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 OCTOBER 25, 1998

                        --------------------------------
                        Commission File Number 333-33483
                        --------------------------------

                             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.)

         Indicated 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  of Class A common  stock  $.01  par  value  and
15,525,022  shares of common stock $.01 par value  outstanding as of December 9,
1998.

<PAGE>
                    American Skiing Company and Subsidiaries


                                Table of Contents

Part I - Financial Information

Item 1. Financial Statements

         Condensed Consolidated Statement of Operations (Unaudited)
         for the three months ended October 25, 1998
         and October 26, 1997..................................................3

         Condensed Consolidated Balance Sheet
         as of October 25, 1998 (Unaudited) and July 26, 1998..................4

         Condensed  Consolidated  Statement  of Cash Flows  (Unaudited)  for the
         three months ended October 25, 1998
         and October 26, 1997..................................................5

         Notes to (Unaudited) Condensed Consolidated Financial Statements......6

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

         General..............................................................16

         Liquidity and Capital Resources......................................16

         Changes in Results of Operations.....................................21

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

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

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

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

Part II - Other Information

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


<PAGE>

<TABLE>
                    American Skiing Company and Subsidiaries

                         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
                                                                                   October 25,              October 26,
                                                                                      1998                     1997
                                                                                   (unaudited)              (unaudited)
<S>                                                                                      <C>                    <C>      
     Net  revenues:
         Resort                                                                          $ 20,435               $  13,811
         Real estate                                                                        4,485                     810
                                                                                ------------------       -----------------
              Total net revenues                                                           24,920                  14,621

     Operating expenses:
         Resort                                                                            28,088                  17,808
         Real estate                                                                        3,963                     925
         Marketing, general and administrative                                             11,012                   6,845
         Stock compensation charge (note 9)                                                     -                  14,254
         Depreciation and amortization                                                      2,709                   1,506
                                                                                ------------------       -----------------
              Total operating expenses                                                     45,772                  41,338
                                                                                ------------------       -----------------
     Loss from operations                                                                 (20,852)                (26,717)
         Interest expense                                                                   8,930                   8,448
                                                                                ------------------       -----------------
     Loss before benefit for income taxes and
         minority interest in loss of subsidiary                                          (29,782)                (35,165)

         Benefit for income taxes                                                         (10,573)                (13,714)
         Minority interest in loss of subsidiary                                                 -                   (456)
                                                                                ------------------       -----------------
     Loss from continuing operations                                                      (19,209)                (20,995)

         Accretion of discount and dividends accrued on
             Mandatorily Redeemable Preferred Stock                                         1,059                   2,431
                                                                                ------------------       -----------------
     Net loss available to common shareholders                                          $(20,268)                $(23,426)
                                                                                ==================       =================
     Retained earnings, beginning of period                                             $      11                $ 12,305

     Net loss available to common shareholders                                            (20,268)                (23,426)
                                                                                 -----------------       -----------------
     Accumulated deficit, end of period                                                 $ (20,257)               $(11,121)
                                                                                ==================       =================

     Basic and diluted loss per share (note 6)
     Continuing operations                                                              $   (0.63)               $  (1.42)
     Net loss available to common shareholders                                          $   (0.67)               $  (1.59)

     Weighted average common shares outstanding                                         30,285,552              14,760,530
                                                                                ==================       =================


See  accompanying  notes  to  (Unaudited)   Condensed   Consolidated   Financial
Statements.
                                       3
</TABLE>

<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>

                      Condensed Consolidated Balance Sheet
               (In thousands, except share and per share amounts)
<CAPTION>
                                                                                        October 25, 1998         July 26, 1998
                                                                                           (unaudited)
<S>                                                                                      <C>                      <C>           
Assets
Current assets
     Cash and cash equivalents                                                           $          9,013         $       15,370
     Restricted cash                                                                                6,378                  6,260
     Accounts receivable                                                                            6,327                  7,538
     Inventory                                                                                     13,296                 13,353
     Prepaid expenses                                                                               4,107                  3,709
     Deferred income taxes                                                                          1,413                  1,413
                                                                                        ------------------      -----------------
           Total current assets                                                                    40,534                 47,643

     Property and equipment, net                                                                  537,722                521,139
     Real estate developed for sale                                                                93,235                 78,636
     Goodwill                                                                                      78,185                 78,687
     Intangible assets                                                                             23,499                 23,706
     Deferred financing costs                                                                       9,106                  9,212
     Long-term investments                                                                          7,408                  7,397
     Other assets                                                                                  18,037                 14,479
                                                                                        ------------------      -----------------
          Total assets                                                                   $        807,726         $      780,899
                                                                                        ==================      =================
Liabilities, Mandatorily redeemable Preferred Stock and Shareholders' Equity
Current liabilities
     Current portion of long-term debt                                                             78,625                 44,153
     Accounts payable and other current liabilities                                                50,823                 44,372
     Deposits and deferred revenue                                                                 27,104                 10,215
     Demand note, Principal Shareholder                                                             1,846                  1,846
                                                                                        ------------------      -----------------
      Total current liabilities                                                                   158,398                100,586

     Long-term debt, excluding current portion                                                    209,859                211,570
     Subordinated notes and debentures, excluding current portion                                 127,539                127,497
     Other long-term liabilities                                                                   10,947                 10,484
     Deferred income taxes                                                                         12,146                 22,719
     Minority interest in subsidiary                                                                  378                    375
                                                                                        ------------------      -----------------
         Total liabilities                                                                        519,267                473,231

Mandatorily  Redeemable 10 1/2% Repriced  Convertible  Preferred Stock, par value
       $1,000 per share; 40,000 shares authorized; 36,626 issued and outstanding;
       including cumulative dividends in arrears (redemption value of $39,464 at                                                 
       July 26, 1998 and $40,523 at October 25, 1998)                                              40,523                 39,464

Shareholders' Equity
     Common stock, Class A, par value $.01 per share; 15,000,000 shares authorized;
     14,760,530 issued and outstanding;                                                               148                    148
     Common stock, par value of $.01 per share; 100,000,000 shares authorized;
     15,525,022   issued and outstanding                                                              155                    155

     Additional paid-in capital                                                                   267,890                267,890
     Retained earnings (deficit)                                                                  (20,257)                     11
                                                                                        ------------------      -----------------
        Total shareholders' equity                                                                247,936                268,204
                                                                                        ==================      =================
Total liabilities, Mandatorily redeemable Preferred Stock and shareholders' equity               $807,726              $ 780,899
                                                                                        ==================      =================

                       See accompanying notes to (Unaudited) Condensed Consolidated Financial Statements.
</TABLE>
                                       4
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>

                 Condensed Consolidated Statement of Cash Flows
                                 (In thousands)
<CAPTION>

