UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K

         [X]      ANNUAL  REPORT   PURSUANT  TO  SECTION  13  OR  15(d)  OF  THE
                  SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended July
                  30, 2000 or

         [ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE
                  SECURITIES  EXCHANGE  ACT OF 1934  For the  transition  period
                  from____________ to ____________.

                         Commission File Number 1-13507

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

         Delaware                                       04-3373730
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)
                                  P.O. Box 450
                               Bethel, Maine 04217
                     (Address of principal executive office)
                                   (Zip Code)

                                 (207) 824-8100
                                  www.peaks.com
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, $.01 par value              New York Stock Exchange
(Title of Each Class)                     (Name of exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act:

         None                                        None
(Title of Each Class)                    (Name of exchange on which registered)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the  preceding  12 months (or  shorter  period  that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the registrant's  outstanding common stock held by
non-affiliates  of the registrant on October 24, 2000,  determined using the per
share closing price thereof on the New York Stock Exchange  Composite  tape, was
approximately $29.7 million. As of October 24, 2000, 30,469,163 shares of common
stock were  issued and  outstanding,  of which  14,760,530  shares  were Class A
common stock.
<PAGE>


                             American Skiing Company

            Form 10-K Annual Report, for the year ended July 30, 2000

              American Skiing Company and Consolidated Subsidiaries

                                Table of Contents

                                                                         Part I
                           Page

Item 1   Business .............................................................1

Item 2   Properties ..........................................................13

Item 3   Legal Proceedings....................................................17

Item 4   Submission of Matters to a Vote of Security Holders .................17

                                     Part II

Item 5   Market for Registrant's Common Equity and Related
         Stockholder Matters .................................................18

Item 6   Selected Financial Data .............................................19

Item 7   Management's Discussion and Analysis of Financial
         Condition and Results of Operations..................................21

Item 7A  Quantitative and Qualitative Disclosures about
         Market Risk .........................................................32

Item 8   Financial Statements and Supplementary Data .........................32


                                    Part III

Item 10  Directors and Executive Officers of the Registrant...................34

Item 11  Executive Compensation...............................................34

Item 12  Security Ownership of Certain Beneficial Owners and
         Management...........................................................34

Item 13  Certain Relationships and Related Transactions.......................34

                                     Part IV

Item 14  Exhibits, Financial Statement Schedules and
         Reports on Form 8-K..................................................34

Signatures....................................................................39

                                       (i)


<PAGE>

                                     PART I
                                 Item 1 Business
American Skiing Company

         American  Skiing Company is organized as a holding company and operates
through  various  subsidiaries.  We believe that we are the largest  operator of
alpine  ski and  snowboard  resorts  in the  United  States.  We  reinforce  and
capitalize   on  this  by   developing,   owning  and   operating   a  range  of
hospitality-related businesses,  including hotels, golf courses, restaurants and
retail  locations.   We  also  develop,  market  and  operate  alpine  villages,
ski-in/ski-out  real estate and townhouses,  condominiums and quarter  ownership
hotels. We manage our operations in two business segments, ski resort operations
and  mountainside  real  estate   development.   For  a  complete  breakdown  of
information by reportable  segment refer to Footnote 14 - "Segment  Information"
in the consolidated financial statements included in Item 8 of this report.

         On August 9,  1999,  we  completed  the sale of  150,000  shares of our
series B convertible  exchangeable preferred stock to Oak Hill Capital Partners,
L.P. We realized  gross  proceeds  of $150  million on the sale.  We used $128.6
million of the proceeds to reduce amounts owed under our senior credit facility,
approximately  $30  million of which has been  reborrowed  and  invested  in our
principal real estate  development  subsidiary,  American  Skiing Company Resort
Properties,  Inc. The remainder of the proceeds  were used to pay  approximately
$16 million in fees and expenses in connection  with the transaction and acquire
from our principal  shareholder certain strategic assets and repay a demand note
issued by one of our subsidiaries to our principal shareholder, in the aggregate
amount of $5.4 million.

         We moved our state of  incorporation  from Maine to Delaware by merging
into a wholly  owned  Delaware  subsidiary  on October  12,  1999.  Our  capital
structure did not change as a result of the merger.

         Our  revenues,   earnings  before  interest   expense,   income  taxes,
depreciation and amortization,  or EBITDA,  and net loss available to our common
shareholders  for our year  ended  July 30,  2000 or fiscal  2000,  were  $424.1
million, $47.0 million, and ($52.5) million,  respectively.  Resort revenues and
resort  EBITDA  for  fiscal  2000  were  $292.1   million  and  $38.8   million,
respectively.  Real estate  revenues and real estate EBITDA for fiscal 2000 were
$132.1 million and $8.2 million, respectively.

Resort Operations

         Our  resort  business  is  derived  primarily  from our  ownership  and
operation  of nine ski  resorts,  several of which are among the  largest in the
United  States.  We  currently  have at least one  resort  located in each major
skiing market in the United States.  During the 1999-00 ski season,  our resorts
generated  approximately  5.0 million skier visits,  representing  approximately
9.6% of total skier visits in the United States.  The following table summarizes
key statistics of our resorts:
<TABLE>

  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
                                  Skiable     Vertical                         Snowmaking                1999-00
                                  Terrain       Drop                Total       Coverage       Ski        Skier
  Resort, Location                (acres)      (feet)   Trails      Lifts     (% of acres)    Lodges     Visits
                                                                 (high-speed)                            (000s)
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
<S>                                <C>         <C>        <C>       <C>            <C>          <C>      <C>

  Killington, VT                   1,200       3,150      200       32(8)          70%          8           939
  Sunday River , ME                  660       2,340      127       18(4)          92%          4           513
  Mount Snow, VT                     769       1,700      130       23(3)          85%          5           513
  Sugarloaf, ME                    1,400       2,820      126       15(2)          92%          2           325
  Sugarbush, VT                      468       2,650      115       18(4)          67%          5           352
  Attitash Bear Peak, NH             280       1,750       70       12(2)          97%          2           194
  The Canyons, UT                  3,625       3,190      135       15(6)          10%          4           248
  Steamboat, CO                    2,939       3,668      142       20(4)          15%          4         1,025
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
       Total                      16,135      24,768    1,129      182(41)                       41       5,006
  ----------------------------- ------------- --------- -------- ------------ -------------- --------- ------------
</TABLE>

  See Item 2 - Properties,  of this report for a detailed description of each of
our resorts.

                                       1
<PAGE>


         Our resort  revenues  are  derived  from a wide  variety of sources and
include lift ticket sales,  food and beverage sales,  retail sales including ski
rentals and repairs,  skier development,  lodging and property management,  golf
and other summer activities and miscellaneous  other sources.  Lift ticket sales
represent   the  single   largest   source  of  resort   revenues  and  produced
approximately  45% of total  resort  operations  revenue  for fiscal  2000.  See
"Management's  Discussion  and Analysis of Results of  Operations",  included in
Item 7 of this report, for a breakdown of the sources of our resort revenues for
the last three fiscal years.

         Lift Ticket Sales.  We manage our lift ticket  programs and products in
order to increase  our ticket  yields.  Lift  tickets are sold to  customers  in
packages together with accommodations in order to maximize occupancy. We offer a
wide variety of incentive-based  lift ticket programs designed to maximize skier
visits during  non-peak  periods and to attract  specific  market  segments.  We
manage our ticket  yields  during peak  periods in order to maximize  total lift
ticket revenues.

         Food and Beverage. We own and operate substantially all of the food and
beverage facilities at our resorts,  with the exception of the Sugarloaf resort,
which is under a long-term  concession  contract with an unrelated  third party.
Our food and beverage strategy involves providing a wide variety of restaurants,
bars, cafes,  cafeterias and other food and beverage outlets at our resorts.  By
controlling the vast majority of our on-mountain and base area food and beverage
facilities, we are able to capture a larger proportion of guest spending as well
as ensure  product and service  quality.  We  currently  own and operate over 40
different food and beverage outlets.

         Retail Sales.  We own over 80 retail and ski rental shops  operating in
our resorts.  The large number of retail  locations that we operate allows us to
improve  margins  through large quantity  purchase  agreements  and  sponsorship
relationships.  On-mountain  shops sell ski  equipment and  accessories  such as
skis, snowboards, boots, goggles, sunglasses, hats, gloves and larger soft goods
such as jackets and snowsuits.  In addition,  all sales  locations offer our own
branded apparel which generally provides higher profit margins than other retail
products.  In the non-winter  seasons,  the shops sell mountain  bikes,  in-line
skates, tennis equipment and warm weather apparel. In addition, we have expanded
our retail operations  through off-site retail facilities in high traffic areas,
such as stores on the Killington Access Road and in downtown South Lake Tahoe.

         Lodging and Property  Management.  Our lodging and property  management
departments  manage our properties as well as properties owned by third parties.
Currently,  our lodging departments manage  approximately 2,300 lodging units at
our  resorts.  The  lodging  departments  perform  a full  complement  of  guest
services,  which include  reservations,  property  management,  housekeeping and
brokerage  operations.  Most of our resorts have a welcome center to which newly
arriving guests are directed.  The center allocates  accommodations and provides
guests with  information  on all of the resort's  activities  and services.  Our
property management operation seeks to maximize the synergies that exist between
lodging and lift ticket promotions.

         Skier  Development.  We have  been an  industry  leader  in  developing
learn-to-ski  programs. Our Guaranteed Learn to Ski Program was one of the first
skier development programs to guaranty that a customer would learn to ski in one
day. The success of this program led to the development of "Perfect Turn," which
we believe was the first combined skier development and marketing program in the
ski industry.  Perfect Turn ski professionals receive specialized instruction in
coaching,  communication,  skiing and are also trained to sell related  products
and  cross-sell  other resort  goods and services and real estate.  We operate a
hard goods marketing  program at each of our resorts designed to allow customers
to test skis and snowboards  with ski  professionals,  purchase their  equipment
from those  professionals and receive ongoing product and technological  support
through Perfect Turn. We have also instituted a unique skier development program
throughout  our resort  network that focuses on the  marketing  and sales of the
entire mountain resort experience,  rather than simply traditional  learn-to-ski
concepts.

Resort Operating Strategy

         We believe that the following key operating strategies will allow us to
increase revenues and profitability by capitalizing on our position as a leading
mountain resort operator and real estate developer.



                                       2
<PAGE>

         Capitalize  on  Recent  Facilities  Expansion  and  Upgrades.  We  have
invested over $172 million  expanding and upgrading our  on-mountain  facilities
over the past three fiscal years. We have  substantially  re-tooled the physical
plant at all of our resorts. As a result of this investment,  we believe that we
now  offer  the most  modern  on-mountain  facilities  available  in each of our
markets.  Capitalizing  on this investment is a primary focus of our fiscal 2001
strategic plan.

         Multi-Resort  Network.  Our network of resorts provides both geographic
diversity  and  significant   operating  benefits.  We  believe  our  geographic
diversity:  reduces the risks  associated with unfavorable  weather  conditions,
insulates us from economic slowdowns in any one particular region, increases the
accessibility  and  visibility  of our network of resorts to the  overall  North
American  skier  population,  and  allows us to offer a wide  range of  mountain
vacation alternatives.

         We believe  that  owning  multiple  resorts  also  provides us with the
opportunity to:

         o        create the industry's largest cross-marketing program,

         o        achieve  efficiencies  and economies of scale when we purchase
                  goods and services,

         o        strengthen our distribution  network of travel agents and tour
                  operators by offering a range of mountain resort alternatives,
                  consistent  service  quality,  convenient  travel  booking and
                  incentive packages,

         o        establish performance  benchmarks for operations across all of
                  our resorts,

         o        utilize specialized  individuals and cross-resort teams at the
                  corporate level as resources for our entire business, and

         o        develop and  implement  consumer  information  and  technology
                  systems for application across all of our resorts.

         Increase  Revenues  Per Skier.  We intend to increase  our revenues per
skier by managing our ticket yields and  expanding  our revenue  sources at each
resort.  We intend to increase  non-lift  ticket  revenue  sources by increasing
point-of-sale  locations  and  sales  volume  through  retail  stores,  food and
beverage services, equipment rentals, skier development and lodging and property
management.  In addition,  we believe that aggressive  cross selling of products
and programs,  such as our frequent skier and multi-resort  programs,  to resort
guests will increase our resort revenues and  profitability.  We believe that we
can increase ticket yields by managing ticket discounts, closely aligning ticket
programs to specific  customer market  segments,  offering  multi-resort  ticket
products and  introducing a variety of programs  that offer  packages of tickets
with lodging and other services available at our resorts.

         Innovative Marketing Programs.  Our marketing programs are designed to:
establish a nationally  recognized  high-quality  name and image while promoting
the  unique   characteristics   of  our   individual   resorts,   capitalize  on
cross-selling   opportunities,   and  enhance  our  customer  loyalty.  We  have
established  joint marketing  programs with major  corporations  such as Sprint,
Mobil,  Anheuser-Busch,   ESPN,  Quaker  Oats,  Pepsi/Mountain  Dew,  Rossignol,
Motorola,  Vermont Pure,  Kodak, and Green Mountain Coffee Roasters.  We believe
these joint  marketing  programs give us a high-quality  image and strong market
presence on both a regional and national basis.

         We  believe  that our new  mEticket  program  is the first  nation-wide
program  targeted at retaining  skiers who ski three to twelve days each season,
which our research indicates  represents the majority of the ski population.  By
giving  guests an incentive  to purchase  their skiing for the year early in the
ski season with the special values  offered by mEticket,  we believe that we can
encourage  guests to ski more often and do the  majority of their  skiing at our
resorts.



                                       3
<PAGE>

         We utilize a variety of marketing media,  including direct mail, radio,
television and the Internet. Television and radio marketing efforts include both
strategic and tactical messaging.  Strategic advertising promotes the sports and
resorts  themselves,  while  tactical  messaging  provides  current  information
related to ski  conditions  as a means of promoting  visits to our  resorts.  In
addition,  each resort uses local cable  television  networks to provide current
information  and cross-sell  resort  products and services.  Internet  marketing
activities  include  individual  resort  websites  which  provide  current  snow
conditions,  special deals and online  reservation  booking, a real estate sales
website promoting our Grand Summit Hotels and Resort Villages,  a dedicated site
for mEticket, a site promoting summer vacation activities,  on-line retail sales
and a special site promoting learning to ski or snowboard.  All sites are linked
through our (www.peaks.com) site. Guests are increasingly researching conditions
and purchasing  tickets and related resort products online. The mEticket program
is  specifically   designed  to  be  accessed  online  advancing  the  Company's
e-commerce strategy.

         Expand Golf and Convention  Business.  We are one of the largest owners
and operators of resort golf courses in New England.  We strive to capitalize on
this status to increase our off-season revenues.  Sugarloaf,  Killington,  Mount
Snow/Haystack and Sugarbush all operate  championship  resort golf courses.  The
Sugarloaf course,  designed by Robert Trent Jones, Jr., has been rated as one of
the top 25 upscale  courses in the country  according to a Golf Digest  magazine
survey.  We also operate  eight golf  schools at locations  along the East Coast
from Florida to Maine. Our golf program and other  recreational  activities draw
off-season visitors to our resorts and support our growing off-season convention
business, as well as our real estate development operations.

Seasonality

         The ski  industry  is highly  seasonal  in  nature.  Historically,  the
majority of our resort  revenues  are  generated  in our second and third fiscal
quarters,  of which a  significant  portion is produced in two weeks  during the
Christmas and the  Presidents' Day vacation  weeks.  Adverse weather  conditions
during the key periods of our ski season could  adversely  affect our  operating
results.

Mountainside Real Estate Development

         In addition to operating alpine resorts,  we develop  mountainside real
estate which complements the expansion of our on-mountain  operations.  Our real
estate  revenues  are  derived  from the sale and leasing of  interests  in real
estate development projects that we have constructed at our resorts and the sale
to third parties of developmental real estate at our resorts.

         Our real estate  development  strategy  is centered on the  creation of
"resort villages" at our four largest resorts (The Canyons, Heavenly, Killington
and  Sunday  River)  and  enhancement  of the  existing  village  at  Steamboat.
Development within these resort villages is focused on projects which we believe
will generate the highest returns. Each resort village is expected to consist of
quartershare  hotels,   whole  and  fractional  ownership   condominium  hotels,
townhouses and single family homes, and retail operations.

         Grand  Summit  Hotels.  The  Grand  Summit  Hotel is a unique  interval
ownership product that we originated.  Each hotel is a condominium consisting of
fully furnished residential and commercial units with a voluminous atrium lobby,
two or more  restaurants,  retail space, a grand ballroom,  conference  space, a
health  club  with an  outdoor  heated  pool and other  recreational  amenities.
Residential  units in the hotel are sold in  quartershare  interests,  with each
unit consisting of four 13-week ownership interests spread evenly throughout the
year.  The  balance  of the  hotel,  including  restaurants,  retail  space  and
conference  facilities,  is  typically  retained  by us and  managed by the host
resort. The initial sale of quartershare units typically  generates a profit for
the real estate  segment,  and our resort segment  derives a continuing  revenue
stream from operating the hotel's retail,  restaurant and conference  facilities
and  from  renting  quartershare  interval  interests  when  not in use by their
owners.

         Whole  Ownership  Condominium  Hotels.  These  hotels  consist of fully
furnished upscale  condominium units operated on a traditional hotel format. The
whole ownership structure satisfies this market segment's desire for traditional
real  estate  but  complements  the  traditional  concept  with both  hotel-type


                                       4
<PAGE>

amenities  and easy access to rental income  generated  through the hotel rental
management program. We retain ownership of the front desk and other common areas
of the condo/hotels with the expectation of operating these hotels over the long
term. By integrating the condo/hotels  with our central  reservation  system, we
are enhancing our revenue  opportunities  through  vertically  integrated resort
operations,  simplifying guest  reservations,  and the revenue splits associated
with this type of product.  The Sundial Lodge at The Canyons,  as in most of the
resort  village  condominium  products,  also creates retail space on the ground
floor that supports a pedestrian  village,  housing 31,800 square feet of retail
and  commercial  space.  This space  rests at the heart of the  resort's  retail
center.

         Townhouses  and Single  Family.  There is a  component  of resort  real
estate purchasers that do not prefer core village areas,  choosing instead to be
located in an area which is convenient to the resort but removed from the center
of  activity.  There is also  logical  reasoning  for  decreasing  densities  of
development  as one moves away from the core areas.  Within  each resort  master
plan are areas that can  accommodate  stacked town houses with a site density of
about 20 to 30 units per acre, town houses ranging from 10 to 20 units per acre,
and single family homes structured as both small and large lot product.

         Retail.  The  master  plans for each  resort  village  core  consist of
approximately  1,200 units of accommodation  supported by approximately  140,000
square feet of retail space.  A strong  component of the retail space is outdoor
recreation-related retail. Each building within a village is expected to consist
of at least one level of  underground  parking,  will  generally  include ground
floor retail and have three to five stories of residential  units. In some cases
(such as the Grand Summit  Hotels at The Canyons and  Steamboat)  the  buildings
will be as high as nine stories and utilize steel and concrete construction.  As
buildings move to the village periphery, residential, parking and retail density
are reduced.

         Local approvals for these resort village plans are at various stages of
completion.

o        The  Canyons:  We secured  specially  planned  area  approval  from the
         appropriate  authorities for our master plan at The Canyons on November
         15,  1999.  Pursuant  to this  master  plan  approval,  density for the
         residential  units and  commercial  development  for our 15-year master
         plan at The Canyons has been approved.  As we seek to develop  specific
         projects  within the  master  plan at The  Canyons,  we will need local
         approval for specific site plans.

o        Heavenly:  On October 28, 1999, we entered into a an agreement with the
         City of South Lake Tahoe,  California,  pursuant to which,  we received
         all necessary  local  approvals for the development of our Grand Summit
         Hotel at Heavenly and an adjacent $25 million  gondola.  The  agreement
         included  approvals  for an  additional  hotel site on a parcel of land
         adjacent  to the  planned  Grand  Summit  Hotel.  We sold the rights to
         develop this additional land to a subsidiary of Marriott  International
         on October 17, 2000.
o        Killington:  The master  plan for the  Killington  Resort  Village  was
         approved by local authorities in November 1999 and state authorities in
         July 2000.  Killington received partial and conceptual approval for the
         ten criteria which are part of the State of Vermont land use review and
         approval  process.  Final  approval  of  each of the  criteria  will be
         rendered  upon  submittal  of actual  construction  plans for  specific
         projects.
o        Sunday  River:  The  resort  village  master  plan for  Jordan  Bowl is
         complete.  Individual permits for projects are all that is required for
         development.
o        Steamboat:  The permitting process for elements of the Steamboat master
         plan is currently being pursued on a case-by-case basis in consultation
         with local authorities.

Real Estate Development Program

         While our business  plan  contemplates  the  completion  of projects at
several of our resorts across the United  States,  there is a clear focus on The
Canyons and, to a slightly lesser extent, Heavenly. The strength of the existing
market in the Park City, Utah area,  combined with the impact of the 2002 Winter
Olympic Games, makes The Canyons a unique development opportunity. The Salt Lake
City area has been one of the fastest  growing regions in the United States over


                                       5
<PAGE>

the last  several  years.  The Park City area is growing even more  rapidly,  at
twice the State average according to Utah authorities. This area is also hosting
the 2002 Winter Olympic Games, which  dramatically  compounds the effect of this
rapid  expansion on the real estate  market.  We believe  that this  combination
provides a unique real estate development opportunity.

         Our five-year real estate business plan consists of developing up to 17
projects at our various resorts.  Our model anticipates  continuing sell-out and
development of our eight existing projects.  Seven projects (Grand Summit Hotels
at Attitash,  Jordan Bowl at Sunday River,  Killington,  Mount Snow, The Canyons
and Steamboat and the Sundial  Lodge at The Canyons) are fully  constructed  and
operational. The eighth project, the final phase of the Locke Mountain Townhomes
at Sunday River, is currently under  construction.  Two additional  projects are
expected to commence construction during our current fiscal year: a Grand Summit
Hotel at Heavenly  and Phase 1 of the Whisper  Ridge  Townhomes  at The Canyons.
Both of these projects are dependent on achieving adequate pre-sales  contracts,
establishing   completed   designs,   budgets  and   guaranteed   maximum  price
construction  contracts.  In addition,  adequate  financing must be obtained for
both projects before they commence.

Alpine Resort Industry

         There are approximately  750 ski areas in North America.  In the United
States,  approximately 503 ski areas generated  approximately 52.2 million skier
visits during the 1999-00 ski season.  Since 1985,  the ski resort  industry has
undergone a period of  consolidation  and attrition,  resulting in a significant
decline  in the total  number of ski areas in North  America.  The number of ski
resorts in the United  States has  declined  from  approximately  735 in 1983 to
approximately  503 in 2000,  although  the number of skier  visits has  remained
relatively flat. Despite the recent  consolidation  trend overall,  ownership of
the smaller  regional ski resorts  remains  highly  fragmented.  We believe that
technological  advances and rising  infrastructure costs are the primary reasons
for the ski resort industry  consolidation,  and that further  consolidation  is
likely as smaller  regional resorts are acquired by larger resort operators with
more  sophisticated   management  capabilities  and  increased  availability  of
capital.  In addition,  the ski resort industry is  characterized by significant
barriers to entry because the number of attractive  sites is limited,  the costs
of resort development are high, and environmental regulations impose significant
restrictions on new development.

         The  following  chart shows a  comparison  of the  industry-wide  skier
visits compared to our skier visits in the U.S.  regional ski markets during the
1999-00 ski season:

<TABLE>
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
                                                    Skier
                        1999-00                   Visits at
                      Total Skier   Percentage     Company      Company
                         Visits*     of Total      Resorts     Regional
                           (in         Skier         (in        Market
 Geographic Region     millions)      Visits      millions)      Share                  Company Resorts
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
<S>                       <C>          <C>           <C>         <C>       <C>
Northeast                 12.0         23.0%         2.8         23.6%     Killington, Sugarbush, Mount Snow, Sunday
                                                                           River, Sugarloaf USA, Attitash Bear Peak
Southeast                 5.2          10.0%          -            -
Midwest                   6.4          12.3%          -            -
Rocky Mountain            18.1         34.7%         1.3         7.0%      Steamboat, The Canyons
Pacific West              10.5         20.0%         0.9         8.6%      Heavenly
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
U.S. Overall              52.2        100.0%         5.0         9.6%
--------------------- ------------- ------------ ------------ ------------ -------------------------------------------
 (*) Source:  Kottke National End of Season Survey 1999/00 Final Report

</TABLE>
         United  States ski  resorts  range from small  operations  which  cater
primarily to day skiers from nearby  population  centers to larger resorts which
attract  both day skiers and  destination  resort  guests.  We believe  that day
skiers  focus  primarily  on the  quality of the skiing and travel  time,  while
destination  travelers  are  attracted  to the total ski and riding  experience,
including the non-skiing  amenities and activities  available at the resort,  as
well as the perceived  overall quality of the vacation  experience.  Destination
guests generate significantly higher resort operating revenue per skier day than
day skiers  because of their  additional  spending  on  lodging,  food and other
retail items over a multiple-day period.

         Since 1985,  the total number of skier visits in the United  States has
been relatively flat.  However,  according to the National Ski Area Association,
the number of skier visits  represented by snowboarders in the United States has
increased  from   approximately  9.9  million  in  the  1996-97  ski  season  to


                                       6
<PAGE>

approximately 13.8 million in the 1999-00 ski season, a compounded annual growth
rate of approximately 11.8%. We believe that snowboarding will continue to be an
important source of lift ticket,  skier  development,  retail and rental revenue
growth for us.

         We  believe  that we are  well  positioned  to  capitalize  on  certain
favorable  trends and  developments  affecting the alpine resort industry in the
United States. These trends and developments include:

o        the  existence  of 66.7 million  members of the "baby boom"  generation
         that  are  now   approaching   the  40  to  59  year  age  group  where
         discretionary income, personal wealth and pursuit of leisure activities
         are  maximized  (this group is estimated to grow by 16.7% over the next
         23 years)

o        the emergence of the "echo boom" generation  (children of baby boomers)
         as a significant  economic  force which is just  beginning to enter the
         prime entry age for skiing, snowboarding and other "on-snow" sports,

o        advances  in ski  equipment  technology,  such  as the  development  of
         parabolic skis which make skiing easier to learn and enjoy,

o        the continued  growth of  snowboarding  as a  significant  and enduring
         segment of the industry which in turn increases youth  participation in
         alpine sports, and

o        a greater focus on leisure and fitness in general.

         There can be no assurance,  however, that these trends and developments
will have a favorable impact on the ski industry.

Competition

         The ski industry is highly competitive. We compete with mountain resort
areas in the  United  States,  Canada and  Europe.  We also  compete  with other
recreation resorts, including warm weather resorts, for vacationers. In order to
cover the high fixed costs of our ski  operations,  we need to maintain  each of
our regional,  national and  international  skier bases. Our prices are directly
impacted by the number and variety of alternatives  presented to skiers in these
markets. Our most significant competitors are resorts that are well capitalized,
well managed and have  significant  capital  improvement  and resort real estate
development programs.

         Our resorts  also face strong  competition  on a regional  basis.  With
approximately three million skier visits generated by our northeastern  resorts,
competition  in that  region is an  important  consideration.  Our  northeastern
markets  are  located  in  the  major  population   centers  in  the  northeast,
particularly eastern Massachusetts,  northern Connecticut, New York and northern
New Jersey.  For example,  skier origin data collected at Sunday River indicates
that  approximately 43% of its weekend skiers reside in  Massachusetts.  Similar
data collected at Killington and Mount Snow indicate that  approximately 23% and
35%,  respectively,  of their  weekend  skiers  reside  in New  York,  with high
concentrations  from  Massachusetts,  Connecticut,  New Jersey and Vermont.  The
Colorado, Utah and California/Nevada ski markets are also highly competitive.

Employees and Labor Relations

         We  employ   approximately   11,700   employees   at  peak  season  and
approximately  1,600  persons  full  time.  Less  than 1% of our  employees  are
unionized,  all of which are  seasonal  ski patrol  employees at The Canyons and
Steamboat resorts. We believe that we enjoy good relations with our employees.

Government Regulation

         Our resorts are subject to a wide variety of federal,  state,  regional
and local laws and regulations  relating to land use,  environmental/health  and
safety, water resources, air and water emissions,  sewage disposal, and the use,


                                       7
<PAGE>

storage,  discharge,  emission and disposal of hazardous materials and hazardous
and nonhazardous wastes, and other environmental  matters. While we believe that
our  resorts  are  currently  in  material  compliance  with  all  land  use and
environmental  laws, any failure to comply with these laws could result in costs
to satisfy environmental compliance,  remediation requirements or the imposition
of severe  penalties or  restrictions  on operations  by government  agencies or
courts  that  could  adversely  affect  our  operations.  Phase I  environmental
assessments have been completed on substantially  all of the real estate that we
own or control. The reports identified areas of potential  environmental concern
including  the need to upgrade  existing  underground  storage  tanks at several
facilities and the potential need to remediate petroleum  releases.  The reports
did not, however, identify any environmental conditions or non-compliance at any
of our  properties,  the remediation or correction of which we feel would have a
material  adverse  impact  on our  business,  financial  condition,  results  of
operations or cash flows.

         We believe that we possess all the permits, licenses and approvals from
governmental  authorities material to our operations as they currently exist. We
have not received any notice of material  non-compliance with permits,  licenses
or approvals necessary for the operation of any of our properties.

         Our  resort  and real  estate  capital  programs  require  permits  and
approvals  from certain  federal,  state,  regional and local  authorities.  Our
operations are heavily  dependent upon our continued  ability,  under applicable
laws, regulations,  policies, permits, licenses or contractual arrangements,  to
have  access to  adequate  supplies of water with which to make snow and service
the other needs of our  facilities,  and  otherwise  to conduct our  operations.
There can be no assurance that new  applications  of existing laws,  regulations
and policies, or changes in these laws,  regulations and policies will not occur
in a manner that would have a material  adverse effect on our business,  or that
important permits,  licenses or agreements will not be canceled, not renewed, or
renewed on terms no less  favorable to us. Major  expansions  of any one or more
resorts  could require the filing of an  environmental  impact  statement  under
environmental  laws and  applicable  regulations  if it is  determined  that the
expansion  has a  significant  impact  upon the  environment  and could  require
numerous other federal, state and local approvals. Although we have consistently
been successful in implementing our capital expansion plans, no assurance can be
given that necessary permits and approvals will be obtained.

Systems and Technology

         Information  Systems.  Our information  systems are designed to improve
the ski  experience  by developing  more  efficient  guest service  products and
programs.  We  are  pursuing   implementation  of  a  comprehensive  system  and
technology  plan which will include an  integrated  customer  database  tracking
guest preference information and product purchasing patterns , an extensive data
communications  network linking most  point-of-sale  locations through a central
database,  a  central  reservations  system  for  use  in  the  resort's  rental
management   business  and  a  skier  development   reservation  and  instructor
scheduling  system that will simplify the booking process and allow for the best
possible use of our instructors.

