second  fiscal
quarter of 1999.

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

     1)   Credit  Agreement  among American  Skiing  Company Resort  Properties,
          Inc.,  certain  lenders  and  BankBoston,  N.A.  as agent  dated as of
          January 8, 1999.

     2)   Third Amendment to Credit Agreement among ASC Utah, ASC West, Inc. and
          its subsidiaries party thereto,  American Skiing Company as guarantor,
          BankBoston,  N.A. as Agent,  and the lenders party thereto dated as of
          March 3, 1999.

     3)   Third  Amendment  to Credit  Agreement  among ASC East,  Inc.  and its
          subsidiaries  party  thereto,  American  Skiing  Company as guarantor,
          BankBoston,  N.A. as Agent,  and the lenders party thereto dated as of
          March 3, 1999.






b) Reports on Form 8-K

The Company did not file a Form 8-K during the second fiscal quarter of 1999.




                                       28
<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:  March 10, 1999                                /s/ Christopher E. Howard
----------------------------                    --------------------------------
                                                       Christopher E. Howard
                                                       Executive Vice President
                                                       (Duly Authorized Officer)


Date:  March 10, 1999                                /s/ Mark J. Miller
--------------------------------                 -------------------------------
                                                     Mark J. Miller
                                                     Senior Vice President
                                                     Chief Financial Officer
                                                     (Principal Financial and 
                                                       Accounting Officer)