                                                                                              For the three months ended
                                                                                      October 25, 1998          October 26, 1997
                                                                                        (unaudited)               (unaudited)
<S>                                                                                      <C>                     <C>            
Cash flows from operating activities
Net loss                                                                                 $     (19,209)          $      (20,995)
Adjustments to reconcile net loss to net cash used in operating activities:
      Minority interest in loss of subsidiary                                                        -                     (456)
      Depreciation and amortization                                                              2,709                     3,001
      Discount on convertible debt                                                                  67                       927
      Deferred income taxes                                                                    (10,573)                  (13,854)
      Stock compensation charge                                                                      -                    14,254
      Decrease (increase) in assets:
            Restricted cash and investments held in escrow                                        (118)                  (14,960)
            Accounts receivable                                                                  1,211                     (557)
            Inventory                                                                               57                   (3,520)
            Prepaid expenses                                                                      (398)                     (957)
            Real estate developed for sale                                                     (12,820)                  (21,938)
            Other assets                                                                        (3,558)                   (2,698)
      Increase (decrease) in liabilities:
            Accounts payable and other current liabilities                                       6,451                     9,381
            Deposits and deferred revenue                                                       16,889                    10,278
            Other long-term liabilities                                                            463                       302
                                                                                     ------------------        ------------------
Net cash used in operating activities                                                          (18,829)                  (41,792)
                                                                                     ------------------        ------------------
Cash flows from investing activities
      Capital expenditures                                                                     (20,017)                  (19,249)
      Long-term investments                                                                        (11)                      127
      Other, net                                                                                    37                       95
                                                                                     ------------------        ------------------
Net cash used in investing activities                                                          (19,991)                  (19,027)
                                                                                     ------------------        ------------------
Cash flows from financing activities
         Net proceeds from Old Credit Facility                                                       -                     1,189
         Net borrowings under Senior Credit Facility                                            13,322                         -
         Net proceeds from long-term debt                                                       19,351                    50,336
         Deferred financing costs                                                                 (210)                      (50)
                                                                                     ------------------        ------------------
Net cash provided by financing activities                                                       32,463                    51,475
                                                                                     ------------------        ------------------
Net decrease in cash and cash equivalents                                                       (6,357)                   (9,344)
Cash and cash equivalents, beginning of period                                                  15,370                    15,558
                                                                                     ------------------        ------------------
Cash and cash equivalents, end of period                                                 $       9,013             $       6,214
                                                                                     ==================        ==================



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

</TABLE>
                                       5
<PAGE>
                    American Skiing Company and Subsidiaries


        Notes to (Unaudited) Condensed Consolidated Financial Statements

         1. Change in Accounting Estimate.  Effective July 27, 1998, the Company
made changes in the  estimated  useful lives of certain of its  operating  fixed
assets.  This  change  had no  effect  on the net loss or loss per share for the
quarter  ended  October  25,  1998  as  the  Company  records  a  full  year  of
depreciation relating to its operating assets over the second and third quarters
of its fiscal year.

         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 October 25, 1998 and
July 26, 1998,  the results of operations for the three months ended October 25,
1998 and October 26, 1997,  and the statement of cash flows for the three months
ended  October 25, 1998 and October 26, 1997.  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 maintenance operating supplies.

         4. Income  Taxes.  The expense  (benefit) for taxes on income (loss) is
based on a projected annual effective tax rate of 35.5%. The net deferred income
tax liability includes the cumulative  reduction in current income taxes payable
resulting  principally  from the excess of depreciation  reported for income tax
purposes over that reported for financial reporting purposes.

         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 development and operation of ski resorts.

         6. Earnings (loss) per Common Share.  Loss per common share figures are
based on the  weighted  average  number of shares  outstanding  during the first
quarter of fiscal 1999 and 1998 of 30,285,552 and 14,760,530,  respectively. The
shares  outstanding are the actual shares  outstanding for both common stock and
Class A common stock. On a pro forma basis, loss per share for the quarter ended
October  26,  1997  including  Class A common and common  stock  would have been
$(1.00) per share. This pro forma loss per share includes the increase in shares
outstanding  from the Company's  initial public offering that closed on November
12, 1997.

         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 months ended October 25, 1998 and October 26, 1997 are
presented for comparative  purposes.  The following pro forma  adjustments  have
been made for the following periods:

         The  three  months  ended  October  25,  1998 - There  are no pro forma
adjustments.

                                       6
<PAGE>
                    American Skiing Company and Subsidiaries

     The three months  ended  October 26, 1997 - The results of  operations  for
Steamboat and Heavenly have been added based on their historical results for the
period from August 1, 1997 through  October 31, 1997. The 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.  The pro forma  adjustments  have been  posted to
interest  expense to reflect the change in the capital  structure of the Company
related to the  acquisition  of Steamboat  and  Heavenly 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>
                                                                              Three Months Ended
            Net revenues:                                             October 25,            October 26,
                                                                         1998                   1997
                                                                     (unaudited)             (unaudited)

<S>                                                                    <C>                    <C>          
              Resort                                                   $     24,920           $      18,008

            Loss from continuing operations                                 (19,209)                (27,055)
                                                                   -----------------      ------------------
            Net loss available to common shareholders                  $   (20,268)                $(29,486)
                                                                   =================      ==================

            Basic and diluted loss per share
            Continuing operations                                      $     (0.63)               $  (0.92)
            Net loss available to common shareholders                  $     (0.67)               $  (1.00)
                                                                   =================      ==================

</TABLE>
                                       7
<PAGE>
                    American Skiing Company and Subsidiaries

         9. Stock  option  plan.  The Company  recorded a  compensation  expense
charge of $14.3  million in the quarter  ended  October  26,  1997 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.  Certain
members of senior  management  are also being granted a cash payment on the date
the options  are  exercised  to cover  individual  Federal and State  income tax
liability  generated by exercising the options.  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.

     10.  Guarantors of Debt. One of the main subsidiaries of the Company is ASC
East,  Inc.  ASC East,  Inc.  files its own Form 10-Q because of notes that were
registered  with the  Securities  and Exchange  Commission  on Form S-4 with the
Securities and Exchange  Commission on November 22, 1996.  These notes are fully
and  unconditionally  guaranteed by ASC East,  Inc. and all of its  subsidiaries
with the exception of Ski Insurance  Company,  Killington West,  Ltd.,  Mountain
Water  Company,  Uplands  Water  Company,  and  Club  Sugarbush.  The  guarantor
information  for the quarters  ended October 25, 1998 and October 26, 1997 is as
follows:

                                       8
<PAGE>
                   American Skiing Company and Subsidiarieis
<TABLE>
                      Balance Sheet as of October 25, 1998
                           (in thousands) (unaudited)
<CAPTION>