         Snowmaking  Systems  and  Technology.  We believe  that we operate  the
largest consolidated snowmaking operation in existence, with approximately 3,900
acres of snowmaking coverage. Our proprietary snowmaking software program allows
us to produce  what we  believe  is the  highest  quality  man-made  snow in the
industry.  We refer to this  ideal  quality  product  as  "Retail  Snow," a high
quality,  durable  skiing  surface  with top to bottom  consistency.  All of our
snowmaking systems are operated through  computer-based control using industrial
automation   software   and  a  variety  of  state  of  the  art   hardware  and
instrumentation.  We use efficient ground based, tower based and fully automated
snowgun  nozzle  technology  and have  developed  software for  determining  the
optimal  snowmaking  nozzle  setting at  multiple  locations  on any  particular
mountain.  This system monitors the weather conditions and system capacities and
determines  the proper  operating  water  pressure for each nozzle,  eliminating
guesswork  and  ensuring  that  ideal  snow  quality  is  provided.  All  of our
snowmaking  systems  are  networked  to allow the  viewing of  information  from
multiple  locations  within our resort  network.  Another  unique feature of our
system is the current display of trail status,  lift status,  weather conditions
and other various on-mountain  information at locations  throughout each resort.
Much of this information is available on the Internet at our various web sites.


                                       8
<PAGE>
                                  RISK FACTORS

         In addition to the other  information  contained in this Form 10-K, you
should carefully consider the following risk factors in evaluating our business.
This Form 10-K contains forward looking  statements and our actual results could
differ materially from those anticipated by any forward-looking  statements as a
result  of  numerous  factors,  including  those  set  forth  in  the  following
description of risk factors and elsewhere in this Form 10-K.

Our business is substantially leveraged and we face a number of financial risks.

         We are highly  leveraged.  As of October  1, 2000,  we had  outstanding
$458.1  million  of total  indebtedness,  including  $331.2  million  of secured
indebtedness, representing 55.0% of our total capital.

         Our  high  level of debt  affects  our  future  operations  in  several
important  ways.  First of all, we will have  significant  cash  requirements to
service  our  debt  which  will in  turn  reduce  the  funds  available  for our
operations,   capital   expenditures  and   acquisitions.   A  decrease  in  the
availability of funds will make us more  vulnerable to adverse general  economic
and  industry   conditions.   Secondly,   the  financial   covenants  and  other
restrictions  contained  in our  debt  agreements  require  us to  meet  certain
financial  tests and  restrict  our  ability to borrow  additional  funds,  make
capital expenditures or sell our assets.

         Our  ability  to  make   scheduled   payments  or  refinance  our  debt
obligations will depend on our future financial and operating performance, which
will be affected by  prevailing  economic  conditions,  financial,  business and
other  factors.  Some of these  factors are beyond our control.  There can be no
assurance that our operating  results,  cash flow and capital  resources will be
sufficient  to pay our  indebtedness.  If our  operating  results,  cash flow or
capital resources prove inadequate we could face substantial  liquidity problems
and might be required to dispose of material  assets or  operations  to meet our
debt and other  obligations.  If we are unable to service our debt,  we could be
forced to reduce or delay  planned  expansions  and capital  expenditures,  sell
assets,  restructure or refinance our debt or seek  additional  equity  capital.
There can be no assurance  that any of these  actions could be effected on terms
satisfactory to our business, if at all.

         Although we believe that capital  expenditures above maintenance levels
can be deferred to address cash flow or other constraints,  these activities can
not be deferred for extended periods without adversely affecting the competitive
position and financial performance of the Company.

         Our continued  growth depends,  in part, on our ability to maintain and
expand our facilities and to engage in successful  real estate  development.  To
the extent that we are unable to do so with cash generated from  operations,  or
through borrowed funds or additional equity investments the growth and financial
health of our business could be impaired.

         We also have significant  future capital  requirements  with respect to
the  retirement  of debt and  other  securities,  including  the  senior  credit
facility,  and redemption of preferred stock such as the 10 1/2% Preferred Stock
in November 2002 and the 8.5% Preferred Stock. There can be no assurance that we
will be able to retire,  redeem,  or refinance these items at their  maturities.
Failure to do so could have a material adverse effect on our business.

If we fail to manage our growth, our business, financial condition and prospects
could be seriously harmed.

         We have  experienced  rapid and  substantial  growth  since 1994.  This
growth has placed,  and could  continue to place,  a  significant  strain on our
management,  employees  and  operations.  Our growth has increased our operating
complexities and the level of responsibility for our management.  Our ability to
compete  effectively  and to manage  recent and future growth  effectively  will
depend  on our  ability  to  implement  and  improve  financial  and  management
information  systems on a timely  basis and to affect  changes in our  business,
such as  implementing  internal  controls  to handle the  increased  size of our
operations  and  hiring,  as  well  as  training,  developing  and  managing  an
increasing number of experienced management-level and line employees. Unexpected


                                       9
<PAGE>

difficulties  during  expansion,  the  failure to attract  and retain  qualified
employees,  or an inability to respond  effectively  to recent growth or planned
future expansion,  could adversely effect our business,  financial condition and
results of operations.

Our  continued  growth  may  depend  in part on making  the right  acquisitions,
obtaining the financing necessary to complete these acquisitions and integrating
into our operations the resorts that we do acquire.

         We continually evaluate potential acquisition opportunities. Any future
acquisitions  will be financed  through a combination  of  internally  generated
funds,  additional bank  borrowings from existing and new credit  facilities and
public offerings or private placements of equity or debt securities.  The nature
of the  financing  will  depend on  factors  such as the size of the  particular
acquisition and our capital  structure at the time an acquisition is made. There
can be no assurance,  however,  that attractive  acquisition  candidates will be
identified,  that we will be able to make  acquisitions on favorable terms, that
necessary  financing will be available on suitable terms, if at all, or that any
acquisitions  will be permitted under applicable  antitrust laws. Our ability to
make acquisitions is limited by antitrust law, and we are effectively prohibited
from acquiring  additional resorts in New England.  If we are unable to continue
making acquisitions our continued growth could be impaired.

         We face risks in connection with the integration of the resorts that we
have  acquired.  Significant  management  resources and time will be required to
integrate any acquired  resorts and  unanticipated  problems or liabilities with
respect  to these new  resorts  could  divert  management's  attention  from our
business,  which  may have a  material  adverse  effect  on our  operations  and
financial performance. Furthermore, there can be no assurance we will be able to
realize any  additional  skier visits,  revenues or cost savings by  integrating
acquired resorts.  The failure to properly integrate new resorts could adversely
affect our business, financial conditions and results of operations.

Our revenues from real estate development are vulnerable to particular risks.

         Our  ability  to  generate   revenues  from  real  estate   development
activities  could be  adversely  affected  by a number of  factors,  such as our
ability to successfully  market our resorts,  the national and regional economic
climate,  local real  estate  conditions  (such as an  oversupply  of space or a
reduction in demand for real estate), costs to satisfy environmental  compliance
and  remediation  requirements  associated with new  development/renovation  and
ongoing  operations,   the  attractiveness  of  the  properties  to  prospective
purchasers and tenants,  competition from other available property or space, our
ability to obtain all necessary zoning, land use, building,  occupancy and other
required  governmental  permits and  authorizations  and changes in real estate,
zoning,  land use,  environmental  or tax laws. Many of these factors are beyond
our  control.  In  addition,  real estate  development  will depend on receiving
adequate  financing on suitable terms.  There can be no assurance as to whether,
when  or on  what  terms  such  financing  may  be  obtained.  Our  real  estate
subsidiaries  do not have  the  financing  available  to  complete  all of their
planned  real estate  development.  In  addition,  these  efforts  entail  risks
associated  with  development  and  construction   activities,   including  cost
overruns,  shortages of materials or skilled labor,  labor disputes,  unforeseen
environmental or engineering  problems,  work stoppages,  and natural disasters,
any of which could delay  construction  and result in a substantial  increase in
our costs.

         In addition, a material portion of our real estate development business
is conducted within the interval  ownership  industry.  As a result, any changes
which already affect the interval ownership  industry,  such as an oversupply of
interval  ownership  units, a reduction in demand for interval  ownership units,
changes in travel and vacation  patterns,  changes in  governmental  regulations
relating to the interval ownership industry,  increases in construction costs or
taxes and tightening of financing  availability,  could have a material  adverse
effect on our real estate development business.

Investments  in  on-mountain  improvements  are  capital  intensive  and  do not
guarantee additional revenue.

         Historically,  a key  element  of  our  strategy  has  been  attracting
additional skiers through investment in on-mountain capital improvements.  These
improvements  are  capital  intensive  and,  to the extent that we are unable to
finance  them from  internally  generated  cash or  otherwise,  our  results  of


                                       10
<PAGE>

operations could be adversely affected.  In addition,  there can be no assurance
that our investment in on-mountain capital  improvements will attract additional
skiers or generate additional revenues.

Our business is highly seasonal and unfavorable weather conditions can adversely
affect our business.

         Ski resort  operations are highly  seasonal.  Over the last five fiscal
years, we have realized an average of  approximately  88% of our resort revenues
and over 100% of resort  EBITDA and net income  during the period from  November
through April, and a significant portion of Resort revenue and approximately 20%
of annual skier visits were  generated  during the Christmas and  Presidents Day
vacation weeks. In addition,  our resorts typically  experience operating losses
and negative cash flows for the period from May to October. During the six-month
period  from  May  to  October  1999,  for  example,  we  had  operating  losses
aggregating  $48.4  million and negative cash flow from  operations  aggregating
$159.2 million.  The negative cash flow from operations  includes $107.0 million
spent developing real estate for resale.  There can be no assurance that we will
be able to finance our capital  requirements  from external  sources during this
period.

         A high degree of  seasonality  in our revenues  increases the impact of
certain events on our operating  results.  Adverse  weather  conditions,  access
route closures,  equipment failures,  and other developments of even moderate or
limited  duration  occurring  during our peak business  periods could reduce our
revenues. Adverse weather conditions can also increase power and other operating
costs associated with snowmaking or could render  snowmaking wholly or partially
ineffective in maintaining quality skiing conditions.  Furthermore,  unfavorable
weather  conditions,  regardless  of actual  skiing  conditions,  can  result in
decreased skier visits.

We operate in a highly competitive industry which makes maintaining our customer
base a difficult task.

         The skiing industry is highly  competitive and capital  intensive.  Our
competitors include major ski resorts throughout the United States,  Canada, and
Europe as well as other  worldwide  recreation  resorts,  including warm weather
resorts and various  alternative leisure  activities.  Our competitive  position
depends on a number of factors, such as our proximity to population centers, the
availability  and  cost  of  transportation  to and  within  a  resort,  natural
snowfall,  the quality and coverage of snowmaking  operations,  resort size, the
attractiveness of terrain,  lift ticket prices,  prevailing weather  conditions,
the appeal of related  services,  the  quality and the  availability  of lodging
facilities,  and resort  reputation.  In addition,  some of our competitors have
greater   competitive   position  and  relative  ability  to  withstand  adverse
developments.  There  can be no  assurance  that  our  competitors  will  not be
successful in capturing a portion of our present or potential customer base.

Changes in regional and national economic  conditions could adversely affect our
results of operations.

         The skiing and real  estate  development  industries  are  cyclical  in
nature  and are  particularly  vulnerable  to shifts in  regional  and  national
economic  conditions.  Skiing and  vacation  unit  ownership  are  discretionary
recreational  activities entailing  relatively high costs of participation,  and
any  decline in the  regional  or  national  economies  where we  operate  could
adversely impact our skier visits, real estate sales and revenues.  Accordingly,
our  financial  condition,   particularly  in  light  of  our  highly  leveraged
condition,  could be  adversely  affected by any  weakening  in the  regional or
national economy.

Our business is subject to heavy environmental and land use regulation.

         We are subject to a wide  variety of federal,  state and local laws and
regulations relating to land use and development and to environmental compliance
and  permitting  obligations,  including  those  related  to the  use,  storage,
discharge,  emission and disposal of hazardous materials.  Any failure to comply
with these  laws  could  result in  capital  or  operating  expenditures  or the
imposition of severe  penalties or  restrictions  on our  operations  that could
adversely  affect our  present  and future  resort  operations  and real  estate
development.  In addition,  these laws and regulations  could change in a manner
that materially and adversely  affects our ability to conduct our business or to
implement desired expansions and improvements to our facilities.

A  significant  portion of our ski resorts are  operated  under leases or forest
service permits.


                                       11
<PAGE>


         We lease a significant  portion of the land  underlying our ski resorts
or use  them  pursuant  to  renewable  permits  or  licenses.  If  any of  these
arrangements  were terminated or not renewed on expiration,  or renewed on terms
materially  less  favorable to us, our ability to possess and use the land would
be impaired.  A substantial  portion of the skiable terrain at our Attitash Bear
Peak,  Sugarbush,  Mount  Snow/Haystack,  Steamboat  and Heavenly ski resorts is
federal  land that is used  under the terms of permits  with the  United  States
Forest  Service.  The  permits  give the Forest  Service the right to review and
comment on the location,  design and  construction of improvements in the permit
area  and on  certain  other  operational  matters.  The  permits  can  also  be
terminated or modified by the Forest Service to serve the public  interest or in
the  event we fail to  perform  any of our  obligations  under  the  permits.  A
termination or modification of any of our permits could have a material  adverse
affect on our results of operations.

A disruption in our water supply would impact our  snowmaking  capabilities  and
impact our operations.

         Our current  operations and  anticipated  growth are heavily  dependent
upon our ability, under applicable federal,  state and local laws,  regulations,
permits,  and licenses or contractual  arrangements,  to have access to adequate
supplies of water with which to make snow and otherwise  conduct our operations.
There can be no assurance that applicable  laws and regulations  will not change
in a manner  that could  have an  adverse  effect,  or that  important  permits,
licenses or agreements will be renewed,  not cancelled,  or, if renewed on terms
no less  favorable to us. Any failure to have access to adequate  water supplies
to  support  our  current  operations  and  anticipated  expansion  would have a
material adverse effect on our business and operating results.

The  loss of any of our  executive  officers  or key  personnel  would  harm our
business.

         Our success  depends to a significant  extent upon the  performance and
continued  service of Mr.  Otten,  as well as several other key  management  and
operational  personnel.  The loss of the  services  of Mr.  Otten  or other  key
personnel could have a material adverse effect on our business and operations.

We are structured as a holding  company and have no assets other than the common
stock of our subsidiaries.

         We are a holding  company and our ability to pay principal and interest
on debt will be dependent upon the receipt of dividends and other distributions,
or the payment of principal and interest on  intercompany  borrowings,  from our
subsidiaries.  We do not have,  and we do not expect in the future to have,  any
material  assets  other  than  the  common  stock  of our  direct  and  indirect
subsidiaries.  The  breach  of any of the  conditions  or  provisions  under the
documents  governing the indebtedness of subsidiaries  could result in a default
which in turn could  accelerate  the maturity of a debt. If the maturity of debt
were accelerated,  the indebtedness  would be required to be paid in full before
the  subsidiary  would be  permitted  to  distribute  any  assets to the  parent
company.  There can be no assurance that our assets or those of our subsidiaries
would be sufficient to repay all of our outstanding debt. In addition, state law
further  restricts the payment of dividends or other  distributions to us by its
subsidiaries.

Our business requires  significant capital  expenditures.  These expenditures do
not, however, guarantee improved results.

         The  development  of ski  resorts  is  capital  intensive.  A  lack  of
available funds for capital expenditures could have a material adverse effect on
our ability to  implement  our  operating  strategy.  We conduct,  and intend to
continue  to  conduct,   real  estate   development   through   special  purpose
subsidiaries and to finance such activities through non-recourse debt. We intend
to finance capital improvements through internally generated funds, non-recourse
financing  and proceeds  from the  offering of debt and equity.  There can be no
assurance  that  sufficient  funds  will  be  available  to fund  these  capital
improvements or real estate development or that these capital  improvements will
attract additional skiers or generate additional revenues.

Control of  our company by principal stockholders

         As a  result  of a  stockholder's  agreement,  Mr.  Otten  and Oak Hill
Capital Partners control a majority of our board of directors. Mr. Otten and Oak
Hill Capital  Partners  may have  interests  different  from those that hold our
common stock.
                                       12
<PAGE>
                                     Item 2
                                   Properties

         Our resorts  include  several of the top  resorts in the United  States
based on skier visits,  such as Steamboat,  the fourth largest ski resort in the
United  States  with over 1.0  million  skier  visits in the 1999-00 ski season,
Killington,  the fifth  largest  resort in the United  States with over  940,000
skier  visits in the  1999-00  ski season,  Sunday  River and Mount Snow,  which
together  with  Killington  comprised  three of the four largest  resorts in the
Northeast  during the 1999-00  ski season,  and  Heavenly,  which  ranked as the
largest  resort  in  the  Pacific  West  region  for  the  1999-00  season  with
approximately 900,000 skier visits.

         The Canyons. When we acquired The Canyons, located in the Wasatch Range
of the Rocky  Mountains  adjacent  to Park City,  Utah,  in July,  1997,  it was
primarily  an  undeveloped  ski resort  with  significant  potential  for future
operational  and  real  estate  development.  The  Canyons  is one  of the  most
accessible  destination  resorts in the world, with the Salt Lake  International
Airport only 32 miles away, and has direct access from a major state highway. We
believe that The Canyons has significant  growth  potential due to its proximity
to Salt Lake City and Park City, its undeveloped ski terrain and its real estate
development  opportunities.  The Utah  Winter  Sports  Park,  which  is  located
immediately  adjacent to the resort,  is scheduled to serve as the venue for the
ski jumping, bobsled and luge events in the 2002 Winter Olympic Games.

         Since  acquiring The Canyons we have invested  significant  capital and
created a  substantial  on-mountain  skiing  infrastructure  which we believe is
capable of supporting substantial skier visit growth. During the 1997-98 season,
its first under our management,  the resort generated over 167,000 skier visits.
This number increased to over 220,000 in 1998-99 and over 248,000 in 1999-00. We
intend to gradually invest additional  capital to improve and expand on-mountain
facilities and skiable  terrain as skier visits grow. We recently  completed two
significant  real estate  projects at The Canyons,  a Grand Summit Hotel and the
Sundial Lodge,  both of which opened during the 1999-00 ski season. In November,
1999, we obtained  final approval of a master  development  plan for The Canyons
which  includes   entitlements  for  approximately  5  million  square  feet  of
development.  Additional  real estate projects at The Canyons are expected to be
launched and begin construction  during the 2001 and 2002 fiscal years.  Several
third  party real  estate  developments  are also  planned  including a Westgate
Resorts time share  project which broke ground in August 2000 and is expected to
begin delivering units in late 2002.

         Steamboat.  The Steamboat ski area is located in the Medicine Bow/Routt
National  Forest,  Routt County,  Colorado on the westerly slopes of Mt. Werner,
approximately 2.5 miles southeast of downtown Steamboat Springs,  Colorado.  The
area consists of 2,694 acres of land licensed  under a Special Use Permit issued
by the Forest  Service and 245 acres of private land owned by Steamboat  located
at the base of the ski area.  Steamboat  receives a high  level of  natural  dry
snow,  averaging  330 inches  annually  the past 10 ski seasons.  Steamboat  has
recorded  more than 1 million  skier visits in each of the past ten seasons.  We
have recently  completed a 300-room Grand Summit Hotel at Steamboat,  which will
bring both additional beds and enhanced amenities to the Steamboat base area.

         Heavenly. Located on the south shore of Lake Tahoe with three base area
complexes,  one in South Lake Tahoe,  California  and two in Stateline,  Nevada,
Heavenly consists of two peaks with a maximum elevation of approximately  10,060
feet.  Heavenly  ranks as the  largest  resort in the  Pacific  West Region with
approximately  900,000  skier  visits for the 1999-00 ski season.  Access to the
resort  is  primarily  through  the  Reno  Tahoe  International  Airport  and by
automobile via Route 50 from San Francisco and Sacramento,  California. Heavenly
has a well-developed bed base in the greater South Lake Tahoe/Stateline area.

         Our  strategy at Heavenly  is to add new  accommodations  and a gondola
lift  system in the South  Lake  Tahoe  commercial  area  through  our  existing
development  rights in the Park Avenue  Redevelopment  area.  We have  commenced
construction  on the gondola and we anticipate  that it will be  operational  in
December  2000. The new gondola will provide lift service to the resort from the


                                       13
<PAGE>

center of South Lake Tahoe and will precede the  construction of two large hotel
projects  over the next three to five years.  Pre-sales  have  commenced for the
first  of the  two  projects,  a 194  room  Grant  Summit  Hotel.  We  sold  the
entitlements  to the land  underlying the second  project to Marriott  Ownership
Resorts, Inc. on October 17, 2000.

         Killington.  Killington, located in central Vermont, is the largest ski
resort in the northeast and the fifth largest in the United  States.  Killington
generated over 900,000 skier visits in 1999-00.  Killington is a  seven-mountain
resort  consisting of approximately  1,200 acres of skiable terrain.  We believe
the size and diversity of skiable  terrain at  Killington  make it attractive to
all levels of skiers and one of the most widely  recognized  of our resorts with
regional,  national  and  international  clientele.  We  have  nearly  completed
construction of a $4 million  snowmaking  expansion project which is expected to
provide the resort with 30% more  snowmaking  capacity  during  certain  periods
which  should lead to higher  early  season  trail  counts and  enhanced  market
confidence in the quality and  reliability  of the snow surface.  We expect this
expansion project to be complete prior to the start of the 2000-01 ski season.

         Killington is a year-round  resort  offering  complete  golf  amenities
including an 18-hole  championship  golf course,  a golf school, a driving range
and a tennis  school.  Our real estate  strategy at  Killington is to expand the
existing Grand Summit Hotel,  begin the first phases of a new destination resort
village and expand the bed base surrounding the company-owned  golf course in an
area  approved  for  development.  The  current  master  plan  for the  proposed
Killington  resort  village  development  includes  over 4,450 units in over 5.3
million square feet of total development.

         Sunday River.  Sunday River,  located in the western mountains of Maine
and approximately a three-hour drive from Boston, is New England's third largest
ski resort with over 500,000 skier visits during the 1999-00  season.  Extending
across eight interconnected  mountains,  its facilities consist of approximately
660 acres of  skiable  terrain  and an  additional  7,000  acres of  undeveloped
terrain.  We have plans to develop a resort village at the Jordan Bowl Area (the
most westerly peak), which could include over 1,350 units, a golf course and 1.1
million square feet of total development.

         Mount Snow. Mount Snow, located in West Dover,  Vermont,  is the fourth
largest ski resort in the northeast United States with over 500,000 skier visits
in  1999-00.  Mount Snow is the  southernmost  of our eastern  resorts.  A large
percentage  of the  skier  base  for  Mount  Snow  derives  from  Massachusetts,
Connecticut  and New  York.  Mount  Snow  also  owns  and  operates  an  18-hole
championship  golf course and is the headquarters of our "Original Golf School",
which consists of eight golf schools located throughout the east coast.

         Sugarloaf.  Sugarloaf is located in the  Carrabassett  Valley of Maine.
Sugarloaf  is a  single  mountain  with a  4,237-foot  summit  and a  2,820-foot
vertical drop. Sugarloaf offers one of the largest  ski-in/ski-out base villages
in the Eastern United States, containing numerous restaurants,  retail shops and
an abundance  of lodging.  Sugarloaf is widely  recognized  for its  challenging
terrain and snowfields  which represent the only  lift-serviced  above-tree line
skiing in the Northeast. As a destination resort,  Sugarloaf has a broad market,
including  areas as distant as New York,  New Jersey,  Pennsylvania,  Washington
D.C. and Canada. Sugarloaf also leases and operates an 18-hole championship golf
course,  designed by Robert Trent Jones Jr. and consistently rated as one of the
top 25 public golf courses in the country.


         Sugarbush.  Sugarbush,  located in Vermont's Mad River Valley, features
the three  highest  mountain  peaks of any single  resort in the Eastern  United
States and extends over six  mountain  peaks in total.  The Slide Brook  Express
Quad connects the Lincoln Peak and Mount Ellen base areas via a 9-minute  scenic
ride through the Green Mountains.  The on-mountain  accommodations  at Sugarbush
consist of  approximately  2,200 beds.  There is also an ample  off-mountain bed
base within the Mad River Valley.  The resort  operates ski shops,  full-service
and  cafeteria-style  restaurants.  We also own and operate the Sugarbush Inn, a
championship  golf course, a sports center and a conference  center, in addition
to managing 185 condominium units in the area.

         Attitash  Bear  Peak.  Attitash  Bear  Peak  is one of New  Hampshire's
premier family  vacation  resorts.  Its 12 lifts  (including  three quad chairs)
constitute one of New Hampshire's  largest lift networks.  Attitash Bear Peak is
located  in the heart of the  Mount  Washington  Valley  which  boasts  over 200


                                       14
<PAGE>

factory outlet stores,  hundreds of bars and  restaurants and a large variety of
lodging  options,  including a 143-room  slopeside Grand Summit Resort Hotel and
Conference Center.

         Real Estate  Properties.  We retain ownership of the front desk, retail
space,  restaurants and conference  facilities,  or "commercial core", of hotels
developed  by our real estate  subsidiaries.  We  currently  own and operate the
commercial  core of seven Grand Summit  Hotels (two at Sunday River and one each
at  Killington,  Attitash Bear Peak,  Mount Snow, The Canyons and Steamboat) and
one whole-ownership condo/hotel at The Canyons (the Sundial Lodge).

Leased Properties

         Our operations are wholly  dependent upon our ownership or control over
the real  estate  underlying  each  resort.  The  following  summarizes  certain
non-owned real estate critical to operations at each of our resorts.  We believe
each of the following leases,  permits or agreements is in full force and effect
and that we are entitled to their benefit.

         The Sunday River resort leases approximately 1,500 acres,  constituting
a substantial portion of its skiable terrain,  under a 50-year lease terminating
on October 14, 2030. The lease renews automatically thereafter on a year-to-year
basis unless  terminated by either the lessor or lessee.  This lease was amended
on January 23,  1998 to allow  Sunday  River to purchase  portions of the leased
property for real estate  development  at a  predetermined  amount per acre.  In
January 1998, we acquired an undivided one-half interest in the fee title to the
leased parcel.

         The  Sugarbush  resort uses  approximately  1,655  acres  pursuant to a
special use permit issued by the United States Forest Service.  The permit has a
40-year  term  expiring  April 30,  2035.  The  special use permit has a renewal
option which provides that it may be renewed if the use of the property  remains
compatible with the special use permit,  the site is being used for the purposes
previously  authorized,  and the ski  area  has been  continually  operated  and
maintained in accordance with all the provisions of the permit.

         The Mount Snow resort leases  approximately  1,315 acres constituting a
substantial  portion  of its  skiable  terrain.  Of this  total,  893  acres are
occupied by Mount Snow  pursuant  to a special use permit  granted by the United
States Forest Service.  The permit has a 40-year term expiring December 31, 2029
and is subject to renewal at the option of Mount Snow if certain  conditions are
satisfied.  Mount Snow also leases 252 acres of skiable terrain from the Town of
Wilmington,  Vermont.  The  lease  expires  November  15,  2030 and there are no
renewal options.  In addition,  Mount Snow leases  approximately  169 acres from
Sargent Inc. under two separate  leases  expiring  September 30, 2018, and March
31,  2025,  respectively.  Each lease can be renewed for an  additional  30-year
term. Mount Snow also has the option to purchase the leased property and a right
of first  refusal  in the  event the  lessor  receives  an offer for the  leased
properties.

         Attitash Bear Peak uses  approximately 281 acres of its skiable terrain
pursuant to a special use permit issued by the United States Forest Service. The
permit has a 40-year term  expiring  July 18, 2034 and is  renewable  subject to
certain  conditions.  In  addition,  Attitash  Bear Peak leases a portion of its
parking facilities under a lease expiring December 31, 2003.  Attitash Bear Peak
has the option to  purchase  this  leased  property at any time during the lease
term.

         Killington leases  approximately 2,500 acres from the State of Vermont.
A substantial portion of that property  constitutes skiable terrain. The initial
lease was for a 10-year term which  commenced in 1960 but contains  nine 10-year
renewal options. Killington exercised the renewal option in 1970, 1980, 1990 and
2000.  Assuming  continued  exercise  of the  renewal  options,  the lease  will
ultimately  expires in the year 2060.  The lease is subject to a buy-out  option
retained by the State of Vermont, as landlord. At the conclusion of each 10-year
term,  or  extended  term,  the State has the option to buy out the lease for an
amount  equal to  Killington's  adjusted  capital  outlay  plus 10% of the gross
receipts  from the operation for the  preceding  three years.  Adjusted  capital
outlay means total capital expenditures  extending back to the date of origin of
the  lease  depreciated  at  1%  per  annum,  except  that  non-operable  assets


                                       15
<PAGE>

depreciate at 2% per annum. This buy-out option will next become  exercisable in
the  year  2010.  Although  we have  not had  confirmation  from  Vermont  State
officials,  we have no reason to believe that the State  intends to exercise the
buy-out option at that time.

         The Sugarloaf  resort leases the Sugarloaf Golf Course from the Town of
Carrabassett  Valley,  Maine  pursuant to a lease dated June 3, 1987.  The lease
term expires  December  2003.  Sugarloaf has an option to renew the lease for an
additional 20-year term.

         The Canyons  leases  approximately  2,100 acres,  including most of the
base area and a substantial  portion of its skiable terrain,  under a lease from
Wolf Mountain  Resorts,  LC. The initial term of this lease is 50 years expiring
July 2047, with an option to extend for three additional terms of 50 years each.
The lease provides an option to purchase  those portions of the leased  property
that are intended for residential or commercial development,  subject to certain
reconveyance  rights,  at a cost  of 5.5% of the  full  capitalized  cost of the
development  in the case of property that we retain,  or 11% of that cost in the
case of property intended for resale. The Canyons also leases  approximately 807
acres,  which  constitutes  the area for a planned  mid-mountain  village  and a
substantial  portion of its skiable  terrain,  from the State of Utah School and
Institutional  Trust  Land  Administration.  Our  lease  term  ends in 2078  and
provides an option to purchase those portions of the  mid-mountain  village area
that are  intended  for real estate  development  at a cost of 25% of their fair
market value on an undeveloped  basis. Our lease with Wolf Mountain Resorts also
includes a sublease of certain skiable  terrain owned by the Osguthorpe  family.
We have  established  certain  additional ski development  rights under a direct
agreement  with  the  Osguthorpe   family.   The  ski  development   rights  for
approximately  3,000  acres  of  skiable  terrain  that  we  have  targeted  for
development  are  contained  in  a  development  agreement  with  Iron  Mountain
Associates,  LLC, which agreement  includes a lease of all skiable terrain for a
term  ending  September  13,  2094.  The  Canyons is  currently  negotiating  an
amendment to this lease which,  if finalized,  is expected to provide that these
ski development rights will be acquired in fee by The Canyons in 2002.

         Heavenly uses approximately  1,543 acres of its skiable terrain located
in California  and Nevada under a special use permit issued by the United States
Forest   Service.   The  permit  expires  on  August  5,  2029.   Heavenly  uses
approximately  2,000 acres of additional skiable terrain in Nevada pursuant to a
special use permit which expires on August 5, 2029.

         Steamboat  uses  approximately  2,644 acres,  a substantial  portion of
which is skiable terrain,  pursuant to a special use permit issued by the United
States  Forest  Service  which  expires on August 31,  2029.  Under  Steamboat's
existing  master plan, an additional  958 acres of  contiguous  National  Forest
lands is expected to be added to the permitted area.