                                                                   ASC       Guarantor     Non- Guarantor   Elimination      ASC
                                                                            Subsidiaries    Subsidiaries       Entries  Consolidated
<S>                                                             <C>           <C>           <C>            <C>             <C>      
Assets
Current assets
   Cash and cash equivalents                                    $    514      $  4,605      $   3,894      $        -      $   9,013
   Restricted cash                                                     -         6,346             32               -          6,378
   Accounts receivable                                               971         8,620          2,790          (6,054)         6,327
   Inventory                                                         311         9,096          3,889               -         13,296
   Prepaid expenses                                                  273         2,959            875               -          4,107
   Deferred income taxes                                               -         1,289            124               -          1,413
   Investment in subsidiaries                                    395,718       314,118        306,526       (1,016,362)            -
                                                              -------------- -------------  -----------  ---------------  ----------
    Total current assets                                         397,787       347,033        318,130       (1,022,416)       40,534

Property and equipment, net                                        7,013       302,674        228,035                -       537,722
Real estate developed for sale                                         -        91,242          1,993                -        93,235
Goodwill                                                               -        19,563         58,622                -        78,185
Intangible assets                                                      -         2,032         21,467                -        23,499
Deferred financing costs                                               -         6,462          2,644                -         9,106
Long-term investments                                                  -             -          7,408                -         7,408
Other assets                                                           -         8,158          9,879                -        18,037
                                                              --------------- ------------  ------------  ----------------  --------
    Total assets                                                $404,800      $777,164       $648,178      $(1,022,416)     $807,726
                                                              --------------- ------------  ------------  ----------------  --------

Liabilities, Mandatorily redeemable Preferred Stock
  and Shareholders' Equity
Current liabilities
   Current portion of long-term debt                            $      -      $ 47,285       $ 31,340     $           -    $  78,625
   Accounts payable and other current liabilities                  7,339        28,988         16,516            (2,020)      50,823
   Deposits and deferred revenue                                     349        20,216          6,539                 -       27,104
   Demand note, Principal Shareholder                                  -         1,846              -                 -        1,846
   Due to affiliates                                              96,274        54,049       (150,323)                -            -
                                                              --------------- ------------  -----------  -----------------  --------
    Total current liabilities                                    103,962       152,384        (95,928)           (2,020)     158,398

   Long-term debt, excluding current portion                           -        87,888        126,005            (4,034)     209,859
   Subordinated notes and debentures, excluding 
     current portion                                                   -       127,539              -                 -      127,539
   Other long-term liabilities                                     3,000         4,468          3,479                 -       10,947
   Deferred income taxes                                          (6,729)       20,654         (1,779)                -       12,146
   Minority interest in subsidiary                                     -             -            378                 -          378
                                                              --------------- ------------  ------------  ---------------  ---------
    Total liabilities                                            100,233       392,933         32,155            (6,054)     519,267

     Mandatorily redeemable 10 1/2% Repriced Convertible
      Preferred Stock par value $1,000 per share;                 40,523             -              -                 -       40,523
      40,000 shares authorized; 36,626 issued and outstanding; 
      including cumulative dividends in arrears (redemption 
      value of $40,523 at October 25, 1998)      

Shareholders' Equity
Common Stock, Class A, par value  $.01 per share; 15,000 
  shares authorized;
   14,760,530 issued and ourstanding                                 148             -              -                -           148
Common stock, par value of $.01 per share;
  100,000,000 shares authorized; 15,525,022 issued and 
   outstanding                                                       155           191             12             (203)          155
Additional paid-in capital                                       267,890       326,257        587,428         (913,685)      267,890
Retained earnings                                                 (4,149)       57,783         28,583         (102,474)     (20,257)
                                                              ------------   -----------  -------------- -------------  ------------
    Total shareholders' equity                                   264,044       384,231        616,023       (1,016,362)      247,936
                                                              ------------   -----------  -------------- -------------  ------------

    Total liabilities, Mandatorily redeemable Preferred
      Stock and shareholders' equity                            $404,800      $777,164      $ 648,178    $ (1,022,416)    $  807,726
                                                              ------------   -----------  -------------- -------------  ------------

</TABLE>
                                       9
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>


                                 Statement of Operations for the three months ended October 25, 1998
                                                     (in thousands) (unaudited)

<CAPTION>
                                                        ASC           Guarantor      Non- Guarantor     Elimination        ASC
                                                                     Subsidiaries      Subsidiaries        Entries      Consolidated

<S>                                                  <C>               <C>               <C>            <C>              <C>        
Net revenues:
    Resort                                           $        808      $     15,762      $      4,096   $      (231)     $    20,435
    Real estate                                                 -             4,323               162              -           4,485
                                                     ------------- ----------------- ----------------- --------------  -------------
      Total net revenues                                      808            20,085             4,258          (231)          24,920
                                                     ------------- ----------------- ----------------- --------------  -------------

Operating expenses:
    Resort                                                    631            19,648             8,040          (231)          28,088
    Real estate                                                 -             3,937                26              -           3,963
    Marketing, general and administrative                   2,304             5,092             3,616              -          11,012
    Depreciation and amortization                               9             1,813               887              -           2,709
                                                     ------------- ----------------- ----------------- --------------  -------------

      Total operating expenses                              2,944            30,490            12,569          (231)          45,772
                                                     ------------- ----------------- ----------------- --------------  -------------

Loss from operations                                       (2,136)         (10,405)           (8,311)              -        (20,852)
    Interest expense                                        1,918             6,929                83              -           8,930
                                                     ------------- ----------------- ----------------- --------------  -------------
Loss before benefit for income taxes                      (4,054)           (17,334)           (8,394)              -       (29,782)
Benefit for income taxes                                    (783)            (6,749)           (3,041)              -       (10,573)
                                                     ------------- ----------------- ----------------- --------------  -------------

Loss from continuing operations                           (3,271)           (10,585)           (5,353)              -       (19,209)

    Dividends accrued on Mandatorily
      Redeemable Preferred Stock                           1,059                  -                 -              -           1,059
                                                     ------------- ----------------- ----------------- --------------  -------------

Net loss available to common shareholders            $    (4,330)      $   (10,585)      $    (5,353)   $          -     $  (20,268)
                                                     ============= ================= ================= ==============  =============

</TABLE>



                                       10
<PAGE>
                    American Skiing Company and Subsidiaries


<TABLE>

                                         Statement of Cash Flows for the three months ended October 25, 1998
                                                             (in thousands) (unaudited)

<CAPTION>
                                                                 ASC        Guarantor      Non- Guarantor   Elimination     ASC
                                                                           Subsidiaries     Subsidiaries      Entries   Consolidated