         The Forest  Service can  terminate  most of the  foregoing  special use
permits if it determines  that  termination is required in the public  interest.
However,  to our knowledge,  no recreational  Special Use Permit or Term Special
Use Permit for any major ski resort then in operation  has ever been  terminated
by the Forest Service over the opposition of the permit holder.


                                       16
<PAGE>
                                     Item 3
                                Legal Proceedings

         We currently and from time to time are involved in  litigation  arising
in the ordinary  course of our business.  We do not believe that we are involved
in any litigation that will,  individually or in the aggregate,  have a material
adverse  effect on our  financial  condition  or results of  operations  or cash
flows.

         Each of our  subsidiaries  which operate resorts has claims pending and
is regularly  subject to personal  injury claims  related  principally to skiing
activities at such resort.  Each of our operating  companies maintains liability
insurance that we consider adequate in order to insure against claims related to
the usual and customary risks associated with the operation of a ski resort.  We
operate a captive  insurance  company  authorized under the laws of the State of
Vermont,  which,  until early  fiscal  1999,  provided  liability  and  workers'
compensation  coverage for our Vermont  resorts.  We do not  currently  use this
insurance  subsidiary to provide liability and workers'  compensation  insurance
coverage,  but it is still  responsible for future claims arising from insurable
events which may have occurred  while it provided this  coverage.  Our insurance
subsidiary  maintains  cash reserves in amounts  recommended  by an  independent
actuarial firm and which we believe to be adequate to cover any such claims.

         The  Killington  resort has been  identified by the U.S.  Environmental
Protection  Agency as a potentially  responsible  party at two sites pursuant to
the  Comprehensive  Environmental  Response,  Compensation  and  Liability  Act.
Killington  has  entered  into a  settlement  agreement  with the  Environmental
Protection  Agency at one of the sites,  the  Solvents  Recovery  Service of New
England Superfund site in Southington, Connecticut. Killington rejected an offer
to enter into a de minimis  settlement with the Environmental  Protection Agency
for the other site, the PSC Resources  Superfund site in Palmer,  Massachusetts,
because it disputes its  designation  as a  potentially  responsible  party.  In
addition, our Heavenly resort was designated as a potentially  responsible party
at a Superfund  site in  Patterson,  CA. We entered  into a cash-out  settlement
agreement  which has been accepted by the  Environmental  Protection  Agency and
funded  as part of an  overall  settlement  of the  site.  We  believe  that our
liability for these Superfund sites, individually and in the aggregate, will not
have a material adverse effect on our business or financial condition or results
of operations or cash flows.

                                     Item 4
               Submission of Matters to a Vote of Security Holders

          Not applicable.


                                       17
<PAGE>

PART II

                                     Item 5
 Market for the Registrant's Common Equity and Related Security Holder Matters.

         Our  common  stock is traded on the New York Stock  Exchange  under the
symbol "SKI".  Our class A common stock is not listed on any exchange and is not
publicly  traded,  but is convertible  into our common stock.  As of October 20,
2000,  30,469,163  shares of our common  stock were issued and  outstanding,  of
which  14,760,530  shares  were  class A common  stock  held by one  holder  and
15,708,633 shares of common stock held by approximately 9,000 holders.

         The following table lists, for the fiscal quarters indicated, the range
of high and low  intra-day  sale  prices of our common  stock as reported on the
NYSE Composite Tape.

                           American Skiing Company Common Stock (SKI)

                                     Fiscal 2000              Fiscal 1999
                                     -----------              -----------
                                 High           Low         High          Low
         1st Quarter             $  4.69     $  3.63       $12.50       $  5.19
         2nd Quarter             $  5.06     $  2.31       $10.25       $  4.75
         3rd Quarter             $  2.88     $  1.75       $ 5.75       $  3.06
         4th Quarter             $  2.94     $  1.63       $ 5.81       $  2.38

Market Information

         We have not declared or paid any cash  dividends on our capital  stock.
We intend to retain  earnings,  to the extent that there are any, to support our
capital  improvement and growth  strategies and we do not anticipate paying cash
dividends on our common stock in the foreseeable  future.  The payment of future
dividends,  if any, will be at the  discretion  of our board of directors  after
they  take  into  account  various  factors,  such as our  financial  condition,
operating  results,  current  and  anticipated  cash needs and plans for capital
improvements  and  expansion.  Each of the  indenture  governing  our 12% senior
subordinated  notes due 2006,  our $165  million  senior  credit  facility  with
FleetBoston,  N.A., our 10.5%  mandatorily  redeemable  preferred stock, and our
series B preferred stock contain certain restrictive covenants that, among other
things,  limit the payment of  dividends or the making of  distributions  on our
equity interests. See Part II, Item 7 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."


                                       18
<PAGE>

                                     Item 6
                             Selected Financial Data

         The following selected historical  financial data has been derived from
our  financial  statements  as  audited  by  Arthur  Andersen  LLP,  independent
accountants as of and for the fiscal year ended July 25, 1999 and July 30, 2000,
and for the years ended July 28, 1996,  July 27, 1997 and July 26, 1998 has been
derived from our financial statements as audited by PricewaterhouseCoopers  LLP,
independent accountants.
<TABLE>
                                                              Historical Year Ended (1)
                                             July 28, 1996 July 27, 1997  July 26, 1998 July 25, 1999 July 30, 2000
                                              (in thousands, except per share, real estate units, and per skier
                                                                       visit amounts)
   <S>                                           <C>          <C>           <C>          <C>           <C>
   Consolidated Statement of Operations
   Data:
   Net revenues:
      Resort (2)                                 $63,489      $163,310      $277,574      $292,558      $292,077
      Real estate                                  9,933        10,721        60,992        24,492       132,063
                                             ------------  ------------   -----------   -----------   -----------
           Total net revenues                     73,422       174,031       338,566       317,050       424,140

   Operating expenses:
      Resort                                      41,799       107,230       171,246       198,231       203,902
      Real estate                                  5,844         8,950        43,554        26,808       123,837
      Marketing, general and administrative       11,289        25,173        40,058        51,434        49,405
      Stock compensation charge (3)                    -             -        14,254             -             -
      Depreciation and amortization                6,783        18,293        37,965        44,202        47,028
                                             ------------  ------------   -----------   -----------   -----------
           Total operating expenses               65,715       159,646       307,077       320,675       424,172
                                             ------------  ------------   -----------   -----------   -----------

   Loss from continuing operations               (2,237)       (5,482)       (1,867)      (27,950)      (30,133)
   Accretion of discount and dividends
   accrued on mandatorily redeemable preferred
   stock                                               -           444         5,346         4,372        20,994
                                             ------------  ------------   -----------   -----------   -----------
   Net loss from continuing operations
   available to common shareholders             ($2,237)      ($5,926)      ($7,213)     ($32,322)     ($51,127)
                                             ============  ============   ===========   ===========   ===========
   Fully diluted net loss from continuing
   operations per share available to common
   shareholders                                  ($2.37)       ($6.06)       ($0.28)       ($1.07)       ($1.69)
                                             ============  ============   ===========   ===========   ===========

   Balance Sheet Data:
   Total assets                                 $298,732      $337,340      $780,899      $907,502      $926,778
   Long term debt and redeemable preferred
   stock, including current maturities           210,720       253,151       422,684       546,297       636,700
   Common shareholders' equity                    21,903        15,101       268,204       236,655       185,497

   Other Data:
   Resort:
   Skier visits (000's)(4)                         1,290         3,025         5,319         5,089         5,006
   Season pass holders (000's)                      13.2          30.9          44.1          44.2          47.3
   Resort revenues per skier visit                $49.22        $53.99        $52.19        $57.48        $58.34
   Resort EBITDA(5)(6)                           $10,401       $30,907       $66,270       $42,893       $38,770

   Real estate:
   Number of units sold                              177           123         1,009         1,290         2,285
   Number of units pre-sold(7)                       109           605           861         1,151           932
   Real estate EBITDA(6)(8)                       $4,089        $1,771       $17,438      ($2,316)        $8,226
</TABLE>

 (1) The historical  results of the Company reflect the results of operations of
the  Attitash  Bear Peak ski resort  since its  acquisition  in July  1994,  the
results of  operations  of the  Sugarbush  ski resort since  October  1994,  the
results of operations of the Mount  Cranmore ski resort from its  acquisition in
June 1995 through its  divestiture in November 1996, the results of operation of
S-K-I Ltd. since its  acquisition in June 1996, the results of operation of Pico
Mountain  since its  acquisition  in November 1996, the results of operations of
The  Canyons  resort  since  its  acquisition  in July 1997 and the  results  of
operations  of the Steamboat and Heavenly  resorts  since their  acquisition  in
November 1997.

                                       19
<PAGE>

(2) Resort revenues  represents all revenues excluding revenues generated by the
sale of real estate interests.

(3) In the  first  quarter  of fiscal  1998,  the  Company  granted  to  certain
executive  officers and other employees fully vested options to purchase 511,530
shares of Common Stock at an exercise price of $2.00 per share. The Company also
agreed to pay certain tax liabilities which the recipients of the options expect
to incur upon  exercise of the  options.  Because  the $2.00 per share  exercise
price was below the fair market  value of a share of Common Stock on the date of
grant, the Company recognized a one-time compensation charge of $14.3 million in
fiscal 1998.

(4) For the purposes of  estimating  skier  visits,  the Company  assumes that a
season  pass  holder  visits  the  Company's  resorts  a number  of  times  that
approximates the average cost of a season pass divided by the average daily lift
ticket price.

(5) Resort EBITDA  represents resort revenues less cost of resort operations and
marketing, general and administrative expense.

(6) Resort and Real Estate EBITDA are not measurements  calculated in accordance
with GAAP and should not be  considered  as  alternatives  to  operating  or net
income as an  indicator  of  operating  performance,  cash flows as a measure of
liquidity or any other GAAP determined measurement.  Certain items excluded from
Resort  and/or  Real  Estate  EBITDA,  such as  depreciation,  amortization  and
non-cash  charges  for  stock  compensation  awards  and asset  impairments  are
significant  components in understanding  and assessing the Company's  financial
performance.   Other   companies  may  define  Resort  and  Real  Estate  EBITDA
differently,  and as a  result,  such  measures  may  not be  comparable  to the
Company's  Resort and Real Estate EBITDA.  The Company has included  information
concerning  Resort and Real Estate EBITDA because  management  believes they are
indicative measures of the Company's  liquidity and financial position,  and are
generally used by investors to evaluate companies in the resort industry.

(7) Pre-sold units represent  quartershare and other residential units for which
the Company has a binding sales contract, subject to certain closing conditions,
and has received a 5% down payment on the unit from the  purchaser.  Recognition
of the revenue from such  pre-sales  is deferred  until the period in which such
sales are closed.

(8) Real Estate EBITDA  represents  revenues from real estate sales less cost of
real  estate  sold,  including  selling  costs,  holding  costs,  the  allocated
capitalized  cost of land,  construction  costs  and  other  costs  relating  to
property sold.


                                       20
<PAGE>
                                     Item 7
                Management's Discussion and Analysis of Financial
                       Condition and Results of Operations
General

         The  following  is  management's  discussion  and analysis of financial
condition and results of  operations  for the twelve months ended July 30, 2000.
As you  read  the  material  below,  we  urge  you  to  carefully  consider  our
Consolidated  Financial Statements and related notes contained elsewhere in this
report.

         When  used  in  this  discussion,  the  words  "expect(s)",  "feel(s)",
"believe(s)",   "will",  "may",  "anticipate(s)"  and  similar  expressions  are
intended to identify forward-looking  statements. Such statements are subject to
certain  risks and  uncertainties  that  could  cause  actual  results to differ
materially  from those  projected.  Readers  are  cautioned  not to place  undue
reliance on these  forward-looking  statements,  which speak only as of the date
hereof.  We  are  under  no  obligation  to  replenish  revised  forward-looking
statements  to  reflect  events or  circumstances  after  the date  hereof or to
reflect the occurrence of unanticipated events.

         The Oak Hill  Transaction.  On August 9, 1999, we completed the sale of
150,000 shares of our series B convertible  exchangeable  preferred stock to Oak
Hill  Capital  Partners,  L.P. and certain  related  entities,  realizing  gross
proceeds  of $150  million.  We used  $128.6  million of the  proceeds to reduce
indebtedness under our senior credit facility (this credit facility is described
in  Footnote 6 to the  accompanying  financial  statements),  approximately  $30
million of which has been  reborrowed  and invested in our principal real estate
development  subsidiary,  American  Skiing Company Resort  Properties,  Inc. The
remainder of the proceeds were used to pay approximately $16 million in fees and
expenses in connection with the series B preferred stock sale (approximately $13
million) and related transactions  (approximately $3 million),  and acquire from
our  principal  shareholder  certain  strategic  assets and repay a demand  note
issued by one of our subsidiaries to our principal shareholder, in the aggregate
amount of $5.4 million.

Liquidity and Capital Resources

         Short-Term.  Our primary  short-term  liquidity  needs involve  funding
seasonal  working  capital  requirements,  continuing and completing real estate
development  projects  presently  under  construction,  funding  our fiscal 2001
capital  improvement  program and servicing our debt. Our cash  requirements for
ski-related  and real estate  development  activities are provided from separate
sources.  Our primary source of liquidity for  ski-related  working  capital and
ski-related  capital  improvements are cash flow from operations of our non-real
estate subsidiaries and borrowings under our senior credit facility. Real estate
development  and  real  estate  working  capital  is  funded  primarily  through
construction  financing facilities established for major real estate development
projects,  a real estate term  facility,  and net proceeds from the sale of real
estate developed for sale after required  construction  loan  repayments.  These
facilities are without recourse to us and our resort operating  subsidiaries and
are  collateralized by significant real estate assets of American Skiing Company
Resort Properties and its subsidiaries,  including the assets and stock of Grand
Summit Resort Properties,  Inc., our primary hotel development subsidiary. As of
July 30,  2000,  the book value of the total  assets that  collateralized  these
facilities and which are included in the accompanying consolidated balance sheet
was approximately $291.8 million.

         Resort  Liquidity.  We have  established  a $165 million  senior credit
facility  agreement  with Fleet  National  Bank,  as agent,  and  certain  other
lenders,  consisting of a $100 million  revolving portion and a $65 million term
portion.  The revolving portion of the senior credit facility matures on May 30,
2004, and the term portion matures on May 31, 2006.

        The  maximum  availability  under the  revolving  portion  of the senior
credit  facility  reduces  over its term by certain  prescribed  amounts.  As of
October  24,  2000,  total  borrowings  under the  revolving  credit  were $75.9
million,  and $5.9 million of  availability  was allocated to cover  outstanding
letters of credit.  The term portion of the senior credit facility  amortizes in
five annual  installments  of $650,000  payable on May 31 of each year, with the


                                       21
<PAGE>

remaining portion of the principal due in two substantially  equal  installments
on May 31,  2005 and May 31,  2006.  As of October  20,  2000,  the  outstanding
balance of the term  portion has been reduced by $650,000 to $64.4  million.  In
addition,  the senior credit facility requires mandatory  prepayment of the term
portion and a reduction in the  availability  under the revolving  portion of an
amount equal to 50% of the  consolidated  excess cash flows during any period in
which excess cash flow leverage  ratio exceeds 3.50 to 1. In no event,  however,
will such  mandatory  prepayments  reduce the revolving  portion of the facility
below $74.8 million. We do not presently expect to generate  consolidated excess
cash flows during fiscal 2001 and there were none generated in fiscal 2000.

         The senior credit facility contains affirmative, negative and financial
covenants customary for this type of credit facility, which includes maintaining
certain financial ratios. The senior credit facility is secured by substantially
all of our assets and subsidiaries  except those of our real estate  development
subsidiaries.  The  revolving  portion of the  facility  is subject to an annual
30-day clean-down requirement,  which period must include April 30 of each year,
during which the sum of the outstanding  principal  balance and letter of credit
exposure  shall not exceed $25  million for fiscal 2000 and $35 million for each
fiscal  year  thereafter.   We  successfully  completed  the  30-day  clean-down
requirement for fiscal 2000 on April 30, 2000.

        The senior credit facility restricts our ability to pay dividends on our
common stock.  We are prohibited  from paying  dividends in excess of 50% of the
consolidated net income of the non-real estate  development  subsidiaries  after
April  25,  1999,  and  further  prohibited  from  paying  dividends  under  any
circumstances  when the effect of such  payment  would  cause the debt to EBITDA
ratio of the non-real estate development  subsidiaries to exceed 4.0 to 1. Based
upon  these  and  other  restrictions,  we do not  expect to be able to pay cash
dividends on our common stock,  mandatorily  redeemable 10.5% preferred stock or
series B preferred stock during fiscal 2001 or fiscal 2002.

        Due to the adverse weather conditions in the eastern United States, Utah
and the  Sierra  Nevadas  during our second  fiscal  quarter of 2000,  and their
effect on our second  quarter  revenue,  EBITDA and net  income,  we amended the
senior  credit  facility  on March 6, 2000 in order to (i)  suspend  our  second
quarter financial covenant requirements, (ii) significantly modify the financial
covenant  requirements  of the senior  credit  facility for our second and third
fiscal quarters and on a prospective  basis,  (iii) establish  minimum quarterly
EBITDA levels  starting with our third quarter of fiscal 2000 through the second
quarter of fiscal 2002, and (iv) establish  monthly  restrictions on the maximum
amount outstanding under the revolving portion of the senior credit facility for
the period from May 1 through December 3, 2000. We exceeded our required minimum
EBITDA levels under the amended senior credit  facility for the third and fourth
fiscal  quarters  of  2000  and we  successfully  fulfilled  the  maximum  usage
requirement for each monthly period through October 1, 2000. Based on historical
operations,  we presently  anticipate that we will be able to meet the financial
covenants of the amended senior credit facility.  Failure to meet one or more of
these  covenants  could  result in an event of default  under the senior  credit
facility.  In the event that such default were not waived by the lenders holding
a majority of the debt under the senior credit facility, this default would also
constitute defaults under one or more of our other major credit facilities,  the
consequences of which would likely be material and adverse to our business.

         The amended  senior  credit  facility  also  places a maximum  level of
non-real  estate  capital  expenditures  of $20  million for fiscal 2000 and $13
million for fiscal 2001, exclusive of certain capital expenditures in connection
with the sale of series B  preferred  stock  during the first  quarter of fiscal
2000.  Following fiscal 2001, annual resort capital  expenditures,  exclusive of
real estate capital  expenditures,  are limited to the lesser of $35 million, or
the total of the non-real estate development  subsidiaries'  consolidated EBITDA
for the four fiscal quarters ended in April of the previous fiscal year less the
consolidated  debt  service for the same  period.  In addition to the  foregoing
amounts,  we are permitted to and expect to make capital  expenditures  of up to
$30 million for the purchase and  construction  of a new gondola at our Heavenly
resort in Lake Tahoe,  Nevada, on which  construction is currently  underway and
$13.4 million has been expended as of October 1, 2000.

        Our  liquidity  is  significantly  affected by our high  leverage.  As a
result of our leveraged position,  we will have significant cash requirements to
service  interest  and  principal  payments  on  our  debt.  Consequently,  cash
availability for working capital needs, capital expenditures and acquisitions is
limited,   outside  of  any  availability  under  the  senior  credit  facility.


                                       22
<PAGE>

Furthermore,  the senior  credit  facility and the  indenture  governing our 12%
Senior Subordinated  Notes, due 2006, each contain  significant  restrictions on
our  ability  to  obtain  additional  sources  of  capital  and may  affect  our
liquidity.  These  restrictions  include  restrictions  on the  sale of  assets,
restrictions on the incurrence of additional  indebtedness  and  restrictions on
the issuance of preferred stock.

        As of October 24, 2000, we have drawn or committed for letters of credit
approximately  $81.8 million of the total $100 million  revolving portion of our
senior credit facility. We expect to maximize borrowings under the senior credit
facility  sometime  between  November and December of 2000,  consistent with our
historical  experience when we have had little, if any,  borrowing  availability
under the senior credit facility.

        Under the indenture for our 12% Senior  Subordinated Notes, due 2006, we
are prohibited from paying cash dividends or making other  distributions  to our
shareholders.

         Real Estate  Liquidity.  Funding of working capital for American Skiing
Company Resort Properties and its fiscal 2001 real estate development program is
provided by a real estate term  facility and the net  proceeds  from the sale of
real estate developed for sale after required construction loan repayments.

         On July 31, 2000, we entered into a second amended real estate facility
agreement  between American Skiing Company Resort  Properties and Fleet National
Bank.  This  fully  syndicated  $73  million  facility   replaced  the  previous
un-syndicated  $58 million real estate  development  term loan  facility.  As of
October 24, 2000 the amount drawn under the facility was $59.4 million,  leaving
availability  of $13.6 million,  of which $5 million is set aside as a liquidity
reserve.  The second amended real estate facility is  collateralized by security
interests in, and mortgages on,  substantially  all of American  Skiing  Company
Resort Properties' assets,  which primarily consist of undeveloped real property
and the  stock of its real  estate  development  subsidiaries  (including  Grand
Summit  Resort  Properties).  As of July 30,  2000,  the book value of the total
assets that  collateralized the real estate facilities,  and are included in the
accompanying consolidated balance sheet, was approximately $291.8 million.

         The second amended real estate facility is comprised of three tranches,
each with separate  interest rates and maturity  dates.  Tranche A has a maximum
principal amount of $35 million,  bears interest at a variable rate equal to the
Fleet National Bank Base Rate plus 8.25%,  or a current rate of 17.8%,  (payable
monthly in arrears)  and  matures on  December  31,  2002.  Mandatory  principal
payments on Tranche A of $5.0 million  each are payable on April 30, 2002,  July
31, 2002 and October 31, 2002.  Tranche B has a maximum  principal amount of $25
million, bears interest at a fixed rate of 25% per annum and matures on December
31, 2003.  Interest calculated at 18% per annum for Tranche B is payable monthly
in arrears.  The  remaining 7% per annum will accrue,  be added to the principal
balance  of  Tranche  B and will  bear  interest  at 25% per  annum,  compounded
annually.  Tranche  C has a  maximum  principal  amount  of $13  million,  bears
interest  at a fixed rate of 18% per annum and  matures on  December  31,  2005.
Interest will accrue,  be added to the  principal  balance of Tranche C and will
bear  interest  at 18% per annum,  compounded  semi-annually.  As of October 24,
2000, the principal balances outstanding, including accrued and unpaid interest,
under  Tranches A, B & C of the second  amended real estate  facility were $28.9
million, $25.0 million, and $5.5 million, respectively.

         Tranche C of the second  amended real estate  facility was purchased by
Oak Hill Capital Partners,  L.P. In connection with this $13 million investment,
we entered a securities  purchase  agreement with Oak Hill, dated as of July 31,
2000,  pursuant  to which we  agreed to either  issue  warrants  to Oak Hill for
6,000,000  shares of our common stock with an exercise price of $2.50 per share,
or issue to Oak Hill common stock in American Skiing Company Resort  Properties,
representing  approximately  15% of the  voting  interest  in that  entity.  The
purchase price of the warrants (or American  Skiing  Company  Resort  Properties
common stock,  as  applicable)  was $2 million.  We expect to issue the warrants
following receipt of necessary lender consents.

         We conduct  substantially  all of our real estate  development  through
single  purpose  subsidiaries,  each of which is a wholly  owned  subsidiary  of
American  Skiing  Company  Resort  Properties.  Grand Summit Hotel  projects are
constructed  through Grand Summit Resort  Properties and are primarily  financed
through a $110 million  construction  loan  facility  among Grand Summit  Resort
Properties and various lenders, including TFC Textron Financial, the syndication
agent and administrative agent, which closed on September 25, 1998.



                                       23
<PAGE>

         As of October 20, 2000, the amount  outstanding  under the construction
loan facility was $84.8  million.  This  facility  matures on March 31, 2002 and
bears  interest at the rate of prime plus 2.5% per annum,  or a current  rate of
12.0%. The principal is payable  incrementally as quartershare  sales are closed
based on a predetermined per unit amount, which approximates between 65% and 80%
of the net proceeds of each closing. The facility is collateralized by mortgages
against the project  sites  (including  the  completed  Grand  Summit  Hotels at
Killington,  Mt. Snow, Sunday River, Attitash Bear Peak and The Canyons, as well
as the recently  completed  Steamboat Grand Hotel), and is subject to covenants,
representations and warranties customary for this type of construction facility.
The  facility  is  non-recourse  to us and  our  resort  operating  subsidiaries
(although it is  collateralized  by  substantial  assets of Grand Summit  Resort
Properties,  having a total  book value of $209.6  million as of July 30,  2000,
which in turn comprise substantial assets of our business).

         Due to  construction  delays and cost increases at the Steamboat  Grand
Summit Hotel project,  Grand Summit Resort Properties entered into a $10 million
subordinated  loan  tranche with TFC Textron  Financial  on July 25, 2000.  This
facility is to be used solely for the purpose of providing  advances to fund the
completion of the Steamboat Grand Hotel.  The facility bears interest at a fixed
rate of 20% per annum, payable monthly in arrears, provided that only 50% of the
amount of such  interest  shall be due and  payable in cash and the other 50% of
such interest shall, if no events of default exist under the  subordinated  loan
tranche facility or the  construction  loan Textron  facility,  automatically be
deferred  until the final  payment  date.  As of October  20,  2000,  the amount
outstanding under the subordinated loan tranche facility was $9.2 million.

         On July 28, 2000 Westgate Resorts, a division of privately-held Central
Florida Investment firm, purchased land and timeshare  development rights at The
Canyons near Park City, UT. The land is expected to be used for the construction
of the "Westgate at The Canyons" timeshare project in the resort's village core.
Westgate  purchased  the land  and  development  rights  for  $7.4  million.  In
addition,  Westgate  separately  contracted  with us to  purchase  150,000  lift
tickets at The Canyons  over the next five years to support  its sales  efforts.
The ticket  contract is expected to yield revenue of  approximately  $6 million.
The planned  facilities at the project are expected include nearly 23,000 square
feet of retail  space,  a health spa, a restaurant,  a heated pool,  outdoor hot
tubs and a private club for Westgate owners.  The project is expected to be sold
in one-and two-week intervals.

         On October 17, 2000,  we sold our option  rights to certain real estate
in the South Lake Tahoe  Redevelopment  District to Marriott  Ownership Resorts,
Inc., a wholly owned  subsidiary  of Marriott  International,  for $8.5 million.
Pursuant  to the  terms of the  option  sale,  American  Skiing  Company  Resort
Properties received $4.09 million in cash proceeds on October 17, applied a $0.3
million previously received deposit and will receive an additional $4.09 million
from Marriott on January 15, 2001.  Simultaneously  with the closing of the sale
of its option rights, our July 28, 1998 development  agreement with Marriott was
terminated.  Management  believes that the  termination  of this  agreement will
allow  American  Skiing Company Resort  Properties to more  aggressively  market
certain  developmental  real estate at its Killington  and Steamboat  resorts to
other potential timeshare  investors.  In addition,  we continue to discuss with
Marriott a possible development at Killington, but have not and may not reach an
acceptable agreement regarding this parcel.

         Our fiscal 2001  business  plan  anticipates  starting  two real estate
projects in the spring and summer of 2001;  a Grand Summit Hotel at Heavenly and
townhomes  at  The  Canyons.  Commencement  of  these  projects  is  subject  to
satisfying  the  requisite  pre-sale  hurdles,  our cash flow  requirements  and
arranging appropriate financing for these projects.

         Long-Term.   Our  primary   long-term   liquidity  needs  are  to  fund
skiing-related  capital  improvements at certain of our resorts,  development of
our  slope  side  real  estate  and the  mandatory  redemption  of our  Series A
Preferred  Stock on November 15, 2002.  With respect to capital  needs,  we have
invested over $172 million in skiing related  facilities  since the beginning of
fiscal 1998.  As a result,  and in keeping with  restrictions  imposed under the
senior  credit  facility,  we expect our resort  capital  programs  for the next
several  fiscal  years will be more  limited in size.  Our  fiscal  2001  resort
capital  program is  estimated at  approximately  $13 million (of which $6.0 had
been expended as of October 1, 2000),  plus an additional  estimated $18 million
to be expended on the Heavenly  Gondola project (of which $6.0 had been expended
as of October 1, 2000).



                                       24
<PAGE>

           For our  2001  and  2002  fiscal  years,  we  anticipate  our  annual
maintenance  capital  needs  to  be  approximately  $10  million.   There  is  a
considerable degree of flexibility in the timing and, to a lesser degree,  scope
of our growth capital program.  Although  specific  capital  expenditures can be
deferred for extended  periods,  continued growth of skier visits,  revenues and
profitability   will  require  continued   capital   investment  in  on-mountain
improvements.

         Our practice is to finance  on-mountain  capital  improvements  through
resort cash flow,  capital leases and our senior credit  facility.  The size and
scope of the capital  improvement  program will generally be determined annually
depending upon the strategic importance and expected financial return of certain
projects,  future availability of cash flow from each season's resort operations
and future  borrowing  availability and covenant  restrictions  under the senior
credit  facility.  The senior credit facility places a maximum level of non-real
estate  capital  expenditures  for  fiscal  2002 and beyond at the lesser of $35
million,  or  the  total  of  the  non-real  estate  development   subsidiaries'
consolidated  EBITDA for the four fiscal quarters ended in April of the previous
fiscal year less consolidated debt service for the same period. In addition,  we
are  permitted to and expect to make capital  expenditures  of up to $30 million
for the purchase  and  construction  of a new gondola at our Heavenly  resort in
Lake Tahoe, Nevada. Construction on the Heavenly gondola began in June, 2000 and
as of  October 1, 2000,  we had  expended  $13.4  million on this  project.  Our
management believes that these capital expenditure amounts will be sufficient to
meet our non-real estate capital improvement needs for the near future.

         Our business plan  anticipates  the development of Grand Summit hotels,
condominium  hotels  and  townhouses  at our  resort  villages  at The  Canyons,
Heavenly, Killington, Steamboat and Sunday River. The timing and extent of these
projects  are subject to local and state  permitting  requirements  which may be
beyond our control,  as well as our cash flow  requirements and the availability
of external capital.  Our real estate development is undertaken through our real
estate  development  subsidiary,  American  Skiing  Company  Resort  Properties.
Recourse on debt incurred to finance this real estate  development is limited to
American Skiing Company Resort  Properties and its  subsidiaries,  which include
Grand  Summit  Resort  Properties.  This debt is usually  collateralized  by the
projects  that it  finances,  which,  in some cases,  constitute  a  significant
portion of our assets. As of July 30, 2000, the total assets collateralizing the
real estate facilities,  and included in the accompanying  consolidated  balance
sheet,  totaled  approximately  $291.8  million.  American Skiing Company Resort
Properties'  eight existing  development  projects are currently being funded by
the second amended real estate facility,  the  construction  loan facility and a
separate  construction  loan facility for the final phase of the Locke  Mountain
Townhomes at Sunday River. The Locke Mountain project is currently 100% sold and
proceeds  from  closings  are expected to be received and used to repay the debt
during the 2nd quarter of fiscal 2001.

         We expect to undertake future real estate development  projects through
special  purpose   subsidiaries  with  financing   provided   principally  on  a
non-recourse  basis to us and our resort operating  subsidiaries.  Although this
financing is expected to be non-recourse to us and our resort  subsidiaries,  it
will likely be  collateralized  by our existing and future real estate  projects
that may constitute  significant assets to us. Required equity contributions for
these projects must be generated before they can be undertaken, and the projects
are subject to mandatory  pre-sale  requirements  under the second  amended real
estate  facility.  Potential  sources  of  equity  contributions  include  sales
proceeds  from  existing  real estate  projects  and assets,  (to the extent not
applied to the  repayment of  indebtedness)  and the possible  sale of equity or
debt interests in American  Skiing Company Resort  Properties or its real estate
development   subsidiaries.   Financing   commitments  for  future  real  estate
development do not currently exist, and we can offer no assurance that they will
be available on satisfactory terms. We will be required to establish both equity
sources and  construction  facilities or other  financing  arrangements  for our
projects before undertaking them.

         We have  outstanding  $36  million of  mandatorily  redeemable  10 1/2%
preferred  stock,  with an  accreted  value of $49.6  million as of October  31,
2000.. The mandatorily redeemable 10 1/2% preferred stock is exchangeable at the
option of the holder into our common stock at a  conversion  price of $17.10 for
each  common  share.  We  expect  to hold  the  mandatorily  redeemable  10 1/2%
preferred  stock until its maturity  date of November 15, 2002, at which time we
will be required to redeem the mandatorily redeemable 10 1/2% preferred stock at
a redemption price of approximately  $62 million.  We can give no assurance that
the necessary  liquidity  will be available to effect the redemption on a timely
basis.


                                       25
<PAGE>
                      Results of Operations of the Company

                 Fiscal Year Ended July 30, 2000 ("Fiscal 2000")
             Versus Fiscal Year Ended July 25, 1999 ("Fiscal 1999")

Resort Operations:
         The components of resort operations for the fiscal years ended July 30,
2000 and July 25, 1999 are as follows:
<TABLE>

         ------------------------------------------------------------------------------------
                                            Actual Year    Actual
                                               Ended       Year Ended        Increase/(Decrease)
                                          July 30, 2000    July 25, 1999      Dollar     Percent
         ------------------------------------------------------------------------------------
<S>                                            <C>           <C>         <C>          <C>
         Revenue category:
          Lift Tickets                         $   131.3     $  134.5    $  (3.2)     (2.4%)
          Food and beverage                         40.0         38.3         1.7       4.4%
          Retail sales                              38.3         41.5       (3.2)     (7.7%)
          Lodging and property                      32.7         31.6         1.1       3.5%
          Skier development                         24.8         24.2         0.6       2.5%
          Golf, summer activities and other         25.0         22.5         2.5      11.1%
                                             -------------  -----------  ----------   --------
         Total resort revenues                 $   292.1     $  292.6    $  (0.5)       0.1%
                                            -------------  -----------  ----------   --------

         Total Skier Visits                        5,006        5,090        (84)     (1.7%)

         Cost of resort operations             $   203.9     $  198.2      $  5.7       2.9%
         Marketing, general and administrative      49.4         51.4       (2.0)      (3.9%)
         Depreciation and amortization              47.0         44.2         2.8       6.3%
         ------------------------------------------------------------------------------------
</TABLE>

         Warm weather patterns in early November,  a rainy Thanksgiving  weekend
in the East and a warm, dry December  nationwide  all  contributed to weak early
season paid skier day levels.  The  December  holiday  week was also  negatively
impacted by the overall  softness in the travel industry due to Y2K concerns and
the lack of natural snowfall in key market areas.  Substantial  natural snowfall
at all resorts and in key market areas late in our second fiscal quarter revived
sluggish  early  season  skier  traffic  heading  into the third  quarter.  This
momentum  continued into February,  during which fresh snowfall and good weather
for the Presidents  Holiday weekend  produced  three-day  attendance  records at
almost all of our resorts. Skier traffic (and operating results) continued to be
strong into March,  but warm weather  nation-wide and sustained  rainfall in the
East  brought  an  early  end to the ski  season  and as a result  April  resort
revenues and operating profits fell short of the prior year.

         Revenues  from lift tickets and retail sales were down a combined  $6.4
million,  or 3.6%,  from the prior year due mainly to the decrease in paid skier
days for the year. Food and beverage and lodging services revenues  increased in
Fiscal 2000, as revenues generated from the two new hotels at The Canyons offset
the  effect  of the  decrease  in  skier  days  at our  eastern  resorts.  Skier
development  revenues  actually  increased by $0.6  million,  or 2.5%, in Fiscal
2000,  as we  continued  to realize the  benefits  of its new skier  development
programs instituted in fiscal 1999 in conjunction with the opening of new Sprint
Perfect Turn Discovery Centers at four of our Eastern resorts.  We also realized
$1.6 million in net gains from the sale of non-strategic assets during the first
quarter of fiscal 2000,  which  contributed most of the $2.5 million increase in
golf, summer activities and other revenues in Fiscal 2000.

         Our Resort  segment  generated a $31.4 million loss before income taxes
in Fiscal 2000,  compared to a $33.4 million  pre-tax loss in Fiscal 1999.  This
$2.0 million decrease in the year-to-date pre-tax loss is derived primarily from
an $8.6 million decrease in interest expense,  offset by a $4.1 million decrease
in resort earnings before interest,  taxes and  depreciation,  or EBITDA,  and a
$2.5 million increase in depreciation expense. The reduction in interest expense
in fiscal 2000 is due primarily to the reduced level of debt  outstanding  under
our senior credit  facility as a result of the paydown on that facility from the
proceeds  of the series B  preferred  stock  issuance.  The  decrease  in resort
earnings before interest,  taxes and depreciation is derived from the net effect


                                       26
<PAGE>

of (i) the $0.5 million decrease in resort revenues described above, (ii) a $5.7
million  increase in resort  operating  expenses due mainly to  pre-opening  and
start-up  costs  associated  with  the two new  hotels  at The  Canyons  and the
Steamboat  Grand Hotel,  increased  snowmaking and maintenance  costs,  food and
beverage  and lodging  costs and retail  costs of goods  sold,  and (iii) a $2.0
million  reduction  in  marketing,  general  and  administrative  expenses.  The
increase in resort depreciation  expense is due to the approximately $30 million
in ski-related  capital assets placed in service at our resorts since the end of
the 1998-99 ski season.

Real Estate Operations:
         Real  estate  revenues  increased  by $107.6  million  in  Fiscal  2000
compared to Fiscal 1999, from $24.5 million to $132.1  million.  The delivery of
units in the Sundial whole-ownership  condominium hotel and the new Grand Summit
Hotel  at  The  Canyons   accounted  for  $41.0   million  and  $59.4   million,
respectively,  of real estate revenues in Fiscal 2000.  Additional  increases in
real estate revenues during Fiscal 2000 resulted from sales of undeveloped  land
at Steamboat and The Canyons  (combined  $9.3 million in Fiscal 2000 versus $2.9
million in Fiscal 1999) and a $2.5 million  increase in quartershare  unit sales
at the existing  Grand Summit Hotels at our Eastern  resorts  ($20.9  million in
Fiscal 2000  compared  to $18.4  million in Fiscal  1999).  An  offsetting  $2.3
million decrease was due to revenues  recognized in Fiscal 1999 from the sale of
townhouses at Sunday River, which did not recur in Fiscal 2000.

         Our Real Estate  segment  generated a loss before  income taxes of $4.5
million in Fiscal 2000, a $5.1 million improvement over the $9.6 million pre-tax
real estate loss  generated  in Fiscal 1999.  This $5.1 million  decrease in the
pre-tax loss in fiscal 2000 is primarily  derived from the net effect of a $10.6
million increase in real estate EBITDA offset by a $5.1 million increase in real
estate interest expense and a $0.3 million increase in real estate depreciation.

         The sale of units at The Canyons Grand Summit Hotel  contributed  $12.7
in real estate  EBITDA in fiscal  2000,  there were no sales for this project in
fiscal 1999.  Offsetting  this  increase in real estate EBITDA was a decrease of
$1.9  million  from the sales of  quarter  shares at the  Eastern  Grand  Summit
hotels.  The Sundial  project  contributed a negative $.8 million  EBITDA to the
fiscal 2000  results,  the first year this  project  recorded  sales.  All other
activities contributed a net positive $.6 million to real estate EBITDA compared
to the prior year's results.

         The $5.1 million increase in real estate interest expense was primarily
due to an  increase in real  estate  debt  outstanding  in fiscal 2000 and lower
capitalized interest due to completion of the two hotels at the Canyons.


         Benefit from income taxes decreased $9.3 million, from $15.1 million in
fiscal 1999 to $5.8 million in fiscal  2000.  The decrease in the benefit is due
primarily  to $7.4 million in valuation  allowances  established  in fiscal 2000
relating to certain  deferred tax assets for prior net  operating  losses.  As a
result of the sale of our series B preferred  stock,  the realization of the tax
benefit of  certain of our net  operating  losses  and other tax  attributes  is
dependent upon the occurrence of certain future events.  It is our judgment that
a valuation  allowance of $3.0  million  against our deferred tax assets for net
operating  losses and other tax  attributes  is  appropriate  because it is more
likely  than not that the  benefit  of such  losses and  attributes  will not be
realized.  Based on facts known at this time, we expect to substantially realize
the  benefit  of the  remainder  of our  net  operating  losses  and  other  tax
attributes  affected by the sale of our series B preferred  stock. The remaining
$4.4 million valuation allowance relates to excess net operating losses that may
not be realizable in the State of Vermont.

         Extraordinary  loss  of  $0.6  million  (net  of  $0.4  million  of tax
benefits)  in Fiscal  2000  resulted  from the  pro-rata  write-off  of  certain
existing  deferred  financing costs related to our senior credit facility.  This
write-off  was  due to  the  restructuring  of the  senior  credit  facility  in
connection  with the permanent  reduction in the  availability  of the revolving
portion and the pay down of the term portion of the  facility  from the proceeds
of the series B preferred stock issuance.

         Cumulative  effect of a change in accounting  principle of $0.7 million
(net of $0.4 million tax benefit) in Fiscal 2000  resulted from the write-off of
certain  capitalized  start-up costs relating to our hotel and retail operations


                                       27
<PAGE>

and the opening of the Canyons resort in fiscal 1998. The accounting  change was
due to our adoption of AICPA Statement of Position 98-5, "Reporting on the Costs
of Start-up  Activities".  SOP 98-5 requires the expensing of all start-up costs
as incurred,  rather than  capitalizing and subsequently  amortizing such costs.
Initial  adoption of this SOP should be reported as a cumulative  effective of a
change in accounting  principles.  Current  start-up costs are being expensed as
incurred and are reflected in their appropriate expense classifications

         Accretion of discount and dividends  accrued on mandatorily  redeemable
preferred  stock  increased  $16.6  million  from $4.4 million in Fiscal 1999 to
$21.0  million  in  the  current   fiscal  year.   This  increase  is  primarily
attributable to the additional  accrual of dividends on 150,000 shares of series
B preferred stock issued to Oak Hill in the first quarter of Fiscal 2000. We are
currently  accruing  dividends  on the series B preferred  stock at an effective
rate of 9.7%,  with the assumption that dividends will not be paid in cash until
the fifth anniversary of the issuance.


       Fiscal 1999 Versus Fiscal Year Ended July 26, 1998 ("Fiscal 1998")

         The actual  results of Fiscal 1999 versus the actual  results of Fiscal
1998 discussed  below are not comparable due to the acquisition of the Steamboat
and Heavenly  resorts on November 12, 1997.  Accordingly,  the usefulness of the
comparisons  presented below is limited,  as the Fiscal 1998 results include the
results of Steamboat and Heavenly since November 12, 1997, while the Fiscal 1999
results  include all twelve  months of results of Steamboat  and  Heavenly.  The
following table illustrates the pro forma effect of the results of Steamboat and
Heavenly as if the purchase had occurred at the beginning of Fiscal 1998:
<TABLE>

-----------------------------------------------------------------------------------------------------------------
                                                  Pro Forma
                                   Actual Year    Effect on     Pro Forma        Actual      Pro Forma Increase/
                                      Ended       Year Ended    Year Ended     Year Ended         (Decrease)
                                 July 26, 1998   July 26, 1998  July 26, 1998  July 25, 1999  Dollar    Percent
-----------------------------------------------------------------------------------------------------------------
<S>                                   <C>           <C>           <C>            <C>         <C>          <C>
Revenue category:
 Lift Tickets                         $   135.9     $    0.0      $   135.9      $  134.5    $  (1.4)     (1.0%)
 Food and beverage                         34.0          0.5           34.5          38.3         3.8      10.9%
 Retail sales                              37.4          1.6           39.0          41.5         2.5       6.4%
 Lodging and property                      27.5          0.1           27.6          31.6         4.0      14.4%
 Skier development                         22.4          0.0           22.4          24.2         1.8       8.0%
 Golf, summer activities and other         20.4          1.4           21.8          22.5         0.7       3.3%
                                   -------------  -----------  -------------  ------------  ----------  ---------
Total resort revenues                 $   277.6     $    3.6      $   281.2      $  292.6     $  11.4       4.0%
                                   -------------  -----------  -------------  ------------  ----------  ---------

Cost of resort operations             $   171.2     $    8.6      $   179.8      $  198.2     $  18.4      10.2%
Marketing, general and administrative      40.1          5.0           45.1          51.4         6.3      14.0%
Depreciation and amortization              38.0          1.6           39.6          44.2         4.6      11.6%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

         Resort revenues increased $15.0 million or 5.4% from $277.6 million for
Fiscal  1998 to $292.6  million  for Fiscal  1999.  The pro forma  effect of the
inclusion  of the results  from  Steamboat  and  Heavenly  resorts for the first
fiscal quarter of 1999 accounts for $3.6 million of the increase.  The remaining
$11.4 million  increase in resort revenues is broken out by revenue  category in
the above table. The decrease in lift ticket revenues is derived from (i) a 4.3%
decrease in skier visits,  due to unfavorable  weather conditions in New England
and Colorado,  resulted in an approximately $6.1 million decrease in lift ticket
revenues,  and (ii) a 3.5%  increase in lift ticket  yield,  due mainly to price
increases at Steamboat and Heavenly,  offset this decrease by approximately $4.7
million.  Increases in food and beverage and retail sales revenues are primarily
attributable to additional food and beverage and retail outlets. The increase in
skier  development  revenues is mainly  associated with a new skier  development
program  instituted in Fiscal 1999, which  corresponded  with the opening of new
Sprint Discovery Centers at four of our eastern resorts. The increase in lodging
revenue is primarily  due to the full year of operations in Fiscal 1999 of three
Grand Summit  Hotels which opened  during  Fiscal 1998 (one each at  Killington,
Mount Snow and Sunday River).

         Real  estate  revenues  decreased  $36.5  million  for  Fiscal  1999 as
compared  to Fiscal  1998.  The  decrease  is  attributable  to the  substantial
revenues recognized in Fiscal 1998 from closings on pre-sold  quartershare units


                                       28
<PAGE>

at our Grand Summit  Hotels at  Killington  and Mt.  Snow,  and the Jordan Grand
Hotel at Sunday River. These projects were completed during the second and third
fiscal  quarters of Fiscal 1998,  and we realized $55.4 million in sales revenue
from these projects in Fiscal 1998. For Fiscal 1999 we realized $18.4 million in
on-going sales of quartershare units.

         Cost of resort operations  increased $27.0 million or 15.8% from $171.2
million to $198.2 million.  The pro forma effect of the inclusion of the results
of Steamboat and Heavenly  resorts for the first fiscal quarter of 1999 accounts
for $8.6  million of the  increase.  The majority of the  remaining  increase is
attributable to (i) $4.8 million in lodging costs associated with a full year of
operation of three new hotels,  (ii) $1.2 million increase associated with a new
skier  development  program  which  included  the  operation  of four new Sprint
Discovery  Centers,  (iii) $3.6  million in food and  beverage  and retail costs
associated with  additional  outlets and higher sales volume and the liquidation
of excess  inventory during the fourth quarter of fiscal 1999; (iv) $1.1 million
increase in snowmaking  due to the lack of natural snow at our eastern  resorts,
(v) $1.5  million  increase  in  property  taxes due to  increased  tax rates in
Vermont  and an  increased  asset  base at The  Canyons,  and (vi) $1.0  million
increase in event costs associated with marketing sponsorship.

         Cost of real  estate  sold  decreased  $16.7  million  in  Fiscal  1999
compared to Fiscal 1998. The decrease is attributable  to the  substantial  cost
recognized  in the third  quarter  of  Fiscal  1998 from  closings  of  pre-sold
quartershare units at our Grand Summit Hotels at Killington and Mt. Snow and the
Jordan  Grand  Hotel at  Sunday  River.  The cost  associated  with the  revenue
realized for Fiscal Year 1998 totaled $32.0 million.  The cost  associated  with
the on-going  sales of these units in Fiscal 1999  totaled  $10.9  million.  The
$21.0  million  decrease  related to sales of  quartershare  units was offset by
other increases,  due mainly to (i) $3.5 million of cost recognized  relating to
the sale of land  which  was not of  strategic  importance  to our  real  estate
development  plan or resort  operations;  (ii) the  write-off of $0.7 million in
prepaid  advertising  and  commission  charges  incurred in generating  pre-sale
contracts,  some of which have subsequently expired, for a Grand Summit Hotel at
our Sugarbush  resort (the timing of  development  for the Sugarbush  project is
expected to be re-evaluated by the Company during next year's skiing season) and
(iii) $0.8 million of expenses were incurred during the second quarter of Fiscal
1999  relating  to  our  unsuccessful  $300  million  bond  offering  which  was
undertaken to provide additional financing for our real estate projects.

         Marketing,  general and administrative expenses increased $11.3 million
or 28.2% from $40.1  million to $51.4  million.  The inclusion of the results of
Steamboat and Heavenly resorts for the first fiscal quarter of 1999 accounts for
$5.0  million  of the  increase.  The  majority  of the  remaining  increase  is
attributable to (i) a planned  increase in marketing  expense at all the resorts
of $2.9 million (ii) a stock compensation charge of $0.8 million relating to the
vesting of additional management stock options, (iii) $0.6 million of additional
expenses resulting from the expansion of management  information services,  (iv)
$2.0 million of severance payments and restructuring of management  compensation
and (v) additional costs associated with being a public company.

         Depreciation  and  amortization  increased $6.2 million for Fiscal 1999
compared to Fiscal 1998. The inclusion of the Steamboat and Heavenly resorts for
the first fiscal quarter of 1999 accounts for $1.6 million of the increase.  The
remaining  increase  is  primarily  due to  additional  depreciation  on capital
improvements of  approximately  $53 million made this year.  These increases are
slightly  offset by the change in the  estimated  useful lives of certain of our
ski-related assets, which decreased depreciation expense by $0.7 million.

         Interest expense  increased from $34.6 million for Fiscal 1998 to $39.4
million for Fiscal 1999. The increase is principally  attributable  to increased
debt levels  associated with financing our recent capital  improvements and real
estate projects.

         The benefit for income  taxes  increased  from $0.8  million for Fiscal
1998 to $15.1  million  for Fiscal  1999 due to the  increase in the loss before
income taxes.  The effective income tax rate increased from 25.1% in Fiscal 1998
to 35.0% in  Fiscal  1999 due to the  non-recurring  stock  option  compensation
charge of $14.3  million in Fiscal  1998,  not all of which was  deductible  for
income tax purposes.

         Accretion of discount and dividends  accrued on mandatorily  redeemable
preferred stock decreased $0.9 million,  or 17.0%,  from $5.3 million for Fiscal


                                       29
<PAGE>

1998 to $4.4 million for Fiscal 1999. The decrease is primarily  attributable to
$0.9 million in additional accretion recognized during Fiscal 1998 relating to a
conversion feature on our series A 14% exchangeable preferred stock that allowed
holders of these  securities  to  convert to shares of our common  stock at a 5%
discount to our initial public offering price. An additional $0.9 million of the
decrease is due to  amortization  of issuance  costs  recognized  in Fiscal 1998
related to our series A 14%  exchangeable  preferred  stock upon its  conversion
into mandatorily redeemable 10 1/2% preferred stock. These decreases were offset
by an increase  resulting from the full twelve months  accretion for Fiscal 1999
related to the  mandatorily  redeemable 10 1/2% preferred  stock (as compared to
only nine months in Fiscal  1998),  and the  compounding  effect of the dividend
accrual.

Recently Issued Accounting Standards

         Effective  July 31,  2000,  we will adopt SFAS No. 133  Accounting  for
Derivative  Instruments  and Hedging  Activities,  SFAS No. 137  Accounting  for
Derivative  Instruments and Hedging  Activities - Deferral of the Effective Date
of FASB  Statement No. 133 - an Amendment of FASB Statement No. 133 and SFAS No.
138 Accounting for Certain Derivative Instruments and Certain Hedging Activities
- an Amendment of FASB  Statement No. 133  (collectively  SFAS 133 as amended or
the  Statement).  We are required to adopt SFAS 133 as amended no later than the
beginning  of our  fiscal  reporting  period  beginning  July  31,  2000.  These
standards  will be adopted  as a change in  accounting  principle  and cannot be
applied retroactively to financial statements of prior periods.

         SFAS 133 as amended requires that we record  derivatives on the balance
sheet as an asset or liability at fair value.  The statement  also requires that
we must record  derivatives that are not hedges at fair value through  earnings,
unless  specific  hedge  accounting  criteria are met.  Special  accounting  for
qualifying hedges allows us to offset a derivative instrument's gains and losses
against  related  results on the hedged  item in the  income  statement,  to the
extent  effective,  and requires that we must formally  document,  designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS 133
as amended,  in part,  allows  special hedge  accounting for fair value and cash
flow  hedges.  The  statement  provides  that the  gain or loss on a  derivative
instrument designated and qualifying as a fair value hedging instrument, as well
as the  offsetting  loss or gain on the hedged item  attributable  to the hedged
risk, be recognized  currently in earnings in the same accounting  period.  SFAS
133 as  amended  provides  that the  effective  portion of the gain or loss on a
derivative   instrument  designated  and  qualifying  as  a  cash  flow  hedging
instrument  be  reported  as a component  of other  comprehensive  income and be
reclassified into earnings in the same period or periods during which the hedged
forecasted   transaction   affects  earnings.   The  ineffective  portion  of  a
derivative's  change in fair  value is  recognized  currently  through  earnings
regardless of whether the instrument is designated as a hedge.

         We have five interest rate swap  contracts  outstanding  as of July 30,
2000, two of which we have designated as cash flow hedges.

Cash flow hedges

         We have entered into two interest  rate swap  agreements,  with a total
notional  amount  of  $75  million.  Under  these  arrangements,  which  may  be
terminated  on November  17,  2000 by the  floating  rate payer,  we receive the
30-day LIBOR rate and pay a fixed rate of 5.68%. Prior to adoption of FAS 133 as
amended,  we have treated  these swaps as hedges and accounted for them as such.
We have not recorded any amounts on the  Consolidated  Balance  Sheet as of July
30, 2000 in connection  with these  instruments and the net effect of the hedges
was to  record  interest  expense  at the  fixed  rate of 5.68% on the first $75
million of debt. We have designated  these swaps as cash flow hedges of variable
future cash flows  associated  with the interest on our senior  credit  facility
through November 17, 2000. Upon adoption, we will record the fair value of these
swaps as an asset on the  balance  sheet  with a  corresponding  credit to other
comprehensive  income.  We will record  subsequent  changes in fair value of the
swaps through other comprehensive income, except for changes related to


                                       30
<PAGE>

ineffectiveness,  during the period these  instruments are designated as hedges.
We do not  currently  anticipate  ineffectiveness  under  these  hedges  through
November  17,  2000.  The net effect of the cash flow  hedges  will be for us to
record  interest  expense  at the fixed  rate of 5.68%  plus 3.5%  (based on our
current  leverage)on  the first $75 million of debt. If the swap  agreements are
not  terminated  on November 17, 2000 all  subsequent  changes in the fair value
will be accounted for through earnings.

Other derivatives
         We entered into three interest rate swap agreements that do not qualify
for hedge  accounting  under SFAS 133 as amended.  The net effect of these swaps
will  result  in a $2.1  million  interest  savings  for us over the life of the
Senior  Subordinated  Notes,  due 2006.  As of July 30, 2000,  we have  recorded
$8,592,185  in Other  Long Term  Liabilities  in the  accompanying  Consolidated
Balance Sheet and we have been recording the net effect of the interest  savings
through  the  income  statement  on a  straight-line  basis over the life of the
agreements.  Upon  adoption,  we will record the fair value of these swaps as an
asset and a liability  with a  corresponding  entry to cumulative  effect of the
change in  accounting  principle in earnings;  and we will  recognize the amount
recorded  in Other  Long Term  Liabilities  through a  cumulative  effect of the
change in accounting principle in earnings. We will record subsequent changes in
fair value of these swaps through the income statement.

Net effect of the Change in Accounting Principle
<TABLE>

       ------------------------- ------------- --------------- -------------- --------------- -----------------
                                                                                                 Cumulative
                                                                                                 effect of
                                                                                                 change in
                                                                Other Long        Other          accounting
                                                 Liability-        Term       Comprehensive     principle in
            Debit/(Credit)       Asset - Swap       Swap        Liabilities       Income          earnings
       ------------------------- ------------- --------------- -------------- --------------- -----------------
<S>                                <C>              <C>             <C>           <C>                <C>
       Cash flow hedges            $  258,862       $       -       $      -      $ 258,862)         $       -
       Other Derivatives            6,519,980    (11,065,538)      8,592,185                       (4,046,627)
                                 ------------- --------------- -------------- --------------- -----------------
       Total Derivatives          $ 6,778,842   $(11,065,538)    $ 8,592,185     $ (258,862)     $ (4,046,627)
       ------------------------- ------------- --------------- -------------- --------------- -----------------

</TABLE>
         We have no  embedded  derivatives  under SFAS 133 as amended and we are
not  aware of the  potential  impact of any other  significant  matter  that may
result from the adoption of these standards.



                                       31
<PAGE>
                          Forward-Looking Statements -
      Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
              the Private Securities Litigation Reform Act Of 1995

         Certain information  contained in this report 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. This report
contains forward looking statements that are subject to risks and uncertainties,
including,  but not limited to: uncertainty as to future financial results;  our
substantial  leverage;  the capital  intensive  nature of development of our ski
resorts;  rapid and substantial  growth that could place a significant strain on
our  management,   employees  and  operations;   uncertainties  associated  with
obtaining  additional financing for future real estate projects and to undertake
future capital  improvements;  demand for and costs  associated with real estate
development;  changes in market  conditions  affecting  the  interval  ownership
industry;  regulation  of  marketing  and sales of our  quartershare  interests;
seasonality of resort revenues; fluctuations in operating results; dependence on
favorable weather  conditions;  the discretionary  nature of consumers' spending
for skiing,  destination vacations and resort real estate; regional and national
economic conditions; laws and regulations relating to our land use, development,
environmental  compliance and permitting  obligations;  termination,  renewal or
extension terms of our leases and United States Forest Service permits; industry
competition;  the  adequacy of water supply at our  properties;  and other risks
detailed  from time to time in our  filings  with the  Securities  and  Exchange
Commission.  These risks could cause our actual results for fiscal year 2001 and
beyond  to  differ  materially  from  those  expressed  in any  forward  looking
statements  made by, or on behalf of, us. The foregoing  list of factors  should
not be construed as  exhaustive  or as any  admission  regarding the adequacy of
disclosure  that  we  have  made  prior  to  the  date  of  this  report  or the
effectiveness of the Private Securities Litigation Reform Act.


                                     Item 7A
           Quantitative and Qualitative Disclosures about Market Risk

         Our market  risk  sensitive  instruments  do not subject us to material
market risk exposures,  except for risks related to interest rate  fluctuations.
As of July 30,  2000,  we had $264.0  million in floating  rate  long-term  debt
outstanding,  including  current  portion.  We have  entered  into a $75 million
notional value interest rate swap agreement in connection with our senior credit
facility,  which  effectively swaps a portion of the variable rate borrowings to
fixed rate  borrowings.  Under this  agreement,  which may be  terminated by the
floating  rate  payer on  November  17,  2000,  we pay a fixed rate of 5.68% and
receive the 30-day LIBOR rate. As of July 30, 2000,  total  borrowings under the
senior credit facility were $118 million, leaving $43 million at a variable rate
for which the current interest rate is LIBOR plus 3.5%.

         The following  sensitivity  analysis  expresses the potential impact on
annual interest  expense  resulting from a hypothetical 100 basis point increase
in the interest rate indices that our floating rate debt  instruments  are based
on:
<TABLE>

                                     Average             Notional          Average
                                     Balance            Variable to       Exposure    Hypothetical    Effect on
          Variable Rate Debt       Outstanding        Fixed Interest     to Interest    Change in      Annual
            Interest Index          in FY 2000          Rate Swaps        Rate Risk    Rate Index     Interest
       ------------------------------------------------------------------------------------------------------

        <S>                           <C>              <C>              <C>             <C>           <C>
        30-day LIBOR Rate             $  92,838        $   75,000       $ 17,838        100 bps       $  178
        US Prime Rate                   151,903                 -        151,903        100 bps        1,519
                                    ------------    --------------   ------------   ------------   ----------
        Total variable rate           $ 244,740        $   75,000       $169,740        100 bps      $ 1,697
       debt
                                    ============    ==============   ============   ============   ==========
</TABLE>

         We believe that the potential  effects of a 100-basis point increase in
its floating rate debt  instruments are not significant to our earnings and cash
flow.

                                       32
<PAGE>

         We have also entered into a series of  (non-cancelable)  interest  rate
swap  agreements in connection  with our Senior  Subordinated  Notes,  which are
intended  to defer a portion  of the cash  interest  payments  on the Notes into
later years.  The following  table  illustrates the key factors of each of these
agreements:

<TABLE>
                       February 9, 1998 - July 15, 2001                      July 16, 2001 - July 15, 2006
                -----------------------------------------------     ------------------------------------------------
                   Notional         Company         Company            Notional         Company         Company
                    Amount           Pays          Receives             Amount           Pays           Receives
                ---------------  --------------  --------------     ---------------  --------------  ---------------
<S>               <C>            <C>             <C>                  <C>            <C>             <C>
Agreement 1       $120,000,000       9.01%       6-month LIBOR        $127,500,000       9.01%       6-month LIBOR

Agreement 2       $120,000,000   6-month LIBOR      12.00%            $127,500,000   6-month LIBOR       7.40%

</TABLE>
         As a result of entering into this interest  rate swap  arrangement,  we
have fixed the cash-pay rate on the notes until their maturity in July 2006. The
net effect of the swap agreements will result in a $2.1 million  interest saving
over the life of the agreements. This amount is currently being realized against
interest expense on a straight-line  basis.  This treatment will change with our
adoption of a new accounting  pronouncement  in the first quarter of fiscal 2001
(see "Recently Issued Accounting Standards" included in Item 7 of this report).