<S>                                                           <C>           <C>              <C>             <C>         <C>       
Cash flows from operating activities
Net loss                                                      $ (3,271)     $(10,585)        $ (5,353)       $       -   $ (19,209)
Adjustments to reconcile net loss to net cash used in 
  operating activities:
    Depreciation and amortization                                    9         1,813              887                -       2,709
    Amortization of discount on subordinated notes and
      debentures and other liabilities                               -            67                -                -          67
    Deferred income taxes                                         (783)       (6,750)          (3,040)               -     (10,573)
    Decrease (increase) in assets:
      Restricted cash and investments held in escrow                 -          (110)              (8)               -        (118)
      Accounts receivable                                         (971)        2,596               59             (473)      1,211
      Inventory                                                    (85)        1,130             (988)               -          57
      Prepaid expenses                                             332          (170)            (560)               -        (398)
      Real estate developed for sale                                 -       (12,820)               -                -     (12,820)
      Other assets                                                   -        (3,467)             (91)               -      (3,558)
      Due to/from affiliate                                        984         9,678          (10,662)               -           -
    Increase (decrease) in liabilities:
      Accounts payable and other current liabilities               837         1,688            3,926                -       6,451
      Deposits and deferred revenue                                349        10,560            5,980                -      16,889
      Other long-term liabilities                                    -           387               76                -         463
                                                            -------------- ---------------  ---------------  ------------ ----------
    Net cash provided by operating activities                    (2,599)      (5,983)          (9,774)            (473)    (18,829)
                                                            -------------- ---------------  ---------------  ------------ ----------

Cash flows from investing activites
Capital expenditures                                             (2,488)      (8,602)          (8,927)               -     (20,017)
Long-term investments                                                 -            -              (11)               -         (11)
Cash contribution from parent                                         -        1,600           (1,600)               -           -
Other, net                                                            -           (5)              42                -          37
                                                             -------------- -------------  ---------------  ------------- ----------
    Net cash used in investing activities                        (2,488)      (7,007)         (10,496)               -     (19,991)
                                                             -------------- -------------  ---------------  ------------- ----------

Cash flows from financing activities
Net borrowings under New Credit Facility                              -       (3,727)          17,049               -       13,322
Proceeds from (repayment of) long-term debt                           -       18,189              689             473       19,351
Deferred financing costs                                              -          (39)            (171)              -         (210)
                                                             -------------- ---------------  ---------------  ------------ ---------
    Net cash provided by financing activities                         -       14,423           17,567             473        32,463
                                                             -------------- --------------  ---------------  ------------- ---------
   Net increase (decrease) in cash and cash equivalents          (5,087)       1,433           (2,703)              -        (6,357)

    Cash and cash equivalents, beginning of period                5,600        3,172            6,598               -        15,370
                                                             -------------- ---------------  ---------------  ------------ ---------

    Cash and cash equivalents, end of period                   $   513       $ 4,605          $ 3,895         $     -       $ 9,013
                                                             -------------- ---------------  ---------------  ------------ ---------

</TABLE>

                                       11
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>
                                                            Balance Sheet as of July 26, 1998
                                                                (in thousands) (unaudited)
<CAPTION>

                                             ASC           Guarantor    Non- Guarantor   Elimination        ASC
                                                          Subsidiaries    Subsidiaries      Entries      Consolidated
<S>                                    <C>              <C>            <C>             <C>            <C>
Assets
Current assets
   Cash and cash equivalents           $      5,600     $     3,173    $     6,597     $         -    $     15,370
   Restricted cash                                -           1,745          4,515               -           6,260
   Accounts receivable                            -          11,215          2,090         (5,767)           7,538
   Inventory                                    226          10,226          2,901               -          13,353
   Prepaid expenses                             604           1,705          1,400               -           3,709
   Deferred income taxes                          -           1,289            124               -           1,413
   Investment in subsidiaries               385,788         263,950        298,844       (948,582)               -
                                        --------------- --------------- --------------  -------------- ---------------
    Total current assets                    392,218         293,303        316,471       (954,349)          47,643

Property and equipment, net                   4,534         296,044        220,561                         521,139
Real estate developed for sale                    -          38,023         40,613                          78,636
Goodwill                                          -          19,702         58,985                          78,687
Intangible assets                                 -           2,050         21,656                          23,706
Deferred financing costs                          -           6,643          2,569                           9,212
Long-term investments                             -               -          7,397                           7,397
Other assets                                      -           4,691          9,788                          14,479
                                        --------------- --------------- --------------  -------------- ---------------
    Total assets                        $   396,752      $  660,456     $  678,040      $(954,349)       $ 780,899
                                        --------------- --------------- --------------  -------------- ---------------

Liabilities and Shareholders' Equity
Current liabilities
   Current portion of long-term debt    $         -     $    30,063    $    16,053     $   (1,963)     $    44,153
   Accounts payable and other current 
      liabilities                             6,500          27,302         11,828         (1,258)          44,372
   Deposits and deferred revenue                  -           3,560          6,655               -          10,215
   Demand note, Principal Shareholder             -           1,846              -               -           1,846
   Due to affiliates                         95,290          17,239      (112,529)               -               -
                                       --------------- --------------- --------------  -------------- ---------------
    Total current liabilities               101,790          80,010       (77,993)         (3,221)         100,586

   Long-term debt, excluding current portion      -          87,541        126,573         (2,544)         211,570
   Subordinated notes and debentures, 
     excluding current portion                    -         127,497              -               -         127,497
   Other long-term liabilities                3,000           4,081          3,403               -          10,484
   Deferred income taxes                     (5,946)          27,428          1,237               -          22,719
   Minority interest in subsidiary                -               -            375               -             375
                                       --------------- --------------- --------------  -------------- ---------------
    Total liabilities                        98,844         326,557         53,595         (5,765)         473,231

       Mandatorily redeemable 10 1/2% 
       Repriced Convertable Preferred              
       Stock par value $1,000 per share;     39,464               -              -                          39,464
       40,000 shares authorized; 36,626  
       issued and  outstanding;  including  
       cumulative  dividends  in arrears 
       (redemption value of $39,464 at 
       July 26, 1998)


Shareholders' Equity
Common Stock, Class A, par value  $.01 
   per share; 15,000 shares authorized;
   14,760,530 issued and ourstanding            148               -              -                             148
Common stock, par value of $.01 per share;
  1,000,000 shares authorized; 978,300 
  issued and outstanding                        155             191             12           (203)             155
Additional paid-in capital                  268,346         291,294        610,727       (902,477)         267,890
Retained earnings                           (10,205)          42,414         13,705        (45,904)              11
                                        --------------- --------------- --------------  -------------- ---------------
    Total shareholders' equity              258,444         333,899        624,445       (948,584)         268,204
                                        --------------- --------------- --------------  -------------- ---------------

    Total liabilities and shareholders' 
       equity                            $  396,752      $  660,456     $  678,040      $(954,349)      $  780,899
                                        --------------- --------------- --------------  -------------- ---------------
</TABLE>

                                       12
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>


                                Statement of Operations for the three months ended October 26, 1997
                                                    (in thousands) (unaudited)
<CAPTION>