                                     Item 8
                   Financial Statements and Supplementary Data

Selected Quarterly Operating Results

        The following  table  presents  certain  unaudited  quarterly  financial
information  for the eight  quarters  ended July 30, 2000. In the opinion of our
management,  this  information  has  been  prepared  on the  same  basis  as the
Consolidated  Financial  Statements  appearing  elsewhere  in this Form 10-K and
includes  all  adjustments  (consisting  only of normal  recurring  adjustments)
necessary to present fairly the financial  results set forth herein.  Results of
operations for any previous  quarters are not necessarily  indicative of results
for any future period.
<TABLE>

                                  Quarter Ended
-------------------------------------------------------------------------------------------------------------------
                     Oct. 25, 1998 Jan. 24, 1999 Apr. 25, 1999 Jul. 25, 1999 Oct. 24, 1999 Jan. 30, 2000 Apr. 30, 2000 Jul. 30, 2000
                      -----------   -----------   -----------   ------------   -----------  ----------     ----------    ----------
                                                              (in thousands)
<S>                       <C>         <C>         <C>              <C>             <C>        <C>            <C>          <C>
 Net revenues:
 Resort                 $ 20,311    $103,205    $154,317         $ 14,725       $ 20,806    $104,480       $149,942      $16,849
 Real estate               4,485       6,300      10,324            3,383          2,549      22,147         73,153       34,214
                      ----------- ----------- -----------     ------------     -----------  ----------     ----------    ----------
 Total net revenues
                          24,796     109,505     164,641           18,108          23,355    126,627        223,095       51,063
                      ----------- ----------- -----------      ------------    -----------  ---------      ----------   ----------
 Operating expenses:
 Resort                   28,073      69,251      74,573           26,334          29,015     73,523         74,865       26,499
 Real estate               4,040       7,865       8,554            6,349           3,284     22,486         63,450       34,617
 Marketing, general and
      Administrative      10,826      17,922      14,519            8,167          10,753     16,283         13,063       9,306
 Depreciation and
      Amortization         2,709      19,010      19,731            2,752           3,202     20,924         19,076       3,826
                      ----------- ----------- -----------     ------------     -----------  ---------      ----------   ----------
 Total operating
expenses                  45,648     114,048     117,377           43,602          46,254    133,216        170,454      74,248
                      ----------- ----------- -----------     ------------     -----------  ---------      ----------   ----------
 Income(loss) from
      Operations       $(20,852)   $ (4,543)    $ 47,264       $(25,494)        $(22,899)   $(6,589)       $ 52,641    $(23,185)
                      =========== =========== ===========     ============     ===========  =========      ==========   ==========

</TABLE>

                                       33
<PAGE>

                                    PART III

         Pursuant  to  General  Instruction  G of  Form  10-K,  the  information
contained in Part III of this report  (Items 10, 11, 12 and 13) is  incorporated
by reference from our Definitive Proxy Statement,  which is expected to be filed
with the Securities and Exchange Commission on or before November 15, 2000.

                                     PART IV

                                     Item 14
         Exhibits, Financial Statement Schedules and Reports on Form 8-K

<TABLE>

 (a)   Documents filed as part of this report:                                                Page
<S>                                                                                          <C>
1.   Index  to  financial   statements,   financial  statement  schedules,   and
     supplementary data, filed as part of this report:

          Report of Independent Accountants...................................................F-1

          Consolidated Balance Sheet..........................................................F-2

          Consolidated Statement of Operations................................................F-3

          Consolidated Statement of Changes in Shareholders' Equity ..........................F-4

          Consolidated Statement of Cash Flows................................................F-5

          Notes to Consolidated Financial Statements..........................................F-7
</TABLE>

2.      Financial Statement  Schedules:  All other schedules are omitted because
        they are not  applicable  or the  required  information  is shown in the
        consolidated financial statements or notes thereto.

3.           Exhibits filed as part of this report:

Exhibit
No.                Description

3.1      Certificate of Incorporation of the Company  (incorporated by reference
         to Exhibit 3.1 to the Company's Form 10K for the report date of October
         22, 1999).

3.2      By-laws of the Company

3.3      Articles of Merger ASC East,  Inc.  and ASC West,  Inc.  into  American
         Skiing Company dated October 5, 1999 with Plan of Merger  (incorporated
         by  reference  to Exhibit 4.3 to the  Company's  Form 8K for the report
         date of October 6, 1999).

3.4      Articles of Merger  American  Skiing  Company into ASC  Delaware,  Inc.
         dated October 12, 1999 with Agreement and Plan of Merger  (incorporated
         by  reference  to Exhibit 4.3 to the  Company's  Form 8K for the report
         date of October 6, 1999).

4.1.     Specimen Certificate for shares of Common Stock, $.01 par value, of the
         Company (incorporated by reference to Exhibit 4.1 to the Company's Form
         10K for the report date of October 22, 1999).



                                       34
<PAGE>

4.2      Form of Indenture relating to 10 1/2% Repriced Convertible Subordinated
         Debentures  (incorporated  by reference to Exhibit 4.3 to the Company's
         Registration Statement on Form S-1, Registration No. 333-33483).

10.1     Preferred Stock  Subscription  Agreement dated July 9, 1999 between the
         Registrant  and the Purchasers  listed on Annex A thereto,  including a
         form of  Stockholders'  Agreement,  Voting Agreement and Certificate of
         Designation  relating to the preferred stock to be issued (incorporated
         by  reference  to Exhibit 2.1 to the  Company's  Form 8K for the report
         date of July 9, 1999).

10.2     Stockholders'  Agreement  dated as of  August  6,  1999  among Oak Hill
         Capital  Partners,  L.P., and the other entities  identified in Annex A
         attached thereto,  Leslie B. Otten and the Registrant  (incorporated by
         reference to Exhibit 10.2 to the Company's Form 10K for the report date
         of October 22, 1999).

10.3     Stock  Purchase  Agreement  dated as of August 1,  1997,  among  Kamori
         International  Corporation,  ASC West and the Company  (incorporated by
         reference  to Exhibit 2.1 of the  Company's  Registration  Statement on
         Form S-1, Registration No. 333-33483).

10.4     Purchase  Agreement dated as of April 13, 1994, among Mt. Attitash Lift
         Corporation,  certain  of its  shareholders  and L.B.O.  Holding,  Inc.
         (incorporated by reference to Exhibit 10.35 to ASC East's  Registration
         Statement on Form S-4, Registration No. 333-9763).

10.5     Stock  Purchase  Agreement  dated  August 17, 1994,  between  Sugarloaf
         Mountain  Corporation  and S-K-I Ltd.  (incorporated  by  reference  to
         Exhibit  10.36  to ASC  East's  Registration  Statement  on  Form  S-4,
         Registration No. 333-9763).

10.6     Acquisition  Agreement  dated  May 16,  1995,  among  Sugarbush  Resort
         Holdings,  Inc., Sugarbush Resort Corporation,  Snowridge,  Inc., Sugar
         Ridge,   Inc.,   Sugarbush  Inn  Corporation   and  Bev  Ridge,   Inc.,
         (incorporated by reference to Exhibit 10.38 to ASC East's  Registration
         Statement on Form S-4, Registration No. 333-9763).

10.7     Purchase  and  Sale  Agreement  dated  as of  August  30,  1996,  among
         Waterville  Valley Ski Area, Ltd.,  Cranmore,  Inc., ASC East and Booth
         Creek Ski Acquisition Corp. (incorporated by reference to Exhibit 10.61
         to ASC East's  Registration  Statement  on Form S-4,  Registration  No.
         333-9763).

10.8     Purchase  and  Sale  Agreement  dated as of  October  16,  1996,  among
         Sherburne Pass Mountain  Properties,  LLC, Pico Mountain Sports Center,
         LLC, Pico Mountain Operating Company, LLC, Harold L. and Edith Herbert,
         and Pico Ski Area  Management  Company  (incorporated  by  reference to
         Exhibit  10.62  to ASC  East's  Registration  Statement  on  Form  S-4,
         Registration No. 333-9763).

10.9     Purchase and Sale Agreement  dated July 3, 1997,  between Wolf Mountain
         Resorts, L.C., and ASC Utah (incorporated by reference to Exhibit 10.74
         to the Company's  Registration  Statement on Form S-1, Registration No.
         333-33483).

10.10    Letter of Agreement  dated  August 27, 1996,  among SKI Ltd and certain
         shareholders  of  Sugarloaf  Mountain   Corporation   (incorporated  by
         reference to Exhibit 10.63 to ASC East's Registration Statement on Form
         S-4, Registration No. 333-9763).

10.11    Amended,  Restated and  Consolidated  Credit Agreement dated as October
         12, 1999,  among the Company,  certain  Subsidiaries as Borrowers,  the
         Lenders party thereto, and Fleet National Bank as Agent for the Lenders
         (incorporated  by reference to Exhibit 10.11 to the Company's  Form 10K
         for the report date of October 22, 1999).



                                       35
<PAGE>

10.12    Indenture  dated as of June 28,  1996  among ASC East,  certain  of its
         subsidiaries  and United States Trust Company of New York,  relating to
         Series  A  and  Series  B  12%  Senior   Subordinated  Notes  Due  2006
         (incorporated  by reference  to Exhibit 4.1 to ASC East's  Registration
         Statement on Form S-4, Registration No. 333-9763).

10.13    First  Supplemental  Indenture  dated as of November 12, 1997 among ASC
         East,  Inc., its  subsidiaries  party thereto,  and United States Trust
         Company of New York as Trustee  (incorporated  by  reference to Exhibit
         10.3 to the  Company's  quarterly  report on Form 10-Q for the  quarter
         ended October 25, 1998).

10.14    Second  Supplemental  Indenture dated as of September 4, 1998 among ASC
         East,  Inc., its  subsidiaries  party thereto,  and United States Trust
         Company of New York as Trustee  (incorporated  by  reference to Exhibit
         4.3 to the Company's Form 8K for the Report date of October 6, 1999).

10.15    Third Supplemental Indenture dated as of August 6, 1999 among ASC East,
         Inc., its subsidiaries  party thereto,  and United States Trust Company
         of New York as Trustee (incorporated by reference to Exhibit 4.3 to the
         Company's Form 8K for the report date of October 6, 1999).

10.16    Fourth  Supplemental  Indenture  dated  as of  October  6,  1999  among
         Supplemental  Indenture  dated as of November  12, 1997 among ASC East,
         Inc., its subsidiaries  party thereto,  and United States Trust Company
         of New York as Trustee (incorporated by reference to Exhibit 4.3 to the
         Company's Form 8K for the report date of October 6, 1999).

10.17    Loan and Security Agreement among Grand Summit Resort Properties, Inc.,
         Textron Financial Corporation and certain lenders dated as of September
         1, 1998  (incorporated  by reference  to Exhibit 10.1 to the  Company's
         quarterly report on Form 10-Q for the quarter ended October 25, 1998).

10.18    First Amendment  Agreement Re: Loan and Security  Agreement Among Grand
         Summit  Resort  Properties,  Inc.,  as Borrower  and Textron  Financial
         Corporation,  as  Administrative  Agent  dated  as  of  April  5,  1999
         (incorporated  by reference to Exhibit 10.1 to the Company's  quarterly
         report on Form 10-Q for the quarter ended April 25, 1999)

10.19    Accession,  Loan  Sale and  Second  Amendment  Agreement  Re:  Loan and
         Security  Agreement  among Grand  Summit  Resort  Properties,  Inc. and
         Textron  Financial  Corp. and The Lenders Listed therein dated June 24,
         1999.

10.20    ISDA Master Agreement between BankBoston, N.A. and the Company dated as
         of May 12, 1998  (incorporated  by  reference  to Exhibit  10.38 to the
         Company's annual report on Form 10-K for the year ended July 26, 1998).

10.21    Credit Support Annex to ISDA Master Agreement between BankBoston,  N.A.
         and the Company dated as of May 12, 1998  (incorporated by reference to
         Exhibit 10.39 to the Company's  annual report on Form 10-K for the year
         ended July 26, 1998).

10.22    Form  of  Master  Lease  Agreement  dated  as of  various  dates  among
         BancBoston  Leasing,   Inc.  as  Lessor  and  Heavenly  Valley  Limited
         Partnership,  Killington,  Ltd., Mount Snow,  Ltd., ASC Leasing,  Inc.,
         Steamboat  Ski & Resort  Corporation,  and Sunday River Skiway Corp. as
         Lessees  (incorporated  by reference to Exhibit  10.41 to the Company's
         annual report on Form 10-K for the year ended July 26, 1998).

10.23    Unlimited Guaranty by the Company in favor of BancBoston Leasing, Inc.,
         dated as of July 20, 1998  (incorporated  by reference to Exhibit 10.40
         to the Company's annual report on Form 10-K for the year ended July 26,
         1998).

10.24    $2,750,000  Subordinated  Promissory Note dated November, 1996 by Booth
         Creek Ski Acquisition  Corp.,  Waterville  Valley Ski Resort,  Inc. and
         Mount Cranmore Ski Resort, Inc., to ASC East (incorporated by reference
         to Exhibit 10.72 to the Company's  Registration  Statement on Form S-1,
         Registration No. 333-33483).



                                       36
<PAGE>

10.25    Assignment dated May 30, 1997, between Wolf Mountain Resorts,  L.C. and
         ASC Utah  (incorporated  by reference to Exhibit 10.7 to the  Company's
         Registration Statement on Form S-1 Registration No. 333-33483).

10.26    Indenture  dated  October 24,  1990,  between  Killington  Ltd. and The
         Howard Bank, as trustee  (representative  of indentures with respect to
         similar indebtedness  aggregating  approximately $2,995,000 in original
         principal  amount  and  maturing  at  various  times from 2015 to 2016)
         (incorporated by reference to Exhibit 10.19 to ASC East's  Registration
         Statement on Form S-4, Registration No. 333-9763).

10.27    Form of Subordinated  Debenture Due 2002 from L.B.O.  Holding,  Inc. to
         former  shareholders of Mt. Attitash Lift Corporation  (incorporated by
         reference to Exhibit 10.34 to ASC East's Registration Statement on Form
         S-4, Registration No. 333-9763).

10.28    Lease dated October 15, 1980,  among H. Donald  Penley,  Joseph Penley,
         Albert  Penley and Sunday River  Skiway  Corporation  (incorporated  by
         reference to Exhibit 10.40 to ASC East's Registration Statement on Form
         S-4, Registration No. 333-9763).

10.29    Lease/Option  dated  July 19,  1984,  between  John  Blake  and  L.B.O.
         Holding, Inc. (incorporated by reference to Exhibit 10.41 to ASC East's
         Registration Statement on Form S-4, Registration No. 333-9763).

10.30    Lease Agreement dated as of July 1, 1993, between  Snowridge,  Inc. and
         Mountain Water Company  (incorporated  by reference to Exhibit 10.42 to
         ASC  East's  Registration  Statement  on  Form  S-4,  Registration  No.
         333-9763).

10.31    Lease Agreement dated as of March 1, 1988, between Snowridge,  Inc. and
         Mountain  Wastewater  Treatment,  Inc.,  (incorporated  by reference to
         Exhibit  10.43  to ASC  East's  Registration  Statement  on  Form  S-4,
         Registration No. 333-9763).

10.32    Lease  dated  November  10,  1960,  between  the State of  Vermont  and
         Sherburne Corporation  (predecessor to Killington,  Ltd.) (incorporated
         by reference to Exhibit 10.44 to ASC East's  Registration  Statement on
         Form S-4, Registration No. 333-9763).

10.33    Lease  Agreement  dated  as of  June  21,  1994,  between  the  Town of
         Wilmington,  Vermont and Mount Snow, Ltd. (incorporated by reference to
         Exhibit  10.46  to ASC  East's  Registration  Statement  on  Form  S-4,
         Registration No. 333-9763).

10.34    Lease Agreement dated April 24, 1995,  between Sargent,  Inc. and Mount
         Snow,  Ltd.  (incorporated  by reference to Exhibit 10.47 to ASC East's
         Registration Statement on Form S-4, Registration No. 333-9763).

10.35    Agreement between Sugarloaf Mountain Corporation and the Inhabitants of
         the Town of Carrabassett Valley,  Maine,  concerning the Sugarloaf Golf
         Course dated June 3, 1987  (incorporated  by reference to Exhibit 10.52
         to ASC East's  Registration  Statement  on Form S-4,  Registration  No.
         333-9763).

10.36    Ground Lease  Agreement  dated July 3, 1997,  between ASC Utah and Wolf
         Mountain Resorts,  L.C.  (incorporated by reference to Exhibit 10.64 to
         the  Company's  Registration  Statement on Form S-1,  Registration  No.
         333-33483).

10.37    Ground  Lease  Guaranty  dated July 3, 1997,  from the  Company to Wolf
         Mountain Resorts,  L.C.  (incorporated by reference to Exhibit 10.65 to
         the Company's Registration Statement on Form S-1, Registration No.
         333-33483).

10.38    Stock Option Plan  (incorporated  by reference to Exhibit  10.89 to the
         Company's   Registration   Statement  on  Form  S-1,  Registration  No.
         333-33483).



                                       37
<PAGE>

10.39    Form  of  Non-Qualified  Stock  Option  Agreement   (Five-Year  Vesting
         Schedule)  (incorporated by reference to Exhibit 10.90 to the Company's
         Registration Statement on Form S-1, Registration No. 333-33483).

10.40    Form   of   Non-Qualified   Stock   Option   Agreement   (Fully-Vested)
         (incorporated   by  reference  to  Exhibit   10.91  to  the   Company's
         Registration Statement on Form S-1, Registration No. 333-33483).

10.41    Form of Incentive Stock Option Agreement  (incorporated by reference to
         Exhibit  10.92 to the  Company's  Registration  Statement  on Form S-1,
         Registration No. 333-33483).

10.42    Registration  Rights  Agreement  dated November 10, 1997 by and between
         American   Skiing   Company   and  ING   (U.S.)   Capital   Corporation
         (incorporated  by  reference  to Exhibit 3 to the  Company's  quarterly
         report on Form 10-Q for the quarter ended October 26, 1997).

10.43    Employment  Agreement  between  the  Company  and Leslie B. Otten dated
         August 1, 2000.

10.44    Terms of Employment  between the Registrant  and  Christopher E. Howard
         dated October, 2000

10.45    Terms of  Employment  between the  Registrant  and Mark J. Miller dated
         October 7, 1999

10.46    Employment  Agreement  between the Registrant and William J. Fair dated
         May 17, 2000

10.47    Terms of Employment  between the Registrant  and Hernan  Martinez dated
         April 28, 2000

10.48    Master Disposition and Development Agreement by and between South Tahoe
         Redevelopment  Agency, The City of South Lake Tahoe and American Skiing
         Company Resort  Properties,  Inc.,  Heavenly  Resort  Properties,  LLC,
         Heavenly Valley Limited Partnership, Trans-Sierra Investments, Inc. and
         Cecil's  Market,  Inc. dated as of October 29, 1999.  (Incorporated  by
         reference from the Registrant's Form 10-Q for the quarter ended October
         24, 1999)

10.49    The Canyons Resort Village  Management  Agreement  dated as of November
         15, 1999.  (Incorporated by reference from the  Registrant's  Form 10-Q
         for the quarter ended October 24, 1999)

10.50    Amended and Restated  Development  Agreement for The Canyons  Specially
         Planned  Area  Snyderville  Basin,  Summit  County,  Utah  dated  as of
         November 15, 1999 (Incorporated by reference from the Registrant's Form
         10-Q for the quarter ended October 24, 1999)

10.51    Securities   Purchase   Agreement   dated  August  1,  2000  among  the
         Registrant,  American  Skiing Company Resort  Properties,  Inc. and Oak
         Hill  Capital  Partners,  L.P.  (Incorporated  by  reference  from  the
         Registrant's Form 8-K for the report date July 31, 1999)

10.52    Second Amended and Restated Credit  Agreement dated July 31, 2000 among
         American Skiing Company Resort  Properties,  Inc., Fleet National Bank,
         as  Agent,  and the  other  Lenders  party  thereto.  (Incorporated  by
         reference from the  Registrant's  Form 8-K for the report date July 31,
         1999)

10.53    Amendment  to  Stockholders'  Agreement  dated August 1, 2000 among the
         Registrant,  Oak Hill  Capital  Partners,  L.P.  and  Leslie  B.  Otten
         (Incorporated  by  reference  from  the  Registrant's  Form 8-K for the
         report date July 31, 1999).

10.54    First Amendment to Amended Restated and  Consolidated  Credit Agreement
         among  Registrant,  Fleet  National  Bank, as Agent,  and certain other
         lenders party thereto,  dated March 6, 2000  (Incorporated by reference
         from the Registrant's Form 10-Q for the report date March 14, 2000)



                                       38
<PAGE>

10.55    First Amendment to the Master  Disposition  and  Development  Agreement
         dated April 18, 2000 among the South Tahoe  Redevelopment  Agency,  the
         City  of  South  Lake  Tahoe  and  the  ASCRP,  Inc.,  Heavenly  Resort
         Properties,  LLC, Heavenly Valley L.P., Trans-Sierra  Investments,  and
         Cecil's Market, Inc.

10.56    Second Amendment to the Master  Disposition and Development  Agreement,
         dated  September  3, 2000,  by and among the South Tahoe  Redevelopment
         Agency,  the City of South Lake Tahoe,  American  Skiing Company Resort
         Properties,  Inc.,  Heavenly  Valley Resort  Properties  LLC,  Heavenly
         Valley,  Limited  Partnership,  Trans-Sierra  Investments  and  Cecil's
         Market, Inc.

10.57    Statement of Intention and Special Additional Financing Agreement dated
         July 25, 2000 between Grand Summit Resort Properties,  Inc. and Textron
         Financial Corporation.

22.1     Subsidiaries of the Company.

23.1     Consent of PricewaterhouseCoopers, LLP

23.2     Consent of Arthur Anderson LLP

24.1     Power of Attorney

27.1     Financial Data Schedule

(b)          Reports filed on Form 8-K.

         None



                                       39
<PAGE>
                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended,  the Company has duly caused this instrument to be signed on its behalf
by the undersigned,  thereunto duly authorized,  in the Town of Bethel, State of
Maine, on this 26th day of October, 2000.

                                                   American Skiing Company


                                                   By:  /s/ Leslie B. Otten
                                                --------------------------------
                                                Leslie B. Otten
                                                Director, President and
                                                Chief Executive Officer
                                                (Principal Executive Officer)

                                                By:  /s/ Christopher E. Howard
                                                --------------------------------
                                                Christopher E. Howard
                                              Director, Executive Vice President

                                                By: /s/ Mark J.Miller
                                                --------------------------------
                                                Mark J. Miller
                                                Senior Vice President,
                                                Chief Financial Officer
                                                (Principal Financial Officer)


                                                By: /s/ Christopher D. Livak
                                                --------------------------------
                                                Christopher D. Livak
                                                Vice President-Accounting
                                                (Principal Accounting Officer)


                                                By: /s/ Paul Whetsell
                                                --------------------------------
                                                Paul Whetsell, Director

                                                By: /s/ Gordon M. Gillies
                                                --------------------------------
                                                Gordon M. Gillies, Director

                                                By: /s/
                                                --------------------------------
                ..                              Daniel Duquette, Director


                                                By:  /s/  David Hawkes
                                                --------------------------------
                                                David Hawkes, Director



                                       40
<PAGE>

                                                By:  /s/ Bradford E. Bernstein
                                                --------------------------------
                                                Bradford E. Bernstein, Director

                                                By:  /s/ Steven Gruber
                                                --------------------------------
                                                Steven Gruber, Director

                                                By:  /s/ J. Taylor Crandall
                                                --------------------------------
                                                J. Taylor Crandall, Director

                                                By:  /s/ William Janes
                                                --------------------------------
                                                William Janes, Director

                                                By:  /s/
                                                --------------------------------
                                                Paul Wachter, Director



                                       41
<PAGE>



                    Report of Independent Public Accountants


To the Board of Directors and
Shareholders of American Skiing Company:

         We  have  audited  the  accompanying  consolidated  balance  sheets  of
American  Skiing Company and its  subsidiaries  as of July 30, 2000 and July 25,
1999,  and  the  related  consolidated  statements  of  operations,  changes  in
shareholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our  audits.  The  financial  statements  of  American  Skiing  Company  and its
subsidiaries  as of July 26, 1998,  were audited by other  auditors whose report
dated October 14, 1998, expressed an unqualified opinion on those statements.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of American  Skiing Company and
subsidiaries  as of July  30,  2000 and July  25,  1999 and the  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States.

                                                     //Arthur Andersen LLP//

Boston, MA
October 3, 2000


                                       F-1


<PAGE>


                             American Skiing Company
                           Consolidated Balance Sheets
               (in thousands, except share and per share amounts)

<TABLE>
                                                                    July 25, 1999        July 30, 2000
<S>                                                                 <C>                  <C>
Assets
Current assets
        Cash and cash equivalents                                      $     9,003          $    10,085
        Restricted cash                                                      6,628                7,424
        Accounts receivable                                                  6,474                8,176
        Inventory                                                           10,837               10,200
        Prepaid expenses                                                     5,309                8,092
        Deferred income taxes                                                4,273                1,566
                                                                    ---------------     ----------------
              Total current assets                                          42,524               45,543

        Property and equipment, net                                        529,154              534,078
        Real estate developed for sale                                     207,745              222,660
        Goodwill                                                            76,672               75,003
        Intangible assets                                                   22,987               22,055
        Deferred financing costs                                             9,279               10,844
        Other assets                                                        19,141               16,595
                                                                    ---------------     ----------------
             Total assets                                              $   907,502          $   926,778
                                                                    ===============     ================

Liabilities, Mandatorily Redeemable Preferred Stock and
Shareholders' Equity
Current liabilities
        Current portion of long-term debt                              $    60,882          $    58,508
        Current portion of subordinated notes and debentures                   673                  525
        Accounts payable and other current liabilities                      77,951               70,957
        Deposits and deferred revenue                                       20,850               15,930
                                                                    ---------------     ----------------
      Total current liabilities                                            160,356              145,920

        Long-term debt, excluding current portion                          313,844              249,841
        Subordinated notes and debentures, excluding current portion       127,062              126,810
        Other long-term liabilities                                         15,687               17,494
        Deferred income taxes                                               10,062                  200
                                                                    ---------------     ----------------
         Total liabilities                                                 627,011              540,265

Mandatorily Redeemable 10 1/2% Series A 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 $43,836 at July
        25, 1999 and $48,706 at July 30, 2000)                              43,836               48,706
Mandatorily Redeemable 8 1/2% Series B Preferred Stock
        par value $1,000 per share; 150,000 shares authorized,
        issued and outstanding; including cumulative dividends in
        arrears (redemption value of $162,865 at July 30, 2000)                  -              152,310

Shareholders' Equity
        Common stock, Class A, par value $.01 per share;
          15,000,000 shares authorized; 14,760,530 issued and
          outstanding at July 25, 1999 and July 30, 2000, respectively         148                  148
        Common stock, par value of $.01 per share; 100,000,000
          shares authorized; 15,526,243 and 15,708,633 issued and
          outstanding at July 25, 1999 and July 30, 2000, respectively         155                  157
        Additional paid-in capital                                         268,663              269,955
        Accumulated deficit                                               (32,311)             (84,763)
                                                                    ---------------     ----------------
                Total shareholders' equity                                 236,655              185,497
                                                                    ---------------     ----------------
                Total liabilities, mandatorily redeemable
                    preferred stock and shareholders' equity           $   907,502          $   926,778
                                                                    ===============     ================

</TABLE>

           See accompanying notes to consolidated financial statements
                                       F-2


<PAGE>
                             American Skiing Company
                      Consolidated Statements of Operations
                    (in thousands, except per share amounts)
<TABLE>
                                                               Year Ended
                                               ----------------------------------------------
<S>                                             <C>              <C>              <C>
                                                July 26, 1998    July 25, 1999    July 30, 2000
                                               ------------    -------------    -------------
Net revenues:
   Resort                                       $  277,574       $  292,558       $  292,077
   Real estate                                      60,992           24,492          132,063
                                               ------------    -------------    -------------
      Total net revenues                           338,566          317,050          424,140
                                               ------------    -------------    -------------
Operating expenses:
   Resort                                          171,246          198,231          203,902
   Real estate                                      43,554           26,808          123,837
   Marketing, general and administrative            40,058           51,434           49,405
   Stock compensation charge                        14,254                -                -
   Depreciation and amortization                    37,965           44,202           47,028
                                               ------------    -------------    -------------
      Total operating expenses                     307,077          320,675          424,172
                                               ------------    -------------    -------------

Income (loss) from operations                       31,489          (3,625)             (32)
Interest expense                                    34,575           39,382           35,906
                                               ------------    -------------    -------------

Loss before benefit from income taxes
 and minority interest in loss of subsidiary       (3,086)         (43,007)         (35,938)

Benefit from income taxes                            (774)         (15,057)          (5,805)
Minority interest in loss of subsidiary              (445)                -                -
                                               ------------    -------------    -------------

Loss before extraordinary item and cumulative
effect of accounting change                        (1,867)         (27,950)         (30,133)

Extraordinary loss, (net of applicable income
   taxes $3,248, $0 and $396, respectively)
   (See Notes 6 & 7)                                 5,081                -              621
Cumulative effect of accounting change (net
     of applicable taxes of $449) (See Note 2)           -                -              704
                                               ------------    -------------    -------------

Loss before preferred stock dividends              (6,948)         (27,950)         (31,458)

Accretion of discount and dividends accrued on
mandatorily redeemable preferred stock               5,346            4,372           20,994
                                               ------------    -------------    -------------

Net loss available to common shareholders       $ (12,294)      $  (32,322)      $  (52,452)
                                               ============    =============    =============

Basic and diluted loss per share:
Loss before extraordinary items and
     cumulative effect of accounting change     $   (0.28)       $   (1.07)       $   (1.69)
Extraordinary loss, net of taxes                    (0.20)                -           (0.02)
Cumulative effect of accounting change, net
of taxes                                                 -                -           (0.02)
                                               ------------    -------------    -------------
Net loss available to common shareholders       $   (0.48)       $   (1.07)       $   (1.73)
                                               ============    =============    =============
Weighted average shares outstanding                 25,809           30,286           30,393
                                               ============    =============    =============
</TABLE>
           See accompanying notes to consolidated financial statements
                                       F-3


<PAGE>


                             American Skiing Company
           Consolidated Statements of Changes in Shareholders' Equity
                      (in thousands, except share amounts)

<TABLE>

                                                                  Class A                           Retained
                                      Common stock              Common stock           paid-in    (Accumulated
                               -------------------------  ------------------------   Additional     earnings/
                                                                                       paid-in     (Accumulated
                                  Shares        Amount        Shares     Amount        capital      deficit)        Total
                               ------------  -----------  ------------- ----------  ------------- -------------  ------------

<S>                             <C>             <C>         <C>             <C>        <C>           <C>           <C>
Balance at July 27, 1997                 -      $     -     14,760,530       $ 10      $   2,786     $  12,305     $  15,101
Shares issued pursuant to
  initial public offering       14,750,000          148              -          -        244,181             -       244,329
Issuance of Common Stock
  options                                -            -              -          -          8,538             -         8,538
Conversion of Class A Common
  Stock                                  -            -              -        138          (138)             -             -
Purchase of minority interest
  in subsidiary                    615,022            6              -          -          8,648             -         8,654
Original issue discount on
  Series A 14% Exchangeable
  Preferred Stock and 14%
  Senior Exchangeable Notes              -            -              -          -          1,841             -         1,841
Shares issued to purchase
  subsidiary                       140,000            1              -          -          1,994             -         1,995
Exercise of Common Stock
  options                           20,000            -              -          -             40             -            40
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -            -              -          -              -       (5,346)       (5,346)
Net loss                                 -            -              -          -              -       (6,948)       (6,948)
                               ------------  -----------  ------------- ----------  ------------- -------------  ------------
Balance at July 26, 1998        15,525,022          155     14,760,530        148        267,890            11       268,204
                               ============  ===========  ============= ==========  ============= =============  ============
Exercise of Common Stock
  options                            1,221            -              -          -              -             -             -
Issuance of Common Stock
  options                                -            -              -          -            773             -           773
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -            -              -          -              -       (4,372)       (4,372)
Net loss                                 -            -              -          -              -      (27,950)      (27,950)
                               ------------  -----------  ------------- ----------  ------------- -------------  ------------
Balance at July 25, 1999        15,526,243          155     14,760,530        148        268,663      (32,311)       236,655
                               ============  ===========  ============= ==========  ============= =============  ============

Exercise of Common Stock
  options                          182,390            2              -          -            363             -           365
Issuance of Common Stock
  options                                -            -              -          -            929             -           929
Accretion of discount and
  issuance costs and
  dividends accrued on
  mandatorily redeemable
  preferred stock                        -            -              -          -              -      (20,994)      (20,994)
Net loss                                 -            -              -          -              -      (31,458)      (31,458)
                               ------------  -----------  ------------- ----------  ------------- -------------  ------------
Balance at July 30, 2000        15,708,633      $   157     14,760,530     $  148      $ 269,955    $ (84,763)     $ 185,497
                               ============  ===========  ============= ==========  ============= =============  ============

</TABLE>

           See accompanying notes to consolidated financial statements
                                       F-4


<PAGE>


                             American Skiing Company
                      Consolidated Statements of Cash Flows
                                 (in thousands)
<TABLE>
                                                                                Year Ended
                                                            -------------------------------------------------
                                                              July 26,           July 25,         July 30,
                                                                1998               1999            2000
                                                            -------------      -------------   --------------
<S>                                                          <C>                  <C>           <C>
Cash flows from operating activities
Net loss                                                     $   (6,948)          $(27,950)     $   (31,458)
Adjustments to reconcile net loss to net cash provided by
(used in)
        operating activities:
     Minority interest in loss of subsidiary                       (445)                  -                -
     Depreciation and amortization                                37,966             44,202           47,028
     Discount on convertible debt                                  3,159                333              368
     Deferred income taxes                                       (3,910)           (15,517)          (7,155)
     Stock compensation charge                                    14,254                773              929
     Extraordinary loss                                            8,329                  -            1,017
     Cumulative effect of accounting change                            -                  -            1,153
     (Gain) loss from sale of assets                               (773)              2,426          (1,449)
     Decrease (increase) in assets:
          Restricted cash                                        (3,448)              (368)            (796)
          Accounts receivable                                    (3,608)              1,090          (1,702)
          Inventory                                              (2,088)              2,516              637
          Prepaid expenses                                       (1,644)            (1,600)          (3,098)
          Real estate developed for sale                        (25,950)          (125,331)         (43,406)
          Other assets                                          (10,319)            (5,000)            2,318
     Increase (decrease) in liabilities:
          Accounts payable and other current liabilities           2,413             33,579          (6,994)
          Deposits and deferred revenue                            (866)             10,635          (4,920)
          Other long-term liabilities                              2,586              2,977            3,637
                                                            -------------      -------------   --------------
Net cash provided by (used in) operating activities                8,708           (77,235)         (43,891)
                                                            -------------      -------------   --------------
Cash flows from investing activities
     Payments for purchases of businesses, net of cash
     acquired                                                  (291,773)                  -            (345)
     Capital expenditures                                      (106,917)           (46,007)         (27,229)
     Long-term investments                                         1,110              1,222                -
     Proceeds from sale of assets                                  7,227              7,198           10,175
     Proceeds from sale of business                                5,702                  -                -
     Other, net                                                      348                101              (4)
                                                            -------------      -------------   --------------
Net cash used in investing activities                          (384,303)           (37,486)         (17,403)
                                                            -------------      -------------   --------------
Cash flows from financing activities
     Net borrowings (repayment) under Senior Credit
     Facility                                                    194,227              7,308         (82,448)
     Repayment of previous credit facility                      (59,623)                  -               -
     Proceeds from long-term debt                                  1,568             20,145              139
     Proceeds from real estate debt                               71,462            115,909          139,026
     Repayment of long-term debt                                (15,793)           (10,466)         (11,105)
     Repayment of real estate debt                              (45,551)           (23,088)        (113,353)
     Deferred financing costs                                    (4,355)            (1,438)          (4,604)
     Net proceeds from initial public offering                   244,329                  -                -
     Repayment of subordinated notes                            (23,223)                  -                -
     Net proceeds from issuance of mandatorily redeemable
     securities                                                   17,500                  -          136,186
     Payments on demand note, Mr. Otten                             (87)               (16)          (1,830)
     Proceeds from exercise of stock options                         40                   -              365
     Cash payment in connection with early retirement of
     debt                                                        (5,087)                  -                -
                                                            -------------      -------------   --------------
Net cash provided by financing activities                        375,407            108,354           62,376
                                                            -------------      -------------   --------------
Net increase (decrease) in cash and cash equivalents               (188)            (6,367)            1,082
Cash and cash equivalents, beginning of period                    15,558             15,370            9,003
                                                           -------------      -------------   --------------
Cash and cash equivalents, end of period                     $    15,370         $    9,003     $     10,085
                                                           =============      =============   ==============
</TABLE>

           See accompanying notes to consolidated financial statements
                                       F-5
<PAGE>


                             American Skiing Company
                Consolidated Statements of Cash Flows (continued)
                                 (in thousands)
<TABLE>

                                                                                  Year Ended
                                                                --------------   -------------   --------------
                                                                   July 26,        July 25,         July 30,
                                                                    1998             1999            2000
                                                                --------------   -------------   --------------
<S>                                                                  <C>             <C>              <C>
Supplemental disclosures of cash flow information
 Cash paid for interest                                              $ 36,583        $ 41,295         $ 48,754
 Cash paid (refunded) for income taxes                                     43            (10)             (60)

 Supplemental schedule of noncash investing
 and financing activities
 Property acquired under capital leases                               $ 9,832         $ 7,425           $    -
 Non-cash transfer of real estate developed for sale to
  property and equipment                                                    -               -           27,758
 Notes payable issued for purchase of assets                           14,232           1,395                -
 Liabilities assumed associated with purchased companies               17,205               -                -
 Deferred tax asset associated with purchased companies                 1,650               -                -
 Purchase price adjustments related to deferred taxes                   1,226               -                -
 Purchase of minority interest                                            375               -                -
 Accretion of discount and issuance costs and dividends
   accrued on mandatorily redeemable preferred stock                    5,346           4,372           20,994
 Exchange of mandatorily redeemable securities for 10 1/2%
    Repriced Convertible Series A Preferred Stock                      36,626               -                -
 Intangible asset assumed to purchase subsidiary                        1,883               -                -




</TABLE>





           See accompanying notes to consolidated financial statements
                                       F-6


<PAGE>


American Skiing Company
Notes to Consolidated Financial Statements
--------------------------------------------------------------------------------

1.       Basis of Presentation

         American  Skiing Company  ("ASC") is organized as a holding company and
operates through various subsidiaries.  ASC and its subsidiaries  (collectively,
the  "Company")  operate in two business  segments,  ski resorts and real estate
development. ASC owns and operates the following ski resorts:  Sugarloaf/USA and
Sunday River in Maine,  Attitash Bear Peak in New Hampshire,  Killington,  Mount
Snow/Haystack  and  Sugarbush in Vermont,  The Canyons in Utah,  Steamboat Ski &
Resort Corporation  ("Steamboat") in Colorado,  and Heavenly Valley Ski & Resort
Corporation  ("Heavenly") in  California/Nevada.  The Company  performs its real
estate development through its wholly-owned subsidiary,  American Skiing Company
Resort   Properties,   Inc.  ("Resort   Properties"),   and  Resort  Properties'
subsidiaries,  including  Grand  Summit  Resort  Properties,  Inc.  ("GSRP") and
Canyons Resort Properties, Inc. The Company owns and operates resort facilities,
real estate development  companies,  golf courses, ski and golf schools,  retail
shops and other related companies.

         ASC was formed on June 17,  1997,  when Leslie B. Otten  ("Mr.  Otten")
exchanged his 96% ownership  interest in ASC East, Inc. ("ASC East") for 100% of
the Common Stock of ASC. In  conjunction  with the formation of ASC, the Company
recorded the 4% minority  interest in ASC East. On January 23, 1998, the Company
and the holders of the  minority  interest in ASC East entered into an agreement
whereby the Company  issued  615,022  shares of Common Stock in exchange for all
shares of ASC East common stock held by the minority shareholders.

         On October 10,  1997,  the Company  approved an increase in  authorized
shares of Common Stock,  a new issue of Class A Common Stock,  the conversion of
100% of the  outstanding  Common Stock to Class A Common Stock and a 14.76 for 1
stock  split of Class A Common  Stock.  The stock  split  was given  retroactive
effect in the consolidated financial statements as of July 27, 1997.

         The Company  consummated an initial public offering (the "Offering") on
November 6, 1997.  The Company sold 14.75 million  shares of common stock in the
Offering  at a price of $18.00 per share.  Net  proceeds  to the  Company  after
expenses of the Offering  totaled  $244.3  million.  Of the 14.75 million shares
sold in the Offering, 833,333 shares were purchased by Mr. Otten.

         The Company  acquired  Heavenly and  Steamboat on November 12, 1997 for
approximately  $300.5  million,  including  closing costs and  adjustments.  The
acquisition  was  accounted  for using the purchase  method of  accounting.  The
accompanying consolidated financial statements reflect the results of operations
of Steamboat and Heavenly subsequent to November 12, 1997.

         On August 9, 1999, the Company sold 150,000 shares of its 8.5% Series B
Convertible  Participating  Preferred Stock ("Series B Preferred  Stock") to Oak
Hill Capital  Partners,  L.P. and certain related entities ("Oak Hill") for $150
million  (collectively,  the "Oak Hill  Transaction").  As part of the  Series B
Agreement, the Company also agreed to move its state of incorporation from Maine
to  Delaware by merging  the  Company  (ASC East,  ASC West and ASC Utah) into a
wholly owned Delaware subsidiary and amending its articles of incorporation (the
"Delaware  Reincorporation").  Under the  Delaware  Reincorporation,  which took
place on October 12, 1999,  the Company was merged into a newly formed  Delaware
subsidiary  (ASC  Delaware)  that  survived  the  merger  and that has a capital
structure identical to the Company's prior to the merger.

2.       Summary of Significant Accounting Principles

    Principles of Consolidation
         The accompanying consolidated financial statements include the accounts
of American Skiing Company and its  subsidiaries.  All significant  intercompany
accounts and transactions have been eliminated.

    Fiscal Year
         The  Company's  fiscal year is a  fifty-two  week or  fifty-three  week
period  ending  on the  last  Sunday  of  July.  The  periods  for 1998 and 1999
consisted  of fifty-two  weeks.  The period for 2000  consisted  of  fifty-three
weeks.
<PAGE>

   Cash and Cash Equivalents
         The  Company  considers  all  highly  liquid  debt  instruments  with a
remaining maturity of three months or less to be cash equivalents.

    Restricted Cash
         Restricted  cash  represents  deposits that relate to pre-sales of real
estate  developed for sale held in escrow and guest advance deposits for lodging
reservations.  The cash will be  available  to the Company  when the real estate
units are sold or the lodging services are provided.

     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
mountain operating supplies.

    Property and Equipment
         Property  and  equipment  are  carried  at  cost,  net  of  accumulated
depreciation. Depreciation is calculated using the straight-line method over the
assets'  estimated useful lives which range from 9 to 40 years for buildings,  3
to  12  years  for  machinery  and  equipment,  10  to 50  years  for  leasehold
improvements  and 5 to 30 years for lifts,  lift lines and trails.  Assets under
capital  leases are  amortized  over the shorter of their  useful lives or their
respective  lease lives. Due to the seasonality of the Company's  business,  the
Company  records a full year of  depreciation  relating to its operating  assets
over the second and third quarters of its fiscal year.

    Real Estate Developed for Sale
         The Company  capitalizes as real estate developed for sale the original
acquisition cost of land, direct  construction and development  costs,  property
taxes, interest incurred on costs related to real estate under development,  and
other  related  costs  (engineering,  surveying,  landscaping,  etc.)  until the
property  reaches its intended use. The cost of sales for individual  parcels of
real  estate or  quartershare  units  within a project is  determined  using the
relative sales value method.  Selling costs are charged to expense in the period
in which the related revenue is recognized.  Interest capitalized on real estate
development  projects  during  fiscal  years 1998,  1999,  and 2000 totaled $2.4
million, $6.4 million, and $15.3 respectively.

    Goodwill and Other Intangible Assets
         Intangible  assets  consist of goodwill and various other  intangibles.
The  Company  has  classified  as  goodwill  the excess of fair value of the net
assets (including tax attributes) of companies acquired in purchase transactions
and also the purchase of a minority interest. Intangible assets are recorded net
of accumulated  amortization in the accompanying  consolidated balance sheet and
are amortized using the  straight-line  method over their estimated useful lives
as follows:

                  Goodwill                           up to 40 years
                  Tradenames                         40 years
                  Other intangibles                  16 - 20 years

     Deferred Financing Costs
         Costs incurred in connection  with the issuance of debt are included in
deferred  financing  costs,  net of accumulated  amortization.  Amortization  is
calculated using the straight-line  method over the respective original lives of
the applicable issues. Amortization calculated using the straight-line method is
not materially  different from  amortization that would have resulted from using
the effective interest method.

    Long-Lived Assets
         The Company  evaluates  potential  impairment of long-lived  assets and
long-lived  assets to be disposed of in accordance  with  Statement of Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for  Long-Lived  Assets to Be  Disposed  Of" ("SFAS  121").  SFAS 121
establishes   procedures  for  review  of  recoverability   and  measurement  of
impairment if necessary, of long-lived assets, goodwill and certain identifiable

<PAGE>

intangibles  held and used by an entity.  SFAS 121 requires that those assets be
reviewed for  impairment  whenever  events or  circumstances  indicate  that the
carrying amount of an asset may not be recoverable.  SFAS 121 also requires that
long-lived  assets and  certain  identifiable  intangibles  to be disposed of be
reported  at the lower of their  carrying  amount or fair value  less  estimated
selling costs. As of July 30, 2000,  management believes that there has not been
any impairment of the Company's  long-lived  assets,  real estate  developed for
sale, goodwill or other identifiable intangibles.

    Revenue Recognition
         Resort  revenues  include  sales  of lift  tickets,  tuition  from  ski
schools,  golf  course  fees  and  other  recreational  activities,  sales  from
restaurants,  bars and retail shops, and real estate rentals.  Daily lift ticket
revenue is recognized on the day of purchase. Lift ticket season pass revenue is
recognized in equal amounts over the ski season,  which is the Company's  second
and third  quarters  of its fiscal  year.  The  Company's  remaining  revenue is
generally  recognized as the services are  performed.  Real estate  revenues are
recognized  under the full  accrual  method  when  title  has been  transferred.
Amounts  received  from  pre-sales  of real estate are  recorded as deposits and
deferred  revenue  in the  accompanying  consolidated  balance  sheet  until the
revenue is recognized.

   Interest
         Interest  is expensed as  incurred  except  when it is  capitalized  in
connection with major capital  additions and real estate developed for sale. The
amounts of interest  capitalized  are  determined by applying  current  interest
rates to the funds required to finance the  construction.  During 1998, 1999 and
2000, the Company  incurred total interest cost of $37.5 million,  $46.4 million
and $51.5 million,  respectively, of which $2.9 million, $7.1 million, and $15.6
million, respectively,  have been capitalized to property and equipment and real
estate developed for sale.

    Employee Benefits
         As of July 27, 1997, the Company  maintained a number of profit sharing
and savings plans  pursuant to Section  401(k) of the Internal  Revenue Code. In
August 1997, the Company  established the ASC 401(k) Retirement Plan pursuant to
Section 401(k) of the Internal Revenue Code (the "Plan") and subsequently merged
the previously  existing plans into the Plan. The Plan allows employees to defer
up to 15%  of  their  income  and  provides  for  the  matching  of  participant
contributions at the Company's discretion.  The Company made no contributions to
the profit sharing plans for 1998, 1999 and 2000.  Contributions  to the savings
plans for 1998, 1999 and 2000 totaled $225,000, $395,000 and $439,000, excluding
contributions  to the former  Steamboat and Heavenly  plans. On January 1, 1998,
the  Heavenly  profit  sharing  plan was merged into the Plan and the  Steamboat
401(k)  plan was merged into the Plan on October 1, 1998.  Contributions  to the
Steamboat  and  Heavenly  plans for  Fiscal  1998  were  $220,000  and  $43,000,
respectively. Contributions to the Steamboat plan for Fiscal 1999 were $7,000.

    Advertising Costs
         Advertising  costs are  expensed the first time the  advertising  takes
place.  At July 25, 1999 and July 30,  2000,  advertising  costs of $244,000 and
$220,000,  respectively,  were recorded in prepaid  expenses in the accompanying
consolidated  balance  sheet.  Advertising  expense for the years ended July 26,
1998,  July 25, 1999 and July 30, 2000 was $7.6  million,  $9.5 million and $7.3
million, respectively.

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

    Seasonality
         The occurrence of adverse weather  conditions during key periods of the
ski season could adversely affect the Company's  operating results. In addition,
the Company's  revenues are highly seasonal in nature,  with the majority of its
revenues  historically  being generated in the second and third fiscal quarters,
of which a significant  portion is produced in two key weeks - the Christmas and
Presidents' Day vacation weeks.


<PAGE>

    Earnings Per Share
         Statement of Financial  Accounting  Standards  No. 128,  "Earnings  Per
Share" ("SFAS 128") requires  presentation of "basic"  earnings per share (which
excludes  dilution as a result of unexercised  stock options and the Mandatorily
Redeemable  Preferred  Stock) and  "diluted"  earnings  per share.  The  Company
adopted  SFAS  128  in  fiscal  1998  and  all  prior  periods   presented  were
retroactively  restated.  For the years ended July 26,  1998,  July 25, 1999 and
July 30, 2000, basic and diluted loss per share are as follows:

<TABLE>
                                                                             Year Ended
                                                              ------------------------------------------
                                                              -------------  ------------  -------------
                                                                July 26,      July 25,       July 30,
                                                                  1998          1999           2000
                                                              -------------  ------------  -------------
                               Loss                            (in thousands, except per share amounts)
<S>                                                             <C>           <C>           <C>
      Loss before preferred stock dividends and
          accretion, extraordinary items and cumulative
          effect of accounting change                           $  (1,867)    $ (27,950)    $  (30,133)
      Accretion of discount and dividends accrued on
          mandatorily redeemable preferred stock                     5,346         4,372         20,994
                                                              -------------  ------------  -------------
      Loss before extraordinary items and cumulative effect
      of accounting change                                         (7,213)      (32,322)       (51,127)
      Extraordinary loss, net of taxes                               5,081             -            621
      Cumulative effect of accounting change, net of taxes               -             -            704
                                                              -------------  ------------  -------------
      Net loss available to common shareholders                $  (12,294)    $ (32,322)     $ (52,452)
                                                              =============  ============  =============

                              Shares
      Total weighted average shares outstanding (basic and
      diluted)                                                      25,809        30,286         30,393
                                                              =============  ============  =============

              Basic and diluted loss per common share
      Loss before extraordinary items                           $   (0.28)    $   (1.07)      $  (1.69)
      Extraordinary loss, net of taxes                              (0.20)             -         (0.02)
      Cumulative effect of accounting change, net of taxes               -             -         (0.02)
                                                              -------------  ------------  -------------
      Net loss available to common shareholders                 $   (0.48)    $   (1.07)      $  (1.73)
                                                              =============  ============  =============
</TABLE>

         The Company has  outstanding  36,626 and 186,626  shares of convertible
preferred stock  (represented by two separate classes) at July 26, 1998 and July
25, 1999, and July 30, 2000,  respectively.  These shares are  convertible  into
shares of the Company's  common stock.  The common stock shares into which these
securities  are  convertible  have  not  been  included  in the  dilutive  share
calculation as the impact of their inclusion would be anti-dilutive. The Company
also has 2,567,673,  2,746,048 and 1,359,963  exercisable options outstanding to
purchase  shares of its common stock under the Company's stock option plan as of
July 26, 1998, July 25, 1999 and July 30, 2000,  respectively.  These shares are
also  excluded  from the  dilutive  share  calculation  as the  impact  of their
inclusion would also be anti-dilutive.

    Stock Compensation
         The Company's  stock option plan is accounted  for in  accordance  with
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees." The Company has adopted the disclosure  requirements of Statement of
Financial   Accounting   Standards  No.  123,  ("SFAS  123"),   "Accounting  for
Stock-Based Compensation" (See Note 12 - Stock Option Plan).


<PAGE>

    Fair Value of Financial Instruments
         The recorded  amounts for cash and cash  equivalents,  restricted cash,
accounts   receivable  and  accounts  payable  and  other  current   liabilities
approximate  fair  value  due  to  the  short-term  nature  of  these  financial
instruments.  The fair value of amounts  outstanding  under the Company's Senior
Credit Facility and certain other debt instruments  approximates  their recorded
values in all material respects,  as determined by discounting future cash flows
at current  market  interest  rates as of July 30,  2000.  The fair value of the
Company's  Senior  Subordinated  Notes has been  estimated  using quoted  market
values. The fair value of the Company's other subordinated  debentures have been
estimated using  discounted cash flow analyses based on current  borrowing rates
for debt with similar maturities and ratings.

     The  estimated  fair  values  of the  Senior  Subordinated  Notes and other
subordinated  debentures at July 25, 1999 and July 30, 2000 are presented  below
(in thousands):

<TABLE>
                                     July 25, 1999               July 30, 2000
                                    -------------                -------------
                                 Carrying          Fair       Carrying         Fair
                                  amount          value        amount          value

<S>                             <C>           <C>          <C>             <C>
12% Senior Subordinated Notes   $   117,240   $  110,400   $  117,512      $  102,300
Other subordinated debentures   $    10,495   $    9,417   $    9,823      $    8,616

</TABLE>
    Income Taxes
         The Company  utilizes the asset and liability  method of accounting for
income taxes,  as set forth in Statement of Financial  Accounting  Standards No.
109,  "Accounting  for  Income  Taxes"  ("SFAS  109").  SFAS  109  requires  the
recognition of deferred tax assets and  liabilities  for the expected future tax
consequences of temporary  differences  between the financial  statement and tax
bases of assets and  liabilities,  utilizing  currently  enacted tax rates.  The
effect of any future  change in tax rates is  recognized  in the period in which
the change occurs.

         Reclassifications

         Certain  amounts in the prior year  financial  statements  and  related
notes have been reclassified to conform to the fiscal 2000 presentation.

    Recently Issued Accounting Standards

         In fiscal 2000,  the Company  adopted  American  Institute of Certified
Public Accountants  (AICPA) Statement Of Position 98-5,  "Reporting on the Costs
of Start-Up Activities" ("SOP 98-5"). At adoption, SOP 98-5 required the Company
to write-off any unamortized  start-up costs as a cumulative effect of change in
accounting principle and, going forward,  expense all start-up activity costs as
they are incurred. The initial adoption of SOP 98-5 resulted in the write-off of
$1.2 million of start-up costs that had previously  been  capitalized as of July
25, 1999.  The net effect of the  write-off of $704,000  (which is net of income
tax benefits of $449,000) has been expensed and reflected as a cumulative effect
of an accounting change in the accompanying statement of operations for the year
ended July 30, 2000.

         In  December  1999,  the  Securities  Exchange  Commission  (SEC) staff
released Staff Accounting  Bulletin No. 101,  "Revenue  Recognition in Financial
Statements"  ("SAB  101").  SAB  101  provides   interpretive  guidance  on  the
recognition, presentation and disclosure of revenue in the financial statements.
The Company  does not believe  that the adoption of SAB 101 will have a material
affect on the Company's consolidated financial results.


<PAGE>

         Effective July 31, 2000, the Company will adopt  Statement of Financial
Accounting Standards ("SFAS") No. 133 Accounting for Derivative  Instruments and
Hedging  Activities,  SFAS No. 137  Accounting for  Derivative  Instruments  and
Hedging  Activities - Deferral of the Effective Date of FASB Statement No. 133 -
an Amendment of FASB  Statement No. 133 and SFAS No. 138  Accounting for Certain
Derivative  Instruments  and Certain  Hedging  Activities - an Amendment of FASB
Statement  No. 133  (collectively  SFAS 133 as amended).  SFAS 133 as amended is
required  to be  adopted  no later than the  beginning  of the fiscal  reporting
period  beginning June 15, 2000,  which for the Company is July 31, 2000.  These
standards  are to be adopted as a change in  accounting  principle and cannot be
applied retroactively to financial statements of prior periods.

         SFAS 133 and 138 require  that  derivatives  be recorded on the balance
sheet as an asset or liability at fair value.  SFAS 133 as amended  require that
derivatives that are not hedges must be recorded at fair value through earnings,
unless  specific  hedge  accounting  criteria are met.  Special  accounting  for
qualifying  hedges allows a derivative  instrument's  gains and losses to offset
related  results  on the  hedged  item in the  income  statement,  to the extent
effective,  and requires  that a company must formally  document,  designate and
assess the effectiveness of transactions that receive hedge accounting. SFAS 133
as amended,  in part,  allows  special hedge  accounting for fair value and cash
flow  hedges.  The  statement  provides  that the  gain or loss on a  derivative
instrument  designated and qualifying as a fair value hedging instrument as well
as the  offsetting  loss or gain on the hedged item  attributable  to the hedged
risk be recognized currently in earnings in the same accounting period. SFAS 133
as  amended  provides  that  the  effective  portion  of the  gain  or loss on a
derivative   instrument  designated  and  qualifying  as  a  cash  flow  hedging
instrument  be  reported  as a component  of other  comprehensive  income and be
reclassified into earnings in the same period or periods during which the hedged
forecasted   transaction   affects  earnings.   The  ineffective  portion  of  a
derivative's  change in fair  value is  recognized  currently  through  earnings
regardless of whether the instrument is designated as a hedge.

         The Company has five interest  rate swap  contracts  outstanding  as of
July 30, 2000. Two of these contracts have been designated as cash flow hedges.

Cash Flow Hedges

         The Company has entered into two interest rate swap agreements,  with a
total notional  amount of $75 million.  Under these  arrangements,  which may be
terminated by the floating rate payer on November 17, 2000, the Company receives
the  30-day  LIBOR rate and pays a fixed  rate of 5.68%.  These  swaps have been
treated, prior to adoption, as hedges and accounted for as such. No amounts were
recorded on the  Consolidated  Balance  Sheet as of July 30, 2000 in  connection
with these instruments,  and the net effect of the hedges was to record interest
expense  at the fixed rate of 5.68% plus 3.5%  (based on the  Company's  current
leverage) on the first $75 million of debt.  These swaps have been designated as
cash flow hedges of variable  future cash flows  associated with the interest on
the Senior Credit Facility  through  November 17, 2000. Upon adoption,  the fair
value of these swaps will be  recorded  as an asset on the balance  sheet with a
corresponding credit to other comprehensive  income.  Subsequent changes in fair
value of the swaps will be recorded through other comprehensive  income,  except
for changes related to  ineffectiveness  during the period these instruments are
designated as hedges. The Company does not currently anticipate  ineffectiveness
under these hedges  through  November 17, 2000.  The net effect of the cash flow
hedges will be to record  interest  expense at the fixed rate of 5.68% plus 3.5%
(based on the Company's  current  leverage) on the first $75 million of debt. If
the swap  agreements  are not  terminated  on November  17, 2000 all  subsequent
changes in the fair value will be accounted for through earnings.


<PAGE>

Other derivatives
         The Company  entered into three interest rate swap  agreements  that do
not qualify for hedge  accounting  under SFAS 133 as amended.  The net effect of
these swaps will be interest  savings to the  Company of $2.1  million  over the
life of the Senior  Subordinated  Notes.  As of July 30,  2000,  the Company had
$8,592,185   recorded  in  Other  Long  Term  Liabilities  in  the  accompanying
Consolidated Balance Sheet and had been recording the net effect of the interest
savings on a straight  line basis over the life of the  agreements  through  the
income statement.  Upon adoption, the fair value of these swaps will be recorded
as an asset and a liability with a corresponding  entry to cumulative  effect of
the change in accounting principle in earnings; and the amount recorded in Other
Long Term  Liabilities  will be  recognized  through a cumulative  effect of the
change in accounting principle in earnings.
Subsequent  changes  in fair  value of the swaps will be  recorded  through  the
income statement.

Net effect of the Change in Accounting Principle
<TABLE>

       ------------------------- ------------- --------------- -------------- --------------- -----------------
                                                                                                 Cumulative
                                                                                                 effect of
                                                                                                 change in
                                                                Other Long        Other          accounting
                                                 Liability-        Term       Comprehensive     principle in
            Debit/(Credit)       Asset - Swap       Swap        Liabilities       Income          earnings
       ------------------------- ------------- --------------- -------------  --------------- -----------------
<S>                                <C>              <C>             <C>           <C>                <C>
       Cash flow hedges            $  258,862       $       -       $      -      $ 258,862)         $       -
       Other Derivatives            6,519,980    (11,065,538)      8,592,185                       (4,046,627)
                                 ------------- --------------- -------------- --------------- -----------------
       Total Derivatives          $ 6,778,842   $(11,065,538)    $ 8,592,185     $ (258,862)     $ (4,046,627)
       ------------------------- ------------- --------------- -------------- --------------- -----------------
</TABLE>

         The Company has no embedded  derivatives  under SFAS 133 as amended and
is not aware of the potential  impact of any other  significant  matter that may
result from the adoption of these standards.

3.       Business Acquisitions and Divestments

    Kamori Combined Enterprises Acquisition
         On November  12,  1997,  the Company  acquired  all of the  outstanding
shares of common stock of Kamori  Combined  Entities (the "Kamori  Acquisition")
which  included the Steamboat  Ski & Resort  Corporation  in Steamboat  Springs,
Colorado  ("Steamboat"),  the Heavenly  Valley Ski & Resort  Corporation in Lake
Tahoe,  California/Nevada  ("Heavenly")  and the  Sabal  Point  Golf  Course  in
Orlando,  Florida ("Sabal Point") for  approximately  $300.5 million,  including
closing costs and adjustments.  Steamboat and Heavenly are major destination ski
resorts while Sabal Point is a golf,  tennis and swimming club. The  acquisition
was accounted for using the purchase method of accounting and, accordingly,  the
results of  operations  subsequent  to  November  12,  1997 are  included in the
accompanying consolidated financial statements. The purchase price was allocated
to the assets  acquired and the  liabilities  assumed based on their fair market
values at the date of acquisition as follows (in thousands):
                                                                  Fair value
                                                                      of
                                                                  net assets
                                                                   acquired
                                                                 -------------
                    Cash                                             $  8,771
                    Accounts receivable                                   129
                    Inventory                                           3,983
                    Prepaid expenses                                      486
                    Property and equipment, net                       183,922
                    Asset held for sale                                 5,780
                    Real estate developed for sale                     25,624
                    Goodwill                                           60,177
                    Intangible assets                                  22,200
                    Long-term investments                               5,000
                    Other assets                                          177
                    Deferred income taxes                               2,443
                                                                 -------------
                       Total assets                                   318,692
                                                                 -------------

                    Accounts payable and other current liabilities   (10,289)
                    Deposits and deferred revenue                     (6,702)
                    Deferred income taxes                               (793)
                    Minority interest                                   (364)

                                                                 -------------
                       Total liabilities                             (18,148)
                                                                 -------------
                       Net assets acquired                          $ 300,544
                                                                 =============



<PAGE>

         Amortization of goodwill and intangible  assets charged to depreciation
and amortization was $1.3 million and $544,000,  respectively,  for fiscal 1998,
$1.3 million and $704,000,  respectively,  for fiscal 1999, and $1.5 million and
$761,000, respectively, for fiscal 2000.