                                                         ASC          Guarantor     Non-Guarantor     Elimination         ASC
                                                                    Subsidiaries     Subsidiaries       Entries        Consolidated
<S>                                                   <C>             <C>             <C>             <C>               <C>        
Net revenues:
    Resort                                            $       120     $    13,566     $       458     $     (333)       $    13,811
    Real estate                                                 -             810               -               -               810
                                                     ------------- --------------- ---------------  --------------  ----------------
      Total net revenues                                      120          14,376             458           (333)            14,621
                                                     ------------- --------------- ---------------  --------------  ----------------
Operating expenses:
    Resort                                                      -          17,476             665           (333)            17,808
    Real estate                                                 -             925               -               -               925
    Marketing, general and administrative                       -           6,538             307               -             6,845
    Stock compensation charge                              10,983           3,271               -               -            14,254
    Depreciation and amortization                              56           1,448               2               -             1,506
                                                     ------------- --------------- ---------------  --------------  ----------------
      Total operating expenses                             11,039          29,658             974           (333)            41,338
                                                     ------------- --------------- ---------------  --------------  ----------------

Income (loss) from operations                             (10,919)        (15,282)           (516)               -          (26,717)
    Interest expense                                        1,547           6,705             196               -             8,448
                                                     ------------- --------------- ---------------  --------------  ----------------
Loss before benefit for income taxes                      (12,466)        (21,987)           (712)               -          (35,165)
Benefit for income taxes                                   (4,993)         (8,443)           (278)               -          (13,714)
Minority interest in loss of subsidiary                      (456)              -               -               -             (456)
                                                     ------------- --------------- ---------------  --------------  ----------------
Loss from continuing operations                            (7,017)        (13,544)           (434)               -          (20,995)

    Dividends accrued on Mandatorily
      Redeemable Preferred Stock                            2,431               -               -               -             2,431
                                                     ------------- --------------- ---------------  --------------  ----------------

Net loss available to common shareholders              $   (9,448)     $  (13,544)      $    (434)     $         -    $     (23,426)
                                                     ============= =============== ===============  ==============  ================


</TABLE>
                                       13
<PAGE>
                    American Skiing Company and Subsidiaries

<TABLE>


                                           Statement of Cash Flows for the three months ended October 26, 1997
                                                                (in thousands) (unaudited)

                                                               ASC       Guarantor      Non-Guarantor    Elimination        ASC 
                                                                       Subsidiaries     Subsidiaries       Entries    Consolidated


<S>                                                       <C>          <C>              <C>             <C>          <C>          
Cash flows from operating activities
Net loss                                                  $   (7,017)  $  (13,544)      $    (434)      $     -      $    (20,995)
Adjustments to reconcile net loss to net cash used 
  in operating activities:
    Minority interest in loss of subsidiary                     (456)           -               -             -              (456)
    Depreciation and amortization                                651        2,348               2             -              3,001
    Stock compensation charge                                 10,983        3,271               -             -             14,254
    Discount on convertable debt                                 927            -               -             -                927
    Deferred income taxes                                     (4,993)      (8,443)           (418)            -           (13,854)
    Decrease (increase) in assets:
      Restricted cash                                        (11,010)        (273)         (3,677)            -           (14,960)
      Accounts receivable                                         (1)        (294)           (593)          331              (557)
      Inventory                                                    -       (3,520)              -             -            (3,520)
      Prepaid expenses                                             1         (826)           (132)            -              (957)
      Real estate developed for sale                               -      (21,938)              -             -           (21,938)
      Other assets                                                 -          155          (2,853)            -            (2,698)
      Due to/from affiliate                                  (17,792)       5,230          12,562             -                 -
    Increase (decrease) in liabilities:
      Accounts payable and other current liabilities            (730)       7,046           3,396          (331)             9,381
      Deposits and deferred revenue                                -        9,965             313             -             10,278
      Other long-term liabilities                                115          219             (32)            -                302
                                                         ------------- ------------ ---------------  --------------  ---------------
    Net cash provided by (used in) operating activities      (29,322)     (20,604)          8,134             -            (41,792)
                                                         ------------- ------------ ---------------  --------------  ---------------

Cash flows from investing activities
Capital expenditures                                              (1)     (11,175)         (8,073)            -            (19,249)
Long-term investments                                              -            -             127             -                127
Other, net                                                        95            -               -             -                 95
                                                         -------------- ----------- ---------------  --------------  ---------------
    Net cash used in investing activities                         94      (11,175)         (7,946)            -            (19,027)
                                                         -------------- ------------ ---------------  --------------  --------------
Cash flows from financing activities
Net proceeds from Senior Credit Facility                           -        1,189              -              -              1,189
Proceeds from (payment of) long-term debt                     17,500       32,840             (4)             -             50,336
Deferred financing costs                                           -          (50)             -              -                (50)
                                                         -------------- ------------ ---------------  --------------  --------------
    Net cash provided by financing activities                 17,500       33,979             (4)             -             51,475
                                                         -------------- ------------ ---------------  --------------  --------------
    Net increase (decrease) in cash and cash equivalents     (11,728)       2,200             184             -             (9,344)

    Cash and cash equivalents, beginning of period            12,874        2,159             525             -             15,558
                                                         -------------- ------------ ---------------  --------------  --------------
    Cash and cash equivalents, end of period               $   1,146   $    4,359     $       709      $      -         $    6,214
                                                         -------------- ------------ ---------------  --------------  --------------


</TABLE>
                                       14
<PAGE>
                    American Skiing Company and Subsidiaries

     11. Subsequent Events. On September 4, 1998, the Company entered into a $30
million credit  arrangement with BankBoston  Morgan Stanley Capital Funding (the
"Bridge  Financing").  The Bridge  Financing bears interest at a rate of 14% per
annum, payable monthly in arrears, and matured on December 4, 1998. The maturity
date for the loan was extended to December 30, 1998. The Company is currently in
the process of obtaining  permanent  financing to repay the Bridge Financing and
provide additional capital for real estate development.

     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 was
effective for all fiscal  quarters of all fiscal years  beginning after December
15,  1997,  (the  fiscal  year  ended  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 October 25, 1998,  the Company has no such
items of comprehensive  income.  As such, the adoption of SFAS 130 had no effect
on the Company's financial statements.

     In June 1997, the FASB issued Statement of Financial  Accounting  Standards
No. 131,  "Disclosures  about Segment 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
effect of fiscal years  beginning after December 15, 1997 (the fiscal year ended
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 June 1998, the FASB issued Statement of Financial  Accounting  Standards
No. 133,  "Accounting for Derivative  Instrument and Hedging  Activities" ("SFAS
133").  SFAS 133 is effective for fiscal  quarters of all fiscal years beginning
after June 15, 1999 (the fiscal year ended July 30, 2000 for the Company).  This
pronouncement  required  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 of 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.
                                       15
<PAGE>
                    American Skiing Company and Subsidiaries

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

                                     General

         We are pleased to present to you  management's  discussion and analysis
of financial condition and results of operations for the first quarter of fiscal
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 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  the real  estate
development,  completing projects initiated in the Company's summer 1998 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 working  capital and
ski-related   capital   improvements  are  cash  flow  from  operations  of  its
subsidiaries  and borrowings  under the Senior Credit  Facility (as  hereinafter
defined).  Real estate  development  is funded  primarily  through  construction
financing facilities  established for major real estate development projects and
through the  mezzanine  facilities  established  or  expected to be  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  mezzanine  facilities are without
recourse to American Skiing Company and its resort operating subsidiaries.