         The  asset  held for sale per  above  of $5.8  million  represents  the
carrying value of Sabal Point.  Sabal Point was subsequently sold on February 2,
1998 for total  proceeds of $5.7 million.  As Sabal Point was identified as held
for sale as of the Kamori Acquisition date, the operating results of Sabal Point
from that  date  through  February  2, 1998  were  excluded  from the  Company's
consolidated  operating  results and were included in the  determination  of the
carrying value of $5.8 million.  No gain or loss was recognized from the sale of
Sabal Point as the  difference  between the carrying  value and the proceeds was
treated as an adjustment to the original purchase price allocation.


4.      Property and Equipment

         Property and equipment consists of the following (in thousands):
<TABLE>

                                                   July 25, 1999      July 30, 2000
                                                   -------------      -------------
<S>                                                   <C>              <C>
                Buildings and grounds                 $ 176,952        $ 195,847
                Machinery and equipment                 166,475          171,037
                Lifts and lift lines                    161,102          162,283
                Trails                                   37,130           38,061
                Land improvements                        19,006           18,708
                                                    ------------    -------------
                                                        560,665          585,936

                Less: accumulated depreciation          111,288          146,973
                                                    ------------    -------------
                                                        449,377          438,963

                Land                                     72,249           78,486
                Construction-in-process                   7,528           16,629
                                                    ------------    -------------
                Property and equipment, net            $529,154        $ 534,078
                                                    ============    =============
</TABLE>

         Property and equipment includes  approximately  $52.3 million and $53.3
million of machinery and  equipment and lifts held under capital  leases at July
25, 1999 and July 30,  2000,  respectively.  At July 25, 1999 and July 30, 2000,
related accumulated  amortization on property and equipment under capital leases
was  approximately  $9.0 million and $13.1 million,  respectively.  Amortization
expense for property and equipment under capital leases was  approximately  $2.2
million,  $4.4 million and $4.2 million for 1998,  1999 and 2000,  respectively.
Total  depreciation  and  amortization  expense  relating  to all  property  and
equipment was $34.0 million,  $40.4 million and $41.9 million for 1998, 1999 and
2000, respectively.


<PAGE>

5.       Long-Term Debt

         Long-term debt consists of (dollar amounts in thousands):
<TABLE>
                                                                                             July 25,      July 30,
                                                                                               1999          2000
<S>                              <C>                                                          <C>            <C>
Senior Credit Facility (See Note 7 - Senior Credit Facility)                                  $200,485       $118,037

Real estate development note payable with a face value of $105,000. The note bears
interest at a variable rate of prime plus 2.5% per annum, which is accrued monthly.
Principal and interest on the note are payable as real estate quartershares are sold. Any
remaining principal and accrued interest is due in March 2002. The note is collateralized
by the real estate developed for sale of GSRP.                                                  55,796         92,083

Real estate development term loan facility with a face value of $58,000 to finance the
working capital of the Company's real estate subsidiaries. The facility bears interest at
a variable rate equal to the lender's base rate plus 8.25% or a current rate of 16%.
Interest is payable monthly in arrears. Any remaining principal is due June 30, 2001. This
facility is underwritten by substantially all the Resort Properties subsidiaries.  This
facility was restructured into a new $73 million facility subsequent to fiscal 2000
year-end (See Note 16 - Subsequent Events).                                                     52,654         53,892

Note payable in an aggregate principal amount of $3,530 for forbearance fees for the
amended and restated real estate development term loan facility described above. The note
bears interest at 12% per annum and is payable at maturity. The Balance is due in full at
February 2002.  This note was paid off subsequent to fiscal 2000 as part of the
restructuring of the real estate term loan facility (See Note 16 - Subsequent Events).           3,530          3,530

Real estate development note payable with a face value of $10,000 to provide additional
funds for the completion of the Steamboat Grand Hotel. The note bears interest at 20% per
annum, half of which is payable monthly in arrears and the remainder is deferred until
final payment is made. The stated maturity date is August 1, 2003.                                   -          2,588

Note payable with a face value of $2,250. The note bears interest at 9% per annum, which
is payable monthly beginning January 1998 for a 15-year term. The principal is due in full
in December 2012.                                                                                2,250          2,250

Note payable with a face value of $2,000. The note bears interest at 10% per annum which
is payable upon the maturity of the note. A principal payment of $1,000 was made in June
1999. The remaining principal and accrued interest was paid in full in June 2000.                1,000              -

Subordinated debentures issued with an original face value of $2,101. The initial coupon
rate is 6% per annum and is adjusted annually in accordance with the agreement. Interest
is payable annually in May beginning in 1995. The debentures mature in April 2002.               1,912          1,800

Note payable with a face value of $1,720. The note bears interest at 12% per annum, which
is payable quarterly, in arrears, beginning October 1998. The principal was paid in full
in July 2000.                                                                                    1,720              -

Note payable with a face value of $1,600. Interest is payable monthly beginning January
1998 for a 30-year term. The interest rate is 7% per annum for the first 10 years, 8.44%
per annum for the second 10 years and 10.55% per annum for the final 10 years. The
principal is due in full in December 2027.                                                       1,600          1,600

Note payable with a face value of $1,000. The note bears interest at 14% per annum, which
is payable monthly beginning in August 1997. The principal was paid in full in July 2000.        1,000              -


<PAGE>
                                                                                             July 25,      July 30,
                                                                                               1999          2000

Note payable with a face value of $2,097 and bearing interest at the rate of 8.25% per
annum. The principal and interest were paid in full upon completion of the Sundial Lodge
at the Canyons resort in fiscal 2000.                                                            2,097              -

Note payable with a face value of $6,600. The note bears interest at a rate of 8.5% per
annum, which is paid quarterly, in arrears. Principal payments of $4,720 were made in
fiscal 1999. The remaining balance was paid in full upon completion of the Grand Summit
Hotel at the Canyons resort in fiscal 2000.                                                      1,880              -

Real estate development note payable with a face value of $29,000. The note bears interest
at a variable rate of prime plus1/4% and is payable monthly. The principal was paid in full
upon completion of the Sundial Lodge project at the Company's Canyons resort in fiscal
2000.                                                                                            6,858              -

Real estate development note payable with a face value of $2,500 for the construction of
employee housing at the Company's Steamboat resort. The note bears interest at a variable
rate of prime plus1/4%. Principal and interest of $17 are payable monthly. The loan will be
converted to a 15-year amortization when the project is completed.                               1,831          2,397

Note payable with face value of $2,294. The note bears interest at 7.83% per annum.
Interest and principal payments of $22 are payable monthly beginning March 1998. The
principal was paid in full in fiscal 2000.                                                       2,154              -

Obligations under capital leases                                                                33,642         28,630
Other notes payable                                                                              4,317          1,542
                                                                                            -----------   ------------
                                                                                               374,726        308,349
                                                                                            -----------   ------------
Less: current portion                                                                           60,882         58,508
                                                                                            -----------   ------------
Long-term debt, excluding current portion                                                     $313,844       $249,841
                                                                                            ===========   ============
</TABLE>

         The carrying  values of the above debt  instruments  approximate  their
respective  fair values in all  material  respects,  determined  by  discounting
future cash flows at current market interest rates as of July 30, 2000.

         At July 30,  2000,  the  Company  had  letters  of  credit  outstanding
totaling $5.9 million.

         The  non-current  portion of  long-term  debt  matures  as follows  (in
thousands):

<TABLE>
                                                             Subordinated
                                                Long-term      notes and        Total
                                                   debt       debentures        Debt
                                               -------------  ------------   ------------
<S>           <C>                                  <C>             <C>          <C>
              2002                                 $ 60,764        $  549       $ 61,180
              2003                                   50,892         1,074         51,985
              2004                                   73,745         1,466         75,231
              2005                                   33,152             -         33,152
              2006 and thereafter                    35,600       126,209        161,809
              Interest related to capitalized
              leases                                (4,245)             -        (4,389)
              Debt discount                            (67)       (2,488)        (2,555)
                                               -------------  ------------   ------------
                                                   $249,841     $ 126,810        376,651
                                               =============  ============   ============

</TABLE>

6.       Subordinated Notes and Debentures

         On June 25, 1996, in connection  with the S-K-I  Acquisition,  ASC East
issued $120.0 million of 12% Senior  Subordinated Notes (the "Notes").  Pursuant
to a registration rights agreement, ASC East filed a registration statement with
respect to an offer to  exchange  the Notes for a new issue of notes of ASC East
registered  under  the  Securities  Act  of  1933,  with  identical  terms.  The
registration statement became effective in November 1996.


<PAGE>

         Concurrently with the Offering,  the Company solicited and received the
required  consents from the holders of the Notes to amend the Notes indenture to
permit the consummation of the Offering without  requiring the Company to make a
Change  of  Control  Offer  (as  defined).   In  connection   with  the  consent
solicitation,  the Company paid a customary fee to the consenting holders of the
Notes.

         In  order to  comply  with  the  conditions  to  closing  the  Series B
Preferred Stock sale (See Note 9 - Mandatorily Redeemable  Securities),  certain
amendments  were  made  to  the  Notes.  One  of the  amendments  permitted  the
consummation of a merger of two of the Company's wholly owned subsidiaries,  ASC
East  and ASC  West,  with  and  into  ASC.  This  merger  was  approved  by the
noteholders  on August 1, 1999 and a payment of  approximately  $1.5 million was
paid to the  holders of the  Notes.  ASC,  ASC East and ASC West were  merged on
October 6, 1999. In connection  with the merger,  ASC assumed all liabilities of
ASC East and ASC West and  became  the  primary  obligor  under  the  Notes.  In
addition,  the then  current  subsidiaries  of ASC and ASC West,  as well as ASC
Utah, also became additional guarantors under the Indenture.  As a result of the
additional   guarantee  given  by  certain  subsidiaries  of  the  Company,  the
noteholders  under the Indenture  will have priority over the equity  holders of
the Company with respect to any claims made on the assets of those  subsidiaries
until the obligations under the Indenture have been satisfied.

         The Notes are general  unsecured  obligations of ASC,  subordinated  in
right of payment to all existing and future  senior debt of ASC,  including  all
borrowings of the Company under the Senior Credit Facility.  The Notes are fully
and unconditionally  guaranteed by the Company and all its subsidiaries with the
exception of Ski  Insurance,  Killington  West,  Ltd.,  Mountain  Water Company,
Uplands Water Company,  Club Sugarbush,  Inc., Walton Pond Apartments,  Inc. and
Deerfield  Operating  Company.  The  guarantor  subsidiaries  are  wholly  owned
subsidiaries  of the Company and the  guarantees  are full,  unconditional,  and
joint and several. The Notes mature July 15, 2006, and will be redeemable at the
option of ASC, in whole or in part,  at any time after July 15, 2001.  The Notes
were issued with an original  issue  discount of $3.4  million.  Interest on the
Notes is payable  semi-annually on January 15 and July 15 of each year. Interest
expense on the Notes amounted to $14.6 million in each of fiscal 1998, 1999, and
2000.

         ASC East incurred  financing  costs of $6.7 million in connection  with
the issuance of the Notes and the Company incurred an additional $2.5 million in
costs related to the amendments  made in connection  with the Series B Preferred
Stock sale.  These  amounts are  recorded as deferred  financing  costs,  net of
accumulated  amortization,  in the  accompanying  consolidated  balance  sheets.
Amortization  expense  included in the  accompanying  consolidated  statement of
operations  for the years ended July 26,  1998,  July 25, 1999 and July 30, 2000
amounted to $713,000, $668,600 and $1.0 million, respectively.

         The Company has entered into a series of (non-cancelable) interest rate
swap  agreements  in connection  with its Notes,  which were intended to defer a
portion  of the cash  interest  payments  on the Notes  into  later  years.  The
following table illustrates the key factors of each of these agreements:

<TABLE>
                       February 9, 1998 - July 15, 2001                      July 16, 2001 - July 15, 2006
                -----------------------------------------------     ------------------------------------------------
                   Notional         Company         Company            Notional         Company         Company
                    Amount           Pays          Receives             Amount           Pays           Receives
                ---------------  --------------  --------------     ---------------  --------------  ---------------
<S>               <C>                <C>         <C>                  <C>                <C>         <C>
Agreement 1       $120,000,000       9.01%       6-month LIBOR        $127,500,000       9.01%       6-month LIBOR

Agreement 2        120,000,000   6-month LIBOR      12.00%             127,500,000   6-month LIBOR       7.40%

</TABLE>
         As a result of entering into this interest rate swap  arrangement,  the
Company has fixed the  cash-pay  rate on the Notes until their  maturity in July
2006.  The net  effect of the swap  agreements  will  result  in a $2.1  million
interest saving to the Company over the life of the  agreements.  This amount is
currently  being realized  against  interest  expense on a  straight-line  basis
prospectively  from the second  fiscal  quarter  of 2000  until  July 2006.  The
cumulative  net proceeds to the Company  received from this  arrangement of $5.1
million and $8.6  million as of July 25, 1999 and July 30,  2000,  respectively,
are included as other long term  liabilities  in the  accompanying  consolidated
balance sheets.

<PAGE>

         A portion of the proceeds from the Senior Credit Facility (See Note 7 -
Senior Credit  Facility)  were used to redeem all of the  Company's  outstanding
13.75%  Subordinated  Discount  Notes  ("Subordinated   Notes").  The  indenture
relating to the  Subordinated  Notes  provided for a  redemption  price equal to
113.75% of the carrying value of the Subordinated  Notes on the redemption date.
The Company recorded extraordinary losses before any benefit for income taxes in
Fiscal 1998 of  approximately  $4.3  million  related to the  prepayment  of the
Subordinated  Notes  and $1.0  million  related  to the  write-off  of  deferred
financing costs.  These losses are included in the total  extraordinary  loss in
the  accompanying  consolidated  statement of operations for the year ended July
26, 1998.

         Other subordinated  debentures owed by the Company at July 30, 2000 are
due as follows (in thousands):

                                                 Interest   Principal
                                       Year        Rate       Amount
                                   ------------------------------------
                                       2001         8%          $  525
                                       2002         8%             549
                                       2003         8%           1,074
                                       2004         8%           1,466
                                       2010         8%           1,292
                                       2012         6%           1,155
                                       2013         6%           1,065
                                       2015         6%           1,500
                                       2016         6%           1,196
                                                            -----------
                                                               $ 9,822
                                                            ===========

7.       Senior Credit Facility

         In  connection  with the  Offering,  the Company  established  a senior
credit  facility on  November  12,  1997 and repaid the  indebtedness  under the
Company's then existing credit facility. In connection with the repayment of the
old credit  facility,  the Company  wrote-off  deferred  financing costs of $1.2
million  and  incurred  prepayment  penalties  of  $433,000.  These  amounts are
included  in the  total  extraordinary  loss  in the  accompanying  consolidated
statement of operations for the year ended July 26, 1998.

           On October  12,  1999,  this  senior  credit  facility  was  amended,
restated and  consolidated  from two  sub-facilities  totaling $215 million to a
single facility totaling $165 million (the "Senior Credit Facility"). The Senior
Credit  Facility  consists of a revolving  credit facility in the amount of $100
million and a term facility in the amount of $65 million.  The revolving portion
of the Senior  Credit  Facility  matures on May 31,  2004,  and the term portion
matures on May 31, 2006. The Senior Credit Facility is secured by  substantially
all the assets of ASC and its subsidiaries,  except the real estate  development
subsidiaries,   which  are  not  borrowers  under  the  Senior  Credit  Facility
(collectively,  the borrowing  subsidiaries  are referred to as the  "Restricted
Subsidiaries").  In  conjunction  with the  restructuring  of the Senior  Credit
Facility,  the Company  wrote-off a pro-rata  portion of its  existing  deferred
financing costs in the amount of $1.0 million,  or $621,000 net of income taxes,
which is included in the accompanying  consolidated  statement of operations for
the year ended July 30, 2000 as an extraordinary loss.

         At July 30, 2000, the revolving  portion of the Senior Credit  Facility
had  outstanding  borrowings of $53.7 million and the term portion of the Senior
Credit Facility had outstanding  borrowings of $64.4 million,  all of which were
under contracts which bear interest at the 30-day LIBOR rate plus an incremental
margin based on the Company's  leverage (a margin of 3.5% for revolving advances

<PAGE>
and 4.0% for term loan  advances  as of July 30,  2000,  both being the  maximum
possible margins under the facility).  The Company has entered into two interest
rate swap agreements, with a total notional amount of $75 million, in connection
with the Senior Credit Facility which effectively swap a portion of the variable
interest rate borrowings to fixed rate borrowings. Under this arrangement, which
will terminate November 17, 2000, the Company receives the 30-day LIBOR rate and
pays a fixed rate of 5.68%. In effect, the first $75 million of borrowings under
the Senior Credit Facility are fixed at 5.68% plus the leverage-based margin and
all borrowings in excess of $75 million will bear a variable interest rate based
on  either  the  30-day  LIBOR or the  Fleet  Boston  base  lending  rate,  plus
applicable margins based on the Company's  leverage position.  At July 30, 2000,
the  Company  had  outstanding  $43.1  million  in excess of the $75  million in
fixed-rate  borrowings under the revolving portion of the Senior Credit Facility
which currently bears interest at the rate of 10.27% (30-day LIBOR rate of 6.77%
plus a leverage-based margin of 3.5%).

         Both the  revolving  and term  portions of the Senior  Credit  Facility
accrue interest daily and pay interest quarterly,  in arrears. At July 30, 2000,
accrued  interest  for the  revolving  and term  portions  of the Senior  Credit
Facility was $1.1 million and $1.7 million, respectively.

        The Senior Credit Facility contains affirmative,  negative and financial
covenants customary for this type of credit facility,  including  maintenance of
certain financial ratios. The revolving portion of the Senior Credit Facility is
subject to an annual 30-day  clean-down  requirement,  which period must include
April 30 of each year, during which the sum of the outstanding principal balance
and letter of credit exposure under the revolving portion of the facility is not
permitted  to exceed $25 million for fiscal 2000 and $35 million for each fiscal
year  thereafter.   The  Company  successfully   complied  with  the  clean-down
requirement for fiscal 2000.

        The Senior  Credit  Facility  contains  restrictions  on the  payment of
dividends by the Company on its common stock.  Those  restrictions  prohibit the
payment  of  dividends  in  excess  of  50%  of  the  Restricted   Subsidiaries'
consolidated  net income after April 25, 1999, and further  prohibit the payment
of dividends under any circumstances when the effect of such payment would be to
cause the Restricted  Subsidiaries'  debt to EBITDA ratio (as defined within the
credit agreement) to exceed 4.0 to 1.0.

        The  maximum  availability  under the  revolving  portion  of the Senior
Credit Facility reduces over its term by certain  prescribed  amounts.  The term
portion of the Senior Credit Facility  amortizes in five annual  installments of
$650,000  payable  on May 31 of each year,  commencing  May 31,  2000,  with the
remaining portion of the principal due in two substantially  equal  installments
on May 31,  2005 and May 31,  2006.  In  addition,  the Senior  Credit  Facility
requires mandatory  prepayment of the term portion and a mandatory  reduction in
the  availability  under the  revolving  portion  of an  amount  equal to 50% of
Consolidated  Excess Cash Flows (as defined in the credit  agreement) during any
period in which the Excess  Cash Flow  Leverage  Ratio (as defined in the credit
agreement)  exceeds  3.50  to 1.  In no  event,  however,  will  such  mandatory
prepayments reduce the revolving portion of the facility below $74.8 million.

         The Senior  Credit  Facility  also  places a maximum  level of non-real
estate capital  expenditures  of $20 million for fiscal 2000 and $13 million for
fiscal 2001  (exclusive of certain  capital  expenditures in connection with the
sale of the Series B Preferred  Stock).  Following  fiscal 2001,  annual  resort
capital expenditures  (exclusive of real estate capital expenditures) are capped
at  the  lesser  of (i)  $35  million  or  (ii)  the  total  of  the  Restricted
Subsidiaries'  consolidated  EBITDA (as  defined  therein)  for the four  fiscal
quarters  ended in April of the  previous  fiscal  year less  consolidated  debt
service for the same period. In addition to the foregoing  amounts,  the Company
is permitted to and expects to make  capital  expenditures  of up to $30 million
for the purchase  and  construction  of a new gondola at its Heavenly  resort in
Lake Tahoe, Nevada.

         The Company  entered into an amendment  to the Senior  Credit  Facility
effective March 6, 2000 (the "Credit Facility  Amendment")  which  significantly
modified  the  covenant  requirements,  effective  as of the  end of the  second

<PAGE>

quarter of fiscal 2000.  The Credit  Facility  Amendment  requires the following
minimum quarterly EBITDA levels:

                           Fiscal Quarter                     Minimum EBITDA
                           -------------------------------------------------
                           2000 Quarter 4                       ($20,000,000)
                           2001 Quarter 1                       ($20,000,000)
                           2001 Quarter 2                        $20,000,000
                           2001 Quarter 3                        $65,000,000
                           2001 Quarter 4                       ($20,000,000)
                           2002 Quarter 1                       ($20,000,000)
                           2002 Quarter 2                        $22,000,000

         The Credit Facility  Amendment also places  restrictions on the maximum
amount outstanding  (excluding letters of credit) under the revolving portion of
the Senior Credit  Facility for the period from May 1 through  December 3, 2000,
after which time these  restrictions  will not recur in future  periods.  During
this period, revolving credit advances shall not exceed the following amounts at
any time during the indicated monthly periods:

                           Monthly Period Ending        Maximum Revolver Balance
                           July 30, 2000                      $60,000,000
                           September 3, 2000                  $70,000,000
                           October 1, 2000                    $80,000,000
                           October 29, 2000                   $85,000,000
                           December 3, 2000                   $90,000,000

8.        Income Taxes

          The  provision  (benefit)  for  income  taxes  charged  to  continuing
operations was as follows (in thousands):

<TABLE>
                                                                                  Year ended
                                                                -------------    -------------    -------------
                                                                  July 26,         July 25,         July 30,
                                                                    1998             1999             2000
                                                                -------------    -------------    -------------
<S>                                                                  <C>              <C>              <C>
     Current tax provision
          Federal                                                   $      -       $        -        $       -
          State                                                            -                -                -

     Deferred tax provision (benefit)
          Federal                                                        580         (11,939)          (7,728)
          State                                                      (1,354)          (3,118)           1,923
                                                                -------------    -------------    -------------
     Total benefit                                                  $  (774)       $ (15,057)        $ (5,805)
                                                                =============    =============    =============

</TABLE>
         Deferred  income taxes reflect the tax impact of temporary  differences
between the amounts of assets and liabilities for financial  reporting  purposes
and such  amounts as measured by tax laws and  regulations.  Under SFAS 109, the
benefit  associated with future deductible  temporary  differences and operating
loss or credit  carryforwards is recognized if it is more likely than not that a
benefit will be realized.  Deferred tax expense (benefit)  represents the change
in the net deferred tax asset or liability balance.


<PAGE>

         Deferred tax  liabilities  (assets) are  comprised of the  following at
July 25, 1999 and July 30, 2000 (in thousands):

<TABLE>

                                                                           July 25, 1999        July 30, 2000
                                                                           --------------     -------------
<S>                                                                           <C>               <C>
     Property and equipment basis differential                                $   53,814        $   57,407
     Other                                                                           640             1,002
                                                                           --------------     -------------
     Gross deferred tax liabilities                                               54,454            58,409

     Tax loss and credit carryforwards                                          (30,887)          (57,272)
     Capitalized  costs                                                          (1,856)           (3,849)
     Deferred revenue and contracts                                             (10,536)           (2,506)
     Stock compensation  charge                                                  (3,112)           (1,740)
     Reserves and accruals                                                       (4,239)           (4,390)
     Other                                                                         (661)                 -
                                                                           --------------     -------------
     Gross deferred tax assets                                                  (51,291)          (69,757)

     Valuation allowance                                                           2,626             9,982
                                                                           --------------     -------------
     Net deferred tax liability (asset)                                        $   5,789       $   (1,366)
                                                                           ==============     =============
</TABLE>

         The  provision  (benefit)  for income taxes  differs from the amount of
income tax determined by applying the applicable U.S.  statutory income tax rate
of  35%  to  income  (loss)  before   provision   (benefit)  for  income  taxes,
extraordinary loss and cumulative effect of change in accounting  principle as a
result of the following differences (in thousands):

<TABLE>
                                                                             Year ended
                                                          --------------    -------------     -------------
                                                          July 26, 1998     July 25, 1999     July 30, 2000
                                                          --------------    -------------     -------------
<S>                                                           <C>             <C>               <C>
     Income tax benefit at the statutory U.S. tax rates       $ (1,080)       $ (15,052)        $ (12,578)
     Increase (decrease) in rates resulting from:
           State taxes, net                                     (1,354)          (3,118)             1,923
           Change in valuation allowance                            250                -             3,000
           Stock option compensation                              1,019            1,623               761
           Nondeductible items                                      634              848               498
           Other                                                  (243)              642               591
                                                          --------------    -------------     -------------
     Income tax benefit at the effective tax rates             $  (774)       $ (15,057)        $  (5,805)
                                                          ==============    =============     =============
</TABLE>

         At July 30, 2000,  the Company has federal net  operating  loss ("NOL")
carryforwards  of  approximately  $127.3 million which expire in varying amounts
though the year 2020, a federal  capital loss  carryover of  approximately  $2.9
million that expires in the years 2003 and 2004, and  approximately  $630,000 in
general  business credit  carryforwards  which expire in varying amounts through
2020.  Internal Revenue Code Section 382 limits the amount of NOL  carryforwards
incurred  before a change in  ownership,  as defined,  that can be used annually
against income generated after the change in ownership.  The Company experienced
a change in  ownership  both in November of 1997 as a result of the Offering and
in  August  of  1999  as a  result  of the  Oak  Hill  Transaction.  The  use of
approximately  $84.9  million  of the  federal  NOL  carryovers  are  subject to
limitation  under  Section  382 as a  result  of the Oak  Hill  Transaction.  In

<PAGE>

addition,  approximately  $27.3  million of the  federal NOL  carryforwards  are
subject  to an  additional  limitation  under  Section  382 as a  result  of the
Offering.  Because of recent  acquisitions,  the  limitation  for both ownership
changes is required to be allocated to the various  subsidiaries  based on their
relative fair market values.  In addition,  certain  subsidiaries  have separate
pre-change  in  ownership  losses,   which  are  subject  to  additional  annual
limitations as a result of previous changes in ownership.
Subsequent  changes in ownership  could further affect the limitations in future
years.

         In addition to the limitations  under Section 382,  approximately  $6.8
million of the federal NOL carryovers are from separate return years, as defined
in the  regulations to the Internal  Revenue Code, of certain  subsidiaries  (or
sub-groups),  and may only be used to offset each  subsidiary's (or sub-group's)
contribution to consolidated taxable income in future years.

         A valuation  allowance is provided when it is more likely than not that
some  portion or all of the  deferred  tax assets will not be  realized.  During
fiscal  2000,  the  valuation  allowance  was  increased by  approximately  $7.4
million,  from $2.6 million at July 25, 1999 to $10.0  million at July 30, 2000.
As a result of the Oak Hill  Transaction,  the realization of the tax benefit of
certain of the Company's NOL  carryovers  and other tax  attributes is dependent
upon the occurrence of certain future events.  It is the judgement of management
that a valuation  allowance of $3.0 million  against its deferred tax assets for
NOL  carryforwards  and other tax attributes is  appropriate  because it is more
likely  than not that the  benefit  of such  losses and  attributes  will not be
realized.   Based  on  facts  known  at  this  time,  the  Company   expects  to
substantially  realize  the benefit of the  remainder  of its NOLs and other tax
attributes  affected by the Oak Hill  Transaction.  The  remaining  $4.4 million
increase in the valuation  allowance primarily relates to the benefit of certain
state NOL carryovers. Based on the specific state rules for the use of these NOL
carryovers and the Company's  operations in those states,  the Company  believes
that  it  is  more  likely  than  not  that  the  benefits  of  such  state  NOL
carryforwards  will not be  realized.  Management  believes  that the  valuation
allowance  of $10.0  million  as of July 30,  2000 is  appropriate  based on the
change  of  ownership  events  and  the  resulting  annual  limitations  and the
Company's business operations and plans.


9.      Mandatorily Redeemable Securities

     Series A Preferred Stock
         Pursuant to a Securities  Purchase Agreement (the "Series A Agreement")
dated July 2, 1997 (as amended July 16, 1997),  the Company issued 17,500 shares
of its  Series A 14%  Exchangeable  Preferred  Stock  (the  "Series A  Preferred
Stock") in a private offering to an institutional investor. The Company incurred
$1.1 million in expenses in connection with the issuance of the Preferred Stock.

         Pursuant to the Series A Agreement,  the Company  issued $17.5  million
aggregate  principal amount of its 14% Senior  Exchangeable  Notes Due 2002 (the
"Exchangeable Notes") on July 28, 1997 in a private offering to an institutional
investor. The Company incurred deferred financing costs totaling $1.1 million in
connection with the issuance of the Exchangeable  Notes. The Exchangeable  Notes
bore  interest at a rate of 14% per annum and mature on July 28, 2002.  Interest
on the Exchangeable Notes was payable in cash or additional  Exchangeable Notes,
at the option of the Company.


<PAGE>
         On November 15, 1997,  subsequent  to the  completion  of the Offering,
each share of Series A Preferred Stock and the Exchangeable Notes were converted
into shares of Mandatorily  Redeemable 10 1/2% Preferred Stock. The total number
of Mandatorily  Redeemable 10 1/2% Preferred  Stock shares issued in association
with the  exchange  were  36,626 and have a face value of $1,000 per share.  The
carrying value of the Series A Preferred Stock and Exchangeable Notes just prior
to the  conversion  were $18.4  million  and $18.2  million,  respectively.  The
Company incurred an extraordinary loss before income tax benefit of $1.0 million
upon the conversion of the Preferred Stock and Exchangeable Notes as a result of
the  write-off  of  unamortized   deferred   financing  costs  relating  to  the
Exchangeable Notes.

         Under  the  Series A  Agreement,  the  Mandatorily  Redeemable  10 1/2%
Preferred Stock shares are  exchangeable at the option of the holder into shares
of the  Company's  Common Stock at a conversion  price of $17.10 for each common
share. In the event the  Mandatorily  Redeemable 10 1/2% Preferred Stock is held
to the maturity  date of November 15, 2002,  the Company will be required to pay
the holder in cash the face value of $36.6 million plus cumulative  dividends in
arrears.