         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 ($7.2 million of which
was available at October 25, 1998) is available for borrowings by ASC East, Inc.
and its subsidiaries  (the "East Facility") and $150 million of which (less than
$0.1  million of which was  available  at October  25,  1998) is  available  for
borrowings by the Company  excluding ASC East,  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.

                                       16
<PAGE>
                    American Skiing Company and Subsidiaries


        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.  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 a 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 customary
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 secured
by substantially all the assets of ASC East, Inc. and its  subsidiaries,  except
its real estate  development  subsidiaries,  which are not  borrowers  under the
Senior Credit Facility.  The West Facility is secured by  substantially  all the
assets of the  Company  and its  subsidiaries,  except  ASC East,  Inc.  and its
subsidiaries.

        Summer 1998 capital  improvements  were funded through the Senior Credit
Facility and a $31 million leasing facility arranged by BancBoston Leasing, Inc.
Interim  funding of working  capital for Resort  Properties and its planned 1998
real estate  development  program was obtained  through a loan from  BankBoston,
N.A. and Morgan  Stanley  Capital  Funding in the maximum  amount of $30 million
(approximately $28.5 of which was outstanding on December 4, 1998), which closed
on September 4, 1998 (the "Bridge  Loan").  The Bridge Loan bears  interest at a
rate of 14% per annum  (payable  monthly in  arrears)  and  initially  carried a
maturity  date of December 4, 1998.  The  maturity  date for the Bridge Loan has
since been extended to December 30, 1998. The Bridge Loan is secured by security
interests in, and mortgages on,  substantially all of Resort Properties' assets.
Resort  Properties  expects to repay the Bridge Loan with the proceeds of either
(1) a subordinated debt financing ("Mezzanine Facility"),  which it is currently
in the process of privately  negotiating  or (2) a Rule 144A  placement of a new
senior secured credit facility with sufficient additional  availability to allow
repayment of the Bridge Loan ("Senior  Secured  Facility").  No assurance can be
given that either the Mezzanine  Facility or the Senior Secured Facility will be
successfully  placed or that the terms of the  Mezzanine  Facility or the Senior
Secured  Facility  will  not  be  costly,   restrictive  to  Resort  Properties'
operations or dilutive of the Company's existing shareholders.  Failure to place
the Mezzanine Facility or the Senior Secured Facility would require curtailing a
major portion of future real estate  development and refinancing the Bridge Loan
to provide longer term funding for Resort Properties' existing seven development
projects.  The Bridge Loan is  non-recourse  to American  Skiing Company and its
resort operating  subsidiaries.  Any Mezzanine  Facility would be expected to be
non-recourse to American Skiing Company and its resort operating subsidiaries.

                                       17

<PAGE>
                    American Skiing Company and Subsidiaries

         The Company runs 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 financed through a $145 million  construction  loan facility between Grand
Summit Resort Properties,  Inc., ("GSRP", the Company's Grand Summit development
subsidiary) and TFC Textron  Financial,  which closed on September 25, 1998 (the
"Textron Facility"). A portion of the proceeds of the Textron Facility were also
used to  refinance  an  existing  facility  with TFC  Textron  which was used 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),  subject to a 9.25%
floor, matures on September 24, 2002 and had a $29.3 million outstanding balance
as of October 25, 1998. The principal is payable  incrementally  as quartershare
sales are closed at the rate of 80% of the net  proceeds  of each  closing.  The
Textron  Facility is secured by mortgages  against the project sites, is subject
to  customary  covenants,  representations  and  warranties  for  this  type  of
construction  facility,  and is  non-recourse to American Skiing Company and its
operating  subsidiaries.  The Textron Facility,  together with funds invested by
the  Company,  is  sufficient  to fund all of the  Company's  Grand Summit Hotel
projects for which the Company is currently in pre-sales.

         The  remaining  hotel  project  commenced  by the Company in 1998,  the
Sundial  Lodge  project at The  Canyons,  is expected  to be financed  through a
construction loan facility with KeyBank, N.A. in a principal amount equal to 90%
of the total project cost (the "Key Facility"). The remaining project costs will
be financed through the Bridge Loan.  Although the Company  anticipates that the
Key Facility  will close in the  Company's  second  fiscal  quarter of 1999,  no
assurance can be given that this facility will close as currently contemplated.

         The Company retained  approximately $15 million of unexpended  proceeds
from its initial  public  offering.  During the fourth  quarter of the Company's
fiscal  1998,  these  proceeds  were treated as a capital  contribution  to real
estate and are currently invested in Resort Properties.  In the first quarter of
fiscal 1999, the Company made a capital contribution of all of the capital stock
of Resort Properties to the Company's  wholly-owned  subsidiary,  ASC East, Inc.
This  contribution  was made to consolidate the operations of Resort  Properties
with those of GSRP, which became a wholly-owned  subsidiary of Resort Properties
subsequent to the merger.

        ASC East,  Inc. is  prohibited  under the  indenture  governing its $120
million 12% Senior  Subordinated  Notes due 2006 from paying dividends or making
other  distributions  to  the  Company,   except  under  certain  circumstances.
Therefore, ASC East, Inc.'s ability to distribute excess cash to the Company for
use by the Company or its other subsidiaries is limited.

        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.

                                       18
<PAGE>
                    American Skiing Company and Subsidiaries

         Due to the seasonality of the Company's business, the Company's maximum
annual leverage occurs during the months of November and December. During fiscal
1999, the Company expects to reach its maximum leverage point in December,  1998
at which time borrowings (exclusive of real estate borrowings with recourse only
to Resort  Properties  and/or its subsidiaries) are expected to approximate $380
million.  During  this  period,  the  Company  expects to have  little,  if any,
borrowing  availability  under the Senior Credit  Facility and will have limited
ability to fund extraordinary expenses.

         Long-Term.  The Company's primary long-term liquidity needs are to fund
skiing  related  capital  improvements  at  certain  of its  resorts,  extensive
development of its slopeside real estate, and any future  acquisitions of resort
properties.  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 $55 million, with the summer 1999 resort capital program estimated
at between $25  million and $35  million.  The  Company  anticipates  its annual
maintenance capital needs to be approximately $12 million.

         The  Company's  largest  long-term  capital needs relate to The Canyons
resort in Utah and the Company's real estate  development  program.  The Canyons
resort will require an estimated  $30 million over the next three years to fully
develop on-mountain  facilities in time for the 2002 Winter Olympic Games. Other
major  capital  expenditures  anticipated  during the next several  fiscal years
include the  interconnection of its Killington and Pico resorts, at an estimated
cost of $7.0  million,  and water  projects  at its  Killington  and Mount  Snow
resorts,  at an estimated  cost of $4.0 million  each,  and at The Canyons at an
estimated cost of $12.3 million.

         There is a  considerable  degree of flexibility in the timing and, to a
lesser degree,  scope of these capital  improvements.  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  under the Senior
Credit Facility.

         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. All real estate
development  is  undertaken   through  the  Company's  real  estate  development
subsidiary, Resort Properties. Recourse on indebtedness incurred to finance real
estate  development  is limited to Resort  Properties  and/or its  subsidiaries.
Resort Properties' seven existing  development  projects are currently funded by
the Bridge Loan,  the Textron  Facility and the  anticipated  Key Facility.  The
Bridge Loan matures on December  30, 1998 and is  anticipated  to be  refinanced
with the Mezzanine Facility or the Senior Secured Facility.  No assurance can be
provided that the Mezzanine  Facility or the Senior Secured  Facility will close
prior to the maturity of the Bridge Loan.

                                       19
<PAGE>

                    American Skiing Company and Subsidiaries

         The  Company  expects  to  undertake  future  real  estate  development
projects   through  special  purpose   subsidiaries   with  financing   provided
principally on a limited  recourse  basis.  Required  equity  contributions  for
approximately  the next five of these projects are expected to be made using the
remaining  proceeds  of the  Mezzanine  Facility  and  sales  proceeds  from the
Company's four existing Grand Summit Hotel projects.  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  construction  facilities or other financing arrangements for these
projects before undertaking each development.

         The Company from time to time considers  potential  acquisitions  which
would be accretive  to earnings.  There are not  currently  any funding  sources
immediately  available to the Company for such  acquisitions,  however,  and the
Company  would need to establish  such sources  prior to  consummating  any such
acquisition.

                                       20
<PAGE>
                    American Skiing Company and Subsidiaries


                        Changes in Results of Operations

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

          1. Resort Revenues.  Resort revenues increased $6.6 million, or 47.8%,
     from $13.8  million for the three  months  ended  October 26, 1997 to $20.4
     million for the three months ended  October 25, 1998.  The inclusion of the
     Steamboat  and  Heavenly  resorts  for the period  ended  October  25, 1998
     accounts  for $3.7  million of the  increase.  The  remaining  increase  is
     primarily  attributable  to the  operation of Grand Summit Resort Hotels at
     the Company's Killington,  Mount Snow and Sunday River resorts which opened
     during the 1997/1998 ski season.

          2. Real estate revenues.  Real estate revenues increased $3.7 million,
     or 462.5%,  from $.8 million for the three months ended October 26, 1997 to
     $4.5 million for the three months ended  October 25, 1998.  The increase is
     primarily  attributable to the sale of  quartershare  units at Grand Summit
     Resort Hotel  projects at the Company's  Killington,  Mount Snow and Sunday
     River  resorts and the sale of Locke  Mountain  townhouses at the Company's
     Sunday River resort.

          3. Cost of resort  operations.  Cost of  resort  operations  increased
     $10.3  million,  or 57.9%,  from $17.8  million for the three  months ended
     October 26, 1997 to $28.1  million for the three months  ended  October 25,
     1998.  The inclusion of the  Steamboat and Heavenly  resorts for the period
     ended  October 25, 1998  accounts  for $7.1  million of the  increase.  The
     remaining  increase is  primarily  attributable  to the  operation of Grand
     Summit  Resort Hotels at the  Company's  Killington,  Mount Snow and Sunday
     River resorts which opened during the 1997/1998 ski season.

          4. Cost of real  estate  operations.  Cost of real  estate  operations
     increased  $3.1 million,  or 344.4%,  from $.9 million for the three months
     ended  October 26, 1997 to $4.0 million for the three months ended  October
     25, 1998. The increase is primarily  attributable to an increase in cost of
     goods  sold  relating  to the sale of  quartershare  units at Grand  Summit
     Resort Hotel  projects at the Company's  Killington,  Mount Snow and Sunday
     River  resorts and the sale of Locke  Mountain  townhouses at the Company's
     Sunday River resort.

          5.  Marketing,  general  and  administrative.  Marketing,  general and
     administrative  expense increased $4.2 million, or 61.8%, from $6.8 million
     for the three months ended  October 26, 1997 to $11.0 million for the three
     months ended October 25, 1998.  The inclusion of the Steamboat and Heavenly
     resorts for the period ended  October 25, 1998 accounts for $2.9 million of
     the increase. The remaining increase is primarily attributable to increased
     costs associated with the establishment of public holding company corporate
     functions,  including legal, accounting,  shareholder relations,  financial
     analysis,  management  information  systems support functions and corporate
     marketing initiatives.

          6. Stock  compensation  charge.  Stock  compensation  charge decreased
     $14.3 million,  or 100%. This charge was recognized during the three months
     ended October 26, 1997 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  $1.2 million,  or 80.0%,  from $1.5 million for the three months
     ended  October 26, 1997 to $2.7 million for the three months ended  October
     25, 1998. $.8 million of the increase is  attributable  to the inclusion of
     the Steamboat  and Heavenly  resorts for the period ended October 25, 1998.
     The remaining increase is primarily  attributable to increased depreciation
     expense related to the Company's capital improvement programs.

                                       21
<PAGE>
                    American Skiing Company and Subsidiaries

          8. Benefit for income taxes.  Benefit for income taxes  decreased $3.1
     million,  or 22.6%,  from a benefit of $13.7  million for the three  months
     ended  October 26, 1997 to a benefit of $10.6  million for the three months
     ended October 25, 1998. The decrease is attributable to the decrease in the
     Company's  net loss for the three months ended October 25, 1998 as compared
     to the three months ended October 26, 1997.

          9.  Accretion  of  discount  and  dividends   accrued  on  mandatorily
     redeemable preferred stock.  Accretion of discount and dividends accrued on
     mandatorily  redeemable  preferred stock decreased $1.4 million,  or 58.3%,
     from $2.4  million  for the three  months  ended  October  26, 1997 to $1.0
     million for the three  months  ended  October  25,  1998.  The  decrease is
     attributable  to additional  accretion  recognized  during the three months
     ended  October 26, 1997  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.

                                       22
<PAGE>

                    American Skiing Company and Subsidiaries

                  Changes in Financial Condition

          First Quarter of Fiscal 1999 Compared to Fiscal Year End 1998

          1. Cash and cash equivalents. Cash and cash equivalents decreased $6.4
     million,  or 41.6%,  from $15.4 million at July 26, 1998 to $9.0 million at
     October 25, 1998 . The decrease is primarily  attributable to the Company's
     seasonal working capital needs.