         In the event of a default, as defined in the Series A Agreement,  there
shall be a mandatory redemption of the Mandatorily  Redeemable 10 1/2% Preferred
Stock by the  Company  unless  the  holder of the stock  elects  instead to have
visitation  rights to meetings  of both the Board of  Directors  and  Management
Committees until the event of default is cured.

         The  Mandatorily  Redeemable  10 1/2%  Preferred  Stock ranks senior in
liquidation  preference to all Common Stock and Class A Common Stock outstanding
at July 30, 2000 as well as any Common  Stock and Class A Common Stock issued in
the future.

     Series B Preferred Stock
         Pursuant to a Preferred  Stock  Subscription  Agreement  (the "Series B
Agreement")  dated July 9, 1999,  the Company  sold  150,000  shares of its 8.5%
Series B Convertible  Participating Preferred Stock ("Series B Preferred Stock")
on  August  9, 1999 to Oak Hill  Capital  Partners,  L.P.  and  certain  related
entities  ("Oak Hill") for $150  million.  The Company used  approximately  $129
million of the proceeds to reduce indebtedness under its Senior Credit Facility,
approximately  $30  million of which has been  reborrowed  and  invested  in the
Company's principal real estate development subsidiary,  Resort Properties.  The
remainder of the proceeds were used to (1) pay approximately $16 million in fees
and expenses in connection with the Series B Preferred Stock sale (approximately
$13  million)  and related  transactions  (approximately  $3  million),  and (2)
acquire  from Mr.  Otten  certain  strategic  assets and to repay a demand  note
issued by a subsidiary of the Company to Mr. Otten,  in the aggregate  amount of
$5.4 million.

      The Series B Preferred  Stock is convertible  into shares of the Company's
common stock at an initial  conversion price of $5.25 per share of common stock.
The initial conversion price is subject to an antidilution adjustment.  Assuming
all shares of the Series B  Preferred  Stock are  converted  into the  Company's
common stock at the initial (and current)  conversion  price, Oak Hill would own
approximately 50.0% of the Company's outstanding common stock and Class A common
stock as of July 30,  2000.  Oak Hill is entitled to vote its shares of Series B
Preferred  Stock on matters  (other than the  election of  Directors)  as if its
shares were converted into the Company's common stock. In addition,  Oak Hill as
the  holder  of  Series B  Preferred  Stock  has  class  voting  rights to elect
Directors to the Company's Board of Directors.  Furthermore,  under the Series B
Agreement, Oak Hill and the Chairman and Chief Executive Officer of the Company,
Mr. Otten,  have agreed to use best efforts and to vote their shares in order to
ensure  that each of them is able to appoint up to four  Directors  to the Board
(depending on their shareholdings).  Therefore, under the Series B Agreement and
the Company's  certificate  of  incorporation,  Oak Hill and Mr. Otten  together
elect eight of the eleven members of the Company's Board.

      Dividends on the Series B Preferred  Stock are payable at the rate of 8.5%
per year.  For the first five  years,  the  Company  may  accrete  and  compound
dividends payable to the liquidation price instead of paying cash dividends,  in
which case the dividend rate will  increase to 9.5% after January 31, 2001,  and
to 10.5% after January 31, 2002. The Series B Agreement requires dividends to be
paid in cash after July 31, 2004.  The dividend rate will revert back to 8.5% at
the time the Company  begins paying the dividend in cash. If the Company  elects
to accrue dividends on the Series B Preferred Stock to the liquidation price for
the  first  five  years,  and  thereafter  pay all  dividends  in cash when due,
assuming no  intervening  stock  issuances or  repurchases  by the Company,  the
Series B Preferred Stock would be convertible into 60.4% of the Company's common
stock after the fifth  anniversary  of its  issuance.  The Company is  currently
accruing dividends on the Series B Preferred Stock at an effective rate of 9.7%,
with the  assumption  that  dividends  will not be paid in cash  until the fifth
anniversary of the issuance.
<PAGE>

         The  Stockholders'  Agreement,  dated August 9, 1999, was amended as of
July 31, 2000 (See Note 16 - Subsequent Events).

10.      Related Party Transactions

         Sunday River provided  lodging  management  services for Ski Dorm, Inc.
("Ski Dorm"), a corporation  previously owned by Mr. Otten and his mother, which
owns a ski dorm  located near the Sunday River  resort.  During  fiscal 1998 and
1999  payments  by  Ski  Dorm  to  Sunday  River  totaled  $2,000  and  $65,000,
respectively.

         After the  consummation  of the  Series B  Preferred  Stock sale to Oak
Hill, the Company, through one of its subsidiaries,  acquired or obtained rights
to acquire the following  assets from entities owned or controlled by Mr. Otten:

         o        The land  underlying the snowmaking  ponds at the Sunday River
                  resort,  together with all associated water rights, which were
                  previously  leased  by a  subsidiary  of  the  Company,  for a
                  purchase price of $2.1 million.

         o        The Ski Dorm  building and land  underlying  the Snow Cap Inn,
                  each  located at the Sunday  River  resort,  for an  aggregate
                  purchase price of $679,000.

         o        Approximately  3,300 acres of  undeveloped  land at the Sunday
                  River  resort,  which  was  optioned  to a  subsidiary  of the
                  Company for an initial payment of $650,000,  which payment may
                  be  applied  to the  purchase  price.  The  purchase  price is
                  $3,692,000,  which is a 12% discount from the appraised  value
                  of the land.  The purchase price will be discounted by another
                  20% or 10% if the option is exercised  within 12 and 24 months
                  of the option date,  respectively.  As of July 30,  2000,  the
                  Company  has  not   exercised   its  option  to  purchase  the
                  undeveloped land.

         In connection  with the foregoing  asset sale,  the Company also repaid
the  outstanding  principal and accrued  interest of a note from a subsidiary of
the Company payable to Mr. Otten totaling  approximately $2.0 million.  The note
was originally  issued to Mr. Otten to cover certain tax  liabilities  generated
when the Company's  subsidiary  converted  from a subchapter S corporation  to a
subchapter C corporation.

         Mr. Paul Wachter, a member of the Company's Board of Directors,  is the
founder  and Chief  Executive  Officer  of Main  Street  Advisors.  Main  Street
Advisors,  through Mr. Wacter,  acted as one of the Company's investment bankers
in connection  with the Series B Preferred  Stock sale,  for which it was paid a
fee of approximately $1.5 million.

         On May  10,  2000,  the  Company,  through  one  of  its  subsidiaries,
purchased two parcels of land adjacent to the  Company's  Sugarbush  resort from
Sugarbush Land Holdings,  Inc., a corporation  controlled by Mr. Otten.  The two
parcels, totaling approximately 128 acres, were purchased for an aggregate price
of  approximately  $589,000.  The terms of the purchase,  including the purchase
price, were reviewed and approved by the Executive Committee and Audit Committee
of the Company's Board of Directors.

         In March,  2000,  the Company,  through one of its  subsidiaries,  sold
residential  units at the  Company's  Sundial Lodge at The Canyons to Mr. Blaise
Carrig, Mr. Christopher Howard and Mr. Daniel Duquette.  Mr. Carrig is President
of the  Company's  subsidiary  which  operates  The Canyons.  Mr.  Howard is the
Company's  Executive Vice  President.  Mr. Duquette is a member of the Company's
Board of Directors.  Mr. Carrig and Mr.  Howard each  purchased one  residential
unit in the  Sundial  Lodge  for a  purchase  price of  $201,000.  Mr.  Duquette
purchased  one  residential  unit in the Sundial  Lodge for a purchase  price of
$345,000.  The purchase  price which Mr.  Carrig,  Mr.  Howard and Mr.  Duquette
purchased  these  units  were the same as those at which  the units (or units of
comparable size and finish) were offered for sale to the general public.



<PAGE>
11.      Commitments, Lease Contingencies and Contingent Liabilities

          The Company leases certain land and facilities  used in the operations
of  its  resorts  under  several  operating  lease  arrangements.   These  lease
arrangements  expire at various  times from the year 2010 through the year 2060.
Lease  payments  are  generally  based on a percentage  of revenues.  Total rent
expense under these operating leases as recorded in resort operating expenses in
the  accompanying  consolidated  statement of operations for 1998, 1999 and 2000
was $2.5 million, $2.6 million and $3.1 million, respectively.

          Significant  portions of the land underlying  certain of the Company's
ski resorts are leased or subleased by the Company or used pursuant to renewable
permits or licenses. If any such lease,  sublease,  permit or license were to be
terminated or not renewed upon  expiration,  or renewed on terms materially less
favorable  to the  Company,  the  Company's  ability to possess and use the land
subject  thereto  and any  improvements  thereon  would be  adversely  affected,
perhaps making it impossible for the Company to operate the affected  resort.  A
substantial  portion of the land  constituting  skiable terrain at Attitash Bear
Peak,  Sugarbush,  Mount  Snow/Haystack and Steamboat is located on federal land
that is used  under the  terms of the  permits  with the  United  States  Forest
Service (the "Forest Service").  Generally, under the terms of such permits, the
Forest  Service has the right to review and comment on the location,  design and
construction of improvements in the permit area and on many operational matters.
The permits  can be  terminated  or modified by the Forest  Service to serve the
public interest.  A termination or modification of any of the Company's  permits
could  have a  material  adverse  effect on the  results  of  operations  of the
Company.  The Company does not anticipate  any  limitations,  modifications,  or
non-renewals which would adversely affect the Company's operations.

          In connection  with the purchase of The Canyons,  the Company  entered
into an  operating  lease  arrangement  with the seller for the lease of certain
land to be used in the  operation  of the  resort  and for  future  real  estate
development.  The  arrangement  provides for an initial  lease term of 50 years,
with the option to extend for three additional 50-year periods for a fee of $1.0
million for each extension  period.  Lease payments are based on a percentage of
gross skiing and lodging revenues.  The arrangement also provides for additional
one-time  payments  ranging from  $250,000 to $3.0 million upon  achievement  of
annual skier visit level increases in 100,000 visit  increments up to 1,000,000.
Total rent  expense  under this  arrangement,  as recorded  in resort  operating
expenses in the accompanying consolidated statement of operations for 1998, 1999
and 2000 was $473,000,  $311,000, and $918,000,  respectively.  In addition, the
Company has the option to purchase  parcels of land covered  under the operating
lease  for  real  estate   development.   Payments  for  these   options   total
approximately  $19.5  million  and are  payable at various  times and in varying
amounts, at the Company's discretion,  through December 2001. The Company is not
required to make the option payments for all parcels of land in order to develop
and sell real estate on the land covered under the lease. Through July 30, 2000,
the Company has made $12.9 million of option payments, of which $3.6 million has
been  allocated  to the cost of parcels that have been  purchased  to date.  The
remaining  $9.3  million in option  payments are included in other assets in the
accompanying  consolidated balance sheet and will eventually be allocated to the
cost of future parcels purchased by the Company.

          In addition to the leases  described  above,  the Company is committed
under several operating and capital leases for various facilities, machinery and
equipment.  Rent  expense  under all  operating  leases was $6.4  million,  $6.1
million and $7.8 million for the years ended 1998, 1999 and 2000, respectively.

         Future  minimum lease  payments for lease  obligations at July 30, 2000
are as follows (in thousands):
<TABLE>
                                                               Capital        Operating
                                                                Leases          leases
                                                             ------------    ------------
               <S>            <C>                                              <C>
               2001                                             $  8,949        $  7,128
               2002                                                8,864           6,366
               2003                                                6,059           5,230
               2004                                               10,898           4,140
               2005 and thereafter                                   600          12,292
                                                             ------------    ------------
                   Total payments                                 35,370        $ 35,156
                                                                             ============
                   Less interest                                 (6,740)
                                                             ------------
                   Present value of net minimum payments          28,630
                   Less current portion                          (6,454)
                                                             ============
                   Long-term obligations                        $ 22,176
                                                             ============
</TABLE>
<PAGE>

          The Company  currently has a Grand Summit Hotel under  construction at
Steamboat.  Total  construction  costs for this project are estimated to be $116
million and it is primarily  being  financed  through a $110  million  revolving
construction  loan facility with TFC Textron and an additional $10 million bulge
facility,  also  with TFC  Textron.  The  Company  also has a $58  million  term
facility  with Fleet Boston that can be used for this project as well as general
and operating  expenditures.  As of July 30, 2000, the Company had $92.1 million
outstanding on the Textron facility,  $2.6 million on the Textron Bulge facility
and the  entire $58  million  available  under the Fleet  Boston  facility.  The
Company  estimates  that as of July 30,  2000,  approximately  $17  million  was
required to complete the Steamboat  Grand Hotel.  The  additional  funds will be
generated from the net proceeds of the sale of existing Grand Summit  inventory.
On July 31, 2000 the Company  Amended the Fleet Boston  Facility  (See Note 16 -
Subsequent Events).

         On July 22, 1998,  the Company  entered into an agreement with Marriott
Ownership Resorts,  Inc. ("Marriott") for the future sale of land parcels at the
Company's Killington,  Sunday River, The Canyons, Steamboat and Heavenly resorts
(the "Marriott Agreement"). Under the Marriott Agreement, Marriott has the right
to  develop  luxury   vacation   ownership   properties  at  each  of  the  five
aforementioned  properties.  In  accordance  with the  Marriott  Agreement,  the
Company has granted to Marriott certain  development and marketing rights at the
related  resorts.  In  return,  in the event  that  Marriott  elects to  develop
properties at the resorts, the Company will receive proceeds for the sale of the
land parcels and will receive a percentage  of the Marriott  sales of the luxury
vacation ownership  properties.  The Company has received a cash deposit of $1.6
million from Marriott relating to the future land sales, and because none of the
parcels  have yet to be sold,  the deposit is recorded as deposits  and deferred
revenue in the accompanying  consolidated balance sheet at July 25, 1999. In the
Fall of 1999, Marriott informed the Company that it would not be proceeding on a
timely basis with its  developments  at the Company's  properties at The Canyons
and  Sunday  River.  As a result,  on March 6,  2000,  the  Company  and  Resort
Properties  entered into an amendment (the  "Amendment")  to their July 22, 1998
Purchase and Development  Agreement with Marriott.  The Amendment eliminates the
Marriott Agreement's  restrictions upon real estate at all the Company's resorts
other than  Killington,  Steamboat  and  Heavenly.  The Company and Marriott are
obligated to negotiate  site specific  agreements  for  development  projects at
those three  remaining  resorts  during the 105-day period  following  March 30,
2000. In the event of successful  negotiation,  Marriott's  exclusive  timeshare
development rights at those three resorts will continue. If negotiations are not
successful,  then  Marriott's  exclusive  timeshare  development  rights will be
terminated.  Under the  Amendment,  Marriott's  right of first  refusal has been
permanently  eliminated and Resort  Properties has refunded to Marriott $960,000
in  previously  advanced  purchase  price.  Early in fiscal  2001,  the Marriott
Agreement was terminated in connection with the sale to Marriott of certain land
option rights at Heavenly (See Note 16 - Subsequent Events).

         The  Killington  resort has been  identified by the U.S.  Environmental
Protection Agency (the "EPA") as a potentially  responsible party ("PRP") at two
sites pursuant to the  Comprehensive  Environmental  Response,  Compensation and
Liability  Act  ("CERCLA"  or  "Superfund").   Killington  has  entered  into  a
settlement  agreement  with the EPA at one of the sites,  the Solvents  Recovery
Service of New England  Superfund site in Southington,  Connecticut.  Killington
rejected  an offer to enter  into a de minimis  settlement  with the EPA for the
other site, the PSC Resources  Superfund site in Palmer,  Massachusetts,  on the
basis that  Killington  disputes  its  designation  as a PRP. In  addition,  the
Company's  Heavenly  resort  was  designated  as a PRP at a  Superfund  site  in
Patterson,  CA. The Company entered into a cash-out  settlement  agreement which
has been accepted by the EPA and funded as part of an overall  settlement of the
site.  The  Company  believes  that its  liability  for these  Superfund  sites,
individually  and in the aggregate,  will not have a material  adverse effect on
the business or financial  condition of the Company or results of  operations or
cash flows.

          Certain  claims,  suits and  complaints  associated  with the ordinary
course of business are pending or may arise  against the Company,  including all
of its direct and  indirect  subsidiaries.  In the  opinion of  management,  all
matters are  adequately  covered by insurance  or, if not  covered,  are without
merit or are of such kind,  or involve such amounts as would not have a material
effect on the  financial  position,  results of  operations or cash flows of the
Company if disposed of unfavorably.

12.     Stock Option Plan

          Effective August 1, 1997, the Company established a fixed stock option
plan, the American Skiing Company Stock Option Plan (the "Plan"), to provide for
the grant of incentive and non-qualified stock options for the purchase of up to
5,688,699 shares of the Company's common stock by officers, management employees
of the  Company  and its  subsidiaries  and  other  key  persons  (eligible  for
nonqualified  stock options only) as  designated by the Options  Committee.  The
Options Committee,  which is appointed by the Board of Directors, is responsible
for the Plan's administration. The Options Committee determines the term of each
option, option exercise price, number of shares for which each option is granted
and the rate at which each option is exercisable. Options granted under the Plan
generally expire ten years from the date of grant and vest either immediately or

<PAGE>

over a five-year term.  Incentive stock options shall not have an exercise price
less  than  the fair  market  value of the  common  stock at the date of  grant.
Nonqualified  stock options shall be granted at an exercise  price as determined
by the  Options  Committee.  The status of the  Company's  stock  option plan is
summarized below:

                                                                Weighted
                                                                 Average
                                                Number          Exercise
                                              of Shares           Price
               ------------------------------------------------------------
               Outstanding at July 27, 1997              -               -
               Granted                           2,716,057          $14.01
               Exercised                          (20,000)            2.00
               ------------------------------------------------------------
               Outstanding at July 26, 1998      2,696,057           14.10
               Granted                           1,196,000            7.17
               Exercised                           (1,221)            2.00
               ------------------------------------------------------------
               Outstanding at July 25, 1999      3,890,836           11.97
               Granted                           2,660,000            2.70
               Exercised                         (182,390)            2.00
               Returned                        (2,325,127)           15.60
               ------------------------------------------------------------
               Outstanding at July 30, 2000      4,043,319          $ 4.24
               ------------------------------------------------------------

         During fiscal 1998, the Company granted  nonqualified options under the
Plan to certain key members of management to purchase  672,010  shares of common
stock with an exercise  price of $2.00 per share when the fair  market  value of
the stock was  estimated to be $18.00 per share.  The majority of these  options
(511,530  shares)  were  granted to members of senior  management  and were 100%
vested  on  the  date  of  grant.  Accordingly,  the  Company  recognized  stock
compensation  expense  of $8.1  million  relating  to the  grants  based  on the
intrinsic  value of $16.00  per  share.  Under  these  senior  management  grant
agreements,  the Company also agreed to pay the optionees a fixed tax "bonus" in
the aggregate of $5.8 million to provide for certain fixed tax liabilities  that
the optionees will incur upon exercise.  The remainder of these options (160,480
shares) were granted under the Plan to certain  members of  management  and were
vested 20% on the date of grant and vest ratably to 100% over the following four
years. For fiscal 1998, 1999 and 2000, the Company recognized $500,000, $773,000
and $1.0 million,  respectively, of stock compensation expense relating to these
options. The total stock compensation charge,  including the tax bonus, of $14.3
million recorded in fiscal 1998 is reflected as Stock compensation charge, while
the $773,000 and $1.0 million recorded in fiscal 1999 and 2000, respectively, is
reflected as marketing,  general and  administrative  costs in the  accompanying
consolidated  statement of operations.  The liability for the fixed tax bonus to
be paid to the  optionees  has been reduced to reflect $1.9 million in tax bonus
payments  made as of July 30, 2000 in  connection  with options  exercised.  The
remaining $3.9 million tax bonus liability is reflected in accounts  payable and
other current liabilities in the accompanying consolidated balance sheet at July
30, 2000.

         The  following  table  summarizes  information  about the stock options
outstanding under the Stock Plan at July 30, 2000:

<TABLE>
                                          Weighted
                                           Average
                                          Remaining    Weighted                Weighted
                Range of                Contractual     Average                 Average
                Exercise  Outstanding      Life (in    Exercise Exercisable    Exercise
                  Prices    @ 7/30/00        years)       Price   @ 7/30/00       Price
             ---------------------------------------------------------------------------
               <S>          <C>                 <C>      <C>        <C>          <C>
               $2 - $5      3,000,869           9.0      $2.58      768,713      $ 2.32
                6 - 10        851,600           8.0        7.11     400,400        7.12
               11 - 15         22,500           7.0       14.19      22,500       14.19
               16 - 18        168,350           8.0       18.00     168,350       18.00
             ---------------------------------------------------------------------------
               $2 - $18     4,043,319           8.7       $4.24   1,359,963       $5.87
             ---------------------------------------------------------------------------
</TABLE>


<PAGE>

         The Company continues to account for stock-based compensation using the
method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for
Stock  Issued to  Employees",  under  which no  compensation  expense  for stock
options is recognized  for stock option awards  granted to employees at or above
fair market  value.  The Company has adopted the  disclosure-only  provisions of
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). Had stock compensation expense been determined based
on the fair value at the grant  dates for  awards  granted  under the  Company's
stock option plan, consistent with the provisions of SFAS 123, the Company's net
loss and loss per  share  would  have  been  changed  to the pro  forma  amounts
indicated below (dollar amounts in thousands):
<TABLE>

              Fiscal Years Ended                   1998              1999         2000
              ---------------------------------------------------------------------------------
              <S>                                <C>              <C>               <C>
              Net Loss
                   As reported                   $  (12,294)      $  (32,322)       $ (52,452)
                   Pro forma                        (27,562)         (32,691)         (39,904)
              Basic and diluted net loss
                per common share
                   As reported                    $   (0.48)        $  (1.07)        $  (1.73)
                   Pro forma                          (1.07)           (1.08)           (1.31)
</TABLE>

         The fair value of each option  grant is  estimated on the date of grant
using the Black-Scholes model with the following weighted average assumptions:

<TABLE>
             Fiscal Years Ended                    1998            1999             2000
             --------------------------------------------------------------------------------
<S>                                               <C>             <C>              <C>
             Expected life                        10 yrs          10 yrs           10 yrs
             Risk-free interest rate               5.6%            6.0%             6.5%
             Volatility                           47.1%           68.4%            93.9%
             Dividend yield                         -                -               -

</TABLE>
         The weighted  average grant date fair value for the options  granted in
fiscal 1998 with an exercise price of $2.00 per share was $16.92 per share.  The
weighted  average  grant date fair value for the options  granted in fiscal 1998
with an exercise  price of $14.19 to $18.00 per share was $11.92 per share.  The
weighted  average  grant date fair value for the options  granted in fiscal 1999
with an  exercise  price of $4.00 to $8.75 per share  was $5.71 per  share.  The
weighted  average  grant date fair value for the options  granted in fiscal 2000
with an exercise price of $2.00 to $3.00 per share was $2.26 per share.

13.      Capital Stock

          The  Company  has two  classes of Common  Stock  outstanding,  Class A
Common Stock and Common Stock.  The rights and preferences of holders of Class A
Common Sock and Common Stock are substantially identical, except that, while any
Class A Common Stock is outstanding,  holders of Class A Common Stock will elect
a class of directors that  constitutes  two-thirds of the Board of Directors and
holders  of  Common  Stock  will  elect a class of  directors  that  constitutes
one-third of the Board of Directors.  Each share of Class A Common Stock will be
convertible  into one share of Common  Stock (i) at the  option of the holder at
any  time,  (ii)  automatically  upon  transfer  to any  person  that  is not an
affiliate of Mr. Otten and (iii)  automatically  if, at any time,  the number of
shares  of  Class  A  Common  Stock  outstanding  represents  less  than  20% of
outstanding  shares of Common  Stock and Class A Common  Stock.  Mr. Otten holds
100% of the Class A Common Stock, representing approximately 51% of the combined
voting power of all outstanding shares of Common Stock and Class A Common Stock.



<PAGE>

14.      Business Segment Information

         The Company currently  operates in two business  segments,  Resorts and
Real  Estate.  The two  segments  are  managed  differently  because  they offer
different products and services and require different marketing strategies. Each
segment also has  distinctly  separate  capital  structures.  The Resort segment
operates  nine ski  resorts and all of their  related  activities  (lift  ticket
sales, retail, food & beverage,  skier development,  lodging services,  golf and
other summer  activities).  The Real Estate segment develops  mountainside  real
estate properties at the Company's ski resorts. Data by segment is as follows:
<TABLE>

                                              July 26, 1998    July 25, 1999     July 30, 2000
                                              --------------   --------------    --------------
<S>                                              <C>              <C>               <C>
        Net revenues:
           Resorts                               $  277,574       $  292,558        $  292,077
           Real estate                               60,992           24,492           132,063
                                              --------------   --------------    --------------
                                                 $  338,566       $  317,050        $  424,140
                                              ==============   ==============    ==============

         Income (loss) before income taxes
           Resorts                              $  (17,286)      $  (33,371)        $ (31,409)
           Real estate                               14,200          (9,636)           (4,529)
                                              --------------   --------------    --------------
                                                $   (3,086)      $  (43,007)       $  (35,938)
                                              ==============   ==============    ==============

        Depreciation and amortization:
           Resorts                               $   37,580       $   43,226        $   45,759
           Real estate                                  385              976             1,269
                                              --------------   --------------    --------------
                                                 $   37,965       $   44,202        $   47,028
                                              ==============   ==============    ==============

        Capital expenditures:
           Resorts                               $   92,998       $   52,465        $   27,229
           Real estate                               93,255          153,106           166,879
                                              --------------   --------------    --------------
                                                 $  186,253       $  205,571        $  194,108
                                              ==============   ==============    ==============

        Identifiable assets:
           Resorts                                                $  560,219        $  538,131
           Real estate                                               247,338           291,754
                                                               --------------    --------------
                                                                  $  807,557        $  829,885
                                                               ==============    ==============
</TABLE>

15      Quarterly Financial Information (Unaudited)

         Following is a summary of unaudited quarterly  information  (amounts in
thousands, except per share amounts):

<TABLE>
                                                           First        Second        Third        Fourth
                                                          Quarter      Quarter       Quarter      Quarter
                                                        -----------  ------------  -----------   ----------
<S>                                                       <C>          <C>          <C>           <C>
Year ended July 30, 2000:

Net sales                                                 $ 23,355     $ 126,627    $ 223,095     $ 51,063
Income (loss) from operations                             (22,899)       (6,589)       52,641     (23,185)
Income (loss) before preferred stock dividends            (21,813)       (9,805)       26,783     (25,298)
Net income (loss) available to common shareholders        (27,954)      (15,124)       21,464     (30,838)

Basic income (loss) per share:
Net income (loss) available to common shareholders        $ (0.92)      $ (0.50)      $  0.71     $ (1.01)
Weighted average shares outstanding                         30,287        30,412       30,423       30,448

Fully diluted income (loss) per share:
Net income (loss) available to common shareholders        $ (0.92)      $ (0.50)      $  0.42     $ (1.01)
Weighted average shares outstanding                         30,287        30,412       60,268       30,448

Year ended July 25, 1999

Net sales                                                 $ 24,796      $109,505     $164,641     $ 18,108
Income (loss) from operations                             (20,852)       (4,543)       47,264     (25,494)
Income (loss) before preferred stock dividends            (19,209)       (9,700)       22,333     (21,374)
Net income (loss) available to common shareholders        (20,268)      (10,779)       21,237     (22,512)

Basic income (loss) per share:
Net income (loss) available to common shareholders        $ (0.67)     $  (0.36)     $   0.70     $ (0.74)
Weighted average shares outstanding                         30,286        30,287       30,287       30,287

Fully diluted income (loss) per share:
Net income (loss) available to common shareholders        $ (0.67)     $  (0.36)     $   0.69     $ (0.74)
Weighted average shares outstanding                         30,286        30,287       30,630       30,287

</TABLE>


<PAGE>

16       Subsequent Events

Real Estate Debt Agreement
      On July 31, 2000,  the Company  entered into a Second Amended and Restated
Credit Agreement between Resort Properties,  Fleet National Bank and the lenders
party thereto (the "Amended Real Estate Term  Facility").  This fully syndicated
$73 million facility  replaces Resort  Properties'  previous  un-syndicated  $58
million Real Estate development term loan facility. The Amended Real Estate Term
Facility  is  collateralized  by  security   interests  in,  and  mortgages  on,
substantially  all of Resort  Properties'  assets,  which  primarily  consist of
undeveloped  real  property  and  the  stock  of  its  real  estate  development
subsidiaries (including GSRP).

         The Amended Real Estate Term  Facility is comprised of three  tranches,
each with separate  interest rates and maturity  dates.  Tranche A has a maximum
principal amount of $35 million,  bears interest at a variable rate equal to the
Fleet  National  Bank's Base Rate plus 8.25%  (payable  monthly in arrears)  and
matures on December 31, 2002.  Tranche B has a maximum  principal  amount of $25
million, bears interest at a fixed rate of 25% per annum and matures on December
31,  2003.  Interest  calculated  at 18% per annum for Tranche B will be payable
monthly in arrears.  The  remaining  7% per annum will  accrue,  be added to the
principal  balance  of  Tranche  B and  will  bear  interest  at 25% per  annum,
compounded  annually.  Tranche C has a maximum  principal amount of $13 million,
bears interest at an effective rate of 25% per annum and matures on December 31,
2005.  Interest will accrue,  be added to the principal balance of Tranche C and
will compound semi-annually.

         Tranche C of the Amended Real Estate Term Facility was purchased by Oak
Hill Capital Partners, L.P. In connection with this $13 million investment,  the
Company entered into a Securities  Purchase Agreement with Oak Hill, dated as of
July 31,  2000,  pursuant  to which the  Company  has agreed to either (i) issue
warrants to Oak Hill for  6,000,000  shares of ASC common stock with an exercise
price of $2.50  per  share or (ii)  issue  to Oak Hill  common  stock in  Resort
Properties  representing  approximately  15% of the  voting  interest  in Resort
Properties.  The purchase  price of the warrants  (or Resort  Properties  common
stock, as applicable) was $2 million.

         In addition, the Series B Agreement,  dated August 9, 1999, was amended
as of July 31, 2000 to provide,  among other things: (i) that Oak Hill will have
the right to elect six members of the  Company's  Board of  Directors,  provided
that Oak Hill maintains certain ownership levels;  (ii) that Mr. Otten will have
the right to elect two members to the Board,  provided that he maintains certain
ownership  levels;  and (iii) that Mr. Otten will have the right to serve on the
executive  committee  of the Board and on the boards of  directors  of  material
subsidiaries  of ASC.  As of July 31,  2000,  Oak Hill  would  own  54.9% of the
67,546,455  shares of common stock of the Company that would be  outstanding  if
all the shares of the Series B Preferred  Stock were converted and if all of the
Warrants were exercised.

Sale of Option Rights

         On  September  26, 2000,  the Company  entered into a purchase and sale
agreement to sell its option rights to a parcel of real estate in the south Lake
Tahoe Redevelopment District to Marriott for $8.5 million. Pursuant to the terms
of the purchase and sale agreement, Resort Properties will receive $4.09 million
in cash proceeds on October 17, apply a previously received $320,000 deposit and
will receive an  additional  $4.09  million  from  Marriott on January 15, 2001.
Also,  as part of the  purchase  and sale  agreement  the  existing  Development
Agreement among the Company,  Resort Properties and Marriott dated July 22, 1998
will be terminated.


<PAGE>