          2. Accounts receivable. Accounts receivable decreased $1.2 million, or
     16.0%,  from $7.5  million at July 26, 1998 to $6.3  million at October 25,
     1998. The decrease is primarily  attributable to the seasonal nature of the
     Company's operating cycle.

          3. Property and equipment,  net. Property and equipment, net increased
     $16.6  million,  or 3.2%,  from  $521.1  million at July 26, 1998 to $537.7
     million at October 25, 1998. The increase is  attributable to the Company's
     summer capital improvement program.

          4. Real estate  developed  for sale.  Real estate  developed  for sale
     increased $14.6 million,  or 18.6%,  from $78.6 million at July 26, 1998 to
     $93.2 million at October 25, 1998.  The increase is primarily  attributable
     to construction of Locke Mountain  townhouse units at the Company's  Sunday
     River resort,  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.

          5. Other assets.  Other assets  increased by $3.5  million,  or 24.1%,
     from $14.5  million at July 26, 1998 to $18.0  million at October 25, 1998.
     This  increase is primarily  attributable  to the payment of a $3.6 million
     cash bond related to infrastructure improvements at the Canyons.

          6. Current  portion of long-term  debt.  Current  portion of long-term
     debt increased $34.5 million, or 78.2%, from $44.1 million at July 26, 1997
     to $78.6 million at October 25, 1998.  Interim funding from the Bridge Loan
     accounts  for $20.5  million of the  increase.  The  remaining  increase is
     attributable  to  increased  debt levels to finance the  Company's  capital
     improvement program and seasonal working capital needs.


          7. Accounts  payable and other current  liabilities.  Accounts payable
     and other current liabilities  increased $6.4 million, or 14.4%, from $44.4
     million at July 26, 1998 to $50.8 million at October 25, 1998. The increase
     is attributable to the Company's seasonal operating cycle.

          8.  Deposits and  deferred  revenue.  Deposits  and  deferred  revenue
     increased $16.9 million,  or 165.7%, from $10.2 million at July 26, 1998 to
     $27.1 million at October 25, 1998.  The increase is primarily  attributable
     to deferred  revenue for season passes and ski and lodging deposits for the
     1998/1999 ski season.

          9.  Deferred  income  taxes.  Deferred  income taxes  decreased  $10.6
     million,  or 46.7%, from $22.7 million at July 27, 1998 to $12.1 million at
     October 25, 1998.  The decrease is  attributable  to the Company's net loss
     during the first quarter of fiscal 1999.

          10. Mandatorily  redeemable  preferred stock.  Mandatorily  redeemable
     preferred stock increased $1.0 million, or 2.5%, from $39.5 million at July
     26,  1998  to  $40.5  million  at  October  25,  1998.   The  increased  is
     attributable to dividends accrued during the three months ended October 25,
     1998.

          11. Retained  earnings.  Retained earnings decreased $20.2 million due
     to the Company's net loss during the three months ended October 25, 1998.

                                       23

<PAGE>

                    American Skiing Company and Subsidiaries

Year 2000 disclosure

     Background The "Year 2000 Problem" is the result of many existing  computer
programs and  embedded  chip  technology  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
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 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--Information  Technology
("IT") Systems,  Non-IT Systems and 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
January 31, 1999; 2) gather certificates and warranties from providers; expected
to be complete by January 31, 1999, 3) determine  required  actions and budgets;
estimated to be completed by January 31, 1999, 4) perform remediation and tests:
estimated to be completed by September 1, 1999 and 5) designing  contingency and
business continuation plans for each Company location: estimated 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 was  acquiring  ski
resorts, the technology was being updated. 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  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 the Springer  Miller  lodging  system and the central
reservation system,  both of which the company belives are compliant.  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,  elevators and  telecommunication
systems.  Phases 1, 2 and 3 are  scheduled  for  completion  by January 31, 1999
which is 45 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, 2 and  3,  are  scheduled  for
completion by January 31, 1999,  which is 45 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.

                                       24
<PAGE>
                    American Skiing Company and Subsidiaries

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  $150,000.
This estimate does not include  Information  System conversions at Sugarloaf and
Sugarbush for the Springer  Miller  lodging  system or the central  reservations
system since those  replacement  costs were not due to, or  accelerated  by, the
Year 2000 Project.  The Company is updating those systems to standardize systems
within  American Skiing Company  resorts.  The total amount expended on the Year
2000  Project  through  October 25, 1998 was $0, of which  approximately  (1) $0
related to costs to modify software, hire internal personnel and hire outsourced
Year 2000 solution  providers and (2) $0 and $0 related to replacement  costs of
non-compliant IT systems and non-IT systems,  respectively. The estimated future
costs of the Year 2000 Project through  October 25, 1998 was $150,000,  of which
approximately (1) $0 related to cost to modify software, hire internal personnel
and hire outsourced Year 2000 solution providers and (2) $150,000 and $0 related
to   replacement   costs  of   non-compliant   IT  systems  and  non-IT  systems
respectively.

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" beginning on page 25.

Contingency plans
As of October 25, 1998, the Company has not developed a contingency plan related
to Year 2000.  The Company is  planning  on  developing  a  contingency  plan by
May 31, 1999.

                                       25
<PAGE>

                    American Skiing Company and Subsidiaries

                           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,  the
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 obtaining financing with which to repay the Bridge
Loan and 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.

                                       26
<PAGE>


                                     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>
                    American Skiing Company and Subsidiaries



                           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 first fiscal quarter
of 1999.

Exhibit No.                 Description
-----------                -----------
s
1)             Loan and Security Agreement among Grand Summit Resort Properties,
               Inc., Textron Financial  Corporation and certain lenders dated as
               of September 1, 1998.

2)             Credit Agreement among American Skiing Company Resort Properties,
               Inc.,  certain lenders and BankBoston,  N.A. as agent dated as of
               September 4, 1998.

3)             Supplemental  Indenture  dated  as of  September  4,  1998  among
               American Skiing Company Resort Properties, Inc., its subsidiaries
               party  thereto,  and United  States Trust  Company of New York as
               Trustee.



b) Reports on Form 8-K
           The  Company  filed a Form 8-K  during  the first  quarter of 1999 on
September  29,  1998,  reporting  the closing of the Bridge Loan and the Textron
Facility.

                                       27
<PAGE>
                    American Skiing Company and Subsidiaries


                                   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:  December 8, 1998                   /s/ Christopher E. Howard
----------------------------               --------------------------------
                                            Christopher E. Howard
                                            Senior Vice President
                                            Chief Administrative Officer and
                                               General Counsel
                                            (Duly Authorized Officer)



Date:  December 8, 1998                   /s/ Christopher D. Livak
--------------------------------           -------------------------------
                                           (Principal Financial and Accounting
                                                Officer)

                                       28